JUSTICE DEEPA SHARMA, PRESIDING MEMBER 1. In the present complaint, the complainant has alleged that it is a registered company since 1997 who is engaged in the manufacture, supply and sale of corrugated boxes / boards to various industrial houses and was having its factory in five sheds. Out of five sheds, four were installed with machinery for manufacture of the card boxes and fifth shed was used for storage of raw material with semi finished goods / excess stocks. The complainant had been taking regular insurance covers for buildings, machinery and stock of raw material and semi finished and finished goods from the very inception and for the relevant period, it were having two valid insurance policies. It is submitted that insurance policy No. 261700/11/2011/194 was covering the following items: i. Stock Rs.1,50,00,000.00 ii. Plant & Machinery Rs.30,00,000.00 iii. Building Rs.25,00,000.00 Total Rs.2,05,00,000.00 Policy No.261700/11/2011/211 was covering the following items: i. Stock Rs.1,42,00,000.00 ii. Plant & Machinery Rs.2,50,00,000.00 iii. Other contents Rs.58,00,000.00 iv. Building Rs.1,00,00,000.00 Total Rs.5,50,00,000.00 2. The admitted facts of case are that during the existence of above mentioned policies, a major fire had broken out on 09.12.2010 and caused huge losses to the insured property. The complainant while informing the other local authorities also informed the insurance company about the incident. The complainant, thereafter, submitted its claim forms dated 22.03.2011. The opposite parties appointed Sh.Pankaj Goyal as preliminary surveyor and Sh.V.K.Kharbanda as final surveyor. The surveyor report was submitted on 15.04.2011 assessing the loss of Rs.1,48,00,000/- for unit No.1 and Rs.3,00,00,000/- for unit no. II, thus totaling to Rs.4,48,00,000/- The surveyor had also recommended release of Rs.1,00,00,000/- as ‘On Account Payment’ as claim was technically payable. The contention of the complainant is that not only the insurance company had failed to make the ‘On Account Payment’ as suggested by the surveyor, they had also exercised undue influence on the surveyor and the surveyor, thereafter, reduced the loss amount to Rs.3,91,30,215/-. That the insurance company obtained the consent from the complainant for this amount and the complainant though in order to settle matter signed the consent letter dated 13.09.2011. The amount was not released to the complainant. After a lapse of about one year i.e. total two years from the filing of the claim by the complainant, the opposite parties vide letter dated 19.09.2012, however, offered a sum of Rs.2,66,43,836/- in full and final settlement of the claim. The complainant asked for the details of the assessment of this amount vide its letter dated 25.09.2012 and the insurance company replied it vide mail dated 01.10.2012. The complainant refused to accept the said sum in full and final settlement but offered to accept it as ‘On Account Payment’ subject to the consideration of the balance claim. The complainant also withdrew its consent for the reduced amount of Rs.3,91,30,215/-. After having received no response from the insurance company, the complainant sent a legal notice dated 22.11.2012. This notice was replied by the insurance company vide email dated 27.11.2012 without disclosing any reason for reduction in claim amount. The complainant has further stated that due to non settlement of its genuine claim, he had suffered a huge loss in the business and the conservative estimate comes to Rs.1,70,00,000/-. He has also suffered harassment and mental agony. On these contentions, the complainant has claimed total sum of Rs.5,64,19,927/- alongwith interest @ 18% p.a. The complainant has also claimed compensation of Rs.1,70,85,188/- towards loss in business, Rs.5,00,000/- towards harassment and mental agony and Rs.55,000/- as litigation expenses 3. The claim is contested by the opposite party. It is not disputed that an accidental fire had broken out during the existence of the valid insurance policies and that a claim had been submitted by the complainant. It is also admitted that Pankaj Goyal and V.K.Kharbanda were appointed as preliminary surveyor and final surveyor respectively to assess the actual loss caused to the complainant. It is, however, contended that claim of the complainant was highly exaggerated. It is denied that insurance company had ever made any effort to influence the surveyor. It is submitted that surveyor had assessed the loss at Rs.3,91,30,215/- vide its report dated 06.01.2012 and consent for settling the loss at this amount was obtained from the complainant. The Divisional Office of the insurance company at Yamuna Nagar after receiving the surveyor report dated 06.01.2012 had submitted its final recommendation vide note dated 11.01.2012 calculating loss of plant and machinery for Rs.1,11,30,138/- after making the deduction on account of obsolete factor in respect of imported China machinery. It was also observed in the notes that surveyor has completely ignored the well established practical checks. The surveyor had mentioned that he had verified availability of storage space inside the production area of subject unit but he has neither mentioned the figure of available cubical space nor he has mentioned any relationship between available space and quantum of stocks that could be accommodated in that available space. On the basis of available cubical space inside the production unit, the quantum of stocks gutted by fire was assessed at Rs.1,18,10,700/- and on that basis claim of Rs.1,48,33,136/- was approved for building, plant and machinery and Rs.1,18,10,700/- for stock and total sum of Rs.2,66,43,836/- was approved towards loss suffered by the complainant. On these basis, the Regional Office vide letter dated 30.05.2012 made recommendation for the said sum. The Divisional Office had assessed the loss after thorough consideration to all the facts vide its note dated 11.01.2012 and forwarded the same to regional office. The Regional office sent its recommendation to Head Office at New Delhi vide letter dated 10.05.2012 and it was approved by the competent authority and accordingly vide letter dated 19.09.2012, the complainant was informed. On these contentions, it is submitted that complaint is liable to be dismissed and there is no deficiency on the part of the opposite parties and they have correctly assessed the loss for Rs.2,66,43,836/- which they are ready to pay to the complainant. 4. In the rejoinder, the complainant has submitted that vide note dated 28.09.2011, the Divisional office of the respondent had recommended the claim of Rs.3,91,30,216/- for approval. The internal note dated 10.11.2011 from DO Yamuna Nagar to RO Ambala further shows that this amount was recommended for approval. It is further submitted that as an interim measure pursuant to order dated 28.11.2013 of this Commission, the amount of Rs.2,66,43,836/- was released to the complainant. It is submitted that although original claim of the complainant was for Rs.5,64,19,927/- but were ready to settle the matter on the basis of the loss assessed by the surveyor appointed by the insurance company i.e. at Rs.3,91,30,216/-. It is submitted that surveyor had arrived at this figure after taking note of books of accounts / record being maintained by the complainant during the ordinary course of its business. It is further submitted that vide letter dated 06.01.2012 the surveyor had reiterated its earlier stand in its report dated 16.09.2011. It is submitted that it is for the insurance company to justify and onus is upon them to prove the reasons for deviating from the surveyor’s report. It is submitted that under the category of stocks, the surveyor has based its report on the basis of duly audited books of accounts maintained by the complainant in the usual course of business and arrived as the loss caused to the stock based on such figure and its cost. The surveyor had also taken note of the stock, both finished and unfinished which were saved from the fire and were lying in the godown and, accordingly had reduced the amount of claim. He had also cross checked the sale / purchase figures, sale invoices and purchase bills of the last three years with the monthly VAT returns filed by the complainant in the usual course of business. He had adopted three tier check in assessing the stock value and then assessing the wastage on such stock at 5% and considering that the damaged stock had no salvage value, assessed the loss at Rs.86,07,340/- for Unit-1 which has been arbitrarily reduced by the insurance company to Rs.29,02,350/- and Rs.84,53,008/- for Unit-II. The surveyor has also verified availability of space for keeping the stock and observed that ‘the plant and machinery alongwith required moving space occupies almost 1/3rd space area of Unit I and Unit II as physically verified. The rest 2/3rd space area is used for storage of material as per requirement. Besides the open areas of both Unit I and Unit II upto 2/3rd are also used for storage of material. Thus the quantity of damaged stock can be accommodated in the space available’. It is further alleged that insurance company has not disputed the audited account books, the monthly VAT returns and the sale invoices / purchase bills mentioned in the usual course of business and, therefore, there was no logic to reduce the amount. It is further contended that as regards machinery of the complainant is concerned, the surveyor has assessed the loss of Rs.11,09,782/- for Unit-1 and Rs.1,75,46,654/- for Unit-II which has been arbitrarily reduced by the insurance company to Rs.1,11,30,138/- i.e. by Rs.64,16,516/-. It is submitted that machinery was all damaged and that while some were repairable and the others were not repairable. The loss was assessed applying the factor of under insurance, depreciation and salvage value. The insurance company have not spelt out any reason for challenging the assessment made by the surveyor on this account. It is submitted that reducing the amount without any valid grounds and reasons is an arbitrary act. 5. The parties led their evidences. Vide order dated 23.08.2018, this Commission had disposed of the present complaint. That order was challenged before the Hon’ble Supreme Court in Civil Appeal no. 1297 of 2019 ( @ Diary no 41786 of 2018) and vide order dated 14.01.2019, the said order was set aside and appellant i.e. Insurance Company was allowed to file relevant material before this Commission by way of an affidavit. 6. Thereafter, the opposite parties have filed their affidavit and have also furnished other documents including the copies of email etc. 7. Parties have also filed their written submissions. We have heard the arguments and perused the relevant record. The admitted facts of the case are that during the existence of insurance policies, a fire had occurred in Unit- 1 and Unit II of the complainant and his claim to the tune of Rs.2,66,43,836/- has been approved. The complainant, however, being dis-satisfied with the amount of compensation approved by the opposite party filed the present complaint. His contention had been that the amount which the surveyor had calculated vide its report dated 16.09.2011 was of sum of Rs.3,91,30,216/- and when clarification was sought from the surveyor, he vide its report dated 06.01.2012 reduced it to Rs.3,90,69,066/-. His contention had been that his approval had been sought for settlement of his claim of Rs.3,91,30,216/- and the opposite party had arbitrarily reduced the amount to Rs.2,66,43,836/-. It is argued that various communications in the department of the opposite parties clearly show that at one stage, approval for appointment of second surveyor had been sought as the sanctioning authorities were of the opinion that further clarifications were required to be sought since the surveyor was sticking to its stand in its report. It is argued that instead of appointing second surveyor, the opposite party on its own reviewed the report of the surveyor which is not permissible under the law. It is submitted that surveyor had taken into consideration all the books of accounts and other relevant documents duly maintained by the complainant in the ordinary course of business and had also done physical inspection of the site and was satisfied that the goods damaged as per stocks available with the complainant on the date of incident and was also satisfied on other counts as well. It is submitted that vide note dated 28.09.2011 the Divisional Office Yamuna Nagar recommended the claim amount of Rs.3,91,30,216/- for approval to the Regional Office. Thereafter, several clarifications were sought from the final surveyor and same were duly replied by him on 12.11.2011, 26.12.2011, 27.12.2011 and 06.01.2012. It is submitted that thereafter vide its reply dated 06.01.2012, surveyor had calculated the amount of Rs.3,90,69,066/- and during the course of arguments on 25.10.2021, learned counsel for the complainant on instructions has submitted that complainant is not pressing its claim amount as mentioned in the prayer clause of the complaint but is ready to settle the same at sum of Rs.3,90,69,066/-. It is submitted that opposite party has arbitrarily and without any basis reduced the assessed amount to Rs.2,66,43,836/- vide its note dated 30.05.2012. It is submitted that Regional Office / Divisional Office has recommended for appointment of the another surveyor for re-assessment to the Headquarter vide its letter dated 12.04.2012 and no approval for appointment of second surveyor had been given by the Headquarter, it clearly shows that Headquarter did not find any cogent reason for appointing another surveyor for re-assessing the loss and in the light of this fact, the act of the opposite party in unilaterally reducing the assessed amount is an arbitrary act and is liable to be set aside. Reliance has been placed on the findings of the Hon’ble Supreme Court in the case of Sri Venkateswara Syndicate V. Oriental Insurance Co. Ltd. (2009) 8 SCC 507 in paragraph nos. 16, 33 & 35. “16. Sub- section (2) of Section 64-UM mandates that no claim in respect of a loss which has occurred in India and requiring to be paid in India equal to or exceeding twenty thousand rupees in value on any policy of insurance be admitted for payment, unless insurer obtains a report on the loss that has occurred from a person who holds a license issued under sub-section (1) of Section 64-UM of the Act as a Surveyor or loss assessor. The proviso to sub- section(2) however, retains the right of the insurer to settle a claim for an amount different from that assessed by the surveyor. This proviso impliedly permits an insurer to obtain a second or further report where considered appropriate or expedient in the circumstances of a case, based upon which the claim could be settled for a different amount than as assessed earlier. 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 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. 35. In our considered view, the Insurance Act only mandates that while settling a claim, assistance of 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.” 8. It is submitted that it was not open to the opposite party to have unilaterally and arbitrarily reduced the assessed amount which has been done by an expert in that field. It is submitted that in terms of interim order dated 28.11.2013, the opposite party had paid a sum of Rs.2,66,43,836/- to the complainant on 23.12.2013 and it is prayed that balance amount shall be ordered to be paid to the complainant and also complainant shall be compensated for harassment and mental agony to the tune of Rs.10 lacs and cost of litigation of Rs.5 lacs be also awarded. 9. The opposite party has furnished its written arguments. It is argued that in terms of proviso to sub-section (2) and sub-section (3) of the Section 64 UM of the Insurance Act, 1938 ( in short, the Act), the insurance company has the liberty to differ from the findings and assessment of the final surveyor and to take report from any other independent surveyor. It is also submitted that under the said provision, the opposite party retains the right to settle the claim for an amount different from that assessed by the surveyor and reliance has been place on para 10 of the findings of the Hon’ble Supreme Court in Sri Venkateswara Syndicate ( supra). It is argued that surveyor in its final report dated 16.09.2011 assessed the loss to Unit–I and Unit-II at Rs.1,14,20,987/- and Rs.2,77,09,229/-, totaling sum of Rs.3,91,30,216/-. Vide its letter dated 06.01.2012, the surveyor had corrected its final survey report with respect to the dismantling charges added under the head of Loss of Building. It had observed that ‘since dismantling charges form a part of debris removal, the liability of the damages to building is reduced accordingly for Unit-I and Unit-II to Rs.16,77,439/- and Rs.16,94,843/- respectively’ and it revised its assessment to Rs.3,90,69,066/-. It is further argued that after discussion with the surveyor, the opposite party’s Regional Office prepared a detailed claim note dated 30.05.2012 on Head Office’s prescribed format and recommended full and final payment of Rs.2,66,43,836/-. The Head Office vide its note dated 25.07.2012 considering all the assessments and recommendations approved the said claim. It is submitted that surveyor in its final report had assessed the loss of stocks at Rs.86,07,340/- and Rs.84,53,008/- towards Unit-I and Unit-II respectively. The opposite party has found that surveyor was silent about the volumetric analysis of remains of stock items under claim. The surveyor has neither mentioned the figure of available cubical space nor has he mentioned any relationship between available space and the quantum of stocks that can be accommodated in that available space. The surveyor was silent about how could the stocks of semi-finished goods worth Rs.90,60,358/- can be accommodated inside the production area of Unit-I as such quantity of stocks require nearly 56,000 cubic feet space which was nowhere available at the insured premises. By analyzing the cubical storage space inside the production areas, the loss of stocks in Unit-I and II comes to Rs.29,02,350/- and Rs.89,08,350/- respectively. The surveyor vide its letter dated 06.01.2012 assessed the loss towards the building in Unit-II at Rs.16,94,843/- which is bifurcated into (i) repair charges in shed no.3 & 4 at Rs.6,78,660/- and Rs.4,73,276/- respectively and total damage portion of shed no.4 at Rs.15,21,000/-. The opposite party found out that the surveyor with respect to the totally damaged portion has considered the cost on 100% loss basis whereas the extent of damage to building of Unit-II was limited to scattered damage to roof structure and in form of peeling of plaster at scattered places. Further, major portion of construction work carried in Unit-II was part of the improvement drive and to make this portion compatible with building of Unit-I. Nature and extent of damages to Unit-II was same as rest of the shed no.4 i.e. repair basis. Thereafter, total damaged area i.e.3380 sq.ft. @ Rs.113/- per sq. ft, gross cost of reconstruction comes at Rs.3,81,940/-. It is submitted that opposite party also noticed that surveyor while assessing the loss of machinery at Rs.1,75,46,654/- has failed to consider the fact that some of the indigenous machineries were obsolete in nature and hence reasonable deduction towards the obsolete factor was required to be deducted. That upon inquiry from the manufacturer of the machines vide letter dated 05.09.2011, it has come to the notice of the opposite party that machineries claimed were outdated machineries and to arrange the parts of this model, they have to arrange all the dies and tools at their factory. It was also noticed by the opposite party that most of the control panels and devices were found of latest design which indicate improvement of machineries. It is submitted that appropriate deduction to the above mentioned heads was not considered by the final surveyor. After discussing the matter with the surveyor, opposite party came to the conclusion that obsolete machineries were liable to additional depreciation as they were having shorter life in comparison with current / live models of same plant and machinery / equipment. The surveyor had considered the life of machinery at 20 years and accordingly deducted 5% p.a. depreciation. As the machineries became obsolete and its Chinese manufacturer had shown their inconvenience in supplying the spare parts only after four years of its sale, it was certain that they will not supply any spare parts after 1-2 years, meaning thereby that this plant and machinery would become completely un-operational after another 3-4 years and, therefore, its total life would be limited to 10 years due to being obsolete in addition to usual depreciation, a correction factor @ 10% per year is applicable on account of being obsolete. Considering all these facts, opposite party had applied the correction factor @ 40% and assessed the loss towards the machineries at Rs.1,11,30,138/-. On these contentions, it is submitted that complaint has no merit and is liable to be dismissed. 10. We have given our thoughtful consideration to the rival contentions and arguments of the learned counsel for the parties and have perused the record. The admitted facts of the case are that fire had broken out in the insured premises of the respondent / complainant. His stocks which were duly insured also got damaged alongwith machinery and building which were also duly insured. The surveyor Mr.Pankaj Goyal in its initial report had reported that the stocks lying in shed no.1, shed no.2, shed no.3, shed no.4 were completely gutted and only the stocks which were lying in the godown of Unit-II were saved as fire did not enter this portion of the factory. Also the stock of some finished corrugated paper boxes and corrugated paper partitions lying stored under the shed adjacent to Office Block of the factory were saved since the fire did not enter this portion of the factory. His report, therefore, clearly shows that entire stock lying in shed no.1. shed no.2, shed no.3 and shed no.4 were gutted. The surveyor, thereafter, was appointed who initially calculated the loss at Rs.3,91,30,215/- and when discrepancies were pointed out to him in his report, he submitted his final report at Rs.3,90,69,066/-. Even this report of the surveyor was not accepted by the insurance company. Thereafter DO Yamunanagar submitted its report on 30.05.2012 for approval and his report was approved by DGM. Vide this report, DO Yamunanagar has calculated loss at Rs.2,66,43,836/-. 11. From the above, it is apparent that several communications were exchanged internally by the opposite party, showing dissatisfaction with the report of the Surveyor. The Regional Manager vide its letter dated 19.03.2012 returned the file to DO for getting the clarification on all the issues and to submit final claim note with clear recommendations. The Regional Manager vide its email dated 12.04.2012 sent at 10.52 a.m. addressed to DM Sh.R.S.Kalra which was in response to its earlier letter dated 19.03.2012 attached the claim note for the perusal and final submission / recommendations . In response to this email at 12.33 p.m. on the same day, Divisional Manager Sh.R.S.Kalra replied to Sh.B.S.Negi that ““since the surveyor has not been able to clarify our observation, we recommend that another surveyor be deputed by the competent authority for reassessment of the loss in light of the observations made by us in the claim note”. Thus, it is clear that there was a recommendation for appointment of a second surveyor for verification and assessment. It is, however, apparent that second surveyor was not appointed but vide letter dated 23.04.2012 written by DO Yamunanagar to RO Ambala, the reassessment was done and the claim amount was reduced to Rs.2,66,43,836/-. The following are the extracts of the said letter: “This has reference to your letter dated 19.03.2012 alongwith captioned claim files and further mail dated 12.04.2012 sent to HO requesting for deputing second surveyor in this case. As desired, we are enclosing herewith complete claim files in original ( 8 nos) duly recommended for approval for Rs.2,66,43,836/- subject to usual formalities”. 12. These facts clearly show that despite recommendations of the appointment of second surveyor, no approval for appointment of second surveyor was sought but reassessment was done by the concerned authorities of the opposite party, the insurer, and sum of Rs.2,66,43,836/- was recommended for approval, thereby the opposite party assumed the role of loss assessor. 13. The issue, therefore, is whether an insurer can adopt the role of loss assessor. Section 64 UM of the Act has been elaborately discussed by the Hon’ble Supreme Court in the case of Sri Venkateswara ( supra). On this order both the parties have relied in support of their contentions. The question before the Hon’ble Supreme Court in this case was whether insurance company could have repeatedly appointed surveyor after surveyor for getting the loss / damage assessed before settling the claim of the insured. While dealing with this issue, the Hon’ble Supreme Court has discussed the scope of sub-section 2, 3 and 4 of Section 64 UM of Act. The relevant paragraphs and the ones relied upon by the parties are reproduced herein: “16. Sub- section (2) of Section 64-UM mandates that no claim in respect of a loss which has occurred in India and requiring to be paid in India equal to or exceeding twenty thousand rupees in value on any policy of insurance be admitted for payment, unless insurer obtains a report on the loss that has occurred from a person who holds a license issued under sub-section (1) of Section 64-UM of the Act as a Surveyor or loss assessor. The proviso to sub- section(2) however, retains the right of the insurer to settle a claim for an amount different from that assessed by the surveyor. This proviso impliedly permits an insurer to obtain a second or further report where considered appropriate or expedient in the circumstances of a case, based upon which the claim could be settled for a different amount than as assessed earlier. 17) Sub-section (3) provides for the Authority (Insurance Regulatory and Development Authority), the power to obtain an independent report from any other surveyor in respect of a claim referred to in sub-section (2). This sub-section vests in the Authority the power to call for a second report, either suo motto or upon the application by the insured person or on a complaint by a third party. Under sub-section (3), the second report is required to be called by the Authority himself for use, consideration and further directions. Sub-section (4) envisages that the authority may on receipt of a report referred to in sub-section (3), issue such directions as he may consider necessary with regard to the settlement of the claim including any direction to settle a claim at a figure less than that at which it is proposed to settle it or it was settled and the insurer shall be bound to comply with such directions. 30. The Insurance Regulatory Authority (`IRDA' for short) has formulated Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations, 2000, which regulate the licensing and the work of surveyors. These regulations stipulate that the surveyor shall investigate, manage, quantify, validate and deal with losses arising from any contingency and carry out the work with competence, objectivity and professional integrity by strictly adhering to the Regulations. 31. The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. 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 officer concerned 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. 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 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. 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 license issued under this Section to act as a surveyor….” (emphasis ours) The Hon’ble Supreme Court concluded thus: 35. In our considered view, the Insurance Act only mandates that while settling a claim, assistance of 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. (emphasis ours) 14. The Hon’ble Supreme Court has while recognizing the right of the insurer to differ with the report of the surveyor has stated that in a situation where the insurer differs with the report of the surveyor, it has right to appoint second surveyor and for appointing second surveyor, it has to give cogent reasons for rejecting the report of the first surveyor. The Hon’ble Supreme Court while recognizing the rights of the insurer to differ with the report has nowhere stated that the insurer is empowered to give its own assessment of loss where it differs with the report of the surveyor. Section 64 UM of the Act does not authorizes insurer to act as loss assessor. The only option available to the insurer is to obtain the report of another surveyor where it had valid reasons to differ with the surveyor report submitted before it. This view finds support from the clear language of sub-section (1) (A) of Section 64 UM of the Act which prohibits every person to act as a loss assessor unless he holds a valid license. The provision is reproduced herein: “64 UM Licensing of surveyors and loss assessors 1 (A) Save as otherwise provided in this section, no person shall act as a surveyor or loss assessor in respect of general insurance business after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968 unless he holds a valid licence issued to him by the Authority.” (emphasis ours) 15. It is apparent that this proviso clearly bars any person to act as a loss assessor. On reading of sub-section (1) (A) of Section 64 UM in conjunction with sub-section (2) of Section 64 UM of the Act, it is apparent that insurer cannot act as a loss assessor and the loss assessor can only be the surveyor which are appointed by the authority established under IRDA Act. Since the insurer cannot act as a loss assessor, it cannot substitute its own assessment of loss to that of the surveyor. The only option under section 64 UM of the Act and as held by the Hon’ble Supreme Court in Sri Venkateswara Syndicate case ( supra) is to appoint another surveyor. In this case, recommendation for appointment of another surveyor has been made and no reasons have been given by the insurer as to why this recommendation was not acted upon. In view of this, calculation of the loss to the tune of Rs.2,66,43,836/- is liable to set aside. Accordingly, the report of the surveyor whereby it assessed the loss to the tune of Rs.3,90,69,066/- is upheld and the complainant is entitled to this amount. 16. We, while allowing the complaint, direct the opposite party to pay a sum of Rs.3,90,69,066/- to the complainant towards its claim for loss. Sum of Rs.2,66,43,836/- has already been released to the complainant in December, 2013. Therefore, amount of Rs.1,24,25,230/- (Rs.3,90,69,066/- minus Rs.2,66,43,836/- ) shall be paid to the complainant alongwith interest @ 9% p.a. from the date of filing of complaint till the date of payment. Interest @ 9% p.a. is also awarded on amount of Rs.2,66,43,836/- from the date of filing of complaint till the date of payment. Litigation cost to the tune of Rs.1,00,000/- is also awarded to the complainant. Consumer Complaint stands disposed of in these terms. |
