OBERAI FORWARDING AGENCY v. NEW INDIA ASSURANCE CO. LTD. AND ANR

Citation: [2000] 1 S.C.R. 554

Court: Supreme Court of India

Bench: S.P. BHARUCHA, S.S.M. QUADRI, N. SANTOSH HEGDE

Judgment text

OBERAI FORWARDING AGENCY v. NEW INDIA ASSURANCE CO. LTD. AND ANR. FEBRUARY 1, 2000 [S. P. BHARUCHA, S. S. MOHAMMAD QUADRI AND N. SANTOSH HEGDE, JJ. ] Consumer Protection Act, 1986: Sections 2(b)(i) and 3. Consume~o is-Consignor--Consignment ofgoods-loss in transit--Claim-Compensation paid by insurer to the consignor-In tum consi! J nor executed a letter ofsubrogation and power of attorney in favour ofinsurer empowering insurer to recover compensation--Complaint filed by insurer in the Consuma Fornm-Held not maintainable--Held in view of its contents "Letter ofsubrogation'' was a Letter ofAssignmen~eing assignee the insurer was not a beneficiary of the hired service-lnsurer held not consumer. Insurance-Subrogation-Difference between subrogation and assignment. Doctrine of subrogation and assignment of-Applicability of. The second respondent, through its agent, hired two tnncli:s from a firm of Bareilly to transport broken rice to Barpata in Assam.

The appellant-forwarding Agency was asked by the firm and the second respondent to settle the freight for the consignment, which it did. However, the consignment sent by the second-respondent was lost in transit. The firstrespondent, the insurer, compensated the second-respondent the consignor, for loss of goods. In turn I. he second-respondent executed a Letter of Subrogation in ravour of the fiirst·respondent assigning, transferring and abandoning all his rights agai1~st the transport carrier. By this letter of subrogation the first-responde111t was granted full power to use all lawful ways and means to recover the claim for the loss in its own name. The second-respondent also executed a Special Power of Attorney in favour of the first- respondent.

Thereafter, the first-respondent filed a complaint against the appellant under the Consumer Protection Act, 1986 in respect of tile loss of consignment specifically stating that the complainant stands subrogated to the rights of second-respondent as consumer. In its written OBERAI FORWARDING AGENCY v. ~EW INDIAASSURANCE CO. LTD. 555 statement the appellant contended that the first-respondent was not a consumer and had no right to file the complaint under the provisions of Consumer Protection Act. The Insurer-complainant thereafter amended the complaint and added the second-respondent as a co-complainant. The District Consumer Forum directed the appellant tu pay Rs. 98,924. 55 as compensation to the Insurer. The appellant unsuccessfully approached the State Forum as well as the National Consumer Disputes Redressal Commission.

In appeal to this Court it was contended on behalf of the appellant that (1) the docuetent executed by the first-respondent though styled as "Letter of Subrogation" was an assignment by the second-respondent of its rights to the first-respondent. t:pon such assignment, the assignor secondrespondent had no right left; and (2) the assignee-Insurer was not a consumer. Allowing the appeal and setting aside the impugned order, the Court HELD : 1. The first-respondent was not entitled to maintain the complaint under the Consumer Protection Act, 1986. (559-E] 2. In its literal sense, subrogation is the substitution of one person for another. T! ue doctrine of subrogation confers upon the insurer the right to receiw the benefit of i. uch dghb and remedies as the assured has against third parties in n:gard to the ! olts t3 the txtent that the Insurer has indemnified the loss and made it good.

The Insurer is, theri:fore, entitled to exercise whatever rights the assured possesses to recover to that extent comFnsation for the loss, but it must do so in the name of the assured. However, there is distinction between subrogation and assignment. (563-E] Mac Gillivray & Parkington; Insurance Law, Seventh Edn. referred to. 3. By the first clause of the operative part of letter of subrogation 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 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 respond. ent.

Thirdly, the first respondent would not be entitled to take steps to rec:over 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. [564-G-H; 565-A] 4. The s~cond 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 Joss or damage", which meant that the tl"ansfer·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. [565-B] 5. The terms of the Letter of Subrogation are clear. They cannot be read differently in the light of another, though contemporaneous, document, viz. the Special Power of Attorney. [565-D] 6.

In this case 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 recov,er compensation for the loss. There was .... no question of the first respondent being a beneficiary 11f the services 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. Tne first respondent, therefore, was not a 'consumer' within the meaning of the Consumer Protection Act ~ind was, therefore, not entitled to maintain the complaint. [565-E] 7. By reason of the transfer· and assignment of all the rights of the second respondent in first respondent's favour, the second respondent retained no right to recover compensation for the loss of the consignment.

The addition of the second respondent to the complaint as a co-complainant did not, therefore, make the complaint maintainable. [565-F-G] Union ofIndia v. Sri Sarada Mills Ltd. , [1972] 2 SCC 877; New India Assurance Co. Ltd. v. G. N. Saina11~ [1997] 6 SCC 383; Vasudeva Mudaliar v. Caledonian Insurance Co. & Anr. AIR (1965) Madras 159; United India Fire and General Insurance Co. Ltd. v. Paianiappa Transport Carriers &Anr. , OBERAIFORWARDINGAGENCY'- NEWINDIAASSURANCECO. LID. [BHARUCHA,J. j 557 AIR (1986) Andhra Pradesh 32; M/s. Green Transport Company v. New India Assurance Company Ltd. , (1992) 2 CPJ 349 and Transport Corporation of India Ltd. v. Davangera Cotton Mills Ltd. & Ors. , (1998) 2 CPJ 16, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13387 of ~ From the Judgment and Order dated 14. 6. 96 of the National Consumer Disputes Redressal Commission, New Delhi in R. P. No 135of1996. B. D. Ahmed, Ms. Shipra Ghose, Anees Ahmed, J. Tripathy and A. K.

Panda for the Appellant. Jos Chiramel, S. B. Upadhyay and Rajesh Kumar Tripathi for the Respondents. The Judgment of the Court was delivered by 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 fist respon- - dent insurance company was subrogated to the rights of the second r . NEWIND! AASSURANCECO. LID. [BHARUCHA, J. ] 565 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.

Learned counsel for the first respondent submitted that the Letter of Subrogation and the Special Power of Attorney should be read together and, so read, it would be seen that the first respondent was not an assignee of the second respondent's rights but was merely subrogated to them. The terms to the Letter of Subrogation are clear. They cannot be read differently in the light of another, though contemporaneous, document. Now, as is clear, 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. By n:ason of the transfer and assignment of all the rights of the second respondent in the first respondent's favour, the second respondent retained no right to recover compensation for the loss of the consignment. The addition of the second respondent to the complaint as a co-complainant did not, therefore, make the complaint maintainable. In the premises, the appeal is allowed. The judgment and order under appeal is set aside. The complaint filed by the respondents is dismissed. T. N. A. Appeal allowed.