UNITED INDIA INSURANCE CO. LTD. Vs LEISURE WEAR EXPORTS LTD.
Bench: ABHAY MANOHAR SAPRE,ASHOK BHUSHAN
Case number: C.A. No.-001004-001004 / 2006
Diary number: 18605 / 2004
Advocates: B. K. SATIJA Vs
ASHWANI KUMAR
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Reportable
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1004 OF 2006
United India Insurance Co. Ltd. Appellant(s)
VERSUS
Leisure Wear Exports Ltd. Respondent(s)
WITH
CIVIL APPEAL NO. 1016 OF 2006
United India Insurance Co. Ltd. Appellant(s)
VERSUS
Leisure Wear Exports Ltd. Etc. Etc. Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) These appeals are filed by the United India
Insurance Company Ltd. against the common final
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judgment dated 05.07.2004 of the National Consumer
Disputes Redressal Commission, New Delhi in First
Appeal Nos. 30-33 of 2000 by which the National
Consumer Disputes Redressal Commission dismissed
their appeals and upheld the order of the State
Consumer Commission.
2) These appeals involve a short point. However, to
appreciate the point, few facts need mention infra.
3) The appellant - United India Insurance Company
Ltd. is the non-applicant whereas the respondent -
Leisure Wear Exports Ltd. is the complainant in the
complaint filed before the State Consumer
Commission, Punjab out of which these appeals arise.
4) The respondent/complainant is engaged in the
business of sale of various kinds of hosiery goods and
ready-made garments at Ludhiana. They also import
and export the goods in which they trade. On
13.06.1996, the respondent obtained from the
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appellant one Open Marine Policy (Cargo) bearing No.
201002-21-99-042-96. The respondent also paid
necessary premium. The policy covered the risk of all
kinds of hosiery goods and ready-made garments kept
in wooden and cardboard cases sent from any part of
India to any friendly country in the world. The policy
covered the risk under Institute Cargo Clause ‘A’,
Inland Transit Clause ‘A’ and risk of war, SRCC, Riots,
Strike valid for “Warehouse to warehouse at final
destination”. The insurance covered the risk of the
insured goods to the extent of Rs. 2 crores. It was
subject to terms and conditions as were mutually
agreed upon. The policy was for the period from
13.06.1996 to 12.06.1997.
5) The respondent received one order from one
party-M/s Magna Overseas, Moscow for supply of
hosiery goods and ready-made garments to them at
Moscow. The respondent accordingly dispatched 320
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cardboard cartons in two separate consignments - one
was under cover note No. LDRO/26948 dated
20.06.1996 worth Rs.49,63,200/- and another was
under cover note No. LDRO/28051 dated 28.06.1996
worth Rs.31,68,000/. The respondent duly notified
these transactions to the appellant(insurer). The
export was to be made from Ex. Ludhiana to Moscow.
6) The consignments reached Mumbai Port and
from there, it was loaded in the ship for its final
destination-Moscow. The consignments landed at port
Odessa in Ukraine and from there, the consignment
was moved by road to Moscow. When the delivery was
taken at Moscow, it was found short of 142 and 139
cartons respectively.
7) The matter was then reported to the Insurance
Company who, in turn, appointed M/s Ingostarkh
Insurance Company Ltd., Moscow as the surveyors to
investigate into the matter and assess the loss. The
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surveyors confirmed the short delivery of the cartons.
In terms of policy, the claim for the loss sustained by
the consignee was lodged with M/s Ingostrakh
Insurance Company in the first instance. They did not
settle it and hence the consignee authorized the
respondent to file the claim against the appellant for
recovery of the loss sustained by them due to loss of
their goods.
8) The respondent then filed two separate complaint
petitions under the Consumer Protection Act before
the State Consumer Commission, Punjab against the
appellant (Insurance Company) on the strength of the
policy issued by the appellant in their favour claiming
compensation for the loss of their goods while in
transit and which were duly insured by the respondent
under the policy dated 13.06.1996. In substance, the
case of the respondent in their complaint was that
since the goods, which were lost, were admittedly got
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insured by the respondent with the appellant and,
therefore, the respondent are entitled to claim
compensation for the loss sustained by them from the
appellant on the strength of the policy which covered
such loss. It was alleged that the policy was admittedly
in force when the loss occurred and hence the
appellant cannot deny their liability to compensate the
respondent for the loss caused to the goods of the
respondent.
9) The appellant filed their written statement and
admitted the factum of issuance of policy in
respondent's favour so also the factum of the loss of
goods sustained by the respondent while the goods
were in transit. Their main objection was that the
respondent had no right to file the complaint and
claim compensation from the appellant on the strength
of policy in question. It was alleged that since the
respondent had already assigned the policy in
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question in favour of their consignee, i.e., M/s Magna
Overseas to whom the goods were sent by them and,
therefore, it was for the consignee/assignee to file the
complaint for realization of the loss amount from the
appellant (insurer) on the strength of the assignment
of the policy. It was, therefore, alleged that once the
respondent made the assignment of the policy in
favour of the consignee then in such event, they lost
all their rights and interest in the policy qua the
insurer and hence had no locus to file the complaint
against the appellant. The complaint was, therefore,
liable to be dismissed on this ground alone. Parties
filed their evidence.
10) The State Consumer forum vide order dated
31.12.1999 allowed both the complaints and awarded
Rs.19,90,000/- in all to the complainant/respondent
by way of compensation in each complaint. The
compensation awarded to the respondent comprises of
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the reported value of the loss of the goods, 10%
towards moral loss, 15% towards loss of earning and
interest at the rate of 12% payable from 07.11.1996 till
realization.
11) Felt aggrieved, the appellant filed the appeals
before the National Consumer Disputes Redressal
Commission, New Delhi out of which this appeal
arises.
12) By impugned order, the National Consumer
Disputes Redressal Commission dismissed the appeals
and upheld the order of the State Consumer
Commission.
13) Felt aggrieved, the Insurance Company has filed
these appeals by way of special leave before this Court.
14) Heard Mr. Vishnu Mehra, learned counsel for the
appellant and Mr. Ashwani Kumar, learned counsel for
the respondent.
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15) Learned counsel for the appellant reiterated the
submissions here, which they had urged before the
two forums unsuccessfully. The submission was that
both the forums erred in entertaining the complaint
filed by the respondent, which deserved dismissal at
the threshold.
16) According to learned counsel, since the
respondent assigned the policy in question in favour of
consignee (M/S Magna Overseas), they (respondent)
ceased to have any subsisting interest in the policy,
which they could enforce against the appellant.
Learned counsel urged that in these circumstances, a
right to file the complaint on the strength of policy and
to seek its enforcement against the appellant was with
the consignee and not with the respondent. It was,
therefore, urged that the respondent had no locus to
file the complaint against the appellant and seek
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enforcement of the terms of the policy for realization of
any claim arising out of the policy.
17) In reply, learned counsel for the respondent
supported the reasoning and the conclusion arrived at
by the National Consumer Redressal Commission and
contended that it does not call for any interference and
deserves to be upheld.
18) Having heard the learned counsel for the parties
and on perusal of the record of the case, we find no
merit in the appeal.
19) The short question which arises for consideration
in this appeal is whether the complaint petition filed
by the respondent under the Consumer Protection Act
against the appellant (Insurer) was maintainable or
not or in other words whether the respondent had the
locus to file the complaint on the strength of contract
of Insurance Policy in question for claiming
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compensation for the loss sustained in the
transaction?
20) Sections 17 and 52 of the Marine Insurance Act,
1963 (hereinafter referred to as “the Act”) are relevant
for deciding the abovesaid question. They read as
under :
“ Section 17. Assignment of interest.—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.
“Section 52. When and how policy is assignable.—
(1) A marine policy may be transferred by assignment unless it contains terms expressly prohibiting assignment. It may be assigned either before or after loss.
(2) Where a marine policy has been assigned so as to pass the beneficial interest in such policy, the assignee of the policy is entitled to sue thereon in his own name; and the defendant is entitled to make any defence arising out of the contract which he would have been entitled to make if the suit had been brought in the name of the person
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by or on behalf of whom the policy was effected.
(3) A marine policy may be assigned by endorsement thereon or in other customary manner.”
21) Section 52 provides as to when and how the
marine policy may be transferred. It says that a
marine policy may be transferred by assignment
unless it contains express terms, which prohibits any
assignment of the policy. It also provides that such
assignment can be made before or after the loss has
occasioned.
22) Sub-Section(2)of Section 52 provides that once
the assignment is made then the assignee is entitled to
sue in his name whereas the insurer/defendant is also
entitled to raise all such defences against the assignee,
which are available to him against the original insured
i.e. assigner.
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23) Section 17 deals with "assignment of interest". It
provides that where the assured assigns or otherwise
parts with his interest in the subject-matter insured,
he (insured) does not thereby transfer to the assignee
his rights under the contract of insurance unless there
is an express or implied agreement with the assignee
to that effect. This Section, however, does not affect
transmission of interest by operation of law.
24) When we examine the undisputed facts of the
case in the light of aforementioned two provisions,
then in our considered opinion, Section 17 has full
application to the facts of the case. In fact, it is a
complete answer to the submission urged by the
learned counsel for the appellant.
25) It is not in dispute that there is no express
agreement between the respondent (insured) and M/s
Magna Overseas (consignee) agreeing to transfer
insured’s rights under the contract of insurance in
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favour of M/S Magna Overseas (consignee). Under
these circumstances, by virtue of Section 17, the
respondent is legally entitled to retain, enjoy and
exercise all those rights, which are available to them
under the contract of insurance, which they have
entered into with the appellant despite making the
assignment of their policy in favour of the assignee.
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
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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
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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.
29) This takes us to the next argument of learned
counsel for the appellant. It was his submission that
there was implied agreement between the respondent
and the consignee whereby the respondent had
transferred all their rights in favour of the consignee
and, therefore, the respondent had no locus to file a
complaint for enforcement of those rights, which were
no longer with them. In support of his submission,
learned counsel referred to letters dated 30.06.1997,
08.07.1997, 04.07.1997 and some Paras from the
pleadings. We find no merit in this submission.
30) In our considered opinion, even if we accept, for
the sake of argument, that the respondent had
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assigned their rights under the contract of Insurance
policy in favour of their consignee by way of
endorsement as contended by the appellant, yet in the
light of authorization letter dated 04.07.1997 duly
issued by the consignee in favour of the respondent
authorizing the respondent to file a complaint petition
before the Consumer forum for recovery of the
compensation, the respondent was entitled and had
the locus to file a complaint against the appellant for
realization of compensation amount towards the loss
sustained due to short delivery of the goods on the
strength of the authorization letter for enforcement of
contract of insurance policy.
31) In view of foregoing discussion, we are of the
considered opinion that in any event, the complaint
filed by the respondent (insured) was maintainable
and that the respondent had the locus to file the
complaint against the appellant. It was, in our view,
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saved by Section 17 of the Act and by the
authorization letter dated 04.07.1997, issued by the
consignee in respondent’s favour.
32) Both the Authorities, i.e., State forum and
National forum (as the first appellate authority) were,
therefore, justified in overruling the objection of the
appellant and were justified in holding that the
complaint filed by the respondent was maintainable
and the respondent was legally competent to file such
complaint.
33) Learned counsel for the appellant then by
referring to Section 79 of the Act contended that the
complaint filed by the respondent was not
maintainable. We find absolutely no merit in this
submission. In our view, Section 79 which deals with
sabrogation does not apply to the case at hand but it
is Section 17 read with Section 52 which governs the
case in question.
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34) Learned counsel for the appellant then placed
reliance on the decisions reported in New India
Assurance Co. Ltd. vs. G.N. Sainani, 1997 (6) SCC
383 and Oberai Forwarding Agency vs. New India
Assurance Co. Ltd. & Anr. [2000(2) SCC 407]. We
have perused these decisions and find that these are
distinguishable on facts. In the latter decision, the
question of locus was not expressly examined in the
context of Section 17 but was examined in the context
of Section 79 of the Act on different set of facts.
Likewise, in the former case, the facts were different
and again Section 17 of the Act did not fall for
consideration. In any event, in the light of findings
which we have recorded on the facts of this case
against the appellant, the case law relied upon by the
appellant is of no help to them.
35) So far as the findings relating to the merits of the
case are concerned, learned counsel for the appellant
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did not challenge any of the findings in this appeal and
in our opinion rightly. We, therefore, need not go into
any of them.
36) In the light of aforesaid discussion, we find no
merit in these appeals which fail and are hereby
dismissed.
.……...................................J. [ABHAY MANOHAR SAPRE]
………..................................J. [ASHOK BHUSHAN]
New Delhi, June 29, 2016.
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