Aruna Attri And Ors vs Sonu Kashyap And Ors (Oriental Insurance Co Ltd)
- Court
- Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Reserved on : 30 July 2026
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Pronounced on : 18 September 2026
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Uploaded on : 21 September 2026
# CNR No. DLHC012289982014
+ MAC.APP. 1190/2014
ARUNA ATTRI AND ORS .....Appellants
Through: Mr. Manish Maini, Ms. Aastha
Chauhan, Mr. Abhinav Sharma,
Advocates.
versus
SONU KASHYAP AND ORS (ORIENTAL INSURANCE CO
LTD) .....Respondents
Through: Mr. Pradeep Gaur, Mr. Amit Gaur,
Mr. Kaarrtikey Parashar, Advocates
for Respondent no.3/ Insurance
Company.
CORAM:
HON'BLE MR. JUSTICE ANISH DAYAL
JUDGMENT
ANISH DAYAL, J.
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1. This appeal has been filed assailing the impugned Award dated 20
August 2014 passed by the Motor Accident Claims Tribunal (West), Delhi
(‘ MACT/Tribunal ’) in Suit No.475/2014, whereby the Insurance Company
was exonerated on the ground that the insurance cover note relied upon by
the claimant was a forged and fabricated document, and liability was instead
fastened jointly and severally upon the driver and owner of the offending
vehicle. The claimants’ appeal seeks to prove that the cover note was not fake
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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and focuses on the imperative duty of the Insurance Company to have taken
steps to file complaint against its own officers if such cover note was indeed
issued without process.
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2. Accident in question occurred on 24 December 2007 at 02:10 p.m.,
when the deceased, Lalit Attri , was proceeding on his motorcycle towards
his office at Mangolpuri. Upon reaching near Suraj Mal Stadium, Rohtak
Road, Delhi, a truck bearing registration No. UP-12C-2045 , driven by
respondent no. 1 and owned by respondent no. 2, struck the deceased, as a
result of which he fell on the road, sustained injuries and subsequently
succumbed to the same.
3. The driver and owner did not file any written statement despite
opportunities. The Insurance Company was subsequently permitted to file its
written statement, although it had not filed the same initially. The Insurance
Company took the defence that the offending vehicle was not insured under
Cover Note No.465971 and, therefore, no liability could be fastened upon it
on the basis of the alleged fake cover note.
Impugned award
4. While concluding, the MACT held that the death was caused due to
the rash and negligent driving of the offending vehicle and compensation of
Rs.41,23,000/- along with interest @ 7.5% per annum was awarded.
5. On the issue of liability, the MACT noted that the Insurance Company
produced R3W1 , Mr. Daya Chand, retired ASI , who stated that the charge
sheet exhibited as Ex.PW1/13 had been prepared by him. He further stated
that the original insurance policy had not been supplied by the owner and
that only a copy of the insurance policy had been furnished to him.
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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6. Mr. N.K. Sharma, Assistant Manager of the Insurance Company , who
deposed as R3W2 , stated that the copy of Cover Note No.465971 , which had
been supplied to the Insurance Company along with the claim petition by the
claimant, was a forged and fabricated document. He further stated that the
said cover note had neither been issued in respect of the offending vehicle
nor signed by the official of the Insurance Company whose stamp appeared
at the bottom of the cover note.
7. It was further deposed that the said cover note had actually been issued
in the name of S.K. Malhotra in respect of vehicle No. DDU-4317 under
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Policy No. 99/2177 , valid from 12 October 1998 to 11 October 1999.
R3W3 , Mr. Hakumat Rai, Deputy Manager , also corroborated the testimony
of R3W2 and tendered his affidavit as Ex. R3W3/A .
8. The Insurance Company further placed on record Cover Note
No.465931 , which had been issued in respect of vehicle No. DL-8CH-2457
in the name of Mr. Ravinder Singh Sethi , which was exhibited as Ex.
R3W3/3 . The Insurance Company also placed on record a copy of the notice
issued to the owner under Order XII Rule 8 of the Code of Civil Procedure,
1908 (‘ CPC’ ), exhibited as Ex. R3W3/5 , along with the postal receipts.
9. The MACT, upon examining the record, noting that there had been no
cross-examination by the driver or the owner, concluded that the cover note
in question, which contained handwritten entries and had been produced by
the claimant, was forged and fabricated.
Submissions on behalf of claimants
10. The appellant, in its written submissions, contended that the same
cover note appeared to have been issued multiple times to different persons
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KUMAR CHOUDHARY
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by the Insurance Company. Therefore, according to the appellant,
responsibility ought to be fixed upon the officials of the Insurance Company,
and the matter would ultimately constitute an internal issue of the Insurance
Company. It was further submitted that the claimant was entitled to ensure
that the compensation was paid by the Insurance Company rather than by the
driver or owner. The appellant relied upon the testimony of R3W2, Mr. N.K.
Sharma , Assistant Manager, Oriental Insurance Co. Ltd., who, in his affidavit
Ex. R3W2/A , deposed that Cover Note No.465971 had been issued in the
name of Mr. S.K. Malhotra for a different vehicle, while Cover Note
No.465931 had been issued in the name of Mr. Vipin Kumar Jain , also in
respect of a different vehicle.
11. Mr. Hakumat Rai, Deputy Manager, who deposed as R3W3, stated
that Cover Note No.465971 was again issued in respect of vehicle no. DL-
1LE-4815 in the name of Mr. Ravinder Kumar by the Regional Office;
however, the same was subsequently cancelled due to the dishonour of the
cheque. He further stated that, according to the records of the Insurance
Company, Cover Note No.465931 had been issued in the name of Sh.
Ravinder Singh Sethi in respect of a different vehicle.
12. Counsel for the appellant, therefore, submitted that Cover Note
No.465971 and 465931 had been issued multiple times in respect of different
vehicles and in favour of different persons, which clearly indicated a
duplicitous act on the part of the officials of the Insurance Company. Counsel
further contended that the document had been collected by the Investigating
Agency after the accident and that the claimants were being made to suffer
for the fault of the Insurance Company.
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
16:11:52
13. Reliance was placed upon the decision of the Supreme Court in
Mangla Ram v. Oriental Insurance Co. Ltd. (2018) 5 SCC 656, wherein the
Court was considering a case in which no premium had been received by the
Insurance Company, and no insurance policy had been issued, though a cover
note had been relied upon. In this case, the Insurance Company had alleged
that the cover note had been fraudulently procured from a Development
Officer who was subsequently dismissed from service. Accordingly, the
Supreme Court noted that the Insurance Company had been able to establish
that no payment towards the insurance premium had been received and that
no insurance policy had been issued. At the same time, the claimants’
assertion that they were in possession of a cover note issued by the concerned
Development Officer was accepted, particularly in the absence of any
positive evidence to establish that the cover note had been ante-dated.
Consequently, the Court invoked the principle of ‘ pay and recover ’, as
enunciated in National Insurance Co. Ltd. v. Swaran Singh & Ors . (2004)
3 SCC 297.
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14. Reliance was also placed on the order of the Supreme Court dated 25
November 2024 in Civil Appeal No. 13043/2024 titled S. Latha & Anr. v.
United India Insurance Co. Ltd. & Ors., wherein the Supreme Court stated
that in cases of motor accident claims, the rights of the claimants must be
considered. When compensation has been granted, it must be ensured that
the rightful compensation reaches the claimants as soon as possible. The
Supreme Court then went on to state “ we find it to be highly unfair to make
the claimants suffer in trying to recover the due compensation. Therefore, to
protect the interests of the claimants and considering the principles of justice
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KUMAR CHOUDHARY
Signing Date:21.09.2026
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and fairness, the Insurance Company must pay the compensation with the
right to recover it later from the owner of the vehicle ”.
15. The decision of this Court in Sundar @ Sunderi Devi & Ors. v.
Reliance General Insurance Co. Ltd. 2014:DHC:955 was also relied upon,
wherein the Insurance Company had contended that it had not received any
premium in respect of the cover note in question and was unable to identify
the person who had received the cash allegedly paid against the said cover
note. The witness examined on behalf of the Insurance Company admitted
that neither the owner of the vehicle nor the concerned authorities had been
informed about the alleged loss of the cover note. Further, the driver and
owner had specifically asserted that the vehicle was insured with the
Insurance Company and had produced the cover note in support thereof. The
Court noted that neither the cover note register/book had been produced nor
had the informant who lodged the FIR been examined. In these
circumstances, the Court observed as under:
“ 9. When such a dispute arises and the owner of the
vehicle produced the cover note and states on oath that
his vehicle was insured with the Insurance Company
and; if the said cover note is found not valid or forged
and; the intimation regarding missing of the said cover
note has not been given to the concerned authority or
the owner of the vehicle, then in such an eventuality,
liability to pay the compensation rests upon the
Insurance Company.
10. For the loss of cover note in question FIR was
lodged. Both the parties are not aware about the
outcome of the FIR. If, after investigation, the police has
filed charge-sheet against the owner of the offending
vehicle, then the insurance company is entitled to
recover the amount from him otherwise not. ”
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
16:11:52
(emphasis added)
16. Mr. Maini further contended that the Insurance Company lodged the
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complaint alleging that the cover note was fake on 15 March 2012, i.e. after
a lapse of nearly five years from the date of the accident. He submitted that
the Insurance Company ought to have proactively lodged a complaint against
the alleged fake cover note immediately upon acquiring knowledge of the
same. In support of his contention, he relied upon the judgment of this Court
in New India Assurance Co. Ltd. v. Kishan Singh Chauhan , 2014 SCC
OnLine Del 1238, wherein the Court was dealing with a case of a fake cover
note and the Court noted the following:
“ 12. On the other hand, learned Amicus Curiae for
Respondents 5 to 7 submitted that though the complaint
dated 29-7-2011 was addressed to the SHO, P.S. Green
Park, New Delhi, but there is no proof that the said
complaint was given/made to the said Police Station.
The said complaint was received in the office of Deputy
Commissioner of Police(South East), which proved that
a formal attempt was made but the complainant was not
serious. Thus, the learned Tribunal has recorded in its
impugned order that in respect of the insurance cover
note, simply one letter was written to SHO, which was
not pursued thereafter and no proceedings or enquiry
shown to have been initiated. Thus, FIR was not
registered pursuant to the complaint noted above. It
only bears the stamp of the Office of DCP, South-East,
without certifying as to which official had received the
complaint. Hence, the factum of lodging the complaint
with the police was not proved as no witness has been
summoned by the appellant company to prove this fact.
13. I have heard the learned counsels for the parties and
have perused the record.
14. On perusal of the material placed on record, it is
revealed that the appellant/Insurance Company raised
the defence before the learned Tribunal that the
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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offending vehicle was being plied without the driving
licence, permit and fitness and the insurance cover note
was forged.
15. It is also revealed from the records that the appellant
had not served Respondents 5 and 6 i.e. driver and
owner of the offending vehicle with any notice under
Order XXII Rule 8 CPC calling upon them to furnish the
driving licence, permit and fitness certificate of the
offending vehicle. Thus, the defence raised by the
appellant does not establish .”
(emphasis added)
17. He further relies upon the judgment of Patna High Court in New India
Assurance Company Ltd. v. Md. Khalil Nai , 2012 SCC OnLine Pat 254,
where the Court was dealing with the issue whether the Insurance Company
could avoid liability for the compensation on the ground that the insurance
cover note relied upon by the claimants was forged, fabricated or contained
overwriting. The Tribunal noted that the question whether the cover note was
issued or not, or the same was forged, fabricated and fake, is between the
Insurance Company and the owner/driver, and that the Insurance Company
could take appropriate legal action against them. The High Court noted that,
in a summary proceeding, the Tribunal could not have conclusively
adjudicated upon the Insurance Company’s plea that the cover note was
forged, fabricated or fake. It therefore rightly observed that the Insurance
Company was at liberty to take appropriate legal action, if any, against the
owner and driver of the vehicle.
18. He further drew the attention of the Court to the signature appearing
on the alleged cover note, contending that the same was that of the agent of
the Insurance Company. He referred to the Stock Register, exhibited as Ex.
R3W2/4 (Colly) to contend that the cover note bore the signature of the
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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Insurance Company’s agent and, therefore, had in fact been issued by the
Insurance Company. For ease of reference the signature on the alleged cover
note and the Stock Register are extracted as under:
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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Submissions of behalf of Insurance Company
19. Mr. Pradeep Gaur , counsel for the Insurance Company, contended that
Tribunal rightly considered that the Cover Note No.465971 , copy of which
had been supplied by the Insurance Company along with the petition, was
forged and fabricated and was neither issued to the offending vehicle nor
signed by the official of the Insurance Company whose stamp had been
affixed at the bottom of the cover note. The Insurance Company’s written
statement it is stated that the alleged vehicle was not insured. He relied on
Ex. R3W3/3 , pointing out that the said the cover note was actually issued in
respect of another vehicle being DL -8CH-2457 and in fact that cover note
was also cancelled due to dishonour of cheque. He further contended that as
per the statement of R3W1 ( IO of the case, who prepared the charge sheet ),
there was no seizure memo of the insurance policy. The only thing which
was produced was a photocopy of the insurance policy by the claimant, and
the owner did not produce the original insurance policy.
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
16:11:52
20. Insurance Company had issued a notice to the owner of the offending
vehicle. Notice had been issued under Order XII Rule 8 of CPC, but the
owner failed to prove any cover note. The Insurance Company had,
therefore, discharged the onus and onus was shifted on the driver to recover
the same. He contended that the Tribunal had rightly exonerated the
Insurance Company and the liability had been rightly fixed on the owner of
the vehicle. In the superdari proceedings, it was also recorded that no cover
note was produced. It was also contended that the Insurance Company’s
testimony through R3W2 was not effectively rebutted in any manner.
Analysis
21. To effectively assess the appellants’ contention that the Insurance
Company ought not to have been exonerated and that the liability fastened
upon the driver and owner should instead be borne by the Insurance
Company, it would be useful to first examine the sequence of events.
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22. The accident took place on 24 December 2007. Right to file written
statement was not availed by the driver and owner, and the right was closed
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on 11 May 2009. As far as the Insurance Company was concerned, they
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were permitted to file a written statement by order dated 15 September
2009.
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23. The FIR was registered on 24 December 2007 on the complaint of
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Balvan , son of Ramkishan . The charge sheet was filed on 29 January 2008.
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The DAR was filed on 16 January 2010. Testimony on behalf of Insurance
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Company was recorded on 25 October 2013.
24. Complaint against the fake note was filed by the Insurance Company
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with SHO P.S. Nangloi, Delhi on 15 March 2012, exhibited as Ex.R3W3/Z .
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
16:11:52
25. One of the major pleas by Mr. Manish Maini , counsel for the appellant
is that the Insurance Company delayed filing a complaint after the alleged
fake cover note had been brought to its attention, despite having raised this
issue in its written statement. It was contended that such delay indicated the
complicity of the Insurance Company, or its officials, in trying to conceal the
fact that the insurance policy had in fact been issued and was in favour of the
owner.
26. While this may amount to an omission on the part of the Insurance
Company, it does not, by itself, constitute proof of the existence of a
legitimate and valid insurance cover in respect of the vehicle.
27. In this regard, it is instructive to consider that there are certain
decisions of various courts which relate to the issue of fake cover notes or
the inability of the claimant to prove the insurance cover notes, which are
referred as under:
27.1. National Insurance Company Ltd. v. Poonam Rana & Ors.
2017:DHC:7357 In that case, the appeal was pressed by the insurer seeking
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recovery rights on the ground that it bore no liability, as the insurance
contract purportedly based on the cover note had been improperly issued in
respect of another vehicle. A Coordinate Bench of this Court observed that
the owner had failed to adduce any evidence to establish payment of the
insurance premium. It was held that a mere denial of the Insurance
Company's evidence could not suffice. The Court observed that “ since they
were to take the benefit of the insurance policy, it was their prime burden to
prove, by some clear evidence, the payment of premium to the Insurance
Company ”.
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
16:11:52
27.2. Reliance General Insurance Co. Ltd. v. Virendra Patel
2024:CGHC:23262: The Chhattisgarh high Court, dealing with an issue of
an alleged fake insurance cover note, stated that the burden of proving that it
was fake lies on the Insurance Company since the driver and owner had
remained ex parte . Upon considering the evidence, the Court observed that,
in order to establish that the cover note was fake, the Insurance Company
could have issued a notice to the registered owner, which had not been done.
It was also noted that the Insurance Company had not lodged any complaint
alleging that the cover note was forged. On that basis, the Court found that
the Insurance Company had admitted that the cover note had been issued
upon receipt of the premium in respect of the offending vehicle. Accordingly,
it was held that the Insurance Company had failed to discharge its burden of
proving that the cover note was fake.
27.3. Naveen Kumar Gupta & Ors. v. Bhupender Singh & Ors .
2016:DHC:1868: A Coordinate Bench of this Court noted that the insured
had not appeared to contest the plea that the cover note had been amended
unilaterally and without his consent. The evidence led by the Insurance
Company demonstrated that due intimation had been given to the insured
prior to such amendment. The evidence further showed that the premium had
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been paid by cheque only on 24 September 1999, making it apparent that
the insurance document relied upon was fabricated. The Court held that the
insurance policy, insofar as third-party rights were concerned, could not have
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come into effect prior to 24 September 1999, whereas the accident had
occurred on 23rd September 1999.
27.4. Shriram General Insurance Co. Ltd. v. Kamlesh Jha & Ors.
2023:DHC:346: A Coordinate Bench of this Court noted that the driver and
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
16:11:52
owner of the offending vehicle had not appeared before the Tribunal to prove
the veracity of the cover note in question. The specific defence raised by the
Insurance Company that the cover note was fake was unchallenged.
Therefore, the Insurance Company could not be directed to pay the
compensation amount.
28. In the present case as well, the driver and the owner did not appear
before the MACT, nor did they file any response. There is, therefore, no
material available to establish that the offending vehicle was, in fact, insured
with the Insurance Company. Such fact could only have been established
through evidence of payment of premium and/or production of the original
cover note/policy document. A mere photocopy of a cover note, particularly
when the Insurance Company has led evidence demonstrating that it was not
issued in respect of the offending vehicle, cannot, by itself, fasten liability
upon the Insurance Company.
29. Moreover, the principle of preponderance of probabilities, as
applicable in motor accident claim proceedings, does not dispense with the
requirement of establishing the basic facts necessary to fasten liability upon
the insurer. The said principle is primarily relevant to the determination of
issues such as the involvement of the offending vehicle and the negligence
of its driver. In this regard, it would be relevant to examine the observations
of the Supreme Court concerning the standard of proof applicable in motor
accident claim proceedings.
30. In Meera Bai v. ICICI Lombard General Insurance Company Ltd.
& Anr. 2025:INSC:600, the Supreme Court has observed that in cases where
the eyewitness was not examined, reliance on FIR and charge-sheet was
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KUMAR CHOUDHARY
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enough for the finding of negligence to be established. In this regard, the
relevant paragraphs are as under:
“ 2. The claimants before the Tribunal have filed an
appeal from the order of the High Court which allowed
the appeal of the insurance company and dismissed the
claim petition for reason of no eyewitness having been
examined to prove the rash and negligent driving.
3. On facts, it needs to be stated that the accident
occurred on 29.01.2015 when the deceased was
travelling pillion in a motorbike driven and owned by
the second respondent. The FIR was lodged against the
owner driver of the vehicle for the offence of rash and
negligent driving. A charge sheet was filed against the
owner driver. The owner driver filed a written statement
before the Tribunal denying the rash and negligent
driving on his part, however he did not mount the box to
depose that it was not due to his fault that the accident
occurred.
4. As far as examining the eyewitness, such a witness
will not be available in all cases. The FIR having been
lodged and the charge sheet filed against the owner
driver of the offending vehicle, we are of the opinion that
there could be no finding that negligence was not
established .”
(emphasis added)
31. In Srikrishna Kanta Singh v. Oriental Insurance Co. Ltd . 2025 SCC
OnLine SC 636, the Supreme Court observed as under:
“ 11.In a motor accident claim, there is no adversarial
litigation and it is the preponderance of probabilities
which reign supreme in adjudication of the tortious
liability flowing from it, as has been held in Sunita v.
Rajasthan State Road Transport Corporation. Dulcina
Fernandes v. Joaquim Xavier Cruz is a case in which
the rider, who also carried a pillion, died in an accident
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KUMAR CHOUDHARY
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involving a pick-up van. There was a contention taken
that the claimants who were the legal heirs of the
deceased had not cared to examine the pillion rider and
hence the version of the respondent in the written
statement that the moving scooter had hit the parked
pick-up van, was to be accepted. It was found, as in the
present case, that the Police had charge-sheeted the
driver of the pickup van which prima facie showed
negligence of the charge-sheeted accused. Similarly in
the present case also, the Police after investigation,
charge-sheeted the driver of the trailer finding clear
negligence on him, which led to the accident. This has
not been controverted by the respondents before the
Tribunal by any valid evidence nor even a pleading. In
fact, the Tribunal, on a mere imaginative surmise, found
that since the scooter collided with the tail-end of the
trailer, it can be presumed that the driver of the scooter
was not cautious, which in any event is not a finding of
negligence.
12.Finding that the driver was not cautious is one thing
and finding negligence is quite another thing. Prima
facie, we are satisfied that the negligence was on the
trailer driver as discernible from the evidence recorded
before the Tribunal; standard of proof required being
preponderance of probability as has been reiterated in
Mangla Ram v. Oriental Insurance Company Limited ”
(emphasis added)
32. In Prabhavathi v. Bangalore Metropolitan Transport Corpn. 2025
SCC OnLine SC 455, the Supreme Court observed as under:
“ 13. It is the settled law that under the Motor Vehicle Act,
1988 it is established that in compensation cases, the strict
rules of evidence used in criminal trials do not apply.
Instead, the standard of proof is based on the
preponderance of probability. This Court
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in Sunita v. Rajasthan SRTC observed that:
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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“22. It is thus well settled that in motor accident claim
cases, once the foundational fact, namely, the actual
occurrence of the accident, has been established, then
the Tribunal's role would be to calculate the quantum
of just compensation if the accident had taken place
by reason of negligence of the driver of a motor
vehicle and, while doing so, the Tribunal would not
be strictly bound by the pleadings of the parties.
Notably, while deciding cases arising out of motor
vehicle accidents, the standard of proof to be borne
in mind must be of preponderance of probability and
not the strict standard of proof beyond all reasonable
doubt which is followed in criminal cases.”
The exposition came to be reiterated in Rajwati alias
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Rajjo v. United India Insurance Company Ltd. , wherein it
was observed that:
“20. It is well settled that Motor Vehicles Act, 1988 is
a beneficial piece of legislation and as such, while
dealing with compensation cases, once the actual
occurrence of the accident has been established, the
Tribunal's role would be to award just and fair
compensation. As held by this Court in Sunita (Supra)
and Kusum Lata (Supra), strict rules of evidence as
applicable in a criminal trial, are not applicable in
motor accident compensation cases, i.e., to say, “the
standard of proof to be borne in mind must be of
preponderance of probability and not the strict
standard of proof beyond all reasonable doubt which
is followed in criminal cases”. ”
(emphasis added)
33. The aforesaid decisions, however, have to be understood in their
proper context. The observations regarding the standard of preponderance of
probabilities concern the manner in which the accident occurred,
involvement of the offending vehicle and negligence of its driver. The said
principle cannot be invoked to dispense with the requirement to establish the
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Digitally Signed By:RAHUL
KUMAR CHOUDHARY
Signing Date:21.09.2026
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necessary facts for fastening liability upon Insurance Company. The question
whether a particular vehicle was insured with a particular insurer is a separate
issue and has to be established by appropriate evidence.
34. Therefore, the Insurance Company cannot be held liable merely by
invoking the principle of preponderance of probabilities on the basis that a
photocopy of a cover note has been produced and negligence on the part of
the offending vehicle has been established.
35. For fastening liability upon the Insurance Company under Section 166
of MV Act, the following foundational requirements must be satisfied:
i. Offending vehicle must have been insured with the Insurance
Company under a valid insurance policy covering the relevant period;
ii. Negligence of the driver of offending vehicle must be established; and
iii. There must be no legally sustainable defence available to the
Insurance Company, including a breach of the terms and conditions of
the insurance policy; and even if it is then there is a possibility of pay
and recover direction by the Tribunal.
36. In the present case, the first and foremost requirement, namely, the
existence of a valid contract of insurance, has not been established by reliable
and cogent evidence.
37. It was submitted on behalf of the appellant that the claimant was
entitled to ensure that the compensation was recovered from the Insurance
Company rather than from the driver or owner of the offending vehicle.
However, the evidence led on behalf of the Insurance Company does not
establish existence of any valid insurance policy in respect of the offending
vehicle.
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MAC.APP.1190/2014 Page 18 of 30
Digitally Signed By:RAHUL
KUMAR CHOUDHARY
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38. R3W2 , Mr. N.K. Sharma , Assistant Manager, Oriental Insurance Co.
Ltd., in his affidavit Ex. R3W2/A , deposed that Cover Note No.465971 had
been issued in the name of one S.K. Malhotra in respect of a different vehicle,
whereas Cover Note No.465931 had been issued in the name of one Vipin
Kumar Jain , again in respect of a different vehicle.
39. This evidence was further corroborated by R3W3 , Mr. Hakumat Rai ,
Deputy Manager, who deposed that Cover Note No.465971 had been issued
by the Regional Office in respect of vehicle No. DL-1LE-4815 in the name
of one Ravinder Kumar . He further stated that the said cover note was
subsequently cancelled on account of dishonour of the cheque. In respect of
Cover Note No.465931 , he stated that, as per the records of the Insurance
Company, the same had been issued in the name of Sh. Ravinder Singh Sethi
in respect of a different vehicle.
40. Conjoint reading of the testimony of R3W2 and R3W3 shows that the
cover notes relied upon by appellant were not issued in respect of the
offending vehicle. Rather, the evidence on record establishes that the said
cover note numbers pertained to different vehicles and different persons.
There is, therefore, no evidence on record to establish that either of the
aforesaid cover notes was ever issued by the Insurance Company in respect
of the offending vehicle.
41. Furthermore, the driver and owner neither appeared before the
Tribunal nor are they present before this Court to establish the authenticity
of the alleged cover note.
42. However, even if driver and owner did not appear before the Tribunal,
it was incumbent upon the appellants to take appropriate steps before the
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Tribunal for obtaining the necessary evidence to prove the authenticity and
genuineness of the alleged cover note. Appellants could have invoked the
powers conferred upon the Tribunal under Section 169 of MV Act, which
empowers the Tribunal to exercise, for the purposes of taking evidence on
oath, enforcing the attendance of witnesses, compelling the discovery and
production of documents and material objects, and for such other purposes
as may be prescribed, the same powers as are vested in a Civil Court, and to
conduct a proper inquiry into the claim.
43. However, no such steps were taken by the appellants to seek to
summon the relevant forensic or other expert evidence for examination of
the alleged cover note, nor did they seek production of the original records
from the concerned insurer or any other material which could establish that
the cover note was forged, fabricated or otherwise not genuine. Therefore,
appellants cannot now seek to rely merely upon the absence of the driver and
owner as a ground to sustain their contention regarding the genuineness of
the cover note.
44. Appellant also did not bring on record any material to rebut the
aforesaid evidence. No receipt of payment of the insurance premium in
respect of the offending vehicle has been produced. Neither has the original
cover note or policy document been placed on record.
45. Accordingly, the evidence on record, rather than establishing that the
offending vehicle was insured with the Insurance Company, establishes the
contrary. In the opinion of this Court, the Insurance Company has discharged
its burden by not only giving a written statement with details but also
providing evidence through R3W2 and R3W3 . The details of the testimony
have already been noted above.
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46. Mere production of a photocopy of a cover note cannot be treated as
sufficient proof of the existence of a valid policy of insurance, when
Insurance Company has led evidence to the contrary showing that the said
document was not issued in respect of the offending vehicle. Moreover, the
principle of preponderance of probabilities would also not come to the rescue
as the same, by itself, cannot be invoked to fasten liability upon the Insurance
Company in the absence of proof of the underlying contract of insurance.
47. The decisions relied upon by the appellants do not advance their case,
as they proceed on materially different factual circumstances.
48. In Mangla Ram ( supra ), the Supreme Court was dealing with an issue
of whether the Insurance Company can be absolved of liability where no
premium was received by the Insurance Company nor was any insurance
policy ever issued by the Insurance Company in relation to the offending
vehicle. In this regard, the Supreme Court observed as under:
“ 35 . The next question is about the liability of insurer to
pay the compensation amount. The Tribunal has absolved
the Insurance Company on the finding that no premium
was received by the Insurance Company nor was any
insurance policy ever issued by the Insurance Company in
relation to the offending vehicle. Respondents 2 and 3 had
relied on a cover note which according to Respondent 1
Insurance Company was fraudulently obtained from the
then Development Officer, who was later on sacked by
Respondent 1 Insurance Company. The possibility of
misuse of some cover notes lying with him could not be
ruled out.
36. Respondents 2 and 3 have relied on the decision of this
Court in Rula. That decision will be of no avail to
Respondents 2 & 3. In that case, the Court found that the
insurance policy was already issued after accepting the
cheque; whereas in the present case, Respondent 1
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Insurance Company has been able to show that no
payment was received by the Company towards the
insurance premium nor had any insurance policy been
issued in respect of the offending vehicle (jeep). However,
the claim of Respondents 2 & 3 to the extent that they
possessed a cover note issued by the then Development
Officer of Oriental Insurance Company (Respondent 1)
will have to be accepted coupled with the fact that there is
no positive evidence to indicate that the said cover note is
ante-dated. Pertinently, the cover note has been issued by
the then Development Officer at a point of time when he
was still working with Respondent 1 Insurance Company.
It must follow that the then Development Officer was
acting on behalf of the Insurance Company, even though
stricto sensu Respondent 1 Insurance Company may not be
liable to pay any compensation as no insurance policy has
been issued in respect of the offending vehicle, much less
a valid insurance policy. But for the cover note issued by
the Development Officer of Respondent 1 Insurance
Company at a point of time when he was still working with
Respondent 1, to do substantial justice, we may invoke the
principle of “pay and recover”, as has been enunciated by
this Court in National Insurance Co. Ltd. v. Swaran Singh ”
(emphasis added)
49. In this case, although the insurer had established that no premium had
been received and no policy had been issued, the claimants were admittedly
in possession of a cover note issued by the concerned Development Officer,
and there was no evidence to the contrary to establish that the cover note was
ante-dated. Therefore, the Supreme Court relied upon the judgment in
National Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297, and
awarded recovery rights .
50. Similarly, in Sundar @ Sunderi Devi ( supra ), the owner himself
asserted that the vehicle was insured and produced the cover note, while the
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insurer had not produced the relevant cover-note register and had failed to
establish the circumstances in which the cover note was allegedly lost or
forged.
51. In the decision of S. Latha ( supra ), the Supreme Court was dealing
with an issue of whether the High Court was justified in fastening the entire
liability to pay the compensation upon the owner of the vehicle, and
absolving Insurance Company from liability or should Insurance Company
have been directed to pay the compensation to the claimants with recovery
rights. While dealing with this issue the Supreme Court held as under:
“ 6. It is submitted before us that the owner of the vehicle is
financially incapable of paying the compensation. The
High Court did not consider that shifting the liability to
pay onto the owner of the vehicle, who does not possess the
financial resources to be able to do so, only results in the
claimants suffering. In cases of motor accident claims, the
rights of the claimants must be considered. If
compensation has been granted, it must be ensured that the
rightful compensation reaches the claimants as soon as
possible. We find it to be highly unfair to make the
claimants suffer in trying to recover the due compensation.
Therefore, to protect the interests of the claimants and
considering the principles of justice and fairness, the
Insurance Company must pay the compensation with the
right to recover it later from the owner of the vehicle.
7. The doctrine of “pay and recover” was examined
in Shamanna & Others vs. the Divisional Manager, The
Oriental Insurance Co. Ltd. & Ors (2018) 9 SCC 650,
wherein this Court directed the Insurance Company to pay
the compensation and thereafter recover the same from the
owner of the vehicle. They held this to be in accordance
with the judgements passed by this Court in National
Insurance Co. Ltd. v. Swaran Singh (2004) 3 SCC 297
and National Insurance Co. Ltd. v. Laxmi Narain
Dhut (2007) 3 SCC 700. This Court noted that:
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“5. In the case of third-party risks, as per the
decision in National Insurance Co. Ltd. v. Swaran
Singh (supra), the insurer had to indemnify the
compensation amount payable to the third-party
and the insurance company may recover the same
from the insured. Doctrine of “pay and recover”
was considered by the Supreme Court in Swaran
Singh (supra) case wherein the Supreme Court
examined the liability of the insurance company in
cases of breach of policy condition due to
disqualifications of the driver or invalid driving
licence of the driver and held that in case of third-
party risks, the insurer has to indemnify the
compensation amount to the third-party and the
insurance company may recover the same from the
insured.”
8. In light of the above discussion, this appeal is allowed
and the impugned judgement of the High Court directing
the owner of the vehicle to pay the entire compensation is
set aside. The amount awarded by the Tribunal shall be
paid by the Insurance Company to the claimants-
appellants within two months from today and will
thereafter have a right to recover it from the owner of the
vehicle. ”
(emphasis added)
52. This case would also not come to the help of the appellant. The
direction to ‘ pay and recover’ necessarily requires a pre-existing contractual
relationship for fastening liability upon the insurer in the first instance. The
same cannot be awarded where the very existence of a valid policy covering
the offending vehicle has not been established.
53. Therefore, all the judgments relied upon by appellants are
distinguishable from the facts of the present case. Herein, the alleged cover
note is only a photocopy; neither the driver nor the owner has appeared to
affirm its issuance or genuineness; no evidence of payment of premium in
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respect of the offending vehicle has been produced; and, significantly, the
Insurance Company has led evidence in its support showing that the cover
note number relied upon by the appellants pertained to different vehicles.
54. Elaborating on this, it is admitted that the cover note, which was part
of the proceedings before the MACT, is only a photocopy which was filed
along with the criminal documents. R3W1 , Sh. Daya Chand, Retd. ASI, Rio
Village & PO Jasaur Kheri, Oistt. Jhajhar, Haryana , in his examination has
stated that the cover note was not part of the seizure by the Investigating
Officer and no original note ever came into play. He further stated that, as
per records, there is no seizure memo of the insurance policy and only
photocopy of the insurance policy has been filed along with the criminal
documents. Even when the owner applied for superdari of the vehicle, he did
not produce the original documents of the vehicle, and the vehicle could not
be released on superdari .
55. The claimants attempted to shift the burden onto the Insurance
Company by contending that its failure to take steps pursuant to the
complaint should operate against it. However, the omission of the Insurance
Company to pursue its complaint cannot reverse the entire situation and
result in the insurance policy being treated as genuine. No doubt, the
Insurance Company did not take steps to pursue its complaint in an
expeditious or even diligent manner. Such omission on the part of the
Insurance Company was viewed adversely by the Coordinate Bench of this
Court in Kishan Singh Chauhan ( supra ).
56. In that case as well, the Insurance Company had taken the plea that the
cover note was forged and, therefore, they had to be exonerated. The Court
noted that the complaint made to the SHO, P.S. Green Park was merely a
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formal complaint, never pursued and no proceedings were initiated and it did
not even result in an FIR. However, the Court further noted that the factum
of lodging the complaint with the police was itself not proved, as no witness
had been summoned by the Insurance Company for that purpose. There is
nothing further which the Court states in this regard, and importantly, does
not enunciate a principle of law that lack of pursuit of criminal proceedings
in respect of fake cover note would result in the insurance cover being
considered as genuine. In Kishan Singh Chauhan ( supra ), the Court, on the
facts of that case, also noted that recovery rights had already been granted to
the Insurance Company.
57. In Md. Khalil Nai ( supra ), the Tribunal, while awarding
compensation, had observed that the Insurance Company may take legal
action against the owner and driver of the vehicle. The High Court held that
the Tribunal, in a summary proceeding, could not adjudicate upon the plea
raised by the Insurance Company that the insurance cover was forged,
fabricated, and fake. It therefore rightly observed that the Insurance
Company may take such legal action as may be available to it against the
owner and driver of the vehicle. In any event, on the facts of that case, the
Tribunal found that the vehicle was insured with the Insurance Company at
the time of the accident and accordingly held the Insurance Company liable
to satisfy the award.
58. Moreover, though not argued, Section 64 VB of the Insurance Act,
1938, the Insurance Company is not liable to cover any risk unless premium
for the same has been received in advance, i.e. before the date of accident in
the present case.
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59. For ease of reference, Section 64 VB of the Insurance Act, 1938 is
extracted as under
“ 64VB. No risk to be assumed unless premium is received
in advance.—(1) No insurer shall assume any risk in India
in respect of any insurance business on which premium is
not ordinarily payable outside India unless and until the
premium payable is received by [it] or is guaranteed to be
paid by such person in such manner and within such time
as may be prescribed or unless and until deposit of such
amount as may be prescribed, is made in advance in the
prescribed manner.
(2) For the purposes of this section, in the case of risks for
which premium can be ascertained in advance, the risk
may be assumed not earlier than the date on which the
premium has been paid in cash or by cheque to the insurer.
Explanation.—Where the premium is tendered by postal
money order or cheque sent by post [or by any online
mode], the risk may be assumed on the date on which the
money order is booked or the cheque is posted [or the
money is received in insurer’s bank account], as the case
may be.
(3) Any refund of premium which may become due to an
insured on account of the cancellation of a policy or
alteration in its terms and conditions or otherwise shall be
paid by the insurer directly to the insured by a crossed or
order cheque or by postal money order and a proper
receipt shall be obtained by the insurer from the insured,
and such refund shall in no case be credited to the account
of the agent.
(4) Where an insurance agent collects a premium on a
policy of insurance on behalf of an insurer, he shall deposit
with, or dispatch by post to, the insurer, the premium so
collected in full without deduction of his commission
within twenty-four hours of the collection excluding bank
and postal holidays.
(5) The Central Government may, by rules, relax the
requirements of sub-section (1) in respect of particular
categories in insurance policies.
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[(6) The Authority may, from time to time, specify, by the
regulations made by it, the manner of receipt of premium
by the insurer.] ”
(emphasis added)
60. Recently, the Supreme Court in the New India Assurance Company
Ltd. & Ors. v. M/s Louis Dreyfus Commodities India Pvt. Ltd . 2026 INSC
876, while dealing with the Insurance Company’s liability to indemnify the
insured for a fire loss, held that Section 64VB of the Insurance Act, 1938
imposes a mandatory statutory embargo on an insurer to compensate the
insured unless the premium is received in advance or its payment is validly
guaranteed in the prescribed manner and within the prescribed time.
61. In the present case, as noted above, neither the driver nor the owner
appeared before the MACT or this Court. The claimants were also unable to
produce any evidence showing payment of the premium. Therefore, even
otherwise, having regard to Section 64 VB of the Insurance Act, 1938 and
the judgment of the Supreme Court, and in the absence of proof of payment
of the premium, the Insurance Company cannot be held liable to satisfy the
claim of the claimants.
62. Mr. Maini had further raised the issue that the signature on the cover
note which was produced was matching that found on the register of the
cover notes of the same official. However, this in itself cannot persuade the
Tribunal or the Court to consider the cover note as being properly issued after
receipt of premium and proper contract precipitating. Relying on such oral
assertion, without any evidence, either forensic or otherwise, would run the
danger of accepting fake cover notes as genuine merely on such assertions.
The claimant never took any steps to take a plea before the MACT to
requisition any forensic analysis on the cover note, as it could have done
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under Section 169 of the MV Act, since the Tribunal has all the powers of
the Civil Court in this regard.
63. Even though the counsel for claimant stated that the officials of the
Insurance Company were responsible for issuing multiple insurance cover
notes bearing nos. 465971 and 465931 , that circumstance, by itself, cannot
lead the Court to conclude that there was any duplicitous or unlawful conduct
on the part of unidentified officials of the Insurance Company. Such officials
would, in any event, have to be specifically identified and held accountable
for their actions. Moreover, even if such a conclusion were to be
independently arrived at on the basis of other material, it would not
automatically establish that the cover note produced in the present case was
genuine or authentic.
64. No doubt, there is a duty cast upon the Insurance Company to take
appropriate action upon discovering a false or fake cover note by lodging a
complaint and pursuing the matter in accordance with law. Needless to state,
the issuance of fake cover notes is a serious issue, as it affects not only
compensation proceedings but also the assessment and assumption of risk by
the Insurance Company. If vehicle owners choose to procure fake cover
notes, or fail to ensure that insurance has been obtained through the proper
process of payment of premium and issuance of a valid policy by the
Insurance Company, albeit through an agent, they are either negligent or have
themselves been deceived. In either eventuality, the contract of insurance
may never have come into existence, and the Insurance Company may not
be held liable. No doubt, facts of each case would be different, and if found
that the owner has legitimately paid premium and risk has been assumed
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through a cover note or some communication, the Insurance Company may
be held liable to pay.
65. Once a fake cover note is brought to the notice of the Insurance
Company, steps must be taken of sanitizing process, as also in public interest,
to get to the bottom of why the fake cover note exists in the first place and
who was responsible for it. This would help reduce the occurrence and
recurrence of such situations. It would also be incumbent upon insurance
companies to initiate internal inquiries to investigate why such a cover note
has been issued without due process, or procured, and take disciplinary or
penal action against errant officers.
66. Accordingly, in view of the above findings, the appeal is dismissed.
67. Pending applications, if any, are rendered infructuous.
68. Copy of this judgment be sent to the concerned MACT/bank for
information and compliance.
69. Judgment be uploaded on the website of this Court.
(ANISH DAYAL)
JUDGE
SEPTEMBER 18, 2026/ ak/bp
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KUMAR CHOUDHARY
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