Case: M/S NEW INDIA ASSURANCE CO. LTD Vs. M/S LUXRA ENTERPRISES PVT LTD

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. 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 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 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 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 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? 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. 20. The Surveyor- M/s Sunil J. Vora & Associates was appointed 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 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 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 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 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 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.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 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 & 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. 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 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.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]20. The Surveyor- M/s Sunil J. Vora & Associates was appointed 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 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 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 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 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 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.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 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 & 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. 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 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.However, we find that the Commission has not granted interest on the amount found due and payable to the Complainant.