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Managing Director, K.S.R.T.C. v. New India Assurance Co. Ltd. & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 5293 of 2010)Decided 27 Oct 2015
Civil Appeal No. 5293 of 2010
Chief Justice H.L. Dattu · Justice Arun Mishra

Background

A bus under a lease or hire agreement with the Karnataka State Road Transport Corporation (KSRTC) was involved in an accident. The Motor Accident Claims Tribunal awarded compensation of Rs 4.09 lakh. The insurer challenged the award, and the High Court held that KSRTC alone was liable. In a connected appeal, the Tribunal had made KSRTC and another party jointly liable, and the High Court upheld that. The question was who must pay the victims, and whether KSRTC could recover from the registered owner or the insurer.

Decision Breakdown

The Supreme Court held that the registered owner, the insurer and KSRTC are all liable to pay compensation jointly and severally to the claimants. Under Section 2(30) of the Motor Vehicles Act, 1988, the "owner" includes the person in possession under a lease, hire-purchase or hypothecation agreement, so KSRTC is treated as an owner. The registered owner nonetheless remains liable under the terms of the lease agreement. Where the vehicle is insured, the insurer must indemnify unless it can show a breach of the policy terms. KSRTC, having paid the victims, may recover the amount from the registered owner under the agreement or from the insurer. The appeals were allowed, and the High Court's exoneration of KSRTC was set aside.

Lesson Learnt

Accident victims can recover compensation from every party responsible for the vehicle, including the registered owner, the insurer and the operator, so they are not left chasing a single party. How those parties share the final cost is then settled between them under their own contracts.

Official source (sci.gov.in)View Judgment (PDF)

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