Control over a vehicle by a hirer determines liability under the Motor Vehicles Act, regardless of the registered owner's status.

1. The National Insurance Company Limited has preferred this Civil Miscellaneous Appeal aggrieved by the award dated 10.10.2006 made in MCOP.No.201/2002 by the learned Principal Subordinate Judge (MACT) Chengalput, whereby the Tribunal directed the Appellant Insurance Company to pay a compensation of Rs.6,60,000/- with interest at 7.5 per cent p.a. as compensation to the claimants on behalf of the 5th Respondent herein / owner of the offending vehicle.  

2. The brief facts are that on 15.10.2001, at about 1.30 p.m. the deceased was proceeding in his bicycle on the Andiyappa Mudali Street and when he was near the junction of Royapuram Rangapillai Junction, the Tractor Trailer Water Tanker Lorry owned by the 5th Respondent and insured with the Appellant Insurance Company hit against the deceased causing fatal injuries to him. At the time of the accident, the Tractor Trailer Water Tanker Lorry was hired by the 6th Respondent, Chennai Metro Water Supply and Sewerage Board (herein after referred to as CMWSSB) for supplying water to the public. During the inquiry, negligence on the part of the driver of the trailer tractor water tanker lorry was proved. However, the Insurer sought exoneration from liability on the ground that as the Tractor Trailer Water Tanker Lorry was hired by the 6th Respondent / CMWSSB, the 6th Respondent alone is liable to pay compensation, which was disputed by the 6th Respondent / CMWSSB. On considering the evidence, the Tribunal came to the conclusion that the Tractor Trailer Water Tanker Lorry was insured with the Appellant and in the absence of any clause in the policy that the vehicle could not be used for any other purpose other than agricultural purpose, there was no violation of policy conditions and held that the Insurer was liable to pay compensation.  

3. Mr.D.Bhaskaran, the learned counsel for the Appellant Insurance Company contended that when the Tractor Trailer Water Tanker Lorry was hired by the 6th Respondent / CMWSSB and was fully under the custody and control of the 6th Respondent / CMWSSB and the driver of the tractor - trailer which was used as water tanker lorry, was also under the control of the 6th Respondent / CMWSSB. The insured could not have hired the vehicle to the 6th Respondent / CMWSSB contrary to the terms and conditions of the Insurance Policy. Referring to the terms and conditions of the policy, the learned counsel submitted that the policy does not cover use of vehicle for hire or reward. The learned counsel would also submit that Ex.R2 to R4 prove that the vehicle was under the custody and control of the 6th Respondent / CMWSSB and the driver was also under the control of the 6th Respondent / CMWSSB and the vehicle having been used contrary to the terms and conditions of the policy, it is the 6th Respondent / CMWSSB, which has to be held vicariously liable and the liability put on the Insurance Company by the Tribunal is, therefore, erroneous and against the law laid down by the Honourable Supreme Court .  

4. The learned counsel also referred to the decision of the Honourable Supreme Court rendered in the case of Rajasthan State Transport Corporation Vs. Kailash Nath Kothari and others (1997 - ACJ - 1148 - SC: AIR - 1997 - SC - 3444 ) and submitted that in the said case, the liability of payment was fastened on the Corporation, as at the time of the accident, the offending vehicle was being run by it under its control. The learned counsel pointed out that the Honourable Supreme Court, after making reference to various provisions of the Act, held that when the offending vehicle is hired by RTC, they alone would b