JUDGMENT: 1. This Miscellaneous Appeal under section 173 of the Motor Vehicles Act, 1988, APSRTC impugns the order dated 21.04.2005 of the learned Chairman, Motor Accident Claims Tribunal – cum - I Additional District Judge, Machilipatnam in MVOP.No.70 of 1999. 2. Respondent No.1 is the injured claimant. Respondent No.2 is the owner of the offending bus. Respondent No.3 is the insurer of the offending bus. 3. Sri Venkateswarlu Sanisetty, the learned standing counsel for the appellant/ APSRTC and Smt.S.A.V.Ratnam, the learned Standing counsel for respondent No.3 submitted arguments. 4. The only question that has arisen in this appeal is " If an insured vehicle is plying under an agreement of contract with APSRTC on the route as permit granted in favour of the corporation, in case of accident, whether the insurance company would be liable to pay compensation or would it be the responsibility of the APSRTC ?” 5. The above question has arisen in the following circumstances. Unaware of the difficulties that one may encounter on a road, an innocent boy aged 9 years was standing on the side of a road at 11 A.M. on 03.09.1998 at Machilipatnam. Bus bearing registration No.AP 9T 6199 was driven by its driver rashly or negligently and at high speed and consequently, it deviated its path and dashed the boy causing fracture of first and second metatarosal bone of left foot and the crush injury developed ostomyloties making the injured to undergo medical treatment for a long time. Claiming compensation for the injuries suffered by the child, the natural guardian preferred a compensation claim making the owner of the bus and the insurer and the hirer of the bus/ APSRTC as responsible to answer the claim. 6. After exchange of necessary pleadings, in proof of the claim, PWs.1 and 2 gave their evidence and Exs.A1 to A6 were marked. Respondents therein did not adduce any oral evidence. However, on behalf of APSRTC, Ex.B1 agreement dated 01.04.1998 was marked. Exs.X1 and X2 which refer to the X-ray and medical case sheet of the injured were also exhibited. 7. As against a claim of Rs.1,50,000/-, the claims tribunal awarded Rs.85,000/- and granted 9% interest to be paid from the date of petition till the date of award. Thereafter, the amount granted would carry 6% interest till the date of realization. Exs.X1 and X2 which refer to the X-ray and medical case sheet of the injured were also exhibited. 7. As against a claim of Rs.1,50,000/-, the claims tribunal awarded Rs.85,000/- and granted 9% interest to be paid from the date of petition till the date of award. Thereafter, the amount granted would carry 6% interest till the date of realization. In the present appeal there is no challenge on either side about the correctness of that part of the award. 8. From the pleadings and evidence and the observations of the claims tribunal, it was found that Sri S. Anjaneyulu was the owner of the offending vehicle and he obtained an insurance policy from the United India Insurance Company Limited, Vijayawada effective up to 30.08.1999. Since the subject matter accident occurred on 03.09.1998, it was found that the policy was in force. The driver of the vehicle at the material point of time was holding a valid and effective driving licence. These aspects are also not in dispute in this appeal. 9. The owner of the vehicle gave the offending bus on hire to APSRTC for a period commencing from 01.04.1998 up to 31.10.1998. The condition No.5 in the lease agreement reads as below "It shall be the responsibility of the owner to make arrangements for proper prosecution of proceedings either before the Motor Accident Claims Tribunal or Tribunals, Commissioner For Workmen Compensation, RTA and STA" 10. Before the claims tribunal, the Insurance company claimed that since the owner of the bus had given it on hire to APSRTC, the liability of the Insurance company ceased and the compensation had to be paid by the APSRTC. On the other hand, the claim of APSRTC before the claims tribunal was that it obtained the bus on hire for limited purpose and by virtue of the lease agreement between it and the owner of the bus, all the claims are to be addressed by the owner and the insurer only and therefore APSRTC cannot be directed to pay compensation. 11. Learned claims tribunal considered these rival contentions. It then placed reliance on the Judgment of the Hon’ble Supreme Court of India in Rajasthan State Road Transport Corporation V. Kailash Nath Kothari, 1997 (7) SCC 481 . 11. Learned claims tribunal considered these rival contentions. It then placed reliance on the Judgment of the Hon’ble Supreme Court of India in Rajasthan State Road Transport Corporation V. Kailash Nath Kothari, 1997 (7) SCC 481 . The ratio in the said ruling, as understood by the claims tribunal, is that the Insurance company is not liable to pay compensation if the owner had given the vehicle on hire to RTC. In such circumstances, the learned claims tribunal directed APSRTC to pay the compensation that was awarded. 12. In this appeal, the said reasoning and conclusions arrived at by the tribunal below are challenged by APSRTC. The learned counsel submits that the tribunal committed legal error in fastening liability on it and committed error in exonerating the insurer. It is argued that the law as enunciated by this court is that even if a vehicle is given on hire, the insurer cannot escape from liability as long as there are no violations of essential policy conditions. To sustain this argument, the learned counsel places reliance on a Judgement of this court in APSRTC V. M Srinivasa Rao, 2023 Supreme (Online) (AP) 23723. 13. Learned standing counsel representing the insurance company submits that the claims tribunal properly analyzed the facts and applied appropriate principles of law and therefore there is no warrant for interference. 14. The reference by the claims tribunal to the ruling of their Lordships in Kailash Nath Kothari’s case[supra 1] misses to notice a few aspects of the matter. In the said case, the subject matter accident occurred in the year 1981. By then there was in force, the Motor Vehicles Act, 1939. In the said ruling, their Lordships considered the definition of owner as contained in section 2(19) of the Act, 1939. In the case at hand, the subject matter accident occurred on 03.09.1998. Thus, the law in force by then, was the Motor Vehicles Act, 1988 and not the old Act, 1939. The definition of owner underwent change as could be noticed from section 2(30) of the Motor Vehicles Act, 1988. In the said ruling, the contract of lease between the owner and the RTC included condition that the RTC would pay and thereafter would recover from the owner. In the case at hand, the terms of contract of lease is in different terms. In the said ruling, the contract of lease between the owner and the RTC included condition that the RTC would pay and thereafter would recover from the owner. In the case at hand, the terms of contract of lease is in different terms. The question whether liabilities arising out of automobile accident could be transferred or not and whether a clause transferring liabilities offends public policy or not was left open by their Lordships since the facts on record available before their Lordships did not require enunciation in that regard. Considering the definition of owner as available in the old Act and considering the terms of lease between the parties, their Lordships held that since in the said case effective control over the subject vehicle as well as the services of the driver were under the control of RTC, insurer was relived of its liability. Learned claims tribunal in the case at hand did not put any endeavour to see the facts and circumstances in which such ruling was given. In fact, their Lordships categorically hold that the case has to be decided based on terms of agreement and other facts and circumstances. Even that did not make the claims tribunal alert. That error on part of the claims tribunal led it to reach incorrect legal conclusions. Be it as it may. 15. The view that was taken by the claims tribunal is clearly erroneous on facts and law. In this regard, the following aspects are to be noticed. A reference has to be made to UPSRTC V. Kulsum, (2011) 8 SCC 142 and UPSRTC V. Rajenderi Devi, (2020) 19 SCC 230 and the ruling of a learned Judge of this court in MACMA.No.754 of 2017[supra 2]. In the cited rulings, the Hon’ble Supreme Court of India held that once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the Act, 1988 does not provide that any person who uses the vehicle independently, a separate insurance policy should be taken. In the cited rulings, the Hon’ble Supreme Court of India held that once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the Act, 1988 does not provide that any person who uses the vehicle independently, a separate insurance policy should be taken. It was further ruled that if a bus insured by its owner was given on hire to RTC under lease agreement and if there is an accident causing injuries to third parties, it would be deemed that the vehicle was transferred along with the insurance policy in existence to lessee and consequently, the insurer of policy alone is liable to pay compensation. Thus, when it comes to third party risks, the insurance company must pay compensation as it agreed to indemnify through its policy. 16. In view of the law as stated above, the reasons given by the claims tribunal are to be stated as erroneous at law and they cannot be supported. Hence the impugned order requires modification. Point is answered in favour of the appellant. 17. In the result, this appeal is allowed by way of a modification. Consequently, order dated 21.04.2005 in MVOP.No.70 of 1999 of learned Chairman, Motor Accident Claims Tribunal - cum – I Additional District Judge, Machilipatnam fixing liability on the appellant/APSRTC by the claims tribunal is set aside. The liability to pay compensation amount shall be exclusively shouldered by respondent No.3 herein/ United India Insurance Co.Ltd. Before the claims tribunal, respondent No.3 herein/ United India Insurance Co.Ltd shall deposit the compensation amount and the proportionate costs along with interest as ordered in the award by the claims tribunal. For this purpose, time granted is 30 days. The claimant is entitled to apply and withdraw the entire amount. There shall be no order as to costs in this appeal.