- 1 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF JULY, 2026 BEFORE THE HON'BLE MRS. JUSTICE P SREE SUDHA MISCELLANEOUS FIRST APPEAL NO. 7182 OF 2013 (WC) BETWEEN: KARNATAKA STATE ROAD TRANSPORT CORPORATION DEPOT NO.4 15TH CROSS, BAPUJINAGAR BANGALORE BY ITS DEPOT MANAGER REPRESENTED BY ITS CHIEF LAW OFFICER. …APPELLANT (BY SRI. RENUKA H R., ADVOCATE) AND: 1. R NAGARAJU AGED ABOUT 37 YEARS S/O RAMEGOWDA R/O HAROHALLI VILLAGE PANDAVAPURA TALUK MANDYA DISTRICT-571 434. 2. R RAGHAVENDRA S/O B K RAMANNA ADULT NO.65, M R A GARDNE SANJAYANAGR BANGALORE-560 094. 3. NEW INDIA ASSURANCE COMPANY BOMMASANDRA BRANCH(670307) K.I.A.D.S COMPLEX R Digitally signed by PADMASHREE SHEKHAR DESAI Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 HOSUR MAIN ROAD BOMMASANDRA INDUSTRIAL AREA BANGALORE-562 158. …RESPONDENTS (BY SRI. K.L. SRINIVAS, ADVOCATE FOR R1, SMT. HARINI SHIVANANDA, ADVOCATE FOR R3, R2 SERVED AND UNREPRESENTED) THIS MFA IS FILED U/S 30(1) OF W.C.ACT AGAINST THE JUDGMENT DATED: 27.4.2013 PASSED IN ECA/NFC/CR- 227/2006 ON THE FILE OF THE LABOUR OFFICER AND COMMISSIONER FOR EMPLOYEES COMPENSATION, MANDYA, SUB DIVISION-2, MANDYA, AWARDING A COMPENSATION OF RS.3,11,970/- WITH INTERSET @ 12% P.A WITH EFFECT FROM 30.11.2003 OUT OF TIME. THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 07.07.2026 COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, P SREE SUDHA J., DELIVERED THE FOLLOWING: CORAM: HON'BLE MRS. JUSTICE P SREE SUDHA CAV JUDGMENT This appeal is filed by the appellant/Depot Manager, KSRTC under Section 30(1) of Workmen Comepnsation Act to set aside the order dated 27.04.2013 passed in ECA/NFC/CR-227/2006, by the Commissioner for Employees Compensation and Labour Officer, Mandya Sub Division II, Mandya (hereinafter referred to as trial court). 2. Heard the arguments of the learned counsel for the appellant and learned counsel for respondents. The - 3 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 ranks of the parties are retained as per tribunal for the sake of convenience. 3. The injured claimant met with an accident on 16.02.2004 and filed claim petition. The Trial court considering the entire evidence on record granted an amount of Rs.3,11,970/- and directed respondent No.3/KSRTC to deposit the amount with interest rate of 12% within 30 days and further stated that they are liable for recovery proceedings, as provided under Section 31 of the Workmen’s Compensation Act, 1923 (now called the Employees' Compensation Act, 1923). Further, the claim against respondent no.2/Insurance Company was rejected by the trial court. 4. Aggrieved by the said order, KSRTC preferred this appeal and mainly contended that the claimant stated that he was working as a driver in bus bearing Reg.No.KA- 04/AA-200 owned by respondent No.2. But the bus is insured with respondent No.3. The claimant stated that he was on duty on 30.10.2003 at about 02.30 a.m., while he - 4 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 was plying on the route Sindanuru to Bangalore, near Hiriyur by-pass a lorry dashed against the bus. As a result, he sustained injuries to both legs. The injured got treated in Sanjaygandhi Hospital and filed an application before the commissioner for Workmens compensation by arraying the owner, Insurance Company and the KSRTC. The Tribunal directed the KSRTC to deposit the amount. They preferred MFA No.13591/2007 which was allowed on 02.12.2009 and case was remitted back for fresh disposal. They examined two witnesses and also marked Exs.R1 to R3. Again on 27.04.2013, the claim was allowed against them. It is stated that the claimant was appointed as driver by the respondent No.2/R.Raghavendra with a salary of Rs.4,000/- per month and Rs.50/- bata per day. He was an employee of the respondent No.2 and not appointed by the appellant herein. As such, there is no master and servant relationship between appellant and the claimant. As per the terms of the contract entered between appellant and respondent No.2, onus of payment - 5 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 of compensation is on the respondent No.2. They have hired the bus, as such, they are not owner of the bus. As per the terms, owner/respondent No.2 shall alone be liable to pay the compensation and it is his duty to process valid insurance policy. But he failed to appear before the court and remained ex parte and thus the trial court relied upon the following substantial questions of law? “1. Whether the commissioner for Employees Compensation was justified in directing the appellant to pay the compensation inasmuch as there is no master and servant relationship between the appellant and the claimant? 2. Whether the commissioner for Employees Compensation was justified in placing reliance on the decision of the apex court reported in 1997 ACC 1148 while the issue with regard to payment of compensation in similar cases is fastened on the owner/insurer in the case of UPSRTC Vs. Kulsum – C.A. No.5901/2011 dated 24.07.2011? 3. Whether the Commissioner for Employees compensation was justified in directing the appellant to pay compensation n the absence of legal obligation to pay the same inasmuch as the terms of contract clearly stated that it is the owner who has to answer the claim in the event of any accident being caused to the vehicle?” - 6 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 5. There is no dispute regarding the fact that the bus was pertaining to Sri.R. Raghavan/owner of the bus which was hired by KSRTC with terms and conditions. Insurance Company stated that the policy cover note issued by them in favour of the bus was cancelled as the premium amount paid through the cheque issued by the respondent No.3 was bounced as insufficient funds. They have not issued any policy to the bus as on the date of accident i.e. on 30.10.2003, thus they are not liable to indemnify the first respondent and they are not liable to pay the compensation. The KSRTC stated that when there is no insurance policy taken by the first respondent/owner, he alone is liable to pay the compensation, but not KSRTC. Owner of the bus did not appear and remained ex parte. The Tribunal held that the driver of the vehicle was working under the control of the KSRTC and they were running the bus and earned profits. As such, they are liable to pay the compensation. However, they are at liberty to recover the same from the owner of the vehicle. - 7 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 It was stated that KSRTC was a State Government-PSU. They have taken the services of the injured claimant according to the directions and collected fees from the passengers traveling in the bus. As such, now they cannot dispute the employer and employee relationship between them as the respondent No.1 obeyed duties allotted by respondent No.3. Learned counsel for the appellant relied upon the citation reported in 2011 Kant MAC 588 (SC) in case of UP State Road Transportation Corporation Vs Kulsum and Ors, it was held that “Perusal of record shows that no violation to terms and conditions of insurance policy by claimants insurance company is liable to pay compensation to claimants and thus appeal filed by Insurance Company dismissed but appeals filed by corporation thus stand allowed.” 6. It is submitted that as per the agreement Ex.R.3(3) the respondent No.3 has to pay the compensation payable to the applicant and can deduct the same from the amount payable to the respondent No.1 for - 8 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 the supply of bus and driver. The KSRTC relied upon the following conditions in the agreement dated 18.02.20203 agreement conditions on 2(a), 14 and 15 (b), reads as follows, “2. (a) The owner of the private bus shall offer only brand new Lay-land (222” wheel base) Telco (232” wheel base) Ultra Deluxe buses that were not put into commercial use earlier (Brand new buses means the buses newly built on the brand new chassis as per the specifications of KSRTC enclosed with the tender application or modified with the consent of successful applicants. The buses shall have a minimum capacity of 39 seats excluding the driver.” 14. The owner of the private bus shall keep the hired bus only insured under a Motor Vehicle comprehensive insurance policy covering all risks and all such costs shall be borne by the owner of the private bus. In case of failure to have valid comprehensive insurance policy, the bus will not used for KSRTC’s operations and it will be deemed that the bus has not been made available to KSRTC for schedule operations with all consequent effects. The insurance cover shall cover 39 passengers.” 15.(b) KSRTC may make payment of ex-gratia amount to the victims in the event accident of such private hired buses while on KSRTC operations as per the KSRTC prevailing norms which shall be recovered from any amounts due to the owner of the private buses from securing deposits etc…..” - 9 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 7. As per the above conditions relied by the KSRTC, condition No.14 clearly shows that the owner of the vehicle, shall keep the hired bus only after insuring the vehicle under comprehensive insurance policy covering all the risks. In case of failure to have valid comprehensive policy, bus will not be used for KSRTC operations. This clearly shows that the owner of the vehicle entered into an agreement with KSRTC on 18.02.2003 and it is for him to insure the bus under a valid policy. But the cheque issued by him towards the premium on 29.07.2003 was dishonoured on the ground that there was an insufficient funds. As such, insurance policy was cancelled on 04.08.2008. The accident occurred on 16.02.2004. It is for the Insurance Company to verify, whether owner of the bus has insured the vehicle properly or not? The KSRTC failed to verify the same from 18.02.2003 till the date of accident i.e., 16.02.2004. In Condition No. 14, it was clearly stated that, if at all there is no valid comprehensive policy, the bus will not be used for KSRTC operations. But - 10 - HC-KAR NC: 2026:KHC:35863 MFA No. 7182 of 2013 for the reasons best known to the KSRTC, they continued their operations for one year with the said bus. Therefore, now they cannot contend that they are not liable to pay the compensation. Tribunal rightly considered all the aspects and directed the KSRTC to deposit the amount of Rs.3,11,970/- along with interest at the rate of 12% p.a. Accordingly, this appeal is hereby dismissed. However, appellant/KSRTC is at liberty to recover the same from owner of the vehicle by due process of law. Sd/- (P SREE SUDHA) JUDGE AKV CT:NR List No.: 1 Sl No.: 51