IN THE HIGH COURT AT CALCUTTA

CONSTITUTIONAL WRIT JURISDICTION

APPELLATE SIDE

Present:

The Hon’ble Justice Rai Chattopadhyay

WPA 2035 of 2019

HMR Constructions Private Limited

Vs.

The Oriental Insurance Company Limited

For the Petitioner : Mr. Partha Bhattacharya, ld. Sr. Counsel

: Mr. Aryak Dutt

For the Insurance Corporation : Ms. Sucharita Paul

Judgment on : 08.04.2026

Rai Chattopadhyay, J. :-

1. The alleged arbitrary and illegal repudiation of claim of the petitioner said

to have been lodged in pursuance to the valid insurance policy, by the

respondent/insurance company, is challenged in the instant writ petition.

Legality and validity of the two letters of the said respondent dated

October 18, 2017 and March 7, 2018 are under challenge here, amongst

which the letter dated March 7, 2018 is the letter impugned that is the

letter of repudiation, sought to be set aside in this writ petition.

2. The petitioner’s case in a nutshell is that on February 11, 2014, within the

period of coverage under the insurance policy number

311200/31/2012/1755, the vehicle of the petitioner, which is a Volvo

excavator, purchased from Volvo India Private Limited Bangalore [vide

bill no. VCE/BLR/0368/2011-12 Dated September 23, 2011], met with an

accident, while being used in works at Borghat site [Meghalaya], where

the petitioner has been engaged in construction of a bridge, for the

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Meghalaya Public Works Department. Coverage of the vehicle on the

particular date of incident has not been disputed in this case.

3. According to the writ petitioner, since the place of incident was remotely

situated, the information of accident and loss and damage of the vehicle

could only be sent to the respondent on February 27, 2014. The said

respondent was informed about the accident, by an email dated same,

followed by a letter dated February 28, 2014. As per request made to the

respondent by the petitioner a surveyor was appointed namely Mr.

Nabendu Das. Mr. Das inspected the machine on March 1, 2014 and

submitted his report to the respondent.

4. An engineer appointed by the vendor of the writ petitioner has also

inspected the vehicle and submitted his report as to the damage caused to

the vehicle and estimated cost of repair. On the basis of the same the writ

petitioner has filed its claim on March 4, 2014, along with the estimate of

cost of repair as provided by the vendor of the vehicle.

5. Upon receipt of the claim of the writ petitioner the respondent/insurance

company appointed on March 7, 2014 a surveyor and loss assessor from

Guwahati namely Mr. Sobhan Malla Buzar Baruah BE. Mr. Baruah sends

letter and reminder to the writ petitioner dated March 17, 2014 and May

2, 2014, ascertaining the fact of damage of the vehicle to be true. He has

also informed in the said letter that since the preliminary inspection work

has been concluded by him, the damaged vehicle can now be dismantled

under supervision of the technical experts of the vendor, so that he can

finally complete his report. Mr. Baruah further writes vide letter dated

July 5, 2014, that physical inspection of the vehicle has been done by him

along with the technical expert of the manufacturer on two days that is,

June 29, 2014 and July 2, 2014 and the damage occurred to the same is

ascertained and confirmed. The petitioner was advised to undertake the

repairing works and to submit documents as required in connection with

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the claim. Later, on January 5, 2015, he however submits an addendum

report to the respondent correcting the date of validity of the driving

licence and name of the place of occurrence, mentioned in his earlier

report.

6. On October 8, 2014, the petitioner sent the repair advice and requisition

received by it from the authorised Volvo vendor to the

respondent/insurance company with the request to approve the estimate

with information to the vendor so that repair works may be undertaken by

the same, with a copy of estimate forwarded to Mr. Baruah the surveyor

and loss assessor, appointed by the said respondent.

7. Upon completion of the repair of the vehicle the writ petitioner has

forwarded to Mr. Baruah, the surveyor and loss accessor appointed by the

respondent, all the original invoices of repair cost of the vehicle provided

by M/s Suchita Earthmoving Solutions Guwahati, authorised distributor

of Volvo India Limited with its letter dated May 23, 2015, for the purpose

of aiding and expediting realisation of the claim amount.

8. The respondent’s first objection as to the claim of the writ petitioner was

raised by dint of its letter dated April 8, 2016, in which the respondent

pointed out certain discrepancies, in the spot survey report and the final

survey report submitted by the two surveyors respectively, that date of

accident has been mentioned differently in the said two documents as if

there were separate incidents of accident. The petitioner says to have duly

replied by justifying the alleged discrepancies, vide letter dated May 3,

2016.

9. This was followed by letters of Mr. Baruah dated May 25 and 30, and

June 10, 2016, informing about presence of typographical error in his

report, as regards the date of accident. He corrected the error by

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mentioning the actual date of accident and clarified the cause of damage

occurred to the said vehicle.

10. Thereafter repeated letters of the petitioner followed requesting the

respondent/insurance company to disburse the claim amount but to no

avail. Ultimately the petitioner received the impugned letter dated

October 18, 2017, which it replied vide latter dated November 9, 2017.

Even in spite thereof, the respondents send its letter dated March 7, 2018,

finally repudiating the claim of the writ petitioner, on the grounds

mentioned therein. Those shall be discussed at a proper place. Being

aggrieved with the same the petitioner has filed the instant writ petition.

11. The writ petitioner has been represented by Mr. Partha Bhattacharya,

learned senior counsel. He says that on the date of accident the

petitioner’s vehicle has been duly covered by the insurance policy

undertaken by the petitioner for the same. Therefore, in accordance with

the conditions thereof any loss suffered by the vehicle due to accident is

bound to be covered by the insurance company by disbursing the claim

amount in favour of the writ petitioner. He further says that the

respondent has appointed two surveyors for inspection of the vehicle and

assessment of loss. That, both of them have reported about damage

suffered by the said vehicle due to accident.

12. Mr. Bhattacharya, learned senior counsel has submitted that the

respondent has arbitrarily not considered the explanation of the

respondent’s queries in its letter dated October 18, 2017, which the

petitioner has satisfied vide its letter dated November 9, 2017. That,

similar grounds have been pleaded by the respondent while finally

repudiating the claim of the writ petitioner in the order dated March 7,

2018. That, it clearly indicates high handed, unlawful and arbitrary

conduct by the respondent insurance company. It is submitted that the

complete ignorance by the said respondent of both the survey reports as

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well as the clarification and explanation submitted by the writ petitioner

in its letter dated November 9, 2017, without any apparent and justifiable

reason, renders the final decision of the respondent to repudiate the claim

of the petitioner as baseless, irrational, arbitrary and illegal. Therefore, he

says that the said order is liable to be set aside in this writ petition.

13. Mr. Partha Bhattacharya, learned senior counsel for the petitioner has

referred to the judgment in Saurashtra Chemicals Limited (presently

known as Saurashtra Chemicals Division of Nirma Limited) Vs.

National Insurance Company Limited reported in (2019) 19 SCC 70 to

buttress the proposition of law argued by him that the

respondent/insurance company cannot bolster its case subsequently with

additional grounds than it has been mentioned in the letter of repudiation

itself. According to Mr. Bhattacharya, the grounds of delay in lodging the

claim by the petitioner is afterthought and was never pleaded in the

impugned letters as mentioned above.

14. The respondent insurance company is represented by Ms. Sucharita Paul,

learned advocate in this case. The respondent’s first contention is as

regards maintainability of the instant writ petition. It is submitted that the

plea of the petitioner is to recover the insurance claim amount in contrast

to the decision of the respondent to repudiate such claim of the petitioner.

Therefore, the same is not maintainable in the plenary and extraordinary

writ jurisdiction of this Court. Instead, the claim of the petitioner being

comprised with the disputed questions of fact, should be subject to

efficacious alternative remedy available in law, before the appropriate

civil Court by filing a money suit therefor. It has been submitted further

that the insurer is lawfully entitled to repudiate claim, due to non-

fulfilment of the terms of policy. That, since the petitioner has not been

able to satisfy the specific terms of the policy, the respondent is justified

in repudiating its claim. In this regard it has further been submitted that

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report of the surveyor is not the conclusive proof of the claim made and it

is the discretion of the respondent to consider it or its part, if at all.

15. The respondent has further stated that the claim of the petitioner has been

repudiated on the ground of violation of the policy condition. That,

merely on the basis of surveyor’s report, the insurance company is not

obliged to release the claim without being satisfied about other factual

and legal aspects in consonance with the terms and conditions in the

policy. The respondent says that the petitioner’s claim is not tenable

under Section 1 of the Commercial Vehicle Package Policy issued to the

petitioner. Such claim is also barred under Exception 4(a) of the “General

Exceptions” of the Commercial Vehicle Package Policy. That the claim of

the petitioner is also untenable as per condition No. 5 of the “Conditions”

provided in the Commercial Vehicle Package Policy. The respondent

specifically emphasizes that a claim can only be reimbursed which duly

complies with and is as per the terms and conditions of the insurance

policy and not otherwise.

16. It is the further contention of the said respondent that, the report of the

surveyor on which the petitioner has placed sufficient reliance on, is not a

conclusive document to prove the factum of the loss suffered by the

petitioner. In a way, the respondent/insurance company has disputed and

denied the allegation of the petitioner of suffering huge loss due to

alleged arbitrary and illegal action of the said respondent by not

disbursing the amount of claim to the same. Per contra, it is the contention

of the respondent that, having not proved the accident as well as loss

suffered and having not complied with the above-stated provisions under

the insurance policy, the petitioner would not be eligible to seek any

claim or reimbursement thereof. The respondent relies on the following

judgments which principally discusses and decides about non-

maintainability of a writ petition due to involvement of disputed questions

of fact, requirement of factual enquiry, delay in lodging the claim and on

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the ground of availability of alternative efficacious remedy to the

petitioner. Those are as follows:-

i) Life Insurance Corp

n

. Of India & Ors. Vs. Asha Goel (Smt)

& Anr. reported in (2001) 2 SCC 160.

ii) Life Insurance Corporation of India & Ors. Vs. Smt. Kiran

Sinha reported in (1986) 2 SCC 553

iii) Poonawalla Fincorp Limited & Anr. Vs. The National

Insurance Company Limited & Anr. [APOT No. 297 of 2021

with WPO No. 494 of 2021, IA No.: G.A. 1 of 2021 dated

March 29, 2022]

iv) Bhaskar Ghosh Vs. The Oriental Insurance Company

Limited & Anr. [WPO 1366 of 2021 dated December 20, 2021]

v) Swapan Ghosh Vs. The Oriental Insurance Company

Limited & Ors. [W.P. 4159 (w) of 2018 dated June 15, 2018]

vi) Poonawalla Fincorp Ltd. (Formerly Known as Magma

Fincorp Limited) & Anr. Vs. The National Insurance Company

Limited & Anr. dated September 16, 2021)

17. On perusal of the letters of the respondent impugned in this case dated

October 18, 2017 and March 07, 2018, it appears that the said respondent

has taken up grounds of coming into operation of (i) Section 1, (ii)

Exception 4 (a) and (iii) Condition No. 5 of the Commercial Vehicles

Package Policy, to hold the claim of the petitioner as unsustainable and to

repudiate the same. The issue, therefore, arises whether the said

respondent could have lawfully and justifiably repudiate the insurance

claim of the petitioner for the reason of coming into operation of the

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specified provisions of the Commercial Vehicles Package Policy; also

that whether the writ petition itself is maintainable or not.

18. Before discussing on merits with reference to the points of dispute as

mentioned above, the said relevant provisions may be quoted as

hereinbelow : -

“SECTION I - LOSS OF OR DAMAGE TO THE VEHICLE INSURED

1. The Company will indemnify the insured against loss or damage to

the vehicle insured hereunder and/or its accessories whilst thereon:

i. by fire, explosion, self ignition or lightning;

ii. by burglary housebreaking or theft;

iii. by riot and strike;

iv. by earthquake (fire and shock damage);

v. by flood, typhoon, hurricane, storm, tempest, inundation, cyclone,

hailstorm, frost;

vi. by accidental external means;

vii. by malicious act;

viii. by terrorist activity;

ix. whilst in transit by road, rail, inland waterway, lift, elevator or

air;

x. by landslide rockslide.”

** ** ** ** **

“(4) (a) any accidental loss or damage to any property whatsoever or

any loss or expense whatsoever resulting or arising there from or any

consequential loss.”

** ** ** ** **

“5. The Insured shall take all reasonable steps to safeguard the vehicle

insured from loss or damage and to maintain it in efficient condition

and the Company shall have at all times free and full access to

examine the vehicle insured or any part thereof or any driver or

employee of the insured. In the event of any accident or breakdown,

the vehicle insured shall not be left unattended without proper

precautions being taken to prevent further damage or loss and if the

vehicle insured be driven before the necessary repairs are effected,

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any extension of the damage or any further damage to the vehicle

shall be entirely at the insured's own risk.”

19. The petitioner has stated that on the date of incident, the excavator vehicle

was working at Borghat Site, Meghalaya which is 58 kilometers away

from Latrambai in East Jayantiya Hills of Meghalaya that is a remote

place in the hills of Meghalaya. During excavation of sand and gravel

near the Coffer dam the bucket of the vehicle got entangled between huge

boulders and got stuck. Repeated attempts for over a week to disentangle

the bucket of the vehicle, did not succeed. In this process, the vehicle was

so damaged that, it became unusable any further. Damage was spotted on

the bucket, arms, stick, pins and allied areas of the vehicle due to such

accident during working of the vehicle. The water cooler was also

damaged.

20. The Spot Surveyor, Mr. Das has noted the date of accident to be February

11, 2014. The surveyor and assessor appointed subsequently, though

initially noted the date of accident erroneously, subsequently vide his

letter dated May 25, 2016, has corrected the said error and mentioned the

date of the accident to be February 11, 2014. Both the surveyors have

duly endorsed the nature of accident that while working, a part of the

vehicle was stuck between the boulders in the hills and got damaged

extensively while being recovered from there.

21. Section 1 of the Commercial Vehicles Package Policy has provided the

incidents, (10 of those), a damage occurred due to any of which, shall

make the respondent liable to indemnify the insured/petitioner. Those are

quoted above. Clause (vi) thereof is worth noting “by accidental external

means”. Clause 4(a) of General Exception states that, any accidental loss

or damage to the vehicle or expense resulting or arising therefrom or any

consequential loss should be considered to be exempted from the list of

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liabilities of the respondent under the said policy. Clause 5 of the

conditions emphasizes that the insured should take all reasonable steps for

safeguard of the vehicle.

22. No materials is forthcoming in this case to suggest remotely that while

using the same for work, necessary protection, care and safeguard has not

been maintained. The vehicle is of specific nature to discharge specific

kind of job that is, for excavation. In hilly areas, the job of excavation is

always involved with the risk and danger of grapple with boulders. In

view of the fact that the concerned vehicle have been entangled with the

boulders while in work the same specifically comes within the bounds of

Section 1 clause (vi) that is, “damage by accidental external means”.

23. The two surveyors’ reports have never been considered by the

respondent/insurance company to come to its decision in the impugned

order. The reason thereof has been stated in the affidavit-in-opposition

that, report of the surveyor being not a conclusive proof of the facts stated

therein, may not compulsorily be taken into consideration. The Court

finds that the respondent’s decision should have been based on some

cogent grounds or else that should be termed as an arbitrary decision

according to its own whims. So far as the nature of loss suffered by the

vehicle, the surveyors’ reports are the only materials available. The

respondent could have merrily not relied on the same, had it got some

other sufficient and cogent material in contrast to the claim of the

petitioner. Unfortunately, the same is not available in this case the

respondent’s decision in the impugned letters is based on no grounds at

all as to why the said specific provisions of the Commercial Vehicle

Package Policy should be made applicable in case of the present

petitioner’s claim. On the other hand, the purpose of appointing a

surveyor is only to ascertain justifiability of the claim on the basis of

collected evidence. Let it be mentioned that the contents of reports of the

surveyors have never been denied or disputed as untrue or improbable.

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Therefore those must be found to be good foundational grounds in

support of the claim of the petitioner. Also against the petitioner or the

surveyors, so to say, there is no allegation levelled for suppression of any

material foundational fact. Obviously, in such situation the reports of the

surveyors are acceptable and those should not have been discarded

without showing any reason, as it has been done in the instant case.

24. The time gap between the date of incident (February 11, 2014) and report

being made to the respondent/insurance company (dated February 27,

2014) is not fatal for the petitioner in view of the remote situation of the

place of incidence and lack of due communication facilities. Furthermore,

the Court is in concurrence with the argument advanced on behalf of the

petitioner that the ground of delay being not part of the impugned letter of

repudiation dated March 07, 2018 cannot subsequently be put in. Or else,

that would have an effect of strengthening its case further by the

respondent authority which is prohibited in the eye of law. In this regard,

the ratio of the judgment relied on by Mr. Bhattacharya in Saurashtra

Chemicals Limited (supra) squarely applies in this case.

25. Hence, the impugned orders as mentioned above, appeared to be

unreasoned and unsubstantiated with any cogent and sufficient material.

In such event, the said order stands neither on the anvil of tests of

arbitrariness nor that of legality or validity.

26. Having said so, it is also necessary that the Court discusses futility of the

preliminary point of objection raised on maintainability of this writ

petition. The objection proceeds on two principal planks, firstly, that the

dispute pertains to enforcement of a contractual right involving disputed

questions of fact; and secondly, that the petitioner has an efficacious

alternative remedy by way of a civil suit. This Court is unable to accept

the said contention in the facts and circumstances of the present case. It is

now well-settled that the jurisdiction under Article 226 of the Constitution

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is not barred merely because the dispute arises out of a contractual

relationship, particularly where the respondent is a State or an

instrumentality thereof and its action is impugned on the ground of

arbitrariness, unreasonableness or violation of Article 14 of the

Constitution. The doctrinal foundation for exercise of writ jurisdiction in

such cases rests on the public law element embedded in the action of the

State, even in contractual matters.

27. The distinction between a pure private law dispute and a dispute

involving public law character must be borne in mind. Where the

challenge is not simpliciter for recovery of money but is directed against

an arbitrary, irrational or mala fide decision-making process of a public

authority, the writ court would be justified in exercising jurisdiction. In

the present case, the petitioner has not merely sought enforcement of a

claim amount, but has assailed the decision-making process culminating

in the repudiation of the claim as being arbitrary, unreasoned and

violative of settled principles of fairness. The doctrine of arbitrariness, as

a facet of Article 14, pervades all State actions, including those arising

out of contractual dealings. An insurance company, being a State

instrumentality within the meaning of Article 12, is bound to act fairly,

reasonably and in a non-arbitrary manner. The impugned repudiation, if

found to be devoid of reasons or based on irrelevant considerations,

would clearly invite judicial review.

28. The Supreme Court in United India Insurance Company Limited versus

Manubhai Dharmasinhbhai Gajera [at (2008) 10 SCC 404] has clearly

held that although the state should be free to negotiate its terms in the

field of contract qua contract, its actions however cannot be arbitrary.

The Court held that the insurance company having acted arbitrarily

cannot be allowed to say that the writ Court should not interfere.

Therefore, in such a case a writ would be maintainable even if it arises

within a contractual obligation.

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29. The contention of the respondent that the writ petition involves disputed

questions of fact also does not commend acceptance. It is trite law that the

mere existence of disputed facts does not ipso facto oust the writ

jurisdiction. The Court must examine whether such disputes are of such a

complex nature that they necessitate oral evidence and detailed trial. In

the present case, the foundational facts, including existence of policy,

occurrence of incident, appointment of surveyors and submission of

reports, are largely undisputed. The controversy essentially revolves

around the interpretation of policy conditions and the legality of the

respondent’s decision in disregarding the survey reports. In this context, it

is pertinent to note that the respondent itself had appointed surveyors for

assessment of loss, and their reports constitute the primary material on

record. The respondent has neither produced any contra material nor

demonstrated that the issues require elaborate evidentiary adjudication.

Therefore, the dispute falls within the realm of judicial review rather than

adjudication of complex factual controversies.

30. The objection as to availability of an alternative remedy is equally

untenable. The rule of alternative remedy is a rule of discretion and not

one of compulsion. It is well-recognised that in cases where the impugned

action is arbitrary, violative of principles of natural justice, or where the

order is wholly without jurisdiction, the writ court would not decline to

exercise jurisdiction merely on the ground of availability of an alternative

remedy. In the present case, the impugned letters of repudiation, as

already discussed hereinabove, are bereft of cogent reasoning and fail to

disclose proper application of mind. The respondent has neither

adequately dealt with the survey reports nor assigned sustainable reasons

for invoking the exclusion clauses of the policy. Such action, ex facie

arbitrary, falls squarely within the exceptions carved out to the rule of

alternative remedy. Further, relegating the petitioner to a civil suit in the

facts of the present case would not be efficacious. The dispute pertains to

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the legality of the decision-making process of a state instrumentality,

which can be more appropriately examined in exercise of writ

jurisdiction. The delay and multiplicity of proceedings inherent in a civil

suit would defeat the ends of justice, particularly when the material

necessary for adjudication is already available on record.

31. The judgments relied upon by the respondent are distinguishable on facts.

In those cases, the disputes involved either complex factual adjudication

or purely private law claims devoid of any public law element. In the

present case, however, the challenge is directed against an arbitrary

exercise of power by a state instrumentality, thereby attracting the writ

jurisdiction of this Court. This Court also draws sustenance from the

doctrinal principle that where a statutory or public authority exercises

discretion, such discretion must be informed by reason, guided by

relevant considerations and free from arbitrariness. The absence of

reasons in the impugned repudiation letters strikes at the very root of

administrative fairness and renders the decision susceptible to judicial

review.

32. In view of the aforesaid discussion, this Court holds that the writ petition

is maintainable. The preliminary objections raised by the respondent,

being devoid of merit, stand rejected.

33. In view of the discussions made hereinabove, this Court is of the

considered opinion that the impugned letters dated October 18, 2017 and

March 7, 2018, issued by the respondent insurance company, are

arbitrary, unreasoned and unsustainable in law. The said decisions having

been arrived at without proper application of mind and in disregard of the

materials on record, including the survey reports, cannot be sustained.

34. Hence, the instant writ petition No. WPA 2035 of 2019 is allowed with

the following directions:

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a. The impugned letter of repudiation dated March 7,

2018, are hereby set aside and quashed;

b. The respondent/insurance company is directed to

immediately release the claim amount in favour of the

writ petitioner, within a period of 3 weeks from the date

of communication of this judgment. In default the claim

amount shall bear simple interest at the rate of 10% per

annum, from the following day after expiry of 3 weeks

till the date of actual payment.

35. The writ petition No. WPA 2035 of 2019 is allowed and disposed of

along with applications pending, if any.

36. Urgent certified copy of this judgment, if applied for, be supplied to the

parties upon compliance with all requisite formalities.

(Rai Chattopadhyay, J.)