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Judgment
Avm J. Rajendra, Avsm Vsm (Retd.), Presiding Member
The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (“the Act”) against the Order dated 20.10.2016 passed by the learned Haryana State Consumer Disputes Redressal Commission, Panchkula (“the State Commission”), in Consumer Complaint No. 41 of 2015, wherein the Complaint filed by the Complainant (Appellant herein) was partly allowed.
For Convenience, the parties in the present case being referred to as mentioned in the Complaint before the State Commission. The Complainant is the proprietor of M/s. Raj Khad Bhandar and running Pesticides and Fertilizer Products business. United India Insurance Company Ltd. is referred to as the Opposite Party /Insurer (OP).
Brief facts of the case, as per the Complainant, are that the Complainant obtained a standard fire insurance policy from the OP for Rs.40,00,000/- valid from 05.11.2012 to 04.11.2013. On the night of 30.10.2013, a fire erupted in the Complainant's shop, resulting in the destruction of goods valued over Rs.40,00,000/-. Subsequently, they submitted a claim for the sum assured, but only Rs.3,27,180/- was paid. Dissatisfied, they filed Consumer Complaint No. 41 of 2015 before the State Commission, seeking release of full Rs.40,00,000/- along with interest @ 18% p.a. Also, Rs.1,00,000/- was claimed for mental agony and Rs.21,000/- as costs.
In the reply, the OP asserted that based on the report of fire and the claim by the Complainant, surveyor was appointed on 31.10.2013. They conducted inspection on 01.11.2013 and the Complainant was instructed to segregate the damaged and other articles. After receiving the necessary information, a follow-up visit was made on 07.11.2013 and the loss was assessed at Rs.3,27,000/-This assessment was not accepted by the Complainant, who failed to substantiate the claim of loss of Rs.40,00,000/-. Additionally, the OP has also raised objections as regards maintainability of the complaint contending that it is defective due to non-joinder of necessary parties. Specifically, Syndicate Bank, Panipat, the Complainant's financier, has not been impleaded. The OP has also cited concealment of true facts, among other grounds and sought dismissal of the complaint.
The learned State Commission partly allowed the complaint, issuing the following Order-
“6….As per calculation submitted by complainant value of the articles is Rs.2,46,535/- much less then the amount assessed by surveyor. The surveyor has assessed loss to the tune of Rs.3,27,000/- which is on the higher side. As insurance company is relying upon the report of the surveyor, so it cannot go out of the same. Resultantly claimant is awarded compensation to the tune of Rs.3,27,180/- as mentioned in Ex.R-1 .
As a sequel to above discussion complaint is allowed and O.P. is directed to pay Rs.3,27,000/- alongwith interest @ 12% per annum from the date of filing of the complaint till realization. Complainant is also awarded compensation of Rs.21,000/- for mental harassment and agony and Rs.11,000/- as litigation expenses.”
Being aggrieved by the impugned order, the Complainant (Appellant herein) filed this present Appeal seeking the following:
It is therefore, most respectfully prayed that this Hon'ble Commission may graciously be pleased to:-
[a] Call the Record and Admit the appeal
[b] Modified the Judgment and Order dated 20.10.2016 passed by the Hon'ble State Consumer Disputes Redressal Commission, Haryana, Panchkula in Complaint No. 41 of 2015 and the respondent may kindly directed to pay Rs. 40 lacs [for loss of pesticides, fixture and furniture suffered by the appellant) along with interest @ 18%
[c] Pass such other order/orders as this Hon'ble Commission may deem just and proper in the facts and circumstances of the case.
The Appellant raised the following grounds of appeal in the present memo:
a. The Appellant had regularly deposited the stock report with his banker. The surveyor failed to consider the stock statements of preceding months before the incident of fire. The perusal of stock statements reveal the loss suffered by the Appellant firm as 35 to 40 Lakhs as in September 2013 the closing stock was 39 Lakhs.
b. The State Commission failed to consider the stock reports produced by the Appellant to his banker and the details kept by the CA of the Appellant firm and that as per the photographs the destroyed pesticides and fertilizers were about 1-2 Tons.
c. The surveyor report was not on facts. It was prepared without any documentary evidence and the surveyor failed to consider balance sheet and turnover for 3 years, which was about 1.26 Cr
Upon notice on the memo of Appeal, the Respondent has filed their written submission and reiterated the facts of the case.
In his arguments, the learned Counsel for Appellant reiterated the grounds of the appeal and pleaded for modification of the order issued by the State Commission. He asserted that, based on the Stock Statement, the Appellant incurred a loss of Rs.35,63,075, as outlined in the report prepared by their Chartered Accountant. Also, the regular preparation of the Appellant's balance sheet, specifically that as of 30.10.2013 (before the fire incident), indicates an opening stock of Rs.35,70,320. Thus, according to these records, the Appellant suffered loss exceeding Rs.40 lakhs. The Surveyors' assessment in the survey report is incorrect, illegal, and arbitrary.
The learned Counsel for the Respondent reiterated the facts of the case and argued that the Appellant relied on two sets of records, i.e. Stock Statements submitted to the Bank and Provisional Balance Sheet prepared by their CA. Both were uncorroborated and revealed several discrepancies, as highlighted by the surveyor. These stock statements covered only till August 2013, whereas the loss occurred on 30.10.2013. The Appellant failed to furnish stock statements for Sept 2013 and Oct 2013, critical for verifying the loss of Rs.40,00,000 as claimed. Further, discrepancies in the balance sheet were noted by the surveyor, who addressed the challenges faced in obtaining essential documents and books of accounts for verification. The surveyor's conclusion, based on joint physical verification, was the only valid option for assessing the loss. The physical verification, which was conducted collaboratively with the Appellant, was deemed the correct approach. The surveyor stated that the Appellant failed to provide records and books of accounts, leaving the stock statements and balance sheet uncorroborated. He emphasized the surveyor's observations about the negligent storage of damaged stocks in open, without adequate protection or security. Loss or damage resulting from theft or aggravated loss due to the Appellant's negligence was not payable under the policy. Despite extensive discussions between the surveyor and the Appellant, the Appellant could not convince or satisfy the surveyor about the total loss claimed. The surveyor, therefore, rightly assessed the loss on Net Adjusted Loss, adding 25% for unidentifiable fire-affected stocks. He highlighted that the State Commission rightfully upheld the surveyor's assessment, considering it the best piece of evidence. He argued that surveyor’s report and finding can be challenged or setting aside only due to manifest gross errors, which the Appellant failed to demonstrate. The State Commission has rightly held that the admission is the best piece of evidence and thereby, upheld the surveyor’s assessment.
I have examined the pleadings and connected documents placed on records and rendered thoughtful consideration to the arguments advanced by learned Counsels for both the parties.
The main issue is determination of the insurance claim filed by the Appellant for damages incurred in the said fire incident and whether the claim paid by the OPs is as per the policy. It is uncontested that the Appellant obtained a Standard Fire Insurance Policy for Rs.40,00,000/-, which was valid during the relevant time. The Appellant contended that the assessed loss by the surveyor appointed by the OP is inadequate. The learned State Commission partially upheld the complaint, directing the OP to pay Rs.3,27,000/- along with interest and additional compensation. Being dissatisfied, the Appellant appealed, seeking modification of State Commission's order and a direction to the OP to pay full sum assured of Rs.40,00,000/-. The Appellant contended that the loss exceeded the amount assessed by the surveyor as the Complainant relied on the stock statements, balance sheets and other supporting documents. While, on the other hand the Respondent argued that the surveyor's assessment is reliable and no apparent and gross errors has been established by the Complainant so as to have any scope for intervention in the said assessment.
The Joint physical verification prepared by the Complainant and the OP and signed by both the parties revealed that 20 items were damaged in the said fire incident. Having admitted the extent of the loss, the Complainant made further claim. it is the contention of the Complainant that the value of the goods as Rs.29,70,107/-. This amount of the claim cannot be granted as these goods are well beyond those stated in the joint inspection report. The amount admitted by the Complainant as well as the OP which constitutes the best piece of evidence, is Rs.2,46,535/-. This amount is even less than the amount assessed by surveyor. The surveyor assessed loss as Rs.3,27,000/- which is on the higher side. Notwithstanding the same, the learned State Commission considered that as the insurance company relied upon the report of the surveyor, the Complainant was awarded compensation of Rs.3,27,180/-, as determined by the surveyor.
The Hon’ble Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Limited and Another, (2009) 8 SCC 507, decided on 24.08.2009, has held that:
"32. There is no disputing the fact that the surveyor / surveyors are appointed by the insurance company under the provisions of the insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them...
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."
The option to accept or not to accept the report is with the insurer. However, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. We hasten to add, if the reports are prepared in good faith, with due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the surveyors."
In Khatema Fibres Ltd Vs New India Assurance Co Ltd 2021 SCC OnLine SC 818 decided on 28.09.2021 it was held that:
“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’. Butto 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.
Two things flow out of the above discussion, 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.
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.”
In view of the discussion above, I am in the considered view that the Order of the State Commission does not suffer from any illegality. The FA No. 145 of 2018 is, therefore Dismissed.
There shall be no order as to costs.
All pending Applications, if any, stand disposed of accordingly.
The Registry is directed to release the Statutory Deposit, if any due, in favour of the Appellant as per law, after compliance of the order of the learned State Commission.