Insurance Co. Can’t Appoint Second Surveyor In Absence Of Valid Reasons, NCDRC Orders United India Insurance Co. To Disburse Amount, Pay Compensation

Brief Facts:

Curewel Packaging Pvt. Ltd. (“Curewel”) held an insurance policy with United India Insurance Co. Ltd (“Insurance Company”) for their factory building, machinery, and stock. They filed a claim alleging damage due to a flood that occurred on 08.08.2008. The insurance company appointed surveyors to assess the loss, and their assessments differed significantly.

The first surveyor, M/s Protech Engineers and Loss Assessors assessed the loss of stock, building, and machinery at a specific amount. However, the insurance company believed that the assessment was not fully substantiated and that the machinery loss was overestimated. Therefore, they appointed a second surveyor, M/s S.K. Bakliwal & Co., who assessed the loss at a lower amount. After considering both survey reports, the insurance company offered Curewel a settlement amount of Rs. 3,81,170, which Curewel accepted under protest. However, later it filed a consumer complaint in the District Consumer Disputes Redressal Forum, Jaipur (“District Commission”) for a larger amount. The District Commission dismissed the complaint on the reasoning that Curewel had not established that the investigation report was false or without basis. Aggrieved by the order, Curewel appealed in the State Consumer Disputes Redressal Commission, Rajasthan (“State Commission”). The State Commission, in its ruling dated 01.05.2017, favoured Curewel and awarded a higher amount. Aggrieved, the insurance company challenged the said ruling in the National Consumer Disputes Redressal Commission (“NCDRC”).

The insurance company contended that the State Commission made errors in both facts and law. They claimed that Curewel failed to prove the presence of stock worth Rs. 3,02,272 on the site at the time of the loss. The insurance company further argued that the assessment of loss by the first surveyor was on the higher side, and the State Commission failed to negate the findings of the District Commission, which stated that the respondent had not established that the investigation report was false or without basis. They also argued that the State Commission failed to appreciate the fact that they were within their rights to appoint a second surveyor due to apparent anomalies in the first surveyor’s report.

Curewel maintained that they had suffered significant losses due to a flood that was covered and payable under the insurance policy. They promptly informed the petitioner about the incident and provided all necessary information and documents. They contended that the petitioner’s rejection of the first surveyor’s report and appointment of a second surveyor without valid reasons was against the law.

Observations by the Commission:

The NCDRC upheld the ruling of the State Commission, affirming the decision in the case. Firstly, the National Commission noted that Curewel had willingly accepted the claim amount of Rs. 3,81,170 as a full and final settlement with the Insurance Company. Curewel’s acceptance of this amount was crucial because they had not alleged any fraud, undue influence, or misrepresentation on the part of the insurance company. Therefore, the NCDRC held that under established legal principles, Curewel was not entitled to further claims once they had voluntarily accepted the settlement amount.

The NCDRC observed that the appointment of a second surveyor by the insurance company was without valid reasons. It referred to the Supreme Court case of Sri Venkateshwara Syndicate Vs. Oriental Insurance Company Limited (2009) 8 SCC 507 where the court held that while the insurance company has the right to appoint a second surveyor, such appointment should be supported by valid reasons, and the insurer must give cogent reasons for not accepting the report of the first surveyor. In this case, the NCDRC found that there were no valid reasons provided for the appointment of the second surveyor.

The NCDRC also highlighted that there was no concrete evidence or proof to suggest that the first surveyor’s report was arbitrary or excessive. Furthermore, the NCDRC considered circulars issued by the Insurance Regulatory and Development Authority of India (IRDA). These circulars stressed that insurers should not use discharge vouchers to prevent policyholders from pursuing higher compensation through judicial forums.

The NCDRC upheld the State Commission’s decision, finding that the petitioner’s actions, including the improper appointment of a second surveyor and attempts to conclude the claim with discharge vouchers, were inconsistent with established legal and regulatory principles and directed the insurance company to grant the remaining amount of Rs. 3,67,739 along with 9% interest from the complaint filing date. An additional Rs. 10,000 was awarded to Curewel for the cost of the proceedings.

Case: United India Insurance Co. Ltd. Vs Curewal Packaging Pvt. Ltd.

Case No.: RP/2124/2017

Advocate of the Complainant: VS Chopra

Advocate of the Respondent: Archana Dave, Anniston Dave and Aadhar Saha

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