The Gujarat High Court has held that an insurance company cannot avoid liability to indemnify third-party claimants under a motor accident claim on a mere assertion that the insurance policy produced before the Tribunal was forged or fabricated, in the absence of adequate evidentiary proof. [2026 LiveLaw (Guj) 294]

Consequently, Justice J.C. Doshi dismissed an appeal filed by SBI General Insurance Company challenging the order passed by a Motor Accident Claims Tribunal (MACT) granting compensation of Rs 37,00,420 with a 9% interest.

“The central evidentiary principle in a case of raising a defence of fake, forged, and fabricated policy is that a mere denial by the insurance company that it has not issued the policy should not automatically be treated as proof of forgery. The insurer must establish its defence through legally admissible and sufficiently reliable evidence assessed in the context of the entire record,” the Court said.

It added, “Ordinarily, the insurer ought to have produce the evidence of authorized officer of policy issuing branch of insurance company to explain whether the policy was issued by the company and the basis of denial; original policy issuance registers or electronic evidence and electronic records to establish whether the policy number, vehicle particulars, and date correspond with the company's records; premium ledgers, receipts, and payment records to examine whether the premium was received and credited for the alleged policy; cover note or policy number series records to investigate whether the number was issued, duplicated, or misused; and investigation reports along with supporting material to establish the factual basis of the allegations of fabrication.”

The Court also observed that after discovering a fake policy, an insurer is also duty-bound to act diligently— which includes reporting the matter to the authorities— as held by the Supreme Court in National Insurance Company Limited vs. K Saravanan (2026). However, the registration of an FIR would not, by itself, be treated as a conclusive proof of fake policy, the Court said.

The case arose from a fatal accident that took place on March 9, 2015. The deceased, 49-year-old Babubhai Govabhai Desai, was traveling as a pillion rider on a motorcycle. A car, owned by the second opponent and insured by SBI General Insurance Company, was driven rashly and negligently at high speed on the wrong side of the road. It collided with the motorcycle. This resulted in grievous injuries to Babubhai, who succumbed to them on March 14, 2015.

The legal heirs filed a claims plea before MACT, claiming a compensation of Rs 65 lakhs. On August 31, 2019, the Tribunal awarded Rs 37,00,420 with 9% interest per annum, directing all opponents jointly and severally to pay, while granting SBI General Insurance the liberty to recover the amount from the car owner. Aggrieved by this, SBI General Insurance filed the appeal.

Noting the material on record and witness testimony, the Court found that the insurance company had failed to substantiate their defence that the insurance policy in question was forged.

“On marshalling the evidence on record, it appears that the Insurance Company hopelessly failed to prove that the policy at Exh.66 was fabricated and fake. By merely producing another policy (Exh.80) bearing the same policy number as Exh.66, which was signed manually despite the practice of digital signing, the Insurance Company could not establish that the policy at Exh.66 was wholly fabricated or fake,” the Court said.

“Furthermore, the Insurance Company failed to produce other relevant records, such as premium accounts, policy particulars, and the testimony of a competent witness, to substantiate its claim. It also did not act diligently upon discovering that the alleged policy was fake, as no follow-up action was taken to verify whether an FIR was registered pursuant to the letter at Exh.79. This casual and lackadaisical approach on the part of the Insurance Company remain un-substantiate and insufficient to prove that the policy involved in this matter is fake and fabricated,” the Court added.

Dismissing the appeal, the High Court upheld the Tribunal order to be “legal and justified.”