Holding

The Supreme Court held that the rule in Rylands v Fletcher (strict liability) is applicable to motor‑vehicle accidents and that the Tribunal may award compensation even where no negligence is established.

Summary

The appellant's husband was killed when the front tyre of a jeep burst, causing the vehicle to capsize and crush a pedestrian. The widow and children filed a claim for compensation before the Motor Accidents Claims Tribunal, which dismissed the claim on the ground that there was no negligence, awarding only Rs 50,000 under Section 140 (no‑fault liability) of the Motor Vehicles Act, 1988. The High Court affirmed the Tribunal's order. On appeal, the Supreme Court held that the Tribunal's jurisdiction is not limited to negligence and that a claim can be maintained on the basis of the common‑law rule of strict liability as articulated in Rylands v Fletcher. Consequently, the Court affirmed the applicability of the Rylands rule to motor‑vehicle accidents, allowing compensation beyond the statutory amount, and set the quantum of compensation at Rs 1,80,000 with interest, deducting the Rs 50,000 already paid. The appeal was allowed and the respondents were directed to pay the balance amount with interest.

Issues considered

Whether a claim for compensation under the Motor Accidents Claims Tribunal can be maintained on the basis of strict liability (Rylands v Fletcher) despite the absence of negligence.
Whether Section 140 of the Motor Vehicles Act, 1988 (no‑fault liability) is distinct from the common‑law rule of strict liability and can be applied concurrently.
Whether the jurisdiction of the Motor Accidents Claims Tribunal extends beyond negligence to include strict liability causes of action.

Legislation cited

Motor Vehicles Act, 1988s. 140, s. 163A, s. 165(1), s. 171, s. 175

Subjects

strict liabilitymotor accident compensationRylands v Fletcherno‑fault liabilityMotor Vehicles Actclaims tribunalnegligencevicarious liabilitycompensation quantuminterest

Judgment

A SMT. KAUSHNUMA BEGUM AND ORS.
v.
THE NEW INDIA ASSURANCE CO. LTD. AND ORS.

JANUARY 3, 2001

B [K.T. THOMAS AND R.P. SETHI, JJ.]

Motor Vehicles Act. 1988: Section 140.

;\/otor accide11t.1·-Compcnsotion-Clai111 for-Rule of Strict LiabiliZJ'-
C Applin1bility of-field: Is applicable.

Motor uccide11ts-Compensatio11-·Cfai111 for- "No Fault Liability" and
"Strief Liubi!izr" Distinction betwee11-Erplai11ed-Victim died due to bursting
ofji'ont zire of a jeep-No negligence ()f drirer-Compensation-E111it!e111e111
to-field· fren apart from "No Faull Liability" victim is entitled to get
D compensation

I
IVords and Phrases:

"No Faull Liability "-Meaning of-In the contexl of S.140 of the
Motor Vehicles Act, 1988.
E
The appl'lhrnt's husband died due to the bursting of the front tyre of
a jeep dri1·en hy the respondent. The Motor Accidents Claim Tribunal
dismissed the claim for compensation on the ground that were was no
negligence on the part of the respondent. The High Court affirmed the
decision of the Tribunal, Hence this appeal. .+
F
The following question arose before this Court:-

Can a claim be maintained before the Motor Accident claims Tribunal
on the basis of Strict liability propounded in Rylands v. Fletcher, (1861-1873
G all England Reports I)?

Disposing of the appeal, the Court

HELD : I. Like any other common law principle, which is acceptable
to the country's jurisprudence, the Rule in Rylands v. Fletcher can be
followed at least until any other new principle which excels the former can
H 8
KAUSHNUMA BEGUM v. NEW INDIA ASSU. CO. 9

be evolved. Hence, the Rule in claims for compensations made in respeCt of A
motor accidents has to be. adopted. ( 15-B(

M.C. Mehta v Union of India, (1987( I SCC 395; Charan Lal Sahu v.
Union of India. (1990( I SCC 613 and Union Carhide Corporation v. Union
of India, ( 1991( 4 SCC 584, followed.
B
.Ji Gujarat Stale Road Transport Co1porutio11 v. Ramanbhai Prabhatbhai,
11987( 3 sec 234, relied on.

Ryla11d1· v. Fletcher, (1861-1873) all England Reports I and Winfield
on Torts 15th Edn. P. 543, referred to. C

2. The jurisdiction of the Motor Accidents Claims 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 cause of action for
making a claim for compensation in respect of accidents arising out of the D
use of motor vehicles. There are other premises for such cause of action.

--
(12-DI

3. "No Fault Liability" envisaged in Section 140 of the Motor Vehicles
Act, 1988 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 E
exceptions to the Rule can be applied it is a statutory liability created,
without which the claiment 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 ofa statute. The
provisions of the MV Act permits that compensation paid under 'No Fault F
Liability' can be deducted from the final amount awarded by the Tribunal.
Therefore, these two are resting on two different premises. Therefore, 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 G
of the compensation payable to them. (15-C-El

General Manager, Kera/a State Road Transport Corpomtion v.
Susamma Thomas, ( 1994) 2 SCC 176; referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6 of2001. H
IO SUPREME COURT REPORTS [200 I] I S.C.R.

A From the Judgment and Order dated 28.4.99 of the Allahabad High Court
in F.A. From O.No. 649 of 1995. ;.--

Sharve Singh and Sanjay Singh, (K.K. Gupta) (NP) for the Appellants.

Vivek Sharma and Ms. Nanita Sharma for the Respondents.
B
The Judgment of the Court was delivered by

THOMAS, J. Leave granted.

Can a claim be maintained before the Motor Accident Claims Tribunal
C ("Tribunal' for short) on the basis of strict liability propounded in Rylands v.
F/e!cher, ( 1861-1873 All England Reports I)? 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
D 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 Tribunal's
order. Hence this appeal by special leave.

E
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.
F 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
G business in manufacturing steel trunks.
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
H (nsurance policy. The Tribunal repelled the above contentions of the jeep
KAUSIINUMA BEGUM v. NEW INDIA ASSU. CO. [THOMAS, J.] 11

owner. Howeve·r, the Tribunal found as follows: A
"It appears that the front wheel of the jeep suddenly got burst resulting
in the dis balance and occurrence of th is 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."
B
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).
c
Aggrieved by the said rejection of the claim the appellants moved the
High Court of Allahabad in appeal, as per the provisions of the MY 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
D
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."
E
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 dawn 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 ifa claim for compensation (due to the accident F
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 G
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 MY Act which was in force. But the old Act contained identical provisions
in respect ofa lot of matters connected with Claims Tribunal. For the purpose H
12 SUPREME COURT REPORTS [2001] l S.C.R.

A 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( l) of the MY Act confers power on the Sate Government
to constitute one or more Motor Accidents Claims Tribunals by notification
B in the Official Gazette for such area as may be s!'ecified 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 out of the use of motor vehicles, or damages to any
property of a third party so arising, or both. Section 175 of the MY Act
C 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.
D Negligence is only one of the species of the causes of action for makir.g 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
E 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
v. Fletcher, (supra) can apply in motor accident cases. The said Rule is
summarised by Blackbum, J, thus: ·

F "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
G
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
H dictum:
KAUSHNUMA BEGUM"· NEW INDIA ASSU. CO. (THOMAS. J.] 13

"We think that the true rule oflaw is that the person who, for his own A
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, B
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 m a large number of
decisions rendered by courts in England and abroad. Winfield on Tort has C
brought out even a chapter on the "Rule in Rylands vs. Fletcher". At page
543 of the 15th Edn. of the celebrated 'York the learned author has pointed
out that "over the years Rylands v. Fletcher has been applied to a remarkable
variety of things: fire, gas, explosions, 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 D
brought on the strength of the rule. in Rylands vs. Fletcher. They are: (I)
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 E
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 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. ifthe damage is caused solely by the act or default of the plaintiff F
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 v: Fletcher has been referred to by this Court in
G
-+ 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. v. Union of India and ors. [ 1987]
I SCC 395, expressed the view that there is no necessity to bank on the Rule
in Rylands v. Fletcher. What the learned Judge observed is this: H
14 SUPREME COURT REPORTS [2001) I S.C.R.

A "We have to evolve new prii1ciples 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
constri'cted 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."
B
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
C proposition.

In Charan Lal Sahu v. Union of India, [1990] I 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.
D Yet another Constitution Bench in Union Carbide Corporation and ors. v.
Union of India and ors., (1991] 4 SCC 584 referred to M.C. Mehta's decision
but did not detract from the Rule in Rylands v. Fletcher.

In Gzyarat State Road Transport Corporation, Ahmedabad v. Ramanbhai
Prabhatbhai and anr., [ 1987] 3 SCC 234 the question considered was regarding ).... ,
E 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 modem civilization, thousands of motor vehicles
are put on the road and the largest number of injuries and deaths are
F 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.
G '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 as
the case may be should be entitled to recover damages if the principle
H of social justice should have any meaning at all. In order to meet to
KAUSllNUMA BEGUM'" NEW INDIA ASSU CO. [THOMAS. J.] 15
some extent"the responsibility of the society to the deaths and injuries A
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 B
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 MY Act is
distinguishable from the rule of strict liability. In the former the compensation C
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 MY D
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 MY 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 E
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 F
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-I widow of the
deceased said that her husband's income was Rs. 1,500 per month. PW-4 G
brother of the deceased also supported the same version. No contra evidence
has been adduced in regard to that aspect. It is, therefore, reasoaable 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 MY Act. Though
it was fonnulated for the purpose of Section I 63A of the MY Act, we find H
16 SUPREME COURT REPORTS [2001] I S.C.R.

A 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
B 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 their claim.

Now, we have to fix up the rate of interest. Section 171 of the MY Act
empowers the Tribunal to direct that "in addition to the amount of
C compensation simple interest shall also. be paid at such rate and from such
date not ear.Her 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
D granting interest at the rate of 9% on fixed deposits for one year. We,
therefore, direct that the compensation amount fixed hereinbefor.e 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
E 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, Kera/a State Road
F Transport Corporation v. Susamma Thomas & ors., (1994] 2 SCC 176. The
appeal is disposed of accordingly. -·
V.S.S. Appeal disposed of.

+