NATIONAL
CONSUMER DISPUTES REDRESSAL COMMISSION
NEW
DELHI
(Against
the order dated 26.9.2003 in C.D No.26/99 of the A.P.
State
Consumer Disputes Redressal Commission, Hyderabad)
1. M/s NVC Group Farms,
Meharnagar, Pochampally Mandal,
Nalgonda District,
Rep. By its Managing Partner,
Sri N.V. Chowdary,
S/o Varadaiah, Aged about 60 years,
Now residing at E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007
2. Sri N.V. Chowdary, s/o Varadaiah,
Aged about 60years, Managing Partner of
M/s Sri Venkataramana Agro Allieds,
M/s Venkataramana Agro Allieds,
M/s Venkateswara Agro Allieds, and Proprietor of
M/s NVC Golden Goat Farms,
Now residing at E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
3. N. Sudha,
W/o Ramamohan Rao, aged about 50 years,
Partner of Vekataramana Agro Allieds,
E-I, Kakatiyanagar, Habsiguda,
Hyderabad-500 007
4. Smt. S. Laxminarasamma,
W/o late S. Venkateswara Rao,
Aged about 45 years,
Partner, M/s Venkataramana Agro Allieds,
M/s Sri Venkataramana Agro Allieds,
M/s Venkateswara Agro Allieds, and Proprietor of
M/s NVC Golden Nurseries,
R/o E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
5. N. Bhavani, d/o N.V. Chowdary,
Aged about 33 years,
Partner of M/s Venkataramana Agro Allieds,
M/s Sri Venkataramana Agro Allieds,
M/s Venkateswara Agro Allieds,
M/s Navbharat Agro Allieds,
M/s Navbharat Agros.,
M/s NVC Golden Farms, and
Properietor of NVC Golden Sheep Farms,
R/o E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
6. Smt. K. Swarajya Laxmi,
W/o Subba Rao,
Aged about 40 years,
Partner of M/s Venkateswara Agro Allieds,
R/o E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
7. Sri M. Prasada Rao, S/o Sri M. Satyanarayana,
Aged about 36 years,
Partner of M/s Navbharat Agro Allieds,
R/o E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
8. Sri M.V. Ramana Rao, s/o Sri Satyanarayana,
Aged about 38 years,
Partner of M/s Navbharat Agros,
R/o E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
9. Smt. V.V. Ramadevi, w/o Sri Nageswara Rao,
Aged about 40 years,
Partner of M/s NVC Golden Farms,
R/o E-I, Kakatiyanagar,
Habsiguda, Hyderabad-500 007.
........ Appellant(s)
Vs.
1. The United India Insurance Company Ltd.,
Rep. by its Senior Divisional Manager,
Divisional Office II,
II Floor, 1-7-241, ‘Ramalaya’
P.B. No.1694, Sarojini Devi Road,
Secunderabad- 500 003
2. The United India Insurance Company Ltd.
Rep. By its Branch Manager,
C.B. III, Tarnaka Branch,
12-5-149/19/2, Opp: N.I.N. Vijayapuri,
Tarnaka, Secunderabad-500 017
3. Canara Bank,
Uppal Branch,
Uppal Post,
Ranga Reddy Distt. (A.P.)
........ Respondent(s)
BEFORE:
HON’BLE MR. JUSTICE R.C. JAIN, PRESIDING
MEMBER
HON’BLE MR. ANUPAM DASGUPTA, MEMBER
For the Appellant(s) : Mr.
Mahabir Singh, Senior Advocate,
Mohd.
Wasay Khan and Mr. G.R.
Prasad,
Advocates
For the Respondent(s) :
Mr. Vishnu Mehra, Advocate
Dated, the 24th
day of May, 2010
ORDER
Aggrieved by the common
order dated 26.09.2003 passed by the Andhra Pradesh State Consumer Disputes
Redressal Commission, Hyderabad, (in short, ‘the State Commission’) in C.D. No.
53 of 1999 and C.D. No. 26 of 1999, the unsuccessful complainants - M/s N.V.C.
Group Farms & Others (to be referred as “complainants” for the sake of
brevity in this order) have filed the present appeals.
2. Above referred complainants had filed two
complaints before the State Commission, claiming a compensation of Rs.18,15,345/-
together with damages of Rs.50,000/- with interest and cost in C.D No. 26 of
1999 and Rs.12,09,000/- with interest together with Rs.5,00,000/- being the
loss of crop and Rs.2,00,000/- towards loss of fruit bearing trees and
Rs.50,000/- towards mental agony in
C.D. No. 53 of 1999. The complaints
were filed with the averments and allegations that the first complainant is a
registered partnership firm having been constituted with the object of
management and development of agricultural lands including commercial crops,
orchards, etc., at village Mehernagar, Pochampally Mandal, Nalgonda District.
The firm developed about 250 acres of
land by raising mango, orange, guava and sapota trees. For the purpose of
growing trees and allied purposes, the complainant firm had installed drip
irrigation system consisting of filter tanks, main and sub-main pipelines,
lateral lines (LPD) with micro drippers etc., which they got insured with the
respondent for a sum of Rs.10,71,000/- under Policy No.050202/11/13/16/343/94
dated 25.7.1994 for the period of one year. The complainant had taken another
insurance policy No.050202/11/13/16/421/14 from the respondent-United India
Insurance Company Limited in the sum of Rs.21,68,900/- to cover sheds,
structures, pandal material, PVC pipelines, G.I pipelines, fencing, gates, pump
houses, servant quarters, tools & equipment, etc. valid for the period from
28.8.1994 to 27.8.1995. It was alleged that while the said two insurance
policies were in force, in the afternoon of 25.3.1995, the farms of the
complainants along with that of the sister concern of NVC Groups were attacked
by the Peoples War Group (PWG) Naxalites and Militants approximately numbering
40, who forcibly entered the farms and burnt the records, destroyed the equipment,
furniture, fencing gates, compound walls, water pipelines, drip irrigation
system, buildings, sheds, pump sets, fixtures, etc. and while leaving the farm,
they threatened and warned the Manager and other staff members and workers at
the farms not to report the matter to the police, failing which they threatened
them of dire consequences. A report of the said incident was lodged in the area
police station only on 05.04.1995 and the Opposite Party-Insurance Company was
also informed of the incident. The Insurance Company appointed a Surveyor, Sri
Anur Naveen, to whom the complainants furnished all the material information
and record. The above-named surveyor
submitted his report in May 1997. Still the Insurance Company failed to settle
the claims of the complainants filed under the above-referred two insurance
policies. Instead, the Insurance Company appointed a second Surveyor, Sri
P.L.N. Murthy and thereafter, also appointed an Investigator, Mr. M.V. Subba
Reddy, a retired Inspector General of Police to investigate the matter. The
Investigator filed his report in March 1999, ruling out the raid/attack by the
PWG Naxalites at the farms of the complainants in the afternoon on 25.3.1999
and, as such, the said Naxalites causing extensive damages as alleged by the
complainants. On the basis of the said report, the Insurance Company eventually
repudiated the claim of the complainants vide communication dated 03.09.1999.
Aggrieved by the said repudiation of the claim and alleging deficiency in
service on the part of the Insurance Company in not settling the claims of the
complainants under the two policies, the complainants filed the
complaints. Canara Bank was also
arrayed as a proforma party.
3. The complaints were resisted by the
Insurance Company thereby refuting the allegations of any deficiency in service
on its part in not settling the claim of the complainants and having repudiated
the claims on the ground that the complainants had failed to establish any
raid/attack by the Members of PWG (Naxalites) on the alleged date, time and
place and the latter having caused any damage to the buildings equipment, fruit
bearing trees, etc. Rather, the Insurance Company maintained that the farms and
the equipment had been abandoned by the complainants long before the alleged
incident.
4. The State Commission, on consideration of
the respective pleas and the evidence and material produced by the parties in
support and against the allegations of the complainants, dismissed the
complaint, primarily on the ground that the complainants failed to establish
the incident of PWG / Naxalites raid at their farms in the afternoon on
25.3.1995. In doing so, the State Commission noted that there was undue delay
in lodging the report of the incident with the police and giving its intimation
to the Insurance Company and relied upon the report of the Investigator, Mr.
M.V. Subba Reddy. While doing so, the
State Commission also held that the cause as well as loss claimed by the
complainants arising out of the alleged incident did not fall under the purview
of the fire policy – ‘C’ taken by the complainants.
5. We have heard Mr. Mahavir Singh, learned
Senior Advocate representing the appellants and Mr. Vishnu Mehra, Advocate, learned
counsel representing the respondent-Insurance Company at length and have given
our thoughtful consideration to their submissions.
6. Learned Counsel for the appellants would
assail the findings of the State Commission as erroneous, being based on improper
appreciation of the pleas and contentions of the parties and the evidence and
material produced on record as also the same not being in consonance with the
settled legal position. The basis of the above submission is that the first
Surveyor, Sri Anur Naveen, after personal visit to the farms of the
complainants and due consideration and verification of all the aspects, had
submitted a detailed report dated 27.5.1997. In the said report, the above
named Surveyor after thorough examination of the claims lodged by the
complainants, assessed the net loss at Rs.14,36,928/- after applying
depreciation on the market value. The Surveyor recommended to the insurer to
process the claim of the complainants subject to the terms & conditions of
the policy giving due consideration to the complete set of documents submitted
by the insured to him (Surveyor), which was enclosed as a separate volume to
the report. He also gave the note that the assessment provided by the insured
were scrutinized by a qualified group of Architect and Civil Engineers with
whom he had discussed threadbare item-wise and finally assessed the loss. It is
pertinent to note that in this report, the above-named Surveyor did not cast
any doubt about the incident dated 25.3.1995 in which it was alleged that PWG /
Naxalites had raided the farms and vandalized, destroyed and damaged the
buildings, various equipment, trees, etc., of the complainants. It would appear
that though the report was filed after more than two years of the incident and
the visit of the Surveyor to the site, yet for reasons not easy to understand,
the Insurance Company appointed another Surveyor/Investigator, Mr. P.L.N.
Murthy. It would appear that this Surveyor/Investigator was not appointed by
any formal communication and his opinion was sought informally based on the
material, which was in possession of the Insurance Company like claim
intimation letter, policies, claim forms and the Surveyor’s report as also the
video cassettes showing the damages leading to the claims. In the light of his
study of the file and the video cassettes but without visit to the affected
site or any further verification or investigation from any quarters, this
Surveyor / Investigator made certain observations and gave the following
findings:
“2.10 THUS,
FROM THE FOREGOING IT APPEARS THAT THE BUILDINGS WERE ABANDONED LONG BEFORE THE
REPORTED OCCURRENCE AND WHATEVER DAMAGE IS FOUND COULD BE DUE TO WITHERING IN
PASSAGE OF TIME, LACK OF MAINTENANCE/REPAIRS, LACK OF CARE AND SECURITY. If any “farming operations” were going on as
mentioned in the claim intimation letter dated 05.04.95, there was no
indication or traces of it in the video nor in the photographs. Quite surprisingly, the survey reports are
also silent on this aspect except saying “said to be in the business of
farming”.
ABOUT
THE SURVEY REPORTS:
The surveyor in his final survey
reports has not given what were his inspection details and physical, personal
findings. In his assessment he bases
his calculations on the estimates furnished by the insured and not on his
physical survey, measurements or judgment of extent and nature of damage and
his findings on the type of repairs / replacements required. There is no description of what he found
inside each building. The photos show
mainly external views of the buildings and the site.
Regarding the cause of damage, he
simply refers to what is stated in the claim form submitted by the
insured. He does not say in his survey
reports what his findings were during his survey, whether he found any tell-tale
signs of fire, burning or destruction, or whether he actually saw the damaged
parts of the buildings and equipments.
From
the study of the survey reports, photographs and videographs it appears to me
that the damage occurred over a period of time when the premises was closed and
abandoned. It does not appear to be a
sudden occurrence due to a deliberate sudden attack by terrorists on an
“Operating” agricultural or sheep/goat farm.
Thus the claims do not appear to be tenable under Fire policy “C”
terrorist or malicious damage clause since there is no conclusive physical
evidence to that effect.
I am enclosing my bill No.PLN
645/98-99, for Rs.2820/- towards my fees and expenses for this study which may
kindly be paid early.”
7. Still not satisfied with the report of Mr.
Murthy, the Insurance Company, in its wisdom, appointed another Investigator,
namely Mr. M.V. Subba Reddy, who after making investigation and on receiving
further information from the complainants submitted his report, with the
following observations and findings:
(a) Sri G. Sriramakrishna Vara Prasad, Manager
of the farms in his police complaint dated 05.04.95 has not identified any
alleged offenders and has not substantiated the reasons for concluding that
they are Naxalite / Militants.
(b) The alleged panchanama of scene of offence
dated 05.04.1995 is a fabricated one.
The panches belonged to Dandu Malkapur which is far away from the farm
when compared to Meharnagr where farm is located. No panches were summoned from the adjoining villages. These examined panches were known
anti-naxalites. Because there was no
naxalite raid at all in the farm, as alleged, excepting these two anti-naxalite
panches, no other could attest such a false panchanama. The panches have not offered any opinion on
the cause of alleged damages. No where
it is noted in the panchanama that the damages were caused due to naxalite and
militant activity.
( c ) The final investigation reply by the police
states that except the statement from the complainant, no other statements from
others were recorded. The case was
closed as undetected.
( d) Undetected case does not mean a positive
proof for an offence as having taken place.
It does not assert anything. The
insured had not produced any evidence in support of his claim of the insured
peril having taken place on that day, in that fashion and causing damage as
claimed.
( e) The surveyor has thrown the responsibility
as to the occurrence and cause of damage on the police. FIR speaks of the facts as complaints and it
does not confirm its occurrence. The
surveyor did not cause any enquiries of his own with the farm staff or workers
who are said to have been present at that time.
(f) The final investigation report which was issued
one and half years after the investigation i.e. on 24.09.1996, did not identify
the culprits, did not identify the losses or even did not recover a part of
such huge stolen properties. This is
despite the assurance of the insured in his letter dated 05.04.1995 that
“measures are being taken to recover the properties and restore the farm
operation”.
(g) It is surprising that 40 naxals and
militants participated in the raid, that too during day-time and none could be
identified either by the complainant or any of the staff members or workers or
the police. Further police have not
enquired and recorded statements from the so called eye witnesses.
(h) If there was a naxalite raid definitely the
police would have recorded statements from the eye witnesses. This further confirms there was no such
incident as alleged. Specially since
the complaint appears to be exclusive knowledge of the farm manager, Sri M.V.
Chowdary and the Pochampally P.S. Sri Mohammed Pashamiya and none else.
( i ) The investigator visited Meharnagar and met
the villagers and initiated enquiries.
The said naxal raid on the insured form and the alleged resultant
malicious damage was indeed news for them.
All the villagers assembled there unanimously stated that no such
incident had taken place on 25.05.95 as claimed and it was false complaint.
The investigator’s enquiries revealed
the following facts:
(i) A girl of 14 years belonging to schedule
caste was stripped off her clothes in the insured farm and was handed over to
the police on an offence of theft during June, 93. She was searched on
suspicion of carrying some farm fruit hidden in her jacket.
(ii) The villagers of Meharnagar, to which in
village this girl belonged, got provoked for this incident, attacked Sri N.V.
Chowdary in his farm bet him black and white.
They had also seized his revolver.
Sri Chowdary was also stripped off his clothes ( except his underwear)
and was brought to Meharnagar and tried before Praja court. Since he admitted his guilt and requested
for pardon, h was left off with a warning.
(iii) Sri N.V. Chowdary gave a police complaint
on 12.06.93 on an event that had taken place on 07.06.1993 against 9
unidentified naxals. But subsequently
the police after investigation had identified 23 accused including some
villagers of Meharnagar. The case was
registered in crime no. 36/93. This
case was being still tried in the sessions court, Nalgonda.
(iv) Soon after this incident, Sri Chowdary was
given police protection for some time.
During this period nothing had happened in the insured farm, and the
activities of the farm were still carried out at a low key
(v) After the withdrawl of the police force,
the insured was afraid of visiting the farm and supervise its activities. Even there were no security men of his own
to protect the farm properties. It is
at this point, the villagers took advantage of this abandoned farm and started
removing the farm properties like door frames, window frames, wooden rafters
etc., which were not prevented by anybody.
The cattle tress passed into this farm and had a free and unprevented
grazing.
(vi) During the investigation it came to light
that the insured lodged one more police complaint on 13.07.97 which was not
brought to the notice of the insurers.
The gist of the complaint was that on 13.07.97 some persons have entered
NVC Farms and cut of 40 acres of Gouva Trees 40 acres of orange trees and anar
trees and sold in the adjoining villages.
It was further complained that the intruders removed cement sheets,
titles, wood of roofs of cattle sheds, fencing poles, barbed wire, submersible
pipes in borewell. 8500 mts. of
pipeline and other materials had been stolen away. A case was registered by the police in crime no. 25/97. It was investigated into by the police and
the complaint was proved to be false and no such alleged theft was committed in
the farm. This proves that the insured
is in the habit of lodging false complaints.
(vii) In respect of the alleged malicious damage
caused to the insured properties on 25.03.95 none had given any statements in
support of these incidents including the farm labourers and farm staff who were
present and no clues were forthcoming as reported by the police. It is surprising that there were no press on
this subject despite such a sensational event in a small village. This, only goes to prove the falsehood of
the claim.
viii) The alleged incident had taken place on
25.03.95. No report was given to the
police till 05.04.95. There was a delay
of 11 days. The place of alleged incident is less than 4 kms from the police
station. The naxalite activity
involving large scale destruction of properties, during day-light involving
driving away the farm staff and workers is not reported to the police for 11
days. Further this is not known to the
villagers in the adjoining village.
There were no press reports. The
police could not identify the offenders involved in the incident nor could they
recover any damaged / stolen property from any person. This is not possible. Specially in the light of identification of
the culprits in a similar incident during 1993. This proves that the claim of insured is false and fictitious.
ix). It is common knowledge that in Andhra
Pradesh the naxalites are dare devils and they attempt at any extremist
activity without any fear. They openly
declare their intentions, give their identity, leave letters at the spot
justifying their action. They even give
press statements. No such evidence is
forthcoming in this claim.
x). The police investigation did not reveal any
recording of statements by the villagers / farm staff/workers confirming the
occurrence of the incident.
xi) The investigator has finally concluded by
stating that:-
(a) The claim lodged by the insured is false
and fictitious.
(b) If at all there was some loss in the farm
that was due to the theft of material by the surrounding villagers taking
advantage of the abandoned farm which was not prevented by the insured.
( c ) There was police protection till 1993 and
after their withdrawl the insured stopped supervising the farm activities for
fear of his own life and the farm remained abandoned. These claims are false and fictitious with a fraudulent intention
of lodging false insurance claim against the insurer to make illegal gain from
the public funds. Neither the police
nor surveyors have confirmed the occurrence of the insured peril nor quantified
the loss under the claim investigated / surveyed by them”.
Thus the investigator also clearly stated that the claim of the complainant is not tenable.
8. On the basis
of the said report, the Insurance Company concluded that the claim of the
complainants was not tenable on the following grounds:
“After
receipt of the investigator’s report the Opposite Party No.1 has discussed the
matter with the Regional Office authorities.
The company officials had come to conclusion that the claim of the
complainant is not tenable and they have observed as follows:
(a) The insured has failed to substantiate the
occurrence of the alleged riot, malicious
and terrorist damage caused by PMG naxals and militants.
(b) The police investigation on the complaint
lodged is inconclusive and the crime is closed as undetected in the final
investigation report by the police.
This does not support their cause.
An undetected crime does not mean confirmation of the occurrence of the
insured peril.
( c) The Survey report of Mr. Naveen was
non-committal. The Surveyor in his report has stated that mere issuance of the
survey report does not imply that the loss is recoverable from the insurers. He
has neither substantiated the occurrence of the insured peril nor made out a
case for the cause of the damages. Further he has not been able to quantify the
loss scientifically.
(d) There was a delay of 11 full days before the
alleged incident was reported to the police. The insured, by failing to lodge
the complaint with the police immediately after the occurrence of the alleged
incident, has not given the opportunity to the insurer to initiate action for
the recovery of the property allegedly lost/stolen. Thus, they have failed to
protect the interest of the insurers. This is a breach of the policy
condition.”
9. Yet another ground for repudiation of the
claim was that the loss claimed to have been sustained by the insured did not
fall under the purview of the fire policy – ‘C’ and that the insured have
disentitled themselves for indemnification of the loss in the face of condition
No.1, 6(i)(a), 6(i)(b) and 8 of Fire Policy – ‘C’.
10. Mr. Mahavir
Singh, learned senior counsel representing the appellants has assailed the
subsequent report of the Surveyor/Investigator, Mr. Murthy and that of Mr.
Subba Reddy as wholly untenable and based on surmises and conjectures rather
than facts and circumstances and the evidence and material, which had come to
their knowledge during the course of investigation. In any case, his contention
is that the said reports are vitiating and could not form the basis of
repudiation of the claims lodged by the complainants because the appointment of
Mr. Murthy and Mr. Subba Reddy after receipt of the report of the first
Surveyor, Mr. Anur Naveen was in contravention of the provisions of section 64
UM (G) (3) of the Insurance Act, 1938. We would like to deal with the first
contention first. In this connection, Mr. Singh has urged before us that the
alleged appointment of the second Surveyor, Mr. Murthy is neither factually
correct nor legally tenable. We have already noted from the report of Mr.
Murthy that his report is based on the report of the earlier Surveyor, Mr. Anur
Naveen and the accompanying documents and the photographs, videographs, etc.,
which were furnished to him by the Insurance Company. No letter appointing him
as a Surveyor or Investigator has been produced on record, and, therefore, we
hold that Mr. Murthy was not appointed as the second Surveyor/Investigator but
his services were availed of by the Insurance Company in order to seek his
advice/opinion based on the abovesaid material furnished to him. Moreover, this
Surveyor/Investigator never visited the site of the damage and the plea put
forth by him that he was prevented from visiting the farms by the complainants
does not appear to be correct. In his cross-examination qua his affidavit filed
by him earlier, RW-3, Mr. P.L.N. Murthy admitted unequivocally that he was
appointed to give information on the probable cause of loss but not to assess
the loss and, therefore, he had to give his opinion based on documents
furnished by the insurer like photographs and videographs, and that he never
visited the spot because he considered it was not under his purview. He further
stated that he had given his report on the basis of photographs, videographs
and original survey report only because he considered it was not his role to
verify the coverage of the insurance.
It is surprising to note the kind of findings given by this surveyor
only on the basis of documents, photographs and video film without making any
spot inspection.
11. The main thrust of the arguments of the
Learned Counsel for the appellants is that the appointment of subsequent
Surveyors/Investigators and the reports submitted by them are in contravention
of the provisions of section 64 UM (G) (3) of the Insurance Act, 1938. The
basis of this submission is that in the case in hand, the respondent-Insurance
Company had appointed the Surveyor, namely, Mr. Anur Naveen who, on the basis
of physical verification and consideration of the entire material submitted by
the appellants along with their claims, had submitted a report after more than
two years of submission of the claims and made an assessment of the loss
suffered by the appellants. But strangely the respondent-Insurance Company,
without giving any reason or pointing out any defect therein, appointed the
second surveyor / investigator Mr. P.L.N. Murthy and Mr. M.V. Subba Reddy
without any justification. He contends
that the appointment of these investigators and the reports submitted by them
are legally untenable and cannot be relied and acted upon as the correct basis
either in regard to occurrence or the loss suffered by the complainant. In
support of his contention, learned counsel for the appellants has placed
reliance upon a recent decision of the Supreme Court in the case of Sri
Venkateswara Syndicate Vs. Oriental Insurance Company Limited & Another
[(2009) 8 Supreme Court Cases 507]. In that case, Hon’ble Supreme Court
considered the important question “whether Insurance Company can repeatedly
appoint Surveyors after Surveyors for getting the loss/damage assessed before
settling the claim of the insurer and if so, under what circumstances and what
value can be attached to the report of the subsequent Surveyors”. On
consideration of the provisions of section 64 UM (2)(3), the Supreme Court held
as under:-
“There is no prohibition in the Insurance
Act, 1938 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. 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 maybe 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 the second surveyor or
surveyors till it gets a report which would satisfy its interest. There must be
sufficient ground to disagree with the findings of surveyor/surveyors. The
Insurance Act only mandates that while settling a claim, assistance of a
surveyor should be taken but it does not go further and say that the insurer
would be bound by whatever the surveyor has assessed or quantified; if for any
reason, the insurer is of the view that certain material facts ought to have
been taken into consideration while framing a report by the surveyor and if it
is not done, it can certainly depute another surveyor for the purpose of
conducting a fresh survey to estimate the loss suffered by the insured.
The
proviso to sub-section (2) of Section 64-UM retains the right of the insurer to
settle a claim for an amount different from that assessed by the surveyor. This
proviso impliedly permits an insurer to obtain a second or further report where
considered appropriate or expedient in the circumstances of a case, based upon
which the claim could be settled for a different amount than as assessed
earlier. Surveyor/surveyors are appointed by the insurance company under the
provisions of the 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. The insurance company cannot go on appointing
surveyors one after another so as to get a tailor-made report to the
satisfaction of the officer concerned 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. The opinion to accept or not to
accept the report is with the insurer. However, if the rejection of the report
is arbitrary and based on no acceptable reasons, the courts or other forums can
definitely step in and correct the error committed by the insurer while
repudiating the claim of the insured. We hasten to add, if the reports are
prepared in good faith, with due application of mind and in the absence of any
error or ill motive, the insurance company is not expected to reject the report
of the surveyors.”
12. Having
regard to the legal position as laid down by the Supreme Court in the above
referred case, we have to consider if the appointment of subsequent
surveyors/investigators, namely, P.L.N.Murthy and Subba Reddy was in order. Our answer is plainly in the negative and it
is for the reasons that the insurance company did not give any reason, what to
talk of any valid reasons, as to why the report of the first surveyor Anur
Naveen was not acceptable to it or what the defects were in the report
submitted by the said surveyor. Moreover, it would appear to us that the
subsequent surveyors were not formally appointed as no appointment letters were
issued and the said investigators were called upon to give their opinion based
on the material supplied by the insured or any further material which could be
collected by them during the course of their investigation. In our view, the procedure adopted by the
insurance company in making inform consultations with these surveyors and seeking
their report was not valid and not in consonance with the power conferred by it
by the provisions of 64 UM (2) (3) of the Insurance Act, 1939.
13. If for the sake of argument, we assume that
there was nothing illegal on the part of the insurer to consult M/s P.L.N.
Murthy and Subba Reddy in order to seek their opinion, even then the reports
submitted by them do not appear to be based on correct appreciation of the
entirety of the facts and circumstances and the material which had come before
them. Mr. P.L.N. Murthy admittedly made
no further physical investigation either by visiting the spot or by collecting
any additional material and largely based his opinion on the material furnished
to him by the insured, like documents, photographs, videographs, etc. This surveyor did not give any cogent
reasons to differ from the report of the previous surveyor, Mr.Anur Naveen, who
had not expressed any doubt about the incident in which the farms of the
complainant had been raided and ransacked by PWG / Naxalites members on the
alleged date, time and place. It is not
disputed that a police case, though after some delay, was made and an FIR was
registered at the Police Station concerned and the crime was investigated and a
final report filed in the criminal court of competent jurisdiction as the
police was unable to identify and arrest the culprits who perpetrated the said
crime. In the said final report, the police did not express any doubt about the
happening of the actual incident. The insurance company did not file any
protest petition against the acceptance of the final report submitted by the
police and, therefore, this itself afforded sufficient proof that such an
incident must have taken place. The
said final investigation report ought to have been relied upon by the third
investigator, Mr. M.V. Subba Reddy. The
criticism of the said final investigation report by Mr. Subba Reddy does not
appear to be wholly unjustified because it is common knowledge that in the
terrorist-infested areas, the residents of the area are loath of speaking
anything against the militants for the apprehension and fear of entailing
consequence(s) if they open their mouth against such militant groups. Merely because the people did not come forward
to support the incident cannot belie the factum of the incident.
14. Mr. Mehra, learned counsel for the
insurance company would support the report of the subsequent surveyors /
investigators primarily on the ground that there was undue delay in reporting
the matter to the police. It is no doubt
true that there was about nine days delay in reporting the matter to the police
inasmuch as the incident was stated to have taken place on 25.03.95 and a
police report was lodged on 05.04.95.
However, the question is as to whether the complainants had any just
cause for not lodging the report promptly.
In this connection, it may be noticed that complainants averred that as
on the date of incident, he was not present either at the spot or at his
ordinary residence in the district of Hyderabad and was traveling for a
pilgrimage. The Manager of the farm
could not contact him and so no report could be made promptly. The reasons as to why the intimation was not
given to the police promptly is recorded in para 2 of the report dated
05.04.95, which is as under:
“As I was away from Hyderabad on pilgrimage with my
family, my manager could not take any action due to lack of advice and fear of
life threat from Naxals. Since I have
returned yesterday, I have ascertained the facts of the case and directed my
manager Mr. G.S.R.K.V. Prasad to lodge a complaint with the police of
Pochampally PS and accordingly complaint has been lodged”.
15. It was averred that while leaving the farms
of the complainants after the raid, the militants had extended threats of dire
consequence to the manager and other staff members of the complainant who were
present at the farms. In such a
situation, it appears to be in consonance with natural human conduct that the manager
and other staff members would wait for the arrival of the owners or directors
rather than lodging a report with the police immediately.
16. It would appear that the insurance company
also wanted to repudiate the claim on the strength of condition no. 1, 6 (i)
(a), 6 (i)(b) and 8 of the terms and conditions of the policy. Although no arguments were advanced from the
side of the respondent to fortify this contention, the basis of the said
contention appears to be that complainants had made fraudulent claims. We have already found that there is ample
material on record which can be considered sufficient to establish the incident
leading to the loss and damage to the building, equipment etc., of the
complainants and, therefore, the contention that the claims lodged by the
complainants were fraudulent must be rejected.
17. Having held that the appointment of Mr.
Murthy and Mr. Reddy was in contravention of the provisions of the Insurance
Act and the report submitted by them are not worthy of credence, it must be
held that it is the report submitted by the surveyor Anur Naveen which should
have been relied and acted upon by the insurance company and could form just
and proper basis for indemnification of the loss suffered by the insured under
the above named policies. The surveyor
Anur Naveen submitted two reports, the first dated 27.05.97 in respect of loss
assessed under policy no.050202/11/13/16/421/96 and the second dated 03.06.97
in respect of loss suffered under policy no.050202/11/13/16/343/94. It is not disputed that the sum insured under
these policies was to the extent of Rs.21,68,900/- and Rs.10,71,000/- respectively.
The claimant had made a claim of Rs.18,15,345/- besides damage and
interest and cost under policy no.050202/11/13/16/421/96. The surveyor based on
the estimated provided by the insured which was scrutinized by a qualified
competent practising group of architects and civil engineers and after applying
depreciation on the market value, assessed the loss at Rs.14,36,928/- before
removing the salvage. The surveyor
accordingly recommended the insurer to pursue the claim subject to the terms
and conditions of the policy. However,
as regards policy no. 050202/11/13/16/343/94 dated 3.6.97 in regard to
pipelines and drip irrigation, the surveyor assessed the loss at Rs.10,28,805/-.
before removing the salvage.
18. Mr. Mehra has challenged this assessment of
loss under the two policies as not having a sound foundation. Having regard to
the discussion made in the said report and the voluminous documents supplied by
the complainants, we do not find merit in this contention. We have, therefore, no manner of doubt that
the reports submitted by surveyor Anur Naveen can form just and valid basis for
the settlement of claims of the complainant under the above referred two
policies.
19. Mr. Mehra has then pointed out that even if
the said assessment of loss at Rs. 14,36,928/- and Rs. 10,28,805/- is to be
accepted as per the recommendation of the surveyor, this amount is subject to
deduction of salvage value of the equipment in order to arrive at the ness loss
suffered by the complainant, for which the complainant can seek indemnification
from the insurance company. We see
merit in this contention because while making the recommendations, the surveyor
has made it clear that the above amounts assessed by him are before removing
the salvage. Now, what is the value of
the salvage which should be deducted from this assessed amount of loss is the
question which remains to be considered.
The surveyor, while making certain deductions on account of
depreciation, did not quantify the value of the salvage and, therefore, some
estimation is required.
20. Mr. Mahavir Singh has argued that once certain amounts have been deducted towards depreciation, there should be no further deduction on account of salvage. In our opinion, though the surveyor has failed to quantify the value of the salvage, still having regard to the fact that coverage under the first policy was in respect of buildings, fencing etc and under the second policy in respect of pipelines and irrigation system, the value of the salvage could not be more than 20% in any view of the matter. Therefore, at best, sums of Rs. 2,87,385/- and Rs.2,05,761/- are liable to be deducted from the gross assessed amount of loss of Rs.14,36,928/- under policy no.050202/11/13/16/421/96 dated 27.05.97 and Rs.10,28,805/- under policy no.050202/11/13/16/343/94 dated 03.06.1997 respectively.
21. In the result, the appeals are partly
allowed and the complaints filed by complainant are hereby partly allowed with
a direction to the opposite party to pay a sum of Rs. 11,49,543/- under policy
no. 050202/11/13/16/421/96 and Rs.8,23,044/- under policy
no.050202/11/13/16/343/94 with interest @ 9% p.a. w.e.f. date of filing of
complaint till the payment is made.
Parties to bear their own costs throughout.
…….......………Sd/-….................
(R.C.
JAIN, J)
PRESIDING MEMBER
…….......…Sd/-………................
(ANUPAM
DASGUPTA)
MEMBER