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Survey report is final unless fault is found

The National Consumer Disputes Redressal Commission on April 10 has ruled that a survey report is binding unless it can be faulted and the infirmities pointed out.

Dev Medical Agency, a partnership firm, was running a medical store at Panipat in Haryana. The company's premises were insured with two separate insurance companies for a total amount of Rs 15 lakh. National Insurance Company gave coverage of Rs 5 lakh under a cover note issued on February 14, 2004, while Rs 10-lakh coverage was given by New India Assurance under a cover note issued on March 2, 2004.

There was a theft in the shop in 2004. The partners informed the local police and insurance companies about the theft. The police registered an FIR the next day. The insurance companies deputed a surveyor to assess the loss. The medical store pegged the loss at Rs 10,64,103, and submitted documents. The insurance companies did not find the documentation acceptable and refused to pay the claim. Aggrieved, the medical agency filed a complaint before the district consumer forum.

The insurance companies justified the repudiation. They pointed out that the claim had been assessed by a spot surveyor and a final surveyor. The survey report found a loss of Rs 2,93,356, which was to be apportioned between the two insurance companies on a proportionate basis according to the sum insured. Despite this, the insurance companies refused to settle the claim, citing the reason to be an observation of the surveyor that the accounts and vouchers had been manipulated to inflate the claim. Terming the manipulation as a breach of the terms of the insurance policy, the claims were repudiated. The insurance companies denied that there was any deficiency in service.

The district forum considered the rival contentions and evidence on record, and concluded that there was deficiency in service. It held the insurance companies liable to pay the partners the claimed amount of Rs 10,64,103 along with interest at the rate of nine per cent a year from the date of repudiation of the claim, and Rs 3,300 as costs. This order was upheld by the Haryana State Commission in appeal.

The insurance companies challenged the order in revision before the national commission. The entire emphasis was that the claim was not payable since the insured medical agency had manipulated its records, which was evident from variation of the figures stated in the sales tax returns and the balance sheet.

The national commission observed that the issue which required to be determined was whether the consumer forums had been right in disregarding the survey report and awarding an amount higher than what was quantified by the surveyors. The commission noted that there was no explanation why the district forum had accepted the medical agency's quantification of Rs 10,64,103, disregarding the surveyor's assessment of Rs 2,93,356.

The commission pointed out that even though a pharmacist is required to run a medical agency, it was admittedly being run by an illiterate, rustic person, which was the reason why the accounts were not being properly maintained. The commission felt that since loss due to theft was not in dispute, it would be improper to reject the entire claim, but should be settled in accordance with the survey report.

Accordingly, the national commission held that a survey report has to be accepted unless it can be established that it suffers from some infirmity. It modified the orders of the district forum and the state commission, and instead directed the insurance company to settle the claim at Rs 2,93,356, as assessed by the surveyor. In addition, interest at nine per cent was awarded from the date of the complaint.

Article referred: http://www.business-standard.com/article/pf/survey-report-is-final-unless-fault-is-found-115050300764_1.html

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