The Allahabad High Court has held that compensation awarded to victims of railway accidents cannot be withheld or restricted merely on the basis of their literacy or financial condition.
Reading down Rule 5.1 and Rule 5.4.1(i) and (ii) of the Railway Accidents and Untoward Incidents (Compensation) Rules, 1990, the Court observed that “Withholding 90 percent of the awarded amount creates a barrier between claimants, who cannot be discriminated on the ground of literacy and financial position.”
It further held that rules “discriminating between class of claimants is violative of Article 14 of the Constitution of India.”
The said order was passed by Justice Rohit Ranjan Agarwal on a writ petition filed by Ram Naresh Singh and five others, along with connected petitions.
The petitions challenged the constitutional validity of Rule 5 of the 1990 Rules, particularly Rules 5.1 and 5.4.1(i) and (ii), besides questioning orders passed by the Railway Claims Tribunal (RCT).
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The petitioners’ near and dear ones had either died or sustained injuries in railway accidents, following which compensation claims were filed before the RCT. In the awards, the Tribunal had released only 10 per cent of the compensation and directed that the remaining amount be kept in a nationalised bank in an interest-bearing account.
Rule 5 was introduced on 03.06.2020 following directions issued by the Delhi High Court in Geeta Devi v. Union of India. It empowered the Tribunal to protect the awarded amount by directing its disbursement through annuities, fixed deposits or other modes, having regard to the claimant’s literacy or other disabling factors.
It also required the Tribunal to examine the claimant’s financial condition and needs and, in certain cases, restrict access to the deposited amount through conditions relating to bank accounts, cheque books and debit cards.
The Court noted that the maximum compensation under Rule 3 had ultimately been increased to Rs. 8 lakh and that, before the introduction of Rule 5, the awarded compensation was released to claimants.
It questioned the justification for releasing only Rs. 80,000 out of an award of Rs. 8 lakh and keeping the remaining Rs. 7.20 lakh in fixed deposit for three years.
“There appears no justification in only releasing 10 per cent of the awarded amount, that is, Rs. 80,000/- to a claimant and keeping rest of Rs. 7,20,000/- in a fixed deposit for a period of three years,” the Court said.
The Court also rejected the premise that illiterate or financially weak claimants necessarily require such restrictions.
Referring to the widespread use of bank accounts linked with Aadhaar and mobile numbers, it observed that “There is no material on record to demonstrate that illiterate or financially weak person cannot manage the awarded amount.”
It further said that “once a person with a weak financial condition is operating and managing financial matters, he cannot be restricted from using the awarded amount.”
The Court found that Rule 5.4.1(ii), which permitted restrictions on cheque books and debit cards, imposed an excessive condition. It held that the Tribunal could direct opening of a savings account where the claimant did not already have in a nationalized bank, but could not impose unnecessary restrictions on the claimant’s use of the awarded money.
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“The issuance of a cheque book is a consequential act pursuant to the opening of a bank account,” the Court observed.
The Court further held that subordinate legislation could not curtail the benefit granted under the parent legislation.
“The rules are there to facilitate the Act and not to curb its power. It simplifies the procedure and provides way for realizing the object of the Act.” it said, adding that Rules 5.1, 5.4.1(i) and 5.4.1(ii) had become hurdles in claims decided by the Tribunal.
It also observed that once the law provides compensation for death or injury in an untoward railway incident, the Rules cannot defer or restrict that statutory benefit.
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Applying the principle of “reading down”, the Court directed that Rule 5.1 shall be read to require the Tribunal to release the sum awarded to claimants, except those covered by Rule 5.2.
It also modified Rule 5.4.1(i) and (ii), permitting restrictions only where a claimant does not have an individual savings account in a nationalised bank near the place of permanent residence.
Accordingly, the writ petitions were partly allowed. The Tribunal was directed to release the entire awarded amount to the petitioners who are major and are not covered by Rule 5.2.
The amount already kept in fixed deposits was also directed to be released immediately, and the RCT orders were modified to that extent.
Case: Ram Naresh Singh and 5 others vs Union of India (With Connected Matters)
Case No: Writ – C No. – 27617 of 2026
Date of Order: 10.09.2026
Status: Allowed
