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Synopsis

The Supreme Court has said insurance companies cannot be left powerless to deny a claim which may not be genuine, as it came across a matter where the vehicle said to be involved in a road accident was alleged to be a planted one and the claim made thereupon was a fraud upon the system.

A bench of Justices Ahsanuddin Amanullah and Prashant Kumar Mishra ordered Odisha's Director General of Police to form a special investigation team to probe a contention by an insurance company that a planted vehicle was involved in an accident.

The Oriental Insurance Company filed a special leave petition against the Orissa High Court's judgment dated May 19, 2022.

The high court had allowed a plea by Tuni Pati and others and directed the insurance company to pay Rs 40,42,162 as compensation under the Motor Vehicle Act, along with interest at 7% per annum from the date of filing of the claim application, for an accident that occurred on October 19, 2017.

The insurance company contended that the vehicle said to be involved in the accident was not the actual vehicle and that it was an implanted vehicle.

To buttress such a claim, its counsel submitted that within one year, that vehicle had been involved in four other claims, which clearly showed that the entire claim regarding the said vehicle being involved in the accident was made with mala fide intention and, in fact, amounted to a fraud on the system.

To support this claim, it was submitted that the brother of the deceased—who is also the informant—had, at the very first instance, stated that an unknown vehicle had hit his brother. However, two days later, when the FIR was filed, the number of the vehicle was mentioned without any justifiable explanation as to why the vehicle number was not disclosed on the first day.

Having considered the matter, the bench said, "We find that there is no sufficient ground for us to hold either way, but when a larger issue is involved regarding insurance policies being misused with ulterior motive and the insurance companies are required to pay heavy amount of compensation to the claimants, it becomes imperative that the claim is based on genuine factual foundation. In the absence of the same, the insurance companies cannot be left powerless to deny a claim which may not be genuine."

Keeping the situation in mind, the bench thought it appropriate to request the Director General of Police, State of Odisha, to constitute a Special Investigation Team (SIT) and get it verified as to whether the vehicle in question was actually the one involved in the accident or whether it was some other vehicle.

The bench ordered that a report be submitted to the court within a period of one month.

The court directed the Registry to communicate a copy of this order to the Director General of Police, State of Odisha forthwith.

The court posted the matter for consideration on April 17, 2025.

Case Title: The Oriental Insurance Co Ltd Vs Tuni Pati & Ors