2019 (5) TMI 202 - SC - Indian Laws

Appointment of one surveyor after another - Compensation for loss suffered on account of damage by fire to the Complainant - 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? HELD THAT - 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. 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 - 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. 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. Appeal allowed.

Summary

Issues Involved:
1. Whether the Insurance Company was justified in appointing multiple surveyors.
2. Validity of the survey reports and the reasons for appointing additional surveyors.
3. Entitlement of the Complainant to the claimed insurance amount and interest.

Issue-wise Detailed Analysis:

1. Whether the Insurance Company was justified in appointing multiple surveyors:

The primary contention revolves around the Insurance Company's decision to appoint multiple surveyors to assess the claim. Initially, M/s Sunil J. Vora & Associates was appointed and assessed the loss at ?54,93,865/-. The Insurance Company, unsatisfied with this report, appointed M/s ABM Engineers & Consultants, who assessed the loss at ?24,76,585/-. Subsequently, a third surveyor, Mr. R.G. Verma, was appointed, who recommended total repudiation of the claim.

The Commission noted that there was no evidence that the appointment of the second, third, and fourth surveyors was with the consent of the Head Quarters. The Commission found that the Insurance Company’s act of appointing multiple surveyors without valid reasons was unjustified. The Supreme Court upheld this view, emphasizing that the Insurance Company must provide cogent reasons for not accepting the initial survey report before appointing another surveyor.

2. Validity of the survey reports and the reasons for appointing additional surveyors:

The Insurance Company argued that the initial survey report by M/s Sunil J. Vora & Associates did not verify certain documents and was arbitrary. However, the Commission and the Supreme Court found that the reasons provided by the Insurance Company for appointing additional surveyors were not valid. The Head Office had already communicated that M/s Sunil J. Vora & Associates was the final surveyor and questioned the appointment of M/s ABM Engineers & Consultants.

The Supreme Court referred to the judgment in Sri Venkateswara Syndicate vs. Oriental Insurance Company Limited, which allows the appointment of a second surveyor only for valid reasons such as inherent defects or arbitrariness in the first report. The Court found that there were no such valid reasons in this case, and the appointment of additional surveyors was to sub-serve the interests of the Insurance Company.

3. Entitlement of the Complainant to the claimed insurance amount and interest:

The Commission directed the Insurance Company to pay ?54,93,865/- to the Complainant, as assessed by the first surveyor, within 45 days, failing which it would carry interest at 10% per annum. The Supreme Court upheld this decision, finding no illegality in the Commission’s order.

Additionally, the Supreme Court noted that the Commission did not grant interest on the amount found due and payable to the Complainant. Therefore, the Court allowed the Complainant’s appeal for interest, granting interest at the rate of 6% per annum from the date of filing the petition until the payment of the amount.

Conclusion:

The Supreme Court dismissed the appeal of the Insurance Company and upheld the Commission’s order directing the payment of ?54,93,865/- to the Complainant. The Court also allowed the Complainant’s appeal for interest, granting 6% per annum interest on the awarded amount from the date of filing the petition until payment. The judgment reinforces the principle that insurance companies must provide valid reasons for appointing multiple surveyors and cannot do so arbitrarily to serve their interests.