Second Surveyor Appointment Requires Cogent Reasons
Judgment dated 18.3.2026 of the High Court of Bombay (OS) in Commercial Arbitration Petition (L) No.30675 of 2023 of Oriental Insurance Company Ltd Vs. Add on Retail Pvt Ltd
Second Surveyor Appointment Requires Cogent Reasons
Bombay HC – Arbitrator Can Correct Surveyor Errors in assessment of the insurance claims
Bombay HC Upheld Arbitral Award that Insurers Cannot Arbitrarily Appoint a Second Surveyor under Section 64-UM of the Insurance Act.
Statutory Check of Bombay HC under Section 64-UM of the Insurance Act Against Appointment of Second Surveyor by the Insurer
Bombay HC – Insurers Cannot Reject First Surveyor Report without valid reasons for appointment of Second Surveyor.
In the present case, the learned Arbitrator has examined the surveyor’s reports and the evidence led by both parties and held that, in the revised assessment, the surveyor has not considered the value of the goods in respect of the fabrics. After exhaustively examining the entire record, the learned Arbitrator held that the surveyor admitted, during cross-examination, that the value of the stock was Rs. 10,17,82,021, but he granted only Rs. 6,76,33,561/-. Thus, the learned Arbitrator has rightly stepped in and corrected the errors committed by the insurer. Therefore, the learned Arbitrator, after appreciating the evidence, has rightly granted the claim. The figures of the claim amount arrived at by the learned Arbitrator are based on the record and the surveyor’s reports.
the scheme of Section 64-UM of the Insurance Act, particularly of sub sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a matter of course and it must specify cogent reasons, without which it is not free to appoint the second surveyor or surveyors till it gets a report which would satisfy its interest. It is further held that the option to accept or decline the report lies with the insurer; however, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. The Hon’ble Apex thus held that if the reports are prepared in good faith, with due application of mind and in the absence of 15/22 901-CARBP(L) NO-30675-2023.docx any error or ill motive, the insurance company is not expected to reject the report of the surveyors
