AMITAVA PALCHOUDHURI AND OTHERS Vs. CHIEF ENFORCEMENT OFFICER, EMERGENCY RISKS INSURANCE SCHEME, EASTERN REGION AND OTHERS

JUDGEMENT

(1.) Upon the invasion of the Northern Frontier of India by the Chinese Forces, the President of India issued a proclamation under Article 352 (1) of the Constitution on 26th October, 1962 declaring that a grave emergency existed threatening the security of India. The proclamation of emergency continued in force until it was revoked under Article 352 (2) of the Constitution, by a subsequent proclamation issued on the 10th January, 1968. Following and during the emergency so declared the Emregency Risks (Factories) Insurance Act and the Emergency Risks (Goods) Insurance Act were enacted in 1982 by the Parliament hereinafter referred to as the Factories Insurance Act and the Goods Insurance Act respectively. The object of these two Acts and the schemes framed thereunder were more or less identical and the object of the two Acts was to make provision for insurance of property and goods against damages by enemy action during the period of emergency. These Acts were intended to cover for war risks which were normally excluded from cover by insurance companies. The schemes were framed under the said Acts, The petitioners under Article 226 of the Constitution took out policies of insurance against the emergency risks in respect of teas, other miscellaneous stores, factories and other buildings, standing crop and machinery of their estates. The petitioners are producers and manu. facturers of tea and for the aforesaid purpose had tea gardens named Mohurgong and Gulam Tea Estates in West Bengal. The petitioners had also at all material times a factory for processing of tea leaves. The petitioners also had diverse buildings, inter alia, for office and resi. dential purposes of their staff and also for housing the said factory. The petitioners contend that the petitioners duly paid all premia payable under the said insurance policies. The petitioners duly took out policies for every quarter against the emergency risks in accordance with the Schemes whereby the petitioners were insured in respect of all properties insurable under the Acts for the insurable value of such property. On the 12th August, 1970, two notices were issued under Section 8/11 under the Emergency Risks (Goods/Factories) Insurance Acts and the respondent no. 2 called upon the petitioners for pro. ductioa of documents as per the lists in the said two notices. In compliance with the said notices the petitioners submitted the documents as called for. The petitioners contend that the petitioners supplied the said documents being unaware of the position that the respondents had no authority to call for the documents. Thereafter there were two demands both dated the 10th December, 1970 and being annexures 'C and'D' whereby the respon. dent no. 2 had called upon the petitioners to pay a sum of Rs. 1,571/- under the Goods Insurance Act and a sum of Rs. 8,372/- under the Factories Insurance Act on the ground that the petitioners had under-valued the insurable value of the property for the period1st quarter, 1963 to 2nd quarter, 1966. under the aforesaid two Acts, two notices being annexures 'B' and 'C' The petitioners state that pursuant to the said demand and being unaware of the position the petitioners prayed for instalment and paid the said sum to the respondents. The last of such payments of Rs. 8,372/- was made on the 10th Jane, 1971. As the petitioners paid the demand for alleged under-insurance, the petitioners did not pay the sums of Rs. 760/. and Rs. 1,341/-. for compounding the alleged offences and no demand in respect of the same was made also at that time. Thereafter, by a notice dated the 28th August, 1971, the respondent No. 1 called upon the petitioners to show cause why proceedings to prosecute the petitioners under Section 7 (2) of the Goods Insurance Act should not be initiated for the alleged offence of not having the goods insured under the Goods Insurance Scheme for 1st quarter. 1963 to 4th quarter, 1984, September 1935, 4th quarter, 1985, 1st quarter, 1966 and 1st quarter, 1937, It was further stated in the said notice that the respondent No. 1 had no objection to compound the alleged offence on payment of a sum of Rs. 760/. in lieu of the prosecution proceedings. The petitioners denied that there was failure on the part of the petitioners to insure the goods on the insurable value. The said notice dated the 28th August, 1971, is annexure ' '. The petitioners challenge in this application under Article 226 of the Constitution the notice dated the 12th August, 1970, the demands on the 10th December, 1971 and the notice dated the 28th August, 1971 and the 17th June, 1972.

(2.) The main point urged on behalf of the petitioners is that after the expiry of the emergency the said two Acts expired and, therefore, action which has been taken after the expiry of the said two Acts was not valid, I had occasion to deal with a similar question in a case which was factually though not identical was similar,, namely, in the case of Nandv V/s. Union of India,1972 76 CalWN 952. Counsel for the petitioners, however, contended that unlike the facts of the aforesaid case in the instant case the notice of demand had been given after the expiry of the emergency and also after the expiry of the said Acts, Therefore, he contended that the ratio of the said decision would not be applicable. He, further c intended that until jthere was a determination of the liability under Acts, the proceedings could not be continued after the expiry of the Act or after the expiry of the emergency. I am unable to accept this position. In my opinion section 7 creates the liability. That liability continues and proceeding for determination is part of the proceeding for the enforcement of the liability. Section 11 of the Act provides for recovery of premiums unpaid. Sub-section (3) of section 1 is material and it is necessary to set out the same :

(3.) In the premises, in view of the position in law as I have held in the case of Nandy V/s. Union of India,1972 78 GalNW 952and in view of the decision of the Allahabad High Court in the case of Raja Ram Om Prakash V/s. Unioa of India, 1971 41 CompCas 1055with which I am in respectful agreement I am unable to accept the contention urged in support of this application. The application, therefore, fails and is accordingly dismissed. Rule nisi is discharged. Interim order, if any is vacated. There will be no order as to costs.