PRABHA SRIDEVAN, J.

1. On 13. 1997, one Vijaya Baskaran (the deceased) was proceeding in his motor cycle, when near the Kathipara Junction, the insured lorry bearing No.TN-21-U-1305 hit him and caused fatal injuries. According to the claimants, the legal representatives of the above Vijaya Baskaran, it was the rash and negligent driving of the lorry driver which caused the accident. They claimed Rupees One Crore as compensation since according to them, the deceased was the proprietor of Saran Engineers and Builders and was earning between Rs.25,000/- and Rs.35,000/-per month. The owner of the lorry, who was the first respondent in the claim petition and who is the fifth respondent herein, remained ex parte initially and then sought to set aside the ex parte order and contested the claim. According to the owner, the deceased was under the influence of alcohol and fell down in his attempt to overtake the vehicle that was going in front of him.

2. The appellant-insurance company, which was the second respondent in the claim petition, disclaimed its liability on the ground that there was no subsisting insurance policy in respect of the lorry on the date of the accident. The vehicle was covered by the policy for the period from 28. 1996 to 28. 1997. The owner of the vehicle had issued a cheque on 28. 1996 for Rs.12,190/-. The cheque was returned for want of funds. On 9. 1996, the appellant received the cheque from the Bank and intimated the fact of dishonour to the owner of the vehicle on 19. 1996. The intimation was sent by R.P.A.D. There was no response from the owner and the policy was cancelled. Therefore, on the date of the accident, viz., 13. 1997, there was no policy. On 13. 1997, the owner approached the Insurance Company and took a fresh policy. The appellant examined R.W.5., the Bank Officer to support their case. The Tribunal gave an award for a sum of Rs.25,00,000/-. Aggrieved by that, the present appeal has been filed.

3. Learned counsel Mr. K.S. Narasimhan appearing on behalf of the appellant-insurance company submitted that when there is no subsisting policy, the insurance company has no liability to indemnify the owner. Even on quantum, he made his submissions. Learned counsel appearing for respondents1 to 4-claimants, on the other hand, relied upon several judgments to support his case. Learned counsel appearing for the fifth respondent-owner too made his submissions.

4. The chronological dates and events are as follows:

28. 1996 - Cheque issued towards premium 28. 1996 - Cover Note issued 28. 1996 to 28. 1997 - Period of Policy 9. 1996 - Dishonour of cheque 19. 1996 - Letter to the insured intimating the cancellation of the policy 19. 1996 - Acknowledgment received 13. 1996 - Accident 13. 1997 - Fresh policy taken for the same vehicle

5. The decisions relied upon are discussed hereunder:

In (2000) 3 S.C.C. 195 [New India Assurance Co. Ltd. vs. Rula & Others], the Supreme Court held that a contract of insurance like any other contract is concluded by the offer and acceptance and liability would arise only on payment of premium. In that case, the a cheque was issued on 11. 1991 towards the premium, it was dishonoured and the insurance policy was cancelled. In that case, the accident took place on 11. 1991. The Supreme Court held that the subsequent cancellation of the insurance policy on the ground of dishonour would not affect the rights of a third party which had accrued on the date when the policy was issued. The subsequent cancellation of insurance policy will not affect the rights already accrued in favour of the third respondent. Learned counsel relied on this decision to draw the inference that this would clearly show that if on the date of the accident the policy had already been cancelled, then the insurer can rightly defend the claim made against him.

6. In 2001 A.C.J. 638 [National Insurance Co. Ltd. vs. Seema Malhotra & Others], the accident took place on 312. 1993. The intimation of disho