1. This appeal is filed by the Appellants-APSRTC (now TSRTC) under Section 173 of the Motor Vehicles Act, 1988, being aggrieved by the judgment and decree dated 16.03.2011 passed in O.P.No.1528 of 2009 by the XXII Additional Chief Judge–cum–Chairman, Motor Accidents Claims Tribunal, City Criminal Courts at Hyderabad (for short, “the Tribunal”), whereby the Tribunal awarded a total compensation of Rs.48,000/- with interest @ 7% per annum from the date of the petition till the date of realization, fastening the liability on the appellants-Corporation and the owner of the vehicle, while dismissing the claim against the insurer.

2. The brief facts of the case are that respondent No.1/claimant, who was a minor aged about 9 years at the time of the accident, represented by her father and natural guardian, filed a claim petition under Section 163-A of the Motor Vehicles Act, 1988, seeking compensation of Rs.1,00,000/- for the injuries sustained by her in a motor vehicle accident that occurred on 22.08.2008 at about 8:00 hours. It is her case that while she was crossing the road at Pagidipally Village on NH-202 to purchase items from a kirana shop, a bus bearing No.AP-29-U-8516, driven by its driver in a rash and negligent manner from Yadagirigutta towards Secunderabad, dashed against her. As a result, she sustained an un-displaced fracture of the distal end of the left radius, a diffuse head injury, a brain injury, and other injuries all over her body. The police of Bhongir Rural Police Station registered a case in Crime No.187/2008 under Section 338 of the IPC against the driver of the offending bus. The said bus admittedly belongs to respondent No.2 herein (owner) and was insured with respondent No.3 herein (Insurance Company) under a valid insurance policy. At the relevant point of time, the vehicle was under a hire agreement with the appellants-Corporation.

3. The Tribunal, on appreciation of the oral evidence of P.Ws.1 to 3 and the documentary evidence under Exs.A.1 to A.23 and Ex.X.1, came to the conclusion that the accident occurred due to the rash and negligent driving of the driver of the offending hired bus and awarded a total compensation of Rs.48,000/-. The Tribunal however held that since the private vehicle was given on hire to the APSRTC, the Corporation alone was liable to pay the compensation, thereby exonerating respondent No.3/Insurance Company from its liability. Assailing the shifting of sole liability onto the hirer, the appellants-Corporation has preferred this appeal.

4. Learned Standing Counsel for the appellants-Corporation contended that the appellants are merely the hirers of the vehicle and not the absolute owners; that the vehicle was admittedly covered under a valid insurance policy issued by respondent No.3; and that the driver was engaged by the owner of the vehicle. It is further contended that the issue of liability of the insurer in respect of a hired vehicle is no longer res integra in view of the authoritative pronouncement of the Hon’ble Supreme Court in the case of Uttar Pradesh State Road Transport Corporation vs. Kulsum and others(( 2011) 8 SCC 142). It is submitted that the action of the Tribunal in fastening liability on the appellants by exonerating the Insurance Company is contrary to the settled position of law.

5. On the other hand, learned Standing Counsel for the Respondent No.3/Insurance Company argued that since the vehicle was under the operational control and management of the appellants-Corporation at the time of the accident, the primary liability to satisfy the award rests with the Corporation. It is further contended that the vehicle was deployed on hire without proper intimation or due adherence to the statutory conditions, and therefore, the insurer cannot be automatically called upon to indemnify the hirer.

6. Learned counsel appearing for respondent No.1/claimant submitted that the claimant is a third party to the contract of insurance and hire. It is further contended that the evaluation of quantum by the Tribunal is just, reasonable, and supported by medical evidence under Exs.A.3 to A.6, and the same does not require any interference.

7. As seen from the material placed on record, the eyewitness testimony of P.W.3 coupled with Ex.A.1 (FIR) and Ex.A.2 (Charge Sheet) clearly demonstrates that the accident was caused by the driver of the bus bearing No.AP-29-U-8516. The finding of the Tribunal on negligence is based on a sound evaluation of the evidence and warrants no interference. Similarly, on the quantum of compensation, this Court finds that the sum of Rs.48,000/- awarded for the fracture of the left arm, head injury, and corresponding medical bills is completely just and reasonable. It is accordingly confirmed.

8. The only issue that requires consideration is whether the Tribunal was justified in exonerating the Insurance Company and shifting the liability to pay compensation onto the appellants-Corporation on the ground that the vehicle was running under a hire agreement.

9. It is appropriate to refer to the law laid down in Kulsum’s case (supra), wherein the Hon’ble Supreme Court dealt with the structural liability arising out of accidents involving private vehicles hired by State Road Transport Corporations. The Hon'ble Supreme Court observed that when a statutory Corporation hires a private vehicle, the operational control of the vehicle shifts to the Corporation, but the effective ownership for the purpose of third-party risk management remains seamlessly covered under the statutory insurance policy taken out by the registered owner.

10. In the present case, it is an admitted position that the offending bus was owned by respondent No.2 and stood insured with respondent No.3 under a valid and effective insurance policy (Ex.B.1) at the time of the accident. The Insurance Company has failed to lead any cogent evidence to establish a fundamental or willful breach of the insurance policy terms by the owner, except raising a bald plea regarding the hiring of the vehicle. A contract of hire between the owner and the Corporation does not vary the third-party risk profile covered by the insurer. The vehicle continues to remain an insured entity on the road. Therefore, the action of the Tribunal in exonerating the insurer is unsustainable. The ultimate liability to satisfy the award must be fastened on respondent No.3/Insurance Company, which is bound to indemnify the risk. Consequently, this Court is of the considered opinion that the Tribunal committed a clear error of law in dismissing the claim petition against respondent No.3/Insurance Company and fastening the liability upon the appellants-Corporation.

11. In the result, this appeal is partly allowed and the finding of the Tribunal in the impugned judgment and decree dated 16.03.2011 passed in O.P.No.1528 of 2009, insofar as it exonerated respondent No.3/Insurance Company and fastened the liability on the appellants-Corporation, is hereby set aside. It is held that respondent No.3/Insurance Company is solely liable to satisfy the award and pay the compensation to the claimant. The impugned award passed by the Tribunal is confirmed in all other respects. In view of the liability being shifted entirely onto respondent No.3, the appellants-Corporation is permitted to withdraw the amount, if any, already deposited by it, or in the alternative, seek recovery/reimbursement of the same from respondent No.3/Insurance Company. Respondent No.3/Insurance Company is directed to deposit the entire remaining award amount along with accrued interest and costs before the Tribunal within a period of two (02) months from the date of receipt of a copy of this judgment. There shall be no order as to costs.

As a sequel, miscellaneous petitions, if any, pending in this appeal shall stand closed.