(1) This is an appeal by the State of Madras represented by the Government Transport through its Director against the order of the First Assistant Judge. City Civil Court, Madras holding that the appellant is liable to pay the respondent, Employees State Insurance Corporation, a sum of Rs. 1527 and such further amounts as may be admissible in accordance with the provisions of the Employees State Insurance Act
(2) One K. P. Rajagopalan is employed in the Enfield India Ltd., Tiruvottiyur. He was proceeding from his house in Madras to his place at work. Tiruvottiyur, on the morning of 16th June 1959. At about 7-25 a.m. the bus. No. 1008 belonging to the appellant hit K. P. Rajagopalan and caused him injuries. It was found that Rajagopalan received injuries due to rash and negligent driving of the driver of the said transport bus, and that finding is not questioned before me. It was also found that Rajagopalan was on his way to the factory, and the accident took place while on his way to work and it was an injury arising in the course of his employment.
(3) Rajagopalan was examined by the Medical Board, and it was found that he had a fracture in the right leg. He was in the hospital from 16th June 1959 to 28th June 1959. The Medical Board considered the disablement as temporary for one and put the extent of loss of earning capacity at thirty per cent. It also recommended the continuance of the disability for a further period of one year and assessed the proportion of the loss of earning capacity at 25 per cent for another year. The Employees State Insurance Corporation has paid Rs. 1527 to Rajagopalan and is liable to pay further sums in future years for loss of earning capacity.
(4) Having paid the amount to Rajagopalan, the Employees State Insurance Corporation seeks to recover it from the Government Transport department under Sec. 67 of the Employees State Insurance Act. sec 67 of the Act is as follows--
"Where an insured person is entitled to receive or to recover (but has not received or recovered), whether from his employer or any other person, compensation or damages under any law for the time being in force in respect of any employment injury caused under circumstances creating a legal liability in some person other than the employer or his agent, the Corporation shall be entitled to be indemnified by the person so liable."
It is admitted the Rajagopalan is an insured person and is entitled to recover damages from a person, who caused the injury to him, and who is, therefore, under a legal liability. If Rajagopalan had not recovered and damages from the person. Sec 67 of the Act empowers the employees State Insurance Corporation to be indemnified by that person. The lower court has found that the Government Transport Department is a person and that it is liable to indemnify the Employees State Insurance Corporation.
(5) One behalf of the appellant, it is submitted that the State is not a person within the meaning of Sec 67, and, therefore, not liable to indemnify the Employees State Insurance Corporation. The question, therefore, that arises for consideration is whether the word person in Sec. 67 of the Employees State Insurance Act includes the State.
(6) In England, it has been held that the word person in its ordinary and natural sense includes Crown, but, in cases where a burden or liability is sought to be imposed upon a person, generally the word person does not include the Crown unless the statute is binding upon the Crown by express provision of by necessary implication in England, the King is not bound by a statute unless he is expressly named or unless be is bound by necessary implication or unless the he is expressly named or unless the statute, being for the public good, it would be absurd to exclude the King from it. It is further laid down, when an Act of Parliament is expressly made for the preservation of public rights and the suppression of public wrongs and does not interfere with the established rights of the Crown, it is said to be binding as well upon the Kind as upon the subject The Privy Council inProvince of Bombay v. Municipal Corporation of the City of Bombay, ILR 1947 Bom 186=(AIR 1947 P. C. 34) held that the law applicable to India is also the same.
(7) It is not disputed that the State, while engaged in commercial activity, is liable in tort. The only contention on behalf of the appellant is that the State is not a person under Sec. 67 of the Act.
(8) Under S. 43(1) of the Motor Vehicles Act, 1939 the State Government is entitled by notification in the Fort St. George Gazette to declare that it will engage in the business of road transport within a specified area in the State. In pursuance of the section the State Government took over the road transport in the City of Madras. By taking over the business of road transport, the State Government will be an owner of the transport vehicle under its charge. The question further arises whether it is a person. In Director of Rationing and Distribution v. Corporation of Calcutta, thequestion arose whether the State was a person under S, 386(1)(a) of the Calcutta Municipal Act. Sec. 386(1)(a) is in the following terms--
"No person shall use or permit to be used any premises for any of the following purpose without or otherwise than in conformity with the terms of a license granted by the Corporation in this behalf, any of the purpose specified in schedule XIX".
On 1st July 1952, the Corporation of Calcutta made an application for summons against the Director of Rationing and Distribution representing the Food Department of the Government of West Bengal for the offence of using or permitting to be used a premises for the purpose of storing rice. It was held by the Supreme Court that the provisions of the penal section neither by express terms nor by necessary implication were meant to be applied to the Government. It was further observed at page 172--
"The immunity of Government from the operation of certain statutes, and particularly statutes creating offences, is based upon the fundamental concept that the Government or its officers cannot be a party to committing a crime...analogous to the "prerogative of perfection" that the King can do no wrong. Whatever may have been the historical reason of the rule, it has been adopted in out country on grounds of public policy as a rule of interpretation of statutes."
(9) The Supreme Court was of the opinion that the rule of interpretation of statutes that the State is not bound by the statute, unless it is so provided in express terms or by necessary implication is still good law. It was sought o be contended before the Supreme Court, that even if it were held that the Government, as a sovereign power, might have the benefit of the immunity claimed, it was not entitled to that immunity, when it embarked upon a business, and, in that capacity became subject to the penal provisions of the statute equally with other citizens. The Supreme Court found that there was no foundation for the contention that the Sovereign power embarked upon a business, and that it was not discharging the duty of a sovereign power in the case before them. The Supreme Court observed that the question was not raised below and had not been gone into by the High Court, and it was not clear from the record that the Food Department of the Government of W. Bengal, which undertook rationing and distribution of food on a rational basis, had in the absence of any indication to the contrary the department of the Government was discharging the elementary duty of a sovereign to ensure proper and equitable distribution of available foodstuffs with a view to maintaining peace and good Government. Thus, it will be seen that the Supreme Court was discharge with a case in which the State was discharging its duty as a sovereign. The contention that the State was not immune, when it embarked on a business, was not considered by the Supreme Court.
(10) It may be relevant to note that in English law, the King is not bound by a statute unless the statute is for public good, and when an Act of Parliament is made for preservation of public rights and suppression of public wrongs, and does not interfere with the established rights of the Crown it is binding on the King.
(11) Admittedly, the established rights of the Crown are not affected by holding the Government Transport, which is running a business liable to indemnity the Employees State Insurance Corporation. So also the Act cannot be attacked on the ground that it was not made for the preservation of public rights, and it would be absurd to exclude the State from the liability, as the statute is intended for public good. The Employees' State Insurance Act was passed for providing benefits to employees in case of sickness, maternity and employment injury and for making provisions for certain other matters. The State employing itself in the business of road transport, by virtue of S. 43(4) of the Motor Vehicles Act, cannot be said to be discharging any functions of the State, and there is no reason why the State should not be made liable for an injury, for which a third person carrying on the business of road transport would be liable. This case is clearly distinguishable from the facts of the case The decision
in was considered by the Supreme Court in State of Bihar v. Rani Sonabati Kumari, . It was urged before the Supreme Court that the word person was at best a neutral expression and in the absence of a compelling indication it was not apt to include a State particularly in the light of the rule of construction approved by the Supreme Court in . The Supreme Court repelled the contention and held that the word person included the defendant Government. It was submitted by the learned Government Pleader that support can not be derived for the condition of the respondent from the decision cited in , as the word person clearly
includes the defendant Government. While it is true that a person in Or. XXXIX Rule 2 C.P.C. includes the defendant State, the observations in the decisions would support the view that the Government would come within the meaning of the word person.
(12) In State of Rajasthan v. Mst. Vidhyawati, , it was observed as follows at page 938:--
"In this connection it has to be remembered that under the Constitution we have established a Welfare State, whose functions are not confined only to maintaining law and order, but extend to engaging in all activities including industry, public transport. State trading, to name only a few of them. In so far as the State activities have such wide ramifications involving not only the use of sovereign powers but also its powers as employers in so many public sectors, it is too much to claim that the State should be immune from the consequence of tortious acts of its employees committed in the course of their employment as such."
(13) On a consideration of the authorities. I do not think that contention of the State that the word person in Sec. 67 of the Employees State Insurance Act will not include the State can be upheld. This contention fails.
(14) The learned Government Pleader submitted that even if she State is held to be liable, its liability is confined only to the extent of damages actually suffered by the injured person. Sec. 67 of the Act provides that the Employees' State Insurance Corporation is entitled to be indemnified by a person under legal liability for damages relating to the injury caused to an insured person. In torts a person, who sustained injury, is entitled to recover damages for the loss caused due to the injury, but the insured person is not entitled to recover from the person, who caused the injury for the loss of efficiently of work, as provided under the Madras State Insurance Act. In the court below the actual damage to which the insured person was entitled from the Government State Transport has not been decided, and for this purpose this appeal will have to be remanded to the trial court. The order of the trial court that the appellant is liable to pay Rs. 1527 to the respondent, on account of the employment injury sustained by P.W. 1 and further liable to pay such further amounts as might be paid by the respondent to the insured person is unsustainable in law, and is set aside.
(15) The appeal is allowed to the extent indicated above and is remanded to the lower Court for determination of the damages.
(16) Appeal partly allowed.