New Delhi: The Supreme Court, while hearing a motor accident compensation matter that began as a dispute over the identity of a vehicle involved in an accident, has substantially widened the scope of the proceedings into a nationwide investigation of fraudulent insurance claims, directing all States to constitute dedicated Special Investigation Teams (SITs) and impleading the Insurance Regulatory and Development Authority (IRDA), the Union Ministries of Finance and of Road Transport and Highways, and the General Insurance Council as respondents.
A Bench of Justice Ahsanuddin Amanullah and Justice Prasanna B. Varale was hearing a batch of matters arising out of Special Leave Petition (C) No.5582/2023, filed by the Oriental Insurance Co. Ltd. against the impugned judgment dated 19.05.2022 passed by the High Court of Orissa at Cuttack in MACA No.324/2021, along with connected Civil Appeal No.6865/2026, in which nearly all major life, health and general insurance companies operating in India, as well as every State and Union Territory, stand impleaded as respondents.
Recording the trajectory of the proceedings, the Court noted that “this appeared to be a fraud of enormous proportion,” observing that what started as an innocuous dispute over whether a particular vehicle was genuinely involved in an accident had, upon a pan-India exercise undertaken pursuant to its earlier orders, revealed a fixed pattern in which the same vehicle was repeatedly shown to be involved in multiple accidents, resulting in frivolous claims being allowed. The Court observed that such a practice not only causes undue financial stress on insurance companies but ultimately drives up premiums for genuine policyholders.
Learned counsel appointed to assist the Court, who had previously worked with an insurance company, suggested that the IRDA be impleaded since all insurance companies are ultimately governed by its regulations, and proposed the creation of a common portal integrating claims data across insurers, along with the existing VAHAN and SARATHI databases, to enable cross-verification of repeated or suspicious claims. Counsel for the State of Tamil Nadu further suggested integration with the Ministry of Road Transport's E-Detailed Accident Report (EDAR) portal, which tracks accidents on national highways, to improve verification of the vehicle and location involved in a claimed accident.
Counsel for the State of Uttar Pradesh apprised the Court that a Special Investigation Team constituted pursuant to a Coordinate Bench's orders in Safiq Ahmad v. ICICI Lombard General Insurance Co. Ltd. & Ors. had, of 2,188 complaints received, investigated over 1,029 and registered 231 FIRs against 533 accused persons. The Court appreciated the effort, while issuing a fresh direction to all States to constitute similar dedicated SITs, forward all insurance-company complaints to them, provide adequate manpower, and disclose the procedure adopted for investigation.
The Court further held that it would be the responsibility of insurance companies to forward all claims indicative of fraud to the SIT without adopting a selective or “pick and choose” approach, and warned that the topmost management of insurance companies would be held accountable for any such selective forwarding. It directed that any SIT recommendation or FIR against an insurance company's own officers be acted upon departmentally without delay, and that companies file affidavits detailing both the cases referred to SITs and in-house disciplinary action taken. Acting on a further suggestion, the Court directed that wherever a claim is rejected by a Motor Accident Claims Tribunal on the ground of fraud or collusion, the concerned insurer must immediately forward the case details to the State SIT and conduct an in-house inquiry into possible complicity of its own officials.
The Court also took serious note of non-compliance by several insurers with its earlier order dated 26.05.2026 requiring the Chairmen and Managing Directors of sixteen insurance companies, including The New India Assurance Company Limited, The Oriental Insurance Company Limited, Kotak Mahindra Life Insurance Company Limited, Bajaj Allianz House, Go Digit Life Insurance Limited, and General Insurance Corporation of India, among others, to remain physically present. While refraining, by way of “extraordinary indulgence,” from issuing contempt notices at this stage, the Court directed all the named CMDs to show cause by way of personally affirmed affidavits as to why they had failed to comply. It was further noted that affidavits remained unfiled by three respondent companies, and that fresh notice would be issued to Sahara India Life Insurance Company in view of incomplete service.
The matter has been listed next on 23.09.2026, with all parties directed to file a one-page precis of their respective affidavits for the Court's ready reference.
Case Title: The Oriental Insurance Co. Ltd. vs. Tuni Pati & Ors., SLP (C) No.5582/2023 with Civil Appeal No.6865/2026
