Key Points: - The judgment holds that when an insured’s cheque towards premium is dishonoured, the insurer is not liable to honour the contract of insurance against the insured (para discussing non-performance due to non-payment) (!) (!) . - Sub-section 64-VB of the Insurance Act and sections of the Contract Act govern that a contract based on reciprocal promises cannot be enforced if the consideration (premium) is not received or paid, especially when the cheque bounces (paras explaining Sections 51, 52, 54 and related analysis) (!) (!) (!) . - If the insured pays the premium later, before the accident date, the situation may differ; otherwise the insurer is justified in refusing to pay the insured claim (para 20) (!) . - The insurer remains liable to third-party claims under Motor Vehicles Act provisions, but not to the insured for non-payment scenarios (discussion around Chapter X and third-party liability) (!) (!) . - The Division Bench’s view that cancellation from the date of cheque dishonour may affect liability vs. what the Supreme Court held (insurer not liable to the insured when cheque dishonoured and cancellation occurs) (!) (!) (!) . - The appeal was allowed; the insurer’s position was upheld (final holding) (!) (!) .

What is the insurer's liability when the premium cheque is dishonoured and the accident occurs before premium payment is completed?