JUDGMENT (Sanjay Karol, J.) - United India Insurance Company Limited, the appellant herein has assailed the impugned award date 7th April, 2004, passed by the Motor Accident Claims Tribunal, Una, H.P. in MAC Petition No. 13 of 1999 titled as Sandhya Devi and others v. Rajesh Kumar and others awarding compensation of Rs. 1,39,600/- to the claimants, legal representatives of the deceased Sh. Basant Ram. 2.Since the Insurance Company has filed the appeal, therefore, the controversy is narrow. Mr. Behl, learned Counsel for the appellant has challenged the impugned award only on the ground that since the cheque towards the premium of the policy stood bounced and the policy cancelled, therefore, the Tribunal seriously erred in holding the Insurance Company liable to indemnify the insured and pay the awarded compensation. 3.Facts necessary for adjudication of the case are that vehicle No. HP-23-1575 owned by Sh. Subhash Chand was insured by the appellant. As per the insurance cover note (Ext.RW-2/A), the policy was to be valid and operative from 11th November, 1997 to 11th November, 1998. However, cheque No. 572022 dated 12th November, 1997 for a sum of Rs. 8,654/- issued towards the insurance premium could not be encashed due to insufficient funds in the account of the insurer respondent No. 2. The appellant, vide endorsement dated 16th December, 1997 sent a notice to the Financier and cancelled the insurance policy. The insurer (respondent No. 2) was also informed about the same vide letter dated 29th January, 1998. 4.On 30th October, 1998, the vehicle in question met with an accident in which one of its occupants, namely, Sh. Basant Ram received injuries and died on the spot. 5.The claimants being the widow and sons of the deceased filed a claim petition under Section 166 of the Motor Vehicles Act claiming compensation of Rs. 9,00,000/- as the deceased was earning Rs. 3,500/- per month. 6.The driver and the owner filed its reply admitting the occurrence of the accident but denying any negligence. 7.The appellant-Insurance Company in its reply inter alia, took a defence that there was no privily of contract between the parties as the Insurance Policy and cover note stood cancelled since inception and intimation thereof was given to the R.T.O. Hamirpur vide letter dated 29th January, 1998. 8.Based on the pleadings of the parties, the Tribunal framed the following issues :- 1. 8.Based on the pleadings of the parties, the Tribunal framed the following issues :- 1. Whether the accident took place on 30.10.1998 at village Bobar due to rash and negligent driving of truck No. No. HP-23-1575 by respondent No. 1 in which Basant Ram died as alleged ? OPP 2. Whether the petitioners are entitled to compensation from the respondents on account of death of Sh. Basant Ram in the accident, if so to what amount and from which of the respondent ? OPP 3. Whether the driver of the truck No. HP-23-1575 was not holding a valid and effective driving license at the time of accident, if so, its effect ? OPR-3 4. Whether the vehicle in question was used against the terms and policy being used for carrying passenger as alleged ? If so its effect ? OPD-3 5. Whether the vehicle was plied without any valid RC, fitness certificate and route permit ? OPD-3 6. Whether the vehicle was insured with respondent No. 3 as alleged ? OPR-1 and 2. 7. Relief. 9.Appreciating the material on record, the Tribunal held that the vehicle in question was involved in the accident in which Sh. Basant Ram died. The driver was negligent. The monthly income of the deceased was taken to be Rs. 1800/- and after applying the necessary deductions (1/3rd), the loss of income was determined to be Rs. 1200/- per month or Rs. 14,400/- per year. Taking into account the age of the deceased (62 years) and the claimants, by applying the multiplier of 9, the total loss of income was determined to be Rs. 1,29,600/-. Rs. 10,000/- as conventional charges were also awarded. Thus, total sum of Rs. 1,39,600/- was awarded as compensation to the claimants. 10.The Tribunal decided issue Nos. 3, 4 and 5 against the respondents as the driver was found to have possessed an effective and valid driving license at the time of the accident. In the absence of any intimation as required under Section 147(4) of the Act, keeping in view the principle laid down by the Apex court in National Insurance Company Ltd. v. Seema Malhotra and others, 2001(3) SCC 151, for third party liability the insurer was held liable to indemnify the insured and pay the compensation. 11.The scope of the present appeal is narrow and confined to issue No. 6 only. 11.The scope of the present appeal is narrow and confined to issue No. 6 only. With regard to the cancellation of the cover note initially the Insurance Company took a vague defence. It was conspicuously silent with regard to the cancellation of the cover note/policy or any intimation sent to the insurer. However, subsequently in December, 2002 the reply was amended, admitting the issuance of cover note No. 690156 dated 12th November, 1997 when cheque No. 572022 dated 12th November, 1997 being the amount of premium was received from the insurer. However, since the cheque bounced, therefore, the cover note was cancelled from inception and intimation to this effect was given to the insured and also the R.T.O. Hamirpur vide letter dated 21st January, 1998 through registered A.D. Post. 12.In order to prove the same, the Insurance Company examined Sh. B.M. Bharti (RW-1), Sh. Jagdish Ram (RW-2), Sh. Rajesh Kumar (RW-3) and Sh. Subhash Chand (RW-4). 13.That the cheque stood bounced though denied by the insurer, is evident from the statement of Sh. Jagdish Ram (RW-2) who has proved the cheque (Ext.RW-2/A), statement of account and the memo of intimation being RW-2/B and RW-2/C. Owner Sh.Subhash Chand (RW-4) denied receipt of intimation of cancellation of the policy and cover note (Ext.RW-4/A), but, however, from the statement of Sh. B.M. Bharti (RW-1) and documents Ext.RW-1/B and Ext.RW-1/C it is evident that the owner was aware of the cancellation. 14.RW-1 has only proved that the intimation of cancellation of policy was sent to the Financier M/s. Premji Motor Finance Ambala vide letter dated 16th December, 1997. The letter dated 29th January, 1998 (Ext.RW-1/B) recording the factum of dishonour of the cheque and cancellation of the policy was sent to the insurer. This fact was also acknowledged by the insurer vide letter (Ext.RW-1/C). 15.From the record, it is thus evident that the information with regard to the cancellation of the policy was sent only to the owner and the Financier and not to the Registering Authority. This fact was also acknowledged by the insurer vide letter (Ext.RW-1/C). 15.From the record, it is thus evident that the information with regard to the cancellation of the policy was sent only to the owner and the Financier and not to the Registering Authority. 16.The provision of Section 147(4) of the Act reads as under :- “147(4) where a cover note issued by the insurer under the provisions of this Chapter or the rules made there under is not followed by the policy of insurance within the prescribed time, the insurer shall within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.” 17.The expression ‘shall’ makes the provision mandatory. The legislative intend is evident that no vehicle can be plied without the same being insured. This is in the public interest and to give benefit to the public. 18.The Insurance Company not having complied with the specific and mandatory provisions of Section 147(4) of the Act cannot be absolved of the third party liability. 19.The Apex Court in Oriental Insurance Co. Ltd. v. Inderjit Kaur and others, 1998(1) SCC 371 after construing the provisions of Section 64-VB of the Insurance Act and Sections 147(5) and 149(1) of the Motor Vehicle Act held that notwithstanding the bar under the Insurance Act, the insurer would not be absolved of its obligations to 3rd party under the policy simply because for the reason that it did not receive the premium. This principle was subsequently reiterated in New India Assurance Co. Ltd. v. Rula and others, 2000(3) SCC 195, where the facts were some what similar to the facts of the present case. The Court held as under :- “But, the contract of insurance in respect of motor vehicles has to be construed in the light of Sections 146(1), 147(5) and 149(1) of the Motor Vehicles Act, 1988. Ltd. v. Rula and others, 2000(3) SCC 195, where the facts were some what similar to the facts of the present case. The Court held as under :- “But, the contract of insurance in respect of motor vehicles has to be construed in the light of Sections 146(1), 147(5) and 149(1) of the Motor Vehicles Act, 1988. The manifest object of Section 146(1), which contains a prohibition on the use of the motor vehicles without an insurance policy having been taken in accordance with Chapter XI of the Act is to ensure that the third party, who suffers injuries due to the use of the motor vehicle, may be able to get damages from the owner of the vehicle and recoverability of the damages may not depend on the financial condition or solvency of the driver of the vehicle who had caused the injuries. Thus, any contract of insurance under Chapter XI of the Motor Vehicles Act, 1988 contemplates a third party who is not a signatory or a party to the contract of insurance but is, nevertheless, protected by such contract. Therefore, the third party is not concerned and does not come into the picture at all in the matter of payment of premium. Whether the premium has been paid or not is not the concern of the third party who is concerned with the fact that there was a policy issued in respect of the vehicle involved in the accident and it is on the basis of this policy that the claim can be maintained by the third party against the insurer.” “Despite the bar created by Section 64-VB of the Insurance Act, the appellant issued a policy of insurance to cover the motor vehicle without receiving the premium therefore. By reason of the provisions of Sections 147(5) and 149(1) of the MV Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered. The subsequent cancellation of the insurance policy in the instant case on the ground that the cheque through which premium was paid was dishonoured, would not effect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place.” 20.This principle has been subsequently followed and reiterated in National Insurance Co. Ltd. v. Seema Malholtra and others, 2001(3) SCC 151 and Deddappa and others v. Branch Manager, National Insurance Co. Ltd., 2008(2) SCC 595. 21.For the aforesaid reasons, I find no error in the impugned award. The Tribunal has not mis-directed itself in holding that taking into account the insurance policy the insurer is liable to indemnify the insured against the third party liability and is liable to pay compensation to claimants. The appeal is accordingly dismissed. M.R.B. ———————