Rules imposing restrictions on disbursement of compensation to illiterate and financially weak railway accident victims struck down as violative of Article 14 of the Constitution
In a significant judgment dated September 10, 2026, the Allahabad High Court, presided by Justice Rohit Ranjan Agarwal, struck down certain provisions of the Railway Accidents and Untoward Incidents (Compensation) Rules, 1990 (hereinafter “Rules of 1990”) that discriminated between claimants based on literacy and financial condition. The Court held that Rule 5.1 and Rule 5.4.1(i) and (ii) of the Rules, which allowed the Railway Claims Tribunal (RCT) to withhold a large portion of compensation awarded to claimants deemed illiterate or financially weak and to impose restrictions such as prohibiting cheque books and debit cards on their bank accounts, violated Article 14 of the Constitution of India, which guarantees equality before law.
The case arose from writ petitions filed by multiple petitioners whose family members had suffered injury or death due to railway accidents. The petitioners challenged the constitutional validity of Rule 5, introduced in 2020 pursuant to directions from the Delhi High Court in Geeta Devi v. Union of India, which allowed the RCT to protect compensation awards by disbursing them in annuities, fixed deposits, or other restrictive methods, especially targeting illiterate or financially weak claimants.
The Court extensively examined the legislative framework, including the Railway Claims Tribunal Act, 1987 and the Railways Act, 1989, which impose liability on railway authorities for compensation in cases of passenger injury or death. It noted that the Rules of 1990 were designed to facilitate the implementation of these statutes and ensure compensation was paid promptly and fairly.
Rejecting the discriminatory classification of claimants, the Court emphasized that the Indian Railways serve all citizens equally, regardless of literacy or financial status, and no such distinction should be imposed in compensation disbursement. It observed that modern financial inclusion initiatives like Jan Dhan Yojana have enabled even illiterate or economically weaker persons to operate bank accounts effectively. The Court found no justification for restricting claimants to receive only 10% of their awarded compensation upfront while mandating the rest to be locked in fixed deposits for years.
The Court referred to precedents from the Supreme Court and other High Courts affirming the principle that once compensation is awarded, the claimant, if a major and of sound mind, should have full control over the amount without arbitrary restrictions. It further applied the doctrine of “reading down” to save the Rules from being struck down entirely, modifying Rule 5.1 to mandate full release of compensation except for minors or persons of unsound mind (covered under Rule 5.2), and revising Rule 5.4.1(i) and (ii) to allow claimants to withdraw money freely, with only necessary safeguards like opening bank accounts in nationalized banks.
The judgment directs the RCT to release the entire compensation amount to major claimants immediately and to modify existing orders to lift any unnecessary restrictions on the use of awarded funds. This decision reinforces the constitutional guarantee of equality and the right of railway accident victims to receive just and unhindered compensation.
Bottom Line:
Rule 5.1 and 5.4.1(i) and (ii) of the Railway Accidents and Untoward Incidents (Compensation) Rules, 1990, which differentiate claimants based on literacy and financial condition, were held violative of Article 14 of the Constitution of India and need to be read down.
Statutory provision(s):
Article 14, Constitution of India; Section 123, 124, 124A, 125, 129, Railways Act, 1989; Railway Claims Tribunal Act, 1987; Railway Accidents and Untoward Incidents (Compensation) Rules, 1990 (Rule 5.1, 5.4.1(i), 5.4.1(ii))
Ram Naresh Singh v. Union of India, (Allahabad) : Law Finder Doc Id # 2978326
