Sursagar Lake - 38 persons died due to capsized of boat in lake - claims against corporation - contractor and insurance company - first denied they are not consumer - next denied there is no service deficiency - corporation denied it's liability - Insurance company limited it's liability only for one lakh per head - consumer court allowed the claim - NCDRC confirmed the same - Apex court held that It is not in dispute that the boat was carrying 38 passengers as against the
capacity of 22 passengers. Neither any life guards were deployed nor any life saving jackets were provided to the passengers. The finding of negligence concurrently recorded by the State Commission and the NCDRC does not call for any interference. Primary liability of the contractor stands established. The victims were consumers and the contractor was service
provider. Deficiency of service stood established. The stand of the Insurance Company based on second policy dated 1st December, 1992 limiting its liability is untenable. Having issued policy
dated 1st November, 1992 covering loss to the extent of Rs.20 lakhs per accident with Rs.80 lakhs as maximum in one year, the Insurance Company could not avoid its responsibility, as rightly held concurrently by the State Commission and the NCRDC. Risk was required to be statutorily covered under the Public Liability Insurance Act, 1991. The Insurance
Company was bound by the The Insurance Regulatory and Development Authority (Protection of Policyholders’ Interest) Regulation, 2002 framed under the Insurance Regulatory and Development Authority Act, 1999 and the law laid down in M.J.K. Corporation, Pushpalaya Printers and Asha Goel (supra), rightly referred to by the NCDRC in its order. We do not find any ground to exonerate the Corporation. Admittedly, the activity in question was covered by the statutory duty of the Corporation under Sections 62, 63 and 66 of the Bombay Provincial Municipal Corporation Act, 1949. Mere appointment of a contractor or employee did
not absolve the Corporation of its liability to supervise the boating activities particularly when there are express stipulations in the contract entered into with the contractor. The Corporation was not only discharging its statutory duties but also was acting as service provider to the
passengers through its agent. The Corporation had a duty of care, when activity of plying boat is inherently dangerous and there is clear forseeability of such occurrence unless precautions are taken like providing life saving jackets. Accordingly, we do not find any merit in the appeals filed by the contractor, the Corporation and the Insurance Company against the award of compensation by the State Commission as affirmed/modified by the NCDRC.=
Sursagar Lake -
contract for plying the boats was given to Ripple Aqua Sports vide licence agreement-
Contractor took insurance policy dated 1st November, 1992. On 11th
August, 1993, against the capacity of 20 persons, 38 passengers were
allowed to ride in the boat which capsized resulting in the death of 22
passengers.
The victims claimed that the
insurance policy covered the claim to the extent of Rs.20 lakhs per
passenger with maximum of Rs.80 lakh in one year.
The Insurance Company contested the case and submitted that as per
the insurance policy given, the liability was limited to Rs.1 lakh per
person. Stand of the Corporation was that complainants were not consumers
and had remedy under the Indian Vessels Act, 1917. The Contractor was
independent licensee without any control of the Corporation. The stand of
the Contractor was that it was not liable as the claimants were not
consumers and the liability was of the Corporation. The Insurance Company
also opposed the claim and also submitted that its liability did not exceed
Rs.20 lakhs.
The State Commission allowed the claims. It held that even a public
authority exercising statutory power was not exempt from liability for
negligent actions. When the Corporation exercised control over the
Contractor, it was vicariously responsible for the negligence of the
Contractor.
On due consideration, we do not find any ground to interfere. It is
not in dispute that the boat was carrying 38 passengers as against the
capacity of 22 passengers. Neither any life guards were deployed nor any
life saving jackets were provided to the passengers. The finding of
negligence concurrently recorded by the State Commission and the NCDRC does
not call for any interference. Primary liability of the contractor stands
established. The victims were consumers and the contractor was service
provider. Deficiency of service stood established. The stand of the
Insurance Company based on second policy dated 1st December, 1992
limiting its liability is untenable. Having issued policy
dated 1st November, 1992 covering loss to the extent of Rs.20 lakhs per
accident with Rs.80 lakhs as maximum in one year, the Insurance Company
could not avoid its responsibility, as rightly held concurrently by the
State Commission and the NCRDC. Risk was required to be statutorily
covered under the Public Liability Insurance Act, 1991. The Insurance
Company was bound by the The Insurance Regulatory and Development Authority
(Protection of Policyholders’ Interest) Regulation, 2002 framed under the
Insurance Regulatory and Development Authority Act, 1999 and the law laid
down in M.J.K. Corporation, Pushpalaya Printers and Asha Goel (supra),
rightly referred to by the NCDRC in its order.
17. We do not find any ground to exonerate the Corporation. Admittedly,
the activity in question was covered by the statutory duty of the
Corporation under Sections 62, 63 and 66 of the Bombay Provincial Municipal
Corporation Act, 1949. Mere appointment of a contractor or employee did
not absolve the Corporation of its liability to supervise the boating
activities particularly when there are express stipulations in the contract
entered into with the contractor. The Corporation was not only discharging
its statutory duties but also was acting as service provider to the
passengers through its agent. The Corporation had a duty of care, when
activity of plying boat is inherently dangerous and there is clear
forseeability of such occurrence unless precautions are taken like
providing life saving jackets.
Accordingly, we do not find any merit in the appeals filed by the
contractor, the Corporation and the Insurance Company against the award of
compensation by the State Commission as affirmed/modified by the NCDRC.
The appeals are accordingly dismissed.
2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41898
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3594-3611 of 2010
VADODARA MUNICIPAL CORPORATION ….. APPELLANT
VERSUS
PURSHOTTAM V. MURJANI AND ORS. ..... RESPONDENTS
With
Civil Appeal No.3630 of 2010, Civil Appeal No.3631 of 2010,
Civil Appeal No.3647 of 2010, Civil Appeal No.3632 of 2010,
Civil Appeal No.3633 of 2010, Civil Appeal No.3634 of 2010,
Civil Appeal No.3635 of 2010, Civil Appeal No.3636 of 2010,
Civil Appeal No.3638 of 2010, Civil Appeal No.3646 of 2010,
Civil Appeal No.3639 of 2010, Civil Appeal No.3640 of 2010,
Civil Appeal No.3641 of 2010, Civil Appeal No.3642 of 2010,
Civil Appeal No.3643 of 2010, Civil Appeal No.3644 of 2010,
Civil Appeal No.3645 of 2010, Civil Appeal No.3648 of 2010 and Civil Appeal
No.3612-3629 of 2010.
J U D G M E N T
ADARSH KUMAR GOEL, J.
1. These appeals have been preferred against the Judgment of the
National Consumer Disputes Redressal Commission (for short “NCDRC”) dated
2nd November, 2006 in F.A. Nos.464/2002 and 61 to 77 of 2004 by the
Vadodara Municipal Corporation (for short “the Corporation”), the Oriental
Insurance Company Ltd. (for short “the Insurance Company”) and the
proprietor of Ripple Aqua Sports (hereinafter referred to as “the
Contractor”) against the award of compensation for the death of 22 persons
by drowning in Sursagar Lake at Vadodara while riding the boat, on account
of negligence in plying the boat.
2. Sursagar Lake is under the control and management of the Corporation
which has been plying boats for joy rides and boating club. During the
period in question, the contract for plying the boats was given to Ripple
Aqua Sports vide licence agreement
dated 26th September, 1992 for managing the affairs of the Boating Club at
the Lake for purposes of entertainment. The agreement, inter alia,
provided that the facility of boating was to be given to the public. It
was necessary that the contractor shall be taking insurance policies to
cover the risk liability of all persons using the equipment of the club.
The Corporation had the right to supervise the boating club. Accordingly,
the Contractor took insurance policy dated 1st November, 1992. On 11th
August, 1993, against the capacity of 20 persons, 38 passengers were
allowed to ride in the boat which capsized resulting in the death of 22
passengers.
3. The victims approached the State Commission
on 30th March, 1994 and around under the provisions of Consumer Protection
Act, 1986 claiming compensation alleging deficiency of service on the part
of the Contractor and the Corporation. The victims claimed that the
insurance policy covered the claim to the extent of Rs.20 lakhs per
passenger with maximum of Rs.80 lakh in one year. Under the Bombay
Provincial Municipal Corporation Act, 1949, the Corporation had the duty to
maintain the safety of the passengers and in case of negligence, the
Corporation had the tortuous liability under the law. The Corporation was
also liable for tortious acts of the Contractor. The passengers had taken
tickets for the boat ride but on account of deficiency in service the
passengers drowned on capsizing of the boat which was overloaded. The
occurrence took place on account of negligence of the contractor as well as
failure of the Corporation to exercise due care. No life guards were
provided, no life saving jackets were provided and if suitable safety
measures would have been taken, the lives of the victims could be saved.
4. The Insurance Company contested the case and submitted that as per
the insurance policy given, the liability was limited to Rs.1 lakh per
person. Stand of the Corporation was that complainants were not consumers
and had remedy under the Indian Vessels Act, 1917. The Contractor was
independent licensee without any control of the Corporation. The stand of
the Contractor was that it was not liable as the claimants were not
consumers and the liability was of the Corporation. The Insurance Company
also opposed the claim and also submitted that its liability did not exceed
Rs.20 lakhs.
5. The State Commission allowed the claims. It held that even a public
authority exercising statutory power was not exempt from liability for
negligent actions. When the Corporation exercised control over the
Contractor, it was vicariously responsible for the negligence of the
Contractor. Reliance was placed on Rajasthan State Road Transport
Corporation vs. Kailash Nath Kothari[1] holding the employer to be
responsible vicariously.
6. As regards liability of the Insurance Company, it was held that its
liability under the policy was Rs.20 lakhs for one incident which meant one
death in view of Motor Owner’s Insurance Co. Ltd. vs. Jadavji Keshavji
Modi[2]. The policy was covered by Public Liability Insurance Act, 1991.
It was also held that Contractor could not escape its liability in the
given circumstances when deficiency in service was patent in view of
violation of Indian Vessels Act, 1917. Negligence in operating the boat
amounted to deficiency in service as held in Ravneet Singh Bagga vs. KLM
Royal Dutch Airlines & Anr.[3]
7. Accordingly, the State Commission held the Aqua Sports and the
Corporation to be jointly and severely liable. The State Commission
awarded total compensation of Rs.30,18,900/- with interest @ 10% per annum
from the date of the incident till payment. The State Commission
determined the quantum of compensation ranging from Rs.50,000/- to
Rs.10,76,000/- in respect of claims for death of 22 passengers.
8. The decision of the State Commission has been upheld by the NCDRC
with the enhancement in quantum of compensation in some of the cases
keeping in mind principles for determining compensation under the Motor
Vehicles Act, 1988.
9. Affirming the finding of the State Commission, the NCDRC held:-
“(i) Contractor had the primary liability to compensate the victims as it
was responsible for the catastrophe in question;
(ii) The Corporation had vicarious liability for the negligence. Plying
boat was inherently dangerous activity. Even for its statutory functions,
liability for negligence was attracted on the principle laid down in Rajkot
Municipal vs. Manjuben Jayantilal Nakum, (1997) 9 SCC 552. The
Corporation failed to perform its duty of supervision undertaken under the
agreement with the Contractor;
(iii) The Insurance Company was liable upto
Rs.20 lakhs per accident (per death) subject
to maximum of Rs.80 lakhs as per policy. Variations in policy could not be
allowed in view of United India Insurance Company Ltd. vs. M.J.K.
Corporation, (1997) 7 SCC 481 and United India Insurance Company Ltd. vs.
Pushpalaya Printers, (2004) 3 SCC 694 and Life Insurance Corporation of
India and ors. vs. Smt. Asha Goel and anr.,
(2001) 2 SCC 160.
(iv) Insurance Company was bound to act as per Insurance Regulatory and
Development Authority Acts of 1999 and 2002 regulations framed thereunder
and also Public Liability Act, 1991.”
10. Concluding part of the judgment of the NCDRC is as follows:-
“In the result, it is held that:
the Ripple Aqua Sports and the Vadodara Municipal Corporation are jointly
and severally liable to pay the compensation to the Complainants as
awarded;
the Vadodara Municipal Corporation is directed to pay the balance of
compensation (that is, after deducting the amount paid) to the Complainants
in each case within a period of eight weeks from the date of the Order. It
would be open to the Corporation to recover the same from the Ripple Aqua
Sports;
the Insurance Company is liable to pay Rs.20 lakhs for each accident,
namely, each death, but in aggregate the sum is limited to Rs.80 lakhs.
Hence, the Insurance Company shall reimburse, in all, Rs. 80 lakhs to the
Vadodara Municipal Corporation; and,
the rest of the order passed by the State Commission directing payment of
interest at the rate of 10% p.a. from the date of the incident, i.e. from
11.8.1993 till the date of payment of compensation is confirmed.
With these modifications the First Appeal Nos.464 of 2002 and First
Appeal Nos.464 of 2002 and First Appeal Nos.61 to 77 of 2004 filed by the
Vadodara Municipal Corporation are disposed of accordingly. Considering
the facts, there shall be no order as to costs.
First Appeal Nos. 197 of 2003 and First Appeal Nos.210 to 226 of 2003 filed
by the Ripple Aqua Sports are disposed of accordingly. There shall be no
order as to costs.
Cross-Appeals for enhancement:
The Appeals filed by the Complainants in First Appeal Nos.488 of 2002; 289
of 2004; 290 of 2004; 292 of 2004; 295 of 2004 and 296 of 2004 are
dismissed. There shall be no order as to costs.
The First Appeal Nos.288 of 2004; 291 of 2004; 294 of 2004; 297 of 2004;
299 of 2004; 293 of 2004; 298 of 2004, and 300 of 2004 filed by the
complaints are partly allowed. The order passed by the State Commission is
modified as under:-
It is held that the complainants are entitled to have compensation of:-
(i) Rs.1 lakh in each Appeal Nos.288 of 2004, 291 of 2004; and 294 of
2004;
(ii) Rs.1,25,000/- in each Appeal Nos.297 of 2004 and 299 of 2004;
(iii) Rs.1,50,000/- in each Appeal Nos.293 of 2004; 298 of 2004; and 300 of
2004.”
11. We have heard learned counsel for the parties.
12. Learned counsel for the Corporation submitted that the Corporation
was not a service provider and had no privy contract with the victims. It
was only facilitating the plying of boating and the liability was of the
contractor. As per the licence agreement dated 26th September, 1992,
control and responsibility for the boating activities was completely of the
contractor. The Corporation had no direct control over the contractor or
its employees.
13. Learned counsel for the Insurance Company submitted that its
liability was limited to Rs.1 lakh as per policy issued on 1st December,
1992 and the policy dated 1st November, 1992 could not be taken into
account.
14. Learned counsel for the Contractor, submitted that it was not
responsible for the accident and liability was of the Manager individually
or of the Corporation for whom the boat was being plied.
15. Learned counsel for the victims supported the
impugned order.
16. On due consideration, we do not find any ground to interfere. It is
not in dispute that the boat was carrying 38 passengers as against the
capacity of 22 passengers. Neither any life guards were deployed nor any
life saving jackets were provided to the passengers. The finding of
negligence concurrently recorded by the State Commission and the NCDRC does
not call for any interference. Primary liability of the contractor stands
established. The victims were consumers and the contractor was service
provider. Deficiency of service stood established. The stand of the
Insurance Company based on second policy dated 1st December, 1992
limiting its liability is untenable. Having issued policy
dated 1st November, 1992 covering loss to the extent of Rs.20 lakhs per
accident with Rs.80 lakhs as maximum in one year, the Insurance Company
could not avoid its responsibility, as rightly held concurrently by the
State Commission and the NCRDC. Risk was required to be statutorily
covered under the Public Liability Insurance Act, 1991. The Insurance
Company was bound by the The Insurance Regulatory and Development Authority
(Protection of Policyholders’ Interest) Regulation, 2002 framed under the
Insurance Regulatory and Development Authority Act, 1999 and the law laid
down in M.J.K. Corporation, Pushpalaya Printers and Asha Goel (supra),
rightly referred to by the NCDRC in its order.
17. We do not find any ground to exonerate the Corporation. Admittedly,
the activity in question was covered by the statutory duty of the
Corporation under Sections 62, 63 and 66 of the Bombay Provincial Municipal
Corporation Act, 1949. Mere appointment of a contractor or employee did
not absolve the Corporation of its liability to supervise the boating
activities particularly when there are express stipulations in the contract
entered into with the contractor. The Corporation was not only discharging
its statutory duties but also was acting as service provider to the
passengers through its agent. The Corporation had a duty of care, when
activity of plying boat is inherently dangerous and there is clear
forseeability of such occurrence unless precautions are taken like
providing life saving jackets.
18. In Municipal Corporation of Delhi vs. Uphaar Tragedy Victims
Association and Ors.[4], concept of negligence or breach of duty to take
care in Tort law as against breach of duty in exercising statutory duty in
public law was gone into with reference to developments in different
jurisdictions. It was observed that archaic principle of State immunity
which was based on assumption of State being efficient, sincere and
dignified was giving way to protection of liberty, equality and rule of
law. Applying the test of proximity of relationship, reasonable
forseeability and justness of claim, liability of a public authority could
be fixed. After noticing development of law world over, it was observed:-
“109. Need for a comprehensive legislation dealing with tortious liability
of the State and its instrumentalities has been highlighted by this Court
and the academic world on various occasions and it is high time that we
develop a sophisticated jurisprudence of public law liability. Due to lack
of legislation, the courts dealing with the cases of tortious claims
against the State and its officials are not following a uniform pattern
while deciding those claims, and this at times leads to undesirable
consequences and arbitrary fixation of compensation amount.
110. The Government of India on the recommendations of the First Law
Commission introduced two Bills on the government liability in torts in the
years 1965-1967 in the Lok Sabha but those Bills lapsed. In Kasturi Lal
case, AIR 1965 SC 1039, this Court has highlighted the need for a
comprehensive legislation which was reiterated by this Court in various
subsequent decisions as well.
111. Public authorities are now made liable in damages in UK under the
Human Rights Act, 1998. Section 6 of the Human Rights Act, 1998 makes a
public authority liable for damages if it is found to have committed breach
of human rights. The Court of Appeal in England in Anufrijeva v. Southwark
London Borough Council, 2004 QB 1124 : (2004) 2 WLR 603 : (2004) 1 All ER
833 (CA), attempted to answer certain important questions as to how
damages should be awarded for breach of human rights and how should damages
be assessed. Further, such claims are also dealt by Ombudsmen created by
various statutes: they are independent and impartial officials, who
investigate complaints of the citizens in cases of maladministration.
Experience shows that majority of the Ombudsmen’s recommendations are
complied with in practice, though they are not enforceable in courts. The
European Court of Justice has developed a sophisticated jurisprudence
concerning liability in damages regarding liability of public bodies for
the loss caused by administrative acts.
112. We have highlighted all these facts only to indicate that rapid
changes are taking place all over the world to uphold the rights of the
citizens against the wrong committed by statutory authorities and local
bodies. Despite the concern shown by this Court, it is unfortunate that no
legislation has been enacted to deal with such situations. We hope and
trust that utmost attention would be given by the legislature for bringing
in appropriate legislation to deal with claims in public law for violation
of fundamental rights guaranteed to the citizens, at the hands of the State
and its officials.”
19. In view of above discussion, while upholding the liability of the
Corporation, we reiterate that not only Constitutional Courts have to, in
suitable cases, uphold claims arising out of loss of life or liberty on
account of violation of statutory duties of public authorities, in private
law remedies, just and fair claims of citizens against public bodies have
to be upheld and compensation awarded in Tort. Where activity of a public
body is hazardous, highest degree of care is expected and breach of such
duty is actionable. This obligation is also referable to Article 21. We
reiterate the need for a comprehensive legislation dealing with tortious
liability of the State and its instrumentalities in such cases for
certainty on the subject. We request the Law Commission to look into the
matter and take such steps as may be found necessary.
20. Accordingly, we do not find any merit in the appeals filed by the
contractor, the Corporation and the Insurance Company against the award of
compensation by the State Commission as affirmed/modified by the NCDRC.
The appeals are accordingly dismissed. There will, however, be no order as
to costs. A copy of this order be forwarded to the Law Commission for
further necessary action.
….…………………………….J.
V. GOPALA GOWDA
….……………………………..J.
NEW DELHI ADARSH KUMAR GOEL
September 10, 2014
-----------------------
[1] (1997) 7 SCC 481
[2] (1981) 4 SCC 660
[3] (2000) 1 SCC 66
[4] (2011) 14 SCC 481
-----------------------
14
capacity of 22 passengers. Neither any life guards were deployed nor any life saving jackets were provided to the passengers. The finding of negligence concurrently recorded by the State Commission and the NCDRC does not call for any interference. Primary liability of the contractor stands established. The victims were consumers and the contractor was service
provider. Deficiency of service stood established. The stand of the Insurance Company based on second policy dated 1st December, 1992 limiting its liability is untenable. Having issued policy
dated 1st November, 1992 covering loss to the extent of Rs.20 lakhs per accident with Rs.80 lakhs as maximum in one year, the Insurance Company could not avoid its responsibility, as rightly held concurrently by the State Commission and the NCRDC. Risk was required to be statutorily covered under the Public Liability Insurance Act, 1991. The Insurance
Company was bound by the The Insurance Regulatory and Development Authority (Protection of Policyholders’ Interest) Regulation, 2002 framed under the Insurance Regulatory and Development Authority Act, 1999 and the law laid down in M.J.K. Corporation, Pushpalaya Printers and Asha Goel (supra), rightly referred to by the NCDRC in its order. We do not find any ground to exonerate the Corporation. Admittedly, the activity in question was covered by the statutory duty of the Corporation under Sections 62, 63 and 66 of the Bombay Provincial Municipal Corporation Act, 1949. Mere appointment of a contractor or employee did
not absolve the Corporation of its liability to supervise the boating activities particularly when there are express stipulations in the contract entered into with the contractor. The Corporation was not only discharging its statutory duties but also was acting as service provider to the
passengers through its agent. The Corporation had a duty of care, when activity of plying boat is inherently dangerous and there is clear forseeability of such occurrence unless precautions are taken like providing life saving jackets. Accordingly, we do not find any merit in the appeals filed by the contractor, the Corporation and the Insurance Company against the award of compensation by the State Commission as affirmed/modified by the NCDRC.=
Sursagar Lake -
contract for plying the boats was given to Ripple Aqua Sports vide licence agreement-
Contractor took insurance policy dated 1st November, 1992. On 11th
August, 1993, against the capacity of 20 persons, 38 passengers were
allowed to ride in the boat which capsized resulting in the death of 22
passengers.
The victims claimed that the
insurance policy covered the claim to the extent of Rs.20 lakhs per
passenger with maximum of Rs.80 lakh in one year.
The Insurance Company contested the case and submitted that as per
the insurance policy given, the liability was limited to Rs.1 lakh per
person. Stand of the Corporation was that complainants were not consumers
and had remedy under the Indian Vessels Act, 1917. The Contractor was
independent licensee without any control of the Corporation. The stand of
the Contractor was that it was not liable as the claimants were not
consumers and the liability was of the Corporation. The Insurance Company
also opposed the claim and also submitted that its liability did not exceed
Rs.20 lakhs.
The State Commission allowed the claims. It held that even a public
authority exercising statutory power was not exempt from liability for
negligent actions. When the Corporation exercised control over the
Contractor, it was vicariously responsible for the negligence of the
Contractor.
On due consideration, we do not find any ground to interfere. It is
not in dispute that the boat was carrying 38 passengers as against the
capacity of 22 passengers. Neither any life guards were deployed nor any
life saving jackets were provided to the passengers. The finding of
negligence concurrently recorded by the State Commission and the NCDRC does
not call for any interference. Primary liability of the contractor stands
established. The victims were consumers and the contractor was service
provider. Deficiency of service stood established. The stand of the
Insurance Company based on second policy dated 1st December, 1992
limiting its liability is untenable. Having issued policy
dated 1st November, 1992 covering loss to the extent of Rs.20 lakhs per
accident with Rs.80 lakhs as maximum in one year, the Insurance Company
could not avoid its responsibility, as rightly held concurrently by the
State Commission and the NCRDC. Risk was required to be statutorily
covered under the Public Liability Insurance Act, 1991. The Insurance
Company was bound by the The Insurance Regulatory and Development Authority
(Protection of Policyholders’ Interest) Regulation, 2002 framed under the
Insurance Regulatory and Development Authority Act, 1999 and the law laid
down in M.J.K. Corporation, Pushpalaya Printers and Asha Goel (supra),
rightly referred to by the NCDRC in its order.
17. We do not find any ground to exonerate the Corporation. Admittedly,
the activity in question was covered by the statutory duty of the
Corporation under Sections 62, 63 and 66 of the Bombay Provincial Municipal
Corporation Act, 1949. Mere appointment of a contractor or employee did
not absolve the Corporation of its liability to supervise the boating
activities particularly when there are express stipulations in the contract
entered into with the contractor. The Corporation was not only discharging
its statutory duties but also was acting as service provider to the
passengers through its agent. The Corporation had a duty of care, when
activity of plying boat is inherently dangerous and there is clear
forseeability of such occurrence unless precautions are taken like
providing life saving jackets.
Accordingly, we do not find any merit in the appeals filed by the
contractor, the Corporation and the Insurance Company against the award of
compensation by the State Commission as affirmed/modified by the NCDRC.
The appeals are accordingly dismissed.
2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41898
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3594-3611 of 2010
VADODARA MUNICIPAL CORPORATION ….. APPELLANT
VERSUS
PURSHOTTAM V. MURJANI AND ORS. ..... RESPONDENTS
With
Civil Appeal No.3630 of 2010, Civil Appeal No.3631 of 2010,
Civil Appeal No.3647 of 2010, Civil Appeal No.3632 of 2010,
Civil Appeal No.3633 of 2010, Civil Appeal No.3634 of 2010,
Civil Appeal No.3635 of 2010, Civil Appeal No.3636 of 2010,
Civil Appeal No.3638 of 2010, Civil Appeal No.3646 of 2010,
Civil Appeal No.3639 of 2010, Civil Appeal No.3640 of 2010,
Civil Appeal No.3641 of 2010, Civil Appeal No.3642 of 2010,
Civil Appeal No.3643 of 2010, Civil Appeal No.3644 of 2010,
Civil Appeal No.3645 of 2010, Civil Appeal No.3648 of 2010 and Civil Appeal
No.3612-3629 of 2010.
J U D G M E N T
ADARSH KUMAR GOEL, J.
1. These appeals have been preferred against the Judgment of the
National Consumer Disputes Redressal Commission (for short “NCDRC”) dated
2nd November, 2006 in F.A. Nos.464/2002 and 61 to 77 of 2004 by the
Vadodara Municipal Corporation (for short “the Corporation”), the Oriental
Insurance Company Ltd. (for short “the Insurance Company”) and the
proprietor of Ripple Aqua Sports (hereinafter referred to as “the
Contractor”) against the award of compensation for the death of 22 persons
by drowning in Sursagar Lake at Vadodara while riding the boat, on account
of negligence in plying the boat.
2. Sursagar Lake is under the control and management of the Corporation
which has been plying boats for joy rides and boating club. During the
period in question, the contract for plying the boats was given to Ripple
Aqua Sports vide licence agreement
dated 26th September, 1992 for managing the affairs of the Boating Club at
the Lake for purposes of entertainment. The agreement, inter alia,
provided that the facility of boating was to be given to the public. It
was necessary that the contractor shall be taking insurance policies to
cover the risk liability of all persons using the equipment of the club.
The Corporation had the right to supervise the boating club. Accordingly,
the Contractor took insurance policy dated 1st November, 1992. On 11th
August, 1993, against the capacity of 20 persons, 38 passengers were
allowed to ride in the boat which capsized resulting in the death of 22
passengers.
3. The victims approached the State Commission
on 30th March, 1994 and around under the provisions of Consumer Protection
Act, 1986 claiming compensation alleging deficiency of service on the part
of the Contractor and the Corporation. The victims claimed that the
insurance policy covered the claim to the extent of Rs.20 lakhs per
passenger with maximum of Rs.80 lakh in one year. Under the Bombay
Provincial Municipal Corporation Act, 1949, the Corporation had the duty to
maintain the safety of the passengers and in case of negligence, the
Corporation had the tortuous liability under the law. The Corporation was
also liable for tortious acts of the Contractor. The passengers had taken
tickets for the boat ride but on account of deficiency in service the
passengers drowned on capsizing of the boat which was overloaded. The
occurrence took place on account of negligence of the contractor as well as
failure of the Corporation to exercise due care. No life guards were
provided, no life saving jackets were provided and if suitable safety
measures would have been taken, the lives of the victims could be saved.
4. The Insurance Company contested the case and submitted that as per
the insurance policy given, the liability was limited to Rs.1 lakh per
person. Stand of the Corporation was that complainants were not consumers
and had remedy under the Indian Vessels Act, 1917. The Contractor was
independent licensee without any control of the Corporation. The stand of
the Contractor was that it was not liable as the claimants were not
consumers and the liability was of the Corporation. The Insurance Company
also opposed the claim and also submitted that its liability did not exceed
Rs.20 lakhs.
5. The State Commission allowed the claims. It held that even a public
authority exercising statutory power was not exempt from liability for
negligent actions. When the Corporation exercised control over the
Contractor, it was vicariously responsible for the negligence of the
Contractor. Reliance was placed on Rajasthan State Road Transport
Corporation vs. Kailash Nath Kothari[1] holding the employer to be
responsible vicariously.
6. As regards liability of the Insurance Company, it was held that its
liability under the policy was Rs.20 lakhs for one incident which meant one
death in view of Motor Owner’s Insurance Co. Ltd. vs. Jadavji Keshavji
Modi[2]. The policy was covered by Public Liability Insurance Act, 1991.
It was also held that Contractor could not escape its liability in the
given circumstances when deficiency in service was patent in view of
violation of Indian Vessels Act, 1917. Negligence in operating the boat
amounted to deficiency in service as held in Ravneet Singh Bagga vs. KLM
Royal Dutch Airlines & Anr.[3]
7. Accordingly, the State Commission held the Aqua Sports and the
Corporation to be jointly and severely liable. The State Commission
awarded total compensation of Rs.30,18,900/- with interest @ 10% per annum
from the date of the incident till payment. The State Commission
determined the quantum of compensation ranging from Rs.50,000/- to
Rs.10,76,000/- in respect of claims for death of 22 passengers.
8. The decision of the State Commission has been upheld by the NCDRC
with the enhancement in quantum of compensation in some of the cases
keeping in mind principles for determining compensation under the Motor
Vehicles Act, 1988.
9. Affirming the finding of the State Commission, the NCDRC held:-
“(i) Contractor had the primary liability to compensate the victims as it
was responsible for the catastrophe in question;
(ii) The Corporation had vicarious liability for the negligence. Plying
boat was inherently dangerous activity. Even for its statutory functions,
liability for negligence was attracted on the principle laid down in Rajkot
Municipal vs. Manjuben Jayantilal Nakum, (1997) 9 SCC 552. The
Corporation failed to perform its duty of supervision undertaken under the
agreement with the Contractor;
(iii) The Insurance Company was liable upto
Rs.20 lakhs per accident (per death) subject
to maximum of Rs.80 lakhs as per policy. Variations in policy could not be
allowed in view of United India Insurance Company Ltd. vs. M.J.K.
Corporation, (1997) 7 SCC 481 and United India Insurance Company Ltd. vs.
Pushpalaya Printers, (2004) 3 SCC 694 and Life Insurance Corporation of
India and ors. vs. Smt. Asha Goel and anr.,
(2001) 2 SCC 160.
(iv) Insurance Company was bound to act as per Insurance Regulatory and
Development Authority Acts of 1999 and 2002 regulations framed thereunder
and also Public Liability Act, 1991.”
10. Concluding part of the judgment of the NCDRC is as follows:-
“In the result, it is held that:
the Ripple Aqua Sports and the Vadodara Municipal Corporation are jointly
and severally liable to pay the compensation to the Complainants as
awarded;
the Vadodara Municipal Corporation is directed to pay the balance of
compensation (that is, after deducting the amount paid) to the Complainants
in each case within a period of eight weeks from the date of the Order. It
would be open to the Corporation to recover the same from the Ripple Aqua
Sports;
the Insurance Company is liable to pay Rs.20 lakhs for each accident,
namely, each death, but in aggregate the sum is limited to Rs.80 lakhs.
Hence, the Insurance Company shall reimburse, in all, Rs. 80 lakhs to the
Vadodara Municipal Corporation; and,
the rest of the order passed by the State Commission directing payment of
interest at the rate of 10% p.a. from the date of the incident, i.e. from
11.8.1993 till the date of payment of compensation is confirmed.
With these modifications the First Appeal Nos.464 of 2002 and First
Appeal Nos.464 of 2002 and First Appeal Nos.61 to 77 of 2004 filed by the
Vadodara Municipal Corporation are disposed of accordingly. Considering
the facts, there shall be no order as to costs.
First Appeal Nos. 197 of 2003 and First Appeal Nos.210 to 226 of 2003 filed
by the Ripple Aqua Sports are disposed of accordingly. There shall be no
order as to costs.
Cross-Appeals for enhancement:
The Appeals filed by the Complainants in First Appeal Nos.488 of 2002; 289
of 2004; 290 of 2004; 292 of 2004; 295 of 2004 and 296 of 2004 are
dismissed. There shall be no order as to costs.
The First Appeal Nos.288 of 2004; 291 of 2004; 294 of 2004; 297 of 2004;
299 of 2004; 293 of 2004; 298 of 2004, and 300 of 2004 filed by the
complaints are partly allowed. The order passed by the State Commission is
modified as under:-
It is held that the complainants are entitled to have compensation of:-
(i) Rs.1 lakh in each Appeal Nos.288 of 2004, 291 of 2004; and 294 of
2004;
(ii) Rs.1,25,000/- in each Appeal Nos.297 of 2004 and 299 of 2004;
(iii) Rs.1,50,000/- in each Appeal Nos.293 of 2004; 298 of 2004; and 300 of
2004.”
11. We have heard learned counsel for the parties.
12. Learned counsel for the Corporation submitted that the Corporation
was not a service provider and had no privy contract with the victims. It
was only facilitating the plying of boating and the liability was of the
contractor. As per the licence agreement dated 26th September, 1992,
control and responsibility for the boating activities was completely of the
contractor. The Corporation had no direct control over the contractor or
its employees.
13. Learned counsel for the Insurance Company submitted that its
liability was limited to Rs.1 lakh as per policy issued on 1st December,
1992 and the policy dated 1st November, 1992 could not be taken into
account.
14. Learned counsel for the Contractor, submitted that it was not
responsible for the accident and liability was of the Manager individually
or of the Corporation for whom the boat was being plied.
15. Learned counsel for the victims supported the
impugned order.
16. On due consideration, we do not find any ground to interfere. It is
not in dispute that the boat was carrying 38 passengers as against the
capacity of 22 passengers. Neither any life guards were deployed nor any
life saving jackets were provided to the passengers. The finding of
negligence concurrently recorded by the State Commission and the NCDRC does
not call for any interference. Primary liability of the contractor stands
established. The victims were consumers and the contractor was service
provider. Deficiency of service stood established. The stand of the
Insurance Company based on second policy dated 1st December, 1992
limiting its liability is untenable. Having issued policy
dated 1st November, 1992 covering loss to the extent of Rs.20 lakhs per
accident with Rs.80 lakhs as maximum in one year, the Insurance Company
could not avoid its responsibility, as rightly held concurrently by the
State Commission and the NCRDC. Risk was required to be statutorily
covered under the Public Liability Insurance Act, 1991. The Insurance
Company was bound by the The Insurance Regulatory and Development Authority
(Protection of Policyholders’ Interest) Regulation, 2002 framed under the
Insurance Regulatory and Development Authority Act, 1999 and the law laid
down in M.J.K. Corporation, Pushpalaya Printers and Asha Goel (supra),
rightly referred to by the NCDRC in its order.
17. We do not find any ground to exonerate the Corporation. Admittedly,
the activity in question was covered by the statutory duty of the
Corporation under Sections 62, 63 and 66 of the Bombay Provincial Municipal
Corporation Act, 1949. Mere appointment of a contractor or employee did
not absolve the Corporation of its liability to supervise the boating
activities particularly when there are express stipulations in the contract
entered into with the contractor. The Corporation was not only discharging
its statutory duties but also was acting as service provider to the
passengers through its agent. The Corporation had a duty of care, when
activity of plying boat is inherently dangerous and there is clear
forseeability of such occurrence unless precautions are taken like
providing life saving jackets.
18. In Municipal Corporation of Delhi vs. Uphaar Tragedy Victims
Association and Ors.[4], concept of negligence or breach of duty to take
care in Tort law as against breach of duty in exercising statutory duty in
public law was gone into with reference to developments in different
jurisdictions. It was observed that archaic principle of State immunity
which was based on assumption of State being efficient, sincere and
dignified was giving way to protection of liberty, equality and rule of
law. Applying the test of proximity of relationship, reasonable
forseeability and justness of claim, liability of a public authority could
be fixed. After noticing development of law world over, it was observed:-
“109. Need for a comprehensive legislation dealing with tortious liability
of the State and its instrumentalities has been highlighted by this Court
and the academic world on various occasions and it is high time that we
develop a sophisticated jurisprudence of public law liability. Due to lack
of legislation, the courts dealing with the cases of tortious claims
against the State and its officials are not following a uniform pattern
while deciding those claims, and this at times leads to undesirable
consequences and arbitrary fixation of compensation amount.
110. The Government of India on the recommendations of the First Law
Commission introduced two Bills on the government liability in torts in the
years 1965-1967 in the Lok Sabha but those Bills lapsed. In Kasturi Lal
case, AIR 1965 SC 1039, this Court has highlighted the need for a
comprehensive legislation which was reiterated by this Court in various
subsequent decisions as well.
111. Public authorities are now made liable in damages in UK under the
Human Rights Act, 1998. Section 6 of the Human Rights Act, 1998 makes a
public authority liable for damages if it is found to have committed breach
of human rights. The Court of Appeal in England in Anufrijeva v. Southwark
London Borough Council, 2004 QB 1124 : (2004) 2 WLR 603 : (2004) 1 All ER
833 (CA), attempted to answer certain important questions as to how
damages should be awarded for breach of human rights and how should damages
be assessed. Further, such claims are also dealt by Ombudsmen created by
various statutes: they are independent and impartial officials, who
investigate complaints of the citizens in cases of maladministration.
Experience shows that majority of the Ombudsmen’s recommendations are
complied with in practice, though they are not enforceable in courts. The
European Court of Justice has developed a sophisticated jurisprudence
concerning liability in damages regarding liability of public bodies for
the loss caused by administrative acts.
112. We have highlighted all these facts only to indicate that rapid
changes are taking place all over the world to uphold the rights of the
citizens against the wrong committed by statutory authorities and local
bodies. Despite the concern shown by this Court, it is unfortunate that no
legislation has been enacted to deal with such situations. We hope and
trust that utmost attention would be given by the legislature for bringing
in appropriate legislation to deal with claims in public law for violation
of fundamental rights guaranteed to the citizens, at the hands of the State
and its officials.”
19. In view of above discussion, while upholding the liability of the
Corporation, we reiterate that not only Constitutional Courts have to, in
suitable cases, uphold claims arising out of loss of life or liberty on
account of violation of statutory duties of public authorities, in private
law remedies, just and fair claims of citizens against public bodies have
to be upheld and compensation awarded in Tort. Where activity of a public
body is hazardous, highest degree of care is expected and breach of such
duty is actionable. This obligation is also referable to Article 21. We
reiterate the need for a comprehensive legislation dealing with tortious
liability of the State and its instrumentalities in such cases for
certainty on the subject. We request the Law Commission to look into the
matter and take such steps as may be found necessary.
20. Accordingly, we do not find any merit in the appeals filed by the
contractor, the Corporation and the Insurance Company against the award of
compensation by the State Commission as affirmed/modified by the NCDRC.
The appeals are accordingly dismissed. There will, however, be no order as
to costs. A copy of this order be forwarded to the Law Commission for
further necessary action.
….…………………………….J.
V. GOPALA GOWDA
….……………………………..J.
NEW DELHI ADARSH KUMAR GOEL
September 10, 2014
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[1] (1997) 7 SCC 481
[2] (1981) 4 SCC 660
[3] (2000) 1 SCC 66
[4] (2011) 14 SCC 481
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