SHAMSUN NISSA Versus KARACHI ROAD TRANSPORT CORPORATION

This is a suit for compensation for loss of life under the Fatal Accidents Act, 1855, and was filed in forma pauperism on 17‑11‑1965. The plaintiffs, who are the two daughters of the deceased Abdullah, were on the date of the filing of the suit minors aged 12 and 10 years respectively. That the deceased Abdullah died on 12‑1‑1965 as a result of an accident caused by rash and negligent driving of the bus by the defendant No. 2, the driver, in the course of his employment with the defendant No. 1 Corporation, which is a public limited company, is not denied. The plaint contains a grievance that the defendants bad failed to disclose to the plaintiffs the name of the in surance company with which the bus was insured and accordingly insurance company was not impleaded as a party, and the right to implead them as and when the particulars were supplied was reserved.

2. During the pendency of the suit the plaintiffs sought to join the defendants Nos. 3 and 4, the two directors of defendant No. i, which request was granted by order dated 10‑8‑1970. These defendants are not contesting the suit and the suit was, on 23‑1‑1970, ordered to proceed ex parte against them. The defendant No. 2 driver is dead but his heirs have not been brought on record. The defendant No. 1 Corporation which is represented by the official Liquidator admitted that the bus was not insured and that they only contest the quantum of compensation due to the plaintiffs.

3. The issues in this case read as follows:

(1) Whether the defendant No. 1 is the owner of bus No. KAT 312 of route No. 1‑C and whether it was plied by it at Karachi ‑ on 12‑1‑1965?

(2) Whether the defendant No. 2 was employed by the defendant No. 1 as its driver on 12‑1‑1965 and was under the supervision and control of the defendant No. 1 ?

(3) Whether the defendant No. 1 neglected and/or failed to properly supervise and or maintain the said bus and did not keep the same in a perfectly fit and motorable condition and directed the defendant No. 2 to ply the same on a busy thoroughfare knowing and/or having reason to know that the bus in question was defective and/or was not in a proper and fit condition on 12‑1‑1965?

(4) Whether the defendant No. 2, on 12‑1‑1965, at the alleged time while driving the bus in question rashly and/or negligently and/or with such an excessive speed lost control of the said bus and crushed the deceased Ibadullah in the manner as alleged? .

(5) Whether the deceased Ibadullah received the injuries as alleged in para. 8 on account of the said accident?

(6) Whether the deceased was earning Rs. 300 per month and whether he used to spend Rs. 200 on the plaintiffs each month and whether the plaintiffs lost support for a period of 20 years ‑and whether the plaintiffs a ere deprived of the support to the extent of Rs. 48,000 as alleged in para. 9 of the plaint?

(7) Whether the defendant No. 1 is responsible for compensating the plaintiffs as claimed?

(8) To what relief, if any, are the plaintiffs entitled and against whom?

An additional issue was framed after the defendants Nos. 3 and 4 were joined as parties and it reads as follows:‑

"Whether defendants Nos. 3 and 4 neglected and failed to perform their duties as directors of defendant No. 1 and if so whether they are personally liable to pay the claims of the plaintiffs and whether the claim against. them is time‑barred."

4. Issues Nos. 1 to 5.‑These issues are as aforesaid not contested by the defendants and are accordingly answered in favour of the plaintiffs.

5. Issue No. 6.‑The plaintiffs examined Ghulam Nabi, a co‑worker of the deceased who stated that the weekly wages of the deceased who was a skilled worker, being weaver of Banarsi Sarees, was at least Rs. 70 to Rs. 75 per week. This witness was not cross‑examined. The plaintiffs also examined Ali Ahmed, the brother of the deceased who also stated that the deceased used to earn Rs. 70 to Rs. 75 per week, as skilled weaver in Banarsi Sarees and most of his income ways spent in maintaining the two plaintiffs, one of whom, Mst. Shamsunnisa, the plaintiff No. 1 was blind. He was not cross‑examined on these aspects. I, therefore hold that the monthly income of the deceased was Rs. 300 per month and that he was spending at least Rs. 200 per month on the plaintiffs, and more so as one of the plaintiffs was blind. The deceased was at the time of his demise about f 45 years old. It is in the evidence that be was possessed of good health. The question that. next arises for consider anon is the General expectancy of life of the deceased. Mr. Sharaf Faridi, the learned counsel for the defendant No. 1 contended that it must be 60 years and not 65 years as contended on be half of the plaintiffs. In majority of cases decided by this Court 60 years has. been held to be life expectancy in Pakistan. I have also adhered to this conser vative view in a case reported in Mst. Qudsia Begum v. Younus Khan and 4 others (P L D 1973 Kar. 636) and I see no reason to make any departure. Mr. Sharaf Furidi then contended that the plaintiffs are the two daughters of the deceased and they should be compensated on the basis of what they would have received if the deceased had been alive and since on marriage they would have ceased to receive maintenance, the compensation should be calculated on the hypo thesis that they would have received at the age of 17 or 18. The question is of academic importance only. The plaintiffs have remained still unmarried and it ears unlikely that the plaintiff No. 1, who is a blind person could reasonably be provided with a husband. It is further possible that the deceased father would have continued to share his income notwithstanding the plaintiffs marriage if the husbands were not financially well oil'. Taking, therefore, 60 years as life expectancy of the deceased, and multiplying the remaining of its years, namely, 35 years by Rs, 200 per month, the amount F lost to the beneficiaries would come to Rs. 35,000 (Rupees thirty six thousand only). I have in calculating this loss ignored the deceased's future Prospects in respect of his earning which would have in all probability enlarged the compensation. I accordingly, hold that the compensation due and payable to the beneficiaries of the deceased is Rs. 36,000.00 (Rupees thirty six thousand).

6. Issue No, 7.‑It was not disputed that the defendant No. 1 is vica riously responsible for compensating the plaintiffs as owners of the bus in ques tion and as to its quantum it will be, as aforesaid, Rs. 36,000.00 (Rupees thirty six thousand).

7. Issue No. 8 and Additional Issue.‑This issue was argued at length by the three learned counsel Mr. Syed Sharifuddin Pirzada, Mr. Ghulamally Memon and Mr. Naimuddin as amicus curiaes and I am indebted to them for their assistance.

8. The learned counsel invited my attention firstly to section 94 of the Motor Vehicles Act, 1939, which provides that no person shall use except as a passenger or cause or allow any 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 complying with the requirements of Chapter III of the said Act. Admittedly, to the present case the defendant No. 1 did not insure the bus and thus plied the Vehicle notwithstanding the prohibition imposed. C Section 125 of the Motor Vehicles Act, 1939, provides for punishment ofl person who drives a motor vehicle or causes or allows a motor vehicle to be driven in contravention of the provisions of section 94, and the question that arises for consideration is whether the penalty provided under this section is the only remedy available for breach of section 94. Does the section preclude private remedy to an injured arising out of the breach of the statutory duty? Will the breach of the statutory duty to insure give rise to a cause of action to an injured member of the public? For the ans wer we will have to look to the intention of the Legislature and ascertain the class of person intended to be protected by section 94. Mr. Ghulam Ali Memon, invited my attention to sections 95 to 101 of the Motor Vehicles Act, 1939, to show that what was intended was to protect persons injured by negligent driving of motor car who may not be able to recover damages from the negligent persons. Section 94 of the Motor Vehicles Act, 1939, imposes a duty to insure against third party risks. Section 95 lays down the conditions which every such policy of insurance must com ply and the extent of the liability of the in insurer. Clause (a) provides that the policy must be issued by persons who is an authorised insurer or by a Co operative Society allowed under section 108 to transact the business of insurance. Under clause (b) the policy must insure against any liability which may be incurred by the insurer in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place in Pakistan. Subsection (2) limits the liability where the vehicle in which the passengers are carried for hire or reward to Rs. 20,000. Subsection (5) provides that notwithstanding any thing contained in any law a person issuing a policy of insurance under this section shall be liable to indemnify the person specified in the policy in respect of any liability which the policy purports to cover in case of that person. Section 96 makes the insurer liable to pay the amount decreed to the persons entitled to the benefit of the decree provided that the insurers had a notice through' the Court that a suit had been brought and if the insurer chooses to be impleaded as a party or is otherwise a party to the action by the injured and the limited defence available against the third party. Section 97 protects the rights of third parties against the insurer in the event of the insolvency or are winding up (as the case may be) of the person insured against third party liability by enabling the third party to recover the money which would be payable to him by the insurance Company. Section 98 obliges the insurer to give to the third party information as to insurance. Section 99 provides that no settlement between the insurer in respect of any claim which might be made by a third party shall be valid unless such third party . is a party to the Settlement. Section 101 provides that the insolvency of the insured person shall not affect the liability of the insured or a claim by a third party.

8‑A. The aforesaid provisions clearly show the mind of the Legislature that the intention was to give remedy to third persons who might suffer injury by the negligence of an impecunious driver of a car and though section 125 provides a penalty for breach of duty to insure under section 94 the duty is nevertheless owed to the individuals. This law is, therefore, intended not only to punish the guilty but also to protect the innocent third party.

9. This question directly arose in the case of Monk v. Warbey and others ((1950) 1 All E R 488), where the Court of Appeal was called upon to construe section 35 of the Road Traffic Act, 1930, a provision parallel to our section 94 of the Motor Vehicles Act, 1939. The facts of this case were that the appellant Warbey was an owner of the motor car in respect of which he had a Lloyds policy covering damaged causes by its use but it was conceded that the policy did not cover the events which had happened. Action was brought against Warbey alleging breach by him of the statu tory obligation imposed by section 35 of the Road Traffic Act, 1930 and damages ensuing as a result of its breach. The Court of Appeal maintained the award of damages holding that the purpose of Road Act, 1930 was to protect third person against risk and the Act could not be read as limiting remedy for a breach of the provision of section 35 to the penalty of fine or imprisonment there set out. Greer L. J. went further and held that:

"Prima facie a person who has been injured by the breach of a statute has a right to recover damages from the person committing it unless it can be established by considering the whole of the Act that no such right was intended to be given. So far from that being shown in this case, the contrary is established. To prosecute for a penalty is no sufficient protection and is a poor consolation to the injured person though it affords a reason why persons should not commit a breach of the statute."

The construction put by the Court of Appeal was approved by the House of Lords in Mcleod v. Buchanan, though the point does not seem to have been seriously contested. In a later case reported in Cortfleld v. Groves and another ((1935) 1 K H 75), Monk v. Warbey was applied.

10. It will, therefore, follow that in so far as defendant No. 1 is concerned it would be liable to the plaintiffs not only vicariously on account of the negligence of its driver but for breach of the statutory duty imposed by section 94 of the Motor Vehicles Act, 1939.

11. The next and the more important question that arises is the liability, if any, of the defendants Nos. 3 and 4, the two directors of defendant No. 1 to the plaintiffs. Mr. Sharifuddin Pirzada dealt with this question from two angles, namely, the liability of the defendants Nos. 3 and 4 to the defendant No. l company and the liability of the defendants Nos. 3 and 4 to the plaintiffs. Several textbooks were referred to by the learned counsel but it will be sufficient to produce only one paragraph from Palmer's Company Law, 21st Edn., at page 572:‑

"The acceptance of the office of director carries with it the acceptance of certain duties towards the company. These duties are partly statutory, partly regulatory, and partly dependent on the law of agents and trustees or persons in a fiduciary position. They vary from company to company, and within any one company the directors may, and frequently do, have different responsibilities. Breach of these duties or negligence in performing them on the part of a director gives the company, and, in its winding‑up, the liquidator, rights and remedies against him for any damage which has been suffered by the company as a result of the breach or negligence."

Attention was also invited to the following passage in the leading case of Re: City Equitable Fire Insurance Co. ((1925) 1 Ch. 407), at page 573:

"In order, therefore, to ascertain the duties that a person appointed to the board of an established company undertakes to perform, it is necessary to consider not only the nature of the company's business, but also the manner in which the work of the company is in fact distributed between the directors and the other Officials of the com pany, provided always that this distribution is a reasonable one in the circumstances, and is not inconsistent with any express provisions of the articles of association. In discharging the duties of his position thus ascertained a director must, of course, act honestly, but he must also exercise some degree of both skill and diligence. To the question of what is the particular degree of skill and diligence required of him, the authorities do not, I think give any very clear answer. It has been laid down that so long as a director acts honestly he cannot be made responsible in damages unless guilty of gross or culpable negligence in a business sense. But as pointed out by Nevile. J. in Re : Brazilian Rubber Plantations and Estates Ltd. (1911) 1 Ch. 425, one cannot say whether a man has been guilty of negligence, gross or otherwise, unless one can determine what is the extent of the duty which he is alleged to have neglected. For myself, I confess to feeling some difficulty in understanding the difference between negligence and gross negligence, except in so far as the expressions are used for the purpose of drawing a distinc tion between the duty that is owed in one case and the duty that is owed in another."

12. In the present case the directors would certainly be liable to the company for their failure to ensure that no vehicle owned by defendant No. 1 is run in breach of section 94 of the Motor Vehicles Act, 1939.

13. As regards the liability of the directors to the third parties Mr. Sharifuddin Pirzada invited my attention to the following passage in Palmer's Company Law, 21st Edn. at page 572:‑

"Any director who is a party to a fraud or to the commission of any a other tort is personally liable to the injured party. This is on the principle that whoever commits a wrong is liable for it himself, and nonetheless so that he was acting as au agent or servant on behalf, and for the benefit, of another; for the contract of agency or service cannot impose any obligation on the agent or servant to commit, or assist in the committing of, fraud or any other wrong. The com pany may also be liable, but that doe; not exonerate the director. So, too, if by the order of the directors, a trespass is committed, a patent infiringed, or another wrongful act committed, the directors who are parties to it are personally liable. If more than one person is concerned in the commission of a wrong, the person wronged has his remedy against all, or any one or more of them, at his choice; for every wrong doer is jointly and severally liable for the whole da mage, and it does not matter whether they acted as between them selves as equals, or one of them as agent or servant of another."

It appears, therefore, to be fairly well established that the directors of a company, if they fail to exercise care which a reasonable man would take under the circumstances of his own affairs in matters of the company of which they are directors, are liable for the negligence not only to the company but even the third party who may have been injured by their neglect. Here it was not a case of nonfeasance nor a case where the statute authorised an existing state of affairs. In the present case the directors failed to perform what can only be regarded as their paramount public duty to insure the vehicle under section 94 of the Motor Vehicles Act, 1939. In other words they acted in violation of the law.

14. Mr. S. A. Nusrat, the learned counsel for defendants Nos. 3 and 4 contended that in determining the duties of defendants Nos. 3 and 4 directors, consideration must be given to the nature of the company's business and the normal distribution of responsibilities among the directors and other Officials of the company. Here the nature of the business of defendant No. 1 was public transport and quite obviously insuring vehicles run by them was of considerable importance. There is no evidence that this important task was either entrusted to a responsible Officer of the Company or that the trust reposed in the Official, was, independently I of any act or omission of the directors, abused. The defendants Nos. 3 and 4, therefore, cannot escape liability which must, however be confined to Rs. 20,000 (Rupees twenty thousand) being the minimum amount for which the vehicle had to be insured under section 95.

15. As regards the question of limitation the same does not arise as the plaintiffs were minors both on the date of the filing of the suit and on the date on which the defendants Nos. 3 and 4 were joined as parties, in view of provisions contained under section 6 of the Limitation Act.

16. Lastly, some arguments were addressed on the powers of this Court to award interest on damages from the date of the suit until the decretal amount is paid. Mr. Sharaf Faridi the learned counsel for defendant No. 1 while not denying the Court's power under section 35 of the Code of Civil Procedure, contended that the discretion should not be exercised against the defendants for the proceedings in the suit have been delayed not on account of any default on the part of the defendants but on account of the Court's inability to take it up early. The simple answer to that would be that equally the plaintiffs should not suffer fox the same reason and more so for the defendants in their written statement denied that the accident was caused by negligence of the driver, a contention so readily given up at the trial, and could have avoided, both inte rest and cost, if they had been reasonable and settled the plaintiffs' claim instead of forcing them to this unfortunate litigation.

17. The result is that there will be a joint and several decree against the defendants Nos. 1, 3 and 4 for Rs. 20,000 (Rupees twenty thousand) with interest thereon at 6 % per annum from the date of the suit until payment and proportionate cost and a further decree of Rs. 16,000.00 (Rupees sixteen thousand) with interest at 6 % from the date of the suit until payment and proportionate cost against defendant No. 1 only.

S. A. H. Suit decreed.