Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Tel) 35919

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Gadi Praveen Kumar, J
United India Insurance Co. Ltd. – Appellant
Versus
T. Bhavani – Respondent
M.A.C.M.A. Nos.604 and 608 of 2024|Cross Objections Nos.91 and 95 of 2024

Advocates:
For the Appellants/Petitioners: A. Ramakrishna Reddy
For the Respondents: Bajrang Singh Thakur

An insurance company cannot be held liable to pay compensation under the Motor Vehicles Act where the insurance policy produced by the claimants is proven to be a fake and fraudulent document, as there exists no privity of contract between the insurer and the vehicle owner.

Headnote:(A) Motor Vehicles Act, 1988 - Claim for compensation - Fake insurance policy - Liability of insurer - Tribunal ordered pay and recover - Appellate court held that where insurance policy produced is proven to be fake and fraudulent, lacking any privity of contract, the Insurance Company cannot be held liable. (Paras 44, 48)

(B) Evidence Act, 1872 - Sections 101, 102 and 106 - Burden of proof - Claimants relied on a xerox copy of an insurance policy disputed by the Insurer - Held, when fraud is alleged, it is the duty of the claimants to establish the genuineness of the document; burden cannot be shunted to the insurer to prove the forgery. (Paras 44, 46)

Facts of the case:
Two separate claim petitions arose from a motor accident involving a vehicle for which a policy was produced by the claimants. The Insurance Company disputed the validity of the policy, alleging it was fake, citing discrepancies in branch codes, seals, and vehicle ownership details. The Tribunal found the policy was indeed fake but directed the Insurance Company to pay the compensation and recover it from the owner. The Insurance Company appealed.

Findings of Court:
The Court found that the policy document produced by the claimants was a fabricated xerox copy. It held that in the absence of a valid contract of insurance, the Insurance Company cannot be burdened with liability under the 'pay and recover' principle.

Issues: Whether the Insurance Company is liable for compensation when the insurance policy produced by the claimants is found to be fraudulent and fake.

Ratio Decidendi: Fraud unravels everything. An insurance company is not liable to indemnify a claimant or an insured under the Motor Vehicles Act when the underlying contract of insurance is non-existent or proven to be a forged document. The burden to prove the validity of a document falls on the party producing it.

Result: Appeals allowed; impugned awards set aside.

Table of Content
1. consolidation of appeal cases arising from a motor vehicle accident claim. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9)
2. establishment of accident facts and driver liability due to lack of valid license. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16)
3. burden of proof regarding the validity of an insurance policy in civil claims. (Para 17 , 18 , 19 , 20 , 21 , 22)
4. analysis of the tribunal's decision and the 'pay and recover' principle applied. (Para 23 , 24 , 25)
5. arguments against holding the insurer liable for a fabricated insurance document. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38)
6. contentions of claimants regarding the insurer's liability for unsuspecting third parties. (Para 39 , 40 , 41)
7. judicial determination on fraud vitiating liability under the insurance act. (Para 42 , 43 , 44 , 45 , 46 , 47 , 48)
8. final orders and disposition of pending proceedings. (Para 49 , 50 , 51)

COMMON JUDGMENT:

Heard Sri A.Ramakrishna Reddy, learned counsel for the appellants and Sri Bajrang Singh Thakur, learned counsel for claimants/respondents at length.

2. M.A.C.M.A.No.604 of 2024 is filed by the Appellant-United India Insurance Company Limited being aggrieved by the Award and decree dated 04.10.2023 passed in M.V.O.P.No.349 of 2017 on the file of the Motor Accidents Claims Tribunal –cum-Judge, Family Court-cum-III Additional District Judge, Mahabubnagar in partly allowing the claim granting compensation of Rs.14,75,200/- with proportionate costs and interest @ 7.5 p.a. from the date of petition till date of realization, out of the claim of Rs.25,00,000/-.

3. M.A.C.M.A.No.608 of 2024 is also filed by the Appellant-United India Insurance Company Limited being aggrieved by the Award and decree dated 04.10.2023 passed in M.V.O.P.No.350 of 2017 on the file of the Motor Accidents Claims Tribunal –cum-Judge, Family Court-cum-III Additional District Judge, Mahabubnagar (for short ‘the Tribunal’) in partly allowing the claim granting compensation of Rs.11,75,000/- with proportionate costs and interest @ 7.5 p.a. from the date of petition till date of realization, out of the claim of Rs.20,00,000/-.

4. Cross Objections No.91 of 2024 is filed against M.A.C.M.A.No.608 of 2024 while Cross Objections Nos.95 of 2024 is filed against M.A.C.M.A.No.604 of 2024 by the claimants seeking enhancement of compensation granted by the learned Tribunal.

5. Since, the crime vehicle involved in the accident i.e. Swaraj Mazda Mini bus bearing No.AP-29U-7933 (for short ‘the crime vehicle’) on 01.05.2017 and travelers/passengers to the incidents as well as the owner of the crime vehicle is one and the same, these Appeals and Cross Objections are being disposed of by this common Judgment.

6. The facts leading to filing of M.V.O.P.No.349 of 2017 and M.V.O.P.No.350 of 2017 are that on 01.05.2017, when the deceased Thakur Anil Singh and his cousin deceased Thakur Bheem Singh were proceeding towards Thellapur village from Gandipet on motor cycle bearing No.TS-15EC-7107 and reached near Coca-Cola Company, outskirts of Khanapur village, the crime vehicle said to have been driven by the driver, who is respondent No.1 in the said OPs, at high speed in a rash and negligent manner came in opposite direction on extremely right side of the road, dashed against the motor cycle resulting the death of the deceased.

7. Basing on the report, a case in Crime No.319/2017 was registered under Section 304-A IPC by Narsingi Police against the driver of the crime vehicle and investigated into.

8. It was contended in MACMA 604 of 2024 that at the time of death of the deceased Thakur Anil Singh, was hale and healthy, aged about 20 years and said to have been working as driver to vehicle bearing No.AP-28DU-9186, thereby used to earn Rs.12,500/- p.m. besides Rs.100/- towards batta every day and used to contribute to the family. On account of the sudden death of Thakur Anil Singh, his family was under deep depression and as such, parents of the deceased,

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2025 Supreme(Online)(Tel) 35919

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABADGadi Praveen Kumar, JUnited India Insurance Co. Ltd. – AppellantVersusT. Bhavani – RespondentM.A.C.M.A. Nos.604 and 608 of 2024|Cross Objections Nos.91 and 95 of 2024

An insurance company cannot be held liable to pay compensation under the Motor Vehicles Act where the insurance policy produced by the claimants is proven to be a fake and fraudulent document, as there exists no privity of contract between the insurer and the vehicle owner.

Cases Referred (2)

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Gadi Praveen Kumar, J
United India Insurance Co. Ltd. – Appellant
Versus
T. Bhavani – Respondent
M.A.C.M.A. Nos.604 and 608 of 2024|Cross Objections Nos.91 and 95 of 2024