ORIENTAL INSURANCE COMPANY LIMITED versus M/S. J.K. CEMENT WORKS

Citation: [2020] 5 S.C.R. 50 · Decided: 28-01-2020 · Supreme Court of India · Bench: MOHAN M. SHANTANAGOUDAR · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 5 S.C.R.
ORIENTAL INSURANCE COMPANY LIMITED
v.
M/S. J.K. CEMENT WORKS
(Civil Appeal No. 7402 of 2009)
JANUARY  28, 2020
[MOHAN M. SHANTANAGOUDAR AND
R. SUBHASH REDDY, JJ.]
Insurance:
Standard Fire and Special Perils Insurance Policy –
Covering damage inter alia by ‘Flood and inundation’ – Claim for
loss caused due to heavy rainfall – Surveyor assessed the loss
stating that same was payable as per the terms and conditions of
the policy – Insurance Company repudiated the claim on the
ground that loss was due to heavy rain and not flood or inundation
– Consumer complain – Consumer Court allowed the claim of
insured to the extent of the loss as assessed by the surveyor –
Appeal to Supreme Court – Held: Loss was covered by the policy
– Damage caused by heavy rainfall would be covered by ‘flood
and inundation’ clause.
Words and Phrases:
‘Flood’ and ‘Inundation’ – Meanings of, discussed.
Dismissing the appeal, the Court
HELD: 1. 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. The appointment
of a Chartered Accountant for this limited purpose does not
tantamount to the appointment of a surveyor. Thus, it is not
necessary to deal with the pre-requisites for the appointment
of a second surveyor in the instant case. [Para 6] [54-F-H]
2.1 Overflow of water due to a flood may result in the state
of inundation.  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). Floods may be caused due
   [2020] 5 S.C.R. 50
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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 flood. [Paras 9 and 11]
[55-G-H; 56-G-H; 57-A]
2.2 The terms ‘flood’ and ‘inundation’ are often used
synonymously to refer to the act of overflowing of water over
land that is generally dry. Pluvial floods occur independently of
a water body.  Thus, it is clear that floods are not restricted to
overflow of water bodies. Even if the intent of the parties
entering into the contract is looked into, 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 case. [Paras 12.1-
12.3][57-C-F]
2.3 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.  In the instant case, the appellant has not disputed
that there were heavy rains. 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 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. [Paras 12, 13][57-A-B][57-F-
H]
Bajaj Allianz General Insurance Co. Ltd. v. M/s.
Gondamal Hardyal Mal [2009] NCDRC 127 ; Oriental
ORIENTAL INSURANCE COMPANY LIMITED v.
M/S. J.K. CEMENT WORKS
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SUPREME COURT REPORTS
[2020] 5 S.C.R.
Insurance Co. Ltd. v. M/s Sathyanarayana Setty & Sons
[2012] NCDRC 124 ; Oriental Insurance Co. Ltd. v.
M/s R.P. Bricks [2013] NCDRC 494 – approved.
Young v. Sun Alliance and London Insurance [1977]
1 W.L.R. 104 – referred to.
Concise Oxford English Dictionary, 8th Edition (1990)
Stroud’s  Judicial Dictionary, 5th Edition (1986) ;
B

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