An insurance company cannot appoint one surveyor after another till it gets a report favorable to it, the Supreme Court asserted in its judgment last week in the case, New India Assurance vs. Luxra Enterprises.
An insurer can reject a survey report, but it must give cogent reasons for doing so, pointing out inherent defects in it or it was arbitrary or excessive. In this case, there was a fire in the garment factory. It claimed Rs. 55 lakh under the insurance policy.
New India appointed a surveyor who allowed the full claim than the insurer appointed another firms as a surveyor which reduced the claim to Rs. 25 lakh. Still dissatisfied with the report, New India appointed a third surveyor who recommended repudiation of the whole claim.
Aggrieved by the total rejection, the garment factory moved the National Consumer Commission. It allowed the full claim but without interest. Both sides moved the Supreme Court.
It dismissed the appeal of New India observing that “the appointment of surveyors was to repudiate the claim on one pretext or the other”. It also granted 6 per cent interest on the amount to the garment firm which was overlooked by the National Commission.
