KHATEMA FIBRES LTD. versus NEW INDIA ASSURANCE COMPANY LTD. & ANR

Citation: [2021] 9 S.C.R. 268 · Decided: 28-09-2021 · Supreme Court of India · Bench: HEMANT GUPTA · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 9 S.C.R.
KHATEMA FIBRES LTD.
v.
NEW INDIA ASSURANCE COMPANY LTD. & ANR
(Civil Appeal No.9050 of 2018)
SEPTEMBER 28, 2021
[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]
Consumer Protection Act, 1986 – ss. 23 and 2(1)(g) –
Surveyor’s Report – Assessment of loss – Correctness of – Accidental
fire in the factory of complainant – Waste paper destroyed by fire –
Claim raised by complainant estimating the value of the paper
destroyed – However, the surveyor appointed by the Insurance
Company assessed the loss suffered by the complainant on account
of the fire accident at a lesser amount – Consumer complaint –
National Commission awarded compensation payable to them only
to the extent of the assessment made by the final surveyor –
Interference with – Held: Not called for – In a complaint before the
Consumer Forum, a consumer cannot succeed unless he establishes
deficiency in service on the part of the service provider – Consumer
Forum which is primarily concerned with an allegation of deficiency
in service cannot subject the surveyor’s report to broad examination
– 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, and the report is not based on adhocism or vitiated
by arbitrariness, then the jurisdiction of the Consumer Forum to go
further would stop – On facts, Insurance Company admitted the
claim of the complainant to the extent of the loss as assessed by the
Surveyor – All the objections of the complainant to the Surveyors’
Report wholly unsustainable and the National Commission rightly
rejected those objections – Insurance Act, 1938 – s.64UM(1A), (2).
Dismissing the appeal, the Court
HELD: 1. 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
[2021] 9 S.C.R. 268
268
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269
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. In view thereof, the judgment of the National
Commission does not call for any interference. [Para 38, 39] [283-
A-C]
2.1 The Surveyor decided to adopt volumetric analysis
method rather than rely upon the stock records of the insured.
The Surveyors could not be found at fault with, for rejecting the
stock records of the insured. When the insured produced two
sets of records and the quantum of material destroyed by fire
arrived on the basis of these records showed huge discrepancies,
the Surveyor had no alternative except to reject these records
and proceed on volumetric analysis. The appellant themselves
have admitted to the Chartered Accountant, who went for spot
inspection when the fire was still raging, that the appellant had
not conducted physical verification of its raw material stock in
the recent past and that the consumption was recorded on
estimated yield basis. In their own letter dated 5.12.2007, the
appellant had conceded that stock taking was done on the basis
of receipts and consumptions as well as physical verification on
volumetric basis. Therefore, the refusal of the Surveyor to go by
the stock records of the appellant, but to adopt volumetric
analysis, was fully justified and no exception can be taken to the
same. [Para 19, 20][277-D-H]
2.2 It is seen from the Surveyors’ Report that there were
actually three different measurements available with the Surveyor,
with a huge variation between one another. Faced with three
different measurements, the Surveyor reonciled the same by
holding that despite the measurement of the open stockyard being
22.5 mtrs. X 105 mtrs. = 2362 mtrs., the area affected by fire
could only be 1485 sq. mtrs. In view of the given circumstances,
there is nothing wrong in the Surveyor taking the measurement
of the area of the stockyard affected by fire, as 27 mtrs. X 55
mtrs.=1485 sq. mtrs. for the purpose of volumetric analysis. [Para
22, 23][278-C, E-H; 279-A-B]
2.3 The allowance of some space within the open stockyard,
for the purpose of movement of men and material is logical. It is
KHATEMA FIBRES LTD. v. NEW INDIA ASSURANCE
COMPANY LTD. & ANR

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