Insurance - Owner forging date on insurance policy - Insurance Company Permitted to Recover 50% of Compensation

Supreme Court Modifies Compensation Recovery in Fraudulent Insurance Case. Insurance Company Permitted to Recover 50% of Compensation Due to Altered Insurance Policy Dates

In a landmark decision, the Supreme Court of India has partially modified the judgment of the High Court of Uttarakhand concerning a motor accident compensation case involving fraudulent alteration of insurance policy dates. The case, New India Assurance Co. Ltd. v. Narayan Singh, revolved around the tragic death of Hem Singh Mehta, a 21-year-old security guard, who died in a road accident caused by a rashly driven truck.

The Claims Tribunal had initially awarded a compensation of Rs. 3,87,000 to the claimants, with 7% interest from the application date, recoverable from the Insurance Company. The Tribunal's decision was based on the insurance policy presented by the vehicle owner, which was alleged to be valid during the accident period. However, subsequent verification revealed that the policy was fraudulently altered to appear valid from 17.06.2006 to 16.06.2007, while its actual validity was from 28.06.2006 to 27.06.2007.

The High Court upheld the Tribunal's assessment, dismissing both the Insurance Company's appeal regarding the fraudulent insurance policy and the claimants' cross-appeal for enhanced compensation. The Supreme Court, acknowledging the fraudulent alteration, allowed the Insurance Company to recover 50% of the compensation from the vehicle owner and driver, aligning with legal provisions.

The Supreme Court emphasized the importance of verifying insurance policy authenticity during initial proceedings, noting the insurer's failure to prove fraud and non-challenge of the review order as significant oversights. It highlighted the necessity for justice by permitting partial recovery of compensation, considering the fraudulent circumstances surrounding the policy's validity.

The decision underscores the judiciary's commitment to ensuring equitable justice while addressing insurance fraud, setting a precedent for future cases involving similar fraudulent acts.

Bottom Line:

Insurance Company allowed to recover 50% of compensation from the owner and driver of the offending vehicle due to fraudulent alteration of insurance policy dates.

Statutory provision(s): Motor Vehicles Act, 1988

New India Assurance Co. Ltd. v. Narayan Singh, (SC) : Law Finder Doc id # 2784597