[Cites 18, Cited by 0]
Delhi High Court
M/S Cosco Blossoms Pvt Ltd vs Oriental Insurance Company Ltd on 12 March, 2026
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 06.11.2025
Judgment pronounced on: 12.03.2026
+ O.M.P. (COMM) 568/2016
M/S COSCO BLOSSOMS PVT LTD .....Petitioner
Through: Mr. Raman Kapur, Sr. Adv. with Mr
Rajinder Wali, Adv.
versus
ORIENTAL INSURANCE COMPANY LTD .....Respondent
Through: Mr. Pradeep Gaur, Mr. Amit Gaur,
Ms. Sweta Sinha, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
JUDGMENT
1. This is a petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 ("the Act"), seeking to challenge the Arbitral
Award dated 17.03.2012 ("Award") passed by the learned Sole
Arbitrator.
FACTUAL MATRIX AS PER THE PETITIONER
2. The petitioner, namely M/s Cosco Blossoms Pvt. Ltd., is a registered
private limited company engaged in the business of floriculture. The
company at the relevant time was primarily a 100% export oriented
company exporting its flowers in foreign markets in Europe, Japan,
etc.
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3. For the purpose of operating its floriculture business, the petitioner
maintained several greenhouses built on area measuring 15 acres
situated at Village Goyla, Sub-Tehsil Tauru, Gurgaon, Haryana.
4. The company catered to the demands of the high-end flowers market
abroad, and to ensure high quality standards, the process/technique of
production, cultivation and all other necessary equipment were
imported from various countries, primarily the UK, Holland and
Israel.
5. Greenhouses were the essential component for the cultivation process.
The structure of each greenhouse was made of galvanized steel
(imported from Israel) containing 17 bays. Each bay measured 7.5
meters wide, 40 meters long, and 3.5 meters in height. The top portion
of each bay was made up of UVA Stabilized polyethylene sheets
measuring 8.5 meters wide and 46 meters long, which were also
imported from Israel.
6. The entire setup of greenhouse structure consisted of 131 high quality
polyethylene sheets imported from Azrom Metal Industries Ltd., Israel
and other foreign companies. Each such sheet was designed to
withstand any high speed winds up to 60km/hr and to allow only a
specific measured amount of sunshine exposure to the plants. The
nature of plantations in this business required maintenance of
appropriate temperature and humidity.
7. The respondent, namely Oriental Insurance Company Ltd., is an
Insurance Company from which the petitioner had availed two
insurance policies bearing Policy No. 211300/47/98/00002 ("Policy
1") and Policy No. 211300/000/00000/11/13/98/05088 ("Policy 2").
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These policies were operative for the period of 12 months, i.e.
07.08.1997 to 06.08.1998.
8. The Policy 1 covered items such as plants, saplings, roses, and inputs,
while the Policy 2 covered other physical assets such as equipment in
the greenhouses. The present dispute emanates from policy 2, namely
the fire and miscellaneous insurance policy.
9. On the evening of 02.06.1998, severe high winds and rainfall struck
the greenhouses of the petitioner. The directors of the company were
informed, and they reached the site immediately. They discovered that
a substantial number of polyethylene sheets had suffered serious
damage, were either torn or blown away, thereby also damaging the
plants.
10. The directors of the company made several efforts to repair the
damaged sheets to reduce the resultant damage to the plants with the
help of the villagers, however a second wave of high winds and rain
struck the greenhouse of the petitioner again on 04.06.1998. The
directors again organised their efforts to repair the damage done on
04.06.1998.
11. The respondent was informed by the petitioner company vide letter
dated 05.06.1998 about the loss and damage suffered by them and
their greenhouses. On 5.06.1998, some more sheets were replaced.
12. Pursuant thereto, the surveyor deputed by the respondent namely Mr.
J.K. Sharma visited the site on 06.06.1998 to assess the damage done
to the material of the greenhouses. The repair work of the said
greenhouses continued on 06.06.1998, whereby 90 sheets were
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replaced because of damage and 41 old sheets were found to be in fit
condition.
13. Since the surveyor did not visit again, the petitioner repeatedly
requested and addressed numerous communications and finally the
survey was conducted on 19.09.1998, whereby the surveyor was
shown the damaged sheets, damaged plants and also the new sheets,
90 in number which were replaced in order to fix the greenhouses.
The stock registers also recorded the said facts, that the petitioner
company had 91 sheets in stock and substantial numbers of them were
utilised. The surveyor tried on several occasions to get the damaged
sheets counted but the same could not be done.
14. The surveyor addressed a letter dated 05.10.1998 to the petitioner
stating that it was not possible to measure the heaps of damaged
polyethylene sheets because of lack of labour and that the same fact
was also informed to one of the directors of the company. The
surveyor through this letter allowed a last opportunity to the petitioner
to submit their response by 15.10.1998. The petitioner vide letter
dated 02.11.1998 submitted a statement of measurement and counting,
and informed the surveyor that the damaged sheets are lying in pieces
and heaps because of extensive damage due to high speed wind and
rain.
15. On 09.11.1998, the surveyor submitted his report to the respondent,
which as per the petitioner was based on misrepresentation of facts
and was without any application of mind.
16. At repeated requests of the petitioner, the respondent company vide
letter dated 18.02.1999 appointed Mr. Ashwani Chaudhary as a new
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surveyor to reassess the loss suffered by the petitioner company. After
his visit, in a report dated 23.03.1999, he recommended a net amount
of Rs. 3,17, 935/- only for 15 sheets without undertaking the analysis
as to the number of sheets actually lost or damaged. The petitioner did
not accept this assessment of loss, and the respondent also refused to
make the payment of the said assessed amount until it is accepted for
full satisfaction.
17. The policy contained a dispute resolution clause being Clause No. 13,
which was invoked by the petitioner vide its letter dated 13.08.1999
and filed a Claim petition. The petitioner made several efforts to
resolve the dispute even after issuing of arbitration invocation notice
but to no avail.
18. The petitioner herein was the claimant before the Arbitrator and the
respondent herein was the respondent in the said Arbitral proceedings.
IMPUGNED AWARD
19. Initially, the Arbitral Tribunal consisted of Hon'ble Mr. Justice A.P.
Chowdhri (Retd.), Presiding Arbitrator, Shri D.B. Malik, Arbitrator
and Shri Girish Aggrawal, Arbitrator. However, the two Arbitrators,
namely Shri D.B. Malik and Shri Girish Aggrawal recused themselves
from the Arbitral proceedings on 02.02.2009 and then the parties
agreed to continue with the presiding Arbitrator Hon'ble Mr. Justice
A.P. Chowdhri (Retd.) as the Sole Arbitrator. However, Justice
Chowdhri also resigned from the proceedings on 31.07.2009.
Thereafter, by mutual consent of the parties Hon'ble Mr. Justice K.S.
Gupta (Retd.) was appointed as the Sole Arbitrator to adjudicate the
disputes between the parties and the petitioner was consequently
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awarded Rs. 3,17,935/- along with interest at the rate of 10% per
annum to be calculated from 27.08.1999 vide Award dated
17.03.2012.
SUBMISSIONS ON BEHALF OF THE PETITIONER
20. Mr. Kapur, learned senior counsel for the petitioner, at the outset
states that the Award suffers from patent error, perversity and has
been passed without considering the materials and evidence placed on
record.
21. He states that the Arbitrator made an erroneous finding without any
application of mind by relying on on-site physical verification as
conducted by the initial surveyor Mr. JK Sharma, despite him stating
that he never had the opportunity to calculate the number of damaged
sheets.
22. The Arbitrator completely disregarded the statements made by Mr. JK
Sharma during his cross-examination, wherein he categorically made
three admissions, firstly that he has not calculated the total number of
damaged sheets, secondly that he was offered full cooperation by the
petitioner to assess the damage on-site, and thirdly the survey report is
based on his memory.
23. It is further submitted that the Arbitrator has not considered the stock
register maintained by the petitioner which clearly proves the
replacement of 90 sheets after the damage.
24. The findings of the Arbitrator are inconsistent and contradictory as he
accepted the total number of damaged sheets to be 15 but at the same
time also recorded an observation as to how this substantial number of
damaged sheets can be replaced by the petitioner in a mere duration of
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3 days. It is argued 15 sheets could not be called substantial number of
sheets.
25. The Arbitrator in holding that the repair work started without
informing the respondent in violation of Clause No. 6(i) of the terms
and conditions, has failed to appreciate the fact that the nature and
environment in which floriculture is practised in very sensitive and
vulnerable and any further delay in repair would have caused damage
to the entire crop.
26. The Arbitrator has also committed an error in accepting the argument
advanced by the respondent that there was a delay in lodging the
claim, and the same is in violation Clause No. 6(i) as the clause
required any claim to be lodged forthwith. It was only because of
another storm which struck the farm of the petitioner on 04.06.1998,
the claim was lodged forthwith i.e. on 05.06.1998.
27. He also submits that Clause No. 6(i) of the insurance policy required a
notice is to be addressed to the respondent within 15 days of the
damage or loss. In the present case, the incident occurred on
02.06.1998 and 04.06.1998, and accordingly a notice was addressed
on 05.06.1998 which is duly proved. The petitioner acted in a
reasonable and prudent manner even in absence of the full Insurance
policy document.
28. In case the notice dated 05.06.1998 was in clear violation of Clause
No. 6(i), the claim of the petitioner would not have been entertained
by the respondent at all.
29. Additionally, it is submitted that the Arbitrator has failed to ensure
compliance with the mandatory statutory requirement as laid down
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under Section 12 of the Act. He failed to make disclosure in writing of
the "circumstances likely to give rise to justifiable doubts as to his
impartiality and independence". The Arbitrator was informed by the
petitioner company vide letter dated 14.03.2012 that he was related to
the Managing director ("M.D.") of the petitioner company and
because of internal family conflicts, the Arbitrator was requested to
recuse. This conduct of refusal to recuse and non-compliance by the
Arbitrator give rise to justifiable doubts regarding his impartiality.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
30. Mr. Gaur, learned counsel for the respondent, states that the Award is
a detailed Award passed after taking into consideration all the relevant
evidence and material placed on record.
31. The Courts in exercise of Section 34 jurisdiction cannot reappreciate
evidence, and the Award cannot be challenged on ground of
evidentiary objections like inadmissibility or impropriety of evidence.
32. It is further submitted that the conduct of petitioner was in clear
violation of the Clause No. 6(i), which contemplated a notice to be
addressed forthwith on the happening of the incident but in the present
case the notice was addressed to the respondent company on
05.06.1998 after getting the replacement work done. The petitioner
not only conducted the replacement work without informing the
respondent but also failed to furnish proof of payment made to the
persons employed/hired in the said work of getting the sheets
replaced.
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33. Further, the surveyor had assessed damage only to extent of 14.5
sheets and the same was duly assessed and offered to the petitioner in
full and final settlement but not accepted by them.
34. The Arbitrator has correctly held that the claim filed by the petitioner
is not substantiated by evidence and accordingly he was only entitled
to Rs. 3,17,935/- with interest.
35. It is also submitted that the Arbitrator has correctly relied on the
survey report as the same is in consonance with law laid down in
United India Insurance Co. Ltd. v. Roshan Lal Oil Mills Ltd.1, D.N.
Bhadoni v. Oriental Insurance Co. Ltd.2
ANALYSIS AND FINDINGS
36. I have heard the learned counsels for the parties and perused the
material and documents placed on record.
SCOPE OF INTERFERENCE UNDER SECTION 34 OF THE
ACT
37. The scope of interference under Section 34 of the Act is now clearly
established. The Court is not required to sit in appeal as an Appellate
Court over the Award, it cannot venture an inquiry into the Award by
reappreciation of evidence or reinterpretation of the terms of the
contractual agreement merely because there is another probable view.
Judicial intervention with the Award is permissible only on limited
and specific grounds, as enumerated under Section 34 of the Act.
These instances warranting interference include incapacity of a party,
invalidity of the arbitration agreement, procedural irregularities, non-
(2000) 10 SCC 19.
1 (2012) C.P.J. 272 (NC).
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compliance with the principles of natural justice and the Award being
in conflict with the public policy of India. The Court is not
required/empowered to reappreciate evidence or substitute its own
view for that of the Arbitral Tribunal. As constantly reiterated, Section
34 of the Act, embodies the principle of minimal judicial interference,
thereby preserving the foundational precept of the Act, the finality and
efficacy of Arbitral Awards. Reliance is placed on Associate Builders
v. DDA3and Delhi Airport Metro Express (P) Ltd. v. DMRC4.
38. Section 34(2)(b)(ii) of the Act stipulates another ground of
challenging the Arbitral award i.e. public policy of India, which was
delineated by the Hon'ble Apex Court in the case of OPG Power
Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P)
Ltd.5, this phrase "public policy of India" is explained with its
contours in both the pre-amendment and the post-amendment position.
The phrase must be accorded a restricted meaning post the 2015
amendments, and a mere contravention of law is not sufficient. The
fundamental principles which form the very basis of administration of
justice and law fallwithin the scope of "Fundamental Policy of Indian
Law". The relevant paragraphs read as under:
"39. Following the expansive view of the concept "contrary
to public policy", in DDA v. R.S. Sharma &
Co. [DDA v. R.S. Sharma & Co., (2008) 13 SCC 80] , which
related to a matter arising from a proceeding under Section
34, as it stood prior to the 2015 Amendment, a two-Judge
(2015) 3 SCC 49.
(2022) 1 SCC 131.
(2025) 2 SCC 417.
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Bench of this Court, on the scope of the power to set aside
an arbitral award, summarised the general principles as
follows : (SCC pp. 91-92, para 21)
"21. ... (a) An award, which is
(i) contrary to substantive provisions of law; or
(ii) the provisions of the Arbitration and Conciliation
Act, 1996; or
(iii) against the terms of the respective contract; or
(iv) patently illegal; or
(v) prejudicial to the rights of the parties;
is open to interference by the court under Section 34(2)
of the Act.
(b) The award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality.
(c) The award could also be set aside if it is so unfair
and unreasonable that it shocks the conscience of the
court.
(d) It is open to the court to consider whether the
award is against the specific terms of contract and if
so, interfere with it on the ground that it is patently
illegal and opposed to public policy of India."
...
55. The legal position which emerges from the aforesaid
discussion is that after "the 2015 Amendments" in Section
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34(2)(b)(ii) and Section 48(2)(b) of the 1996 Act, the phrase
"in conflict with the public policy of India" must be
accorded a restricted meaning in terms of Explanation 1.
The expression "in contravention with the fundamental
policy of Indian law" by use of the word "fundamental"
before the phrase "policy of Indian law" makes the
expression narrower in its application than the phrase "in
contravention with the policy of Indian law", which means
mere contravention of law is not enough to make an award
vulnerable. To bring the contravention within the fold of
fundamental policy of Indian law, the award must
contravene all or any of such fundamental principles that
provide a basis for administration of justice and
enforcement of law in this country.
56. Without intending to exhaustively enumerate instances
of such contravention, by way of illustration, it could be
said that:
(a) violation of the principles of natural justice;
(b) disregarding orders of superior courts in India or
the binding effect of the judgment of a superior court;
and
(c) violating law of India linked to public good or
public interest, are considered contravention of the
fundamental policy of Indian law.
However, while assessing whether there has been a
contravention of the fundamental policy of Indian law,
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the extent of judicial scrutiny must not exceed the limit
as set out in Explanation 2 to Section 34(2)(b)(ii).
63. As we have already noticed, the object of
inserting Explanations 1 and 2 in place of earlier
explanation to Section 34(2)(b)(ii) was to limit the scope of
interference with an arbitral award, therefore the
amendment consciously qualified the term "justice" with
"most basic notions" of it. In such circumstances, giving a
broad dimension to this category [In conflict with most
basic notions of morality or justice.] would be deviating
from the legislative intent. In our view, therefore,
considering that the concept of justice is open-textured, and
notions of justice could evolve with changing needs of the
society, it would not be prudent to cull out "the most basic
notions of justice". Suffice it to observe, they [ Most basic
notions of justice.] ought to be such elementary principles of
justice that their violation could be figured out by a prudent
member of the public who may, or may not, be judicially
trained, which means, that their violation would shock the
conscience of a legally trained mind. In other words, this
ground would be available to set aside an arbitral award, if
the award conflicts with such elementary/fundamental
principles of justice that it shocks the conscience of the
Court. ..."
39. Perversity as a ground for setting aside an Arbitral Award is to be
generally examined on the touchstone of the principle of
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reasonableness. An Award which is founded on reasons and evidence,
however limited or compendious they might be, cannot be categorised
as perverse. When the view adopted by the Arbitrator is a plausible
view, the same must be upheld.
40. At the outset, Mr. Gaur, learned counsel for the respondent, states that
the present petition is not maintainable as an Arbitral Award cannot be
challenged on the ground of wrong conclusion by the Arbitrator
seeking reappreciation of evidence by the Court. The Award is a
detailed Award substantiated by the evidence available on record and
the same does not suffer from any vice as enumerated under Section
34 of the Act warranting interference by this Court.
41. With the scope of Section 34 of the Act in mind, I shall now deal with
the rival contentions.
REPORT OF THE SURVEYOR
42. The petitioner has contended that the Award is patently erroneous as
the Arbitrator has squarely relied on the survey report of Mr. J.K.
Sharma, while he himself admitted during cross-examination that the
report was based on his memory and he never actually had the
opportunity to calculate the number of damaged sheets. The operative
portions of the Award read as under:
"Claim in this case has been made for 90 sheets whereas
J.K. Sharma, surveyor confined the number of damaged
sheets to 14.5 which has been increased to 15 by A.K.
Choudhary, surveyor. It was pointed out by Shri Vachher,
advocate that neither any inventory of the damaged
property was prepared nor measurements, were taken by
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J.K. Sharma, and the conclusion reached by this surveyor
about damage of 14.5 sheets is erroneous. Report of another
surveyor-A.K. Choudhary too is incorrect as he had taken
for assessment of loss the number of sheets to be 15 based
on the report of J.K. Sharma. Alongwith the affidavit of
D.N. Shakkarwal, Deputy Manager, copy of the insurance
policy in question was filed. Condition No. 6(i) of the policy
provides that "on the happening of any loss or damage the
insured shall forthwith give notice thereof to the company
and shall within 15 days after the loss or damage or such
further time as the company may in writing allow in that
behalf, deliver to the company." In cross- examination it
was suggested to Shri Sakkarwal that the terms and
conditions forming part of the policy in question were not
supplied to the insured which suggestion he denied
emphatically. As admitted by the Claimant the greenhouses
was started sometime in January 1994 and claimant had
purchased similar policy in previous years. Claimant must
have been supplied the terms and conditions subject to
which the policies were issued. In case the terms and
conditions including condition No. 6(i) forming part of the
policy in question was not supplied, the Claimant ought to
have brought that fact to the notice of Insurance Company
which it seem to have not done. There appears to be no
reason not to believe, Shri Sakkarwal that the terms and
conditions of the policy in question were also supplied to the
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Claimant. In regard to the loss/damage on 2nd and 4th June
1998, admittedly, the Insurance Company was intimated
only on 5.06.1998 in the evening. J.K. Sharma had visited
the site immediately on 6.06.1998. In para 5: of the
Statement of Claim, it is alleged that the work of replacing
the damaged sheets was carried on 3rd June 1998 and it
continued on 4th June 1998; few more old sheets were
damaged in the high wind and rains in the evening of 4th
June 1998 and out of the stock of 91 sheets available with
the Claimant, substantial number of sheets were utilized by
the afternoon of 5th June 1998.It is in the cross-examination
of Suresh Goel Managing Director that no agency was
hired for replacement of the polyethylene sheets though the
sheets were very costly and skilled persons and supervision
needed to fix them; about 25 to 30 persons /villagers had
done the job under his direct supervision and Claimant had
made payment to them. He admitted that the claimant had
not filed any documentary proof/evidence in regard to the
payment to the said persons, before the Insurance Company
or in arbitration proceedings. Replacement of a substantial
number of sheets even before intimating the Insurance
Company or visit of the first surveyor to the site is not only
in contravention of said condition No. 6(i) but raises serious
doubts in regard to the number of sheets damaged. This
doubt is further strengthen by non-submission of proof in
regard to the payment allegedly made to the persons
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involved in the work which required skill. Estimate not
prepared in the presence of J.K. Sharma, surveyor
forwarded alongwith Claimant's letter dated 2.11.1998 was
in response to the letter dated 5.06.1998 and it cannot be
safely considered for assessment of damage. Much
importance cannot be attached to the inventory having not
been prepared by J.K. Sharma and /or the number of sheets
lying in stock with the Claimant in view of what has been
found on physical verification at the site by him. Surveyors
are appointed by the Insurance Company under the
provisions of Insurance Act and their reports are to be
given, due importance. One should have sufficient ground
not to agree with the assessment made by them.(See Shri
Vekenteshwara Syndicate Vs. Oriental Insurance Company
Limited (2009) 8 SCC 507). For the forgoing discussion, I
find absolutely no reason not to accept J.K Sharma's report
in regard to the number of polyethylene sheets damaged as
modified by A.K Choudhary's report. The number of sheets
damaged must be taken to be 15 instead of 90 as claimed by
the Claimant. At the cost of repetition it may be stated that
in his said report A.K. Choudhary, surveyor has made
additions towards freight charges, C& F charges and
labour charges, reduced the percentage of depreciation and
has maintained the value of salvage as suggested by J.K.
Sharma based on weight. A.K. Choudhary assessed the
damage at Rs. 4,17,935/- subject to deduction of Excess as
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per the policy conditions. Amount of Rs. 3,17935/- seem to
have been offered towards full and final settlement through
the letter dated 22.4.1999 considering the deduction
towards Excess clause of the policy. By the letter dated
13.08.1999 the Claimant requested the Insurance Company
to unconditionally make the payment of the said amount
which was declined by the letter dated 27.08.1999 by the
Insurance Company. As the Claimant was dissatisfied with
the said quantum of damage it could not have been legally
forced to receive amount towards full and final settlement.
Since that amount is still being retained by the Insurance
Company, it is liable to make payment thereof alongwith
interest w.e.f. 27.8.1999 till the payment is made. In the
facts &circumstances of the case, the rate of interest is
quantified @ 10% per annum. In addition, the Claimant is
entitled to the share of fee paid to the arbitrator and the
amount of stamp duty on the award.
Resultantly, award of Rs. 3,17,935/- alongwith interest @
10% per annum w.e.f. 27.08.1999 thereon is passed in
favour of the Claimant and against the respondent
Insurance Company. Insurance Company will also pay the
share of fee paid by the Claimant to the arbitrator and the
amount of stamp duty on the award.
Award made and pronounced at New Delhi on 17.03.2012."
(Emphasis supplied)
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43. The Arbitrator in the Award specifically held that the number of
sheets damaged must be taken as 15 instead of 90 as claimed by the
petitioner. The Arbitrator primarily relied on the survey reports of Mr.
JK Sharma and Mr. A.K. Chaudhary while rejecting the petitioner's
claim that 90 sheets were damaged.
44. The Arbitrator categorically observed in the Award that "...Surveyors
are appointed by the Insurance Company under the provisions of
Insurance Act and their reports are to be given due importance..."
and relied upon Shri Venkenteshwara Syndicate v. Oriental
Insurance Company Limited6 to support the proposition that one
should rely on the report of the insurance surveyor and should be
reluctant to disagree with the findings made therein.
45. However, a perusal of the Award reveals that the Arbitrator himself
recorded serious deficiencies in the survey report. The petitioner's
counsel pointed out that neither was any inventory of the damaged
property was prepared nor measurements were taken by Mr. JK
Sharma, and the conclusion reached by this surveyor regarding
damage to 14.5 sheets is erroneous. The Arbitrator did not
categorically deal with these contentions but nonetheless accepted the
survey report by stating that "Much importance cannot be attached to
the inventory having not been prepared by J.K. Sharma and/or the
number of sheets lying in stock with the Claimant in view of what has
been found on physical verification at the site by him. Surveyors are
appointed by the Insurance Company under the provisions of
Insurance Act and their reports are to be given, due importance. ..."
2009 (8) SCC 507.
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46. A perusal of the cross-examination of the surveyor Mr. JK Sharma
reveals the following crucial admissions on his part:
i. He admitted that he did not actually calculate the total number
of damaged sheets.
ii. He stated that the report was based on his memory.
iii. He mentioned that he was offered full cooperation by the
petitioner to assess the damage on-site.
iv. He acknowledged that he could not complete a thorough count
of the damaged sheets.
v. No inventory of damaged property was prepared.
vi. No measurements were taken during the site visit.
47. The relevant portions of the cross-examination of the surveyor Mr. JK
Sharma, read as under:
"Q. Is there any term or condition in the policy issued to the
Claimant which provided that the Claimant was required to
provide staff or labourers at the site to you for measuring
the damaged sheets?
Ans. The policy does not contain any such term/condition.
Photographs are generally taken by us. On the spot I had
not prepared any rough estimate/report. Inventory of the
damaged insured goods was also not prepared. It is correct
to suggest that the survey report was prepared on the basis
of memory. The report was prepared after physical
verification. In this case I had taken the photographs of the
site and those have been filed along with my affidavit. As
per Ext. RW2/1 photographs are not filed with the survey
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report. There is no mention of the photographs in the Survey
Report which I have seen. It is incorrect to suggest that no
photographs were taken at the site. I admit that a meeting
was held on 17.9.1998 at the office of the Claimant along
with Ashok Sharma who is an employee of the Insurance
Company and in that meeting it was decided that another
visit would be made to the site. I visited the site thereafter
on 19.9.1998. On that date I was alone when I visited the
site. I admit that the Claimant had provided labourers and
offered to measure the loss. They had co-operated in
measuring the loss. Number of the sheets damaged is shown
as 13 in the Survey Report. The Claimant had claimed that
the number of sheets damaged were 94. I have seen the copy
of the Claim Form which would show that the Claimant had
claimed damage for 90 sheets. A letter was sent on
5.10.1998 to the Claimant. I admit that thereafter I had not
visited the site. Claimant had sent reply to the letter dated
2.11.1998. Copy of the letter dated 2.11.1998 was shown to
me which does not contain acknowledgement of receipt with
my signature. I had received this letter. Claimant must have
sent the letter dated 2.11.1998 to the respondent-Insurance
Company also. On page 19 of the report, it is stated that the
Claimant had claimed that the number of the sheets which
were damaged were 104. It is incorrect to suggest that the
report was prepared on the basis of surmises and
conjectures and not on the basis of the number of the sheets
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which were damaged. The Claim was allowed for 14.5
sheets in the Survey Report.
Q. Can you furnish any explanation as to why when in your
report you had mentioned that the number of sheets
damaged were 13, you had recommended for payment of
claim for 14.5 sheets?
Ans. Total number of damaged sheets was calculated by me.
They have a standard on each roll and then after division
the result is calculated about the number of damaged rolls.
On the first visit I had spent 4 or 5 hours. Subsequent visits
also were of the same duration. I admit that the area of the
Farm House was approximately 15 acres. It is incorrect to
suggest that some of the pieces of the torn/damaged sheets
were blown in the air and the damaged sheets were 90 in
number. It is correct that there is always a difference in
colour between a new sheet and an old sheet."
(Emphasis supplied)
48. Though a report of the surveyor is important and holds substantial
value in the eyes of law but the same is neither sacrosanct not binding,
it is only a piece of evidence. The Hon'ble Division Bench of this
Court in its judgment titled United India Insurance Co. Ltd v. M/S
Valley Iron & Steel Co. Ltd.7, while discussing issue-wise assessment
traced down a catena of Supreme Court judgments. The relevant
paragraphs of the judgment read as under:
FAO(OS) (COMM) 165/2025, pronounced on 24.12.2025.
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"20.4.3 Appellant's contention that surveyor's report ought
to have been accepted at face value, does not hold water,
particularly in the light of the law by the Supreme Court.
The Supreme Court, in a catena of judgments, has
consistently held that a surveyor's report, though statutorily
recognised, is only a piece of evidence, is neither sacrosanct
nor binding, and may be departed from where it suffers
from infirmities or is outweighed by more reliable material
on record. For the purpose of reference, said decisions are
extracted as under:
...
ii. National Insurance Co. Ltd. v. Hareshwar Enterprises
(P) Ltd. (2021) 17 SCC 682:
"13. In that view of the matter the only question on merits
which needs consideration herein is with regard to the loss
assessed towards destruction of the stock-intrade in the fire
incident. On this aspect, the learned counsel for the
appellant while contending that Ncdrc has committed an
error in relying on the surveyor report as sacrosanct
without giving credence to the investigation report has
referred to the decision in New India Assurance Co. Ltd. v.
Pradeep Kumar [New India Assurance Co. Ltd. v. Pradeep
Kumar, (2009) 7 SCC 787 : (2009) 3 SCC (Civ) 314] and
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referred to paras 21 and 22 which read as hereunder :
(SCC pp. 791-92)
...
14. In the said decision, it is no doubt held that though the
assessment of loss by an approved surveyor is a prerequisite
for payment or settlement of the claim, the surveyor report
is not the last and final word. It is not that sacrosanct that it
cannot be departed from and it is not conclusive. The
approved surveyor's report may be the basis or foundation
for settlement of a claim by the insurer in respect of loss
suffered by insured but such report is neither binding upon
the insurer nor insured. On the said proposition, we are
certain that there can be no quarrel. The surveyor's report
certainly can be taken note as a piece of evidence until more
reliable evidence is brought on record to rebut the contents
of the surveyor's report.
17. Having noted the said decisions, we are of the opinion
that the same cannot alter the position in the instant case.
On the proposition of law that the surveyor's report cannot
be considered as a sacrosanct document and that if there is
any contrary evidence including investigation report,
opportunity should be available to produce it as rebuttal
material, we concur. However, the issue to be noted is as to
whether the surveyor's report in the instant case adverts to
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the consideration of stock position in an appropriate
manner and in that circumstance whether an investigation
report which is based on investigation that was started
belatedly should take the centre stage. The fact remains that
the surveyor's report is the basic document which has
statutory recognition and can be made the basis if it inspires
the confidence of the adjudicating forum and if such forum
does not find the need to place reliance on any other
material, in the facts and circumstances arising in the case.
..."
(Emphasis supplied)
49. In this view of the matter, the recommendation/report of the surveyor
is only evidentiary in nature and not a binding or sacrosanct
document. When the report is perfunctory, casual or suffers from
infirmity, the same has to be rejected by the Arbitrator.
50. In the present case, the cross-examination of Mr. J.K. Sharma itself
reveals casualness and a perfunctory manner in which the report was
prepared. A survey is an integral and most important cog in the
wheelof insurance claim settlements. The survey report is a
foundational document on which the first assessment of loss is made.
The survey report dated 09.11.1998 of Mr. JK Sharma which forms
the fountainhead of the Award is without actual measurement of loss
and based on the surveyor's memory. This survey report at best is the
guesswork of the surveyor. The petitioner in his cross-examination has
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clearly been able to demolish the surveyor's method to assess loss,
and its evidentiary value for quantification of loss.
51. The evidence led by the witnesses of the petitioner namely Suresh
Goel, M.D. (CW-1), Gautam Goel, Director (CW-2), Zuruddiun (CW-
3) and Sanjeev Tyagi (CW-4), as well as stock registers attached as
exhibit-CW-1/10 in the Claim petition, had not even been discussed in
the Award. Even though the Arbitrator has stated that these witnesses
of the petitioner duly tendered their evidence and that the same was
also subjected to the rigour of cross examination, but the Arbitrator
failed to analyse, even in one single paragraph, the evidence led on
behalf of the petitioner and has squarely relied on the respondent's
version on the basis of the report of the surveyor.
52. The Arbitrator while performing its adjudicatory function even in
presence of a survey report was required to examine, consider and
weigh the evidence of the claimant also, which in the present case had
not been adverted to at all, and in fact, the Award is only based on the
observations of the surveyor made in the survey report.
53. The paragraph No. 18 (i) of the affidavit furnished in evidence by Mr.
Suresh Goel (CW-1) mentions that the surveyor in his report has
categorically stated that the requisite measurement was undertaken for
each damaged sheet in front of the directors of the petitioner company.
However, this statement is inconsistent with the surveyor's letter dated
05.10.1998 wherein he specifically mentioned that the measurement
of the damaged polyethylene sheets could not be carried out as the
petitioner failed to provide him with proper labour for the said
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purpose. The relevant portions of the report dated 09.11.1998 reads as
under:
"Methodology for assessment of loss.
Damage to the polyethylene sheets, was assessed after
measuring each damaged sheet. The damages were
critically examined with respect to the cause of accident
mentioned in the claim form.
Damage to sheets were counted in front of insured's
representative. Then we measured length and width of each
sheet. All the sheets were of standard size of 46 X8.50
meters. ..."
(Emphasis supplied)
54. The said observation in the report of the surveyor, which forms the
basis of the report and the Award, is totally contrary to the evidence of
the surveyor in his cross-examination. Mr. JK Sharma categorically
admitted in his cross-examination that no inventory or rough estimate
was prepared at the site. He further stated that, the report was prepared
on the basis of his memory and that he last visited the site on
19.09.1998. Even though, in his cross-examination, the surveyor
stated that he had taken photographs of the damaged sheets at that
relevant time, however they were neither filed with the survey report,
nor mentioned in the report. The relevant portions of the cross-
examination read as under:
"...I visited the site thereafter on 19.9.1998. On that date I
was alone when I visited the site. I admit that the Claimant
had provided labourers and offered to measure the loss.
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They had co-operated in measuring the loss. Number of the
sheets damaged is shown as 13 in the Survey Report. The
Claimant had claimed that the number of sheets damaged
were 94. I have seen the copy of the Claim Form which
would show that the Claimant had claimed damage for 90
sheets. A letter was sent on 5.10.1998 to the Claimant. I
admit that thereafter I had not visited the site. ...
Q. I put it to you that between 2.6.1998 and 5.6.1998, the
Claimant had replaced around 90 sheets and the difference
of the colour in the sheets was clearly visible?
There was no colour difference and one could easily make
out that the sheets had never been replaced.
It is incorrect to suggest that the salvage of the damaged
sheets was lying at the site. It is incorrect that despite the
salvage of the damaged 90 sheets at the site, I had not
measured the same. I admit that I had not measured the
damaged/salvaged sheets up to 5.10.1998. I have a vague
idea that A.K. Chaudhary was appointed as a Surveyor later
on by the respondent-Insurance Company. I have no idea
that A.K. Chaudhary was appointed since my report was
erroneous. It is incorrect to suggest that I had not stayed for
more than 2 hours on any of my visits at the site. It is
incorrect to suggest that I am deposing falsely. ..."
(Emphasis Supplied)
55. A bare perusal of the letter dated 05.10.1998 also reveals that the
measurement of the polyethylene sheets could not be undertaken on
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the date of earlier visit due to the petitioners lack of cooperation with
the surveyor in getting the waste sheets counted. The relevant letter is
reproduced as under:
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56. This letter is also clearly contradicted by the evidence of Mr. JK
Sharma, who in his cross-examination has categorically stated that the
petitioner had provided adequate labour. The relevant portion of the
cross-examination reads as under:
"...I admit that the Claimant had provided labourers and
offered to measure the loss. They had co-operated in
measuring the loss. ..."
57. In view of the above, there is material inconsistency in the statements
made by the surveyor. While the report of the surveyor dated
09.11.1998 records that each damaged sheet was measured in the
presence of the insured's representatives, his earlier letter dated
05.10.1998, as well as his categorical admission during cross-
examination, reveal that no such measurement exercise was actually
conducted owing to non-availability of proper labour and lack of
cooperation from the petitioner. This contradiction is apparent on the
face of the record and shakes the reliability and authenticity of the
report of the surveyor. This ground of inconsistency was raised before
the Arbitrator by the petitioner but the same was not considered by
him.
58. A survey report based merely on memory, without proper calculation,
verification, inventory preparation or measurements, cannot form the
sole basis for determining the quantum of insurance claim, especially
when the petitioner has placed on record documentary evidence in the
form of stock registers showing replacement of 90 sheets. These stock
registers maintained in ordinary course of business have not even been
discussed in the Award.
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59. In the present case, the Arbitrator erred by placing reliance on the
survey report despite its deficiencies, which were duly admitted by the
surveyor himself in his cross-examination, while simultaneously not
considering the petitioner's evidence at all.
60. In this view of the matter, it is crucial to point out that the Arbitrator
has failed to consider the contentions raised by the petitioner, material
placed on record and has also erred in accepting the survey report on
its face value without giving reasoned analysis and findings. Thus, the
Award which clearly ignores the evidence available on record and is
based on findings which are in contradiction to the clear admissions
on record, cannot be sustained.
61. Even though the Arbitrator is the master of quality and quantity of
evidence in Arbitral proceedings, an Award which ignores material
evidence and gives findings contrary to the evidence on record is
perverse and deserves to be set aside. The relevant paragraph of
Associate Builders v. DDA (Supra) reads as under:
"31. The third juristic principle is that a decision which is
perverse or so irrational that no reasonable person would
have arrived at the same is important and requires some
degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something
irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision,
such decision would necessarily be perverse."
(Emphasis Supplied)
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62. In view of the above, on this ground alone the impugned Award dated
17.03.2012, is hereby set aside.
SECTION 12: NON-DISCLOSURE BY THE ARBITRATOR
63. Learned counsel for the petitioner has also raised a contention that the
Arbitrator in the present case has failed/ignored to make disclosure
which is mandated by the Section 12 of the Act. The petitioner in
support of its contention relies on a letter dated 14.03.2012 addressed
by the M.D. of the petitioner Company to the Arbitrator, wherein the
Arbitrator was requested to recuse himself from the proceedings on
the ground of being related with the M.D. of the petitioner company,
thereby raising doubts about the impartiality of the Arbitrator in
rendering the Award. The relevant letter dated 14.03.2012 reads as
under:
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64. The petitioner has only fleetingly invoked the embargo of Section 12
of the Act. In any event, the petitioner had participated in the Arbitral
proceedings, knowingly, and being fully aware of the identity of the
Arbitrator and his relationship with the M.D. of the petitioner
company. Additionally, it was only three days prior to the passing of
the Award that the petitioner company requested the Arbitrator to
recuse himself from the proceedings. No reasons have been given by
the petitioner for the delay in addressing the letter dated 14.03.2012,
after a period of about 2 years from the date of appointment of
Arbitrator on 30.11.2009 by mutual consent of the parties and even
the allegations of partiality are vague and ambiguous. For the said
reasons, I am not inclined to entertain this ground of non-disclosure
raised by the petitioner.
CLAUSE NO. 6(i) NOTICE AFTER LOSS/DAMAGE
65. Clause No. 6(i) of the policy which is reproduced in the Award, reads
as under:
"On the happening of any loss or damage the insured shall
forthwith give notice thereof to the company and shall
within 15 days after the loss or damage or such further time
as the company may in writing allow in that behalf, deliver
to the company"
66. The Arbitrator with respect to the aforesaid clause has held that
"replacement of a substantial number of sheets even before intimating
the Insurance Company or visit of the first surveyor to the site is not
only in contravention of said condition No. 6(i) but raises serious
doubts in regard to the number of sheets damaged."
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67. To my mind there is substantial compliance of Clause No. 6(i), which
prescribes the outer limit of 15 days to furnish the requisite
information and does not unequivocally/mandatorily state that the
same be furnished immediately. The clause mentions the word
"forthwith" and the words as used are to be given their intended
meaning. From a perusal of the aforesaid clause it is clear that the
insured is required to inform the insurer "forthwith" about the loss
sustained by it and in the context of this Clause "forthwith" means "as
soon as possible" and maximum within 15 days unless time extended
by the insurance company. The first storm hit the greenhouses of the
petitioner on 02.06.1998 and the second storm on 04.06.1998,
thereafter the petitioner furnished notice to the insurance company on
05.06.1998. In view of the matter, the petitioner company has
informed the respondent "forthwith" about the loss suffered.
68. The Arbitrator has erred in holding that the replacement of sheets
prior to any intimation to the insurer violated Clause No. 6(i) of the
policy. The nature of damage required immediate restoration and the
representatives of the petitioner acted in a manner as every prudent
person ought to have. I am of the view that the actions were
reasonable and in any case, the insured is required to take reasonable
steps in order to prevent extensive damage to its plants.
69. An Award which does not analyse the evidence led by the parties and
ignores vital evidences placed on record deserves to be set aside under
Section 34 of the Act.
70. The reasoning of Arbitrator is cryptic, without application of mind,
ignoring the clear evidence available on record and is consequently
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perverse. Thus, the same needs to be set aside by this Court in the
interest of justice.
CONCLUSION
71. The Award is squarely based on a survey report which, though an
important piece of evidence, is not a sacrosanct document and cannot
be accepted at face value when it is clearly defective. The Arbitrator
could not have relied solely on the survey report to deliver its findings
while disregarding other vital evidence placed on record. Such non-
consideration of vital evidence and contentions of the petitioner at all
by the Arbitrator amounts to perversity.
72. Accordingly, the impugned Award dated 17.03.2012 is hereby set
aside.
73. The petition is allowed and disposed of in the aforesaid terms along
with pending applications, if any.
JASMEET SINGH, J
MARCH 12th, 2026/(SS)
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