Consumer forum can’t order forensic test of insurance surveyor’s report like civil courts: SC

In cases of this nature the jurisdiction of the special forum constituted under the Consumer Protection Act, 1986 is limited. When the insured produced two sets of records and the quantum of material destroyed by fire arrived based on these records showed huge discrepancies, the Surveyor had no alternative except to reject these records and proceed on volumetric analysis, the top court said on facts of the case.

New Delhi, Sep 28 (PTI)A consumer cannot succeed in a consumer forum unless the deficiency in service is established on the part of a service provider and unlike a civil court, such a panel cannot subject a report of an insurance surveyor to “forensic examination”, the Supreme Court Tuesday held.

The top court upheld the findings of the National Consumer Disputes Redressal Commission (NCDRC) that consumers are “not entitled to succeed unless they were able to establish any deficiency in service on the part of the Insurance Company.” The verdict assumes significance since a firm sought enhancement of the insured amount on the grounds that the surveyor did not assess the loss of insured articles properly.

“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,” said a bench of Justices Hemant Gupta and V Ramasubramanian.

Referring to the facts, the verdict said it was not the 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,” it held.

The verdict came on an appeal of one company Khatema Fibres Ltd against the NCDRC order holding that its insurer, New India Assurance Company Ltd, was obligated to pay Rs 2.86 crore as insurance claim as per the surveyor’s report.

The apex consumer body has confined the compensation payable only to the extent of the assessment as made by the final Surveyor.

The firm had taken a ‘Standard Fire and Social Peril’ policy for the period from May 7, 2007, to May 6, 2008, for a sum of Rs 42.40 crore, and when the policy was in force, a fire broke out in the factory premises on November 15, 2007.

The insured firm submitted a claim estimating the quantity of waste paper destroyed by fire at 8500 MT and its value at Rs 13 crore.

However, the surveyor firm submitted a final report assessing the loss suffered by the appellant on account of the fire accident as Rs 2.86 crore.

“We fail to understand how the Surveyors could be found fault with, for rejecting the stock records of the insured, especially in the light of the circumstances narrated... When the insured produced two sets of records and the quantum of material destroyed by fire arrived based on these records showed huge discrepancies, the Surveyor had no alternative except to reject these records and proceed on volumetric analysis,” the top court said on facts of the case.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)