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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3594-3611 of 2010

VADODARA MUNICIPAL CORPORATION      ….. APPELLANT

VERSUS

PURSHOTTAM V. MURJANI AND ORS. ..... RESPONDENTS

With

Civil Appeal No.3630 of 2010, Civil Appeal No.3631 of  2010,  Civil Appeal No.3647 of 2010, Civil Appeal No.3632 of  2010,  Civil Appeal No.3633 of 2010, Civil Appeal No.3634 of  2010,  Civil Appeal No.3635 of 2010, Civil Appeal No.3636 of  2010,  Civil Appeal No.3638 of 2010, Civil Appeal No.3646 of  2010,  Civil Appeal No.3639 of 2010, Civil Appeal No.3640 of  2010,  Civil Appeal No.3641 of 2010, Civil Appeal No.3642 of  2010,  Civil Appeal No.3643 of 2010, Civil Appeal No.3644 of  2010,  Civil Appeal No.3645 of 2010, Civil Appeal No.3648 of  2010 and Civil Appeal No.3612-3629 of 2010.

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CIVIL APPEAL NO.3594-3611/2010

J U D G M E N T

ADARSH KUMAR GOEL, J.

1. These  appeals  have  been  preferred  against  the  

Judgment of the National Consumer Disputes Redressal  

Commission  (for  short  “NCDRC”)  dated  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 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 of the Corporation which has been plying  

boats for joy rides and boating club.  During the period in  

question, the contract 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  purposes  of  

entertainment.  The agreement, inter alia, provided that  

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the facility of boating was to be given to the public.  It  

was  necessary  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 of 20  

persons, 38 passengers were allowed to ride in the boat  

which capsized resulting 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  deficiency  of  service  on  the  part  of  the  

Contractor and the Corporation.  The victims claimed 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 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  

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deficiency  in  service  the  passengers  drowned  on  

capsizing  of  the  boat  which  was  overloaded.   The  

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 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 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 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  exempt  from  liability  for  negligent  actions.  

When  the  Corporation  exercised  control  over  the  

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Contractor,  it  was  vicariously  responsible  for  the  

negligence of  the Contractor.   Reliance was placed on  

Rajasthan  State  Road  Transport  Corporation vs.  

Kailash  Nath  Kothari  1      holding  the  employer  to  be  

responsible vicariously.   

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  

Modi  2  .    The  policy  was  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  in  

Ravneet Singh Bagga vs. KLM Royal Dutch Airlines  

& Anr.  3   

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 of the incident till payment.  The  1 (1997) 7 SCC 481 2 (1981) 4 SCC 660 3 (2000) 1 SCC 66

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State  Commission  determined  the  quantum  of  

compensation ranging from Rs.50,000/- to Rs.10,76,000/-  

in respect of claims for death of 22 passengers.   

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, 1988.   

9. Affirming the finding of the State Commission, the  

NCDRC held:-

“(i) Contractor had the primary liability to   compensate  the  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 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;  

(iii) The  Insurance  Company  was  liable   upto   Rs.20 lakhs per accident (per death) subject   

to maximum of  Rs.80 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  India  Insurance  Company Ltd. vs.  Pushpalaya Printers,  (2004)  3  SCC  694 and  Life  Insurance  Corporation of India and ors. vs.  Smt.  

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Asha  Goel and  anr.,   (2001) 2 SCC 160.

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

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  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  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 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,

(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. from 11.8.1993 till   the  date  of  payment  of  compensation  is   confirmed.

With  these  modifications  the  First   Appeal  Nos.464  of  2002  and  First  Appeal   Nos.464 of 2002 and First Appeal Nos.61 to  77 of 2004 filed by the Vadodara Municipal   

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Corporation  are  disposed  of  accordingly.   Considering  the  facts,  there  shall  be  no   order as to costs.

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.

Cross-Appeals for enhancement:

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.

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:-

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 2004; and 294 of 2004;

(ii) Rs.1,25,000/- in each Appeal Nos.297  of 2004 and 299 of 2004;

(iii) Rs.1,50,000/- in each Appeal Nos.293  of 2004; 298 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 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  

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September,  1992,  control  and  responsibility  for  the  

boating activities was completely of the contractor.  The  

Corporation had no direct control over the 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 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 was being plied.

15. Learned  counsel  for  the  victims  supported  the   

impugned order.

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  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  

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contractor  was  service  provider.   Deficiency  of  service  

stood established.  The stand of the Insurance Company  

based  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  could  not  avoid  its  

responsibility,  as rightly held concurrently by the State  

Commission and the NCRDC.  Risk was required to be  

statutorily  covered  under  the  Public  Liability  Insurance  

Act,  1991.  The Insurance Company 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  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  

Corporation.   Admittedly,  the  activity  in  question  was  

covered by the statutory duty of the Corporation under  

Sections  62,  63  and  66  of  the  Bombay  Provincial  

Municipal Corporation Act, 1949.   Mere appointment of a  

contractor or employee did not absolve the Corporation  

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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  

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 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  duty  in  exercising  statutory  duty  in  

public law was gone into with 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,  

reasonable forseeability and justness of claim, liability of  

a  public  authority  could  be  fixed.   After  noticing  

development of law world over, it was observed:-  

4 (2011) 14 SCC 481

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“109. Need for a comprehensive legislation  dealing  with  tortious  liability  of  the  State  and  its  instrumentalities  has  been  highlighted by this Court and the academic   world  on  various  occasions  and  it  is  high  time  that  we  develop  a  sophisticated  jurisprudence of public law liability. Due to  lack of  legislation,  the courts  dealing with  the  cases  of  tortious  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.

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   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  how  damages  should  be  awarded  for  breach  of  human  rights  and  how  should  damages  be  assessed.  Further,  such  claims  are  also   dealt  by  Ombudsmen  created  by  various   statutes:  they  are  independent  and  impartial  officials,  who  investigate  complaints  of  the  citizens  in  cases  of   maladministration.  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  

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concerning  liability  in  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  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  legislation  to   deal with claims in public law for violation of   fundamental  rights  guaranteed  to  the  citizens, at the hands of the State and its   officials.”

19. In  view of  above  discussion,  while  upholding  the  

liability  of  the  Corporation,  we  reiterate  that  not  only  

Constitutional 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 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  

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certainty  on  the  subject.   We  request  the  Law  

Commission to look into the matter and take 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  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.

….…………………………….J. V. GOPALA GOWDA

….……………………………..J. NEW DELHI            ADARSH KUMAR GOEL September 10, 2014

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