NATIONAL INSURANCE CO. LTD. vs YELLAMMA

The Supreme Court addressed the validity of an insurance policy under Section 166 of the Motor Vehicles Act, 1988, determining that a policy can be effective upon the issuance of a cheque, regardless of its encashment. The Court held that the cancellation of the insurance cover was not valid due to lack of proper notice and examination of the cancellation process, thus enhancing the compensation awarded to the injured party to Rs. 1,50,000. The ruling emphasized that the liability of the insurer commences from the date of cheque issuance, not its encashment.