1.       These two appeals arise out of a common order dated 26.06.2015 passed by the State Consumer Disputes Redressal Commission, Gujarat in Complaint No. 69 of 2010. The impugned order is in native Gujarati and a translated copy thereof has been placed on record.

2.       Appeal No. 613 of 2015 has been filed by the complainant praying for enhancement of the amount of claim awarded by the State Commission, contending that the claim has been only partly allowed and the loss has been inadequately compensated. Appeal No. 653 of 2023 has been filed by the Insurance Company for setting aside the entire impugned order of the State Commission.

3.       Having heard learned counsel for the parties, the facts which remain undisputed are that the complainant, which is a Dye manufacturing unit, took insurance coverage in respect of buildings, plant, machinery and accessories of the said unit for production of chemical colour fabrication and stocks relating thereto, where a total sum of Rs.1,76,00,000/- was insured. The policy is a Standard Fire and Special Perils Policy and is also governed by the additional conditions of the Standard Fire and Special Perils Policy (Material Damage). The relevant clause of the Material Damage Terms that has to be taken note of for the purpose of this dispute is extracted herein:-

“VI. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation.

Loss, destruction or damage directly caused by Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood or Inundation excluding those resulting from earthquake volcanic eruption or other convulsions of nature shall stand deleted.”

4.       The contention of the complainant is that on 7^th and 8^th August, 2010, there were heavy rains in Ahmedabad, where the unit is situate and on account of such heavy rains, the entire premises was inundated with water with regard to which a claim was made before the Insurance Company seeking indemnification for the loss and damage suffered on account of the stocks that were lost in the said incident. Immediate information was tendered to the Insurance Company on 09.08.2010. The intimation sent is extracted herein under:-

“Monday, August 09, 2010

To

The New India Assurance Co. Ltd.

104-105, Dev Arc Building, Iscon Circle,

Opp. Big Bazar, SG Highway Ahmedabad-380054

Policy NO. 212400/11/10/11/0000576

Subject: Due to heavy rain Request for survey in our factory

Dear Sir,

Due to heavy rain at early morning 8^th August, 2010 the rain water destroyed material and machinery approximately of Rs.60,00,000.00 to Rs.70,00,000.00 we hereby request an urgent insurance survey.

Thanking Your,

For Vaibhav Dyestuff Industries,

Sd/-

Partner/ jasmine Shah

Mo.9824023759”

5.       The Insurance Company appointed M/s. Trans Ocean Marine & General Survey Agency, which was to conduct the survey. The complainant also wrote a letter to the said surveyor on the very same day informing them of the heavy rains from the midnight of 7^th August, 2010 that continued till the morning of 8^th August, 2010 and stated that the water has flooded the whole factory causing destruction to the stocks and material inside the premises. They also informed about taking precautions in the matter. The said letter is extracted herein under:-

“Date: 09^th, August, 2010

To

Trans Ocean Marin & General Survey Agency

Gawarikar Sadan, Vasant Chowk,

Bhadra, Ahmedabad – 380 001

Kind Attn: Mr. B. M. Gawarikar

Policy NO. 212400/11/10/11/0000576

Subject: Note of Occurrence

Dear Sir,

It rained very heavily on midnight of 07^th August, 2010, we got a call from our factory night supervisor that water is flooding in the whole factory and ruining our material. At the same time we instructed the supervisor to move the affected material on higher level they instantly came in action and started moving the material. They did whatever they can but they couldn’t save all of it. We saved whatever they moved in time rest of all got wasted in water.

Hereby we are attaching the document of stock which was saved and lost material, in the said disaster.

Thanking Your,

For Vaibhav Dyestuff Industries,

Sd/-

Partner/ jasmine Shah

Mo.9824023759”

6.       The spot survey was conducted and the said report was submitted to the Insurance Company on 11.08.2010, which is extracted herein under:-

ABD/4664/F/2010                                          August 11, 2010

To                                                                          

The New India Assurance Co. Ltd.

Claims Hub, Regional Office, 4^th Floor, Popular House,

Ashram Road,

Ahmedabad-380 009

----------------------------------------------------------------------------------

SUB.   : SURVEY OF DAMAGED STOCK OF RAW MATERIAL AND SEMI FINISH GOODS, WHICH REPORTED DAMAGED DUE TO INUNDATION.

INSURED : M/S. VAIBHAV DYSTUFF INDUSTRIES, AHMEDABAD.

POLICY NO. : 212400/11/10/11/00000576

----------------------------------------------------------------------------------

INTRODUCTION

Pursuant to the instructions received from the New India Assurance Co. Ltd., claim Hub, Regional Office, 4^th Floor, Ashram road, Ahmedabad – 380 009 vide their telephone instructions dated 09/08/2010, we the undersigned surveyor and loss assessor visited the premises of insured M/s. Vaibhav Dyestuss Industies, 63-64/7, G.I.D.C. Odhav, Ahmedabad to carry out the survey of damaged Stock of Raw Material, Finished and Semi Finished Dyes. We visited the insured premises on 10/08/2010.

The brief details of the same are as under.

Description of insured premises

Insured’s premises occupies 800 sq. yard having open yard, two stories office building, a store room and process area built up brick walls above lintel level and upper part is covered from all side by tin sheets and roof is made of tin sheets fixed on steel traces. The process area is sub divided for machinery and storage.

The factory is surrounded on three sides by  other factory premises and in front 12 ft Road is prevailing.

Survey Findings

1. During our survey, we observed that the factory premises was having metal gate and there was a gap of 9” in between bottom of gate and ground.
2. It was contention of the insured that due to heavy rain in Ahmedabad on 7^th August, 2010 Saturday night/ Sunday early morning, water had accumulated on the road and the same had entered in their factory. There was a rain of more than 10” during short span in Ahmedabad.
3. The insured is manufacturer of Dyes and this Dyes are made for fabric, it was the contention of insured that these dyes are water soluble.  
4. During our survey we observed that lot of empty bags were lying on the factory floor and the floor was totally blackish and in wet condition.
5. We observed the level of water marks in the factory, which was prevailing in the factory and it was more than 1 feet.
6. The bags which were lying on the ground were accumulated and made heap of 25 Nos. Totally 405 bags were found to be empty.
7. As per the contention of insured, that these bags were of Raw material as well as semi finished goods.
8. We also counted the bags retrieved from the inundation, having Raw material as well as semi finished products and they arrived at 642 numbers.
9. At the time of survey, we have taken a few photographs, which will be submitted with final report.

Cause of Damage

The dyes manufactured by insured are water soluble. The water has entered in the premises, and bottom bags were dissolved/ melted in the water and then the upper bags came to the ground and the same were also melted in the water. The incidence happened in the night/ early morning, so, the water remained more than 16 hours and the Dyes/ Raw material in the bags got away with water. 

Remarks

During our survey we have asked insured to submit the following documents with necessary proof. On receipt/ study of the same the final Report will be submitted in due course.

1. Building Plan
2. Machinery
3. Note on Occurrence
4. 3 year’s balance sheet.
5. Sale/ Purchase Account-April to August-2010
6. Bank statement 200-2010.
7. Last year’s Sales Tax Return.
8. April-2010-June/July 2010 Sales Tax Return.
9. Stock Statement issued to Bank-April 2010 to June/July 2010
10.  April-August 2010 Excise Register copy.
11. Statement of Raw material/ Finished goods.
12. Statement of physical stock
13. Claim Bill
14. Claim Intimation Letter copy.

For Trans Ocean Marine and General Survey Agencies,

Sd/-

CC: The New India Assurance Co. Ltd., Unit -212400

     104-105, Dev Arc Building, Iscon Circle,

     Opp. Big Bazar, SG Highway Ahmedabad-380054

CC: M/s. Vaibhav Dystuff Industries,

     63-64/7, GIDC Estate, Odhav,

     Ahmedabad-382415”

7.       The complainant was called upon to submit all necessary documents and vide letter dated 20.08.2010, the same was intimated, which is extracted herein under:-

“Date: 20^th, August, 2010

To

Trans Ocean Marin & General Survey Agency

Gawarikar Sadan, Vasant Chowk,

Bhadra, Ahmedabad – 380 001

Kind Attn: Mr. B. M. Gawarikar

Policy NO. 212400/11/10/11/0000576

Dear Sir,

Please find attached documents as bellow.

1. Building Plan
2. Machinery List
3. Note on Occurrence
4. 3 year’s Balance Sheet.
5. Sale/ Purchase Account-April to August-2010
6. Bank statement April 2009 to July 2010.
7. Sales Tax Return April 2009 to June 2010.
8. Stock Statement issued Bank-April 2010 to June/July 2010
9.  Excise Register copy April 2010 to August 2010.
10. Statement of Raw material/ Finished goods.
11. Statement of Physical Stock
12. Claim Bill
13. Claim Intimation Letter copy.

Kindly acknowledge us as you received the documents.

Thanking Your,

For Vaibhav Dyestuff Industries,

Sd/-

Partner/ jasmine Shah

Mo.9824023759”

8.       The Insurance Company also called upon the complainant to submit the documents to which a reply was submitted on 07.09.2010, intimating them that the entire information has been given to the surveyor as indicated above.

9.       According to the complainant, the surveyor did not respond appropriately, but at the same time sent a notice on 15.09.2010, indicating certain discrepancies in the said communication and then concluded that the damage claimed by the complainant could not be attributed to inundation and the cause of water found on the factory shop floor may be different from the reported and claimed incident.  On the said basis the surveyor also opined, requesting the complainant to withdraw its claim, which would save any official investigation. The said notice is very relevant and is extracted herein under:-

“ABD/4664/M/2010                     Wednesday, September 15, 2010

To                                                                          

M/s. Vaibhav Dystuff Industries,

 63-64/7, GIDC Estate, Odhav,                        without Prejudice

 Ahmedabad-382415”

KIND ATTN.: Mr. MR JAMMINE SHAH- Partner.

Dear Sir,

Sub: SURVEY-Observation-Analysis-Investigation-Status.

------------------------------------------------------------------

Refernce is made ot surveyor’s visit along with officer from Insurance company. During survey visit following was observed that pointed to rour kind self.

#1. Only factory floor was found wet with black color marks (finding no. 4).

#2. Rest of factory area i.e. office floor, front of office veranda/ tied floor, approach way to factory gate, loose earth was found mostly dry and without any colour marking.

#3. A lot of empty bags were lying on factory floor. (Photographs shows they were scatted over total factory floor area).

# 4. Municipal tar road was dry and without any colour markings.

# 5. The scattered bags on factory floor were collected and kept in the heap of 25 bags per heap and was counted. Totally 405 bags were counted and found in empty condition. Totally retrieved bags and kept on upper level were counted and found to be 642 bags.

#6. At the time of survey a trailer had arrived with number of bags and were unloaded in the premises. These bags were not counted.

Subsequent to survey we had forwarded our preliminary report to the insurers and copy was marked for your kind perusal. Attached with your letter dated 20^th August 2010, various documents/ copies (13 types) were forwarded, which include claim intimation letter and final Claim Bill.

On receipt of documents a few discrepancies were observed. Which are listed follows:

1. The claim intimation letter has put estimated los around 70 lacs.
2. The claim bill shows totally 953 bags as against counted 405 bags.
3. The claim bill shows total semi finished 714 bags got damaged and 239 bags were of raw material.

On finding huge difference between actual counted bags and that of bags shown in claim bill as damaged, we had carried out analysis of photographs with the help of high resolution photometry. During analysis it was observed that all the scattered bags on the factory shop floor were found with their mouth in open condition. Not a single bag was found in sealed condition. Semi finished goods might have been stuffed inside non sealed bags. It is expected that the arrived raw material bags must be in sealed condition. Further analysis of photographs showed that bags can get scattered all over factory floor shop, provided there is enough force to carry these bags over a distance. This is possible only with turbulence in water i.e. flood or cyclonic wind. Both were absent.

Considering listed various facts, analysis and findings, it was apparent that facts are far from the picture presented vide your submitted documents and information provided. In the circumstances to find actual water level present in the insured factory and in surrounding area, we carried further investigation and took help of a few outside agencies like G.I.D.C. office, fire brigade, police and surrounding factories. During survey it was observed that from main road, the road branch leading to your factory has a upward trend and the factory at junction which is at lower lever had inundated up to 9” only. Considering gradient, hump at the front of your factory premises it was not possible to enter inundated water inside your premises and the same was found during our investigation.

This shows damages not attributed to inundation. The cause of found water on factory shop floor may be different from the reported and claimed incidence.

We have gathered a few proofs too, which includes a few photographs and statement issued by some agencies.

Considering facts and in greater interest it is requested the claim to be withdrawn by your kind self. This may not require official investigation.

Thanking you and with best regards,

Yours faithfully,

For TRANSOCEAN MARINE & GENERAL SURVEY AGENCIES,

Sd/-“

10.     The surveyor sent another reminder on 24.09.2010, whereafter a notice was received from the Insurance Company calling upon the complainant to give intimation on four counts, namely, submission of the claim form duly completed, newspaper cutting reporting the incident, to contact the surveyor with the requirements and the original invoices, payment receipts of the damaged property.

11.     The complainant responded to the same by his reply dated 29.09.2010 stating therein that the surveyor was not acting bonafidely, in spite of the fact that he had been provided all the documents relating to the damaged property including balance sheet, sale purchase accounts, bank statement, sales tax return, stock statement issued by the bank, excise register copy, statement of raw material and finished goods and the statement of physical stocks as well. These items found mention in the letter of the complainant addressed to the surveyor dated 20.08.2010 quoted hereinabove.

12.     The Insurance Company again had a discussion with the complainant and the Insurance Company again called for information on the observations made by the surveyor with regard to the incident and the loss, as well as the claim made by the complainant. This notice dated 08.08.2010 quoted the surveyor’s observation and await a reply from the complainant. The complainant on 30.10.2010 sent a detailed reply running into five pages, giving details as desired, whereafter the Insurance Company dispatched the said reply of the surveyor.

13.     The surveyor submitted his report on 25.11.2010 that has been filed on record. In the survey findings the following observations in paragraph 1 to 12 were made which are extracted herein under:-

“1) At the time of survey it was informed by the insured's representative that due to heavy rain in Ahmedabad on 7^th August 2010 Saturday night/8^th August early morning, water had accumulated on the road and the same had entered in their factory. As per insured's contention, there was a rainfall of more than 10 inches, during short span in Ahmedabad. (Actual weather data shows that there was 8.00 cm rainfall on 07/08/2010 and 7.8 cm on 08/08/2010 i.e. total 15.8 cm which is equals to 6.22 Inches in two days).

2) It was informed that the insured is manufacturer of dyes and these dyes are made for fabric. It was the contention of insured that these dyes are water soluble.

3) During our survey we observed that a lot of empty bags with mouth in open condition were lying scattered in factory shed floor and the floor was found totally blackish and in wet condition. All the bags were found totally empty and any traces or a few kilos in form of lumps were not found from these bags,

4) It was observed that blackish stains and water mark was prevailing on all walls of the factory shed on inner side more than 1 foot level. Similar mark was found on outside shed wall. Similar marks or stains of colour were not found on office wall, inside the office premises and on tiles in from of office and earthen ground outside factory premises.

5) We observed that the out side linking road, adjacent earthen ground and inside office premises was dry and without any colour stains.

6) During survey we had asked insured's representative about chances of entry of rain water from the grill and empty space in factory shed above 15 brick wall. The insured's representative categorically denied the chances. Factory floor was not found any traces of mud or sand. It was observed that the floor showed presence of fresh water only.

7) At the time of survey, it was observed that the office premises, which is on lower side compare to factory shed, was without any traces of entry of water. The insured's representative informed that anything in office premises and that inside the factory premises kept on elevated backside was not affected or damaged. That includes plant, machinery, equipments, furniture, fixtures etc.

8) At the time of survey, bags which were lying scattered on factory floor were collected with the help of factory workers and kept in heap of 25 bags each heap. These bags were counted in presence of insured and insurers' representative and they were found be exact 405 bags.

They were found to be totally empty and their mouth were found in open condition. It was informed by insured's representative that stuffed dyes, raw material and semi finished dyes were TOTALLY washed away.

9) It was informed by the insured's representative that with start of heavy rains, a few bags, which were said kept on factory floor were shifted to upper elevated platform and first floor in manufacturing section. Goods i.e. raw material and semi finished product were not affected by water and contents are sound. These bags were counted they found be exactly 642 in numbers.

10) During survey, it was observed that the factory premises is situated on upward side of slope and water marks on factory office premises, dividing wall and adjacent factory was not found. Earthen bump at an entry of premises and adjacent earthen area and road was found dry and without any colour traces or stains.

11) Factory was at road junction was found with 9" water marks on wall of factory situated on plot No. 62/7. Examination of the plot and premises shows the water marks level upto 9" only. Compare to plot No. 62, plot No. 63 & 64 are found situated in upward side of slope.

12) At the time of survey, we have taken a few photographs of insured premises from inside the factory shed and from outside. Details of the photographs is as follows.”

14.     The surveyor then doubted the claim on the quantity of the loss and then observed as follows about the incident:-

“At the same time we had a knowledge that although rain was present but cyclonic condition was not present. Wind speed on 7^th & 8^th never exceed 32 K.M./hour. Average speed was maximum 13 K.M./Hour. At the same time water marks were not observed on office premises in same plot and on wall of the adjacent plot. Linking road found dry without any stains or patches of colour on tied road and adjacent loose earth. Adjacent sand, mud and earth and even on makeshift bump found any traces of dyes or colour.”

15.     Other investigation findings are also given and thereafter the analysis of the stock has been made which comments were indicated by the surveyor. While considering the cause of damage and loss, the surveyor observed as follows:

“The cause of damage and loss is not attributed to any named peril. Storm, Tempest, flood and inundation was not reported or recorded by a weather authority. The weather report for dated 7th August 2010 confirm that maximum wind speed was 28 km/h and rain fall recorded was 8.00 cm. The weather report recorded of dated 8th August 2010 shows wind speed was maximum 32km/h and recorded rain was 7.8 cm. Damages attributed to rain water is beyond the scope of policy.”

16.     A perusal of the said observations indicates that the surveyor was of the opinion that the damage attributed to the rain water was beyond the scope of policy and therefore the inference drawn was that the claim was not admissible.

17.     He then went on to describe as to why the claim is not covered under the policy by explaining the definition of the word ‘inundation’, which is as follows:

“Flood and inundation inside the plot was not reported. The meaning and technical definition of word INUNDATION used in insurance policy in conjunction with flood is as follows.

• To cover with water, especially flood waters.
• Flooding, by the rise and spread of water, of a land surface that is not normally not submerged.
• To cover with a flood: Overflow.
• Flood or inundation occurs when the water rises to an abnormal level.”

18.     While assessing the quantum of loss, the surveyor indicated that the actual counted empty bags were 405, which was the same figure indicated in clause 6 of the survey findings in the spot survey report dated 11.08.2010 and clause 8 in the final survey report dated 25.11.2010 quoted hereinabove.

19.     The surveyor in his recommendation went a step ahead that the circumstances as indicated about the claim for the loss lacked confidence and therefore the surveyor wanted to get a forensic laboratory report in this regard, which could not be obtained as the laboratory available was only for the state police department. The surveyor then went on to record something more which would be evident from the said recommendations extracted herein:-

Recommendation

Based on the survey finds, investigation and observation as illustrated above we are of the considered opinion that the loss claimed as circumstances explained lacks confidence level. We wanted to refer this matter considering quantum of claim to forensic laboratory and we were informed that the laboratory is for state police department only and thus samples are referred and opinion is accorded only to state police.

For ready reference weather data of Ahmedabad for dates 5th, 6th, 7th & 8th August 2010, are enclosed with the report.

We as an insurance surveyor lack certain investigative powers which are delegated to police, and/or revenue intelligence department and others, and thus to prove or disprove fraud in Indian jurisprudence is difficult to us considering limitations of powers. We therefore strongly recommend that the claim case may be referred to revenue intelligence and or C.B.I through court intervention if deemed fit. 

It is thus clear that the surveyor clearly doubted the incident and made above recommendations.

20.     However, for reasons best known to the surveyor, he again submitted an addendum to his report on 25.11.2010, with regard to the calculation of  loss of the stock of material i.e. the 405 empty bags of the stock that were recovered from the site.

21.     Accordingly he drew a conclusion that the value of the stocks lost would not exceed Rs.17,69,486/- and the details about the remaining alleged lost bags not being available, the same could not be assessed as a loss. The addendum, however, stated that no recommendation for payment is made for the reasons already assigned in the main report referred to above. The addendum is relevant for the purpose of understanding the conclusion for the loss assessed and is extracted herein under:-

“ABD/4664/M/2010                     Friday, December 10, 2010

“ADDENDUM TO OUR SURVEY REPORT NO. ABD/4664/F/2010 DATED NOVEMBER 25, 2010

------------------------------------------------------------------------------------------

Issue for probable cost of material from found 405 empty bags.

As per insured's claim bill and statements attached therewith the total stock shown is for Rs. 94,80,341/-. Actual calculation carried out based on provided documents. It was observed that the actual cost of the stock on the date of incidence was not exceeding Rs. 75,33,967 (page no. 11 of our report).

In absence of stock statement verified and certified by Excise Department (VAT) and Bank certificate, we cannot consider the cost of total stock as on dated of incidence, of Rs. 94,80,341/-.

Considering the documents provided the total stock as on date of an incidence was Rs. 75,33,967/- only. Considering the insured's statement the stock of 666 Bags costing around Rs. 12,99,552/- was not said affected. At the same time total 629 bags costing Rs. 20,70,662/- was unaffected which were in the spray driver space. This shows that out of 75,33,967/- stock value, Less value of sound bags was Rs. 41,63,753/-. Data of unaffected bags can be considered and accepted as true as the same was available for cross verification.

This shows that the actual cost of claimed 953 Bags was 41,63,753, against which the insured have claimed Rs. 61 ,10,127/ considering cost of 953 bags to be Rs. 41,63,753/-. The proportionate cost of 405 bags would not exceed Rs. 17,69,486/-, independent of type of material.

In our opinion stock value from 405 bags would not exceed Rs. 17 ,69,486/- Details about remaining bags (548) and status was not provided by the insured with required evidence. Evidence of inundation and loss was never provided, hence we have not considered the claim and have not recommended the same to the under writers.

ISSUED WITHOUT PREJUDICE,

For, TRANSOCEAN MARINE & GENERAL SURVEY AGENCIES,

Sd/-“

22.     Since the claim had not been finalized by the Insurance Company, the complaint giving rise to these appeals was filed by the complainant, on which notices were issued. It is during the pendency of the complaint that a formal letter of repudiation was issued on 20.12.2010, which is extracted herein under:-

“Date: 20/12/2010

BY REGD AD

M / S VAIBHAV DYESTUFF INDUSTRIES

63, 64/7 GIDC ESTATE,

ODHAV

AHMEDABAD

Dear Sir,

Re: Your claim under Policy no.21240011101100000576

Date of loss: 8/8/2010

We refer to your letter dated 9th August, 2010 intimating a claim under the above policy due to "rain water".

Accordingly we have deputed M/s. Transocean Marine & General Survey Agencies for survey and assessment of the loss.

The surveyors have conducted the survey and submitted their report no. ABD / 4664 / F / 2010 dated 25/11 / 2010

As per the survey report,

(1) The alleged loss under the policy was not due to the operation of any peril insured under the Standard Fire & Special Perils Policy.

(2) No loss was caused due to the incident as the bags allegedly containing stock were empty and in mouth open condition.

(3) All information sought by the surveyors was not supplied by you and the supplied information showed differences. Thus there was breach of policy terms and conditions.

In view of above we hereby repudiate our liability for the above loss, which please note.

Thanking you,

Yours faithfully,

Sd/-

DEPUTY MANAGER”

23.     The complainant in the rejoinder filed before the State Commission took a plea that this rejection has come only after notices were issued and that the complainant proposed to challenge the said letter of repudiation, whereafter, the complaint proceeded and has been ultimately decided by the State Commission holding that the complainant was entitled to a partial acceptance and the addendum report of the surveyor, which indicated the amount of loss, came to be accepted and was accordingly awarded under the impugned order.

24.     Learned counsel for the Insurance Company advanced his submissions contending that firstly, the complaint was not admissible, as no such risk was covered under the policy, secondly the incident itself was seriously doubted as there was lack of evidence with regard to the alleged flooding of the factory due to heavy rains and thirdly the loss claimed was not found to be matching with the documents that were produced by the complainant, who did not supply the entire material that was necessary to believe  the claim as set up in the complaint. Learned counsel also submitted that the documents on record clearly indicate that the claim did not inspire any level of confidence for acceptance and the observations made by the surveyor could not be doubted on any count.

25.     Learned counsel for the complainant/ appellant submitted that all documents had been produced and the entire material was placed on record. However, with regard to the exact loss, the State Commission has erroneously accepted only a part of the claim, whereas all documents pertaining to the complete loss was on record. The contention is that there has been an erroneous and perverse appreciation of the evidence for calculating the loss and hence the impugned order of the of the State Commission to that extent deserves to be set aside and the entire amount as claimed by the complainant deserves to be awarded.

26.     The first issue on the main contention, which was advanced before the State Commission deserves to be analyzed first.  In order to arrive at a conclusion as to whether the finding recorded by the State Commission can be sustained regarding the factory having been inundated by heavy rains, the evidence which needs to be mentioned at the outset  is the intimation sent by the complainant of heavy rains on 09.08.2010 and a simultaneous letter to the surveyor informing about the heavy rain water having entered and flooded the premises of the factory. In support of this intimation the complainant’s counsel has invited the attention of the Bench to the spot survey dated 11.08.2010, extracted hereinabove. A perusal thereof indicates that the complainant had claimed before the surveyor that there was a downpour of rain of more than 10 inches during a short span in Ahmedabad that had flooded the factory premises. The surveyor in his findings at clause no. 4 has observed that a lot of empty bags were lying on the factory floor and the floor was totally blackish and in wet condition. What is more remarkable is that the said report observes the level of water marks in the factory that existed which was more than one feet, and he also recorded the recovery of 405 bags in 25 heaps, which were alleged to be of the raw material and some finished goods. There were other unaffected bags also and it was observed that the total count of those bags came to 642. Photographs were also taken and the cause of damage has been clearly stated therein that the water had entered in the premises and the bags kept below were dissolved and melted in the water, whereafter the bags kept on top of that tumbled to the ground and the same also melted in the water. It is also stated that the incident happened in the night of 07.08.2010 and the early morning of 08.08.2010 and the water remained there for more than 16 hours.

27.     The survey findings and the cause of damage therefore as noted above, commenced with the survey report, where the incident of rain water being located inside the premises has been recorded. The water marks of 9” on the inside and the outside of the wall have been noted and on a general survey it is indicated that the same was about one feet. The doubt which has been cast by the surveyor is on the strength of hump of mud seen on the front of the gate and also there being no water mark in the office area of the factory. He has also indicated that there is a tri junction, where also the area seems to be dry. What is notable is that the complainant reported flooding of water to the surveyor. The surveyor in his spot survey report records that he visited the premises on 10.08.2010 and during survey the factory floor was totally blackish and in wet condition. He also observed the level of water marks in the factory, which were prevailing and which was more than one feet. He then assessed the cause of damage by stating that the water has entered the premises and some of the bags that were placed at the bottom of a pile had dissolved and melted in the water and the bags which were kept over and above them also fell down and melted in the water. The water is said to have retained for more than 16 hours, resulting in the complete damage of the goods that were kept in the said bags.

28.     The same surveyor while making his queries indicates the same number of bags that were found empty and also the number of bags claimed to have been damaged in the claim bills. He has shown some difference therein but in his query, he also indicates his observations that the factory is situate on a road branch from the main road that has upward trend. He then casts a doubt that it was not possible for inundated water to have entered the premises and therefore he observes in the said letter dated 15.09.2010 that there did not seem to be any damage due to inundation and goes on to request for withdrawing of the claim.

29.     This in my opinion was a prelude to the preparation of the repudiation, and the surveyor did not have any authority to advice withdrawing of the claim. The surveyor himself had seen and observed that water marks existed inside the factory premises and then formed an opinion about the possibility of the water not entering premises, which is just contrary to the evidence on record. His subsequent estimation about the water not having entered the premises does not seem to be based on any sound logic. The rains were heavy and this fact has also been noted in the final survey report as well, and has been extracted hereinabove. The weather report indicates that there was a rainfall recorded on 07.08.2010 to the tune of 8 cms and on 08.08.2010 it was 7.8 cms.

30.     What is clinching in the surveyor’s final report is the observation that “damages attributed to rain water is beyond the scope of the policy”. This recital therefore establishes that heavy rains had occurred but the surveyor thought that damages attributable to rain water is not permissible. This observation of the surveyor further translated itself into a recommendation of lack of confidence and he went on to observe that the claim may be referred to revenue intelligence or CBI. An advise to obtain a report from a Forensic Laboratory was also given. The aforesaid estimation of the surveyor presented a grim picture, while at the same time the fact of heavy rains has been noted and it has been observed by the surveyor himself that water had entered the factory premises, the depth whereof was over 9” or one feet. The recovery of empty bags and bags which had not been subjected to any damage have also been indicated. Thus, to term the incident as lacking confidence is just diluting the real incident of inundation for no valid reason. The surveyor seems to have created an aura of doubt in order to represent as if the complainant’s claim was generated. In my opinion there is no evidence nor any such onus has been discharged by the Insurance Company to establish even an iota of doubt about the cause of inundation, which was nothing else but on account of the heavy rains.

31.     The word inundation according to the Oxford Dictionary, Second Edition, edited by Murray, Volume 8 (of the 22 Volumes) means to over spread or over flow of water in abundance, so as to cause flooding. It is not only the flooding of river, which is inundation. The surveyor and also the Insurance Company placing reliance on it is erroneous, as the technical definition of the word inundation as reproduced by him was considered in conjunction with the word flood as if only floods from rivers only cause inundation.

32.     The aforesaid conclusion of the surveyor and the Insurance Company while repudiating the claim, does not seem to have taken notice of  various orders of this Commission and the judgments of the Apex Court that have clearly indicated that a downpour of rain can also cause inundation. To mention a couple of said cases reference be had to the order of this Commission in the case of Oriental Insurance Company Limited Vs. M/s. R.P. Bricks, 2013 SCC OnLine NCDRC 496. Paragraphs 7 and 8 of the said order are extracted herein under:

“7. Learned Counsel for the Appellant/Insurance reiterated the contentions made before the State Commission and stated that an insurance claim has to be construed strictly in terms of the insurance policy and in the instant case monsoon rains admittedly were not specified as one of the perils, against which the insurance policy had been taken. It was also submitted that as per the dictionary meaning the term “inundation” means overflow and flood. In the instant case, the damage was possibly due to heavy rains and not because of any flood or overflow. Further, the report of the Surveyor is an important document and has to be relied upon unless contradicted or controverted by more plausible evidence. In the instant case, the State Commission erred in not giving due credence to the report of the Surveyor, which clearly confirmed that the loss occurred due to monsoon rains on 13^th and 14^th June, 2004 and not because of storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation as covered under the insurance policy and the appeal, therefore, may be allowed.

8. We have heard learned counsel for the Appellant/Insurance Company and have carefully gone through the evidence on record. The fact pertaining to the Respondent/Complainant taking Standard Fire and Special Perils Policy (Material Damage) to cover the stocks of green bricks, finished bricks and the kiln from the Appellant/Insurance Company is not in dispute. As stated by the State Commission in its order, it is also a fact that heavy rains were recorded in the village where the insured premises/stocks were located on 13^th and 14^th of June, 2004 creating a flood like situation as per the report of the Revenue Officer of the area. Further, the Surveyor in its report has not disputed that there was damage to the stocks as well as to the kiln amounting to Rs. 31,77,655/- due to these rains and that he recommended repudiating the claim only on the ground that the loss occurred due to monsoon rains and not because of flood, inundation or any other peril specified in the insurance policy.”

33.     The said order has been approved by the Apex Court in the case of “Oriental Insurance Company Limited Vs. J.K. Cement Works, (2020) 19 SCC 794”. Paragraphs 7 to 11 of the judgment are extracted herein under:-

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 Concise Oxford English Dictionary, 8th Edn. (1990) as follows:

“flood.— … 1a an overflowing or influx of water beyond its normal confines, esp. over land; an inundation.

b the water that overflows.

2a an outpouring of water; a torrent (a flood of rain).”

Particularly in the context of the insurance contracts, Stroud's Judicial Dictionary, 5th Edn. (1986) defines the word “flood”, in Young v. Sun Alliance & London Insurance Ltd. [Young v. Sun Alliance & London Insurance Ltd., (1977) 1 WLR 104 (CA)] , an English case decided by the Court of Appeal, and reads as follows:

“… ‘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 Concise Oxford English Dictionary, 8th Edn. (1990) as follows:

“inundate.— … 1 flood.

2 overwhelm (inundated with enquiries).”

Further, per Black's Law Dictionary, 9th Edn. (1990), the word “inundate” means:

“inundate.— 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. The 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. The fluvial or river flood occurs when the water level exceeds the capacity of a river, stream, or lake, resulting in the overflow of 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, the 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. The pluvial floods include the 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 run-off water comes and accumulates in the low-lying area. In urban localities, because of the 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. The inundation can also be intentional, which is sometimes carried out for military purposes, as well as for agricultural and river management 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, 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 manmade 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.”

34.     The inundation in the present case has resulted from excessive rainfall and according to the aforesaid orders and judgments, inundation would stand covered under the risk policy, which is also available in the present case. The accumulation of water  to the extent  of 9” to 1 feet as observed by the surveyor and its retention for about 16 hours in the premises, that to a certain extent is also supported by photographs, renders  the claim to be preponderantly probable and therefore acceptable.  Consequently, in view of the conclusions drawn hereinabove and the law as discussed, no error is discernable in the conclusions drawn by the State Commission, while allowing the complaint. The loss had occurred due to heavy rainfall and it appears that the surveyor seems to have inappropriately recommended non-payment of damages and his report, which contradicts his own observation is not creditworthy.

35.     It has also been urged by the learned counsel for the Insurance Company that the surveyor’s report should not be forensically examined as held by the Apex Court in the case of “Khatema Fibers Ltd. Vs. New India Assurance Company Ltd. & Anr.,  2021 SCC OnLine SC 818”. In the present case this is not an issue of forensic examination but of an incorrect approach of the surveyor bordering perversity, wherein the opinion to repudiate has been recorded contrary to the observations made by him as indicated above. The Insurance Company therefore erroneously repudiated the claim and the State Commission was justified in awarding indemnity for the claim. The appeal filed by the Insurance Company namely, First Appeal No. 633 of 2015, deserves dismissal and is accordingly dismissed.

36.     Coming to the appeal of the complainant, being First Appeal No. 613 of 2013, it appears that the loss had not been correctly addressed to in the final survey report and therefore an addendum was tendered by the surveyor on 10.12.2010. Even though the assessed loss was denied in the addendum on the ground of the premises not being inundated, yet there is a consistency in the number of bags said to have been recovered both, which were empty, resulting in loss or damage and also the unaffected bags. The addendum report has been extracted hereinabove, which demonstrates the same. Consequently, the proportionate calculation of the loss of 405 bags appears to be correct, as this was the figure of the empty bags mentioned in the spot survey report and also in the final survey report. This indicates that the surveyor did not deviate on the figures of the empty bags that had been collected from the site on the date of first survey conducted immediately after the incident. The unaffected bags have also been accounted for. Thus, the State Commission in my opinion had rightly assessed the loss accordingly and therefore no error is found in the same so as to interfere in this appeal. This appeal is also accordingly dismissed.