Vicarious liability of hirer and route-permit holder extends to bus accident compensation despite a clause shifting responsibility.

A hirer and route-permit holder may be treated as the "owner" for compensation liability where it has actual possession and effective control of the vehicle. Because the bus was operated on the Corporation's route, fares were collected through its conductor, and the driver functioned under its control, the Court treated the Corporation as vicariously liable for the driver's tort committed in the course of operation. A contractual clause shifting liability to the registered owner did not defeat that responsibility, especially where the agreement contemplated reimbursement if the Corporation made payment.

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Issues: Whether the Rajasthan State Road Transport Corporation, as hirer of the bus and holder of the route permit, was vicariously liable to pay compensation for the accident despite not being the registered owner, and whether the contractual clause shifting liability to the owner could defeat such liability.

Analysis: The bus was being operated on a route permitted to the Corporation, the fare was collected on its behalf by its conductor, and the driver was required to act under the instructions and control of the Corporation's conductor and officers. On these facts, the Court treated the expression "owner" in the Act in a wider sense so as to include the person in actual possession and effective control of the vehicle. The Court held that when the services of the driver are transferred along with effective control, the hirer becomes vicariously liable for the driver's tort committed in the course of operation of the vehicle. The contractual clause purporting to fasten liability only on the bus owner did not avail the Corporation, particularly because the agreement itself contemplated reimbursement if the Corporation had to make payment.

Conclusion: The Corporation was held liable to compensate the claimants, and the challenge to the award failed.

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