An ex parte vehicle owner must be allowed to contest the insurer’s cancellation-based liability defence.

The injured claimants, a mother and son, obtained compensation awards in MVC Nos. 388/2021 and 410/2021 arising from an accident on 25 January 2021.

The Tribunal held the bus owner liable after accepting the insurer’s evidence that the premium cheque had been dishonoured, notice of dishonour had been served, and the policy had been cancelled.

The owner had remained ex parte.

She appealed, disputing service of notice and seeking an opportunity to contest the insurer’s evidence; she also referred to the COVID-19 lockdown and a Government communication concerning extension of motor-vehicle document validity.

The claimants opposed remand but sought release of the amount deposited, subject to the outcome before the Tribunal.

1. Whether the owner, having remained ex parte, should be given an opportunity to contest the insurer’s case concerning dishonour of the premium cheque, service of notice, and cancellation of the policy

2. Whether the remand should be limited to liability, leaving the compensation assessment undisturbed, and whether the deposited amount should be released to the claimants subject to the remanded proceedings

The appeals were brought under Section 173(1) of the Motor Vehicles Act, 1988.

The judgment cites no precedent or specific statutory provision governing the effect of a dishonoured premium cheque or cancellation of an insurance policy.

The Court’s stated approach was to permit the owner to contest the insurer’s evidence on liability, while preserving the Tribunal’s compensation assessment; the deposited amount could be released to the claimants subject to the result on liability and upon execution of indemnity bonds.

The insurer’s evidence on dishonour, service of notice, and cancellation had gone unchallenged because the owner was ex parte.

Given the owner’s specific dispute over service and her request to contest the insurer’s case, the Court considered that the liability question required reconsideration after giving the parties an opportunity to lead additional evidence.

It therefore confined the remand to liability and left the compensation amounts assessed by the Tribunal undisturbed.

To address the claimants’ concern about hardship, it directed transfer and release of the deposited amounts, subject to the remanded proceedings and indemnity bonds.

The awards were set aside only insofar as they determined liability; the compensation assessments remained unchanged, and the parties were permitted to lead additional evidence on liability.

The owner was directed to file objections on the date of appearance, and the parties were directed to appear before the Tribunal on 28 October 2026.

The deposited amounts were to be transferred to the Tribunal and released to the claimants against indemnity bonds, subject to the outcome on liability.