AI Structured Summary
Not yet generated for this judgment
Judgment
Rajes Kumar, J.—These are 14 appeals filed by the Insurance Company against the order of the Motor Accident Claims Tribunal/Vth Additional District Judge, Barabanki passed on 22.2.2001 in Claim Petition Nos. 163 of 1996, order dated 26.9.2006 passed by the Special Judge (E.C. Act)/M.A.C.T. Bahraich in M.A.C.T. No. 93/70/2000, order dated 5.4.2006 in Claim Petition No. 154/70/1998, order dated 10.3.2006 in Claim Petition No. 147/70/1998, order dated 10.3.2006 in Claim Petition No. 232/70/1998, order dated 6.4.2006 in Claim Petition No. 151/70/1998, order dated 10.3.2006 in Claim Petition No. 163/70/1998, order dated 4.4.2006 in Claim Petition No. 148/70/1998, order dated 8.5.2006 in Claim Petition No. 153/70/1998, order dated 31.1.2006 in Claim Petition No. 155/70/1998, order dated 10.4.2006 in Claim Petition No. 149/70/1998, order dated 10.3.2006 in Claim Petition No. 150/70/1998, order dated 23.9.2005 in Claim Petition No. 220/70/1998 and order dated 25.9.2006 passed by the Additional District Judge, Motor Accident Claims Tribunal, Special Judge (E.C. Act), Bahraich in Claim Petition No. 164/70/1998 by which in the accident the buses attached to U.P.S.R.T.C., the Insurance Company has been held liable to pay the compensation. Since in all the appeals a common question is involved, therefore, all the appeals are being decided by a common order.
In all the cases owner of the buses entered into the contract/agreement with Uttar Pradesh State Road Transport Corporation, Sapru Marg, Lucknow (hereinafter referred to as the "UPSRTC") to provide their buses for transportation. The owner of the vehicles admittedly got their vehicles insured through the appellant-Insurance Companies. The UPSRTC has not got such vehicles insured . The question for consideration is that while such buses met with accidents, which, under the terms of the contract, have been provided to UPSRTC, whether the Insurance Company is liable for compensation to the third party to indemnify the liability of the owner of the buses or the UPSRTC.
Heard Sri R.C. Sharma, Ms Alka Verma and Sri Shishir Pradhan, learned Counsel appearing on behalf of the appellants, Sri Aqtar Abbas, learned Counsel appearing on behalf of U.P.S.R.T.C. and S/Sri Ravindra Pratap Singh and Sarvesh Kumar Saxena, learned Counsel appearing on behalf of claimants.
Learned Counsel for the appellant submitted that under the Motor Vehicles Act, 1988 (hereinafter referred to as the "Act"), it is the owner of the vehicle who is liable to pay the compensation to the claimants in case of accident. The owner is defined by Section 2(30) of the Act. Under the definition of the owner the person under whose possession the vehicle was, is deemed to be the owner. Under the terms of the agreement between the actual owner of the vehicle and the UPSRTC, the possession and control of the vehicle have been transferred to UPSRTC during the period of contract which is clear from Clause (1) of the agreement. Therefore, the UPSRTC is the owner of the vehicle within the definition of owner under the Act for the period of contract. He submitted that under the Insurance Policies, the Insurance Companies undertook to indemnify the liability of the owner who got the vehicle insured. Since the vehicle during the period of contract, was not in possession and control of the actual owner (in short ''insured'') but was under the possession and control of UPSRTC. The insured who got the vehicles insured were not the owner within the definition of "owner" under the Act and the UPSRTC was the owner within the definition of the Act and liable for compensation. The Insurance Company has not undertaken, under the Insurance Policies, to indemnify the UPSRTC in respect of their liability, therefore, the Insurance Company is not liable for the payment of compensation for the accident committed during the period of agreements between the insured and the UPSRTC.
In support of the contention they relied upon a decision of the Apex Court in the case of Uttar Pradesh State Road Transport Corporation v. Kammarudin and Ors. reported in 1998 (1) TAC 42. The Division Bench decision of this Court in the case of FAFO No. 389 of 2003 (UPSRTC v. Kammarudin and others) decided on 21.10.2003 the SLP filed against the said order has been dismissed by the Apex Court on 25.7.2005. The Division Bench decision of this Court in the case of FAFO No. 63 of 2001 (UPSRTC v. Smt. Lallan Devi and Ors.) and other connected FAFOs decided on 12.4.2007, the decision of the apex Court in the case of National Insurance Co.Ltd. v. Deepa Devi and Ors. reported in 2008 (1) TAC 214 S.C.
Learned Counsel appearing on behalf of UPSRTC submitted that under Clause (2) of the agreement the liability under the Act was on the owner of the vehicle and not on UPSRTC. He submitted that u/s 146 of the Act no vehicle could be plied without getting the insurance and it also allowed the owner of the vehicle to allow other person to ply such vehicle and such person using the vehicle is not required to take seperate insurance. In support of contention he relied upon the following decisions - Rikhi Ram and Another Vs. Smt. Sukhrania and Others, Gauri Shanker Paliwal v. J.N. Nigam and Ors. reported in 2007 (1) ALJ 774 and Oriental Fire & General Insurance Company, Rampur v. Smt. Savitri Devi and Ors. a reported in 2008 (1) ALJ 417. He submitted that the decision cited by the learned Counsel for the appellant is distinguishable and is not applicable to the present case. He further submitted that the Insurance Companies were aware that the vehicles were given under the contract to the UPSRTC and knowing this fact the vehicle was insured owning the liability which may arise due to the accident. He submitted that the vehicle was insured and, therefore, any liability arises from the accident by such insured vehicle, the Insurance Company is liable to pay compensation. The Copy of the agreement is on record. It is admitted by both the parties that the terms of agreement in all the cases are common. Extracts of some of the relevant clauses of the agreement read as follows:
1 f}rh; i{k }kjk miyC/k djk;h x;h feuhcl la[;k UP 32 A7352 ekMy 30-3-93 O;kid chek ikfylh la0-93@31@10447 oS/krk ;k oSdfYid cl tks bl vuqcU/k ds vU; ''krksZ ds v/khu le; le; ij myC/k djk;h tk;sxh] vuqcU/k vof/k esa iz/kku i{k ds gokys jgsxh rFkk cl dk Lokf/kdkj vkSj fu;a=.k izFke i{k ds v/khu jgsxk] fdUrq cl dk LokfeRo f}rh; i{k dk gh jgsxk A
2 eksVj ;ku vf/kfu;e 1988 ;k vU; vf/kfu;eksa ds vUrxZr lHkh fof/kd nkf;Roksa ;kuh eksVj okgu dk iathdj.k VSDl] Hkqxrku] O;kidchek rFkk os lHkh nkf;Ro tks le; le; ij fdlh Hkh fo/kh }kjk okgu Lokeh ij fu/kkZfjr fd;s tk;s] ds fuoZgu ds fy, f}rh; i{k dk mRrjnkf;Ro gksxk rFkk izFke i{k dk dksbZ nkf;Ro ugha ekuk tk;sxk A
4-4 ;k=h dks fVdV nsus] fdjk;k izkIr djus rFkk bl laca/k esa fofHkUu izdkj ds vfHkys[kksa dks iw.kZ djus dk nkf;R; izFke i{k }kjk fu;qDr ifjpkyd dk gksxk A ifjpkydksa dh fu;qfDr izFke i{k }kjk dh tk;sxh A ifjpkyd ds funsZ''ku esa pkyd cl lapkfyr djsxk A pkyd] lapkyu laca/kh izFke i{k ds lHkh vkns''kksa ls ck?; gksxk A ;fn pkyd }kjk lapkyu ds laca/k esa dksbZ =qfV ;k voKk dh tkrh gS rks og f}rh; i{k dh =qfV ;k voKk ekuh tk;sxh rFkk rRlaca/kh lHkh gkfu dh izfriwfrZ izFke i{k }kjk f}rh; i{k ls djus dks vf/kd`r gksxk o dh tk;sxh A
9-1 vuqcU/k uohuhdj.k u fd;s tkus dh fLFkfr esa 3 o"kZ dk gksxk fdUrq f}rh; i{k dks izR;sd o"kZ ;g izek.k i= nsuk gksxk fd mls izFke i{k ls vuqcaf/kr cl dk vuqcaf/kr vof/k ds fy, O;kid chek djk fy;k gS tks fd oS/k gS ,oa cl ds VSDl vkfn dk vn~;kof/kd Hkqxrku fd;k tk pqdk gS vkSj cl dh fQVusl laHkkxh; ifjogu vf/kdkjh ls djk th x;h gS] rFkk oS/k gS A
10 pkyd dh fdlh =qfV vlko/kkuh] nq?kZVuk ;k vU; voS/k dk;ksZa dk iw.kZ nkf;Ro f}rh; i{k dk gksxk rFkk bl laca/k eaa fdlh Hkh izfrdj ;k vU; ns; /kujkf''k ds Hkqxrku dk nkf;Ro cl Lokeh ;k vf/kfu;eksa ds vUrxZr chek dEiuh dk gksxk fdlh Hkh voLFkk esa pkyd dh =qfV vlko/kkuh nq?kZVuk voS/k dk;ksZa dk nkf;Ro izFke i{k dk ugha gksxk A ;fn fdlh U;k;ky; vkfn ds vkns''k ds vuqikyu esa izFke i{k }kjk dksbZ Hkqxrku fd;k x;k gks rks f}rh; i{k ds ns;dksa ls ;k vU; fof/k;ksa }kjk izFke i{k O;olkf;d nj ij C;kt lfgr olwyh djus ds fy, vf/kd`r gksxk A
27 vuqcfU/kr feuh cl dk ijfeV izFke i{k ds uke cusxk rFkk Qhl ij O;; dh x;h /kujkf''k dk ogu izFke i{k gh djsxk A
Some of the relevant provisions of the Motor Vehicles Act read as follows:
Section 2(30) "owner" means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement;
Section 140. Liability to pay compensation in certain cases on the principle of no fault.- (1) Where death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section.
(2) The amount of compensation which shall be payable under Sub-section (1) in respect of the death of any person shall be a fixed sum of fifty thousand rupees and the amount of compensation payable under that Sub-section in respect of the permanent disablement of any person shall be a fixed sum of twenty-five thousand rupees.
(3) In any claim for compensation under Sub-section (1), the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect of default of the owner or owners of the vehicle or vehicles concerned or of any other person.
(4) A claim for compensation under Sub-section (1) shall not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or permanent disablement the claim has been made nor shall be quantum of compensation recoverable in respect of such death or permanent disablement be reduced on the basis of the share of such person in the responsibility for such death or permanent disablement.
(5) Notwithstanding anything contained in Sub-section (2) regarding death or bodily injury to any person, for which the owner of the vehicle is liable to give compensation for relief, he is also liable to pay compensation under any other law for the time being in force:
Section 144. Overriding effect.- The provisions of this Chapter shall never effect notwithstanding anything contained in any other provision of this Act or of any other law for the time being in force.
Section 146. Necessity for insurance against third party risk.-(1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter:
Provided that in the case of a vehicle carrying, or meant to carry, dangerous or hazardous goods, there shall also be a policy of insurance under the Public Liability Insurance Act, 1991 (6 of 1991.
Section 147. Requirements of policies and limits of liability.- (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which-
(a) is issued by a person who is an authorized insurer; or
(b) insurer the person or classes of persons specified in the policy to the extent specified in Sub-section (2)-
(i)against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorized representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii)against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:
Provided that a policy shall not be required-
(i)to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen''s Compensation Act, 1923 (8 of 1923) in respect of the death of, or bodily injury to, any such employee-
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation.- For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of the vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.
(2)Subject to the proviso to Sub-section (1), a policy of insurance referred to in Sub-section (1), shall cover any liability incurred in respect of any accident, up to the following limits, namely:
(a) save as provided in Clause (b), the amount of liability incurred;
(b) in respect of damage to any property of a third party, a limit of rupees six thousand:
Provided that any policy of insurance issued with any limited liability and in force, immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier.
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
(4) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.
(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.
Section 149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under Sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147 (being a liability covered by the terms of the policy) or under the provisions of Section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:
(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:
(i) a condition excluding the use of the vehicle-
(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or
(d) without side-car being attached where the vehicle is a motor cycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot of civil commotion; or
(b) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representative of fact which was false in some material particular.
Section 157. Transfer of certificate of insurance.- (1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.
Explanation.- For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.
(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.
Section 163A. Special provisions as to payment of compensation on structured formula basis.-(1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorized insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs of the victim, as the case may be.
Explanation.- For the purposes of this Sub-section, "permanent disability" shall have the same meaning and extent as in the Workmen''s Compensation Act, 1923 (8 of 1923).
(2)In any claim for compensation under Sub-section (1), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect of default of the owner of the vehicle or vehicles concerned or of any other person.
(3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from time to time amend the Second Schedule.
Section 168. Award of the Claims Tribunal.-(1) On receipt of an application for compensation made u/s 166, the Claims Tribunal shall, after giving notice of the application to the insurer and after giving the parties (including the insurer) an opportunity of being heard, hold an inquiry into the claim or, as the case may be, each of the claims and, subject to the provisions of Section 162 may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid and in making the award the Claims Tribunal shall specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them, as the case may be:
Provided that where such application makes a claim for compensation u/s 140 in respect of the death or permanent disablement of any person, such claim and any other claim (whether made in such application or otherwise) for compensation in respect of such death or permanent disablement shall be disposed of in accordance with the provisions of Chapter X.
Having heard learned Counsel for the parties we have perused the impugned orders, copy of the agreement between the UPSRTC and the insured and the materials available on record.
Section 2(30) of the Act defines ''owner''. u/s 140 it is the ''owner'' who is liable to pay compensation in case of death or disablement of any person resulted from an accident arising out of the use of motor vehicle. Section 146 says that no person shall use except as a passenger a motor vehicle in a public place unless there is enforce in relation to the use of the vehicle by that person or other person as the case may be a policy of the insurance complying with the requirement of this chapter. Section 146 also permits a person to allow the other person to use motor vehicle. The insurance is necessary against third party risk. u/s 147 of the Act a liability of the insurer is limited as well as unlimited depending upon the nature of the policy. Section 149(1) of the Act contemplates the duty of the insurer to satisfy judgment and awards against persons insured in respect of third party risk. Section 149(2) provides the condition under which the insurer may not be liable to pay. The ''owner'' is defined u/s 2(30) of the Act. It means a person in whose name the motor vehicle stands registered and where such person is a minor the guardian of such minor and in relation to a motor vehicle which is of the higher purchase agreement or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement. Therefore, under the agreement of lease the person in possession of the vehicle shall be the ''owner''.
Therefore, in order to decide the controversy in the present case it is to be examined that what is the nature of the agreement and who was in possession of the vehicle during the period of the agreement. The relevant clauses of the agreement are referred herein above. Clause 1 of the agreement clearly stipulates that during the period of agreement possession and control of the vehicle shall be with the UPSRTC. Clause 9.1 provides that the period of agreement was for three years. Therefore, as per the agreement for the period of three years the possession and control of the vehicle was with the UPSRTC. Having regard to the terms of the conditions we are of the view that the nature of agreement was the agreement of lease and there was a transfer of a right to use the vehicle by the insured to the UPSRTC and the possession of the vehicles were with the UPSRTC during the period of contract. Therefore, we are of the view that under the definition of ''owner'' in Section 2(30) of the Act, the UPSRTC was the owner of the vehicles and liable for compensation under the Motor Vehicles Act to the persons who were injured or caused death in an accident by such vehicles.
In the case of Rajasthan State Road Transport Corporation v. Kailash Nath Kothari and Ors. (supra) the facts of the case was that in an accident held on 17.7.1981 by Bus No. RSB-3945, which was provided by the insurer to the Rajasthan State Road Transport Corporation (called the ''RSRTC'' for short) under the terms of the agreement, 23 passengers travelling in the Bus died in an accident. The insured (actual owner of the vehicle) has got the vehicle insured with the Insurance Co. The question for consideration was whether the Insurance Co. was liable to pay compensation or the RSRTC. Under the term of the contract it was found that the vehicle was under the actual possession and control of the RSRTC. The definition of ''owner'' u/s 2(19) of the old Act and now Section 2(30) of the new Act and conditions No. 4 to 7 and 15 of the agreement executed between the RSRTC and the owner have been considered.
On the aforesaid fact, the apex Court held as follows :
Conditions 4 to 7 and 15 of the agreement executed between the RSRTC and the owner read :
The Corporation shall appoint the conductor for the operation of the bus given on contract by the second party and the conductor of the Corporation shall do the work of issuing tickets to the passengers, to receive the fare, to all the passengers to get in and get out of the bus, to help the passengers to load and unload their goods, to stop the bus at the stops fixed by the Corporation and to operate the bus according to time table.
The tickets, way-bills and other stationary shall be supplied by the Corporation to the said conductor of the Corporation to the said conductor of the Corporation.
The driver of the bus shall have to follow all such instructions of the conductor, which shall be necessary under the rules for the operation of the bus.
The driver of the bus shall comply with all the orders of the Corporation or of the officers appointed by the Corporation.
Upon the accident of the bus taking place the owner of the bus shall be liable for the loss, damages and for the liabilities relating to the safety of the passengers. The Corporation shall not be liable for any accident. If the Corporation is required to make any payment or incur any expenses through some Court or under some mutual compromise, the Corporation shall be able to recover such amounts from the owner of the bus after deducting the same from the amounts payable to him."
The admitted facts unmistakably show that the vehicle in question was in possession and under the actual control of RSRTC for the purpose of running on the specified route and was being used for carrying, on hire, passengers by the RSRTC. The driver, was to carry out instructions, orders and directions of the conductor and other officers of the RSRTC for operation of the bus on the route specified by the RSRTC.
The definition of owner u/s 2(19) of the Act is not exhaustive. It has, therefore, to be construed, in a wider sense, in the facts and circumstances of a given case. The expression owner must include, in a given case, the person who has the actual possession and control of the vehicle and under whose directions and commands the driver is obliged to operate the bus. To confine the meaning of ''owner'' to the registered owner only would in a case where the vehicle is in the actual possession and control of the hirer, not be proper for the purpose of fastening of liability in case of an accident. The liability of the "owner" is vicarious for the tort committed by its employee during the course of his employment and it would be a question of fact in each case as to one whom can vicarious liability be fastened in the case of an accident. In this case, Shri Sanjay Kumar, the owner of the bus could not ply the bus on the particular route for which he had no permit and he in fact was not plying the bus on that route. The services of the driver were transferred along with complete ''control'' to RSRTC, under whose direction, instructions and command the driver was to ply or not to ply the ill-fated bus on the fateful day. The passengers were being carried by RSRTC on receiving fare from them. Shri Sanjay Kumar was, therefore, not concerned with the passengers travelling in that bus on the particular route on payment of fare to RSRTC. Driver of the bus, even though an employee of the owner, was at the relevant time performing his duties under the order and command of the conductor of RSRTC for operation of the bus. So far as the passengers of the ill-fated bus are concerned, their privity of contract was only with the RSRTC to whom they had paid the fare for travelling in that bus and their safety, therefore, became the responsibility of the RSRTC while travelling in the bus. They had no privity of contract with Shri Sanjay Kumar, the owner of the bus at all. Had it been a case only of transfer of services of the driver and not of transfer of control of the driver from the owner to RSRTC, the matter may have been somewhat different. But on facts in this case and in view of conditions 4 to 7 of the agreement (supra), the RSRTC must be held to be vicariously liable for the tort committed by the driver while plying the bus under contract of the RSTRC. 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, 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. The proposition based on the general principle as noticed above is adequately rebutted in this case not only on the basis of the evidence led by the parties but also on the basis of conditions 6 and 7 (supra), which go to show that the owner had not merely transferred the services of the driver to the RSRTC but actual control and the driver was to act under the instructions, control and command of the conductor and other officers of the RSRTC.
Reliance placed by learned Counsel for the appellant on condition No. 15 of the agreement (supra) in our view is misconceived. Apart from the fact that this clause in the agreement between the owner and the RSRTC, to the extent it shifts the liability for the accident, from the RSRTC to the owner, may be against the public policy as opined by the High Court, though we are not inclined to test the correctness of that proposition of law because on facts, we find that RSRTC cannot escape its liability to pay compensation. The second part of condition No. 15 makes it abundantly clear that the RSRTC did not completely shift the liability to the owner of the bus because it provided for reimbursement to it in case it has to pay compensation arising out of an accident. the words
if the Corporation is required to make any payment or incur any expenses through some Court or under some mutual compromise, the Corporation shall be able to recover such amounts from the owner of the bus afater deducting the same from the amounts payable to him.
in the later part of condition No. 15 leave no ambiguity in that behalf and clearly go to show the intention of the parties. Thus, RSRTC cannot escape its liability under condition No. 15 of the agreement either. Thus, both on facts and in law the liability to pay compensation for the accident must fall on the RSRTC."
In the case of National Insurance Co. Ltd. v. Deepa devi and Ors. (supra) the fact of the case was that the offending car was requisitioned during the assembly election by the Sub-Divisional Magistrate, Rampur, through the Deputy Commissioner, Shimla. The said vehicle was in possession as also under the control of the said officer. On 17.11.1993 while the SDM, Rampur, was travelling in the said vehicle an accident occurred, as a result whereof a boy named Satish Kumar sustained injuries. He later on expired. The heirs of Satish Kumar filed the complaint. Such car was insured with the National Insurance Co. Ltd. The insurance was obtained by the actual owner of the vehicle. The question was whether the actual owner of the vehicle was liable to pay compensation and in turn National Insurance Company or the State is liable to pay on behalf of SDM, Rampur. The apex Court has considered the definition of the owner in Section 2(30) of the Act and the various decisions of the apex Court including the decision in the case of Kailash Nath Kothari and the decisions of the various High Courts. The apex Court held as follows :
Parliament either under the 1939 Act or the 1988 Act did not take into consideration a situation of this nataure. No doubt, respondent Nos. 3 and 4 continued to be the registered owner of the vehicle despite the fact that the same was requisitioned by the District Magistrate in exercise of its power conferred upon it under the Representation of People Act. A vehicle is requisitioned by a statutory authority, pursuant to the provisions contained in a statute. The owner of the vehicle cannot refuse to abide by the order of requisition of the vehicle by the Deputy Commissioner. While the vehicle remains under requisition, the owner does not exercise any contgrol thereover. The driver may still be the employee of the owner of the vehicle but he has to drive it as per the direction of the officer of the State, who is put in-charge thereof. Save and except for legal ownership, for all intent and purport, the registered owner of the vehicle loses entire control thereover. He has no say as to whether the vehicle should be driven at a given point of time or not. He cannot ask the driver not to drive a vehicle on a bad road. He or the driver could not possibly say that the vehicle would not be driven in the night. The purpose of requisition is to use the vehicle. For the period the vehicle remains under the control of the State and/or its officers, the owner is only entitled to payment of compensation therefore in terms of the Act but he cannot not exercise any control thereupon. In a situation of this nature, this Court must proceed on the presumption that the Parliament while enacting the 1988 Act did not envisage such a situation. If in a given situation, the statutory definitions contained in the 1988 Act cannot be given effect to in letter and spirit, the same should be understood from the common sense point of view.
We, therefore, are of the opinion that the State shall be liable to pay the amount of compensation to the claimants and not the registered owner of the vehicle and consequently the appellant herein.
In F.A.F.O. No. 389 of 2003 (U.P.S.R.T.C. v. Kammarudin and Ors.) the Tribunal has held UPSRTC liable for the payment of compensation. The UPSRTC filed the aforesaid appeal in this Hon''ble Court. The Division Bench of this Court, following the decision of the apex Court in the case of RSRTC v. Kailash Nath Kothari (supra) dismissed the appeal of UPSRTC and upheld the order of the Tribunal. SLP against the aforesaid order has been dismissed by the apex Court on 25.7.2005.
In another case the Division Bench of this Court in FAFO No. 63 of 2001 (UPSRTC v. Smt. Lallan Devi and Ors.) and other connected appeals, has held as follows :
Although contractual liability is not defined under the Act but to us as the liability arising in the case in hand is because of contract between the Corporation and the owner of the bus as per terms and conditions determined, policy cannot cover the liability arising out of this contract. The contract was between owner and corporation without involving Insurance Company. We have failed to understand as to how in those circumstances liability arising due to said contract the Insurance Company can be made liable. Therefore, in our opinion, since the vehicle was running under the contract with the Corporation and as would be evident, under the direct control of the conductor appointed by the Corporation on the specified routes and realizing of fare by the conductor as fixed by the Corporation, if any liability arose during enforcement of the contract, the Insurance company cannot be held liable. In such eventuality, since Corporation is in ultimate control of the vehicle, it should own vicarious liability for the fault and negligence of the driver although appointed by the owner but plying the vehicle under the command of the Corporation. For the same reason, not only the Insurance Company, but the owner who placed his vehicle at the control of Corporation, will also not be liable for compensation because of any act such as negligence etc. committed by the driver acting under the control of the Corporation.
The Division Bench further held that the decision of the apex Court in the case of RSRTC v. Kailash Nath Kothari (supra) was not confined to limited liability alone.
For the reason stated above, we are of the view that under the terms of the contract the vehicles were under possession and control of UPSRTC during the period of the contract. The permit was in the name of the UPSRTC and the driver was under the control of UPSRTC and had to ply on the instruction of the UPSRTC, thus the UPSRTC is liable for compensation arising from the accident by such vehicles. The Insurance Co. was not the party in the agreement between the UPSRTC and the actual owner. The vehicle was got insured by the actual owner and not by the UPSRTC. Under the insurance policy the Insurance Co. was liable to indemnify the liability of the insured and not of UPSRTC. Therefore, the appellant Insurance Cos. cannot be held liable for the payment of compensation payable to the heirs arising as a result of accident by such vehicles.
We do not find any substance in the argument of learned Counsel for the UPSRTC. Merely because under Clause 2 of the agreement between UPSRTC and the actual owner, the actual owner has been held liable, the Insurance Co. cannot be held liable to pay compensation as the Insurance Co. was not the party of such agreement. Similar clause has also been considered by the apex Court in the case of R.S.R.T.C. v. Kailash Nath Kothari, referred herein above and on the consideration of such term the apex Court has held RSRTC liable for compensation and not the Insurance Co. The decision in the case of Rishiram and Ors. v. Sukhrani and Ors. relied upon by the learned Counsel for the UPSRTC has been considered by the apex Court in the case of National Insurance Complany Ltd. v. Deepa Devi and Ors. and held not applicable to such situation. It was a case relating to transfer of vehicle by the owner to the third party. In the case of Gauri Shjanker Paliwal v. J.N. Nigam & Ors. (supra) the case was relating to the change of ownership. Relying upon the provision of Sections 94, 95(1)(b) and 103A, the learned Single Judge of this Court has held that the insurer cannot be exempted from the payment of compensation. This situation is not available in the present case. Therefore, this case is not applicable.
In the case of Oriental Fire & General Insurance Company, Rampur v. Smt. Savitri Devi and Ors. (supra) the vehicle was being driven by the third person with the permission of the registered owner and on these facts it has been held that the Insurance Co. cannot be exempted from payment of compensation. Therefore, this case is also distinguishable.
For the reasons stated above all the appeals are allowed. The order of the Tribunals are set aside. We hold that the UPSRTC are liable for payment of compensation and not the appellant Insurance Cos. In case if the amount has already been deposited by the Insurance Co. the same shall be recovered from the UPSRTC. The Tribunal is directed to recover the balance amount, not already recovered, from the UPSRTC and release the same forthwith to the claimants as per their respective shares. The statutory amount deposited shall be remitted to the Tribunal. The Insurance Company may move an application for the refund of the amount. In case if any such application is moved, the same may be disposed of at the earliest. There shall be no order as to costs.