Divya Ann Samuel & Nikunj Rakyan

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1 CASE LAW ANALYSIS OF VADODARA MUNICIPAL CORPORATION VS. PURSHOTTAM V. MURJANI Divya Ann Samuel & Nikunj Rakyan Amity Law School, Noida The following case analysis aims to elucidate certain aspects of judicial opinion relating to tortious liability of the State in certain matters. It is clear that Courts in India have failed to effect tort law in India in comparison to their English counterparts. This is not a failure of the judiciary, but that of the general public who find themselves unable to seek shelter in the protective gaze of the Court. It is a poignant state of affairs where the State fails to satisfy the duty of care it owes its individuals. It is even more regretful where the State is able to absolve itself of responsibility and evade the leveling hand of law. For that reason, a greater need exists to impose liability upon the State. While serving such an important need, the matter at hand also presents a vignette of how tort cases are handled in India while discussing matters of liability and manners to compute the same. Key words: Tortious Liability, Duty, Services, Consumer FACTS The facts of the case are as follows: 1. In September, 1992, the Vadodara Municipal Corporation [hereinafter the Corporation ] entered into a license agreement with Ripple Aqua Sports [hereinafter the Contractor ] for the management of the Boating Club at Sursagar Lake, which falls under its control and management. 2. The terms of the agreement were as follows: 2.1. The Contractor would be responsible for providing boating services to the public The Contractor would take insurance policies covering risk liability of persons using club equipment The Corporation would retain right of supervision over the boating club. 3. In consonance the agreement, the Contractor took an insurance policy on through Oriental Insurance Company Ltd. [hereinafter the Insurance Company ]. 4. On , 38 passengers were allowed onto a boat having capacity of 20 persons, causing the same to capsize, and thereby resulted in the death of 22 persons. 1 THE WORLD JOURNAL ON JURISTIC POLITY ALL RIGHTS RESERVED.

2 5. No life guards, lifesaving jackets or other safety measures has been adopted or made available, the presence of which may have positively affected the outcome of the incident. 6. Subsequently, the victims approached the State Commission claiming compensation on the ground of deficiency of service by Contractor and Corporation. 7. The contentions of the parties before the State Commission have been posited hereunder: Contentions of Victims 7.1. The victims contended that the claim was covered by the insurance policy to the extent of Rs. 20 lakhs per passenger to a maximum of Rs. 80 lakh in one year The victims further relied on provisions of the Bombay Municipal Corporation Act, to contend that the Corporation had a duty to maintain the safety of the passengers and exercise due care. However, the Corporation had failed and thus, was liable for the tortious acts of the Contractor The victims further relied upon the empirical absence of safety measures to supplement their averment of the Corporation s negligent act. Contentions of the Insurance Company 7.4. The Insurance Company claimed that their liability was limited to Rs. 1 lakh per person and did not exceed Rs. 20 lakhs. It contended further, that the complainants were not consumers and could avail remedy under the Indian Vessels Act, Contentions of the Contractor 7.5. The Contractor sided with the Insurance Company and contended that the liability fell upon the Corporation. 8. The State Commission answered the above claims in the affirmative and held the Corporation vicariously liable for negligence of the Contractor. The liability of the Insurance Company was fixed at Rs. 20 lakh in line with the decision in Motor Owner s Insurance Co. Ltd. v. Jadavji Keshavji Modi 3. The Court found the negligence in operation of the boat as amounting to deficiency in service in view of the Indian Vessels Act, Act 59 of Act 1 of (1981) 4 SCC THE WORLD JOURNAL ON JURISTIC POLITY ALL RIGHTS RESERVED.

3 9. Accordingly, both the Contractor and Corporation were held jointly and severally liable to the amount of Rs. 30,18,900 with 10 percent interest p.a. from date of incident of payment. 10. On appeal, the decision of the State Commission was confirmed by the National Consumer Disputes Redressal Commission [hereinafter the NCDRC ]. However, certain elements including quantum of compensation were altered as follows: ISSUES Primary liability lay with the Contractor The Corporation failed to perform its duty of supervision and was thus vicariously liable for the negligence The Insurance Company was held liable up to Rs. 20 lakhs (per death) subject to a maximum of Rs. 80 lakhs as opposed to the cap of Rs. 20 lakhs as decided by the State Commission. 1. Whether the NCDRC had erred in fixing the liability of the Contractor, the Corporation, or the Insurance Company? CONTENTIONS Corporation The contentions made by the Corporation were as follows: 1. The Corporation was not a service provider and lacked privy with the victims. 2. As per the license agreement, all control and management in the boating club vested in the Contractor upon which the Corporation exercised no direct control. Insurance Company The contentions of the Insurance Company were as follows: 1. The liability of the Insurance Company was limited to Rs. 1 lakh as per the insurance policy issued. Contractor The contentions of the Contractor were as follows: 1. The liability lay with the Manager individually or upon the Corporation for whom the boat was being plied. OBSERVATIONS The Hon ble Supreme Court observed as follows: 3 THE WORLD JOURNAL ON JURISTIC POLITY ALL RIGHTS RESERVED.

4 1. With regard to the Contractor: 1.1. The victims were consumers and the contractor was the service provider. From this analogy, it flows that the contractor was to be blamed for the mishap Deficiency of service exists. 2. With regard to the Insurance Company: 2.1. The Insurance Co. is bound by following laws: Public Liability Insurance Act, The Insurance Regulatory and Development Authority (Protection of Policyholders Interest) Regulation, Insurance Regulatory and Development Authority Act, United India Insurance Company Ltd. Vs. M.J.K Corporation With regard to Corporation: 3.1. The Corporation had the duty to supervise and the mere appointment of the contractor would not absolve the Corporation of such a duty, especially when the contract between the two shows the same expressly The Court also took a view that though the contractor had the direct interaction with the consumers as a service provider, the Corporation, too, is the service provider, for it acts as a principal to the agent contractor The court reiterated the rule that duty of care was on the Corporation, for a reasonable foresight would make the plying of boat with passengers an inherently perilous task The Court cited the case of Municipal Corporation of Delhi vs. Uphaar Tragedy Victims Association & Ors. 5, and held that based on the concept of remoteness of damage and the justness of claims, liability of any public office can be fixed. The claims of the victims for a private law remedy has to be analyzed and upheld, if they are just and fair, and compensation must be awarded in Tort. DECISION The Court held as follows: 4 (1997) 7 SCC (2011) 14 SCC THE WORLD JOURNAL ON JURISTIC POLITY ALL RIGHTS RESERVED.

5 1. The Contractor is undisputedly liable for the accident for it failed to provide service to the consumers appropriately with due care. 2. It upheld the decision of the State Consumer Forum and the NCRDC that the Insurance company cannot do away with its responsibility by self-limiting its liability of up to a maximum of Rs. 80 lakhs in a year, with 20 lakhs per accident, namely, per death. Hence, the Insurance Co. shall reimburse Vadodara Municipal Corporation Rs. 80 Lakhs. 3. The Vadodara Municipal Corporation is equally liable for the acts of its agent contractor. ANALYSIS AND CONCLUSION The Supreme Court as well as the Consumer Courts refused to exonerate the Municipal Corporation as a discharger of statutory duties. Instead, they correctly held the same liable for negligence and for failing to exercise the very duty of care to the public, upon which it was conceived. Such a duty cannot be compromised. The hon ble Supreme Court also pointed out the lacunae in the Indian system existing in the absence of a comprehensive legal instrument fixing the tortious liability of the State. The problem has only grown by virtue of legislative dormancy as well as lack of judicial opinion clearly enunciating the dire need. Others have stubbornly attached themselves to the archaic view of the notion that the State is efficient, sincere and dignified. It becomes axiomatic from this view that State immunity gives rise to liberty, equality and rule of law. The underlying purpose of citing the Uphaar Tragedy case 6 was to bring to light the repercussions of not having a uniform law fixing the liability of the State. The major drawback is the arbitrary compensations which are awarded by the Courts. For the first time two Bills were tabled in the years But, owing to the Parliamentary culture of granting State limitless powers, the Bills lapsed. It is surprising (but not shocking for the trend still continues) how the first Law Commission took a drastic step with high spirit for establishing the foundation in the years to come but was put down in a thrashing way by the Parliament. In the year 1965, the honorable Supreme Court, too, for the first time realized the need for legislation in the case of Kasturi Lal case 7. In the years to follow, many judgments of the Apex Court highlighted the same. To their dismay, everything fell on deaf ears. The Courts have done much ground work for the enactment of the legislation by devising many tests for awarding compensation and holding the State and its instrumentalities liable. It has even gone into the extensive research work by giving a comparative analysis of 6 Supra Note 5 7 AIR 1965 SC THE WORLD JOURNAL ON JURISTIC POLITY ALL RIGHTS RESERVED.

6 laws of various nations holding the State accountable for the infringement of fundamental rights of the citizens. India has a plethora of legislations, many of which needs to be scraped. But, it also needs new legislations, especially the one requiring to fix the tortious liability on the State and its instrumentality. CONCLUSION In Vadodara Municipal Corporation, the Municipal Corporation has failed to exercise its power of supervision and allowed a contractor to continue flagrantly its flawed careless operations. The Supreme Court has affirmed the stance adopted by the Consumer Courts and has acted in the best interests of the victimized general public by fixing the liability of both the Corporation and the contractor, refusing to absolve neither for the acts of the other. The Supreme Court has continued its duty to bring to light the plight of the Indian judiciary and rolled the ball towards the Law Commission requiring to emphasize the need for a legislation for tortious liability. 6 THE WORLD JOURNAL ON JURISTIC POLITY ALL RIGHTS RESERVED.

IMPORTANT JUDGEMENTS

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