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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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