MAIN POINTS
Besides the insurance policy, the Insurance Company is also bound by Public Liability Insurance Act, 1991 and Insurance Regulatory and Development Authority (Protection of Policyholders’ Interest) Regulation, 2002.
Corporation cannot escape its tort liability by merely appointing a contractor .

Headnote:(a) Consumer Protection Act, 1986 – Section 14 – Lake under control, maintenance and supervision of Corporation – Boat carrying permissible capacity of 22 passengers carrying 38 – Capsizing – 22 persons dying – Neither any life guards deployed nor any life saving jackets provided – Concurrent finding of negligence – Not liable to be interfered – Primary responsibility of contractor established – Victims consumers of the contractor-service provider – Deficiency of service established. (Para 16)
       (b) Insurance law – Policy of 1st November, 1992 covering loss to the extent of Rs.20 lakhs per accident with Rs.80 lakhs as maximum in one year – Company cannot take shelter under subsequent policy of 1st December, 1992 limiting its liability to Rs. 1 lakh – Company bound by Public Liability Insurance Act, 1991 and Insurance Regulatory and Development Authority (Protection of Policyholders’ Interest) Regulation, 2002. (Para 16)
       (1997) 7 SCC 481; (1981) 4 SCC 660; (2000) 1 SCC 66; (1997) 7 SCC 481; (2004) 3 SCC 694 – Relied upon
       (c) Provincial Municipal Corporation Act, 1949 – Sections 62, 63 and 66 – Corporation statutorily duty bound to manage, control and supervise the boating facility at the lake – Mere appointment of a contractor cannot absolve the corporation of its liability and responsibility – Constitution of India – Article 21. (Para 17, 19)
       (2011) 14 SCC 481 – Relied upon
       Facts of the case:
       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 for managing the affairs of the Boating Club at the Lake for purposes of entertainment.
       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.
       The victims approached the State Commission around 30th March, 1994 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.
       The State Commission allowed the claims.
       The decision of the State Commission has been upheld by the NCDRC with the enhancement in quantum of compensation in some of the cases.
       Finding of the Court:
       No interference is required in present case.

JUDGMENT

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 (1997) 7 SCC 481 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 (1981) 4 SCC 660. The policy was covered by Public Liability Insurance Act, 1

Click Here to Read the rest of this document

2014 Supreme(SC) 657

Cases Referred (7)