MARIKAR MOTORS LTD Vs. CHIEF ENFORCEMENT OFFICER

JUDGEMENT

(1.) M/s. Mankar (Motors) Limited, Main Road, Trivandrum is the petitioner in this O.P. under Article 226 of the Constitution.

(2.) The petitioner is a public limited company with its registered office at Trivandrum. The petitioner deals in motor cars, trucks etc. Under the Emergency Risks (Goods) Insurance Act, 1962 (shortly stated the Act), the Central Government made it compulsory to have emergency risk insurance taken for goods comprising of motor vehicles, spares and accessories etc. Accordingly from 1st October, 1963, the petitioner had paid premium declaring the value of stock to respondents 1 and 2 (The Chief Enforcement Officer, Emergency Risks Insurance Scheme, Madras and the Enforcement Officer, Emergency Risks Insurance Scheme, Ernakulam). The petitioners had been insuring goods and paying premium also from time to time. On 30-12-68, the 2nd respondent issued an order calling upon the petitioner to remit an additional sum of Rs. 10,279/- towards premium. In fact, no amount is due towards premium for the insurance taken by the petitioner under the Act. The petitioner, therefore, filed objections stating that during the years the goods were only in transit and were, therefore, not liable for additional premium claimed. Ext. P1 is the objection. Under S.6 of the Emergency Risks (Goods) Insurance Scheme (shortly stated the Scheme) the consignor alone is liable to take insurance for the goods in transit. Since the petitioner is only a consignee he is not liable to take the insurance or pay the premium. However, as the respondents insisted that the petitioner should remit the additional sum of Rs. 10,279, the petition was filed on 17-2-69 before the 2nd respondent; copy of the petition is Ext. P2. Goods have been insured for the proper value and the policy was issued on the basis of such valuation. The respondents would now suggest that the insurable value was higher and. therefore, the petitioner should make good the difference in the premium. The policy having been operative only for the value for which the goods were insured and the period of policy having expired the petitioner's case is that the demand made for the additional premium is not sustainable. Even if the petitioner is found liable for the additional premium it has to be noticed that he did not obtain any corresponding benefit for the insurance to a higher value and that being the case the demand for additional premium is illegal as that would result in his deprivation of property without return and hence unconstitutional. Even if it is assumed that the premium based upon difference in insurable value is recoverable, the quantum mentioned in the statement is incorrect. The petitioner, therefore, requested the 2nd respondent to deduct the value of the goods in transit from the figures adopted by him. Without doing that the 1st respondent issued notice to the petitioner calling upon him to pay Rs. 10,279/- towards premium and Rs. 4,773/- towards compounding fee. The petitioner has not agreed for composition. Under S.14 of the Scheme, the amount evaded is to be determined in accordance with the 3rd Schedule. The period of the policy having expired it is not proper to demand any additional premium on the assumption that the insurable value was higher. In the circumstances, the petitioner prays for the quashing of Ext. P3 demand notice and for declaring S.14 of the Scheme unconstitutional.

(3.) The respondents in their counter have stated that the petitioner has not correctly declared the value of the stock of insurable goods in their application for insurance. The amount of premium payable was also not correct. The 2nd respondent verified the figures given by the petitioner with their books of account and found that their valuation was far less than the real value of the goods (the relevant figures have been quoted in para 3). The averment in the petition that the petitioner had been insuring the goods from time to time giving correct valuation is denied. In fact, proper premium has not been paid. The letter dated 30-12-68 referred to in the petition was not the order demanding payment of the amount. It was only intimation showing the amount due as per calculation made by the 2nd respondent. The petitioner should have shown cause against it. The 2nd respondent has no power to recover any amount unless the figure is accepted by the party. In the event of a dispute the matter is to be referred to the 1st respondent. The survey report giving figures was given to the secretary of the petitioner company on 30-12-1968. No objection was taken against that. So the 2nd respondent prepared a chalan and handed it over to the secretary who acknowledged the same by signing on the survey report. No objection was taken against that also and the figures were accepted by accepting the chalan. It is not correct to say that Ext. P1 was given in answer to the intimation dated 30-12-68. It was sent by post and received by the 2nd respondent only on 27-1-69, long after the chalan was accepted by the petitioner's secretary. In the objection the only point taken was that much of the goods were in transit and the petitioner believed that the insurance would be paid by the consignee (Hindustan Motors, Calcutta). They offered to give the correct figures on hearing from their principals. It was in the further letter dated 17-2-69 that the petitioner disclaimed liability to pay the amount as the period of insurance was over. They gave a list of certain goods in transit and offered to give a complete list shortly. The 2nd respondent visited the shop on 24-2-69 and 26-2-69; but no further information was given. It is not correct to say that the petitioners are not liable for the premium on goods in transit. The property in the goods would pass to the consignee, the moment the goods left the premises of the Hindustan Motors. There was no intermediary carrier in this case. The petitioners themselves took custody of the goods at Calcutta. The liability, therefore, is on the petitioners themselves and not on the Hindustan Motors. The sale was complete at Calcutta and the delivery was taken from there. The petitioners themselves are liable for the premium under S.4 of the Act even if he is only an agent of the Hindustan Motors. The Act and the Scheme had made it obligatory for every person carrying on business in India as a seller or supplier of goods with a stock exceeding Rs. 30,000/- in value to take out insurance against emergency risks. The insurance to be taken was for a sum not less than the value of the insurable goods in terms of S.7(1) of the Act. The contravention of the provisions of the said section attracts penalties provided under S.7(2) of the Act. The petitioner having violated the provisions of S.7(1) by giving a gross undervaluation cannot be heard to say in these proceedings that he is not bound to pay the premium on the correct value of the goods. The liability of the petitioner is clear from S.1(3) of the Act. The demand to pay the correct premium is not violative of Art.19(1)(f) of the Constitution. Para 14(3) of the Scheme does not apply in this case where the evasion was found out after the period was over. There is no basis for saying that para 14 of the Scheme is unconstitutional or void. The petitioner is, therefore, not entitled to any relief.