`IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA FAO No. 154 of 2011 Date of Decision: 20.9.2011 National Insurance Company Ltd. … Appellant. Versus. Rajender Pal and others …Respondent. Coram: The Hon’ble Mr. Justice Deepak Gupta, Judge. Whether approved for Reporting? No. For the Appellant: Mr. Ashwani Kumar Sharma Advocate. For the respondent No.1.: Mr. Varun Rana, Advocate. For the respondents No. 2 and 3: Mr. G.R.Palsra, Advocate. Deepak Gupta, J. (Oral). 1. By means of this appeal the Insurance Company has challenged the award of the learned Motor Accident Claims Tribunal-cum-Presiding Officer, Fast Track Court, Mandi dated 28.12.2010 whereby the claimant has been awarded compensation of Rs.55,376/- alongwith interest and the Insurance Company has been held liable to satisfy the award. 2. The main contention raised by Shri Ashwani Kumar Sharma, learned counsel for the Insurance Company is that the cheque vide which premium of the policy was paid 2 was dishonoured and therefore, there was no valid policy existing on the date of the accident. 3. The facts of the case are that the policy was issued on 31st March, 2000 and the premium amount of Rs.6,270/- was paid by cheque. The cheque was dishonoured and the Insurance Company cancelled the policy and sent a letter to the insured on 18.4.2000 that the company was not liable to indemnify the owner. The accident in the present case occurred on 11.4.2000 i.e. prior to the cancellation of the policy by the Insurance Company. This Court in a number of cases has held that the Insurance Company must cancel the policy prior to the date of the accident and send intimation in this regard both to the insured as well as to the registering authority concerned. The latest judgement on this point is FAO No.200 of 2010 titled as Oriental Insurance Company Ltd. vs. Smt. Rani and others decided on 24.08.2011 and the relevant portion of the same reads as follows:- “17. The facts which stand established in the present case are that the Insurance Company had not cancelled the policy on the date when the accident took place. It is for the Insurance Company to decide whether they should accept premium by cheque or not. However, once the Insurance Company decides to accept the premium by cheque then it takes the risk that the cheque may bounce. Third party rights are created as soon as a policy or cover note is issued. The Insurance Company cannot on the pretext, that the cheque has bounced, 3 disclaim its liability without cancelling the policy. Every vehicle is statutorily required to be insured for third party claims. An Act policy is a must and a person not having such a policy is guilty of an offence under the Motor Vehicles Act and can be penalized. No person is permitted to ply a vehicle without having a valid policy. Therefore, once the Insurance Company issues the policy it cannot turn around and say that it is not liable for third party risk without showing that it has cancelled the policy and intimated the insured and the concerned Registering Authority about the cancellation of the policy.” 4. In view of the aforesaid law there is no merit in the appeal of the Insurance Company which is accordingly rejected. No costs. 20th September, 2011 ( Deepak Gupta ) ™ Judge.