Patna High Court
Eastern Bihar Divisional Chamber Of ... vs The Chief Enforcement Officer ... on 17 February, 1972
Equivalent citations: AIR1972PAT314, AIR 1972 PATNA 314, ILR (1972) 51 PAT 973, 42 COM CAS 371, 42 FJR 573
JUDGMENT S.N.P. Singh, J.
1. These three writ applications have been heard together as they challenge the validity of the notices of demand issued by the Enforcement Officer, Government of India, under the Emergency Risks (Goods) Insurance Act, 1962 (No. 62 of 1962) -- hereinafter called the 'Goods Insurance Act' -- and the Emergency Risks (Factories) Insurance Act, 1962 (No. 63 of 1962) -- hereinafter called the 'Factories Insurance Act'. This judgment will govern the disposal of the three cases.
2. In C.WJ.C. No. 1149 of 1969, there are two petitioners. Petitioner No. 1 is the Eastern Bihar Divisional Chamber of Commerce and Industry, Bhagalpur. It is not clear as to why petitioner No. 1 has been made a party to this application. Petitioner No. 2 is a partnership firm, Messrs. Hind Hardware Stores, dealing in hardware stores in the town of Bhagalpur. The facts giving rise to this application are these: The Enforcement Officer (respondent No. 2) visited the premises of petitioner No. 2, and, after an inspection of the books of account and other documents, ascertained that petitioner No. 2 had defaulted in payment of premiums in respect of insurable goods held by it during the different quarters from the first quarter of 1963 to the second quarter of 1966. A detailed statement of the premiums in default and the compounding fee, as ascertained by the Enforcement Officer, was prepared and a copy of the same was sent to petitioner No. 2 under his letter dated the 14th of August, 1969. Petitioner No. 2 was asked to pay the amount within seven days. A copy of that letter has been made annexure 1" to the writ application. Subsequently, a notice was sent to petitioner No. 2 for payment of Rs. 630/- as premium in default and Rs. 317/- as compounding fee. Petitioner No. 2 was reminded by this notice that, if it failed to produce the proof of payment within fifteen days, necessary legal action under the provisions of the Goods Insurance Act would be taken against it. A copy of that notice has been made annexure "2" to the writ application.
3. In C.WJ.C. No. 671 of 1970, there are two petitioners. Himatram Kanhaiyalal, petitioner No. 1, is a registered partnership firm and it has an oil mill. Messrs. Kailash Company, petitioner No. 2, is also a registered partnership firm and it deals in wholesale cloth business at Lakhisarai. Petitioner No. 1 had taken policies under the Factories Insurance Act for all the four quarters of 1963 and had paid the premiums of Rs. 50/-, Rs. 37.50 paise, Rs. 28/- and Rs. 25/-, respectively, for the four quarters. For the first quarter of 1968 also, this petitioner had taken a policy under the Factories Insurance Act and had paid a premium of Rs. 38/- Under the Goods Insurance Act also petitioner No. 1 had taken policies for the four quarters of 1963 and had paid the premiums of Rs. 150/-, Rs. 100/-, Rs. 75/- and Rs. 60/-, respectively. It also took a policy for the first quarter of 1966 under the Goods Insurance Act and had paid a premium of Rs. 100A.
4. Petitioner No. 2 got the goods insured under the Goods Insurance Act for all the quarters of the year 1963. As stat-
ed in the application, the value of the goods insured for the first quarter was Rs. 50,000/-, for the second quarter Rs. 50,000/-, for the third quarter 40,000 and for the fourth, quarter Rupees 40,000/-. The Policies had been issued by the Oriental Fire and General Insurance Company Ltd. under the Goods Insurance Act. A copy of the policy for the first quarter of 1963 has been made annexure "1' to the writ application. For the third and fourth quarters of 1965 also policies were taken and the premiums of Rs. 13/- and Rs. 40/-, respectively, were paid.
5. Some time in September, 1969, the Enforcement Officer (respondent No. 2) visited the premises of both these petitioners and scrutinised the books of account and other relevant documents of the two petitioners in order to ascertain whether or not the requirements of the aforesaid two Acts had been complied with by them. It was ascertained by him that petitioner No. 1 had not taken policies of insurance in respect of its goods for a proper value during the four quarters of 1963 and the first quarter of 1966, and there was also a total default for the month of September, 1965 and the fourth quarter of 1965. It was also ascertained by him that petitioner No. 1 had failed to take out insurance in respect of its factory's assets for adequate value during the four quarters of 1963 and the first quarter of 1966 and there was a total default for the month of September, 1965 and the fourth quarter of 1965. As ascertained by him, there was short payment of the premiums amounting to Rs. 47.1/- under the Goods Insurance Act and Rs. 379/- under the Factories Insurance Act.
6. So far as petitioner No. 2 was concerned, the Enforcement Officer came to the conclusion that it had failed to take out adequate insurance in respect of its goods for all the four quarters of 1963, September, 1965 and the fourth quarter of 1965 and there was a total evasion during the first quarter of 1966. As ascertained by him, there was a default in payment of premiums amounting to Rs. 351/-. The Enforcement Officer, accordingly prepared detailed statements of the premiums in default and the compounding fee under both the Acts and sent copies of those statements to petitioners 1 and 2 under his letters dated the 23rd September, 1969. A copy of the statement under the Factories Insurance Act sent to petitioner No. 1 has been made annexure "2" to the application, a copy of the statement under the Goods Insurance Act sent to petitioner No. 1 has been made annexure "3" to the application, and a copy of the statement with respect of the premiums in default under the Goods Insurance Act sent to petitioner No. 2 has been made annexure "4" to the writ application. Both the petitioners were asked to pay the amounts mentioned in the said statements within seven days.
7. It appears that subsequently the Enforcement Officer issued notices to both the petitioners to produce proof of payment or the premiums and the compounding fees as ascertained by him. A copy of the notice sent to petitioner No. 1 for payment of the premiums and the compounding fee under the Goods Insurance Act has been made annexure "5" to the application, a copy of the notice sent to petitioner No. 1 for payment of the premiums and the compounding fee under the Factories Insurance Act has been made annexure "6" to the application and a copy of the notice issued to petitioner No. 2 for payment of the premiums and the compounding fee under the Goods Insurance Act has been made annexure "7" to the writ application. The petitioners have prayed for quashing annexures "2" to "7" to the writ application.
8. It may be stated at the outset that this writ application is liable to be dismissed in limine on the preliminary ground that the two petitioners, being two independent firms and having no common interest, have filed a joint writ application challenging separate orders and notices in respect of the two firms. There is another defect also inasmuch as the affidavit in support of the writ application has been sworn by one Shyam Sunder, a partner of the firm of petitioner No. 1. He was certainly not competent to swear the affidavit relating to the facts in respect of the firm of petitioner No. 2.
9. In C.W.J.C. No. 1652 of 1970, there are three petitioners. All the three petitioners are registered partnership firms carrying on business in retail cloth at Khagaria in the District of Monghyr. As stated in the petition, petitioner No. 1 was insured under the Goods Insurance Act for the first quarter of 1963 for goods worth Rs. 40,000/- and had paid a premium of Rs. 60/-. Petitioner No. 2 also took a policy under the Goods Insurance Act for the first quarter of 1963 for goods worth Rs. 35,000/- and paid a premium of Rs. 52.50 paise. Similarly petitioner No. 3 took a policy under the Goods Insurance Act for goods worth Rs. 60,000/-for the first quarter of 1963 and had paid a premium of Rs. 90/-. It had further taken a policy for the third quarter of 1963 for goods worth Rs. 50,000/- and had paid a premium of Rs. 37.50 paise.
10. It appears that the Enforcement Officer visited the premises of the three petitioners and, after inspecting tha books of account and other relevant records, ascertained that the petitioners had failed to insure or to insure to the full value the goods owned by them during the different quarters. On that basis, he prepared statements and issued letters to the petitioners asking them to deposit the premiums in default and the compounding fees. A copy of the letter dated the 16th of August, 1970 sent to petitioner No. 1 has been made annexure "1" to the writ application; a copy of the letter dated the 17th of August, 1970 sent to petitioner No, 2 is, annexure "2" to the writ application, and a copy of the letter dated the 16th of August, 1970 sent to petitioner No. 3 has been made annexure "3" to the writ application. The petitioners have made a prayer for quashing the three annexures. This writ application also is liable to be dismissed in limine on the preliminary ground that the three petitioners, being three independent firms and having no common interest, have filed a joint writ application. There is also another defect inasmuch as the affidavit appended to the writ application has been sworn by one Murlidhar Kejriwal, a partner of the firm of petitioner No. 3. He was certainly not competent to swear the affidavit in relation to the facts concerning petitioners 1 and 2.
11. In the wake of the Chinese attack on our country, the President of India declared emergency with effect from the 26th of October, 1962. To mitigate the hardship arising from the reluctance of the Insurance Companies to insure properties against war risks, the Indian Parliament enacted the two Acts which, in substance, are similar to the War Risks Insurance Act which was in force in the United Kingdom during the Second World War. The two Acts came in force with effect from the 1st January, 1963. The schemes framed under the Acts were published and they came into force simultaneously with the Acts. As provided in the Acts and the Schemes, the Central Government undertook the liability to pay 80% of the sum insured or 80% of the loss or damage of the value of the insured properties computed on the basis of the price prevailing at the time of occurrence of the loss, whichever was less. Twenty per centum of the loss or damage was to be borne by the owner. The period of insurance was restricted to a quarter at a time and the rates of premiums were to be determined for every quarter by the Central Government, after taking into consideration various factors. The material provisions of the two Acts are identical, although the numbering of the sections is different. Section 1 (3) of both the Acts reads as under:
"(3) It shall remain in force during the period of operation of the proclamation of Emergency issued on the 26th October, 1962, and for such further period as the Central Government may, by notification in the official Gazette, declare to be the period of emergency for the purposes of this Act, but its expiry shall not affect anything done or omitted to be done before such expiry and Section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply upon the expiry of this Act as if it had been repealed by a Central Act."
12. It was submitted by learned counsel appearing on behalf of the petitioners that with the revocation of the emergency by the President on the 10th January, 1968, the two Acts, which were temporary statutes, ceased to be in force and thereafter no action could be taken under them. In order to decide the questions raised in these applications, it is necessary to notice the material provisions of the two Acts and the schemes framed thereunder.
13. Section 3 of the Goods Insurance Act specified the goods insurable under the Act. Section 5 empowered the Central Government to put into operation a scheme whereby the Central Government undertook, in relation to persons carrying on business in India as sellers or suppliers of goods, the liability of insurance of such persons against emergency risks. Section 7 prohibited a person from carrying on any business in India as a seller or supplier of such goods, while the scheme was in operation, unless, in respect of any goods insurable under that Act which were for the time being owned by him in the course of that business, there was in force a policy of insurance against emergency risks issued in accordance with the scheme. The prohibition did not apply to persons whose insurable goods did not exceed Rs. 3,000/- in value. As provided in Section 7 (2), the contravention of this provision was made punishable with fine. Section 8 is important and it reads thus:
"8. Omission to insure or to insure up to the full amount -- (1) Without prejudice to the provisions of Sub-section (2) of Section 7, where any person has failed to insure as, or to the full amount, required by this Act, and has thereby evaded the payment by way of premium of any money which he would have had to pay but for such failure, an officer authorised in this behalf by the Central Government may determine the amount payment of which has been so evaded and the amount so determined shall be payable by such person and shall be recoverable from him as an arrear of land revenue and shall be a first charge on the goods in respect of which the default was made.
(2) A person against whom a determination is made under Sub-section (1) may, within the period specified in the scheme, appeal against such determination to the Central Government whose decision thereon shall be final."
Section 11 of the Act empowered the Central Government to obtain information for the purpose of ascertaining whether or not the requirements of the Act had been com-
plied with. It is not necessary to refer to the other provisions of that Act.
14. As provided in paragraph 3 of the Emergency Risks (Goods) Insurance Scheme, the Central Government undertook, in relation to persons carrying on business in India as sellers or suppliers of goods, the liability of insurance of such persons against emergency risks. Paragraph 4 of the Scheme provided that every person carrying on business as a seller or supplier of goods which had not been exempted under the Act was to take out a policy of insurance against emergency risks to the extent provided by the Act, except where the insurable value of the goods in any one and the same Presidency town or district did not exceed Rs. 30,000/-. Paragraph 8 provided that every application for insurance under the Scheme was to be in accordance with the form set out in the First Schedule thereto and was to be accompanied by a treasury chalan evidencing payment of the requisite premium into a Government Treasury under the specified head. Paragraph 9 of the Scheme provided the mode for valuation of insurable property, paragraph 10 prescribed the rate of premium payable under the policy of insurance. Paragraph 12 (1) provided as follows:
"13. Date of effect of policies-- (1) Where the policy of insurance is in relation to goods in respect of which the person who is the owner or is deemed to be the owner thereof is compelled to take out a policy of insurance in accordance with the provisions of paragraph 4, the policy shall be issued so as to take effect from the date on which he becomes so liable, if the premium is paid in advance or within seven days of the date on which he became so liable, or from the date of payment of the premium, if the premium is paid after the expiry of seven days from the date on which he becomes so liable." Paragraph 14 of the Scheme, which is important for our purpose, reads as follows:
"14. Failure to pay premium and evasion-- (1) Where any person has failed to pay the premium due from him or to insure as, or to the full amount, required by the Act and has thereby evaded the payment of any money which he would have had to pay but for such failure, the amount evaded shall be determined in accordance with the Third Schedule.
(2) Every person against whom a determination has been made in pursuance of sub-paragraph (1) may, within the period laid down in the Third Schedule, appeal to the Central Government, whose decision shall be final-
(3) Where tbe amount determined in accordance with the provisions of sub-paragraph (1) or sub-paragraph (2) is fully recovered, the Government Agent shall, as soon as possible after such recovery, send the requisite application forms to the defaulter for completion and return, and a policy or supplementary policy of insurance, according as the recovery is in respect of non-insurance or under-insurance, shall be issued by the Government Agent on the receipt of the applications correctly filled in, the said or supplementary policy being made out so as to take effect from the date on which the amount was fully recovered".
15. Now I will refer to the relevant provisions of the Factories Insurance Act and the Scheme framed thereunder. Section 3 of the Act empowered the Central Government to put into operation a scheme to be called the "Emergency Risks (Factories) Insurance Scheme". Section 5 enjoined that it was the duty of every owner of a factory to get the factory insured against emergency risks in accordance with the Scheme for an amount not less than the insurable value of the factory. The contravention of this provision was made punishable with fine. Section 8 of the Act empowered the Central Government to authorise any person to require the owner or occupier of any property required to be insured under the Act to furnish to him any document or information, or to enter upon any premises, or to inspect or examine documents etc. Section 11 of the Act read as under:
"11. (1) Without prejudice to the provisions of Sub-section (4) of Section 5, where any person has failed to insure as, or to the full amount, required by this Act, and has thereby evaded the payment by way of premium of any money which he would have had to pay but for such failure, an officer authorised in this behalf by the Central Government may determine the amount, payment of which has been so evaded and the amount so determined shall be payable by such person and shall be recoverable from him as provided in Sub-section (2).
(2) Any instalment of premium due on a policy of insurance issued under the Scheme, and any amount determined as payable under Sub-section (1), shall be recoverable as an arrear of land revenue and shall be a first charge on the property in respect of which the default was made.
(3) A person against whom a determination is made under Sub-section (1) may, within the period specified in the Scheme, appeal against such determination to the Central Government whose decision thereon shall be final."
It is not necessary to refer to the other provisions of this Act.
16. By paragraph 3 of the Emergency Risks (Factories) Insurance Scheme, the Central Government undertook in relation to factories the liability of insuring such factories against emergency risks to the extent provided by the Act. Under paragraph 4 of the Scheme, every owner of a factory was to take out a policy of insurance against emergency risks in accordance with the Scheme. Paragraph 6 of the Scheme related to the method of application. Paragraph 7 provided the mode of valuation of insurable properties; paragraph 8 fixed the rate of premium and paragraph 9 related to the issue of policy and verification of previous policies. Paragraph 10 laid down that every policy of insurance issued under the Scheme was to be in the form set out in the Second Schedule and was to be in respect of the period ending on the last day of the quarter for which the policy had been issued. Paragraph 13, which is relevant for our purpose, is reproduced below in extenso.
"13. Failure to pay premium and evasion-- (1) where any person has failed to pay any premium due from him or to insure as, or to the full amount, required by the Act and has thereby evaded the payment by way of premium of any money which he would have had to pay but for such failure, the amount evaded shall be determined in accordance with the Third Schedule.
(2) Every person against whom a determination has been made in pursuance of sub-paragraph (1) may, within the period laid down in the Third Schedule, appeal to the Central Government whose decision shall be final.
(3) Where the amount determined under the provisions of sub-paragraph (1) or sub-paragraph (2) is fully recovered, the Central Government agent shall, as soon as possible after such recovery, send the requisite application forms to the defaulter for return, and a policy or supplementary policy in respect of the property concerned according as the recovery is in respect of non-insurance or under-insurance shall be issued by the Government agent on receipt of the application correctly filled in the said policy being made out so as to take effect from the date the amount was fully recovered."
As provided in paragraph 16, the insured person was to bear in respect of such claim twenty per cent of the loss or damage. It also laid down that in case the total value of the property insured exceeded the sum insured under the policy, the insured person was to be considered as being his own insurer for the excess as well as for twenty per cent of the sum insured, for the purpose of his bearing a rateable proportion of the loss. It is not necessary to refer to the other provisions of the Scheme.
17. Upon an analysis of the relevant provisions of the Acts and the Schemes framed thereunder, it is manifest that a statutory obligation was imposed upon a person carrying on business in India as a seller or supplier of goods to take out a policy of insurance against emergency risks relating to insurable goods where the insurable value exceeded Rs. 30,000/-. Similarly, there was a statutory obligation imposed upon the owner of a factory to take out a policy of insurance against emergency risks in respect of the factory owned by him. It was the duty of such persons to apply for an insurance policy and to deposit the requisite premium. The Acts provided for the recovery of premiums the payment of which had been evaded; and the Schemes made a detailed provision for the procedure to be followed.
18. The question for consideration, however, is, whether, after the expiry of the emergency, it was possible for the authorities to take action for the recovery of the evaded premiums payable under the two Acts. The answer to this question depends upon the construction of Sub-section (3) of Section 1 of the Acts which has been already quoted in extenso. As there was no notification by the Central Government extending the period during which the Acts were to remain in force, the two Acts ceased to be in force when the proclamation of emergency was revoked on the 10th of January, 1968. It may, however, be noticed that the second part of Section 1 (3) contains two provisions. It not only declares that the expiry of the Acts "shall not affect anything done or omitted to be done before such expiry", but also provides that "section 6 of the General Clauses Act, 1897 (10 of 1897) shall apply upon the expiry" of the Act "as if it had been repealed by a Central Act". It is well settled that, in absence of some special provision to the contrary, after a temporary Act has expired, no proceeding can be taken under it and it ceases to have any effect. Though Section 6 of the General Clauses Act, in terms, has no application on the expiry of a temporary Act, the second part of Section 1 (3) of the Acts, by a legal fiction, has equated the expiry of the Acts, with their repeal by a Central Act and has prescribed that the provisions of Section 6 of the General Clauses Act would be applicable. The result is that the expiry of the two impugned Acts does not "affect any right, privilege, obligation or liability acquired, accrued or incurred" under them.
19. Mr. Rajgarhia, learned counsel appearing for the petitioners, in support of his contention that no action could be taken under the Acts after the expiry of the emergency, relied on a decision of the Supreme Court in Rayala Corporation (P.) Ltd, v. Director of Enforcement, New Delhi, AIR 1970 SC 494 and a Bench decision of the Madras High Court in Stoneware Pipes (Madras) Ltd. v. Union of India, AIR 1971 Mad 442. In the Supreme Court case, the question for consideration was, whether proceedings could be validly continued on a complaint in respect of a charge under Rule 132-A (4) of the Defence of India Rules Clause 2 of the Defence of India (Amendment) Rules, 1965 read as under:
"In the Defence of India Rules, 1962, Rule 132-A (relating to prohibition of dealings in foreign exchange) shall be omitted except as respects things done or omitted to be done under that rule."
It was contended in that case that the language contained in the above clause could only afford protection to an action already taken while the rule was in force, but could not justify initiation of a new proceeding which would not be a "thing done or omitted to be done", rather it would be a new act of initiating a proceeding after the rule had ceased to exist. This contention was accepted by their Lordships of the Supreme Court. On behalf of the respondent Director of Enforcement, reliance was placed upon a decision of the Privy Council in Wicks v. Director of Public Prosecutions, 1947 AC 362 and two other cases, viz., (i) in State of Madhya Pradesh v. Hiralala Sutwala, AIR 1959 Madh Pra 93 and (ii) in J.K. Das Plant Manufacturing Co. (Rampur) Ltd. v. King Emperor, AIR 1947 FC 38 = 1947 FCR 141.
20. Dealing with the decision in the case of Wicks, 1947 AC 362, their Lordships of the Supreme Court observed:
"... That case, however, is distinguishable from the case before us inasmuch as, in that case, the saving provision laid down that the operation of that Act itself was not to be affected by the expiry as respects things previously done or omitted to be done. The Act could, therefore, be held to be in operation in respect of acts already committed, so that the conviction could be validly made even after the expiry of the Act in respect of an offence committed before the expiry. In the case before us the operation of Rule 132-A of the D.I.Rs. has not been continued after its commission. The language used in the notification only affords protection to things already done under the rule, so that it cannot permit further application of that rule by instituting a new prosecution in respect of something already done. The offence alleged against the accused in the present case is in respect of acts done by them which cannot be held to be acts under that rule. The difference in the language thus makes it clear that the principle enunciated by the Privy Council in the case cited above cannot apply to the notification with which we are conerned."
21. With respect to the case of Madhya Pradesh High Court, AIR 1959 Madh Pra 93, the Supreme Court said as follows:
"... . but, there again, the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which Section 6 of the General Clauses Act had been made applicable. In the case before us, Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the D.I.Rs. for the two obvious reasons that Section 6 only aplies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule. If Section 6 or the General Clauses Act had been applied, no doubt, this complaint against the two accused for the offence punishable under Rule 132-A of the D. I. R. could have been instituted even after the repeal of that rule."
22. Again, while referring to the Federal Court case, AIR 1947 FC 38, their Lordships of the Supreme Court observed as under:
"... .secondly, the language introduced in the amended Sub-section (4) of Section 1 of the Act had the effect of making applicable the principles laid down in Section 6 of the General Clauses Act, so that a legal proceeding could be instituted even after the repeal of the Act in respect of an offence committed during the time when the Act was in force."
The Supreme Court has thus made it clear-that new and fresh proceedings, after the expiry of a temporary Act, can be initiated, if the provisions of Section 6 of the General Clauses Act are made applicable, or the Act itself provides for such a provision. The Supreme Court decision, therefore, does not support the contention of Mr. Rajgarbia. As I have already pointed out, Sub-section (3) of Section 1 of the impugned Acts provided for the application of Section 6 of the General Clauses Act. Therefore, by virtue of that provision, the appropriate authority was quite competent to initiate the proceedings under the provisions of the Acts.
23. The Madras case, AIR 1971 Mad 442 relied upon by Mr. Rajgarhia is a direct case. That case related to tha Factories Insurance Act. In that case, the Chief Enforcement Officer, by his order, dated the 24th of March, 1970, had found that the petitioner of one of the cases had, for the four quarters of 1963, the last quarter of 1965 and the first quarter of 1966, failed to take out cover for the full insurable value of the buildings, with machinery and stores etc. He determined the difference of the amount payable on account of the under-insurance and called upon the petitioner to pay a total sum of Rs. 24,000 and odd within a specified time. The Chief Enforcement Officer purported to act in exercise of his powers under Section 11 (1) of the Act. The petitioner of that case contended that the Chief Enforcement Officer had no power to make the demand after the revocation of the proclamation of emergency. In the other cases, the petitioners had been asked to show cause by the Enforcement Officer against determination of the insurable value at certain sums. The Madras High Court took the view that, as the impugned proceedings started in those cases after the 10th of January, 1968, when the emergency was revoked and the Act ceased to operate, they could not be regarded as anything done or omitted to be done before the expiry of the Act; nor could the proceedings be regarded as any right acquired or liability incurred before that date. The petitions were, accordingly, allowed and the proceedings were quashed. Veeraswami, C. J. observed in that case as follows:--
"It is clear, therefore, that Section 11 (1) in the Act is not independent by itself, but the determination has to be made in accordance with Section 13 of the Scheme and also the Third Schedule. That being the case, one important feature that emerges is, that when in respect of under-insurance the corresponding premia are recovered, the Government agent should send the requisite application form to the defaulter for completion and return, and a supplementary policy in respect of the underinsurance found should be issued by him so that it should take effect from the date the amount was fully recovered. That is what is contemplated by Section 13 (3) of the Scheme. The necessary implication of this provision is, that the War Bisks should still be there when the supplementary policy is issued to cover it in respect of the property insured."
While considering the scope of the saving under Section 1 (3) of the Act the learned Chief Justice observed :
"... .Whether a right has been acquired, or liability incurred under the enactment repealed would depend on its language and the circumstances. If the Act had provided that in certain circumstances a person shall be liable to a sum of money either by way of debt, or to a fine or imprisonment, such liability incurred will survive the repeal. In that event, it may be open to the court to investigate and determine the liability after the repeal. But if the incurring of the liability is contingent upon determination of facts, and no such determination has been made before the Act was repealed, no liability has obviously been incurred prior to the repeal, and, therefore, there will be no saving of such liability after the repeal."
Reference was also made to the decision of the Supreme Court in Bayala Corpn. (P.) Ltd., AIR 1970 SC 494 and the case of S. Krishnan v. State of Madras, AIR 1951 SC 301 = 1951 SCR 621. Mr. Rajgarhia strongly relied upon the observations made in that case which have been quoted above.
24. A contrary view has, however, been taken by a Bench of the Andhra Pradesh High Court in Union of India v. Thammana Sitaramanjaneyulu, AIR 1971 Andh Pra 145. In that case both the Acts impugned here were under consideration. Identical arguments were raised that, on the expriy of the emergency, no action could be taken under the provisions of the Acts. It was held in that case that both under Article 358 of the Constitution as well as under Section 1 (3) of the Acts, the operation of the Acts was not affected by their expiry as respects things previously done or omitted to be done. It was further held that the rights accrued and the liability incurred were preserved and any investigation, legal proceeding or remedy in regard to them might be initiated, continued, or any penalty, forfeiture or punishment might be imposed as if the temporary Act was repealed by a Central Act. Dealing with the question whether the right to recover an evaded premium accrued within the meaning of Section 6 of the General Clauses Act, it was observed by Gopal Rao Ekbote, J. as under :
"68. In the instant case, under Section 11 of the Act read with Clause 13 of the Scheme and 3rd Schedule, the authorised officer is empowered to determine the amount of evaded premia. After its determination, it would be recovered as arrears of land revenue. The right to recover an evaded premium is thus a statutory right conferred on the Union Government. It may be that a proceeding to determine the amount evaded may have to be taken, but because of that it will not be correct to argue that the right to recover evaded premia is dependant upon the discretion of the authorised officer or that it is merely a hope of the Central Government to get the amount determined and not a right accrued. The right is there. What is required under the Act is its quantification and that alone is done by the authorised officer. Even assuming that in some proceedings the claim of the union may not be accented by the authorised officer, but that hardly alters the real situation. If there are evaded premia, there is a right accrued which is prescribed and can be enforced even after the expiry of the Act."
Earlier, his Lordship had made the following observation:
"... .It is true that because of a deliberate or unintentional undervaluation of insurable property after the expiry of the period of policy, the insured may be obliged to pay evaded premia without thereafter getting the benefit of any risk which was originally involved. But it is the insured who has to blame himself for such a situation. The statute or even a contract as seen above creates an obligation on the insured to get the property insured for a correct insurable amount. If he fails to discharge that obligation and if the statute makes provision for determination of the correct insurable value and permits the determination of evaded premia and allows its recovery as arrears of land revenue, we fail to see how these provisions would not relate to the subject of insurance. We do not therefore experience any difficulty in rejecting this contention."
25. A Bench of the Allahabad High Court in Raja Ram Om Prakash v. Union of India, Writ Petn. No. 2261 of 1970, decided on 16-12-1970 (All.) also held that, by virtue of the provisions contained in Section 1 (3) of the Goods Insurrance Act, the appropriate authority was competent to take proceedings under Section 8 and paragraph 14 of the Scheme on the basis that the Act continued to operate for the purpose of such proceedings, although otherwise it might have expired. In that case, Pathak, J. observed as follows:--
"... .It is immaterial that in some cases the period has expired and the goods never suffered, any loss or damage during that period, so that no risk in the usual sense can possibly be said to be in contemplation when the insurance policy is issued. In those cases, it would seem that the issue of an insurance policy is a meaningless or unnecessary act. But regard must be had to the object of Section 8, which is to recover the premium the payment of which has been evaded. The Act and the Scheme created an absolute obligation on persons liable under it to take Out insurance. Any attempt to avoid the statutory obligation was intended to be foiled by enacting Section 8.
The intention appears to be to put the insured in the same position which he would have occupied if he had applied for an insurance policy from the very outset as the law intended him to. In its practical consequences, an insurance policy issued under paragraph 14 of the Scheme stands on the same footing as an insurance policy issued under paragraph 11 of the Scheme, the essential difference between them lying only with regard to the date on which they take effect."
26. I entirely agree with the views taken by the Andhra Pradesh and Allahabad High Courts and respectfully differ from the view taken by the Madras High Court. I, accordingly, hold that there is no force in the contention raised on behalf of the petitioners that no action could be taken against them under the two impugned Acts after the revocation of the emergency on the 10th of January, 1968.
27. In the counter-affidavit filed in each case on behalf of the respondents, it has been stated that the ascertainment report and the letter asking the petitioners to pay the arrears of premiums are not final. It has further been stated that, if the petitioners are not agreeable to the Enforcement Officer's assessment, the matter would be taken up by the Chief Enforcement Officer, Calcutta, to pass necessary orders under the provisions of the Acts and the Schemes. Thereafter, the petitioners will have a right of appeal to the Central Government against the orders of the Chief Enforcement Officer. From what has been stated in the counter-affidavits, it is thus clear that no final order has been passed against the petitioners as yet.
28. In the result, all the three writ applications are dismissed with costs. Hearing fee is assessed at rupees one hundred in each case.
Akbar Hussain, J.
29. I agree.