National Insurance Co. Ltd. And Ors. vs Pacific Packers

THIS appeal is directed against the order dated 29.10.2002 of Consumer Disputes Redressal Commission Punjab, Chandigarh allowing the complaint with direction to the appellant/opposite party -Insurance Company to pay amount of Rs. 9,00,175 minus salvage charges with interest @ 9% p.a. w.e.f. four months after the submission of claim till realization, to the respondent/complainant.

FACTS giving rise to this appeal lie in a narrow compass. Respondent has been running business of packaging at Ludhiana and had taken five insurance policies which also covered the risk of floods from the appellant -Insurance Company. It was alleged that on 25.2.1998, there was heavy rain and it continued for three days. On 27.2.1998 at around 4 a.m. the sewerage blocked and the water entered into the business premises of the respondent. Stocks of raw material, semi -finished and finished goods was damaged. On 27.2.1998, the appellant was intimated about the inundation loss. M/s. Indemnity Consultancy was appointed as Surveyor by the appellant. Complainant submitted the claim bill for Rs. 11,72,626.85. Surveyor assessed the loss at Rs. 9.00 lakh. It was further alleged that the appellant appointed Tarsem Lal as Investigator who submitted the report on 14.9.1998. Dissatisfied with the report of M/s. Indemnity Consultancy, the appellant appointed M/s. Duggal Gupta and Associates, Surveyor who submitted the report on 14.11.1998. This Surveyor assessed the lost at Rs. 2,81,179. On amount as recommended by the first Surveyor not being paid, the respondent attributing deficiency in service, filed complaint which was contested by the appellant.

WRITTEN submission has been filed on behalf of appellant -Insurance Company. Trust of argument by Mr. Atul Nanda for the Insurance Company was that a second Surveyor can be appointed under Section 64UM of the Insurance Act, 1938 by the Insurance Company and permission of Inspector for appointing a second Surveyor is not necessary. Appellant -Insurance Company for justifiable reasons had discarded the report of M/s. Indemnity Consultancy, first Surveyor. Decision in National Insurance Company Ltd. v. New Patiala Trading Company, I (2003) CPJ 33 (NC), rendered by the Commission against which SLP was dismissed in limine by the Supreme Court is not in conformity with the provisions contained in said Section 64UM. However, he did not dispute that the peril in question was covered under the policies. During the course of arguments, Mr. Nanda passed on the copy of noting made by the concerned Assistant Manager recommending re -survey of the loss. This noting would show that Assistant Manager apprehended that there was a collusion between the first Surveyor and the respondent in regard to the assessment of loss and the Surveyor even did not know how to apply the Average Clause and had not bothered to know that the excess applicable was Rs. 1.00 lakh instead of Rs. 25,000 which was deducted while assessing the loss. To be noted that in the last but one para of the order under challenge the State Commission has observed that a second Surveyor could not be appointed without permission of the Inspector of the Insurance Company.

SECTION 64UM(2), (3) and (4) of the Insurance Act, 1938 being material is re -produced below: "(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 unles 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 Assessor"):

Provided that nothing in this sub -section shall be deemed to take away or abridge that 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 it 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 not time limit has been specified by it within a 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 it may consider necessary with regard to the settlement or 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. ...."

EVIDENTLY ,this section does not provide that a second Surveyor cannot be appointed without permission of the Inspector of Insurance Company as held by the State Commission. In New Patiala Trading Company''s case (supra) in para No. 7 (at page 36 of the report) it was held: "Scheme of Section 64UM, particularly of Sub -sections (3) and (4), would show that insurer cannot appoint second Surveyor just as a matter of course. If the report of the Surveyor or Loss Assessor is not acceptable to the insurer it must specify reasons but it is not free to appoint second Surveyor. Appointment by the insurer of a second Surveyor itself would be a reflection on the coduct of the first Surveyor. Surveyor or Loss Assessor is duty bound to give a correct report. If the insurer -Insurance Company finds that Surveyor or Loss Assessor has not considered certain relevant points or has considered irrelevant points or for any other account it has reservation about the report, it can certainly require the Surveyor or Loss Assessor to give his views and then come to its own conclusion, but insurer cannot certainly appoint a second Surveyor -cum -Loss Assessor to counter or even contradict or rebut the report of the first Surveyor."

THIS decision having been rendered by a Bench of three Members and the then President of this Commission is binding on this Bench. Insurance Company does not seem to have asked M/s. Indemnity Consultancy, first Surveyor to give its views on the points raised in aforesaid noting. Copies of the policies filed by the appellant on 28.3.2008 do not contain Excess Clause of Rs. 1.00 lakh. Average clause seems to have been rightly applied in the first survey report dated 24.3.1998. There is vast difference between the assessments of loss made by the two Surveyors. First Surveyor assessed the net loss at Rs. 9,00,175 while the second Surveyor at Rs. 2,81,179. Appellant -Insurance Company appears to have not obtained comments from the first Surveyor in regard to the difference nor initiated action against the first surveyor for its allegedly having colluded with the respondent and assessed higher amount of loss. Even if the report of second Surveyor is taken note of, we are of the view that Insurance Company had unjustifiably rejected the report of first Surveyor and offered to make payment based on the second Surveyor''s report. We, thus, do not find any legal infirmity warranting interference under Section 21(a)(ii) of the Consumer Protection Act, 1986 in the order under appeal.

ACCORDINGL Y , the appeal is dismissed with Rs. 5,000 as cost to the respondent. Appeal dismissed.