Hindustan Transport Service vs National Insurance Co. Ltd. and Others

T.S. Doabia, J.—M/s. Dev Raj Raj Kumar hereinafter referred to as complainant No. 1 sent a consignment of goods. This was gone by

utilising the services of a transport vehicle bearing registration No; JKO-559. These goods were covered by a marine insurance policy. The value

of the goods which was subject matter of the consignment is said to be Rs. 1,27,295/-. The fact that these goods were despatched through this

truck was sought to be proved by placing reliance on a challan prepared in this regard. It was the further case of complainant No. 1 that it was the

appellant Hindustan Transport service yard No.5, Transport Nagar Jamu which Allotted the truck in question for transporting the goods. One

Vinod Kumar is said to be driver of the vehicle.

As indicated above, the goods were got insured for a sum of Rs. 1,000,000/- (Ten Lakhs). This insurance was valid from 26-5-1995 to 26-5-

1996, it is the further case of complainant No. 1 that the truck met with an accident. It fell 150 feet below the hill slope. This resulted in damage to

the vehicle. This also caused loss to the goods. A Surveyor is said to have been appointed by the National Insurance Company (hereinafter

referred to as the Insurance Company). This loss was assessed of is 89,952,00. This amount was paid by the Insurance Company to the

complainant No. 1. This was done on 20-9-1996. After taking aforementioned steps and after making the payment, a complaint was filed before

the State Consumer Commission constituted under the J and K Consumer Protection Act of 1987. This was filed jointly by the complainant No. l

and the Insurance Company. Plea taken was that the Insurance Company had stepped into the shoes of complainant No. 1 and could file a joint

complaint. Requisite averments are made in paragraphs 10 and 11 of the complaint. For facility of reference these paragraphs are being

reproduced below:

That when the transport or either does not deliver the consignment or deliver its part. It is the deficiency of the service on the part of the

carrier and the consigner as well as the Insurance Co. after having settled the claim, can maintain a joint complaint against the carrier for seeking

lose of the goods and the freight, which herein is Rs. 89,952/- However, it is an arrangement inter se between the complainants that the

complainant No. 2 shall claim an amount of damages from the respondents, hence this complaint.

That the complainant No.2 by virtue of the present complaint, claims an amount of Rs. 89,952/ along with interest at the rate of 24% per

annum w.e.f 20-9-1998 the date when the claim was paid by the complainant No.2 to the complainant No. 1 till the time the payment is made by

the respondents to the complainant No.2 Jointly or severally and further claims an amount of Rs. 6000/- on account of litigation expenses and Rs.

1200/-as counsel fee for serving of legal notice dated 9-4-1997. Photocopy of the duty slip Issued by the respondent No. 1 and deputed

respondent No.2 is marked as annexure C-1, FIR is marked as annexure C-2, Survey report is marked as Annexure C-3 Notice dated (sic) is

marked as Annexure C-4. Letter of Sabrogation and Special power of Attorney are marked as unnexures C-5 and C-6 respectively and legal

notice dated 9-4-1997 is marked as Annexure C-7 along with complaint as a matter of proof and reliance.

The State Commission proceeded with the trial Present appellant who figured as respondent No.2 therein was said to have been served. It,

however, did not put his appearance. Ex parte proceedings were taken. An application was filed later on in which a prayer was made that ex parte

proceedings against it be set aside. This was done before the judgment was pronounced by the Commission. There State Commission did not

thought fit to set aside the ex parte proceedings but allowed the appellant to Join the proceedings with effect from the State of appearance.

Thereafter, the State Commission recorded finding to the effect that the present appellant was bound to indemnify the Insurance Company. It was

directed to pay Rs. 89,952/ to the Insurance Company. Interest was allowed at the rate of 12%. This was payable from 20-9-1996. The

aforementioned appellant has come to this Court. He challenges the initial order by which the prayer for setting aside the ex parte proceedings was

declined. It also challenges the order which was finally passed by the Commission.

The learned counsel for the appellant submits that once the claim of complainant No, 1 stood settled and it receives their payment from the

Insurance Company, it had no interest left in the dispute and in these circumstances, if the Insurance Company was to lodge a complaint, then it

was supposed to show as to how it fell within the definition of the term consumer as found in Section 2(b) of the J and K Consumer Protection Act

of 1987. It was also urged that the remedy if any was to file a civil suit. For laying foundation for his legal argument, it is averred that the letter of

subrogation and all the steps which were taken in this regard i, e authorisation of complainant No. 1 in favour of Insurance Company were taken

after the marine policy had come to an end. For this reliance is being placed on a Special Power of Attorney. This was executed on 20-9-1996. It

is further submitted that as it was done after the expiry of the term of the marine insurance policy, this would not enable the Insurance Company to

(sic) the complainant and it would not fall within the definition of the term ""consumer."" it is also urged that merely because the complainant No. 1

who may or may not fall within the definition of ""Consumer"" has also been arrayed as a complainant in the complaint would not improve the status

of Insurance Company. As a matter of fact it IB stated that complainant No. 1 whose claim stood satisfied was neither necessary nor a proper

party and therefore, the complaint should have been rejected as not maintainable. It is also urged that a perusal of the award given by the State

Commission Indicates that no finding as to loss has been recorded by the Commission. It is alleged that all that has been noticed is that complainant

No. 1 has stated that the loss had taken placer and that they were paid the amount. It is stated that the assertion made in paragraph 4 of the order

cannot be taken as an expression of opinion of the Commission that in fact the loss had taken place.

In addition to this, it is submitted that the view expressed by the Commission that it had no Jurisdiction to set aside ex parte proceedings, is a

view which is contrary to the know cannons of Jurisprudence. It is stated that when a forum exercising juridical function passes an ex parte order,

then it has inherent power to set aside that ex parte order also. Reliance in this regard is being placed on a decision of the Supreme Court of India

reported an Grindlays Bank Ltd. Vs. Central Government Industrial Tribunal and Others, . It is urged that this view has been affirmed by the

Supreme Court of India in case reported as Satnam Verma Vs. Union of India (UOI), . For the proposition that the Insurance Company had no

locus standi to maintain the complaint before the State consumer Forum Constituted under the J and K Consumer Protection Act of 1987, reliance

is being placed on a Judgment of the Supreme Court of India reported as New India Assurance Co. Ltd. Vs. G.N. Sainani, , and also on a

decision of the National Consumer Commission reported as Green Transport Company Ltd. v. New India Assurance Company 2 (1992) CPJ

It thus urged that once the Insurance Company comes in and wants to exercise right of subrogation, then the original party is not entitled to

pursue the litigation.

The learned counsel appearing for the respondents, however, submits that a joint complaint at the Instance of complainant No; 1 and the

Insurance Company was maintainable. For this, reliance is being placed on decisions reported as:

Roadwings International v. Hindustan copper Ltd. (1998) C 2 CPR 11.

Sasha Indurstries Corportion v. Economic Roadways Corporation. (1998) 2 CPR 193,

As to what has been laid down in the above decisions on which reliances has been placed by the learned counsel appearing for the Insurance

Company and complainant No: 1, be now noticed.

In Sasha Industries Limited Economic Roadways Corporation (1998) 2 CPR 193, the view expressed is that Insurance Company cannot be

said to be consumer, but directions can be given to the person who is liable to pay the money to the Insurance Company which was payable to the

original complainant.

Roadwings International v. Hindustan Copper Limited (1998) 2 CPR 11 it has been observed that complaint can be made jointly by the

consumer and the Insurance Company,

Before dealing with legal Submissions made by the learned counsel for the appellant, it would be apt to mention that there is no finding

recorded by the Commission that loss infact took place. This ground is in itself sufficient to set aside the award given by the Commission. Again

had this been the only factor present in the case, we would have remanded the matter back to the commission for further adjudication. However,

this case is fully covered by the ratio of the decision given by the Supreme Court in case reported as New India Assurance Co. Ltd. Vs. G.N.

Sainani, . As explicit reliance has been placed by the learned counsel appearing for the appellant in the aforementioned case, facts in the above

case be briefly noticed:

In the above case, the assessement of the loss was made after the term of the Insurance policy had expired. This aspect of the matter is noticed

in paragraph ""6"" of the Judgment, wherein following observations have been made:

All this narration of events was necessary to understand the Issues Involved in the appeal. It is submitted by Mr. Midha. Learned counsel for the

appellant that the compliant was barred by limitation; that the complainant was not a consumer within the meaning of the Act and under Clause 9 of

the policy the appellant was absolved from claim as the policy had lapsed.

After taking note of the above factual position, the question which was considered by the supreme Court of India was as to whether Insurance

Company can maintain the claim. It was observed that the Insurnce Company would not fall within the definition of the terms consumer. It was

further observed that the interest of the insrured must exist in the case of marine insurance at the time of loss and the assured must have subsisting

right and interest in the subject matter of the insurance. The services which the insurer offers is with reference to the goods and the msurable

interest has to be in respect of the goods. Ultimately, it was observed that what was assigned was the amount of loss suffered by the insured on

account of short delivery of the goods, meaning thereby, the right to recover loss. It was, accordingly, held that this cannot be treted as a subject

matter covered by the term ""services to be rendered under the policy"". Taking this view of the matter, it was observed that the claim would not be

maintainable under the Consumer Protection Act. It was specifically stated that the Consumer Protection Act is not a general law for all remedies,

it is for the protection of the consumer as defined in the Act. What was said is quoted below:

Unless the assignee has some insurable interest in the property subject-matter of the Insurance until the time the policy terminates he cannot be

beneficiary of any service required to be rendered by the Insurer under the policy. Admittedly it was much after the goods had reached the port of

destination and appropriated that the policy was transferred by the insured to the complainant to recover the amount of loss suffered by the

assured. Thus, what is assigned is in effect a mere right to sue for the loan on account of short landing of the goods. It is difficult to see as to how it

could be said that the respondent, that is the assignee, is the beneficiary of any service under the policy. He may, however, have right to recover

the loss from the insurer by filling a suit in a civil Court but certainly to seek remedy under the Act he must be a consumer, If the policy had been

assigned during the course of its validity and before the goods were appropriatea after their arrival at the port, of destination, it could perhaps be

said that the as signee had beneficial interest therein but not otherwise. By not extending the policy beyond a particular period, that is 60 days the

Insurer acted within the terms of the contract of Insurance and on that account it would not be said that there was deficiency in service to be

provided by the insured under the policy.

The position in this case is similar. A perusal of the letter of subrogation and power of Attorney makes it apparent that what was assigned was

the tight to recover the loss of the goods which took placed on 20-9-1996. For facility of reference, what was stated in the power of attorney is

being reproduced below:--

Special Power of Attorney.

Be it known to All to whom these presents shall come that, I Raj Kumar, Attorney Holder of M/s Dev Raj Kumar, Galli Gujran City Chowk

Jammu hereby make appoint and constitute the National Insurance Co. Ltd. Jammu as my true and lawful attorney for ourselves and on our behalf

with regard to loss to our goods which took place on 22-5-1996 and was Insured with the said Insurance Co. vide policy No. 420801/21/44/

95/00021 and claim No. 420 801/21/44/ 00004. Out attorney holder shall do the following acts, deeds and things for ourselves and on our behalf

that is to say;

To persue the investigation for recovery of the said goods.

Take possession of the goods it traced out, from the police station, Court of any other agency on Supurdnama.

To sell the said goods to any person, they deem fit and receive the consideration amount and issue their affectual receipt with which I/We shall

have no lien, claim, interest whatsoever and to execute sale in favour of the interested party.

And fn general all the acts, deeds and things lawfully done by my attorney holder shall be deemed/considered to be acts, deeds and things done

by me being personally present.

In witnesses whereof, we the executants signs this special power of attorney on this 20th day of September, 1996 at Jammu in presence of-the

witnesses.

If above be the position, then the issue in this case would be squarely covered by the Supreme Court decision noticed above.

So far the question of power of the State commission to set aside ex parte proceedings is concerned, that aspect of the matter is not being

adverted to. This issue becomes totally academic and is not being gone into.

Councel of the respondents submits that as the complaint was filed jointly by Dev Raj Raj Kumar and the National Insurance Company Ltd.

therefore, the ratio of the Supreme Court would not apply in the presents case.

We are of the opinion that so far as M/s Dev Raj Raj Kumar is concerned, it having received the amount of loss from the Insurance Company,

had no subsisting right, title or interest in the Us in question. The litigation was pursued effectively by the National Insurance Company. The

National Insurance Company does fall not within the definition of consumer therefore, no relief can be granted to the Insurance Company.

In view of the above the liability created against the appellant, which if enforced would have benefited the Insurance Company. It cannot be

enforced under the J and K Consumer Protection Act.

The appeal is allowed. Liability saddled on the appellant would not be enforced. However nothing said in this judgment would stand in the way

of the National Insurance Company for persuing of remedies in forums available to it.

Money deposited by the appellant in this court be refunded to it. This would be refunded after a period of ninety days i.e the period for filing of

SLP is over.