Holding

The Supreme Court held that the complaint was timely, the surveyors' report could be relied upon, and interest should be fixed at 9% per annum.

Summary

The insured, a manufacturer of polyethylene products, suffered a total loss of plant, machinery and stock due to a fire on 6 November 1999. The insurer appointed joint surveyors who submitted a loss assessment, but thereafter delayed settlement and appointed an investigator in June 2001. The insured filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC) in 2003, which allowed the claim in part, apportioned the award between the lenders and ordered interest at 12% per annum. The insurer appealed, challenging the limitation period under Section 24A of the Consumer Protection Act, 1986, the reliance on the surveyors' report over the investigator's report, and the rate of interest. The Supreme Court held that the complaint was filed within the two‑year limitation because the insurer’s actions created a fresh cause of action, that the surveyors' report, being a statutory document, could be relied upon in the absence of contrary evidence, and that interest should be fixed at 9% per annum. The appeal was partly allowed, modifying the interest rate and directing the parties to comply with the revised order.

Issues considered

Whether the complaint filed before the NCDRC was within the two‑year limitation period prescribed by Section 24A of the Consumer Protection Act, 1986.
Whether the NCDRC could rely on the joint surveyors' report without giving credence to the insurer's investigator's report.
Whether the interest rate of 12% per annum awarded by the NCDRC was appropriate.

Legislation cited

Consumer Protection Act, 1986s. 24A
Insurance Act, 1938s. 64-UM(2)

Subjects

Consumer Protection Actinsurance claimlimitation periodsurveyors reportinvestigator reportinterest rateNCDRCfire insurancecause of actionapportionment

Judgment

[2021] 8 S.C.R. 895 895

NATIONAL INSURANCE COMPANY LTD. A
v.
M/S. HARESHWAR ENTERPRISES (P) LTD. & ORS.
(Civil Appeal No.7033 of 2009)
AUGUST 18, 2021 B
[HEMANT GUPTA AND A. S. BOPANNA, JJ.]
Consumer Protection Act, 1986 – Insurance claim –
Respondent No.1-insured was engaged in the business of
manufacture of polyethylene, plastic films etc. – Plant and machinery
C
in respondent no.1’s factory was charged in favor of respondent
no.2 as security and stock in trade was hypothecated to respondent
no.3 for discharge of loan obtained from them – The factory, plant
and machinery were covered under the insurance policies of
appellant-insurer against risk of fire, flood and earthquake – Fire
broke out causing total destruction – Appellant was intimated – D
Joint Surveyors appointed by appellant assessed the loss – Final
report submitted – Despite said report, the appellant appointed
investigators – Eventually, complaint filed by respondent no.1 –
NCDRC allowed claim in part, further apportioning the amount in
favour of respondent nos.2 and 3 – On appeal, held: Fire occurred
E
on 06.11.99 – Surveyors visited the site on 09.11.99 itself – Interim
and final report were submitted to the insurer on 23.03.2000 and
13.03.01 but, it did not take any steps immediately – After much
delay, it appointed the investigator on 22.06.01 but did not conclude
the said process despite repeated requests by respondent no.1 –
Further, for the first time the insurer relied on the investigator’s F
report in the NCDRC proceedings – Surveyors report was submitted
as the natural process – Conclusion reached therein is more reliable
rather than the investigation report keeping in view the manner in
which the insurer proceeded in the matter – Hence, reliance placed
on the surveyor’s report by NCDRC without giving credence to the
G
investigation report cannot be faulted – Such conclusion does not
call for interference – However, amount ordered by NCDRC shall
be payable with interest at 9% p.a. instead of 12% p.a.
Consumer Protection Act, 1986 – s.24A – Cause of action –
Held: s.24A indicates that the complaint is required to be filed within
H
895
896 SUPREME COURT REPORTS [2021] 8 S.C.R.

A two years from the date on which the cause of action arises – Cause
of action will remain flexible and is to be gathered from the facts of
each case – In the present case, though the cause of action arose
for the first time when the fire broke out but it did not remain static
at that point – As the matter kept oscillating, fresh cause of action
arose – On facts, complaint filed was within time – Consideration
B
of the same on merits by NCDRC justified.
Consumer Protection Act, 1986 – Insurance Claim – Surveyors
report, reliance on – Held: Surveyors report is the basic document
which has statutory recognition – It can be relied upon if it inspires
confidence of adjudicating forum and if on facts, the forum does
C not find the need to place reliance on any other material.
Partly allowing the appeal, the Court
HELD: 1.1 Section 24A of the Consumer Protection Act,
1986 indicates that the complaint is required to be filed within
D two years from the date on which the ‘cause of action’ has arisen.
The cause of action will remain flexible to be gathered from the
bundle of facts arising in each case. In the instant case the fire
incident had occurred on 06.11.1999. The appellant had informed
the insurer on 07.11.1999, where after the joint surveyors were
appointed and on verification had submitted their final report on
E 13.03.2001. Despite said report, the insurer through their letter
dated 22.06.2001 had appointed an investigator but did not
proceed to either accept the claim or repudiate the same. Further,
in the reply filed on behalf of the insurer before the NCDRC
reference is contained that correspondence was exchanged
F between the investigator appointed by the insurer and the
respondent No.1 through the letters dated 07.03.2002,
05.04.2002, 03.05.2002, 03.06.2002 and 13.07.2002. If in the
above context the fact situation herein is noticed, though the fire
incident occurred on 06.11.1999, the same merely provided the
cause of action for the first time to make the claim but the same
G did not remain static at that point. On the other hand, the process
of joint survey though had concluded with its final report on
13.03.2001, the letter dated 22.06.2001 addressed by the insurer
to the respondent No.1 regarding appointment of the investigator
had created a fresh cause of action and kept the matter oscillating.
H Thereafter, the matter did not rest at that but there was repeated
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 897
ENTERPRISES (P) LTD. & ORS.

action being taken by the investigators seeking for details. When A
the same did not conclude in an appropriate manner, the
respondent No.1 got issued a legal notice dated 05.01.2003 to
which reply was issued, when in fact the repudiation was gathered
and the complaint was filed. Even if the date on which the process
of intimation of appointment of the investigator through the letter
B
dated 22.06.2001, received by the respondent No.1 is taken into
consideration, from that date also the complaint filed on
26.03.2003 is within time. There was no need for the NCDRC to
pass any separate order at the outset to hold the claim to be
within limitation and then proceed when it is clear on the fact of
it. As such the consideration of the complaint on merits by the C
NCDRC was justified. [Paras 6-8][902-E-F; 903-C-D, G-H; 904-
A-E]
Kandimalla Raghavaiah and Company v. National
Insurance Company and Another (2009) 7 SCC 768 :
[2009] 10 SCR 870 – distinguished. D
1.2 On the merits of the claim, a perusal of the impugned
order passed by the NCDRC indicates that the NCDRC has made
detailed reference to the report submitted by the joint surveyors,
dated 13.03.2001 and has ultimately allowed the claim, in part. In
the surveyor report dated 13.03.2001 consideration was made to E
two parts; firstly, the assessment of loss relating to the stock of
LDPE plastic, powder, granules, tubings and films as contained
in clause 8.1 of the report. Next, the loss caused due to the
destruction of plant and machinery is assessed in clause 8.2 and
the sum of Rs.46,60,459/- being the depreciated value has been
awarded for loss of plant and machinery. In respect of the said F
claim the respondent No.2 (Maharashtra State Financial
Corporation) is interested. There is no serious dispute with
regard to the consideration made either by the surveyors or the
NCDRC on the aspect of plant and machinery. In that view of the
matter the only question on merits which needs consideration G
herein is with regard to the loss assessed towards destruction of
the stock-in- trade in the fire incident. The surveyor’s report
certainly can be taken note as a piece of evidence until more
reliable evidence is brought on record to rebut the contents of
the surveyor’s report. In the instant facts there is no serious
dispute with regard to the fire incident. The loss caused by H
898 SUPREME COURT REPORTS [2021] 8 S.C.R.

A destruction of the plant and machinery in the fire incident is not
much of an issue. The dispute raised insofar as the loss caused
to the raw- materials/stock is by contending that the purchase of
stock during the months of August, September and October 1999
is shown excessive as compared to the stock position from April
to July 1999. In that circumstance, in the facts and circumstances
B
herein whether the investigation report was an indispensable
document or as to whether the survey report is exhaustive enough
to arrive at a conclusion on that aspect is the issue. The
proposition of law that the surveyor’s report cannot be considered
as a sacrosanct document and that if there is any contrary evidence
C including investigation report, opportunity should be available
to produce it as rebuttal material, is concurred by this Court.
However, the issue to be noted is as to whether the surveyor’s
report in the instant case adverts to the consideration of stock
position in an appropriate manner and in that circumstance
whether an investigation report which is based on investigation
D
that was started belatedly should take the centre stage. The fact
remains that the surveyors report is the basic document which
has statutory recognition and can be made the basis if it inspires
the confidence of the adjudicating forum and if such forum does
not find the need to place reliance on any other material, in the
E facts and circumstance arising in the case. If in that light, the
surveyors report, on which reliance has been placed by the
NCDRC is taken note insofar as the assessment relating to the
loss due to destruction of stock, the consideration of the same
has been adverted in clause 8.1.1 and the stock position as
declared to the bank has been referred to in clause 8.1.3. [Paras
F
9-11, 13 and 14][904-E-G; 905-A-B; 906-C-D; 907-A-F]
National Insurance Company Limited v. Harjeet Rice
Mills (2005) 6 SCC 45 : [2005] 1 Suppl. SCR 794 –
distinguished.
G New India Assurance Company Limited v. Pradeep
Kumar (2009) 7 SCC 787 : [2009] 16 SCR 508 –
referred to.
1.3 The consideration made by the surveyors to ascertain
the correctness of the details relating to the stock indicates that
H reference is made to the value of the stock declared to the bank;
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 899
ENTERPRISES (P) LTD. & ORS.

value of the stock as per audited manufacturing account and A
balance sheet for the year ended 31.03.1999; the explanation
offered for the purchase made during the months of August 1999
to October 1999. In that regard, the surveyors have also visited
the source from which the LDPE was procured during September
1999 to 04.11.1999. Thus, a perusal of the surveyor’s report would
B
indicate that the same is not perfunctory but has referred to all
aspects, discarded what was not reliable and the assessment has
been made thereafter. In that background, as noted, the fire
incident had occurred on 06.11.1999 and the surveyors had visited
the site on 09.11.1999 itself and the interim as also the final report
were submitted on 23.03.2000 and 13.03.2001 to the insurer after C
due deliberations. The insurer did not take any steps immediately
but after much delay appointed the investigator on 22.06.2001
and had not concluded the said process though the respondent
No.1 had made repeated request. The insured had approached
the NCDRC and it is in the said proceedings, for the first time
D
the insurer seeks to rely on the investigator’s report. Therefore,
in the facts and circumstances herein the surveyors report was
submitted as the natural process, the conclusion reached therein
is more plausible and reliable rather than the investigation report
keeping in view the manner in which the insurer had proceeded
in the matter. Hence, the reliance placed on the surveyor’s report E
by the NCDRC without giving credence to the investigation
report in the facts and circumstances of the instant case cannot
be faulted. In that view, the conclusion reached on this aspect by
the NCDRC does not call for interference. [Paras 15, 16][907-G-
H; 908-A; 909-C-F]
F
1.4 The rate of interest to be awarded in a normal
circumstance should be commensurate so as to enable the
claimant for such benefit for the delayed payment. There is no
specific reason for which the NCDRC has thought it fit to award
interest at 12% per annum. Therefore, the normal bank rate or
thereabout would justify the grant of interest at 9% per annum. G
Accordingly, the amount as ordered by the NCDRC shall be
payable with interest at 9% per annum instead of 12% per annum.
To that extent, the order stands modified. This Court while
admitting the appeal and granting stay of the order, it was made
subject to deposit 50% of the amount before the National H
900 SUPREME COURT REPORTS [2021] 8 S.C.R.

A Commission. The second and third respondents were permitted
to withdraw the same in the ratio of 60:40 subject to their
furnishing, security to the satisfaction of the Commission. The
appellant shall therefore deposit the balance amount within six
weeks, before the National Commission and the disbursement
shall be made in the ratio to constitute the payment of the full
B
amount awarded. The second and third respondents shall be
permitted to withdraw the same. [Paras 17, 18][909-G-H; 910-A-
C]
State Bank of India v. B.S. Agriculture Industries (I)
(2009) 5 SCC 121 : [2009] 4 SCR 762 – referred to.
C
Case Law Reference
[2009] 4 SCR 762 referred to Para 5
[2009] 10 SCR 870 distinguished Para 6
2009] 16 SCR 508 referred to Para 10
D
[2005] 1 Suppl. SCR 794 distinguished Para 12
CIVIL APPELLATE JURISDICTION: Civil Appeal No.7033 of
2009.
From the Judgment and Order dated 27.03.2009 of the National
E Consumer Disputes Redressal Commission, New Delhi in Original
Petition No.102 of 2003.
Vishnu Mehra, B. K. Satija, Advs. for the Appellant.
Vinay Navare, Santosh Paul, Sr. Advs., Ms. Abha R. Sharma,
M. J. Paul, Aniruddha P. Mayee, Advs. for the Respondents.
F The Judgment of the Court was delivered by
A. S. BOPANNA, J.
1. The appellant (insurer) who was arrayed as respondent No.1
in the complaint filed before the National Consumer Disputes Redressal
Commission, New Delhi (“NCDRC” for short) in O.P. No.102/2003 is
G before this Court in this appeal being aggrieved by the order dated
27.03.2009. The respondent No.1 (insured) was the claimant before
NCDRC. The plant and machinery in the factory owned by respondent
No.1 was charged in favour of respondent No.2 as security, while the
stock in trade was hypothecated in favour of respondent No.3 (Thane
H Jan Sahakari Bank) for discharge of loan obtained from them. Since the
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 901
ENTERPRISES (P) LTD. & ORS. [A. S. BOPANNA, J.]

respondent No. 2 and 3 are entitled to adjust the claim towards their A
outstanding dues, they are arrayed as parties to the proceedings.
2. Through the order dated 27.03.2009 impugned herein, the
NCDRC has allowed the complaint in part and directed the insurer to
pay the sum of Rs.79,34,703/- with interest at 12 % per annum. Out of
the said amount, a sum of Rs.49,56,897/- is ordered to be apportioned in B
favour of respondent No.2 (Maharashtra State Financial Corporation)
and the balance amount of Rs.29,77,806/- is ordered to be paid to the
respondent No.3 (Thane Jan Sahakari Bank Limited). The total amount
awarded is against the claim of Rs.1,25,25,319/- made by the respondent
No.1 (Insured).
C
3. The brief facts leading to the claim before the NCDRC is that
the respondent No.1 was engaged in the business of manufacture of
polyethylene, plastic films and other similar packaging materials. The
respondent No.2 had advanced loan to the respondent No.1 against
security of its building, plant and machinery. The respondent No.3 had
also advanced money to the respondent No.1 for procurement of stock D
in trade, which was accordingly hypothecated to them. In order to cover
the risk of fire, flood and earthquake to the factory building and also the
plant and machinery, the respondent No.1 secured insurance policies
from the appellant. One policy was to cover the risk during the period
05.02.1999 to 04.02.2000. Another policy in respect of the risk to the E
stock in trade was also secured which was for the period of 17.09.1999
to 16.09.2000. The respondent No.1 was accordingly carrying on its
business in the factory premises while on 06.11.1999 fire broke out causing
total destruction of the plant and machinery, raw material as also finished
and unfinished goods. The respondent No.1 intimated the appellant
regarding the fire incident on 07.11.1999. F

4. The appellant accordingly appointed M/s. H. Manna and
Company and Virendra Padmasi Shah jointly as surveyors to assess the
loss. The surveyors visited the site on 09.11.1999. On having obtained
the documents and records submitted their interim report on 23.03.2000
and the final report on 13.03.2001 to the insurer. The surveyors through G
the said report had assessed the loss at Rs.1,06,00,000/- excluding the
loss of business and other losses. The insurer, however, did not settle the
claim nor repudiate the same. Instead, the insurer through their letter
dated 22.06.2001 informed the respondent No.1 regarding appointment
of Om Nityanand Enterprises as investigators to look into the claim. It is H
902 SUPREME COURT REPORTS [2021] 8 S.C.R.

A in that view, since the repeated request and demand ultimately made
through the legal notice had not been complied with by the appellant, the
respondent No.1 filed the complaint before the NCDRC. As already
noted, the NCDRC after considering the matter in detail has arrived at
its conclusion and has passed the order allowing part of the claim.
B 5. Mr. Vishnu Mehra, learned counsel for the appellant at the
outset contended that very proceedings before the NCDRC was not
sustainable since the claim was filed beyond limitation. In this regard,
the learned counsel has referred to Section 24A of the Consumer
Protection Act, 1986 (‘Act 1986’ for short) which provides the limitation
to file the complaint within two years from the date on which the cause
C of action has arisen. In that light, it is contended that the fire incident had
taken place on 06.11.1999, but the respondent No. 1 had filed the
complaint before the NCDRC on 26.03.2003 which is way beyond the
period of two years provided under the said provision. In order to buttress
his submission the learned counsel has relied on the decision reported in
D the case, State Bank of India vs. B.S. Agriculture Industries (I) (2009)
5 SCC 121 with specific reference to paragraphs 11 and 12. A perusal
of the said decision no doubt would indicate that it has been held by this
Court that the provision is peremptory in nature and requires the consumer
forum to see before it admits the complaint that it has been filed within
two years from the date of accrual of cause of action.
E
6. Having noted the contention, on the provision as contained,
there is no ambiguity whatsoever. However, what is required to be taken
note is that the provision indicates that the complaint is required to be
filed within two years from the date on which the ‘cause of action’
has arisen. In that context, another decision relied on by the learned
F counsel for the appellant in the case, Kandimalla Raghavaiah and
Company vs. National Insurance Company and Another (2009) 7
SCC 768 with specific reference to para 18 would indicate that the term
‘cause of action’ though not defined in the Act, but it is of wide import
and it would have different meaning in different context while considering
G limitation. It has been held therein that pithily stated ‘cause of action’
means, cause of action for which the suit is brought and which gives
occasion for and forms the foundation of the suit. Reliance is placed on
this case by the learned counsel since in the said case, which was also in
respect of a fire incident it was held that the date of accrual of cause of
action has to be a date on which the fire breaks out. However, what
H
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 903
ENTERPRISES (P) LTD. & ORS. [A. S. BOPANNA, J.]

cannot be lost sight is that, such conclusion was reached in the cited A
case since the fire in tobacco godown took place 22/23.03.1988 and the
bank in whose favour the stocks had been hypothecated was informed
about it by the appellant on 23.03.1988 itself, but insofar as the claim, the
matter had rested there till 06.11.1992 when for the first time the appellant
addressed the letter to the insurance company and sought for claim form.
B
The facts therein, if noted would indicate the reason for which this court
had indicated that the date on which the fire broke out is the date of
accrual of cause of action since it did not move forward in any other
manner. It has not been laid in strait jacket. The cause of action will
remain flexible to be gathered from the bundle of facts arising in each
case. C
7. In contradistinction, in the instant case as noted the fire incident
had occurred on 06.11.1999. The appellant had informed the insurer on
07.11.1999, where after the joint surveyors were appointed and on
verification had submitted their final report on 13.03.2001. Despite said
report, the insurer through their letter dated 22.06.2001 had appointed D
an investigator but did not proceed to either accept the claim or repudiate
the same. In that background, a perusal of the complaint filed by the
respondent No.1 before the NCDRC would indicate that the cause of
action has been mentioned in para 21 as follows:-
“21.CAUSE OF ACTION E
The cause of Action arose for the first time when property
belonging to the Complainant was destroyed in the fire on
6.11.1999. Then it continued from time to time when the survey
was complete and the Complainant was not paid the claim amount.
It arose when the legal notice on behalf of Complaint was issued F
and same was replied by advocate on behalf of the Opponent No.
1. Hence the present Original Petition is in limitation. The Advocate
for the complainant issued legal notice on 5.1.2003 demanding
money from opposite party No. The copy of the said letter is
annexed hereto and marked as Annexure P/13.”
G
Further, in the reply filed on behalf of the insurer before the
NCDRC reference is contained that correspondence was exchanged
between the investigator appointed by the insurer and the respondent
No.1 through the letters dated 07.03.2002, 05.04.2002, 03.05.2002,
03.06.2002 and 13.07.2002.
H
904 SUPREME COURT REPORTS [2021] 8 S.C.R.

A 8. If in the above context the fact situation herein is noticed, though
the fire incident occurred on 06.11.1999, the same merely provided the
cause of action for the first time to make the claim but the same did not
remain static at that point. On the other hand, the process of joint survey
though had concluded with its final report on 13.03.2001, the letter dated
22.06.2001 addressed by the insurer to the respondent No.1 regarding
B
appointment of the investigator had created a fresh cause of action and
kept the matter oscillating. Thereafter, the matter did not rest at that but
there was repeated action being taken by the investigators seeking for
details. When the same did not conclude in an appropriate manner, the
respondent No.1 (Insured) got issued a legal notice dated 05.01.2003 to
C which reply was issued, when in fact the repudiation was gathered and
the complaint was filed. Even if the date on which the process of
intimation of appointment of the investigator through the letter dated
22.06.2001, received by the respondent No.1 is taken into consideration,
from that date also the complaint filed on 26.03.2003 is within time.
There was no need for the NCDRC to pass any separate order at the
D
outset to hold the claim to be within limitation and then proceed when it
is clear on the fact of it. As such the consideration of the complaint on
merits by the NCDRC was justified. The contention therefore urged by
Mr. Vishnu Mehra, learned counsel on that ground is accordingly rejected.
9. On the merits of the claim, a perusal of the impugned order
E dated 27.03.2009 passed by the NCDRC indicates that the NCDRC
has made detailed reference to the report submitted by the joint surveyors,
dated 13.03.2001 and has ultimately allowed the claim, in part. In the
surveyor report dated 13.03.2001 consideration was made to two parts;
firstly, the assessment of loss relating to the stock of LDPE plastic,
F powder, granules, tubings and films as contained in clause 8.1 of the
report. Next, the loss caused due to the destruction of plant and machinery
is assessed in clause 8.2 and the sum of Rs.46,60,459/- being the
depreciated value has been awarded for loss of plant and machinery. In
respect of the said claim the respondent No.2 (Maharashtra State
Financial Corporation) is interested. In that regard, the learned counsel
G for the appellant, as also the learned counsel for respondent No. 1 and 2
are agreed that there is no serious dispute with regard to the consideration
made either by the surveyors or the NCDRC on the aspect of plant and
machinery. The same having not been a major issue before the NCDRC,
need not be gone into in these proceedings.
H
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 905
ENTERPRISES (P) LTD. & ORS. [A. S. BOPANNA, J.]

10. In that view of the matter the only question on merits which A
needs consideration herein is with regard to the loss assessed towards
destruction of the stock-in- trade in the fire incident. On this aspect, the
learned counsel for the appellant while contending that the NCDRC has
committed an error in relying on the surveyor report as sacrosanct without
giving credence to the investigation report has referred to the decision in
B
the case, New India Assurance Company Limited vs. Pradeep Kumar
(2009) 7 SCC 787 and referred to para 21 and 22 which read as
hereunder: -
“21. Section 64-UM(2) of the Act, 1938 reads:
“64-UM. (2) No claim in respect of a loss which has occurred in C
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 one year from the commencement of
the Insurance (Amendment) Act, 1968, shall, unless otherwise
directed by the Authority, be admitted for payment or settled by D
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 assessor”):
Provided that nothing in this sub-section shall be deemed to take E
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.”
The object of the aforesaid provision is that where the claim in
respect of loss required to be paid by the insurer is Rs.20,000/- or F
more, the loss must first be assessed by an approved surveyor (or
loss assessor) before it is admitted for payment or settlement by
the insurer. Proviso appended thereto, however, makes it clear
that insurer may settle the claim for the loss suffered by insured
at any amount or pay to the insured any amount different from G
the amount assessed by the approved surveyor (or loss assessor).
22. In other words although the assessment of loss by the approved
surveyor is a pre-requisite for payment or settlement of claim of
twenty thousand rupees or more by insurer, but surveyor’s report
is not the last and final word. It is not that sacrosanct that it cannot
H
906 SUPREME COURT REPORTS [2021] 8 S.C.R.

A be departed from; it is not conclusive. The approved surveyor’s
report may be basis or foundation for settlement of a claim by the
insurer in respect of the loss suffered by the insured but surely
such report is neither binding upon the insurer nor insured.”
11. In the said decision, it is no doubt held that though the
B assessment of loss by an approved surveyor is a prerequisite for payment
or settlement of the claim, the surveyor report is not the last and final
word. It is not that sacrosanct that it cannot be departed from and it is
not conclusive. The approved surveyor’s report may be the basis or
foundation for settlement of a claim by the insurer in respect of loss
suffered by insured but such report is neither binding upon the insurer
C nor insured. On the said proposition, we are certain that there can be no
quarrel. The surveyor’s report certainly can be taken note as a piece of
evidence until more reliable evidence is brought on record to rebut the
contents of the surveyor’s report.
12. The learned counsel for the appellant has also relied on the
D decision in the case, National Insurance Company Limited vs. Harjeet
Rice Mills (2005) 6 SCC 45 with reference to paragraphs 5, 6 and 7. In
the facts arising in the said case the insured was seeking to rely on the
surveyor’s report to bind the insurer in view of the provisions contained
in Section 64-UM (c) of the Insurance Act, 1938. The Insurer had
E however sought to rely on the investigation report. The State Commission
refused to look into report of the private investigator. In that circumstance,
this court was of the view that the State Commission should have given
an opportunity to the insurer to prove the investigation report. In the said
case, the very nature of the fire incident was in dispute from the very
inception. The claimant had contended that the fire was caused by a
F short circuit, which was seriously disputed by the insurer and an
investigation in that regard had been held. It is in that light, a conclusion
was to be reached by the forum adjudicating the claim as to whether
any fraud was committed in making the claim with reference to the very
nature of the incident. In that circumstance, even though at the first
G instance, there was an investigation held by the police, the private
investigation held by the insurer would have been relevant to decide the
question. As such, in the said circumstance it was imperative that the
investigator’s report was to be considered threadbare and a decision
ought to have been arrived at.

H
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 907
ENTERPRISES (P) LTD. & ORS. [A. S. BOPANNA, J.]

13. On the other hand, in the instant facts there is no serious A
dispute with regard to the fire incident. Even going by the contention put
forth, it is noted that the loss caused by destruction of the plant and
machinery in the fire incident is not much of an issue. The dispute raised
insofar as the loss caused to the raw-materials/stock is by contending
that the purchase of stock during the months of August, September and
B
October 1999 is shown excessive as compared to the stock position
from April to July 1999. In that circumstance, in the facts and
circumstances herein whether the investigation report was an
indispensable document or as to whether the survey report is exhaustive
enough to arrive at a conclusion on that aspect is the issue.
14. Having noted the said decisions, we are of the opinion that the C
same cannot alter the position in the instant case. On the proposition of
law that the surveyor’s report cannot be considered as a sacrosanct
document and that if there is any contrary evidence including investigation
report, opportunity should be available to produce it as rebuttal material,
we concur. However, the issue to be noted is as to whether the surveyor’s D
report in the instant case adverts to the consideration of stock position in
an appropriate manner and in that circumstance whether an investigation
report which is based on investigation that was started belatedly should
take the centre stage. The fact remains that the surveyors report is the
basic document which has statutory recognition and can be made the
basis if it inspires the confidence of the adjudicating forum and if such E
forum does not find the need to place reliance on any other material, in
the facts and circumstance arising in the case. If in that light, the surveyors
report, on which reliance has been placed by the NCDRC is taken note
insofar as the assessment relating to the loss due to destruction of stock,
the consideration of the same has been adverted in clause 8.1.1 and the F
stock position as declared to the bank has been referred to in clause
8.1.3. The learned counsel for the appellant as also the learned counsel
for the respondents has made detailed reference and taken us through
details contained in the report.
15. The consideration made by the surveyors to ascertain the G
correctness of the details relating to the stock indicates that reference is
made to the value of the stock declared to the bank; value of the stock
as per audited manufacturing account and balance sheet for the year
ended 31.03.1999; the explanation offered for the purchase made during
the months of August 1999 to October 1999. In that regard, the surveyors
H
908 SUPREME COURT REPORTS [2021] 8 S.C.R.

A have also visited the source from which the LDPE was procured during
September 1999 to 04.11.1999. It is on making such verification and
inquiries, the surveyors arrived at the conclusion as follows: -
“8. 1. 8 Though the purchases and sales were found to be in order
as per records, we could not accept the total quantity of 73585
B kgs claimed by the Insured. Opening stock considered for arriving
at this balance is higher as compared to quantity declared to bank.
For assessing the quantity we have taken Stock quantity as on
30.04. 99 as per Bank declaration and then made addition/
deduction for purchase & sale quantity during the period 1.5.99 to
6.11.99. Accordingly the quantity of stock as on date of loss worked
C out as follows:
Kgs.
Stock Quantity as on 30.4.99 5,367.75
Add : Purchases from 1.5.99 to
D
6.11.99 1,14,155.60
____________
1,19,523.35
Less : Sales from 1.5.99 to 6.11.99
E
Balance Quantity on 6.11.99 75,444.73
_______
44,078.62

F 8.1.9 We have valued the stock as per the latest purchase rate
viz. At market value. The last purchases made by Insured
prior to loss was on 4. 11. 99. The rate including Octroi is
Rs.68.238 per kg. The rate matches with the selling price
fixed by IPCL. Further the entire quantity was considered
to be raw material avoiding any addition of Insureds own
G manufacturing cost.
8.1.10 Salvage : There was small quantity of remnants of the
burnt stock, in lump/me ted form. Considering the limited
quantity which could be extracted and its scrap value we
have deducted 1% as salvage value.
H
NATIONAL INSURANCE COMPANY LTD. v. M/S. HARESHWAR 909
ENTERPRISES (P) LTD. & ORS. [A. S. BOPANNA, J.]

8.1.11 The Loss Assessed for Stock is as follows A
Cost of 44078.620 Kgs. of LDPE
@ Rs. 68.238 per kg. Rs. 30,07,885
Less : Salvage value 1% Rs. 30,079
——————— B
Loss Assessed Rs. 29,77,806
16. Thus, a perusal of the surveyor’s report would indicate that
the same is not perfunctory but has referred to all aspects, discarded
what was not reliable and the assessment has been made thereafter. In
C
that background, as noted, the fire incident had occurred on 06.11.1999
and the surveyors had visited the site on 09.01.1999 itself and the interim
as also the final report were submitted on 23.03.2000 and 13.03.2001 to
the insurer after due deliberations. The insurer did not take any steps
immediately but after much delay appointed the investigator on
22.06.2001 and had not concluded the said process though the respondent D
No.1 had made repeated request. The insured had approached the
NCDRC and it is in the said proceedings, for the first time the insurer
seeks to rely on the investigator’s report. Therefore, in the facts and
circumstances herein the surveyors report was submitted as the natural
process, the conclusion reached therein is more plausible and reliable
E
rather than the investigation report keeping in view the manner in which
the insurer had proceeded in the matter. Hence, the reliance placed on
the surveyor’s report by the NCDRC without giving credence to the
investigation report in the facts and circumstances of the instant case
cannot be faulted. In that view, the conclusion reached on this aspect by
the NCDRC does not call for interference. F
17. One other aspect of matter which arises for consideration
herein is with regard to the rate of interest. The learned counsel for the
appellant contended that the interest rate at 12% per annum is excessive.
The learned counsel for the respondent, however, contended that there
was delay in payment of the amount payable to the respondent No.1 G
which was necessary to be compensated appropriately and the NCDRC
was justified in that regard. Having considered this aspect, the rate of
interest to be awarded in a normal circumstance should be commensurate
so as to enable the claimant for such benefit for the delayed payment.
There is no specific reason for which the NCDRC has thought it fit to
H
910 SUPREME COURT REPORTS [2021] 8 S.C.R.

A award interest at 12% per annum. Therefore, the normal bank rate or
thereabout would justify the grant of interest at 9% per annum.
Accordingly, the amount as ordered by the NCDRC shall be payable
with interest at 9% per annum instead of 12% per annum. To that extent,
the order shall stand modified.
B 18. It is to be noted that this Court while admitting the appeal and
granting stay of the order, it was made subject to deposit 50% of the
amount before the National Commission. The second and third
respondents were permitted to withdraw the same in the ratio of 60:40
subject to their furnishing, security to the satisfaction of the Commission.
The appellant shall therefore deposit the balance amount within six weeks,
C before the National Commission and the disbursement shall be made in
the ratio to constitute the payment of the full amount awarded. The
second and third respondents shall be permitted to withdraw the same.
19. In terms of the above, the appeal is allowed in part.

D 20. Pending application, if any, shall stand disposed of.

Divya Pandey Appeal partly allowed.

E

F

G

H