The Judgment of the Court was delivered by

Elipe Dharma Rao, J.:— Heard the learned counsel for the appellants and also the respondents.

2. The above five appeals can be disposed of by a common judgment, as these appeals arise out of a common judgment in O.P Nos. 271, 248, 485, 247 and 486 of 1988 respectively, dated 17.8.89 on the file of the Chairman (Additional District Judge), Motor Accidents Claims Tribunal, Khammam. The accident took place on 20.2.1988 when the Andhra Pradesh State Road Transport Corporation (hereinafter referred as ‘the Corporation’) hired bus bearing No. AEK 4899 reached near Mangapuram Major Canal situated in between Venkata-puram and Gokinapally villages, the bus turned turtle to its right side in a roadside ditch as the driver of the bus lost control over the steering of the bus due to its driving in a rash and negligent manner at high speed, as a result of which one passenger by name B.P Kanaka Ratnam succumbed to the injuries at the Government Hospital, Khammam and that Ananthalaxmi, Seetha-ramamma, Pandu Ranga Murthy and some other passengers who were travelling in the bus received fractures, grievous and multiple injuries all over the body. The police registered a case in Crime No. 12 of 1988 against the driver of the Corporation bus. In those circumstances the victims-claimants filed claim petitions and are allowed based on both oral and documentary evidence on record and awarded compensation as per their entitlement, but fastened the liability on the owner of the vehicle, insurance company and the Corporation.

3. Assailing the above finding, the Cor poration filed these appeals on the ground that as per condition 4(iv) of the bilateral agreement dated 7.4.86, entered between owner of the bus and the Corporation, the Corporation is not liable but the owner of the bus is liable to pay the compensation.

4. The Tribunal after evaluating both oral and documentary evidence, while awarding compensation directed all the respondents to pay compensation jointly and severally, as awarded by the Tribunal in each of the claim petitions as under:

(1) O.P No. 247 of 1988: claiming compensation for the injuries sustained, the Tribunal awarded compensation of Rs. 30,000.

(2) O.P No. 248 of 1988: was filed claiming compensation for the injuries sustained, the Claims Tribunal awarded compensation of Rs. 6,000.

(3) O.P No. 271 of 1988: was filed by the legal representatives of the deceased Kanaka Ratnam, claiming compensation for his untimely death, the Tribunal awarded compensation of Rs. 45,000.

(4) O.P No. 485 of 1988: was filed claiming compensation for the injuries sustained, the Tribunal awarded compensation of Rs. 2,000.

(5) O.P No. 486 of 1988: was filed claiming compensation for the injuries sustained, the Tribunal awarded compensation of Rs. 27,500.

5. In the backdrop of the above submissions, let us examine the recitals of the bilateral agreement entered into between the Corporation and the owner of the bus bearing No. AEK 4899, Chennupati Suguna, on 7.4.86 The owner of the bus agreed to lend her vehicle on hire in favour of the Corporation for the purpose of plying on notified routes, routes covered by drawn schemes or on any route covered by a permit either pucca or temporary issued by either the State Transport Authority or the Regional Transport Authority. As per the terms and conditions of the agreement, the owner of the bus agreed to give the vehicle bearing No. AEK 4899 having a seating capacity of 48 excluding the seat of driver and the conductor, on hire basis to the Corporation with effect from 7.4.1986 on a fixed remuneration of Rs. 265 per day. The above said agreement was valid for a period of two years from the date of commencement, i.e, 7.4.1986 It further envisages that the owner shall make available the vehicle on all days except two days in a calendar month for the maintenance of the vehicle, that the owner shall give at least 24 hours notice in case the owner fails to make available the vehicle and the Corporation shall be at liberty to levy a penalty of Rs. 500 per day and deduct the same from the amount due to the owner, that the owner of the vehicle shall make the same available for fourteen hours a day and complete the schedule given to him for the day. As per condition No. 3, the Corporation shall give a guaranteed kilometre of 7000 per bus in a calendar month and the same can be proportionately reduced when the vehicle is not made available on any day or days. As per condition No. 4, the owner shall keep the bus roadworthy in accordance with Chapter V of the Motor Vehicles Act, 1939, and the Rules made thereunder from time to time by carrying out necessary maintenance and repairs at his own costs, that the owner shall keep his vehicle duly insured to cover third party risks and shall also pay the taxes and other levies payable as a consequence of the operation of the above vehicle to all concerned authorities. That the parties to the agreement mutually agreed that the Corporation shall not be responsible for any damage or loss caused to the vehicle hired during the period of agitation, accident, etc. As per clause (iv) of condition 4, it is envisaged that the owner shall be responsible for all claims that may arise due to statutory violations out of the operations, like claim due to accidents payable under the provisions of Motor Vehicles Act and Rules and the Corporation shall under no circumstances be made liable or responsible to pay compensation that may be awarded by Motor Accidents Claims Tribunal or Tribunals in respect of the accident, and the owner has to make arrangements for proper prosecution of proceedings either before the Motor Accidents Claims Tribunal or Tribunals, Commissioner for Workmen's Compensation, R.T.A or S.T.A

6. As per condition No. 6, the owner shall provide a driver with a valid licence for the vehicle supplied by him who shall follow the instructions of the authorised officials of the Corporation, and in case if the driver is found disobedient or discourteous towards passengers, the owner shall replace the driver within 24 hours of the request made by the Corporation. The agreement further prohibits the employment of the person who has been removed or dismissed from service of the Corporation, a person who has retired from the service of the Corporation either on attainment of the age of superannuation or on any other ground and a person who is aged more than 58 years. This condition further imposes a condition that the driver employed by the owner should undergo medical examination by a Medical Officer of the Corporation and he will be permitted to ply the vehicle only when the Medical Officer certifies that he is fit for the job of a driver; that the change of employment of the driver should be intimated in advance to the Depot Manager, that the Corporation shall provide a conductor for the operation of services with the necessary equipment for issuing tickets to the passengers as well as for luggage and it is the right of the Corporation to collect fare or luggage or freight charges in the cases of bus parcel service, post mail bags, etc. and the owner shall not have any right or claim over them; that the owner shall permit to display advertisement boards or panels on the bus or in interior portion of the bus by the Corporation or its authorised agent and the owner has no right to claim the revenue. That parties have mutually agreed that the change of vehicle or model shall be done with the prior approval of the Chief Traffic Manager of the Corporation; that when the bus is operated without conductor, the driver shall have the responsibility to ensure the issue of tickets to all the passengers and if the driver is found to have committed any cash or ticket irregularity or any other offence, the owner shall replace him immediately; that the owner shall not use the vehicle covered by the agreement to ply for others or for any other purpose. As per condition No. 8, it is the right of the Corporation to fix up the timings en route and the owner shall ply the vehicle on the schedule of timings furnished by the Corporation; and the Corporation shall have right to levy penalty or fine on the owner for contravention or breach of any terms and conditions of the agreement. Under condition No. 10, the parties to the agreement have agreed that in case of any dispute or disagreement between the owner and the officers of the Corporation with regard to the interpretation of the terms and conditions of the agreement, penalties or fines, amount due, the decision of the Chief Traffic Manager of the Corporation shall be final.

7. The facts of the case in narrow compass are that on the fateful day, i.e, 20.2.88 when the bus reached near Mangapuram Major Canal situated in between Venkata-puram and Gokinapalli villages, due to the rash and negligent driving of the bus, it turned turtle to its right side into a roadside ditch as the driver of the bus lost control over the same as a result of which one passenger by name B.P Kanaka Ratnam succumbed to the injuries at Government Hospital, Khammam and other passengers who are the petitioners in the above petitions received fractures and other grievous and multiple injuries all over the body. A few minutes after the accident, a car which was coming from Kodada side, stopped and Panduranga Murthy was taken away in the car as he was seriously injured. The Police, Mudigonda, registered a case in Crime No. 12 of 1988 against the driver of the bus. Thus these O.Ps came to be filed, claiming compensation for the death and injuries, before the Motor Accidents Claims Tribunal.

8. The respondents: driver of the bus, owner and the insurance company filed their counters resisting the claim of the dependants, legal heirs of the deceased and victims of the accident. The owner of the bus, arrayed as respondent No. 2 in all the O.Ps, stated that the bus was insured with respondent No. 3, Oriental Insurance Co. Ltd., Divisional Manager, Madras-I and the Corporation has hired the vehicle and as such the owner respondent No. 2 is not liable to pay the compensation.

9. The insurance company, respondent No. 3, filed its counter stating that the vehicle involved in the accident was hired by the Corporation under an agreement with specific terms and conditions and crew of the vehicle at the time of accident were employees of the Corporation and the trip-sheet is drawn up in the name of the Corporation as well as the permit was obtained by the Corporation and the respondent No. 2, owner, is not having any control as such. Therefore, the insurance company is not liable to pay the compensation and the Corporation alone is liable to pay the compensation. However, it is stated that the quantum of compensation claimed is excessive and exorbitant and liable to be rejected.

10. The Corporation filed its counter admitting that the bus was hired from the owner by the Corporation on specific terms and conditions and the bus in question was covered by insurance. As per clause 4 of the bilateral agreement entered into by the Corporation and the owner, Chennupati Suguna, the Corporation, under no circumstances be made liable to pay the compensation that may be awarded by the court and the insurance company alone is liable to pay the compensation.

11. Based on the claims and denial made by the claimants and the respondents, the Tribunal framed the following issues:

(1) Whether the accident occurred on account of the rash and negligent driving of respondent No. 1?

(2) Whether the petitioner is entitled to Rs…. towards general and special damages?

(3) Whether the petitioner is entitled to interest? If so, at what rate?

(4) To what relief?

12. Based on the oral and documentary evidence adduced by both the parties with regard to issue No. 1, the Tribunal held that the accident occurred due to the rash and negligent driving of the bus by its driver, respondent No. 1. Considering the documents like driving licence of respondent No. 1 (Exh. B-1), copy of the insurance policy (Exh. B-2), Tariff book of respondent No. 3 company (Exh. B-3) and copy of agreement entered into between respondent No. 2 and respondent No. 5, Exh. B-4, the Tribunal held that the claimants are entitled to claim compensation from all the respondents jointly and severally; either from the Corporation or the insurance company.

13. With regard to the issue No. 2, the Tribunal has awarded the compensation as per their entitlement based on income, avocation and age with interest at 12 per cent per annum from the date of petition till realisation.

14. While the matters stood thus, the Corporation filed these appeals assailing the finding of the Tribunal that all the respondents are jointly and severally liable to pay the compensation ordered by the Tribunal.

15. The learned counsel for the appellants, Mrs. Jyothi Kiran, laid her foundation on clause 4 of the bilateral agreement entered into between the respondent No. 2 and respondent No. 5 Corporation and contends that it is respondent No. 3 alone, which is liable to pay the compensation and the Corporation is not liable to pay the same.

16. To consider the contentions raised by the learned counsel for the appellants, it is necessary to go into some of the provisions of Motor Vehicles Act like section 2(3), which defines ‘contract carriage’ as:

“…a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum:

(i) on a time basis whether or not with reference to any route or distance, or

(ii) from one point to another, and in either case without stopping to pick up,

or set down along the line of route passengers not included in the contract, and includes a motorcab notwithstanding that the passengers may pay separate fares;”

Section 2(19) of the Act defines an ‘owner’ in the following terms:

“…where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement, the person in possession of the vehicle under that agreement;”

Section 2(29) defines ‘stage carriage’ in following terms:

“…a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares, paid by or for individual passengers, either for the whole journey or for stages of the journey;”

Section 42 deals with the necessity for permits from the transport authorities.

17. Thus section 2(19) defines owner, as a person in possession of motor vehicle. So, it is evident from the terms and conditions of the agreement entered into between respondent No. 2 and respondent No. 5 Corporation, it is clear that the vehicle was in possession of the Corporation. If that is the legal position, covering the facts and circumstances of the case, as the respondent No. 2 has given the vehicle in possession of the Corporation, the respondent No. 2 owner had no control over the bus and it was to be plied on the routes specified by the Corporation, which was also empowered to collect the fares and freights for the passengers and baggage. The Corporation also prescribed qualifications for appointment of the driver; it has got the power to impose penalty for violation of the conditions like making the vehicle available for 14 hours a day, to make the bus available for the entire calendar month except two days, that the bus hired to the Corporation shall not be used for any other purpose; in one-man service, it can impose on the driver to ensure the issue of tickets to all the passengers, etc. That being so, the owner respondent No. 2 had practically no control over the vehicle. Thus taking into consideration the terms and conditions, it is manifest and clear that it is the Corporation who was possessor of the vehicle and owner of the vehicle as contemplated under section 2(19) of the Act. The vehicle was being plied on the routes suggested by the Corporation and the Corporation has obtained permits from the RTA and STA. Thus practically except getting Rs. 265 as remuneration, the Corporation had the full command and control over the vehicle and the owner had to replace the driver whenever requested by the Corporation. Whenever he was found to be disobedient and discourteous. Therefore, it can be safely concluded that the Corporation is the owner of the vehicle and as such for the tortious act of driver, the Corporation who is owner is liable to pay the compensation determined by the Tribunal.

18. With regard to the submission of the learned counsel for the appellant that the owner shall be responsible for all claims that may arise due to statutory violations out of the operations, like claim due to accident payable under the provisions of the Motor Vehicles Act/Rules and the Corporation shall under no circumstances be made liable or responsible to pay the compensation, that may be awarded by the Motor Accidents Claims Tribunal or Tribunals in respect of the accidents, the law is settled by the Apex Court in a decision Rajas than State Road Trans Corpn v. Kailash Nath Kothari, 1997 ACJ 1148 (SC).

19. In that case, similar matter arose before the Supreme Court, wherein the bus was hired by the Rajasthan State Road Transport Corporation and the bus met with an accident due to rash and negligent driving of the bus and all the 23 passengers died in the accident. Similar contention was raised by the State Transport Corporation. As per one of the terms of the agreement, the Corporation was not liable to pay the compensation to the legal heirs and dependants of the deceased in the above accident. While taking into consideration the provisions of the Motor Vehicles Act, the Apex Court held that such a clause is against public policy; that the definition of owner under section 2(19) is exhaustive, it has to be construed in wider sense in the facts and circumstances of a given case. The expression ‘owner’ must include, in a given case, the person who was actually in possession and control of the vehicle and under whose directions and commands, the driver was obliged to operate the vehicle. 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 the 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 on whom can vicarious liability be fastened in the case of an accident.

20. 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 payroll of the original owner. Therefore, condition No. 15 under the agreement entered into between the Rajasthan State Road Transport Corporation and the owner of the vehicle therein, was held to be misconceived and fastening of liability on the owner of the vehicle was held to be against the public policy.

21. Therefore, the principle laid down by the Supreme Court squarely applies to the facts and circumstances of the case on hand. At the cost of repetition, I would like to add that the Corporation has reserved the right to collect the fare and the freight charges for the passengers and luggage, the driver was under the very thumb of the Corporation authorities to ensure the issue of tickets to all passengers in case of one-man service and the owner, respondent No. 2, had no control over him or the bus, except getting a remuneration prescribed under the agreement and the owner shall keep the vehicle roadworthy and make it available throughout the calendar month except two days for maintenance of the vehicle and that too for 14 hours a day and the owner shall not use the vehicle covered by the agreement to ply for others or for any other purpose. For the foregoing reasons, I consider it appropriate to hold that the clause (iv) of condition No. 4 is against the public policy and, therefore, the dependants and legal heirs of the deceased and the injured claimants are entitled to compensation from the Corporation.

22. When a comparative study of the condition 4(iv) of Exh. B-4 herein and condition 15 of the agreement entered into between the Rajasthan State Road Transport Corporation and the owner Sanjay Kumar therein is made, it is evident that condition 15 therein is more generous than condition 4(iv) of Exh. B-4 agreement inasmuch as second part of condition 15 therein at least provides for reimbursement of the amounts payable arising out of the accident cases. Such a contingency does not find place in the instant case under condition 4(iv) of the Exh. B-4 agreement. Actually, I am inclined to set aside condition 4(iv) of Exh. B-4 agreement and the same be done, but for the reason that these appeals were filed by the Corporation.

23. Therefore, for the foregoing reasons, I have no hesitation to hold that the condition 4 of the bilateral agreement, Exh. B-4 is against public policy, which shall mean that the claimants-respondents are entitled to the compensation from the Corporation.

24. In the result, the appeals fail and they are accordingly dismissed. Consequently, the cross-objections S.R No. 23167 of 1990 filed in C.M.A No. 173 of 1990 are also dismissed. No costs in both the C.M As. and cross-objections.

25. Appeals dismissed.