A Bench of Justices Ahsanuddin Amanullah and R. Mahadevan has set aside a consumer commission award in favour of an insured that had claimed Rs. 28.2 crore for a 2011 godown fire, holding on forensic findings that the fire was the result of deliberate arson rather than an accidental short circuit, and that the claim coincided suspiciously with a recent enhancement of insurance coverage.
The Court held that once fraud in an insurance claim is established, no relief, even partial relief calibrated to some 'genuine' portion of the loss, can be granted to the claimant, and directed constitution of a Special Investigation Team to probe the fraudulent claim further, elevating what began as a civil consumer dispute into active criminal investigation territory.
The ruling confirms that Indian courts will not apportion a 'partial genuine loss' relief once fraud is established in an insurance claim, and signals that egregious fraudulent claims can trigger criminal investigation via a court-ordered SIT even though the underlying dispute originated as a civil consumer complaint.