SC orders Pan-India SIT probe into fraudulent motor accident claims, warns insurers against “pick and choose approach” for reporting claims

Supreme Court: The present proceeding initially concerned with a narrow question, whether the vehicle stated to have caused a motor accident was in fact the vehicle involved in the accident, however, subsequently revealed a much wider concern, i.e., allegations of fraudulent motor accident claims being lodged in a recurring and organised pattern, including instances where the same vehicle was shown as having been involved in multiple accidents. Describing the suspected fraud as being of “enormous proportion” and expanding the proceedings to examine mechanisms for detecting and investigating such claims pan India, the Division Bench of Ahsanuddin Amanullah and Prasanna B. Varale, JJ., directed all the States to constitute a special dedicated SIT at the State level for dealing with suspected fraudulent insurance claims and issued fresh directions.

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The Court considered the emerging pattern to be indicative of fraud on a very large scale. It observed that fraudulent claims not only impose an undue financial burden upon insurance companies and the system but ultimately affect genuine consumers, who may have to bear higher insurance premiums because insurers must maintain their financial viability. Therefore, the proceedings expanded beyond the individual dispute and came to address systemic mechanisms for identifying, investigating and preventing fraudulent insurance claims.

The Court sought the assistance of Advocate Jagdish Chandra Solanki, who had experience of working in an insurance company and had encountered irregularities, acts of commission and omission, and inadequate oversight which could facilitate fraudulent practices.

The Court was given significant suggestions, including

1. to implead the Insurance Regulatory and Development Authority of India (IRDAI), since insurance companies function within the regulatory framework prescribed by it,

2. a common portal be developed containing insurance claim data, enabling insurers to cross-check whether the same vehicle, person, institution or entity had been repeatedly involved in claims,

3. the existing VAHAN and SARATHI portals could be integrated with a common claims database. Such integration could facilitate verification of the accident, the vehicle involved and the precise location of the alleged accident,

4. integration of the E-Detailed Accident Report (EDAR) portal maintained by the Ministry of Road Transport and Highways with other relevant databases and the IRDAI portal. Such integration could make verification of the authenticity of accidents and the vehicles involved more efficient.

The Court informed by the State of U.P. that it had already constituted a special SIT pursuant to directions issued by this Court in Safiq Ahmad v. ICICI Lombard General Insurance Co. Ltd., (2021) 18 SCC 813. The State reported that, until then, 2188 complaints had been received. Of these, 1029 had been investigated, resulting in 231 FIRs against 533 accused persons. The Court appreciated the action taken by the State of U.P.

The Court issued a fresh direction:

1. All States to constitute a special dedicated SIT at the State level for dealing with suspected fraudulent insurance claims. All complaints received from insurance companies concerning such claims are to be forwarded to the SIT, which must examine them expeditiously. States were to provide adequate personnel to enable the SITs to complete investigations and to disclose the procedure adopted for investigating such matters.

2. A specific responsibility was placed upon insurance companies to ensure that all claims indicative of fraud are forwarded to the SIT concerned without any “pick and choose approach”. Topmost management of the insurance companies concerned would be held accountable if selective forwarding of fraudulent claims to the State SIT was found.

3. Where an SIT makes a recommendation or an FIR is lodged against officers of an insurance company, the insurer must take cognizance of the same and initiate appropriate departmental action without delay. The companies were also directed to disclose in their affidavits the action taken both with respect to matters referred to SITs and with respect to internal action against officials whose conduct may have facilitated attempted or committed fraud.

4. Impleaded IRDAI as Respondent 104, Ministry of Finance, Union of India, through its Secretary, as Respondent 105, Ministry of Road Transport and Highways, through its Secretary, as Respondent 106 and General Insurance Council (GIC) as Respondent 107. These newly added respondents were directed to file affidavits explaining their present responsibilities, how those responsibilities were being discharged, and what measures they considered necessary to address the problem.

5. Where a motor accident claim is rejected by the MACT concerned on the ground of fraud or collusion, the insurance company should undertake an internal appraisal and forward the case to the concerned State SIT. In every such case, the insurer must:

   (a) immediately forward the details to the SIT of the State where the claim was raised; and

   (b) conduct an in-house investigation to determine whether its own officers were involved in contributory collusion.

   the details of such action were also required to be disclosed in the affidavits filed before the Court.

6. Compliance with its earlier order dated 26 May 2026, under which the CMDs of certain insurance companies were required to remain physically present before the Court because they had not entered appearance pursuant to the earlier directions dated 6 April 2026.

7. The Court, while noting that it had initially considered issuing contempt notices, granted “extraordinary indulgence” for the present and instead issued notices calling upon the CMDs concerned to show cause through personally affirmed affidavits as to why they had not complied with the direction.

8. Issued notices to the CMDs concerned requiring them to show cause, through a personally affirmed affidavit, as to why they had failed to comply with the direction requiring their physical presence.

9. Fresh notice was directed to be issued to Respondent 53, Sahara India Life Insurance Company, since service had not been completed.

10. The matters be listed on 23 September 2026 at 2.00 p.m.

Also Read: “Expecting insurer to pay third-party compensation beyond terms of agreement is unfair”: Supreme Court upholds pay and recover principle in motor accident claims

[Oriental Insurance Co. Ltd. v. Tuni Pati, SLP (C) No. 5582 of 2023 with Civil Appeal No. 6865 of 2026, decided on 17-8-2026]

Advocates who appeared in this case :

For the Petitioner: 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 the Respondents 1 to 3: Mr. Goutham Shivshankar, AoR Ms. Renuka Sahu, AoR Mr. Saurabh Bhardwaj, Adv.

For the Respondent 5: 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.

For the Respondent 6: Ms. Eliza Barr, Adv. Ms. Akansha, AoR Mr. Govind Sharma, Adv.

For the Respondent 7: Ms. Diksha Rai, AoR

For the Respondent 8: Mr. Samir Ali Khan, AoR Mr. Kashif Irshad Khan, Adv. Ms. Komal Vats Singh, Adv

For the Respondent 9: Mr. Vinayak Sharma, Standing Counsel

For the Respondent 11: Ms. Swati Ghildiyal, AoR Ms. Aditi Agarwal, Adv.

For the Respondent 14: Ms. Pallavi Langar, AoR Mr. Sujeet Kumar Chaubey, Adv. Ms. Anushka Raghunath, Adv.

For the Respondent 16: 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.

For the Respondent 18: 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.

For the Respondent 19: Mr. Pukhrambam Ramesh Kumar, AoR Mr. Karun Shamra, Adv. Ms. Anupama Ngangom, Adv. Ms. Rajkumari Divyasana, Adv.

For the Respondent 20: Mr. Avijit Mani Tripathi, AoR Mr. Z.H. Isaac Haiding, Standing Counsel Mr. Daniel Stone Lyngdoh, Adv. Ms. Marbiang Khongwir,

For the Respondent 21: Mr. Anando Mukherjee, AoR

For the Respondent 22: s. K. Enatoli Sema, AoR Mr. Amit Kumar Singh, Adv. Ms. Chubalemla Chang, Adv. Mr. Prang Newmai, Adv. Ms. Yanmi Phazang, Adv.

For the Respondent 23: Mr. Srisatya Mohanty, AoR Ms. Sakshi Mittal, Adv. Mr. Jyotiraditya Roychowdhury, Adv.

For the Respondent 25: Mr. Mohd. Irshad, A.A.G. Ms. Abha Sharma, Ao

For the Respondent 27: Mr. Sameer Abhyankar, AoR Mr. Krishna Rastogi, Adv. Mr. Aryan Srivastava, Adv.

For the Respondent 30: Ms. Ruchira Goel, AoR Mr. Sharanya, Adv. Ms. Rishika Rishabh, Adv. Mr. Harsh Pratap Shahi, Adv.

For the Respondent 31: Mr. Adarsh Chamoli, AoR

For the Respondents 34, 35, 36 and 38: 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.

For the Respondent 40: Mr. Aravindh S., AoR Ms. Anika Bansal, Adv.

For the Respondent 41: 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.

For the Respondent 42: Ms. Udita Singh, AoR

For the Respondents 44, 45 and 95: Mr. Sanjay K Chadha, Adv. Mr. Amaditya, Adv. Mr. Kanishk Mor, Adv. Mr. Dharmendra Kumar Sinha, AoR

For the Respondent 47: Mr. Joydip Bhattacharya, Adv. Mr. Sarath S Janardanan, AoR Ms. Ipsita, Adv. Ms. Namita Kumari, Adv.

For the Respondents 49 and 50: 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

For the Respondent 52: Mr. Anuj Bhandari, AoR

For the Respondent 54: Mr. Hitesh Kumar, Adv. Mrs. Sapna, Adv. Mr. Zakir Hussain, AoR

For the Respondent 56: Mr. Aman Malik , AoR Mr. Ali Khan, Adv.

For the Respondent 78: 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

For the Respondents 43, 46, 58, 60, 61 and 63: 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.

For the Respondents 51, 55, 59 and 62: Mr. Daga Sachin Subhash, AoR 5 SLP (C) NO.5582/2023 Ms. Shreyashi Panda, Adv.

For the Respondents 65 and 67: Mr. Manik Ahluwalia, AoR

For the Respondent 71: 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,

For the Respondents 48, 70, 72 and 86: Mr. Rajat Khattry, Adv. Mr. Abhay Kumar, AoR Mr. D. Vardrajan, Adv.

For the Respondents 66, 73, 74, 75, 80, 83, 84 and 103: Mr. Shoeb Alam, Sr. Adv. Mr. Rajeev Maheshwaranand Roy, AoR Mr. Nilesh Kumar, Adv. Mr. P Srinivasan, Adv. Mr. Shivam Madhur, Adv.

For the Respondent 68: Mr. Arun K. Sinha, AoR

For the Respondent 76: Mr. Shubham Janghu, Adv. Mr. Yoshit Jain, Adv. Mr. Gopal Si

For the Respondents 57, 69 and 85: Mr. Jagdish Chandra, Adv. Mr. Vishal Meghwal,

For the Respondents 81, 88 and 91: Mr. Amit Kumar Singh, AoR Ms. Chubalemla Chang, Adv. Mr. Prang Newmai, Adv.

For the Respondent 82: Mr. Vishnu Kant, AoR

For the Respondent 87: 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, A

For the Respondent 89: Ms. Awantika Manohar, AoR Ms. Parul D., Adv.

For the Respondent 92: Mr. Rajat Khattry, Adv. Mr. Siddhartha Iyer, AoR Mr. Aman Gupta, Adv. Ms. Jaispriya Poply, Adv.

For the Respondent 93: Mr. Suraj Raj Kesherwani, Adv. Mr. Karun Sharma, AoR Mr. Mayank Raj, Adv.

For the Respondent 96: Mr. Manu Luv Shahalia, Adv. Ms. Manjeet Chawla, AoR Ms. Jyoti, Adv. Ms. Usha Pant Kukreti, Adv. Ms. Reenu Kumar, Adv.

For the Respondent 97: Ms. M. B. Ramya, Adv. Mr. Arindam Ghosh, AoR

For the Respondent 99: 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

For the Respondent 101: Mr. Shishir Mathur, Adv. Ms. Anshul Singh, Adv. Ms. Preeti Gupta, AoR Mr. Amit Anand Daspande, Adv.

For the Respondents 90 and 102: Mr. H. Chandra Sekhar, AoR Mr. Jadhav Vishal, Adv.