Gauhati High Court trims insurer's liability after fake motor policy unravels at appeal

Justice Yarenjungla Longkumer holds that fraud unravels even an unchallenged MACT award: the offending oil tanker was uninsured on the date of the 2011 accident, so the insurer keeps Rs 3,19,250 already withdrawn by the family but is freed of any further payment, with the balance to be recovered from the vehicle's owner.

A single-judge bench of the Gauhati High Court has partially modified a 2015 Motor Accidents Claims Tribunal award of Rs 12,77,000 after the Oriental Insurance Company produced fresh evidence on remand showing that the insurance policy filed by the vehicle owner was a fabricated document and that the offending oil tanker was, in fact, uninsured on the day a Bongaigaon man was killed in a road accident on 22 January 2011. Justice Yarenjungla Longkumer held that fraud can be raised at any stage of legal proceedings — including in appeal — and that a decree obtained by fraud is a nullity. The family will keep the Rs 3,19,250 it has already withdrawn; the balance must now be recovered from the vehicle's owner, M/s Dudhnoi Oil Service.

The order, delivered orally on 30 April 2026 in MACApp. 84/2017, is the latest application of the Supreme Court's recent ruling in New India Assurance Co. Ltd. v. Narayan Singh & Others (2025 INSC 1178), which calibrates how a High Court should reset a third-party motor-accident award once the underlying insurance is shown to have been a sham.

How a 2011 accident reached the High Court a second time

Dwijen Ch. Das was killed in a motor vehicle accident on 22 January 2011. His widow Lakhi Das and his mother Phuleswari Das filed MAC Case No. 718/2011 before the Member, MACT-3, Kamrup. By judgment and award dated 5 June 2015, the Tribunal awarded Rs 12,77,000 and fastened liability on Oriental Insurance, accepting at face value a policy filed by respondent No. 4, M/s Dudhnoi Oil Service, that bore the date 21 January 2011.

The insurer did not deposit the awarded sum within the four-month window. The claimants then moved Misc. Case No. 14/2015 to recover it. For the first time, in its objection in that miscellaneous case, the insurer pleaded that the policy was post-dated to the accident and was a manufactured document. The MACT rejected the objection on 21 December 2015, holding that the insurer ought to have raised this at trial. Oriental Insurance carried both orders to the High Court under Section 173 of the Motor Vehicles Act, 1988.

By an order dated 17 July 2018, the High Court did not decide the appeal but remanded the file to the Tribunal so that both sides could lead additional evidence on the validity of the policy. The Tribunal completed that exercise and the trial court records returned. The appeal was finally heard by Justice Longkumer in 2026.

What the additional evidence showed

The post-remand record gave the insurer a much stronger documentary case than it had at the original trial. DW-2 Pranay Kr. Brahma, the Divisional Manager of the Bongaigaon division of Oriental Insurance, deposed that the offending vehicle had been insured with the company only up to 2010 and was uninsured between 21 January 2011 and 27 January 2011. The vehicle was insured afresh only with effect from 00:00 hours on 27 January 2011 — five days after the fatal accident — with cover running till midnight of 26 January 2012.

Equally important was the witness's evidence that Oriental Insurance had stopped issuing manual policies in 2009 and had moved entirely to a computer-generated regime from that year onwards. The policy filed before the MACT, presented as a 21 January 2011 manual document, was therefore anomalous on its face. A second witness, Sarvesh Suman, the Assistant Officer (Legal) at the Guwahati Regional Office — the office under which the Bongaigaon branch sits — produced two computer extracts. Exhibit C showed the only valid policy in respondent No. 4's name began on 27 January 2008. Exhibit D, the consolidated record of policies issued by the company on 21 January 2011, did not list M/s Dudhnoi Oil Service at all.

The respondent's own witness did not help its case. Robin Gayari, produced by M/s Dudhnoi Oil Service as the registered owner of the oil tanker AS-25 C/3037, testified to the existence of policy No. 322300/31/2011/7279 dated 21 January 2011. But in cross-examination he conceded that he was neither the registered owner of the vehicle nor a salaried employee of M/s Dudhnoi Oil Service. Respondent No. 4 itself never appeared in the witness box.

The procedural objection — and why the bench rejected it

Mr. S. Islam, for the family, argued that the insurer was disentitled to raise fraud now because it had stayed silent at trial, never filed an FIR alleging fabrication, and had never produced the proposal form. He invoked Balbir Kaur v. New India Assurance Co., 2009 (13) SCC 370, for the proposition that an insurer cannot unilaterally back-date a policy without the policy holder's consent — the gap, he urged, was the insurer's own administrative lapse, not fraud by the insured.

Justice Longkumer was not persuaded. The bench applied United India Insurance Co. v. Rajendra Singh, (2000) 3 SCC 581, which holds that fraud can be agitated at any stage of legal proceedings, including appeal or revision, because fraud vitiates everything. The Court noted that the insurer could not have been expected to plead fraud at the original trial: it did not yet know its own records had been falsified. The fabrication came to light only when its regional office's computer database was checked during the post-remand evidence.

“A judgment or decree obtained by fraud is a nullity.”

On the burden of proof, the bench drew on a coordinate-bench Gauhati ruling in MACApp. 190/2014, decided on 13 December 2018. That ruling treats the absence of a valid policy as a negative fact — one the insurer cannot be made to prove by leading evidence. The burden of showing that the vehicle was insured rests on the claimant who asserts coverage. Read with the post-remand record, that allocation of burden meant the claim of insurance had failed.

Balancing fraud against the protective intent of the MV Act

Having found the policy fabricated, Justice Longkumer was still alive to the protective philosophy of the Motor Vehicles Act — that road-accident victims should not be left without a remedy because of disputes between the insured and the insurer. The Court resolved the tension by following the recent Supreme Court ruling in New India Assurance Co. Ltd. v. Narayan Singh & Others, 2025 INSC 1178.

That ruling allows a High Court, in cases where third-party claimants have already drawn part of the deposited award, to leave that withdrawal undisturbed while freeing the insurer of any further obligation. The unrecovered balance is then realised from the actual tortfeasor. The bench applied the same template here. The Rs 3,19,250 the family had withdrawn out of the deposit would not be clawed back. The remaining award would not lie against Oriental Insurance at all; the family was given liberty to recover it from M/s Dudhnoi Oil Service, the owner of vehicle AS-25 C 3036, in accordance with law.

Outcome

The appeal under Section 173 of the Motor Vehicles Act is allowed. The MACT's judgment and award dated 5 June 2015 in MAC Case No. 718/2011, and the order dated 21 December 2015 in Misc. Case No. 14/2015, stand modified to the extent that Oriental Insurance is no longer required to pay the balance of the award. The Rs 3,19,250 already withdrawn by the claimants is not to be recovered. The statutory deposit of Rs 25,000 made before the High Court, and the balance Rs 3,19,250 still lying in court, are to be refunded to the insurer after due verification. Liability for the unpaid portion shifts to the vehicle owner. The Registry has been directed to return the trial court records forthwith.