The Gauhati High Court has set aside an Award granted by the Motor Accident Claims Tribunal to a Ford Eco Sport owner after discovering that the claimant had withheld information regarding compensation received from their own insurer for vehicle damage. The claim was solely for vehicle damage and did not involve any personal injury.

The Single-Judge Bench of Justice Sanjay Kumar Medhi emphasized the principle of utmost good faith in insurance claims, stating, "A claim for insurance is a claim out of utmost good faith."

The Court highlighted that the claimant had received compensation from TATA AIG, their own insurer, which was not disclosed during the proceedings against the insurer of the alleged offending vehicle.

"A claim for insurance is a claim out of utmost good faith. There is a legal obligation on the part of a claimant making a claim qua a contract of insurance to disclose all the relevant facts and not to suppress any material facts. A contract of insurance is a contract to indemnify an insured by the insurer with regard to any claim made during the validity of such policy. Any claim arising out of such contract mandatorily requires that such claim is made bona fide and with utmost good faith," it said.

The Court noted that TATA AIG was not made a party to the proceedings, and crucial details about the prior compensation were omitted from both the claim petition and the chief examination. "In the instant case, the claim was admittedly made for damage of the vehicle and not for any injuries sustained by any person. The estimate was given for repair of the vehicle (Ford Eco Sport) in question, which was taken into consideration by the learned Motor Accident Claims Tribunal. It has, however, emerged from the records of the proceeding that the vehicle (Ford Eco Sport) was purchased back by the Insurance Company, namely, TATA AIG as scrap by paying a price. It was not disclosed either in the claim petition or the chief examination that the claimant had already successfully made a claim from his insurance company-TATA AIG and yet had made the present claim against the Insurance Company of the other vehicle," it noted.

The Counsel representing the insurer of the alleged offending vehicle argued that pursuing a claim after already receiving compensation from the claimant's insurer constituted an attempt to gain double benefits, which contradicts the fundamental principles of insurance law. On the contrary, the Claimant's Counsel argued that the claim before the Tribunal pertained to tort, while the compensation from TATA AIG was derived from a contractual claim.

The Court opined, "The learned Motor Accident Claims Tribunal fell into grave error in entertaining the claim itself and subsequently granting the Award. Accordingly, the impugned Award dated 11.06.2018 passed by the MACT No. 1, Kamrup in MAC Case No. 524/2016 is set aside."

"The MAC Appeal No. 856/2018 accordingly stands allowed and MAC Appeal No. 860/2018 is dismissed," it added.

Furthermore, the Court stated that the Tribunal erred in allowing the claim to proceed, emphasizing that claims arising from insurance contracts must be made in good faith. The Court termed the claimant's attempt to enhance the Award as "audacious" and cautioned against frivolous litigation.

Consequently, the Court dismissed the claimant's appeal for award enhancement and imposed a penalty of Rs. 5,000/-.

"...this Court views the claimant's attempt to seek an enhancement of the Award as audacious. A Motor Accident Claims Tribunal should not be approached for a windfall or undue gain. Frivolous litigations, apart from being a gross misuse of the process of the Court, is also adding to the pendency. This menace must be nipped in the bud to ensure that precious judicial time is preserved and utilized for the effective dispensation of justice. Consequently, while dismissing the claimant's appeal (MAC Appeal 860/2018), this Court imposes a token cost of Rs. 5,000/- (Rupees Five Thousand) only upon the claimant/appellant to be paid to the Gauhati High Court Bar Association Welfare Fund. The statutory deposit of Rs. 25,000/- in connection with MAC Appeal 856/2018 is to be refunded to the Insurance Company (Oriental Insurance Company Limited)," the Court ordered.

Cause Title: Oriental Insurance Company Ltd. v. Shri Amal Borah and 2 Others

Click here to read/download the Judgment


Justice Sanjay Kumar MedhiGauhati High Court

Sukriti Mishra