JUDGMENT : 1. Instant appeal has been filed by the appellant Insurance company under Section 173 of the Motor Vehicles Act, 1988 against the judgment and award dated 05.10.2005 passed by learned Addl. District and Sessions Judge (FT) No.4, MACT Cases, Jodhpur [hereinafter referred to as Judge, MACT Cases] in Claim Case No. 189/2004 whereby, the learned Judge, MACT Cases has awarded compensation in the sum of Rs. 4,19,000/- to the claimant respondents. 2. Succinctly stated, facts of the case are that a claim petition was filed by the respondent no.1 to 4 before the Motor Accident Claims Tribunal, Jodhpur which was later on transferred to the court of learned Judge, MACT Cases, stating therein that on 10.04.2002, when the deceased Nawab Khan was coming to Jodhpur from Banar road in Truck No. RSN- 4881 carrying limestone, at around 6:30 PM, a private bus No. RNS 3989 being driven rash and negligently by the driver hit the truck from behind due to which Nawab Khan who was sitting on the other side of the driver of truck fell down on the road. It is further stated that the private bus No. RNS 3989 coming behind the truck ran over him, consequently due to grievous injuries, he died on the spot. As per claim petition, the deceased was earning Rs. 5000/- per month, therefore, it was prayed in the claim petition that a sum of Rs. 16,07,000/- may be awarded as compensation in favour of the claimants. 3. The non-applicant no.2 Ugam Singh, owner/insured of the vehicle remained ex parte despite service. The non-applicant no.1 Driver Jitendra Singh filed reply to the claim petition and stated that no accident was caused due to negligence of non-applicant no.1. The appellant insurance company non-applicant no.3 filed its reply and raised preliminary objection that Vehicle No. RNS 3989 was not insured with the insurance company on the date of accident and therefore, the insurance company is not liable to make payment of compensation. In para no.17 of the reply, the insurance company has specifically stated that owner Ugam Singh applied for insurance of Vehicle No. RNS-3989 and an account payee cheque No. 045026 dated 14.01.2002 of Jodhpur Central Co-operative Bank Ltd, Bhopalgarh Branch for a sum of Rs. 7815/- was given towards payment of premium amount and in lieu thereof, a cover note being valid for 15 days was issued. 7815/- was given towards payment of premium amount and in lieu thereof, a cover note being valid for 15 days was issued. It is stated in the reply that the Insurance company presented the cheque for clearance but the same was dishonoured due to insufficient funds. The information with regard to dishonouring was received by the company on 30.01.2002 and thereafter, on 06.02.2002 the company informed the owner of the vehicle Shri Ugam Singh about dishonouring of cheque and the insurer cancelled the cover-note issued for Policy No. 242202/31/4340/2002/2302 on 16.02.2002. In reply it has further been stated that the contract of insurance was cancelled much before the date of accident and in absence of a subsisting and valid insurance contract on the date of accident, the insurer has no obligation to indemnify the insured. 4. Non-applicant no.1 driver did not produce any evidence. On behalf of non-applicant Insurance company DW/1 Mahendra Kumar Jain was examined as witness in evidence and Ex.A/1 Policy cancellation certificate, Ex.A/2 original cheque, Ex.A/3 memo of dishonour of cheque of Rs. 7815/- by Jodhpur Central Co-operative Bank Ltd, Ex.A/4 information to the owner, Ex.A/5 & 6 postal receipts and Ex.A/7 intimation letter dated 06.02.2002 regarding cancellation of policy were produced as documentary evidence. 5. On the basis of pleadings, the learned Judge, MACT Cases framed following issues for consideration :- “1. Whether on 10.04.2002 at 6:30 PM Near Gattani Hospital, Banar Road the non applicant no.1 Driver of vehicle No. RNM 38889 while driving the vehicle in rash and negligent manner caused the accident due to which Nawab Khan succumbed to injuries ? 2. Whether at the time of accident, non-applicant no.1 was in employment of the owner of vehicle non-applicant no.2 and driving the vehicle in the interest and benefit of non-applicant no.2? 3. Whether non-applicant no.1 was not having valid driving license at the time of accident and whether the Insurance company can be absolved from its liability and if not then what shall be the effect? 4. Whether the claimants are entitled to get compensation as claimed in the claim petition, if yes, from who and how much and in what proportion the claimants shall be entitled to receive the amount of compensation ? 6. In support of claim petition, the claimants produced PW/1 Kulsum, PW/2 Islamuddin, PW/3 Md. 4. Whether the claimants are entitled to get compensation as claimed in the claim petition, if yes, from who and how much and in what proportion the claimants shall be entitled to receive the amount of compensation ? 6. In support of claim petition, the claimants produced PW/1 Kulsum, PW/2 Islamuddin, PW/3 Md. Shabir and exhibited documents FIR Ex.P/1, Ex.P/2 Naksha Mauka, Ex.P/3 Site memo, Ex.P/4 Panchnama, Ex.P/5 Postmortem report, Ex.P/6 policy Covernote, Ex.P/7 notice under Section 133, Ex.P/8 Registration certification, Ex.P/9 covernote and Ex.P/10 Driving license. 7. Learned Judge, MACT Cases after taking into consideration the entire facts of the case and taking the monthly income of the deceased as Rs. 3000/- awarded compensation in the sum of Rs. 4,19,000/- to the claimants and the Insurance company, owner and driver were held to be liable jointly and severally. 8. In this appeal, the Insurance company has challenged the award mainly on the ground that on the date of accident i.e. 10.04.2002, vehicle No. RNS 3989 was not insured with the appellant company as the policy of insurance already stood cancelled before the accident due to the fact that an account payee cheque dated 14.01.2002 amounting to Rs. 7815/- was given towards the payment of premium amount and in lieu thereof, a cover note was issued which was valid upto 15 days only but when the cheque against premium amount was sent to clearing, the same was dishonoured and consequently due to non-receipt of premium amount, the Insurance company cancelled the policy and information to this effect was given to the insured vide registered notice dated 06.02.2002, therefore, the finding of learned Judge, MACT Cases on Issue no.3 against the appellant is vitiated. Learned counsel for the appellant argued that in a contract of insurance when an insured gives a cheque towards payment of premium amount or part of the premium, such a contract consists of reciprocal promise that such money would be paid and if the contract becomes void, any person who has received any advantage under such contract is bound to restore it to the person from whom he received it, therefore, since the policy was cancelled with the notice to the insured, the appellant insurance company is not at all liable to pay compensation. Learned counsel for the appellant submits that it is not a case of subsequent cancellation of insurance policy and since on the date of accident there was no policy in existence in respect of vehicle in question, therefore, appellant insurance company is not liable to pay compensation. Learned counsel for the appellant placed reliance on decision of Hon'ble Supreme Court in the case of 'New India Assurance Co. Ltd Vs. Rula & Ors' reported in 2000 ACJ 630 and 'National Insurance Co. Ltd Vs. Seema Malhotra & Ors' reported in 2001 ACJ 638. 9. Per contra, learned counsel for the respondent claimants submits that the cheque alleged to have been issued in lieu of premium amount is issued by one Ram Jeevan Choudhary and not by the insured and no legal notice was served upon Ram Jeevan Choudhary for dishonour of cheque, therefore, the policy issued in favour of the insured Ugam Singh could not have been cancelled and same was very much in existence on the date of accident. 10. Learned counsel for the owner submits that despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium amount therefore by reason of the provisions of Sections 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement to avoid or cancel the policy for the reason that the cheque issued in payment of the premium amount thereon had not been honoured. It is further argued that it must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium amount in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant. 11. Heard learned counsel for the parties. I have gone through the record and perused the impugned judgment/award passed by the learned Judge, MACT cases, Jodhpur. 12. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant. 11. Heard learned counsel for the parties. I have gone through the record and perused the impugned judgment/award passed by the learned Judge, MACT cases, Jodhpur. 12. It is evident from the facts that the accident occurred on 10.04.2002, as a result of which Nawab Khan succumbed to injuries whereas, for insurance of the vehicle in question, the account payee cheque was given against the premium amount on 14.01.2002 and cover note was issued in respect of the vehicle in question which was valid upto 15 days but when the cheque was sent for clearing the same returned dishonoured on 25.01.2002 and information regarding non-clearing of the cheque was given to the company on 30.01.2002 by the Bank. It would be noticed that the cheque dated 14.1.2002 for a sum of Rs. 7815/- was given towards payment of premium amount for insurance of the vehicle in question Bus No. RNS 3989. Thereafter, the cheque was dishonoured by the Jodhpur Central Co-operative Bank Ltd vide Ex. A/4 dated 25.2.2002. The Appellant Insurance Company immediately intimated the insured so also the Regional Transport Officer, Jodhpur about cancellation of the insurance policy by way of a registered notice dated 06.02.2002 (Ex.A/7) which has been produced on record by the insurance company alongwith postal receipts Ex.A/5 & Ex.A/6 respectively. 13. The said letter dated 06.02.2002 Ex.A/7 clearly indicated that 'It is therefore, understood and declared that the above policy stands cancelled abinitio due to non receipt of consideration and our Co. is not on risk nor any claim will be entertained'. The appellant Insurance company examined witness DW/1 Mahendra Kumar inter alia to prove the cancellation of insurance policy and its intimation to the insured alongwith documents Ex.A/1, Ex.A/7, Ex.A/5 & Ex.A/6. The said cancellation of policy was also communicated to the Regional Transport Officer, Jodhpur informing that on account of dishonour of the cheque, the insurance company has cancelled the policy. The said cancellation of policy was also communicated to the Regional Transport Officer, Jodhpur informing that on account of dishonour of the cheque, the insurance company has cancelled the policy. In rebuttal, the owner/ driver of the vehicle did not produce any evidence regarding payment of premium amount towards the insurance policy after dishonour of the cheque through any other mode, therefore, the learned Judge, MACT Cases while deciding Issue No.2 & 3 wrongly held that the Insurance company has failed to prove that the policy issued in favour of the insured regarding vehicle in question was cancelled much before the date on which the accident took place. 14. The position of law regarding the liability of insurer/insurance company in cases where the cheque relating to payment of premium amount has been dishonoured is now well settled by various pronouncements of Hon'ble Supreme Court. The Hon'ble Supreme Court after considering various judgments, in the case of Daddappa reported in 2008 ACJ 581 (SC), held as under: “(22) A contract is based on reciprocal promise. Reciprocal promises by the parties are conditions precedent for a valid contract. A contract furthermore must be for consideration. (23) In today's world payment made by cheque is ordinarily accepted as valid tender. Section 64VB of the 1938 Act also provides for such a scheme. (24) Payment by cheque, however, is subject to its encashment. In Damadilal and Ors. v. Parashram and Ors. : AIR 1976 SC 2229 , this court observed: 15. On the ground of default, it is not disputed that the defendants tendered the amount in arrears by cheque within the prescribed time. The question is whether this was a lawful tender. It is well established that a cheque sent in payment of a debt on the request of the creditor, unless dishonoured, operates as valid discharge of the debt and, if the cheque was sent by post and was met on presentation, the date of payment is the date when the cheque was posted... (Emphasis supplied) It was further observed : (26) We are not oblivious of the distinction between the statutory liability of the insurance company vis-a-vis a third party in the context of sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim. (27) A beneficial legislation as is well known should not be construed in such a manner so as to bring within its ambit a benefit which was not contemplated by the legislature to be given to the party. In Regional Director, Employees' State Insurance Corporation, Trichur v. Ramanuja Match Industries, AIR 1985 SC 278 , this court held: We do not doubt that beneficial legislations should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme. We, therefore, agree with the opinion of the High Court” 16. In the case of United India Insurance Co. Ltd Vs. Laxmamma and others reported in AIR 2012 SC 2817 , the Hon'ble Apex Court considered the question whether the Insurance Company (insurer) is absolved of its obligations to the third party under the policy of insurance because the cheque given by the owner of the vehicle towards the premium amount got dishonoured and subsequent to the accident, the insurer cancelled the policy of insurance and while considering the question, the Hon'ble Apex Court held as under :- “In our view, the legal position is this: where the policy of insurance is issued by an authorized insurer on receipt of cheque towards payment of premium and such cheque is returned dishonoured, the liability of authorized insurer to indemnify third parties in respect of the liability which that policy covered subsists and it has to satisfy award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the M.V. Act unless the policy of insurance is cancelled by the authorized insurer and intimation of such cancellation has reached the insured before the accident. In other words, where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonored and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company's liability to indemnify the third parties which that policy covered ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.” 17. In the case of 'National Insurance company Limited Vs. Kumari Martina & Anr' reported in ILR 2009 Karnataka 2776, the High Court of Karnataka has observed in para no.7 that “It is trite that, the Court should not place reliance on decisions without discussing as to how the factual position fits in with the facts situation of the decision on which reliance is placed. The ratio of any decision must be understood in the background of the facts of that case as it has been said that, a case is only an authority for what it actually decides and not what logically follows from it A little difference in facts or additional facts may make a lot of difference in the presidential value of a decision.” 18. Further, in para 8, the Court while taking into consideration the case of Seema Malhotra (supra) has observed as under :- 8. In the case Inderjit Kaur (Supra), the material facts were that, premium was paid by cheque, which was later dishonoured and the insured was intimated about it by the insurer, two months after the vehicle got involved in the accident. The claims made by the legal heirs of the driver who died in the accident was resisted by the insurer on the strength of Section 64-B-V of the Insurance Act 1938. The contention was not accepted in view of Section 147(5) and 149(1) of the Act. The claims made by the legal heirs of the driver who died in the accident was resisted by the insurer on the strength of Section 64-B-V of the Insurance Act 1938. The contention was not accepted in view of Section 147(5) and 149(1) of the Act. The said decision and the subsequent decision in the case of New India Assurance Company Ltd. v. Rula, (2000) 3 SCC 195 , were noticed by the Hon'ble Supreme Court in the case of National Insurance Company Ltd. v. Seema Malhotra and Ors., (2001) 3 SCC 151 , wherein, the point considered was, "under a contract of insurance, the insured gave the cheque to the insurer towards the first premium amount but the cheque was dishonoured by the drawee Bank due to insufficiency of funds. Is the insurer liable in such a situation to honour the contract of insurance? " The material facts in the case of Seema Malhotra (Supra) were that, the insured and the insurer entered into an insurance contract 21.12.1993 by insuring a Maruthi car. The insured gave the cheque towards the first installment of premium and the insurer issued a cover note. The insured died and the car was completely damaged in an accident, which was caused on 31.12.1993. On 10.1.1994, the Bank sent an intimation to the insurer that the cheque was dishonoured. On 20.1.1994 insurance company informed the business concern of the insured about the cancellation of policy with immediate effect. The legal heirs of the insured, filed a claim for loss of vehicle, which was repudiated and there after they approached the State Consumer Protection Commission, wherein, the claim was rejected and the matter was carried to the High Court, which held the insurer liable to honour the claim. When the insurer challenged the said order in the Hon'ble Supreme Court, after making reference to Section 2(9), 2D, 64-B-V of the Insurance Act 1938 and Section 51, 52 and 54 of the Indian Contract Act, while upholding the contentions of the insurer, it was held as follows: 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. 19. 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. 19. Under Section 25 of the Contract Act an agreement made without consideration is void. Section 65 of the Contract Act says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, the insurer is entitled to get the money back. 20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case, the Insurance Company is legally justified in refusing to pay the amount claimed by the respondents. (Emphasis supplied by me)” 19. In the matter in hand, the learned Judge, MACT Cases without noticing the factual aspect that the accident had occurred on 10.04.2002 i.e. much after communication of the cancellation of policy to the insured which is evident from Ex.A/1 policy cancellation certificate, Ex.A/7 policy cancellation intimation letter and intimation of such cancellation also reached to the insured through postal receipts exhibited as Ex.A/5 & Ex.A/6 and DW/1 Mahendra Kumar Jain proved documents Ex.A/1, A/7, Ex.A/5 & A/6 in his evidence, has committed an error in fastening the liability on the insurer. Further, learned trial court failed to notice the fact that the insured/owner failed to prove that the dishonoured cheque was not against premium amount and the amount of premium was paid through any other mode, the owner of the vehicle remained ex parte and the version of DW/1 Mahendra Kumar Jain as well as the document Ex.A/1 cancellation of policy dated 06.02.2002, Ex.A/7 policy cancellation intimation letter and Ex.A/5 & Ex.A/6 postal receipts remained unchallenged. 20. 20. The result of the above discussion is that on the material available on record it is clearly established by the insurance company that before the accident took place, on 06.2.2002, the policy stood cancelled and the owner of the vehicle was informed about the said fact. Therefore, in view of the pronouncement of the Hon'ble Supreme Court in the case of Laxmamma (supra) and Dedappa (supra), when contract of insurance has been cancelled and all concerned have been intimated thereabout, the insurance company is not liable to pay the compensation to the claimant. 21. In view of aforesaid discussion, the finding and conclusion recorded by the learned Judge, MACT Cases for awarding compensation while holding the Insurance Company liable jointly and severally is not based on proper appreciation of evidence on record. The appellant in the absence of a subsisting and a valid insurance contract, has no obligation to indemnify the insured. Accordingly, the appeal is allowed and the impugned award dated 05.10.2005 passed by learned Addl. District and Sessions Judge (FT) No.5, MACT Cases, Jodhpur in Claim Case No. 189/2004 to the extent of holding the Insurance Company liable jointly and severally for making payment of compensation is quashed and set aside and the appellant Insurance company is held to be not liable to indemnify the insured. No order as to costs.