Insurance claims must be fully justified; arbitrary surveyor deductions without evidence are invalid.

JUDGMENT :

Mohammed Nias C.P., J.

W.P.(C) No.43531 of 2024 and W.P.(C) No.195 of 2025 are filed by the National Insurance Company (hereinafter referred to as the insurer) challenging the awards passed by the Permanent Lok Adalath (hereinafter referred to as 'PLA'), Ernakulam, in O.P.No.4442/2020 and O.P.No.4443/2020, dated 06.09.2024. W.P.(C) No.3062 of 2025 and W.P.(C) No.3164 of 2025 are filed by the complainants/insured in the above proceedings, challenging the award to the extent it refused payment of interest from the date of the petition filed on 29.01.2020.

2. The brief facts necessary for the disposal of the cases are as follows:

O.P.No.4442/2020 was filed by the first respondent in W.P. (C) No.43531/2024 before the second respondent, alleging that an amount of Rs 43.12 lakhs is due to him under two policies of insurance issued by the petitioner company. It was his case that he was engaged in the business of production, storage and sale of rice and allied products and that the stock of raw materials and finished goods was insured for Rs 70 lakhs, and the machinery therein was insured for Rs 24 lakhs. It was contended that in the flood that occurred on 15.08.2018, stock of 16 metric tons of paddy, 178 metric tons of rice, 43 metric tons of rice bran and new gunny bags worth Rs 1.45 lakhs were damaged and were verified by the Chartered Accountant. He also contended that the water level rose to 7 to 9 feet, and the entire stock was damaged, and the estimated loss was Rs 69.36 lakhs.

3. It was pleaded that on 23.08.2018, the Surveyor appointed by the company inspected the premises to assess the loss. It is also stated that on 12.09.2018, the Food Safety Officer concerned inspected the factory and storage of the first respondent and estimated that 60.051 metric tons of paddy and 178.545 metric tons of rice found in the premises were unfit for human consumption and that the quantity was estimated with the aid of the stock register as no physical verification was possible. The Surveyor, based on the report of the Chartered Accountant, valued the total stock at Rs.2,29,54,037/- and assessed 60% loss of the said value as loss, without considering the capillary rise of water through the stacks above the water level. It is also stated that the applicant received Rs.1,07,46,484/- in his bank account through RTGS transfer and that the entire stock and something in excess was consigned to Bharat Kataria as salvage, and it was not merely 60% of the total stock.

4. The company contended that the Surveyor appointed by the company fixed the loss at Rs.2,29,54,037/- and the consumer/insured was directed to segregate the affected stock, but they did not do so on the premise that the Food Safety Officer had certified that the whole stock was unfit for human consumption. The contention that the entire items were affected was denied. It is also stated that a further amount of Rs.11,15,571/- was paid. It was submitted that the first respondent had given a consent form for a settlement of the claim on 03.05.2019. The Survey report dated 09.03.2019 was also produced.

5. The PLA, after appreciating the documentary evidence, directed the company to pay a further amount of Rs.79,14,103/- through Ext.P6 award in W.P.(C) No.43531/2024. It was found that the survey report ought to have been accepted in toto, and that there was no justification on the part of the Surveyor in making a deduction of 40% of the stock value.

6.