The central legal point established in the judgment is that the insurer's liability to indemnify third parties in a motor accident claim subsists unless the policy of insurance is cancelled and intimation of such cancellation has reached the insured before the accident.

Mansoor Ahmad Mir, J.

Subject matter of this appeal is the judgment and award, dated 20.09.2008, made by the Motor Accident Claims Tribunal, Solan, Camp at Nalagarh, H.P. (for short "the Tribunal") in MAC Petition No. 3NL/2 of 2005/04, titled as Madan Lal versus Suresh Kumar and others, whereby compensation to the tune of Rs. 2,58,400/with interest @ 9% per annum from the date of filing of the claim petition till its realization came to be awarded in favour of the claimant-injured and against the owner and the driver and the insurer was directed to satisfy the award (for short "the impugned award").

2. The claimant-injured, the owner-insured and the driver of the offending vehicle have not questioned the impugned award on any count, thus, has attained finality so far it relates to them.

3. The appellant-insurer has questioned the impugned award on the ground that the premium cheque was bounced, thus, the insurer was not liable to satisfy the award.

4. Thus, the only question to be determined in this appeal is whether the Tribunal has rightly saddled the appellant-insurer with liability or otherwise? The answer is in the affirmative for the following reasons:

5. It was for the appellant-insurer to prove that the owner-insured has violated the mandate of Section 64VB of the Insurance Act, 1938 (hereinafter referred to as "the Insurance Act") read with the mandate of Sections 147 to 149 of the Motor Vehicles Act, 1988 (for short "MV Act"), has not performed its duty and has not informed the owner-insured about the bouncing of the premium cheque or about the cancellation of the insurance policy. Thus, it can not lie in the mouth of the appellant-insurer that the owner-insured has committed willful breach.

6. It was the duty of the appellant-insurer to prove the said factum by leading positive evidence, which it has failed to do so.

7. My this view is fortified by the judgment rendered by the Apex Court in a case titled as New India Assurance Co. Ltd. versus Rula and others, reported in AIR 2000 Supreme Court 1082. It is apt to reproduce para 11 of the judgment herein:

“11. This decision, which is a 3Judge Bench decision, squarely covers the present case also. The subsequent cancellation of the Insurance Policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not affect the rights of the third party which had accrued on the issuance of the Policy on the date on which the accident took place. If, on the date of accident, there was a Policy of Insurance in respect of the vehicle in question, the third party would have a claim against the Insurance Company and the owner of the vehicle would have to be indemnified in respect of the claim of that party. Subsequent cancellation of Insurance Policy on the ground of nonpayment of premium would not affect the rights already accrued in favour of the third party.”

8. The matter again came up for consideration before the Apex Court in Deddappa & Ors. versus The Branch Manager, National Insurance Co. Ltd., reported in 2007 AIR SCW 7948, and the same principle has been laid down.

9. In the case titled as United India Insurance Co. Ltd. versus Laxmamma & Ors., reported in 2012 AIR SCW 2657, the Apex Court has discussed the law developed on the issue and ultimately held that if cancellation order is not made or if the accident occurs till the cancellation is made and conveyed, the insurer is liable. It is profitable to reproduce para 19 of the judgment herein:

“19. In our view, the legal position is this where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the a