Insurance company does not waive right to reject claim by appointing surveyor, SC

The Supreme Court has held that the right of an insurance company to reject a claim on account of delay in intimation does not get waived merely because it appointed a surveyor..The Bench of Chief Justice Dipak Misra and Justices AM Khanwilkar and DY Chandrachud held the same in a petition filed against New India Assurance Co. Ltd (respondent)..The appellant, Sonell Clocks and Gifts Ltd, had filed a complaint before the National Consumer Disputes Redressal Commission, New Delhi back in 2006. In 2004, the appellant company had taken an insurance policy from the respondent for a period of one year, with regard to its building, plant and machinery for a sum assured of Rs. 2 crore 87 lakh..As a result of torrential rains and floods, water gushed into the factory premises causing damage to the machinery as well as the raw material lying therein. This event occurred on August 4, 2004. Intimation of the loss was given to the respondent after a gap of 3 months 25 days, on November 30, 2004..Thereafter, the respondent appointed a surveyor to assess the loss caused due to the flooding of the factory premises. After conducting the inspection, the surveyor submitted its report to the respondent, stating that the claim was not payable on account of the failure of the complainant to comply with the mandate of Clause 6 of the general conditions of the insurance policy..As per Clause 6, the insured company was required to give notice of any loss caused to its property to the insurance company within 15 days after the damage or loss was caused..Therefore, the respondent conveyed rejection of the claim to the appellant on the grounds that the intimation of the loss had not been given to it immediately. This prompted the appellant to approach the Commission, claiming reimbursement to the tune of Rs. 2.6 crore, plus an additional Rs. 5 lakh towards compensation for mental agony and Rs. 1 lakh for incidental expenses..However, the Commission dismissed this claim vide an order dated December 10, 2015. This decision came to be challenged before the Supreme Court, which gave liberty to the appellant to file a review petition before the Commission. The review petition was dismissed vide judgment and order dated October 25, 2016..The main issue before the three-judge Bench was whether the respondent (insurer) had waived the condition relating to delay in intimation, by appointing a surveyor..Appearing in the Supreme Court, Senior Advocate Jitendra Mohan Sharma represented the appellant, while Senior Advocate Joy Basu argued for the respondent..The primary contention of the appellant was that through appointment of a surveyor, the insurance company waives its right to declare that the claim was not entertainable. The Apex Court’s decision in Galada Power and Telecommunication Ltd. was relied on to buttress this claim..However, the Court held,.“We, therefore, agree with the respondent that the dictum in Galada’s case (supra) is in the context of the facts of that case and does not lay down that on the appointment of a surveyor, per se, the insurer is estopped from raising a plea of violation of the condition warranting a repudiation of the claim.”.After hearing both parties and considering a host of judgments on the topic, the Bench held,.“…the appointment of a surveyor by the respondent after receipt of intimation of the loss from the appellant, in the context of the present insurance policy, coupled with the 2000 Regulations and in particular an express stand taken in the repudiation letter dated 18th February, 2005 sent by the respondent to the appellant after consideration of the surveyor’s report, it cannot be construed to be a case of waiver on the part of the respondent.”.The appellant company had also argued that the Supreme Court had, in Om Prakash v. Reliance General Insurance and Another, held that genuine claims ought not be rejected on mere technical grounds. In response, the Court held,.“That contention cannot be taken forward at the instance of the appellant who has failed to fulfill the threshold stipulation contained in Clause 6 of the general conditions of the policy and for which reason must suffer the consequence. It is not a technical matter but sine qua non for a valid claim to be pursued by the insured, as agreed upon between the parties.”.Thus, the Court dismissed the appeals, holding in favour of New India Assurance..Read the judgment: