NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Deepa Sharma, Presiding Member and Subhash Chandra, Member
New India Assurance Co. Ltd. – Appellant
versus
M/s. Enmax Systemz – Respondent
First Appeal No.27 of 2020
(Against the Order dated 09/10/2019 in Complaint No.562/2014 of the State Commission Delhi)
Decided on 8.7.2021

IMPORTANT POINTS
(1) Insurance company cannot arbitrarily appoint surveyors claim to the insured.
(2) It is within the purview of the insurance company to accept or reject surveyors’ assessment, but valid reasons need to be provided.
(3) Award cannot exceed insurance value

Headnote:

(A) Consumer Protection Act, 1986 – Section 19 (Consumer Protection Act, 2019 – Section 24) – First Appeal – Appeal filed against order of State Commission – Appellant insurance company insured respondent’s property – Property engulfed in fire - Extensive damage awarded by first surveyor - Appellant rejected findings of first surveyor and appointed second surveyor – Second surveyor only awarded partial damages – State Commission awarded damages more than insured value – Appellant went in appeal - NCDRC agreed that award cannot exceed insured value – Awarded insurance amount with 9% interest along with Rs. 20,000 litigation cost.

Held: It is not disputed by the learned Counsel for the Complainant that the State Commission has wrongly awarded the amount beyond the insured amount and it needs to be corrected. He has also agreed that the award of interest from the date of incident is also illegal and be corrected and that the interest be awarded from the date when the claim was filed by the Complainant with the Insurance Company, i.e., 06.06.2013. However, it is argued that the appointment of second surveyor is without justification and reasonable reasons, and was an illegal act on the part of the Insurance Company. It is further submitted that the Insurance Company had never informed the Complainant of appointing a second surveyor and rather, they had kept asking for, till the end, more documents from the Complainant as required by the first surveyor. It is submitted that the report of the second surveyor has rightly been rejected by the State Commission. It is further submitted that the first surveyor has assessed the loss to the tune of ¹ 23,87,325/- which is less than the insured amount and the same amount should be awarded to the Complainant.

The admitted facts of the case are that the Complainant was a holder of Standard Fire and Special Peril policy and had paid the premium. During the validity of this policy, a fire broke out in the insured premises and the goods insured were perished. The Insurance Company was duly informed. The Insurance Company appointed a surveyor who went on asking for the documents again and again and also threatened to close the claim. An e-mail dated 08.08.2014 rejecting the claim of the Complainant and sanction of only a sum of ¹ 8,65,941/- towards loss on account of fire was received by the Complainant. Aggrieved by the said act of the Insurance Company, the Complainant filed the Complaint before the State Commission.

It is apparent that the State Commission could not have granted the damages for the loss to the Complainant more than the insured amount. It is also apparent that the grant of interest from the date of incident also is an illegality.

In view of the above discussion, it is apparent that the Insurance Company in the affidavit in evidence as well as before this Commission in the present Appeal had taken the plea of appointment of second surveyor with the sole intention to defy the claim of the Complainant. It is worthy to note here that the first surveyor has assessed the loss suffered by the Complainant to the tune of ¹ 23,87,325/- which is close to the sum for which the goods were insured. It is also not disputed that the entire insured stock got damaged in the said fire. No basis has been disclosed by the Insurance Company for ascertaining the claim at ¹ 8,65,941/- and making the offer. The act of the Insurance Company amounts to deficiency in service and it has rightly been so held by the State Commission. The order of the State Commission does not suffer with any illegality or infirmity on this count. (Paras 3, 5, 8 & 10)

(B) Insurance Act, 1938 – Section 64 UM – Licensing of Surveyors/Loss Assessors – Appointment of surveyor cannot be arbitrary – Cogent reasons need to be provided for appointment of second surveyor – Insurer bound by first surveyor’s assessment – No valid reasons provided for appointing second surveyor – Appointment of second surveyor done solely to defy the claim of the respondent – Assessment of second surveyor held invalid.

Held: It is argued by learned Counsel for the Insurance Company that the second surveyor was appointed by the Insurance Company who had assessed the loss at Rs. 8,65,941/-. From the perusal of the contentions in the Written Statement filed by the Insurance Company before the State Commission, it is apparent that there is not a whisper in the Written Statement regarding the appointment of second surveyor. The only contention was that on the basis of the report of the surveyor, the Insurance Company assessed the loss at Rs. 8,65,941/- towards full and final settlement and hence made an offer to the Complainant. It was only when the affidavit in evidence was filed by the Insurance Company that they alleged that they had appointed a second surveyor. It is a settled proposition of law that any evidence led beyond the facts pleaded is irrelevant evidence and not admissible. Since there was no contention regarding the appointment of second surveyor, any evidence subsequently led regarding appointment of second surveyor is irrelevant and immaterial evidence. This further reflects upon the conduct of the Insurance Company. It seems that during the period of filing of the Written Statement and furnishing of the affidavit in evidence, they have manufactured certain documents with the sole intention to defy the claim of the Complainant. It is apparent that no notice had ever been issued to the Complainant regarding the appointment of the second surveyor. No justification for appointment of the second surveyor in the Written Statement has been disclosed. It has been so held by Hon’ble Supreme Court in “Sri Venkateswara Syndicate vs. Oriental Insurance Company Limited & Anr., Civil Appeal No.4487 of 2004 decided on 24.08.2009”, that the Insurance Company cannot keep on appointing surveyor after surveyor on its own whims and fancies. The Apex Court has observed as under:

“(22) ...................Scheme of Section 64-UM particularly, of sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second 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 second Surveyor or Surveyors till it gets a report which would satisfy its interest. 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 18 appointment of second Surveyor by the Insurance Company, but while doing so, the insurance company has to give satisfactory reasons for not accepting the report of the first Surveyor and the need to appoint second Surveyor.

(23) Section 64 UM(2) of the Insurance Act, 1938, reads that ‘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 intimates 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 the insurer unless he has obtained a report on the loss that has occurred from a person who holds a license issued under this Section to act as a surveyor. In our considered view, the Insurance Act only mandates that while settling a claim, assistance of surveyor should be taken but it does not go further and say that the insurer would be bound 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 19 estimate the loss suffered by the insured. In the present case, the insurer has stated in the counter affidavit filed before the National Commission and even before us, why the appointment of second Surveyor was necessitated and also has given valid reasons for appointing second Surveyor and also has assigned valid reason for not accepting the report of Joint Surveyor. The correspondence between the insurer and the Surveyors would indicate the particulars differed by the insurer for differing with the assessment of loss made by the Surveyors. 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 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, 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.” (Para 9)

Result: State Commission decision upheld, respondent awarded insurance amount with costs.