Mahadevi and others vs Shivaputra and another. Miscellaneous First Appeal 201689/2016 (MV) decided on 20 November 2020.
Judgment Link: http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/349819/1/MFA201689-16-20-11-2020.pdf
The Karnataka High Court has expressed deep concern and anguish over the increasing cases where insured vehicles are implanted just to get compensation. In many vehicular accidents, the actual vehicle that caused accident lacks insurance policy. Many cases involve ‘hit and run’ accidents. In such cases, the “unscrupulous nexus” stages false scenario in implanting a “proxy” vehicle which is covered by insurance policy. The present case is a classic example of a clear fraud. After 103 days of the accident, brother of the deceased produces his own insured vehicle insinuating its involvement in the accident!
The Court noticed the earlier judgment in Sumangala and others vs Virupakshi and another MFA 30219/2011 decided on 15 June 2011. The fervent plea of the insurance company in the said case, questioning involvement of the insured vehicle as shown in the final report, was brushed aside by observing that ‘if there was any shady material which creates suspicion about the credibility of the final report, the proper course for the insurer should have been to apply to the higher authorities to get the matter investigated or at least should have challenged the final report seeking a writ of mandamus for reinvestigation”. However, the High Court in Mahadev’s case observed as follows; “”
“‘We have, with great respect, perused the entire judgment. From a perusal of the same, we do not find any law laid down in the said judgment of universal application that in all cases where charge sheets were filed, unless Insurance Company challenges the same and obtains writ of mandamus, MACTs are required to act upon the same and proceed to come to a conclusion that the vehicles named as offending vehicles in the charge sheet, without any further proof, are to be taken as the motor vehicles involved in causing the accident, even in cases where evidence produced points to the contrary.
‘Further, we find that in the said judgment, there is no discussion of the relevant provisions of Code of Criminal Procedure or other cognate provisions of law under which the police authorities would investigate and file charge sheets and on the probative value of the charge sheets vis-a-vis the involvement of a motor vehicle in causing the accident before the Tribunals trying the compensation cases. Experience of the recent past shows that instances of fraudulent/collusive involvement of motor vehicles duly covered by insurance policy in accident cases are burgeoning and if the insurance companies are saddled with the burden of challenging the charge sheets filed throughout the country without there being no clear legal mandate to do so, their work would be seriously crippled and they would not be able to do their insurance business without enhancing the premium, thereby further burdening the ever suffering owners of motor vehicles. Even the most liberal reading the provisions of the Motor Vehicles Act, 1988 does not spell out such a requirement.
The question is one of fundamental importance – what is the standard of proof applicable in these proceedings? On whom is the initial burden of proving the accident or, as in this case, involvement of the offending motor vehicle cast? Is not still the standard of proof one of “preponderance of probabilities”? Is a mere charge’ sheet, which in this case is shown to be deficient in truth sufficient to tip the balance only on the premise that insurance company has not dipped deep into its pockets to challenge the charge sheet- what with the toxic nexus between the black sheep among the police, medical professionals and touts of every kind masquerading the field which has become a notorious fact of life. We are afraid, we would be muddling the field further for the already befuddled members of MACT by accepting the arguments of learned counsel for the appellants on this aspect’.
NOTE: Fraud is a ground to question any administrative orders, quasi-judicial and even judicial verdicts. Lord Denning in one of his most celebrated judgments in Lazarus Estates Ltd v Beasley [1956] 1 Q.B. 702; [1956] 2 W.L.R. 502 held “No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever…”
The decision of the High Court has armed the Tribunals to independently assess involvement of insured vehicles when fraud is alleged and prima facie shown. The Tribunals are no longer shackled by the chargesheets filed in criminal cases.
A path-breaking judgment in the direction of saving insurance companies from succumbing in the web of conspiracy, deceit and fraud.
Compiled and written by S. Basavaraj, Advocate, Daksha Legal.
Daksha Legal 