Click the Play button to listen to article

The Supreme Court has directed all States to constitute dedicated Special Investigation Teams (SITs) to probe suspected fraudulent motor accident compensation claims, after proceedings in a case involving allegations that the same vehicle had been shown as being involved in multiple accidents revealed what the Court described as a potential fraud of “enormous proportion.”

The Court also directed the insurance companies to forward the cases to the SIT, where claims were negated to conduct an in-house enquiry to ascertain whether the claim was processed in collusion with their officers.

A bench of Justice Ahsanuddin Amanullah and Justice Prasanna B. Varale passed the directions on August 17 in proceedings arising from an individual case, expanding the scope of the matter to address alleged systematic fraud in motor accident claims across the country.

The proceedings initially arose from a dispute over whether the vehicle alleged to have caused an accident was actually involved in that accident.

However, as the proceedings progressed, the Court undertook a pan-India exercise to examine allegations that the same vehicle was being shown as involved in multiple accidents and that such claims were being allowed despite being potentially fraudulent.

The Court said the issue had persuaded it to enlarge the scope of the proceedings on a pan-India basis to “unravel and also to check such fraudulent claims.”

The Court observed that fraudulent insurance claims not only cause financial stress to insurance companies but may ultimately result in genuine consumers paying higher premiums to maintain insurers' financial viability.

“The matter started on an innocuous issue of whether a vehicle which was said to be the cause of an accident, was the real vehicle involved in the said accident. But as the events unfolded, an exercise has been taken pan India, pursuant to the order of this Court in the present proceedings to unearth whether fraudulent claims are being filed, that too, in a fixed pattern, where the same vehicle is shown to be involved in multiple accidents, which results in such frivolous claims being allowed. This appeared to be a fraud of enormous proportion and has persuaded the Court to enlarge the scope of the present proceedings to unravel and also to check such fraudulent claims, which ultimately result in not only undue financial stress on the Insurance Companies, but also on the system and one of the fallouts is that the common genuine consumer has to pay a higher premium, just because the Insurance companies have to ensure their financial viability.”, the Court noted.

Noting that the matter requires serious attention, the Court directed all States to constitute a special dedicated SIT at the State level to deal with complaints relating to potentially fraudulent insurance claims.

All complaints received by insurance companies indicating possible fraud are to be forwarded to the concerned SIT, which has been directed to examine them expeditiously.

The States have also been directed to provide sufficient manpower to the SITs and disclose the procedure adopted for investigating such claims.

"A fresh direction is issued to all the States to constitute a special dedicated SIT for such purposes at the State level. All complaints by the Insurance Companies be forwarded to the said body, which will be looked into expeditiously. The States are directed to provide sufficient hands to the SIT for completion of the investigations. The States should also disclose with regard to the procedure they have adopted for investigating in the present matter.”, the Court observed.

“…a direction is issued to the Insurance Companies that such matters where the claim is negated on the ground of fraud or collusion, the said Insurance Company shall immediately forward the details of the said case to the SIT of the State where the claim is raised and also carry out an in-house investigation with regard to whether there was contributory collusion by its officers.”, the Court added.

Suggestion to launch a common portal to check veracity of insurance claims to prevent fraud

Adv. Jagdish Chandra Solanki, assisting the Court, suggested creation of a common portal containing insurance claims data, which could enable insurers to cross-check whether a particular vehicle, person or entity has repeatedly featured in accident claims.

The suggestion included integration with existing VAHAN and SARATHI platforms.

The Court was also informed about the Ministry of Road Transport and Highways' e-Detailed Accident Report (EDAR) portal by Adv. Rupali Samuel, who appeared for the State of Tamil Nadu, which tracks accidents on national highways.

A proposal was made to integrate relevant accident and insurance databases so that the authenticity of accidents, vehicles involved and accident locations could be verified more efficiently.

The Court noted the suggestion put forth by the counsels, which may be useful to identify and track cases where the claims are settled through fraudulent means.

IRDAI, MoRTH, Ministry of Finance and General Insurance Council impleaded as parties

Considering the wider implications of the issue, the Supreme Court directed that several regulatory and government bodies be impleaded in the proceedings.

The Insurance Regulatory and Development Authority of India (IRDAI) was impleaded as respondent No. 104, while the Ministry of Finance, through the Union government's Secretary, was impleaded as respondent No. 105.

The Ministry of Road Transport and Highways was impleaded as respondent No. 106, and the General Insurance Council as respondent No. 107.

The newly added respondents have been directed to file affidavits explaining their existing responsibilities and suggesting measures to address fraudulent insurance claims.

The matter is listed for September 23, 2026, where parties were directed to file affidavits dealing with the issues raised and asked counsel to be prepared with a one-page précis or summary of their affidavits at the next hearing.

Background

The proceedings arose from a challenge by The Oriental Insurance Company to a motor accident compensation claim. The insurer had alleged that the vehicle shown as the offending vehicle had been involved in several other accidents and was being repeatedly projected as the vehicle responsible for accidents because it had valid insurance coverage.

The allegation was that such insured vehicles were being “planted” in accident claims so that compensation could be recovered from solvent insurance companies.

Taking note of the allegation, the Supreme Court had earlier in March 2025 directed the authorities in Odisha to conduct a wider fact-finding exercise.

The subsequent inquiry revealed that the vehicle involved in the present proceedings had also figured in four other accident cases, which were subjected to further investigation.

Although the inquiry established that the vehicle was genuinely involved in the accident forming the basis of the present claim, the Court was concerned by the broader pattern that had emerged.

In an earlier order, the Court had taken note of submissions by the Advocate General of Odisha indicating a possible “wide racket” involving several stakeholders. The State had informed the Court that arrests had been made and that further investigation and custodial interrogation could be required.

The Court had also observed that the facts emerging from the inquiry were “very shocking” and indicated the “enormity of the situation, " prompting it to expand the scope of the proceedings on a pan-Indian basis.

Cause Title: The Oriental Insurance Co. Ltd. v. Tuni Pati & Ors.

Citation : 2026 LiveLaw (SC) 861

Click here to download order

Appearance:

For Petitioner(s) :Mr. H. Chandra Sekhar, AoR Mr. Jadhav Vishal, Adv. Mr. Pankaj Seth, Adv. Ms. Manjeet Chawla, AoR Ms. Jyoti, Adv. Ms. Shruti Jain, Adv. Ms. Sheetal Sharma, Adv.

For Respondent(s) :Mr. Goutham Shivshankar, AoR Ms. Renuka Sahu, AoR Mr. Saurabh Bhardwaj, Adv. (R.Nos. 1 to 3) Mr. G. Balaji, AoR Ms. Arzu Paul, Adv. Mr. Ashwani Gahlot, Adv. Ms. Shaurya Mishra, Adv. Mr. Sabarish Subramanian, AoR Ms. Prerna Singh, Adv. Mr. Guntur Pramod Kumar, AoR Mr. Dhruv Yadav, Adv. [(R-5) STATE OF ANDHRA PRADESH] Ms. Eliza Barr, Adv. Ms. Akansha, AoR Mr. Govind Sharma, Adv. [(R-6) STATE OF ARUNACHAL PRADESH] Ms. Diksha Rai, AoR [(R-7) STATE OF ASSAM] Mr. Samir Ali Khan, AoR Mr. Kashif Irshad Khan, Adv. Ms. Komal Vats Singh, Adv. [(R-8) STATE OF BIHAR] Mr. Vinayak Sharma, Standing Counsel [(R-9) STATE OF CHHATTISGARH] Ms. Swati Ghildiyal, AoR Ms. Aditi Agarwal, Adv. [(R-11) STATE OF GUJARAT] Ms. Pallavi Langar, AoR Mr. Sujeet Kumar Chaubey, Adv. Ms. Anushka Raghunath, Adv. [(R-14) STATE OF JHARKHAND] Mr. Naveen Sharma, AoR Mr. Kunal Vajani, A.A.G. Mr. James P. Thomas, Standing Counsel Mr. Sanchit Garga, AoR Mr. Kunal Rana, Adv. Mr. Shashwat Jaiswal, Adv. Ms. Diksha Arora, Adv. Mr. Bhanu Pratap Singh, Adv. Mr. Guneet S. Sidhu, Adv. Mr. Amitoj Chadha, Adv. Mr. C. K. Sasi, AoR Mr. Ravi Sagar, Adv. [(R-16) STATE OF KERALA] Mr. Harmeet Singh Ruprah, AoR Mr. Surjeet Singh, Adv. Mr. Kanishq Sharma, Adv. Mr. Siddharth Shrivastava, Adv. Mr. Aaditya Aniruddha Pande, AoR Mr. Siddharth Dharmadhikari, Adv. Mr. Shrirang B. Varma, Adv. Mr. Sourav Singh, Adv. Ms. Chitransha Singh Sikarwar, Adv. [(R-18) STATE OF MAHARASHTRA] Mr. Pukhrambam Ramesh Kumar, AoR Mr. Karun Shamra, Adv. Ms. Anupama Ngangom, Adv. Ms. Rajkumari Divyasana, Adv. [(R-19) STATE OF MANIPUR] Mr. Avijit Mani Tripathi, AoR Mr. Z.H. Isaac Haiding, Standing Counsel Mr. Daniel Stone Lyngdoh, Adv. Ms. Marbiang Khongwir, Adv. [(R-20) STATE OF MEGHALAYA] Mr. Anando Mukherjee, AoR [(R-21) STATE OF MIZORAM] Ms. K. Enatoli Sema, AoR Mr. Amit Kumar Singh, Adv. Ms. Chubalemla Chang, Adv. Mr. Prang Newmai, Adv. Ms. Yanmi Phazang, Adv. [(R-22) STATE OF NAGALAND] Mr. Srisatya Mohanty, AoR Ms. Sakshi Mittal, Adv. Mr. Jyotiraditya Roychowdhury, Adv. [(R-23) STATE OF ODISHA] Mr. Mohd. Irshad, A.A.G. Ms. Abha Sharma, AoR [(R-25) STATE OF PUNJAB] Mr. Sameer Abhyankar, AoR Mr. Krishna Rastogi, Adv. Mr. Aryan Srivastava, Adv. [(R-27) STATE OF SIKKIM] Ms. Ruchira Goel, AoR Mr. Sharanya, Adv. Ms. Rishika Rishabh, Adv. Mr. Harsh Pratap Shahi, Adv. [(R-30) STATE OF UTTAR PRADESH] Mr. Adarsh Chamoli, AoR [(R-31) STATE OF UTTARAKHAND] Mr. Mukesh Kr. Verma, Adv. Ms. Indira Bhakar, Adv. Mr. Bhuvan Kapoor, Adv. Mr. Varun Chugh, Adv. Mr. Mukul Singh, Adv. Mr. Yogesh Vats, Adv. Mr. Shreekant Neelappa Terdal, AoR Mr. Vineet Singh, Adv. [(R-34) U.T OF ANDAMAN AND NICOBAR ISLANDS] [(R-35) UNION TERRITORY OF CHANDIGARH] [(R-36) U.T. OF DADRA AND NAGAR HAVELI AND DAMAN AND DIU] [(R-38) UNION TERRITORY OF LADAKH] Mr. Aravindh S., AoR Ms. Anika Bansal, Adv. [(R-40) UNION TERRITORY OF PUDUCHERRY] Mr. Brijesh Kumar Tamber, AoR Mr. Vinay Singh Bist, Adv. Mr. Yashu Rustagi, Adv. Mr. Sahas Bhasin, Adv. Ms. Chanchala Kumari, Adv. Mr. Dhimaan Dutta, Adv. [(R-41) Life Insurance Corporation of India] Ms. Udita Singh, AoR [(R-42) Axis Max Life Insurance Limited] Mr. Sanjay K Chadha, Adv. Mr. Amaditya, Adv. Mr. Kanishk Mor, Adv. Mr. Dharmendra Kumar Sinha, AoR [(R-44 ICICI Prudential Life Insurance Company Limited] [(R-45) Kotak Mahindra Life Insurance Company Limited [(R-95) Aditya Birla Health Insurance Co. Ltd.] Mr. Joydip Bhattacharya, Adv. Mr. Sarath S Janardanan, AoR Ms. Ipsita, Adv. Ms. Namita Kumari, Adv. [(R-47) Tata AIA Life Insurance Company Limited] Mr. Piyush Singhal, Adv. Ms. Srishti Prabhakar, AoR Mr. Ishpreet Singh, Adv. Mr. Nishant Bishnoi, Adv. Mr. Kushagra Sinha, Adv. Ms. Shweta Singh Parihar, AoR [(R-49) Bajaj Allianz House] [(R-50 PNB Metlife India Insurance Company Limited] Mr. Anuj Bhandari, AoR [(R-52) Aviva Life Insurance Company India Limited] Mr. Hitesh Kumar, Adv. Mrs. Sapna, Adv. Mr. Zakir Hussain, AoR [(R-54) Shriram Life Insurance Company Limited] Mr. Aman Malik , AoR Mr. Ali Khan, Adv. [(R-56) Generali Central Life Insurance Company] Mr. Piyush Singhal, Adv. Mr. Saurabh Upadhyay, Adv. Mr. Ishpreet Singh, Adv. Ms. Mansi Sharma, Adv. Mr. Ajit Kumar, Adv. Mr. Manish Chaurasia, Adv. Ms. Khushi Chhetri, Adv. Mr. Piyush Garg, Adv. Ms. Hardikaa Kalia, AoR [(R-78) kshema General Insurance Limited] Mr. Rajesh Kumar Chaurasia, AoR Mr. Anurag Jain, Adv. Mr. Jaideep Singh Sethi, Adv. Mr. Surya Pratap, Adv. Mr. Nitin Kumar Gupta, Adv. Mr. Sujeet Kumar, Adv. Mr. Soni, Adv. [(R-43 HDFC Life Insurance Company Limited] [(R-46) Aditya Birla Sunlife Insurance Company Limited] [(R-58) Canara HSBC Life Insurance Company Limited] [(R-60) Pramerica Life Insurance Company Limited] [(R-61) Union Dai-Ichi Life Insurance Company Limited] [(R-63) Edelweiss Life Insurance Company Limited] Mr. Daga Sachin Subhash, AoR Ms. Shreyashi Panda, Adv. [(R-51) Indusind Nippon Life Insurance Company Limited] [(R-55) Bharti Life Ins Co Ltd] [(R-59) Bandhan Life Insurance Limited] [(R-62) India First Life Insurance Company Limited] Mr. Manik Ahluwalia, AoR [(R-65) Acko Life Insurance Limited] [(R-67) Acko General Insurance Limited] Ms. Anuja Pethia, AoR Mr. Rishabh Nigam, Adv. Mr. Rishabh Govila, Adv. Ms. Kshirja Agarwal, Adv. Ms. Amisha Aggarwal, Adv. Ms. Puja Dewan, AoR Mr. Anand Prakash, Adv. Mr. Uday Seth, Adv. [(R-71) ECGC Ltd.] Mr. Rajat Khattry, Adv. Mr. Abhay Kumar, AoR Mr. D. Vardrajan, Adv. [(R-48) SBI Life Insurance Company Limited] [(R-70) Cholamandalam MS General Insurance Company Ltd.] [(R-72) Generali Central Insurance Company Limited] [(R-86) SBI General Insurance Company Limited] Mr. Shoeb Alam, Sr. Adv. Mr. Rajeev Maheshwaranand Roy, AoR Mr. Nilesh Kumar, Adv. Mr. P Srinivasan, Adv. Mr. Shivam Madhur, Adv. [(R-66) Go Digit Life Insurance Limited] [(R-73) Go Digit General Insurance Limited] [(R-74) HDFC Ergo General Insurance Company Limited] [(R-75) ICICI Lombard General Insurance Company Limited] [(R-80) Magma General Insurance Limited] [(R-83) Raheja QBE General Insurance Co. Ltd.] [(R-84) IndusInd General Insurance Company Limited] [(R-103) Valueattics Reinsurance Limited] Mr. Arun K. Sinha, AoR [(R-68) Agriculture Insurance Company Of India Limited] Mr. Shubham Janghu, Adv. Mr. Yoshit Jain, Adv. Mr. Gopal Singh, AoR [(R-76) Iffco Tokio General Insurance Company Limited] Mr. Jagdish Chandra, Adv. Mr. Vishal Meghwal, AoR [(R-57) Ageas Federal Life Insurance Company Limited] [(R-69) Bajaj General Insurance Limited] [(R-85) Royal Sundaram General Insurance Company Ltd.] Mr. Amit Kumar Singh, AoR Ms. Chubalemla Chang, Adv. Mr. Prang Newmai, Adv. [(R-81) National Insurance Company Limited] [(R-88) Tata AIG General Insurance Company Limited] [(R-91) United India Insurance Company Limited] Mr. Vishnu Kant, AoR [(R-82) Navi General Insurance Limited] Mr. Abhishek Kumar Gola, Adv. Mr. Sudhir Naagar, AoR Mr. Anshul Mehral, Adv. Mr. Arun Kumar Nagar, Adv. Mr. Yogendra Kumar, Adv. Mr. Yogesh Kumar, Adv. [(R-87) Shriram General Insurance Company Limited] Ms. Awantika Manohar, AoR Ms. Parul D., Adv. [(R-89) The New India Assurance Company Limited] Mr. Rajat Khattry, Adv. Mr. Siddhartha Iyer, AoR Mr. Aman Gupta, Adv. Ms. Jaispriya Poply, Adv. [(R-92) Universal Sompo General Insurance Company Ltd.] Mr. Suraj Raj Kesherwani, Adv. Mr. Karun Sharma, AoR Mr. Mayank Raj, Adv. [(R-93) Zuno General Insurance Ltd.] Mr. Manu Luv Shahalia, Adv. Ms. Manjeet Chawla, AoR Ms. Jyoti, Adv. Ms. Usha Pant Kukreti, Adv. Ms. Reenu Kumar, Adv. [(R-96) Care Health Insurance Limited] Ms. M. B. Ramya, Adv. Mr. Arindam Ghosh, AoR [(R-97) Galaxy Health Insurance Company Limited] Mr. Dheeraj Nair, AoR Mr. Jayant Mehta, Sr. Adv. Mr. Varghese Thomas, Adv. Ms. Padmaja Kaul, Adv. Mr. Kushagra Sah, Adv. Mr. Azeem Parvez, Adv. Mr. Joydeep Saha, Managing Director and Chief Executive Officer [(R-99) Manipal Cigna Health Insurance Company Limited] Mr. Shishir Mathur, Adv. Ms. Anshul Singh, Adv. Ms. Preeti Gupta, AoR Mr. Amit Anand Daspande, Adv. [(R-101) Star Health and Allied Insurance Co. Ltd.] Mr. H. Chandra Sekhar, AoR Mr. Jadhav Vishal, Adv. [(R-90) The Oriental Insurance Company Limited] [(R-102) General Insurance Corporation Of India (GIC RE)]

Tags: