Insurance Claim Dispute: Supreme Court clarifies the cause of damage due to heavy rains vs. seepage in United India Insurance claim case (2025)

Introduction

Date of the Judgment: May 19, 2025

Citation: 2025 INSC 731

Judges: B.V. Nagarathna, J. and Satish Chandra Sharma, J.

When disaster strikes, homeowners rely on insurance to cover damages. But what happens when the insurance company denies the claim, arguing the damage was due to a cause not covered in the policy? The Supreme Court of India recently addressed such a dispute in the case of Gopal Dikshit vs. United India Insurance Company Ltd., focusing on whether the damage to a property was caused by heavy rains (a covered peril) or seepage (an excluded peril).

This judgment clarifies the responsibilities of insurance companies in assessing claims related to property damage, especially when there are conflicting reports about the cause of the damage. The bench comprised Justice B.V. Nagarathna and Justice Satish Chandra Sharma.

Case Background

Gopal Dikshit owned a property at 50, Ishwar Nagar, Mathura Road, New Delhi, comprising a basement, ground floor, first floor, and second floor. The entire building was insured with United India Insurance Company Ltd. for Rs. 1.50 crores under House Holder Insurance Policy No. 2219042615P115431073, valid from March 13, 2016, to March 12, 2017.

Dikshit claimed that heavy downpours in New Delhi from August 25, 2016, to August 31, 2016, severely flooded his premises. He was out of Delhi from August 24, 2016, to August 29, 2016. Upon returning, he found the basement inundated with water, causing extensive damage to furniture, fittings, books, and other belongings. He installed a booster pump on August 30, 2016, to drain the water, but it was not fully effective.

A surveyor, Mr. Akash Chopra, inspected the premises on September 3, 2016. Subsequently, a second surveyor, Mr. R.K. Singla, also visited the premises. Dikshit contacted Ms. Indu Singh at the insurance company, who informed him that the initial survey report was unsatisfactory and that another surveyor would reassess the damage. The first survey report, submitted on September 6, 2016, indicated that the damage was due to heavy rain on August 25, 2016, with water entering from the flooring.

On September 7, 2016, structural engineers opined that the building was unsafe for habitation and recommended demolition and reconstruction. On November 23, 2016, the insurance company formally rejected the claim, stating that the damage was caused by continuous seepage of water from the basement, which was not a covered peril under the policy.

Timeline

Course of Proceedings

The appellant, being aggrieved and dissatisfied by the dismissal of the claim, filed Consumer Case No. 2287 of 2017 before the National Consumer Disputes Redressal Commission (NCDRC). However, the NCDRC dismissed the complaint, leading to the present appeal before the Supreme Court.

Legal Framework

This appeal is filed under Section 23 of the Consumer Protection Act, 1986, which allows a person aggrieved by an order made by the National Consumer Disputes Redressal Commission (NCDRC) to appeal to the Supreme Court.

Section 23 of the Consumer Protection Act, 1986 states:

“Any person aggrieved by an order made by the National Commission in exercise of its powers conferred by sub-clause (i) of clause (a) of section 21, may prefer an appeal against such order to the Supreme Court within a period of thirty days from the date of the order.”

Arguments

Arguments by the Appellant/Complainant

• The counsel for the appellant argued that NCDRC judgments have consistently held that “flood” means an outpouring of water, including both inundation and seepage. Reliance was placed on United India Insurance Co. Ltd. v. Dipendu Ghosh & Anr. [II (2009) CPJ 3 11 (NC)].
• The NCDRC should have relied on the Meteorological Department Report stating that Delhi had rainfall from August 25, 2016, to August 31, 2016. It is common for different areas in Delhi to receive varying amounts of rainfall, and Ishwar Nagar received heavy rainfall, leading to flooding.
• “Seepage” refers to the slow and gradual flow of liquid from a source. In this case, the basement accumulated over 3 feet of water in just three days, which cannot be classified as “seepage.”
• If there was seepage, the appellant would have taken remedial measures earlier to stop it and prevent damage to his belongings.
• The first surveyor visited the site on September 3, 2016, while the second visited on September 9, 2016, ten days after the incident. No prudent person would allow water to stay in the premises for ten days, further destroying belongings. The NCDRC should have relied on the survey report dated September 6, 2016, rather than the one dated October 18, 2016, which appears to be mala fide.
• In the report dated September 6, 2016, the surveyor stated that the cause of loss was: “Due to heavy rains in Delhi on 25.08.2016 the water entered from the flooring, resulted in damages to the insured’s building and contents.” This report was not considered, and instead, the respondent opted for another survey conducted ten days after the incident.
• The engineer’s report only stated the condition of the building and had nothing to do with seepage water in the basement. The certificates issued by M/s Unique Consulting Engineers dated September 7, 2016, state that:

  “Further, existing building was constructed having RCC frame. As time passes structure became old resulting corrosion in reinforcement due to water seepage in structural elements, i.e. reducing the strength of building. Hence, it is strongly recommended to dismantle existing building and reconstruct to meet present seismic parameters of the National Building Code of India; 2009.”

  The report discusses the structural condition of the building and water seepage in structural elements, not the basement.

• Surveyors appointed by the respondent had categorically stated that there was heavy rainfall on August 25, 2016. The basement was perfectly dry when the appellant left on August 24, 2016, but after returning on August 29, 2016, he found it flooded with water marks up to the window height.
• The respondent denied the claim based on seepage but never tried to trace the source of the water or appointed anyone to do so, which is an unfair practice.

Arguments by the Respondents

• Even if “seepage” encompasses both inundation and seepage, each case is distinct and should be evaluated based on its individual circumstances and the terms of the contract. The case law cited by the appellant does not establish a universal interpretation. The specific terms and conditions of the policy do not encompass seepage as a covered peril.
• The appellant’s claim timeline, from August 25 to 31, 2016, raises questions regarding its reliability. The Meteorological Report dated August 25 to 31, 2016, does not mention heavy rainfall on August 25, 2016. The relevant portion of the impugned order states:

  “17. The Complainant, however, in the Consumer Complaint, alleged that the loss was caused during the period from 25th to 31st August, 2016, which appears to be an afterthought. We have carefully gone through the Meteorological Report dated 25th to 31st August, 2016, filed by the Complainant. Nowhere in the report is it mentioned that there was heavy rains on 25th August, 2016. The Policy covered the risk due to flood and inundation, amongst others. Meteorological Report does not show that there was such heavy rain in the area leading to flooding. Admittedly, the loss was caused due to seepage. The certificate of International Consultants and Technocrats Pvt. Ltd. dated 06.09.2016 as well as certificate issued by Unique Consulting Engineers dated 07.09.2016 make it abundantly clear that there was continuous ingress of seepage water into the foundation and basement, which corroded the reinforcement steel, making it weaker to sustain loads, especially the lateral loads. As seepage of water was not named in the insured perils, the Opposite Party rightly repudiated the claim.”

  The insurance policy covered risks associated with flood and inundation, but the Meteorological Report did not provide evidence of significant rainfall leading to flooding. The primary cause of the loss was attributed to seepage, supported by certificates from structural engineers confirming continuous ingress of seepage water into the foundation and basement, resulting in corrosion of the reinforcement steel.

• The interpretation of “seepage” as a gradual process aligns with the circumstances. Seepage, especially in the context of a basement or foundation, acknowledges its potential for prolonged occurrence, as water gradually infiltrates and accumulates. Seepage refers to the unauthorized infiltration of water into areas where it should not be, resulting in progressive accumulation over time.
• The certificates issued by International Consultants and Technocrats Pvt. Ltd. on September 6, 2016, underline the continuous ingress of seepage water into the foundation and basement. The certificate issued by Unique Consulting Engineers dated September 7, 2016, accentuates that the building was designed according to the Indian Standard codes of 1986. However, with the revision of seismic parameters, the existing structure no longer meets the updated requirements, and the structure has aged, resulting in corrosion due to water seepage.
• The escalation of the water level in the basement during the appellant’s absence can be attributed to seepage, as water had been gradually infiltrating the area for an extended period, leading to substantial accumulation.
• Both the Preliminary Report and the Final Survey Report identified the cause of the loss as continuous seepage of water into the foundation and basement. There was no mention of heavy rainfall causing significant damage in The Times of India editions dated August 26 and 27, 2016.
• The certificate issued by M/s International Consultants & Technocrats Pvt. Ltd. indicated that continuous seepage of water into the foundation and basement was the primary cause of the damage, rendering the building structurally unsound.

Submissions Table

Issues Framed by the Supreme Court

1. Whether the cause of loss to the premises is due to seepage water or heavy rains in Delhi.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Court considered the following authorities:

• United India Insurance Co. Ltd. v. Dipendu Ghosh & Anr. [II (2009) CPJ 3 11 (NC)]: The appellant relied on this case to argue that “flood” includes both inundation and seepage.
• Mahavir Road and Infrastructure Private Limited v. Iffco Tokio General Insurance Company Limited (2019) 5 SCC 677: The respondent relied on this case, but the Court distinguished it, noting that the facts were different as that case had no evidence of flood damage.

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• United India Insurance Co. Ltd. v. Dipendu Ghosh & Anr. [II (2009) CPJ 3 11 (NC)]: The appellant relied on this case to argue that “flood” means outpouring of water and on this analogy, it would include both inundation and seepage.
• Mahavir Road and Infrastructure Private Limited v. Iffco Tokio General Insurance Company Limited (2019) 5 SCC 677: The Respondent relied upon the judgment of this court in Mahavir Road and Infrastructure Private Limited v. Iffco Tokio General Insurance Company Limited (2019) 5 SCC 677. However, the set of facts of the relied upon judgment are different from the instant case. In the said case, the Surveyor recorded that there was no evidence of any damage on account of flood water and only surface damage was found. In the case at hand, from the evidence presented before us it can be concluded that the cause of damage to the premises is due to heavy rainfall accounting for flooding in the basement.

What weighed in the mind of the Court?

To determine the basis of the Supreme Court’s decision, a sentiment analysis was conducted, focusing on key aspects emphasized in the reasoning portion of the judgment.

The Supreme Court’s decision in Gopal Dikshit vs. United India Insurance Company Ltd. was primarily influenced by the following factors:

• First Survey Report: The initial survey report, which attributed the damage to heavy rains and flooding, played a significant role in the Court’s decision.
• Technical Expert Certificates: Certificates from technical experts corroborated the findings of the first survey report, further solidifying the conclusion that the damage was due to flooding rather than seepage.
• Rejection of Second Survey Report: The Court found the second survey report, which claimed seepage, to be arbitrary and without a valid basis, leading to its rejection.
• Distinction from Previous Case Law: The Court distinguished the facts of the present case from those in Mahavir Road and Infrastructure Private Limited v. Iffco Tokio General Insurance Company Limited, further reinforcing its decision.

Fact:Law Ratio Table

The Supreme Court’s decision was heavily influenced by the factual aspects of the case, particularly the evidence presented in the first survey report and the certificates from technical experts. While legal considerations were also taken into account, the factual evidence played a more significant role in the Court’s reasoning.

Logical Reasoning

For the issue of whether the cause of loss to the premises was due to seepage water or heavy rains in Delhi, the court’s logical reasoning can be illustrated as follows:

Key Takeaways

• Insurance companies must thoroughly investigate claims and provide reasonable grounds for rejecting them.
• Initial survey reports carry significant weight and should not be arbitrarily overturned without valid justification.
• Policyholders should ensure they have adequate documentation and expert opinions to support their claims.

Directions

The Supreme Court set aside the NCDRC’s order and remanded the matter back to the NCDRC for the limited purpose of determining the appropriate quantum of compensation payable to the appellant in accordance with the policy terms and applicable law.

Development of Law

The ratio decidendi of this case is that insurance companies must provide reasonable and justifiable grounds for rejecting claims, and initial survey reports carry significant weight. The Court emphasized the importance of thorough investigation and documentation in insurance claim disputes.

Conclusion

In the case of Gopal Dikshit vs. United India Insurance Company Ltd., the Supreme Court set aside the NCDRC’s order, holding that the damage to the insured premises was caused by heavy rains and flooding, not seepage. The Court remanded the matter back to the NCDRC to determine the appropriate compensation. This judgment underscores the importance of thorough investigation and reasonable justification in insurance claim disputes.