HARYANA URBAN DEVELOPMENT AUTHORITY vs BHARGAVA APARELS PVT LTD

-THESE three appeals filed by the appellant Carrier M/s. Green Transport, involved a common point of law, hence they are taken together for purposes of passing the orders.

VERY briefly the facts in each of the case are as follows: first Appeal No. 241 of 1999 Second respondent M/s. Shiva Exports hired the services of appellant for purposes of sending consignment of coconut oil from Cochin to Guntur. The consignment was sent by the appellant in tanker bearing number MCU, 1964 which met with an accident in Salem district as a result of this 98. 20 quintals of coconut oil was lost. The consignment admittedly was insured with the first respondent. Second respondent preferred claim for compensation with the appellant as also with the Insurance Company. The claim was settled by the Insurers, i. e. , Oriental Insurance Corporation for a sum of Rs. 5,01,018 upon getting a ''letter of Assignment'' and ''subrogation''. But when the matter was not getting settled with the appellant, a complaint was filed before the State Commission by the respondents before us, who after hearing the parties allowed the complaint and directed the appellant to pay Rs. 5,23,563 with interest @ 18% p. a. to the first respondent, i. e. , Insurance Company from the date of complaint till payment and the first respondent was also entitled to cost of Rs. 1,000. First Appeal Nos. 424 and 425 of 1999

In these two appeals, the second respondent M/s. M. K. Oil Industries, Chunangamvely, Aluva, sent two consignments of coconut oil by hiring the services of appellant from Chunangamaveli to Hindustan Lever Limited, Howrah by two separate consignments. But the vehicle carrying the coconut oil met with an accident in Nellore District of Andhra Pradesh. Loss certificate was issued by the appellant but the appellant did not agree to pay any compensation for the loss but when the matter was taken up with the Insurance Company, the claim was settled as per report of the surveyor in both these cases, after execution of ''letter of Assignment and Subrogation'' as also the General Power of Attorney. Since the issue was not getting settled with the appellant, the Insured and the Insurer (the respondents before us) filed a complaint before the State Commission who allowed the complaint and directed the appellant to pay Rs. 7,51,844 with interest @ 18% p. a. on the principal amount of Rs. 6,85,053 from the date of complaint till the date of payment alongwith cost of Rs. 1,000 in one case and Rs. 5,17,899 with interest @ 18% p. a. on the principal amount of Rs. 4,88,584 from the date of the complaint till payment.

AGGREIVED by these three orders of the State Commission, three separate appeals have been filed before us. Basic facts are not disputed, hence not being reproduced but the fact remains that in all these cases, the Insurers had settled the claim with the insured after executing ''letter of Subrogation and Assignment'' and ''general Power of Attorney''. The Hon''ble Supreme Court had occasion to go into the whole question of ''subrogation'' and ''assignment'' in the case of Oberai Forwarding Agency v. New India Assurance Co. Ltd. and Anr. , I (2000) CPJ 7 (SC)=ii (2000) SLT 86=2000 (2) SCC 407, and their observations in this regard are a follows : "18. The distinction between subrogation and assignment is explained in the standard text book on ''insurance Law'' by Macgillivrary and Parkington (Seventh Edition ). "1131. Difference between subrogation and assignment-Both subrogation and assign-ment permit one party to enjoy the rights of another, but it is well established that subro-gation is not a specie of assignment. Right of subro-gation vest by operation of law rather than as the product of express agreement. Whereas rights of subrogation can be enjoyed by the insurer as soon as payment is made, an assignment requires by agreement that the rights of the assured be assigned to the insurer. The insurer cannot require the assured to assign to him his rights against third parties as a condition of payment unless there is a special clause in the policy obliging the assured to do so. This distinction is of some importance, since in certain circumstances an insurer might prefer to take an assignment of an assured''s right rather than rely upon his rights of subrogation. If, for example, there was any prospect of the insured being able to recover more than his actual loss from a third party, an insurer, who had taken an assignment of the assured''s rights, would be able to recover the extra money for himself whereas an insurer who was confined to rights of subrogation would have to allow the assured to retain the excess. 1132. Another distinction lies in the procedure of enforcing the rights acquired by virtue of the two doctrines. An insurer exercising rights of subrogation against third parties must do so in the name of the assured. An insurer who has taken a legal assignment of his assured''s right under statute should proceed in his own name. . . . . (Emphasis supplied)

With the distinction between subrogation and assignment in view, let us examine the letter of subrogation executed by the second respondent in favour of the first respondent. Its operative portion 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. ''

By the first clause the second respondent assigned and transferred to the first respondent all its rights arising by reasons 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 right 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.

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 trans-portation 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 reason 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 complainant as a co-complainant did not, therefore, make the complaint maintainable. (Emphasis supplied)"

IN view of above, we find that this case is squarely covered by the judgment of Hon''ble Supreme Court in view of which we cannot sustain the order passed by the State Commission which is set aside for the simple reason that the complainants would not fall within the definition of ''consumer'' and the complaint filed by them is not maintainable. However, the respondents shall be free to seek remedy before any appropriate forum, if so advised under appropriate law, for which the time spent before the Consumer Fora can be sought to be exempted under Section 14 of the Limitation Act in the light of the judgment of the Hon''ble Supreme Court in the case of "laxmi Engineering Works v. P. S. G. Industrial Institute, II (1995) CPJ 1 (SC)= (1995) 3 SCC 583. " All the appeals are allowed in above terms. Appeals allowed.