HONOURABLE SRI JUSTICE NOUSHAD ALI M.A.C.M.A.No.1350 of 2007 & CROSS OBJECTIONS (S.R.) No.36149 of 2007 %09.07.2010 # M/s.National Insurance Co. Ltd., Secunderabad ...Appellant VERSUS $ K.Chandrakala and others ...RESPONDENTS < GIST: > HEAD NOTE: !Counsel for Appellant: Sri A.Rama Krishna Reddy. ^Counsel for Respondent: B.Madhusudhan Reddy ? Cases referred 1. 2004 ACJ 883 22008 ACJ 705 3 2009 (2) ALT 512 4 1997 ACJ 1148 (S.C.) = AIR 1997 S.C. 3444 5 1988 (ACJ) 540 (Orissa) 6 1996 (AC) 1229 (Gujarat) 7 1988 ACJ 585 (S.C.) 8 2009 (6) S.C.C. 121 HONOURABLE SRI JUSTICE NOUSHAD ALI M.A.C.M.A.No.1350 of 2007 & CROSS OBJECTIONS (S.R.) No.36149 of 2007 09-07-2010 Between: M/s.National Insurance Co. Ltd., Secunderabad VERSUS K.Chandrakala and others HONOURABLE SRI JUSTICE NOUSHAD ALI M.A.C.M.A.No.1350 of 2007 & CROSS OBJECTIONS (S.R.) No.36149 of 2007 JUDGMENT: Both the appeal and cross objections are directed against the same award in O.P.No.694 of 2005, dated 05-03-2007 on the file of the XV Additional Chief Judge-cum-I Additional Metropolitan Sessions Judge, Hyderabad. 2. Since both the appeal and the cross objections arise out of the same award, they are being heard together and disposed of by this judgment. 3. While the appellant-Insurance Company filed the appeal M.A.C.M.A.No.1350 of 2007 questioning the award fastening liability on it jointly and severally along with the 4th respondent herein (owner of the vehicle) in a sum of Rs.4,41,000/- granted in favour of the respondents 1 to 3 herein (claimants), the claimants have filed the cross-objections seeking enhancement of compensation. 4. Claimant No.1 is the wife of one K.Bikshapathi (deceased in the accident) and claimants 2 and 3 are his minor children. The deceased was an agriculturist. He engaged a tractor bearing Regn. No.AP-24V-3625 for harvesting paddy. On 11-11-2004 during harvesting, the driver of the tractor was driving the vehicle in a rash and negligent manner. The tractor hit the deceased as a result of which, he came under the wheels and sustained grievous injuries to the stomach and other vital parts of the body. He died on the way to the hospital. The claimants, therefore, filed O.P. and sought for the compensation for a sum of Rs.5.00 lakhs. 5. The 4th respondent (owner) remained ex parte. The Insurance Company obtained permission in I.A.No.14 of 2006, dated 10-01-2007 under Section 170 of the Motor Vehicles Act, 1988 (for brevity ‘the Act’) and contested the matter on merits. 6. The Court framed the relevant issues viz., whether the death was caused due to rash and negligent driving of the driver of the tractor and whether the claimants were entitled to compensation and if so, to what amount and from whom. 7. The 1st claimant examined herself as P.W.1 and also examined one P.Rama Narsaiah as P.W.2. Exs.A-1 to A-10 were marked on behalf of the claimants. The Insurance Company marked Ex.B-1, Policy, but did not examine any witness on its behalf. The Tribunal, on the basis of evidence, awarded Rs.4,08,000/- towards pecuniary loss, Rs.15,000/- in favour of claimant No.1 towards loss of consortium, Rs.15,000/- towards loss of estate and Rs.3,000/- towards funeral expenses and transport charges, in all, a sum of Rs.4,41,000/- was granted. This is the award under challenge by both the parties in this appeal. 8. Heard the learned counsel for both the parties. 9. The learned counsel appearing for the appellant-Insurance Company would submit that on the date of accident, the tractor was on lease with the deceased. The vehicle was in his possession as lease- holder, as such the deceased should be considered as owner of the vehicle within the meaning of sub-Section (30) of Section 2 of the Motor Vehicles Act, 1988 (for brevity ‘the Act’). According to the learned counsel, Ex.B-1, Insurance Policy, did not cover the risk of owner and as such the Insurance Company is not liable. The learned counsel would further submit that the amount awarded is excessive and liable to be scaled down. 10. On the other hand, the learned counsel for the respondents would contend that the tractor was engaged on hire for agricultural operation to harvest paddy from the fields of the deceased. There was no agreement of lease nor the deceased was in possession and control of the vehicle and as such, he could not be considered as owner of the vehicle. He would further contend that the compensation awarded is inadequate and the claimants are entitled to enhancement. 11. In the light of the aforesaid contentions, the points which arise for consideration are: 1. Whether the deceased can be considered as the owner within the meaning of sub section (30) of Section 2 of the Act? 2. Whether the Insurance Company can be fastened with the liability? 3. Whether the claimants are entitled for enhancement of compensation? 12. Point Nos.1 and 2:- It is the contention of the appellant- Insurance Company that the deceased engaged the tractor for harvesting paddy at the time of accident, and therefore, he is deemed to be the owner “within the meaning of sub Section (30) of Section 2 of the Act”. Reliance is placed on the judgment of this Court in New India Assurance Company Limited V. B.G.Suma and others[1]. 13. Sub Section (30) of Section 2 of the Act on which the Insurance Company seeks to rely is 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 subject matter 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.” As per the definition, the following are ‘owners’: 1. A person in whose name the vehicle is registered (registered owner); 2. If such person is a minor, his guardian; 3. If the motor vehicle is on a hire purchase agreement or agreement of lease or agreement of hypothecation, in such cases, the person in possession of the vehicle under that agreement. 14. In the instant case, the deceased was admittedly not a registered owner nor a minor. Therefore, it is to be seen whether the deceased comes within the meaning of a person in possession of the vehicle under the 3rd category, referred to above. 15. There may be many situations in which a person may come into possession of a vehicle. For example, a person may engage a goods vehicle to transport his goods. The owner of goods may or may not travel in the vehicle along with goods. Another person may engage a taxi for a tour. Yet another person may borrow a car along with the driver from his friend for journey. There may be yet another person who may handover the vehicle to the hirer. Example, to a Government Department under an instrument of agreement subject to certain terms and conditions lasting over a period. In all the above cases, in common sense understanding, one can say that the person who has engaged a goods vehicle, a taxi can be said to be in possession of the vehicle. But on a deeper analysis, one can notice the difference. A person who has engaged vehicle for transport or a taxi has no control over the vehicle in its operation nor can he claim any right over the vehicle as such. The driver of such vehicle does not perform his duties under the order and command of the said person. There is no obligation also on such persons to insure the hired vehicle. On the contrary, there may be other situations, where the registered owner hands over his vehicle to the hirer under an agreement for hire for a tenure. In such cases, possibly the vehicle can be said to be in possession of such hirer. The driver, in such cases, may have to perform his duties as per the commands of the hirer. In each of the above cases, the nature of possession is evidently distinct and different. In the 1st category, the possession is mere corporal and in the 2nd category, the possession is both corporal and managerial. A mere hirer of the vehicle of the 1st category cannot be considered as a person in possession under an agreement within meaning under Section 2 (30) of the Act. The meaning assigned to the term “owner” in sub Section (30) of Section 2 of the Act is to be understood in the above sense. Any other understanding and interpretation would be absurd. If a hirer of a goods carrier or a taxi or a borrower of vehicle of a friend are also considered as owners and on that basis if the insurer can avoid its liability, then in no case, in respect of a claim against a goods carrier or other public service vehicle or transport vehicle, the insurance company would be liable. This would be violating the mandatory requirement to insure third party risks under the statute. 16. The learned counsel for the Insurance Company seeks to rely on the decisions in B.G.Suma’s case (supra 1), National Insurance Company Limited V. Deepa Devi[2] a n d Branch Manager, Oriental Insurance Company Limited V. Javvaji Bhaskar Rao[3]. I 17. In B.G.Suma’s case (supra 1), a learned Division Bench of this Court was dealing with a case relating to hired buses. A bus owned by a private operator was given on hire to A.P.S.R.T.C. on certain terms and conditions. The vehicle met with an accident. The O.P. filed by the claimants was allowed and the Accidents Claims Tribunal awarded compensation making the Insurance Company also liable. The Insurance Company approached this Court contending that since the vehicle was on hire to A.P.S.R.T.C., which alone should be liable. The learned Division Bench referred to a judgment of the Apex Court in Rajasthan State Road Transport Corporation V. Kailash Nath Kothari[4], wherein, the Apex Court observed that the R.S.R.T.C. had a permit to ply the bus on a route between Kekri to Jaipur and it had taken the bus bearing Regn. No.RSB-3145 on lease from the owner and that the driver of the bus was under the control of R.S.R.T.C. herein required to ply a bus on a particular route and further the conductor of a bus was an employee in R.S.R.T.C., held that the owner of the vehicle had no control over the route on which the bus was plying, but bus was in possession of the R.S.R.T.C., and therefore, they are the owners within the meaning of the Act. The Bench of this Court, following the said judgment of the Apex Court, held that the A.P.S.R.T.C. alone was liable, not the Insurance Company. 18. The Apex Court in Kailash Nath Kothari’s case (supra 4) has observed thus, “( 17 ) THE definition of owner under Section 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 on 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 directions, instructions and command the driver was to ply or not to ply the ill-fated bus on the fateful day.” 19. I n Deepa Devi’s case (supra 2), the Apex Court was dealing with a case in which Maruti Gypsy Jeep was requisitioned by the Sub-Divisional Magistrate, Rampur, for election purpose. The Apex Court, after referring some judgments including Kailash Nath Kothari’s case (supra 4), National Insurance Company Limited V. Durdadahya Kumar Samal[5] and the Chief Officer, Bhavnagar Municipality, v. Bachubhai Arjanbhai[6], held that when a vehicle is hired by the third party having effective control over driver such third party would be alone liable to pay compensation and accordingly, exonerated the insurance Company and fastened liability on the State. 20. The Apex Court in Deepa Devi’s case (supra 2), referred to a judgment in Guru Govekar V. Filomena F. Lpbo[7], wherein, a car was handed over to a mechanic for carrying out certain electrical repairs when the accident occurred. The Apex Court held that on the facts of that case, the insurer was liable to pay compensation to the claimant on account of the car colliding due to the negligence of the mechanic who had been engaged to repair the vehicle, by virtue of the provisions contained in Section 94 of the Act (old Act). 21. i n Javvaji Bhaskar Rao’s case (supra 3), a learned Division Bench of this Court dealt with a case, in which, the bus was hired by A.P.S.R.T.C and held that the A.P.S.R.T.C was liable to pay the compensation. In coming to the conclusion, reliance was placed on Kailash Nath Kothari’s case (supra 4) and Deepa Devi’s case (supra 2) cases also. 22. The principle that emerge from the aforesaid judgments is that the expression ‘owner’, in a given case, is a person who has actual possession and control over the vehicle and under whose direction and command, the driver is obliged to operate the vehicle. By mere use of vehicle without there being an agreement, under which both corporal and managerial possession has been handed over, the hirer cannot be considered as “owner” within the meaning of Section 2 (30) of the Act. 23. As held in Kailashnath Kothari’s case (supra 4), the definition of owner is not exhaustive and it has to be construed in the facts and circumstances of a given case. In the instant case, the claimants pleaded that the deceased engaged the tractor for harvesting body. At the time of incident, he was in the field and loading the vehicle. The evidence of P.W.1 supported the said plea. The Insurance Company did not elicit any other information in the cross examination. The Insurance Company, on its part, set up a plea that the deceased should be considered as owner within the meaning of Sub Section (30) of Section 2 of the Act. Therefore, the burden lies on the Insurance Company to establish that the vehicle was given on lease to the deceased and that he was in possession of the vehicle under that agreement. It should also be established that the registered owner parted with the vehicle to the deceased with actual control of the vehicle and the driver was under the directions and commands of the deceased. As noted earlier, the Insurance Company did not examine any witness and adduce any evidence or produced any agreement to support the said plea. In the absence of such evidence, it is impermissible to surmise that there existed an agreement between the deceased and the registered owner of the vehicle and the rights and obligations of the deceased are under the agreement. 24. In the aforesaid analysis, it must be held that the deceased cannot be considered as owner within the meaning of Sub Section (30) of Section2 of the Act. It should therefore be held that the Insurance Company is also jointly liable. The points 1 and 2 are answered accordingly. 25. Point No.3:- The claimants filed cross objections seeking enhancement of compensation contending that the income of the deceased was wrongly fixed at Rs.3,000/- per month. The deceased was a skilled labourer in toddy tapping and also an agriculturist. He was earning Rs.6,000/- per month. The claimants are entitled to interest at 12% per annum instead of 7.5% per annum as awarded by the Tribunal. 26. P.W.1, in her deposition, stated that the deceased was earning Rs.6,000/- per month as an agriculturist. Ex.A-9 is the photo copy of the pattedar passbook which shows that the deceased owned Ac.3.00 guntas of dry land. P.W.2, who is a member of Toddy Tappers’ Society, deposed that the deceased was also working as a toddy tapper and earning Rs.3,000/- per month. Ex.A-10 is a certificate issued by the Prohibition and Excise Inspector, Mothkur, certifying that the deceased was a member of the Toddy Cooperative Society, Palle Pahad village. 27. From the evidence of P.Ws.1 and 2 and the documentary evidence in Exs.A-9 and A-10, it is evident that the deceased was earning income both as an agriculturist and a toddy topper. Considering the same, the income at Rs.3,000/- per month as assessed by the Tribunal cannot be considered as correct. An ordinary cooli could earn Rs.100/- per day. Therefore, the income of the deceased can be taken at Rs.3,000/- per month as a toddy tapper. 28. So far as the income from agriculture, it cannot be said that the claimants were deprived of the said income. However, some reasonable amount towards supervision of agricultural operations can be taken into consideration. The lands of the deceased being dry lands, considering that the agricultural operations would last for about 5 or 6 months, the amount can be fixed at Rs.4,000/- per annum. Thus, the income of the deceased can be fixed at Rs.40,000/- per annum (3000 (x) 12 = 36000 (+) 4000 = 40,000/-). 29. There is no dispute that the deceased was aged 35 years. The learned counsel for the Insurance Company would submit that the Tribunal applied a wrong multiplier ‘17’. The appropriate multiplier is only ’14.81’. To the extent the Tribunal applied ‘17’ multiplier cannot be considered as correct in view of the principles laid down by the Apex Court in Sarla Varma Vs. Delhi Transport Corporation[8], according to which, the correct multiplier is ‘16’. Deducting 1/3rd from out of the annual income and applying multiplier ‘16’, the pecuniary loss would be Rs.4,26,666/- (26,666/- (x)16=4,26,666/-). It is appropriate to award Rs.7,000/- towards loss of consortium, Rs.5,000/- towards loss of estate and Rs.3,000/- towards funeral expenses. Thus, the claimants are entitled to a compensation of Rs.4,41,666/-, rounded off to Rs.4,41,000/- in total, which amount is the same as awarded by the Tribunal, though for different reasons. Point No.3 is answered accordingly. 30. In view of the above, the claimants are not entitled to enhancement of compensation. Accordingly, both the appeal and the cross objections are dismissed. There shall be no order as to costs. ________________ NOUSHAD ALI, J 09-07-2010. Mark the L.R. Copy. B/o Kvr [1] 2004 ACJ 883 [2] 2008 ACJ 705 [3] 2009 (2) ALT 512 [4] 1997 ACJ 1148 (S.C.) = AIR 1997 S.C. 3444 [5] 1988 (ACJ) 540 (Orissa) [6] 1996 (AC) 1229 (Gujarat) [7] 1988 ACJ 585 (S.C.) [8] 2009 (6) S.C.C. 121