Supreme Court of India
M/S NEWS INDIA ASSURANCE CO. LTD.versusM/S LUXRA ENTERPRISES PVT. LTD. & ANR.
- Citation
- 2019 INSC 607
- Decided
- 1 May 2019
- Disposal
- Disposed off
- Bench
- D Y CHANDRACHUD
Holding
An insurer may not appoint successive surveyors without valid, cogent reasons; the first surveyor’s report stands and the claimant is entitled to the awarded compensation with interest.
Summary
Luxra Enterprises (the complainant) insured its garment factory against fire for Rs 85 lakh. After a fire on 12‑07‑2000 it claimed the loss. The insurer’s head office appointed a first surveyor who accepted a loss of Rs 54,93,865. The insurer later appointed a second surveyor who reduced the loss to Rs 24,76,585 and subsequently a third surveyor who repudiated the claim altogether, relying on a newspaper report of a criminal case unrelated to the complainant. The complainant challenged the insurer’s right to keep appointing new surveyors until a favourable report was obtained. The Supreme Court held that the insurer could not replace the first surveyor without cogent reasons; the first surveyor’s report was not arbitrary or excessive, and there was no valid basis to reject it. Consequently, the insurer’s appeal was dismissed and the compensation of Rs 54,93,865 awarded by the Consumer Disputes Redressal Commission was upheld, with interest of 6% per annum from the filing of the petition.
Issues considered
- The insurer’s authority under the Insurance Act, 1948 to appoint multiple surveyors for the same claim.
- Whether the insurer provided cogent reasons for rejecting the first surveyor’s report.
- Whether the appointment of successive surveyors violated the provisions of Section 64UM of the Insurance Act.
- Whether the compensation awarded by the Consumer Disputes Redressal Commission should be upheld with interest.
Legislation cited
Subjects
insurance claimsurveyor appointmentfire lossConsumer Protection ActInsurance Act 1948Section 64UMcompensationinterestrepudiation of claim
Judgment
1172 [2019]REPORTS
SUPREME COURT 6 S.C.R. 1172 [2019] 6 S.C.R.
A M/S NEW INDIA ASSURANCE CO. LTD.
v.
M/S LUXRA ENTERPRISES PVT. LTD. & ANR.
(Civil Appeal No. 9668 of 2014)
B MAY 01, 2019
[DR. DHANANJAYA Y. CHANDRACHUD AND
HEMANT GUPTA, JJ.]
Consumer Protection Act, 1986: Compensation for loss
suffered on account of damage by fire – Right of insurance company
C
to appoint surveyor – The complainant obtained a policy of
insurance for the risk of fire with the assured sum of Rs.85 lacs –
The factory of complainant was engulfed in fire and he filed claim
for loss – Insurance company appointed a surveyor who accepted
the damage to the tune of Rs.54 lacs – Insurance company appointed
D second surveyor who reduced the amount to Rs.24 lacs – However,
the insurance company appointed third surveyor on the basis of
report published in newspaper that the police had arrested three
persons for duping exporters – Third surveyor repudiated the claim
– Grievance of the complainant was that the insurance company
appointed one surveyor after another till such time it was successful
E
in getting a report of total repudiation of the claim of complainant
– Held: It is not open for insurance company to appoint another
Surveyor till such time, it gets a report in its favour – The first
surveyor was appointed by Head Office of the Insurance Company
– The communication was addressed by the Head Office to the
F Regional Office referring to the fact that as a surveyor was
appointed by it, there was no reason for Regional Office to appoint
another surveyor – In view of said fact, the appointment of another
surveyor could not be justified when a conscious decision was
communicated by the Head Office of not approving the appointment
of second surveyor – Still further, the reasoning given by the local
G
office was that the first surveyor did not clarify certain points when
clarification was sought for – The second surveyor had considered
the report of the Canara Bank in respect of stocks statement – Such
stocks statement was brushed aside for the reason that if said stocks
H
1172
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1173
ENTERPRISES PVT. LTD. & ANR.
statement was correct then there was no reason to show as to why A
letter of credit could not be materialised – The verification of the
stocks by the Canara Bank which had primary charge on the stocks
could not be doubted in the manner, the second surveyor has
reported – Insurance company relied upon a newspaper report in
which three persons were arrested for duping exporters – However,
B
there was no such or similar allegation against the complainant –
Thus, there was no valid reason for the Insurance Company for not
accepting the report of the first surveyor nor there was any proof
that such report was arbitrary and excessive – There were no cogent
reasons to appoint surveyors time and again till such time one
Surveyor gives a report which could satisfy the interest of the C
Insurance Company – Insurance Act, 1948 – s.64UM.
Disposing of the appeals, the Court
HELD: 1.1 The first surveyor was appointed by Head Office
of the Insurance Company. The Head Office of the Insurance
Company has communicated to the Regional/ Branch Office as D
to why another Surveyor has been appointed. In view of said fact,
the appointment of another surveyor could not be justified when
a conscious decision has been communicated by the Head Office
of not approving the appointment of second surveyor. Still further,
the reasoning given by the local office was that the first surveyor E
did not clarify certain points when clarification was sought for.
The said reason stood answered even in the report of second
surveyor. Such surveyor had considered the report of the Canara
Bank in respect of stocks statement. Such stocks statement was
brushed aside for the reason that if said stocks statement was
correct then as to why letter of credit could not be materialised. F
The Complainant had explained that it was on 15.06.2000, it has
been communicated to the consignee to have inspection of the
stocks before exporting the consignment. The consignee did not
inspect the stocks which led to the extension of letter of credit
up to 08.08.2000. The verification of the stocks by the Canara G
Bank which had primary charge on the stocks could not be
doubted in the manner, the second surveyor has reported.
[Paras 20, 21][1185-A-E]
H
1174 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 1.2 The letter of credit was a valid document which could
not be said not to be genuine only on the basis of reason that
such letter of credit was not in favour of the Complainant when
the order was placed on the Complainant by a Singapore based
firm. [Para 22][1185-F-G]
B 1.3 In the FIR lodged on 6.4.2002, there was no allegation
in respect of export by the Complainant. The allegation against
accused was of duping the exporters whereas, there was no such
or similar allegation against the Complainant. Thus, there was
no valid reason for the Insurance Company not to accept the
C report of the first surveyor nor there was any proof that such
report is arbitrary and excessive. There were no cogent reasons
to appoint Surveyors time and again till such time one Surveyor
gives a report which could satisfy the interest of the Insurance
Company. [Paras 23, 24][1185-G-H; 1186-A-B]
D Sri Venkateswara Syndicate vs. Oriental Insurance
Company Limited (2009) 8 SCC 507 : [2009] 14 SCR
57 – relied on
Case Law Reference
[2009] 14 SCR 57 relied on Para 15
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9668
of 2014
From the Judgment and Order dated 01.08.2014 of the National
Consumer Disputes Redressal Commission, New Delhi in Original
F Petition No. 182 of 2002
With
Civil Appeal Nos. 4371-4372 of 2015.
G Santosh Kumar, Shekhar Kumar, Nagesh, Sushant, Shantanu
Kumar, Rohitash K. Sharma, Vishnu Mehra, Ms. Manjeet Chawla,
Ms. Sakshi Mittal, Vipin Kumar Jai, Dushyant Parashar, Vipul Jai,
Ms. Shailly Dinkar, Advs. for the appearing parties.
H
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1175
ENTERPRISES PVT. LTD. & ANR.
The Judgment of the Court was delivered by A
HEMANT GUPTA, J. 1. This order shall dispose of Civil
Appeals filed under Section 23 of the Consumer Protection Act, 19851
preferred by both the parties against an order passed by the National
Consumer Disputes Redressal Commission2 against its order dated
01.08.2014 wherein, a sum of Rs. 54,93,865/- has been awarded as B
compensation for loss suffered on account of damage by fire to the
Complainant, subject to the condition that the said amount will be paid
within 45 days by the Insurance Company otherwise it will carry interest
at the rate of 10 % per annum till its realisation.
2. For the facility of reference, the respondent in Civil Appeal
No. 9668 of 2014 will be called hereinafter as the Complainant, whereas C
the Appellant- New India Assurance Co. Ltd. will be called as Insurance
Company. Civil Appeal Nos. 4371-72 of 2015 are filed by the
Complainant.
3. The Complainant is an Industrial Unit engaged in manufacture
of garments. The Complainant obtained a policy of insurance for the D
risk of fire for the period 27.3.2000 to 26.3.2001 with the assured sum of
Rs. 85,00,000/-. It was on 12.07.2000 at about 3.45 AM, the factory of
the Complainant was engulfed in fire. It is thereafter, the Complainant
lodged a claim for loss due to fire incident in its factory.
4. M/s R.N. Sharma & Co., was appointed as an investigator to E
conduct a preliminary investigation by the Insurance Company. The
preliminary investigation report was submitted on 20.07.2000. It is
thereafter, M/s Sunil J. Vora & Associates was appointed as the Surveyor
by the Head Office of the Insurance Company on July 28, 2000. The
said Surveyor submitted detailed report and accepted the claim of the
Complainant for Rs. 54,93,865/-. Out of the said amount, Rs. 1,65,430.53 F
was the claim on account of damage to building; Rs. 3,93,779.78 was
the claim towards the damage to the machinery and Rs. 49,44,657.67
was the claim towards the damage to the stocks. The amount was
rounded off to Rs. 54,93,865/-.
5. The Insurance Company issued a communication dated G
09.04.2001 to the Complainant asking for certain information after the
said report was submitted to the Insurance Company on 12.02.2001.
The information sought is as under:-
1
1985 Act
2
Commission H
1176 SUPREME COURT REPORTS [2019] 6 S.C.R.
A “1. List of Machineries (copy of assets register)
2. Loss and profit accounts
3. Purchase details of raw materials
4. Verified copy of Balance Sheet for last 2 years.
B 5. Original copy of LC & LC with extended date of expiry
6. Details of Financial arrangements for increasing the turn
over.
7. Clarify the status of insurable interest on building.”
C 6. The Surveyor in his report has given loss to the machinery
giving details of the machinery damaged in fire and the amount admissible
in respect of its loss. The Insurance Company also communicated a
letter to its Senior Branch Manager on 26.09.2001 that the letter of
credit dated 11.05.2000 of Singapore Branch of Bank of India was
established for Gurcharan Singh & Co. Pvt. Ltd., but the said letter of
D
credit expired without receipt of any document. It was also mentioned
that the Complainant is neither a beneficiary nor a notified party of said
letter of credit.
7. Subsequently, M/s ABM Engineers & Consultants was
appointed as the second Surveyor by the Insurance Company. The said
E Surveyor accepted the loss of Rs. 24,76,585/- in its report dated
28.02.2002. The second surveyor has taken into consideration stocks
statement submitted by the Complainant to Canara Bank on 30.4.2000,
31.05.2000 and 01.07.2000 respectively. Though, the Manager of Canara
Bank is said to have pointed out that these statements are like statutory
F requirements but the surveyor brushed them aside for the reason that
these documents cannot be treated as documents for finalising the stock
value. It was further observed that if the stocks statement is to be referred
to, there is no reason as to why letter of credit could not be materialized.
The relevant extracts from the report of the second surveyor are as
under:-
G
“(i) Stock statement as on 1.7.2000, 31.5.2000, 30.4.2000 submitted
by insured to bank.
These statements are just like statutory requirement (Refer opinion
of Canara Bank Manager, 13B, Investigation verification). These
H
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1177
ENTERPRISES PVT. LTD. & ANR. [HEMANT GUPTA, J.]
documents cannot be treated as document for finalizing stock A
value. If we refer to the quantity in these stock statements then
there was no reason why LC could not materialize. Further these
documents contradict with purchase invoices of items purchased
by Luxara Enterprises Pvt. Ltd. From their vendors.”
8. The Insurance Company was still not satisfied by the report B
and thereafter appointed Mr. R.G.Verma, a Chartered Accountant as its
third surveyor. The said surveyor recommended total repudiation of claim
in its report on 28.05.2002 under Clause 8 of the Insurance Policy on the
ground that there were enough valid circumstantial reasons on the part
of the Insured to manipulate the fire. It is after the said report furnished
on 28.06.2002, the claim was repudiated by the Insurance Company on C
the same day i.e. 28.6.2002, inter-alia, on the ground that the Complainant
had no export order and the letter of credit does not show the name and
address of the buyer. It is mentioned therein that as per stocks statement
furnished to Canara Bank on 05.07.2000, 34,800 shirts were ready as on
01.07.2000 and that the letter of credit was expiring on 09.07.2000. D
Therefore, the Complainant did not explain as to why the said consignment
was not shipped on or before 01.07.2000. Another reason given was
that the letter of credit was alleged to have been extended up to
08.08.2000 in favour of somebody else. Therefore, there was no reason
for extension of letter of credit when the goods were allegedly ready on
01.07.2000 and that the garment could not be exported without E
endorsement of invoice by Apparel Export Promotion Council but no
such endorsement was obtained by the Complainant. The Surveyor
further gave another reason, that 104203 meters of fabric was purchased
from M/s S.V. Traders but the address given on the invoice and the
challans was not of fabric shop but that of a photocopy shop. Still further, F
another reason communicated was that the letter of credit was opened
by M/s Sirdanwal Overseas of Ajay Verma who is facing a criminal
case under Sections 420, 406, 120(B) of IPC in FIR No. 98 dated
06.04.2002.
9. The Complainant in his complaint filed on 16.5.2002, has inter- G
alia averred that he has taken a credit facility from Canara Bank to the
tune of Rs. 50,00,000/- and that the loan amount was disbursed in the
months of March and May, 2000. Such advance was secured by primary
security of stocks and goods lying in the factory of the Complainant
apart from the personal guarantee of the Directors of the Complainant
H
1178 SUPREME COURT REPORTS [2019] 6 S.C.R.
A and equitable mortgage/residential house of one of the Directors and
plant & machinery installed at the above said factory as collateral
security. The Bank also got insured the factory building as well as the
stocks from the Insurance Company for which premium was paid by
debiting the account of Complainant by the Bank.
B 10. The grievance of the Complainant is that the Insurance
Company has appointed one surveyor after another. The first surveyor-
M/s Sunil J. Vora & Associates has accepted the damage preferred by
the Complainant to the extent of Rs. 54,93,865/- whereas, the second
surveyor- M/s ABM Engineers & Consultants reduced the amount to
Rs. 24,76,585/- and the third surveyor-R.G. Verma repudiated the total
C claim.
11. In respect of second survey report, it is pointed out that Shri
B. S. Aggarwal of the surveyor- M/s ABM Engineers & Consultants
attended the meeting in the office of the Complainant which was attended
by the Officers of the Insurance Company. The Complainant submitted
D a letter to the Regional Manager of the Insurance Company as well as
to the Branch Office at Delhi apart from the Grievance Cell, Mumbai on
15.01.2002. Shri B.S. Aggarwal communicated a letter dated 30.01.2002
pointing out that the letter dated 15.01.2002 submitted by the Complainant
was misleading as the Complainant could not make available accounting
E records to the Surveyor.
12. The Complainant again submitted a letter dated 18.3.2002
aggrieved against the actions of the surveyor to the various officers of
the Insurance Company. The Complainant also pointed out that the
Insurance Company could not appoint one surveyor after another. It
F was open to the Insurance Company to apply to the Insurance Regulatory
and Development Authority to appoint an independent Surveyor under
Section 64 UM (3) of the Insurance Act, 1938 3 but the Insurance
Company could not appoint one surveyor after another till such time, it is
successful in getting a report of total repudiation of the claim of the
Complainant. The relevant provisions of the 1938 Act read as under:-
G
“(2) No claim in respect of a loss which has occurred in India and
requiring to be paid or settled in India equal to or exceeding twenty
thousand rupees in value on any policy of insurance, arising or
intimated to an insurer at any time after the expiry of a period of
3
H 1938 Act
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1179
ENTERPRISES PVT. LTD. & ANR. [HEMANT GUPTA, J.]
one year from the commencement of the Insurance (Amendment) A
Act, 1968, shall, unless otherwise directed by the Authority, be
admitted for payment or settled by the insurer unless he has obtained
a report, on the loss that has occurred, from a person who holds a
licence issued under this section to act as a surveyor or loss
assessor (hereafter referred to as “approved surveyor or loss
B
assessors) :
Provided that nothing in this sub-section shall be deemed to take
away or abridge the right of the insurer to pay or settle any claim
at any amount different from the amount assessed by the approved
surveyor or loss assessor.
C
(3) The Authority may, at any time, in respect of any claim of the
nature referred to in sub-section (2), call for an independent report
from any other approved surveyor or loss assessor specified by
him and such surveyor or loss assessor shall furnish such report
to the Authority within such time as may be specified by the
Authority or if no time limit has been specified by him within D
reasonable time and the cost of, or incidental to, such report shall
be borne by the insurer.
(4) The Authority may, on receipt of a report referred to in sub-
section (3), issue such directions as he may consider necessary
with regard to the settlement of the claim including any direction E
to settle a claim at a figure less than, or more than, that at which
it is proposed to settle it or it was settled and the insurer shall be
bound to comply with such directions:
Provided that where the Authority issues a direction for settling a
claim at a figure lower than that at which it has already been F
settled, the insurer shall be deemed to comply with such direction
if he satisfies the Authority that all reasonable steps with due
regard to the question whether the expenditure involved is not
disproportionate to the amount required to be recovered, have
been taken with due dispatch by him: G
Provided further that no direction for the payment of a lesser sum
shall be made where the amount of the claim has already been
paid and the Authority is of opinion that the recovery of the amount
paid in excess would cause undue hardship to the insured:
H
1180 SUPREME COURT REPORTS [2019] 6 S.C.R.
A Provided also that nothing in this section shall relieve the insurer
from any liability, civil or criminal, to which he would have been
subject but for the provisions of this sub-section.”
13. In the written statement filed before the Commissioner, the
Insurance Company explained the reason for appointing another Surveyor
B after the report of Surveyor- M/s Sunil J. Vora & Associates was
submitted on 01.02.2001. It was, inter-alia, asserted that quantum of
loss has been assessed without verifying and providing any documents
and that the clarification sought from the Surveyor has not led to any
response. The Insurance Company concluded the reasons for appointing
another Surveyor in para 3.9 of its reply which reads as under:-
C
“Respondent No.1 sought clarification from the Surveyors as
well as the insured on certain points but neither the Surveyors nor
the insured submitted the clarification or the desired documents.
In the absence of the said clarification/documents, Respondent
No. 1 was not able to ascertain the cost of the shirts. The Surveyors
D had taken the value of the shirts at Rs. 235/- but it was not clear
from where he had taken the said value. On the other hand, the
Complainant had taken the order @ 5.9 US$ i.e. Rs. 271/- and
adding overhead expenses the cost comes Rs. 295/- per shirt.
The Preliminary Surveyor in his report dated 20th July, 2000, also
E did not give the basis of the estimate of loss at Rs. 75,00,000/-.
The letters dated 11th May, 2001 was written to the Preliminary
Surveyor asking about the basis of the figure of Rs. 75,00,000/-
which was not responded. This was followed by reminder dated
28th June, 2001 which was also not responded. The letters dated
11th May, 2001 and 28th June, 2001 is Annexure R-14 and R-15
F hereto”.
14. Such are the only reasons available in the written statement
as to why another Surveyor was appointed. No other record has been
furnished for appointment of M/s ABM Engineers & Consultants, second
surveyor on 22.08.2001. The Commission in its order held as under:-
G
“22. There is no evidence on record that the appointment of
Surveyor Nos. 2, 3 & 4 was with the consent of the Head Quarters.
After the second Surveyor, there is no reasoning given as to why
third and fourth Surveyors were appointed. This is an admitted
H
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1181
ENTERPRISES PVT. LTD. & ANR. [HEMANT GUPTA, J.]
fact that the fire broke out in the premises of the complainant. All A
the first three Surveyors spoke about this fact in one voice. Even
the Investigator/Fourth Surveyor, did not deny the happening of
incident and admitted in no uncertain terms that shirts worth rupees
few lakhs must have been burnt. There can be no conflictions on
the point that some loss was occurred to the complainant. Whether
B
the Order or LCs were fake or manipulated or the Order for
import of shirts could not be proved or Mr. Ajay Verma was
involved in a criminal case has got no bearing on this case. There
is no inkling on evidence of record that Mr. Ajay Verma was
involved in this particular case.
23. It cannot be laid down as a rule of thumb that the Surveyor C
cannot ask for other documents after he has informed the
complainant that the documents are complete. There lies no rub.
24. Under these circumstances, we have no hesitation to accept
the second Surveyor, M/s Sunil J. Vohra’s report. The same is
partly accepted and we allow the complaint and direct the D
Insurance Company, OP1, to pay a sum of Rs. 54,93,865/- to the
complainant, within 45 days from the receipt of this order,
otherwise, it will carry interest @ 10% p.a., till its realization. In
view of peculiar facts of this case, there is no order as to costs or
pendente lite interest.”
E
15. The learned counsel for the Appellant-Insurance Company
argued that the Commission has gravely erred in law in not examining
the question whether letter of credit was fake or manipulated or that the
order of import of shirts could not be proved or Mr. Ajay Verma was
involved in a criminal case as it was held that such facts have no bearing
on this case. Learned counsel for the Appellant-Insurance Company F
relies upon an order passed by this Court as reported in Sri
Venkateswara Syndicate vs. Oriental Insurance Company
Limited4 which case has examined Section 64 UM of the 1938 Act to
hold that there is no prohibition in the Act for appointment of another
Surveyor- M/s ABM Engineers & Consultants by the Insurance Company G
except that the Insurance Company has to record reasons for not
accepting the report of the Surveyor- M/s Sunil J. Vora & Associates.
Therefore, the Insurance Company has rightly appointed another
Surveyor.
4
(2009) 8 SCC 507 H
1182 SUPREME COURT REPORTS [2019] 6 S.C.R.
A 16. The Insurance Company relied upon newspaper report dated
09.05.2002 published in Punjab Kesari that the Delhi Police has arrested
three persons on the basis of forged documents duping exporters. It was
the said newspaper report which was made basis of appointing yet another
Surveyor. The relevant extract from the written statement reads as
under:-
B
“3.12 On 9th May, 2002, it was reported in the “Punjab Kesari”
newspaper that Delhi Police has arrested a gang of three persons
who had duped the exporters of crores of rupees on the basis of
forged documents. It also came to the notice of Respondent No.
1 that Mr. Ajay Verma of M/s. Sirdanwal Overseas from whom,
C the Complainant is alleged to have dealings for LC and procurement
of the export order had been arrested in a cheating case in FIR
No. 98 dated 6th April, 2002, P.S. Chitranjan Park, under Sections
420/406/12B of the Indian Penal Code. The newspaper report
dated 9th May, 2002 is Annexure R-25 hereto. Respondent No. 1
D appointed Shri R.G. Verma, Chartered Accountant to conduct an
investigation of the claim. Shri R.G. Verma conducted the detailed
investigation and submitted his report dated 28th May, 2002 in
which he observed that the claim was fraudulent. The report of
Shri R.G. Verma is Annexure R-26 hereto. The following
documents were collected by the investigator:-
E
i. List of bail applications dated 24th May, 2002.
ii. FIR NO. 98 dated 6th April, 2002.
iii. Application for request for judicial custody by the Accused.
F iv. Respondent No.1 took the photographs of the office of
S.V. Traders which are Annexure R-27 hereto”.
17. On the other hand, learned counsel for the Complainant rebutted
the arguments raised and referred to communication dated 07.12.2001
G addressed by the Head Office of the Insurance Company to its Delhi
Regional Office, inter-alia, to the facts that Head Office has appointed
M/s Sunil J. Vohra & Associates as the final Surveyor and that the Head
Office is unable to understand as to why and who has appointed M/s
ABM Engineers & Consultants as Surveyor. The extracts from the said
letter read as under: -
H
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1183
ENTERPRISES PVT. LTD. & ANR. [HEMANT GUPTA, J.]
“07.12.2001 A
DELHI RO II
Kind Attn. : MR. S. MAMMAN, ASSTT. GEN. MANAGER,
Re: Fire Claim under Policy No.
11/310830/99/9010 A/c B
M/s. Luxra Enterprises Pvt. Ltd.
Date of Loss : 11/12.7.2000
We note from our record that based on your request vide letter dt.
24.7.2000, HO had appointed Sunil J. Vora & Associates as the C
Final Surveyor and we have communicated the decision to you
vide our letter dt. 27.7.2000. we understand that surveyor had
already submitted their report also.
We have received a bunch of papers dt. 20.11.01 from M/s ABM
Engineers and Consultants pertaining to this claim. We are unable D
to understand what for they are appointed and who has appointed
them. Please note that once HO has appointed a surveyor, you
cannot appoint surveyor or investigator without consulting HO.
Please let us have your explanation to enable us to apprise
Management.
E
We note that correspondence by M/s. ABM Engineers and
Consultants are directly addressed to the Senior Branch Manager
only and copies are seen forwarded to various higher offices.
Kindly inform us the current status of this claim also for our
records.”
F
18. Before considering the respective contentions of the parties,
the judgment in Sri Venkateswara(supra) is required to be examined.
In the said judgment, this Court has upheld the right of the Insurance
Company to appoint Surveyor but such right can be exercised for valid
reasons or if the report is found to be arbitrary and that Insurance
Company must give cogent reasons without which it is not free to appoint G
the second Surveyor. The relevant extracts of the judgment read as
under: -
“33. Scheme of Section 64-UM, particularly of sub-sections (2),
(3) and (4) would show that the insurer cannot appoint a second
H
1184 SUPREME COURT REPORTS [2019] 6 S.C.R.
A surveyor just as a matter of course. If for any valid reason the
report of the surveyor is not acceptable to the insurer may be for
the reason if there are inherent defects, if it is found to be arbitrary,
excessive, exaggerated, etc., it must specify cogent reasons,
without which it is not free to appoint the second surveyor or
surveyors till it gets a report which would satisfy its interest.
B
Alternatively, it can be stated that there must be sufficient ground
to disagree with the findings of surveyor/surveyors. There is no
prohibition in the Insurance Act for appointment of second surveyor
by the insurance company, but while doing so, the insurance
company has to give satisfactory reasons for not accepting the
C report of the first surveyor and the need to appoint second surveyor.
xxx xxx xxx
35. In our considered view, the Insurance Act only mandates that
while settling a claim, assistance of a surveyor should be taken
but it does not go further and say that the insurer would be bound
D by whatever the surveyor has assessed or quantified; if for any
reason, the insurer is of the view that certain material facts ought
to have been taken into consideration while framing a report by
the surveyor and if it is not done, it can certainly depute another
surveyor for the purpose of conducting a fresh survey to estimate
E the loss suffered by the insured.
xxx xxx xxx
37. The option to accept or not to accept the report is with the
insurer. However, if the rejection of the report is arbitrary and
based on no acceptable reasons, the courts or other forums can
F definitely step in and correct the error committed by the insurer
while repudiating the claim of the insured. We hasten to add, if
the reports are prepared in good faith, with due application of
mind and in the absence of any error or ill motive, the insurance
company is not expected to reject the report of the surveyors”.
G 19. In view of above, the question to be examined is whether the
Insurance Company has reasons or there were inherent defects in the
survey report of Surveyor- M/s Sunil J. Vora & Associates or that such
report is arbitrary, excessive and exaggerated, before another Surveyor
could be appointed.
H
M/S NEW INDIA ASSURANCE CO. LTD.v. M/S LUXRA 1185
ENTERPRISES PVT. LTD. & ANR. [HEMANT GUPTA, J.]
20. The Surveyor- M/s Sunil J. Vora & Associates was appointed A
by Head Office of the Insurance Company. The Head Office of the
Insurance Company has communicated to the Regional/ Branch Office
as to why another Surveyor has been appointed. In view of said fact, the
appointment of another surveyor could not be justified when a conscious
decision has been communicated by the Head Office of not approving
B
the appointment of second surveyor.
21. Still further, the reasoning given by the local office is that the
Surveyor- M/s Sunil J. Vora & Associates has not clarified certain points
when clarification was sought for. The said reason stands answered
even in the report of Surveyor- M/s ABM Engineers & Consultants.
Such surveyor has considered the report of the Canara Bank in respect C
of stocks statement. Such stocks statement was brushed aside for the
reason that if said stocks statement was correct then as to why letter of
credit could not be materialised. The Complainant has explained that it
was on 15.06.2000, it has been communicated to the consignee to have
inspection of the stocks before exporting the consignment. The consignee D
has not inspected the stocks which led to the extension of letter of credit
up to 08.08.2000. It was argued that letter of credit is to facilitate receipt
of money from the exporter and once the stock of the Complainant has
been verified by the Canara Bank, which had the first charge over the
property, therefore, such verification of stock could not be doubted by
the Insurance Company only for the reason that letter of credit could not E
be materialised. The verification of the stocks by the Canara Bank which
had primary charge on the stocks could not be doubted in the manner,
the surveyor- M/s ABM Engineers & Consultants has reported.
22. Still further, it is explained in the affidavit that the letter of
credit was by M/s Sirdanwal Overseas which was endorsed to Gurcharan F
Singh Company Pvt. Ltd. PTE Singapore. Therefore, the letter of credit
was a valid document which could not be said not to be genuine only on
the basis of reason that such letter of credit was not in favour of the
Complainant when the order was placed on the Complainant by the
above said Singapore based firm. G
23. Mr. Ajay Verma is an accused in FIR in which there is no
allegation in respect of export by the Complainant. The allegation against
Ajay Verma is of duping the exporters whereas, there is no such or
similar allegation against the Complainant. The Complainant has also
H
1186 SUPREME COURT REPORTS [2019] 6 S.C.R.
A averred that there was endorsement by the Apparel Export Promotion
Council, therefore factually such assertion of the Insurance Company is
incorrect.
24. Thus, we find that there was no valid reason for the Insurance
Company not to accept the report of the surveyor- M/s Sunil J. Vora &
B Associates nor there is any proof that such report is arbitrary & excessive.
There are no cogent reasons to appoint Surveyors time and again till
such time one Surveyor gives a report which could satisfy the interest of
the Insurance Company.
25. In fact, in the present case it is evident that the claim of Rs.
C 54,93,865/- was accepted by the surveyor- M/s Sunil J. Vora &
Associates. The second surveyor- M/s ABM Engineers & Consultants
accepted the claim in the sum of Rs. 24,76,585/-. The third surveyor -
R.G. Verma recommended total repudiation of claim. It is the third
Surveyor’s report which sub-served the interest of the Insurance
Company which was made basis of repudiation of the claim of the
D Complainant on the same day, when the report was furnished. We find
that in view of the judgment in Sri Venkateswara (supra), it is not
open to appoint another Surveyor till such time, it gets a report in its
favour. In fact, the appointment of the Surveyors was to repudiate the
claim of the Complainant on one pretext or the other.
E 26. Thus, we do not find any illegality in the order passed by the
Commission. Consequently, Civil Appeal No. 9668 of 2014 is dismissed.
27. However, we find that the Commission has not granted interest
on the amount found due and payable to the Complainant. Therefore,
Civil Appeal Nos.4371-72 0f 2015 preferred by the Complainant are
F allowed. The Complainant shall be entitled to the interest on the amount
of Rs. 54,93,865/- at the rate of 6% per annum from the date of filing of
petition till the payment of the amount.
Devika Gujral Appeals disposed of.
G
H
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