1. M.F.A. No. 6870 of 2005 is directed against the judgment and award in M.V.C. No. 302 of 2002 dated 2.5.2005 on the file of M.A.C.T., Kolar.

2. Appeal is by the insurer, questioning the liability whereas, Cross Objection is by the claimant seeking enhancement of compensation.

3. Claimant has also produced an additional document by way of additional evidence.

4. Claimant sought for compensation for that injury suffered in a road accident that occurred on 7.11.1996. It is alleged that, while claimant was proceeding on TVS motor bike bearing No. KA-07/E-6359, a lorry bearing No.AP-03/T-3231 came in a rash and negligent manner and dashed against the said motor cycle, as a result of which, claimant fell down and sustained grievous injuries and was hospitalized. In this regard, claimant sought for compensation towards injuries and disability suffered on account of the injuries.

5. Claim petition was initially contested by the insurer by filing objections, denying the liability and also the quantum of compensation. Subsequently, the objection statement was amended and specific plea was raised that the policy issued in favour of the owner of the vehicle has been cancelled by issuing notice dated 4.7.1996, which was served on the owner on 10.7.1996 and similar notice was also issued to the RTO. It is the case of the insurer that the cheque issued by the owner was dishonoured on 19.6.1996, as such, the policy was cancelled by issuing notice and in view of the cancellation of the policy, there is no contract between the owner and the insurer to indemnify the liability of the owner.

6. Before the Tribunal, claimant got himself examined as PW-1 and examined Doctor as PW-2 and produced Exs.P1 to P17. On behalf of the respondent, owner was examined as RW-1, RW-2 is the driver and RW-3 is the officer of the Insurance Company. In the evidence of RW-3, Exs. R1 to R7 were marked.

7. The Tribunal on appreciation of the evidence though determined the compensation at Rs. 2,05,000/- with interest, however, it held that, the cheque issued towards the premium of the insurance policy was dishonoured and the owner had not protected his interest, having so held, it is also held that the claimant being a third party to the contract between the insured and the insurer, he is entitled for compensation and the insurer is liable to pay the said amount and recover from the owner. It is against the direction of pay and recover, the insurer is in appeal. The cross-objection is by the claimant for enhancement of compensation.

8. Sri. A.N. Krishnaswamy, learned Counsel appearing for the appellant – insurer submitted that, apart from raising specific plea of cancellation of the insurance policy in favour of the owner of the vehicle, in the evidence of RW-3, the insurer has produced Ex. R2 – an acknowledgment for having served the notice on the RTO as well as the owner of the vehicle. Ex. R3 is the cancellation letter sent by RPAD, Ex. R4 – copy of the insurance policy, Ex. R5 is the copy of cancellation. Ex.R6 is the statement of the bank. He also relied on these documents and submitted that, even before the accident, in view of the dishonor of the cheque issued by the owner of the vehicle towards premium of the policy, the Insurance Company issued a notice, cancelling the policy. Said notice was served on 10.7.1996. Similar notice was also sent to RTO for intimation and it was also served on the RTO. In view of the cancellation of the policy there being no privity of contract between the insured and the insurer, the question of insurer praying the compensation to the claimant does not arise. It arises only if there is existing contract between the insured and the insurer and submitted that, the Tribunal erred in holding that, the insurer can pay and recover from the owner of the vehicle.

9. On the other hand, Smt. Kalpana, learned Counsel appearing for the claimant submitted that, Exs. R2, R3, and R5 are only the Xerox copies, no original document