A carrier is presumed to be negligent for loss or damage to goods entrusted for transport and delivery. A consignor would be entitled to recover the loss from the transporter. But, when the consignor has insured the goods, he can recover the loss by lodging a claim under the policy. When the insurance company settles the claim, it obtains a letter of subrogation from the insured. This entitles the insurance company to step into the shoes of the insured and initiate legal proceedings against the transporter to recover the loss.
Legal proceedings on the strength of a letter of subrogation can be filed by the insurance company along with the insured (consignor) before the consumer forum, but the catch is that the consignor must be a consumer as defined under the Consumer Protection Act. If the consignor has availed of the transporter's services for commercial purposes, the complaint would not be maintainable. This ruling has been given by the National Commission in its recent judgment of October 12 in the case of Suzuki Motorcycle India & Anr. v/s Nagana Roadlines.
Suzuki had imported 26 new crank shaft lines. These were shipped from Tokyo and discharged at Nhava Sheva Port. Part of the consignment was then sent by road transport through Nagana Roadline for delivery to Suzuki's at Gurgaon.
During the transport, the trailer carrying these machines met with an accident on the highway, resulting in damage to the consignment. A surveyor was appointed who assessed the loss, which was covered under a Marine Policy. After deducting the salvage value from the insured value, the loss was settled at Rs 3,63,46,225.
Suzuki accepted this amount in full and final settlement and executed a letter of subrogation cum special power of attorney in favour of the insurance company, entrusting it with the right to recover the loss from the transporter.
The National Commission observed Suzuki is a company engaged in the business of manufacture and sale of motorcycles and motorcycle spare parts. The machines involved in the accident were a deep-hole drilling machine, which is a specifically designed high precision CNC lathe for automatic vertical as well as tapered drilling holes of different diameter depth in crank shaft for motorcycles engines; a cylindrical grinding machine which is a specifically designed high precision CNC lathe for automatic grinding of crank shaft of motorcycle engines, and a cooling tank assembly for cylindrical grinding machines. These are used for the commercial activity of manufacturing motorcycles. So, the Bench of Justice Ajit Bharihoke and Rekha Gupta concluded the machines were meant for a commercial purpose, taking the dispute out of the purview of the Consumer Protection Act.
As the transaction was a commercial one, the Commission held Suzuki could not claim to be a consumer. The insurance company, being a subrogatee having acquired recovery rights under a letter of subrogation, cannot enjoy better rights than Suzuki the main claimant. So, when a complaint filed by Suzuki is not maintainable, the insurance company which derives its rights through Suzuki, would also not be entitled to file a consumer complaint.
Accordingly, the National Commission dismissed the complaint, with liberty to approach the appropriate court.
The author is a consumer activist
