Supreme Court ruling on Flood and Inundation Insurance Claim: Appellant vs. Respondent

In a landmark judgement, the Supreme Court of India has ruled on the Flood and Inundation Insurance Claim case involving the Appellant and the Respondent. The case revolved around the interpretation of ‘flood’ and ‘inundation’ in an insurance policy, where the Appellant sought clarification on the cause of loss. The National Consumer Disputes Redressal Commission (NCDRC) had previously directed the Appellant to pay a substantial sum to the Respondent. Let’s delve into the details of this significant legal decision.


  • The factory premises of the Complainant included an open coal yard where coal for manufacturing was stored.
  • The Chartered Accountant hired by the Appellant reported inability to verify declarations due to lack of necessary documents.
  • Appellant sought clarification on whether the loss was caused by ‘Flood and Inundation’ as per the insurance policy wording.
  • A Chartered Accountant was hired to verify the Complainant’s declarations and daily stocks.
  • The surveyor confirmed losses were payable to the Complainant as per policy terms due to heavy rain causing damage to coal stock.
  • The surveyor’s report assessed the loss at Rs. 58,89,400/-.
  • NCDRC allowed the complaint and directed Appellant to pay Rs. 58,89,400/- along with 9% interest per annum.

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  • The terms ‘flood’ and ‘inundation’ differ significantly and cannot be equated.
  • ‘Flood’ refers to overflowing of water bodies like rivers, ponds, lakes.
  • Since there was no nearby water body overflowing into the coal yard, the loss cannot be categorized as a ‘flood’.
  • ‘Inundation’ refers to the accumulation of water, not mere washing off of coal due to heavy rains.
  • The Respondent’s counsel argues that even if the Appellant’s definition of ‘inundation’ as ‘accumulation of water’ is accepted, the surveyor’s report clearly observed water accumulation in the coal yard, making the policy applicable.
  • The surveyor relied on rainfall data from the Meteorological Department of the Government of India for 29.08.2003 and 30.08.2003 of Nimbahera to conclude adequate rains in the area leading to floods/inundation.
  • The Appellant’s unilateral appointment of a second surveyor was questioned as it did not follow the procedure under Section 64-UM of the Insurance Act, 1938, requiring permission from the Insurance Regulatory and Development Authority for appointing a second surveyor.

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  • The terms ‘flood’ and ‘inundation’ are often used interchangeably to refer to the overflow of water over dry land.
  • Different types of floods can occur due to various factors such as heavy rainfall, dam construction failures, or river overflows.
  • The intent of the parties entering into the contract should be considered when interpreting the term ‘flood’.
  • In the absence of a water body near the coal yard or factory premises, the restrictive interpretation of ‘flood’ as solely overflowing water bodies is not applicable.
  • Inundation can refer to both the act of water overflow and the state of being submerged in water.
  • Inundation can also have intentional purposes like military, agricultural, or river management.
  • Accumulation of water due to rainfall can overwhelm drainage systems and lead to economic damage.
  • NCDRC in previous cases has held that damage from heavy rainfall falls under ‘flood and inundation’ clause of insurance policies
  • Different categories of floods are coastal floods, fluvial floods, and pluvial floods
  • Coastal floods occur when water from the sea or ocean flows into nearby areas
  • Stroud’s Judicial Dictionary defines ‘flood’ as a large movement or irruption of water, not mere seepage from a natural source
  • The NCDRC has consistently taken a view that supports the impugned judgment.
  • This view is deemed to be correct and not erroneous.
  • The learned counsel for the Respondent has highlighted the consistent stance of the NCDRC on this matter.

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  • The appeal has been dismissed.
  • The Appellant must pay the sum awarded by the NCDRC to the Respondent within eight weeks from the date of this order.


Case Number: C.A. No.-007402-007402 / 2009

Click here to read/download original judgement

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