Insurance – Essential to provide copies of surveyor / investigator reports to the insured to call for objections before repudiating the claim

The appellant – private limited company filed Consumer Case for direction to the Respondent SBI General Insurance Company to idenmnify it for the loss caused by fire insured manufacturing unit of coir foam mattresses, pillows, cushions, etc.   It was registered as a small scale industry.  It had taken fire policy for Rs.1.25 crores for 2013 to 2014.   On 13/14.4.2014, there was massive fire in the unit of the insured.   The claim for Rs.3.31 crores was repudiated on the ground of fraud and exaggeration.

The Surveyor submitted the final report dated 11.2.2014, after examining all the documents and the reports of two investigators, that the claim was fraudulent, based on fabricated documents and recommended repudiation of the claim.   The Insurer invoked clause 8 of the General Terms and Conditions of Policy and repudiated the claim vide letter dated 3.3.2014.

The National Commission dismissed the consumer case of the insured-company.

One of the grounds raised in the appeal before the Supreme Court that the copies of the surveyor’s report and investigators’ report were not timely provided and the insurer did not get proper opportunity to rebut the same.  This pertinent plea taken by the insured in the memo of appeal was not specifically refused and a formal denial was made in the counter affidavit.  It was held that the ends of justice require the insurer to provide proper opportunity to file its objections to the affidavit / rejoinder of the insurer before the National Commission and consequently, the complaint should be re-considered on merits after providing such opportunity to the appellant.

Judgment dated 20.3.2024 in Civil Appeal No(s).7966 of 2022 in M/s. Kozyflex Mattresses Private Limited Vs. SBI General Insurance Com[any Ltd and another