In a significant ruling by the Supreme Court of India, a dispute over the validity of an insurance claim was settled. The case involved discrepancies in assessing a claim for loss due to a fire incident at the factory of the Complainant. Various surveyors provided conflicting assessment amounts, leading to a legal battle. The Court’s decision sheds light on the importance of adhering to regulations and maintaining integrity in the insurance industry.
Facts
- The Complainant did not explain the reason for extending the letter of credit when the goods were allegedly ready for export on 01.07.2000.
- The Insurance Company appointed multiple surveyors to assess the claim for loss due to a fire incident at the Complainant’s factory.
- Different surveyors provided varying assessment amounts for the claim, with the final surveyor completely repudiating the total claim.
- The Insurance Company requested specific information from the Complainant regarding the claim.
- The Complainant availed a credit facility from Canara Bank secured by stocks, goods, personal guarantees of directors, and collateral security of the factory.
- The Insurance Company was criticized for appointing one surveyor after another until a total repudiation of the claim could be obtained.
- The claim amount varied from Rs. 54,93,865/- to Rs. 24,76,585/- as assessed by different surveyors.
- The second surveyor raised concerns regarding the accounting records of the Complainant during the assessment process.
- The Commission noted that RLC was found guilty of violating certain regulations.
- RLC was directed to pay a fine for non-compliance with the specified regulations.
- The Commission emphasized the importance of adhering to regulations to maintain integrity in the industry.
Also Read: Anticipatory Bail Application in Different Cases: Landmark Judgment by the Supreme Court of India
Arguments
- The Insurance Company appointed M/s Sunil J. Vohra & Associates as the final Surveyor based on a letter from the Head Office.
- The Head Office questioned the appointment of M/s ABM Engineers & Consultants as Surveyor.
- The Appellant-Insurance Company argued that the Commission erred in not examining whether the letter of credit was fake or manipulated, the order of import of shirts could not be proved, or if Mr. Ajay Verma was involved in a criminal case.
- The Appellant-Insurance Company relied on a previous case to argue that there is no prohibition in appointing another Surveyor.
- The Insurance Company cited a newspaper report about the Delhi Police arresting individuals for using forged documents.
Also Read: Supreme Court of India Dismisses Writ Petition on Arms Export to Israel
Analysis
- The authenticity of the letter of credit was confirmed by M/s Sirdanwal Overseas and endorsed to Gurcharan Singh Company Pvt. Ltd. PTE Singapore.
- The claim amounts were disputed by different surveyors, with one recommending total repudiation and another accepting Rs. 24,76,585/- as the claim.
- The third surveyor’s report led to the total repudiation of the initial claim of Rs. 54,93,865/-, highlighting discrepancies in stock verification and letter of credit processing.
- The appointment of multiple surveyors by the Insurance Company’s Head Office without sufficient justification raised questions regarding the validity and consistency of survey reports.
- The involvement of Canara Bank in stock verification was questioned by the Insurance Company based on the failure to materialize the letter of credit, despite the Canara Bank’s primary charge over the stocks.
- The Court upheld the Insurance Company’s right to appoint surveyors but emphasized the need for valid reasons and justified cause before second surveyor appointments.
- Allegations against Mr. Ajay Verma were noted, but they were unrelated to the export claims of the Complainant.
- The local office’s reasoning for dismissing the report of a surveyor lacked validity and proper justification.
- There was no concrete proof presented that the disputed survey report was arbitrary or exaggerated, leading to repeated appointments of surveyors until a favorable report was obtained.
- No substantial reasons were provided to explain the repetitive appointment of surveyors by the Insurance Company.
- In light of the judgment in Sri Venkateswara, appointment of another Surveyor is not permissible until a favorable report is obtained
- The order passed by the Commission is found to be legal
- The appointment of Surveyors was aimed at refuting the Complainant’s claim through various excuses
Also Read: National Task Force for Healthcare Safety: Ensuring Dignity and Protection for Medical Professionals
Decision
- The Complainant is entitled to interest at the rate of 6% per annum on the amount of Rs. 54,93,865/- from the date of filing of the petition until the payment of the amount.
- Civil Appeal Nos. 4371-72 of 2015 filed by the Complainant are allowed.
- Civil Appeal No. 9668 of 2014 is dismissed.
- The Commission did not grant interest on the amount due and payable to the Complainant.
Case Title: M/S NEW INDIA ASSURANCE CO. LTD Vs. M/S LUXRA ENTERPRISES PVT LTD
Case Number: C.A. No.-009668-009668 / 2014
