Fake MACT Claim By Lawyers- Supreme Court Suggests Ministry Of Road Transport To Extend Operation of 'VAHAN' Portal To Tackle The Issue

On brief perusal of some of the suggestions put forth by Senior Advocate, Mr. Atul Nanda, appearing on behalf of the insurance company, a Bench comprising Justices M.R. Shah and Sanjiv Khanna asked Mr. Nataraj to get instructions from the Ministry of Road Transport and Highways, if a centralised mechanism can be developed so that all the information crucial to a claim can be on the same portal.

The Bench was hearing the matter pertaining to the fake claim petitions filed by advocates in Uttar Pradesh under the Motor Accident Claims Tribunal and the Workmen Compensation Act. A S.I.T was constituted by the High Court of Allahabad to, inter alia, investigate these matters. On the last date of hearing, the Apex Court displeased with the inaction of the Bar Council of U.P. in adopting measures against the erring advocates directed the presence of the President and Secretary of the U.P. Bar Council. At the outset, the Counsel appearing on behalf of the Bar Council of U.P. informed the Court that the President and Secretary were present in compliance with its earlier order.

The Counsel appearing on behalf of the Petitioner apprised the Court that he had filed the petition against the formation of the SIT, since it had dismissed his client's genuine claim.

"The Petitioner has filed this petition against the formation of SIT. SIT was formed in 2015. The purpose of SIT was to enquire the court records, advocate's files etc.. Kindly see the order on the basis of which SIT was formed…Till the time of SIT, there was no FIR against advocates, but... information that some false cases were there is UP…This formation of SIT, on the basis of which my claim has been dismissed…My son has died..I have no other remedy."

Pointing out at the magnitude of the issue at hand, the Court clarified that it is not dealing with individual cases. In case of any adverse order against genuine claims, the Court asked the Petitioner to challenge the same, independently.

"We are not considering individual cases…If there is an adverse order, file an appeal. You have seen the larger issue, what is happening in the Court. Have you seen the data that has come about. Let's assume in one case a wrong order has been passed, you have to challenge the order. We cannot set aside the constitution of SIT."

The Counsel humbly submitted, "I have some questions before the Hon'ble Court. I have challenged the formation of SIT."

The Court assured the Counsel for the Petitioner that it would go through the issues highlighted by him and consider them.

Thereafter, the Counsel appearing on behalf of SIT informed the Court that, "The list of advocates and accused were filed two days ago."

Dissatisfied with the lack of information in the list provided by SIT, the Bench stated -

"List of cases and chargesheet also filed…On which dates chargesheets have been filed, before which court chargesheet had been filed nothing has been given. Suppose we want to issue some direction…We can atleast direct Ld. Magistrate to frame charges..'

The Counsel for SIT assured the Court that he would file a detailed document.

"I will place it on record…These charge sheets have been filed in the last two months."

Justice Khanna enquired, "Has sanction under 193 etc. has been obtained?"

The Counsel for SIT submitted, "Till today in none of the cases it was required."

The Bench further enquired, "In none of these cases FIR was registered? These are motor accident claims, there would be corresponding FIRs, where in those cases chargesheet filed?"

The Counsel for SIT informed the Court that it was not aware of the other cases, but in the concerned 1372 cases, out of 92 cases in 36 cases chargesheet have been filed.

"I am not aware of the other cases but in 92 cases with respect to 1372 cases. Out of 92 cases in 36 cases chargesheet has been filed."

As the Counsel for SIT mentioned in the passing that no police officer in UP was found to be involved in these cases of fake claims, the Bench asked him:

"When you say no police officer in UP is involved, there has to be first some investigation… SIT of UP?"

The Counsel for SIT responded that, the finding against the police officers in U.P. was of negligence, but not of involvement in the fake claims.

"Yes, your lordship. Negligence was found, involvement in those fake cases not found. Some statements were not taken of the vehicle owners. That was the negligence…Disciplinary proceedings have been initiated."

Displeased with the poor progress in the investigation by SIT, the Bench remarked -

"Please see the SIT report. Is it not shocking?...Out of 1376 cases by now, despite the fact that SIT was constituted in 2015, you have been able to complete the investigation only in 247 cases…Tell your officers, it is none of our business to do all these things, it's for the supervisor authority to consider."

The Counsel for SIT elucidated the practical problems that the investigating agency is facing in the matter at hand. One of the most crucial issues was that the insurance companies were not ready to act as complainants in the cases of fake claims, which was causing undue delay.

"The problem that SIT is facing is that the insurance companies are not becoming complainants in FIR. SIT is only filing FIR. I am seeking direction, let they become a complainant in the FIR, so there would be speedy registration of FIR."

Aware of the reason for the insurance companies to act in this manner, Justice Khanna asked the Counsel for SIT -

"You realise the reason they do not want to become complainant?"

Justice Shah clarified that the harassment meted out to the complaints in our country discourages people to come forward and file a complaint.

"Because of the conduct. Many a times in the country complainants are treated as accused, and there is harassment, that is why no one wants to become a complainant…If you guarantee that there shall not be harassment…In European countries they consider it is there duty to defend the witness…"

Justice Khanna added -

"Not only from the police, the whole class of people involved, there will be threats…"

Stating that a police officer can very well act as the complainant, Justice Shah asked the SIT to become the complainant.

"You can become the complainant now."

Another problem highlighted by the Counsel for SIT was that there are two sets of Investigating officers in the SIT - one is enquiring and the other investigating.

"The problem we are facing is one IO is involved in enquiry…thereafter new IO will come.

We are having 2 sets of IO, one enquiring and another set will investigate."

Explaining the procedure that the SIT is to follow, the Bench stated -

"You are there for conducting enquiry, thereafter you have to file a report before the concerned police station. Thereafter, the IO of the PS will be the investigating officer."

The Counsel for the SIT responded, "Here, the IO of the SIT is investigating the matter."

The Bench was not satisfied that the SIT could investigate.

"That is wrong. Ask him if it is permissible or not?"

It was clarified by the Counsel appearing for SIT, "As per the HC order, we have to lodge the FIR and investigate the matter."

Unconvinced, the Bench commented, "That was enquiry."

The Counsel for SIT asserted, "No, your lordship, the impugned order says investigation."

Again on the issue of slow progress of the investigation, the Bench remarked, "In 5 years, how only 247 cases."

Providing explanation for the delay, the Counsel for SIT reiterated -

"These cases have been forwarded by the insurance companies…Can we record in the order Milords, that they will not be harassed. Let them become…They are required to be as a witness."

The Counsel appearing for the Bar Council of India vehemently opposed the idea of the insurance companies acting as the complainants, as he was of the opinion that it would delay the processing of genuine claims.

"I will not agree to this proposition…Now in case the insurance companies become complainants they may for every claim that has come, they may send a report and all the genuine claims will also get pending, apart from the harassment."

The Bench reminded the Counsel that it ought not to be presumed that the insurance companies will file false complaints -

"Insurance companies are also not interested in saying that every case is a false case. The total number of cases during 5 years is 1300 odd…"

Reiterating his concern, the Counsel for BCI submitted -

"What I am saying that the insurance company can give them the grievance…They should not be made complainants…All genuine cases will also get… Let the SITs of all the States look into it."

The Bench asked Mr. Atul Nanda, to advise the insurance companies to file complaints, as it might expedite the process.

"Ultimately you have sent the complaint, you advise them. You can also be the complainant."

Agreeing to do the needful, Mr. Nanda commenced his arguments by referring to Section 159 of the amended Motor Vehicles Act which deals with the process of providing information of the accident. He highlighted that the Accident Information Report (AIR) becomes the basis for the claim petition before the Motor Accident Claims Tribunal. To put the content of the provision into context, he also referred to three judgments of the Supreme Court -

"I want to show three judgments from 2009 onwards. Kindly have the Motor Vehicles Act amendment in 2019. My lords kindly have Section 159 (information to be given regarding the accident). How does it kick off and how it is to kick off….Now, the AIR becomes the basis of the claim petition. Kindly see 166(4)...There are rules under MV Act."

Mr. Nanda submitted that in 2007, when the provision was considered, the Supreme Court had directed mandatory implementation of the provision.

"In 2007, this provision was considered. Fake claims, expeditious disposal of claims was at the back of the mind…The Supreme Court said that you must implement this provision in every State…"

In 2009, he averred, the Delhi High Court had clarified that the AIR to be forwarded to the jurisdictional accident claim tribunal. He further emphasised that the Supreme Court had later endorsed the High Court's order. Mr. Nanda, elucidated the subsequent development to indicate that it does not appear that the States have followed the guidelines laid down by the Apex Court.

"In 2009 the Delhi High Court, in a very balance approach, came and laid down that whenever there is an accident, you must as a police officer in compliance of Section 159 forward this to the jurisdictional accidents claim…These directions are contained in a judgment, Rajesh Tyagi which got approval of Supreme Court in 2009. Justice Ravindran said…. You will unscrupulously follow the direction of Delhi High Court…Thereafter in 2020 J. Sikri reiterates, not followed. It is mandate of law that under 159 police officers should verify those facts… Not only that , the latest order of 2021 by J. Kaul. Kindly see, if this is done, then why does fake claim take place. Because we have too much time between the claim petition and the accident…Now, this is the latest is. I am talking about prevention, I'll come to the remedy later. Your lordship must ask the states what they have done 2007 onwards…These are the direction:

The jurisdiction police station should report the accident to the Tribunal and the insurer within the first 48 hours over email or at a dedicated website…for the adjudication of such claims what is required in the Identification of person injured/deceased, legal heirs, their age, age of deceased and what type of employment he was in. If these ingredients are there then it becomes easy for the Motor Vehicle tribunal to pass order in 30 days."

The Bench added, "Involvement of the vehicle also."

It was highlighted by Mr. Nanda, that the scope of manipulation increased manifold because of the time gap between the accident and the claim. He suggested that if a claim is mandated to be filed within a day, then the number of fake claims will decrease.

"Yes, involvement of the vehicle. The motor vehicle forms are very comprehensive. You have to click pictures…very very difficult to manipulate. Manipulation happens when there is a time gap…if this is done within 1 day..the way they are conspiring and creating fake claims will diminish."

The Bench enquired about the types of fake claims -

"What type of fake claims are filed? Either the vehicles were not involved, or no accident occured."

Mr. Nanda submitted that he had been able to categorise the fake claims into five groups.

"I categorise these into 5. The first type of case is when the person has met the natural death. In my note I have filed cases of States, where a person has died of cancer and a motor accident claim has been filed."

The Bench suggested that the information pertaining to the modus operandi of the fake claims can also be provided by the SIT.

"We will ask the IO also. He will know how the fake claims are filed."

The Counsel for the SIT informed the Court, "SIT has filed the modus operandi of fake claims."

Referring to his notes Mr. Nanda apprised the Bench that the issue of fake claims is not limited to U.P., but is a pan India problem. Thereafter, he continued with his submissions pertaining to the categorisation of the fake claims -

"Second, there are a large number of cases…the fraudulent implantation of vehicles takes place..Third, there is a false implantation of a driver…kindly see, many a times claimants are illiterate, there are ambulance chasers, they supply claimants who file false claims…Unlike CPC, the MV Act..my accident can take place in Delhi, I can file a claim in Guwahati…Fabricated insurance, pertaining to exaggerated claims. In the later part of my note I have provided suggestions."

Some suggestions were proposed by Mr. Nanda, which he thought might assist the Court in tackling the issue at hand. He informed the Court about the Government portal VAHAN, which already has the details of the owner, insurer and particular of the insurance. He recommended that the said portal can be utilised for disseminating the information pertaining to the AIR, so that everyone is made aware of the claim.

"Now, fortunately, technology has improved…There is something called a VAHAN portal…In the VAHAN portal there is the mobile number of the owner, details of insurance policy and the insurance company, if there is any information on VAHAN of that AIR. If it is to be implemented within 48 hours as per J. Kaul's order, within 48 hours the owner will know that his vehicle has been impounded ..the insurance companies will also set in motion…Now, kindly have the directions to the States. Three HCs have set up SIT - Rajasthan, Gujarat and UP…When my company went to Punjab, please set up SIT…The Hc refused to entertain by plea saying that the matter is pending before the Supreme Court. There is a necessity for my lords to give practice directions, not only to the MACTs, the police establishment, Home Dept, as well as the transport ministry of GOI…Kindly have 2 judgments, your lordships, (2007) 12 SCC 352…I'll only give the relevant paragraphs. (2007) 12 SCC 352, relevant paragraphs are 2, 5 and 10. The Supreme Court shows that this has not been implemented in….(2010) 6 SCC 768 para 8 and 9…I will cite one order of DHC. Here it was laid down that AIR is a must. This judgment got an approval of my lords in J. Ravindran's order in the celebrated judgment of …(2010) 2 SCC 607…Relevant paragraphs, para 14, direction are given in para 16."

Justice Khanna asked Mr. Nanda, "Is it correct that in terms of CrPC, all the FIRs to be registered at the Central server.

Mr. Nanda responded, "Not a central server… There is a portal from each States."

Rephrasing the previous statement, Justice Khanna enquired, "Central server would be a wrong term, it is a dedicated server…Just check it up, if this is factually correct, what I am saying."

Justice Shah added, "All applications are to be made online, so no question of further manipulation…"

Pointing out some practical difficulties in implementing the suggestion given by Mr. Nanda, Justice Khanna stated -

"Once FIR data is authentic, date and time cannot be backdated. Data is then available to everybody…The difficulty is then we will have to upgrade all the staff at MACT so that they can suo moto register…Look at the practical problem, under 116(1) you can file individually also, then there will be multiple claim applications registered. Then, suppose FIR is incorrectly registered…as long as we have the data of FIR, it should be made mandatory or the Court staff should attach it."

Further, Justice Shah added, "If it is only at the stage of AIR, then it has to be sent. That is only for the purpose of claim petition."

Concluding his submissions, Mr. Nanda apprised the Court that 25% to 35% of the claims filed were seen to have been fake, which includes cases of exaggerated claim.

"Only request, SLP where my WP was dismissed for constitution of SIT…One humble submission..if my lords direct that since.. There is an insurance bureau that collects data. My reading of data of responsible bodies is 25 to 35% fake. It may be fake because it is totally fake or maybe because it is exaggerated."

The Bench assured, "We will consider your suggestions…Mr. Nanda, these are policy matters also…It can be done as a pilot project in one or two places…if it works well, hiccups that come..We want to know their (UOI) response. They are serious about fake claims we want to know."

The Counsel for SIT read out the 11 types of fake cases that it had identified.

"On 06.12.2021, we have given modus operandi. There are 11 types of cases."

The Bench sought ASG, Mr. Nataraj's assistance in the matter to see how the cases of fake claims could be tackled at a pan India level.

"Mr. Nataraj, we will like to have your assistance, you can contact Jayant Sood also, he can assist you also…These are fake petitions under the MV Act as well as the Workman Compensation Act. Initially in this case it was found that this was happening in UP…now it's pan India. Now your Ministry of transport has come up with some VAHAN..that can be improved also…How can you (Ministry of Transport) help in getting such fake claims down…One suggestion was under S. 159 AIR register is to be maintained, police officer within 48 hours is required to send all particulars of the concerned to MACT Court. This will be considered as a claim petition. It was found that, claim petition can be filed pan India. Now in one court it is filed, the same thing is filed in another place and nobody knows… Can it not be that the particulars of AIR can also be on the Vahan portal, so that everybody knows that this vehicle is involved in an accident…Fake petition filed multiple times, how to check that."

Mr. Nataraj informed the Court, "We will try to develop a centralised system for this."

The Council appearing on behalf of the Bar Council of U.P. submitted that three disciplinary committees have been constituted and the hearings were going on.

"Three disciplinary committees have been formed on 27.11.2021. The hearing is going on. It took place today also. I am humbly requesting that the president and secretary are there. I'll assist your lordship."

The Bench emphasised on the conduct of the State Bar Council in not considering the complaints it received for a whole year, so that the same automatically goes to the BCI and they are relieved from their duty of passing any adverse order against their members.

"We want to impress upon them that they are the representatives of the advocates…may cases it is found that when Complaints are filed against the advocate, they are kept pending for more than one years. So, Section 36(b) would come into play and it would automatically get transferred to the Bar council of India, so that they do not have to take any decision. They do not want to displease their friends. UP is to dispose it off within one year…Only in exceptional cases when it is not disposed off for a valid reason, only it is required we transfer….We wanted to impress upon them that the purity of this institution is in their hands - the Bar Council of State and Bar Council of India."

Expressing regret on behalf of the President and Secretary, the Counsel for Bar Council of U.P. reiterated, "I will be present. If your lordship dispenses them (President and Secretary)"

The Bench is to pass a detailed order, the day after tomorrow i.e. Thursday.

[Case Title: Safiq Ahmad v. ICICI Lombard General Insurance Co. Ltd. & Ors. SLP (C) 1110/2017]

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