TaxTMI 
TaxTMI 
2010 (5) TMI 402
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....r for the stock of Red Sanders Wood in its godown at the premises located in Srikalahasti Road, Renigunta, Andhra Pradesh. The fire policy for the period 29-3-1996 to 28-3-1997 covered stocks furniture and fixtures stored at its premises for a sum of Rs. 29.5 crores. The sum insured was enhanced by Rs. 2.25 crores on 4-6-1996 by an extra endorsement. It was further enhanced by Rs. 5.25 crores on 24-6-1996 by another extra endorsement. The total sum thereby insured stood enhanced to Rs. 37 crores. Apart from the above Fire Policy, there was a second policy for the same period covering stocks at another premises at Renigunta for the sum of Rs. 3 crores. A third policy covering stocks kept near the Check Post at Renigunta was insured for a sum of Rs. 4.5 crores. 3. On 29-6-1996, an accidental fire broke out at the godown at Srikalahasti Road, Door No. 16-237, Renigunta. According to the intimation given to the police by Respondent No. 3, there was a stock of nearly 2850 tons of Red Sanders Wood in the godown on 28-6-1996. Of this, a stock of 1150 tons of dressed Red Sanders Wood was inside the godown and 1700 tons of undressed Red Sanders Wood was outside in the compound. According....
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....and 200 IPC. It is also stated that the Respondent No. 3 had made false declarations and had adopted fraudulent means to obtain benefit under the policy. By a subsequent letter dated 1-6-2001 the Petitioner indicated additional grounds for repudiation. The Petitioner claimed that it had come to its knowledge that the Respondent No. 3 had been allegedly involved in illegal and smuggling activities and had violated the forest laws. Respondent No. 3 had not taken care to repair the southern wall of the godown which put the Red Sanders Wood to greater risk of fire thereby violating the conditions 2 and 3 of the Fire Policy. Respondent No. 3 had failed to give necessary particulars in support of its claim as required under condition No. 6 of the Fire Policy. 7. Aggrieved by the repudiation of its claims, Respondent No. 3 filed an appeal before the IRDA. Respondent No. 3 herein. IRDA on its part appointed Mr. Moinuddin Mohd. and Mr. R. Madhusudan as two new Joint Surveyors on 31-7-2002 for survey and loss assessment. The said two surveyors disagreed vastly on the quantum of claim payable. Mr. Madhusudan assessed the claim of Respondent No. 3 at Rs. 21.01 crores. On the other hand, Mr.....
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....r dated 1-2-2007 rejected the said assessment and directed the Petitioner to pay the sum as already settled by Mr. Moinuddin. 13. Aggrieved by the order dated 1-2-2007 of the IRDA, Respondent No. 3 filed an appeal before the Appellate Authority on 17-2-2007. By its order dated 20-6-2007, the Appellate Authority; passed the impugned order directing the Petitioner to pay a sum of Rs. 7,95,50,300 less the amount of Rs. 2,21,34,819 already paid to Respondent No. 3. It was further directed that the Petitioner shall pay the aforementioned amount along with the interest at 2 per cent above the bank rate at the beginning of the financial year, with effect from, 21-5-2001 till the date of payment in full within 30 days of the receipt of the order. This is the order under challenge in this writ petition. Incidentally a challenge is laid to the earlier order dated 5-3-2004 of the Appellate Authority as well as the survey report submitted by the Joint Surveyors pursuant to that order. Subsequent Proceedings 14. While directing notice to issue in this petition, this Court on 24-10-2007 suspended the operation of the impugned order. Initially a learned Single Judge of this Court by a ju....
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....r. Chitale that section 64UM(1) Insurance Act deals essentially with licencing of surveyors and loss assessors. Section 64UM(2) applies to a claim in respect of a "loss requiring to be paid or settled" in India on a policy of insurance. It is stated that such a claim shall not be admitted for payment or settled by the insurer unless he has obtained a report from an approved surveyor or loss assessor. The insurer has the right to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor. Relying upon the decision of the Supreme Court in New India Insurance Co. Ltd. v. Pradeep Kumar [2009] 7 SCC 787, it is submitted that the insurance company is not bound by the survey report. The submission is that if at the very threshold the insurance company does not decide to entertain the claim and repudiates the claim then the question of appointing any surveyor does not arise. Sub-section (3) of section 64UM which brings in the IRDA does not get attracted unless and until the insurer decides to accept the claim for settlement. The emphasis is on a claim "requiring to be paid or settled in India." In other words, according to Mr. Chitale....
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.... IRDA to again appoint fresh surveyors. It is submitted that in the instant case, the Appellate Authority exceeded its jurisdiction in issuing the impugned order dated 5-3-2004 and the subsequent order dated 20-6-2007 requiring the Petitioner to pay the sum of Rs. 7,95,50,300 less the amount already paid, i.e., Rs. 2,21,34,819. 23. It is further contended that the mere submission to the jurisdiction of the Appellate Authority did not amount to waiver by the Petitioner of its right to challenge the jurisdiction of both the IRDA and the Appellate Authority. It is submitted that in any event since the Respondent No. 3 filed an independent claim before the NCDRC for a sum of Rs. 40 crores, the justification for its claim would be tested by that forum. 24. Appearing for Respondent No. 3, Mr. Sukumar Pattjoshi, submits that factual disputes between the parties are not to be decided by this Court in exercise of its jurisdiction under article 226 of the Constitution. All that is required to be decided is whether the impugned orders were without jurisdiction and could be said to be perverse. It is pointed out that in the order dated 5-3-2004 the Appellate Authority had held that the I....
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....he Appellate Authority's power is co-terminus with the power of the IRDA. Reliance is placed on the judgment in Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688^1 (SC) and CIT v. Nirheram Deluram 1997(3) JT 688. It is further submitted that since the claim was above Rs. 20,000 it was mandatorily required by the IRDA to appoint independent surveyors. Reliance is placed on the judgment in Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd. [2009] 8 SCC 507 and New India Assurance Co. Ltd.'s case (supra). Reliance is also placed on the decisions of this Court in Rajinder Kumar Khanna v. Oriental Insurance Co. 41(1990) DLT 176; Surveyor's Welfare Association (Regd.) v. Union of India 59 (1995) DLT 205 and Oriental Insurance Company Ltd. v. Amira Foods (India) Ltd. (passed in OMP No. 319 of 2003, judgment dated 14-10-2009). It is submitted that the IRDA's role is independent and uninfluenced by the act of repudiation by the insurer of a claim, and it has a duty under section 14(2)(b) IRDA Act to settle insurance claims for the protection of the interests of the policyholders. Jurisdiction of the IRDA 27. IRDA is a statutory authority constituted under the IRDA Act. The pr....
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....d or settled in India....". It refers to a claim in respect of a loss which has occurred in India. To that extent, there can be no doubt that the claim made by Respondent No. 3 is a claim in respect of a loss which has occurred in India. The second limb is that it should be a claim "requiring to be paid or settled in India." This virtually would include every claim whether the insurance company accepts such claim for payment or not. The words "requiring to be paid" cannot be restricted to those claims which insurance company has decided to accept for payment. Every claim made against an insurance company in respect of a loss, would be a claim within the purview of the claims "requiring to be paid or settled" under section 64UM(2) Insurance Act. 32. The petitioner also understood that the claim made by the Respondent No. 3 was a claim which fell within the definition of section 64UM(2) of the Insurance Act. That is why the Petitioner appointed two surveyors upon receiving the claim. It was sought to be contended by the learned Senior counsel for the Petitioner that the said appointment of the two surveyors by the Petitioner was not strictly pursuant to section 64UM(2) Insurance A....
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....is not expected to reject the report of the surveyors." 36. The resultant position is that while generally a surveyor's report is not binding on the insurer, given the fact that there is an in-built review mechanism before the IRDA and then the Central Government, the refusal by the insurer to abide by a surveyor's report has to be for good reasons, the legal tenability of which can be tested by the IRDA or the Central Government as the case may be. As far as the instant case is concerned, the Petitioner was required to show good reasons why it was completely repudiating the claim of Respondent No. 3 thereby accepting none of the reports of the surveyors appointed by it. Further, it was open to the IRDA as well as the Central Government to appoint surveyors to verify that the assessments made earlier were justified. Scope of IRDA's powers 37. Turning next to sub-section (3) of section 64UM, this is where the IRDA comes into the picture. It is empowered at any time in respect of any claim of the nature referred to in sub-section (2) of section 64UM to call for an independent report from any other approved surveyor or loss assessor as specified by it. Therefore, even in resp....
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....41. The principal challenge in this petition is to the validity of the impugned order dated 20-6-2007 of the Appellate Authority by which the Petitioner has been asked to settle the claim of the Respondent No. 3 at a sum of Rs. 7,95,50,300. This was clearly consequential to the earlier order dated 30-9-2005 passed by the Appellate Authority. It is based on the report of the Joint Surveyors and of the Principal Chief Conservator of Forests. Since that order has not been challenged, this Court is not called upon to examine the correctness of the Joint Surveyors' report. 42. Given the scope of the powers of judicial review of this Court under article 226 of the Constitution, this Court is not called upon to examine if the grounds on which the claim of the Respondent No. 3 was repudiated by the petitioner were valid or not. The incidental challenge to the earlier order dated 5-3-2004 of the Appellate Authority as well as the survey report submitted by the Joint Surveyors pursuant to that order must also fail for the simple reason that the order dated 5-3-2004 has been reiterated by the Appellate Authority in the subsequent order dated 30-9-2005 which has not been challenged by the p....