Balachandran, J.

The interesting question of vast legal importance which comes up for consideration before us upon a reference by a Division Bench is the following:-

“Whether the insurer is liable to pay compensation to the injured in a motor vehicle accident even if it has cancelled the policy issued in relation to the offending vehicle for non-payment of premium, the (the cheque issued towards payment of premium having been dishonoured) in respect of accident that has taken place within the period specified in the policy but that has taken place after the cancellation?”

2. The Referring Bench was of the view that the principles laid down by a division Bench of this court in New India Assurance Co. Ltd. v. Raghu (2001 (3) K.L.T. 515) required reconsideration by a larger bench on analyzing the provisions of Sections 147 (5) and 149(1) of he Motor Vehicles Act, 1988 in the light of the decisions of the Apex Court in Oriental Insurance Co. Ltd v. Inderjit Kaur and others (AIR 1998 SC 588) = 1998 ACJ 123 and New India Assurance Co. Ltd. v. Rula and others (2000 (3) SCC 195 = 2000 ACJ 630).

3. The appellant is the third respondent Insurance Company and the respondents are the petitioner and respondents 1 and 2 in O.P.(MV) 490 of 1992 on the file of the Motor Accidents Claims Tribunal, Pathanamthitta. Reference to the parties are hereinafter made reference to their status before the Tribunal.

4. The petitioner was passenger in stage carriage bus “Sheeba” bearing Registration No. KLB 9666 plying along Ranni-Erumeli route on 23.12.1991. At Ranni junction, the offending lorry bearing Regn. No. KRO 5405 which was coming in the opposite direction hit the said bus resulting in injuries and fracture being caused to the petitioner. The first respondent was the owner and the second respondent was the driver of the said lorry. The third respondent Insurance company had issued Ext.B8 policy of insurance in relation to the said lorry on 4.11.1991 for the period from 5.11.1991 to 4.11.1992. But consequent on dishonour of Ext.B1 cheque issued but he first respondent towards payment of premium, the third respondent vide Ext.B3 letter dt. 19.11.1991 informed the first respondent of the dishonour of the cheque and thereafter by Ext.B6 notice dt. 29.11.1991 issued to the first respondent, cancelled the policy under intimation to the R.T.O. vide Ext.4 of the same date. It is thereafter on 23.12.1991 that the accident involved in this case has taken place. Additional respondents 4 to 6 were the owner, driver and insurer of the bus involved in the accident and they remained exparte.

5. The Tribunal found on evidence that the accident has occurred solely on account of the negligence of the second respondent driver of the lorry bearing Regn. No.KRO 5405 owned by the second respondent and in relation to which the third respondent Insurance Company had issued Ext.B8 policy of insurance covering period from 5.11.1991 to 4.11 1992. The compensation payable to the petitioner the injured in the accident was assessed at Rs.2,22,000/-. The second respondent driver was held primarily liable in damages for his negligence, the first respondent owner was held vicariously liable and the third respondent Insurance Company was found liable to pay the compensation awarded despite cancellation by them of Ext.B8 policy of insurance relying on the decisions of the Apex Court in Oriental Insurance Co. Ltd. v. Inderjit Kaur and others (AIR 1998 SC 588) and in New India Assurance Co. Ltd. v. Rula and others (2000 (3) SCC 195) and of a Division Bench of this Court in New India Assurance Co Ltd. V., shamsed (2000 (2) KLT 67) but with right to recover the amount so paid in satisfaction of the award from the first respondent owner of the lorry by reason of provisions in Sections 147(5) and 149(4) of the Motor Vehicles Act, 1988.

6. It is in the appeal filed by the third respondent Insurance Company challenging the said award that the question of law involved as aforesaid has