Sanjeev Soni vs General Insurance Public Sector ...
2018 Latest Caselaw 4932 Del

$~61
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+       W.P.(C) 8786/2018

        SANJEEV SONI                                  ..... Petitioner

                           Through      Mr. Amit Bansal & Mr. Akhil
                                        Kulshrestha, Advocates

                           versus

        GENERAL INSURANCE PUBLIC SECTOR
        ASSOCIATION (GIPSA) AND ORS.  ..... Respondents
                      Through

        CORAM:
        HON'BLE MR. JUSTICE VIBHU BAKHRU
                     ORDER

        %            21.08.2018

VIBHU BAKHRU, J

1. The petitioner is a licensed insurance surveyor and has filed the present petition, inter alia, impugning the circular dated 15.03.2017 (hereafter 'the impugned circular') issued by the General Insurers' (Public Sector) Association of India to the extent that it seeks to impose a cap on the fees payable to insurance surveyors in respect of the survey conducted by them. The petitioner also seeks a declaration that the fees fixed by the impugned circular is not inclusive of the cost incurred by a surveyor for physical verification of third party bills.

2. At the outset, it is relevant to note that the impugned circular seeks to enhance the fees payable to insurance surveyors. A plain

reading of the Schedule of fees indicates that fees for loss assessed upto ₹5 crores has not been altered by the impugned circular. However, the fees for loss assessed above the sum of ₹5 crores has been enhanced. It is also noteworthy that whilst the maximum fees payable to a surveyor prior to issuance of the impugned circular was pegged at ₹7 lakhs; the said ceiling has been increased to ₹25 lakhs. Thus, setting aside of the impugned circular would essentially reduce the fees to surveyors payable in certain cases. The petitioner, therefore, seeks an affirmative relief to the extent of setting aside the maximum ceiling fixed on the fees payable to surveyors.

3. It is also relevant to note that the matter of fixing the fees for conducting a survey is essentially an internal matter between the Insurance Company and the Surveyors. The said fees is not fixed by any statute. It is also doubtful whether the impugned circular in the present petition has any statutory force.

4. The thrust of the arguments advanced on behalf of the petitioner is that the surveyors cannot be called upon to physically verify the bills of the third parties, as the fees fixed is not sufficient for the said purpose. After examining the averments made in the petition as well as the arguments advanced on behalf of the petitioner, this Court is left in no manner of doubt that the present petition has been filed for an oblique purpose. The focus of the petitioner is not to assail the fees payable to the surveyors but to elicit a finding from this Court that a surveyor is not required to carry out verification of third party bills by visiting their premises.

5. This is also be clear from the relevant facts as stated in the present petition.

6. The petitioner was appointed as a surveyor to submit a report in respect of a claim made by a company named North India Coating Pvt. Ltd. ( hereafter 'NICPL'). It is claimed that the said company was controlled by one Mr Jha. NICPL had preferred a claim of ₹4,26,16,292.83/- crores with United India Insurance Company. The petitioner had examined/surveyed the aforesaid claim. The petitioner after assessed the loss at ₹1,38,32,240.59. It is alleged that Mr Jha (and/or NICPL) had repeatedly made false insurance claims. It was further alleged that this was done in collusion with surveyors appointed by the Insurance Companies. In this regard, the Central Bureau of Investigation (CBI) had conducted certain investigations and has also filed charge sheets arraying Mr Jha, Director, NICPL and one Mr Munish Prashar (who was also a licensed surveyor) as accused. In this context, inquiries were also made from the petitioner.

7. It is not disputed that the petitioner is not an accused in any of the charge sheets filed by the CBI; however, he has been indicated as a witness. Nonetheless, CBI made a recommendation to the Insurance Regulatory and Development Authority of India (IRDAI) to cancel the license of the petitioiner as well. In view of the recommendations made by the CBI, IRDAI issued a show cause notice dated 16.04.2015 to the petitioner calling upon the petitioner to show cause why his licence should not be cancelled. The petitioner had responded to the said show cause notice disputing the allegations. He, inter alia,

claimed that the surveyor had no power to visit third party vendors and examine their records. It was further contended that surveyors also had no power to visit banks and insist on being shown the bank accounts of their customers. The aforesaid proceedings before the IRDAI culminated in an order dated 12.02.2016, whereby the IRDAI issued a warning to the petitioner and advised him to exercise due diligence in the future. The IRDAI was of the view that the petitioner "should have exercised due diligence in verification of the bills to check their genuineness before giving final recommendation". The IRDAI was also of the view that the petitioner failed to comply with Regulation 15(7) of the Insurance Surveyors and Loss Assessors (Licensing, Professional Requirement and Code of Conduct) Regulations, 2000 (hereafter 'the Regulations').

8. The petitioner and his employees impugned the aforesaid decision in a writ petition being W.P. (C) 3165/2016 captioned "Dijo Mathew and Ors. v. Insurance Regulatory and Development Authority of India". The said petition was disposed of by an order dated 03.04.2018, whereby the matter was remanded to the IRDAI to consider afresh. This Court also observed that the IRDAI was required to discuss the scope of the work and responsibility placed on the petitioner and the infraction if any committed by him in making inquiries and/or investigations in respect of the loss incurred by NICPL. This Court also held that the IRDAI was required to point out whether it was incumbent upon the petitioner to interface with third parties who were related to NICPL, which included its vendors and

bankers.

9. The learned counsel appearing for the petitioner states that, on remand, the IRDAI has reiterated its earlier view. The petitioner has also averred that respondent nos.3 and 4 (the Executive Director and the General Manager of IRDAI), who were present at the hearings had reiterated their stand that it was obligatory on the part of the petitioner to verify third party bills.

10. In the aforesaid context, the learned counsel for the petitioner contends that the verification of third party bills is not possible given the quantum of fees fixed for the survey work. He also referred to a tabular statement set out in the petition, which indicates the fees charged in four separate cases and further also states the fees that would be required if all bills were to be verified by the surveyor. He submitted that in one of the cases (Javi Home (Pvt.) Ltd., Panipat), the amount of loss assessed was ₹5,64,37,583/- and the fees claimed by the petitioner was ₹6,00,000/-. The fees payable under the impugned circular woule be ₹10,29,725/-. It is is claimed that if the bills were verified, the fees required to be paid would be ₹2,53,05,000/-. The learned counsel for the petitioner had made the aforesaid arguments to drive home the point that verification of third party bills was not envisaged as a part of the survey work.

11. A closer examination of the illustration given by the petitioner would indicate that the petitioner has computed the fees payable at ₹2,53,05,000/- by including travel bills to various countries on the

assumption that visiting suppliers overseas is essential for verification of thrid party bills. This is plainly erroneous and travelling to the supplier's installation is not the only method of verification of bills.

12. At this stage, it would be relevant to refer to Regulation 15 of the Regulations, which is set out below:-

"15. Every surveyor and loss assessor shall-

(1) behave ethically and with integrity in the professional pursuits. Integrity implies not merely honesty but fair dealings and truthfulness;

(2) strive for objectivity in professional and business judgment;

(3) act impartially, when acting on instructions from an insurer in relation to a policy holder's claim under a policy issued by that insurer;

(4) conduct himself with courtesy and consideration to all people with whom he comes into contact during the course of his work;

(5) not accept or perform survey works in areas for which he does not hold a license;

(6) not accept or perform work which he is not competent to undertake, unless he obtains some advice and assistance, as will enable him to carry out the work competently;

(7) carry out his professional work with due diligence, care and skill and with proper regard to technical and professional standards expected of him;

(8) keep himself updated with all developments relevant to his professional practice;

(9) at all times maintain proper record for work done by him and comply with all relevant laws;

(10) assist and encourage his colleagues to obtain professional qualifications, and, in this behalf, provide free articleship and/or practical training for a period of twelve months;

(11) maintain a register of survey work, containing the relevant information, in FORM-IRDA-11 as given in the Schedule to these regulations, and shall keep important records of the survey reports, photographs and other important documents for a period of three years and furnish the same and such other specified returns, as and when called for by the Authority or by an investigating authority or the insurer;

(12) disclose to all parties concerned his appointment, where the acceptance or continuance of such an engagement may materially prejudice, or could be seen to materially affect the interests of any interested party. As soon as a conflict of interest is foreseen, every surveyor and loss assessor shall notify all interested parties immediately and seek instructions for his continuance;

(13) not disclose any information, pertaining to a client or employer or policy holder acquired in the course of his professional work, to any third party, except, where consent has been obtained from the interested party, or where there is a legal right or duty enjoined upon him to disclose;

(14) neither use nor appear to use, any confidential information acquired or received by him in the course of his professional work, to his personal advantage or for the advantage of a third a party."

13. A plain reading of Regulation 15(7) of the Regulations

indicates that a surveyor is required to carry out his profession work with due diligence, care and skill and having regard to technical and professional standards expected of him. The question as to what degree of scrutiny or method is to be adopted to verify third party bills would depend on the facts of each case. There is nothing in the Regulations to indicate that the petitioner must travel to the location of third parties to verify the third party bills. It is well accepted that the third party bills can be verified by various methods, other than merely from the books of the insured/claimant. The present petition is founded on an erroneous premise that the surveyor is required to visit each third party for verification/investigation of the third bills. As noticed above, the surveyor is required to do his professional work with due diligence, care and skill and with proper regard to technical and professional standards. In given cases, the same may warrant the surveyor to visit some of the premises of the third parties. However, there is nothing placed on record which would lead this Court to expect that a surveyor is required to travel to the premises of third parties in each and every case. This is also not the stand of the IRDAI in any of the orders as annexed with the present petition.

14. Further, the orders passed by the IRDAI are in the context of the specific facts before IRDAI. In view of the above, the very premise on which the present petition is founded is flawed.

15. Apart from the above, the question as to the fees payable to surveyor is a matter between the insurance companies and surveyors and warrants no interference by this Court.

16. As is apparent from the above, the petitioner has filed the present petition for an oblique purpose and, thus, this Court is of the view that it would be a fit case where the petition is dismissed with costs.

17. In view of the above, the petition is dismissed with costs quantified at ₹10,000/-.

VIBHU BAKHRU, J AUGUST 21, 2018 pkv