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On the 18th of June, 1935, the plaintiff took a loan of Rs. 3,700/- from defendant No. 2 on the security of his insurance policy and on the 20th of June, 1938, he took another loan of Rs. 2,315 from defendant No. 2 on the same security. On the 26th of June, 1939, he again took a loan of Rs. 519 from defendant No. 2 on the security of his insurance policy.

Till the 31st of August, 1939, the plaintiff paid tall premiums, and the total sum paid by that date comes to Rs. 21,571/14/-.

On the 3rd of September, 1939, war broke out between the British and the Germans, and the case of the plaintiff is that on the declaration of the said war the contract of insurance became frustrated. On the declaration of war, defendant No. 2 being an enemy firm, the Government of India closed its office. The Government of India, however, purporting to act under rule 113A of the Defence of India Rules, issued a notification, exhibit E(I), dated the 14th of December, 1939, authorising Messrs. A.F. Ferguson and Company, Chartered Accountants of Bombay (Defendant No. 1) to carry on the business of this firm subject to the conditions that defendant No. 1 "shall in the management of the said business, be accountable to the Central Government, and be subject to the superintendence, direction and control of the Central Government, and shall not effect any new contracts of life insurance."

The Preamble of the Act shows that it was enacted only to provide for the transfer of the business of the Allianz Und Stuttgarter Life Insurance Bank, Limited (which has been used in the Act as "transferor company"), to the United India Life Assurance Company, Limited (which has been used in the Act as "transferee company"), and for matters connected therewith.

Under Section 3 of the Act all the assets and liabilities of the transferor company relating to or arising out of the life insurance business of the transferor company carried immediately before the commencement of the Act by Messrs, A. F. Ferguson & Company, Chartered Accountants of Bombay (defendant No. 1), under the Defence of India Rules stood, by virtue of the Act, transferred to and vested in the transferee company, subject to the provisions of the Act and to the terms and conditions specified in the First Schedule.

"No. 2S8-Or/39--Whereas it appears to the Central Government that the control and management of the Allianz Und Stuttgarter Life Insurance Bank Ltd. being an enemy firm as defined in rule 103 of the Defence of India Rules, has been so affected by the state of war as to prejudice the effective continuance of its business in British India, and that it is in the public interest that the said business should be carried on:
Now, therefore, in exercise of the powers conferred by Sub-rule (1) of Rule 113A of the Defence of India Rules, the Central Government is pleased to authorise Messrs. A. F. Ferguson and Company, Chartered Accountants of Bombay, to carry on the said business: