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Judgment
Deepa Sharma, Presiding Member
The present Appeal has been filed by the Insurance Company against the order dated 17.02.2017 of the State Commission in Complaint No.CC/17/2010 filed by the Respondent (hereinafter referred to as the ‘Complainant’).
The brief admitted facts of the case are that complainant is a proprietorship firm and in order to cover the risk of the stocks, building and plant. It had purchased three policies under name and title as “Standard Fire and Special Perils Policy” for total sum of Rs.31,65,04,000/-. During the validity of these policies, a fire had broken out in the factory on 29.05.2015 at about 2.00 a.m. The cotton bales and the bardana stored in the godown caught fire and burnt into ashes. The fire brigade was called. Concerned authorities were informed including the insurance company. The insurance company appointed a Surveyor namely M/s Joglekar Associates, Nagpur ( hereinafter referred to as ‘first surveyor’). The complainant fully cooperated with him and furnished all the documents to the surveyor as and when demanded. The said surveyor inspected the place of incident and examined the balance sheets of previous three years, audited statements on the date of date of loss, stock statements submitted to the bank, MSEB report on cause of fire, fire brigade charges, VAT returns, sales bills, bardana purchase bills, salvage quotations, etc. took photographs and recorded statements of witnesses and assessed the loss at Rs.1,55,99,828/- and submitted its report within 4 months i.e. on 17.09.2015. Even after submission of this report, for four months, the insurance company did not act on that and finding no other solution, the complainant wrote a letter to Insurance Company dated 13.01.2016 for early settlement of his claim as he was facing financial crises due to lack of funds. The complainant had also taken cash credit facility of Rs.1,94,78,000/- and term loan of Rs.52.82 lacs from Bank of India and he received a letter dated 16.03.2016 from Bank of India informing him that his cash credit account and term loan account would be converted into Non Performing Asset ( in short, ‘NPA’). Thereafter, the complainant wrote a letter dated 17.03.2016 to the Insurance Company/ opposite party no.1 informing about his financial condition and urged it to settle the claim at the earliest. No action was taken by the insurance company and finally on 07.04.2016, the complainant received a letter from the bank informing that his account has been declared as NPA on 31.03.2016. The insurance company, after 6 months of the submission of the report of the first surveyor, appointed another investigator namely Mr.S.V.Sarda (in short, the second surveyor) to reassess the claim of the complainant, who visited the factory on 18.03.2016 and demanded the records which was supplied to him. The second surveyor reassessed the claim at Rs.1,04,88,042/- and thus reduced the claim by Rs.51,11,786/-. The contention of the complainant is that in order to save himself from the financial crises, which he was facing, he gave his consent to accept the reduced amount assessed by the second surveyor and received the said sum on 02.06.2016 after about 1 year and 8 months from the date of incident of fire. He filed the claim before the State Commission wherein he had alleged that he was coerced and forced to accept the reduced amount assessed by the second surveyor due to financial crisis he was facing and his consent was, therefore, not voluntary and insurance company had taken the advantage of his financial predicament. He had also challenged the appointment of second surveyor and alleged that it was contrary to the IRDA guidelines and the Insurance Act. On these contentions, the complainant has claimed balance sum of Rs.51,11,786/-, which is the difference in the amount of two surveyors.
The claim was contested by the Insurance Company on the ground that once the complainant has settled his account voluntarily, the complaint was not maintainable. It was also contended that insurance company was within their legal rights to appoint the second surveyor once it is dissatisfied with the performance of the first surveyor. It was submitted that there was some discrepancy in the first surveyor report regarding quantity and rates which necessitated the appointment of second surveyor.
Parties led their evidences before the State Commission and also filed number of case laws in support of their contentions. The State Commission after hearing the arguments of the counsels for the parties allowed the complaint and awarded balance sum of Rs.51,11,786/- to the complainant.
Aggrieved by this order of the State Commission, the present Appeal has been filed by the Insurance Company. Same contentions which had been raised before the State Commission, has been raised by the Insurance Company before this Commission.
The contention of the complainant is that appointment of second surveyor was contrary to the Insurance Act and directions of IRDA. It is also argued that act of the insurance company by not settling his claim for more than 1 ½ year also amounts to violation of directions of IRDA guidelines which requires that all the claims should be settled within 6 months.
It is not disputed by the counsel for the insurance company that IRDA guidelines do require the insurance company to settle the claim within 6 months but it is submitted that it is not compulsory. Learned counsel has relied on the judgment of Hon’ble Supreme Court in “Sri Venkateswara Syndicate Vs. Oriental Insurance Company Limited (2009) 8 SCC 507”.
I have given my thoughtful consideration to the arguments of the learned counsels and have perused the record. Obviously, in the present case, there is violation of IRDA guidelines since the claim has not been settled by the insurance company for about more than a year. The explanation given by the insurance company for this delay is, since they had to appoint second surveyor, therefore, the delay had occurred. There is no doubt as held by Hon’ble Supreme Court in Sri Venkateswara Syndicate (supra) that insurance company is not bound by the report of the first surveyor and has the right to appoint second surveyor. The Supreme Court has also held that it should not be done in routine manner and there has to be cogent reasons for appointment of the second surveyor and the Insurance Company is also needed to justify the necessity of appointment of the second surveyor. The Hon’ble Supreme Court has held as under:-
“ 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. We also add, that, under this Section the insurance company cannot go on appointing surveyors one after another so as to get a tailor-made report to the satisfaction of the officer concerned of the insurance company; if for any reasons, the report of the surveyors is not acceptable, the insurer has to give valid reasons for not accepting the report.
33) Scheme of Section 64-UM, particularly of sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor Just as a matter of course. If for any valid reason the report of the surveyor is not acceptable to the insurer may be for the reason if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated, etc., it must specify cogent reasons, without which it is not free to appoint the second surveyor or surveyors till it gets a report which would satisfy its interest. Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of surveyor/surveyors. There is no prohibition in the Insurance Act for appointment of second surveyor by the insurance company, but while doing so, the insurance company has to give satisfactory reasons for not accepting the report of the first surveyor and the need to appoint second surveyor.
34) xxxxx
35) 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.”
In the present case, no evidence has been produced on record by the insurance company to justify the appointment of second surveyor. Even the letter by which second surveyor was appointed has not been proved on record. Since the Insurance Company has totally failed to justify the appointment of second surveyor, the appointment of second surveyor was certainly in violation of the Insurance Act. Also, the second surveyor seems to have visited the site after about 9 months of the incident, and, therefore, he could not have found any evidence of loss at the site and, therefore, his assessment of the loss is not based on the verification of the loss at the site. I have also perused the report of the second surveyor. The entire report is the review of the first surveyor report. It is not the duty of the second surveyor to review the assessment of the first surveyor. For this reason also, the report of the second surveyor is meaningless. The first surveyor had visited the spot immediately after the incident, collected all the documents and has given its report on the basis of actual investigation at the site and the verification of the documents. Counsel for the insurance company has failed to point out any discrepancy in the report of the first surveyor.
The second contention of the counsel for the insurance company is that once the complainant has voluntarily settled its claim, the complaint was, therefore, not maintainable. The complainant has, however, alleged that it had not voluntarily accepted the claim but it was due to the circumstances created by the insurance company. It is argued that first surveyor had given its report within 4 months of the incident but insurance company kept sitting on the report and did not settle its claim despite its repeated requests in writing and in order to defy the claim, appointed the second surveyor who gave its report after one year of the incident. It is further argued that complainant had taken credit facilities and also took loan from the Bank and bank had declared his account as NPA and the complainant was under dire necessity of funds to save his property and business. It is argued that it was under these circumstances that he had settled the claim for the lesser money. This aspect has been considered by the State Commission in detail and State Commission has held as under :-
“15. So far as the question of full & final settlement of the claim is concerned, we find that admittedly, huge loss in Crore was suffered by complainant in the incident of fire and its whole business was stopped for a period of more than one year and the bank, from which it had obtained cash credit limit facility and the loan, had declared its account as non-Performing Assets (NPA). Thus, the complainant was under serious financial crises for a period of more than one year. It was insisting the opposite parties from time to time by making request orally as well as in writing to settle the claim as it was under financial crisis and suffering heavy losses due to stop of its business. No cogent explanation was given by the opposite party why its claim was not settled for such a long period of one and half year. Therefore, it is crystal clear that the complainant has to save his business and in order to save it from further financial crisis it was under constrain to accept the reduced claim. Thus, the opposite parties used undue influence by not settling its claim for one and a half year, putting it under serious financial crisis and thereby compelled it to accept insurance claim at Rs.1,04,88,042.82 though the surveyor M/s. Joglekar & Associates had assessed the loss of Rs.1,55,99828.75.
Moreover, it is also seen that the complainant, after receiving its reduced claim, immediately filed the complaint before this Commission for the differential amount. In our view, as the complainant accepted the claim under duress and undue influence as discussed above, it cannot be said that it accepted the said claim with its freewill and voluntarily. Hence, the aforesaid decisions relied on by the learned counsel for the opposite parties on the point of full & final settlement of the claim, are not applicable to the facts and circumstances of the present case.”
The State Commission has also relied on the case laws relied upon by the complainant and which it had discussed in detail in the impugned order and has given its findings. The fact that first surveyor had given its report within 4 months of the incident and no action was taken by the insurance company for about 4 months on that report and rather had appointed second surveyor who took its own time is not disputed. It is also not a disputed fact that bank account of the complainant was declared NPA as he was unable to run his business and pay accruing interest and return the money to the bank and the bank was in the process of attaching its properties in order to recover the loan amount. If the complainant under these circumstances had settled the claim, it certainly cannot be said to have been done voluntarily but it was due to the circumstances created by the insurance company by delaying the settlement of the claim.
I found no illegality, infirmity or perversity in the impugned order. The impugned order is, hereby affirmed. The present Appeal has no merit and same is dismissed with cost of Rs.30,000/-.