1. Insurance claim dispute — Flooding of basement due to heavy rainfall — Repudiation of claim on grounds of seepage — Appeal under Section 23, Consumer Protection Act, 1986. (Para 1 , 2 , 3 , 8 , 9 )
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2025 Supreme(SC) 871
SUPREME COURT OF INDIA
B.V. Nagarathna, Satish Chandra Sharma, JJ.
Gopal Dikshit – Appellant
Versus
United India Insurance Company Ltd. – Respondent
Civil Appeal No. 6623 of 2025
Decided On : 19-05-2025
Advocates appeared:
For the Appellant(s) : Mr. Siddhartha Chowdhury, AOR
For the Respondent(s): Mr. Amit Kumar Singh, AOR Ms. K Enatoli Sema, Adv. Ms. Chubalemla Chang, Adv. Mr. Prang Newmai, Adv.
For the Appellant(s) : Mr. Siddhartha Chowdhury, AOR
For the Respondent(s): Mr. Amit Kumar Singh, AOR Ms. K Enatoli Sema, Adv. Ms. Chubalemla Chang, Adv. Mr. Prang Newmai, Adv.
IMPORTANT POINT
Insurance – In absence of any substantive grounds to question findings of first survey, belated reassessment conducted by Insurance Company is not proper.
Headnote:
Consumer Protection Act, 1986 – Section 23 – Insurance – House Holder Insurance Policy – Damage to premises due to flood water – Claim rejected on the ground that damage to building was caused by continuous seepage of water from basement, which was not listed as a named peril under insurance policy – Damage to insured premises was not caused by any inherent structural defect or seepage, but was instead a direct consequence of unprecedented and heavy rainfall experienced during relevant period, which led to flooding of water into basement – Despite conducting survey before, Respondent proceeded to commission a second survey without furnishing any valid grounds justifying necessity for reassessment – Certificates submitted by technical expert pertains solely to seepage affecting structural elements of building and is silent on condition of basement or cause of damage in question – As such, this report does not assist in determining cause of damage to basement and as a result of such limitation, it cannot be relied upon for present purpose – In absence of any substantive grounds to question findings of first survey, belated reassessment conducted by Respondent is deemed arbitrary and without due basis – Impugned order passed by NCDRC dismissing complaint set aside and matter remanded back to NCDRC for limited purpose of determining appropriate quantum of compensation payable to Appellant in accordance with policy terms and applicable law. (Paras 28, 29, 30 and 31)
Facts of the case:
Present appeal under Section 23 of Consumer Protection Act, 1986 arises out of impugned order dated 07.12.2022 passed by National Consumer Disputes Redressal Commission, New Delhi in Consumer Case No. 2287 of 2017 whereby NCDRC dismissed complaint filed by Appellant.
Findings of Court:
In view of concurrent findings in certificates and first survey report aforementioned, we conclude that the damage to the insured premises was not caused by any inherent structural defect or seepage, but was instead a direct consequence of the unprecedented and heavy rainfall experienced during the relevant period, which led to flooding of water into the basement.
Result : Civil Appeal disposed of.
Legal Category Hierarchy
Table of Contents
2. Whether damage resulted from covered peril of flooding and inundation or excluded peril of continuous seepage — Reliability of conflicting survey reports. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 )
3. Technical reports and the initial survey consistently attributed damage to heavy rainfall and flooding; the subsequent survey was arbitrary and lacked justification for deviating from initial findings. (Para 27 , 28 , 29 )
4. An insurance claim cannot be repudiated based on a subsequent survey report that arbitrarily contradicts a prompt, comprehensive initial survey without providing cogent reasons or new evidence. (Para 30 )
5. Impugned order set aside — Matter remanded to NCDRC for determination of compensation quantum. (Para 31 , 32 )
6. How does the court distinguish between flooding and seepage in the context of insurance claims?
The court distinguishes them based on the nature of water ingress. Rapid accumulation of water resulting from heavy rainfall is classified as flooding, whereas slow, gradual infiltration into structural elements is considered seepage. (Para 27 , 28 , 29 )
7. What is the evidentiary value of a second survey report that contradicts a first survey report?
A second survey report that deviates from a prompt and comprehensive first survey without providing reasonable, cogent, or valid grounds for reassessment is deemed arbitrary and unreliable. (Para 30 )
8. Can a structural engineer's report on general building corrosion be used to deny a specific claim for basement flooding?
No, if the report addresses general structural seepage in elements but remains silent on the specific area of loss, it cannot establish a causal link to deny the claim. (Para 27 )
JUDGMENT :
SATISH CHANDRA SHARMA, J.
1. The present appeal under Section 23 of the Consumer Protection Act, 1986 (hereinafter the “Act”) arises out of the impugned order dated 07.12.2022 passed by the Hon’ble National Consumer Disputes Redressal Commission, New Delhi (hereinafter “NCDRC”) in Consumer Case No. 2287 of 2017 whereby NCDRC dismissed the complaint filed by the Appellant.
FACTUAL MATRIX
2. The complainant who is the Appellant herein is the owner of the premises situated at 50, Ishwar Nagar, Mathura Road, New Delhi, 110065 (hereinafter “Premises”). The Premises had a basement, ground floor, first floor and second floor. The entire building was insured with the opposite party who is the Respondent herein vide House Holder Insurance Policy No. 2219042615P115431073 for Rs. 1.50 crores which was valid for the period from 13.03.2016 to 12.03.2017.
3. It is the case of the Appellant that due to a heavy downpour in New Delhi from 25.08.2016 to 31.08.2016, the Premises were severely flooded. During this period, the Appellant was out of Delhi from 24.08.2016 to 29.08.2016. Upon his return, he found that the basement of the Premises was inundated with water, resulting in extensive damage to the furniture, fittings, almirahs, books, and other belongings stored there. In an effort to prevent further deterioration, the Appellant installed a booster pump on 30.08.2016 to drain out the water from the basement. Despite this measure, the accumulated floodwater could not be completely drained out. Thereafter, the Surveyor, Mr. Akash Chopra, visited the Premises on 03.09.3016 and inspected the basement.
4. On 04.09.2016, the Appellant contacted Ms. Indu Singh by phone to inquire about the outcome of the survey conducted by Mr. Akash Chopra. Ms. Singh informed him that the report prepared by Mr. Chopra was not satisfactory and, therefore, she would assign another Surveyor to revisit the premises and reassess the damage. The Appellant also requested a copy of the preliminary survey report, but the Respondent did not provide it, avoiding the request without offering any explanation.
5. Second Surveyor, Mr. R.K. Singla visited the Appellant’s Premises and conducted the survey again. In the meanwhile, the surveyor who visited the site on 03.09.2016, submitted its report on 06.09.2016 which stated that the cause of loss was due to heavy rain in Delhi on 25.08.2016 and water entered from the flooring, resulting in damages to the insured building and contents.
6. Additionally, on 07.09.2016 the Appellant sought the opinion of two structural engineers concerning the safety of the Premises. The opinion given by both of them indicated that the building was no longer fit for habitation and had become structurally unsafe and concluded that the Premises had to be vacated immediately and recommended that it be demolished and reconstructed.
7. On 10.09.2016, the Complainant once again contacted Ms. Indu Singh to inquire about the status of the survey. She reiterated that the report was not satisfactory and requested the Appellant to visit her office on 12.09.2016 to clarify certain points. During this meeting, Ms. Indu Singh informed the Complainant that, due to the use of the term “seepage” in the survey reports, the insurance claim would not be admissible. Consequently, the final survey report was submitted on 18.10.2016.
8. Subsequently, on 23.11.2016, the Appellant received a letter from the Respondent formally repudiating the claim. The rejection was based on the ground that the damage to the building was caused by continuous seepage of water from the basement, which was not listed as a named peril under the insurance policy, therefore, the resulting loss or damage was not indemnifiable.
9. Being aggrieved and dissatisfied by the dismissal of the Appellant’s claim, Consumer Case No. 2287 of 2017 was filed before NCDRC. However, the said complaint was dismissed by the NCDRC, which gives rise to the instant appeal.
10. Before delving into the merits of the
