An insurer is not liable when the premium cheque is dishonoured and the policy is void before the accident.

Ashok Kumar Chauhan died from injuries sustained in a road accident on 1 November 2019 involving a car owned by Gopalakrishna A.

His legal heirs obtained an award of ₹27,45,676, with interest at 6% per annum, from the MACT.

The owner had obtained a cover note after issuing a cheque for the insurance premium on 14 December 2018. The cheque was dishonoured on 17 December 2018; the insurer notified the owner on 19 December 2018 that the insurance cover had become void.

The insurer appealed against being held liable to satisfy the award, and a companion appeal was also before the High Court. The judgment’s caption identifies the owner as appellant in MFA No. 785/2024, while its text describes that appeal as having been filed by the claimants.

1. Whether the insurer was liable to satisfy the compensation award when the premium cheque had been dishonoured, the cover note stated that the policy would be void ab initio in that event, and the owner had been notified of the dishonour.

2. Whether the companion appeal warranted interference with the MACT’s award.

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

The court applied the policy’s express term that the policy would be void ab initio if the premium cheque were dishonoured, and treated the insurer’s notice to the owner as relevant to the absence of insurance cover at the time of the accident.

It distinguished the authorities relied on by the MACT, observing that the court could not find the same policy clause in those cases, where insurers had been required to pay compensation and recover it from the owner.

No other statutory provision or precedent is identified in the judgment.

The cheque for the premium was dishonoured well before the accident, and the policy expressly provided that dishonour would render it void ab initio.

The insurer also notified the owner of the dishonour in December 2018; the owner neither denied awareness of the policy terms and notice nor took steps to pay the premium and revive the cover.

The court therefore held that no insurance contract was in force on the accident date and that the authorities supporting a pay-and-recover order did not apply because they did not involve the same policy clause.

The claimants were entitled to recover the award jointly and severally from the owner and driver, and the insurer’s statutory deposit was to be refunded with accrued interest, if any.

The companion appeal was dismissed; the judgment does not provide substantive reasons for that dismissal.