- 1 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR MISCELLANEOUS FIRST APPEAL No. 2143 OF 2023 (MV-D) C/W MISCELLANEOUS FIRST APPEAL No. 1255 OF 2023 (MV-D) IN MFA No. 2143/2023 BETWEEN: 1. SMT. LAKKSHMAMMA W/O LATE MARIYAPPA AGED ABOUT 48 YEARS R/O No.36, 3RD CROSS MM ROAD, BYATARAYANAPURA MYSORE ROAD, NEAR BHEL BENGALURU SOUTH BENGALURU- 560 026. …APPELLANT (BY SRI HARISH N.R, ADVOCATE) AND: 1. THE HDFC ERGO GENERAL INSURANCE CO. LTD., No.2/1-1, 2ND FLOOR, 11TH MAIN ROAD 3RD BLOCK, OPP JAYANAGARA BENGALURU - 560 011. (POLICY No. 2315202834552000000 VALID FROM 20-06-2029 TO 19.6.2020) Digitally signed by LAKSHMINARAYANA MURTHY RAJASHRI Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 2. SRI HANUMANTHRAJU S/O SIDDAPPA No. 311, VISHWESHWARAPURA NELAMANGALA TALUK BENGALURU RURAL DISTRICT – 562 123. (R.C OWNER OF LORRY BEARING REG. No. KA-32-A-9259) …RESPONDENTS (BY SRI LINGARAJ H S, ADVOCATE FOR R1 SRI PUNITH C, ADVOCATE FOR R2) THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:30.09.2022 PASSED IN MVC No.6374/2019 ON THE FILE OF THE IV ADDITIONAL JUDGE, COURT OF SMALL CAUSES, BENGALURU SCCH-6, PARTLY ALLOWING THE CLAIM PETITION FOR COMPENSATION AND SEEKING ENHANCEMENT OF COMPENSATION. IN MFA No. 1255/2023: BETWEEN: 1. THE HDFC ERGO GENERAL INSURANCE COMPANY LIMITED No.2/1-1, 2ND FLOOR, 11TH MAIN ROAD 3RD BLOCK, OPP JAYANAGAR BENGALURU-560 011 NOW AT No.25/1, 2ND FLOOR BUILDING No.2, SHANKARANARAYANA BUILDING M G ROAD, BENGALURU-560 001. BY ITS MANAGER(L). ...APPELLANT (BY SRI LINGARAJ H S, ADVOCATE) AND: 1. SMT. LAKSHMAMMA W/O LATE MARIYAPPA NOW AGED ABOUT 49 YEARS - 3 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 R/AT No.36, 3RD CROSS, M M ROAD BYATARAYANAPURA, MYSORE ROAD NEAR BHEL, BENGALURU SOUTH BENGALURU-560 026. 2. SRI HANUMANTHARAJU MAJOR (AGE NOT MENTIONED IN THE CLAIM PETITION) S/O SIDDAPPA No.311, VISHWESHWARAPURA NELAMANGALA TALUK BENGALURU RURAL DISTRICT. ...RESPONDENTS (BY SRI. HARISH N.R, ADVOCATE FOR R1 SRI PUNITH C, ADVOCATE FOR R2) THIS MFA IS FILED UNDER SECTION 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:30.09.2022 PASSED IN MVC No.6374/2019 ON THE FILE OF THE IV ADDITIONAL JUDGE, COURT OF SMALL CAUSES, BENGALURU, SCCH-6, AWARDING COMPENSATION OF Rs.14,79,000/- WITH INTEREST AT 6 PERCENT P.A. FROM THE DATE OF PETITION TILL REALIZATION. THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 02.07.2026, THIS DAY, SHIVASHANKAR AMARANNAVAR J, DELIVERED THE FOLLOWING; CORAM: HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR CAV JUDGMENT MFA No.2143/2023 is filed by the claimant seeking enhancement of the compensation and MFA No.1255/2023 is filed by the insurer challenging the liability saddled on it - 4 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 by the judgment and award dated 30.09.2022 passed in MVC.No.6374/2019 by the IV Additional Judge, Court of Small Causes and MACT, Bangalore. 2. The claimant made a claim petition seeking award of compensation for the death of Shri.Punith, aged 32 years (son of the claimant) in a road traffic accident occurred on 01.09.2019 contending that the accident occurred due to the rash and negligent driving of the driver of the lorry bearing Regn.No.KA-32-A-9259. The Tribunal after recording the evidence, appreciated the evidence on record and assessed compensation and awarded compensation under different heads as under: Sl.No. Heads Amount in (Rs.) 01. Loss of dependency 13,44,000/- 02. Funeral and transportation expenditure 25,000/- 03. Loss of love and affection 60,000/- 04. Loss of estate 50,000/- Total 14,79,000/- 3. The Tribunal has also awarded interest @ 6% p.a. from the date of petition till realisation and directed the - 5 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 respondent Nos.1 and 2, owner and insurer jointly and severally liable to pay the compensation and directed the respondent No.1 - insurer to deposit the said compensation amount. The insurer, challenging the liability saddled on it has filed the appeal in MFA No.1255/2023 and the claimant seeking enhancement has filed appeal in MFA No.2143/2023. 4. Heard the learned counsel for claimant and learned counsel for insurer. 5. Learned counsel for claimant would contend that the Tribunal has not calculated the loss of future prospects while calculating loss of dependency. The deceased was aged 32 years as on the date of accident and therefore, he is entitled to future prospects at 40% as per decision of the Hon’ble Apex Court in National Insurance Co.Ltd vs. Pranay Sethi (AIR 2017 SC 5157). He further contended that the deceased was a third party, even though the insurance policy was cancelled by the insurer - 6 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 due to dishonour of cheque paid towards the premium by the owner, the insurer is liable to pay the compensation amount as held by the Tribunal. 6. Learned counsel for the insurer would contend that the cheque (Ex.R1) issued by the owner of the lorry has been dishonored. The dishonour intimation was received by the insurer on 26.06.2019 (Ex.R2). Thereafter the insurer by letter dated 28.06.2019 (Ex.R3) intimated the same to the insured i.e. the owner of the vehicle by registered post and cancelling the policy issued. The said letter has been sent by registered post and postal acknowledgment is at Ex.R4 and it is dated 03.07.2019. So the accident occurred on 01.09.2019 is subsequent to the letter at Ex.R3 dated 28.06.2019. Therefore, when policy is cancelled for non-payment of premium the insurer is not liable to pay the compensation amount. The learned counsel placing reliance on the decision of the Hon'ble Apex Court in the case of Deddappa and others vs. Branch Manager, National Insurance Co. Ltd (2008) - 7 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 2 SCC 595 would contend that in the similar case the Hon'ble Apex Court has considered and held that the insurer is not liable to pay the compensation amount. He further contented that the Hon’ble Apex Court in the case of United India Insurance Company Limited vs. Laxmamma and others (2012) 3 SCC 234, has considered a similar case, but in that case the intimation has not been given of the dishonour of the cheque to the owner prior to the accident and considering the same the Apex Court has directed the insurance company to pay the compensation amount and recover the same from the owner of the vehicle. He also placed on a decision of the Division Bench of this Court rendered in MFA No.8329/2023 disposed on 27.06.2024 wherein in a similar case the Division Bench has held that the policy issued by the insurance company was cancelled for non- receipt of premium amount much before the accident and therefore, there was no insurance coverage to the - 8 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 offending vehicle as on the date of accident and set- aside the liability fastened on the insurance company. 7. Learned counsel for the claimants would contend that the deceased was a third party and lapse on the part of the owner, the third and his legal heirs cannot be put to inconvenience in recovering the compensation amount from the owner. The cheque has been paid for renewal of the policy which indicate that there was an existing policy. He placing reliance on the decision of Hon’ble Apex Court in the case of National Insurance Co.Ltd vs. Sunita Devi and others (AIR Online 2025 SC 718) contends that insurance company to make payment of compensation to the claimants and thereafter permit it to recover the same. He placing reliance on the decision of the Hon’ble Apex Court in the case of Prema and others vs. Sampathkumar and others (2020 ACJ 2283) would contend that the cheque issued for renewal of the policy which got bounced even though return of cheque was intimated by the insurance company to the owner - 9 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 before the accident, it cannot be said that there was no existence of insurance policy at all and as the claim petition relates to third party risk, it is fit and proper to direct the insurance company to pay the compensation and then recover the same from the owner of the vehicle. He placing reliance on the decision of the Hon’ble Apex Court in the case of New India Assurance Co.Ltd vs. Rula and others (2000) 3 SCC 195 would contend that subsequent cancellation of insurance policy on the ground that the cheque through which premium was paid was dishonored, would not affect the rights of the third party which had accrued on the issuance of the policy on the date on which the accident took place. He placing reliance on the decision of the Hon’ble Apex Court in Oriental Insurance Co.Ltd vs. Inderjit Kaur and others (1998) 1 SCC 371 would contend that the insurance company was not absolved of its obligations to third parties under the policy because it did not receive the premium and its remedies in this behalf lay against the insured. He placing - 10 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 reliance on the decision of Full Bench of this Court in New India Assurance Co.Ltd., Bijapur by its Divisional Manager vs. Yallavva and another (ILR 2020 KAR 2239) would contend that even if the policy is void vis-à- vis third party, the insurer is not completely absolved of its liability and it has to pay to third party and recover from the insured the amount paid to third party. 8. Having the heard the learned counsels, the Court has perused the judgment, award and trial court records. The following points arise for consideration: (i) Whether the claimant has made out a case for enhancement of the compensation as awarded by the Tribunal? (ii) Whether the Tribunal is justified in saddling the liability on the insurer even though the cheque paid towards premium has been dishonored, intimation of dishonor has been issued - 11 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 to the owner and policy has been cancelled? On point No.1: 9. The deceased as on the date of accident was aged 32 years. The Tribunal has rightly taken the notional income of the deceased at Rs.14,000/- p.m. The Tribunal has not taken into consideration future prospects. Since the deceased was aged 32 years as on the date of accident, he is entitled to future prospects at 40% in view of the decision of the Hon'ble Apex Court in Pranay Sethi (supra). The Tribunal has rightly applied the multiplier ‘16’. In view of the above, the loss of dependency is calculated as under: Rs.14,000 + 40% (5,600) = Rs.19,600-50% = Rs.9,800/- Rs.9,800x12x16=18,81,600/-. 10. The Tribunal has awarded loss of love and affection in a sum of Rs.60,000/-. The deceased died as a bachelor leaving behind the claimant/mother. Therefore, the claimant is entitled to loss of consortium in a sum of - 12 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 Rs.40,000/- as against loss of love and affection awarded in a sum of Rs.60,000/-. The claimant is entitled to funeral expenses and transportation of dead body in a sum of Rs.15,000/- as against Rs.25,000/- awarded by the Tribunal and Rs.15,000/- towards loss of estate as against Rs.50,000/- awarded by the Tribunal. Therefore, the claimant is entitled to total compensation under different heads as under: Sl.No. Heads Amount in (Rs.) 01. Loss of dependency 18,81,600/- 02. Loss of consortium 40,000/- 03. Funeral expenses and transportation of dead body 15,000/- 04. Loss of estate 15,000/- Total 19,51,600/- 11. Therefore, the claimant is entitled to total compensation of Rs.19,51,600/- as against Rs.14,79,000/- awarded by the Tribunal. Consequently, the claimant is entitled to enhanced compensation of Rs.4,72,600/- with interest @ 6% p.m. from the date of petition till realisation. - 13 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 On Point No.2 12. The owner of the vehicle in order to renew his policy has issued cheque - Ex.R1 dated 19.06.2019 and policy has been issued on 19.06.2019 and validity of the policy is for the period between 19.06.2019 to 18.06.2020. The said cheque has been dishonored on 26.06.2019. The intimation of dishonour is at Ex.R2 and it is dated 26.06.2019. The reason for dishonour is signature differs. The cheque Ex.R1 is drawn for Rs.57,600/- and it is towards the premium. After receipt of the intimation of dishonour of the cheque, the insurer has sent a letter dated 28.06.2019 (Ex.R3) to the insured/owner of the vehicle by registered post intimating that the policy is treated as void from inception due to dishonour of the cheque paid towards the premium. The said letter - Ex.R3 dated 28.06.2019 has been sent to the insured/owner of the vehicle by registered post acknowledgement due. The postal acknowledgment is at Ex.R4 and it has been served on the addressee on 03.07.2019. Even though the said - 14 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 registered article is served on one Gayathri but the address of the owner of the vehicle/insured on the postal acknowledgment has not been disputed. Therefore, there is deemed service of registered article addressed to the owner/insured. 13. The said intimation of dishonour of the cheque paid towards premium was prior to the accident i.e. 28.06.2019 served on 03.07.2019. The accident occurred on 01.09.2019. The Hon'ble Apex Court has considered a similar situation in the case of Deddappa(supra) wherein it is observed as under: “9. Before embarking on the said question we may notice the admitted facts. The second respondent who was driving the vehicle was also the owner thereof. The insurance policy was to remain valid for the period 17-10-1997 to 16-10-1998. Respondent 3 issued a cheque on 15-10-1997. The said cheque was presented for encashment before Syndicate Bank. The Bank by its letter dated 21-10-1997 issued a “return memo” disclosing dishonour of the cheque with the remarks “fund insufficient”. The first respondent thereupon cancelled the policy of - 15 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 insurance. The said information was communicated to Respondent 2. An intimation thereabout was also given to RTO concerned. 10. Before the Motor Accidents Claims Tribunal, the insurer has also examined witnesses, inter alia, to prove cancellation of the policy of insurance, postal acknowledgement showing intimation thereabout which was served to the insured and a copy of the letter dated 6-11-1997 issued to RTO and the memo issued by the Bank as regards dishonour of the cheque, etc. 11. Indisputably, the accident had occurred on 6-2- 1998, that is, much after communication of cancellation of the policy. 12. Keeping in view the aforementioned backdrop of all events, we may notice the legal issues addressed before us by the learned counsel. 13. Section 147 of the Act obligates the owner of the motor vehicle to get the vehicle insured insofar as the claim of third party is concerned. The Act does not deal with contract of insurance as such. Contract of insurance is governed by the Insurance Act, 1938 (for short “the 1938 Act”). - 16 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 14. Section 64-VB of the 1938 Act provides that no risk is to be assumed unless premium is received in advance in the following terms: “64-VB. No risk to be assumed unless premium is received in advance.—(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. (2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation.—Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. - 17 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 (3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding bank and postal holidays.” The said provision, therefore, in no unmistakable term provides for issuance of a valid policy only on receipt of payment of the premium. 15. The question came up for consideration before this Court in Inderjit Kaur [(1998) 1 SCC 371] wherein it was opined that a policy of insurance which is issued in public interest would prevail over the interest of the insurance company. In that case a - 18 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 bus met with an accident. The policy of insurance was issued on 30-11-1989. A letter stating that the cheque had been dishonoured was sent by the Insurance Company to the insurer on 23-1-1990. The premium was paid in cash on 2-5-1990. The accident took place on 19-4-1990. Despite noticing Section 64-VB of the 1938 Act, but having regard to the underlying public policy behind the statutory scheme in respect of insurance as evidenced by Section 147 and Section 149 of the Act and in particular having regard to the fact that policy of insurance to cover the bus without receiving the premium had already been issued, this Court held that the Insurance Company was liable to indemnify the insured. 16. We may, however, notice that in terms of sub- section (5) of Section 147 and sub-section (1) of Section 149 of the Act, the Insurance Company became liable to satisfy awards of compensation in respect thereof, notwithstanding its entitlement to avoid or cancel the policy for the reason that the cheque issued for payment of premium thereon had not been honoured. 17. The said question, however, was left open in Inderjit Kaur [(1998) 1 SCC 371]. The said decision proceeded on the basis that it was the Insurance Company which was responsible for placing itself in - 19 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 the said predicament as it had issued a policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the 1938 Act. The public interest in a situation of that nature and applying the principle of estoppel, this Court held, would prevail over the interest of the Insurance Company. 18. The ratio of the said decision was, however, noticed by this Court in New India Assurance Co. Ltd. v. Rula [(2000) 3 SCC 195 : 2000 SCC (Cri) 601]. It was held 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 - 20 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 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. 19. Almost an identical question again came up for consideration before this Court in National Insurance Co. Ltd. v. Seema Malhotra [(2001) 3 SCC 151 : 2001 SCC (Cri) 443] and a Division Bench noticed both the aforementioned decisions and analysed the same in the light of Section 64-VB of the 1938 Act. It was held: (SCC pp. 156-57, paras 17-20) “17. In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain - 21 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 person. It involves a promise that such money would be paid. 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. 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 - 22 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 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.” 20. A contract is based on reciprocal promise. Reciprocal promises by the parties are condition precedents for a valid contract. A contract furthermore must be for consideration. 21. In today's world payment made by cheque is ordinarily accepted as valid tender. Section 64-VB of the 1938 Act also provides for such a scheme. 22. Payment by cheque, however, is subject to its encashment. In Damadilal v. Parashram [(1976) 4 SCC 855] this Court observed: (SCC pp. 865-66, para 13) “13. 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 - 23 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 presentation, the date of payment is the date when the cheque was posted.” (emphasis supplied) 23. Recently, again in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya [(2006) 5 SCC 192 : 2006 SCC (L&S) 973] although in the context of the Workmen's Compensation Act, 1923, Balasubramanyan, J. opined: (SCC p. 199, para 24) “24. … It is not brought to our notice that there is any other law enacted which stands in the way of an insurance company and the insured entering into a contract confining the obligation of the insurance company to indemnify to a particular head or to a particular amount when it relates to a claim for compensation to a third party arising under the Workmen's Compensation Act. In this situation, the obligation of the insurance company clearly stands limited and the relevant proviso providing for exclusion of liability for interest or penalty has to be given effect to. Unlike the scheme of the Motor Vehicles Act the Workmen's Compensation Act does not confer a right on the claimant for compensation under that Act to claim the - 24 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 payment of compensation in its entirety from the insurer himself.” It was further observed: (SCC p. 199, para 23) “23. The law relating to contracts of insurance is part of the general law of contract. So said Roskill, L.J. in Cehave NV v. Bremer Handelsgesellschaft mb H, The Hansa Nord [1976 QB 44 : (1975) 3 WLR 447 : (1975) 3 All ER 739 (CA)] . This view was approved by Lord Wilberforce in Reardon Smith Line Ltd. v. Hansen-Tangen [(1976) 1 WLR 989 : (1976) 3 All ER 570 (HL)] (All ER p. 576h) wherein he said: ‘It is desirable that the same legal principles should apply to the law of contract as a whole and that different legal principles should not apply to different branches of that law.’ A contract of insurance is to be construed in the first place from the terms used in it, which terms are themselves to be understood in their primary, natural, ordinary and popular sense. (See Colinvaux's Law of Insurance, 7th Edn., Para 2-01.) A policy of insurance has therefore to be construed like any other contract. On a - 25 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 construction of the contract in question it is clear that the insurer had not undertaken the liability for interest and penalty, but had undertaken to indemnify the employer only to reimburse the compensation the employer was liable to pay among other things under the Workmen's Compensation Act. Unless one is in a position to void the exclusion clause concerning liability for interest and penalty imposed on the insured on account of his failure to comply with the requirements of the Workmen's Compensation Act of 1923, the insurer cannot be made liable to the insured for those amounts.” 24. We are not oblivious of the distinction between the statutory liability of the insurance company vis-à-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. 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. - 26 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 25. 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 : (SCC pp. 224-25, para 10) "10. …..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. 26. However, as the appellant hails from the lowest strata of society, we are of the opinion that in a case of this nature, we should, in exercise of our extra-ordinary jurisdiction under Article 142 of the Constitution of India, direct the Respondent No.1 to pay the amount of claim to the appellants - 27 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 herein and recover the same from the owner of the vehicle viz., Respondent No.2, particularly in view of the fact that no appeal was preferred by him. We direct accordingly.” 14. We direct accordingly.” 14. In view of the above, as the contract of insurance has been cancelled and the insured has been intimated about the same, the insurance company would not be liable to satisfy the claim. It is pertinent to note that it is observed by the Hon'ble Apex Court at para 26 of the judgment “in exercise of our extraordinary jurisdiction under Article 142 of the Constitution of India, direct Respondent No.1 to pay the amount of claim to the appellants herein and recover the same from the owner of the vehicle viz. Respondent No.2.” Such a direction cannot be issued either by the claims Tribunal or even by this Court. 15. Following the observations of the Hon'ble Apex Court, this Court is of the opinion that the insurance - 28 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 company is not liable to pay any amount of compensation to the claimant. 16. The Division Bench of this Court in the case of HDFC Ergo General Insurance Company Limited vs. Mohammed Nawaq (MFA No.8329/2023 DD 27.06.2024) has considered a similar case and observed as under: 7. Section 64VB of the Insurance Act clearly states that unless the premium is received, the risk would not be covered. In the Regulations issued by Insurance Regulation and Development Authority, regulation No.4 clearly states that: "4. Commencement of Risk: In all cases of risks covered by the policies issued by an insurer, the attachment of risk to an insurer will be in consonance with the terms of Section 64VB of the Act and except in the cases where the premium has been paid in cash, in all other cases the insurer shall be on risk only after the receipt of the premium by the insurer." - 29 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 8. Now, it becomes clear that the cheque issued by 2nd respondent was dishonoured. The policy issued by insurance company was cancelled for non-receipt of premium amount much before the accident. Therefore, on the date of accident, there was no insurance coverage to the offending vehicle. In this view, the Tribunal has erred in fastening the liability on the insurance company…… 17. The Hon’ble Apex Court considering the earlier decisions has elaborately considered the liability of the insurance company in Deddappa (supra). In that case also, the Hon’ble Apex Court has exercised its extra ordinary jurisdiction under Article 142 of Constitution of India directing the insurer to pay the amount of compensation to the claimants and recover from the owner of the vehicle. 18. The insurer has not at all received any premium. Therefore, it cannot be directed to pay the compensation to the claimants and then recover from the - 30 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 owner. The liability is on the owner to pay the compensation since the policy issued by the insurer is intimated to have been void/cancelled since premium has not been collected due to dishonor of cheque. The pay and recover can be ordered only if there is violation of conditions by the insured. Even in the case relied by the learned counsel in the case of Sunita Devi (supra) the Apex Court has not ordered for pay and recover and directed the claimants to recover from the owner. 19. The Hon'ble Apex Court in Lakshmamma(supra) has ordered payment of compensation by the insurer and recover the same from the owner on the ground that the intimation of dishonour has not been given to the insured/owner of the vehicle prior to the accident. In the case on hand, the insurer has intimated dishonour of the cheque paid towards the premium prior to the accident. In view of the above, the Tribunal has erred in fastening the liability of payment of the compensation amount on the insurer. Therefore, the - 31 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 liability fastened on the insurer requires to be set aside. Point No.2 is answered, accordingly. In view of the above, the following: ORDER (i) The appeal filed by the insurer in MFA No.1255/2023 is allowed. (ii) The liability saddled on the insurer to pay the compensation to the claimant is set aside. (iii) The appeal filed by the claimant in MFA No.2143/2023 is allowed in part. (iv) The claimant is entitled to enhanced compensation of Rs.4,72,600/- with interest @ 6% p.a from the date of petition till realisation. (v) The respondent No. 2 / owner of the vehicle is liable to pay the compensation awarded by the Tribunal and enhanced compensation awarded by this Court to the claimant with interest. - 32 - HC-KAR NC: 2026:KHC:33777 MFA No. 2143 of 2023 C/W MFA No. 1255 of 2023 (vi) The insurer is entitled to get back the amount deposited. Hence, office is directed to refund the amount deposited by the insurer to the insurer. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE DKB List No.: 1 Sl No.: 68 Ct.sm