1.        This Complaint under Section 21 of the Consumer Protection Act, 1986 (for short “the Act”) has been filed against the repudiation of the insurance claim under a Standard Fire and Special Perils Policy obtained by the Complainant who is a proprietorship firm operating as a premier distributor of genuine spare parts of commercial vehicles, on account of a fire incident on 12.10.2013 at the office-cum-warehouse of the Complainant at Panipat, Haryana. 

2.     The Complainant lodged a claim for ₹6,97,37,720/- with the Opposite Party.  The Opposite Party appointed M/s Atul Kapur and Company, Fire, LOP, Miscellaneous & Marine Surveyors to assess the loss to whom all relevant documents were submitted by the Complainant.  However, on 01.04.2015, Opposite Party No.3 (Surveyor) submitted an assessment report for a net loss of ₹48,83,696/-.  A copy of this report was received by the Complainant on 29.12.2015.  Based on this report, which stated that during verification, it had been found that stock registers, inward outward register etc. had not been maintained and that the Complainant had informed that most of the records pertaining to the stock had been burnt in the fire incident.  After deducting 10% on account of dead stock and 10% on account of possibility of items to be of old vehicle models, the Surveyor without assessing the value of salvage, assessed the total loss at ₹51,40,732/- on which a further 5% deduction against policy excess clause was applied to arrive at a net loss of ₹48,83,696/-. 

3.     Vide letter dated 03.01.2016, Opposite Parties No.1 and 2 repudiated the claim on the basis of the Surveyor’s report.  The Complainant has challenged this repudiation on the grounds that the Opposite Parties No.1 and 2 had repudiated their claim after an inordinate delay on technical grounds in contravention of the regulations of Insurance Regulatory and Development Authority.  It is contended that Regulation 9 of the IRDA (Protection of Policyholder’s Interests) Regulations, 2002 provides for the settlement of a claim within certain specified period of time and the Surveyor’s report dated 01.04.2015 was erroneous and arbitrary.  Accordingly, repudiation of their genuine claim had been done casually and arbitrarily.  Appellant contends that the policy in question was for a sum of ₹7.37 Crores and that it was approved after inspection of the Complainant’s warehouses at Delhi and Panipat.  The documents pertaining to all stocks along with supporting invoices, purchase bills, ledger accounts etc. had been kept at the premises of the Complainant and had been shared with the Surveyor.  The contention of the Opposite Parties that the documents had not been provided, had been explained by the Complainant since certain documents had been burnt in the fire in the warehouse.  The cause of the fire on account of short circuit is not in dispute and there was no question of a fraudulent claim by them.  Alleging unfair trade practice and deficiency in service on the part of the Opposite Parties, the Complainant is before this Commission with the following prayers:

4.     The Complaint was resisted by the Opposite Parties by way of filing Written Statement.  It was contended by the Opposite Parties that the Complainant is not a ‘consumer’ qua them because the insurance policy in question had been obtained in the name of M/s Swarna Motors to cover and protect its commercial interests and purposes and as such, it is not maintainable under the Consumer Protection Act, 1986.  It was submitted that the Complainant failed to supply the required documents and information sought for by the surveyor and it is denied that the surveyor ignored and failed to assess the value of the salvage.  It is also submitted that there was no delay in settlement of the insurance claim in question     

5.     I have heard the arguments advanced by both the parties and perused the material on record.

6.     On behalf of the Complainant, it was argued that the repudiation of the claim had been made on the basis of the Surveyor’s report.  It was averred that this Commission had held in Gulshan Chemical Limited vs. United India Insurance Company Ltd., 2022 SCC Online NCDRC 16 that Regulation 9 of IRDA provided for submission of the Surveyor’s report within 30 days and in any case within 45 days from the date of his appointment.  The delay in submission of its report by the Surveyor by over two years in the instant case was inordinate and therefore, the Complainant was entitled for settlement of his claim with interest @ 12% p.a. after 6 months for the loss in terms of Regulation 9 (6).  It was also argued on the basis of this Commission’s order in Madan Lal Gupta vs. Divisional Manager, National Insurance Company Limited, 2017 SCC Online NCDRC 610 that the repudiation of a claim after over two years without stating reasons was a violation of Section 64 UM (2) of the Insurance Act, 1938 as it had been held that an insurer was bound to accept or repudiate the claim within 30 days from the receipt of the Surveyor’s report and, in case of repudiation, to record reasons in writing and indicate the same to the insured within the said period.  It was argued that since the same had not been done in the instant case, the Insurance Company was liable for deficiency in service and therefore, the Complaint is liable to be allowed.  It was also argued, on the basis of the Hon’ble Supreme Court’s judgment in Khatema Fibres Limited vs. New India Assurance Company, 2021 SCC Online State Commission 818 that a Surveyor is governed by a code of conduct, the breach of which may give rise to an allegation of deficiency in service and that the discretion vested in the insurer to reject the report of the Surveyor in whole or part if exercised arbitrarily or whimsically, would be a violation of the Code.

7.     On behalf of the Opposite Party, reliance was placed on the judgment of the Hon’ble Supreme Court in Sri Venkateswara Syndicate vs. Oriental Insurance Company Limited, (2009) 8 SCC 507 to argue that the appointment of a Surveyor is a statutory requirement under the Insurance Act 1938 and the report of the Surveyor forms the basis for the settlement of a claim by the insurer in respect of a loss suffered by the insured.  It was contended that if the report is prepared in good faith with due application of mind, the report is binding on the insurer and the courts or other Foras can intervene only if rejection is arbitrary and based on unacceptable reasons.

8.     From the record it is seen that the policy in question was undisputedly for a sum of ₹7.37 Crores and the claim preferred was for ₹6.97 Crores on account of a fire the cause of which is not in dispute.   After the appointment of the Surveyor on 14.10.2013, various documents had been sought from the Complainant and a list of 14 documents had been provided to the Surveyor from time to time.  It is also evident that the Complainant had informed the Surveyor that various documents had been lost due to the fire in the fire incident.  The Surveyor submitted his report to the Respondent on 01.04.2015.  On the basis of this report, a letter of repudiation was issued by the insurer/Respondent on 03.01.2016.    

9.     The letter of repudiation dated 03.01.2016 issued by the Opposite Party No.1 while recording that the documents submitted by the Complainant were considered, repudiated the claim on the ground that

“That as per terms and conditions of the policy No.271601/11/2014/204 issued to you, you were under contractual obligation to provide, produce and give to the company all such documents, books, vouchers, invoices & proofs with respect to the claim and any matter touching the liability or the amount of liabilit7y of the Company as may be reasonably required by or on behalf of the Company, which is a condition precedent to any liability under the policy, but on the contrary you have failed to establish & provide necessary evidences/proofs asked by the surveyor & the Insurance Company, despite our having asked for the same for numerous times & opportunity afforded in this regard besides the surveyor has found the claim lodged to be grossly exaggerated one.”

10.    The repudiation is based upon the report of the Surveyor (Opposite Party No.3) whose conclusion is based on the fact that the Complainant failed to substantiate the claim based on the documents sought and            due to non-submission of the requisite documents, the claim was pending correlation of the purchase bills.  The Surveyor concluded that “the insured was claiming loss of about ₹6.97 Crores but despite numerous communications/meetings/opportunities and lapse of considerable time they were unable to substantiate their above claim amount.  He also noted that despite requests, the insured did not provide any proof of quantities in stock and several invoices.  The Surveyor, therefore, concluded the claim to be violation of policy conditions no.6 and 8.

11.    From the foregoing, it is evident that the date of the fire incident was 12.10.2013 on which date the policy in question was valid.  The cause of the fire is not in dispute.  The claim dated 14.10.2013 and the documents submitted to the Opposite Party No.3 and the documents submitted to the Opposite Party No.3 were duly acknowledged on 27.02.2014 and further documents sought on 28.07.2014.  The report of the Surveyor is dated 01.04.2015, a copy of which was supplied to the Complainant only on 29.12.2015.  The repudiation letter of the Opposite Party No.1 is dated 03.01.2016 which relies upon the report of the Surveyor.  From the record it is also apparent that the Complainant had made available the documents relating to the separate stock and inventory list for the warehouses in Panipat and Delhi, balance sheets as on 31.03.2011, 31.03.2012 and 31.03.2013 separately for both the warehouses, VAT returns for the same period along with the income tax returns and a certificate by M/s Eicher Trucks and Buses giving the actual value of purchase by the Complainant apart from the other documents such as trading account, purchase bills, ledger account and records of sale and purchase, copies of all invoices and transportation records.  It is also not disputed that some of the records had been destroyed in the fire.  The conclusion of the Surveyor that the claim was fraudulent is not supported by any evidence to establish any malafide on the part of the Complainant.  It is also not substantiated in the report how the claim has been determined to be exaggerated.  Reliance of the Opposite Party No.1 on the Surveyor’s report to conclude that the claim was exaggerated, therefore, does not find evidentiary support within the report of the Surveyor.    

12.    While the report of a Surveyor is a mandatory requirement under Section 64 UM of the Insurance Act, 1938 and the Hon’ble Supreme Court in Sri Venkateswara Syndicate (supra) and Khatema Fibres Limited (supra) has laid down that the report of the Surveyor has to be given due importance, it has also laid down in New India Assurance Company Limited vs Pradeep Kumar (2009) 7 SCC 787 that the Surveyor’s report is not last and final word and is not that sacrosanct that it cannot be departed from.  Regulation 9 of the IRDA (Protection of Policyholder’s Interests) Regulations, 2002 directs a Surveyor to submit his report within 30 days and, in any case, within 45 days from the date of appointment.  In the present case, the Surveyor’ report is dated 01.04.2015 whereas he was appointed on 14.10.2013.  Copy of the Surveyor’s report was also not shared with the insured Complainant for over 8 months as per the records.  The insurer is also bound to accept or reject the claim within 30 days from the receipt of the Surveyor’s report as per Regulations of the IRDA (supra).  In the present case, the Surveyor admittedly submitted his report on 01.04.2015 and the Insurance Company after an unexplained silence of nearly 8 months repudiated the claim on the basis of the Surveyor’s report which, as stated above, was itself not based on any cogent reasoning to establish either an excess or fraudulent claim.  Reliance on Condition No.8 of the policy pertaining to a fraudulent claim should have been corroborated by cogent evidence without which it is only speculative.  In view of the above, there is no option but to conclude that the repudiation of the claim in question by the Opposite Party No.1 was in breach of the mandatory statutory provisions amounting to deficiency in service on its part.     

13.    For the reasons stated above and in the facts and circumstances of the case, the Complaint is allowed with the directions   to the Opposite Party No.1 to:

(i)     pay to the Complainant the amount of ₹6,97,00,000/- (Rupees Six Crores and Ninety Seven Lakhs only) claimed towards the loss suffered by him on account of the fire, along with interest @ 6% p.a. from the date of filing of the Complaint till realization, within eight weeks from the date of receipt of a copy of this order, failing which they shall be liable to pay interest @ 9% p.a.

(ii)    pay, in addition, litigation costs of ₹50,000/-.

14.    Pending IAs, if any, also stand disposed of with this order.