Surveyors' Welfare Association ... vs Union Of India
1995 Latest Caselaw 1010 Del

JUDGMENT

M.K. Sharma, J.

(1) This Letters Patent Appeal arises out of the judgment and order dated 9.5.1995 passed by the learned Single Judge in Civil Writ Petition No. 3115/1994 dismissing the writ petition. The appellant association Filed the aforesaid writ petition seeking a direction to the respondents to strictly adhere to and comply with the provisions of Section 64UM of the Insurance Act, 1938 (hereinafter referred to as the Act.) and to quash all appointments of unqualified persons acting and/or performing duties of surveyors in contravention of Section 64UM of the Act and to substitute them with only licensed surveyors in terms of the Insurance Act.

(2) In the writ petition the appellant, as the writ petitioner, challenged the legality and validity of the statement of the Chairman-cum- Managing Director of the Oriental Insurance Company, which appeared in the Issue of 'Economic Times' dated 21st April, 1994, wherein it was stated that the company would not employ licensed surveyors or loss assessors in respect of small claims of the value of less than Rs.20,000.00 and that such claims would be settled by the Insurance Company through its own sources. It appears that a decision was taken by the aforesaid Insurance Company that in case of claims of value of less than Rs.20,000.00 , the Insurance Company will have in-house assessments made by its own staff and they would not seek returns in ease of such claims from licensed surveyors or loss assessors. According to the respondents the said decision was taken so as to simplify the procedure and also to cut down delays in settling the claims against the Insurance Companies. The appellant appears to have been aggrieved by the aforesaid decision and policy of the respondents and challenged the same through the aforesaid writ petition alleging that the said policy is in violation of the provisions of Section 64UM of the Act and also is in violation of Article 14, 19(1)(g) and 21 of the Constitution of India. The respondents contested the aforesaid writ petition by filing the counter affidavit staling inter alia, that claims, the value of which is less than Rs. 20,000.00 could be settled by the Insurance Company itself, without reference to the approved assessors or surveyors as the provision of Section 4 Ljm of the Act do not bar in house assessments or settlement of claims in such cases.

(3) On, the analysis of the pleadings of the parties in the writ petition the question that arose for consideration of the learned Single judge appeared to be as to whether Under Section 64UM of the Act any survey by an approved surveyor or loss assessor is necessary in respect of a claim of less than Rs. 20,000.00 and whether or not such a claim could be settled by the Insurance Company itself without intervention of an approved surveyor or loss assessor. Therefore, the answer to the aforesaid question appear to be rested upon a true and correct interpretation of Section 64UM of the Act which was brought into effect by an Amendment Act, 1908 w.e.f. 1st January, 1969.

(4) The learned Single Judge after considering the entire provisions of Section 64UM of the Act and also on considering the entire scheme of the Act came to the conclusion that the legislature did not require that all claims should be surveyed by an approved surveyor and loss assessor and finally held that so far as in-house asessment is concerned, Section 64UM of the Act does not place any restriction on the settlement of the claims where the value of the claim is less than Rs.20,000 and that the policy to have such claims stifled by an insurer without seeking a report from a surveyor or loss assessor could not be said to be arbitrary or violative of Article 14 of the Constitution of India and accordingly dismissed the writ petition.

(5) Mr. Vishwajit Bhattacharya, learned counsel appearing for the appellant submitted before us that on a proper and correct interpretation of the provision of Section 64UM of the Act the insurer has no power to settle even a claim below Rs.20,000.00 by itself without the same being reported upon by a qualified assessor by valuer and that under such circumstances the policy of the respondents in deciding to settle the claims of the value of less than Rs.20,000.00 without the intervention of the approved surveyors or loss assessors is arbitrary and in violation of the provisions of Section 64UM of the Act and also of Article 14, 19(l)(g) and 21 of the Constitution of India. His further submission was that the policy of having an in-house assessment for the claim off value of less than Rs. 20,000.00 is also against the objects and reasons of the Amendment Act by which the aforesaid amendment of Section 64UM of the Act was brought in by the legislature. The further submission of the learned Counsel for appellant was that the source of power for settlement of claim below Rs.20,000.00 is the provision of sub-section (6) of Section 64UM of the Act according to which an in- house assessment is clearly barred and therefore the learned Single Judge erred in law and on facts in holding that a power is vested in the Insurance Company under Section 64UM of the Act to have an in-house assessment. According to him the learned Single Judge further erred in law in not holding that either sub-section (6) or sub-section (9) of the Section 64UM of the Act docs not empower the Insurer to do away with the services of such surveyors or to vest the Insurer with the power to perform the role and/or to act as surveyor. He also submitted that obtaining a report from approved surveyor or loss assessor before settling any claim by the Insurer is a mandatory requirement of the provision of Section 64UM, irrespective of the amount of the claim involved, whether Rs.20,000.00 , below, or above.

(6) Mr. Milon K. Banerjee, Attorney General appearing on behalf of respondent took us through different provisions of Section 64UM of the Act and submitted that on a true and correct interpretation of the aforesaid provisions read with the objects and reasons of the Amendment Act the conclusion arrived at by the learned Single Judge is the correct and true conclusions that could be arrived at in the present case. He also placed before us the report of the Committee of Reforms in the Insurance sector, a copy of which was placed before us by him, as a persuasive value for the construction of the enactment: On careful reading of the said recommandations of the Committee it was also noticed by the learned Single Judge that no other conclusion could be arrived at than what was arrived at by the learned Single Judge. The learned counsel further submitted before us that a conjoint reading of the entire provision of Section 64 of the Act will explicitly make it clear that an Insurance Company is permitted to settle a claim of the value of less than Rs. 20,000.00 by assessment of the case by its own in-house staff.

(7) For a proper and correct appreciation of the rival contentions of the partics, it is necessary for us to consider the relevant provisions of Section 64UM of the Act. The aforesaid provision of Section 64UM is a relatively new provision which came. to be inserted in the Insurance Act by the Insurance (Amendment) Act 1968 which was brought into effect on 1st January 1969. clause A Sub-Section (1) of Section 64UM deals with the grant of license to a surveyor or loss assessor in respect of general insurance business whereas Clauses (B) and (C) of sub section (1) of Section 64UM deals with the mode and procedure for acquiring such a license. Sub section (1)(D) lays down the qualifications required by a person to enable him to acquire a license for acting as a surveyor or loss assessor. The aforesaid sub section 1(D) of Section 64UM reads thus :-

64UM..(1)

(A)xxx xxx xxx

(B)XXXXXXXXX

(C)xxx xxx xxx

(D)No license to act as a surveyor or loss assessor shall be issued unless -

(I)the applicant, where he is an individual, satisfies the Controller that he -

(A)has been in practice as a surveyor or loss assessor on the 26th day of October,1968,or

(B)holds a degree of a recognised University in any Branch of engineering, or

(C)is a fellow or associate; member of the Institute of Chartered Accountants of India or the Institute of Cost and Works Accountants of India, or

(D)possesses actuarial qualifications or holds a degree or diploma of any recognised University or institute in relation to insurance, or

(C)holds a diploma in insurance granted or recognized by the Government, or

(F)possesses such other technical qualification as may be prescribed, and

(G)docs not suffer from any of the disqualifications mentioned in subsection (4) of Section 42;

(II)the applicant, where he is a company or firm, satisfies the Controller that all his directors or partners, as the case may be, possess one or more of the qualifications specified in clause (i) and none of such directors or partners suffer from any of the disqualifications mentioned in sub-section (4) of Section 42."

8.The remaining clauses of sub section (1) of Section 64UM need not be referred to as they have no relevance to the present case.

(9) On the other hand sub section (2) reads as follows :- "(2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at .any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Controller, be admitted for payment or settled by the insurer unless he has obtained areport, on the loss that has occurred, from a person who holds a license issued under this section to act as a surveyor or loss assessor (hereinafter referred to as "approved surveyor or loss assessor"); Provided that nothing in this sub- section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor."

(10) The said sub-section provides that settlement and or payment of a claim of Rs. 20,000 or above would not be done by the insurer so long a report on the quantum of loss in respect thereof is not obtained from an approved surveyor or loss assessor. This sub section also provides us with the meaning of an approved surveyor or loss assessor which means a person who holds a license issued under this Section as a surveyor and loss assessor.

(11) In view of the aforesaid definition of approved surveyor or loss assessor given in sub- section (2) of Section 64UM of the Act defining him as a person who holds a license issued under Section 64UM of the Act to act as a surveyor or loss assessor the submission of the learned counsellor the appellant that there is a distinction between the expression 'approved surveyor' and licensed surveyor' cannot be accepted. As is apparent from the aforesaid definition given in sub section (2) of Section 64UM an approved surveyor is a licensed surveyor and that no distinction is envisaged in this section in the aforesaid two expressions. 1'The provisions of sub section (3) and sub section (4), in our opinion, are not of much relevance to the facts of the present case. However, we feel that we should look into the said provisions also for a better appreciation of the issues raised before us by the counsel for the rival parties. Sub section (3) authorises the Controller to call for an independent report from any other approved surveyor or loss assessor specified by him in respect of any claim of the nature referred to in sub section (2). The expression any other approved surveyor or loss assessor' used in this sub section refers to an approved surveyor or loss assessor other than the one employed by the insurance Company for the purpose of determining the claim made in a particular case. Such other approved surveyor or loss assessor from whom an independent report is called for is to submit his report to the Controller. Sub- section (4) authorises the Controller, on receipt of the report to issue such direction as he may consider necessary with regard to the settlement of claim which could be a direction to settle a claim at a figure less than or more than that of the quantum proposed by the other surveyor or loss assessor for settlement of the said claim and in such case the Insurance Company would be bound to comply with such directions.

(13) Sub section (5), on the other hand is, in the nature of a mandate or direction to the Insurer. As it opens by a non obstante clause, therefore, is a mandate that after the expiry of the period of one year from the commencement of the Amendment Act no fee shall be paid to any person for surveying or verifying or reporting on a claim of loss under the policy of Insurance unless the person making such survey or verification is an approved surveyor or loss assessor. Now coming down to sub section (6) we feel and consider that a detailed analysis of the said provision is necessary for deciding the present case, therefore, the said provision is quoted herein for ready reference :- "WHERE,in the case of a claim of less than twenty thousand rupees in value on any policy of insurance it is not practicable for an insurer to employ an approved surveyor or loss assessor without incurring expenses disproportionate to the amount of the claim, the insurer may employ any other person (not being a person disqualified for the time being employed as a surveyor or loss assessor) for surveying such loss and may pay such reasonable fee or remuneration to the person so employed as he may think fit."

(14) This sub section provides that where the claim is less than the value of Rs. 20,000.00 and where the insurer does not want to employ an approved surveyor or loss assessor on the ground that expenses for obtaining the report from an approved surveyor and loss assessor would be disproportionate to the amount of the claim, the insurer can employ any other person for surveying such loss provided the said person is not disqualified for being employed as surveyor or loss assessor. This provision fur- ther enables the insurer to pay a reasonable fee to the person so employed as he may think fit. Subsection (9) and(IU) also are relevant and have a bearing to the facts and circumstances and the issues raised in the present case, which read as follows :-

"9.The Controller may in respect of any claim of value of less than twenty thousand rupees on an insurance policy, if the claim has not been or is not proposed to be reported upon by a surveyor or loss assessor, direct that such claim shall he reported upon by an approved surveyor or loss assessor and where the Controller makes such direction, the provision of sub section (3) and (4) shall apply in respect of such claim.

10 Where, in relation to any class of claims, the Central Government is satisfied that it is customary to entrust the work of survey or loss assessment to any person other than a licensed surveyor or loss assessor, or it is not practicable to make any survey or loss assessment, it may, by an other published in the Official Gazette exempt such class of claims from the operation of this Section."

(15) From a reading of the aforesaid sub section (9) it would appear that a power has been vested on the Controller to ask for a report from an approved surveyor or loss assessor in respect of a claim of a value of less than Rs. 22,000.00 , if the claim is not reported upon or is not proposed to be reported by a surveyor or loss assesor. Under sub section (10) a power has been vested in the Central Government to exempt any class of claims mentioned in the Schedule from the operation of the provision of Section 64UM.

(16) On a careful reading of the aforesaid provisions of Section Mum it appears to us that in any claim of value of Rs.20,000.00 or more the same could be paid or settled by the insurer only upon receipt of a report on the loss occurred from a licensed/approved surveyor or loss assessor. It is, however, to be made clear at this stage that even in such type of claim where the value is Rs. 20,000.00 or more the Insurance Company is not bound 10 accept and/or act on the report of the said surveyor or loss assessor and a right is vested in the Insurer to pay or settle any claim at any amount different from the amount assessed and proposed by the approved surveyor or loss assessor. Therefore when we give effect to the provisions of this Act, we are of the view, that the Insurer still possesses an inherent right to make payment and/or to settle a claim against it at an amount which it thinks to be reasonable on the facts and circumstances of each case. The aforesaid power also appears to be inherent to the Insurance Company in all types of 'claim whether it is above Rs.20,000.00 or below the value of Rs.20,000.00 and in certain cases the aforesaid inherent power of the Insurance Company has been abridged or barred to a limited extent that is to the extent that when the claim is of the value of Rs.20,000.00 or more obtaining a report from an approved surveyor or loss assessor is mandatory. But even in such cases the Insurance Company is not bound to accept and/or act on such report and make payment as assessed or proposed by the approved surveyor or loss assessor.

(17) Going by the said analogy we do not find any fetter or bar being put up by any of the provisions of Section 64UM relied upon and referred to by the counsel for par lies before us that there is a prohibition or bar for settlement of a claim without obtaining a report from an approved/licensed surveyor or loss assessor when the claim is of value less than Rs.20,000.00 . Sub- section (6) of the section 64UM deals with cases of claim of the value of less than Rs.20000.00 and under that provision a power is vested in the Insurance Company not to employ any approved surveyor or loss assesor, if according to the Insurance Company the expenses to be incurred for such appointment would be disproportionate to the amount of claim. In such cases the Insurance Company could employ any other person for surveying such loss. The only requirement to be possessed by such a person is that he is not disqualified to be employed as a surveyor or loss assessor. A controversy has been raised before us with regard to the qualifications to be possessed by such a person which we would like to deal with separately a little later. In our considered opinion, sub section (6) cannot be said to have put any restriction on the right of the Insurer to settle the claim by itself through its own officers. When we read the provision of sub section (6) and sub section (9) together it becomes apparent to us that where the Insurer choses not to have a claim below Rs.20,000.00 reported upon by any surveyor or loss assessor, whether approved or the one contemplated by sub section (6), the Controller has been endowed with the power to get the claim reported upon by an approved surveyor or loss assessor. We have understood the meaning of the provision of different sub sections contained in Section 64UM in the aforesaid context and going by the said interpretation, in-house assessment by the staff, in a case where the claim of value of less than Rs.20,000.00 appear to be clearly permissible to us. After reading the entire provisions of the Act, we are left with no hesitation in our mind to hold that when the law permits a person, who is otherwise not disqualified to be appointed as surveyor or loss assessor, to enquire and survey a loss and submit a report on it, there is no earthly reason as to why the Insurer could not get a claim examined and scrutinised through an in-house process of assessment of loss where the value of the claim is less than Rs.20,000.00 . This process of reasoning and findings arrived at by us tally with the findings arrived at by the learned Single Judge in respect of the aforesaid provisions and therefore we do not see any infirmity in the judgment and order impugned herein.

(18) We may now examine the other aspect of the case dealt with by the learned Single Judge with regard to the qualification that is necessary to be possessed by a person as referred to in subsection(6) of section 64UM. The learned Attorney General appearing for the respondent drew our attention to Section 42(4) which provides for the nature of these disqualifications. The said provision Along with sub-section (1) of Section 42 reads as follows :-

"42.Licensing of insurance agents.- (1) The [Controller) or an officer authorized by him in this behalf shall, in the prescribed manner and on payment of the prescribed fee which shall 'not be more than [twenty five rupees], issue to any individual [making an application in the prescriber manner] and not suffering from any of the disqualifications hereinafter mentioned a license to act as an insurance agent for- the purpose of soliciting or procuring insurance business,

(2)xxx xxx xxx

(3)xxx xxx xxx

(3-A)xxx xxx xxx

(4)The disqualifications above referred to shall be the following -

(A)that the person is a minor;

(B)that he is found to be of unsound mind by a Court of competent jurisdiction;

(C)that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating for forgery or an abetment of or attempt to commit any such offence by a Court of competent jurisdiction

:

{PROVIDED that, where at least rive years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the {Controller} .shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause;}

(D)that in the course of any judicial proceeding relating to any policy of insurance of the winding up of an insurance company or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud dishonesty or misrepresentation {against an insurer or an insured}".

(19) Now the question arises for our consideration in respect of which a controversy is being raised is with regard to the true meaning of the word "not being a person disqualified". The learned Single Judge has held that if a person docs not fulfill the requisite qualifications in clause (a) to (g) of sub section 1(D) of Section 64UM, he is to be considered a person disqualified for being employed as surveyor or loss assessor. We, however, feel that the aforesaid conclusion arrived at by the learned Single Judge appear to us to be not correct and we express our pain for not being able to agree with him on this count. In our opinion, the word 'disqualified' does not mean not being qualified. We also feel that while interpreting the provisions of a statute the plain meaning of the words or the expressions should be given effect to and in case the said word or expression is found to be already defined in the Act itself, then the said definition as enumerated in the Act itself should be held to be the guiding principle for giving true meaning to the expression. As we have staled earlier sub-section (4) of section 42 of the Act clearly lays down the criteria and/or grounds on which a person is said to be disqualified. In our opinion, while interpreting the provisions of sub section (6) of section M Um the expression "any other person not being a person dis-qualified for the time being" should be given the same meaning as is given to the said expression appearing in Section 42(4) and nothing beyond it and thereby qualifying a person not suffering from any of the disqualificalions' occurring in sub-section (1) of Section 42 and enumerated in sub-section (4) of Section 42 of the Act.

(20) With the aforesaid modification in our conclusions from that of the conclusion reached by the learned Single Judge we dismiss this appeal hut on the facts and circumstances we do not propose to impose any cost in the present.appeal.