( 1 ) THE Madhya Pradesh State Road Transport Corporation (hereinafter referred to as the "mpsrtc"), has filed this appeal under Section 110-D of the Motor Vehicles act (Act 4 of 1939), against an award of the Claims Tribunal, Rewa, dated 30th june 1966, awarding a sum of Rs. 20,000/- as compensation to one Jahiram, for bodily injuries resulting from a road accident.

( 2 ) THE facts giving rise to this appeal, so far as necessary, may be briefly stated. On 21st November 1962, a bus MPJ 2434 owned by the MPSRTC, while on its way from Rewa to Satna, met with an accident when it collided with a truck on a culvert of a river, near Mouja Rampur. As a result of the accident, the MPSRTC bus, together with all its passengers, fell beneath the culvert. The claimant, who was a passenger in the ill-fated bus, sustained serious injuries on his person and became unconscious as a result of the injuries sustained by him. He was brought back to Rewa and admitted in Gandhi Memorial Hospital, Rewa. An X-ray revealed fractures of the 2nd, 4th, 5th, 6th, 7th and 9th ribs on the left side of his chest. . The claimant received treatment at the hospital for his injuries until 14th december 1962 when he was discharged, and he had evidently suffered damages for his disablement, loss of business, physical and mental worries and sufferings, and medical treatment On that account, he claimed Rs. 20,000/-as compensation, against the MPSRTC and its driver, one Fatehmohammad. While denying its liability on account of the alleged rashness or negligence on the part of its driver, the MPSRTC asserted that the direct and proximate cause of the accident was the negligence of the driver of truck. Alternatively, it was pleaded that narrowness of the culvert, made it impossible for more than one vehicle to simultaneously pass and although Fateh Mohd, had acted as a person of ordinary prudence, he could not have foreseen the impending impact and, therefore, the accident was an inevitable accident not attributable to any negligence on his part. The quantum of compensation claimed was also disputed. After a trial on these issues, the Claims tribunal found that the accident occurred due to rash and negligent driving of the bus and hence awarded Rs. 20,000/-as damages.

( 3 ) BEFORE dealing with the merits of this appeal, it is necessary for us to set out a few more facts. The MPSRTC came to be constituted as a "state Transport undertaking", under Section 3 of the Madhya Pradesh State Road Transport corporation Act (Act 64 of 1950), w. e. f. 5th June 1962. Its financial structure is that the Corporation has a fund under Section 27 called "the MPSRTC Fund", and as regards its third party liability arising out of the use of its vehicles. It has to set apart from put- of its revenues, such sum as may be directed for meeting any such liability. A provision in that behalf was made by Rule 26 of the Madhya pradesh State Road Transport Corporation Rules, 1962, which is in these terms:

"26. Third Party Liability Fund:-There shall be established and maintained by the Corporation a Fund to be called the Third Party liability Fund into which shall be paid every year from and out of the revenues of the Corporation such sum as may be directed by the State government from time to time for meeting any liability arising out of the use of any vehicle of the Corporation, which the Corporation or any person in the employment of the Corporation may incur to third parties. "

Initially when the Corporation had been established, it had no Third-Party Liability fund in existence, and, therefore, all its vehicles were insured against third party risks under Section 94 (1) of the Motor Vehicles Act. This was until 19th July 1963 when the State Government Issued a notification under Section 94 (3), exempting mpsrtc from the operation of Section 94 (1 ). The Third-Party Liability Fund by them had been established and maintained by that authority, in accordance with rule 26. Nevertheless, all l