2009 (8) TMI 1233 - SC - Indian Laws

Supreme Court affirms insurance company's right to appoint multiple surveyors with valid reasons

The Supreme Court upheld the insurance company's right to appoint multiple surveyors with valid reasons, in accordance with Section 64-UM of the Insurance ... - Issues Involved:1. Legality of appointing multiple surveyors by the insurance company.2. Justification for awarding 6% interest per annum from 01.03.2001 instead of 18% from the date of the fire accident.Issue-wise Detailed Analysis:1. Legality of Appointing Multiple Surveyors:The appellant, a registered partnership firm trading in cotton, suffered a loss due to an accidental fire on 24.08.1999. The cotton stocks were insured under seven policies issued by the respondent insurance company. The insurance company appointed several surveyors to assess the loss, which led to varying estimates. The appellant claimed that the insurance company's action of appointing multiple surveyors until it received a favorable report was illegal and undermined the confidence in the insurance process.The Supreme Court examined Section 64-UM of the Insurance Act, 1938, which mandates that no claim exceeding Rs. 20,000 can be settled without a report from a licensed surveyor. The proviso to sub-section (2) allows the insurer to settle a claim for an amount different from that assessed by the surveyor. Sub-section (3) empowers the Insurance Regulatory and Development Authority (IRDA) to call for an independent report from another surveyor. Sub-section (4) allows the Authority to issue directions regarding the settlement of the claim based on the independent report.The Court noted that while the insurer cannot appoint multiple surveyors just as a matter of course, it can do so if there are valid reasons for not accepting the initial surveyor's report. In this case, the insurance company provided valid reasons for appointing a second surveyor, such as discrepancies in the joint survey report and the need for verification of the books of accounts. The Court concluded that the insurance company's actions were justified and in accordance with the provisions of the Insurance Act.2. Justification for Awarding 6% Interest per Annum:The appellant contended that the National Consumer Disputes Redressal Commission (NCDRC) erred in awarding interest at 6% per annum from 01.03.2001 instead of 18% from the date of the fire accident. The appellant argued that the insurance company's delay in settling the claim constituted a deficiency in service.The Supreme Court referred to previous judgments, including Secretary, Irrigation Deptt., Govt. of Orissa v. G.C. Roy and Ghaziabad Development Authority v. Balbir Singh, which held that interest could be awarded as compensation for the deprivation of money. The Court emphasized that the award of interest must be justified by the facts and circumstances of each case and should reflect the relationship between the amount awarded and the delay or harassment caused.In this case, the Court observed that the insurance company had valid reasons for appointing multiple surveyors and had eventually settled the claim based on the Chartered Accountant's report. However, the insurer should have made the payment promptly once the settlement was reached. The Court directed the insurance company to pay the assessed amount of Rs. 1,05,00,817 with interest at 9% per annum from the date of the Chartered Accountant's assessment.Conclusion:The Supreme Court upheld the insurance company's right to appoint multiple surveyors if justified by valid reasons and provided clarity on the application of Section 64-UM of the Insurance Act, 1938. The Court also emphasized the need for timely payment of settled claims and awarded interest at 9% per annum as compensation for the delay in payment. The appeal was partly allowed, with no order as to costs.