(Sanjay Karol, J.) - United India Insurance Company Limited, the appellant herein has assailed the impugned award date 7th April, 2004, passed by the Motor Accident Claims Tribunal, Una, H.P. in MAC Petition No. 13 of 1999 titled as Sandhya Devi and others v. Rajesh Kumar and others awarding compensation of Rs. 1,39,600/- to the claimants, legal representatives of the deceased Sh. Basant Ram.

2.Since the Insurance Company has filed the appeal, therefore, the controversy is narrow. Mr. Behl, learned Counsel for the appellant has challenged the impugned award only on the ground that since the cheque towards the premium of the policy stood bounced and the policy cancelled, therefore, the Tribunal seriously erred in holding the Insurance Company liable to indemnify the insured and pay the awarded compensation.

3.Facts necessary for adjudication of the case are that vehicle No. HP-23-1575 owned by Sh. Subhash Chand was insured by the appellant. As per the insurance cover note (Ext.RW-2/A), the policy was to be valid and operative from 11th November, 1997 to 11th November, 1998. However, cheque No. 572022 dated 12th November, 1997 for a sum of Rs. 8,654/- issued towards the insurance premium could not be encashed due to insufficient funds in the account of the insurer respondent No. 2. The appellant, vide endorsement dated 16th December, 1997 sent a notice to the Financier and cancelled the insurance policy. The insurer (respondent No. 2) was also informed about the same vide letter dated 29th January, 1998.

4.On 30th October, 1998, the vehicle in question met with an accident in which one of its occupants, namely, Sh. Basant Ram received injuries and died on the spot.

5.The claimants being the widow and sons of the deceased filed a claim petition under Section 166 of the Motor Vehicles Act claiming compensation of Rs. 9,00,000/- as the deceased was earning Rs. 3,500/- per month.

6.The driver and the owner filed its reply admitting the occurrence of the accident but denying any negligence.

7.The appellant-Insurance Company in its reply inter alia, took a defence that there was no privily of contract between the parties as the Insurance Policy and cover note stood cancelled since inception and intimation thereof was given to the R.T.O. Hamirpur vide letter dated 29th January, 1998.

8.Based on the pleadings of the parties, the Tribunal framed the following issues :-

1. Whether the accident took place on 30.10.1998 at village Bobar due to rash and negligent driving of truck No. No. HP-23-1575 by respondent No. 1 in which Basant Ram died as alleged ? OPP

2. Whether the petitioners are entitled to compensation from the respondents on account of death of Sh. Basant Ram in the accident, if so to what amount and from which of the respondent ? OPP

3. Whether the driver of the truck No. HP-23-1575 was not holding a valid and effective driving license at the time of accident, if so, its effect ? OPR-3

4. Whether the vehicle in question was used against the terms and policy being used for carrying passenger as alleged ? If so its effect ? OPD-3

5. Whether the vehicle was plied without any valid RC, fitness certificate and route permit ? OPD-3

6. Whether the vehicle was insured with respondent No. 3 as alleged ? OPR-1 and 2.

7. Relief.

9.Appreciating the material on record, the Tribunal held that the vehicle in question was involved in the accident in which Sh. Basant Ram died. The driver was negligent. The monthly income of the deceased was taken to be Rs. 1800/- and after applying the necessary deductions (1/3rd), the loss of income was determined to be Rs. 1200/- per month or Rs. 14,400/- per year. Taking into account the age of the deceased (62 years) and the claimants, by applying the multiplier of 9, the total loss of income was determined to be Rs. 1,29,600/-. Rs. 10,000/- as conventional charges were also awarded. Thus, total sum of Rs. 1,39,600/- was awarded as compensation to the claimants.

10.The Tribunal decided i