# AMADALAVALASA COOPERATIVE. AGRICULTURAL & INDUSTRIAL SOCIETY LTD. & ANOTHER v. UNION OF INDIA & ANOTHER

- **Citation:** [1976] 2 S.C.R. 731
- **Court:** Supreme Court of India
- **Decided:** 1975-11-17
- **Case number:** Writ Petition No. 461 of 1971
- **Bench:** A. N. Ray, K. K. Mathew, N. L. Untwalia
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/amadalavalasa-cooperative-agricultural-industrial-society-ltd-another-v-union-6875
- **Pages:** 9

## Headnote

Constitution of lndia, Art. 19(1) (f) (g) 31 (l )-359~Proclamation of Emergency-Whether Statutes made during Emergency can be challenged under
Article 19-Whether liability created during emergency by statutes violating
Art. 19 can be enforced after the revocatidn of emergency-General Clauses Act,
_sec. 6-Emergency Risks (Goods) Insurance
Act,
1962-Emergency
Risks
(Factories) insurance Act, 1962-Liability to pay deficit premium dependent 011 quantification of evcded [JJ'emium-Whether liability to pay deficit premiwn conditioned by insurer"s ability
to
issue a supplementary
po/icyDistinction between a compulsory and voluntary insurance.
The President of India after the Chinese aggression in 1962, proclaimed
emergency under Article 3 52 of the Constitution.
The Parliament passed the
Eml:!rgency Risks ( Good5) Insurance Act, 1962 and the Emergency Risks
(Factories) Insurance Act, 1962, which came into force from 1-1-1963. It was
realised after the Chinese aggression that i~ was necessary to make provision for
reinstating the factories damaged or ruined by enemy action and for reimbursing the 1Q.s5 or damage of goods and. continue the commercial and economic
activity with a view to stabilize ti)e economy of the counlry. The Acts, therefore, provided for compulsory insurance of factories and goods against loss
or damage sustained by enemy action. The Acts further provided that if any ·
person failed to insure the goods or factories or immred for a lesser value than
what was required by the Acts and thereby evaded the payment by way of premium such amounts would be payable by such person.
Proclamation
of
Emergency was revoked by the President on 10-9-1968. After the expiry of
the acts, notices were is~ued to the appellants stating that they evaded payment
of Emergency Risk Insurance Premia in respect of goods or factories by undervaluing the goods or factories.
'
The a~pellant filed a writ petition, in the High Court challenging the said
notices which were allowed by a learned Single Judge on the ground that after
the expiry of the Acts there could be no authorised officer to determine the
quantum of the evaded premia on the basb of the correct value of the goods
or factories.
In an appeal the Division Bench of the High Court held that the
liability to pay the evaded premia arose during the currency of the Acts and
that the extent of the liability could be ascertained by an authorised officer
even after the expiry of the Acts.
In the present appeals the said judgment of the Division Bench is challenged.
The appellants contended :
1. That the liability to pay the evaded premia was dependent on the ascertainment by the authorised officer of the in5urable value of the factory
or goods and that until the extent of the liability was so ascertained
there can be no liability and, therefore, section 6 of the General
Clauses Act was not attracted.
2. The provisions of the Acts contravened the Articles 14, 19 and 3 J of
the Constitution.
A
B
c
D
E
F
G
H
A
B
c
D
F
G
H
732
SUPREME COURT REPORTS
[1976) 2 S.C.R.
HELD : ( 1) The duty to take out in~urance policy for the full insurable
value of the fa,ctory or goods was mandatory and that the failure to do so was
an offence. To effectuate this purpose the .Procedure for determination of the
insurable value of the factory or goods and of the premium evaded was provided. The scheme of the insurance envisaged by the Acts was different from a
voluntary insurance. There was no element of consensus on the fundamental
terms of insurance. The liability to take insurance policy for the full insurable
value of the factory or goods was compulsory. Terms and conditions of the
policy to be taken were governed solely by the provisions of the Acts and the
schemes.
The liability to pay premia in case of under-valuation was not depend·
ent on the subsequent determination of the full insurable value of the factory or
goods insured. The decision in the case of Ekambarappa v. Excess Profits .Tax
Officer holding that t

## Text

731
AMADALAVALASA COOPERATIVE. AGRICULTURAL &
INDUSTRIAL SOCIETY LTD. & ANOTHER
v.
UNION OF INDIA & ANOTHER
November 17, 1975
[A. N. RAY, C.J., K. K. MATHEW AND N. L. UNTWALIA, JJ.]
Constitution of lndia, Art. 19(1) (f) (g) 31 (l )-359~Proclamation of Emergency-Whether Statutes made during Emergency can be challenged under
Article 19-Whether liability created during emergency by statutes violating
Art. 19 can be enforced after the revocatidn of emergency-General Clauses Act,
_sec. 6-Emergency Risks (Goods) Insurance
Act,
1962-Emergency
Risks
(Factories) insurance Act, 1962-Liability to pay deficit premium dependent 011 quantification of evcded [JJ'emium-Whether liability to pay deficit premiwn conditioned by insurer"s ability
to
issue a supplementary
po/icyDistinction between a compulsory and voluntary insurance.
The President of India after the Chinese aggression in 1962, proclaimed
emergency under Article 3 52 of the Constitution.
The Parliament passed the
Eml:!rgency Risks ( Good5) Insurance Act, 1962 and the Emergency Risks
(Factories) Insurance Act, 1962, which came into force from 1-1-1963. It was
realised after the Chinese aggression that i~ was necessary to make provision for
reinstating the factories damaged or ruined by enemy action and for reimbursing the 1Q.s5 or damage of goods and. continue the commercial and economic
activity with a view to stabilize ti)e economy of the counlry. The Acts, therefore, provided for compulsory insurance of factories and goods against loss
or damage sustained by enemy action. The Acts further provided that if any ·
person failed to insure the goods or factories or immred for a lesser value than
what was required by the Acts and thereby evaded the payment by way of premium such amounts would be payable by such person.
Proclamation
of
Emergency was revoked by the President on 10-9-1968. After the expiry of
the acts, notices were is~ued to the appellants stating that they evaded payment
of Emergency Risk Insurance Premia in respect of goods or factories by undervaluing the goods or factories.
'
The a~pellant filed a writ petition, in the High Court challenging the said
notices which were allowed by a learned Single Judge on the ground that after
the expiry of the Acts there could be no authorised officer to determine the
quantum of the evaded premia on the basb of the correct value of the goods
or factories.
In an appeal the Division Bench of the High Court held that the
liability to pay the evaded premia arose during the currency of the Acts and
that the extent of the liability could be ascertained by an authorised officer
even after the expiry of the Acts.
In the present appeals the said judgment of the Division Bench is challenged.
The appellants contended :
1. That the liability to pay the evaded premia was dependent on the ascertainment by the authorised officer of the in5urable value of the factory
or goods and that until the extent of the liability was so ascertained
there can be no liability and, therefore, section 6 of the General
Clauses Act was not attracted.
2. The provisions of the Acts contravened the Articles 14, 19 and 3 J of
the Constitution.
A
B
c
D
E
F
G
H
A
B
c
D
F
G
H
732
SUPREME COURT REPORTS
[1976) 2 S.C.R.
HELD : ( 1) The duty to take out in~urance policy for the full insurable
value of the fa,ctory or goods was mandatory and that the failure to do so was
an offence. To effectuate this purpose the .Procedure for determination of the
insurable value of the factory or goods and of the premium evaded was provided. The scheme of the insurance envisaged by the Acts was different from a
voluntary insurance. There was no element of consensus on the fundamental
terms of insurance. The liability to take insurance policy for the full insurable
value of the factory or goods was compulsory. Terms and conditions of the
policy to be taken were governed solely by the provisions of the Acts and the
schemes.
The liability to pay premia in case of under-valuation was not depend·
ent on the subsequent determination of the full insurable value of the factory or
goods insured. The decision in the case of Ekambarappa v. Excess Profits .Tax
Officer holding that the liability for excess profits tax arose at the close of the
accounting year and was not dependent upon its ascertainment by order of
assessment is approved.
[737 B, C, D, FG]
(2) The argument that the liability to pay premia on the basis of the fUll
insurable value in case of under-insurance was conditioned by the capacity on
the pa,rt oi' the insurer to issue a 9upplementary policy negatived. The ob!iga.
tion to insure for full insurable value was obligation which was not dependent
upon corresponding liability of the insurer to indemnity.
[738 B-E]
(3) Since the liability to pay the premia on the full insurable value was
incurred before the expiry of the Act, section 6 of the General Clauses Act
would enable the ascertainment of the extent of liability for evaded premia
by an officer who was authorised when the Act was in force or by an officer
authorised after the expiry of the Act. The principle behind section 6 of the
General Clames Act is that all the provisions of the Acts would continue in force
for purposes of enforcing the liability incurred when the Acts were in force and
any investigation, legal proceeding, remedy, may be instituted, continued or
enforced as if the Acts had not expired. [738 G-H]
( 4) Article 19 is not available to the petitioner as these Acts were passed
during the proclamation of Emergency under Article 352.
The liability incurred
being acts or omissions during the currency of the proclamation of emergency
cannot be nullified even if it be assumed that provisions of the Acts were
violative of Article 19.
The procedure for ascertaining correct insurable value
of the factory or goods is reasonable having regard to the provisions of Third
Schedule in that behalf and cannot, therefore, violate
Article 19(1) (f)
or
(g).
[739 B, D-E]
(5) The petitioners were not deprived of any pro)l'E'rty without the authority
of 1 aw.
There is, therel'ore, no violation of Article 31 (1). The provisions are
not violative of any provisions in Part III of the Constitution. [739 F]
ORIGINAL JURISDICTION: Writ Petition No. 461 of 1971.
Under article 32 of the Constitution of India
AND
Civil Appeals Nos. 506-510, 842-844, & 1710-1713 of 1971
From the Judgment
and
Order dated
the
12-3-1970
and
27-4-1971 of the Andhra Pradesh High Court in W.P. Nos. 360-364
of 1970, 4365-4366/69, 2704/71 and 295, 297-298, 301/70 respectively.
AND
Civil Appeals Nos. 2319 to 2354 of 1972
From the Judgment and Order dated
the
24-2-1971
of the
Madras High Court in Writ Petitions Nos. 1794, 2544, 2563, 2570,
)
·,
•
,
AMADALAVALASA CO-OP. SOCIETY v. UNION (Mathew, J.)
733
2598, 2600, 2634, 2635, 2636, 2642, 2643, 2644,
2764,
2795,
2806, 2807, 3409, 3459, 3679, 3698 and 3699 of 1969, and 161,
162, 307, 308, 1071, 1512, 1514, 1779, 2279, 2282, 2283, 2285,
3164, 3534 and 3535 of 1970 respectively.
A. V. Koteswara Rao and K. Rajendra Chowdhary for the Petitioners (In W.P. No:461/71).
B. Sen, G. S. Rama Rao for the Appellants (in CAs. Nos. 506510 and 1710 to 1713/71).
Naunit Lal, K. Srinivasamurthy and Lalita Kohli for the Appellants (In CAs. Nos. 2319-2354/72) and for Respondents (In CAs~
~
Nos. 506 to 510 and 842 to 844/71).
A
B
Gopalaratnam a!ad A. T. M. Sampath for the Respondents (In
C
CAs. Nos. 2328, 2332, 2343 and 2337 /72).
B. Sen, S. Gopalakrishnan (Mrs.) for Respondents (In CAs. Nos.
2323-2327, 2331, 2335-36, 2342 and 2344-47 /72).
The Judgment of the Court was delivered by
MATHEW, J.-We first take up for consid-:ration Civil Appeals
Nos. 506-510 of 1971.
D
The appellants in these appeals filed writ petitions
before
the
Andhra Pradesh High Court questioning the validity of notices issued
by the 2nd respondent therein under the Emergency Risks (Goods)
Insurance Act (Act 62 of 1962) and the Emergency Risks (FactoE
ries) Insurance Act (Act 63 of 1962) (hereinafter referred to as the
Acts, collectively and individually as 'the Goods Act' and 'the Factories Act' respectively),' The impugned notices stated that the appellants had evaded payments of emergency risks insurance premia in
respect of goods or factories, as the case may be, by undervaluing the
goods or factories for the purpose of insuring them under the Acts.
A learned Single Judge of the High Court allowed the writ petitions
F
on •the ground that, after the expiry of the Acts, there could be no
authorized officer to determine the quantum of the evaded premia on
the basis of the correct value of the goods
or factories.
Appeals
were filed against the orders, and a Division Bench of the Court, by a
common judgment, held that the liability to pay the evaded premia
arose during the currency of the Acts and that the extent of the liability could be ascertained by an authorized officer even after the expiry
G
of the Acts and allowed the appeals.
These appeals are
directed
against the common judgment.
The President of India, after the Chinese aggression in October,
1962, proclaimed an Emergency under Article 352 of the Constitution
on 26-10-1962.
The proc1amation was revoked by the President on
10-1-1968.
The Acts came into force with effect from 1-1-l963.
H
The Acts were in substance similar to War Risks Insurance Acts
which were in force in the United Kingdom during the Second World
A
B
'
c
D
E
F
G
H
734
SUPREME COURT REPORTS
(1976) 2 S.C.R.
War. It was realised after the Chinese aggression that it was necessary to make provision, if possible on wa~ footing, for ~einstat~ng the
factories damaged or ruined by enemy act10n and for re1mbursmg the
loss or damage of goods and continue the commercial and econo~ic
activity with a view to stabilize the economy of the country.
In view
of the magnitude of the task, no private agency in the field of insurance could have undertaken it.
By the Acts, the Central Government undertook the task of insuring factories and goods against loss
or damage sustained by enemy action.
The Acts in substance provided for compulsory insurance against
emergency risks of every person carrying on business as a seller or
supplier of goods in respect of the insurable goods, whic~ we~e from
time to time owned or deemed to have been owned by him m the
course of such business, if the iasurable value of such goods lying in
one and the same city or district exceeded Rs. 30,000/- and of all
factories falling within the purview of the
Factories,
1948.
The
schemes framed under the Acts provided for procedural matters relating to the mode of valuation of the insurable gpods and assets, receipt
of applications for the issue of policies, payment of premium,
the
terms and conditfons attaching to such policies and
settlement
of
claims and other matters.
The provisions of the two Acts were more or less similar.
We
would now refer to certain provisions of the 'Factories Act'.
Under
s. 1 (3) of that Act, it was provided that the Act would
remain in
force during the period of operation of the proclamation of
emergency issued on 26-10-1962 and for such further period as the Central Government might declare to be the period of emergency for the
purpose of the Act. It was also provided in that section that the
expiry of the Act shall not affect anything done or omitted to be done
before such expiry and s. 6 of the General Clauses Act, 1897, shall
apply upon the expiry of the Act as if it were repealed by a Central
Act.
Section 2(f) of that Act defined 'insurable value' of property as
the value of the property as ascertained for the purpose of insurance
under the Act.
Section 2 (j) defined 'quarter' as meaning a period
of three months commencing on the first day of January, April, July
or October and s. 2(i) defined 'emergency risks'.
.
Section .3 of that Act empowered the Central Government to put
mto operat10n a scheme called the "Emergency Risk
(Factories)
Insurance Scheme", where by the Central Govemment would undertake, in relation to factories, the liability of insuring property against
emergency risks.
Under s. 3 (3) (a), the liability of
the
Central
Government as insurer did not extend to more than 80 per cent of
the insurable value of the property insurable.
Under s. 3(3) (c), the
premium under a policy was payable at a rate not exceeding 3 per
cent per annum of the sum insured as may be specified in the scheme.
Section 3 (7) enjoined that every scheme shall be laid before
each
House of Parliament for a total period of thirty days.
,) ..
•
AMADALAVALASA CO-OP. SOCIETY v. UNION tMathew, /.)
735
Section 5 ( 1) said that while a scheme was in operation,
every
owner of a factory shall take out a policy of insurance against emergency risk, issued in accordance with the scheme, for a sum not less
than the insurable value of the property, and, if any owner of factory
failed to fulfil the obligation under s. 5 ( 1) and failed to pay the premium on the policy which was subsequently due, he was liable to be
convicted of an offence under s. 5 ( 4), punishable with fine and, that
would be without prejudice to any other penalty or liability incurred
in consequence of the failure.
Section 6 placed restrictions on carrying on
certain
insurance
business.
By s. 7, the Central Government was authorised to create
an "Emergency Risks (Factories) Insurance Fund".
The
Central
Government was authorized, under s. 8, to require the
owner or
occupier to furnish any document or information to a person authorized by it.
Section 11 provided that where any person had failed
to insure as, or to the full amount, required by the Act,
and
had
thereby evaded the payment by way of premium of any money which
would have had to pay but for such failure, an officer authorized in
that behalf by the Central Government might determine the amount
the payment of which had been so evaded.
The amount so determined shall be payable by such person and shall be recoverable from
him as provided in sub-section (2) of s. 11.
And sub-section (2)
stated that 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.
Section 11 (3) stated that a person against
whom a determination is made under sub-section (1) could, within
the period specified in the scheme, appeal against such determination
to the Central Government, whose decision therein shall be final.
A
s
c
J)
E
Now we will note a few relevant provisions of the
Emergency
Risk (Factories) Insurance Scheme.
The Scheme was
put
into
operation with effect from 1-1-1963.
In clause 6 of the Scheme it
F
was provided that_ an application for insurance should be made · in
the form set out in Part A or Part B of the Fjrst Schedule thereto
according as the application was for the original or supplcmentarv
policy, and that it should be made to the government agent or such
other officer of the government agent as might be authorized by that
agent in this behalf. and. the application must be accompanied by a
~rcasury challan ev1dencmg the payment of the requisite premium
G
mto the government treasury.
·
Clause 7 pertained to the method of valuation of insurable property. . It laid down that the insurable value of the property shall be
ascertamed in accordance with the principles
mentioned
therein.
Clause 8 fixed the rate of premium to be 25 paisc for every
100
rupees or oany part thereof in respect of the quarter ending 31-3-1963.
H
9ause 9 related to iss.'1e of policy and verification of previous policies.
Clause 12 ment10ned the date from which the policies would
be. effective.
A
B
c
D
G
736
SUPREME COURT REPORTS
[1976) 2 S.C.R.
Clause 13 (1) provided that where any person had failed to pay
any premium due from him or to insure as, or to the full amount,
required by the Act and had 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; and sub-clause (2) provided for appeal against
the determination.
Sub-clause (3) of clause 13 stated that where
the amount determined under the provisions of sub-clause
(1)
or
sub-clause (2) was fully recovered, the government agent shall,
as
soon as possible after such recovery, sl!nd the requisite
application
forms to the defaulter for completion and return, and a policy or
supplementary policy in respect of the property concerned according
as the recovery was 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.
Clause 16 declared that the insured person shall bear 20 per cent
of the loss or damage. It also declared that if the total value of the
property insured exceeded the sum insured, the insured person shall
be considered as his own insurer for the excess as well as for 20 per
cent of the sum insured.
The First Schedule to the Scheme contained forms of applications
for a policy or supplementary policy and other matters.
The Second
Schedule gave a model form of the policy to be issued.
According to the Third Schedule, the authorized officer, when he
had reason to believe that the owner or occupier of any property
insurable under the Act had failed to pay any premium and
had
thereby evaded the payment by way of premium of any money which
he would have had to pay but for such failure, the officer may serve
on such owner or occupier a notice requiring him to show cause why
he failed to insure the property or to full amount as required by the
Act and further to produce before the officer on such date any document or other evidence in support of his case.
The Officer,
after
providing him an opportunity ()f being heard shall assess the insurable value of the property and the amount of premium, the payment
of which had been evaded.
The Schedule
made
provisions
for
appeal to the Central Government.
The provisions of the Scheme framed under the 'Goods Act' were
practically the same.
The appellants challenged the finding of the High Court that the
liability to pay the evaded premia arose during the currency of the
Acts and contended that the liability itself was dependent
on the
ascertainment by the authorized officer of the insurable value of the
factory or goods in accordance with the Third Schedule and that until
the extent of the liability was so ascertained, there could be no liability and so, s. 6 of the General Clauses Act was not attracted. In
other words, the contention was that until the liability of the insured
was determined by the authorized officer by ascertaining the correct
)
•
AMADALAVALASA CO-OP. SOCIETY v. UNION (Mathew, /.)
7 37
insurable value in accordance with the provisions of the Third SchedUle, no liability to pay the evaded premia arose and t~erefore, . no
liability was incurred before the expiry of the Acts which could be
enforced un9er the provisions of s. 6 of the General Clauses
Act
after their expiry.
It is clear from the provisions of the Acts that the duty to take
out insurance policy for the full rnsurable value of the factory of
goods was mandatory and that the failure to do so was an offence.
Besides, in the c•ase of failure to insure for the full insurable value,
provisions were made for recovery of the relative premia.
To effectuate this purpose, the procedure for determination of the insurable
value of the factory or goods and of the premia evaded was
also
provided.
There is no compulsion in a voluntary insurance that the cover
should be made for the entire insurable value of the property.
The
premium collected in a voluntary insurance is related to the quantum
of the risk undertaken in the light of the insurable value suggested
by the insured.
Generally, in a voluntary insurance, the premium is
A
B
c
paid in consideration of the cover provided.
In other words,
preniinm is paid in order to enable the insurer to indemnify the insured - D
against loss or damage on account of the risk specified.
The scheme
cf insurance envisaged by the Acts was different.
There
was
no
element of consensus on the fundamental terms of insurance in the
t:cheme.
The liability to take insurance policy for the full insurable
value of the factory or goods was compulsory.
The terms and conditions of the policy to be taken were governed solely by the provisions of the Acts and the Schemes.
It is a mistake to assume that
E
the rights and liabilities of the parties in this statutory scheme were
similar to those of a voluntary contract of insurance. If the liability
to take the insurance policy for. the full insurable value was absolute,
and if the terms and conditions of insurance were settled by the terms
of the statutes and the Schemes read with the Schedules, there is no
merit in the contention of counsel for the appellants that the obligation of the President as insurer was same as that of an insurer in a
F
contract of voluntary insurance.
The liability to pay premia in case
of under-valuation, was not< dependent upon the subsequent determination of the full insurable value of the factory or goods insured. If
the factory or goods was under-valued, when the insurance policy
was taken, the liability tc;i pay premia on the basis of the full insurable value arose at the time when the policy was take.ri.
That liability
was not dependent upon the ascertainment of the full insurable value
G
J;iy the authorized officer in accordance with the_ Third Schedule.
In Ekambarappa v. Excess Profits Tax Officer(!) this Court held
that the liability for excess profits tax arose at the close
of
the'
accounting year and was not dependent upon its ascertainment by an
order of assessment. In the same way, the liabili~y to pay the premia
on the ]Jasis of the full insurable value of the factory or goods insured
H
was incurred when the Acts and the schemes were in operation. The
(1) [l 967] 3 S.C.R. 864.
738
SUPREME COURT REPORTS
[1976] 2 .S.C.R.
A
liability to pay premia on the basis of the full insurable value of t~c
factory or goods is one thing; the quantification of the amount
is
B
c
D
another.
•
But it was argued that if a policy was taken not for the full
insurable value, the authorized officer should have ascertained the c?rrect insurable value within the quarter and a supplementary pohcy
should have been issued on the basis of the full insurable value, alw
within the quarter, so that the liability to pay premia on the basis L'f
the full insurable value might arise.
In other words, the argument
was that the liability to pay premia on the basis of the full insurable
value in case of under imurance was conditioned by the capacity on
the part of the insurer to issue a supplementary policy within
the
quarter undertaking to indemnify the insured on the basis
of
the
correct value aga;nst emergency risks, and, as the insurer ceased to
have the capacity after the expiry of the quarter, and a fortiori after
the expiry of the Acts, to issue a supplementary policy undertaking
the liability to indemnify against loss arising out of emergency risks
on the basis of the full insured value, the obligation to pay· premia
on the full insurance value ceased, as, after the expiry of the Acts,
there could no longer be any emergency risk.
We do not think that the argument is correct.
As we said, the
obligation to insure for f11ll insurable value of the factory or goods
was an obligation which was not dependent upon the corresponding
liability of the insurer to indemnify. If the owner of factory or goods
failed to take insurance policy at the time he ought to have taken it
and pay the premia, the liability of the insured to pay the prernia
E
could be enforced under clause 13 or 14 respectively of the Schemes
under the 'Goods Act' or the 'Factories Act'.
In such a case there
would be no obligation on the part of the President to indemnify the
insured in case of loss\ or damage on account of emergency risk as
the insured did not take out the policy of insurance.
The obligation
to issue the policy or supplementary policy, as the case may be,
F
G
would arise only after payment or recovery of the evaded premia, and
even then, the liability of the insurer under the policy or supplementary policy would be from the date of payment or recovery of
the
evaded premia.
The fact, therefore, that no supplementary~ policy
was issued before the expiry of the Acts is no answer for not fulfilling
the obligation of the insured to pay the premia in accordance with
the correct insurable value of the factory or goods
as
determined
under the Third Schedule to the Schemes. Therefore, if under s. 5
of the 'Factories Act' or under s. 7 of the 'Goods Act'; the liability
to pay the premia on the full insurable value was incurred before the
expiry of the Act, s. 6 of the Qeneral Clauses Act would enable the
ascert•ai'ament of the extent of liability for . the evaded premia by an
officer who was authorized when the Act was in force or by an officer
authorised after the expiry of the Act.
The principle behind s. 6 of
the General Clauses Act is that all the provisions of the Acts· would
H continue rn force for purposes of enforcing the
liability
incurred
when the Acts were in force and any investigation, legal proceeding.
remedy, may be instituted, continued or enforced as if the Acts l1itd
not expired.
}·
•
\.
AMADALAVALASA CO-OP. SOCIETY v. UNION (Mathew,/.)
739
The Third Schedule to the Schemes provides for the method of
ascertaining thy liability in case of under-insuranc~. The provisi~ns
of the Third Schedule show that the officer has to give an opportumty
to the iusured to show cause why he should not be made to pay the
premia on the basis of correct value of the factory or goods undervalued.
It was contended for the petitioner in Writ Petition No. 461 of
1971 that the provisions of the Acts contravened Articles 14, 19 and
] 1.
Article 19 is not available to the petitioner for
challenging the
validity of the provisions of the Acts as these Acts were p~ss~ during
the currency of the proclamation of emergency under Articfe 352.
No doubt, when the proclamation of emergency was revoked
in
1968, the provisions of the Acts became liable to be challenged on
the ground that they violated Article 19 (1) ; but the liability incurred for acts or omissions during the currency of the proclamation of
emergency cannot be nullified even jj1 it be assumed that the provisions
of the Acts were violative of Article 19. In other words, liability created by •an act or omission when the Acts were in operatid11 during
the currency of the proclamation of emergency cannot be challenged
even after the .revocation of the proclamation on the ground that
the provisions of the Acts violated Article 19.
This, we think, is
the principle laid down by this Court after reading Article 358 of the
Constitution in Makhan Singh v. State of Punjab(!).
We also think that the procedure for ascertaining the correct insurable value of the factory or goods is reasonable, having regard
to the provisions of the Third Schedule in that behalf and cannot
therefore, violate Article 19 ( 1) ( f) or (g).
'
The writ petitioner has not shown how the provisions of the Acts
violated Article 14.
·
A
B
c
D
E
.. And, as regards .the conten.tion of the petitioner that the proF
v1s10ns of the Acts violated Article 31 ( 1) , we do not think that the
. petition~~ was deprived of any pi;operty without the authority of law.
The petitioner has not succeeded m showing how the law which deprived him of his property could be challenged on the ground that it
was violative of any of th~ provisions in Part III of the Constitution.
We dismiss Writ Petition No. 461 of 1971 and Civil Appeals
G
Nos. 506-510, 842-844 and 1710-1713 of 1971 and allow
Civil
Appeals Nos. 23l9-2364 of 1972 without any order as to costs.
P.H.P.
Appeals partly allowed.
(1) [1964] 4 S.C.R. 797 at 812