The Supreme Court upheld the liability of the Insurance Company to pay compensation to the accident claimants. However, upon finding the insurance policy was fraudulently manipulated and not valid on the accident date, the Court granted the insurer the right to recover 50% of the compensation amount from the vehicle owner and driver.
Facts Of The Case:
The case arose from a fatal road accident on June 21, 2006, which resulted in the death of a 21-year-old security guard, Hem Singh Mehta. The accident occurred when a truck, driven rashly and negligently, hit the deceased while he was waiting for a bus. The legal heirs of the deceased filed a claim before the Motor Accident Claims Tribunal in Haldwani. The Tribunal, after establishing that the accident was caused by the truck driver’s negligence, awarded a compensation of ₹3,87,000. Crucially, the Tribunal held the appellant, New India Assurance Co. Ltd., liable to pay the compensation after the truck owner produced an insurance policy that appeared to be valid from June 17, 2006.Subsequently, the Insurance Company filed a review application before the Tribunal, presenting a critical new fact. It claimed that upon verification from its issuing office in Rohtak, the genuine policy was valid only from June 28, 2006, to June 27, 2007, meaning it was not in force on the date of the accident (June 21). The insurer alleged the owner had fraudulently altered the policy document’s dates. The Tribunal dismissed this review, stating it had no power to review under the Act. The Insurance Company then appealed to the High Court, which dismissed the appeal, leading to the insurer filing the present special leave petition in the Supreme Court.
Procedural History:
The procedural history of this case began with the Motor Accident Claims Tribunal in Haldwani awarding compensation to the claimants and holding the Insurance Company liable. The insurer’s subsequent review application, which raised the new allegation of a fraudulent policy, was dismissed by the Tribunal for lack of review jurisdiction. The Insurance Company then filed an appeal before the High Court of Uttarakhand, while the claimants filed a cross-appeal seeking enhancement of the compensation. The High Court dismissed both the appeal and the cross-appeal, upholding the Tribunal’s award. This led the Insurance Company to file a Special Leave Petition in the Supreme Court, which granted leave and culminated in the final judgment.
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Court Observation:
The Supreme Court made key observations on the procedural and substantive aspects of the case. It noted that the Insurance Company’s crucial contention regarding the policy’s validity was raised belatedly, only in a review petition before the Tribunal, and the subsequent order dismissing that review was never challenged before the High Court. The Court also observed that while the allegation of fraud by the vehicle owner could not be conclusively proved in the original claim proceedings, the verification report from the insurer’s Rohtak office, which indicated the policy was not valid on the accident date, was now on record. Balancing these factors, the Court emphasized the need to serve the ends of justice. It upheld the insurer’s primary liability to the claimants but partially acknowledged its grievance by granting it the right to recover half of the compensation amount from the vehicle owner and driver.
Final Decision & Judgement:
The Supreme Court partially modified the impugned judgment of the High Court. While dismissing the Insurance Company’s main appeal and upholding its liability to first pay the full compensation amount to the claimants, the Court introduced a crucial remedy for the insurer. Recognising the material on record suggesting the insurance policy was not valid on the accident date, the Court granted the Insurance Company the right to recover 50% of the compensation amount from the owner and driver of the offending vehicle. The insurer was directed to deposit any unpaid compensation with the Tribunal within six weeks. This decision balanced the finality of the award for the victims with the principles of justice concerning the potentially fraudulent policy.
Case Details:
Case Title: New India Assurance Co. Ltd. vs. Narayan Singh & Ors. Citation: 2025 INSC 1178 Appeal Number: arising from Special Leave Petition (C) No. 19976 of 2019 Date of Judgement: September 26, 2025 Judges/Justice Name: Justice N.V. Anjaria and Justice K. Vinod Chandran
Download The Judgement Here