ORDER
PER JUSTICE R.C.JAIN, PRESIDING MEMBER
The above named complainant, a registered partnership firm engaged in the business of Poultries at Bhabandha. It had insured one Poultry Farm by taking a Fire Policy "C"
bearing No. 1155060104549 in the sum of Rs. 77,62,000/- valid from4.7.1999 to 03.7.2000. Unfortunately, on the night intervening 17th& 18thOctober, 1999, a severe cyclone hit the entire south Orissa and completely devastated the unit of the complainant, intimation of which was given to the Opposite Party-Insurance Company. M/s. Mehta & Padamsey Surveyors Pvt. Ltd., were appointed, who after spot verification on 28.10.1999 and on some other dates vide their final survey report dated 08.3.2000 assessed the total net loss at Rs. 65,76,317/- . The opposite party-Insurance Company did not release the claim amount in terms of the survey report and sat over the matter. The complainant made representations for early settlement of claim. To the utter shock the complainant was
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surprised to note that the complainant had offered to settle the claim of the complainant at Rs. 40,06,211/- as against the net loss assessed by the surveyor at Rs. 65,76,317/-. The amount of Rs. 40,06,211/- was received by the complainant through its Banker under duress and protest as according to the complainant the insurance company had arbitrarily withheld the balance of the claim hence, the complaint seeking a sum of Rs. 25,70,106/- being the balance claim amount besides a sum of
Rs. 10.00 lacs as compensation towards loss of business caused to the complainant and on account of mental agony and harassment has filed this complaint.
2. On being noticed on the complaint, the opposite party-Insurance Company contested the complaint by filing a written version not disputing the factum of issuance of the insurance policy, the extent of loss and damage suffered by the complainant due to the cyclone on the aforesaid date and place but as also the factum of payment of Rs. 40,06,211/-However, the said amount is stated to have been paid to the complainant in full and final settlement of the complainant's claim under the policies and pursuant to the report of another surveyor Mr. S.C. Senapati, who had re-assed the total net loss at Rs. 41,24,286/- as against the net loss assessed by the previous surveyor, M/s. Mehta & Padamsey. It is denied that after receiving the aforesaid sum of Rs. 40,06,211/- in full and final settlement of its claim, anything remains due and payable to the complainant.
3. In the rejoinder, the complainant has controverted the objections and pleas raised in the written version and has generally reiterated the averments and allegations made in the complaint. We have carefully gone through the evidence and material brought on record and in particular the two survey reports submitted by M/s. Mehta & Padamsey and Er. Sarat Chandra Senapati. We have also heard the counsel for the parties and have considered their respective submissions.
4. The fate of the present complaint hinges on the answer to the question as to whether the opposite party-Insurance Company was justified in settling the claim of the complainant at Rs. 40,06,211/- on the strength of the report of the second surveyor submitted by S.C.
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Senapati and by discarding the assessment of loss made by the first surveyor-M/s. Mehta & Padamsey and by doing so whether they have committed any deficiency in service.
5. Learned counsel for the complainant has empathetically argued that the insurance company having itself appointed a surveyor M/s. Mehta & Padamsey, who after due consideration of the matter had assessed the net loss of the complainant at Rs. 65,76,317/- it could not have appointed second surveyor-M/s. S.C. Senapati unilaterally and without obtaining the approval of the Regulatory Authority under the Insurance Act, 1938 (hereinafter 'the Act') for obtaining a second report. On the other hand submissions of the learned counsel for the Opposite Party-Insurance Company is that since the reports submitted by M/s. Mehta & Padamsey did not disclose the basis on which the net loss had been assessed for the damage of various items and the report was made pursuant to agreement which the said surveyor is stated to have reached with the complainant; the insurance company did no wrong in appointing a second surveyor so as to get the correct assessment of loss for the damage suffered by the complainant in respect of his building and other articles. The question is squarely governed by Section 64-UM of the Act, which was the subject for interpretation by the Hon'ble Supreme Court in the case of Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd. And Anr. (2009)8SCC
507. In para 9 after reproducing Section 64UM(2) of the Act, the Hon'ble Court held as under:
"10. Section 64UM(1) of the Act speaks of licensing of Surveyors and loss assessors. We are not very much concerned with this Sub-Section. Sub-Section (2) 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 64UM of the Act as a surveyor or loss assessor. The proviso to Sub-section (20, 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 that as assessed earlier.
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11. 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."
6. Learned counsel for the complainant has referred to a later decision of the Hon'ble Supreme Court in the case of New India Assurance Co. Ltd., Vs. M/s. Protection Manufacturers Pvt. Ltd. AIR 2010 SC 3035. One of the submission made in the said case was that Section 64 UM of the Act, which proves for licensing of surveyor and loss assessment would be attracted to the fact of the said case and in case as was done in that case by appointment of M/s. Basheer & Associates ought to have gone to the Regulatory Authority under the Insurance Regulatory & Development Act, 1999 and under Sub- section (3) it was for the said Authority to call for an independent report from any other Approved Surveyor or Loss Assessor specified by it. It was urged that since appointment of another surveyor after the first surveyor had submitted its report was bad in law and the National Commission ought to have discarded the second report of M/s. J. Basheer & Associates. This contention was upheld by the Supreme Court in para 35 of the said Judgment by observing as under :
"The submissions of Mr. Piyush Gupta in regard to Section 64-UM of the Insurance Act, 1938, are also of substance, as the Appellant-Insurance Company should have applied to the Regulatory Authority under the Act for a second opinion instead of appointing M/s. J. Basheer & Associates for the said purpose unilaterally. The reports submitted by M/s. J. Basheer & Associates are liable to be discarded on such ground as well."
7. On the strength of above legal position, counsel for the complainant states that in the case in hand also the opposite party had appointed the second surveyor M/s. S.C. Senapati without the permission of IRDA and therefore, the report of said surveyor is liable to be discarded and cannot form the basis of assessment of loss.
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8. Having considered the above submissions, we are of the considered opinion that while it is permissible to appoint a second surveyor to assess the loss but this must be for given reasons and only through the auspices of the Regulatory Authority i.e. IRDA. Counsel for the opposite party-Insurance Company fairly admitted that the reasons for appointing a second surveyor is not disclosed to the complainant though there may be valid reasons and the permission of the IRDA was not obtained for appointment of the second surveyor. Therefore, strictly speaking going by the view taken by the Supreme Court in the case of New India Assurance Co. Ltd., Vs. M/s. Protection Manufacturers Pvt. Ltd., (Supra) there is no escape from the conclusion that the appointment of second surveyor viz. S.C. Senapati was not in accordance with the provisions of Section 64-UM of the Act, and therefore the said report of such surveyor must be discarded and cannot form valid basis for the settlement of the insurance claim of the complainant. The plea of the counsel for the opposite party that the appointment of the second surveyor was necessitated on account of the glaring defect in the report of the first surveyor M/s. Mehta & Padamsey even if it has weight will not survive. Accordingly, we hold that the insurance company ought to have settled the claim of the complainant as per the assessment made by the first surveyor-M/s. Mehta & Padamsey Pvt. Ltd. i.e. at Rs. 65,76,317/-. Since the complainant has already been paid a sum of Rs. 40,06,211/-, the complainant is entitled to the balance amount of Rs. 25,70,106/-. The claim of the complainant for a further sum of Rs. 10.00 lacs towards metal agony and harassment and loss of business etc., is misconceived, unjustified and is accordingly declined.
9. In the result, the complaint is partly allowed with the direction to the opposite party- Insurance Company to pay a sum of Rs. 25,70,106/- to the complainant. The amount shall be paid within a period of six weeks from the date of this order, failing it shall carry interest shall @ 9% per annum.
In the peculiar facts and circumstances of the case, we leave the parties to bear their
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own cost.
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R. C. JAIN
PRESIDING MEMBER
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S. K. NAIK
MEMBER
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