Case: THE ORIENTAL INSURANCE CO.LTD Vs. M/S J.K.CEMENT WORKS

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 Chittorgarh, Rajasthan. These factory premises included an open coal yard, where a stock of coal that was used in the manufacturing process was stored2.2 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 Inundation2.3 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 Chartered Accountant to verify the declarations submitted by the Respondent vis¬à-vis its accounts books and daily stocks2.5 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 him2.6 Notably, vide letter dated 14.12.2004, the Appellant repudiated the Respondents 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 inundation2.7 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 at the rate of 9% per annum. The instant appeal has been filed by the Appellant against this order.

Reasoning:
6. At the very outset, we note that as far as the Respondents 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 case7. 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 period11. 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, non¬coastal 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 (low-lying or altitudinous), the water retention capacity of the soil, and the density of population and man¬made construction in the area, among other things. In rare cases, a non-coastal 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 flood12. 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 Respondent12.1 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 sustained12.2 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 merit12.3 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 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 case13. 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 flood-like conditions that resulted in some of the coal kept in the insured premises being washed off. Moreover, the surveryors report also stated that there was accumulation of water due to the heavy rains, that had caused the coal to get washed off14. 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) 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.