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National Insurance Co. Ltd., Warangal v. Lunavathi Hariya And Others
Structured Summary of the Opinion
Factual and Procedural Background
This common order disposes of sixteen Civil Miscellaneous Appeals (CMAs) and five Civil Revision Petitions (CRPs) arising from a common judgment and the Motor Vehicle Accidents Claims Tribunal-cum-District Judge, Warangal's order dated 11.4.1997 in OP Nos. 272 of 1995 and batch. The matters are before the court on appeals filed by National Insurance Company Limited, Warangal Branch, aggrieved by the Tribunal's order.
The facts, as recorded in the opinion, are: on 27.1.1995 a private bus bearing No. AEO 4237, owned by the second respondent and hired to Andhra Pradesh State Road Transport Corporation (APSRTC), was involved in an accident while driven by the first respondent. The bus hit a culvert and fell into a trench; seven persons died and eighteen were injured. Claimants filed thirty-six petitions under Section 166 of the Motor Vehicles Act, 1988. The Tribunal dismissed eleven OPs and allowed twenty-five, awarding various amounts (detailed in the opinion). The Insurance Company filed multiple CMAs and CRPs challenging the awards; sixteen CMAs and five CRPs are the subject of the present common order.
The Tribunal framed the issues of negligence, entitlement and from whom compensation should be recovered, and quantum of relief. On evidence the Tribunal found the driver negligent and, relying on an unreported earlier decision of this Court, concluded the driver belonged to the owner and APSRTC (the hirer) was not liable; it held the owner and the Insurance Company liable and assessed compensation accordingly. The appellant (National Insurance Company) challenged the Tribunal's findings in these CMAs and CRPs.
Legal Issues Presented
- Whether, having regard to the facts and circumstances of the case, APSRTC (the hirer) can be held liable to pay the compensation awarded by the Tribunal?
- Issues as framed by the Tribunal (recorded in the opinion): (i) Whether the accident was due to rash and negligent driving of the RTC-hired bus by its driver; (ii) Whether the petitioners are entitled to compensation and, if so, from which respondent(s) and what amount; (iii) To what relief?
Arguments of the Parties
Appellants' Arguments (as recorded)
- The learned counsel for the appellants (National Insurance Company) submitted that the conductor was an employee of APSRTC and that because of overloading by the conductor the accident occurred; therefore APSRTC alone is responsible to pay compensation.
- The learned counsel did not dispute the Tribunal's findings on negligence or the quantum awarded to the claimants.
- Reliance was placed on the Supreme Court's decision in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari and the decision of this Court in General Manager, APSRTC v. B. Kanaka Ratnabai to support the submission that a hirer (APSRTC) cannot escape liability where control has passed to the hirer.
Respondents' Defences (as recorded)
- Second respondent (vehicle owner) denied negligence on the part of the driver and contended the vehicle was insured with the fourth respondent; since the vehicle was hired by APSRTC, the APSRTC alone is liable to pay the amount.
- Third respondent (APSRTC) contended that the second respondent was the employer of the driver, that APSRTC had no control over the driver, and therefore the owner alone is liable to pay the compensation.
- The Insurance Company (in its counter affidavit before the Tribunal) contended that the bus was overloaded beyond the permitted limit and therefore the insurer is not liable to pay the amount.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Usha Sehgal v. Chhote, 1985 ACJ 515 | Where a private vehicle is hired into the service of a transport corporation, a contract between owner and hirer may allocate liability; a contract term may exclude the hirer (DTC) from liability such that the owner remains liable under the Motor Vehicles Act. | The opinion recounts the Delhi High Court's holding that, given the contract's specific term excluding DTC liability, DTC was not liable. The present court noted this decision as part of the jurisprudence on whether an agreement can exclude the hirer from liability. |
| A.P.S.R. T. C. v. Ranga Lakshman (CMA No. 973 of 1984, dated 26.10.1988) (unreported) | Interpreted an agreement between owner and hirer to conclude that the owner remained liable; relied on Usha Sehgal to find that APSRTC was not liable where the agreement excluded APSRTC's liability. | The Tribunal relied on this unreported judgment to hold that the driver belonged to the owner and APSRTC (hirer) was not liable. The present court discussed this earlier decision and its reliance on the agreement/exclusion clause. |
| General Manager, APSRTC v. B. Kanaka Ratnabai, 2000 (2) ACJ 56 | Interpretation of the agreement (Ex.B) between owner and APSRTC in the light of Supreme Court authority to determine whether APSRTC is excluded from liability. | This Court (in that decision) held that APSRTC was not excluded from liability. The present court referred to that contrast when analyzing how agreements have been interpreted in earlier cases. |
| Rajasthan State Road Transport Corporation v. Kailash Nath Kothari (Supreme Court) | If the original employer establishes that effective control over the servant (driver) was transferred to the hirer when the servant was lent, then the hirer (temporary employer) is vicariously liable for torts committed by the employee while under the hirer's command and control, even if the driver remained on the payroll of the original owner. | The present court applied the principle to explain that where an agreement (and evidence) shows transfer of effective control to the hirer, the hirer must be held vicariously liable. However, in the present case no agreement was produced to show such transfer of control; therefore the authority undermined the appellants' contention because the owner failed to establish the necessary facts. |
Court's Reasoning and Analysis
The court's analysis proceeded from facts and evidentiary posture recorded in the record. The Tribunal had found the driver negligent and awarded compensation; this finding on negligence and quantum of award was not seriously disputed by the appellants and the court did not re-open those findings.
The central legal question for the appellate court was whether APSRTC (the hirer) could be held liable to pay the compensation awarded by the Tribunal. The court examined the authorities on when a hirer becomes vicariously liable for the acts of a servant lent by the owner, notably the Supreme Court's decision in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari and the Delhi High Court's decision in Usha Sehgal v. Chhote, as well as earlier decisions of this Court.
The court emphasized the legal principle from the Supreme Court: if the original employer shows that effective control over the servant was transferred to the hirer, the hirer must be held vicariously liable. The court then considered the evidentiary situation in the present case: the driver remained ex parte and the owner (second respondent) did not produce the agreement between the owner and APSRTC to demonstrate any transfer of effective control. The Insurance Company also did not take steps to summon or produce such agreement.
Because no agreement or documentary evidence was produced, the court held it was impermissible to speculate about the rights and obligations of the owner and APSRTC under any such agreement. The court therefore concluded that the precedents that support hirer liability when control is transferred (notably the Rajasthan decision) could not be invoked in favor of the appellants in the absence of proof of transfer of effective control. The court explicitly distinguished cases in which the agreement demonstrated transfer of control from the present factual posture where no agreement was produced.
On that basis, the court found the appellants' contention (that APSRTC must be held liable) unsustainable and affirmed the position that, given the record before it, APSRTC could not be held liable to pay the awards in place of the owner/insurer based on the principles relied upon.
Holding and Implications
Holding: The CMAs and the CRPs fail and are accordingly dismissed without any order as to costs.
Implications
- The Tribunal's awards (as detailed in the record) remain in effect; the appeals filed in the sixteen CMAs and five CRPs have been dismissed and thus do not disturb the Tribunal's compensatory awards.
- The direct effect on the parties is that the appellants' challenge to the Tribunal's allocation of liability was unsuccessful; the absence of evidence (notably the agreement between owner and APSRTC) meant the appellants could not establish that effective control had passed to APSRTC so as to fasten vicarious liability on the hirer.
- The opinion does not purport to set a new or broader precedent beyond applying settled principles: where a hirer's vicarious liability is asserted, the party asserting it must produce evidence (for example, an agreement) demonstrating that effective control over the driver was transferred to the hirer. In the present case no such evidence was produced and therefore the appellants' reliance on authorities establishing hirer liability did not succeed.
No additional facts, arguments or precedential material beyond those contained in the provided opinion have been inferred or added.
1. This common order shall dispose of sixteen CMAs being CMA No. 1529 and other fifteen CMAs and five CRPs being CRP No. 2452 of 1999. These matters are filed by National Insurance Company Limited, Warangal Branch, aggrieved by the common order dated 11.4.1997 passed by the Motor Vehicle Accidents Claims Tribunal-cum-District Judge, Warangal, in OP Nos. 272 of 1995 and batch and hence the common judgment. The parties are referred by their status before the Tribunal.
2. The second respondent is owner of a private bus bearing No. AEO 4237. The bus was hired and owned by Andhra Pradesh State Road Transport Corporation (APSRTC). On 27.1.1995 the bus was involved in an accident while the same was driven by the first respondent and going from Venkirala Village to Warangal by reason of the bus hitting a culvert and falling into a trench. As a result of the accident seven persons died and eighteen persons suffered injuries. The claimants filed as many as thirty six petitions under Section 166 of the Motor Vehicles Act, 1988 claiming damages for death and injuries. The Tribunal appears to have dismissed eleven OPs and allowed twenty five OPs. The fourth respondent Insurance Company filed nineteen CMAs and six CRPs, out of which sixteen CMAs and five CRPs were listed today. Be it noted that CRPs were filed because the amount awarded by the Tribunal is less than Rs. 10,000/-. The details of these cases are as under.
Sl. No. C.M.A.No.
O.P.No.
Death/injury Amount claimed,
Amount awarded,
1. 1529 of 1998 285 of 1995 Injuries 30,500 30, 500 1535 of 1998 277 of 1995 Injuries 48,500 40,000
3. 1753 of 1998 651 of 1995 Death 1,80,000 1,68,000
4. 2469 of 1998 364 of 1995 Injuries 1,00,000 28,000
5. 2532 of 1998 282 of 1995 Injuries 41,500 20,000
6. 2564 of 1998 284 of 1995 Injuries 25,500 1 7,000
7. 2565 of 1998 281 of 1995 Injuries 15,500 10,000
8. 2566 of 1998 276 of 1995 Injuries 48,500 35,000
9. 2567 of 1998 366 of 1998 Death 3,00,000 2,07,000
10. 2568 of 1998 272 of 1995 Injuries 36,500 26,000
11. 2571 of 1998 332 of 1995 Injuries 25,000 18,000
12. 2572 of 1998 411 of 1995 Death 2,00,000 65,000
13. 2573 of 1998 658 of 1995 Death 95,000 75,000
14. 2592 of 1998 296 of 1995 Injuries 45,500 21,000
15. 2594 of 1998 273 of 1995 Injuries 20,500 20,500
16. 3190 of 1998 376 of 1995 Death 1,50,000 1,49,400
17. 3201 of 1998 547 of 1995 Death 1,50,000 1,21,632
18. 3202 of 1998 280 of 1995 Injuries 41,500 29,000
19. of 1999 323 of 1995 Death 1,00,000 65,000 CRP. No
20. 2452 of 1999 329 of 1995 Injuries 25,000 4,500
21. 2453 of 1999 274 of 1995 Injuries 20,000 4,500
22. 2492 of 1999 328 of 1995 Injuries 20,000 4,000
23. 3822 of 2001 327 of 1995 Injuries 15,000 4,000
24. 4463 of 2001 530 of 1995 Injuries 10,000 1,000
25. 7761 of 1998 331 of 1995 Injuries 15,000 3,000 (CRP. SR.)
3. Before considering various grounds, the defence of the respondents may be briefly noticed. The second respondent, who is owner of the vehicle denied any negligence on the part of the first respondent. He also contended that the vehicle was insured with the fourth respondent, that as the vehicle is hired by the third respondent APSRTC, the APSRTC alone is liable to pay the amount. The third respondent in their counter affidavit contended that the second respondent is employer of the first respondent, that APSRTC has no control over the first respondent and therefore the owner alone is liable to pay the amount. The Insurance Company filed a counter affidavit contending that the bus was overloaded beyond the permitted limit and therefore it is not liable to pay the amount On these averments and counter averments, the Tribunal framed the following issues.
(i) Whether the accident was due to rash and negligence in driving the RTC hired bus bearing No. AEO 4237 by its driver ?
(ii) Whether the petitioners are entitled for compensation claimed in their respective claim petition, if so, from which of the respondents and what amount ?
(iii) To what relief ?
4. The claimants examined as many as 26 witnesses as PWs. 1 to 26 and marked Exs.A1 to A73. First respondent remained ex parte. The insurance Company examined its Branch Manager as RW1 besides marking Exs.Bl and B2. On appreciation of the evidence on record the lower Tribunal came to the conclusion that the first respondent was negligent in driving the vehicle. On the second issue, the Tribunal placed reliance on unreported judgment of this Court in A.P.S.R. T. C. v. Ranga Lakshman (CMA No. 973 of 1984, dated 26.10.1988) and held that the driver belongs to the owner and therefore APSRTC (hirer) is not liable to pay compensation. It also held that owner and the Insurance Company alone are liable to pay compensation. The Tribunal further proceeded to consider the claims and awarded the amounts as indicated in the above table.
5. Learned Counsel for the appellants Sri B.V. Rama Mohan Rao submits that admittedly the conductor was employee of the third respondent-APSRTC and that because of overloading of the bus by the Conducter only the accident occurred. Therefore, APSRTC alone is responsible. The learned Counsel, however, does not dispute that the driver was under the control of the owner. The learned Counsel also placed reliance on the Judgment of the Supreme Court in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari, , in support of the submission that even if the bus belonging to second respondent is hired by the third respondent, the latter cannot escape the liability. The learned Counsel also placed reliance on the judgment of this Court in General Manager, APSRTC v. B, Kanaka Ratnabai, 2000 (2) ACJ 56. The learned counsel does not seriously dispute the finding of the Tribunal on the question of negligence and on the question of quantum of compensation awarded to various claimants.
6. The only point that arises for consideration is having regard to the facts and circumstances of the case whether APSRTC can be held liable to pay compensation awarded by the Tribunal.
7. In Usha Sehgal v. Chhote, 1985 ACJ 515, the Delhi Transport Corporation (DTC) hired a bus from a private person which met with an accident resulting in death of Narinder Prakash Sehgal. A question arose whether DTC was not liable according to the Act. The Delhi High Court held as under. The vehicle in question was a private vehicle of the owner, but under the service of the DTC. The counsel for the DTC submitted that DTC was not liable as according to the Motor Vehicles Act the liability is only of the owner. He also submits that by virtue of a contract between the owner and the DTC the liability for payment of compensation in case of accident was passed on to the owner of the bus and not on the DTC. In reply the counsel for the appellant has submitted that the private vehicle of the owner was being plied into service of the DTC. The licence was also held by the DTC. For these reasons, he submitted that the DTC is liable to pay compensation. Considering the provisions of the Act and the contract between the owner and the DTC there is no doubt that it is only the owner who is liable. DTC is not liable. The fact that the vehicle was in the service of the DTC or that the licence was in the name of the DTC would not make any difference. That is because the contract has by a specific term excluded the DTC from any liability and had reiterated the liability of the owners as provided by the Act.
8. In CMA No. 973 of 1984 dated 26.10.1988 this Court relied on agreement between the owner and hirer (APSRTC) and placing reliance on the judgment of the Delhi High Court in Usha Sehgal v. Chhote (supra) held that APSRTC is not liable. The following observations are relevant. In this case also on a reading of the language adopted in Section 110-B of the Act and the agreement, Ex.B4, it can be said that the owner of the vehicle is liable ultimately in the event of any accident. The APSRTC is not liable merely because the private vehicle was taken on hire in service of the APSRTC and when the licence was in the name of the owner of the vehicle and what is contemplated in Ex.B4 about the liability is correct. The contract Ex.B4 exclude the APSRTC from any liability. So, the APSRTC is not liable to pay any amount towards compensation.
9. In General Manager, APSRTC. v. Kanaka Ratnabai (supra) agreement between owner and APSRTC was marked as Ex.B.4 and interpreting the said agreement in the light of the judgment of the Supreme Court in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari (supra) this Court held that APSRTC is not excluded from the liability.
10. In Rajasthan State Road Trasnport Corporation v. Kailash Nath Kothari (supra) also the agreement between the RTC and private owner was marked. The Supreme Court referred to Clauses 6, 7 and 15 of the agreement and came to the conclusion that the owner had not merely transferred the services of the driver to RTC, but until contrary is proved driver has to act under the instructions, control and command of the conductor and other officers of the RTC. Thus, referring to the agreement itself it is concluded that in fastening liability to pay compensation on the RTC, the Motor Vehicle Accidents Claims Tribunal has not committed any error. The Supreme Court observed as under:
...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 employee concerned 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 payroll of the original owner. The proposition based on the general principles 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.
11. As per the decision of the Supreme Court referred to hereinabove, if the original employer established that when he lent servant, effective control over him was also transferred to hirer, the original owner can avoid liability and the temporary employer or hirer as the case may be must be held vicariously liable for the tort committed by the concerned employee. In this case, the driver remained ex parte. Though the owner of the bus, second respondent, filed counter, he did not come into box and produce necessary documents. Even the Insurance Company which examined its Branch Manager did not take any steps to summon the agreement between the APSRTC and the second respondent. In the absence of any agreement, the submission that even if there is such clause in the agreement excluding the liability of APSRTC on the authority of the Supreme Court in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari (supra) such clause must be held contrary to public policy, cannot be countenanced. This is the most glaring and distinguishable feature in Rajasthan Transport Corpn, v. Kailash Nath Kothari (supra) as well as the case in General Manager, APSRTC v. B. Kanaka Ratnabai (supra). In the absence of agreement between second and third respondents, it is impermissible to surmise as to what are rights and obligations of respondents 2 and 3 under the agreement. Hence, I am of the considered opinion that the judgment of the Supreme Court in Rajasthan State Road Transport Corporation v. Kailash Nath Kothari (supra) goes against the contention of the learned Counsel for the appellants. In these cases, the original employer, the second respondent has failed to establish necessary facts to come to a conclusion that hirer (APSRTC) was having control over the driver and therefore it has vicarious liability.
12. In the result, for the above reasons, the CMAs and the CRPs fail and are accordingly dismissed without any order as to costs.
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