Misappropriation of motor accident claim deposits | Madras HC wants banks to monitor online transactions

Madras High Court explores dedicated bank units to prevent misappropriation of insurance funds in motor accident cases.

In an effort aimed towards preventing misappropriation of thousands of crores of rupees deposited by insurance companies in motor accident cases in the bank accounts maintained by various courts across the State, the Madras High Court has begun to explore the possibility of making all scheduled commercial banks to set up dedicated units to monitor such accounts.

Passing interim orders in a suo motu case, a Division Bench of Justices C.V. Karthikeyan and Krishnan Ramasamy directed State Bank of India (SBI) to start examining the possiblity of establishing a centralised unit, in any convenient place, to monitor the online transactions. The judges made it clear that the unit must be manned by sufficient staff members including a professional auditor.

SBI counsel Chevanan Mohan was asked to get instructions in this regard from the corporate centre of the bank in Mumbai and present it before the court on September 5 for passing further orders. “We are now restricting exploration of this particular scheme to the State Bank of India, but if SBI comes up with a viable solution in this regard, we are confident that other banks may also follow suit,” the Bench wrote.

The judges also recorded the submission made by Senior Counsel Vijay Narayan, representing Reserve Bank of India, that the central bank had issued a circular to all scheduled commercial banks on July 2 to exercise greater check and conduct internal audit of the motor accident claim accounts. They hoped that RBI would also take necessary follow up action and seek periodical reports from the banks.

The Bench led by Justice Karthikeyan also stated that the inspection cell of the High Court should be sufficiently staffed and manned by professionals including chartered accountants and management experts who would be able to audit the bank accounts maintained by various district courts. The judges impressed upon the need for the cell to conduct regular inspections at the courts in Tamil Nadu and Puducherry.

“This inspection team could be of assistance to the district courts in ensuring transparency and in proper maintenance of accounts relating to the amounts deposited by the insurance companies consequent to awards passed by various motor accident claim tribunals,” the judges said and called for breakup of the amount of money lying in the bank accounts maintained by various courts in the State.

The suo motu writ petition was taken up in 2021 by a Division Bench led by Justice P.N. Prakash (since retired) after it came to light that a staff member at an Additional District Court in Pattukottai of Thanjavur district had misappropriated ₹1.5 crore from the money deposited by insurance companies in motor accident claim cases. Subsequent hearings of the case led to many skeletons tumble out of the closet.