The main legal point established in the judgment is that the liability of an insurance company to indemnify third parties under the Motor Vehicles Act, 1988, remains despite the dishonoured cheque and cancellation of the policy.

( 1 ) THIS is an appeal by insurance company. The claimant, R-1, has filed a motor accident claim against gangaram, R-2, Narsingh, R-3 and the insurance company, the appellant, on being injured in an accident with minibus No. MP 09-S 2855. Gangaram, R-2 and Narsingh, R-3, the owner and driver of the offending vehicle have not contested the claim. They had not filed even their written statements. The Claims Tribunal below has awarded compensation of Rs. 90,000 with interest at the rate of 12 per cent per annum from date of claim, i. e. , 4. 1. 1999 against the respondent Nos. 2, 3 and the appellant.

( 2 ) AS per appellant, a cover note, Exh. D-1, was issued on 31. 7. 1998 insuring the vehicle for one year. However, cheque issued for Rs. 8,954, Exh. D-6, on record was dishonoured vide Exh. D-5 and was returned to insurance company vide Exh. D-7 whereupon the insurance company had issued a letter Exh. D-8 to Gangaram, r-2, cancelling the insurance policy from the very inception and, thus, the insurance company was not liable to cover the risk of the accident happening on 4. 12. 1998. Gangaram, R-2, had failed to pay any premium and the insurance company was not liable to cover the risk in view of section 64-VB of the Insurance Act, 1938. The insurance company had examined Govind-prasad Soni, NAW-1, the Senior Assistant to prove these facts before the Tribunal.

( 3 ) THE Tribunal below held that merely because the cheque was dishonoured liability of insurance company to the claim of third party had not come to an end. The claims Tribunal had relied upon Oriental insurance Co. Ltd. v. Inderjit Kaur, 1998 acj 123 (SC), wherein it was held by the apex Court:"despite bar created by section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of sections 147 (5) and 149 (1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion)to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured. ""the policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured. "

( 4 ) NEW India Assurance Co. Ltd. v. Rula, 2000 ACJ 630 (SC); Ishwar Singh v. Ashok Kumar, 2001 ACJ 1714 (MP); oriental Insurance Co. Ltd. v. Santosh devi Goyal, 1999 ACJ 1195 (Calcutta); oriental Insurance Co. Ltd. v. Honnamma, 2000 ACJ 761 (Karnataka); Oriental insurance Co. Ltd. v. Guddappa, 1999 ACJ 670 (Karnataka); United India Insurance Co. v. Abada Khatun, 2000 ACJ 714 (Orissa); national Insurance Co. Ltd. v. Pawan kumar, 2001 ACJ 67 (MP); have been relied upon by the Tribunal below. All these cases were decided on above principles in oriental Insurance Co. Ltd. v. Inderjit kaur, 1998 ACJ 123 (SC ).

( 5 ) IN Gaura Bai v. Dev Nath Makad, 2003 ACJ 836 (MP), the same principle was applied though in this case accident had happened before the cancellation of the policy. Oriental Insurance Co. Ltd. v. Pinjary Hussainamma, 2002 ACJ 597 (AP), was a case where the policy was cancelled prior to the date of accident but cancellation was not communicated to the registering authority as is required under section 147 (4) of the Motor Vehicles Act, 1988. Insurance company was held not exempted from the liability to the third party, though it could proceed against the owner in view of Oriental Insurance Co. Ltd. v. Inderjit Kaur, 1998 ACJ 123 (SC ). In National Insurance Co. Ltd. v. Ramzan khan, 2003 ACJ 951 (MP), the cheque towards pr