NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
V.K. Jain, Presiding Member and Anup K. Thakur, Member
Oriental Insurance Co. Ltd. —Appellant
versus
Ajanta International —Respondent
First Appeal No. 436 of 2011
(Against the Order dated 02/08/2011 in Complaint No. 4/2006 of the State Commission Gujarat)
Decided on 5.9.2016

IMPORTANT POINT
Right of assured under contract of insurance is nothing but right to obtain reimbursement from insurer in case insured goods are lost or damaged.

Headnote:Marine Insurance Act, 1963—Section-17—Insurance—Consumer Protection Act, 1986—Sections 17, 19 and 21—Marine Cargo Policy—Theft of goods—State Commission directed Insurer to pay sum of Rs. 28,10,000 along with 9% interest, compensation quantified at Rs. 10,000/- and cost of litigation quantified at Rs. 5,000/—Right of assured under contract of insurance is nothing but right to obtain reimbursement from insurer in case insured goods are lost or damaged—Even if property / ownership in goods came to be transferred to consignee either when goods were loaded on ship or at Lusaka when delivery of goods appears to have been taken by agent of consignee, such transfer of property / ownership of goods did not take away right of the complainant to seek reimbursement from the insurer in terms of the insurance cover—No misrepresentation was made by complainant to Insurer as regards the basis of transaction between it and consignee—Order passed by State Commission does not call for interference.

       Held: Section-17 of the Marine Insurance Act, 1963 reads as under:

        “Where the assured assigns or otherwise parts with his interest in the subject matter insured, he does not thereby transfer to the assignee his rights under the contract of insurance, unless there be an express or implied agreement with the assignee to that effect. But the provisions of this section do not affect transmission of interest by operation of law”.

        It would thus be seen that where a person who has obtained an insurance policy assigns, or sells the goods in respect of which the insurance cover has been obtained, the right available to him under the contract of Insurance does not get transferred to the assignee of the goods, unless there is an express or implied agreement between him and the assignee transferring such a right to the assignee. ‘The subject matter insured’ in this case, was the goods sent by the complainant to the overseas buyer. The right of the assured under the contract of insurance is nothing but the right to obtain reimbursement from the insurer in case the insured goods are lost or damaged. Therefore, even if the property/ownership in the goods came to be transferred to the consignee either when the goods were loaded on the ship as is contended by the learned counsel for the insurer or at Lusaka when the delivery of the goods appears to have been taken by the agent of the consignee, such transfer of the property / ownership of the goods did not take away the right of the complainant to seek reimbursement from the insurer in terms of the insurance cover taken by it, since there is no evidence of the right to seek reimbursement in case of loss or damage to the insured goods having been transferred to the consignee of the goods. Section 17 of the Marine Insurance Act, expressly saves the right of the insured to claim reimbursement from the insurer in such a case.

       In United India Insurance Co. Ltd. Vs. Leisure Wear Exports Ltd., Civil Appeal No. 1004 of 2006 decided on 29.06.2016, the respondent obtained an Open Marine Policy from the appellant United India Insurance Company Ltd., to the extent of Rs. 2,00,00,000. The respondent shipped a consignment of hosiery goods and readymade garments to a buyer in Moscow. The consignment on reaching Moscow Port was loaded in the ship for its final destination – Moscow. The consignment landed at a port in Ukraine and from there it was taken by road to Moscow. When delivery was taken at Moscow, it was found short of 142 cartons of hosiery goods and 139 cartons of readymade garments. Thus, the facts in that case were identical to the facts in this case. Thus, the facts in that case were identical to the facts in this case. Initially the claim for the aforesaid loss was lodged by the consignee with another insurance company. They having not settled it, the consignee authorized the respondent to file claim against the appellant company for recovery of the loss ‘of their goods’. The respondent then filed two consumer complaints on the strength of the policy which it had taken from the appellant. The complaints were resisted by the insurer firstly on the ground that the complainant had no right to file the complaint. It was also alleged that since the respondent had already assigned the policy in favour of the consignee to whom the goods were sent, it was for the consignee to file the complaint and the complainant had no locus-standi to file the said complaint. The question which arose before the Hon’ble Supreme Court , as spelt out in para 19 of the judgment was as to whether the respondent had a locus-standi to file the complaint on the strength of the contract of the insurance policy in question, claiming compensation for the loss sustained in the transaction. Referring to Section 17 of the Marine Insurance Act, the Hon’ble Supreme Court inter-alia observed and held as under:

        “26. Section 17, in terms, recognizes and permits the insured to make assignment of their contract of insurance policy in favour of an assignee and at the same time allows the insured even after making an assignment to retain all those rights which are available to them under the contract of insurance with the insurer (appellant). In other words, in terms of Section 17, even after making an assignment by the insured of their contract of insurance policy, the rights of insured under the contract of insurance policy are not assigned in favour of assignee by the deed of assignment but they are continued to remain with the insured.

        27. We are, therefore, of the considered view that firstly, we do not find that the respondent (insured) assigned the contract of insurance policy in favour of their consignee as contended by the appellant. Secondly, even assuming that the respondent (insured) assigned the contract of insurance policy in favour of their consignee, yet the assignment so made did not have any adverse effect on the rights of the insured under the contract of insurance policy as the rights continued to remain with them by virtue of Section 17 of the Act.

        28. The respondent was, therefore, legally entitled and had the locus to file a complaint against the appellant on the strength of contract of insurance policy for enforcement of their all contractual rights available to them under the insurance policy for claiming compensation for the loss caused from the appellant and the complaint so filed by the respondent could not be dismissed as not maintainable on the ground of locus. It was thus rightly held as maintainable”. (Paras 8 to 10)

       Result: Appeal disposed of.