Judgment 1. This interlocutory application under the proviso to section 173 of the Motor Vehicles Act (hereinafter referred to as the Act) has been filed by the appellant Company seeking condonation of the delay in preferring this appeal. In view of the statements made in this application and the submissions made by learned counsel for the parties, this application is hereby allowed and the delay in preferring the appeal is condoned. IA No. 1056 of 2003 is, accordingly disposed of. 2. Heard Mr. Ajay Kumar for the appellant, and Mr. Ajay Kumar Thakur for respondent nos. 1 and 2. This appeal is directed against the judgment and order dated 22.5.2000 passed by the learned 3rd Addl. District Judge-cum-Claims Tribunal, Begusarai, whereby claim application of respondent nos. 1 and 2 herein has been allowed, and the appellant Insurance Company has been directed to pay the amount of compensation. Respondent no. 3 (Naveen Kumar Singh) was the owner of a motor vehicle, being a gypsy bearing registration no. BR 06/0011, which met with an accident on 2.8.95, resulting in the death of one Rabindra Paswan who was coming on a bicycle. Respondent no. 1 is the mother, and respondent no. 2 is the father of the deceased. Respondent nos. 1 and 2 filed claim application under Section 166 of the Act. The owner of the vehicle did not appear before the Tribunal. The appellant Insurance Company took the stand that the insurance policy had been cancelled and, therefore, it was not liable to pay the compensation amount. The contention has been over-ruled. The learned Claims Tribunal has found in the impugned judgment that the accident took place on 2.8.95 involving the death of the said Rabindra Paswan. It proceeded to quantify the amount of compensation, and directed the appellant company to pay the same to the claimants. Hence this appeal. 3. While assailing the validity of the impugned judgment, learned counsel for the appellant submits that the cheque for payment of the premium amount bounced resulting in cancellation of the insurance policy and, therefore, it is not liable to pay the amount of compensation. He relies on the judgment of the Supreme Court, reported in (2001) 3 SCC 151 (National Insurance Company vs. Seema Malhotra & Ors.). He has not pressed any other point. 4. Mr. Ajay Kumar Thakur, learned counsel for respondent nos. 1 and 2 has supported the impugned judgment. He relies on the judgment of the Supreme Court, reported in (2001) 3 SCC 151 (National Insurance Company vs. Seema Malhotra & Ors.). He has not pressed any other point. 4. Mr. Ajay Kumar Thakur, learned counsel for respondent nos. 1 and 2 has supported the impugned judgment. He submits that the question whether or not the terms of the policy had been violated is a matter inter se between the insurer and insured, and does not in any event adversely affect the case of the claimants. He relies on the judgment of the Supreme Court reported in (2003) 3 SCC 338 (United India Insurance Co. Ltd. vs. Lehru & Ors.). 5. In spite of valid service of notice on respondent no. 3, he has chosen not to enter appearance in this proceeding. 6. I have perused the materials on record including the lower court record, and considered the submissions of learned counsel for the parties. It appears to me that the cover note issued by the appellant Company dt. 31.5.95 is marked Annexure 2. The same on the face of it covers the vehicle in question for the period 31.5.95 to 30.5.1996. Respondent no. 3 had handed over Cheque dt. 31.5.95, for Rs. 5,640/-, on State Bank of India, ADB Branch, Majhaul, in favour of the National Insurance Company Limited, Begusarai, towards payment of the premium amount. Ext. B is the bank note dated 20.6.95 issued under the signature of the Branch Manager, ADB Branch, Majhaul, addressed to the appellant company returning the cheque with the note that the amount could not be collected for lack of fund, stating "no fund". This was followed by the letter dated 28.6.95 from the appellant company to respondent, no. 3 cancelling the policy on the ground that the cheque had bounced. A copy of the extract of the ledger maintained in routine course of business in the office of the appellant Company is also on record. It thus appears to me on a perusal of the materials on record that the cheque handed over by respondent no. 3 to the appellant company towards payment of the premium amount could not be collected for lack of fund in his account. Therefore, the Insurance Company had cancelled the policy by its letter dated 26.6.95, which was before the accident taken place on 2.8.95. 3 to the appellant company towards payment of the premium amount could not be collected for lack of fund in his account. Therefore, the Insurance Company had cancelled the policy by its letter dated 26.6.95, which was before the accident taken place on 2.8.95. I have, therefore, no hesitation in holding that there was no insurance policy, i.e, no subsisting contract between the appellant company and respondent no. 3 on the date of the accident. 7. The next question which arises for consideration is whether or not the Insurance Company is still liable to pay the amount of compensation in such a situation. Learned counsel for the appellant has rightly relied on the judgment of the Supreme Court in National Insurance Co. Ltd. vs. Seema Malhotra (supra) which deals with precisely the same question. The Supreme Court has held that the essence of the insurance business is the coverage of risk by undertaking to indemnify the insured against loss or damage. They agree to pay the damages arising out of any accident by taking a chance that no accident might happen. Motivation of the insurance business is that the premium would turn to be the profit of the business in case no damage occurs. Such business of the insurance company can be carried on only with the premium paid by the insured persons on the insurance policy. The only profit, if at all the insurance company makes, of the insurance business is the premium paid when no accident or damage occurs. But to ask the insurance company to bear the entire loss or damage of somebody else without the company receiving a pie towards premium is contrary to the principles of equity, though the insurance companies are made liable to third parties on account of statutory compulsions due to the initial agreement, entered between the insured and the company concerned, Paragraph 18 of the judgment is relevant and is set out herein below for the facility of quick reference:- "18, Thus, when the insured fails to pay the premium promised, or when the cheque issued by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation." 8. The corollary is that the insured cannot claim performance from the insurer in such a situation." 8. Before I conclude, I must consider the judgment of the Supreme Court in United India Insurance Company vs. Lehru (supra) relied on by respondent nos. 1 and 2. It appears to me that the judgment stood on a fundamentally different footing. That was not a case where the cheque had bounced and the insurance policy had been cancelled in default. That was a case of subsisting contract and the driver was driving the vehicle without a valid licence. The same dealt with a situation where the policy/contract subsisted, and there was privity of contract between the insurer and the insured. It was a case where the question for consideration was whether or not the insurance company was liable only when the contract subsisted. This being a beneficial legislation, the Supreme Court took the view that the insurance company is liable in view of the factual position that it had received the amount of premium. On the other hand, the present case and the judgment of the Supreme Court in National Insurance Co. Ltd. (supra), deal with a situation where the insurance company is liable to pay in a situation where there was no subsisting insurance policy. The answer has been clearly rendered in the judgment of the Supreme Court. I accordingly hold that the appellant Company is not liable to pay the compensation amount. 9. In the result, this appeal is allowed, the impugned judgment is set aside only to the extent that the appellant company is not liable to pay the amount. Respondent no. 3 (Navin Kumar Singh, owner of the vehicle) is liable to pay the entire amount of compensation as per the impugned judgment. Let the statutory amount deposited by the appellant company in this Court be refunded by means of an appropriate instrument prepared in favour of the appellate Company and be handed over to its counsel.