Interpretation of words ‘Flood and Inundation’ in an insurance contract(NCDRC): SC

Interpretation of words ‘Flood and Inundation’ in an insurance contract(NCDRC): SC

The question , whether damages caused by Heavy Rains are included under ‘ Flood and Inundation’ in an Insurance contract, arose in supreme court from the case Oriental Insurance Company Ltd. v. M/S J K Cement Works Ltd. The matter was firstly talento 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.

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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”.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/­.Aggrieved   by   this repudiation, the Respondent filed a consumer complaint before the NCDRC seeking compensation to the tune of Rs.1.32 crores.The instant appeal has been filed by the Appellant against this order.

Appellant contended that the term ‘flood’ refers to overflowing of water bodies such as rivers, ponds, lakes etc. With respect to the term ‘inundation’, he argue 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. Before delving into the particular facts of this case, the court found it to be useful to refer to the dictionary meanings ofthe terms ‘flood’ and ‘inundation’. 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)…” The word ‘inundate’ is defined in the Concise Oxford English Dictionary, 8th edition (1990) as follows: “…1 flood.

   2 overwhelm (inundated with enquiries)…” Simply put, a flood may be described as overflowof water over land. Floods can be broadly divided into   the following categories: coastal floods, fluvial floods (river floods), and pluvial floods (surface floods).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 low-lying 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. The Court also noted that there was no water body near the factory.

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“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”, the bench observed, dismissing the appeal.