A Bench of Justices Ahsanuddin Amanullah and R Mahadevan passed the order. The Court said the direction aimed to ensure that insurance companies handle public funds with due vigilance.
Forged insurance policy probe before Supreme Court
The Bench observed that the issue appeared widespread across the country. It said an insurance company must act once it learns that someone fraudulently obtained a policy. It must inform the police because policy fabrication constitutes an offence.
The development came after the Director General of Police, Tamil Nadu, told the Court that the insurance company had still not filed a complaint. The complaint concerned the forged or fabricated policy. Counsel for National Insurance Company conceded that point. He submitted that the company would be advised to file an appropriate complaint.
The Bench, however, said that this stand reflected a lack of responsibility and sheer casualness. It noted that an insurance company may have to satisfy claims arising from motor vehicle accidents under policies issued by it. For that reason, the Court said, the company also carries a duty to act with due diligence. Once it knows that a policy is forged or fabricated, it must inform the police. The Court said the creation and use of such documents amount to an offence.
The Bench also said that failure to file the required complaint could suggest connivance between the parties. It therefore directed registration of a fresh case on the facts of the present matter. It also directed the authorities to array as accused those company officers who knew of the fraud. Those officers must include persons posted at the relevant time in the branch from which the forged or fabricated policy was purportedly issued.
The case concerns respondent K. Saravanan. In 2004, while travelling on a bike, Saravanan allegedly met with a tragic accident because a bus was driven rashly and negligently. He suffered multiple injuries. He also underwent surgeries on his thighs and legs. Doctors declared him 70 per cent disabled.
The record showed that the police gave the forged or fabricated insurance policy to the claimants. Based on that document, they filed a claim petition. On verification, however, the insurance company found that the policy had not been renewed for the period during which the accident occurred.
The Motor Accident Claims Tribunal passed an award in favour of the claimants. It awarded compensation of over Rs. 8 lakhs. National Insurance Company then approached the Madras High Court.
After hearing the parties, the High Court enhanced the compensation by about three times. It also rejected the company’s claim that the policy was fake. The High Court noted that the company had not lodged any complaint in that regard.
The High Court observed that the company could have strengthened its case had it lodged a criminal complaint. Such a complaint could have set the criminal law in motion to identify those involved in the fake policy. It could also have helped trace those who collected insurance subscription from innocent and gullible people. The High Court added that the company could not reasonably expect the claimant to identify the culprits without first filing a criminal complaint itself. Therefore, it held that, without any complaint against unknown culprits, it could not accept the insurer’s contentions.
AoR Manjeet Chawla and Advocates Manu Luv Shahalia, Usha Pant Kukreti and Jyoti appeared for the petitioner-insurance company. Senior Advocate Vipin Sanghi, Senior AAG Amit Anand Tiwari, AoRs Goutham Shivshankar, G Balaji and Sabarish Subramanian, and Advocates Arzu Paul, Shiv Kumar, Vaishnavi, Veshal Tyagi, Muthu Mayan R, and Vishnu Unnikrishnan appeared for the respondents.
The case is titled National Insurance Company Limited v. K. Saravanan, SLP (C) No. 1003/2022. The citation is 2026 INSC 339.
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