SANJIV KHANNA, J.

( 1 ) THE present appeals raise a common question of law relating to third party liability of an insurance company under the Motor Vehicles Act, 1988 (hereinafter referred to as the Act, for short) even after the cheque given by the insured,. e. , the owner of the vehicle, to cover third party liability has bounced and notice terminating the contract of insurance has been served on the insured. Learned Motor Accidents Claim Tribunal has held that the appellants, the insurance companies will be liable to third parties.

( 2 ) UNDER law of contract, if one party commits fundamental breach of the terms of the agreement, the other party is entitled to terminate the contractual relationship and be absolved from performing it's obligations. Failure and default in paying consideration as per terms agreed, is a fundamental breach of a contract. In fact the party terminating the contract is entitled to sue the other side and claim/recover damages, if any. The Act, however, has made inroads into the law of contract as far as contract of insurance relating to motor vehicles is concerned. The Act has specific provisions in respect of third party liabilities. Being a beneficial legislation, the Courts have interpreted the provisions of the Act to ensure that the legislative intent and benefit is not nullified by the insurance companies on the basis of contractual terms to the contrary. Courts have always endeavored to ensure maximum protection to third parties who suffer as a result of a road accident so that they are not penalised. Brief Facts of MAC. APP. No. 259/2004

( 3 ) MOTOR car bearing registration No. DL-1y-2760 was owned by. Megha tours and Travels. The owner issued a cheque dated 22nd February, 1997 towards payment of premium for insurance cover to the Oriental Insurance company Limited. The insurance was for the period 22nd December, 1997 to 21st December, 1998.

( 4 ) THE said cheque was dishonoured and payment of the premium was not made. The appellant insurance company vide letter dated 7th January, 1998 informed the owner of the motor car that the insurance cover stood cancelled due to non-receipt of premium and that the insurance company would not be on risk whatsoever, and no claim will be entertained. It was further stated that the insurance cover would commence from the time when the premium would be paid.

( 5 ) THE motor car met with an accident on 6th October, 1998. Mr. Vinod kumar was injured in the said accident having suffered fractures in his left leg and other injuries. He filed a claim petition before the Motor Accidents' claim Tribunal and an award for Rs. 43,000/- along with interest has been passed in his favour against the owner and the driver of the motor car. The insurance company has also been made liable to pay the aforesaid amount in spite of the fact that insurance cover note was cancelled vide letter dated 7th January, 1998 and the insurance premium was not paid. Learned tribunal in this regard relied upon two judgments of the Supreme Court in the case of Oriental Insurance Company Limited v. Inderjit Kaur, AIR 1998 SC 588 and New India Assurance Company Limited v. Rula and others, (2000) 3 SCC 195 and inter alia, held that the insurance company would be liable to pay compensation even if the cover note was cancelled. Recovery rights were granted to the insurance company after making payment, to collect the amount from the owner/driver of the vehicle. The appellant insurance company has challenged the impugned award dated 5th february, 2004 on the question of it's liability to make payment, once cheque given for the insurance premium had bounced and the insurance cover note was cancelled.

( 6 ) BUS bearing registration No. DL-1p-7961 owned by Mr. Dev Raj singh was insured with the appellant insurance company-National insurance Company Limited. The owner-insured issued a cheque towards insurance premium, which was however dishonoured and the insurance premium was not paid. The insu