OBERAI FORWARDING AGENCY versus NEW INDIA ASSURANCE CO. LTD. AND ANR.

Citation: [2000] 1 S.C.R. 554 · Decided: 01-02-2000 · Supreme Court of India · Bench: S.P. BHARUCHA, S.S.M. QUADRI, N. SANTOSH HEGDE

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Judgment (excerpt)

A 
OBERAI FORWARDING AGENCY 
v. 
NEW INDIA ASSURANCE CO. LTD. AND ANR. 
FEBRUARY 1, 2000 
B 
[S.P. BHARUCHA, S.S. MOHAMMAD QUADRI AND 
N. SANTOSH HEGDE, JJ.] 
Consumer Protection Act, 1986: Sections 2(b )(i) and 3. 
C 
Consume~o is-Consignor--Consignment of goods-loss in tran-
sit--Claim-Compensation paid by insurer to the consignor-In tum consi!J 
nor executed a letter of subrogation and power of attorney in favour of insurer 
empowering insurer to recover compensation--Complaint filed by insurer in 
the Consuma Fornm-Held not maintainable--Held in view of its contents 
"Letter of subrogation'' was a Letter of Assignmen~eing assignee the insurer 
D was not a beneficiary of the hired service-lnsurer held not consumer. 
E 
Insurance-Subrogation-Difference between subrogation and assign-
ment. 
Doctrine of subrogation and assignment of-Applicability of. 
The second respondent, through its agent, hired two tnncli:s from a 
firm of Bareilly to transport broken rice to Barpata in Assam. The appel-
lant-forwarding Agency was asked by the firm and the second respondent 
to settle the freight for the consignment, which it did. However, the 
F consignment sent by the second-respondent was lost in transit. The first-
respondent, the insurer, compensated the second-respondent the consig-
nor, for loss of goods. In turn I.he second-respondent executed a Letter of 
Subrogation in ravour of the fiirst·respondent assigning, transferring and 
abandoning all his rights agai1~st the transport carrier. By this letter of 
G subrogation the first-responde111t was granted full power to use all lawful 
ways and means to recover the claim for the loss in its own name. The 
second-respondent also executed a Special Power of Attorney in favour of 
the first- respondent. Thereafter, the first-respondent filed a complaint 
against the appellant under the Consumer Protection Act, 1986 in respect 
of tile loss of consignment specifically stating that the complainant stands 
H subrogated to the rights of second-respondent as consumer. In its written 
554 
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OBERAI FORWARDING AGENCY v. ~EW INDIA ASSURANCE CO. LTD. 
555 
statement the appellant contended that the first-respondent was not a A 
consumer and had no right to file the complaint under the provisions of 
Consumer Protection Act. The Insurer-complainant thereafter amended 
the complaint and added the second-respondent as a co-complainant. The 
District Consumer Forum directed the appellant tu pay Rs. 98,924.55 as 
compensation to the Insurer. The appellant unsuccessfully approached the 
State Forum as well as the National Consumer Disputes Redressal Com-
mission. 
In appeal to this Court it was contended on behalf of the appellant 
B 
that (1) the docuetent executed by the first-respondent though styled as 
"Letter of Subrogation" was an assignment by the second-respondent of its C 
rights to the first-respondent. t:pon such assignment, the assignor second-
respondent had no right left; and (2) the assignee-Insurer was not a 
consumer. 
Allowing the appeal and setting aside the impugned order, the Court 
HELD : 1. The first-respondent was not entitled to maintain the 
complaint under the Consumer Protection Act, 1986. (559-E] 
2. In its literal sense, subrogation is the substitution of one person 
for another. T!ue doctrine of subrogation confers upon the insurer the right 
to receiw the benefit of i.uch dghb and remedies as the assured has 
against third parties in n:gard to the !olts t3 the txtent that the Insurer 
D 
E 
has indemnified the loss and made it good. The Insurer is, theri:fore, 
entitled to exercise whatever rights the assured possesses to recover to that 
extent comFnsation for the loss, but it must do so in the name of the 
assured. However, there is distinction between subrogation and assign-
F 
ment. (563-E] 
Mac Gillivray & Parkington; Insurance Law, Seventh Edn. referred to. 
3. By the first clause of the operative part of letter of subrogation 
the second respondent assigned and transferred to the first respondent all G 
its rights arising by reason 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 rights in respect of the loss but the H 
556 
SUPREME COURT REPORTS 
[2000] 1 S.C.R. 
A transfer would be limited t

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