Survey Report Must Be Given Due Consideration In Insurance Settlement Unless It Ignores Material Evidence Or Misrepresents Facts: NCDRC

Brief Facts:

The complainant firm was engaged in the business of selling tyres, tubes, and related goods. The shop was insured by New India Assurance Company (“Insurance Company”) under two policies. The first policy covered stocks worth Rs. 23,50,000/- and furniture and fixtures worth Rs. 1,50,000/-. The second policy covered the building (three shops). Both policies were valid from June 18, 2010, to June 17, 2011.

On November 5, 2010, a fire broke out at the shop, causing an estimated loss of approximately Rs. 30 lakh. The fire was promptly reported, and the Fire Brigade extinguished it. A report was lodged with the local police station, and the Insurance Company was informed. The Insurance Company appointed Shri Deepak Malhotra as a surveyor, who assessed the loss and submitted a report on December 1, 2010. Another investigator, Shri KS Chandhok, confirmed that the fire was due to an electric short circuit and reported significant damage to the stock, furniture, fixtures, and the building. Despite repeated requests and a legal notice sent on July 18, 2011, the Insurance Company did not settle the claim and closed it as "No Claim," alleging the cause of the fire was doubtful. Aggrieved by this decision, the complainant filed a consumer complaint before the State Consumer Disputes Redressal Commission, Punjab (“State Commission”).

The Insurance Company contended that the complaint was misleading and lacked a cause of action. It argued that the issue required extensive evidence and should be handled by a civil court. Further, the claim was handled according to policy terms and was rightfully closed as "No Claim" based on valid reasons. The Insurance Company pointed out discrepancies between the stock statements of the Devigarh shop and the bank's records, asserting that the complainant failed to provide proof of stock transfer between branches. The Insurance Company emphasized that the surveyor's report, which highlighted inconsistencies, supported its decision to deny the claim.

The State Commission partly allowed the complaint and awarded the complainant Rs. 1,79,335/- along with 9% interest per annum, Rs. 50,000/- as compensation, and Rs. 11,000/- as litigation expenses. Dissatisfied with the State Commission's order, the complainant filed an appeal before the NCDRC for enhancement of compensation.

Observations of the NCDRC:

The NCDRC referred to the report submitted by Mr. K.S. Chandhok, the surveyor. This report highlighted that the complainant did not provide concrete proof to establish that the shop was its branch office. The signboard at the insured premises depicted two different proprietors of the head office and the branch office.

Further, the investigation revealed that the majority of the stock on the lower ground floor consisted of old, discarded tyres. In the absence of genuine purchase bills, the condition of these old tyres could not be verified. The purchase bills submitted by the complainant did not pertain to the captioned premises. Additionally, the physical verification of the tyre remnants indicated that about 56 kg remained, establishing that only 10% of the entire stock was damaged in the fire. Consequently, the Insurance Company repudiated the claim.

The NCDRC held that it is a well-established legal position that survey reports should be given due consideration unless they exhibit non-consideration of material evidence or misrepresentation of facts, which was not the case here. While the stock statements and other records were unclear, the State Commission, after a detailed evaluation of the records and consideration of the facts and circumstances, determined the loss as Rs. 1,81,835/- based on Mr. Deepak Malhotra's survey report. Despite Mr. K.S. Chandhok's report, which assessed no loss, the State Commission considered Rs. 2,500/- as excess and determined the loss as Rs. 1,79,335/-.

The NCDRC concluded that the detailed and well-reasoned order of the State Commission did not suffer from any illegality or impropriety, and no interference was warranted. Therefore, the appeal was dismissed.

Case Title: M/s Bhupinder Tyres Works vs New India Assurance Company Ltd.

Case No.: First Appeal No. 1275 of 2014

Advocate for the Appellant: Mr Navneet Singh

Advocate for the Respondent: Mr Salil Paul and Mr Sahil Paul

Date of Pronouncement: 30th July 2024