Oberai Forwarding Agency vs New India Assurance Co. LTD.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2000 Supreme(SC) 251

2000(1) Supreme 339
SUPREME COURT OF INDIA
(From National Consumer Disputes Redressal Commission, New Delhi)
S.P. Bharucha, S.S. Mohammad Quadri & N. Santosh Hedge, JJ.
Oberai Forwarding Agency -Appellant
verus
New India Assurance Co. Ltd. & Anr. -Respondents
Civil Appeal No. 13387 of 1996
Decided on 1-2-2000
Counsel for the Parties :
For the Appellant : B.D. Ahmed, Ms. Shipra Ghose, Anees Ahmed, J. Tripathy, A.K. Panda, Advocates.
For the Respondents : Jos Chiramel, S.B. Upadhyay, Rajesh Kumar Tripathi, Advocates.

Headnote:(i) Consumer Protection Act, 1986-Section 2(d)(ii) r/w Section 2(b)(a)-Consumer-Assignee of consignor (of lost goods)-Consigned goods lost-Insurance Company settled claim of consignor and got letter of subrogation and assignment -Claim petition by Insurance Company against transporter-In terms of letter of subrogation Insurance Company is only an assignee-Insurance Company not a beneficiary of services hired by insured consignor -Insurance Company not a consumer -Claim petition not maintainable.
       In its literal sense, subrogation is the substitution of one person for another. The doctrine of subrogation confers upon the insurer the right to receive the benefit of such rights and remedies as the assured has against third parties in regard to the loss to the extent that the insurer has indemnified the loss and made it good. The insurer is, therefore, entitled to exercise whatever rights the assured possesses to recover to that extent compensation for the loss, but it must do so in the name of the assured. (Para 17)
       In the instant case the operative portion of the letter of subrogation executed by the second respondent (consignor) in favour of the Insurance Company, may be broken up into two, namely, (i) "we hereby assign, transfer and abandon to you all our rights against the Railway Administration Road transport carriers or other persons whatsoever, caused or arising by reason of the said damage or loss and grant you full power to take and use all lawful ways and means in your own name and otherwise at your risk and expense to recover the claim for the said damage or loss"; and (ii) "we hereby subrogate to you the same rights as we have in consequence of or arising from the said loss or damage." (Para 19)
       Held : By the first because the second respondent assigned and transferred to the first respondent all its rights arising by reason of the loss of the consignment. It granted the first respondent full power to take lawful means to recover the claim for the loss, and to do so in its own name. If it were a mere subrogation, first, the word "assigned" would not be used. Secondly, there would not be a transfer of all the second respondent s rights in respect of the loss but the transfer would be limited to the recovery of the amount paid by the first respondent to the second respondent. Thirdly, the first respondent would not be entitled to take steps to recover the loss in its own name; the steps for recovery would have to be taken in the name of the second respondent. Thus, by the first clause there was an assignment in favour of the first respondent. The second clause, undoubtedly, used the word "subrogate", but it conferred upon the first respondent "the same rights" that the second respondent had "in consequence of or arising from the said loss or damage", which meant that the transfer was not limited to the quantum paid by the first respondent to the second respondent but encompassed all the compensation for the loss. Even by the second clause, therefore, there was an assignment in favour of the first respondent. (Paras 20 and 21)
       The loss of the consignment had already occurred. All that was assigned and transferred by the second respondent to the first respondent was the right to recover compensation for the loss. There was no question of the first respondent being a beneficiary of the service that the second respondent had hired from the appellant. That service, namely, the transportation of the consignment, had already been availed of by the second respondent, and in the course of it the consignment had been lost. The first respondent, therefore, was not a consumer within the meaning of the Consumer Protection Act and was, therefore, not entitled to maintain the complaint. (Para 23)
       (ii) Insurance-Subrogation-Distinction between subrogation and assignment-Rights of Insurance Company under subrogation and assignment-Distinction. (Paras 17 to 23)

JUDGMENT

Bharucha, J.-The facts are set out only in so far as they are relevant to the two issues in this appeal, namely, whether the first respondent insurance company was subrogated to the rights of the second respondent consignor in respect of the lost consignment or whether it was the assignee of the rights of the second respondent in respect thereof, and, if the latter, whether it wsa a consumer within the meaning of the Consumer Protection Act, 1986, entitled to maintain a complaint thereunder.

2. The second respondent, throught its agent, hired two trucks from M/s. Bhasin Goods Carriers of Bareilly to transport broken rice to Barpeta, Assam. According to the appellant, it was asked by M/s. Bhasin Goods Carriers and the second respondent s agent only to settle the freight for the consignment, which it did. The trucks loaded with the consignment did not reach their destination and the consignment was lost.

3. The second respondent made a claim for the value of the consignment upon the first respondent, who had insured it, in the sum of Rs. 93,925.55. The claim was settled by the first respondent in the sum of Rs. 64,137/-, and that sum was paid to the second respondent.

4. Consequent upon the claim being settled, the second respondent executed in favour of the first respondent, a "Letter of Subrogation" on 15th June, 1992. It stated:

"In consideration of your paying to us the sum of Rs. 64137/- only say Rupees Sixty four thousand one hundred and thirty seven only in full settlement of our claim for non-delivery/shortage & damage under policy No. 2142140400015 Cert. No./decl. No. 269240001/54 & 55 issued by you all on the undermentioned goods, we hereby assign, transfer and abandon to you all our rights against the Railway Administration Road transport carriers or other persons whatsoever, caused or arising by reason of the said damage or loss and grant you full power to take and use all lawful ways and means in your own name and otherwise at your risk and expense to recover the claim for the said damage or loss and we hereby subrogate to you the same rights as we have in consequence of or arising from the said loss or damage.

And we hereby undertake and agree to make and execute at your expense all such further deeds, assignments and documents and to render you such assistance as you may reasonably require for the purpose of carrying out this agreement."

On the same day the second respondent also executed in favour of the first respondent a Special Power of Attorney, inter alia for the following purpose :

"To file suit in the court of law against the Railways Adm. if necessary for the recovery of the claim moneys for the afore said claim, on our behalf and in our name and to give valid discharges and effectful receipt thereto."

5. On 9th September, 1992 the first respondent filed against the appellant a complaint under the Consumer Protection Act in respect of the loss of the consignment wherein it stated that the second respondent had "assigned/transferred their rights to claim the amount from the O.P. in favour of the complainant by executing Letter of Subrogation and power of attorney in it favour. ...... The complainant stands subrogated to the rights of M/s. M.S. Industries as consumer and is consumer under the law and the private of the C.P. Act.". The appellant in its written statement contended that the first respondent was not a `consumer and had no right to file the complaint and that the provisions of the Consumer Protection Act were not attracted. The complaint was thereafter amended and the second respondent was added as a co-complainant.

6. The District Forum, Shahjahanpur, in which the complaint was filed, allowed it and directed the appellant to pay to the respondents the sum of Rs. 98,924.55 and interest. The appellant preferred an appeal before the State Forum. The appeal was dismissed, but the amount of compensation was reduced to Rs. 69.137/-. Against the order of the State Commission, a Revision Petition

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2000 Supreme(SC) 251

Cases Referred (4)