Ramesh Madhav Bapat, J.@mdashThis is an appeal by District Co-operative Central Bank Limited, Mahabubnagar, represented by its General
Manager Sri T. Suresh. The appellant herein was aggrieved by the award passed in OP No. 313 of 1989 by the Motor Accidents Claims
Tribunal-cum-Additional District Judge, Mahabubnagar making the appellant liable to pay compensation to the respondents 1 and 2 herein. These
two persons were claimants in the aforesaid OP. The original petition was filed claiming compensation on the ground that a person named P.V.
Narasimaha Rao, who was working as Assistant Regional Officer in AP Cooperative Central Bank Limited was travelling in a Jeep bearing No.
AHK 5180 on National Highway No. 7 from Atmakur-Mahabubnagar. The 5th respondent in the OP named Telugu Ramulu drove the Jeep. The
Jeep was hired by the 3rd respondent from the 1st respondent in the OP and it was insured with the Insurance Company. On hearing all the
parties, the Tribunal awarded compensation of Rs. 3,24,000/- with interest at the rate of 12% p.a., making liable the District Cooperative Central
Bank Limited, to pay compensation to the claimants.
2. Mr. N. Vasudeva Reddy the learned Counsel appearing on behalf of the appellant herein did not dispute the quantum but submitted that the
District Co-operative Central Bank Limited, is not liable to pay compensation because the vehicle in question was hired by them from the owner of
the vehicle named Mr. M.V. Krishnaiaha Goud i.e., the 3rd respondent herein. The said vehicle was insured with the New India Assurance
Company Limited. The learned Counsel further submitted that if the vehicle is hired and it met with an accident, then the person, who hired the
vehicle, could not be made liable. In support of his contention, the learned Counsel relied upon a ruling of this Court in LPA Nos. 87 to 90 of
1990, which was decided by the Division Bench of this Court, held as under:
The question involved in these appeals is whether the A.P. State Road Transport Corporation is liable to pay the compensation. It is held in more
than one decision by this Court that where the APSRTC takes vehicles on hire from the owner which is insured with the Insurance Company, the
APSRTC is not liable to pay the compensation. (Vide AAO No. 1028/84 dated 27-10-1988). However, the liability of the owner and the
Insurance Company cannot be disputed.
It is open to the claimants-respondents to proceed against the Insurance Company and the owner of the vehicle for realisation of the amounts.
Considering the above ruling, this Court holds that the appellant cannot be made liable to pay compensation to the claimants in OP No. 313 of
1989.
3. Now the second question arises for our consideration as to who is liable to pay compensation?
4. It is not in dispute that the vehicle owner by name Mr. M.V. Krishnaiah Goud was the respondent in the OP as well as in the appeal. The said
vehicle was insured with the New India Assurance Company Limited and therefore they are liable to pay compensation to the claimants. In
support of his contention the learned Counsel relied upon a ruling reported in New India Assurance Co., Shimla Vs. Kamla and Others etc. etc., ,
in which their Lordships of the Supreme Court were pleased to hold that even there is a breach, the Insurance Company is liable to pay
compensation. As it is found in this case that the owner had given the vehicle on hire to the District Co-operative Central Bank Limited without
paying any additional premium, the Insurance Company is not exonerated from paying the compensation. After paying compensation, the
Insurance Company gets rights to recover the said amount from the owner as he has committed the breach.
5. Similar view as expressed earlier by the Hon''ble Supreme Court in a ruling reported in Amrit Lal Sood and Another Vs. Smt. Kaushalya Devi
Thapar and Others, .
6. Considering the above legal position, we are of the considered view that the liability fastened on the appellant making them to pay compensation
is not legally correct. They are exonerated from paying compensation. But the owner Mr. M.V. Krishnaia Goud and the New India Assurance
Company Limited are made liable to pay compensation to the claimants.
7. As per the interim direction of this Court, the appellant herein had deposited an amount of Rs. 3,21,094/- in OP No. 313/89 before the
Tribunal. In view of the above finding, the appellant is permitted to withdraw the same.
8. With these modifications in the award, the appeal filed by the District Cooperative Central Bank Limited is hereby allowed. No costs.