The case established that the insurance company's liability to pay compensation under the Motor Vehicles Act, 1988, prevails over the cancellation of the policy due to dishonored premium payment, based on public interest and statutory provisions.

S. B. SINHA, J.

( 1 ) LEAVE granted.

( 2 ) THIS appeal is directed against the judgment and order dated 15/6/2005 passed by a learned Single Judge of the High Court of Karnataka in M. F. A No. 5751 of 2002, whereby and whereunder an appeal preferred by the respondent herein from the judgment and order dated 12/6/2002 passed by the Motor Accidents Claims Tribunal in M. C. A. No. 113 of 2001 was allowed.

( 3 ) SHANTAMMA, daughter of the appellant herein was sleeping in her hut. A tempo bearing No. KA 37 - 2257 which was being rashly and negligently driven by Respondent No. 2 herein ran over her. She died on the spot. Household articles of the appellant also were damaged in the said accident.

( 4 ) AN application for grant of compensation was filed by the appellants herein under Section 166 of the Motor Vehicles Act, 1988 (for short "the act") in the Court of C. J. (SD) and Motor Accidents Claims Tribunal at gangavati in the district of Koppal on 12/6/2006.

( 5 ) THE said vehicle was insured with the National Insurance Company. A plea was taken therein by the Insurance Company that although the vehicle in question was insured by the owner for the period 17/10/1997 and 16/10/1998, but the cheque issued therefor having been dishonoured, the policy was cancelled and, thus, it was not liable therefor.

( 6 ) BY an Award dated 12/6/2002, the learned Motor Vehicles Accidents claims Tribunal allowed the said claim application directing payment of compensation for a sum of Rs. 1,58,000. 00 with interest @ 12% per annum holding that the Insurer was liable to pay the said awarded amount despite cancellation of the contract of insurance. As noticed hereinbefore the High court of Karnataka on an appeal preferred by the first respondent herein allowed the same relying on the judgment of the Karnataka High Court in m. F. A. No. 6430 of 2001.

( 7 ) MR. C. M. Angadi, the learned counsel appearing on behalf of the appellant in support of this appeal inter alia submitted that the High Court committed a serious error in passing the impugned judgment in so far as it failed to take into consideration that when the insurance cover was issued, the liability of the Insurance Company subsists despite dishonour of cheque evidencing payment of the insurance premium.

( 8 ) STRONG reliance in this behalf has been placed on Oriental Insurance co. Ltd. v. Inderjit Kaur and Ors. [ (1998) 1 SCC 371] and National insurance Co. Ltd. v. Seema Malhotra and Ors. [ (2001) 3 SCC 151].

( 9 ) BEFORE embarking on the said question we may notice the admitted facts. Second respondent who was driving the vehicle was also the owner thereof. The insurance policy was to remain valid for the period 17/10/1997 to 16/10/1998. Respondent No. 3 issued a cheque on 15/10/1997. The said cheque was presented for encashment before the Syndicate Bank. The Bank by its letter dated 21/10/1997 issued a 'return Memo' disclosing dishonour of the cheque with the remarks "fund insufficient". First Respondent thereupon cancelled the policy of insurance. The said information was communicated to Respondent No. 2. An intimation thereabout was also given to the R. T. O. concerned.

( 10 ) BEFORE the Motor Vehicle Accidents Claims Tribunal, the insurer has also examined witnesses, inter alia, to prove cancellation of the policy of insurance, postal acknowledgement showing intimation thereabout which was served to the insured and a copy of the letter dated 6. 11. 1997 issued to the R. T. O. and the memo issued by the Bank as regards dishonour of the cheque etc.

( 11 ) INDISPUTABLY, the accident had occurred on 6. 2. 1998 that is much after communication of cancellation of the policy.

( 12 ) KEEPING in view the aforementioned backdrop of all events, we may notice the legal issues addressed before us by the learned counsel.

( 13 ) SECTION 147 of the Act obligates the owner of the motor vehicle to get the vehicle insured in so far as the claim of third party is concerned. The act does not deal