Insurance policies are void if cancelled and the insured was duly notified before an accident, absolving the insurer from liability for resulting claims.

JUDGMENT :

Sanjay K. Agrawal, J.

1.The claimants have preferred this appeal under Section 173 of the Motor Vehicles Act, 1988 (for short “Act of 1988”) challenging the impugned award dated 27.06.2022 passed by the Motor Accident Claims Tribunal, Koriya, Chhattisgarh (for short “Claims Tribunal”) in Claim Case No. 62/2019, by which the Insurance Company exonerated from its liability to pay the compensation amount to the claimants/appellants herein.

2.Mr. A.L. Singroul, learned counsel for the appellants, would submit that the Claims Tribunal ought to have invoked the principle of pay and recover by fastening the liability upon the Insurance Company/respondent No.2 herein and while granting compensation and, therefore, the appeal deserves to be allowed.

3.Mr. Pankaj Agrawal, learned counsel for the respondent, would submit that the dishonour of cheque and cancellation of the policy were intimated to the appellant much prior to the date of the accident, therefore, the principle of pay and recover has rightly been not invoked by the Claims Tribunal.

4.I have heard learned counsel for the parties, considered their rival submissions made herein above and gone through the records precisely.

5.In the instant case, the insurance policy was issued by the Insurance Company of Truck bearing Registration No. CG-15-AC-4002 for the period from 05.02.2019 to 4.02.2020 vide Ex.D/1 for which the payment was made through cheque vide Ex.D/2C on 05.02.2019, which was dishonored on 07.02.2019 vide Ex.D/3C and due to which the insurance policy was cancelled. The aforesaid information was given to owner of the vehicle Intezar Khan, through registered notice dated 11.02.2019 vide Ex.D/4C, which was received by him on 12.02.2019 vide Ex.D/7C, and except that, Insurance Company has also informed the aforesaid fact to the R.T.O. Ambikapur through registered notice dated 11.02.2019 vide Ex.D/5C, which was received by the RTO Ambikapur on 12.02.2019 vide Ex.P/6C. Entry of cancellation of insurance policy/dishonoured cheque was made by the Insurance Company in its postal register on 11.02.2019 vide Ex.D/8C and same was informed to the RTO Ambikapur vide Ex.D/9C. However, as per the case of the claimants, the accident was occurred on 14.04.2019, meaning thereby, the policy has been cancelled much prior to the date of the accident i.e. after two months of cancellation of the policy the accident was occurred, and the cancellation of the policy had already been informed to owner of the vehicle Intezar Khan vide Ex.D/4C. In this regard, the decision rendered by the Supreme Court in the matter of United India Insurance Company Limited v. and other , (2012) 5 SCC 234 may be noticed herein, in which their Lordships of the Supreme Court have clearly held as under:-

“26. In our view, the legal position is this: where the policy of insurance is issued by an authorised insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorised insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the MV Act unless the policy of insurance is cancelled by the authorised insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorised insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonoured and before the accident of the vehicle occurs, such in