Case: Uttar Pradesh State Road Transport Corp Vs. Kulsum

Vishen, the owner of mini bus, bearing Registration No. UP 32T/7344 entered into an Agreement of Contract with the Corporation on 07.08.1997 for allowing it to ply mini bus, as per the permit issued in favour of Corporation, by the concerned Road Transport Office (R.T.O.). On account of State amendment incorporated in Section 103 of the Motor Vehicles Act, 1988 (hereinafter called the Act) vide Uttar Pradesh Amendment Act 5 of 1993; the Corporation is vested with right to take the vehicles on hire as per the contract and to ply the same on the routes as per the permit granted to it. According to the terms and conditions of the Agreement, the mini bus was to be plied by the Corporation, on the routes as per the permit issued by R.T.O. in its favour. Except for the services of the driver, which were to be provided by the owner, all other rights of owner were to be exercised by the Corporation only. The conductor was to be an employee of the Corporation, and he was authorised and entitled to collect money after issuing tickets to the passengers and had the duty to perform all the incidental and connected activities as a conductor on behalf of the Corporation. The collection so made was to be deposited with the Corporation.  7. While the mini bus was running on the specified route on 13.06.1998, at about 9.00 a.m., Vijay Pal Singh (deceased), along with his minor children namely, Km. Rupa (deceased), Rohit (deceased) and Km. Laxmi (deceased), was present near Gumti shop of a Barber at the side of National Highway, near Swastic Biscuit Factory, Police Chauki Mohammadpur, Post Safedabad, District Barabanki.  8. The Mini Bus, plying under the contract of the Corporation, driven by Narottam, suddenly rammed into the Gumti causing injuries to Vijay Pal, his children and also to the Barber- Majeed, owner of the Gumti shop. On account of severe bodily injuries suffered by them, they died.  9. Smt. Lallan Devi, w/o deceased Vijay Pal Singh and mother of the three deceased children filed four claim petitions claiming compensation. Smt. Kulsum w/o deceased Majeed, filed a separate claim petition for awarding compensation for death of Majeed in the said accident before the aforesaid M.A.C.T.  10. Although, all the above five claim petitions were allowed and different amounts of compensation were awarded by the Tribunal alongwith interest @ 12% per annum but, relying on a judgment of this Court in the case of Rajasthan State Road Transport Corporation Versus Kailash Nath Kothari and others reported in (1997) 7 SCC 481 ,  the liability of payment has been fastened on the Corporation as, at the time of accident, the offending vehicle, i.e., the mini bus was being run by it under the contract.  11. Feeling aggrieved by the awards of the Tribunal, Corporation preferred appeals and the owner of the bus, Ajai Vishan, filed cross objection against the finding on issue No. 4 recorded by the Tribunal, holding therein that Insurance Company was not liable to make payment and fastening the liability on the owner also, on account of alleged breach of Insurance Policy. However, it had a caveat that liability of the owner would arise only in case the Corporation fails to make the payment. The National Insurance Company Ltd., with which admittedly the said bus was insured for the relevant period, has been exonerated from payment of any compensation. Hence, the appeals.

Reasoning:
Critical examination thereof would show that the Appellant and the owner had specifically agreed that the vehicle will be insured and a driver would be provided by owner of the vehicle but overall control, not only on the vehicle but also on the driver, would be that of the Corporation. Thus, the vehicle was given on hire by the owner of the vehicle together with its existing and running insurance policy. In view of the aforesaid terms and conditions, the Insurance Company cannot escape its liability to pay the amount of compensation. There is no denial of the fact by the insurance company that at the relevant point of time the vehicle in question was insured with it and the policy was very much in force and in existence. It is also not the case of the insurance company that the driver of the vehicle was not holding a valid driving licence to drive the vehicle. The Tribunal has also held that the driver had a valid driving licence at the time of accident. It has also not been contended by it that there has been violation of the terms and conditions of the policy or that the driver was not entitled to drive the said vehicle30. During the course of hearing, we had asked the following pertinent questions to Mr. Kishore Rawat, learned counsel for the Insurance Company:i) Since the Insurance Company had admittedly received the amount of premium for the period when the mini bus had met with the accident then why should it not be made liable to make the payment of compensation? According to him, in normal circumstances, if the said vehicle would not have been attached with the Corporation for being plied by it on the route of permit granted to it, then of course, the Insurance Company would have no option but to make the paymentii) We had also enquired if there exists different tariffs of premium for the vehicle insured at the instance of owner or for the vehicle which is being attached with the Corporation for being plied by it. He categorically admitted that there is no such difference in the tariff in either of the aforesaid situation and it is same for bothiii) We further enquired from him that if an intimation would have been given to the Insurance Company that the vehicle is being attached with the Corporation then what would have been the position? He again informed us that in that case, the Insurance Company would have met the liability of compensation, in case of an accident(iv) Lastly, we enquired from him as to under which provision of the Act or the Rule, any statutory duty or otherwise is cast on the owner to seek permission or give an intimation to the Insurance Company in case the vehicle is attached with the Corporation for being plied by it? He candidly conceded that there is neither any statutory duty cast on the owner under the Act or under any Rules to seek permission from the Insurance Company nor it is under any of the orders issued by the CompanyAccording to him, it would have been desirable for the insured to have informed about such a contract31. Thus, in the light of the aforesaid, it is clear that Insurance Company is trying to evade its liability on flimsy grounds or under misconception of lawThe liability to pay compensation is based on a statutory provision. Compulsory Insurance of the vehicle is meant for the benefit of the Third Parties. The liability of the owner to have compulsory insurance is only in regard to Third Party and not to the property. Once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the Act does not provide that any person who uses the vehicle independently, a separate Insurance Policy should be taken. The purpose of compulsory insurance in the Act has been enacted with an object to advance social justicePerusal thereof would show that there has not been any violation of the aforesaid terms and conditions of the policy. Respondent-Insurance Company has also failed to point out violation of any Act, Rules or conditions of the Insurance. Insurance Company has no legal justification to deny the payment of compensation to the claimants44. In the light of the foregoing discussions, the Appeal filed by Insurance Company fails, wherein it has been directed that the amount would first be paid by the Company, with right to it to recover the same from owner of the vehicle. This we hold so, as the liability of the Insurance Company is exclusive and absolute45. Thus, looking to the matter from every angle, we are of the considered opinion that Insurance Company cannot escape its liability of payment of compensation to Third Parties or claimants. Admittedly, owner of the vehicle has not violated any of the terms and conditions of the policy or provisions of the Act. The owner had taken the insurance so as to meet such type of liability which may arise on account of use of the vehicleApart from the above, learned counsel for Insurance Company could not point out any legal embargo which may give right to it to deny the payment of compensation. Thus, legally or otherwise liability has to be fastened on the Insurance Company only47. In the light of the aforesaid discussion, the Appeals of the Corporation are allowed. The impugned judgment and order passed by High Court qua the Corporation are hereby set aside and quashed and we hold that the Insurance Company would be liable to pay the amount of compensation to the claimants