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Report No. 149

Chapter 10

Distribution of Compensation

10.1. The only provision of the Act which deals with this topic is section 168(3). It provides that "the person who is required to pay any amount in terms of (an) award" should deposit the entire amount awarded in such manner as the claims Tribunal may direct within 30 days of the announcement of the award. If the amount is so deposited, it will, presumably,1 be paid to the respective parties in favour of whom the award has been made, on their making an application to the Tribunal for payment. If the amount is not so deposited, the same will be recovered from the party liable as if it were an arrear of land revenue on an application made by the beneficiary concerned.2

1. There is no specific statutory provision in this behalf.

2. Section 174 of the Act.

10.2. We are of opinion that the rigidity of this provision should be somewhat relaxed by conferring a discretion on the Tribunal, in cases of hardship, to extend the period above-mentioned. Such relaxation is necessary, as the amount of compensation may be quite large and may have to be paid sometimes, not by an insurance company, but by some other person whose financial position may not be very strong. We, therefore, suggest the addition of a proviso in section 168(3) to the following effect:

"Provided that the Tribunal may, in appropriate cases and for reasons to be recorded in writing, extend the period above mentioned for making the deposit."

10.3. We may also refer to another aspect on which it would be better to have statutory clarification. In the initial years, the Tribunals used to direct the payment out of the full compensation money straightaway to the applicants entitled thereto or their agents or representatives. But, this gave rise to several difficulties and malpractices with the result that certain precautionary steps became inevitable.1 Some of the difficulties, malpractices and situations which need to be provided for are these:

(a) Very often the claimants are poor and illiterate and the compensation amounts are withdrawn and misappropriated by middlemen.

(b) In cases where the claimant is a minor or a person of unsound mind, the payment of compensation amount may have to be deferred and arrangements made for the utilisation of only the income accruing therefrom for the benefit of the applicant. This course may sometimes be advisable also in the case of other claimants who are badly in need of some regular recurring income and the immediate payment to whom of the entire compensation amount may only result in its being frittered away.

(c) Sometimes, even in the case of a person of the above categories whose compensation has to be kept in deposit, situations may arise requiring the immediate payment out of the whole or part of the amount (e.g., where funds are needed for the medical treatment or higher education of the minor or for the marriage of daughter). There may be many such imponderable situations warranting immediate payment.

1. Such precautions have generally been observed in recent years. See in this context, the guidelines laid down by the Supreme Court in Union Carbide Corpn. v. Union of India, (1991) 4 SCC 584, approving the decision of the Gujarat High Court in Mulibhai Ajarambhai Harijan v. United India Insurance Co. Ltd., 1982 (1) Guj LR 756. See also K.S.R.T.C. v. Sussamma Thomas, 1933 4 SCALE 643 (650).

10.4. Considering the various circumstances discussed earlier, it appears to us advisable that a reference to these situations should be specifically set out in the statute itself for guidance of the Tribunal. We would like to make it clear that the situations as contemplated by us are not exhaustive; they are merely illustrative and the Tribunal may issue orders for the payment of the compensation at one time or in phases according to the facts and circumstances of a particular case. However, we are of the opinion that the Tribunal should have express power in this respect and for that reason we recommend the insertion of sub-section (4) in section 168 in the following terms:

"(4)(a) The Tribunal may, in an appropriate case, having regard to the disability of the applicant on account of being an illiterate widow, a minor or of unsound mind, or otherwise, direct that the whole or any part of the amount of compensation shall, instead of being paid to the applicant, be kept in deposit or invested in a bank or in other trustee securities for such period and on such terms and conditions as it may consider necessary to safeguard the interest of the beneficiary.

(b) Where any amounts are directed by the Tribunal to be deposited or invested under clause (a) and until they are disbursed to the applicant concerned, the interest or income accruing thereon from time to time or part thereof may be directed to be paid to the applicant or utilised for his benefit in such manner as may be directed by the Tribunal from time to time.

(c) Where the Tribunal directs the payment out of any amount of compensation under this Act, it may issue such directions or impose such conditions or restrictions as may be necessary to ensure that the compensation reaches, or ensures to the benefit of, the intended beneficiary."

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