TMI Blog2010 (5) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... the scope of powers of the Appellate Authority under section 110H. This Court is of the opinion that the Appellate Authority was justified in directing the IRDA by its order dated 5th March, 2004 to appoint two fresh surveyors to again assess the loss because one of the assessors who had been appointed earlier turned out to be an interested party. Given the scope and functions of the Appellate Authority, which is co-terminus with that of the IRDA, these directions could not be said to be illegal or ultra vires the powers of the Appellate Authority under the Insurance Act. The challenge to the impugned orders and the report of the Joint Surveyors by the Petitioner must fail. - W.P. (C) NO. 7569 OF 2007 AND CM NOS. 2454 OF 2008, 9099 AND 11255 OF 2009 - - - Dated:- 24-5-2010 - S. MURALIDHAR, J. Atul Y. Chitale and Ms. Sunaina Dutta for the Petitioner. Sachin Datta, Manikya Khanna, Arunabh Chaudhary, Sukumar Pattjoshi and Somesh Kumar Dubey for the Respondent. JUDGMENT 1. Interesting questions of law concerning powers and jurisdiction of the Insurance Regulatory Development Authority (IRDA), Respondent No. 2 herein under section 64UM of the Insurance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 days of the loss together with a claim containing as particular an account as may be reasonably practicable of all the property damaged or destroyed and the amount of loss or damage suffered having regard to their value at the time of the accident. 5. The Petitioner appointed two Joint Surveyors, namely, Mr. C.P. Mehta and Mr. N. Velayutham for assessing the loss caused due to the fire in the premises of Respondent No. 3. The Petitioner also appointed Mr. M.V. Subbareddy, a retired Addl. I.G. (Prisons) as an Independent Investigator to investigate the claims. The said Joint Surveyors submitted their final survey report dated 31-12-1997 in which they assessed the loss at Rs. 1,43,19,876. Based on the above survey report dated 31-12-1997, the Petitioner by its letter dated 21-5-2001 repudiated the claim of Respondent No. 3 on the ground of non-compliance with the terms and conditions of the fire policy and particularly with reference to the Condition Nos. 2, 3, 6 8. The repudiation was also based of the report of the independent investigator Mr. M.V. Subbareddy made in the year 2001. 6. It was the Petitioner s case that the Respondent No. 3 had not cooperated with it and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial Sector Division, in the Ministry of Finance, Department of Economic Affairs, Government of India. The contention was that against the repudiation of a claim, the IRDA could at best enhance or reduce the assessment finalized by the surveyors appointed by the Petitioner. It could not independently appoint surveyors or intervene once the claim was repudiated. It was also contended that the claim by Respondent No. 3 was time barred. 9. By an order dated 5-3-2004, the Appellate Authority directed the IRDA to appoint yet another set of surveyors to report on the claim because the earlier surveyor Mr. Madhusudan was an interested party and therefore relying on his report could prejudice the proceedings. At that stage, the IRDA filed an application before the Appellate Authority for recalling and modifying the order dated 5-3-2004. It prayed for settlement of the claims in terms of the order dated 2-6-2003 passed by it. 10. By an order dated 30-9-2005, the Appellate Authority reiterated its earlier order dated 5-3-2004. In the meanwhile it directed the Petitioner to pay Respondent No. 3 Rs. 2,21,34,819 as per the order dated 2-6-2003 of the IRDA. This payment was subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Petitioner placing on record the fact that in March, 2008 the Respondent No. 3 had filed a complaint in the National Consumer Disputes Redressal Commission (NCDRC) in which an interim order had been passed by the NCDRC on 27-3-2009 directing the Petitioner herein to pay Respondent No. 3 Rs. 5,74,15,481 as interim relief subject to the latter furnishing a bank guarantee. 16. Aggrieved by the said order, the petitioner filed a SLP (Civil) No. 1250 of 2009. On 10-8-2009 the Supreme Court permitted the Petitioner to withdraw the said SLP with liberty to file an application before the NCDRC in view of the interim order dated 27-7-2009 passed by this Court reviving the earlier stay order dated 24-10-2007. When the matter went back before the NCDRC an order was passed by it on 27-8-2009 recalling its earlier order dated 27-3-2009. Respondent No. 3 thereafter urged before this court that it should take up for hearing the present writ petition and vacate the interim order dated 27-7-2009. Respondent No. 3 also filed CM No. 14021 of 2009 pointing out that there was no mechanism for enforcement of an order passed by the IRDA and therefore, the Petitioner should be asked to deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be settled by the insurer. In such event, the insurer shall be bound to comply with such a direction. It is accordingly submitted that where the insurer has decided to repudiate the claim, there was no question of such a direction being issued by the IRDA. 20. On the basis of the above interpretation, it is submitted that in the instant case the direction issued by the IRDA for appointing two surveyors to prepare a survey report was itself entirely without jurisdiction. The further direction issued by it for settling the claim of the Respondent No. 3 at a particular figure was also entirely without jurisdiction. 21. It is submitted that the purpose of section 64UM(3) of the Insurance Act is to allow the IRDA, acting as a regulator, to appoint independent surveyors and direct payment or settlement of claims so as not to cause any hardship to the insured or the insurer. Its powers are summary in nature based on survey reports without giving the parties the right to adduce independent evidence or the right of cross-examination. It is submitted that the IRDA does not have any adjudicatory powers or trappings of a civil court. The legislative intent, it is submitted, is to leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IRDA, the Petitioner gave up a challenge to the jurisdiction of the Appellate Authority. It never objected to the jurisdiction of the IRDA as long as the IRDA was seized of the matter. It is further pointed out that the order dated 30th September, 2005 passed by the Appellate Authority appointing fresh surveyors and directing the Petitioner to pay Rs. 2,21,34,819 has not been challenged by the Petitioner. It has been complied with on 28-3-2006 by the Petitioner without protest. 25. It is submitted by Mr. Pattjoshi that notwithstanding the report of the Joint Surveyors appointed by the Appellate Authority, assessing the loss at Rs. 7,95,50,300, the IRDA passed an order dated 1-2-2007 reiterating its earlier order. In the circumstances, the subsequent order passed by the Appellate Authority on 20-6-2007 was fully justified. It is submitted that the order dated 20-6-2007 is only by way of implementation of the earlier order dated 30-9-2005 which has not been challenged by the Petitioner. The order dated 5-3-2004 was not acted upon because that order merged into the order dated 30-9-2005 which has not been challenged by the Petitioner. 26. Mr. Pattjoshi refers to the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the IRDA, it was stated that these functions and powers "would enable the Authority to perform the role of an effective watchdog and regulator for the insurance sector in India." Further, in order to enable the Authority to function "in a truly independent manner and discharge its assigned responsibilities effectively", it was proposed to vest the Authority with statutory status. 29. Section 14 of the IRDA Act specifies the duties, powers and functions of the IRDA. Under section 14(2)( b ) IRDA Act, its powers and functions include: "( b )protection of the interests of the policyholders in matters concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance" 30. Therefore, it is plain that one of the functions of the IRDA includes protecting the interests of the policyholders in matters concerning settlement of insurance claims. If the above provision has to be given a meaningful interpretation, keeping in view the objective of having the IRDA as an independent statutory authority, then clearly the intention of the Parliament was to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed by the approved surveyor or loss assessor." Under the proviso to sub-section (2), it was not open to the Petitioner to repudiate the claim once it appointed the surveyors and the surveyors gave an assessment of the loss. 34. At this juncture a reference may be made to the decisions of the Supreme Court in New India Insurance Co. Ltd. s case ( supra ) and Sri Venkateswara Syndicate s case ( supra ). Both have observations on the extent to which the insurer can be held to be bound by the report of the surveyor. In New India Insurance Co. Ltd. s case ( supra ), it was observed (p.790): "22. In other words although the assessment of loss by the approved surveyor is a prerequisite for payment or settlement of claim of twenty thousand rupees or more by insurer, but surveyor s report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor s report may be the basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured." 35. Four months later, in Sri Venkateswara Syndic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IRDA did not commit any illegality. 38. Counsel for Respondent No. 3 is right in his contention that by filing an appeal before the Appellate Authority under section 110H, the Petitioner has waived its right to question the jurisdiction of such Appellate Authority at a later stage. Be that as it may, the question that next arises is about the scope of powers of the Appellate Authority under section 110H. Scope of powers of the Appellate Authority 39. Learned counsel for Respondent No. 3 is correct in his submission that the powers of the Appellate Authority are co-terminus with that of the IRDA. In the instant case, the Appellate Authority could very well have exercised the powers and functions of the IRDA for the purposes of section 64UM(3) of the Insurance Act. Consequently, this Court does not find any illegality having been committed by the Appellate Authority by passing the order dated 5-3-2004. The question whether the loss assessed by one surveyor or the other was correct is not within the scope of the present proceedings under article 226 of the Constitution. It is essentially about the powers and functions of the different authorities under the Insurance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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