Fake insurance claim racket: Madras High Court orders FIRs in 467 complaints, SIT to handle probe

The Madras High Court recently ordered the registration of first information reports (FIRs) in 467 complaints involving allegations of fake insurance claims worth over ₹105 crores [Cholamandalam Ms General Insurance Company v. Director General Of Police and ors and connected matter].

Justice N Anand Venkatesh added that these complaints will be investigated by a Special Investigation Team (SIT) that was set up in 2021 following the Court's orders to probe such cases.

"The respondents shall ensure that the 467 complaints which have been given in the respective Police Stations ... shall be taken on file and FIRs shall be registered and all the FIRs shall be transferred to the SIT. This process shall be completed within a period of four weeks from the date of receipt of copy of the order," the September 12 order said.

In 2021, the Court had ordered the formation of an SIT to handle a probe into 120 such cases allegedly involving claims worth ₹15.63 crores, identified by an insurance company named Cholamandalam General Insurance.

Over the years, more such bogus claims were flagged before the Court. In April 2022, the Court was informed that seven other insurance companies had identified various such cases that had been filed across Tamil Nadu.

The Court proceeded to transfer all such cases to the SIT. These cases involved allegations that fake or inflated medical bills were used to make fraudulent insurance claims in accident cases.

Notably, related issues were also tackled by another single judge, Justice PN Prakash (now retired) in 2018 as well, on an earlier plea by the Cholamandalam insurance company,

Justice Prakash, in particular, had taken exception to "turf wars" among advocates when it came to motor accident cases. Justice Prakash had also ordered the constitution of an expert committee headed by Justice (retired) K Chandru to suggest measures for reforming the field of motor accident claims.

This 2018 case was eventually closed after the Court accepted the report submitted by the expert committee, while directing the State to take follow-up action. The committee's report reportedly flagged around 280 suspected fake motor insurance cases.

However, Cholamandalam again moved the High Court in 2021, flagging concerns about fake and tampered insurance claims, particularly through online mode.

In response, Justice Anand Venkatesh passed an order in February 2021 ordering the formation of an SIT headed by an officer not below the rank of Additional Director General of Police to exclusively deal with the investigation into false claims in motor accident cases across Tamil Nadu.

During subsequent hearings in the matter, the Court also flagged suspicion over the withdrawal of over 82 motor accident cases from motor accident claims tribunals in 2019, after complaints were filed alleging that there was some form of fraud at play.

"This is not merely coincidental and it is more a knee-jerk reaction after complaints were made," the Court opined in a January 24, 2022 order.

The Court, therefore, issued directions for the examination of claimants in these cases to verify whether the claimants were aware that their claims were withdrawn.

In April that year, the Court was told that in 39 cases, the claimants were not even aware that their insurance claims had been closed as "not pressed."

The Court proceeded to order the State Bar Council to initiate an inquiry against four lawyers who were alleged to have been the "brain behind these fake claims." However, the Supreme Court stayed this directive in May 2022.

Meanwhile, the High Court took note of allegations that documents connected with these 82 cases had gone missing and could not be traced.

In an April 18, 2022, order, Justice Venkatesh said,

"In all cases where documents are missing, the concerned Court shall immediately start an enquiry and ensure that the documents that were filed along with the MCOP is kept intact."

In the latest order of September 12, the High Court noted that reports received from the trial courts have not addressed this aspect. Justice Venkatesh, therefore, ordered the Principal Sub Judge at Hosur and the Additional District Judge at Hosur to report on the same.

If the files cannot be traced, a criminal complaint must be lodged, the High Court added.

"If ultimately, the documents are not able to be traced, a criminal complaint has to be lodged since the case property belonging to the Court has gone missing and it has to be enquired and it has to be taken to its logical end. The steps taken/to be taken in this regard shall be informed to this Court," the order said.

The matter will be heard next on October 17.

Advocates N Vjayaraghavan and NP Vijay Kumar appeared for the petitioners.

Additional Public Prosecutor E Rajthilak appeared for the State.

Advocate CK Chandrasekaran appeared for the Tamil Nadu State Legal Services Authority.

[Read Order]