FAO No.1022 of 2001 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH FAO No.1022 of 2001 Date of Decision. 26.10.2010 National Insurance Company Ltd., SCO No.337-340, Sector 35-B, Chandigarh through its Regional Manager ......Appellant Versus Harnadi w/o Randhir resident of village Bhaini Mato District Rohtak and others ......Respondents 2. FAO No.1023 of 2001 National Insurance Company Ltd., SCO No.337-340, Sector 35-B, Chandigarh through its Regional Manager ......Appellant Versus Smt. Indrawati widow of Manphool Singh and others ......Respondents 3. C.R. No.2183 of 2001 National Insurance Company Ltd., SCO No.337-340, Sector 35-B, Chandigarh through its Regional Manager ......Appellant Versus Har Gyan Singh son of Shri Sadhu Ram and others ......Respondents 4. C.R. No.2184 of 2001 National Insurance Company Ltd., SCO No.337-340, Sector 35-B, Chandigarh through its Regional Manager ......Appellant Versus Surender son of late Sh. Mehar Singh and others ......Respondents Present: Mr. L.M. Suri, Senior Advocate with Mr. Neeraj Khanna, Advocate for the appellant. Mr. Rakesh Nehra, Advocate for the respondents. FAO No.1022 of 2001 -2- CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? -.- K. KANNAN J.(ORAL) 1. The appeals and the revision petitions address the issue of liability of the insurer in a case where the defence, inter alia, of the insurance company had been that the owner had committed a breach of terms of the policy by using the vehicle for hire or reward and taking some passengers for hire for a marriage party. The case was one of collusion between the insured's jeep and a tractor and all the claimants were passengers in the jeep. 2. At the trial, issues were framed and one of the issues was in some sense an omnibus issue namely whether the insurance company is not liable to pay the compensation in case of award as alleged. The insurance company in the course of cross-examination was able to elicit through the evidence of PW4, who was one of the passengers to say as follows:- "It is correct that owner of the jeep used to ply his jeep on fare. My uncle was paid driver on the jeep. The vehicle was hired for marriage party for Rs.1,000/-." 3. PW5, who was also another passenger made halting admission in the following words:- "The owner of the jeep used to ply his jeep for fare." 4. PW6's evidence was as follows:- "It is correct that Mehar Singh was employed as a driver of FAO No.1022 of 2001 -3- the jeep in question, which was being plied for hire. We might have hired the same for Rs.800/900 on that day." 5. As against the statement filed by the insurance company complaining of breach of terms of policy and the statement elicited from some of the witnesses, the owner did not choose to lead any evidence as regards the manner of user and as regards the breach complained of by the insurance company. 6. When the written statement of the insurance company and the statements extracted above were put to the counsel for the respondent-owner, the learned counsel points out that there was no specific issue at all regarding the fact whether there had been any violation of terms of policy and whether the vehicle had been led for hire in violation of terms of policy. Learned counsel would also submit that the insurance company had not let in any evidence and the statement of witnesses giving on the side of claimants cannot constitute an admission. 7. Any statement in order to constitute an admission shall be made by any person against whom it is to be used. It is apposite to reproduce Sections 17 and 19 of the Evidence Act here:- “17. Admission defined. - An admission is a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons, and under the circumstances, hereinafter mentioned. 19. Admissions by persons whose position must be proved as against party to suit. - Statements made by FAO No.1022 of 2001 -4- persons whose position or liability it is necessary to prove as against any party to the suit, are admissions, if such statements would be relevant as against such persons in relation to such position or liability in a suit brought by or against them, and if they are made whilst the person making them occupies such position or is subject to such liability. Illustration A undertakes to collect rents for B. B sues A for not collecting rent due from C to B. A denies that rent was due from C to B. A statement by C that he owed B rent is an admission, and is a relevant fact as against A, if A denies that C did owe rent to B.” 8. I have no doubt in my mind that statement made by the claimants themselves cannot constitute in the admission against the insured. However, as regards the defences which are available to the insurance company under Section 149(2) of the Motor Vehicles Act, it is invariably a dispute between the insurer and the insured and the statement of the claimants' witnesses if they do not operate as admission, they operate as substantive evidence tendered against the interest of the owner. It must be taken as fact established in trial, which is relevant and unless such evidence is impeached by substantive evidence adduced by the insured himself, the insurance company is entitled to rely on such statements as facts established in support of the evidence taken by the insurance company. It cannot be denied that the nature of user of the vehicle by taking passengers for hire in a vehicle, when the admission of insurance was only for use as a private vehicle, constitutes a violation of terms of policy. FAO No.1022 of 2001 -5- The user of a vehicle for hire requires permit under Section 66 of the Motor Vehicles Act and Section 149(2) itself sets out through Section 149(2)(a)(i)(c) that a user of a vehicle for a purpose, which is not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle. If the vehicle was used as a transport vehicle then it was a user which was not permitted by the terms of the policy especially without a permit having been secured therefor. 9. I cannot accept a plea that there was no specific point for consideration made regarding the violation of terms of policy. When points for consideration are issues or procedural mechanisms to direct appropriate focus for the parties to adduce their evidence upon which shall be the duty of the parties themselves to ensure that appropriate issues are struck so that evidence can be properly adduced. The issues are also definitely to be carefully drawn by the Court or the Tribunal so that the parties know what they were litigating for. I would have taken this petition as relevant if there was a surprise at the trial and no pleadings had been there set forth by the insurer. On the other hand, I have seen through the written statement of the insurer which specifically sets out its contention regarding the violation of terms of the policy and the user of the vehicle for hire. It did not merely stop with contention in the written statement. It was a subject of cross-examination of three witnesses one after another. The owner of the vehicle, who had participated at the trial with the counsel ought to have, therefore, known that evidence was being led in directly against his interest. The owner, however, has not chosen to make a further cross- FAO No.1022 of 2001 -6- examination of the claimant, for after all the claimants were the owners adversaries as well. If the owner had not a right of cross- examination against the claimants' witnesses and the effect of the statements of the witnesses had not been diluted in any way by cross-examining them or giving any evidence in his own favour denying the statement adduced through PW-4, PW-5 and PW-6, I must only hold that there was a violation of terms of policy that could disentitle the owner to obtain a right of indemnity from the insurer. The insurer's liability to satisfy the claim is never in doubt for that is an old liability secured through Section 149(4) proviso and Section 149(5) and supported through decision of the Hon'ble Supreme Court in New India Assurance Co., Shimla v. Kamla, (2001) 4 SCC 342 . 10. The awards of the Tribunal are confirmed as regards the entitlement of the claimants and mode of apportionment of liability on the issue of negligent but shall stand modified to provide to the insurer a right of recovery against the insured for breach of violation of terms of policy relating to the nature of user of the vehicle for hire. 11. All the appeals and revision are allowed to the above extent. (K.KANNAN) JUDGE October 26, 2010 Pankaj*