The insurer is liable for compensation in cases involving hired vehicles, provided the insurance policy is valid and in force, irrespective of lease agreements.

JUDGMENT:

1. This Miscellaneous Appeal under section 173 of the Motor Vehicles Act, 1988, APSRTC impugns the order dated 21.04.2005 of the learned Chairman, Motor Accident Claims Tribunal – cum - I Additional District Judge, Machilipatnam in MVOP.No.70 of 1999.

2. Respondent No.1 is the injured claimant. Respondent No.2 is the owner of the offending bus. Respondent No.3 is the insurer of the offending bus.

3. Sri Venkateswarlu Sanisetty, the learned standing counsel for the appellant/ APSRTC and Smt.S.A.V.Ratnam, the learned Standing counsel for respondent No.3 submitted arguments.

4. The only question that has arisen in this appeal is

" If an insured vehicle is plying under an agreement of contract with APSRTC on the route as permit granted in favour of the corporation, in case of accident, whether the insurance company would be liable to pay compensation or would it be the responsibility of the APSRTC ?”

5. The above question has arisen in the following circumstances.

Unaware of the difficulties that one may encounter on a road, an innocent boy aged 9 years was standing on the side of a road at 11 A.M. on 03.09.1998 at Machilipatnam. Bus bearing registration No.AP 9T 6199 was driven by its driver rashly or negligently and at high speed and consequently, it deviated its path and dashed the boy causing fracture of first and second metatarosal bone of left foot and the crush injury developed ostomyloties making the injured to undergo medical treatment for a long time. Claiming compensation for the injuries suffered by the child, the natural guardian preferred a compensation claim making the owner of the bus and the insurer and the hirer of the bus/ APSRTC as responsible to answer the claim.

6. After exchange of necessary pleadings, in proof of the claim, PWs.1 and 2 gave their evidence and Exs.A1 to A6 were marked. Respondents therein did not adduce any oral evidence.

However, on behalf of APSRTC, Ex.B1 agreement dated 01.04.1998 was marked. Exs.X1 and X2 which refer to the X-ray and medical case sheet of the injured were also exhibited.

7. As against a claim of Rs.1,50,000/-, the claims tribunal awarded Rs.85,000/- and granted 9% interest to be paid from the date of petition till the date of award. Thereafter, the amount granted would carry 6% interest till the date of realization. In the present appeal there is no challenge on either side about the correctness of that part of the award.

8. From the pleadings and evidence and the observations of the claims tribunal, it was found that Sri S. Anjaneyulu was the owner of the offending vehicle and he obtained an insurance policy from the United India Insurance Company Limited, Vijayawada effective up to 30.08.1999. Since the subject matter accident occurred on 03.09.1998, it was found that the policy was in force. The driver of the vehicle at the material point of time was holding a valid and effective driving licence. These aspects are also not in dispute in this appeal.

9. The owner of the vehicle gave the offending bus on hire to APSRTC for a period commencing from 01.04.1998 up to 31.10.1998. The condition No.5 in the lease agreement reads as below

"It shall be the responsibility of the owner to make arrangements for proper prosecution of proceedings either before the Motor Accident Claims Tribunal or Tribunals, Commissioner For Workmen Compensation, RTA and STA"

10. Before the claims tribunal, the Insurance company claimed that since the owner of the bus had given it on hire to APSRTC, the liability of the Insurance company ceased and the compensation had to be paid by the APSRTC. On the other hand, the claim of APSRTC before the claims tribunal was that it obtained the bus on hire for limited purpose and by virtue of the lease agreement between it and the owner of the bus, all the claims are to be addressed by the owner and the insurer only and therefore APSRTC cannot be directed to pay compensation.

11. Learned claims tribunal considered these rival contentions. It then placed reliance o