ROHTAS INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner 1, a public limited company is engaged in the business of manufacture, production and sale of cement, paper, vanaspati etc. and owns factories at Dalmianagar, Bihar. In the year 1962 Emergency Risks (Factories Insurance) Act, 1962 (hereinafter referred to as the Act) was enacted which provided for insurance of certain properties in India against damage by enemy action during the period of emergency. On 5th Dec. 1962 the Central Government put into operation the Emergency Risks (Factories Insurance) Scheme (Hereinafter referred to as the Scheme). The Scheme continued to be in force during the proclamation of emergency and expired with the end of emergency on 10th Jan. 1968. As per the requirements of the Scheme and the Act the petitioner 1 was required to obtain insurance policies for the period between 1963 to 1966. On 8th April, 1968 the Enforcement Officer attached to the office of the Chief Enforcement Office, Eastern Region, Emergency Risks Insurance Scheme, gave notice to the petitioner that he had reasons to believe that the petitioner 1 had failed to insure its property as required under the provisions of the Act to the extent and for the periods indicated in the said notice. Thereafter, certain correspondence ensued between the petitioner and the respondent and on 17th July, 1968 respondent 2 gave another notice to the petitioner that respondent 2 had reasons to believe that the petitioner had failed to insure its property to the extent and for the periods indicated in the said letter and to show cause within a fortnight why final determination be not made under sub-s. (1) of S. 11 of the Act. The petitioner 1 availed of the opportunity of personal hearing offered to it. However, respondent 2 rejected the basis of valuation adopted by the petitioner and made its own valuation. The petitioner 1 disputed the method of calculation followed by the Directorate taking the income-tax rate or balance-sheet rate, whichever was lower, in respect of the different items of the assets and for different periods. Respondent 2, however, negatived the contention of the petitioner 1 particularly with regard to depreciation and determined the amount of Rs. 6,62,874.00 which according to the Directorate was the amount of premium evaded by the petitioner and demanded the petitioner to pay the said amount into the treasury within 30 days of the receipt of the said letter. Being aggrieved by this order of respondent 2 the petitioner 2 filed an appeal before respondent 1 under S. 13 of the Act on 22nd Oct. 1970. By its order dt. 9-7-1971 respondent 1 rejected the appeal of the petitioner as being time barred on the ground that the order of respondent 2 was received by the petitioner on 21st Sept. 1970 and the time limit of 30 days had already expired when the appeal was filed on 22nd Oct. 1970.

(2.) The petitioner, amongst other things, has challenged these orders of respondent 1 and respondent 2 in the present writ petition under Art. 226 of the Constitution.

(3.) The learned counsel for the petitioner submitted that respondent 2 erred in ascertaining the rate of depreciatipn by taking the total depreciation provided in the balance-sheet of the petitioner and dividing it by the original cost of the said assets and applying the said rates to its replacement cost to arrive at the due depreciation as provided under the scheme. It was further submitted that there was no evasion of premium since there was no under-insurance. The petitioner further contended that respondent 1 should have condoned the delay and decided the appeal on merits. It was submitted that respondent 1 had the power to condone the delay, however, it failed to exercise the power vested in it and, therefore, the order rejecting the appeal was unreasonable and bad in law.