Research › Search › Judgment

Andhra High Court · body

2008 DIGILAW 424 (AP)

P. Satyanarayana v. Kesari Manevva

2008-06-26

C.Y.SOMAYAJULU

body2008
ORDER Since common questions of fact and law arise in these two proceedings, they are being disposed of by a common order. 2. CMA No. 2580 of 2004 arises out of a claim petition filed under Section 166 of the Motor Vehicles Act, 1988 (for short - 'the Act'), by the mother of Kesari Ganesh (the 7 deceased), aged about 1 V2 years, in connection with the death of the deceased on 29-04-2002 at 7.45 p.m. due to the rash and negligent driving of the driver of a bus belonging to the appellant and insured with the National Insurance Company (insurer) and hired to the Andhra Pradesh State Road Transport Corporation (APSRTC), during the subsistence of lease to APSRTC. Appellant and the driver of the bus chose to remain ex parle before the Tribunal. Both the insurer and the APSRTC filed counters inter alia contending that they are not liable to pay the compensation payable to the claimant. In support of her case, the claimant examined herself as P.W.1 and another witness as P.W. 2 and marked Exs.A-1 to A-4. The insurer did not adduce any oral evidence but marked a copy of the policy issued by it as Ex. B-1. No evidence either oral or documentary was adduced by the APSRTC. The Tribunal held that the accident occurred due to the rash and negligent driving of the driver of the bus belonging to the appellant and that the claimant is entitled to Rs.60,000/- as compensation from the appellant and the APSRTC only but not the insurer is liable to pay the compensation payable to the claimant. Aggrieved by the order of Tribunal exonerating the insurer from the liability the owner of the bus preferred this appeal. 3. W.P.No. 5933 of 2007 is filed by the owner of the bus against the action of the APSRTC in withholding the amounts of rent payable by it to him on the ground that the claimant had obtained a decree against it on the basis of the agreement entered into by it with the owner of the bus that the owner only is liable to pay the compensation to the victims in case the bus involves in an accident, on the ground that the said condition in the agreement entered into by him with APSRTC is against public policy. 4. 4. Heard the learned counsel for appellant, the claimant, the insurer and the standing counsel for APSRTC at length. They relied on Rajasthan State Road Transport Corporation v. Kailash Nath Kathan', District Co-operative Central Bank Limited, Mahbubnagar v. P. V. SitamahalaxmF, New India Assurance Co., Ltd., v. B.G. SumcP, Depot Manager, APSRTC, Miryalaguda, Nalgonda District v. Poreddy Sujatha4, K. Matura Bai and others v. A. Shiva Nageswar RacY, APSRTC v. Polavarapu Lakshmi Kumarf, New India Assurance Co., Ltd., Chittoor v. V. Ramachandra Naidu7, G. Govindan v. New India Assurance Co. Ltd.B, Zilla Sahakari Kendrya Bank Maryadit v. Shahjadi Begum9, General Manager, APSRTC v. B. Kanaka RatnabaPO, Rikhi Ram and another v. Sukhrania and others11, Andhra Pradesh State Road Trans.Corpn. v. K. Susheelamma12 and Morbi Taluka Panchayat v. Vikramsinh Gambhirsinh13 in support of the contentions raised by them. 5. The point for consideration in the appeal is whether the insurer is not liable to pay the compensation payable to the claimant and the point for consideration in the writ petition is whether the APSRTC is entitled to withhold the amounts of hire payable by it to the owner of the bus on the ground that the agreement between it and the owner of the bus contemplates his meeting the liability to third parties in case of an accident. 6. The contention of the learned counsel for the owner of the bus is that inasmuch as the insurance of the vehicle runs with the bus, merely because the owner hired the bus to APSRTC, the insurer cannot escape its liability as held in Kailash Nath Kothari case (1 supra), P. V. Sitamahalaxmi case (2 supra) and Poreddy Sujatha case (4 supra). The contention of the learned counsel for APSRTC is that in view of the terms and conditions of the agreement entered into between the owner of the bus and the APSRTC, the owner of the bus alone is responsible to the compensation awarded in the claim petitions filed in connection with any accidents that might occur during the course of user of the hired vehicle and inasmuch as the Tribunal by exonerating the insurer from the liability of paying compensation to the claimants passed an award against the owner and APSRTC only, the APSRTC had no other option except to withhold the hire payable to the owner of the bus to the extent of the liability fastened on it by the Tribunal and, in view of the terms and conditions of the agreement entered into between the owner and APSRTC, the action of the APSRTC in withholding the amounts of hire payable to the owner of the bus cannot be said to be erroneous. The contention of the learned counsel for insurer is that the Tribunal did not commit any error in exonerating the insurer from liability in view of the ratio in B. G. Suma case (3 supra). The contention of the learned counsel for claimant is that he has no objection for an award being passed against the insurer also. 7. The contention of the learned counsel for insurer is that the Tribunal did not commit any error in exonerating the insurer from liability in view of the ratio in B. G. Suma case (3 supra). The contention of the learned counsel for claimant is that he has no objection for an award being passed against the insurer also. 7. In Kailash Nath Kothari case (1 supra) which arose under the provisions of the Motor Vehicles Act, 1939, (the 1939 Act), the Apex Court while considering the question whether an award can be passed by the claims Tribunal constituted under the 1939 Act in favour of the claimants in that case making the owner and insurer liable for payment of compensation to the extent of Rs.75,000/- as per the terms and conditions of the policy issued by the insurer in that case and for the rest of the amount against the Rajasthan State Road Transport Corporation (RSRTC), in spite of the agreement between the owner of the us and the RSRTC that the RSRTC would not be liable to pay any compensation to the victims and that the liability to pay compensation would be on the owner of the bus, held "The general proposition of law and the presumption arising therefrom that an employer, that is the person who has the right to hire and fire the employee, is generally responsible vicariously for the tort committed by the concerned employee during the course of his employment and within the scope of his authority, is a rebuttable presumption. If the original employer is able to establish that when the servant was lent, the effective control over him was also transferred to the hirer, the original owner can avoid his liability and the temporary employer or the hirer, as the case may be, must be held vicariously liable for the tort committed by the concerned employee in the course of his employment while under the command and control of the hirer notwithstanding the fact that the driver would continue to be on the pay roll of the original owner" As per the terms and conditions of insurance in that case, the liability of the insurance company was only to an extent of Rs. 75,000/- in respect of all the claim petitions that would arise out of one accident. 75,000/- in respect of all the claim petitions that would arise out of one accident. So, the Tribunal held that the liability of the insurance company was limited to the extent of Rs.75,000/- only in one accident. Appeal to the High Court by RSRTC contending that it is not liable to pay any compensation was dismissed by the High Court. Further appeal by the RSRTC to the apex Court also was dismissed. In that case, the apex Court did not hold that the insurer is not liable to pay any compensation when the owner gives the bus on hire to another. The insurer in that case did not even question the award passed by the Tribunal against it for Rs.75,000/- as per the terms of the policy. The driver of the vehicle in this case admittedly was under the effective control of the APSRTC and was acting under the instructions of the APSRTC at the time of accident. So, APSRTC is the de facto owner of the bus at the time of the accident, as the effective control of the bus and its driver was only with the APSRTC but not with the de jure owner. So, APSRTC would be deemed to be the de facto employer of the driver of the bus at the time of the accident. The ratio in the above case supports the contention of the owner but not the APSRTC or the insurer. 8. In P. V. Sitamahalaxmi case (2 supra) decided on 28-08-2002 the vehicle was given on hire by its owner to the District Cooperative Central Bank Limited. The Court held that the owner but not the hirer that can be made liable to pay the compensation payable and so insurance company also can be made liable. For arriving at that conclusion the division bench relied on an unreported decision in AAO.No. 1028/84 dated 27-10-1988. The Court held that the owner but not the hirer that can be made liable to pay the compensation payable and so insurance company also can be made liable. For arriving at that conclusion the division bench relied on an unreported decision in AAO.No. 1028/84 dated 27-10-1988. In view of the ratio in Kailash Nath Kothari case (1 supra) and the definition of 'owner' in the Act and also the ratio in B.G.Suma case (3 supra) rendered by the same bench holding that when a motor vehicle, involved in the accident, was given on hire to APSRTC, APSRTC would be the owner within the meaning of Section 2(30) of the Act and not the original owner, the view taken in P. V. Sitamahalaxmi case (2 supra) may not be correct, because the same bench took a different view subsequently on 16-09-2002. 9. In Poreddy Sujatha case (4 supra) a division bench of this Court, of which I was a party, held that when a bus is hired to the APSRTC it, as the lessee of the bus would be the owner of that bus within the meaning of the Act and so APSRTC and the insurer also are liable to pay the compensation to the victims in the accident. 10. In K. Matura Bai case (5 supra) a learned single Judge held that in cases where APSRTC takes a bus on hire along with the driver, APSRTC is vicariously liable to the compensation payable to the claimants arising out of the accident because the driver would be in its effective control and the insurance company cannot escape its liability on the ground that the insured vehicle was hired by the owner to the APSRTC. 11. In Polavarapu Lakshmi Kumari case (6 supra) it is held that an insurer cannot avoid its liability to a third party merely because the owner gave the vehicle on hire to APSRTC. 12. In V. Ramachandra Naidu case (7 supra) a learned Judge of this Court held that the definition of 'owner' in Section 2(30) of the Act is different from the definition of the 'owner' in 1939 Act. The legal representative of the victim in that case filed a petition under Section 140 of the Act seeking compensation of Rs.50,000/- under no fault liability. The legal representative of the victim in that case filed a petition under Section 140 of the Act seeking compensation of Rs.50,000/- under no fault liability. The Tribunal allowed the petition repelling the contention of the APSRTC that it is not liable to pay compensation, as it is not the owner of the bus. Questioning the said award, the insurer of the bus preferred an appeal on the ground that it is not liable to pay compensation as the bus was hired to APSRTC. That appeal was dismissed by the learned Judge. So, in fact, that decision supports the case of the owner. 13. In G. Govindan case (8 supra) it is held that insurance policy remains effective in respect of third party risks but not in respect of the transferees risks even after transfer of the vehicle. 14. In Zilla Sahakari Kendrya Bank, Maryadit case (9 supra) a Jeep belonging to the bank along with its driver was requisitioned for election duty. The driver of that jeep was staying with the vehicle at the residence of requisitioning authority and was acting under the instructions of requisitioning authority. The driver entered the septic tank at the residence of the requisitioning authority to help workers who were cleaning that tank and became unconscious due to poisonous gas and fell in the tank resulting his death. His legal representatives filed a claim under the Workmen's Compensation Act, 1923. The Commissioner directed the employer bank to pay compensation. The question before the apex Court was whether the requisitioning authority is liable to pay the compensation. The apex Court held that as the definition of 'employer' embraces within its fold those who were in control of the workman temporarily lent or let on hire and as the driver in that case was under the control of Election Officer, the requisitioning authority would be his employer, and so the State is liable to pay the compensation. This decision also supports the view that the APSRTC, being the temporary owner of the bus, having effective control over the bus at the time of accident in this case also is liable to pay the compensation payable to the victims. 15. This decision also supports the view that the APSRTC, being the temporary owner of the bus, having effective control over the bus at the time of accident in this case also is liable to pay the compensation payable to the victims. 15. In B. Kanaka Ratna case (10 supra) it is held that the condition in the agreement between the APSRTC and the owner that he would be liable to pay the compensation for the torts committed by the driver is opposed to public policy and so the claimants are entitled to seek compensation from the APSRTC also. 16. In Rikhi Ram case (11 supra) this Court held that the liability of the insurer does not cease in so far as the third party victims are concerned even if the transfer of the vehicle is effected without notice to the insurer. 17. In Morbi Taluka Panchayat case (13 supra) the panchayat took a water tanker on hire from its owner for supply of water in water scarcity areas. The vehicle was under the exclusive use and possession of the panchayat and the expenses of repair and pay of driver were also borne by the panchayat. The question was whether the panchayat as the hirer is liable for the claims arising out of the accident. The Gujarat High Court held that the hirer is liable to pay the compensation. 18. In view of the ratio in the above decisions, it is clear that even if the bus is given on hire to APSRTC, the insurance policy obtained by the owner of the bus would be valid and the insurer is liable to pay the compensation payable to third party risks in cases where the bus got involved in accidents. In B.G. Suma (3 supra), a division bench, on the basis of Kailash Nath Kothari case (1 supra), held that the Tribunal was in error in making the insurance company liable and ought to have made APSRTC only liable. In my considered opinion, the said view taken by the Division Bench is not in accordance with ratio in Kailash Nath Kothari case (1 supra), where the question relating to the liability of the insurance company did not come up for consideration by the apex Court. If the vehicle meets with an accident when in the custody of the de facto owner, the de facto owner also is liable to pay the compensation. If the vehicle meets with an accident when in the custody of the de facto owner, the de facto owner also is liable to pay the compensation. He cannot escape his liability on the ground that the de jure owner had undertaken to meet the liability of third parties. When APSRTC also is liable to pay the compensation, question of its withholding the hire, taking the said agreement entered into between it and the de jure owner of the bus, is against law as it cannot contract itself out of the provisions of law. Therefore, the withholding of the amounts by the APSRTC is erroneous and unsustainable. The point is answered accordingly. 19. In view of the above, the CMA is allowed and the award passed by the Tribunal is modified and an award for the amount granted by the Tribunal is passed against the insurer also. The Writ Petition is allowed directing the APSRTC to release the amounts of hire withheld by it to the owner of the bus within one week from the date of receipt of a copy of this order. Both parties are directed to bear their own costs in these proceedings.