Page 55 - Insurance Times December 2023

No. 3 inapplicable. It highlighted that the approved evidence did not support negligence on the part of the
surveyor's report, while important, is not absolute and not insured.
binding on the parties, relying on the case of New India
Assurance Co. Ltd. vs. Pradeep Kumar. The surveyor's report in insurance claims is not
sacrosanct and binding
New grounds for repudiation cannot be
The court highlighted the significance of a surveyor's report
introduced during the hearing if they were not in insurance claims, citing the Insurance Act of 1938. The
included in the repudiation letter Act mandates that claims exceeding Rs. 20,000 must
The Court referred to earlier cases such as Galada Power undergo an initial assessment by an approved surveyor.
and Telecommunication Ltd. vs. United India Insurance Co. However, the Court emphasized that while the insurer has
Ltd. (2016) 15 SCC 161 and Saurashtra Chemicals Ltd. vs.
the discretion to settle the claim for a different amount, the
National Insurance Co. Ltd. (2019) 19 SCC 70, where it was surveyor's report is not a conclusive and binding document.
firmly established that new grounds for repudiation cannot
be introduced during the hearing if they were not explicitly The Court referred to New India Assurance Co. Ltd. v.
mentioned in the repudiation letter. Pradeep Kumar (2009) 7 SCC 787 which observed that "It is
not that sacrosanct that it cannot be departed from; it is
Further, the court examined the location of the fire, policy not conclusive. The approved surveyor's report may be the
documents, the Leave & License Agreement, and
basis or foundation for the settlement of a claim by the
communications from various departments. It concluded
insurer in respect of loss suffered by the insured but such
that the insured premises at Survey No. 9/3 was covered by
report is neither binding upon the insurer nor insured."
the insurance policy.
In the present case, the court found that the surveyor's
Essential repair works by insured won't amount
report, although comprehensive, was inconclusive regarding
to an alteration increasing risk of loss or damage the actual cause of the fire.
to deny claim
Claimant neither importer nor owner but merely
The Court scrutinized Clause 3(a) of the insurance policy,
which says the policy won't apply if "there is an increased custodian of goods: Insurance claim can include
risk of loss or damage to the insured premises or goods customs duty
within it." The next issue was about the inclusion of customs duty,
amounting to 2 crores in the insurance claim filed by the
In the present case, the insured had undertaken repairs on
the rooftop to prevent water leakage to the warehouse. insured. The appellant contended that customs duty should
not be part of the claim, citing the Customs Act, 1962, which
The court held that "such essential repair work on the specifies that only the importer is liable to pay customs duty.
rooftop by itself, cannot be reasonably construed to be an He argued that since no bills of entry were filed, and no
alteration that would increase the risk of loss or damage." assessed goods were lost in the fire, there is no customs duty
Outlines circumstances under which the policy would cease liability.
to be applicable. It specifically addressed the repair work However, the court agreed with the claimant who argued
undertaken on the rooftop to prevent water leakage, that Sections 22 and 23 of the Customs Act, which grant
asserting that such essential repairs did not constitute an privileges related to abetment and remission, apply
alteration increasing the risk of loss or damage. exclusively to 'importers' of insured goods. The claimant,
Significant time gap between repair work and functioning as a custodian, neither assumes the role of an
importer nor owner of the goods but acts solely as a trustee
fire, no negligence by insured
on behalf of their clients.
The Court referred to varying conclusions in various reports
regarding the cause of the fire. While seven reports This distinction became crucial in establishing the claimant's
suggested a short circuit, the forensic investigation report right to include customs duty in the insurance claim.
pointed to sparks from rooftop welding work. In light of the above, the Court dismissed the appeal of the

The Court questioned the logic of the forensic investigator's Insurance Company. The customs duty component of the
conclusion, pointing out a significant time gap between the claim was directed to be paid to the Customs Department
welding work and the fire. The Court emphasized that the directly.

50 December 2023 The Insurance Times