The position was reverse in the a recent decision of the Constitution bench of the Supreme Court. The question was whether an insurance company could be a consumer in a dispute between a manufacturer and its transporter. This required resolution of conflicting views expressed by the court in its earlier judgments on the definition of consumer. The factual scenario is very common. Here, Charan Spinning Mills, a manufacturer of cotton yarn, bought a policy from National Insurance Company for transit risks. Its consignment was entrusted to Economic Transport Organisation. The goods were totally damaged in an accident. On the basis of the surveyor's report, the insurance company settled the claim of the Mills. Then the Mills gave a power of attorney and subrogation to the insurance company to sue the carrier. When the insurance company moved the consumer forum, it was opposed by the carrier which argued that the insurer could not claim the rights of a consumer. However, all the consumer forums up to the National Commission granted standing for the insurance company.
Though an insurance company cannot be a consumer, it can get authority from the assured party to be its surrogate and claim damages from the negligent party. The fact that the assured person had received compensation from the insurance company in pursuance of the contract of insurance does not erase or reduce the liability of the wrong-doer responsible for the loss. In such cases, the insurance company first pays the loss to the affected party according to the surveyor's report and then gets a letter of authority from it to sue the negligent party. This kind of arrangement is common, and is recognised as subrogation in insurance law.
However, disputes arise because of the prevalence of standard forms of contract, which none of the parties bother to read. The person preparing the document for a particular contract is required to delete or modify the terms or clauses. But this is usually not done, leading to questions whether there was assignment or subrogation. The Supreme Court was also misled by this inadvertence in the case of Oberai Forwarding Agency a decade ago. Confusion prevailed all these years. However, with the present judgment, the insurance companies' right to move consumer forums has been clarified. The only caveat is that the assured person also should be along the side of the insurance company while suing the service provider.
It seems to me that the principle of subrogation in Insurance Law is different from the Locus Standi of a claimant to prosecute a claim before the Consumer Forum. The former is a contractual right arising from the Contract of Insurance between the Insurer and the Insured whereas the latter is a statutory right created by the Act, which defines a "consumer" in order to have locus standi to prosecute a claim under the Act. I believe this nuance has escaped the attention of the Court in the Judgment.