STONEWARE PIPES MADRAS Vs. UNION OF INDIA

JUDGEMENT

(1.) THESE petitions have been grouped and heard together as the facts in each are of a common pattern raising the identical question as to the validity of demands made on the petitioners by the Chief Enforcement Officer. Emergency Risks insurance Scheme. Madras, to make payments of premium towards alleged under insurance against war risks in respect of factories and goods pertaining to certain quarters between January and December 1963 and September 1965 to March 1966. It will, therefore, suffice to notice the facts in one of them. In W. P. 1071 of 1970 the petitioner is a private limited company which during the relevant period, carried on the business of a spinning mill at Dindigul. As required by the emergency Risks (Factories) Insurance Act, 1962 it had taken out polices of insurance against Emergency Risks issued in accordance with the Emergency Risks (Factories) Insurance Scheme, which covered the quarters during the periods mentioned above. It appears that Dindigul Enforcement Officer conducted a survey and verification of insurable values of the assets owned by the petitioner after 101-1968. After following the procedure prescribed by the scheme, and considering the petitioner's representations, the Chief Enforcement Officer, by his order dated 24-3-1970, found that the petitioner had, for the four quarters in 1963, the last two quarters of 1965, and the first quarter of 1966, to take out cover for the full insurable value of its buildings, 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. 24,717 within the specified time. In doing so, the Chief Enforcement Officer purported to act in exercise of his powers under Section 11 (1) of the Act. He intimated that in default on the part of the petitioner, action would be taken to recover the said sum as arrears of land revenue. He also made it clear that the demand made was without prejudice to the Government's right to prosecute the petitioner under Section 5 (4) for having contravened the provisions of Section 5 (1) of the Act. The petitioner wants this order to be quashed on the ground that the Chief Enforcement Officer, after revocation of the proclamation of the emergency, has no longer the power or jurisdiction to make the demand. In some of the other petitions, the proceedings of this officer are at the stages of notice asking the relative petitioners to show cause against determination of the insurable values at certain sums. These petitioners have asked for prohibition of further proceedings.

(2.) GENERALLY speaking, underwriters exclude the War Risk from the scope of cover under property insurance. Apparently following the example of the United Kingdom to mitigate the hardship arising from the reluctance of the Insurance companies to insure property against war risks, the Indian Parliament enacted the Emergency risks (Factories) Insurance Act. 1962 in the wake of the Chinese attack on our country. In view of the invasion, the President of India declared Emergency with effect from 26-10-1962. The Act became law from 19-12-1962. Its object was to make provision for insurance of certain property in India against damage by enemy action during the period of emergency. By Section 1 (3), it should remain in force during the period of operation of the Proclamation of Emergency. The Central government was empowered by Section 3 (1) to put into operation by notification in the Official Gazette, a scheme to be called the Emergency Risks (Factories)Insurance Scheme, whereby the Central Government undertook in relation to factories the liability of insuring property insurable under the Act against emergency risks, to the extent provided by or under the Act. The main provisions in the Scheme are indicated by sub-section (3) of the section. They are to secure inter alia, that the liability of the Central Government as insurer should not extend to more than 80 per cent of he insurable value of the property, and that the liability of the Central Government as insurer under the scheme should be determined by a policy of insurance issued in the form and in respect of a period not exceeding the period specified in the scheme, by a person acting on behalf of the Central Government. Section 5 (1) makes it obligatory for the owner of a factory to insure against emergency risks. It says that while the scheme was in operation, every owner of a factory.

(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". Sections 12 and 13 provide for limitation on prosecutions, that is to say, prosecutions are to be launched only with the consent of the Central Government, and for composition of offences. The Emergency Risks (Factories) Insurance scheme contemplated under Section 3 (1) was to put into operation with effect from 1-1-1963. It has a definition in the section for 'policy' which among other things means a policy of insurance issued under the Scheme and included any supplementary policy. Defining the scope and effect of the Scheme, Section 3 provided that the Central Government under the Scheme undertook in relation to factories, the liability of insuring them against emergency risks to the extent provided by the Act. The Scheme provided by Section 6 that an application for insurance should be made in the form set out in Part A or Part B of the First schedule according to the application was for an original or a supplementary policy and it should be made to the Government agent or to such officer of the government agent as might be authorised by that agent in that behalf. Each application should be accompanied by a treasury chalan evidencing payment of the requisite premium into a Government treasury. For the purpose of the Act, as stated by Section 7 of the Scheme, the insurable value of property should be the actual value in the case of completed works, and the estimated value of the works which were in the course of construction, and in both the cases at the prices prevailing on the relevant dates after making due allowance for any depreciation. The rate of premium should be 25 paise for every Rs. 100 or any part thereof of the sum insured. On a proper application and remittance of the premium, the government agent should issue a policy of insurance as soon as possible. The insurance was to cover every quarter. If the chalan accompanying an application was for an amount which fell short of the premium due on the insurable value of the property