Andhra Pradesh State Road Transport Corporation vs Katta Kusuma and Others

B. Siva Sankara Rao, J.—The Managing Director of APSRTC-4th respondent to the claim petition in O.P. No. 686 of 2008 filed this appeal; having been aggrieved by the Order/Award of the learned Chairman of the Motor Accidents Claims Tribunal-cum-Principal District Judge, Karimnagar (for short, ''Tribunal'') dated 06.09.2011, awarding compensation of Rs. 8,25,000/- (Rupees eight lakhs twenty five thousand only) with interest at 7.5% per annum only against respondents 2 and 4 of the claim petition i.e., the owner of the crime bus bearing No. AP-15-W-6082 hired with the 4th respondent-APSRTC covered by Ex. B1-hire agreement dated 13.06.2007, by exonerating the claim petition third respondent-insurer of the bus even Ex. B2 is equivalent to Ex. B3-insurance policy issued covering the risk and in force with effect from the mid night of 18.05.2007 as on the date of the accident on 17.04.2008, by impugning mainly for exonerating the insurer and fastening of liability on the APSRTC with the contentions in the grounds of appeal that the award of the Tribunal referred to supra is contrary to law, weight of evidence and probabilities of the case, against the provisions of the Motor Vehicles Act, 1988 and in ignorance of the factum that the bus was only hired with APSRTC owned by the claim petition second respondent insured with the claim petition third respondent-United India Insurance Company Limited and as per Ex. B1-agreement, the terms and conditions including from Clause 5 sub-Clause iv, it is the owner that is responsible to indemnify and not the APSRTC and there is no any observation of any of the policy terms and conditions violated by the said owner for exonerating the insurer to escape from liability to indemnify the owner. The other contentions in the grounds of appeal are on the quantum by disputing as excessive so also in considering the age of the deceased as 23 and income at Rs. 12,000/- per month by applying the multiplier ''15''; and as to the fixing of contributory negligence on the part of the deceased also while riding the Hero Honda motorcycle bearing No. AP 15-S-7405 while proceeding in opposite direction and hence to fix contributory negligence of 50% on the deceased rider of the bike instead of 25%. Heard Smt. D. Radhika, the learned standing counsel for the appellant (APSRTC), Sri M. Sudhir Kumar, learned counsel for respondents 1 to 3 (claimants). Perused the material on record. The parties hereinafter are referred to as arrayed before the Tribunal for the sake of convenience in the appeal.

In the course of hearing, the learned Standing Counsel for APSRTC brought to the notice of this Court the Full Bench judgment of this Court reported in APSRTC, Hyderabad V. B. Kanakaratnabai 2013(1) ALD 644 (FB) and the decisions referred therein. The owner of the vehicle-5th respondent to the appeal though appeared before the trial Court along with the driver by engaging a common Advocate and contested the notice issued in the appeal was returned unserved and he did not intimate any change of address and a perusal of the registered cover shows that it was even in deposit for 7 days with dates noted by the Postman of the addressee was not there, once it is the duty to intimate any change of address and not communicated and for the same address, the appellant taken the process that can be taken as sufficient notice. Even otherwise, as per the judgment of this Court in Meka Chakra Rao Vs. Yelubandi Babu Rao @ Reddemma and others, , the appeal is maintainable without impleading the owner of the vehicle. The insurer failed to appear despite served. The claimants contested the appeal saying that there is nothing to interfere with the quantum of compensation awarded by the Tribunal so also on the contributory negligence on the part of the deceased bike rider of 25% fixed by the Tribunal and that it is for the Tribunal to consider whether the insurer is liable to fix joint liability and the APSRTC is also for the purpose of the claim owner since there is a hire agreement between the real owner and the APSRTC with the control of the bus under APSRTC as per Ex. B1-agreement.

Now the points that arise for consideration in the appeal are:

Whether the finding of the Tribunal in fixing the liability only against the claim petition second respondent-K. Ramesh, owner of the bus and the A.P.S.R.T.C-4th respondent to the claim petition by exonerating the insurer-United Indian Insurance Company Limited-third respondent to the claim petition from liability is unsustainable and requires interference by this Court while sitting in the appeal?

If so, whether there is any joint and several liability of all the respondents or only of the second and the third respondents by exonerating 4th respondent-APSRTC either based on any general principles of law or factual matrix of the case for this Court while sitting in appeal against the award?

Whether the quantum of compensation awarded by the Tribunal including rate of interest are high and requires interference and if so, to what extent and with what observations?

To what result?

POINTS-1 to 3:

As points 1 to 3 are interrelated and to avoid repetition of facts and discussion, these are taken up together for convenient disposal.

The fact that the deceased Katta Vinod Kumar, Student of 4th year B-Tech of Peddapalli, aged about 23 years, while proceeding on his Hero Honda Bike bearing No. AP-15-S-7405 on 17.04.2008, the accident occurred at the outskirts of Sulthanabad Village, involving the crime bus bearing No. AP 15-W-6082 and covered by Ex. A1-FIR in Cr. No. 53 of 2008 against the bus driver-first respondent to the claim petition and also the charge sheet filed against him under Ex. A2 is not disputed. Though it is one of the contentions of the appellant-APSRTC regarding the contributory negligence of 25% fixed by the Tribunal is unsustainable and it requires fixing of 50% contributory negligence, the perusal of the material on record including Ex. A5-Motor Vehicle Inspector Report and Ex. A2-charge sheet coupled with the evidence of P.W. 2-eye witness speaks the main negligence was on the part of the bus driver. The contributory negligence since depends upon several factors including size of the vehicle, width of the road and condition of the road and from the crime vehicle is a bus and the deceased was proceeding on bike while coming in opposite direction of both the vehicles, the accident occurred, there is nothing to show that the deceased was on extremely wrong side including from the evidence of R.Ws. 1 and 2. So far as 25% contributory negligence fixed on the deceased in fastening liability for 75% on the owner and the insurer, if any, of the crime bus concerned, for this Court while sitting in appeal, there is nothing to interfere with the reasoned judgment of the trial Court supported by the appreciation of evidence on record with right conclusion.

Before coming to the dispute on fixation of liability on the 4th respondent-APSRTC and not fixing the liability jointly on the owner and insurer of the hired bus and the quantum of compensation whether excessive and what is just compensation in the factual matrix of the case concerned, it is apt to state that perfect compensation is hardly possible and money cannot renew a physique or frame that has been battered and shattered, nor relieve from a pain suffered as stated by Lord Morris. In Ward v. James 1965 (1) All. E.R 563, it was observed by Lord Denning that award of damages in personal injury cases is basically a conventional figure derived from experience and from awards in comparable cases. Thus, in a case involving loss of limb or its permanent inability or impairment, it is difficult to say with precise certainty as to what composition would be adequate to sufferer. The reason is that the loss of a human limb or its permanent impairment cannot be measured or converted in terms of money. The object is to mitigate hardship that has been caused to the victim or his or her legal representatives due to sudden demise. Compensation awarded should not be inadequate and neither be unreasonable, excessive nor deficient. There can be no exact uniform rule in measuring the value of human life or limb or sufferance and the measure of damage cannot be arrived at, by precise mathematical calculation, but amount recoverable depends on facts and circumstances of each case. Upjohn LJ in Charle red House Credit v. Tolly 1963 (2) All. E.R 432 remarked that the assessment of damages has never been an exact science and it is essentially practical. Lord Morris in Parry v. Cleaver 1969(1) All. E.R 555 observed that to compensate in money for pain and for physical consequences is invariably difficult without some guess work but no other process can be devised than that of making a monitory assessment though it is impossible to equate the money with the human sufferings or personal deprivations. The Apex Court in R.D. Hattangadi Vs. M/s. Pest Control (India) Pvt. Ltd. and Others, with SLP(Civil) 4586 of 1989 at paragraph No. 12 held that in its very nature whatever a Tribunal or a Court is to fix the amount of compensation in cases of accident, it involves some guess work, some hypothetical consideration, some amount of sympathy linked with the nature of the disability caused. But all the aforesaid elements have to be viewed with objective standard. Thus, in most of the cases involving Motor Accidents, by looking at the totality of the circumstances, an inference may have to be drawn and a guess work has to be made even regarding compensation in case of death, for loss of dependent and estate to all claimants; care, guidance, love and affection especially of the minor children, consortium to the spouse, expenditure incurred in transport and funerals etc., and in case of injured from the nature of injuries, pain and sufferance, loss of earnings particularly for any disability and also probable expenditure that has to be incurred from nature of injuries sustained and nature of treatment required.

Now, coming to the quantum of compensation, the claimants are the dependants of the deceased and the age of the mother, first claimant, was 44 years. From that as per the Apex Court''s expression in Smt. Sarla Verma and Others Vs. Delhi Transport Corporation and Another, from the age of mother within 41 to 45, the multiplier that is applicable is ''14'' and the income of the deceased estimated by the Tribunal was at Rs. 12,000/- per month, as he is a final year student, it may be more. Apart from it, the Tribunal ought to have taken the prospective earning capacity also since he is in the verge of completion of his academics B-Tech being 4th year student and by considering the prospective earning capacity also, it requires to take at least Rs. 15,000/- per month and if half of the amount is deducted for personal expenses since bachelor, it comes to Rs. 7,500/- per month. Rs. 7,500/- X12= 90,000/- X14=12,60,000/- and 75% contributory negligence thereon comes to Rs. 9,45,000/-. In addition to that, for funeral expenses, the claimants are entitled to Rs. 25,000/- vide Rajesh and Others Vs. Rajbir Singh and Others, and for loss of estate at Rs. 10,000/- vide Sarla Verma''s case and Rajesh''s case supra, it comes to Rs. 9,80,0000/- and what the Tribunal awarded of Rs. 8,25,000/- is thereby no way on high side but for to say a low amount and though it is the just compensation, the claimants are to be awarded; this Court while sitting in appeal has no power with no cross-objections filed by the claimants much less any independent appeal, since there is a bar on the power of the Court even to exercise any power under Order XLI, Rule 33 C.P.C. to enhance the quantum from what is laid down in Ranjana Prakash and Others Vs. Divisional Manager and Another, that in the appeal filed by the driver or owner or insurer, in the absence of cross-objections by the claimants they have no right and Court also has no power to enhance the compensation, but for to support the quantum on one ground or the other.

Regarding the rate of interest awarded by the Tribunal at 7.5% per annum, the same is also reasonable as per the settled expression in Tamil Nadu State Transport Corporation Ltd. Vs. S. Rajapriya and Others, Sarala Verma''s case (supra) and Rajesh''s case (Supra). Thus, regarding the quantum of compensation and the rate of interest and also on the contributory negligence on the part of the crime bus, there is nothing to interfere.

Now, the only point left to answer, which is crucial is whether the APSRTC is to be fastened with the liability or jointly along with the real owner of the bus and if so, whether the insurer is liable to indemnify them or not concerned, the fact that prior to the vehicle hired with APSRTC on 13.06.2007 under Ex. B1-agreement, the vehicle was insured by claim petition second respondent owner with the claim petition third respondent insurer under Exs. B2 and B3 policy with effect from the mid night of 18.05.2007. No doubt, there and from, no reference of any permission even subsequently for hire much less intimated even subsequently of the hire of the bus by the owner with APSRTC under Ex. B1 to the insurer. However, that itself is not a breach much less substantial to exonerate the insurer. The appellant, claim petition 4th respondent-APSRTC, no doubt, exercising control over the bus including on the driver of the bus by engaging its own conductor under Ex. B1 contract of hire. The question is whether that by itself exonerates the real owner and the insurer, though APSRTC is a limited owner for the purpose so long as the contract for hire under Ex. B1 in force and given full control of the bus with or without knowledge of the insurer of the vehicle insured by the owner and not by the APSRTC.

In this regard the Apex Court in Uttar Pradesh State Road Transport Corporation Vs. Kulsum and Others, by referring to Section 146 to 149, 157 read with Section 2(3) and Section 103 of the M.V. Act, 1988 regarding the third party risk from the statutory insurance on the scope and meaning of who is owner of a hired vehicle when the policy taken out by lesser and transferred the vehicle to the lessee covered by terms of lease held that

The liability to pay compensation is based on a statutory provision. Compulsory insurance of the vehicle is meant for the benefit of third parties. The liability of the owner to have compulsory insurance is only in regard to the 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 justice.

Third party rights have been considered by this Court and several expressions and the law on the said point is now fairly well settled.

10(a). The Apex Court in Guru Govekar Vs. Miss Filomena F. Lobo and Others, held that

Thus if a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of chapter VII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of the third party caused by or arising out of the use of the vehicle at a public place. The liability to pay compensation in respect of death of or injury caused to the person or property of a third party undoubtedly arises when such injury is caused when the insured is using the vehicle in a public place. It is also arises when the insured has caused or allowed any other person (including an independent contractor) to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period, unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident.

This meant that once the insurer had issued a certificate of insurance in accordance with sub-section (4) of Section 95 of the Act the insurer had to satisfy any decree which a person receiving injuries from the use of the vehicle insured had obtained against any person insured by the policy. He was liable to satisfy the decree when he had been served with a notice under sub-section (2) of Section 96 of the Act about the proceedings in which the judgment was delivered.

Any other view will expose innocent third parties to go without compensation when they suffer injury on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act.

In a recent judgment of this Court, in United India Insurance Co. Ltd. Vs. Santro Devi and Others, t has been held as under:

The provisions of compulsory insurance have been framed to advance a social object. It is in a way part of the social justice doctrine. When a certificate of insurance is issued, in law, the insurance company is bound to reimburse the owner. There cannot be any doubt whatsoever that a contract of insurance must fulfil the statutory requirements of formation of a valid contract but in case of a third-party risk, the question has to be considered from a different angle.

Section 146 provides for statutory insurance. An insurance is mandatorily required to be obtained by the person in charge of or in possession of the vehicle. There is no provision in the Motor Vehicles Act that unless the name(s) of the heirs of the owner of a vehicle is/are substituted on the certificate of insurance or in the certificate of registration in place of the original owner (since deceased), the motor vehicle cannot be allowed to be used in a public place. Thus, in a case where the owner of a motor vehicle has expired, although there does not exist any statutory interdict for the person in possession of the vehicle to ply the same on road; but there being a statutory injunction that the same cannot be plied unless a policy of insurance is obtained, we are of the opinion that the contract of insurance would be enforceable. It would be so in a case of this nature as for the purpose of renewal of insurance policy only the premium is to be paid. It is not in dispute that quantum of premium paid for renewal of the policy is in terms of the provisions of the Insurance Act, 1938.

Perusal of the ratio of aforesaid judgments of this Court shows that Section 146 of the Act gives complete protection to the third party in respect of death or bodily injury or damage to the property while using the vehicle in public place. For that purpose, insurance of the vehicle has been made compulsory to the vehicles or to the owners. This would further reflect that compulsory insurance is obviously for the benefit of third parties.

Certificate of insurance between the owner and the insurance company contemplates under what circumstances the insurance company would be liable to pay the amount of compensation. The relevant conditions are reproduced hereinbelow:

Rules with respect to use of the vehicle

Use only for carriage of passengers in accordance with permit (contract carriage or stage carriage) issued within the meaning of the Motor Vehicles Act, 1988. This policy does not cover:

Use for organized racing, pace making, reliability trial, speed testing.

Use whilst drawing a trailer except the towing (other than to reward) of any one disabled mechanically propeller (sic propelled) vehicle.

Persons who are qualified to use the vehicle:

Any person including the insured provided that the person driving holds an effective driving licence at the time of the accident and is not disqualified from holding or obtaining such licence. Provided also that a person holding an effective learner''s licence may also drive the vehicle when not used for transport of passengers at the time of the accident and such a person satisfies the requirement of Rule 3 of the Central Motor Vehicle Rules, 1989.

Perusal thereof would show that there has not been any violation of the aforesaid terms and conditions of the policy. The respondent Insurance Company has also failed to point out violation of any Act, Rules or conditions of insurance. The Insurance Company has no legal justification to deny the payment of compensation to the claimants.

In the light of the foregoing discussions, the appeal filed by the 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 the owner of the vehicle. This we hold so as the liability of the Insurance Company is exclusive and absolute.

Thus, looking to the matter from every angle, we are of the considered opinion that the 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 vehicle.

Apart from the above, the learned counsel for the 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 only.

10(b). From this expression it is also necessary to discuss the relevant portions

A 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, along with the driver would be that of the APSRTC. Thus, the vehicle was given on hire by owner of the vehicle together with 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.

On account of the aforesaid discussions, it is crystal clear that actual possession of the vehicle was with the Corporation. The vehicle, driver and the conductor were under the direct control and supervision of the Corporation.

Black''s Law Dictionary defines "vicarious liability" as follows:

Liability that a supervisory party (such as an employer) bears for the actionable conduct of a subordinate or associate (such as an employee) because of the relationship between the two parties.

So, through the above definition, it can be inferred that the person supervising the driver through the principle of respondent superior should pay for the damages of the victim.

From the above, for all practical purposes, for the relevant period, the APSRTC had become the owner of the vehicle during the specific hire period. If the Corporation had become the owner even for the specific period and for the limited purpose the vehicle having been insured at the instance of original owner, it will be deemed that the vehicle was transferred along with the insurance policy in existence to the Corporation and thus the Insurance Company would not be able to escape its liability to pay the amount of compensation. So, through the definition of vicarious liability it can be inferred that the person supervising the vehicle through the principal-respondeat superior to pay the damages to the victim-third party, when it is not the case of the insurer that driver was not holding a valid licence to drive the vehicle at the time of accident. It has not also been contended that there is any violation of terms and conditions of the policy from saying driver was not entitled to drive the vehicle. The insured admittedly received the premium for the period at the time that bus had met with accident and the bus being plied by APSRTC. When there is no statutory duty cast on the owner under the Act or the Rules to seek permission or to give intimation to insurer in case of vehicle hired with APSRTC for it is being plied to say any violation, the insurer cannot escape the liability much less any legal justification to deny the payment of compensation to the third party claimants. It is because the liability of the insurance company is exclusive and absolute.

Apart from the above expression; in the Full Bench judgment of this Court in LPA No. 206 of 2000, dated 20.11.2012 between A.P.S.R.T.C. V. B. Kanakaratnabai and others 2013(1)ALD 644 (FB) (supra) it was held that

The only question that arises for consideration is as to whether the compensation payable in respect of third party claims arising out of accident, involving insured vehicle hired by the APSRTC, should be borne by the owner of the vehicle or by the insurance company or by the APSRTC or by some or all of them?

A similar question as to whether the compensation payable in respect of the claims arising out of accident involving insured but hired by the APSRTC should be borne by the owner of the vehicle or by the Insurance Company or by the APSRTC or by some or all of them was referred to a Full Bench of this Court and the Full Bench in L.P.A. No. 206 of 2000 and batch vide common judgment, dated 20.11.2012 held that mere hiring of insured buses by the owners to the APSRTC would not in any manner limit the liability and accountability of the insurance companies, be it under the Act of 1988 or the Act of 1939, to honour passengers/third party risks covered by the Insurance policies issued by them in favour of the owners and notwithstanding the hiring of insured buses by the owner to the APSRTC, the Insurance Company shall be solely and exclusively liable for payment of the compensation arising out of such passengers/third party claims unless any of the grounds in Section 149(2) of the Act of 1988/Section 96(2) of the Act of 1939 are made out.

Therefore, we are of the opinion that the issue raised in this appeal by the APSRTC is squarely covered by the Full Bench judgment of this Court.

Having regard to the facts and circumstances of the case, the appeal is allowed setting aside the order dated 22.03.2010 passed in O.P. No. 904 of 2008 by the Tribunal, in so far as dismissing the same as against the owner and insurance company. The 8th respondent-insurance company is directed to honour the claim of respondents 1 to 6 herein as ordered by the Tribunal notwithstanding hiring of the said vehicle by the owner in favour of the APSRTC, as it is solely and exclusively liable to pay compensation arising out of the third party claims.

The above propositions of law thus crystallizes the issue on hand to the conclusion that even the APSRTC, for the limited purpose during the agreement of hire in force, having control over the bus as well as the driver that belongs to the owner by engaging its own conductor in plying the bus got control over it to a limited extent as owner, the real owner is always the original person who hired the bus and owned the bus registered in his name and once the insurance company insured the vehicle by impugning for its hiring, insurer cannot escape the liability much less fastened the liability solely on the APSRTC. As the bus was taken on hire for plying by the APSRTC and from above expression of the Honourable Apex Court, no doubt there is something left open to say that if there is any violation of the policy terms and conditions saying that the driver of the bus was not having valid driving licence at the time of accident; whether the insurance company is liable to be exonerated and if so, the real owner or the APSRTC limited owner can alone or both together subject to any direction to the insurer to pay and recover from real owner to be given in the present case that aspect also does not arise to answer but for to say among the respondents 1 to 3 i.e., real owner and the insurer of the bus which hired to APSRTC are jointly liable and not the APSRTC. From the above it is though not necessary but for the purpose to clear the cloud to observe that even if there is any violation from the driver engaged by the real owner from any conscious knowledge of not having effective driving licence to make him liable but for the real owner and not the APSRTC as limited owner, to be made liable to pay and recover if at all the insurer was made liable to pay to recover by execution of the award only against the real owner and not against the APSRTC who is not the real owner. Accordingly the above points for consideration are answered. In the result, the appeal is allowed in part while confirming the quantum of compensation of Rs. 8,25,000/- with percentage of contributory negligence and the rate of interest awarded by the Tribunal in favour of the claimants, however by modifying the finding of the Tribunal in fixing liability only against the real owner and the APSRTC i.e., respondents 2 and 4 to the joint liability by directing the 3rd respondent to the claim petition-insurer of the vehicle to satisfy the claim by payment or deposit of compensation amount (indemnifying the real owner-insured) within one month from today, failing which the claimants can execute and recover to the credit of the O.P. before the Tribunal. It is only after such execution of recovery, the APSRTC is to be permitted to withdraw the amount in their deposit. On other aspects, the finding of the Tribunal regarding apportionment and withdrawal holds good. There is no order as to costs. The application for vacating the stay is thereby closed for no orders are necessary as the appeal itself is disposed of.