The complainant which is appellant in FA No. 1578/2019 and respondent in FA No. 1647/2019 obtained an insurance policy from National Insurance Company Limited, appellant in FA No. 1647/2019 and respondent in FA No. 1578/2019 in respect of the stock kept in its cold storage for the period from 07.01.2005 to 06.01.2006. A fire broke out in the premises of the complainant and stock stored therein is alleged to have been destroyed/damaged. A surveyor M/s S Sony & Co. was appointed by the insurer to assess the loss. The surveyor submitted a report assessing the loss. However, instead of making payment in terms of the report of the surveyor an investigator was appointed by the insurer namely M/s Royal Associates who submitted a report dated 22.08.2006. The investigator recorded several findings which need not be reproduced in this order. The opinion given by them on the basis of their investigation reads as under:-
“On the basis of the investigations made and findings recorded above, we are of the considered opinion that the insured’s claim is not genuine and is an outcome of his long term planning to recover his losses from the insurers to neutralize the loan taken from the bank and from other government agencies. Some of the acts committed by the insured were not only immortal but were illegal. We submit this report based on the facts investigated by us, discussions held with various persons concerned with the cold storage in one way or the other and have put down the facts without bias for and against any of the parties concerned be it insurers of the insured.
We hope you will find the facts produced above useful for appropriately dealing with the insured’s claim strictly in the with the relevant policy of insurance.”
2. The insurer repudiated the claim wide letter dated 22.01.2007 which to the extent it is relevant reads as under:-
“We would like to draw your attention to two Condition No. 6 of the policy of Insurance which categorically provides that in case the compliance of the said condition is not made the claim is not payable. The said condition reads as under:-
On the happening of any loss or damage the insured shell forthwith give notice thereof to the company and shall within 15 days after the loss or damage or such further time as the company may in writing allow in that behalf deliver to the company.
A claim in writing for the loss or damage containing as particular an (illegible) as may be reasonably practicable of all the several articles for items or property damaged or destroyed and of the amount of the loss or damage thereto respectively having regard to their value at the time of the loss or damage not including profit of any kind.
Particulars of father insurances, if any
The insured shall also at all times at his own expense produce procure and give to the company all such further particulars specification books purchase invoices duplicates or copies thereof documents investigation reports (internal/external) proof and information with respect to the claim and the origin and cause of the loos and the circumstances under which the loss or damage occurred and any matter touching the liability or the amount of the liability of the company as may be reasonably required by or on behalf of the company together with the declaration on oath or in other legal form of the truth of the claim and of any matters concerned therewith.
No claim under this policy shall be payable unless the terms of this condition have been complied with.
In no case whatsoever Shelby the company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration; it being expressly agreed and declared that if the company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for our purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.
That apart your above said claim was also got investigated by an independent investigating agency as it was learnt from the other insurance companies who had also insured the property etc. of the cold storage in question that the investigations which were both carried out by them revealed that the claim was not genuine. The investigators are appointed by us had accordingly made enquiries at various sources including enquiries from you, your employees police station and the others traders whose stocks were also lying in the said cold storage. After discreet enquiry into the matter they submitted their report to the company along with the documentary evidence in support of their findings recording to the investigation report.
After examining the report of the said investigators and the documents collected by them in the process of their investigation we find that there are positive evidence which indicate that your claim is not genuine and it is an outcome of your plan to recover the (illegible) from the insurers to repay the various loans taken by you from different banks and other Financial Institutions. Your conduct at the initial stages of the fire was not that of a prudent insured in as much as there was a deliberate attempt on your part to ensure that the small (illegible) takes is serious turn by purposely delaying the fire fighting operations and prevent other traders to take out there stokes when the same could have been easily taken out. This would have not only save those stocks but would have also reduced the intensity of fire thereby reducing the possibility of the fire from spreading and damaging the complete contents and the cold storage building. Apart from this very records produced by you are manufactured/fabricated so as to exaggerate the claim. The investigations revealed that you had removed some stokes before the fire. Apparent discrepancies were found in the claim and no valid reason could be provided for the delay in informing the police authorities and the report which was made in a casual manner thus escaping from a proper investigation by the police authorities.
We would like to draw your attention to condition number 8 of the policy of insurance which reads as under:-
If the claim be in any respect fraudulent or if any false declaration be made or used in support thereof or I fany fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act or with the convenience of the insured all benefits under the this policy shall be forfeited.
For the above said about reasons, we regret to inform you that your claim is hereby repudiated under the above said terms and conditions of the policy.”
3. Being aggrieved from the repudiation of the claim the complainant approached the concerned State Commission by way of a consumer complaint. Vide impugned order dated 06.05.2019 the State Commission directed as under:-
Having regard to the discussion done and the legal position explained above, the appointment of the 2nd Surveyor, in the absence of any infirmity or irregularity alleged to have been made in the assessment made by the Surveyor is not appropriate. It appears that the appointment of the Investigator was only for suiting the convenience of the insurer. In these circumstances the repudiation of the claim preferred by the complainant is set aside being unjustified and in these circumstances ends of Justice would be met if a direction is issued to the insurer to settle the claim and make the payment keeping in view the assessment made by the Surveyor within a period of two months from the date of receipt of the certified copy of this order. No order as against the Bank is called for in the facts and circumstances of the case. Ordered accordingly.
4. Being aggrieved from the order passed by the State Commission both the parties are before this Commission by way of these cross appeals.
5. A careful perusal of the impugned order shows that the State Commission allowed the consumer complaint solely on the ground that the appointment of the investigator was illegal the same being in violation of section 64UM Insurance Act. The State Commission did not examine the matter own merits in the light of the report of the surveyor and the investigator.
6. The Ld. counsel for the complainant contends that the appointment of the investigator was illegal. He also submits that the insurer appointed a second surveyor under the name of an investigator and the second server could not have been appointed except for cogent reasons. Reliance is placed upon the decision of the Hon’ble Supreme Court in in Sri Venkateswara Syndicate v. Oriental Insurance Company Limited & Anr., (2009) 8 SCC 507 where the Hon’ble Supreme Court inter-alia held as under:-
“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 concerned officer 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.”
7. Mr. Vishnu Mehra, Ld. counsel for the insurer, on the other hand, submits that the decision relied upon by the Ld. counsel for the complainant has no application to the matter since they have appointed an investigator and not a second surveyor. The power of an insurer to appoint an investigator was upheld by the Hon’ble Supreme Court in III (2005) CPJ 6 (SC) where the Hon’ble Supreme Court held as under:-
“5. One of the main defences attempted by the appellant was that the fire was not accidental and hence the appellant had no liability under the policy. The respondent- claimant met this plea by pointing out that the Surveyor had reported that the fire was caused by a short-circuit as pleaded by it. It is true that the Surveyor’s report supported the claim of the respondent herein. But the said report was also based on an investigation by the police, supporting a conclusion that the fire was caused by short-circuit of electricity. It is seen that there was a further police investigation and the Deputy Superintendent of Police R.S. Pura had reported that the earlier investigation was perfunctory, that the cause of the fire has to be properly investigated and in the circumstances a fresh investigation was called for. The appellant had engaged a private investigator to investigate and that agency had reported that the fire might not have been caused by short-circuit; that it could have been arson or a deliberate attempt to make an insurance claim; that the loss estimated could not have occurred considering the capacity of the godown and that the available materials in the custody of the police indicated that what was burned was paddy husk and not rice or paddy itself as claimed. The appellant argued before the Commission that in the light of this report, the Commission should decline jurisdiction and direct the claimant to go to a Civil Court to establish its claim. It was also argued that the report of the Surveyor could not be accepted in the circumstances, especially in view of the report of the Deputy Superintendent of Police. The claimant argued that the report of the private investigator could not be looked into in the light of Section 64 UM(c) of the Insurance Act, since there was nothing to show that the private investigator was licensed. The State Commission accepted the position canvassed for by the claimant and refused to look into the report of the private investigator. The High Court in appeal, also endorsed that position.
6. We are of the view that the State Commission should have given an opportunity to the appellant before us to prove the investigation report. Section 64UM of the Insurance Act cannot stand in the way of the Insurance Company in establishing that the claim was a fraud on the company, or that it was a case of deliberately causing a fire so as to lay the foundation for an insurance claim. Similarly, the Commission did not apply its mind to the aspect highlighted that the first police investigation was reported to be perfunctory and a fresh, proper investigation had been recommended. Similarly, t
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he discrepancy in the capacity of the godown and the possibility that what was lost was only or mainly paddy husk, should have persuaded the Commission to make a proper inquiry before deciding to accept the Surveyor’s report in this case. The High Court, in our view, has failed to exercise its appellate jurisdiction properly. It failed to see that it had the duty as the Appellate Authority to satisfy itself that no fraud was involved and that the claim was genuine and sustainable. We are of the view that adequate prima facie material was available to warrant a proper inquiry on that question. In this situation, we are satisfied that interference is called for in this appeal.” 8. In view of the legal proposition discussed hereinabove, the State Commission, in my opinion, ought to have examined the matter on merits in the light of the both the reports i.e. the report of the serveyor as well as the report of the investigator. That having not been done the matter needs to be remitted back to the State Commission to undertake the exercise. The impugned order is, therefore, set aside and the matter is remitted back to the State Commission to decide the complaint afresh in the light of the survey report as well as the report of the investigator and the documents produced by the parties. 9. The parties shall appear before the State Commission on 28.08.2020. Considering the age of the case the State Commission shall decide the complaint fresh within six months of the parties appearing before it.