The main legal point established in the judgment is that the liability of the Insurance Company to indemnify third parties in case of accidents is determined by the validity of the insurance policy at the time of the accident, and the cancellation of the policy after the accident does not affect the rights of the third party.

JUDGMENT

The instant appeal has been preferred against the Judgment and Award dated 12th March 2013 passed by the Learned Judge, Motor Accident Claims Tribunal Tamluk, Purba Medinipur in MAC Case No. 23/244 of 2012/2008.

The brief fact of the case is that the present appellants being the claimants have preferred an application before the Learned Tribunal u/s 166 of Motor Vehicles Act for getting compensation on the ground that their predecessor was died in a road traffic accident due to rash and negligent driving of the driver of the offending vehicle duly insured under the policy of the Insurance Company.

The claim case was contested by the Insurance Company by filing written statement.

After hearing the parties and after receiving the evidence the Learned Tribunal has awarded a sum of Rs 3,88,5,00/-. The Learned Tribunal has directed the OP No. 1 i.e. the owner of the offending vehicle to pay the same award to the claimant along with 08% interest per annum.

Owner has not satisfied with the award hence the claimant has preferred the instant appeal. Learned Advocate for the appellant submits that the Learned Tribunal has committed an error by directing the owner of the offending vehicle to pay the compensation. The offending vehicle was well covered under the policy of the Insurance Company. Thus the Insurance Company may be directed to pay the compensation and they may be given liberty to recover the same from the owner. He submits that the offending vehicle was well covered under the National Insurance Company Limited; to renew the said policy the owner has issued a cheque in favour of the Insurance Company. On the basis of the cheque the Insurance Company has issued the new policy covering under the period of the accident. Subsequently the said cheque was dishonoured. The Insurance Company after issuing the policy in favour of the offending vehicle cannot cancel the policy. The insurance company has liability to pay the compensation and thereafter they may be indemnified through the owner.

In support of his contention he cited several decisions reported in New India Assurance Company Limited Vs. Rula and Ors AIR 2000 SC 1082, Oriental Insurance Company Limited Vs. Indrajit Kaur 1998 SC 588, Pranab Kumar Mitra Vs. Oriental Insurance Company Ltd. 2007 ACJ 1467, Oriental Insurance Company Vs. Shibam Kutti TAC 1 (2006) 631.

The Hon’ble Three Judges Bench of Supreme Court of India in the Case of Indrajit Kaur and ors. (supra) has held that

6. In the setting indicated we are of the view that the High court was not right in holding that in the absence of steps for cancellation of the cover note, the risk would be subsisting but as Mr. Madan has himself stated, we do not interfere with the decision of the High Court requiring the sum of Rs 15,000/- to be paid by the insurer. “We find it is difficult to conclude that the judgment in the case of United India Insurance Company Ltd. Vs. Ayeb Mohammed decides a principle of law because no notice had been issued on the special leave petition. At the same time, the opinion is expressed in the judgment that the High Court was in error in holding that, in the absence of steps to cancel the cover notre, the risk would subsist.

Chapter 11 of the Motor Vehicles Act, 1988, provides for the insurance of motor vehicles against third party risks. Section 146 thereunder states that no person shall use or cause or allow any other person to use a motor vehicle in a public place unless there is in forced in relation to the use of the vehicle a policy of insurance that complies with the requirements of the Chapter. Section 147 sets out the requirements of polices and the limits of liability. A policy of insurance, by reason of this provision, must be a policy which is issued by a person who is an authorised insurer. Subsection 5 reads thus:

“(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall