When an insurer has issued a certificate of insurance in respect of a contract of insurance between the insurer and the insured person, then -
(a) if and so long as the policy described in the certificate has not been issued by the insurer to the insured, the insurer shall, as between himself and any other person except the insured, be deemed to have issued to the insured person a policy of insurance conforming in all respects with the description and particulars stated in such certificate; and
(b) if the insurer has issued to the insured the policy described in the certificate, but the actual terms of the policy are less favourable to persons claiming under or by virtue of the policy against the insurer either directly or through the insured than the particulars of the policy as stated in the certificate, the policy shall, as between the insurer and any other person except the insured, be deemed to be in terms conforming in all respects with the particulars stated in the said certificate.
Legal Commentary & Landmark Judgments: Section 156
Section 156 of the Motor Vehicles Act, 1988 codifies a conclusive statutory presumption and rule of estoppel against an insurer, providing that once a certificate of insurance is issued, the insurer is legally bound by the terms of the policy in favour of third parties, irrespective of pending premium reconciliation or administrative irregularities.
In MACT proceedings, production of the valid cover note or insurance certificate is conclusive threshold proof of insurance under Section 156. If the insurer files an application seeking exoneration due to bounced premium cheques, confront them with Inderjit Kaur and Section 156 to secure an immediate pay-and-recover order rather than claim dismissal.