REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1095  OF 2012 [arising out of SLP (C) No. 22521 of 2008]

A.V. Padma & Ors. … Appellants

Versus

R. Venugopal & Ors. … Respondents

J U D G M E N T

CYRIAC JOSEPH, J.

1. Leave granted.

2. The  appellants  were  the  petitioners  in  Writ  Petition  No.  

10405/2008 which was dismissed by the High Court of Karnataka as  

per  order  dated  5.8.2008  which  is  impugned  in  this  appeal.  

Respondent  Nos. 1 to 3 herein were respondent  Nos. 1, 2 and 4 in  

the writ petition.  

3. One  T.S.  Subrahmanyam  met  with  a  motor  accident  on  

12.11.1991 and died on 21.7.1993 due to injuries sustained in the  

accident.  Appellant No. 1 is the widow and appellant Nos.2 and 3 are  

the daughters of the said T.S. Subrahmanyam.  In the claim petition

filed by the appellants who are the legal heirs of T.S. Subrahmanyam,  

the  Motor  Accidents  Claims  Tribunal-I,  Mysore  (for  short,  “the  

Tribunal”)  passed an award granting Rs.60,000/- as compensation.  

In appeal, the High Court of Karnataka vide its order dated 6.7.2006  

enhanced the amount of compensation to Rs.4,25,000/-.  Respondent  

No. 3 - United India Insurance Co. Ltd. deposited in the Tribunal an  

amount of Rs.6,33,038/- on 7.1.2008.  On 31.1.2008, the appellants  

filed  an  application  before  the  Tribunal  praying  for  release  of  the  

amount  in  deposit  in  favour  of  appellant  No.  1,  A.V.  Padma.  

Appellants  Nos.  2  and  3  filed  affidavits  stating  that  they  had  no  

objection to the payment of the amount to their mother A.V. Padma.  

However, the Tribunal directed to invest Rs.1,00,000/- each in long  

term deposits in favour of appellant Nos. 2 and 3 and to disburse only  

the balance amount to the appellants. The appellants filed a further  

application dated 19.6.2008 praying to disburse the entire amount to  

the decree-holders without insisting on deposit of any portion of the  

amount  in  any  nationalized  bank.  However,  by  an  order  dated  

28.6.2008, the Tribunal rejected the prayer for release of the amount  

of Rs.2,00,000/- deposited in the nationalized bank.  Aggrieved by the  

order of the Tribunal, the appellants filed Writ Petition No. 10405 of  

2008 in the High Court of Karnataka. The High Court dismissed the  

writ  petition observing that the Tribunal had passed the impugned  

order  keeping  in  mind  the  law declared  by  the  Supreme  Court  in  

General  Manger,  Kerala  State  Road  Transport  Corporation,  

Trivandrum v. Susamma Thomas and Others,  AIR 1994 SC 1631.  

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According to the High Court, the Tribunal only followed the judgment  

of the Supreme Court in letter and spirit. Challenging the order of the  

High Court this appeal has been filed.  

4. In  the case  of  Susamma Thomas (supra),  this  Court  issued  

certain guidelines in order to “safeguard the feed from being frittered  

away  by  the  beneficiaries  due  to  ignorance,  illiteracy  and  

susceptibility to exploitation”.  Even as per the guidelines issued by  

this Court Court, long term fixed deposit of amount of compensation  

is  mandatory  only  in  the  case  of  minors,  illiterate  claimants  and  

widows.  In the case of illiterate claimants, the Tribunal is allowed to  

consider the request for lumpsum payment for effecting purchase of  

any movable property such as agricultural implements, rickshaws etc.  

to earn a living.  However, in such cases, the Tribunal shall make sure  

that the amount is actually spent for the purpose and the demand is  

not a ruse to withdraw money.  In the case of semi-illiterate claimants,  

the Tribunal should ordinarily invest the amount of compensation in  

long term fixed deposit.  But if the Tribunal is satisfied for reasons to  

be stated in writing that the whole or part of the amount is required  

for expanding an existing business or for purchasing some property  

for earning a livelihood, the Tribunal can release the whole or part of  

the amount of compensation to the claimant provided the Tribunal  

will ensure that the amount is invested for the purpose for which it is  

demanded  and  paid.   In  the  case  of  literate  persons,  it  is  not  

mandatory to invest the amount of compensation in long term fixed  

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deposit.  The expression used in guideline No. (iv) issued by this Court  

is that in the case of literate persons also the Tribunal may resort to  

the procedure indicated in guideline No. (i), whereas in the guideline  

Nos.  (i),  (ii),  (iii)  and (v),  the  expression  used is  that  the Tribunal  

should.  Moreover, in the case of literate persons, the Tribunal may  

resort to the procedure indicated in guideline No. (i)  only if, having  

regard to the age, fiscal background and strata of the society to which  

the  claimant  belongs  and  such  other  considerations,  the  Tribunal  

thinks that in the larger interest of the claimant and with a view to  

ensure  the  safety  of  the  compensation  awarded,  it  is  necessary  to  

invest the amount of compensation in long term fixed deposit.   

5. Thus, sufficient discretion has been given to the Tribunal not to  

insist on investment of the compensation amount in long term fixed  

deposit and to release even the whole amount in the case of literate  

persons.  However, the Tribunals are often taking a very rigid stand  

and are mechanically ordering in almost all cases that the amount of  

compensation shall be invested in long term fixed deposit.  They are  

taking such a rigid and mechanical approach without understanding  

and appreciating the distinction drawn by this Court in the case of  

minors,  illiterate  claimants  and  widows  and  in  the  case  of  semi-

literate and literate persons.  It needs to be clarified that the above  

guidelines were issued by this Court only to safeguard the interests of  

the claimants,  particularly  the minors,  illiterates and others whose  

amounts are sought to be withdrawn on some fictitious grounds.  The  

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guidelines were not to be understood to mean that the Tribunals were  

to take a rigid stand while considering an application seeking release  

of the money.  The guidelines cast a responsibility on the Tribunals to  

pass appropriate orders after examining each case on its own merits.  

However, it is seen that even in cases when there is no possibility or  

chance of the feed being frittered away by the beneficiary owing to  

ignorance, illiteracy or susceptibility to exploitation, investment of the  

amount of compensation in long term fixed deposit is directed by the  

Tribunals as a matter of course and in a routine manner, ignoring the  

object and the spirit of the guidelines issued by this Court and the  

genuine requirements of the claimants.  Even in the case of literate  

persons, the Tribunals are automatically ordering investment of the  

amount of compensation in long term fixed deposit without recording  

that having regard to the age or fiscal background or the strata of the  

society to which the claimant belongs or such other considerations,  

the  Tribunal  thinks  it  necessary  to  direct  such  investment  in  the  

larger interests of the claimant and with a view to ensure the safety of  

the compensation awarded to him. The Tribunals very often dispose of  

the  claimant’s  application  for  withdrawal  of  the  amount  of  

compensation in a mechanical manner and without proper application  

of mind.  This has resulted in serious injustice and hardship to the  

claimants.   The  Tribunals  appear  to  think  that  in  view  of  the  

guidelines  issued  by  this  Court,  in  every  case  the  amount  of  

compensation should be invested in long term fixed deposit and under  

no  circumstances  the  Tribunal  can  release  the  entire  amount  of  

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compensation to the claimant even if it is required by him. Hence a  

change  of  attitude  and  approach  on  the  part  of  the  Tribunals  is  

necessary in the interest of justice.

6. In this case, the victim of the accident died on 21.7.1993.  The  

award  was passed by  the  Tribunal  on 15.2.2002.   The  amount  of  

compensation was enhanced by the High Court on 6.7.2006.  Neither  

the Tribunal in its award nor the High Court in its order enhancing  

compensation had directed to invest the amount of compensation in  

long  term  fixed  deposit.   The  Insurance  Company  deposited  the  

compensation amount in the Tribunal on 7.1.2008.  In the application  

filed  by  the  appellants  on  19.6.2008  seeking  withdrawal  of  the  

amount without insisting on investment of any portion of the amount  

in long term deposit, it was specifically stated that the first appellant  

is an educated lady who retired as a Superintendent of the Karnataka  

Road Transport Corporation, Bangalore.  It was also stated that the  

second appellant Poornachandrika is a M.Sc. degree holder and the  

third appellant Shalini was holding Master Degree both in Commerce  

and  in  Philosophy.   It  was  stated  that  they  were  well  versed  in  

managing  their  lives  and finances.  The  first  appellant  was  already  

aged 71 years and her health was not very good.  She required money  

for maintenance and also to put up construction on the existing house  

to  provide  dwelling  house for  her  second daughter  who was  a  co-

owner along with her.  The second daughter was stated to be residing  

in a rented house paying exorbitant rent which she could not afford in  

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view of the spiralling costs.  It was further stated in the application  

that the first  appellant was obliged to provide a shelter to the first  

daughter Poornachandrika.  It was pointed out that if the money was  

locked up in a nationalised bank, only the bank would be benefited by  

the deposit as they give a paltry interest which could not be equated  

to the costs of materials which were ever increasing.  It was further  

stated that the delay in payment of compensation amount exposed the  

appellants to serious prejudice and economic ruin.  Along with the  

application,  the  second  and  third  appellants  had  filed  separate  

affidavits  supporting the prayer  in  the application and stating  that  

they had no objection to the amount being paid to the first appellant.

7. While rejecting the application of the appellants, the Tribunal  

did not consider any of the above-mentioned aspects mentioned in the  

application.  Unfortunately,  the  High  Court  lost  sight  of  the  said  

aspects  and  failed  to  properly  consider  whether,  in  the  facts  and  

circumstances  of  the  case,  there  was  any  need  for  keeping  the  

compensation amount in long term fixed deposit.

8. Having regard to the facts and circumstances of the case and in  

view  of  the  uncontroverted  averments  in  the  application  of  the  

appellants  referred  to  above,  we  are  of  the  view that  the  Tribunal  

ought  to  have  allowed  the  prayer  of  the  appellants.   Hence  the  

impugned orders of the Tribunal and the High Court are set aside.  

The  prayer  in  the  application  of  the  appellants  for  release  of  the  

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amount invested in long term deposits  stands allowed.   The entire  

amount  of  compensation  shall  be  withdrawn  and  paid  to  the  

appellants without any further delay.  The appeal is allowed in the  

above terms.  There will be no order as to costs.   

…..………………………………….J. (CYRIAC JOSEPH)

…..…………………………………J. (T.S. THAKUR)

New Delhi; January  27, 2012.

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