C.Y. Somayajulu, J.
1. Respondents 1 to 4, who are the widow, children and mother (hereinafter referred to as 'claimants') of Poreddi Janaki Reddy (hereinafter referred to as 'deceased'), filed O.P. No. 716 of 1990 before the Motor Accident Claims Tribunal-cum-District Judge, Nalgonda seeking compensation of Rs. 2,00,000/-, alleging that on 11.6.1990 at about 1.00 p.m., while the deceased was boarding the bus bearing No. AHM 1879 belonging to the fifth respondent, insured with sixth respondent and taken on hire by the appellant, he was thrown out of the footboard due to the driver negligently starting the bus and was crushed to death by the rear wheels of the bus. The O.P. against the fifth respondent was dismissed by the Tribunal for non-payment of the process. Sixth respondent, who is the insurer of the bus that caused the accident, filed its counter statement putting the claimants to proof of the allegations in the petition. Appellant filed its counter putting the claimants to proof of the allegations in the petition and contending that there was no negligence on the part of the driver of the bus and that the accident occurred only due to the negligence of the deceased, by his trying to enter the bus while trying to open the closed door of the bus in motion, and so claimants are not entitled to any compensation.
2. On the basis of the evidence on record, the Tribunal held that the accident occurred due to the rash and negligent driving of the driver of the bus and that the claimants would have been entitled to Rs. 64,000/- as compensation from fifth and sixth respondents and that the appellant, as hirer, is not liable to pay the compensation, but dismissed the O.P. against the sixth respondent and since the O.P. against the owner, i.e., fifth respondent, was dismissed. Aggrieved thereby, claimants preferred C.M.A. No. 88 of 1995 to this Court. A learned Single Judge of this Court, holding that the appellant, as hirer, was having control over the bus at the time of accident and hence is liable to pay the compensation payable to the claimants, determined the compensation payable at Rs. 80,000/-, and accordingly passed an award in favour of the claimants for Rs. 80,000/- with interest at 12% p.a. from the date of petition till the date of realization against the appellant. Hence this appeal by A.P.S.R.T.C., the hirer of the bus.
3. The point for consideration is who, among the appellant and respondents 5 and 6, is or are liable to pay the compensation payable to the claimants?
4. The contention of Sri K. Harinath, learned Standing Counsel for the appellant, is that since the driver that caused the accident was employed by and was under the control of the fifth respondent, the owner, he and the insurer alone, but not the appellant that is liable to pay the compensation payable to the claimants. He placed strong reliance on National Insurance Company Limited, Warangal v. Lunavathi Hariya, : 2003(2)ALD617 , in support of his said contention. His further contention is that in any event since the bus admittedly was insured with sixth respondent at the time of accident, sixth respondent also is liable to pay the compensation to the claimants. He placed strong reliance on Rikhi Ram v. Sukharania, 2003 (2) ALD 71 (SC), in support of the said contention. He also relied on Peddaboina Laxmi v. Lamba Road Lines, : 2002(6)ALD132 (DB), and Rajastan State Road Transport Corporation v. Kailash Nath Kothari, : AIR1997SC3444 , Sri M. Rajamalla Reddy, learned Counsel for the claimants, placing strong reliance on Kailash Nath Kothari case (supra) and General Manager, APSRTC v. B. Kanakaratna Bai, : 2000(1)ALD649 , contended that the learned Single Judge rightly made appellant liable for payment of the compensation payable to the claimants. Sri K.L.N. Rao, learned Counsel for sixth respondent, relying on Noorjahan (TMT) v. Sultan Rajia TMT, : (1997)1SCC6 , contended that since the claim against the owner was dismissed for nonpayment of process, sixth respondent, who is the insurer, is not liable to pay any compensation to the claimants. He also relied on Oriental Insurance Company Ltd. v. Sunita Rathi, : AIR1997SC4228 , and New India Assurance Company Ltd. v. B. Hari Singh, : 1998(6)ALT34 .
5. It has to be stated that merely because fifth respondent is made a party to this L.P.A., it would not cure the defect of the dismissal of the O.P. against him by the Tribunal for non-payment of process, more so because claimants did not even seek the relief of restoration of the O.P. in the C.M.A., and have not, in fact, made the fifth respondent a party to the C.M.A. Yet the appellant made the owner a party to this L.P.A. as fifth respondent, and allowed this appeal to be dismissed for non-payment of process. Thus, the owner of the bus is not a party either to the O.P. or C.M.A. or this L.P.A. and so no award can be passed against him.
6. Before we proceed to decide the point for consideration, it is useful to refer to the case law cited by the learned Counsel for parties. In Lunavathi Hariya case (supra) an owner of the bus gave it on hire to the A.P.S.R.T.C. As a result of an accident caused by the driver of the bus while it was under the control of A.P.S.R.T.C., seven persons died and eighteen persons suffered injuries, and so all the injured and the legal representatives of the deceased passengers filed claim petitions seeking compensation. The owner, who contested the petition, denied negligence on the part of the driver and took a plea that since his vehicle was insured and was given on hire to the A.P.S.R.T.C., A.P.S.R.T.C. alone is liable to pay the compensation. The A.P.S.R.T.C. filed its counter contending that since it has no control over the driver employed by the owner, the owner alone is liable to pay the compensation. The Insurer filed its counter contending that since the bus was overloaded beyond permissible limit, it is not liable to pay the compensation. The Tribunal held that A.P.S.R.T.C., as hirer, is not liable to pay compensation and that the owner and the insurer of the bus alone are liable to pay the compensation payable to the petitioners in all the petitions. Aggrieved thereby, the insurer filed an appeal to this Court. The learned Single Judge, after referring to an unreported judgment in C.M.A. No. 973 of 1984, dated 26.10.1988 of this Court, rendered on the basis of the ratio in Usha Sehgal v. Chhote, 1985 ACJ 515, Kanaka Ratnabai case (supra) and Kailash Nath Kothari case (supra), observed that in those cases the agreement between State Road Transport Corporation and the owner was marked, and thus the petitioners in those cases were able to establish that effective control over the driver, as per the terms of the agreement, was transferred to hirer, and since in the cases before him the driver remained ex parte, and the owner of the bus did not produce the necessary documents, and since the insurer did not take steps to summon the agreement between the A.P.S.R.T.C. and the owner, the terms agreed between them are not known, and since the terms agreed between A.P.S.R.T.C. and the owner cannot be surmised, it has to be taken that the driver was under the control of the owner only and so the appellant before him as insurer is also liable, and dismissed all the appeals.
7. The ratio in Rikhi Ram case (supra) is that in respect of vehicles insured as per the provisions of the Motor Vehicles Act either the owner or any other person, with the consent of the owner, can use the vehicle and if by such use any third party is injured he can enforce the liability undertaken by the insurer.
8. The facts in Peddaboina Laxmi case (supra) are the Tribunal, without noticing that it dismissed the O.P. against the owner for non-payment of process, passed an award directing the insurance company to pay the compensation arrived at as payable to the petitioners therein. Aggrieved thereby, the insurer filed an appeal before this Court. A learned Single Judge allowed the appeal in view of the ratio in Sunita Rathi case (supra) that insurer cannot be fastened with the liability in the absence of owner and dismissed the O.P. Aggrieved thereby, the petitioners preferred L.P.A. to a Division Bench. The Bench allowed the appeal and remitted the case to the Tribunal giving liberty to the petitioners in the O.P. either to file a fresh O.P. or to file an application under Rule 4 of Order 9 C.P.C. The said decision has no application to the facts of this case since the claimants did not seek such relief.
9. The ratio in Kailash Nath Kothari case (supra), which was referred in Lunavathi Hariya case (supra), is that the definition of 'owner' in Section 2(19) of Motor Vehicles Act, 1939 is not exhaustive and that the word 'owner' has to be construed in a wider sense by including a 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. Basing on the terms of the agreement between the owner of the bus and its hirer, it was held that the hirer Corporation is liable to pay the compensation payable for the torts committed by the driver.
10. In Kanaka Ratnabai case (supra) a learned Single Judge, basing on the terms and conditions of the agreement between the owner and A.P.S.R.T.C., held that since the A.P.S.R.T.C. had full command and control over the bus and the driver, and since the original owner had no control over the bus except getting the remuneration for the vehicle hired, it is liable for the tort committed by the driver.
11. In Noorjahan case (supra), which arose under the Motor Vehicles Act, 1939, it was held that if death or personal injury occurs to a person while alighting a public service vehicle in a public place, he should be treated as a passenger and not as a third party, and so the liability of the insurance company would be in accordance with the terms of the policy under Section 95 (2) (b) (ii) of the Motor Vehicles Act, 1939. In this case, since the accident occurred in 1990 and since the liability of the insurer under Section 147 of the Motor Vehicles Act, 1988 is not limited as in Section 95(2)(b)(ii) of the Motor Vehicles Act, 1939, the said decision has no application to the facts of this case.
12. The ratio in Sunita Rathi case (supra) and B. Hari Singh case (supra) is that since the liability of the insurer arises only when the insured's liability is known, in the event of the insured being exempt from liability, the insurer cannot be made liable.
13. Point : Since the agreement between the appellant and the owner (fifth respondent) is not exhibited, there is no evidence on record to show on what terms and conditions the bus involved in the accident was given on hire to the appellant. But that is not of any consequence for deciding this appeal. The following passage in Salmond & Heuston on the Law of Torts, 12th edition, at page-454 would be of help in deciding this appeal:
'Nobody can have two de jure employers, but he can have a general (de jure) and a special (de facto) employer [Esso Petroleum Ltd. v. Hall Russell Ltd. (1989) A.C. 643, 683]. In particular an employer may lend or hire his servant to another person for a certain transaction so that quoad that employment he becomes the servant of the person to whom he is so lent, though he remains for other purposes, the servant of the lender. When a servant is sent by his employer to do work for another, it is a question depending on the construction of the contract between the general and the special employer, whose servant he may be [Arthur White Ltd. v. Tarmac Civil Engineering Ltd, (1967) 1 W.L.R. 1508]. If there is no contract, then it is a question of fact, depending on the nature of the arragement and the degree of control exercised over the servant. When the servant has thus two employers, the responsibility for a tort committed by him lies exclusively upon the eraployer for whom he was working when he did the act complained of.
That fifth respondent is the de jure owner is admitted. The question is for whom the driver of the bus was working at the time of the accident.
14. For this purpose, the difference in the definition of 'owner' in Motor Vehicles Act, 1939 and Motor Vehicles Act, 1988 has to be kept in mind for deciding this case. As per Section 2(30) of the Motor Vehicles Act, 1988:
' '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 the subject 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.'
While as per Section 2(19) of Motor Vehicles Act, 1939:
' 'Owner' means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to motor vehicle which is the subject-matter of hire purchase agreement, the person in possession of the vehicle under that agreement.'
That the appellant was in possession of and was operating the bus at the time of accident is not denied or disputed. Significantly appellant did not even take a plea that it is not liable to pay the compensation to the claimants in view of the contract between it and fifth respondent. The only plea in the counter of the appellant is that since the deceased died due to his own negligence, and not due to the negligence of 'the driver', it is not liable to pay compensation. It is thus clear that the appellant did not dispute its liability to pay compensation on any other ground except on the ground that there was no negligence on the part of 'the driver'. It is also not the case of the appellant that the driver was not acting under its control and was acting as per the directions of the de jure owner, i.e., fifth respondent.
15. When as per Section 2(30) of the Motor Vehicles Act, 1988 appellant, as 'lessee' of the bus, is the 'owner' of the bus, and when there is nothing on record to show that the de jure owner, i.e., fifth respondent, provided 'his' driver to the appellant with a direction to act under 'his' control, it would be a surmise to say that the driver of the owner, i.e., fifth respondent, was acting under his, i.e., fifth respondent's, control at the time of the accident, but not under the control of the hirer. The appellant did not adduce any evidence to show that it has no control over the driver, or to establish that the driver appointed by the fifth respondent, while under the control of the fifth respondent was driving the bus at the time of accident. Obviously keeping in view the wider definition of the word 'owner' given in Motor Vehicles Act, 1988 the Supreme Court in Kailash Nath Kothari case (supra) must have held that narrow interpretation to the word 'owner' in Motor Vehicles Act, 1939 cannot be given, and that that word should include the person who hired the vehicle. When the appellant is the 'owner' as per the legal fiction created by Section 2(30), it, as owner, would be liable for the acts committed by the person driving the bus as per its directions. Obviously at its instructions and directions only the bus must be plying in that route at the time of the accident. So, we do not find any grounds to interfere with the finding of the learned Single Judge that the appellant is liable to pay the compensation to the claimants.
16. The next question is whether sixth respondent is liable to pay the compensation payable to the claimants. It is no doubt true that as held in Sunitha Rathi case (supra) the liability of the insurer arises only after the liability of the insured is fixed. In this case, it is the fifth respondent that is the dejure owner of the bus involved in the accident, and he took out the insurance with sixth respondent and gave the vehicle on hire to the appellant. So, fifth respondent is the insured. But fifth respondent admittedly was not in custody or control of the vehicle at the time of the accident. It was in the custody and control of the appellant at that time. So, the fact that the O.P. was dismissed against the fifth respondent is not, and cannot be, a ground for the sixth respondent (insurer) to avoid its liability to the claimants, because the appellant also is the deemed owner of the bus involved in the accident as per Section 2(30) of the Act, and is a party to the O.P. So, the liability of the 'owner' as to the person who has to pay the compensation to the claimants is fixed on the appellant.
17. Section 146(1) of the Act reads as under:
'Necessity for insurance against third party risk:--(1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter:
Provided that in the case of a vehicle carrying, or meant to carry, dangerous or hazardous goods, there shall also be a policy of insurance under the Public Liability Insurance Act, 1991 (6 of 1991)Explanation :--A person driving a motor vehicle merely as a paid employee, while there is in force in relation to the use of the vehicle no such policy as is required by this sub-section, shall not be deemed to act in contravention of the sub-section unless he knows or has reason to believe that there is no such policy in force.'
Ex.A.3 shows that the bus involved in the accident was insured with the sixth respondent up to 20.10.1990. Since the accident took place on 10.6.1990, it is clear that the sixth respondent was the insurer of the vehicle at the time of accident. In G. Govindan v. New India Assurance Company Ltd., : [1999]2SCR476 , the Supreme Court held that since insurance against third party risks is compulsory, once the insurer had undertaken the liability to third parties, incurred by the persons specified in the policy, the third parties, right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy. Though that decision was rendered taking into ' consideration Sections 97, 94, 95 and 103A, which relate to covering of third party risk under Motor Vehicles Act, 1939, since a three Judge Bench of the Supreme Court in Complete Insulations (P) Ltd. v. New India Assurance Co., Ltd., : AIR1996SC586 , held that the provisions of Sections 157, 146, 147 and 156 of the Motor Vehicles Act, 1988 and Sections 97, 94, 95 and 103A of the Motor Vehicles Act, 1939, in relation to liability for third parry risk are substantially the same the ratio in Govindan case (supra), which was approved in Rikhi Ram case (supra), apply to cases of third party risk arising under Motor Vehicles Act, 1988 also.
18. In case of hire title is not transferred, but in case of sale title is transferred. In Rikhi Ram case (supra) the insured sold the vehicle prior to the accident and failed to intimate the transfer to the insurer. The question was whether the insurer is liable to pay the compensation to the third party victims. It was held that the fact that the vehicle, which is covered by the third party risk insurance policy, which is statutory, is transferred to another party does not absolve the insurer of its liability to pay compensation to third party victims. When the insurer is made liable to pay compensation to third party victims in an accident, caused by a vehicle insured with it, in spite of the transferor or transferee not putting it on notice of the transfer, in case of an accident to the vehicle while in custody of the hirer, the insurer would be liable to pay the compensation when the hirer is made a party to the proceedings. Since the appellant, who is the hirer of the bus involved in the accident is a party to the O.P., sixth respondent, who is the insurer, is also liable to pay the compensation payable to the claimants. So, we hold that both the appellant and the sixth respondent are liable to pay the compensation payable to the claimants. The point is answered accordingly.
19. In view of the recent trend, 9% p.a., instead of 12% p.a., would be a reasonable rate of interest.
20. In the result, the appeal is allowed in part and an award is passed for a sum of Rs. 80,000/- with interest @ 9% p.a. from the date of petition till the date of deposit, in favour of the claimants against the appellant and the sixth respondent jointly and severally. Out of the said amount, fourth respondent is entitled to Rs. 10,000/- and interest thereon, respondents 2 and 3 are each entitled to Rs. 22,500/- and interest thereon, and the first respondent is entitled to the remaining amount of Rs. 25,000/- and interest thereon. The compensation payable to respondents 2 and 3 shall be kept in fixed deposit till they attain the age of majority. First respondent can withdraw the interest accrued on the deposit made for the benefit of respondents 2 and 3 periodically for their maintenance. Parties are directed to bear their own costs in this appeal.