Oriental Insurance Co. Ltd. vs Kailash Kumar Luharuka

The respondent/complainant is engaged in the business of selling cloth obtained a cash credit limit of Rs. 4,00,000/- from the Canara Bank and then obtained a Standard Fire & Special Perils Policy from the petitioner company for the period from 31.07.1996 to 30.07.1997. A fire broke out in the premises of the complainant in the night of 23/24.06.1997. The matter was reported to the police and fire brigade was informed. On intimation being given to the insurer a surveyor namely Mr. Ashok Prasad was appointed by the insurer to carry out the preliminary survey. Accordingly, Mr. Ashok Prasad inspected the premises of the complainant and submitted a report assessing the loss to the complainant at Rs. 3,88,583.53 though the assessment was made subject to the final survey.

The report of Mr. Ashok Prasad would show that not only he had inspected the shop and found that the fire had engulfed almost three portions of the shop, he also asked the complainant to segregate the good cloth and an inventory of the good cloth costing Rs.1,06,761.16/- was prepared by him as per the details enclosed to his report. Thereafter, he asked the complainant to prepare separate inventories of the damaged goods and partially damaged goods.

The report further shows that the surveyor had made local enquiries in which the extent of fire was confirmed. He also inspected the account books shown to him by the complainant and thereafter made the assessment. The report to the extent it pertains to the assessment of the loss reads as under:-

"BOOKS OF ACCOUNTS:-

Cash book and Ledger of the Insured were checked and signed. A photocopy of the cloth Account was also obtained, purchase bill file of Insured was partially burnt some of the figures were test checked from cloth Account and no discrepancy was observed. Insured is also an Assessee of Income Tax and files his regular Income Tax Return. A photocopy of the return papers were also obtained and opening stock was verified. There is also very good transaction in the Bank Account of the Insured which suggests that shop of Insured was running very good.

From the cloth trading Account from 1.4.97 to 23.6.97, it appears that stock of cloth just before fire was to the tune of Rs.4,95,344/69 as against the Insurance of Rs.4,00,000/-. If inventory of cloth after fire is deduced from this figure, then estimated loss comes to Rs.3,88,583.53/- of fully and partially damaged cloths which is subject to final survey."

It would thus be seen that though Mr. Ashok Prasad was termed as a preliminary surveyor he had carried out a full fledged survey. Not only did he inspect the premises of the complainant and prepare inventory of the damaged goods, partially damaged goods and the goods which had been damaged he also computed the value of the goods which had not damaged. He also confirmed the incident of fire by local inquiries including from the president of the market association.

The report shows that the surveyor checked cash books, ledgers of the complainant as well as the cloth account. He found no discrepancy in the cloth account. He also obtained the income tax returns of the complainant and verified the opening stock. He found on perusal of the trading account that the stock in the shop at the time of fire was worth Rs.4,95,355/69. He deducted the value of the undamaged stock and then arrived at the figure of Rs. 3,88,583.53.

The report of Mr. Ashok Prasad being a full-fledged survey report, the petitioner in my opinion was not justified in appointing a second surveyor. A reference in this regard can be made to the decision of the Hon'ble Supreme Court in Sri Venkateswara Syndicate v. Oriental Insurance Company Limited & Anr., (2009) 8 SCC 507 where the Hon'ble Supreme Court inter-alia held as under:-

"32. There is no disputing the fact that the Surveyor/Surveyors are appointed by the Insurance Company under the provisions of 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 concerned officer of the Insurance Company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report.

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 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."

The State Commission has not awarded even the entire amount assessed by Mr. Ashok Prasad. Deduction on account of unde-insurance was made before the State Commission awarded a sum of Rs.2,68,565/- to the complainant. The order passed by the State Commission is absolutely fair and reasonable in the facts and circumstances discussed hereinabove and does not call for any interference by this Commission in exercise of its revisional jurisdiction. The revision petition, is therefore, dismissed with no order as to costs. It is made clear that interest in terms of the order of the State Commission on the amount deposited by the petitioner company with the District Forum would be payable only till the date of that deposit. However, the complainant would be entitled to release of that amount along-with interest which may have accrued on it.