The main legal point established in the judgment is that the insurer becomes liable to indemnify third party liability once a policy has been issued in respect of third party risk, even without receiving the premium, as per the provisions of the Motor Vehicles Act, 1988.

( 1 ) THIS appeal has been preferred by Oriental Insurance Co. Ltd. aggrieved by an award dated 10. 5. 2001 passed by Second Additional Member, m. A. C. T. , Bhopal in MCC No. 64 of 1998. Claimants have also filed cross-objections for enhancement of compensation.

( 2 ) IN short the claimants' case is that on 16. 8. 1996 Sandhya was travelling in jeep no. MP 04-A 5157, when it reached near bhanpura police check post, bus No. MP 04-H 7445 dashed the jeep, bus was driven at excessive speed, Sandhya, driver and other sustained injuries. Sandhya was taken to Padar Hospital for treatment where she died. Autopsy was performed on 17. 8. 1996. Bus was driven by Mohd. Umar. Age of deceased was 35 years. She was unmarried. She was hale and hearty. She had decided not to marry. She was the only daughter of claimants. She was working as Assistant instructor in Aaganwadi Centre, earning rs. 1,300 per month. She was obtaining other facilities also. In addition she used to do the work of handicraft and stitching, in all her income was Rs. 4,000 per month. Compensation of Rs. 8,20,000 was claimed along with interest.

( 3 ) JEEP was owned by Mahila Chetna manch, Bhopal and insured with New india Assurance Co. Ltd. for the period 21. 3. 1996 to 20. 3. 1997.

( 4 ) RESPONDENT Nos. 1 and 2 have not filed any written statement. Oriental Insurance Co. Ltd. , in the reply contended that bus was not insured. The policy which was issued, was cancelled owing to the dishonour of the cheque; the drivers were not having the driving licence, as such, insurer of the bus was not liable to make the payment of compensation.

( 5 ) RESPONDENT Nos. 4 and 5 in their reply contended that jeep was driven by the driver safely. The jeep was insured with new India Assurance Co. Ltd. Liability, if any, is that of New India Assurance Co. Ltd.

( 6 ) NEW India Assurance Co. Ltd. in the reply contended that jeep was not insured, as such, there is no liability to make the payment of compensation. There was no report lodged against the driver of the jeep. Driver of the bus was negligent.

( 7 ) RESPONDENT No. 7, M. P. S. R. T. C. has contended that only bus was plied on the route reserved for M. P. S. R. T. C. , other liabilities are that of owner of the bus, hence, it is not liable to make the payment of compensation.

( 8 ) THE Claims Tribunal has found that bus was driven in a rash and negligent manner. Driver of the jeep was not negligent. Sandhya died owing to the injuries sustained in the accident. Compensation of rs. 1,36,800 has been awarded along with interest at the rate of 9 per cent per annum from the date of filing of claim petition. Liability has been saddled on the owner, insurer of the bus and M. P. S. R. T. C.

( 9 ) MR. S. K. Rao, learned senior counsel with Mr. Ajit Agrawal for the appellant insurer, has submitted that policy which was issued, was cancelled owing to the dishonour of the cheque. Since the policy was cancelled, liability could not have been saddled upon the insurer to make the payment of compensation, hence, insurer be exonerated from making payment of compensation.

( 10 ) IN the cross-objections filed by the claimants, it is submitted that inadequate compensation has been awarded. Income has been assessed on lower side. Prayer has been made to enhance the compensation.

( 11 ) ACCIDENT took place on 16. 8. 1996. The bus was owned by Mohd. Iqbal and insured with Oriental Insurance Co. Ltd. The Tribunal has found that policy, Exh. D2, was issued on 29. 11. 1995. It was to be effective till 25. 11. 1996. It was the case set up by the insurer that intimation of cancellation of policy, Exh. D3, was sent on 29. 12. 1995, however, the receipt of sending aforesaid notice of cancellation could not be produced by the insurer. The acknowledgment of such receipt of notice of cancellation is not on record. It was mentioned in the notice, Exh. D3, that it was to be sent by registered acknowledgment post, however, admittedly it was not sent by re