Court’s Decision
The Delhi High Court dismissed the petition filed by the insurance company challenging the National Consumer Disputes Redressal Commission’s (NCDRC) order that had restored the District Consumer Forum’s direction to pay the full claimed loss. The Court held that re-appraisal of evidence is impermissible under Article 227, and there was no manifest error or jurisdictional lapse warranting interference. The Court clarified that while surveyors’ reports are important, “the report of a surveyor is neither final word nor conclusive” and can be rejected if it fails to inspire confidence.
Facts
The respondent company had obtained a fire insurance policy covering stocks, machinery, and building worth ₹92 lakhs, including ₹60 lakhs for stock, valid from 16 May 2005 to 15 May 2006. On 23 September 2005, a fire broke out at its plant, allegedly due to an electrical short circuit igniting flammable solvents. Two workers lost their lives, and the company claimed a total loss of ₹16,40,991, asserting that 5,138 garments were destroyed.
The insurance company appointed a surveyor, who concluded that only 1,500 garments were lost, assessing damages at ₹4,73,097. The insurer remitted ₹2,20,339 to the complainant’s bank as full settlement.
The complainant filed a consumer complaint. The District Forum allowed the claim in full, awarding compensation for mental agony and litigation costs. The State Commission, on appeal, reduced the claim and awarded interest at 10% per annum. Both sides approached the NCDRC, which restored the District Forum’s order. The insurance company then approached the High Court under Article 227.
Issues
- Whether the NCDRC erred in discarding the surveyor’s report and restoring the District Forum’s award.
- Whether the High Court, in exercise of supervisory jurisdiction under Article 227, could re-appreciate the evidence in such a matter.
- Whether surveyors’ reports are binding on adjudicating authorities in insurance claims.
Petitioner’s Arguments (Insurance Company)
The insurer contended that the NCDRC unjustifiably rejected the surveyor’s report without proper reasoning. It argued that the surveyor’s assessment was based on site inspection and investigation, and that reducing the claim was justified. The insurer stressed that the High Court should intervene as the rejection of the surveyor’s report amounted to a miscarriage of justice.
Respondent’s Arguments (Complainant)
The complainant argued that the surveyor’s objections were frivolous and had been duly addressed, including providing challans for all 5,138 garments. Despite this, the surveyor arbitrarily reduced the claim. The complainant also pointed out that the insurance company failed to examine the surveyor as a witness, instead relying on a divisional manager’s affidavit, thereby withholding the best evidence.
Analysis of the Law
The Court reiterated that Article 227 jurisdiction is supervisory, not appellate, and interference is warranted only in cases of manifest error or miscarriage of justice. The Court referred to National Insurance Co. Ltd. v. Hareshwar Enterprises (2021) to reaffirm that surveyor reports are important but not binding, and can be rejected if lacking credibility. The Court also clarified that sweeping remarks branding all surveyors as biased are unwarranted, as they are bound by a statutory code of conduct under the Insurance Act, 1938.
Precedent Analysis
- National Insurance Co. Ltd. v. Hareshwar Enterprises (2021 SCC OnLine SC 628) – Assessment by an approved surveyor is required but not binding; the adjudicating authority must determine if the report inspires confidence.
- Omaxe Buildhome (P) Ltd. v. Ibrat Faizan (2022 SCC OnLine Del 944) – Article 227 jurisdiction is supervisory; the High Court should not re-weigh evidence.
- Garment Craft v. Prakash Chand Goel (2022) 4 SCC 181 – Supervisory jurisdiction is not meant to correct every factual or legal error if the lower forum’s view is plausible.
Court’s Reasoning
The Court found that:
- The insurer’s plea essentially sought re-evaluation of evidence, which is impermissible under Article 227.
- The insurer failed to produce the surveyor’s affidavit, which weakened its case as the surveyor was central to the dispute.
- The NCDRC’s view restoring the District Forum’s award was plausible and not perverse.
- While disapproving the District Forum’s remark branding surveyors as biased, the Court upheld the principle that a surveyor’s report is not the sole deciding factor.
Conclusion
The High Court dismissed the petition, holding there was no compelling reason to interfere. The execution proceedings had already been satisfied, and the pending issue of interest was before the Supreme Court. The Court’s ruling reinforced that surveyors’ reports, while important, are subject to judicial scrutiny and are not binding if lacking credibility.
Implications
This judgment strengthens consumer protection in insurance disputes by confirming that adjudicating bodies can reject a surveyor’s report if it fails to inspire confidence. It also reaffirms the narrow scope of Article 227 jurisdiction, limiting the High Court’s role to correcting jurisdictional errors rather than re-weighing evidence.
Referred Cases and Their Role
- National Insurance Co. Ltd. v. Hareshwar Enterprises – Established that surveyor reports are not conclusive.
- Omaxe Buildhome v. Ibrat Faizan – Clarified the limited scope of Article 227.
- Garment Craft v. Prakash Chand Goel – Stressed that supervisory jurisdiction cannot be used to substitute factual conclusions of lower forums.
FAQs
1. Is a surveyor’s report binding in insurance claim disputes?
No. While it is a prerequisite for loss assessment, courts and consumer forums can reject it if it does not inspire confidence.
2. Can the High Court under Article 227 re-assess evidence in such cases?
No. Article 227 provides only supervisory jurisdiction, allowing interference only in cases of manifest error or miscarriage of justice.
3. What was the key reason for rejecting the insurer’s challenge?
The insurer withheld the surveyor’s testimony, relied on weaker evidence, and sought re-evaluation of facts, which is not permissible in Article 227 proceedings.
