REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7402 OF 2009

Oriental Insurance Company Limited            ...Appellant

Versus

M/s. J.K. Cement Works                   …Respondent

J U D G M E N T

MOHAN M. SHANTANAGOUDAR, J.  

1. This appeal  arises out of the  judgment dated 18.11.2008

passed by the National Consumer Disputes Redressal

Commission (‘NCDRC’) in Original Petition No. 59 of 2005. Vide

the impugned judgment, the NCDRC allowed the consumer

complaint filed by the Respondent herein, directing the Appellant

to pay Rs. 58,89,400/­ to the Respondent, along with interest @

9% per annum from 01.06.2004 till the date of payment.

2. The brief facts giving rise to this appeal are as follows:

2.1 Respondent herein (Complainant) is a cement

manufacturer, having a factory in Nimbahera, District

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Chittorgarh, Rajasthan. These factory premises included an open

coal yard, where a stock of coal that was used in the

manufacturing process was stored.  

2.2 The Respondent purchased a Standard Fire and Special

Perils insurance policy from the Appellant herein for the stock of

coal for the period between 20.11.2002 and 19.11.2003. Among

other things, the policy covered damage caused by “Storm,

Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and

Inundation”.  

2.3 Due to heavy rains in Nimbahera on 29.08.2003 and

30.08.2003, some of the coal was washed off, and the stock of

coal suffered damage. Consequently, on 01.09.2003, the

Respondent informed the Appellant of the damage and requested

the appointment of a surveyor. The surveyor so appointed

submitted its report on 29.03.2004, assessing the loss caused to

the Respondent at Rs.58,89,400/­.

2.4 Upon receiving such report, the Appellant sought a

clarification from the surveyor, as to whether the loss could be

said to have been caused by “Flood and Inundation” in terms of

the wording of the insurance policy. The Appellant also hired a

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Chartered Accountant to verify the declarations submitted by the

Respondent vis­à­vis its accounts books and daily stocks.  

2.5 On 13.08.2004, the surveyor reaffirmed its stand that the

losses  in question were payable  to  the Respondent as per  the

terms and conditions of the policy. On the other hand, the

Chartered Accountant hired by the Appellant reported on

02.09.2004 that he was unable to verify the declarations because

the Respondent  had not  provided the necessary documents  to

him.  

2.6 Notably, vide letter dated 14.12.2004, the Appellant

repudiated the Respondent’s claim on the ground that the loss

caused to it did not fall within the scope of the policy, having

occurred due to heavy and extraordinary rain and not ‘flood’ or

‘inundation’.

2.7 Aggrieved by this repudiation, the Respondent filed a

consumer complaint before the NCDRC seeking compensation to

the tune of Rs.1.32 crores. Vide the impugned order dated

18.11.2008,   the NCDRC allowed the complaint to the extent of

the loss assessed by the surveyor, i.e. Rs.59,89,400/­, and

directed the Appellant to pay the said amount along with interest

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at the rate of 9% per annum. The instant appeal has been filed by

the Appellant against this order.  

3. Heard learned counsel for the parties.

4. Learned counsel for the  Appellant  argued  that the terms

‘flood’ and ‘inundation’ refer to two significantly different

phenomena that cannot be equated with each other. He

contended that the term ‘flood’ refers to overflowing of  water

bodies such as rivers, ponds, lakes etc. Accordingly, he

submitted that since it was not the case of the Respondent that

there was a water body near the factory which had overflown into

the coal yard, the loss cannot be said to have been caused by a

‘flood’. With respect to the term ‘inundation’, he argued that the

same refers to ‘accumulation of  water’  and could thus not  be

applied to the instant case as the coal had merely been washed

off due to heavy rains.  

5. Per contra, learned counsel for the Respondent submitted

that even if the Appellant’s definition of ‘inundation’ as

‘accumulation of water’ were to be accepted, the surveyor’s report

had clearly observed that that there  was  an accumulation  of

water in the coal yard, thereby  making the  policy  applicable.

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Further, it was brought to our attention that the surveyor had

relied on the rainfall data of Nimbahera for 29.08.2003 and

30.08.2003, as received from the Meteorological Department of

the Government of India, to conclude that that there were

adequate  rains  in the area to  cause  floods/inundation. It  was

also submitted  that the Appellant  could not  have appointed a

second surveyor unilaterally, as the procedure under Section 64­

UM of the Insurance Act,  1938, requiring permission from the

Insurance Regulatory and Development Authority before

appointing a second surveyor, had not been followed.  

6. At the very outset, we note that as far as the Respondent’s

contention  regarding the  appointment  of  a  second surveyor is

concerned, the Appellant had only appointed a Chartered

Accountant for the purposes of verifying the accounts books of

the Respondent regarding its daily stock of coal. In our

considered opinion, the appointment of a Chartered Accountant

for this limited purpose is not tantamount to the appointment of

a surveyor. Thus, we do not consider it necessary to deal with the

prerequisites for the  appointment  of  a  second surveyor in the

instant case.

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7. Further, it is pertinent to note that the quantum of

compensation or the date of the incident are not in dispute here.

Nor has it  been argued by the  Appellant that the  date  of the

incident  did  not fall  within the insurance  period.  The  central

question that then remains to be considered is whether the loss

caused to the Respondent occurred due to ‘flood’ or ‘Inundation’.  

8. Before delving into the particular facts of this case, it may

be useful to refer to the dictionary meanings of the terms ‘flood’

and ‘inundation’.  

8.1 The word ‘flood’ is defined in the  Concise Oxford English

Dictionary, 8th edition (1990) as follows:

“…1 a  an  overflowing or influx of  water  beyond its normal confines, esp. over land; an inundation.  b the water that overflows.  2 a an outpouring of water; a torrent (a flood of rain)…”

Particularly in the context of insurance contracts, Stroud’s

Judicial Dictionary, 5th edition (1986) defines the word ‘flood’,

in reference to Young v. Sun Alliance and London Insurance,

[1977] 1 W.L.R. 104, an English case decided by the Court of

Appeal, and reads as follows:

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“…“Flood” in an insurance policy meant a large movement  or irruption  of  water, and  did  not cover mere seepage from a natural source...”

8.2 The word ‘inundate’ is defined in the  Concise Oxford

English Dictionary, 8th edition (1990) as follows:

“…1 flood.  

  2 overwhelm (inundated with enquiries)…”

Further, per  Black’s Law Dictionary, 9th edition  (1990),

the word ‘inundate’ means:

“To overflow or overwhelm; esp. to flood with water”

9. Simply put, a flood may be described as overflow of water

over land. Floods can be broadly divided into the following

categories: coastal floods, fluvial floods (river floods), and pluvial

floods (surface floods).  

9.1 Coastal floods occur when water  from a sea or an ocean

flows into nearby areas. They are caused either by extreme tidal

activity (high tides) or by a storm surge – strong winds from a

hurricane or other storms forcing the water onshore – or by the

simultaneous occurrence of both these phenomena.

9.2 Fluvial or river flood occurs when the water level exceeds

the capacity of a river, stream, or lake, resulting in the overflow of

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the surplus water to surrounding banks and neighbouring land.

They are usually caused by either excessive rainfall or unusually

high melting of snow because of rising temperatures.

9.3 Lastly, pluvial or surface floods refers to the accumulation

of  water  in an area because of excessive rainfall.  These  floods

occur independently of an overflowing water body. Pluvial floods

include flash floods which take place due to intense, torrential

rains over a short period of time. A pluvial flood may also occur if

the area is surrounded by hilly regions from where the run­off

water  comes and accumulates  in  the  low­lying area. In urban

localities,  because  of concrete  streets  and dense  construction,

rainwater is unable to seep into the ground. Steady rainfall over a

few days or torrential rains for a short period of time may

overwhelm the capacity of the drainage systems in place, leading

to accumulation of water on the streets and nearby structures,

and resulting in immense economic damage.

10. So far as the term ‘inundation’ is concerned, it can be used

to  refer to  both the  act  of  overflow of  water  over land  that is

normally dry and to the state of being inundated. Inundation can

also be intentional, which is sometimes carried out for military

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purposes, as well as for agricultural and river­management

purposes. In the latter sense, i.e. as a state of being, inundation

refers to accumulation of water in which objects or land may be

submerged.  In simpler terms,  inundation can be used to refer

both the act of overflow of water as well as the result of such

overflow.

11. It flows from the above discussion that overflow of water due

to a  flood may result in the state of  inundation.  As discussed

above, floods are of different types, and may be caused due to

several  factors complementing each other. Usually, non­coastal

floods originate from rainfall, but the magnitude of rainfall

sufficient to cause a flood, and the damage that a flood causes,

may vary depending on a variety of aspects such as the location

of land (low­lying or altitudinous), the water retention capacity of

the soil, and the density of population and man­made

construction in the area, among other things.  In rare cases, a

non­coastal flood may also occur without any rainfall. For

instance, shortcomings in the construction of a dam may lead to

its complete breakdown, resulting in a flood.  

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12. It is  not the case of the  appellant that the coal  was not

properly stocked or that there was any negligence on part of the

Respondent. The only arguments advanced by the Appellant are:

firstly, that the terms ‘flood’ and ‘inundation’ cannot be equated,

and,  secondly,  that  ‘flood’ needs to be understood in a narrow

sense to refer  only to the overflowing of  a water body,  and to

exclude instances where overflowing of water occurs due to

excessive rainfall.  

12.1 We have already highlighted that the terms ‘flood’ and

‘inundation’ are often used synonymously to refer to the act of

overflowing of water over land that is generally dry. Therefore, the

first argument of the Appellant cannot be sustained.

12.2 Similarly, given our prior discussion on pluvial floods,

which occur independently of a water body, it is clear that floods

are not restricted to overflow of water bodies. Thus, the second

argument raised by the Appellant also lacks merit.

12.3 Furthermore, the second argument made by the Appellant

seems tenuous even if  we look into the intent of the  parties

entering into the contract, as it has not come on record that there

was any water body near the coal yard or the factory premises. In

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such a scenario, where there was no risk of water from a water

body overflowing onto the dry land  where the coal yard  was

located, it could not have been the intention of the parties

entering into the  contract to  give  a restrictive  meaning  to the

term ‘flood’. Such a narrow interpretation would lead to the

conclusion that the insertion of the term ‘flood’ was superfluous,

which could not have been the case.

13. In the instant  case, the  Appellant  has  not  disputed that

there  were  heavy rains  on  29.08.2003 and 30.08.2003  in the

Nimbahera region.  In fact, the surveyor appointed by the

Appellant had also observed in its report that heavy rainfall had

occurred in the area, causing flood­like conditions that resulted

in some of the coal kept in the insured premises being washed

off. Moreover, the surveryor’s report also stated that there was

accumulation of water due to the heavy rains, that had caused

the coal to get washed off.

14. The NCDRC in the following cases: (i)  Bajaj Allianz

General Insurance Co. Ltd. v. M/s. Gondamal Hardyal Mal,

[2009]  NCDRC 127, (ii)  Oriental Insurance  Co.  Ltd. v.  M/s

Sathyanarayana Setty & Sons, [2012] NCDRC 124, and (iii)

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Oriental Insurance Co. Ltd. v. M/s R.P. Bricks, [2013] NCDRC

494, had held that damage caused by heavy rainfall would not

fall beyond the ‘flood and inundation’ clause of the Standard Fire

and Special Perils insurance policies. It is brought to our notice

by  the  learned counsel  appearing  for the Respondent  that the

aforesaid view has been consistently taken by the  NCDRC. The

aforementioned view of the NCDRC supports the impugned

judgment and the same cannot be said to be erroneous.

15. In view of the above, the appeal stands dismissed. The

Appellant is  directed to  pay the  sum awarded  by the  NCDRC

within a period of eight weeks from the date of this order, to the

Respondent.   

 ……………………........................J. [MOHAN M. SHANTANAGOUDAR]

 …….……………….......................J. [R. SUBHASH REDDY]

New Delhi; January  28, 2020

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