Calling it a “test case” with national ramifications, the SC Bench comprising Justices Ahsanuddin Amanullah and R. Mahadevan issued the order after questioning the conduct of NIC for not initiating criminal proceedings despite asserting that the policy in question was fabricated.
The SC described the insurer’s failure to act as demonstrating a “brutal lack of responsibility.”
New Delhi:For the first time, the Supreme Court(SC) on Thursday has ordered that the Chairman and Managing Director (CMD) of National Insurance Company (NIC) be made an accused in a criminal probe against allegations that a forged insurance policy, with NIC name, was relied upon in a motor accident claim.
According to a legal news portal LegalChakara, the Court also directed the formation of a special investigation team (SIT) to investigate the matter and instructed the SIT to file a fresh FIR naming NIC’s CMD and other employees, including local branch manager as accused.
However, the SC order on the case is not yet vailable yet.
The SC was examining a motor accident claims case [National Insurance Company Vs K Saravanan,under litigation since Apr,2021] where allegations have been made that a forged insurance policy, supposed to be issued by NIC, had been relied upon in a motor accident compensation case.
Calling it a “test case” with national ramifications, the SC Bench comprising Justices Ahsanuddin Amanullah and R. Mahadevan issued the order after questioning the conduct of NIC for not initiating criminal proceedings despite asserting that the policy in question was fabricated, as per the report published by a few legal portals.
The SC described the insurer’s failure to act as demonstrating a “brutal lack of responsibility.”
The Bench said,“Time has come when this Court has to take some drastic measures… to ensure that the insurance companies discharge their onus and also their responsibility of being vigilant… because ultimately they are paying money from the coffers to which the general public contributes,”
The bus owner involved in the accident whose insurance policy is under scrutiny must also be named as an accused, the portal has reported.
The case concerns allegations that a forged insurance policy was used in a motor accident compensation claim by K. Saravanan, who was injured in a bus collision. Saravanan underwent surgeries, required prolonged treatment, and later resigned from his job because of his injuries. He brought a petition before the Motor Accident Claims Tribunal (MACT) seeking compensation from the bus owner and NIC.
Before the MACT, NIC denied liability and argued that the third-party policy relied on by the claimant was invalid. The MACT rejected those defenses and held NIC liable. The Madras High Court upheld the MACT’s findings on appeal, dismissed the insurer’s challenge to the policy’s validity, and adjusted the compensation award. The matter then proceeded to the Supreme Court.
The Bench questioned NIC’s conduct on the fact that although the insurer maintains the policy is forged, it admitted it never lodged a criminal complaint.
However to prevent further delay in compensation, the Court directed that the insurer must pay the awarded amount to the claimant within four weeks. NIC may later recover that sum from the person who was in control of the vehicle at the time of the accident (the lessee).
Earlier, the Court had summoned the Tamil Nadu Director General of Police (DGP) to appear personally after an affidavit indicated that police do not verify the authenticity of insurance documents collected in motor accident cases. The Court strongly objected to that position. The DGP appeared and tendered an unconditional apology, which the Bench accepted.
The Court stressed that the investigation should be conducted promptly and seriously, specifically probing the alleged fabrication of the insurance document.
On February 9, the Supreme Court had added the State of Tamil Nadu, through the DGP, as a party and sought a detailed affidavit on whether the alleged fabrication had been investigated. The DGP’s affidavit stated that police gather insurance details from parties during motor accident investigations and provide them to claimants, but do not verify authenticity with insurers. The Court took strong exception and summoned the DGP.
The DGP apologised in court, explaining that while manual verification was previously difficult, systems have since improved. The Court was told that the E-DAR (Electronic Detailed Accident Report) and the Vahan portal now allow for “automated” and “instant” verification of insurance details.
The DGP said that detailed guidelines were issued in 2024 and 2025 to sensitize police officers and ensure investigating officers identify discrepancies in insurance records at the earliest opportunity. The Court accepted this explanation and excused the DGP from appearing further.
Source -LegalChakra