JUSTICE A.P. SAHI, PRESIDENT 

1. This is a complaint by M/s. PEC Limited a Government of India enterprise/ a Public Sector Undertaking alleging that the repudiation of the claim, in respect of a loss of a part of the consignment of Manganese ore at Vishakhapatnam Port, by the opposite party no. 1/ Insurance Company is unwarranted. The ground taken, that the complainant/ insured did not have an insurable interest on the insured property on the date of loss, is manifestly erroneous and against record.
2. The background in which the complaint has been filed is that the complainant is a Public Section Undertaking under the Ministry of Commerce incorporated in April, 1971 at New Delhi and the business of the company involves exports, imports, deemed exports, third country trading, arranging, financing logistics, project exports and management. According to the complainant it has expended its role as an international business organizer and a provider of integrated trade facilitating services dealing in the exchange of commodities, goods and services between India and other nationals of the world.
3. It is in the exercise of such of its functions and obligations that it entered into the facilitation of supply of raw material through an Associateship Agreement with the opposite party no. 2, M/s. Berry Alloys Limited (BAL) on 28.05.2014 against a sales contract dated 23.05.2014 for the import of Manganese ore in bulk from a company in the African country of Gabon.
4. In pursuance thereof a High Sea Sale Contract was entered into on 04.08.2014 and simultaneously a Deed of Pledge was also executed bearing the same date. The agreement, High Sea Sale Contract and the Deed of Pledge are appended as annexure C-1, C-2 and C-4, respectively to the complaint.
5. The consignment was shipped to Vishakhapatnam port where it arrived on 11.08.2014 and after discharge between 13.08.2014 and 16.08.2004 was stocked at the location given in the policy. The said consignment was sold to the opposite party no. 2 under the High Sea Sale Contract. The cargo remained at the risk location as on the date when it was damaged.
6. In accordance with the Associateship Agreement the entire stocks were completely insured for the perils under a policy acquired from the opposite party no. 1 which was a Standard Fire and Special Perils policy effective from 12.08.2014 to 02.07.2015, the policy is also on record as annexure C-5. The cover note was issued on 02.07.2014 but the endorsement and date of issuance of the policy is 12.08.2014. The endorsement was altered in favour of M/s. PEC Ltd. on 12.08.2014 as the insured. The location of the risk is also endorsed thereon as follows:

“Synergy Shipping Pvt. Ltd. East Cake of Esser Steel Pvt. Ltd.

Port Area Vishakhapatnam

Andhra Pradesh

Vishakhapatnam

530001

Visakhapatnam"

7. There is no dispute on these facts. It is also undisputed that during the subsistence of the risk coverage under the said policy, the Hudhud cyclone had hit Vishakhapatnam on 12.10.2014 and had partly damaged the insured stocks of the consignment.     
8. The complainant intimated the Insurance Company and submitted a claim of Rs.1,78,57,216.66 paise supported by whatever documentary proof the complainant had in support of the claim. The claim was lodged on 12.10.2014 itself.
9. The Insurance company appointed M/s. Rank Surveyors Private Limited, who conducted the survey on 18.10.2014 and 01.11.2014 and submitted an interim report through their surveyor Mr. D. Venkataraman, which is extracted herein under:

“Report No.: RSCN/OIC/Fire/Status/H038/J/14-15                         Date: 05.11.14

Interim report

CLAIM ON LOSS OF PROPERTIES DUE TO “HUDHUD” CYCLONE

INSURED:- M/s PEC LIMITED

                                                                                                     Sd/-

(D. Venkataraman)

10. The Insurance Company on 31.12.2014 repudiated the claim on the strength of the preliminary survey report referred to above. The said communication is extracted herein under:

“TO                                                                                     DATE: 31/12/2014

PEC Ltd.

Hansalaya

15, Barakhamba Road

New Delhi

Re: Fire Claim policy No. 191300/11/2015/128

Claim No. 191300/11/2015/000010

Date of Loss: 12/10/2014

Dear Sir,

    Kindly refer to the claim lodged by M/s Berry Alloys Ltd. under the policy no. 191300/11/201572017 vide loss intimation letter dated 12/10/2014.

    On close scrutiny of preliminary report submitted by Surveyor M/s Rank Surveyors Pvt. Ltd. We observed that PEC ltd. has no Insurable Interest at following loss since as per per agreement dated 04/08/2014 the subject matter (goods) were already sold to M/s Berry Alloys Ltd. on dated 04/08/2014 and as per High Sea Agreement Surveyor has reported the same in his Preliminary Survey Report dated 05/11/2014.

Hence company is not liable for any loss under the concerned claim

Please note:

Thanking you

Your faithfully

Sd/-

Divisional Manager”

11. The said repudiation indicates that since the goods had been transferred and already sold to the opposite party no.2 prior to the date of loss therefore the complainant had no insurable interest following the loss and consequently the Insurance Company was not liable to pay for any such loss against the claim.
12. The complainants through their letter dated 21.11.2014 that was received by the surveyors on 26.11.2014, after the preliminary survey report  had been submitted, had dispatched the copy of the Pledge Deed whereupon the surveyor proceeded to examine the same before submitting the final survey report but by that time the above quoted letter of repudiation was dispatched on 31.12.2014.
13. The surveyor submitted his final report on 02.03.2015, which is extracted herein under:

Report No.: RSCN/OIC/Fire/Final/H038/J/14-15                                   Date: 02.03.2015

FINAL SURVEY REPORT

CLAIM ON LOSS OF PROPERTIES DUE TO “HUDHUD” CYCLONE

INSURED:- M/s PEC LIMITED (BERRY ALLOYS LTD)

               Sd/-

(D. VENKATRAMAN)”

14. This report surfaced on 02.03.2015 after the previous repudiation on 31.12.2014 referred to above but the documents sent on 21.11.2014 by the complainant had already been received on 26.11.2014, prior to the repudiation. This is evident from the 7^th paragraph of the recital contained under the heading “admissibility of claim” in the final survey report quoted hereinabove. The final survey report by the same surveyor Mr. D. Venkataraman records an analysis of the Deed of Pledge and then opines categorically that they are convinced that the insured possess as insurable interest based on the deed of pledge and therefore the question of admissibility raised by the surveyor in the interim report dated 05.11.2014 is not in conformity with the said documents vis-à-vis the terms and conditions of the policy. It has been further confirmed in the said report that the complainant has an insurable interest both at the time of taking of the policy as well as at the time of the loss and has an exclusive first charge by virtue of the pledge deed dated 04.08.2014.
15. It may be pointed out that the endorsement also against the column of insured in the policy is in favour of M/s. PEC (BAL). Thus there was no doubt in the mind of the final surveyor about the claim that was clarified in the final survey report  dated 02.03.2015 quoted hereinabove.
16. On receipt of the said survey report the Insurance Company took a legal opinion on 26.03.2015 from one Mr. Vinod Deshmukh, Advocate of Raipur, Chhattisgarh and his legal opinion has been filed on record by the Insurance Company through its written version. The same is extracted herein under:

“To,

Senior Divisional Manager

The Oriental Insurance Co. Ltd.

Divisional Office-3, Raipur

Subject : Opinion

Regarding -   Policy no. 191300/11/2015/128 of the insured PEC Ltd Delhi

Date of loss- 12/10/2014

Policy period - 03/07/2014 to 02/07/2015

Your file no.

Sir,

In this respect I have studied the final survey report dated 02/03/2015 of Rank Surveyor Private Limited. I understood after reading that Berry Alloys Ltd. through the insured PEC Ltd. on 04/08/2014 under a contract sold the insured property and another document Deed of Pledge dated 04/08/2014 was executed and in this regard the insured issued an   Invoice dated 04/08/2014. Through the insured PEC Ltd. the insured item was transferred before the date of loss. Accordingly, the insured does not have insurable interest on the Insured property. For this reason on the basis of the survey report in my opinion the Insurance claim should be repudiated.

The opinion is accordingly submitted.

Raipur (Chhattisgarh)

Date-26/03/2015

Yours sincerely,

Sd/-

VINOD DESHMUKH

ADVOCATE”

17. After having received this legal opinion the Insurance Company once again repudiated the claim vide their letter their dated 08.04.2015, which is extracted herein under:

“DATE: 08/04/2015

To,

M/S PEC LTD.

15, 'HANSALAYA

BARAKHAMBA ROAD

NEW DELHI-110001

RE: Repudiation letter for claim of PEC Ltd

Kindly refer to the claim lodged by you under the policy no. 191300/11/2015/128 vide your loss intimation letter dated 14/10/2014. As per document submitted by you it is found that PEC Ltd does not have insurable interest at the time of loss hence the competent authority has decided to repudiate your claim.

Thanking you

Yours faithfully

Sd/-

Divisional Manager”

18. Learned counsel for the complainant contends that all the documents are perfectly in order and the insurance claim was clearly covered under the policy but under the garb of some misconception and an incorrect opinion previously expressed in the interim report dated 05.11.2014 supplemented by an erroneous legal opinion on 26.03.2015, the Insurance Company has repudiated the claim against the weight of evidence on record with no legal foundation.
19. The submission is that under the Deed of Pledge and the documents executed between the complainant and the opposite party no. 2 that was fully known to the Insurance Company, the claim was clearly indemnifiable for the pledged goods as there was no dispute with regard to the loss suffered as well as the quantum of the loss. 
20. Learned counsel for the opposite party/ Insurance Company however submitted that the documents that were relied on by the Complainant clearly demonstrated that on the date of loss that is 12.10.2014, there was no insurable claim or insurable interest of the complainant and hence the repudiation is fully justified. To demonstrate this alleged lack of insurable interest, the written statement in paragraph 4 of the preliminary reply and paragraph 6 and 17 of the reply to the main complaint are extracted herein under:

“4. The complainant submitted a Deed of Pledge which was received by the surveyor on 26/11/2014 around 45 days after the event of loss on 12/10/2014. The complainant claims under the Deed of Pledge that the complainant has insurable interest. A careful look at this Deed of Pledge reveals that the said Deed was notarised on 21/11/2014. Therefore, even if the said Deed confers insurable interest on the complainant the conferment is much after the date of loss. This document is an afterthought and appears to be created only to claim insurance benefits. In any case under law the title of the property does not pass to a pledgee and the complainant has no title over the damaged goods. Moreover, a pledgee has right of possession but no right of enjoyment. Under law a pledgee is not responsible for any loss to the pledged articles if the loss occurred despite the pledgee taking due care. In the instant case, even if the complainant is taken as a pledgee it does not have any insurable interest on the pledged goods.

6. The contents of paragraph-6 of the complaint are wrong and denied. It is denied that the Deed of Pledge was executed on 04/08/2014. A careful look at the Deed of Pledge reveals that the deed was notarised on 21/11/2014 well after the date of loss of 12/10/2014. The contents of the Deed of Pledge are also wrong and denied. The contents of the deed of Pledge conflict with the contents of the other 2 agreements mentioned in paragraph-3 of this written statement.

17. The contents of paragraph-17 of the complaint are not denied to the extent they are a matter of record. It is denied that the final report of the surveyor concluded that the complainant has insurable interest. The surveyor recorded that based on the Deed of Pledge the complainant seems to have insurable interest and in the same breath directed the respondent no. 1 to take legal opinion regarding the admissibility of the claim on the facts presented by the complainant.”

21. Learned counsel for the opposite party therefore relying on the contents of the legal opinion quoted above, the preliminary survey report and the contents of the written version, including that quoted hereinabove, has urged that the goods had already been sold and passed on to the opposite party no. 2 and the complainant ceased to have any insurable interest for all the aforesaid reasons.
22. It is further submitted that so far as the final survey report and its contents are concerned, the same had categorically recommended the seeking of a legal opinion and therefore the said survey report is neither final nor is the Insurance Company bound by the said report keeping in view the aforesaid facts. It is urged that the documents filed by the complainant therefore were clearly doubtful and were an afterthought as alleged in the written statement and quoted hereinabove.
23. Learned counsel therefore vehemently urged that there is no deficiency at all and the claim of the complainant deserves outright rejection.
24. We have considered the submissions raised and perused the documents on record. The claim of a public sector undertaking, and not a private company has been repudiated by raising doubts and then concluding that the complainant did not have an insurable interest for the claim. It may be clarified that the Deed of Pledge categorically records that the complainant shall have an exclusive first charge on the said material. Since the consignment had been pledged, the complainant continued to have an insurable interest for any loss caused to the Cargo/ stock. A reference to the Marine Insurance Act, 1963, Section 7, 17 and 52 is necessary that has been extracted in paragraph 27 of the complaint. A conjoint reading of these sections would demonstrate that the complainant continues to have a right to recover any insurable interest and the Insurance Company is liable to indemnify the same. The insurable interest does not get eclipsed nor does it vanish or evaporate, more so keeping in view the terms and conditions of the Deed of Pledge and in terms of the policy as well as the law applicable to such insurable claims. To understand, as to what is an insurable interest, reference be had to the definition thereof, as contained in the Dictionary of Insurance Law by E.R. Hardy Ivamy published by Butterworths Professional Dictionary Series (1981). The definition, in its bare form, is extracted hereinunder:-

“Insurable interest. A term to describe the legal or equitable relation in which the insured stands to the subject-matter insured in consequence of which he may benefit by its safety and be prejudiced by its loss.”

The dictionary goes on further to explain it with the terms of Marine Insurance, Marine Adventure, as well as insurable property, by referring to the provisions of the Marine Insurance Act, 1906.

 25. With reference to the Marine Insurance Act, 1963, and the definitions contained therein, as referred to above, the matter was dealt with by the Apex Court in the case of Contship Container Lines Limited Vs. D.K. Lall and Others, (2010) 4 SCC 256, paragraphs 17 to 23, which is extracted hereinunder:-

17. Section 7 of the Act stipulates that subject to the provisions of the Act every person interested in a marine adventure has an insurable interest. It reads:

“7. Insurable interest defined.—(1) Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure.

(2) In particular a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof.”

18. What is noteworthy is the use of the words “interested in a marine adventure” appearing in Section 7 of the Act. The expression “interested” has not been defined in the Act although sub-section (2) to Section 7 gives an indication of what would constitute “interest” in a marine adventure. The question is whether a seller of goods on f.o.b. basis like the complainant in the present case can be said to be “interested in marine adventure” within the meaning of Section 7. If the answer be in the affirmative, the complainant would have an insurable interest but not otherwise.

19. The provisions of the Marine Insurance Act, 1906 enacted by the British Parliament are in pari materia with those contained in the Indian Act. The former is in fact a precursor to the latter. The definition of “insurable interest” given in the English legislation is the same as the one given in Section 7 of our enactment. Judicial pronouncements by English courts would, therefore, be both relevant and helpful in understanding the true purport of the expression “insurable interest”.

20.Halsbury's Laws of England, 4th Edn., Vol. 25 (Para 190) has, while dealing with the expression “insurable interest” under the Marine Insurance Act, 1906 prevalent in that country, explained the purport of the expression “interest” in a marine adventure in the following words:

“190. Meaning of ‘insurable interest’.—… A person may be said to be interested in an event when, if the event happens, he will gain an advantage, and, if it is frustrated, he will suffer a loss, and it may be stated as a general principle that to constitute an insurable interest it must be an interest such that the peril would by its proximate effect cause damage to the assured, that is to say cause him to lose a benefit or incur a liability.”

21.Halsbury's refers (in Para 190) to the decision of the House of Lords in Lucena v. Craufurd [(1806) 2 Bos & PNR 269 at p. 302 (HL)] as to the meaning of the expression “insurable interest”:

“… ‘A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it; … and whom it importeth that its condition as to safety or other quality should continue. Interest does not necessarily imply a right to the whole or part of the thing, nor necessarily and exclusively that which may be the subject of privation, but having some relation to, or concern in, the subject of the insurance; which relation or concern, by the happening of the perils insured against, may be so effected as to produce a damage, detriment or prejudice to the person insuring. And where a man is so circumstanced with respect to matters exposed to certain risks and dangers as to have a moral certainty of advantage or benefit but for those risks and dangers, he may be said to be interested in the safety of the thing. To be interested in the preservation of a thing is to be so circumstanced with respect to it as to have benefit from its existence, prejudice from its destruction.’ ”

22. Dealing with the question whether the seller of goods retains any insurable interest, Halsbury explains (in Para 201):

“201. Seller and buyer.—… When, however, the property which is the subject-matter of the contract of sale has completely passed from the seller to the buyer, or when it has under the contract of sale become completely at the buyer's risk, the seller ceases to have any insurable interest, and the buyer acquires one. Thus, a contract for the sale of goods to be supplied on board a particular vessel may be so framed that the property in them and the risk of their loss do not pass to the buyer until a complete cargo has been loaded, in which case the buyer has no insurable interest until the complete cargo has been loaded; or the contract may be so framed that the property in and the risk as to any part of the goods pass to the buyer on shipment, in which case the buyer acquires an insurable interest on any part of the goods then shipped.”

(emphasis supplied)

23. Reference may also be made by us to MacGillivray on Insurance Law. While dealing with insurable interest under contracts for the sale of goods, the author has the following to say:

“The unpaid seller of goods who has parted with property in them has no insurable interest in them unless either they remain at his risk or he has a lien, charge or other security interest over them for the price. So long as the risk remains with him, he has an interest whether the property has passed or not, and the measure of his interest is the purchase price or the actual value of the goods, whichever is the greater.

Even when risk and property have both passed, the seller retains an insurable interest in the goods while he still possesses them because, if he is unpaid in whole or part on account of the buyer's insolvency or for other reasons, he has an interest in respect of his lien for the purchase money. His possession of the goods would also permit him to insure on the buyer's behalf if his intention is clear and the policy does not forbid it.”

It is evident from the terms of the deed of pledge dated 04.08.2014, in the present case that the entire goods are pledged to the complainant till they are delivered, in terms thereof, upon full payment, and till then, the complainant will continue to have exclusive first charge on the goods. The insurable interest, therefore, continues and is supported by the ratio of the decision of the Apex Court extracted hereinabove.

26. Learned counsel for the Insurance Company has been unable to dislodge this legal position and has urged that since the goods ceased to be that of the complainant, there was complete absence of an insurable claim. The aforesaid argument has to be decided in the light of the averments which have been made in the written version of the Insurance Company as quoted hereinabove.

 27. It may be mentioned that the opposite party no. 2 M/s Beryy Alloys Ltd. has also    filed a written version urging that since there is no deficiency against the opposite party no. 2, the complainant cannot claim any liability against the said opposite party and hence the complaint be dismissed as against the opposite party no. 2. The opposite party no. 2 has however indicated in paragraph 2 (Xiii) as follows:

2 (xiii) That the opposite party no. 1 appointed Rank Surveyor's Pvt. Ltd. the Local claim Settline Agent of the opposite party no. 1 in turn the Surveyor's as appointed by the opposite party no. 1 assess the loss and submitted the report to the opposite party no. 1 and a copy to the complainant on 2nd of March, 2015. The said Final Report of the Surveyor's submits that the complainant possesses "Insurable Interests" which is based on the Deed of Pledge as entered into between the complainant and the opposite party no. 2.

The aforesaid averment of the opposite party no. 2 therefore supports the claim of the complainant.

28. On an analysis of the averments made by the Insurance Company in its written version as quoted above, it is pertinent to point out that the Associateship Agreement between the complainant and the opposite party no. 2 was followed by the High Sea Sale Contract, which is annexure C-2. The very first line of the said contract recites as follows: “This contract is entered into this 4^th August, 2014” between PEC Limited and M/s. Berry Alloys Limited. The last sentence of the said contract recites as follows:

“In witness, where, of the Seller and the Buyer have hereunto set their hands and seals this 04 August 2014.”  

  29. The deed of pledge has an identical endorsement of execution of the deed on 04.08.2014. Before we delve into the status of the deed of pledge, as questioned by the Insurance Company, it would be apt to refer to the final survey report dated 02.03.2015, extracted hereinabove. The Insurance Company, even before receipt of this report, had repudiated the claim on 31.12.2014, on the basis of the preliminary report of the surveyor. It is evident from a perusal of the preliminary survey report dated 05.11.2014 that it did not have the advantage of assessing the deed of pledge, which was dispatched by the complainant on 21.11.2014 and was received by the surveyor on 26.11.2014. The deed of pledge had been received by the surveyor long before the repudiation on 31.12.2014. It is not understandable that once the said document had arrived for assessment, then the hurry with which the claim was repudiated on 31.12.2014, without referring to the same and without even waiting for the final survey report, remains unexplained by the Insurance Company. Nonetheless, the same feat was repeated by the Insurance Company, even after receiving the final survey report, by once again repudiating the claim on the basis of a legal opinion dated 26.03.2015, on 08.04.2015. There is no reference or opinion as to why the final survey report was incorrect, inasmuch as after having gone through the deed of pledge, the surveyor has categorically stated that he did not have the advantage of going through the deed of pledge, which was of utmost importance, as it had not been submitted prior to release of the interim survey report. However, the surveyor proceeds to assess the same, including the reply and representation of the complainant that has been quoted extensively in the final survey report. It has been noted by the surveyor that the deed of pledge is dated 04.08.2014 and that the terms and conditions of the pledge categorically defined the insurable interest of the complainant, which recites that the first charge on the cargo is of the complainant in order to insure the financial interest till all the contractual obligations by the purchaser are duly met. It is upon an assessment of all the relevant clauses of the High Sea Sale Contract, the deed of pledge, and the Associateship Agreement that the surveyor opined that they were convinced that the complainant had an insurable interest, as the goods were on pledge, and that the complainant had insurable interest both at the time of taking the policy and at the time of loss.

30. The surveyor has nowhere doubted the correctness, the veracity or the probative value of the deed of pledge, nor is there any comment to doubt its execution or the signatures thereon between the complainant and the opposite party no.2. As noted above, the opposite party has supported the cause of the complainant in paragraph 2 of the written version quoted hereinabove.

   31. The contention is that the signatures on the said documents indicate that the pledge deed was notarized on 21.11.2014 and was received by the surveyor on 26.11.2014, which is almost 45 days after the event of loss on 12.10.2014. It is on the strength of this endorsement in the Deed of Pledge that this submission has been raised contending that the document is an afterthought and has been created for the purpose of the claim.

   32. In our opinion, the attestation by a notary on 21.11.2014 does not take away the impact of the document which categorically recites that it has been signed, executed and delivered on the 4^th Day of August, 2014, which is evident from the recital contained in the last line of the Deed of Pledge which is on record. There is no evidence led by the Insurance Company or any averment in the pleadings to demonstrate that the said document was not signed or executed or delivered on 04.08.2014. The doubt is being expressed only on account of the notary having attested it on 21.11.2014. In our considered opinion these documents are not registered documents but they are public documents and have been accepted to have been executed by the complainant and the opposite party no. 2 who are signatories to the same. The opposite party no. 2 has admitted the execution of the said documents and having signed the same. The Insurance Company has not produced any evidence to contradict the execution and the signing of the said documents except for drawing an inference on the basis and strength of the date of attestation by the notary. If the document was attested by the notary later on, the document by itself perse does not become invalid, nor is there any evidence to doubt the creation and execution of the document on 04.08.2014. The recital and the contents of the document therefore cannot be doubted and weighing all probabilities, such documents being executed by public functionaries, that too by a Government of India/ Public Sector Undertaking cannot be cast aside so lightly on a mere  suspicion which is based on a doubtful legal opinion.

33. The legal opinion obtained and the repudiation are both contrary to the opinion   expressed in the final survey report dated 02.03.2015, which categorically records that the same surveyor had arrived at the conclusion that the document is convincing and that the complainant has a clear insurable claim covered under the policy. The surveyor has not doubted the execution or the contents of the Pledge Deed. There is no reason given either by the Insurance Company in its repudiation letters or in the legal opinion as to why the conclusions in the final report of the surveyor dated 02.03.2015 are unacceptable. The only response in the written version is that the surveyor himself had recommended for taking a legal opinion. This by itself in our opinion does not render the execution of the pledge deed as doubtful.

34. Needless to remind that the report of the surveyor should not be cast aside so    lightly which is standard in terms of Section 64 UM of the Insurance Act, 1938. This issue has been settled long back in the case of Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd., (2009) 8 SCC 507, where it has been held as follows:

“34. Section 64-UM(2) of the Insurance Act, 1938, reads that:

“64-UM. (2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor….”

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.

36. In the present case, the insurer has stated in the counter-affidavit filed before the National Commission and even before us, why the appointment of second surveyor was necessitated and also has given valid reasons for appointing the second surveyor and also has assigned valid reason for not accepting the report of the joint surveyor. The correspondence between the insurer and the surveyors would indicate the particulars differed by the insurer for differing with the assessment of loss made by the surveyors.

37. 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.”

35. Apart from that the very factual foundation to doubt the probative value or the veracity of the Deed of Pledge is without any basis as reasoned out hereinabove. The legal opinion rendered which is sketchy even otherwise is not in conformity either with the facts or legal position as indicated above. The Deed of Pledge was clearly proved to have been executed prior to the date of the loss and its mere attestation later on by the notary does not take away or reduce its probative value in any form, more so, when no evidence to the contrary to dispute the said document has been led by the Insurance Company. The deed of pledge creates the right of the complainant to claim indemnity as it continuous to have an insurable interest in the goods by virtue of its being pledged in terms of the deed. The interest in the goods of the complainant was alive on the date of loss that was also admitted to the buyer, the respondent no.2 herein. The deed being valid and suffering from no legal infirmity, clearly permits the complainant to claim indemnity for the loss that has been wrongly denied.

36. We therefore find no justification for the repudiation on 31.12.2014 and 08.04.2015. It goes without saying that the first repudiated dated 31.12.2014 has been rendered even without obtaining the final survey report which was obligatory on the part of the Insurance Company, but they for some reason hastily repudiated the claim for no valid reason. The final survey report admittedly arrived on 02.03.2015, but once again for all the reasons given hereinabove the second repudiation on 08.04.2015 is also unsustainable.

37. Consequently, the complaint is allowed as there is a clear deficiency established on the part of the Insurance Company in not having indemnified the claim for all reasons hereinabove, the claimant is stated above a Government of India enterprise and there is no reason to doubt the claim. Accordingly, the entire claim as assessed by the surveyor the net computation of loss of Rs.1,26,95,692/- is allowed that shall be paid by the Insurance Company along with 6% interest from the date of the loss that is 12.10.2014, till the date of actual payment within three months. In the event the amount is not disbursed within the time period hereinabove the same shall carry an interest of 9%.