advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Saturday, July 2, 2016

Sections 17 and 52 of the Marine Insurance Act, 1963=When the delivery was taken at Moscow, it was found short of 142 and 139 cartons respectively. 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 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.= 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 compensation for the loss sustained in the transaction? = 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 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.”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.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.-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.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 assignment but they are continued to remain with the insured. 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.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 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.In our considered opinion, even if we accept, for the sake of argument, that the respondent had 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. 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, saved by Section 17 of the Act and by the authorization letter dated 04.07.1997, issued by the consignee in respondent’s favour. 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.- 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.



                                                                  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  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 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 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
      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 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 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 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.
      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 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 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 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.
      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 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 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  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  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,  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.
      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 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.