Monday, September 21, 2009

Sri Venkateswara Syndicate versus Oriental Insurance Co. Ltd. and another

Insurance Act, 1938 — Section 64-UM(2) — report of surveyor in relation to claim — gross deficiency in service — accidental fire took place in godown of appellant — insured cotton stocks damaged — appellant made claim of Rs. 1.90 crores with the insurer — insurer repeatedly appointed surveyors over surveyors for amount of claim — inordinate delay in settling lawful claim — appellant filed complaint — whether the Insurance Company can repeatedly appoint Surveyors after Surveyors for getting loss/damage assessed before settling the claim? — whether National Consumer Commission justified in awarding 6% interest p.a. as against the claim of appellant @18% p.a.? — held if the reports are prepared in good faith, due application of mind and in absence of any error or ill motive, the Insurance Company not expected to reject the report of the surveyors — insurer not satisfied with the assessment of the Surveyor, retains right to settle claim for different amount — no unnecessary delay — direct Insurance Company to pay Rs. 1,05,00817/- plus interest @9% as compensation from the date of assessment done — appeal partly allowed with no costs.
Judgement
Case No: Civil Appeal No. 4487 of 2004)
Sri Venkateswara Syndicate Appellant(s) versus Oriental Insurance Co. Ltd. and another Respondent(s)
Date of Decision(mm/dd/yy): 8/24/2009.
Judge(s): Hon'ble Mr. Justice Markandey Katju and Hon'ble Mr. Justice H.L. Dattu.
 IN THE SUPREME COURT OF INDIA

                     CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 4487 OF 2004



     Sri Venkateswara Syndicate                                ..........Appellant

                            Versus

     Oriental Insurance Company Ltd. and Anr.                 ........Respondents



                                     JUDGMENT



H.L. Dattu,J.

        This appeal is directed against the order passed by National Consumer

        Disputes Redressal Commission, New Delhi in Original Petition

        No.135 of 2001 dated 19th day of January, 2003.

2)       The brief facts are as under :

         The appellant is a registered partnership firm. Their line of activity is

        trading in cotton. For the purpose of their business, they had taken

        M/s Jai Bharat Traders Cotton Ginning Mill on lease. The claim of the

        appellant is that an accidental fire took place in the godown of M/s Jai



                                                                                1
Bharat Traders, leased by the appellant firm, where its cotton stocks

were stored and insured at about 2.10 a.m. in the morning hours of

24.8.1999 and according to the appellant the estimated loss was of Rs.

1.90 crores. The cotton stocks in question were covered by seven

insurance policies issued by respondent - Oriental Insurance

Company Ltd. hereinafter for the sake of brevity referred to as

`insurer' for a total sum of Rs.1.98 Crores during the period when the

fire accident took place. The appellant made a claim of Rs.1.90 crores

towards loss of stock due to accidental fire in its business premises,

with the insurer. Pursuant to the claim so made, the insurance

company appointed one Sri K. Siva Prasad, a licensed surveyor for

preliminary investigation and for submitting a preliminary report,

about the cause of fire and the probable loss said to have been

suffered by the insured. The surveyor having examined the place of

fire accident gave preliminary report dated 09.09.1999 to the

insurance company estimating the loss of stock at Rs.1,73,92,310/-,

however, had noticed in his report that the number of bales and borahs

lying in the Godown and the actual quantity of lint damaged by fire

has to be got confirmed from the accounts of the insured and also by

physical verification of bale hoops. The insurer after receipt of the



                                                                   2
preliminary report of Sri K. Siva Prasad, had appointed Joint

Surveyors M/s Mehta and Padamsey and Kaypens, in terms of Section

64 UM(2) of the Insurance Act to give a joint report.           They

conducted a joint survey and in that, had estimated the loss of stock

insured at Rs.1,67,80,925/- and gave a report to that effect to the

insurer. The insurer being of the view that the report is perfunctory,

had appointed yet another Surveyor viz. Dinesh Gopal and Co. who,

in turn appointed one Mr. Panchal, former DIG (Fire) CISF and Fire

Adviser to the Government of India to investigate and submit a report,

who in turn after investigation and survey submitted his report dated

07.05.2000, confirming the quantification made by the Joint Surveyor.

Since the insurer was not satisfied with the aforesaid report also,

appointed R. Srinivasan and Co., Chartered Accountant to give a fresh

report by estimating the loss of stock insured due to accidental fire

incident. After inspection of the godown and verifying the books of

accounts, estimated the loss of stock at Rs.1,05,00,817/-. The

insurance company had placed the aforesaid report before the Joint

Surveyor viz. M/s. Mehta and Padamsey and Kaypsens for their

opinion. The joint surveyors in their clarificatory report dated

06.01.2001, did not agree with the findings of the chartered



                                                                   3
      accountant, on the ground that the chartered accountant had based his

      report only after verifying the books of accounts for the period

      01.10.1998 to 31.03.1999 and not till the date of fire accident.

3) Since there was inordinate delay in settling the lawful claim under the

   fire insurance policy, the appellant preferred original complaint before

   the National Consumer Forum against the insurer, inter-alia, alleging that

   there was deficiency in service and, therefore, they are entitled for   a

   sum of Rs.1,67,80,925/- being the value of loss assessed by the Joint

   Surveyors and, therefore, sought a direction to the insurer for payment of

   the aforesaid amount with interest at 18% from the date of fire accident

   till its realization and for payment of a sum of Rs. 6,91,155/- being the

   value of the salvage as assessed by the surveyors and also to award

   damages in causing unnecessary and unwarranted delay in settling the

   claim under the insurance policy.

4) The National Consumer Disputes Redressal Commission, hereinafter for

   the sake of brevity referred to as "Commission" on the concession made

   by the insurance company based on the report of Chartered Accountant

   has passed the impugned order, directing the insurer to pay a sum of Rs.

   1,05,00,817/- with interest at 6% per annum from 01.03.2001 till the date

   of payment within two months from the date of receipt of the order. The



                                                                           4
   reasons assigned by the Commission for accepting the concession made

   by the respondents is forthcoming in its order. The same is extracted for

   better appreciation of the case pleaded by the parties to the lis. It is as

   under :

         "7.5 As regards the quantum of loss, we need to give
         weightage to the estimates made by various Investigators
         appointed by the Insurance Co. The first three Investigators
         assessed the loss at about the same figures i.e. the loss is of
         1350 fully pressed bales of cotton and 88 boras of lint valued
         that about Rs. 1.73 to Rs. 1.74 crores. However, the Insurance
         Co. having noticed that these Investigators had not gone into
         the details of transactions and stocks in a thorough manner,
         asked another Chartered Accountant, M/s R. Srinivasan & Co.
         to specially ascertain the quantum of loss caused by the fire.
         M/s R. Srinivasan & Co. submitted a "Accounts Verification
         Report" on 22.11.2000 and assessed the loss at Rs.
         1,05,00,817/-. They also furnished subsequent clarification on
         22.12.2000, 22.1.2001 and 9.9.2002 pointing out the lacunae in
         the reports of the previous Investigators."

      Finally, the opposite party themselves, while disputing their liability

      to pay, have however agreed that the loss is only Rs.1,05,00,817/- and

      not Rs.1.90 crore, as claimed by the appellant.

5) Being aggrieved by the aforesaid order, the claimant is before us in this

   appeal.

6) The learned senior counsel Shri K.V. Viswanathan appearing for the

   appellant submitted, that, the action of the insurance company in

   appointing several surveyors till it got a favourable report to suit its



                                                                           5
  estimation of loss of stock in the fire incident is illegal and shatters the

  confidence and trust of the people on the very purpose of insurance. It is

  further submitted that the National Commission despite upholding the

  report of the Joint Surveyors which assessed the loss at Rs.1,64,70,407/-,

  ought not to have accepted the concession made by the insurer and

  directed the insurance company to pay only the amount as quantified by

  the chartered accountant.     Lastly, it is submitted that the National

  Commission despite giving a finding that there is gross deficiency in

  service has only granted interest at 6% per annum from 01.03.2001 and

  not from the date of fire accident, which, according to learned counsel is

  improper and illegal.

7) In response to the submission made by learned senior counsel for the

  appellant, the learned counsel for the insurer invites our attention to the

  counter affidavit filed by them before this Court in justification of the

  order passed by National Consumer Commission and then submits that

  the provisions of Section 64-UM of Insurance Act, 1938 does authorize

  the insurer to appoint surveyor or surveyors, may be for the second time

  for the purpose of getting a fair report of the actual loss suffered by the

  insured. To buttress their submission, they invite our attention to the

  provision of Section 64-UM of the Insurance Act, 1938, for which we



                                                                           6
  will make reference at the appropriate stage. The learned counsel also

  submitted several reasons for not accepting the report of Joint Surveyors

  in view of the lacuna pointed out by the Chartered Accountant, who was

  asked to verify the Books of Accounts maintained by the insured to

  ascertain the actual loss incurred due to the fire accident by the insured in

  its place of business and therefore, there is no illegality committed by the

  National Consumer Commission in accepting the report of Chartered

  Accountant and directing the insurance company to pay as assessed and

  quantified by an independent agency. The learned counsel also submits

  that keeping in view the facts and circumstances of the case, the National

  Consumer Commission was justified in awarding interest at the rate of

  6% per annum from 01.03.2001, though a claim was made for awarding

  interest at the rate of 18% from the date of fire incident till the date of

  payment.

8) Two issues would arise for our consideration and decision. Firstly,

  whether the insurance company can repeatedly appoint Surveyors after

  Surveyors for getting the loss/damage assessed before settling the claim

  of the insured.     The incidental question is, whether the National

  Consumer Commission was justified in awarding 6% interest per annum




                                                                            7
   from 01.03.2001 as against the claim of the appellant at 18% from the

   date of the fire accident, viz. 24.08.1999.

9) To appreciate the issues raised in this civil appeal, we extract relevant

   Section by omitting what is not necessary for the purpose of this case.

   Section 64-UM(2) of the Insurance Act, 1938 is as under :

           "64- UM(2) - 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 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
           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 assessors):

           Provided that nothing in this sub-section shall be deemed to take
           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.

           (3) The Authority may, at any time, in respect of any claim of the
           nature referred to in sub-section (2), call for an independent
           report from any other approved surveyor or loss assessor
           specified by him and such surveyor or loss assessor shall furnish
           such report to the Authority within such time as may be specified
           by the Authority or if no time limit has been specified by him
           within reasonable time and the cost of, or incidental to, such
           report shall be borne by the insurer.

           (4) The Authority may, on receipt of a report referred to in sub-
           section (3), issue such directions as he may consider necessary
           with regard to the settlement of the claim including any direction
           to settle a claim at a figure less than, or more than, that at which
           it is proposed to settle it or it was settled and the insurer shall be
           bound to comply with such directions:

           Provided that where the Authority issues a direction for settling
           a claim at a figure lower than that at which it has already been


                                                                                    8
           settled, the insurer shall be deemed to comply with such direction
           if he satisfies the Authority that all reasonable steps with due
           regard to the question whether the expenditure involved is not
           disproportionate to the amount required to be recovered, have
           been taken with due despatch by him:

           Provided further that no direction for the payment of a lesser
           sum shall be made where the amount of the claim has already
           been paid and the Authority is of opinion that the recovery of the
           amount paid in excess would cause undue hardship to the
           insured:

           Provided also that nothing in this section shall relieve the
           insurer from any liability, civil or criminal, to which he would
           have been subject but for the provisions of this sub-section."

10)Section 64-UM (1) of the Act speaks of licensing of Surveyors and loss

   assessors. We are not very much concerned with this sub-section. Sub-

   section (2) mandates that no claim in respect of a loss which has occurred

   in India and requiring to be paid in India equal to or exceeding twenty

   thousand rupees in value on any policy of insurance be admitted for

   payment, unless insurer obtains a report on the loss that has occurred

   from a person who holds a license issued under sub-section (1) of Section

   64 UM of the Act as a Surveyor or loss assessor. The proviso to sub-

   section(2) however, retains the right of the insurer to settle a claim for an

   amount different from that assessed by the surveyor.                 This proviso

   impliedly permits an insurer to obtain a second or further report where

   considered appropriate or expedient in the circumstances of a case, based




                                                                                  9
   upon which the claim could be settled for a different amount than as

   assessed earlier.

11)Sub-section (3) provides for the Authority (Insurance Regulatory and

   Development Authority), the power to obtain an independent report from

   any other surveyor in respect of a claim referred to in sub-section (2).

   This sub-section vests in the Authority the power to call for a second

   report, either suo motto or upon the application by the insured person or

   on a complaint by a third party. Under sub-section (3), the second report

   is required to be called by the Authority himself for use, consideration

   and further directions.

12)Sub-section (4) envisages, that the authority may on receipt of a report

   referred to in sub-section (3), issue such directions as he may consider

   necessary with regard to the settlement of the claim including any

   direction to settle a claim at a figure less than, that at which it is proposed

   to settle it or it was settled and the insurer shall be bound to comply with

   such directions.

13)   The learned senior counsel Shri K.V. Viswanathan for the appellant,

      submits that, despite the surveyors having consistently given a

      specific finding that the claim was bonafide and the fire was

      accidental had assessed the loss at Rs.1.70 crores, but the insurance



                                                                               10
      company has repudiated the claim on frivolous ground, that too after a

      period of three years from the date of fire incident. It is further

      contended that the company had appointed several surveyors, which

      they could not have done in terms of Section 64-UM of the Insurance

      Act, 1938.

14)In the instant case, the insurer had appointed a surveyor for preliminary

   inspection and survey to assess the loss caused due to the fire accident in

   the business premises of the appellant. In the preliminary survey report

   dated 09.09.1999, Sri K. Siva Prasad had given broadly an estimate of

   loss caused due to the fire accident in the business premises of the

   appellant. He had specifically reported that the number of bales and

   borahs lying in the godown and the actual quantity of lint damaged by

   the fire has to be got confirmed from the accounts of the insured and also

   by physical verification of the bale hoops. In his report, he had made it

   clear that he has not finally assessed the loss. The Joint Surveyors who

   were appointed to jointly assess the loss had given their report dated

   15.11.1999, wherein they had assessed the loss at Rs. 1,67,80,925/- on

   receipt of this report, the insurance company by their letter dated

   7.1.2000, had sought several clarifications from their Joint Surveyors,

   which according to them were omitted to be noticed by the Joint



                                                                           11
Surveyors while assessing the loss caused due to the fire accident in the

appellant's business premises. The letter dated 7.1.2000, is extracted for

better understanding the rival claims of the parties :

          "THE ORIENTAL INSURANCE HYDERABAD REGION

           THE ORIENTAL INSURANCE COMPANY LIMITED
                  DIVISIONAL OFFICE : GUNTUR
   Dear Sirs,

      RE: FIRE LOSS TO COTTON STOCKS ON 24-8-1999 -
          OUR CLAIM NO. 432301/136/0/F/04/2000 -
          A/c : M/S SRI VENKATESWARA SYNDICATE - GUNTUR

   We refer to your joint survey report bearing Nos. MR/1269 (MS/61640) and
   KPS/CL/1837 dated 15.11.99 respectively.

   On perusal of the papers, we have observed as under :

   1) The cause of the accident is mentioned as electrical short circuit because of
   voltage fluctuations. When the stocks were kept in a locked godown and when
   there was no kind of activity for months together, we wonder as to why the lights
   in the godown were kept switched on round the clock. Had the lights been
   switched off the short circuit causing the fire accident could not have occurred.
   Please let us have your comments.

   2)    From the balance sheet of insured as on 31st march, 1999 nearly 50% of the
   purchases i.e. Rs. 1.07 crore out of Rs. 2.27 crores were from individual village
   ryots on credit basis. We fell in a claim of such a magnitude some random
   investigation is required on the credit purchases to confirm their genuinity.

   3) As per the preliminary survey report there were two varities of bales/borahs
   viz. MCU-5 @ Rs. 7,140/- per quintal in bales and Rs. 7,040/- per quintal in
   borahs and LK variety @ Rs. 5,650/- per quintal in bales and Rs. 5,550/- in
   borahs. But, in your assessment you have taken the entire quantity as a single
   variety i.e. MCU-5 @ Rs. 7,193/- per quintal in FP bales and Rs. 7,084-19 ps per
   quital in borahs and assessed the loss @ Rs. 1,74,82,080/-. Whereas, when we
   have applied the different rating the assessment is claiming to Rs. 1,72,57,305/-.
   Please clarify.

   Please let us have your clarification on the above points at the earliest to enable us
   to proceed further.




                                                                                      12
      Thanking you,

      Yours faithfully,

      Sd/-

      SR. DIVISIONAL MANAGER

      cc to: Regional Office, Hyderabad, for information."

15)The Joint Surveyors by their reply letter dated 12.1.2000 had stated that

   they did not consider an investigation into the purchases necessary

   although they stated that the insurer may cause and/or carry out any

   investigation as necessary. We intend to extract only that portion of the

   reply, which may be relevant for the purpose of knowing why the insurer

   thought it fit to appoint Chartered Accountants for verification of the

   accounts of the insured firm :

                     "(2). The doubts on procurements and need for
             investigations (irrespective of cash or credit purchase)
             would arise only if the stock position as claimed did not
             tally with the available physical evidence. Even if
             purchases are proved against actual payment, the
             physical evidence after the incident, the single most
             important factor in such situations can necessitate further
             enquiries and investigation. That kind of a situation never
             arose in this particular incident as the physical evidence
             and the extent of damage to the building were supportive
             of the quantum of stocks claimed to have been held. Our
             local enquiries did not show any evidence other than an
             accidental fire. In the circumstances, we do not, from our
             survey and assessment point of view, consider an
             investigation into the purchases too essential.
             Nevertheless, as insurers with privy to the contract, we



                                                                           13
            note that you may cause and/or carry out any
            investigation as necessary."
                        [Emphasis is supplied by us]

16)In view of certain discrepancies in the joint report of the Joint Surveyors,

   the insurer was constrained to appoint a Chartered Accountant for

   verification of the books of accounts of the insured, to ascertain the

   actual quantum of loss caused by fire accident in the business place of

   the appellant.

17)Mr. Srinivasan, the Chartered Accountant, after detailed verification of

   the books of accounts and other relevant material had assessed the loss at

   Rs. 1,05,00817/-.    In his report, he has stated that the Joint Surveyors

   without verifying the books of account and other relevant records of the

   appellant firm had assessed the loss which does not reflect the loss

   sustained by the insured. They had also pointed out various other

   omissions in the joint report of the Joint Surveyors.

18)The insurer for the purpose of ascertaining the actual loss sustained by

   the insured had sought clarifications from the Joint Surveyors in view of

   the findings by the Chartered Accountant. We were taken through their

   replies by learned counsel for the insurance company. To our mind, it

   appears, they were not prepared to accept their omissions while




                                                                            14
   preparing their reports after inspection and verification of the place of

   fire accident.

19)Parties have not lead in any evidence in support of their claim. In fact

   National Consumer Commission has proceeded to decide the lis between

   the parties based on certain documents filed by the parties along with

   their pleadings.

20)We have carefully perused the joint survey report submitted by the

   surveyors who were appointed by the insurer and the report of the

   Chartered Accountant. The perusal of the joint survey report reveals that

   the Joint Surveyors without going into the records of the appellant firm

   had assessed the loss said to have been sustained by the insured in the

   fire accident. The Joint Surveyors had arrived at the cost of own Ginned

   lint at Rs. 7084/- as against the records of the insured which itself shows

   the cost of Ginned lint at Rs. 6,229.35 and Rs. 6,181.57 per quintal.

   Secondly, the Joint Surveyors had taken into account 88 borahs while

   assessing the loss, whereas as per the records of the insured submitted to

   the bank, there were 551 borahs as on 31.7.1999, out of which 548

   borahs were sold from 1.8.1999 to 24.8.1999, (the date of the fire

   incident) thus leaving only 3 borahs in the stock. Mr. R. Srinivasan,

   Chartered Accountant, who gave the report having noticed all these



                                                                           15
omissions and after detailed verification of the books of accounts and

records maintained by the appellant has assessed the loss at

Rs.1,05,00817/-. In his report he has specifically stated that the Joint

Surveyors have failed to notice that the accounts presented to them

belonged to one of the several firms operating from the same premises

under the same or similar names and further the Joint Surveyors had over

looked to ascertain the identity of the firm which was insured and the

firm which had in fact sustained the loss. The learned senior counsel Sri

K.V. Viswanathan would contend that the Chartered Accountant who

was deputed in conducting the survey had verified the books of accounts

of the appellant till 31.3.1999 and not till the date of incident and,

therefore, the National Commission could not have accepted the report

of the Chartered Accountant. This submission of the learned counsel is

not based on facts.     A bare perusal of the report of the Chartered

Accountant would clearly demonstrate that it is only after verifying the

books of accounts maintained by the appellant in the regular course of

business, has calculated the number of borahs that could have been

available in the business premises at the time of fire incident. These finer

aspects of the matter has been taken into consideration by the National

Consumer Commission while rejecting the Joint Survey report of Joint



                                                                         16
   Assessors and for accepting the report of Chartered Accountant. The

   Commission has also observed that after looking into several reports of

   the surveyors and the loss assessed by them, it would be fair to go by

   what the Chartered Accountant has said in his report. May be, the

   discussion is brief, but the conclusion is sound, and we concur.

21)The Insurance Regulatory Authority (`IRDA' for short) has formulated

   Insurance Surveyors and Loss Assessors (Licensing, Professional

   Requirements and Code of Conduct) Regulations, 2000, which regulate

   the licensing and the work of surveyors. These regulations stipulate that

   the surveyor shall investigate, manage, quantify, validate and deal with

   losses arising from any contingency and carry out the work with

   competence, objectivity and professional integrity by strictly adhering to

   the Regulations.

22)The assessment of loss, claim settlement and relevance of survey report

   depends on various factors. Whenever a loss is reported by the insured,

   a loss adjuster, popularly known as loss surveyor, is deputed who assess

   the loss and issues report known as surveyor report which forms the

   basis for consideration or otherwise of the claim.         Surveyors are

   appointed under the statutory provisions and they are the link between

   the insurer and the insured when the question of settlement of loss or



                                                                          17
damage arises. The report of the surveyor could become the basis for

settlement of a claim by the insurer in respect of the loss suffered by the

insured. There is no disputing the fact that the Surveyor/Surveyors are

appointed by the insurance company under the provisions of Insurance

Act and their reports are to be given due importance and one should have

sufficient grounds not to agree with the assessment made by them. We

also add, that, under this Section the insurance company cannot go on

appointing Surveyors one after another so as to get a tailor made report

to the satisfaction of the concerned officer of the insurance company, if

for any reason, the report of the Surveyors is not acceptable, the insurer

has to give valid reason for not accepting the report. 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.

24)Now with regard to the question of awarding rate of interest as

  compensation in cases where loss is caused due to deficiency/delay in

  services, this court in various judgments has held that the award of

  compensation must depend on facts and circumstances of each case and

  has to be worked out after determining the amount of loss suffered by the



                                                                           20
   consumer. In the case of Secretary, Irrigation Deptt., Govt. of Orissa v.

   G.C. Roy, (1992) 1 SCC 508, this court has stated that "a person

   deprived of the use of money to which he is legitimately entitled has a

   right to be compensated for the deprivation, call it by any name. It may

   be called interest, compensation or damages."

25)It was observed in the case of Ghaziabad Development Authority v.

   Balbir Singh,(2004) 5 SCC 65, that:

         "it is already held that awarding interest at a flat rate of 18%
         is not justified. It is clear that in all these cases interest is
         being awarded as and by way of compensation/damages.
         Whilst so awarding it must be shown that there is relationship
         between the amount awarded and the default/unjustifiable
         delay/harassment. It is thus necessary that there be separate
         awards under each such head with reasons why such award is
         justified."

26)In the case of Kaushnuma Begum v. New India Assurance Co. Ltd.,

   (2001) 2 SCC 9, this court has held that, "with a change in economy and

   the policy of Reserve Bank of India the interest rate has been lowered.

   The nationalized banks are now granting interest at the rate of 9% on

   fixed deposits for one year. We, therefore, direct that the compensation

   amount fixed hereinbefore shall bear interest at the rate of 9% per annum

   from the date of the claim made by the appellants."

27)In the case before us it has been made clear that if the insurer is not

   satisfied with the assessment of the surveyor, he retains the right to settle

                                                                             21
  claim for a different amount. The insurer after rejecting the assessments

  of the surveyor and the joint surveyor has accepted the assessment made

  by the Chartered Accountant. Therefore, it would not be correct to say

  that insurer while settling the claim has caused an unnecessary delay of

  three years. But once the insurer has reached a settlement he should

  make the payment at the earliest. And if further delay is caused by the

  insurer in making the payment then he should be made liable to pay the

  interest on the amount settled, as compensation at the current rate of

  interest till the payment is made, as it has deprived the appellant from

  using his money for which he is legitimately entitled.

28)Thus, in view of the above discussion, we direct the respondent

  Insurance Company to pay Rs.1,05,00817/- with interest at the rate of

  9% as compensation from the date of assessment done by the Chartered

  Accountant, within two months from the date of this order. The appeal is

  partly allowed. No order as to costs.




                                               .......................................J
                                               [ MARKANDEY KATJU ]




                                                                                    22
                   .......................................
                   J                 [ H.L. DATTU ]


New Delhi,
August 24, 2009.

0 comments:

Post a Comment