Bombay High Court Upholds Arbitral Award Rejecting Insurer's Undisclosed Expert Report In Claim Dispute

The Bombay High Court has recently upheld an arbitral award rejecting an insurer's reliance on an undisclosed expert opinion used to reduce an insured's claim, holding that the challenge essentially sought a reappreciation of evidence.

Justice Gauri Godse held the arbitral tribunal was justified in discarding the insurer's expert report. “ The expert opinion's report is also rightly not accepted by the Tribunal. It is held that the expert was appointed without any intimation to the claimant. Although the Insurance Company contended that the expert was appointed on the aspect of depreciation, the Tribunal, on an appreciation of the pleadings and evidence, held that the expert had given an opinion not only on depreciation but also on improvement, salvage, and other technical factors. Nothing is shown in this petition that the appointment of an expert by the Insurance company is permissible for independently assessing the loss and discarding the surveyor's assessment, which is as per the applicable rules.”

Seapol Port Pvt. Ltd. had insured its Leibherr Harbour Crane under a policy issued by New India Assurance Co. Ltd. for the period between August 10, 2019 and August 9, 2020.

A fire at Vishakhapatnam Port Trust on August 26, 2019 substantially damaged the crane, following which the insurer appointed surveyor Vijaykumar S. Saokar, who inspected the machine five times and ultimately assessed the loss at ₹11.30 crore after addenda.

The insurer later relied on an opinion by technical expert Navin Jain, who assessed the loss at ₹8.37 crore, and approved the claim at that amount. Seapol accepted the payment under protest and invoked arbitration.

The three-member arbitral tribunal, by a majority award dated September 27, 2022, directed the insurer to pay ₹3.73 crore, being the difference between the surveyor's assessment and the amount paid, along with interest at 18% per annum from the date of the statement of claim till realisation. A minority award favoured the insurer.

Before the High Court, the insurer argued that Jain had been appointed as a technical expert and that his opinion could not be discarded merely because he was not a surveyor.

It also challenged the award of interest as excessive. Seapol argued that the insurer could not disregard its own surveyor's assessment by relying on an expert opinion obtained without informing the insured, particularly when the expert had not physically inspected the damaged crane.

The Court noted that the tribunal had examined Jain's oral evidence in detail and found that he lacked the technical expertise required to rebut the surveyor's assessment. It also noted that Jain had prepared his opinion without physically inspecting the crane and that no appointment letter had been issued indicating the scope of his assignment.

“The Insurance Company discarded the surveyor's final assessment report only by referring to the expert opinion, which was obtained without any intimation to the claimant.”

On the issue of interest, the Court held that the tribunal had treated the insurer's inordinate delay in settling the claim as an important factor, and no valid ground was made out to interfere with that finding.

Holding that the insurer's objections would require a fresh reappreciation of evidence, which is impermissible in a challenge to an arbitral award, the Court dismissed the petition.