JUDGMENT : 1. The Insurance Company has preferred the appeal against the award of compensation in Compensation Case No.171/1998 under Section 166 of the Motor Vehicle Act, 1988 whereby and where under the insurance company has been held liable for paying the compensation amount to the claimants. 2. The appeal has been preferred on the ground that the offending vehicle was not under its insurance cover on the date of accident 7.6.1998. 3. As per the claimant’s case the motor vehicle accident took place on 07.06.1998 involving a jeep bearing registration No. BR-14 P-1548. The interest of the owner of the vehicle Chandra Bhusan Singh in the said vehicle was under its insurance cover from 5.5.1998 to 4.5.1999. Thereafter the cheque for a sum of Rs.7215 for payment of premium was submitted to the insurance company for its renewal, but the same was dishonoured due to insufficiency of fund. It was written by the State Bank of India with a remark, “insufficient fund” consequently, the Insurance Company cancelled insurance policy and intimated the owner of the vehicle (O.P.1) about it. It is argued that since the vehicle was not under its insurance cover at the relevant time of accident therefore it was not liable for paying the compensation amount. 4. Learned Tribunal as noted that the offending vehicle was under the insurance cover of O.P. No.2 United India Insurance Company at the relevant time of accident and the said insurance policy was issued on payment of premium of Rs.7215 through a cheque issued by the O.P. No.1 being the owner of the vehicle. The insurance company presented the cheque to the bank which was returned back with endorsement of insufficiency of fund. On 22.04.99 after about one year insurance company intimated the owner of the vehicle regarding dishonour of the cheque to registered letter (Ext B). It was against this background that the Tribunal on the basis of ratio decided by Hon’ble the Apex court in Inderjit Kaur & Ors. 1998(2) TAC 615 (SC) held the insurance company liable to pay the compensation amount. 5. The short question that falls for consideration is whether on account of delay in intimation of the cancellation of the insurance policy to the owner of vehicle the insurance company shall be liable for payment of the compensation amount? 6. 1998(2) TAC 615 (SC) held the insurance company liable to pay the compensation amount. 5. The short question that falls for consideration is whether on account of delay in intimation of the cancellation of the insurance policy to the owner of vehicle the insurance company shall be liable for payment of the compensation amount? 6. Liability of the insurance company to indemnify the insured in cases of motor vehicle accident is founded on the contractual liability with the insured during the subsistence of the insurance policy. It has been held in Deddappa v. National Insurance Co. Ltd., (2008) 2 SCC 595 that ordinarily a liability under the contract of insurance would arise only on payment of premium, if such payment was made a condition precedent for taking effect of the insurance policy but such a condition which is intended for the benefit of the insurer can be waived by it. It was opined : (SCC p. 200, para 13) “13. … 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 would have to be indemnified in respect of the claim of that party. Subsequent cancellation of the insurance policy on the ground of non-payment of premium would not affect the rights already accrued in favour of the third party.” The dicta laid down therein clarifies that if on the date of accident the policy subsists, then only the third party would be entitled to avail the benefit thereof. 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. 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. 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.” United India Insurance Co. Ltd. v. Laxmamma, (2012) 5 SCC 234 26. In our view, the legal position is this: where the policy of insurance is issued by an authorised insurer on receipt of cheque towards the payment of premium and such a cheque is returned dishonoured, the liability of the authorised insurer to indemnify the third parties in respect of the liability which that policy covered subsists and it has to satisfy the award of compensation by reason of the provisions of Sections 147(5) and 149(1) of the MV Act unless the policy of insurance is cancelled by the authorised 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 authorised insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonoured 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. 7. 7. From the above, it follows that in cases where the cheque drawn for payment of the premium for renewal of insurance policy is dishonoured, it is incumbent upon the insurance company to intimate the insured about cancellation of the insurance policy on account of non-payment of the premium amount. When such intimation is given before the date of accident the insurance company shall not be liable to indemnify the owner of the vehicle to pay any compensation amount to a third party. 8. Here in the present case the accident took place on 7.6.1998. Owner of the offending vehicle O.P. No.1 has adduced evidence Ext. D which is the insurance policy issued by the United India insurance Co. Ltd covering the interest of Mr Chandra Bhusan Singh for vehicle no. BR-14P-1548 effective from 5.5.1998 to 4.5.1999 the proposal of which was signed on 28.4.98 and the policy was signed on 9.6.98. The insurance company cancelled this policy vide letter dated 22.4.99 (Ext B) on account of dishonour of dishonour cheque no. 775001 dated 27.4.98. 9. From these documentary evidences it is manifest that the intimation of cancellation of the insurance policy was given to the insured (OP No.1) much after the accident. It was the responsibility of the insurance company to intimate about the cancellation of the insurance policy on account of dishonour of the cheque without any delay. The proposal form was submitted on 28.4.1998 with the cheque dated 27.4.1998. The accident took place on 7.6.1998, but no intimation regarding cancellation was given by the insurance company to the owner of the vehicle before the accident. Under the circumstance the insurance company cannot avoid liability to pay compensation to the third party for the accident. Appeal is dismissed. The Insurance Company is however permitted to withdraw the statutory amount deposited at the time of filing of the memo of appeal.