Mere appointment of a contractor or employee does not Absolve Corporation from its statutory duties #indianlaws

It was held by the Supreme Court held a Corpoation who grants the boating rights to contractor would continue to be liable to suprevise the boating activities and pay for the loss of life during boating.

The present set of appeals were preferred against the Judgment of the National Consumer Disputes Redressal Commission by the Vadodara Municipal Corporation, the Oriental Insurance Company Ltd. and the proprietor of Ripple Aqua Sports (“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.

The Lake is under the control and management of the Corporation which has been plying boats for joy rides and boating club. The contract for plying the boats was given to the Contractor for managing the affairs of the Boating Club at the Lake for purposes of entertainment and the agreement provided that the facility of boating would be given to the public. It was made necessary for the contractor to take insurance policies to cover the risk liability of all persons using the equipment of the club and the Contractor had accordingly taken the insurance policy against the capacity of 20 persons. 38 passengers were allowed to ride in the boat which capsized resulting in the death of 22 passengers.

The Court held that mere appointment of a contractor or employee does 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 held to be not only discharging its statutory duties but also was acting as service provider to the passengers through its agent and thus had a duty of care, when activity of plying boat was inherently dangerous and there was clear forseeability of such occurrence unless precautions were taken like providing life saving jackets. The Insurance Company was held to be bound by the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interest) Regulation, 2002 framed under the Insurance Regulatory and Development Authority Act, 1999 and its liability was held to be determinable to the maximum limit as per the insurance policy.

The Court accordingly upheld the liability of the Corporation, observed 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.

It was further observed that 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 subject and the Law Commission was requested to look into the matter and take such steps as would found to be necessary.

[Vadodara Municipal Corporation vs. Purshottam V. Murjani and Ors.]
(SC, 10.09.2014)