The central legal point established in the judgment is the liability of the insurer to pay compensation to the third party in case of a valid insurance policy at the time of the accident, as determined by the relevant provisions of the Contract Act and the Motor Vehicles Act.

1. This appeal by the New India Assurance Company Limited is directed against the judgment and award dated 22.8.2000 passed by the 4th Additional Motor Vehicles Accident Claim Tribunal, Muzaffarpur in Claim Case No. 134 of 1997 by which it has allowed the compensation of rupees three lacs to respondent nos.1 and 2 for the death of one Rabindra Yadav in a motor vehicle accident.

2. Learned counsel for the appellant has assailed the judgment and award on the ground that on the date of accident i.e. 18.6.1997 there was no valid insurance policy to indemnify the liability of the owner. He contended that the owner of the vehicle which caused accident had obtained an insurance policy from the appellant Company firstly on 6.6.1997 effective from 7.6.1997 to 6.6.1998 but as the premium of the insurance was paid by cheque on 6.6.1997 and the same bounced due to insufficient fund and the policy was cancelled, the policy became non est and so there was no valid policy on 18.6.1997. As such the appellant is not liable to pay compensation. In support of the submission, he relied on the decision of the Apex Court in the case of National Insurance Company Limited vs. Seema Malhotra and others reported in (2001)3 S.C.C. 151.

3. Learned counsel for the respondents-claimants, on the other hand, submitted that the above decision relied upon by the learned counsel for the appellant is not applicable in this case. He contended that for the same motor vehicle accident, two claim cases viz, Claim Case No. 134/97 and Claim Case No. 136/97 were filed against the appellant Insurance Company and another and both the claim cases were disposed of and allowed by the same judgment by the 4th Additional Motor Vehicles Claim Tribunal and in both of them the appellant was directed to pay the awarded amount. The appellant then filed Misc. Appeal No. 614 of 2000 in the High Court against the Award passed in Claim Case No. 136/97 and this Court relying on the decision of the Apex Court in the case of New India Assurance Company Limited vs. Rula and others reported in (2000)3 SCC 195 by order dated 3.10.2002 held that the appellant Insurance Company is fully liable to pay compensation awarded by the Tribunal. Learned counsel submitted that the decision of this Court is fully applicable in this case and that this appeal is liable to be dismissed.

4. In the case of Seema Malhotra (supra) the insured and the appellant Insurance Company entered into an insurance contract on 21.12.1993 by insuring a Maruti Van. On the same day the insured (owner) gave a cheque towards the first instalment of the premium and the Insurance Company issued a cover note but unfortunately on 31.12.1993 the Maruti Car was involved in an accident in which the insured died and the car was completely damaged. On 10.1.1994 the Bank on which the cheque was drawn sent an intimation to the Insurance Company that the cheque given by the Insured had been dishonored. On 20.1.1994 the Insurance Company cancelled the above policy with immediate effect. Seema Malhotra and others, the widow and the children of the insured, moved the State Consumer Protection Commission for compensation for the damaged vehicle. When the matter went to the Apex Court, the Court held that under sec. 25 of the Contract Act an agreement made without consideration is void. So when the Insured failed to pay the premium promised and when the cheque paid by him was returned dishonored by the Bank concerned, the insurer need not perform his part of promise and the corollary is that the insured cannot claim performance from the insurer in such a situation.

5. The above decision of the Apex Court, however, is not applicable in this case. In that case the legal heirs had claimed compensation from the Insurer and as such it was held that the insurer is under no obligation to perform his part of promise. But in this case a third party has claimed compensation from the appellant, the insurer of the vehicle. In the above case also