In Brief
An industrial garment manufacturer's fire insurance claim of Rs. 54,93,865/- was accepted by the first surveyor but progressively rejected by two subsequent surveyors appointed by the insurer. The Supreme Court held that an insurance company cannot appoint successive surveyors merely to obtain a favorable report. Under the Insurance Act, 1938, the insurer must provide cogent reasons for rejecting a surveyor's report and may only appoint another if the original report is arbitrary, excessive, or defective. The Court found no valid grounds for rejecting the first surveyor's findings and held that the appointment of surveyors in succession to secure a report favoring the insurer's interest constitutes an abuse of discretion, restored the first surveyor's assessment.
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