UNITED INDIA INSURANCE COMPANY LTD. vs NORTHERN CARRIERS PVT. LTD.

APPELLANT was the complainant before the State Commission where the Insurance Company along with the consignor of goods had filed a complaint against the respondent Northern Carriers Pvt. Ltd., alleging deficiency in service.

BASIC facts are not in dispute that the second appellant M/s. Punjab Tractors Ltd. booked a consignment of electric goods from Jalandhar for being carried to Bombay vide GR dated 25.2.1995. This consignment was also got insured with the first appellant. This consignment was damaged in a fire accident while in the godown of the respondent Northern Carriers Pvt. Ltd., at Bhiwandi. The second appellant/complainant took up the matter with the first appellant insurer as also with the respondent Northern Carriers Pvt. Ltd. while the Insurance Company appointed a Surveyor and after following due process settled the claim by paying Rs. 14,68,110 to the second appellant M/s. Punjab Tractors Ltd. after obtaining a "Letter of Subrogation'''' Assignment'' and ''General Power of Attorney'', put there was no satisfactory reply for settlement of claim by the respondent. It is in these circumstances that a complaint was filed by the appellants before the State Commission, who after hearing the parties dismissed the complaint on the ground that the appellants/ complainants have failed to prove any deficiency in rendering service on the part of the respondents/opposite parties. Aggrieved by this order, this appeal has been filed before us. We heard the learned Counsel for the parties and perused the material on record. We have seen the ''letter of subrogation'', ''special power of attorney'' and ''Assignment'' made in favour of the first appellant by the second appellant. In this document, it is stated in clear terms that the second appellant ''assigns'', ''transfers'' and ''abandons'' all actionable rights in favour of the first appellant. It is also stated in para 4 of ''Letter of Subrogation'' that, "....we hereby subrogate to you the rights and remedies...." meaning (hereby that the second appellant had subrogated his right in favour of the first appellant.

LEARNED Counsel appearing for the appellant vehemently argued that the State Commission erred in not allowing the complaint and secondly that the Judgement of the Hon''ble Supreme Court in the case of Oberai Forwarding Agency v. New India Assurance Company, II (2000) SLT 86=1 (2000) CPJ 7 (SC)=2000 (2) SCC 407, is not applicable in view of the fact that in para 4 of the ''letter of subrogation'' and ''Special Power of Attorney'' executed by the second appellant in favour of the first appellant the word used is, "we hereby subrogate to you.,." on account of which present case is not covered by the judgment (supra). It was also argued by her that in the instant case Insurers appear as the 1st complainant, hence the complaint is maintainable in a consumer case based on the ''Letter of Subrogation and Insurer being the 1st complainant.

IN our view, the Hon''ble Supreme Court had occasion to go into the whole question of ''subrogation'' ''General Power of Attorney'' and ''Assignment'' in the cited judgment and their observations in this regard are as follows: "18. The distinction between subrogation and assignment is explained in the standard text book on "Insurance Law" by MacGillvrary and Parkington (Seventh Edition). "1131. Difference between subrogation and assignment. Both subrogation and assignment permit one party to enjoy the rights of another, but it is well-established that subrogation is not a species of assignment. Right of subrogation 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 be 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......"

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 yon 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" (emphasis supplied).

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. 23. 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. 24. 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 do not find any ground to interfere with the order passed by the State Commission for the simple reason that the complainant could not fall within the definition of ''Consumer'' and complaint filed by them is not maniminable. In the aforementioned circumstances, we see no merit in the appeal hence stands dismissed.

HOWEVER , the appellants 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) CPJ1 (SC)=(1995) 3 SCC 583.