NCDRC Rules Against United India Insurance: No Second Surveyor Without Valid Reasons

NCDRC Rules Against United India Insurance: No Second Surveyor Without Valid Reasons

The bench of the National Consumer Disputes Redressal Commission, led by Dr. Inder Jit Singh as the Presiding Member, ruled that in the assessment of whether the insurance company's appointment of a second or subsequent surveyor is warranted, it is imperative to consider the need for such action, taking into account pertinent facts and circumstances. This includes an evaluation of any inadequacies or omissions in the initial surveyor's report.

Curewel Packaging Pvt. Ltd. (Curewel) maintained an insurance policy with United India Insurance Co. Ltd. (the Insurance Company) covering their factory building, machinery, and stock. They submitted a claim, citing damage resulting from a flood that occurred on August 8, 2008. The Insurance Company appointed surveyors to evaluate the extent of the loss, and their assessments showed significant disparities.

The initial surveyor, M/s Protech Engineers and Loss Assessors assessed the loss of stock, building, and machinery at a specific amount. However, the insurance company questioned the validity of this assessment, particularly about the machinery loss, which they believed was overestimated. Consequently, they appointed a second surveyor, M/s S.K. Bakliwal & Co., who evaluated the loss at a lower value.

Following a review of both survey reports, the insurance company offered Curewel a settlement amount of ₹3,81,170, which Curewel accepted under protest. However, Curewel later filed a consumer complaint with the District Consumer Disputes Redressal Forum, Jaipur ("District Commission") seeking a larger settlement. The District Commission dismissed the complaint, reasoning that Curewel had not demonstrated that the investigation report was false or lacked a basis.

Dissatisfied with this decision, Curewel appealed to the State Consumer Disputes Redressal Commission, Rajasthan (State Commission). In its ruling dated May 1, 2017, the State Commission ruled in favour of Curewel, awarding a higher sum. Subsequently, the insurance company contested this decision by appealing to the National Consumer Disputes Redressal Commission (NCDRC).

The insurance company raised several contentions, asserting that the State Commission had made errors in both factual and legal matters. They contended that Curewel had not sufficiently demonstrated the presence of stock valued at ₹3,02,272 at the site during the time of the loss. Additionally, the insurance company argued that the initial surveyor's assessment of the loss was on the higher side. They claimed that the State Commission failed to refute the District Commission's findings, which stated that Curewel had not established the investigation report as false or lacking a valid basis.

The insurance company also asserted that the State Commission did not acknowledge their right to appoint a second surveyor, given the apparent anomalies in the first surveyor's report.

Curewel maintained that they had incurred substantial losses as a result of a flood incident that fell within the coverage and payment terms of the insurance policy. They promptly notified the insurance company about the event and furnished all requisite information and documentation. Curewel contended that the insurance company's rejection of the initial surveyor's report and the subsequent appointment of a second surveyor without valid justifications violated the law.

The NCDRC upheld the State Commission's decision, thereby confirming the judgment in the case. To begin, the National Commission highlighted that Curewel had willingly agreed to accept the claim amount of ₹3,81,170 as a complete and final settlement with the Insurance Company. The fact that Curewel had not alleged any fraud, undue influence, or misrepresentation by the insurance company made their acceptance of this amount significant. Consequently, the NCDRC maintained that, in accordance with established legal principles, Curewel was not eligible to pursue further claims once they had voluntarily accepted the settlement amount.

The NCDRC pointed out that the appointment of a second surveyor by the insurance company lacked valid reasons. It referred to the Supreme Court case of Sri Venkateshwara Syndicate Vs. Oriental Insurance Company Limited (2009) 8 SCC 507, where the Court established that while the insurance company has the right to appoint a second surveyor, such an appointment must be substantiated by valid justifications, and the insurer must provide compelling reasons for not accepting the initial surveyor's report. In the present case, the NCDRC found that there were no valid reasons presented for the appointment of the second surveyor.

The NCDRC additionally established that there was no substantial evidence or proof to indicate that the initial surveyor's report was arbitrary or inflated. Moreover, the NCDRC took into account circulars issued by the Insurance Regulatory and Development Authority of India (IRDA). These circulars underlined that insurers should refrain from using discharge vouchers to prevent policyholders from seeking higher compensation through judicial channels.

The NCDRC confirmed the State Commission's ruling, concluding that the insurance company's actions, which encompassed the improper appointment of a second surveyor and endeavours to settle the claim through discharge vouchers, were at odds with established legal and regulatory principles. Consequently, the NCDRC instructed the insurance company to disburse the outstanding amount of ₹3,67,739, along with 9 per cent interest dating from the day of filing the complaint. Furthermore, an additional sum of ₹10,000 was granted to Curewel to cover the costs of the proceedings.