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.