State Consumer Disputes Redressal Commission
K.N. Resources Pvt. Ltd. vs New India Insurance Co. Ltd. on 13 June, 2023
Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023
New India Insurance Company Limited
AFR / NAFR
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Date of Institution: 05/03/2019
Date of Final Hearing: 01/06/2023
Date of Pronouncement: 13/06/2023
COMPLAINT CASE No.- CC/2019/14
IN THE MATTER OF :
K. N. Resources Private Limited,
Through: Authorized Representative Atul Sahu S/o. Shri P.C. Sahu,
IT Manager, K. N. Resources Pvt. Ltd., K.N. Building, Subhash Road,
RAIPUR (C.G.) - 492 001
Through: Shri R.K. Bhawnani, Advocate
... Complainant.
Vs.
New India Insurance Company Limited,
Zonal Office - II, Jeevan Bima Marg, Commercial Area, Pandri,
RAIPUR (C.G.)
... Opposite Party
Both Through: Shri Shekhar Amin, Advocate
CORAM: -
HON'BLE SHRI JUSTICE GAUTAM CHOURDIYA, PRESIDENT
HON'BLE SHRI GOPAL CHANDRA SHIL, MEMBER
HON'BLE SHRI PRAMOD KUMAR VARMA, MEMBER
PRESENT: -
Shri R.K. Bhawnani, Advocate for the complainant.
Shri Shekhar Amin, Advocate for the opposite party.
JUDGEMENT
PER: - JUSTICE GAUTAM CHOURDIYA, PRESIDENT This complaint, under section 17 of the Consumer Protection Act, 1986 (hereinafter referred to as "the Act") has been filed by the complainant alleging deficiency in service and unfair trade practice upon the opposite party by not settling the claim of the complainant and seeking direction to the opposite party to pay an amount of Rs.91,68,348/- along with interest and cost of litigation.
2. As per case of the complainant it is a company registered under the Companies Act 1956 carrying its business activities from Raipur (C.G.). Allowed Page 1 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited The complainant obtained a „Fire Floater Policy‟ from the opposite party vide policy No.45180011130300000013 for the period between 21.11.2013 to 20.11.2014 for sum insured of Rs.19,00,00,000/- covering the risk of Surya Vinayak Warehouse No.3, Gandhidham, Gujarat and the insured commodity was Soyabean Meal. On 23.04.2014 a loss occurred due to fire in the insured warehouse, the incident was timely intimated to the insurance company with all details supported with documents. Then claim was submitted to the opposite party on 04.06.2014, Annexure-A1, for claim amount of Rs.91,68,348/- claiming loss of 330.000 MT Soya DOC. On 24.04.2014 the Raipur Office of the opposite party informed the complainant that M/s. Gupta and Associates (Assessors) Pvt. Ltd. has been appointed as the Surveyor, who visited the site and inspected the segregation of material and assessed the loss. The complainant was asked to purchase the salvage, to which the complainant refused and requested the surveyor to dispose off the same as per rules, which was disposed off on 16.08.2014. The surveyor appointed by the opposite party submitted its Final Loss Assessment Report dated 16.12.2014, Annexure-A2 and assessed the net payable loss to the tune of Rs.91,68,348/- describing the same as out of 3579.936 MT stock kept in the warehouse 330.000 MT stock was separated as damaged for which the net payable loss was assessed.
3. In the meanwhile a complaint was filed by one Mr. Nikunj Naik with respect to the loss assessed by the Surveyor, then Mr. U.C. Nahar was appointed as Investigator in the matter on 27.03.2015. The opposite party acted upon a complaint made by a random person without any proof or evidence in support of his complaint and the investigator also relied upon the same without paying any heed to the issues raised by the complainant. The complainant raised its concerns regarding the claim Allowed Page 2 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited vide letter dated 17.03.2017 which was not replied by the investigator and the opposite party both. The investigator re-assessed the claim instead of investigating into complaint of Mr. Nikunj Naik and submitted his report without considering the documents submitted by the complainant. In the amended para No.22(a) of the complaint it has been averred that the opposite party has unnecessarily raised objection that the complaint is premature whereas the insurance company itself appointed a surveyor, who gave his report but it was not as per interests of the opposite party, then without taking permission of the Insurance Regulatory & Development Authority (hereinafter called as „IRDA‟ for short) and consent of the complainant a second surveyor was appointed.
4. As per surveyor report of Mr. B.M. Gupta of Gupta & Associates (Assessors) Pvt. Ltd. the net payable loss was assessed to the tune of Rs.91,68,348/- and in the written version the opposite party has stated that Mr. Nikunj Naik in his report dated 22.03.2015, Annexure OP-1, assessed the loss at Rs.47,00,000/- but even after having these two survey reports, the opposite party demanded certain documents from the complainant just to delay the settlement of claim which amounts to deficiency in service and unfair trade practice. The opposite party has overlooked the IRDA Circular No.IRDA/NL/CIR/Misc./173/09/2015 dated 24.09.2015 in which the IRDA has advised that where the liability and quantum of claim under a policy is established, the insurers shall not withhold claim amounts. In the amended para No.26 (a) it is further averred that the opposite party is denying report of its own surveyor and against the provisions of IRDA has appointed second surveyor i.e. without permission of the IRDA and consent of the complainant. It is further averred that the contention of the opposite party that the claim is Allowed Page 3 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited exaggerated and false in not correct and the computation of loss by the investigator Mr. U.C. Nahar is also incorrect. On these grounds, alleging deficiency in service and unfair trade practice this complaint is filed seeking relief as aforesaid in paragraph No.1.
5. The opposite party in its written version has denied the contentions of the complainant of loss of 330.000 MT Soya DOC and averred that there was fire loss of only 45 MT. It is further averred that the complainant did not provide all details and proper support to the investigator. The complainant did not support the opposite party as well as its investigator for more than 2.5 years, hence the opposite party was left with no option but to close the claim for pending non-compliance from the complainant since 01.08.2016. Since the claim of the complainant has not been repudiated yet hence the complaint is premature and this Commission has no jurisdiction to entertain the complaint being premature for which the cause action has not arisen even on 27.08.2018. By way of amendment in Para 16 (a) it is further averred that the Surveyor M/s. B.M. Gupta and Associates Pvt. Ltd. (in fact „Gupta & Associates (Assessors) Pvt. Ltd.‟) has submitted its report of loss of 330 MT worth Rs.91,68,348/-, which is manipulated, highly exaggerated, unreliable and without any substance. There are many irregularities in the process of survey for damaged stock, therefore, this survey report is not in order and highly prejudiced to provide benefit to the complainant illegally hence it is false. The survey report submitted by Shri U.C. Nahar for loss of 45 MT worth Rs.12,50,190/- is realistic. The investigator Mr. U.C. Nahar for computing the actual loss has taken into consideration the handling loss 0.30 % and this rate of deduction for handling loss is certified by the Clearing House Agency of the complainant. On this ground also the quantum of loss Allowed Page 4 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023
New India Insurance Company Limited
claimed by the complainant is exaggerated. The opposite party has
further averred that there is an alternative remedy available to the complainant of filing application before the IRDA for independent assessment of loss particularly when the dispute is regarding quantum of claim amount between the parties. Therefore, before approaching IRDA, directly approaching this Commission is abuse of process of law. On the above grounds the opposite party prayed that the complaint is vexatious and fraudulent which needs to be dismissed with compensatory cost of Rs.25,00,000/-.
6. In support of the complaint, the complainant has filed affidavit of Mr. Atul Sahu, Authorized Representative of the complainant dated 27.02.2019 and his additional affidavits dated 08.07.2019, 06.12.2019, 16.02.2021 and 16.11.2022. The complainant has filed documents as per list marked as Annexure A-1 to A-50, C-51 and C-52, which includes copy of insurance policy, fire intimation to the insurance company, correspondence with the insurance company, surveyor and the investigator, fire insurance claim, minutes of the meeting held on 01.08.2016 at the Divisional Office of New India Assurance Co. Ltd. D.O.- 2, Raipur, panchnama with English translation, stock lies in Surya Vinayak Godown as on 23.04.2014, notes of financial statement for the year ended March 2014 and details of Shakti Clearing Agency Gandhidham of the complainant company, whereas the opposite party in support of its written version has filed affidavit of Mr. R.K. Kishore, Retd. Regional Manager of the opposite party, affidavit of Mr. U.C. Nahar, Investigator and Mr. Ajay Shendre, Senior Divisional Manager and Authorized Representative of the insurance company and documents as per list marked as Exhibit OP-1 to OP-46, which includes copy of correspondences Allowed Page 5 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited through email, report of the surveyor Gupta & Associates (Assessors) Pvt. Ltd. dated 11.02.2015 along with photographs & documents, Investigation report of U.C. Nahar dated 03.02.2016/15.04.2017, letter of complaint by Mr. Nikunj Naik dated 12.03.2015, closure of claim file dated 16.03.2017 and sanction of claim dated 22.07.2022 etc.
7. We have heard the final arguments advanced by both the parties and perused their written arguments and case-laws relied by them. We have also minutely perused the documents and affidavits submitted by both parties.
8. After hearing arguments, perusal of complaint, written version and the written arguments of both parties it is abundantly clear that issuance of policy, incident of fire loss occurred to the insured commodity and its coverage under the policy as well as admissibility of the claim are not in dispute and only the quantum and assessment of loss is disputed in this case. Looking to the challenge in this complaint and objections in the written version the issues which need consideration and determination of this Commission are as under : -
(i). Whether the complaint is pre-mature, hence should be dismissed in limine ?
(ii). Whether the complainant ought to have approached IRDA for appointment of independent surveyor for assessment of loss, before approaching this Commission directly ?
(iii). Whether the first appointed Surveyor M/s. Gupta & Associates (Assessors) Pvt. Ltd. was competent for the category Fire Loss ?
(iv). Whether the appointment of second Surveyor Mr. Nikunj Naik was lawful and valid ?
(v). Whether the appointment of investigator Mr. U.C. Nahar was lawful ?Allowed Page 6 of 23
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(vi). Quantum of net loss payable to the complainant ? Whether the assessment of loss by Mr. U.C. Nahar is reliable and to be acted upon ?
9. The issue Nos. (i) & (ii) are considered together. So far as these issues are concerned, the opposite party in its written version has raised these objections on two grounds, first that the claim of the complainant has not been repudiated yet and the complaint was filed; and second that there are two different claim amounts based on assessment of first surveyor and second based on investigation report of investigator Mr. U.C. Nahar. Both the claim amounts are based on two different methods followed in computation of loss. In such a situation as per sub-section (3) of Section 64 UM of the Insurance Act 1938, the Authority may call for an independent report from any other approved surveyor or loss assessor and on receipt of such report, under sub-section (4) of the Section 64 UM of the Insurance Act 1938, it may make directions to the insurer to settle the claim at an amount higher or lesser than the amount as assessed by the Surveyors or investigators appointed by the insurer. In this regard learned counsel for the opposite party has relied upon judgement of Hon‟ble Supreme Court in the case of Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd. & Anr., (2009) 8 SCC 507 & judgement of Hon‟ble National Commission in Vijay Cotton & Fibre Co. Vs. New India Assurance Company Ltd., I (2021) CPJ 65 (NC).
10. Learned counsel for the complainant has argued that cause of action as per the Act arises even when there is unreasonable delay in paying the insurance claim. In the instant case the loss occurred on 23.04.2014 and the claim was not paid till filing of this complaint in February 2019. The opposite party unilaterally and arbitrarily closed the Allowed Page 7 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited claim file instead of settling the claim as per the survey report. The complainant came to know only in October 2017 that its claim file was closed on 17.03.2017 i.e. vide Annexure OP-42. Subsequently the complainant requested the insurance company to reopen the claim file and to reconsider its decision of closing the claim but that request was also refused by the opposite party on 05.09.2018 vide Annexure OP-44. Later on the opposite party agreed to pay the complainant‟s claim based on the assessment of the investigator. Thus, the cause of action arose when the opposite party failed to pay the claim as per the loss assessed by the first surveyor, thereafter when they closed the clam file and when they agreed to pay the claim as per the assessment of the investigator, hence the complaint cannot be said as pre-mature. It is also argued that the provisions of the Insurance Act 1938 or the IRDA do not bar the jurisdiction of this Commission as Section 3 of the Act makes it clear that the provision of the Act are in addition to and not in derogation with the provisions of any other law for the time being in force. In this regard learned counsel for the complainant has relied upon judgement of Hon‟ble Supreme Court in Kishore Lal Vs. Chairman, Employees State Insurance Corporation in Appeal (Civil) 4965 of 2000, judgement dated 08.05.2007; Sri Venkateswara Syndicate (supra); The New India Assurance Co. Ltd. Vs. M/s. Protection Manufacturers Pvt. Ltd., 2010 7 SCC 386 and Judgement of Hon'ble National Commission in M/s. Crystal Crop Protection Pvt. Ltd. Vs. New India Assurance Co. Ltd. & Ors. in Consumer Case No.305 of 2015 order dated 13.12.2019.
11. We have considered the above rival contentions of both parties and perused the case-laws relied by them. There is no doubt that in this case an inordinate delay has already been caused by the insurance company in Allowed Page 8 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited settlement of claim of the complainant. However, on intimation of the incident of fire loss occurred on 23.04.2014 a surveyor was appointed immediately on the same day 23.04.2014 and thereafter another surveyor was appointed on 24.04.2014, as per Annexure A-5 & A-6 respectively but thereafter for one reason or another the claim was kept pending for a long time and was closed on 17.03.2017 vide Annexure OP-42 and subsequently the request of the complainant to reopen the claim was also refused by the opposite party on 05.09.2018 vide Annexure OP-44 in such a situation, if the complainant approached this Commission alleging deficiency in service for non-payment of its insurance claim for such an inordinate and unreasonable delay then the complaint cannot be said to be pre-mature, even if the claim is not repudiated completely. Without any appropriate decision for this or that reason the claim was closed and even on the request of the complainant the same was not reopened by the insurance company, which can also be termed as repudiation of claim. In our opinion this was the sufficient cause of action to file the complaint and the complaint cannot be said to be pre-mature. Hence, in view of the above discussion the issue No.(i) is decided in favour of the complainant.
12. So far as the issue No.(ii) is concerned to adjudicate this issue as well as issue Nos.(iii), (iv) & (v) also it is relevant to refer to Section 64- UM(2), (3) & (4) of the Insurance Act 1938 which are 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 Allowed Page 9 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited 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 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 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 subsection (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 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 dispatch 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."
The term "Authority" is defined under section 2 (1A) of the Insurance Act 1938 as : -
"Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999."Allowed Page 10 of 23
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CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited This issue was earlier discussed and decided by the Hon‟ble Apex Court in the case of New India Assurance Company Limited Vs. M/s.
Protection Manufacturers Private Limited, 2010 7 SCC 386 which has been relied by the learned counsel for the complainant also. In that case the interpretation of Section 64 UM of the Insurance Act, 1938 by the Hon‟ble Apex Court in paragraph 35 was as under : -
"35. The submissions of Mr. Piyush Gupta in regard to Section 64 UM of the Insurance Act, 1938, are also of substance, as the Appellant Insurance Company should have applied to the Regulatory Authority under the Act for a second opinion instead of appointing M/s. J. Basheer & Associates for the said purpose unilaterally. The reports submitted by M/s. J. Basheer & Associates are liable to be discarded on such ground as well."
The facts of the above case were identical with the facts of the present case so far as appointment of surveyors and investigator one by one is concerned. In that also on the same day when the fire broke out, the insurance company appointed Mr. A.S. Asthana, Surveyor, to conduct a preliminary spot survey. Mr. Asthana and the representatives of the Insurance Company took joint stock of burnt motors and air coolers which were being manufactured by the Respondent/complainant. Mr. Asthana submitted his preliminary report, but did not specify the cause of fire. Thereafter, on 9th April, 2000, one Mr. Bhaskar Joshi was appointed as Joint Surveyor to conduct a final survey along with Mr. Asthana. The Joint Surveyors prepared a draft assessment report and estimated the loss suffered by the Respondent/complainant to be Rs.2,37,09,372.12 paise. The joint assessment report which was submitted, clearly stated that the exact cause of fire was not known, though it could be due to a short circuit. Thereafter, the Regional Manager of the Insurance Company appointed M/s. J. Basheer & Associates as investigator to conduct an investigation into the cause of fire and to assess the loss. As many as six Allowed Page 11 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited independent investigation reports were filed by M/s. J. Basheer & Associates. According to M/s. J. Basheer & Associates, the net amount of loss suffered by the Respondent Company on account of the fire would be Rs.1,10,57,034/-, which tallies almost exactly with the assessment made by the Insurance Company amounting to Rs.1,10,67,230/-. Interestingly, although in the report submitted by M/s. J. Basheer & Associates it was mentioned that their appointment was for investigation into (i) cause of fire and (ii) assessment of loss but there was nothing definite in the 67 page report as to the cause of fire, except for a reference to the reply sent by the Fire Officer, Cuttack stating that the estimate of fire amount was about Rs.15 lakhs and the cause of fire was "short circuit" in the raw material section. The event which was different in that case was that the Insurance Company requested Mr. Bhaskar Joshi to make his observations on the report submitted by M/s. J. Basheer & Associates. In his comments submitted Mr. Bhaskar Joshi severely criticized the report filed by M/s. J. Basheer & Associates and even went to the extent of observing that they had failed to measure up to the faith and responsibility reposed on them by the insurers. The report seemed to suggest that the same had been tailor-made in order to fit the loss assessed by the Insurance Company at Rs.1,10,67,230/-, which uncannily tallied with the estimate of M/s. J. Basheer & Associates, namely, Rs.1,10,57,034/-.
13. In the above similar set of events of appointment of surveyors and investigator, the Hon‟ble Apex Court was of the view that the insurer should have moved an application before the IRDA for appointment of an independent second surveyor under the Insurance Act instead of appointing another surveyor unilaterally. Hence in the instant case the argument of the opposite party insurance company that the complainant Allowed Page 12 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited ought to have moved to IRDA instead of coming before this Commission has no substance, in fact the insurance company ought to have moved to the IRDA for appointment of independent second surveyor at the place of appointing one and another surveyor / investigator unilaterally, which they have failed to do and if in such situation the complainant has approached this Commission, they cannot be faulted at in it. Otherwise also, we are agree with the arguments of learned counsel for the complainant that as per Section 3 of the Act, the Insurance Act 1938 or the IRDA do not bar the jurisdiction of this Commission as the provisions of the Act are in addition to and not in derogation with the provisions of any other Law for the time being in force. Hence the issue No.(ii) is also decided in favour of the complainant.
14. Now the Issue Nos.(iii), (iv) and (v) being co-related issues they are decided together. As discussed above in the similar set of facts the Hon‟ble Apex Court in M/s. Protection Manufacturers (supra) has discarded the appointment of second surveyor by the insurance company unilaterally and was of the view that the insurer ought to have approached the IRDA for appointment of independent surveyor. The Hon‟ble Apex Court in its reportable judgement dated 21.01.2020 in Civil Appeal No 504 of 2020 between The New India Assurance Co. Ltd. Vs. Sri Buchiyyamma Rice Mill and Anr. has discussed its previous judgements in Sri Venkateswara Syndicate (supra) and M/s. Protection Manufacturers (supra) regarding the issue of appointment of surveyor under Section 64 UM of the Insurance Act 1938 and is of the constant view on this issue. In paragraph No.13 of the Sri Buchiyyamma Rice Mill (supra) the principle laid down in Sri Venkateswara Syndicate (supra) is discussed as under : -
Allowed Page 13 of 23
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"13 In Sri Venkateswara Syndicate (supra), the issue before
this Court was whether the insurer can appoint successive surveyors for getting the loss and damage assessed before settling the claim of the insured. The two judge Bench while explaining the purpose of a report of the surveyor observed thus:
"31. 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 assesses 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 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." (Emphasis supplied) This Court held that the report of a surveyor must be given due importance and that there should be sufficient grounds for explaining a disagreement with an assessment made by a report of the surveyor. Yet at the same time, under Section 64-UM(2) of the Insurance Act 1938, it is not open to the insurer to merely appoint a succession of surveyors with a view to obtain a tailor- made report. It is open to the insurer to appoint another surveyor for valid reasons bearing on the deficiencies found in the survey report and the reasons which must be indicated by the insurer. In this backdrop, the two judge Bench while holding that there is no absolute prohibition on the insurer appointing more than one surveyor observed thus:
"33. 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 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 CA 504/2020 12 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."Allowed Page 14 of 23
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...
"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." (Emphasis supplied) 14 While determining whether the appointment of a second or successive surveyor is justified, one must take into consideration the necessity of doing so and it must be weighed in the context of relevant facts and circumstances including the deficiencies or omissions in the report of the first surveyor. Each case must be independently considered based on relevant facts and circumstances. There ought to be cogent reasons for appointing a second surveyor."
Hon‟ble National Commission in its judgement in M/s. Tirupati Vinyl India Private Ltd. Vs. United India Insurance Company, in First Appeal No.495 of 2013 decided on 12 May, 2022 has also concurred with the same view and paragraph No.16 of the said judgement has held as under : -
"16. This Commission had also dealt with the issue vide Order dated 19.01.2012 passed in Original Petition No. 73 of 2002 entitled "M/s. Jagannatha Poultries vs. New India Assurance Co. Ltd." and had held as under:
"Having considered the above submissions, we are of the considered opinion that while it is permissible to appoint a second surveyor to assess the loss but this must be for given reasons and only through the auspices of the Regulatory Authority i.e. IRDA. Counsel for the opposite party-Insurance Company fairly admitted that the reasons for appointing a second surveyor is not disclosed to the complainant though there may be valid reasons and the permission of the IRDA was not obtained for appointment of the second surveyor. Therefore, strictly speaking going by the view taken by the Supreme Court in the case of New India Assurance Co. Ltd., Vs. M/s. Protection Manufacturers Pvt. Ltd., (Supra) there is no escape from the conclusion that the Allowed Page 15 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited appointment of second surveyor viz. S.C. Senapati was not in accordance with the provisions of Section 64-UM of the Act, and therefore the said report of such surveyor must be discarded and cannot form valid basis for the settlement of the insurance claim of the complainant. The plea of the counsel for the opposite party that the appointment of the second surveyor was necessitated on account of the glaring defect in the report of the first surveyor M/s. Mehta & Padamsey even if it has weight will not survive.
Accordingly, we hold that the insurance company ought to have settled the claim of the complainant as per the assessment made by the first surveyor-M/s.
Mehta & Padamsey Pvt. Ltd. i.e. at ₹ 65,76,317/-"
15. When we go through the provisions of the Section 64 UM of the Insurance Act 1938 in the light of the above discussion and case-laws of Hon‟ble National Commission and the Hon‟ble Apex Court the entire picture of the settled principle of law which emerges is that insurer was not correct in appointing another surveyor unilaterally without moving application before the IRDA and permission of the IRDA. Hence the appointment of second surveyor Mr. Nikunj Naik cannot be held in accordance with the provisions of Section 64 UM of the Insurance Act 1938.
16. Regarding appointment of surveyor Mr. Nikunj Naik the insurance company has tried to explain that the first surveyor Mr. B.M. Gupta was not competent to make survey of the loss in question as he was not surveyor of fire loss therefore the Surveyor Mr. Nikunj Naik was appointed. But if the fact being so and the insurance company was of the view that Mr. B.M. Gupta was not competent to make survey and assess the fire loss they ought to have cancelled the appointment of the Mr. B.M. Gupta first and then to appoint the Surveyor Mr. Nikunj Naik. In the entire record there is no document to show that appointment of Mr. B.M. Allowed Page 16 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited Gupta was ever cancelled. During the course of arguments, when the learned counsel for the opposite party was asked in this regard, he submitted that he has no knowledge of the fact and he failed to lay his hand on any document to show that appointment of Mr. B.M. Gupta was ever cancelled by the insurance company. Hence, it cannot be said that appointment of Surveyor Mr. B.M. Gupta was ever cancelled he was in fact the first surveyor appointed in this matter. If the insurance company wanted to appoint second surveyor Mr. Nikunj Naik, the procedure in accordance with law as discussed above was to be followed by the insurance company, but the insurance company has failed to do so.
17. Otherwise also in the record the only survey report which is brought on record is of the Gupta & Associates (Assessors) Pvt. Ltd. dated 11.02.20015, marked as OP-46 which runs into as many as 148 pages which contains Fire Loss Assessment Report six pages and its enclosures including photographs. This survey report titled as „Fire Lass Assessment Report‟ starts with the words „Under the instruction received from The New India Assurance Co. Ltd. (211600) Gandhidham, we the undersigned Surveyors and Loss Assessors attended at the Surya Vinayak Warehouse No.3 Kidana Gandhidham, in order to carry out survey & ascertain the loss caused to the stock of Soya DOC which reported got damaged due to Spontaneous Combustion on 23.04.2014 and at the last page of the report i.e. page No.6 Surveyor Mr. K D Vyas (SLA63817/2013-18) and Surveyor Mr. R.K. Patel, (SLA56604/2011-16), category Fire A have signed the report with Surveyor Mr. B.M. Gupta has also signed the report along with them. Hence this plea that Mr. B.M. Gupta was not competent to assess fire loss is also not tenable looking to the fact that Gupta & Associates (Assessors) Pvt. Ltd. has submitted its report duly signed by Allowed Page 17 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited three surveyors and one of them was of the „Category Fire-A‟. If for the sake of arguments if it is assumed that the said surveyor was not empanelled to assessed the Fire Loss, the insurance company ought to have rejected the their report instead of acting upon that report and appointing investigator for further investigation of the complaint by Mr. Nikunj Naik regarding that report but the said report was never rejected by the insurance company. If it was a report of incompetent surveyor for assessing fire loss the insurance company ought to have outright rejected the report but it has not done so.
18. However, on a complaint made by Mr. Nikunj Naik an investigator Mr. U.C. Nahar was appointed to investigate the matter vide minutes of the meeting held on 01.08.2016, Annexure-OP 22. In that meeting also no question of survey category of Mr. B.M. Gupta was raised. He remained present in that meeting and submitted that "they have taken all care during assessing the loss, segregation of the same and disposal of cargo salvage and the report submitted by him is all ok." Mr. Nahar expressed that "investigation is specific for the complaint made by Mr. Nikunj Naik, who is not present today and it require to have his specific submission supporting his complaint, it is agreed that the complaint made by Mr. Naik is not supported by any evidences." Ultimately, it was agreed by all parties that "Mr. Nahar will further investigate with Mr. Nikunj Naik and submit his report as early as possible. In case, if any further information is required from the insured and surveyor, the same will be asked." In that meeting Mr. R.K. Kishore, Senior Divisional Manager, Mr. R.K. Shukla, Development Officer of the insurance company, Mr. Ram Choubey, Mr. Sanjay Singhal of K. N. Resources Private Limited, Surveyor Mr. B.M. Gupta and Investigator Mr. U.C. Nahar remained present. It is clear from Allowed Page 18 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited the above minutes of the meeting that on a complaint made by Mr. Nikunj Naik the Investigator Mr. U.C. Nahar was appointed for investigation of the said complaint. It was also agreed by all parties that no evidence in support of the complaint was submitted by Mr. Nikunj Naik. Nor the report filed by him, if any, is brought on record by the insurance company. In such a situation, if an investigator Mr. U.C. Nahar is appointed to investigate on the complaint made by Mr. Nikunj Naik, the same cannot be held unlawful, in fact which was done with the consent of both parties and nobody expressed any objection in appointment of investigator.
19. Mr. Nikunj Naik has not filed his detailed report and in the so called complaint dated 12.03.2015 at page No.2 under the heading „Conclusion About Damaged Cargo‟ has mentioned as under : -
"As Per My Several Visit I Had Assessed the Loss Of Damaged Soya Cargo Was Approx 140 Mt. it‟s Value About Market Price Was 47 Lac, but I Realy Surprised To Know That Mr. B.M. Gupta (Gupta Associate) Gandhidham Had Assessed The Loss By Him Self the Damaged Soya Bean Stock Loss Approx 330 Mt. Without My Concent & information & That Report Also Submited to Under Writter. So I Humbly To Request You to Investigate This Damaged Cargo Loss & About It‟s Damaged Salvage Costing In Proper Channel Or Way You Get & Found Many Manipulation In Damaged Stock, Account & Activity Before To Process & Settled the Fire Claim File."
But in support of his complaint, as agreed between the parties in the meeting held on 01.08.2016, Mr. Nikunj Naik has not filed any evidence in any form. It is pertinent to mention here that this Commission called the investigator Mr. U.C. Nahar and Surveyor Mr. Nikunj Naik for explaining certain issues, but the insurance company informed that Mr. Nikunj Naik has passed away during Covid period as mentioned in order sheet dated 28.03.2023. Hence, the allegation of Mr. Nikunj Naik Allowed Page 19 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited regarding manipulation and exaggerated assessment made by Surveyor Mr. B.M. Gupta, being without any support of any cogent evidence appears to be baseless.
20. Thus, with the foregoing discussion, the issue No.(iii), (iv) and (v) are decided with the observation that appointment of first surveyor Gupta & Associates (Assessors) Pvt. Ltd. was in accordance with Law but the appointment of Second Surveyor Mr. Nikunj Naik was not in accordance with Law and necessary procedure under the law for his appointment was not followed by the insurance company hence is invalid. Though he visited the site and inspected the loss and was of course a duly qualified and licensed surveyor by the IRDA for fire loss, hence his complaint cannot be simply brushed aside, hence the appointment of investigator Mr. U.C. Nahar cannot be termed as unlawful.
21. So far as the last issue No.(vi) regarding quantum of net loss payable to the complainant is concerned, the occurrence of loss and its coverage is nowhere at dispute. In the surveyor report of Gupta & Associates (Assessors) Pvt. Ltd. at Sr. No.15 under the heading Assessment of Loss the Stock as on 23.04.2014 at Surya Vinayak Godown No.3 Kidana Gandhidham was mentioned as 3579.936 MT and the Value of Stock Rs.33,358.81 per MT duly certified by CA is mentioned as Rs.11,94,22,404.84. The quantity separated as sound i.e. 3250.865 MT @ 33,358.81 i.e. Rs.10,84,44,987.87 is mentioned. The quantity segregated as damaged due to Spontaneous Combustion was 329.071 MT and Gross Assessed Loss was Rs.1,09,77,416.97. Salvage value of the material was calculated as per Grade-1 & Grade-2 and total salvage value was calculated at Rs.13,26,524.00, thus the Gross Assessed Loss was computed Allowed Page 20 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited as Rs.96,50,892.97 in which Excess @ 5% of the claim amount was deducted and thereby the net assessed loss payable to the insured was calculated as Rs.91,68,348.00. Along with this report there was as many as 30 enclosures including 56 photographs. In the list of enclosures copy of stock statement as on 23.04.2014, copy of quantity wise turn over details for the financial year ended on 31.03.2014 certified by CA, copy of minutes of the meetings during tender opening proceedings, copy of delivery details of salvage material Grade-I and Grade-II, copy of panchnama, FSL report etc. are mentioned. The Fire Loss Assessment Report is marked as Annexure OP-46 and its runs into 148 pages with all the enclosures.
22. The investigator Mr. U.C. Nahar has investigated the matter upon the complaint made by the Mr. Nikunj Naik, but the said complaint was not supported with any cogent evidence as discussed above, nor Mr. Nikunj Naik has filed his report except the complaint made by him. Mr. Nahar has tried to explain that the complainant never co-operated with him and did not supply the documents which he demanded, but looking to the Loss Assessment Report and the list of enclosures as well as the copy which are filed before us we are satisfied that the complainant had already given the necessary documents either to the surveyor or to the insurance company that is why the copy of the same are filed before us. Hence this contention of the investigator cannot be said to be true.
23. So far as assessment made by the Investigator is concerned, the investigator in his Revised Investigation Report at page No.6 has mentioned the „Total stock at the time of loss‟ as 3579.936 MT, which is the same stock as considered by surveyor Gupta & Associates (Assessors) Pvt. Ltd. In the clarification filed before us by the investigator also in Allowed Page 21 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited Annexure B the stock shifted to Surya Vinayak WH No.3 on 22.03.2014 is mentioned as 3579.936 MT, thus it appears that there is no difference in the total stock at the time of loss in the concerned Warehouse as reported by the Surveyor or by the investigator. The sound stock shifted to Itarsi is also mentioned in the investigation report as „Sound stock shifted to Itarsi as per the survey report‟ which shows that there was no difference of opinion in this regard also. Thereafter, the investigator Mr. U.C. Nahar has considered handling shortage, based on the calculation of M/s. Shakti Clearing Agency which is under : -
"So shortage apportioned to Railway Cargo 183393.324 = 82.44% 222433.328 Of 115235.79 x 82.44% = 95000.038 MT Shortage @ 0.30% = 285.000 MT"
Thereafter, finally the loss due to incident is considered of 45 MT only.
24. In our considered opinion the investigator has erred in deducting the handling shortage. On the one hand in his report he has used the term "Total Stock at the time of loss" as 3579.936 MT and on the other hand he has considered handling shortage, which was in fact calculated on 95000 MT @ 0.30% based on M/s. Shakti Clearing Agency as above. In our opinion whatever stock is considered as "Total Stock as the time of loss"
was in fact the actual stock after deducting the handling shortage etc. in which the incident of spontaneous combustion occurred and loss was caused, then there was no reason to consider handling shortage again on that quantity and that too the shortage quantity which was calculated on 95000 MT. Regarding disposal of salvage in the Survey Report of Gupta & Associates (Assessors) Pvt. Ltd., at page No.3, it is mentioned that after obtaining consent from the insured and the insurer, sealed quotations Allowed Page 22 of 23 Complaint No.: K.N. Resources Private Limited Date of Pronouncement:
CC/19/14 Vs. 13/06/2023 New India Insurance Company Limited were called and sealed envelopes were opened in presence of representatives of the insurer, that of M/s. Shakti Clearing Agency and the participants of the tender. In which M/s. Sai Eswar Impex quoted the highest rate for purchase of the salvage and after some negotiation all the concerned, who remained present, agreed to award the tender to M/s. Sai Eswar Impex and finally the tender was awarded to them. In support of these facts the surveyor has enclosed copy of Minutes of the Meeting During Tender Opening Proceedings, as Annexure OP 46 (65), which bears seal and signature of all the concerned parties. Thus, in our considered opinion the disposal of salvage was also done properly and the procedure adopted cannot be questioned. We are not inclined to accept the calculation and deduction of handling shortage considered by the investigator Mr. U.C. Nahar and we fully concur with the net loss assessed by the surveyor M/s. Gupta & Associates (Assessors) Pvt. Ltd.
We are of the considered view that in not paying the said amount to the complainant, the opposite party insurance company has committed deficiency in service and unfair trade practice.
25. In view of the foregoing discussion, we find substance in this complaint to succeed. We allow this complaint and direct the opposite party Insurance Company to pay the complainant within 45 days the amount as under : -
(a) Rs.91,68,348.00 (Rupees Ninety One Lacs Sixty Eight Thousand Three Hundred & Forty Eight) i.e. the net assessed loss by the surveyor M/s. Gupta & Associates (Assessors) Pvt. Ltd. with interest @ 6% p.a. from the date of filing of this complaint i.e. 05.03.2019.
(b) Cost of litigation, which is quantified at Rs.15,000/- ( Rupees Fifteen Thousand).
(Justice Gautam Chourdiya) (Gopal Chandra Shil) (Pramod Kumar Varma) President Member Member /06/2023 /06/2023 /06/2023 Pronounced On: 13th June 2023 Allowed Page 23 of 23