Insurance Surveyor's Report Not Sacrosanct, But Consumer Forum Cannot Subject It To 'Forensic Examination': Supreme Court

The Supreme Court observed that though an insurance surveyor's report is not so sacrosanct, a Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject it to 'forensic examination of its anatomy'.

"Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop", the bench of Justices Hemant Gupta and V. Ramasubramanian observed said.

The court observed thus while upholding a Judgment of the National Consumer Disputes Redressal Commission confining the compensation payable to claimants only to the extent of the assessment as made by the final Surveyor.

In this case, a "Standard Fire and Social Perils" policy was taken by the complainant from the insurance company. When the policy was in force, a fire broke out in its factory premises. One M/S Adarsh Associates, appointed by the Insurance Company, conducted a survey, and submitted its report assessing the loss suffered as Rs.2,86,17,942. Aggrieved, the complainant filed a consumer complaint before the National Commission claiming inter alia compensation in a sum of Rs.1364.88 lakhs. The commission directed the insurance company to pay only the amount of Rs.2,85,76,561 as admitted by them.

Taking note of the documents on record, the Apex Court bench observed that the objections to the Surveyors' Report are wholly unsustainable and that the National Commission rightly rejected those objections. 

"31. This is not a case where the Insurance Company has repudiated the claim of the appellant arbitrarily or on unjustifiable grounds. This is a case where the claim of the appellant has been admitted, to the extent of the loss as assessed by the Surveyor. In cases of this nature the jurisdiction of the special forum constituted under the Consumer Protection Act, 1986 is limited. Perhaps if the appellant had gone to the civil court, they could have even summoned the Surveyor and cross examined him on every minute detail. But in a complaint before the Consumer Forum, a consumer cannot succeed unless he establishes deficiency in service on the part of the service provider.", the court observed.

Surveyor is governed by a code of conduct

32. It is true that even any inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law or which has been undertaken to be performed pursuant to a contract, will fall within the definition of the expression 'deficiency'. But to come within the said parameter, the appellant should be able to establish (i) either that the Surveyor did not comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specified by the regulations made under the Act, in terms of Section 64UM(1A) of the Insurance Act, 1938, as it stood then; or (ii) that the insurer acted arbitrarily in rejecting the whole or a part of the Surveyor's Report in exercise of the discretion available under the Proviso to section 64UM(2) of the Insurance Act, 1938.

37.... They are (i) that the surveyor is governed by a code of conduct, the breach of which may give raise to an allegation of deficiency in service; and (ii) that the discretion vested in the insurer to reject the report of the surveyor in whole or in part, cannot be exercised arbitrarily or whimsically and that if so done, there could be an allegation of deficiency in service.

38. A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor's report to forensic examination of its anatomy, just as a civil court could do. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop.

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