VADODARA MUNICIPAL CORPORATIONversusPURSHOTTAM V. MURJANI AND ORS.

                          [2014) 7 S.C.R. 810


A            VADODARA MUNICIPAL CORPORATION
                                    v.
               PURSHOTTAM V. MURJANI AND ORS.
               (Civil Appeal Nos. 3594-3611 of 2010)

                       SEPTEMBER 10, 2014
B
                     [V. GOPALA GOWDA AND
                   ADARSH KUMAR GOEL, JJ.]

          Consumer Protection Act, 1986 - Deficiency in service -
C   Compensation - Boat carrying 38 passengers as against the
    capacity of 22 passengers, capsized resulting in death of 22
    passengers - Municipal Corporation supervised boating
    activities - Contractor took contract for plying the boat and took
    insurance policy - Claim for compensation - Corporation and
D   contractor held jointly and severally liable by forums below -
    Insurance Company to pay Rs.20 lakhs for each accident-
    death but aggregate sum limited to Rs. 80 lakhs - Interference
    with - Held: Not called for - Victims were consumers and the
    cqntractor was service provider - Passengers neither provided
E   life saving jackets nor life guard deployed - Deficiency of
    service stood established - Also primary liability of the
    contractor established - Mere appointment of a contractor or
    employee did not absolve the Corporation of its liability to
    supervise the boating activities - Bombay Provincial
F   Municipal Corporation Act, 1949 - ss. 62, 63 and 66.

         Dismissing the appeals, the Court

       HELD: 1.1 The finding of negligence concurrently
  recorded by the State Commission and the National
G Commission does not call for any interference. Primary
  liability of the contractor stands established. The victims
  were consumers and the contractor was service provider.
  Deficiency of service stood established. The Insurance
  Company having issued policy covering loss to the
H                              810
       VADODARA MUNICIPAL CORPORATION v.               811
            PURSHOTTAM V. MURJANI
extent of Rs.20 lakhs per accident with Rs.80 lakhs as        A
maximum in one year, could ·not avoid its responsibility.
[Para 16] [818-D-F]

     1.2 The activity In question was covered by the
statutory duty of the Corporation u/ss. 62, 63, 66 of the
                                                              8
Bombay Provincial Municipal Corporation Act, 1949. Mere
appointment of a contractor or employee did not absolve
the Corporation of its liability to supervise the boating
activities particularly when there are express stipulations
in the contract entered into with the contractor. The
Corporation was not only discharging its statutory duties     C
but also was acting as service provider to the
passengers through its agent. The Corporation had a
duty of care, when activity of plying boat is inherently
dangerous and there is clear forseeability of such
occurrence unless precautions are taken like providing        D
life saving jackets.[Para 17] [818-H; 819-A-C]
    1.3 There is a need for a comprehensive legislation
dealing with tortious liability of the State and its
instrumentalities in such cases for certainty on the          E
subject. The Law Commission is requested to look into
the matter and take such steps as may be found
necessary. [Para 19] [821-C, D]

    Rajasthan State Road Transport Corporation vs. Kai/ash    F
Nath Kothari 1997 (3) Suppl. SCR 724:(1997) 7 SCC 481;
Motor Owner's Insurance Co. Ltd. vs. Jadavji Keshavji Mod/
1982 (1) SCR 860:(1981) 4 sec 660; Ravneet Singh Bagga
vs. KLM Royal Dutch Airlines & Anr. 1999 (4) Suppl. SCR
320:(2000) 1 SCC 66;Municipal Corporation of Delhi vs.
Uphaar Tragedy Victims Association & Ors. 2011 (16) SCR       G
1:(2011) 14 sec 481-referred to.
                    Case Law Reference:
  1997 (3) Suppl. SCR 724      Referred to       Para 5
                                                              H
    812      SUPREME COURT REPORTS                [2014] 7 S.C.R.


A     1982 (1) SCR 860              Referred to        Para 6
      1999 (4) Suppl. SCR 320       Referred to        Para 6

      2011 (16) SCR 1               Referred to        Para 18

B       CIVIL APPELLATE JURISDICTION : Civil Appeal
    Nos.3594-3611 of 2010.

          From the Judgment and Order dated 02.11.2006 passed
    by the National Consumer Disputes Redressal Commission in
    first Appeal No. 464 of 2002 and 61 to 77 of 2004.
c
                                WITH
    C.A. Nos. 3630, 3631, 3647, 3632, 3633, 3634, 3635, 3636,
    3638, 3646, 3639, 3640, 3641, 3642, 3643, 3644, 3645, 3648
    and 3612-3629 of 2010.
D
         R.S. Suri, P.K. Seth Manjeet Chawla, Avinash Kumar,
    Pallavi Tayal, Tanuj Bhushan (for Suresh A. Shroff & Co.) and
    Chanchal Kumar Ganguli, Tabinda Syed, K.L. Janjani for the
    appearing parties.
E
          The Judgment of the Court was delivered by

       ADARSH KUMAR GOEL, J. 1. These appeals have been
  preferred against the Judgment of the National Consumer
  Disputes Redressal Commission (for short "NCDRC") dated
F 2nd November, 2006 in F.A. Nos.464/2002 and 61 to 77 of
  2004 by the Vadodara Municipal Corporation (for short "the
  Corporation"), the Oriental Insurance Company Ltd. (for short
  "the Insurance Company") and the proprietor of Ripple Aqua
  Sports (hereinafter referred to as "the Contractor") against the
G award of compensation for the death of 22 persons by drowning
  in Sursagar Lake at Vadodara while riding the boat, on account
  of negligence in plying the boat.

       2. Sursagar Lake is under the control and management
H of the Corporation which has been plying boats for joy rides
      VADODARA MUNICIPAL CORPORATION v.        813
 PURSHOTTAM V. MURJANI [ADARSH KUMAR GOEL, J.]

and boating club. During the period in question, the contract         A
for plying the boats was given to-Ripple Aqua Sports vide
licence agreement dated 26th September, 1992 for managing
the affairs of the Boating Club at the Lake for pur.poses of
entertainment. The agreement, inter alia, provided that the
facility of boating was to be given to the public. It was necessary   B
that the contractor shall be taking insurance policies to cover
the risk liability of all persons using the equipment of the club.
The Corporation had the right to supervise the boating club.
Accordingly, the Contractor took insurance policy dated 1st
November, 1992. On 11th August, 1993, against the capacity            c
of 20 persons, 38 passengers were allowed to ride in the boat
which capsized res~lting in the death of 22 passengers.

     3. The victims approached the State Commission on 30th
March, 1994 and around under the provisions of Consumer
Protection Act, 1986 claiming compensation alleging                   D
deficiency of service on the part of the Contractor and the
Corporation. The victims clah:ned that the insurance policy
covered the claim to the extent of Rs.20 lakhs per passenger
with maximum of Rs.80 lakh in one year. Under the Bombay
Provincial Municipal Corporation Act, 1949, the Corporation           E
had the duty to maintain the safety of the passengers and in
case of negligence, the Corporation had the tortuous liability
under the law. The Corporation was also liable for tortious acts
of the Contractor. The passengers had taken tickets for the boat
ride but on account of deficiency in service the passengers           F
drowned on capsizing of the boat which was overloaded. lhe
occurrence took place on- account of negligence of the
contractor as well as failure of the Corporation to exercise due
care. No life guards were provided, no life saving jackets were
provided and if suitable safety measures would have been              G
taken, the lives of the victims could be saved.

     4. The Insurance Company contested the case and
submitted that as per the insurance policy given, the liability was
limited to Rs.1 lakh per person. Stand of the Corporation was         H
   814        SUPREME COURT REPORTS               [2014] 7 S.C.R.


A that complainants were not consumers and had remedy under
  the Indian Vessels Act, 1917. The Contractor was independent
  licensee without any control of the Corporation. The stand of
  the Contractor was that it was not liable as the claimants were
  not consumers and the liability was of the Corporation. The
B :insurance Company also opposed the claim and also
  submitted that its liability did not exceed Rs.20 lakhs.

       5. The State Commission allowed the claims. It held that
  even a public authority exercising statutory power was not
C exempt from liability for negligent actions. When the Corporation
  exercised control over the Contractor, it was vicariously
  responsible for the negligence of the Contractor. Reliance was
  placed on Rajasthan State Road Transport Corporation vs.
  Kai/ash Nath Kothan~ holding the employer to be responsible
  vicariously.
D
       6. As regards liability of the Insurance Company, it was
  held that its liability under the policy was Rs.20 lakhs for one
  incident which meant one death in view of Motor Owner's
  Insurance Co. Ltd. vs. Jadavji Keshavji Modi2• The policy was
E covered by Public Liability Insurance Act, 1991. It was also held
  that Contractor could not escape its liability in the given
  circumstances when deficiency in service was patent in view
  of violation of Indian Vessels Act, 1917. Negligence in
  operating the boat amounted to deficiency in service as held
F in Ravneet Singh Bagga vs. KLM Royal Dutch Airlines & Anr3.
       7. Accordingly, the State Commission held the Aqua
  Sports and the Corporation to be jointly and severely liable.The
  State Commission awarded total compensation of
  Rs.30, 18,900/- with interest @ 10% per annum from the date
G of the incident till payment. The State Commission determined
  the quantum of compensation ranging from Rs.50,000/- to

    1.   (1997) 1 sec 481.
    2.   (1981) 4 sec sso.
H 3. (2000) 1 sec 66.
     VADODARA MUNICIPAL CORPORATION v.        815
PURSHOTTAM V. MURJANI [ADARSH KUMAR GOEL, J.]
            \


Rs.10,76,0001- in respect of claims for death of 22 passengers.. A

     8. The decision of the State Commission has been upheld
by the NCDRC with the enhancement in quantum of
compensation in some of the cases keeping in mind principles
for determining compensation under the Motor Vehicles Act,
                                                                     8
1988.

   9. Affirming the finding of the State Commission, the
NCDRC held:-

    "(i) Contractor had the primary liability to compensate the      c
    victims as it was responsible for the catastrophe in
    question;
                                                             •
    (ii) The Corporation had vicarious liability for the
    negligence. Plying boat was inherently dangerous activity.
    Even for its statutory functions, liability for negligence was   D
    attracted on the principle laid down in Rajkot Municipal
    vs. Manjuben Jayantilal Nakum, (1997) 9 SCC 552. The
    Corporation failed to perform its duty of supervision
    undertaken under the agreement with the Contractor;
                                                                     E
     (iii) The Insurance Company was liable upto Rs.20 lakhs
     per accident (per death) subject to maximum of Rs.BO
     lakhs as per policy. Variations in policy could not be
     allowed in view of United India Insurance Company Ltd.
     vs. M.J.K. Corporation, (1997) 7 SCC 481 and United             F
     India Insurance Company Ltd. vs. Pushpalaya Printers,
     (2004) 3 SCC 694 and Life Insurance Corporation of
     India and ors. vs. Smt. Asha Goel and anr., (2001) 2 sec
     160.

     (iv) Insurance Company was bound to filCt as per                G
     Insurance Regulatory and Development Authority Acts
     of 1999 and 2002 regulations framed thereunder .and
     also Public Liability Act, 1991."

                                                                     H
    816         SUPREME COURT REPORTS                 [2014] 7 S.C.R.

A         10. Concluding part of the judgment of the NCDRC is as
    follows:-

          "In the result, it is held that:

          (i) the Ripple Aqua Sports and the Vadodara Municipal
B         Corporation are jointly and severally liable to pay the
          compensation to the Complainants as awarded;

          (ii) the Vadodara Municipal Corporation is directed to pay
          the balance of compensation (that is, after deducting the
c         amount paid) to the Complainants in each case within a
          period of eight weeks from the date of the Order. It would
          be open to the Corporation to recover the same from the
          Ripple Aqua Sports;

          (iii) the Insurance Company is liable to pay Rs.20 lakhs
D         for each accident, namely, each death, but in aggregate
          the sum is limited to Rs. 80 lakhs. Hence, the Insurance
          Company shall reimburse, in all, Rs. 80 lakhs to the
          Vadodara Municipal Corporation; and,

E         (iv) the rest of the order passed by the State Commission
          directing payment of interest at the rate of 10% p.a. from
          the date of the incident, i.e. fro.m 11. 8. 1993 till the date
          of payment of compensation is confirmed.

               With these modifications the First Appeal Nos.464
F
          of 2002 and First Appeal Nos. 464 of 2002 and First
          Appeal Nos.61 to 77 of 2004 filed by the Vadodara
          Municipal Corporation are disposed of accordingly.
          Considering the facts, there shall be no order as to costs.

G               First Appeal Nos. 197 of 2003 and First Appeal
          Nos.210 to 226 of 2003 filed by the Ripple Aqua Sports
          are disposed of accordingly. There shall be no order as
          to costs.

H
    VADODARA MUNICIPAL CORPORATION v.         817
PURSHOTIAM V. MURJANI [ADARSH KUMAR GOEL, J.]

    Cross-Appeals for enhancement:                                    A
         The Appeals filed by the Complainants in First
    Appeal Nos.488 of 2002; 289 of 2004;-290 of 2004; 292
    of 2004; 295 of 2004 and 296 of 2004 are dismissed.
    There shall be no order as to costs.                              8
          The First Appeal Nos.288 of 2004; 291 of 2004;
    294 of 2004; 297 of 2004; 299 of 2004; 293 of 2004; 298
    of 2004, and 300 of 2004 filed by the complaints are
    partly allowed. The order passed by the State
    Commission is modified as under:-                                 C

        It is held that the complainants are entitled to have
    compensation of:-

    (i) Rs.1 lakh in each Appeal Nos.288 of 2004, 291 of
                                                                      0
    2004; and 294 of 2004;

    (ii) Rs.1,25,0001- in each Appeal Nos.297 of 2004 and
    299 of 2004;

    (iii) Rs.1,50,0001- in each Appeal Nos.293 of 2004; 298           E
    of 2004; and 300 of 2004."

     11. We have heard learned counsel for the parties.

     12. Learned counsel for the Corporation submitted that the
Corporation was not. a service provider and had no privy              F
contract with the victims. It was only facilitating the plying of
boating and the liability was of the contractor. As per the licence
agreement dated 26th September, 1992, control and
responsibility for the boating activities was completely of the
contractor. The Corporation had no direct control over the            G
contractor or its employees.

     13. Learned counsel for the Insurance Company submitted
that its liability\ was limited to Rs.1 lakh as per policy issued
                                                                      H
    818      SUPREME COURT REPORTS                   [2014] 7 S.C.R.


A   on 1st December, 1992 and the policy dated 1st November,
    1992 could not be taken into account.

        14. Learned counsel for the Contractor, submitted that it
    was not responsible for the accident and liability was of the
    Manager individually or of the Corporation for whom the boat
8
    was being plied.

        15. Learned counsel for the victims supported the
    impugned order.

c       16. On due consideration, we do not find any ground to
  interfere. It is not in dispute that the boat was carrying 38
  passengers as against the capacity of 22 passengers. Neither
  any life guards were deployed nor any life saving jackets were
  provided to the passengers. The finding of negligence
D concurrently recorded by the State Commission and the
  NCDRC does not call for any interference. Primary liability of
  the contractor stands established. The victims were consumers
  and the contractor was service provider. Deficiency of se.rvice
  stood established. The stand of the Insurance Company based
E on second policy dated 1st December, 1992 limiting its liability
  is untenable. Having issued policy dated 1st November, 1992
  covering loss to the extent of Rs.20 lakhs per accident with
  Rs.80 lakhs as maximum in one year, the Insurance Company
  co.uld not avoid its responsibility, as rightly held concurrently by
  the State Commission and the NCRDC. Risk was required to
F be statutorily covered under the Public Liability Insurance Act,
  1991. The Insurance Cofupany was bound by the The Insurance
  Regulatory and Development Authority (Protection of
  Policyholders' Interest) Regulation, 2002 framed under the
  Insurance Regulatory and Development Authority Act, 1999 and
G the law laid down in M.J.K. Corporation, Pushpalaya Printers
  and Asha Goel (supra), rightly referred to by the NCDRC in its
  order.

      17. We do not find any ground to exonerate the
H Corporation. Admittedly, the activity in question was covered
    VADODARAMUNICIPAL CORPORATION v.          819
PURSHOTIAM V. MURJANI [ADARSH KUMAR GOEL, J.]

by the statutqry duty of the Corporation under Sections 62, 63        A
and 66 of the Bombay Provincial Municipal Corporation Act,
1949. Mere appointment of a contractor or employee did not
absolve the Corporation of its liability to supervise the boating
activities particularly when there are express stipulations in the
contract entered into with the contractor. The Corporation was        B
not only discharging its statutory duties but also was acting as
service provider to the passengers through its agent. The
Corporation had a duty of care, when activity of plying boat is
inherently dangerous and there is clear forseeability of such
occurrence unless precautions are taken like providing life           c
saving jackets.

     18. In Municipal Corporation of Delhi vs. Uphaar Tragedy
Victims Association and Ors. 4 , concept of negligence or
breach of duty to take care in Tort law as against breach of dy,ty
in exercising statutory duty in public law was gone into with         D
reference to developments in different jurisdictions. It was
observed that archaic principle of State immunity which was
based on assumption of State being efficient, sincere and
dignified was giving way to protection of liberty, equality and
rule of law. Applying the test of proximity of relationship,          E
reasonable forseeability and justness of claim, liability of a
public authority could be fixed. After noticing development of
law world over, it was observed:-

      "109. Need for a comprehensive legislation dealing with         F
      torlious liability of the State and its instrumentalities has
      been highlighted by this Courl and the academic world
      on various occasions and it is high time that we develop
      a sophisticated jurisprudence of public law liability. Due
      to Jack of legislation, the courls dealing with the cases of    G
      torlious claims against the State and its officials are not
      following a uniform pattern while deciding those claims,
      and this at times leads to undesirable consequences and
      arbitrary fixation of compensation amount.
4.   c2011) 14 sec 481                                                H
    820       SUPREME COURT REPORTS                 [2014] 7 S.C.R.

A         110. The Government of India on the recommendations
          of the First Law Commission introduced two Bills on the
          government liability in torts in the years 1965-1967 in the
          Lok Sabha but those Bills lapsed. In Kasturi Lal case, AIR
          1965 SC 1039, this Court has highlighted the need for a
          comprehensive legislation which was reiterated by this
          Court in various subsequent decisions as well.

           111. Public authorities are now made liable in damages
          in UK under the Human Rights Act, 1998. Section 6 of
           the Human Rights Act, 1998 makes a public authority
c         .liable for damages if it is found to have committed breach
          of human rights. The Court of Appeal in England in
          Anufrijeva v. Southwark London Borough Council, 2004
           QB 1124 : (2004) 2 WLR 603 : (2004) 1 All ER 833 (CA),
          attempted to answer certain important questions as to
D         how damages should be awarded for breach of human
          rights and how should damages be assessed. Further,
          such claims are a/so dealt by Ombudsmen created by
          various statutes: they are independent and impartial
          officials, who investigate complaints of the citizens in
E         cases of ma/administration. Experience shows that
          majority of the Ombudsmen's recommendations are
          complied with in practice, though they are not enforceable
          in courts. The European Court of Justice has developed
          a sophisticated jurisprudence concerning liability in
F         damages regarding liability of public bodies for the loss
          caused by administrative acts.

          112. We have highlighted all these facts only to indicate
          that rapid changes are taking place all over the world to
          uphold the rights of the citizens against the wrong
G
          committed by statutory authorities and local bodies.
          Despite the concern shown by this Court, it is unfortunate
          that no legislation has been enacted to deal with such
          situations. We hope and trust that utmost attention would
          be given by the legislature for bringing in appropriate
H
   . VADODARA MUNICIPAL COR?ORATION v.        821
PURSHOTIAM V. MURJANI [ADARSH KUMAR GOEL, J.)

     legislation to deal with claims in public law for violation       A
     of fundamental rights guaranteed to the citizens, at the
     hands of the State and its officials."          '1

      19. In view of above discussion, while upholding the liability
 of the Corporation, we reiterate that not only <;onstitutional        8
 Courts have to, in suitable cases, uphold claims arising out of
·loss of life or liberty on account of violation of statutory duties
 of public authorities, in private law remedies, just and fair
 claims of citizens against public bodies have to be upheld and
 compensation awarded in Tort. Where activity of a public body         C
 is hazardous, highest degree of care is expected and breach
 of such duty is actionable. This obligation is also referable to
 Article 21. We reiterate the need for a comprehensive
 legislation dealing with tortious liability of the State and its
 instrumentalities in such cases for certainty on the subject. We
 request the Law Commission to look into the matter and take           D
 such steps as may be found necessary.

     20. Accordingly, we do not find any merit in the appeals
filed by the contractor, the Corporation and the Insurance
Company against the award of compensation by the State                 E
Commission as affirmed/modified by the NCDRC. The appeals
are accordingly dismissed. There will, however, be no order as
to costs. A copy of this order be forwarded to the Law
Commission for further necessary action.

Nidhi Jain
                                                                       F
                                                  Appeals dismissed.