Apex Court seeks report on misappropriation of funds arising due to failure of insurance companies to furnish MCOP numbers

Read Judgment: Bajaj Allianz General Insurance Company Private Ltd vs. Union Of India & Ors

Pankaj Bajpai

New Delhi, August 13, 2021: The Supreme Court took note of the submissions canvassing the matter of concern which arose in Tamil Nadu on account of misappropriation of amounts from the Pattukottai Court due to the failure of the insurance companies to furnish the MCOP numbers and stating only the UTR numbers of the deposits. 

Accordingly, a Division Bench of Justice Sanjay Kishan Kaul and Justice Hrishikesh Roy called for submission of the directions sought by the counsel, in order to facilitate the scrutiny of payment by insurance companies in Motor Accident Claim Tribunal (MACT) cases. 

The Bench also asked the ASG to examine the possibility of withdrawing the exemption from insurance provided to public transport vehicles, which leads to compensation not being paid for long periods of time in case of road accidents. 

The SC listed the matter for further directions on October 26, 2021.

During the hearing earlier this month, the counsel solicited the attention of the Apex Court by stating that the matter is being examined in a larger context and an agreed template for the insurance companies to make the deposits will be finalized at a pan India level.

Two main suggestions which were adverted, comprise of a certificate of disability of victims and relaxation in TDS deduction on compensation award. 

It was proposed that the certificate of disability of victims through the district medical board will bring some uniformity and to keep out stock witnesses as medical experts. Further, relaxation was sought to bring uniformity on the issue of tax deduction at source in case of non-availability of PAN number which attracts 20% deduction. 

One of the aspects raised by counsel is that the States may respond by specifying whether the direction issued by the Court have been circulated to the local police stations and the MACT Court so that everyone is aware of the same and the process works to its full capacity.

The counsel therefore urged that these proposals may be explored by the ASG to make appropriate suggestions. 

The Apex Court found that the vehicles of the State Corporations which run public transport are not insured because of exemption provided and, as a result thereof, compensation is not paid for long period of time as most of these Corporations are running in losses. 

In fact, there are numerous illustrations where the vehicles had to be attached for coercive recovery from the Corporations to make payments to the claimants, noted the Bench. 

The Division Bench therefore asked the ASG to examine the possibility of either withdrawing the exemption or for a mechanism to ensure that sufficient fund pool is available with these Corporations for meeting their liabilities towards the claimants.

The Top Court also noted from the submission that the online mediation groups would be advising the insurance companies and it would be binding on the insurance companies while the claimant has the option to accept it or not.