ORAL JUDGMENT:

1. This first appeal is preferred against the order passed on an application under Section 140 of the Motor Vehicle Act, whereby it exonerated the Insurance Company.

2. The facts giving rise to the claim are as follows –

The claimant is an agriculturist. He had brought to Kalamna the agricultural produce for being sold there. It was brought in a Metador bearing No.MH-31/AP-7922 from his village. After selling the said Soyabeen, the claimant as well as others were going back home sitting in the same Metador, to their village. On way, the said Metador met with an accident in which the claimant suffered injuries. Due to the said injuries, it is alleged that the claimant has suffered a permanent disability. He has, therefore, filed an application claiming compensation under Section 166 of the Motor Vehicle Act. Therein, he also filed an application under Section 140 of the M.V.Act.

3. The said application under Section 140 of the M.V.Act was opposed by the Insurance Company on the ground that the cheque issued by the owner of the vehicle towards the premium to be paid for insuring the vehicle was dishonoured and an intimation was given to the owner as well as to the R.T.O. office of such cancellation of the policy. The other ground is that the claimant was not a third party and a gratuitous passenger not covered by the policy of insurance.

4. The learned judge of the Tribunal found that since cheque issued by the owner of the vehicle was dishonoured and the policy of insurance was cancelled by the insurance company after intimation to the owner, the insurance company was not liable. Feeling aggrieved thereby, this appeal has been preferred.

5. I have heard the learned counsel for the appellant and the respondent.

6. The Insurance Company does not dispute that the owner of the vehicle had taken out the policy for the vehicle in question w.e.f. 28/11/2003 to 27/11/2004. The defence of the Insurance Company is threefold.

1) that the policy of insurance has been cancelled due to dishonour of the cheque,

(2) the claimant since travelling in the vehicle was not third party ,and (3) the claimant was travelling in a goods vehicle as a gratuitous passenger and was, therefore, not covered.

7. The Insurance Company specifically contends that the cheque issued towards the payment of premium was dishonoured and as soon as the said cheque was dishonoured an intimation was given to the owner by registered post as well as to the Regional Transport Officer. It is contended that said letter was sent on 8/12/2003. Insurance Company has placed on record the copy of the letter and the postal acknowledgment. The postal acknowledgment shows that the owner had received the letter on 10/12/2003 intimating that the policy stands cancelled. Shri Sadavarte, the learned counsel for the claimant/appellant, submits that once Insurance Company issues a policy, it cannot escape the liability even if a cheque may be dishonoured subsequently. He submits that as far as third party is concerned, the dishonour of cheque will not come in the way and vehicle should be deemed to be covered by the insurance once policy is issued and the term of the policy has not expired. He also contends that if the cheque is dishonoured, the Insurance Company is at liberty to recover the amount, which it is required to pay, from the owner but the Insurance Company is in any case bound to indemnify the third party. He relied on the decision of the Kerala High Court, reported in AIR 2006 Kerala 20 (The Oriental Insurance Company Ltd. vs. A.B.Sivankuty and ors.). The High Court observes as follows –

15. Thus by no means can an insurer who has issued a policy of insurance for a motor vehicle receiving cheque towards payment of premium be allowed to disown liability to third party. Their remedies have to be worked out against the insured.

20. Neither from the three member Bench decision of the Apex Court in Inderjit Kaur’s case AIR 1996 SC 588 nor from the provi