Summary
An insurer could not appoint successive surveyors without cogent reasons until it obtained a report supporting repudiation. The first final surveyor’s fire-loss assessment was not shown to be arbitrary or excessive, and the reasons advanced for further surveys were unsupported on the record. The Supreme Court upheld compensation of Rs.54,93,865, dismissed the insurer’s appeal, and allowed the insured’s appeals to award 6% annual interest from filing of the complaint until payment.
Issues
- Whether the insurer had cogent grounds to reject the first final survey and appoint successive surveyors.
- Whether the insured was entitled to interest on the compensation.
Provisions considered
- Section 64-UM(2)–(4), Insurance Act, 1938A survey assessment did not bind the insurer absolutely, but further surveys required satisfactory reasons rather than repeated appointments to obtain a favourable report. (¶¶ 12, 18–25)
Held
- There was no absolute prohibition on a further survey. The insurer had to identify sufficient grounds, such as inherent defects, arbitrariness or excessive assessment, and could not reject a good-faith report without acceptable reasons. (¶ 18–19)
- The Head Office had appointed the final surveyor and questioned the local office’s further appointment. Alleged gaps did not justify rejecting bank-verified stock records merely because the letter of credit had not materialised. (¶¶ 17, 20–21)
- The letter-of-credit explanation and absence of an allegation connecting this insured’s export to the separate cheating case defeated the asserted repudiation grounds. No arbitrariness or excess in the original assessment was proved. (¶ 22–24)
- The successive assessments, culminating in total repudiation adopted upon receipt, showed appointments aimed at rejecting the claim. Compensation stood; the insured additionally deserved 6% annual interest from filing to payment. (¶ 25–27)
Result
Insurer’s Civil Appeal No.9668 of 2014 dismissed. Insured’s Civil Appeal Nos.4371–4372 of 2015 allowed: Rs.54,93,865 compensation to carry interest at 6% per annum from filing of the petition until payment.