‘The dictum in Galada’s case (supra) is in the context of the facts of that case and does not lay down that on the appointment of a surveyor, per se, the insurer is estopped from raising a plea of violation of the condition warranting a repudiation of the claim. The factum of waiver has to be gathered from the totality of the obtaining circumstances.’
In an important judgment in the realm of insurance laws, the Supreme Court has held that the insurer is not estopped from raising a plea of violation of the condition relating to delay in intimation warranting a repudiation of the claim, merely because it appointed a surveyor to assess the loss.
The bench of Chief Justice of India Dipak Misra, Justice AM Khanwilkar and Justice DY Chandrachud (Sonell Clocks and Gifts Ltd vs. New India Assurance Co Ltd) upheld a National Consumer Commission order that held that appointment of a surveyor does not amount to waiver by the insurer as regards the condition relating to delay in intimation.
On 4th August 2004, due to torrential rains and floods in the entire area, the water gushed into the factory premises owned by the company causing damage to the machinery as well as raw material lying therein. Intimation of the loss was given to the insurer after more than three months, on 30th November 2004. The insurer appointed a surveyor to assess the loss caused due to the flooding of the factory premises. Based on surveyor’s report, insurer rejected the claim on the ground that neither the intimation of the loss had been given to it immediately nor were the requisite particulars of the loss conveyed within stipulated period.
The sole issue before the consumer commission was whether the insurer had waived the condition relating to delay in intimation, by appointing a surveyor, which it answered in the negative dismissing the complaint filed by the company.
Before the apex court, it was contended that in court in Galada Power and Telecommunication Ltd vs India Insurance Co Ltd, it was held that the insurer having appointed a surveyor despite stipulation as regards delay in intimation, waives its right to advance the plea that the claim was not entertainable because of the condition enumerated in duration clause was not satisfied.
The bench then, referred to the facts in Galada case and observed that the said judgment does not lay down that on the appointment of a surveyor, per se, the insurer is estopped from raising a plea of violation of the condition warranting a repudiation of the claim. It said: “Galada’s case (supra) was not a case which considered repudiation based on a premise or a reason similar to condition No.6 of the present policy and a specific plea taken by the insurer in that behalf in the repudiation letter itself. Notably, Clause 5 of the Marine Insurance Policy which was the subject matter in Galada’s case (supra) did not have a negative covenant as in this case in the proviso to condition No.6 of the subject policy. The fulfillment of the stipulation in Clause 6 of the general conditions of the policy is the sine qua non to maintain a valid claim under the policy.”
Justice Khanwilkar also said: “It is a well-established position that waiver is an intentional relinquishment of a right. It must involve conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. It is an agreement not to assert a right. To invoke the principle of waiver, the person who is said to have waived must be fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. [See para 41 of State of Punjab (supra)]. There must be a specific plea of waiver, much less of abandonment of a right by the opposite party.”
The bench further observed that it is the duty of insured to inform the loss forthwith after the incident. Referring to relevant clauses in the insurance policy, the bench said: “The event occurred on 4th August, 2004 but intimation was given to the insurer only on 30th November, 2004 after a gap of around 3 months 25 days. No explanation was offered for such a long gap much less plausible and satisfactory explanation. The stipulation in condition No.6 of the policy to forthwith give notice to the insurer is to facilitate the insurer to make a meaningful investigation into the cause of damage and nature of loss, if any.”
The court also took note of provisions in Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations, 2000, which came into effect on 14th November, 2000, and makes it mandatory to appoint a surveyor on receipt of intimation about the loss; and the surveyor so appointed has to discharge his responsibilities and duties specified in the regulations while submitting its report.
Dismissing the appeal, the bench observed: “The appointment of a surveyor by the respondent after receipt of intimation of the loss from the appellant, in the context of the present insurance policy, coupled with the 2000 Regulations and in particular an express stand taken in the repudiation letter dated 18th February, 2005 sent by the respondent to the appellant after consideration of the surveyor’s report, it cannot be construed to be a case of waiver on the part of the respondent.”
Read the Judgment Here