NATIONAL INSURANCE COMPANY LTD. versus M/S. HARESHWAR ENTERPRISES (P) LTD. & ORS. on 18 August 2021

[2021] 8 S.C.R. 895

NATIONAL INSURANCE COMPANY LTD.

v.

M/S. HARESHWAR ENTERPRISES (P) LTD. & ORS.

(Civil Appeal No.7033 of 2009)

AUGUST 18, 2021

[HEMANT GUPTA AND A. S. BOPANNA, JJ.]

Consumer Protection Act, 1986 – Insurance claim –Respondent No.1-insured was engaged in the business ofmanufacture of polyethylene, plastic films etc. – Plant and machineryin respondent no.1’s factory was charged in favor of respondentno.2 as security and stock in trade was hypothecated to respondentno.3 for discharge of loan obtained from them – The factory, plantand machinery were covered under the insurance policies ofappellant-insurer against risk of fire, flood and earthquake – Firebroke out causing total destruction – Appellant was intimated –Joint Surveyors appointed by appellant assessed the loss – Finalreport submitted – Despite said report, the appellant appointedinvestigators – Eventually, complaint filed by respondent no.1 –NCDRC allowed claim in part, further apportioning the amount infavour of respondent nos.2 and 3 – On appeal, held: Fire occurredon 06.11.99 – Surveyors visited the site on 09.11.99 itself – Interimand final report were submitted to the insurer on 23.03.2000 and13.03.01 but, it did not take any steps immediately – After muchdelay, it appointed the investigator on 22.06.01 but did not concludethe said process despite repeated requests by respondent no.1 –Further, for the first time the insurer relied on the investigator’sreport in the NCDRC proceedings – Surveyors report was submittedas the natural process – Conclusion reached therein is more reliablerather than the investigation report keeping in view the manner inwhich the insurer proceeded in the matter – Hence, reliance placedon the surveyor’s report by NCDRC without giving credence to theinvestigation report cannot be faulted – Such conclusion does notcall for interference – However, amount ordered by NCDRC shallbe payable with interest at 9% p.a. instead of 12% p.a.

Consumer Protection Act, 1986 – s.24A – Cause of action –Held: s.24A indicates that the complaint is required to be filed within

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Atwo years from the date on which the cause of action arises – Causeof action will remain flexible and is to be gathered from the facts ofeach case – In the present case, though the cause of action arosefor the first time when the fire broke out but it did not remain staticat that point – As the matter kept oscillating, fresh cause of actionarose – On facts, complaint filed was within time – ConsiderationBof the same on merits by NCDRC justified.

Consumer Protection Act, 1986 – Insurance Claim – Surveyorsreport, reliance on – Held: Surveyors report is the basic documentwhich has statutory recognition – It can be relied upon if it inspiresconfidence of adjudicating forum and if on facts, the forum doesCnot find the need to place reliance on any other material.

Partly allowing the appeal, the Court

Conclusion

HELD: 1.1 Section 24A of the Consumer Protection Act,1986 indicates that the complaint is required to be filed withinDtwo years from the date on which the ‘cause of action’ has arisen.The cause of action will remain flexible to be gathered from thebundle of facts arising in each case. In the instant case the fireincident had occurred on 06.11.1999. The appellant had informedthe insurer on 07.11.1999, where after the joint surveyors wereappointed and on verification had submitted their final report onE13.03.2001. Despite said report, the insurer through their letterdated 22.06.2001 had appointed an investigator but did notproceed to either accept the claim or repudiate the same. Further,in the reply filed on behalf of the insurer before the NCDRCreference is contained that correspondence was exchangedFbetween the investigator appointed by the insurer and therespondent No.1 through the letters dated 07.03.2002,05.04.2002, 03.05.2002, 03.06.2002 and 13.07.2002. If in theabove context the fact situation herein is noticed, though the fireincident occurred on 06.11.1999, the same merely provided thecause of action for the first time to make the claim but the sameGdid not remain static at that point. On the other hand, the processof joint survey though had concluded with its final report on13.03.2001, the letter dated 22.06.2001 addressed by the insurerto the respondent No.1 regarding appointment of the investigatorhad created a fresh cause of action and kept the matter oscillating.HThereafter, the matter did not rest at that but there was repeated action being taken by the investigators seeking for details. Whenthe same did not conclude in an appropriate manner, therespondent No.1 got issued a legal notice dated 05.01.2003 towhich reply was issued, when in fact the repudiation was gatheredand the complaint was filed. Even if the date on which the processof intimation of appointment of the investigator through the letterdated 22.06.2001, received by the respondent No.1 is taken intoconsideration, from that date also the complaint filed on26.03.2003 is within time. There was no need for the NCDRC topass any separate order at the outset to hold the claim to bewithin limitation and then proceed when it is clear on the fact ofit. As such the consideration of the complaint on merits by theNCDRC was justified. [Paras 6-8][902-E-F; 903-C-D, G-H; 904-A-E]

Kandimalla Raghavaiah and Company v. NationalInsurance Company and Another (2009) 7 SCC 768 :[2009] 10 SCR 870 – distinguished.

1.2 On the merits of the claim, a perusal of the impugnedorder passed by the NCDRC indicates that the NCDRC has madedetailed reference to the report submitted by the joint surveyors,dated 13.03.2001 and has ultimately allowed the claim, in part. Inthe surveyor report dated 13.03.2001 consideration was made totwo parts; firstly, the assessment of loss relating to the stock ofLDPE plastic, powder, granules, tubings and films as containedin clause 8.1 of the report. Next, the loss caused due to thedestruction of plant and machinery is assessed in clause 8.2 andthe sum of Rs.46,60,459/- being the depreciated value has beenawarded for loss of plant and machinery. In respect of the saidclaim the respondent No.2 (Maharashtra State FinancialCorporation) is interested. There is no serious dispute withregard to the consideration made either by the surveyors or theNCDRC on the aspect of plant and machinery. In that view of thematter the only question on merits which needs considerationherein is with regard to the loss assessed towards destruction ofthe stock-in- trade in the fire incident. The surveyor’s reportcertainly can be taken note as a piece of evidence until morereliable evidence is brought on record to rebut the contents ofthe surveyor’s report. In the instant facts there is no seriousdispute with regard to the fire incident. The loss caused by A

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Adestruction of the plant and machinery in the fire incident is notmuch of an issue. The dispute raised insofar as the loss causedto the raw- materials/stock is by contending that the purchase ofstock during the months of August, September and October 1999is shown excessive as compared to the stock position from Aprilto July 1999. In that circumstance, in the facts and circumstancesBherein whether the investigation report was an indispensabledocument or as to whether the survey report is exhaustive enoughto arrive at a conclusion on that aspect is the issue. Theproposition of law that the surveyor’s report cannot be consideredas a sacrosanct document and that if there is any contrary evidenceCincluding investigation report, opportunity should be availableto produce it as rebuttal material, is concurred by this Court.However, the issue to be noted is as to whether the surveyor’sreport in the instant case adverts to the consideration of stockposition in an appropriate manner and in that circumstancewhether an investigation report which is based on investigationDthat was started belatedly should take the centre stage. The factremains that the surveyors report is the basic document whichhas statutory recognition and can be made the basis if it inspiresthe confidence of the adjudicating forum and if such forum doesnot find the need to place reliance on any other material, in theEfacts and circumstance arising in the case. If in that light, thesurveyors report, on which reliance has been placed by theNCDRC is taken note insofar as the assessment relating to theloss due to destruction of stock, the consideration of the samehas been adverted in clause 8.1.1 and the stock position asdeclared to the bank has been referred to in clause 8.1.3. [ParasF9-11, 13 and 14][904-E-G; 905-A-B; 906-C-D; 907-A-F]

National Insurance Company Limited v. Harjeet RiceMills (2005) 6 SCC 45 : [2005] 1 Suppl. SCR 794 –distinguished.

GNew India Assurance Company Limited v. PradeepKumar (2009) 7 SCC 787 : [2009] 16 SCR 508 –referred to.

1.3 The consideration made by the surveyors to ascertainthe correctness of the details relating to the stock indicates thatHreference is made to the value of the stock declared to the bank;

value of the stock as per audited manufacturing account andbalance sheet for the year ended 31.03.1999; the explanationoffered for the purchase made during the months of August 1999to October 1999. In that regard, the surveyors have also visitedthe source from which the LDPE was procured during September1999 to 04.11.1999. Thus, a perusal of the surveyor’s report wouldindicate that the same is not perfunctory but has referred to allaspects, discarded what was not reliable and the assessment hasbeen made thereafter. In that background, as noted, the fireincident had occurred on 06.11.1999 and the surveyors had visitedthe site on 09.11.1999 itself and the interim as also the final reportwere submitted on 23.03.2000 and 13.03.2001 to the insurer afterdue deliberations. The insurer did not take any steps immediatelybut after much delay appointed the investigator on 22.06.2001and had not concluded the said process though the respondentNo.1 had made repeated request. The insured had approachedthe NCDRC and it is in the said proceedings, for the first timethe insurer seeks to rely on the investigator’s report. Therefore,in the facts and circumstances herein the surveyors report wassubmitted as the natural process, the conclusion reached thereinis more plausible and reliable rather than the investigation reportkeeping in view the manner in which the insurer had proceededin the matter. Hence, the reliance placed on the surveyor’s reportby the NCDRC without giving credence to the investigationreport in the facts and circumstances of the instant case cannotbe faulted. In that view, the conclusion reached on this aspect bythe NCDRC does not call for interference. [Paras 15, 16][907-G-H; 908-A; 909-C-F]

1.4 The rate of interest to be awarded in a normalcircumstance should be commensurate so as to enable theclaimant for such benefit for the delayed payment. There is nospecific reason for which the NCDRC has thought it fit to awardinterest at 12% per annum. Therefore, the normal bank rate orthereabout would justify the grant of interest at 9% per annum.Accordingly, the amount as ordered by the NCDRC shall bepayable with interest at 9% per annum instead of 12% per annum.To that extent, the order stands modified. This Court whileadmitting the appeal and granting stay of the order, it was madesubject to deposit 50% of the amount before the National AB

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ACommission. The second and third respondents were permittedto withdraw the same in the ratio of 60:40 subject to theirfurnishing, security to the satisfaction of the Commission. Theappellant shall therefore deposit the balance amount within sixweeks, before the National Commission and the disbursementshall be made in the ratio to constitute the payment of the fullBamount awarded. The second and third respondents shall bepermitted to withdraw the same. [Paras 17, 18][909-G-H; 910-A-C]

State Bank of India v. B.S. Agriculture Industries (I)(2009) 5 SCC 121 : [2009] 4 SCR 762 – referred to.C

CIVIL APPELLATE JURISDICTION: Civil Appeal No.7033 of

2009.

From the Judgment and Order dated 27.03.2009 of the NationalEConsumer Disputes Redressal Commission, New Delhi in OriginalPetition No.102 of 2003.

Vishnu Mehra, B. K. Satija, Advs. for the Appellant.

Vinay Navare, Santosh Paul, Sr. Advs., Ms. Abha R. Sharma,M. J. Paul, Aniruddha P. Mayee, Advs. for the Respondents.FThe Judgment of the Court was delivered by

A. S. BOPANNA, J.

1. The appellant (insurer) who was arrayed as respondent No.1in the complaint filed before the National Consumer Disputes RedressalCommission, New Delhi (“NCDRC” for short) in O.P. No.102/2003 isGbefore this Court in this appeal being aggrieved by the order dated27.03.2009. The respondent No.1 (insured) was the claimant beforeNCDRC. The plant and machinery in the factory owned by respondentNo.1 was charged in favour of respondent No.2 as security, while thestock in trade was hypothecated in favour of respondent No.3 (ThaneHJan Sahakari Bank) for discharge of loan obtained from them. Since the respondent No. 2 and 3 are entitled to adjust the claim towards theiroutstanding dues, they are arrayed as parties to the proceedings.

2. Through the order dated 27.03.2009 impugned herein, theNCDRC has allowed the complaint in part and directed the insurer topay the sum of Rs.79,34,703/- with interest at 12 % per annum. Out ofthe said amount, a sum of Rs.49,56,897/- is ordered to be apportioned infavour of respondent No.2 (Maharashtra State Financial Corporation)and the balance amount of Rs.29,77,806/- is ordered to be paid to therespondent No.3 (Thane Jan Sahakari Bank Limited). The total amountawarded is against the claim of Rs.1,25,25,319/- made by the respondentNo.1 (Insured).

3. The brief facts leading to the claim before the NCDRC is thatthe respondent No.1 was engaged in the business of manufacture ofpolyethylene, plastic films and other similar packaging materials. Therespondent No.2 had advanced loan to the respondent No.1 againstsecurity of its building, plant and machinery. The respondent No.3 hadalso advanced money to the respondent No.1 for procurement of stockin trade, which was accordingly hypothecated to them. In order to coverthe risk of fire, flood and earthquake to the factory building and also theplant and machinery, the respondent No.1 secured insurance policiesfrom the appellant. One policy was to cover the risk during the period05.02.1999 to 04.02.2000. Another policy in respect of the risk to thestock in trade was also secured which was for the period of 17.09.1999to 16.09.2000. The respondent No.1 was accordingly carrying on itsbusiness in the factory premises while on 06.11.1999 fire broke out causingtotal destruction of the plant and machinery, raw material as also finishedand unfinished goods. The respondent No.1 intimated the appellantregarding the fire incident on 07.11.1999.

4. The appellant accordingly appointed M/s. H. Manna andCompany and Virendra Padmasi Shah jointly as surveyors to assess theloss. The surveyors visited the site on 09.11.1999. On having obtainedthe documents and records submitted their interim report on 23.03.2000and the final report on 13.03.2001 to the insurer. The surveyors throughthe said report had assessed the loss at Rs.1,06,00,000/- excluding theloss of business and other losses. The insurer, however, did not settle theclaim nor repudiate the same. Instead, the insurer through their letterdated 22.06.2001 informed the respondent No.1 regarding appointmentof Om Nityanand Enterprises as investigators to look into the claim. It is AB

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Ain that view, since the repeated request and demand ultimately madethrough the legal notice had not been complied with by the appellant, therespondent No.1 filed the complaint before the NCDRC. As alreadynoted, the NCDRC after considering the matter in detail has arrived atits conclusion and has passed the order allowing part of the claim.

B5. Mr. Vishnu Mehra, learned counsel for the appellant at theoutset contended that very proceedings before the NCDRC was notsustainable since the claim was filed beyond limitation. In this regard,the learned counsel has referred to Section 24A of the ConsumerProtection Act, 1986 (‘Act 1986’ for short) which provides the limitationto file the complaint within two years from the date on which the causeCof action has arisen. In that light, it is contended that the fire incident hadtaken place on 06.11.1999, but the respondent No. 1 had filed thecomplaint before the NCDRC on 26.03.2003 which is way beyond theperiod of two years provided under the said provision. In order to buttresshis submission the learned counsel has relied on the decision reported inDthe case, State Bank of India vs. B.S. Agriculture Industries (I) (2009)5 SCC 121 with specific reference to paragraphs 11 and 12. A perusalof the said decision no doubt would indicate that it has been held by thisCourt that the provision is peremptory in nature and requires the consumerforum to see before it admits the complaint that it has been filed withintwo years from the date of accrual of cause of action.E

6. Having noted the contention, on the provision as contained,there is no ambiguity whatsoever. However, what is required to be takennote is that the provision indicates that the complaint is required to befiled within two years from the date on which the ‘cause of action’has arisen. In that context, another decision relied on by the learnedFcounsel for the appellant in the case, Kandimalla Raghavaiah andCompany vs. National Insurance Company and Another (2009) 7SCC 768 with specific reference to para 18 would indicate that the term‘cause of action’ though not defined in the Act, but it is of wide importand it would have different meaning in different context while consideringGlimitation. It has been held therein that pithily stated ‘cause of action’means, cause of action for which the suit is brought and which givesoccasion for and forms the foundation of the suit. Reliance is placed onthis case by the learned counsel since in the said case, which was also inrespect of a fire incident it was held that the date of accrual of cause ofaction has to be a date on which the fire breaks out. However, whatH

cannot be lost sight is that, such conclusion was reached in the citedcase since the fire in tobacco godown took place 22/23.03.1988 and thebank in whose favour the stocks had been hypothecated was informedabout it by the appellant on 23.03.1988 itself, but insofar as the claim, thematter had rested there till 06.11.1992 when for the first time the appellantaddressed the letter to the insurance company and sought for claim form.The facts therein, if noted would indicate the reason for which this courthad indicated that the date on which the fire broke out is the date ofaccrual of cause of action since it did not move forward in any othermanner. It has not been laid in strait jacket. The cause of action willremain flexible to be gathered from the bundle of facts arising in eachcase.

7. In contradistinction, in the instant case as noted the fire incidenthad occurred on 06.11.1999. The appellant had informed the insurer on07.11.1999, where after the joint surveyors were appointed and onverification had submitted their final report on 13.03.2001. Despite saidreport, the insurer through their letter dated 22.06.2001 had appointedan investigator but did not proceed to either accept the claim or repudiatethe same. In that background, a perusal of the complaint filed by therespondent No.1 before the NCDRC would indicate that the cause ofaction has been mentioned in para 21 as follows:-

“21.CAUSE OF ACTION

The cause of Action arose for the first time when propertybelonging to the Complainant was destroyed in the fire on6.11.1999. Then it continued from time to time when the surveywas complete and the Complainant was not paid the claim amount.It arose when the legal notice on behalf of Complaint was issuedand same was replied by advocate on behalf of the Opponent No.1. Hence the present Original Petition is in limitation. The Advocatefor the complainant issued legal notice on 5.1.2003 demandingmoney from opposite party No. The copy of the said letter isannexed hereto and marked as Annexure P/13.”

Further, in the reply filed on behalf of the insurer before theNCDRC reference is contained that correspondence was exchangedbetween the investigator appointed by the insurer and the respondentNo.1 through the letters dated 07.03.2002, 05.04.2002, 03.05.2002,03.06.2002 and 13.07.2002.

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A8. If in the above context the fact situation herein is noticed, thoughthe fire incident occurred on 06.11.1999, the same merely provided thecause of action for the first time to make the claim but the same did notremain static at that point. On the other hand, the process of joint surveythough had concluded with its final report on 13.03.2001, the letter dated22.06.2001 addressed by the insurer to the respondent No.1 regardingBappointment of the investigator had created a fresh cause of action andkept the matter oscillating. Thereafter, the matter did not rest at that butthere was repeated action being taken by the investigators seeking fordetails. When the same did not conclude in an appropriate manner, therespondent No.1 (Insured) got issued a legal notice dated 05.01.2003 toCwhich reply was issued, when in fact the repudiation was gathered andthe complaint was filed. Even if the date on which the process ofintimation of appointment of the investigator through the letter dated22.06.2001, received by the respondent No.1 is taken into consideration,from that date also the complaint filed on 26.03.2003 is within time.There was no need for the NCDRC to pass any separate order at theDoutset to hold the claim to be within limitation and then proceed when itis clear on the fact of it. As such the consideration of the complaint onmerits by the NCDRC was justified. The contention therefore urged byMr. Vishnu Mehra, learned counsel on that ground is accordingly rejected.

9. On the merits of the claim, a perusal of the impugned orderEdated 27.03.2009 passed by the NCDRC indicates that the NCDRChas made detailed reference to the report submitted by the joint surveyors,dated 13.03.2001 and has ultimately allowed the claim, in part. In thesurveyor report dated 13.03.2001 consideration was made to two parts;firstly, the assessment of loss relating to the stock of LDPE plastic,Fpowder, granules, tubings and films as contained in clause 8.1 of thereport. Next, the loss caused due to the destruction of plant and machineryis assessed in clause 8.2 and the sum of Rs.46,60,459/- being thedepreciated value has been awarded for loss of plant and machinery. Inrespect of the said claim the respondent No.2 (Maharashtra State Financial Corporation) is interested. In that regard, the learned counselGfor the appellant, as also the learned counsel for respondent No. 1 and 2are agreed that there is no serious dispute with regard to the considerationmade either by the surveyors or the NCDRC on the aspect of plant andmachinery. The same having not been a major issue before the NCDRC,need not be gone into in these proceedings.H

10. In that view of the matter the only question on merits whichneeds consideration herein is with regard to the loss assessed towardsdestruction of the stock-in- trade in the fire incident. On this aspect, thelearned counsel for the appellant while contending that the NCDRC hascommitted an error in relying on the surveyor report as sacrosanct withoutgiving credence to the investigation report has referred to the decision inthe case, New India Assurance Company Limited vs. Pradeep Kumar(2009) 7 SCC 787 and referred to para 21 and 22 which read ashereunder: - “21. Section 64-UM(2)of the Act, 1938 reads:

“64-UM. (2) No claim in respect of a loss which has occurred inIndia and requiring to be paid or settled in India equal to orexceeding twenty thousand rupees in value on any policy ofinsurance, arising or intimated to an insurer at any time after theexpiry of a period of one year from the commencement ofthe Insurance (Amendment) Act, 1968, shall, unless otherwisedirected by the Authority, be admitted for payment or settled bythe insurer unless he has obtained a report, on the loss that hasoccurred, from a person who holds a licence issued under thissection to act as a surveyor or loss assessor (hereafter referredto as “approved surveyor or loss assessor”):

Provided that nothing in this sub-section shall be deemed to takeaway or abridge the right of the insurer to pay or settle any claimat any amount different from the amount assessed by the approvedsurveyor or loss assessor.”

The object of the aforesaid provision is that where the claim inrespect of loss required to be paid by the insurer is Rs.20,000/- ormore, the loss must first be assessed by an approved surveyor (orloss assessor) before it is admitted for payment or settlement bythe insurer. Proviso appended thereto, however, makes it clearthat insurer may settle the claim for the loss suffered by insuredat any amount or pay to the insured any amount different fromthe amount assessed by the approved surveyor (or loss assessor).

22. In other words although the assessment of loss by the approvedsurveyor is a pre-requisite for payment or settlement of claim oftwenty thousand rupees or more by insurer, but surveyor’s reportis not the last and final word. It is not that sacrosanct that it cannot A

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Abe departed from; it is not conclusive. The approved surveyor’sreport may be basis or foundation for settlement of a claim by theinsurer in respect of the loss suffered by the insured but surelysuch report is neither binding upon the insurer nor insured.”

11. In the said decision, it is no doubt held that though theBassessment of loss by an approved surveyor is a prerequisite for paymentor settlement of the claim, the surveyor report is not the last and finalword. It is not that sacrosanct that it cannot be departed from and it isnot conclusive. The approved surveyor’s report may be the basis orfoundation for settlement of a claim by the insurer in respect of losssuffered by insured but such report is neither binding upon the insurerCnor insured. On the said proposition, we are certain that there can be noquarrel. The surveyor’s report certainly can be taken note as a piece ofevidence until more reliable evidence is brought on record to rebut thecontents of the surveyor’s report.

12. The learned counsel for the appellant has also relied on theDdecision in the case, National Insurance Company Limited vs. HarjeetRice Mills (2005) 6 SCC 45 with reference to paragraphs 5, 6 and 7. Inthe facts arising in the said case the insured was seeking to rely on thesurveyor’s report to bind the insurer in view of the provisions containedin Section 64-UM (c) of the Insurance Act, 1938. The Insurer hadEhowever sought to rely on the investigation report. The State Commissionrefused to look into report of the private investigator. In that circumstance,this court was of the view that the State Commission should have givenan opportunity to the insurer to prove the investigation report. In the saidcase, the very nature of the fire incident was in dispute from the veryinception. The claimant had contended that the fire was caused by aFshort circuit, which was seriously disputed by the insurer and aninvestigation in that regard had been held. It is in that light, a conclusionwas to be reached by the forum adjudicating the claim as to whetherany fraud was committed in making the claim with reference to the verynature of the incident. In that circumstance, even though at the firstGinstance, there was an investigation held by the police, the privateinvestigation held by the insurer would have been relevant to decide thequestion. As such, in the said circumstance it was imperative that theinvestigator’s report was to be considered threadbare and a decisionought to have been arrived at.

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13. On the other hand, in the instant facts there is no seriousdispute with regard to the fire incident. Even going by the contention putforth, it is noted that the loss caused by destruction of the plant andmachinery in the fire incident is not much of an issue. The dispute raisedinsofar as the loss caused to the raw-materials/stock is by contendingthat the purchase of stock during the months of August, September andOctober 1999 is shown excessive as compared to the stock positionfrom April to July 1999. In that circumstance, in the facts andcircumstances herein whether the investigation report was anindispensable document or as to whether the survey report is exhaustiveenough to arrive at a conclusion on that aspect is the issue.

14. Having noted the said decisions, we are of the opinion that thesame cannot alter the position in the instant case. On the proposition oflaw that the surveyor’s report cannot be considered as a sacrosanctdocument and that if there is any contrary evidence including investigationreport, opportunity should be available to produce it as rebuttal material,we concur. However, the issue to be noted is as to whether the surveyor’sreport in the instant case adverts to the consideration of stock position inan appropriate manner and in that circumstance whether an investigationreport which is based on investigation that was started belatedly shouldtake the centre stage. The fact remains that the surveyors report is thebasic document which has statutory recognition and can be made thebasis if it inspires the confidence of the adjudicating forum and if suchforum does not find the need to place reliance on any other material, inthe facts and circumstance arising in the case. If in that light, the surveyorsreport, on which reliance has been placed by the NCDRC is taken noteinsofar as the assessment relating to the loss due to destruction of stock,the consideration of the same has been adverted in clause 8.1.1 and thestock position as declared to the bank has been referred to in clause8.1.3. The learned counsel for the appellant as also the learned counselfor the respondents has made detailed reference and taken us throughdetails contained in the report.

15. The consideration made by the surveyors to ascertain thecorrectness of the details relating to the stock indicates that reference ismade to the value of the stock declared to the bank; value of the stockas per audited manufacturing account and balance sheet for the yearended 31.03.1999; the explanation offered for the purchase made duringthe months of August 1999 to October 1999. In that regard, the surveyors AB

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Ahave also visited the source from which the LDPE was procured duringSeptember 1999 to 04.11.1999. It is on making such verification andinquiries, the surveyors arrived at the conclusion as follows: - “8. 1. 8 Though the purchases and sales were found to be in orderas per records, we could not accept the total quantity of 73585Bkgs claimed by the Insured. Opening stock considered for arrivingat this balance is higher as compared to quantity declared to bank.For assessing the quantity we have taken Stock quantity as on30.04. 99 as per Bank declaration and then made addition/deduction for purchase & sale quantity during the period 1.5.99 to6.11.99. Accordingly the quantity of stock as on date of loss workedCout as follows:

F8.1.9We have valued the stock as per the latest purchase rateviz. At market value. The last purchases made by Insuredprior to loss was on 4. 11. 99. The rate including Octroi isRs.68.238 per kg. The rate matches with the selling pricefixed by IPCL. Further the entire quantity was consideredto be raw material avoiding any addition of Insureds ownGmanufacturing cost.

8.1.10 Salvage : There was small quantity of remnants of theburnt stock, in lump/me ted form. Considering the limitedquantity which could be extracted and its scrap value wehave deducted 1% as salvage value.

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16. Thus, a perusal of the surveyor’s report would indicate thatthe same is not perfunctory but has referred to all aspects, discardedwhat was not reliable and the assessment has been made thereafter. Inthat background, as noted, the fire incident had occurred on 06.11.1999and the surveyors had visited the site on 09.01.1999 itself and the interimas also the final report were submitted on 23.03.2000 and 13.03.2001 tothe insurer after due deliberations. The insurer did not take any stepsimmediately but after much delay appointed the investigator on22.06.2001 and had not concluded the said process though the respondentNo.1 had made repeated request. The insured had approached theNCDRC and it is in the said proceedings, for the first time the insurerseeks to rely on the investigator’s report. Therefore, in the facts andcircumstances herein the surveyors report was submitted as the naturalprocess, the conclusion reached therein is more plausible and reliablerather than the investigation report keeping in view the manner in whichthe insurer had proceeded in the matter. Hence, the reliance placed onthe surveyor’s report by the NCDRC without giving credence to theinvestigation report in the facts and circumstances of the instant casecannot be faulted. In that view, the conclusion reached on this aspect bythe NCDRC does not call for interference.

17. One other aspect of matter which arises for considerationherein is with regard to the rate of interest. The learned counsel for theappellant contended that the interest rate at 12% per annum is excessive.The learned counsel for the respondent, however, contended that therewas delay in payment of the amount payable to the respondent No.1which was necessary to be compensated appropriately and the NCDRCwas justified in that regard. Having considered this aspect, the rate ofinterest to be awarded in a normal circumstance should be commensurateso as to enable the claimant for such benefit for the delayed payment.There is no specific reason for which the NCDRC has thought it fit to A

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Aaward interest at 12% per annum. Therefore, the normal bank rate orthereabout would justify the grant of interest at 9% per annum.Accordingly, the amount as ordered by the NCDRC shall be payablewith interest at 9% per annum instead of 12% per annum. To that extent,the order shall stand modified.

B18. It is to be noted that this Court while admitting the appeal andgranting stay of the order, it was made subject to deposit 50% of theamount before the National Commission. The second and thirdrespondents were permitted to withdraw the same in the ratio of 60:40subject to their furnishing, security to the satisfaction of the Commission.The appellant shall therefore deposit the balance amount within six weeks,Cbefore the National Commission and the disbursement shall be made inthe ratio to constitute the payment of the full amount awarded. Thesecond and third respondents shall be permitted to withdraw the same.

19. In terms of the above, the appeal is allowed in part.

D20. Pending application, if any, shall stand disposed of.

Divya Pandey

Appeal partly allowed.

E

F

G

H