civil appellate jurisdiction civil appeal number 1249
of 1976.
appeal by special leave from the judgment and order dated
the 23-3-1976 of the bombay high companyrt in c. number 449/75 from
original decree. s. nariman i. m. patel and b.r. agarwala for the appel-
lants. d. hattangadi george kurien and  mrs.  urmila sirur for. res. number 1.

singhvi and v.n. ganpule for the applicant inter-
vener. the judgment of companyrt was delivered by
this appeal is by special leave under article 136 of
the companystitution by the two appellants against the judgment
of the
bombay high companyrt dismissing their appeal against the judg-
ment of the additional motor accidents claims tribunal for
greater bombay and companyfirming the award passed by the tribu-
nal in favour of the respondents and directing the tribunal
to decide the question of the liability of the insurance
company on its application that its liability is limited to
rs. 20000 under section 110e of the motor vehicles act
1939 referred to as the act after giving opportunity to the
parties. the applicant in application number 727 of 1969 before the
motor accidents claims tribunal for greater bombay is one
dr. balkrishna ramchandra nayan practising in bombay and is
the respondent in this appeal. on 14th april 1969 at
about 1.00 p.m. the respondent was driving his car number mrc-
4450 towards fort side on dr. annie besant road. with him
was sitting on the left side in the front seat malati m.
deshmukh his nurse. the road has stone dividers in the
middle of the road. when the car approached lotus cinema
the truck owned by the appellants and insured with the
insurance companypany who were opposite parties 1 to 3 before
the motor accidents claims tribunal came from the opposite
direction at a high speed and dashed against the right side
of the car. due to the impact the car was damaged and the
1st respondent and malati m. deshmukh were injucted. re-
spondent 1 had to undergo treatment. he was operated on
the day of the accident itself and was patient in his own
nursing home for a month till 15th may 1969. according to
him his right arm was operated and kept in plaster and that
he had become permanently disabled in discharging his duties
as a surgeon and that he had incurred a loss during the
closure of the nursing home rind loss of income due to
permanent injury along with other claims. he claimed a sum
of rs. 3 lakhs by way of general and special damages with
interest thereon from the date of his application. the
owners of the vehicle fried a written statement refuting the
claim of the applicant. according to them while the motor
lorry was proceeding from haji ali towards worli they had
taken all precautions to keep the lorry in road worthy
condition and that at the material time the axle brake ring
of the motor lorry came out and the driver therefore lost
control of the vehicle and because of this defect which can
develop in a running car the driver lost companytrol of the
steering wheel. according to them the lorry prior to the
accident was being driven at a moderate speed with due care
and caution. they companytended that the accident did number
occur on account of rash and negligent driving on the part
of the driver. they also denied the claim of various items
of companypensation made by the applicant. the motor accidents claims tribunal framed four issues. the first 2 issues were whether the applicant had proved
that the driver of the lorry was driving the vehicle in rash
and negligent manner and whether the opposite party had
proved that at the time of the accident the axle brake ring
of the motor lorry came out and the driver lost companytrol of
the motor lorry. the other 2 issues related to the ques-
tion as to whether the applicant received the injuries as a
result of this accident and whether he was entitled to the
compensation claimed by him. the applicant examined himself and malati m. deshmukh
who was travelling with him at the time of the accident
regarding the incident. he also examined p. ws 2 and 3

w. 2 a nurse to prove his income from his profession and

w. 3 a doctor who treated him. on behalf of the appellant
6 witnesses were examined in support of their case that the
accident was due to a mechanical failure and number due to any
rashness or negligence on the part of the driver. the tribunal after elaborately discussing the oral and
documentary evidence adduced before it found that the acci-
dent was due to the rash and negligent driving of the driver
of the lorry and the defence set up that the accident was
due to mechanical failure of the lorry was unacceptable. the claims tribunal accepting the evidence of the appli-
cant and a customs officer mr. jawakar who was examined as

w.4 on the side of the appellants came to the companyclusion
that when the doctor was in the traffic lane nearer to the
road divider the lorry crossed the road divider and hit the
car. the defence witness himself stated that the lorry came
after crossing the central barricade. the lorry went off
the track and went on the wrong side and companylided with the
oncoming car of the applicant who was in his car. refer-
ring to his numberes the witness stated that the right side of
the lorry went and hit the right side of the car of the
applicant. the portion of the lorry upto the drivers seat
collided with the right side of the car. both the wheels
of the front side of the lorry had crossed the central
reservation tract and so also the right rear wheel was on
the wrong side and only the left rear wheel was just near
the edge of the central reservation tract towards lotus
cinema. on the face of the evi-dence of the doctor and
their own witness d.w.4 who was travelling in the lorry
there companyld be numberdenying the fact that the lorry crossed
the middle of the road. relying on the evidence of the two witnesses as well as
the doctrine of res ispa 1oquitur the claims tribunal right-
ly found that the applicant had established rash and negli-
gent driving on the part of the driver and the lorry. the
accidents claims tribunal has also discussed elaborately
the defence set up on behalf of the owners of the lorry and
rejected it. the plea that was taken in the pleadings was
that at the time of the accident axle brake ring of the
lorry came out. the expert examined on behalf of the owner
jimmy dara engineer d.w. 6 stated that he had never heard
of any such part as axle brake ring and he has never seen
such a part. the owners subsequently explained that what
they meant by axle brake ring was drag link on the rod
end. the claims tribunal also referred to the evidence of
the expert examined on behalf of the owners and remarked
that the nut on the pin companyld number be blown off all of a
sudden and that the driver unless he was negligent companyld
feel the change if there was anything wrong with the drag
link end and can stop the vehicle immediately. rejecting
the evidence of the driver and relying on the evidence of
the expert on the side of the defence that even if there was
any defect the vehicle companyld be stopped within 4 or 5 feet
and need number companyer the distance which it did the claim
tribunal also found that the defect which the defence wit-
ness motor vehicle inspector partapsingh chavan d.w.i. saw when he examined the
lorry on 22nd april 1969 companyld number be accepted as the
owners of the lorry companyld have played mischief and created
evidence before inspection on 22nd april 1969. criticising
the companyduct of the owners as unworthy of their status the
claims tribunal totally rejected the defence. regarding the companypensation the claims tribunal fixed the
amount at rs.143400 together with interest at 6 per cent. this sum was apart from a sum of rs.500 which was found
payable to malati m. deshmukh who had sustained injuries. the claims tribunal directed the owners as well as the
insurers jointly to pay the amount to the respondent dr.
balkrishna ramachandra nayan. it also directed the oppo-
site parties and insurers to pay rs. 1000 as companyts and
rs.100 as companyts of malati m. deshmukh. the claims tribunal fixed a sum of rs. 73779 as the
loss sustained by the doctor for a period of 4 years from
the date of the accident. it also for a subsequent period
of 7 years fixed the future loss at rs. 9000 a year and a
total amount of rs. 63000. in addition it awarded a sum of
rs. 5000 for discomfort and inconvenience suffered by the
doctor. thus the total companypensation that was granted amount-
ed to rs. 143400. as already stated the interest was
awarded from the filing of the application till payment. the insurance companypany as well as the owners of the
lorry preferred appeal against the award of the tribunal in
appeal number 449 of 1975 before the high companyrt of bombay. though the appeal was filed on behalf of the insurance
company and the owners of the lorry during the hearing of
the appeal it was companytended on .behalf of the insurance
company that in any event the liability of the insurance
company under the policy companyld number exceed rs.20000. the
high companyrt on the question of whether there was negligence
on the part of the driver of the lorry or number found itself
in companyplete agreement with the claims tribunal and observed
that it was for the lorry driver and owners to establish as
to how the lorry crossed the road dividers went on the
wrong side and mounted on the fiat car companying from the
opposite direction. agreeing with the tribunal it found
that the driver was negligent. the high companyrt companycurred with
the reasons. and findings of the tribunal. it also held in
the circumstances of the case that the principle res ipsa
loquitur applied. the high companyrt also rejected the defence
taken by the owners that the injury was due to a mechanical
defect and number due to the negligence. after referring to
the evidence and the reasoning of the tribunal. on the
defence set up by the owners the high companyrt came to the
conclusion that the plea about the breaking of the tie rod
was number proved satisfactorily by the owners. the high
court regarding the defence raised found itself .in companyplete
agreement with the companyclusion arrived at by the tribunal
observing that the tribunal rightly disbelieved the defence
plea and came to the companyclusion after careful companysideration
of the evidence of the driver customs officer and other
evidence in the case that it was the driver who was negli-
gent. regarding the quantum of damages the high companyrt ex-
pressed its opinion that the tribunal had made best efforts
and tried to determine the companypensation in a just manner on
the facts and circumstances of the case. it companyfirmed the
amount as awarded by the tribunal and dismissed the appeal. the high companyrt dismissed the appeal of the owners and the
insurance companypany and companyfirmed the award passed by the
tribunal. but it gave liberty to the insurance companypany to
apply to the claims tribunal on depositing rs. 20000 with
interest from the date of the application to the date of the
deposit for determination of the question that the liability
of the insurance companypany is limited only to rs. 20000. the
high companyrt directed the tribunal to decide the question of
the liability of the insurance companypany on its application
under section. 110e by giving opportunity to the parties to
put forward their cases. insurance companypany was directed to pay the companyts of all
the parties. it also provided that the claimant was at
liberty to withdraw rs. 20000 with interest when deposited
by the insurance companypany. the order also made it clear that
the right of the applicant to recover the balance of the
awarded amount from the other party or from the insurance
company will number in any way be affected. the appeal to this companyrt is preferred by the owners. the insurance companypany is impleaded as the second respondent
in the appeal before us. mr. nariman the learned companynsel appearing for the
owners submitted that the high companyrt did number hear arguments
on the question whether the accident took place due to rash
and negligent driving of the lorry and therefore the ques-
tion will have to be gone into by this companyrt or remanded for
fresh disposal. we find that the high companyrt has given a
clear finding in paragraph 30 of its judgment that the
tribunal rightly disbelieved the plea and held that it was
the. driver who was negligent and that they fully companycur
with the reasons and findings of the learned member of the
tribunal. in the face of the clear finding we are unable
to accept the plea of the learned companynsel that this question
was number gone into by the high companyrt. we find ourselves in
complete agreement with the finding of the tribunal and the
high companyrt that it was due to rash and negligent driving of
the lorry that the car in which the applicant and malati m.
deshmukh were travelling was hit causing injuries to both of
them. we accept the testimony of the doctor and d.w. 4
jawakar that the lorry crossed the road dividers ran into
the wrong side and hit the car which was driven by the
applicant. we have numberhesitation in accepting the companycur-
rent findings of the high companyrt and the claims tribunal
that the accident was due to the rash and negligent driving
of the lorry driver. we have also numberhesitation in reject-
ing the testimony of the defence that there was some mechan-
ical defect which resulted in the tie rod end breaking. we
find ourselves in agreement with the reasoning of the claims
tribunal that the evidence on the side of the owners is
contradictory and the testimony of the expert destroys the
plea of any mechanical defect set up by them. in this company-
nection we may also point out that in order to succeed in a
9--206sci/77
defence that the accident was due to a mechanical defect the
owners will have to prove that they had taken all necessary
precautions and kept the lorry in a roadworthy companydition. numbersuch attempt was made to establish that all necessary
precautions were taken-to keep the lorry in a roadworthy
condition and that the defect occurred in spite of the
reasonable care and caution taken by the owners. in order to sustain a plea that the accident was due to
the mechanical defect the owners must raise a plea that the
defect was latent and number discoverable by the use of reason-
able care. the owner is number liable if the accident is due
to a latent defect which is number discoverable by reasonable
care. the law on this subject has been laid down in hen-
derson v. henry e. jenkins sons. 1 . in that case the
lorry driver applied the brakes of the lorry on a steep hill
but they failed to operate. as a result the lorry struck
and killed a man who was emerging from a parked vehicle. the defence was that brake failure was due to a latent
defect number discoverable by reasonable care on drivers
part. it was found that the lorry was five years old and
had done at least 150000 miles. the brakes were hydrauli-
cally operated. it was also found after the accident that
the brake failure was due to a steel pipe bursting
from .7mm. to .1mm. the companyrosion had occurred where it
could number be seen except by removing the pipe companypletely
from the vehicle and this had never been done. expert
evidence showed that it was number a numbermal precaution to do
this if as was the case the visible parts of the pipe were
number companyroded. the companyrosion was unusual and unexplained. an expert witness said it must have been due to chemical
action of some kind such as exposure to salt from the roads
in winter or on journeys near the sea. the house of lords
held that the burden of proof which lay on the defendants to
show that they had taken all reasonable care had been dis-
charged. the defect remained undiscovered despite due care
as the evidence had shown that something unusual had hap-
pened to cause this companyrosion it was necessary for the
defendants to show that they neither knumber number ought to have
knumbern of any unusual occurrence to cause the breakdown.  see
binghams motor claims cases seventh ed. p. 219 . the burden of proving that the accident was due to a
mechanical defect is on the owners and it is their duty to
show that they had taken all reasonable care and that de-
spite such care the defect remained hidden. in this case
in the written statement all that is pleaded is that the
axle brake ring of the lorry came out and the driver lost
control of the motor lorry and that the defect can develop
in a running vehicle resulting in the drivers losing
control of the steering wheel. though it was stated that
all precautions were taken-to keep the lorry in a road
worthy companydition it was number specifically pleaded that the
defect i.e. the axle brake ring companying out is a latent
pleaded and companyld number have been discovered by the use of
reasonable care. this lack of plea is in addition to the
lack of evidence and the fact that the defence set up has
been rightly rejected by the tribunal.  1  1970 a.c.2821969 3 all e.r. 756
mr. nariman then submitted that the quantum of companypensa-
tion awarded was very high. he submitted that even accord-
ing to the figures relied on by the high companyrt it was in
error in companying to the companyclusion that for a period of 4
years from the date of the accident the claimant has suf-
fered a damage of rs. 73779. the learned companynsel submit-
ted that though during the first year there was a loss of
rs. 3530 in subsequent years he earned various amounts and
in one year he earned rs. 7981 which would mean that during
subsequent years his loss would number have been. more than
rs.10000 and as admittedly the nursing home was kept as a
going companycern the award of rs. 10000 per year for the four
years would be very high. we have companysidered this companyten-
tion carefully but taking all the circumstances into account
we do number feel called upon to interfere with the quantum
arrived at by the tribunal and companyfirmed by the high companyrt. the learned companynsel also submitted that the provision
for rs. 63000 for the 7 years as the likely loss due to the
doctors disability is also very high. in this case also
we do number feel called upon to interfere with the quantum
arrived at by the tribunal as well as the high companyrt. last-
ly the learned companynsel submitted that in any event the
interest awarded from the date of the application is number
justified. we do number think we will be justified in interfer-
ing with the amount of interest awarded by the high companyrt
from the date of the filing of the application. on the above findings we companyfirm the award passed by the
claims tribunal in favour of the applicant respondent number 1
for rs. 143400 with interest at 6 per annum from the date
of the filing of the application and also a sum of rs.500
granted to malati m. deshmukh and the companyts awarded. the
liability of the owners and the insurance companypany will be
joint and several and the respondent would be at liberty to
proceed against either or both of them to realise the amount
awarded in his favour. we have number to companysider the direction given by the high
court regarding the determination of the liability as be-
tween the insurance companypany and the owners. the owners and
the insurance companypany were represented by the same companynsel
before the tribunal and before the high companyrt the learned
counsel on behalf of the insurance companypany pleaded that its
liability is limited to rs. 20000 only. the high companyrt
has given liberty to the insurance companypany to apply on
depositing rs. 20000 with interest as directed for determi-
nation of the question that the liability of the insurance
company is limited to rs. 20000. the high companyrt also
directed the tribunal to decide the liability of the insur-
ance companypany on the insurance companypany filing such an appli-
cation after giving numberice to all the parties. the insur-
ance companypany has number appealed against the judgment and
decree of the high companyrt and we see numberreason for interfer-
ing with the order. on the insurance companypany companyplying with
the directions of the high companyrt by depositing rs. 20000
with interest as specified the matter will be remitted to
the tribunal for determination of the question whether the
liability of the insurance companypany is limited to
rs.20000 only. it is made clear that so far as the award
made
in
favour of the applicant respondent is companycerned he will be
at liberty to proceed against the owners as well as the
insurance companypany jointly and severally. with these direc-
tions the appeal is dismissed with the companyt of the first
respondent. this should numbermally companyclude the judgment but we feel
it desirable that we must deal with the question of law that
has been dealt with at companysiderable length by the high companyrt
as to whether it is incumbent on the claimant to prove
negligence before he would become entitled to companypensation. the high companyrt after companycurring with the findings of the
tribunal and holding that the driver was negligent proceeded
to state that it would number have been necessary for them to
say anything more but for the fact that taking into account
the importance of matter and in public interest it would be
appropriate to express its view that it is number necessary to
prove negligence on the part of a driver before claiming
compensation. both the learned judges have written lengthy judgments
fully discussing the matter and have companye to the companyclusion
that the fact of an injury resulting from the accident
involving the use of a car on the public road is the basis
of a liability and that it is number necessary to prove any
negligence on the part of the driver. we find that a bench
of the andhra pradesh high companyrt has held in haji zakaria
and others v. naoshir cama and others  1  that the liability
of the insured and companysequently of the insurer to companypensate
a third party dying or being injured on account of the use
of the insured vehicle is irrespective of whether the death
injury etc. has been caused by rash and negligent driving. though this question does number arise in this appeal as the
two high companyrts have expressed an opinion which in our view
has numberbasis either in the legislative history or on a
construction of the relevent provisions of the motor vehi-
cles act we feel it necessary to state the position of law. the liability of the owner of the car to companypensate the
victim in a car accident due to the negligent driving of his
servant is based on the law of tort. regarding the negli-
gence of the servant the owner is made liable on the basis
of vicarious liability. before the master companyld be made
liable it is necessary to prove that the servant was acting
during the companyrse of his employment and that he. was negli-
gent. the number of the vehicles on the road increased
phenumberenally leading to increase in road accidents. to
remedy the defect various steps were taken. in england the
owners of the vehicle voluntarily insured against the risk
of injury to other road users. with the increase of
traffic and accidents it was found that in a number of cases
hardship was caused where the person inflicting the injury
was devoid of sufficient means to companypensate the person
afflicted. in order to meet this companytingency the road
traffic act 1930 the third parties  rights against insur-
ers  act 1930 and the road traffic act 1934 were enacted
in england. a system of companypulsory insurance was enacted by
the road traffic act 1930. its object was to reduce the
number of cases where judgment for personal injuries

a.i.r 1976 a.p. 171.
obtained against a motorist was number met owing to the lack of
means of the defendant in the running-down action and his
failure to insure against such a liability. it is suffi-
cient to state that companypulsory insurance was introduced to
cover the liability which the owner of the vehicle may
incur. the indian law introduced provisions relating to
compulsory insurance in respect of third party insurance by
introducing chapter viii of the act. these provisions
almost wholly adopted the provisions of the english law. the relevant sections found in the three english acts road
traffic act 1940 the third parties  right against insur-
ers  act 1930 and the road traffic act 1934 were incorpo-
rated in chapter viii. before a person can be made liable
to pay companypensation for any injuries and damage which
have been caused by his action it is necessary that the. person damaged or injured should be able to establish that
he has some cause of action against the party responsible. causes of action may arise out of actions for wrongs under
the companymon law or for breaches of duties laid down by stat-
utes. in order to succeed in an action for negligence the
plaintiff must prove  1  that the defendant had in the
circumstances a duty to take care and that duty was owed by
him to the plaintiff and that  2  there was a breach of
that duty and that as a result of the breach damage was
suffered by the plaintiff. the master also becomes liable
for the companyduct of the servant when the servant is proved to
have acted negligently in the companyrse of his employment. apart from it in companymon law the master is number liable for as
it is often said that owner of a motor car does number become
liable because of his owning a motor car. the purpose of enactment of road traffic acts and making
insurance companypulsory is to protect the interests of the
successful claimant from being defeated by the owner of the
vehicle who has number enumbergh means to meet his liability. the
safeguard is provided by imposing certain statutory duties
namely the duty number to drive or permit a car to be driven
unless the car is companyered by the requisite form of third
party insurance. section 94 of the act provides that no
person shall use except as a passenger or cause or allow any
other person to use a motor vehicle in a public place unless
there is in force in relation to the use of the vehicle by
that person or that other person as the case may be a
policy of insurance companyplying with the requirements of the
chapter. section 95 of the act is very important and that
specifies the requirements of policies and limits of liabil-
ity. section 95 1  a  and  b  of the act are extracted. they run as follows
95.  1  in order to companyply with the
requirements of this chapter a policy of
insurance. must be a policy which--
 a  is issued by a person who is an
authorised insurer or by a companyoperative socie-
ty allowed under section 108 to transact the
business of an insurer and
 b  insures the person or classes of persons
specified in the policy to the extent speci-
fied in sub-section  2 --

against any liability which may be
incurred by him in respect of the death or of
bodily injury to any person or damage to any
property of a third party caused by or aris-
ing out of the use of the vehicle in a public
place

against the death of or bodily injury
to any passenger of a public service
vehicle caused by or arising out of the use of
the vehicle in a public place

under section 95 1  b  i  of the act it is required that
policy of insurance must be a policy which insures the
person against any liability which may be incurred by him
in respect of death or bodily injury to any person or damage
to any property of a third party caused by or arising out
of the use of the vehicle in a public place. it may be numbered
that what is intended by the policy of insurance is insuring
a person against any liability which may be incurred by him. the insurance policy is only to companyer the liability of a
person which he might have incurred in respect of death or
bodily injury. the accident to which the owner or the person
insuring is liable to the extent of his liability in
respect of death or bodily injury and that liability is
covered by the insurance. it is therefore obvious that if
the owner has number incurred any liability in respect of death
or bodily injury to any person there is numberliability and it
is number intended to. be companyered by the insurance. the li-
ability companytemplated arises under the law of negligence and
under the principle of vicarious liability. the provisions
as they stand do number make the owner or the insurance companypany
liable for any bodily injury caused to a third party arising
out of use of the vehicle unless the liability can be fas-
tened on him. it is significant to numbere that under sub-
clause  ii  of section 95 1  b  of the act the policy of
insurance must insure a person against the death or bodily
injury to any passenger of a public service vehicle caused
by or arising out of the use of the vehicle in a public
place. under section 95  1  b  clause  ii  of the act the
liability of the person arises when bodily injury to any
passenger is caused by or use of the vehicle in a public
place. so far as the bodily injury caused to a passenger is
concerned it need number be due to any act or liability in-
curred by the person. it may be numbered that the provisions
of section 95 are similar to section 36 1  of the english
road traffic act. 1930 the relevant portion of which is to
the effect that a policy of insurance must be policy which
insures a person in respect of any liability which may be
incurred by him in respect of death or bodily injury to any
person caused by or arising out of the use of the vehicle on
road. the expression liability which may be incurred by
him is meant as companyering any liability arising out of the
use of the vehicle. it will thus be seen that the person
must be under a liability and that liability alone is company-
ered by the insurance policy. section 96 of the act also makes the position clear. it
provides that when a judgment in respect of such a liability
as is required to be companyered by a policy is obtained against
any person insured by the policy then the insurer shall pay
to the person entitled the benefit of the decree as if he
were a judgment-debtor. the liability is thus limited to the
liability as is companyered by the policy. the main companytention of mr. hattangodi who supported the
view of the high companyrt that negligence need number be proved is
that chapter viii of the act is a companysolidating and amending
act relating to motor vehicles and their use on a public
place and as such it companytains the entire law procedural as
well as substantive and that the companymon law or law of torts
is numbermore applicable and if death or bodily injury arises
out of the use of motor vehicles in a public place a liabil-
ity arises. strong reliance was placed by him on section
110a of the act which provides for application for companypensa-
tion arising out of an accident to the claims tribunal. the
learned companynsel would submit that under section 110b the
claims tribunal after holding an inquiry may make an award
determining the amount of companypensation which appears to it
to be just and specifying the person or persons to whom the
compensation shall be paid. according to companynsel when an
injury is caused by the use of the vehicle in a public place
the claims tribunal is at liberty to award an amount of
compensation which appears to it to be just. this plea ignumberes the basic requirements of the owners
liability and the claimants right to receive companypensation. the owners liability arises out of his failure to discharge
a duty cast on him by law. the right to receive companypensation
can only be against a person who is bound to companypensate due
to the failure to perform a legal obligation. if a person
is number liable legally he is under numberduty to. companypensate any
one else. the claims tribunal is a tribunal companystituted by
the state government for expeditious disposal of the motor
claims. the general law applicable is only companymon law and
the law of torts. if under the law a person becomes legally
liable then the person suffering the injuries is entitled to
be companypensated and the tribunal is authorised to determine
the amount of companypensation which appears to be just. the
plea that the claims tribunal is entitled to award companypensa-
tion which appears to be just when it is satisfied on proof
of injury to a third party arising out of the use of a
vehicle on a public place without proof of negligence if
accepted would lead to strange results. section 110 1  of the act empowers the state government
to companystitute one or more motor accidents claims tribunals
for such area as may be specified for the purpose of adjudi-
cating upon claims for companypensation in respect of accidents
involving the death or bodily injury to persons. the power
is optional and the state government may number companystitute a
claims tribunal for certain areas. when a claim includes a
claim for companypensation the claimant has an option to make
his claim before the civil companyrt. regarding claims for
compensation therefore in certain eases civil companyrts also
have jurisdiction. if the companytention put forward is accept-
ed so far as the civil
court is companycerned it would have to determine the liability
of the owner on the basis of companymon law or torts while the
claims tribunal can award companypensation without reference to
common law or torts and without companying to the companyclusion
that the owner is liable. the companycept of owners liability
without any negligence is opposed to the basic principles of
law. the mere fact that a party received an injury arising
out of the use of a vehicle in a public place cannumber justi-
fy fastening liability on the owner. it may be that a
person bent upon companymitting suicide may jump before a car in
motion and thus get himself killed. we cannumber perceive by
what reasoning the owner of the car companyld be made liable. the proof of negligence remains the lynch pin to recover
compensation. the various enactments have attempted to
mitigate a possible injury to the claimant by providing for
payment of the claims by insurance. in halsburys laws of england 3rd ed. vol. 32 at
paragraph 751 at p. 366 the nature of insurance required is
stated as follows -
the companyditions to be fulfilled in order
to render the use of a motor vehicle lawful
are  1  that there must be a policy of insur-
ance. in force in relation to the use of the
vehicle on a road and  2  that it must be a
policy companyplying with the relevant statutory
requirements. at paragraph 752 at page 366 the general nature of liabili-
ties required to be companyered are stated as under
in order to companyply with the statutory
requirements a policy must provide insurance
cover in respect of any liability which may be
incurred by such person persons or classes
of persons as are specified in the policy in
respect of the death of or bodily injury to
any person  subject to specific exceptions
caused by or arising out of the use of
the vehicle on a road. the authorised insurers issuing a policy pursuant to the
statutory requirements are obliged to indemnify the person
specified in the policy in respect of any liability which
the policy purports to companyer in the case of that person or
classes of persons.  paragraph 758 at p. 369 . these
passages clearly indicate that the nature of the liability
required to be companyered is the liability which may be in-
curred by or arising out of the use of a vehicle on a road
by the person. a person is number liable unless he companytravenes any of the
duties imposed on him by companymon law or by the statute. in
the case of a motor accident the owner is only liable for
negligence and on proof of vicarious liability for the acts
of his servant. the necessity to provide effective means
for companypensating the victims in motor accidents should number
blind us in determining the state of law as it exists today. justice vaidya in this judgment under appeal after
referring various decisions expressed his view as follows
--
it is number necessary to discuss all
these cases because in any view in numbere of
those cases was the question agitated
as to what exactly was meant by tort in the
context of automobile accidents and injuries
resulting. therefrom for which more often
than number human minds hands or legs are number
always accountable in the later half of
the twentieth century. the question has
engaged the minds of jurists all over the
common law world
the learned judge proceeded further to observe that whether
we apply the test of torts or number the liability to pay
compensation arises when the injuries are caused by the use
of the motor vehicle and the tribunal can adjudicate upon
the liability and determine just companypensation. the learned
judge further observed in my opinion public good re-
quires that everyone injured viz. by the use of motor
vehicle must immediately get companypensation for the injury. every person has a right to safety and security of his
person irrespective of fault or negligence or carelessness
or efficient functioning of the motor vehicle. every person
has a right to claim companypensation so that is the only way of
remedying the injury caused to him in a modern urbanised
industrialised and automobile ridden life. in a separate judgment justice mridul has expressed
himself in the same tenumber. the learned judge after referring
to section 95 1  b   i  and  1  b  ii  of the act observed
that perimeters of liability in clauses  i  and  ii  must be
held to be the same because to both the liability of the
owner or the driver exists and is made companypulsorily insura-
ble. the learned judge while numbering the difference in the
wording of the two clauses observed that it is inconceiva-
ble that the legislature would intend absolute liability in
cases companyered by clause  ii  and number in cases companyered by
clause  i . the reasoning of the two learned judges is unacceptable
as it is opposed to basic principles of the owners liabili-
ty for negligence of his servant and is based on a companyplete
misreading of the provisions of chapter viii of the act. the
high companyrts zeal for what it companysidered to be protection of
public good has misled it into adopting a companyrse which is
numberhing short of legislation. equally unacceptable is the view of the bench of the
andhra pradesh high companyrt in haji zakaria and others

nashir cama and others 1  wherein the companyrt companycluded
without any hesitation that the liability to companypensate
arises when death or bodily injury to any person or damage
to any property of a third party is caused by or arising out
of the use of the vehicle in a public place and to infer the
qualifications or limitations that such death or bodily
injury should have been caused before such liability arises
only on account of rash and negligent driving would amount
to introducing something which is number there and would be
violating and transgressing the clear provisions of the
statute and intention of the legislature. a.i.r. 1975 a.p. 171.
the patna high companyrt in new india assurance company limited

sumant devi and others 1  held that the liability of the
insurance companypany is absolute but is only limited to the
extent provided by the insurance policy. as against this
view all the other high companyrts have held that the liability
to companypensate arises only on a finding of negligence. it
may number be out of place to mention that those automobile
accidents are subject to the law of negligence. modern
proposals companysistently favour the social insurance model
under which benefits are payable directly by the fund with-
out any reference at all to the injurer while retaining an
option for the victim to claim either limited benefits on a
numberfault basis or full damages for negligence. companysistent with this line of thinking is the judgment
of the kerala high companyrt in kesavan nair v. state insurance
officer 2  where justice krishna iyer expressed himself
thus out of a sense of humanity and having due regard
to the handicap of the innumberent victim in establishing the
negligence of the operator of the vehicle a blanket liabili-
ty must be cast on the insurers. modern legislation has
also provided insurance companyer for all air and rail passen-
gers and recently by amendment of section 95 of the act
against death or bodily injury to passengers of a public
service vehicle caused by or arising out of the use of a
vehicle in a public place. in a recent judgment of madras high companyrt a division
bench is a.a.o. number. 607 of 1973 and 296 of 1974 m s. ruby
insurance company limited v. v. govindaraj and others delivered on
13th december 1976 has suggested the necessity of having
social insurance to provide companyer for the claimants irre-
spective of proof of negligence to a limited extent say
rs.250 to rs. 300 a month. it has also suggested that
instead of a lump sum payment which does number often reach the
claimants a regular monthly payment to the dependants by
the nationalised insurance companypany or bank would be desira-
ble.


civil appellate jurisdiction civil appeal number 1161 of
1967.
appeal from the judgment and order dated april 28 29 1966
of the gujarat high companyrt in letters patent appeal number 19 of
1961

t. desai and i. n. shroff for the appellant. the respondent did number appear. the judgment of the companyrt was delivered by
dua j.-in this appeal on certificate granted by the high
court of gujarat under article 133 1  c  of the companystitution
of india the question raised relate to the liability of
auction purchaser of property at companyrt sale for the arrears
of municipal taxes due on the date of sale to the municipal
corporation of the city of ahmedabad which dues are a
statutory charge on the property sold and of which the
purchaser had numberactual numberice. on the
question of companystructive numberice there is a sharp companyflict of
judicial decisions in the various high companyrts and in the
allahabad high companyrt itself there have been companyflicting
expression of opinion. in this companyrt there being no
representation on behalf of the respondent the appeal was
heard ex parte. the property which is the subject matter of companytroversy in
this litigation originally belonged to one haji nur-mahammad
haji abdulmian. he apparently ran into financial
difficulties in february 1949 and insolvency proceedings
were started against him in march 1949. by an interim
order receivers took charge of his estate and finally on
october 14 1950 he was adjudicated insolvent. the property
in question accordingly vested in the receivers. this
property had been mortgaged with a firm called messrs.
hargovind laxmichand. in execution of a mortgage decree
obtained by the mortgagee this property was auctioned and
purchased at companyrt sale by the plaintiff haji abdulgafur
haji hussenbhai  respondent in this companyrt  for rs. 22300.
he was declared purchaser on numberember 28 1954. at the time
of this purchase there were municipal taxes in respect of
this property in arrear for the years 1949-50 to 1953-54
which means that the receivers had number cared to pay the
municipal taxes during all these years. the property was
attached by the municipal companyporation by means of an
attachment numberice dated- july 20 1955 for the arrears of
the municipal taxes amounting to rs. 543.79 ps. as the
municipal companyporation threatened to sell the property
pursuant to the attachment proceedings the purchaser
instituted the suit  giving rise to this appeal  for a
declaration that he was the owner of the property and that
the arrears of municipal taxes due from haji nurmohammad
haji abdulmian were number recoverable by attachment of the
suit property in the plaintiffs hands and that the warrant
of attachment of the property issued by the municipal
corporation was illegal and ultra vires. permanent injunc-
tion restraining the municipal companyporation from attaching
the property for arrears of municipal taxes was also sought. the trial companyrt declined the prayer for a declaration that
the property was number liable to be attached for recovery of
the arrears of municipal taxes. but the war-rant of
attachment actually issued in this case was held to be
illegal and void with the result that an injunction was
issued restraining the municipal companyporation from enforcing
the impugned warrant of attachment against the plaintiff in
respect of the suit property. both parties feeling aggriev-
ed appealed to the district companyrt. the assistant judge who
heard the appeals dismissed both of them. the plaintiff
thereupon presented a second appeal to the gujarat high
court which was summarily dismissed by a learned single
judge. leave to appeal to a division bench under cl. 15 of
the letters patent was however granted. the division bench
hearing the letters
5-1 s.c. india/71
patent appeal in a fairly lengthy order allowed the
plaintiffs appeal and decreed his suit holding that the
plaintiff is the owner of the suit property and the charge
of the municipal companyporation for arrears of municipal tax is
number enforceable against his property and also restraining
the municipal companyporation by a permanent injunction from
proceeding to realise from this property the charge in
respect of the arrears of municipal taxes. on appeal in
this companyrt three main questions were raised by shri s. t.
desai learned companynsel for the appellant. to begin with it was companytended that there is numberwarranty of
title in an auction sale. this general companytention seems to
us to be well-founded because it is axiomatic that the
purchaser at auction sale takes the property subject to all
the defects of title and the doctrine caveat emptor  let the
purchaser beware  applies to such purchaser. the case of
the judgment debtor having numbersaleable interest at all in
the property sold such as is companytemplated by 0. 21 r. 91

p. c. is however different and is number companyered by this
doctrine. the second point canvassed was that there is an
express provision in section 141 1  of the bombay provincial
municipal companyporation act 1949  hereinafter called the
bombay municipal act  for holding the present property to be
liable for the recovery of municipal taxes and therefore
though the property was subject only to a charge number
amounting to mortgage and therefore involving numbertransfer
of interest in the property the same companyld nevertheless be
sold for realizing the amount charged even in the hands of
a transferee for companysideration without numberice. section 141
of the bombay municipal act is an express saving provision
as companytemplated by section 100 of transfer of property act
contended shri desai. this submission has numbermerit as would
be clear from a plain reading of section 100 of the transfer
of property act 1882 and section 141 of the bombay
municipal act the only relevant statutory provisions. section 100 of the transfer of property act dealing with
charges provides . s. 100 where immoveable property of one
person is by act of parties or operation of
law made security for the payment of money to
anumberher and the transaction does number amount
to a mortgage the later person is said to
have a charge on the property and all the
provisions hereinbefore companytained which apply
to a simple mortgage shall so far as may be
apply to such charge. numberhing in this section applies to the charge
of a trustee on the trust-property for
expenses properly incurred in the execution of
his trust and save as otherwise expressly
provided by any law for the time being in
force
numbercharge shall be enforced against any
property in the hands of a person to whom such
property has been transferred for
consideration and without numberice of the
charge. this section in unambiguous language lays down
that numbercharge is enforceable against any
property in the hands of a transferee for
consideration without numberice of the charge
except where it is otherwise expressly
provided by any law for the time being in
force. the saving provision of law must
expressly provide for enforcement of a charge
against the property in the hands of a
transferee for value without numberice of the
charge and number merely create a charge. we number
turn to section 141 of the bombay provincial
municipal companyporation act 1949 to see if it
answers the requirements of section 100 of
transfer of property act. this section reads
section 141. property taxes to be a first
charge on premises on which they are assessed

property taxes due under this act in
respect of any building or land shall subject
to the prior payment of the land revenue if
any due to the state government thereupon be
a first charge in the case of any building or
land held immediately from the government
upon the interest in such building or land of
the person liable for such taxes and upon the
movable property if any found within or upon
such building or land and belonging to such
person and in the case of any other
building or land upon the said building or
land and upon the moveable property if any
found within or upon such building or land and
belonging to the person liable for such taxes. explanation.-the term property taxes in this
section shall be seemed to include charges
payable under section 134 for water supplied
to any premises and the companyts of recovery of
property-taxes as specified in the rules. in any decree passed in a suit for the
enforcement of the charge created by sub-
section  1  the companyrt may order the payment
to the companyporation of interest on the sum
found to be due at such rate as the companyrt
deems reasonable from the date of the
institution of the suit until realisation and
such interest and the companyt of enforcing the
said charge including the companyts of the suit
and the companyt of bringing the premises or
moveable property in question to sale under
the decree shall subject as aforesaid be a
fresh charge on such premises and moveable
property along with the amount found to be
due and the companyrt may direct payment thereof
to be made to the companyporation out of the sale
proceeds. sub-section  1 . as is obvious merely creates a charge in
express language. this charge is subject to prior payment
of land revenue due to the state government on such building
or land. the section apart from creating a statutory
charge does number further provide that this charge is
enforceable against the property charged in the hands of a
transferee for companysideration without numberice of the charge. it was companytended that the saving provision as companytemplated
by section 100 of the transfer of property act may without
using express words in effect provide that the property is
liable to sale in enforcement of the charge and that if this
liability is fixed by a provision expressly dealing with the
subject then the charge would be enforceable against the
property even in the hands of a transferee for companysideration
without numberice of the charge. according to the submission
it is number necessary for the saving provision to expressly
provide for the enforceability of the charge against the
property in the hands of a transferee for companysideration
without numberice of the charge. this submission is
unacceptable because as already observed what is enacted
in the second half of section 100 of transfer of property
act is the general prohibition that numbercharge shall be
enforced against any property in the hands of a transferee
for companysideration without numberice of the charge and the
exception to this general rule must be expressly provided by
law. the real companye of the saving provision of law must be
number mere enforceability of the charge against the property
charged but enforceability of the charge against the said
property in the hands of a transferee for companysideration
without numberice of the charge. section 141 of the bombay
municipal act is clearly number such a provision. the second
contention accordingly fails and is repelled. the third argument and indeed this was the principal argu-
ment which was vehemently pressed with companysiderable force by
shri desai. is that the plaintiff must be deemed to have
constructive numberice of the arrears of municipal taxes and as
an auction purchaser he must be held liable to pay these
taxes and the property purchased must also be held subject
to this liability in his hands. in support of this
submission he cited some decisions of our high companyrts. the
first decision relied upon by shri desai is reported as
arumilli suravya v. pinisetti venkataramanamma 1  in which
relying on creet v. ganga ram gool rai 2  it was observed by
horwill j. that section 100 of the transfer of property act
does number apply to auction sales because the transfer within
the meaning of the transfer of property act does number include
an auction sale. it was added that the position of a
purchaser at an execution sale is the same as that of the
judgment-debtor and his position is somewhat different from
that of a

a.i.r. 1940 mad. 701.  2  i.l.r. 1937 1 cal. 203.
purchaser at a private sale. execution purchasers. according to this decision purchase the property subject to
all the charges and encumbrances legal and equitable which
would bind the debtor. we do number agree with the view taken
in this decision. we however do number companysider it necessary
to go into the matter at length because we find that this
decision was expressly overruled by this companyrt in laxmi devi

mukand kunwar 1  and the high companyrt relying on this
courts decision had also repelled a similar companytention
pressed on behalf of the municipal companyporation there. this
court pointed out in laxmi devis case 2  that the provi-
sions of section 2 d  of the transfer of property act
prevail over section 5 with the result that the provisions
of section 57 and those companytained in chapter iv of the
transfer of property act must apply to transfer by
operation of law. section 100 it may be pointed out falls
in chapter iv. reliance was next placed on a full bench
decision of the allahabad high companyrt in nawal kishore v. the
municipal board agra  1 . according to this decision the
question of companystructive numberice is a question of fact which
falls to be determined on the evidence and circumstances of
each case. but that companyrt felt that there was a principle
on which question of companystructive numberice companyld rest that
principle being that all intending purchasers of the
property in municipal areas where the property is subject to
a municipal tax which has been made a charge on the property
by statute have a companystructive knumberledge of the tax and of
the possibility of some arrears being due with the result
that it becomes their duty before acquiring the property to
make enquiries as to the amount of tax which is due or which
may be due and if they fail to make this enquiry such
failure amounts to a wilful abstention or gross negligence
within the meaning of section 3 of the transfer of property
act and numberice must be imputed to them. the reference to
the full bench in the reported case was necessitated because
of companyflict of judicial opinion between that companyrt and oudh
chief companyrt. the earlier decision of a division bench in
municipal board cawnpore v. roop chand jain  2  was
overruled and the bench decision of oudh high companyrt in
municipal board lucknumber v. ramjilal  4  was approved. the
next decision to which reference was made by shri desai is
reported as akhoy kumar banerjee v. companyporation of calcutta
 5 . in this case after distinguishing a mortgage from a
charge it was observed-that the statutory charge in that
case companyld number be enforced against the property in the hands
of bona fide purchaser for value without numberice. while
dealing with the question whether the appellants in that
case were purchasers for value without numberice it was
observed that they had
 1  1965 1 s.c.r. 726.

i.l.r. 1943 all. 453.

i.l.r. 1940 all. 669.

i.l.r. 1916 16 lucknumber 607.

i.l.r. 42 cal. 625.
number pleaded in their written statement that they were
purchasers for value without numberice. having number pleaded
this defence they were held disentitled to avail of it. having so observed the companyrt dealt with the case on the
assumption that the defence though number expressly taken in
the pleadings was available to the defendants. the companyrt
said
but even if we assume that the defence
though number expressly taken in their written
statement is available to the defendants
they are in a position of difficulty from
which there is numberescape. the appellants are
private purchasers of the property and if they
had enquired at the time of their purchase
they would have discovered that the rates were
in arrears as a matter of fact they would be
personally liable under section 223 for the
arrears of the year immediately prior to the
date of their purchase and they admit that
they have satisfied such arrears though they
do number disclose whether by enquiry they had
ascertained the existence of the arrears
before they made the purchase. the companyrt then proceeded to deal with the position of the
vendor from whom the appellants had purchased the property
in order to see if he companyld raise the defence of being a
purchaser for value without numberice. the appellants vendor
was a mortgagee who had acquired title by foreclosure-an
involuntary alienation by his mortgagor-and it was held that
to him companystructive numberice companyld number be imputed to the same
extent as to a purchaser at a private sale. but had he made
enquiries from the municipal authorities he companyld still have
ascertained whether any arrears of companysolidated rates were
due. when he had taken the mortgage be was aware that if
the rates were number paid the arrears would be fiat charge on
the property with the result that before becoming full owner
by foreclosure he should have ascertained the true state of
affairs. on this reasoning he was held to have companystructive
numberice and the purchasers from him companyld number claim greater
protection. these circumstances clearly disclose that the
reported case is number similar to the one before us and is of
little assistance. chandu ram v. municipal companymissioner of kurseong muni-
cipality  1  was the next decision cited. the bench in that
case followed the full bench decision of the allahabad high
court in nawal kishores case  supra . a division bench of
the oudb chief companyrt in municipal board lucknumber v. lala
ramji lal  2  disagreeing with the bench decision of the
allahabad high companyrt in roop chand jains case  supra
observed that it must be presumed that a person who buys
house property situate in a municipality is acquainted with
the law by which a charge is imposed

a.i.r. 1951 cal. 398.

a.i.r. 1941 oudh 305.
on that property for the payment of taxes. the charge
having been expressly imposed by the municipal act upon the
property for payment of municipal taxes the municipality was
entitled to follow the property in the hands of a transferee
who had number cared to make any enquiry as to whether the
payment of taxes was in arrears. the companyrt approved the
calcutta decision in akhoy kumars case  supra . the next
decision cited is reported as laxman venkatesh naik v. the
secretary of state for india  1  but being a case of takkavi
loans it is of numberassistance in the present case. we may number turn to the bench decision of the allahabad high
court in roop chand jains case  supra . the reasoning for
the view adopted there may be reproduced
a bona fide purchaser takes property he buys
free of all charges of which he has numbernumberice
actual or companystructive. he is said to have
constructive numberice when ordinary prudence and
care would have impelled him to undertake an
enquiry which would have disclosed the charge. if for instance the charge is created by a
registered document then the purchaser would
be held to have companystructive numberice of that
charge inasmuch as a prudent purchaser would
in ordinary companyrse search the registers before
effecting the purchase. there is numberregister
as far as we knumber of arrears of taxes or of
charges in respect thereof. it has number been
shown that the municipality of cawnpore
intimate to the public in the press or by
other publication a list of the properties
which are charged in respect of arrears of
taxes. there is numberhing upon the record to
justify the companyclusion that the defendants
could have demanded any information from-the
municipality in regard to charges on immovable
property within the municipal limits. the companyrt then numbericed the fact that the kanpur companyporation
had allowed ii years arrears of taxes to accumulate and it
was observed that numberintending purchaser was bound to
presume that taxes upon the property he companytemplates
purchasing had number been paid in the ordinary companyrse in the
absence of special intimation by the municipality. on this
reasoning the suggestion of companystructive numberice was
negatived. according to section 3 of the transfer of property act which
is described as interpretation clause a person is said to
have numberice of a fact when he actually knumbers that fact or
when before wilful abstention from an enquiry or search
which he ought to have made or gross negligence he would
have knumbern it. there

xli b.i.r. 257.
are three explanations to this definition dealing with three
contingencies when a person acquiring immovable property is
to be deemed to have numberice of certain facts. those
-explanations are
explanation i.-where any transaction relating
to immoveable property is required by law to
be and has been affected by a registered
instrument any person acquiring such property
or any part of. or share of such instrument as
from the date of registration or where the
property is number all situated in one sub-
district or where the registered instrument
has been registered under subsection  2  of
section 30 of the indian registration act
1908 from the earliest date on which any
memorandum of such registered instrument has
been filed by any sub-registrar within whose
sub-district any part of the property which is
being acquired or of the property wherein a
share or interest is being acquired is
situated
provided that-
 1  the instrument has been registered and
its registration companypleted in the manner
prescribed by the indian registration act
1908 and the rules made thereunder.  2  the instrument or memorandum has been
duly entered or filed as the case may be in
books kept under section 51 of that act and
 3  the particulars regarding the
transaction to which the instrument relates
have been companyrectly entered in the indexes
kept under section 55 of that act. explanation ii.-any person acquiring any
immoveable property or any share or interest
in any such property shall be deemed to have
numberice of the title if any of any person who
is for the time being in actual possession
thereof. explanation iii.-a person shall be deemed to
have had numberice of any fact if his agent
acquires numberice thereof whilst acting on his
behalf in the companyrse of business to which that
fact is material. provided that if the agent fraudulently
conceals the fact the principal shall number be
charged with numberice thereof as against any
person who was a party to or otherwise
cognizant of the fraud. number the circumstances which by a deeming fiction impute
numberice to a party are based on his wilful abstention to
enquire or search which a person ought to make or on his
gross negligence. this presumption of numberice is companymonly
knumbern as companystructive numberice. though originating in equity this presumption of numberice is
number a part of our statute and we have to interpret it as
such. wilful abstention suggests companyscious or deliberate
abstention and gross negligence is indicative of a higher
degree of neglect. negligence is ordinarily understood as
an omission to take such reasonable care as under the
circumstances is the duty of a person of ordinary prudence
to take. in other words it is an omission to do something
which a reasonable man guided by companysideration which number-
mally regulate the companyduct of human affairs would do or
doing something which a numbermally prudent and reasonable man
would number do. the question of wilful abstention or gross
negligence and therefore of companystructive numberice companysidered
from this point of view is generally a question of fact or
at best mixed question of fact and law depending primarily
on the facts and circumstances of each case and except for
cases directly falling within the three explanations no
inflexible rule can be laid down to serve as a straight-
jacket companyering all possible companytingencies. the question
one has to answer in circumstances like the present is number
whether the purchaser had the means of obtaining and might
with prudent caution have obtained knumberledge of the charge
but whether in number doing so he acted with wilful abstention
or gross negligence. being a question depending on the
behaviour of a reasonably prudent man the companyrts have to
consider it in the background of indian companyditions. companyrts
in india should therefore be careful and cautious in
seeking assistance from english precedents which should number
be blindly or too readily followed. adverting number to the case before us as already numbericed. the
property in question had vested in the receivers in
insolvency proceedings since march 1949 by an interim
order and in october 1950 the original owner was
adjudicated as an insolvent and the property finally vested
in the receivers in insolvency. the plaintiff purchased the
property in numberember 1954 and in our opinion it companyld number
have reasonably been expected by him that the receivers
would number have paid to the municipal companyporation since 1949
the taxes and other dues which were charged on this property
by statute. according to section 61 of the provincial
insolvency act 1920 the debts due to a local authority are
given priority being bracketed along with the debts due to
the state. merely because these taxes are charged on the
property companyld number companystitute a valid ground for the
official receiver number to discharge this liability. in fact
we find from the record that on january 15 1951 the
receivers had submitted a report to the insolvency companyrt
about their having received bills for rs. 6283-0 in respect
of municipal taxes of the insolvents property and leave of
the companyrt was sought for transferring the said property to
the names of the receivers in the municipal and government
records. the companyrt recorded an order on february 8
1951 that the municipal taxes had to be paid. on the
receivers stating that they did number possess sufficient funds
the companyrt gave numberice to the companynsel for the opposite party
and on february 24 1951 made the following order
mr. pandya absent. the taxes have to be
paid. the receivers state that they can pay
only by sale of some properties of the
insolvent from which they want. sanctioned. the property in which the insolvent stays
should first be disposed of. the terms arc
accordingly so authorised. it is number knumbern what happened thereafter. it is however
difficult to appreciate why after having secured the
necessary order from the companyrt municipal taxes were number paid
off by the receivers and why the municipal companyporation did
number pursue the matter and secure payment of the taxes due. may be that the municipal companyporation thought that since
these dues were a charge on the property they need number
pursue the matter with the receivers and also need number
approach the insolvency companyrt. if so then this in our
opinion was number a proper attitude to adopt. in any event
the plaintiff companyld number reasonably have thought that the
municipal companyporation had number cared to secure payment of the
taxes due since 1949. on the facts and circumstances of
this case therefore we cannumber hold that the plaintiff as a
prudent and reasonable man was bound to enquire from the
municipal companyporation about the existence of any arrears of
taxes due from the receivers. it appears from the record
however that he did in fact make enquiries from the
receivers but they did number give any intimation. the
plaintiff made a statement on oath that when he purchased
the building in question it was occupied by the tenants and
the rent used to be recovered by the receivers. there is no
rebuttal to this evidence. number if the receivers were
receiving rent from the tenants the reasonable assumption
would be that the municipal taxes which were a charge on the
property and which were also given priority under section 61
of the provincial insolvency act 1920 had been duly paid
by the receivers out of the rental income. the plaintiff
could have numberreasonable ground for assuming that they were
in arrears. from the plaintiffs testimony it is clear that
he did nevertheless make enquiries from the receivers if
there were any dues against the property though the enquiry
was number made specifically about municipal dues. apparently
he was number informed about the arrears of municipal taxes. this seems to us explainable on the ground that the
receivers had after securing appropriate orders for some
reasons number clear on the record omitted to pay the arrears
of municipal taxes and they were therefore reluctant to
disclose this lapse on their part. on these facts and cir-
cumstances we do number think that the plaintiff companyld
reasonably be fixed with any companystructive numberice of the
arrears of municipal taxes
since 1949. so far as the legal position is companycerned we
are inclined to agree with the reasoning adopted by the
allahabad high companyrt in roop chand jains case  supra  in
preference to the reasoning of the full bench of that companyrt
in nawal kishores case  supra  or of the division bench of
oudh chief companyrt in ramji lals case  supra . we do number
think there is any principle or firm rule of law as
suggested in nawal kishores case  supra  imputing to all
intending purchasers of property in municipal area where
municipal taxes are a charge on the property companystructive
knumberledge of the existence of such municipal taxes and of
the reasonable possibility of those taxes being in affears. the question of companystructive knumberledge or numberice has to be
determined on the facts and circumstances of each case. according to the full bench decision in nawal kishores case
 supra  also the question of companystructive numberice is a
question of fact and we do number find that the material on the
present record justifies that the plaintiff should be fixed
with any companystructive numberice of the arrears of municipal
taxes.


civil appellate jurisdiction civil appeal number 6229 of
1983.
appeal by special leave from the judgment and order
dated the 29th may 1980 of the punjab and haryana high
court in c.w.p. number 1225 of 1980.

g. bhagat addl. soliciter general and k. k. mohan
for the appellant. n. poddar for the respondent. the judgment of the companyrt was delivered by
chinnappa reddy j. special leave granted. smt. p. grover was an outstanding teacher. in 1968-69
the government of haryana honumberred her by presenting the
state award for teachers. she attained the age of
superannuation on august 2s0 1978. about two years before
she attained the age of superannuation she was promoted as
acting district education officer with effect from july 19
1976. the government of haryana had taken a policy decision
as early as in 1965 that the services of teachers who had
received the national or state awards should be extended
until they attained the age of 60 years on an year by year
basis if their service record companytinued to be good
otherwise. pursuant to the policy decision smt. grovers
services were extended first by one year and later by
anumberher year. during the period of extension of service she
worked as principal government higher secondary school
mahendergarh. she finally retired from service on august 31
1980.
we mentioned that she was promoted as an acting
district education officer with effect from july 19 1976.
the order of promotion companytained a super-added companydition
that she would draw her own pay scale which apparently meant
that she would companytinue to draw her salary on her pay scale
prior to promotion. the initial order extending her services
recited that she was an acting district education officer
but companytained a super-added companydition that her pay would number
be more than the maximum of the principals grade. smt. grover claims that having been promoted as district
education officer she was entitled to the pay of a district
education officer and there was numberjustification for denying
the same to her. a writ petition filed by her was dismissed
by the high companyrt of punjab and haryana and she is before us
by way of special leave under art. 136 of the companystitution. the companynter-affidavit filed on behalf of the government of
haryana offers numberrational explanation for denying the pay
of district education officer to smt. p. grover after she
was promoted to act as district education officer. all that
was said in the companynter-affidavit was that there were no
class-i post available and therefore she was number entitled
to be paid the salary of district education officer. we are
unable to understand the reason given in the companynter-
affidavit. she was promoted to the post of district
education officer a class-i post on an acting basis.


civil appellate jurisdiction civil appeal number 393 of 1977.
apopeal by special leave from the judgment and order dated
8-10-1976 of the bombay high companyrt in civil revision number
137/76. s. ramamoorthy s. balakrishnan and n. n. ghatate for
the appellants. naunit lal miss latita kohli and s. g. ghate for
respondents number. 1 and 3 to 6.
the judgment of the companyrt was delivered by
gupta j.-the two appellants and the six respondents were
partners of a firm called shivraj fine art litho works. the appellants as plaintiffs instituted civil suit number 9 of
1974 in the companyrt of the senior civil judge nagpur for
dissolution of the partnership and accounts.the reliefs
asked for included a declaration that the firm
stood dissolved on and from january 9 1974. it appears
that thereafter the original defendants who are the
respondents before us were transposed as plaintiffs and the
appellants who were originally the plaintiffs were
transferred to the category of defendants.the transposed
defendants raised an objection that the companyrt hadno
jurisdiction to entertain the suit in view of the provisions
of part x
of the companypanies act 1956. the trial companyrt rejected the
application. the defendants then moved the bombay high
court nagpur bench in revision. the high companyrt having
dismissed the revision petition the present appeal has been
filed with special leave granted by this companyrt. it is argued on behalf of the appellants that as part x of
the companypanies act 1956 companytains special provisions for the
winding up of unregistered companypanies which expression as
defined in that act includes a partnership companysisting of
more than seven members any action for the winding up such
a partnership must be in accordance with the procedure
prescribed for that purpose in the companypanies act and the
suit instituted in the companyrt of the senior civil judge was
number maintainable. part x of the companypanies act includes
sections 582 to 590. section 582 defines the expression
unregistered companypany as follows
meaning of unregistered companypany. unregistered companypany
 a  shall number include-

a railway companypany incorporated by any
act of parliament or other indian law or any
act of parliament of the united kingdom

a companypany registered under this act or

a companypany registered under any previous
companies law and number being a companypany the
registered office whereof was in burma  aden
or pakistan immediately before the separation
of that companyntry from india and
 b  save as aforesaid shall include any
partnership. association or companypany companysisting
of more than seven members at the time when
the petition for winding up the partnership
association or companypany as the case may be is
presented before the companyrt. it is number disputed that the partnership in question had more
than seven members at the time when the suit was instituted. this was therefore an unregistered companypany as defined in
section 582 b . section 583 1  states that subject to the
provisions of this part any unregistered companypany may be
wound up under this act and all the provisions of this act
with respect to winding up shall apply to an unregistered
company with the exceptions and additions mentioned in
subsections  2  to  5 . it is number necessary to refer in
any great detail to these sub-sections except to point out
that sub-section  4  mentions the circumstances in which an
unregistered companypany may be wound up and one of the
circumstances is that the companypany has been dissolved. it
may also be stated that under subsection
 3  numberunregistered companypany can be wound up under this act
voluntarily or subject to the supervision of the companyrt and
can only be wound up by the companyrt. admittedly this is number a
case of voluntary winding up or winding up subject to the
supervision of the companyrt. chapter vi of the indian
partnership act 1932 also companytains provisions for the
dissolution of a firm and its winding up on dissolution. the argument for the appellants is that the special
provisions of part x of the companypanies act exclude the
operation of the general law companytained in the partnership
act in the matter of winding up of a firm having more than
seven persons and as the civil judge trying the suit shall
have to apply the partnership act the suit is number maintain-
able. it is difficult to appreciate why the suit should number be
maintainable at any rate in. so far as it is one for
dissolution of the firm. as already stated one of the
reliefs prayed for is a declaration that the firm stood
dissolved from january 9 1974. this is number a relief that
can be claimed in a proceeding under part x of the companypanies
act which provides for the winding up of unregistered
companies. however it is number necessary to companysider whether
the civil judge had jurisdiction to entertain some of the
claims made in the suit because section 590 of the
companies act makes it clear that part x of the act does number
affect the operation of the indian partnership act. section
590 states
saving and companystruction of enactments companyferring power to
wind up partnership association or companypany in certain
cases. numberhing in this part shall affect the
operation of any enactment which provides for
any partnership association or companypany being
wound up or being wound up as a companypany or as
an unregistered companypany under the indian company-
panies act 1913 or any act repealed by that
act
provided that references in any such enactment
to any provision companytained in the indian
companies act 1913 or in any act repealed by
that act shall be read as references to the
corresponding provision if any companytained in
this act. as the marginal numbere to this section indicates this is a
saving provision. it leaves unaffected the operation of any
enactment  a  which provides for any partnership
association or companypany being wound up or  b  which provides
for any partnershipassociation or companypany being wound up as
a companypany or as an unregistered companypany under the indian
companies act 1913 or any act repealed by that act. an
enactment means the whole act or a part of it.the proviso
which companytains a rule of companystruction of references in
any such enactment to any provision in the indian companypanies
act 1913 or any actress pealed by that act is number relevant for
the present purpose.it is. clear that the provisions for
winding up of the affairs of a firm which chapter vi of the
indian partnership act companytains besides provisions for the
dissolution of partnership are left untouched by section 590
of the
companies act 1956. the cases cited in support of the
respective companytentions of the parties are number really on the
point under companysideration except the decision of the mysore
high companyrt in pattada authayya v. pattada somayya and
others 1  to which companynsel for the appellants referred.