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CASE NO.: Appeal (civil) 6  of  2001 Special Leave Petition (civil)  1431     of  2000

PETITIONER: SMT.  KAUSHNUMA BEGUM AND ORS.

       Vs.

RESPONDENT: THE NEW INDIA ASSURANCE CO.  LTD.  AND ORS.

DATE OF JUDGMENT:       03/01/2001

BENCH: K.T.Thomas, R.P.Sethi

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

     J U D G M E N T

     THOMAS,  J.  Leave granted.  Can a claim be maintained before  the  Motor Accident Claims Tribunal (Tribunal  for short)  on  the  basis  of strict  liability  propounded  in Rylands  vs.   Fletcher (1861-1873 All England  Reports  1)? The  Tribunal dismissed a claim made before it solely on the ground  that  there was neither rashness nor  negligence  in driving  the vehicle and hence the driver has no  liability, and  the  corollary  of  which  is that  the  owner  has  no vicarious liability to pay compensation to the dependants of the  victim  of a motor accident.  A Division Bench  of  the High  Court  of Allahabad dismissed the appeal filed by  the claimants  by a cryptic order stating that there is no error in  the  Tribunals  order.  Hence this  appeal  by  special leave.

     The  accident which gave rise to the claim occurred at about  7.00 P.M.  on 20.3.1986.  The vehicle involved in the accident  was  a jeep.  It capsized while it was in  motion. The  cause of the capsize was attributed to bursting of  the front  tyre  of the jeep.  In the process of  capsizing  the vehicle  hit against one Haji Mohammad Hanif who was walking on  the road at that ill-fated moment and consequently  that pedestrian  was  crushed and subsequently succumbed  to  the injuries sustained in that accident.

     Appellants are the widow and children of Haji Mohammad Hanif,  the  victim  of the accident.  They  filed  a  claim petition  before the Tribunal in 1986 itself claiming a  sum of  Rs.2,36,000/-  as  total compensation.  They  said  that deceased  Haji  Mohammad Hanif was aged 35 when he died  and that  he  was earning a monthly income of  Rs.1500/-  during those  days  by doing some business in  manufacturing  steel trunks.

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     The  owner  of  the jeep disclaimed the  liability  by denying  even the fact of the accident in which his jeep was involved.   Alternatively,  he contended that any  liability found  against  him  in respect of the said  jeep  the  same should be realised from the insurance company as the vehicle was  covered  by  valid   insurance  policy.   The  Tribunal repelled  the above contentions of the jeep owner.  However, the  Tribunal found as follows:  It appears that the  front wheel  of  the  jeep  suddenly got burst  resulting  in  the disbalance  and  occurrence  of  this   accident  as  it  is mentioned  in  Ex-2  the  report   of  the  Police  Station. Whatever is the circumstance, the rash and negligence of the alleged jeep is not established. Consequently, the Tribunal dismissed the claim for compensation.  However, the Tribunal directed  the  insurance company to pay Rs.50,000/-  to  the claimants  by way of no fault liability envisaged in Section 140 of the Motor Vehicles Act, 1988 (for short the MV Act) (corresponding  to  Section 92-A of the Motor Vehicles  Act, 1939  the old MV Act).

     Aggrieved  by  the  said rejection of  the  claim  the appellants  moved the High Court of Allahabad in appeal,  as per  the provisions of the MV Act.  On 28.4.1999, a Division Bench  of  the High Court dismissed the appeal for  which  a very  short  order has been passed.  It reads thus:   Heard learned  counsel  for  the   appellant.   Finding  has  been recorded  that  the  tempo  overturned  and  there  were  no negligence or rashness of the driver.  Hence Rs.50,000/- has been  awarded  as compensation which is the minimum  amount. There is no error in the order.  Dismissed.

     We  have  to  proceed  on two premises  based  on  the finding  of  the Tribunal.  The first is that there  was  no negligence  or  rashness  on the part of the driver  of  the jeep.   Second is that the deceased was knocked down by  the jeep  when its front tyre burst and consequently the vehicle became   disbalanced  and  turned   turtle.   Should   there necessarily  be  negligence  of  the person  who  drove  the vehicle  if  a claim for compensation (due to  the  accident involving that vehicle) is to be sustained?

     For considering the above question we may refer to the relevant  provisions  of the MV Act.  Chapter XII of the  MV Act  subsumed the provisions relating to Claims  Tribunal. Whatever  could  be considered and determined by  the  civil courts   in  suits  claiming   compensation  in  respect  of accidents,  arising  out of the use of motor vehicles,  have been  now  directed  to be determined  by  Claims  Tribunals established by the State under the provisions of the MV Act. Of  course,  when accident in this case happened it was  the old  MV  Act which was in force.  But the old Act  contained identical  provisions  in  respect  of   a  lot  of  matters connected  with  Claims  Tribunal.  For the purpose  of  the appeal  only  those provisions which are identically  worded need  be considered.  So it would be convenient to refer  to the provisions of the new Act.

     Section 165(1) of the MV Act confers power on the Sate Government  to constitute one or more Motor Accidents Claims Tribunals  by notification in the Official Gazette for  such area  as  may  be  specified   in  the  notification.   Such Tribunals  are  constituted for the purpose of  adjudicating upon  claims  for  compensation  in  respect  of   accidents involving  the death of or bodily injury to persons  arising

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out of the use of motor vehicles, or damages to any property of a third party so arising, or both.  Section 175 of the MV Act  contains a prohibition that no civil court shall  have jurisdiction to entertain any question relating to any claim for compensation which may be adjudicated upon by the Claims Tribunal.

     It must be noted that the jurisdiction of the Tribunal is not restricted to decide claims arising out of negligence in the use of motor vehicles.  Negligence is only one of the species  of  the  causes of action for making  a  claim  for compensation  in respect of accidents arising out of the use of  motor vehicles.  There are other premises for such cause of action.

     Even  if  there  is no negligence on the part  of  the driver  or owner of the motor vehicle, but accident  happens while  the vehicle was in use, should not the owner be  made liable  for damages to the person who suffered on account of such  accident?  This question depends upon how far the Rule in Rylands vs.  Fletcher (supra) can apply in motor accident cases.   The said Rule is summarised by Blackburn, J,  thus: The  true  rule of law is that the person who, for his  own purposes,  brings on his land, and collects and keeps  there anything  likely to do mischief if it escapes, must keep  it at  his peril, and, if he does not do so, he is prima  facie answerable  for  all  the  damage   which  is  the   natural consequence of its escape.  He can excuse himself by showing that  the  escape was owing to the plaintiffs default,  or, perhaps,  that the escape was the consequence of vis  major, or  the  act  of God;  but, as nothing of this  sort  exists here,  it  is  unnecessary to inquire what excuse  would  be sufficient.

     The  House of Lords considered it and upheld the ratio with  the following dictum:  We think that the true rule of law  is that the person who, for his own purposes, brings on his  land and collects and keeps there anything likely to do mischief  if it escapes, must keep it in at his peril,  and, if  he does not do so, he is prima facie answerable for  all the  damage which is the natural consequence of its  escape. He  can excuse himself by showing that the escape was  owing to the plaintiffs default, or, perhaps, that the escape was the  consequence  of vis major or the act of God;   but,  as nothing  of  this  sort exists, here, it is  unnecessary  to inquire  what  excuse would be sufficient. The  above  Rule eventually  gained  approval in a large number of  decisions rendered  by courts in England and abroad.  Winfield on Tort has  brought out even a chapter on the Rule in Rylands  vs. Fletcher.   At page 543 of the 15th Edn.  of the calibrated work the learned author has pointed out that over the years Rylands  v.   Fletcher  has  been applied  to  a  remarkable variety  of  things:  fire, gas,  explosiions,  electricity, oil,  noxious  fumes,  colliery  spoil, rusty  wire  from  a decayed fence, vibrations, poisonous vegetation.  He has elaborated  seven defences recognised in common law  against action  brought  on the strength of the rule in Rylands  vs. Fletcher.   They  are:   (1) Consent of the  plaintiff  i.e. volenti non fit injuria.  (2) Common benefit i.e.  where the source of the danger is maintained for the common benefit of the plaintiff and the defendant, the defendant is not liable for its escape.  (3) Act of stranger i.e.  if the escape was caused by the unforeseeable act of a stranger, the rule does not  apply.   (4) Exercise of statutory authority i.e.   the rule  will stand excluded either when the act was done under

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a  statutory duty or when a statute provides otherwise.  (5) Act  of God or vis major i.e.  circumstances which no  human foresight can provide against and of which human prudence is not  bound to recognise the possibility.  (6) Default of the plaintiff i.e.  if the damage is caused solely by the act or default  of the plaintiff himself, the rule will not  apply. (7)  Remoteness  of  consequences i.e.  the rule  cannot  be applied   ad  infinitum,  because   even  according  to  the formulation of the rule made by Blackburn, J., the defendant is  answerable only for all the damage which is the natural consequence of its escape.

     The Rule in Rylands vs.  Fletcher has been referred to by  this Court in a number of decisions.  While dealing with the   liability  of  industries   engaged  in  hazardous  or dangerous  activities  P.N.  Bhagwati, CJ, speaking for  the Constitution  Bench  in  M.C.  Mehta & anr.  vs.   Union  of India  and ors.  {1987 (1) SCC 395}, expressed the view that there  is  no necessity to bank on the Rule in  Rylands  vs. Fletcher.   What  the learned Judge observed is  this:   We have  to evolve new principles and lay down new norms  which would adequately deal with the new problems which arise in a highly industrialised economy.  We cannot allow our judicial thinking  to  be constricted by reference to the law  as  it prevails  in England or for the matter of that in any  other foreign  country.   We  no  longer need the  crutches  of  a foreign legal order.

     It  is  pertinent to point out that  the  Constitution Bench did not disapprove the Rule.  On the contrary, learned judges  further  said  that we are  certainly  prepared  to receive  light from whatever source it comes. It means that the  Constitution Bench did not foreclose the application of the Rule as a legal proposition.

     In  Charan Lal Sahu vs.  Union of India {1990 (1)  SCC 613}  another Constitution Bench of this Court while dealing with Bhopal gas leak disaster cases, made a reference to the earlier  decisions  in M.C.  Mehta (supra) but did not  take the  same  view.   The rule of strict  liability  was  found favour  with.   Yet  another  Constitution  Bench  in  Union Carbide  Corporation and ors.  vs.  Union of India and  ors. {1991  (4)  SCC 584} referred to M.C.  Mehtas decision  but did not detract from the Rule in Rylands vs.  Fletcher.

     In Gujarat State Road Transport Corporation, Ahmedabad vs.   Ramanbhai Prabhatbhai and anr.  {1987 (3) SCC 234} the question  considered  was regarding the application  of  the Rule  in  cases  arising  out   of  motor  accidents.    The observation  made  by E.S.  Venkataramiah, J.  (as  he  then was)  can  profitably be extracted here:  Today, thanks  to the modern civilization, thousands of motor vehicles are put on  the  road and the largest number of injuries and  deaths are  taking  place  on  the roads on account  of  the  motor vehicles  accidents.   In  view of the fast  and  constantly increasing  volume  of traffic, the motor vehicles upon  the roads  may  be regarded to some extent as coming within  the principle  of  liability  defined in Rylands  v.   Fletcher. From  the point of view of the pedestrian the roads of  this country  have been rendered by the use of the motor vehicles highly  dangerous.  Hit and run cases where the drivers of the  motor  vehicles who have caused the accidents  are  not known  are increasing in number.  Where a pedestrian without negligence  on  his part is injured or killed by a  motorist whether  negligently or not, he or his legal representatives

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as  the case may be should be entitled to recover damages if the  principle of social justice should have any meaning  at all.   In order to meet to some extent the responsibility of the  society  to  the  deaths and injuries  caused  in  road accidents  there has been a continuous agitation  throughout the  world to make the liability for damages arising out  of motor vehicles accidents as a liability without fault.

     Like   any  other  common   law  principle,  which  is acceptable  to  our jurisprudence, the Rule in  Rylands  vs. Fletcher  can  be  followed  at least until  any  other  new principle  which excels the former can be evolved, or  until legislation provides differently.  Hence, we are disposed to adopt the Rule in claims for compensation made in respect of motor accidents.

     No  Fault Liability envisaged in Section 140 of  the MV Act is distinguishable from the rule of strict liability. In  the  former  the  compensation amount is  fixed  and  is payable even if any one of the exceptions to the Rule can be applied.   It is a statutory liability created without which the  claimant  should not get any amount under  that  count. Compensation  on account of accident arising from the use of motor  vehicles  can  be claimed under the common  law  even without  the aid of a statute.  The provisions of the MV Act permits  that  compensation paid under no fault  liability can  be  deducted  from  the final  amount  awarded  by  the Tribunal.  Therefore, these two are resting on two different premises.  We are, therefore, of the opinion that even apart from  Section  140  of the MV Act, a victim in  an  accident which  occurred while using a motor vehicle, is entitled  to get  compensation  from  a Tribunal unless any  one  of  the exceptions  would  apply.  The Tribunal and the  High  Court have,  therefore, gone into error in divesting the claimants of the compensation payable to them.

     Now,   we  have  to  decide  as  to  the  quantum   of compensation  payable  to the appellants.  We first  thought that the matter can be remitted to the Tribunal for fixation of  the  quantum of compensation but we are mindful  of  the fact that this is a case in which the accident happened more than 13 years ago.  Hence we are inclined to fix the quantum of compensation here itself.

     Appellants  claimed a sum of Rs.2,36,000/-.  But PW-1 widow  of  the deceased said that her husbands  income  was Rs.1,500/-  per  month.  PW-4 brother of the  deceased  also supported  the  same version.  No contra evidence  has  been adduced  in  regard  to  that  aspect.   It  is,  therefore, reasonable  to  believe  that  the  monthly  income  of  the deceased  was  Rs.1,500/-.   In calculating  the  amount  of compensation  in  this case we lean ourselves to  adopt  the structured formula provided in the Second Schedule to the MV Act.   Though  it was formulated for the purpose of  Section 163A of the MV Act, we find it a safer guidance for arriving at  the amount of compensation than any other method so  far as the present case is concerned.

     The  age  of the deceased at the time of accident  was said to be 35 years plus.  But when that is taken along with the  annual  income of Rs.18,000/- figure indicated  in  the structured  formula is Rs.2,70,000/-.  When 1/3 therefore is deducted the balance would be Rs.1,80,000/-.  We, therefore, deem  it  just  and proper to fix the said amount  as  total compensation  payable  to the appellants as on the  date  of

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their claim.

     Now,  we have to fix up the rate of interest.  Section 171  of the MV Act empowers the Tribunal to direct that  in addition to the amount of compensation simple interest shall also  be  paid at such rate and from such date  not  earlier than  the  date of making the claim as may be  specified  in this  behalf.  Earlier, 12% was found to be the  reasonable rate  of simple interest.  With a change in economy and  the policy  of  the Reserve Bank of India the interest rate  has been  lowered.   The  nationalised banks  are  now  granting interest  at the rate of 9% on fixed deposits for one  year. We,  therefore,  direct that the compensation  amount  fixed hereinbefore shall bear interest at the rate of 9% per annum from  the  date  of the claim made by the  appellants.   The amount  of  Rs.50,000/- paid by the Insurance Company  under Section  140 shall be deducted from the principal amount  as on   the  date  of  its   payment,  and  interest  would  be recalculated on the balance amount of the principal sum from such date.

     We  direct  the first respondent Insurance Company  to pay  the  above amount to the claimants by depositing it  in the  Tribunal.  Once such deposit is made the same shall  be disbursed to the claimants in accordance with the principles laid  down  by this Court in General Manager,  Kerala  State Road Transport Corporation vs.  Susamma Thomas & ors.  {1994 (2) SCC 176}.  The appeal is disposed of accordingly.