Insurer Has Discretion To Reject A Surveyor's Report If It Is Arbitrary Or Unreasonable: NCDRC

Brief Facts of the Case

The complainant, a company incorporated under the Companies Act, 1956 and a distributor for TISCO, obtained a Burglary and House Breaking Policy from the New India Assurance/insurer for its stock in trade, including agro buckets, agro tools, and other goods, insured for Rs. 1,00,53,000 against a premium of Rs. 12,535 for its godown. A truck carrying stolen goods from the insured godown was apprehended, and an FIR was registered. The insurer was informed, and a surveyor was appointed to assess the loss. The complainant lodged a claim for the loss of material worth Rs. 89,29,703.65, which was repudiated by the insurer. The complainant filed a complaint before the State Commission, which was dismissed. Aggrieved by this, the complainant filed an appeal before the National Commission.

Contentions of the Insurer

The insurer argued that the premises were occupied by M/s Western Steel & Engineering, a sister concern of the complainant, at the time of the burglary, which was not disclosed and constituted misrepresentation. The policy contains an exclusion clause stating that coverage ceases if the premises are uninhabited for seven or more consecutive days and nights without the insurer's consent. The premises were uninhabited for 94 days before the discovery of the loss. It was further argued that the total stock claimed to be stolen amounted to about 15 truckloads, making it impossible for the theft to occur in a single day, suggesting that it happened over multiple occasions. This indicated a lack of proper care and precaution for such high-value stock, breaching the policy's reasonable care condition. Furthermore, despite repeated requests from the surveyor, no documents were provided by the complainant to assess and quantify the loss until the surveyor submitted his report.

Observations by the Commission

The Commission observed that, as per the terms and conditions of the Policy, compliance with the terms, conditions, and endorsements is a prerequisite for any liability of the insurer. This includes the obligation for the insured to take reasonable steps to protect the insured property against accident, loss, or damage, as mandated by General condition No. 3. Additionally, General condition No. 4 (c) requires the insured to provide the insurer with all reasonable information, assistance, and proofs regarding any claim. The commission highlighted that the complainant failed to fulfill these obligations by not exercising reasonable care to safeguard the property and providing incomplete information to the surveyor during the claim assessment process. The Supreme Court's decision in Sri Venkateswara Syndicate Vs. Oriental Insurance Co. Ltd. & Anr. underscores the requirement for appointing a surveyor to assess losses in claims of Rs 20,000 and above, but it does not bind the insurer to accept the surveyor's assessment unquestioningly. This principle was reaffirmed in the case of New India Insurance Co. Ltd. Vs. Pradeep Kumar, where it was emphasized that the insurer has the discretion to reject a surveyor's report if it is found to be arbitrary or perverse. In the present case, the complainant failed to demonstrate any arbitrariness or perversity in the insurer's rejection of the surveyor's report. Moreover, the complainant's lack of evidence to counter the insurer's contention regarding the extent of the burglary and the absence of documented stock records led the State Commission to base its findings on the evidence presented before it.

The Commission found no merit in the appeal and dismissed it.

Case Title: M/S. Shah Vadilal Jethalal Vs. New India Assurance Co. Ltd

Case Number: F.A. No. 681/2012