Judgment:
Rekha Kumari, J.
1. This appeal by the New India Assurance Company Limited is directed against the judgment and award dated 22nd August, 2000 passed by the 4th Additional Motor Vehicle Accident Claims Tribunal, Muzaffarpur in Claim Case No. 134 of 1997 by which it has allowed the compensation of rupees three lakh to respondent Nos. 1 and 2 for the death of one Rabindra Yadav in a motor vehicle accident.
2. Learned Counsel for the appellant has assailed the judgment and award on the ground that on the date of accident i.e. 18th June, 1997 there was no valid insurance policy to indemnify the liability of the owner. He contended that the owner of the vehicle which caused accident had obtained an insurance policy from the appellant Company firstly on 6th June, 1997 effective from 7th June, 1997 to 6th June, 1998 but as the premium of the insurance was paid by cheque on 6th June, 1997 and the same bounced due to insufficient fund and the policy was cancelled, the policy became non est and so there was no valid policy on 18th June, 1997. As such the appellant is not liable to pay compensation. In support of the submission, he relied on the decision of the Apex Court in the case of National Insurance Co. Limited v. Seema Malhotra and Ors. reported in : [2001]1SCR1131 .
3. Learned Counsel for the respondent-claimants, on the other hand, submitted that the above decision relied upon by the learned Counsel for the appellant is not applicable in this case. He contended that for the same motor vehicle accident, two claim cases viz. Claim Case No. 134/97 and Claim Case No. 136/97 were filed against the appellant Insurance Company and another and both the claim cases were disposed of and allowed by the same judgment by the 4th Additional Motor Vehicle Claims Tribunal and in both of them the appellant was directed to pay the awarded amount. The appellant then filed Misc. Appeal No. 614 of 2000 in the High Court against the award passed in Claim Case No. 136/97 and this Court relying on the decision of the Apex Court in the case of New India Assurance Co. Limited v. Rula and Ors. reported in : [2000]2SCR148 by order dated 3rd October, 2002 held that the appellant Insurance Company is fully liable to pay compensation awarded by the Tribunal. Learned Counsel submitted that the decision of this Court is fully applicable in this case and that appeal is liable to be dismissed.
4. In the case of Seema Malhotra (supra), the insured and the appellant Insurance Company entered into an insurance contract on 21st December, 1993 by insuring a Maruti Van. On the same day the insured (owner) gave a cheque towards the first instalment of the premium and the Insurance Company issued a cover-note but unfortunately on 31st December, 1993 the Maruti Van was involved in an accident in which the insured died and the car was completely damaged. On 10th January, 1994 the bank on which the cheque was drawn sent an intimation to the Insurance Company that the cheque given by the insured had been dishonoured. On 20th January, 1994 the Insurance Company cancelled the above policy with immediate effect. Seema Malhotra and others, the widow and the children of the insured, moved the State Consumer Protection Commission for compensation for the damaged vehicle. When the matter went to the Apex Court, the Court held that under Section 25 of the Contract Act, an agreement made without consideration is void. So when the insured failed to pay the premium promised and when the cheque paid by him was returned dishonoured by the bank concerned, the insurer need not preform his part to promise and the corollary is that the insured cannot claim performance from the insurer in such a situation.
5. The above decision of the Apex Court, however, is not applicable in this case. In that case the legal heirs had claimed compensation from the insurer and as such it was held that the insurer is under no obligation to perform his part of promise. But in this case a third party has claimed compensation from the appellant, the insurer of the vehicle. In the above case also the Apex Court had held that if the insured fails to pay the promised premium or his cheque is returned dishonoured by the Bank, the insurer is under no obligation to perform his part of the contract except in relation to its statutory liabilities in respect of third party.
6. In the case of Rula (supra), on 8th November, 1991 the appellant Insurance Company had issued the truck and issued an insurance policy in terms of the Motor Vehicles Act. On the same day at midnight the truck met with an accident in which three occupants died. Their dependents filed claim case before the Motor Vehicle Accident Claims Tribunal. The Insurance Company contested the claim on the ground that the cheque dated 8th November, 1991 towards payment of premium was dishonoured on 16th November, 1991 with the result that the insurance policy itself was cancelled. The Apex Court relied on the decision of three Judges Bench of the Supreme Court in the case of Oriental Insurance Co. Limited v. Inderjit Kaur and Ors. reported in : (1998)1SCC371 and held that the 'subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which the 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 will have to be indemnified in respect of the claim of that policy. Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights accrued in favour of the third party.
7. In this case also the judgment shows that the accident took place on 18th June, 1997 and the insurance policy was cancelled subsequently on 23rd June, 1997. Hence, in view of the above decision of the Supreme Court in the case of Rula and Others (supra) which squarely covers the present case, the appellant is fully liable to pay the compensation awarded to the respondent Nos. 1 and 2, the legal heirs of the deceased who are third party in respect of the contract.
8. In the result, there is no merit in this appeal and the same is hereby dismissed.