Consumer Protection Act, 1986 – ss. 23 and 2(1)(g) – Surveyor’s Report – Assessment of loss – Correctness of – Accidental fire in the factory of complainant – Waste paper destroyed by fire – Claim raised by complainant estimating the value of the paper destroyed – However, the surveyor appointed by the Insurance Company assessed the loss suffered by the complainant on account of the fire accident at a lesser amount – Consumer complaint – National Commission awarded compensation payable to them only to the extent of the assessment made by the final surveyor – Interference with – Held: Not called for – In a complaint before the Consumer Forum, a consumer cannot succeed unless he establishes deficiency in service on the part of the service provider – Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor’s report to broad examination – Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, and the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop – On facts, Insurance Company admitted the claim of the complainant to the extent of the loss as assessed by the Surveyor – All the objections of the complainant to the Surveyors’ Report wholly unsustainable and the National Commission rightly rejected those objections – Insurance Act, 1938 – s.64UM(1A), (2). Dismissing the appeal, the Court
HELD: 1. A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor’s report to forensic examination of its anatomy, just as a civil court could do. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop. In view thereof, the judgment of the National Commission does not call for any interference. [Para 38, 39] [283A-C]
2.1 The Surveyor decided to adopt volumetric analysis method rather than rely upon the stock records of the insured. The Surveyors could not be found at fault with, for rejecting the stock records of the insured. When the insured produced two sets of records and the quantum of material destroyed by fire arrived on the basis of these records showed huge discrepancies, the Surveyor had no alternative except to reject these records and proceed on volumetric analysis. The appellant themselves have admitted to the Chartered Accountant, who went for spot inspection when the fire was still raging, that the appellant had not conducted physical verification of its raw material stock in the recent past and that the consumption was recorded on estimated yield basis. In their own letter dated 5.12.2007, the appellant had conceded that stock taking was done on the basis of receipts and consumptions as well as physical verification on volumetric basis. Therefore, the refusal of the Surveyor to go by the stock records of the appellant, but to adopt volumetric analysis, was fully justified and no exception can be taken to the same. [Para 19, 20][277-D-H]
2.2 It is seen from the Surveyors’ Report that there were actually three different measurements available with the Surveyor, with a huge variation between one another. Faced with three different measurements, the Surveyor reonciled the same by holding that despite the measurement of the open stockyard being
22.5 mtrs. X 105 mtrs. = 2362 mtrs., the area affected by fire could only be 1485 sq. mtrs. In view of the given circumstances, there is nothing wrong in the Surveyor taking the measurement of the area of the stockyard affected by fire, as 27 mtrs. X 55 mtrs.=1485 sq. mtrs. for the purpose of volumetric analysis. [Para 22, 23][278-C, E-H; 279-A-B]
2.3 The allowance of some space within the open stockyard, for the purpose of movement of men and material is logical. It is not possible to accept that the whole space in the stockyard was completely stacked by material without any space for movement. Without providing adequate gaps and spaces within the open courtyard, it would not have been possible for the appellant to remove the material for the purpose of processing, even if forklifts were used. Therefore, the objection to the provision for open space/gaps is unfounded. [Para 26][279-G-H; 280-A-B]
2.4 In the calculation sheet annexed to the letter addressed to the Surveyor, the appellant themselves estimated the average weight per bale to be 900 kgs. What is arrived at by the Surveyor, in Annexure A-3 to their Report, as 988.889 kgs is based only upon the sizes of different types of bales and the areas occupied by different types of bales, and arriving at the average weight. There was no reason for the Surveyor to adopt the average weight per bale, when the party himself has provided the average weight to be 900 kgs. per bale. [Para 28][280-C-D]
2.5 All the objections of the appellant to the Surveyors’ Report are wholly unsustainable and the National Commission rightly rejected those objections. [Para 29][280-E-F]
3.1 This is not a case where the Insurance Company has repudiated the claim of the appellant arbitrarily or on unjustifiable grounds. This is a case where the claim of the appellant has been admitted, to the extent of the loss as assessed by the Surveyor. In cases of this nature the jurisdiction of the special forum constituted under the Consumer Protection Act, 1986 is limited. Perhaps if the appellant had gone to the civil court, they could have even summoned the Surveyor and cross examined him on every minute detail. But in a complaint before the Consumer Forum, a consumer cannot succeed unless he establishes deficiency in service on the part of the service provider. [Para 31][280-H; 281-A-B]
3.2 Any inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law or which has been undertaken to be performed pursuant to a contract, will fall within the definition of the expression ‘deficiency’. But to come within the said parameter, the appellant should be able to establish either that the Surveyor did not comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specified by the regulations made under the Act, in terms of Section 64UM(1A) of the Insurance Act, 1938, as it stood then; or that the insurer acted arbitrarily in rejecting the whole or a part of the Surveyor’s Report in exercise of the discretion available under the Proviso to section 64UM(2) of the Insurance Act, 1938. [Para 32][281-BE]
3.3 Section 64UM (2) , before its amendment by Act 5 of 2015, mandated that no claim equal to or exceeding a sum of rupees twenty thousand only shall be admitted for payment unless the insurer had obtained a report from an approved surveyor or loss assessor. But the Proviso to sub-section (2) of section 64UM also recognized the right of the insurer to pay any amount different from the amount as assessed by the approved surveyor or loss assessor. [Para 33, 34][281-E-F; 282-B-C]
3.4 The surveyor’s report is not the last and final word. The surveyor’s report is not so sacrosanct as to be incapable of being departed from. The Insurance Act, 1938 even while assigning an important role for the surveyor, casts an obligation on him under section 64UM(1A) to comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specified by the regulations made under the Act. Two things flow that the surveyor is governed by a code of conduct, the breach of which may give raise to an allegation of deficiency in service; and that the discretion vested in the insurer to reject the report of the surveyor in whole or in part, cannot be exercised arbitrarily or whimsically and that if so done, there could be an allegation of deficiency in service. [Para 35-37][282-C-H]
United India Insurance Company Ltd. And Others v. Roshan Lal Oil Mills Ltd. and Others (2000) 10 SCC 19; Sikka Papers Limited v. National Insurance Company Limited And Others (2009) 7 SCC 777 : [2009] 9 SCR 1088; New India Assurance Company Limited v. Luxra Enterprises Private Limited and Another (2019) 6 SCC 36 : [2019] 6 SCR 1172; New India Assurance Company Limited v. Pradeep Kumar (2009)
7 SCC 787 : [2009] 16 SCR 508 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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