A.K. Basheer, J.

1. The short but interesting question that arises for consideration in this appeal is whether the appellant/insurance company is entitled to be exonerated from the liability to indemnify the insured/owner of the vehicle on the plea that as on the date of the accident the cover note issued in respect of the vehicle had been rendered ineffective and invalid since the cheque issued by the latter towards premium was dishonoured due to insufficiency of funds. The Tribunal, after considering the relevant materials available on record, negatived the above plea raised by the appellant and held that the appellant was liable to indemnify the insured. The said award passed by the Tribunal is under challenge in this appeal.

2. Shorn of unnecessary details, the facts which are necessary for disposal of this appeal may be briefly noticed.

3. A tourist bus owned by respondent No.5 herein knocked down a pedestrian causing fatal injuries to him at about 5 a.m. on October 20, 1992. The legal representatives of the deceased victim claimed compensation from the owner, driver and insurer of the bus. The Motor Accidents Claims Tribunal, after considering the claim and the rival contentions of the insurance company, held that the claimants were entitled to get a sum of Rs. 5,31,984/- as compensation from the owner, driver and the insurer. The appellant/insurance company was directed to indemnify the owner, since it was found that as on the date of the accident there was a valid insurance policy in respect of the vehicle.

4. Sri.Mathews Jacob, learned Senior counsel who appears for the appellant submits that the cover note issued by the company was for the period from September 4, 1992 to September 18, 1992 only. The above cover note was issued on the basis of a proposal form submitted by the owner of the vehicle along with a cheque for Rs.5123/- towards premium. The proposal form was returned to the owner, since certain defects were noted therein, and he was requested to resubmit the form after curing the defects. However, the appellant admittedly retained the cheque with it. It is on record that the cheque was presented for encashment on September 30, 1992. According to the appellant, the cheque was dishonoured due to insufficiency of funds in the account of the owner (respondent No. 5) and an intimation in this regard was received from the bank on October 20, 1992, the date on which the accident took place.

5. Appellant contended before the Tribunal that on the same day the appellant had sent a communication to respondent No.5 intimating him about the dishonour of the cheque and since the factum of dishonour and cancellation of the cover note had been intimated to respondent No.5, the appellant would not be liable to indemnify him.

6. However, the Tribunal repelled the above contention and held that since there was no evidence to show that the appellant/insurance company had informed the insured/owner about the dishonour of the cheque as well as cancellation of the cover note before the accident occurred, the insurance company would be liable to indemnify the owner.

7. It is contended by the learned senior counsel that the appellant had never issued any valid insurance policy as such. But he conceded that the appellant had issued a cover note which had validity for a period of two weeks starting from September 4, 1992. It is pointed out by the learned senior counsel that as on the date of the accident viz. October 20, 1992 the vehicle was not covered under a policy. The validity of the cover note had expired on September 18, 1992. Thus it is contended by the learned senior counsel that there was no privity of contract between the appellant and respondent No.5 as on the date of the accident and therefore the appellant cannot be mulcted with the liability to indemnify respondent No.5.

8. At first blush, the above contention may appear to be quite attractive. But it has to be noticed that the appellant had admittedly retained the che