M/S New India Assurance Co. Ltd vs M/S Luxra Enterprises Pvt Ltd

3. The Complainant is an Industrial Unit engaged in manufacture of garments. The Complainant obtained a policy of insurance for the 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 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 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 09.04.2001 to the Complainant asking for certain information after the said report was 2 submitted to the Insurance Company on 12.02.2001. The information sought is as under:-

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 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 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 requirements but the surveyor brushed them aside for the reason that these documents 3 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:-

9. The Complainant in his complaint filed on 16.5.2002, has inter-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 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.

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 5 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 claim.

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 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.”

iii. Application for request for judicial custody by the Accused.

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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.

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.

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 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.