The Bombay High Court has held that when a cheque issued towards payment of insurance premium bounces, an insurance company is not bound to indemnify the owner of the insured vehicle (in this case the offending vehicle) and has a right to recover compensation awarded in case of motor accidents from the owner of the offending vehicle. Justice SV Kotwal of the Aurangabad bench was hearing a first appeal filed by SBI Insurance Company against an order of the Motor Accidents Claims Tribunal wherein the appellants were directed to pay a compensation of Rs. 11,93,000 to the family of a carpenter who died in an accident with a bus that was being driven on the wrong side. Case Background On November 19, 2015, the deceased was riding his motorcycle and a bus came from the wrong side and hit the vehicle, resulting in his death. The deceased was a carpenter earning Rs.400 per day and the sole earning member of his family. Therefore, claimants filed a petition for compensation under Section 166 of the Motor Vehicles Act against the owner, driver and insurer of the offending bus. While the owner and driver of the offending bus did not resist the claim petition, the insurer of offending bus filed written statement and denied its liability to pay the compensation on the ground that it had issued two policies of insurance of the offending bus. However, both the policies were cancelled by the insurer of the vehicle due to bouncing of cheques issued by the owner of the offending vehicle issued towards premium of both policies. Judgment SBI Insurance Company’s counsel SS Patil argued that the policies of insurance issued towards the offending vehicle was cancelled after two cheques issued towards premium bounced. The insurance company is not liable to indemnify the owner of the offending vehicle. Therefore, the insurance company has right to recover the compensation from owner of the offending vehicle paid to the claimants, towards satisfaction of the award passed by the tribunal, Patil submitted. Meanwhile, RS Shinde, counsel for the owners of the offending vehicle submitted that on the date of the accident, neither had the cheques bounced nor was the policy cancelled. Therefore, the insurer company has no right to recover compensation from the owner of the vehicle. The court examined judgments of the apex court and submissions from all parties, and said: “When on account of bouncing of cheque issued towards premium of policy of insurance, the owner of the offending vehicle committed breach of his promise, the insurer of the offending vehicle is not bound to indemnify the owner of the offending vehicle. In the circumstances, as insurer was liable to pay compensation to the third party, it has right to recover the paid amount from owner of the offending vehicle. Therefore, I hold that appellant-Insurance Company has right to recover the compensation amount with accrued interest thereon from insured, paid by the Insurance Company to the claimants.” Thus, the appeal was partly allowed and liberty was granted to SBI Insurance Company to recover the compensation amount from the owner of the offending vehicle.