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Union of India New Delhi and ors. Vs. Thammana Sitaramanjaneyulu and ors. - Court Judgment

LegalCrystal Citation
Overruled ByAmadalavalasa Cooperative Agricultures and Industrial Society Ltd vs. UOI
SubjectConstitution
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 620, 621 of 1969 and W.P. Nos. 4365 and 4366 of 1969, 104 to 106, 121 to 123, 295,
Judge
Reported inAIR1971AP145; [1971]41CompCas1030(AP)
ActsEmergency Risks (Factories) Insurance Act, 1962 - Sections 1(3), 3(3), 5 and 11; Emergency Risks (Goods) Insurance Act, 1962 - Sections 3(3); General Classed Act, 1897 - Sections 6; Constitution of India - Articles14, 19, 19(1), 31, 246 and 358; General Clauses Act, 1897 - Sections 6
AppellantUnion of India New Delhi and ors.
RespondentThammana Sitaramanjaneyulu and ors.
Excerpt:
constitution - validity of notice - sections 1 (3), 3 (3), 5 and 11 of emergency risks (factories) insurance act, 1962, section 3 (3) of emergency risks (goods) insurance act, 1962, section 6 of general clauses act, 1897 and articles 14, 19, 19 (1), 31, 246 and 358 of constitution of india - notice issued charging petitioners for evading premia in respect of goods and factories - validity of notice challenged - authorized officer bound to issue notice and to provide opportunity of being heard to concerned persons before determining evaded premia - no such notices issued - authorized officers directed to issue proper notices. - - 1. the two writ appeals and the writ petitions question the validity of the notices issued by the 2nd respondent under the emergency risks (good) insurance.....gopal rao ekbote, j. 1. the two writ appeals and the writ petitions question the validity of the notices issued by the 2nd respondent under the emergency risks (good) insurance act (lxii of 1962) and the emergency risks (factories) insurance act (lxiii of 1962). hereinafter called ' the goods act'. and 'the factories act.' the impugned notice charge the petitioners of having evaded premia in respect of goods and/or factories the allegation was that the petitioners contravened the provisions of the acts inasmuch as they under ablaued the goods or factories for the purpose of insuring them under the a acts.2. during the second world war, war risks insurance acts in force in the united kingdom then were also n extended to india. the emergency risks (goods and factories) insurance acts. 1962.....
Judgment:
Gopal Rao Ekbote, J.

1. The two writ appeals and the writ petitions question the validity of the notices issued by the 2nd respondent under the Emergency Risks (Good) Insurance Act (LXII of 1962) and the Emergency Risks (Factories) Insurance Act (LXIII of 1962). hereinafter called ' the Goods Act'. and 'the Factories Act.' The impugned notice charge the petitioners of having evaded premia in respect of goods and/or factories The allegation was that the petitioners contravened the provisions of the Acts inasmuch as they under ablaued the goods or factories for the purpose of insuring them under the a Acts.

2. During the Second World War, War Risks Insurance Acts in force in the United Kingdom then were also n extended to India. The Emergency Risks (Goods and Factories) Insurance Acts. 1962 in substance are similar to the War Risks Insurance Acts. The object of the Acts is to ensure smooth flow of the commercial and industrial activity during the emergency proclaimed by the President after the Chiness aggression, by providing indemnity against damage or loss of goods or factories by enemy action. Immediately after the Chinese aggression in October, 1962, it was realised that it is necessary not only to continue the production of various goods, if possible, on war footing but also to make provisions for replenishing the damaged or ruined factories by enemy action and also by reimbursing the loss or damage of goods continue the commercial and economic activities with a view to successfully meet the sudden act of perfidy on the part of Chinees. The task was large and no private enterprise in the insurance filed could have undertaken insurance of losses or damages sustain by the insured properties due to enemy action. No one can deny that these Acts instilled confidence in the public mind in regard to the economic security. Apart from the other relief that the victims of any enemy action may get from the Government , they are under the insurance schemes put on their feet again by paying them admissible compensation under the Emergency Risks Insurances Scheme. BY creating an insurance fund, the Acts ensure the speedy payment of the insurance compensation.

3. The President of India after the Chinese aggression in October, 1962 proclaimed emergency under Art. 352 of the Constitution. The emergency began on 26-10-1962. The proclamation was revoked by the president on 10-1-1963. The Emergency Risks Insurance Acts came into force with effect from 1-1-1963. The Acts provide for compulsory insurance against emergency risks of every person carrying on business in India as a seller or supplier of goods in respect of the insurable goods, which are from time to time owned or deemed to be owned by him in the course of such business if the insurable value of such goods lying in one and the same city or district exceeds Rs. 30,000 (sic) all factories falling within the purview of the Factories Act. 1948 and other plants and machinery etc. The schemes framed under the two respective Acts were also published and came into force simultaneously with the Acts. These schemes set out in detail procedural matters relating to the mode of the valuation of the insurable goods and assets, payment of premium, receipt of applications for the issue of policies, the terms and condition attaching to such policies and other connected matters such as settlement of the claims etc.

4. A reading of the Acts and the schemes made thereunder would indicate that the Central Government has undertaken the liability to pay 80% of the sum insured or 80% of the aforesaid loss or damage in the value of the insured properties, computed on the basis of price prevailing at the time of occurrence of the loss, whichever is less. 20% of the loss of damage is expected to be borne by the owner. That is based on the principles of moral hazard. It is realised that unless the owner has a sense of belonging to the goods or factories insurance. he may not take ordinary care which is expected of a prudent man. That is why 20% risk is left t to the owner so that he may take necessary precaution. It would be a mistake to say that the Emergency Risks Insurance Acts are measures of fiscal levy on that account.

5. The period of insurance is restricted to a quarter at a time and the rates of premium were to be announced for every quarter by the Central Government after taking into account various factories. Although the Acts placed a statutory ceiling of 3% per annum of the sum insured within which the rate of premium can be fixed. it is seen from the various notifications that the premium in fact never exceeded 1 % under either of the schemes. Quite often it started with 25 paise her hundred, the rates of premium were gradually scaled down for the later three quarters of 1963.

6. After having noticed a few prominent features of the Emergency Risks Insurance Acts and the scheme made thereunder, it is necessary to note a few provisions of the Acts for the purposes of the appreciation of the arguments advanced before us. Although the numbering of sections differ in the two Acts. the provisions with which we are concerned are identical. We would therefore refer only to the provisions of the Factories Act.

7. Under Section 1(3) of the Factories Act, the Act was to 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 may declare to be the period of emergency for the purposes of the Act.

8. The said provision however, makes it clear that 'but its expiry 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 this Act as if it had been repealed by a Central Act.'

9. Section 2 then gives the definitions of the terms 'enemy'. 'factory'. 'emergency risks'

10. Section 3 empowers the central Government to put into operation a scheme called the 'Emergency Risks (Factories) Insurance Scheme, whereby the Central Government undertakes in relation to factories the liability of insuring property against emergency risks. Under Section 3 (3) (a), the liability of the Central Government as insurer 'shall not extend to more than eighty per cent of the insurable value of the property insurable' And under clause (c) the premium under a policy is payable at a rate not exceeding 3% per annum of the sum insured as may be specified in the Scheme.

11. Sub-Section (7) of Section 3 enjoins that every scheme shall be laid before each House of Parliament for a total period of 30 days. It empowers both the Houses to make any modification in the scheme. The Parliament may even decide that it should not be made. It is only after any such decision of the Parliament is made and subject of the Parliament is made and subject thereto that the scheme comes into effect.

12. Section 5 enjoins that it is the duty of every owner of factory to insure the factory against emergency risks in accordance with the scheme for a sum not less than the insurable value of the factory.

13. Section 6 puts a restriction on carrying on certain insurance business.

14. Section 7 empowers the Central Government to create 'Emergency Risks (Factories) Insurance Fund.'

15. Section 8 empowers the Central Government to authorise any person to require the owner or occupier or any other person to furnish to him and document or information or to enter upon any premises and to inspect or to examine documents etc.

16. Section 11, which is more relevant for our purpose may be read in full:

'(1) Without prejudice to the provisions of sub-section (4) of Section 5, where any person has failed to insure as, or to the full amount, required by this Act, and has thereby evaded the payment by way of premium of any money which he would have had to pay but for such failure, an officer authorised in this behalf, by the Central Government may determine the amount payment of which has been so evaded and the amount so determined shall be payable by such person and shall be recoverable from him as provided in sub-section (2).

(2) Any installment of premium due on a policy of insurance issued under the scheme, and any amount determined as payable under sub-sec. (1). shall be recoverable as an arrears of land revenue and shall be a first charge on the property in respect of which the default was made.

(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.'

17. Section 20 requires all the notifications issued under Sections 15,17 or 18 to be laid before Parliament for a period of 30 days.

18. We would then notice a few relevant provisions of the Emergency Risks (Factories) Insurance Scheme. Clause 6 relates to the method of application. Clause 7 pertains to the mode of valuation of insurable property. It lays down that the insurable value of property shall be ascertained in accordance with the principles mentioned therein. Clauses 8 fixes the rate of premium to be 25 paise for every hundred rupees or any part thereof in respect of the quarter ending 31-3-1963. Clause 9 relates to issue of policy and verification or previous policies. Clause 12 mentions the date from which the policies would be effective. Clause 13 being relevant for our purpose, We would read it in full:

'(1) Where any person has failed to pay any premium due from him or to insure, as or to the full amount, required by the Act and has 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.

(2) Every person against whom a determination has been made in pursuance of sub-paragraph (10 may, within the period laid down in the Third Schedule appeal to the Central Government whose decision shall be final.

(3) Where the amount determined under the provisions of sub-paragraph (1) or sub-paragraph (2) is fully recovered. the Government agent shall, as soon as possible after such recover, send 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 in respect of non-insurance or under-insurance shall be issued by the Government agent on receipt of the application correctly filled on the said policy being made out so as to take effect from the date the amount was fully recovered.'

19. Clause 16 then declares that the insured person shall bear 20% of the loss or damage. It also declares that if the total value of the property insured exceeds the sum insured, the insured person shall be considered as his own insurer for the excess as well as for 20% of the sum insured.

20. According to the Third Schedule, where any officer authorised has reason to believe that the owner or occupier of any property insurable under the Act has failed to pay any premium and has 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 as or to the full amount, 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 of being heard shall assess the among of premium, payment of which has been evaded. The Schedule makes a provision for appeal to the Government of India, Ministry of Finance. Department of Economic Affairs and prescribes a period of 30 days.

21. It is in the light of this general scheme of the Acts and the provision referred to above that we have to examine the validity of the arguments advanced before us.

22. The contention before the learned Judge (sic), being temporary, they expired on the withdrawal of proclamation of emergency by the President. Thereafter no authority under the Act can determine the evaded premia and collect the same as arrears of land revenue.

23. The learned single Judge has been evidently impressed with this argument. According to him, Section II of Act and the Third Schedule annexed to the scheme provide for the determination of evaded premia by an Officer authorised in that behalf by the Central Government. The right of the Central Government is not to recover to recover premia as is determined by the Officer authorised. The enforcement Officer was authorised to make the necessary determination under Section 7 of the Act read with the third Schedule. The learned Judge further observed:

'but his authorisation expired with the expiry of the Act and no fresh authorisation could be made under the Act after its expiry. The result is that while the right of the Central Government to recover evaded premia as determined by an authorised Officer is intact there is no authorised Officer who can determine the amount of evaded premia.'

The learned Judge though that 'the situation might have been otherwise if instead of the authorised Officer, Sec.7 has designed a civil Court or a collector or some other authority who existed irrespective of the continuance of the Act and the scheme as the authority competent to determine the amount of evaded premia.'

24. The argument before us, however was that the entire Act expired on the expiry of the emergency and thereafter no action can be taken in regard to any right accrued or liability incurred during the subsistence of the emergency. According to this argument, even the right of the Central Government to recover evaded premia is extinguished on the expiry of the emergency and consequently there is no liability on the petitioners to pay any evaded premia. As a result, no question of any authorised Officer, whose authority does not survive determining the evaded premia can arise.

25. Now, it is a well recognised general rule that unless it contains some special provisions to the contrary, after a temporary act has expired, it in its entirety ceases to have any further effect and no proceedings which are pending can be continued nor fresh proceedings can be initiated upon such an expired Act. Any Offense committed against temporary Act must be prosecuted and punished before the Act expires. As soon as the temporary Act expires, any prosecution which is taken against a person ipso facto terminates and no fresh prosecution can be taken upon the expiry of the Act. This, however, does not mean or punishments awarded become invalid on the expiry of the Act .In other words, its expiry does not make the statute dead for all purposes. The nature of the right created by the temporary Act or obligation arising out of the provisions thereof and their character may have to be taken into account to determine whether any right or obligation under the Act is enduring and survives in spite of the expiry of the Act or not.

26. We have already noticed that this general rule relating to expiry of a temporary Act is always subject to any special provision made to the contrary in the temporary Act. If the temporary Act contains within itself a saving provision on the lines Section 6 of the General on the lines of Section 6 of the General Clauses Act. then that provision will have to be given effect to. It is true that there is a difference between the expiry of the temporary Act and the repeal of an Act by another. The difference between the effect of the expiration of a temporary Act and the repeal of a permanent Act is pointed out by Parke. B., in Steavension v. Oiliver. (184) 8 M & W 234 at pp. 240 and 241:

'There is a difference between temporary statutes and statutes which are repealed, the latter (expect so far as they relate to transactions already completed under them) become as if they had never existed, but with respect to the former the extent of the restrictions imposed, and the duration of the provisions are matters for construction.

27. In that very case, Lord Abinger, C.B. in giving the Judgment said:

'It is by no means a consequence of an Act of Parliament expiring that rights acquired under it should likewise expire. The Act provides that persons who hold such commission should be entitled to practice as apothecaries, and we cannot engraft on the statute a new qualification limiting that enactment.'

28. What must follow is that the effect of expiry of a temporary Act depends upon the construction of the Act itself. When a temporary Act expires. Section 6 of the General Clauses act which in terms is limited in its application only to repeals has no application to an expiry of a temporary statute. Nevertheless the temporary Act may provide for its survival even after its expiry in regard to transactions which took place during the time when that temporary Act was in force.

29. A question often arises in connection with legal proceedings in relation to matters connected with a temporary Act whether they can be continued or initiated after the Act has expired. The answer to such a question, as stated above, depends upon the construction of the temporary Act as a whole.

30. It is in this background that we have to examine the scope and effect of Section 1 (3) of the Act. The Section is aimed at two things. It not merely saves 'anything done or omitted to be done before such expiry' but also applies the provisions of Section 6 of the General Clauses Act 'upon the expiry of this Act as if it had been repealed by a Central Act.'

31. It will immediately be noticed that although Section 6 may not have applied in its terms to an expiry of a temporary Act, but the said provision by a legal equates the expiry of the Act with that of its repeal by a Central Act and then applies the Section 6 of the expiry of the Act.

32. The term 'anything done or omitted to be done' came in for construction in Wicks v. Director of Public Prosecutions. (1947) 1 All ER 205, before the House of Lords. In that case, there was a charge under the Defence (General) Regulations, 1939, Regulation 2-A, and the Emergency Powers (Defence)Act, 1939, Section 3 of assisting the enemy, The Emergency Powers Act expired on February 24, 1946. The trial took place on May 27 and 28, 1946. The acts which formed the subject of the charge took place from August 19943 to January 1944. Section 11 (3) provided that 'the expiry of the Act shall not affect the operation thereof as respects things previously done or omitted to be done.' This language was held to be wide enough to make provisions of the statute operate in respect of any act done before its expiration, therefore, its expiration did not affect the liability to punishment under the statute or the prosecution of legal proceedings for the purpose of inflicting that punishment.

33. As to the effect of Section 11 (3) it was contended before the Court of Criminal Appeal that the sub-section operated only on matters past and completed in all respects while the act was in force. Refuting this arguments, the Court said in R.v. Wicks (1946) 2 All ER 529 at p. 532.

'While no doubt it does cover complete acts or transactions, we think the language is wide enough to make the provisions of the Act apply, or, in the language of the section to operate, in respect of any act done before the expiration even though not perfected or completed till afterwards.'

Lord Goddard, C.J. posed the question:

'Now, if this sub-section operates only on matters past and completed it may well be asked what object there was in enacting it at all. A competent authority or administrator under the Act would not require it for his protection after right e Act had expired, provided what had been done or omitted thereunder was authorised by the Act at the time of the act or omission.'

The learned Chief Justice answered that question:

'Had the words of the sub-section been: 'The expiry of this Act shall not affect anything previously done or omitted to be done thereunder.' 'there would have been greater, it may be irresistible force in the appellant's contention. Such words would indicate no more than a confirmation of acts or a ratification of or excuse for omissions that had already taken place. Here, however, the provision in that the Act is to operate after its expiry as respects previous act or omissions. On turning to Schedule I, Part III to the Act of 1946, it will be notice that exactly the same words are used with reference to each of the regulations mentioned therein. and the only difference is that Section 11 (3) of the Act of 1939 is general and Schedule I, Part III, to the 1946 is specific. It is clear that Parliament intends that the regulations should continue to operate in respect they had not expired.'

34. The same question was again agitated as stated above in appeal before the House Lords in (1947) 1 All ER 205, In affirming the decision referred to above of the Court of Criminal Appeal Viscount Simon in the leading judgment observed:

'It is clear that Parliament did not intend sub-section (3) to expire with the rest of the Act, and that its presence in the statute preserves the right State within the scope of Article 358 even after the date of expiry.'

This decision is accepted in India and followed in J.K. Gas Plant Mfg Co. Ltd. v. Emperor, AIR 1947 FC 38 at pp. 46. and 47, Gopi Chand v. Delhi Administration, : 1959CriLJ782 and State of Orissa v. Bhupendra Kumar. : AIR1962SC945 .

35. In State of Madhya Pradesh v. Hiralal, : AIR1959MP93 , M. Hidayatullah, C.J. (as he then was). was concerned with a case under the Essential Supplies (Temporary Powers) Act. 1946. After observing that 'that being a law made by Parliament it did come to an end after the expiry of five years as provided by Article 369 of the Constitution.' the learned Judge observed:

'But there was a saving clause provided in the article itself in the last 14 words namely, 'Except as respect things done or omitted to be done before the expiration thereof' This Art. 369 contains its own saving clause and the full operation of that saving clause is to keep intact not only the savings enacted by sub-section (3) to Section 1 of the Essential Supplies (Temporary Powers) Act, but for purposes of prosecution - both in continuation and to be commenced - the entire Act. The non obstinate clause at the beginning of Art. 369 excludes any consideration arising from any other part of the Constitution.'

36. It is in this connection pertinent to notice the last few words of Article 358, i.e. 'except as respects things done or omitted to be done before the law so ceases to have effect.'

37. These words, according to one view, merely obviate the necessity of enacting an Act of indemnity after the proclamation ceases to operate. It is said that by reason of these words no action will lie for anything done by the State within the scope of Article 358, even after the proclamation ceases to operate.

38. The question posed by Lord Goddard, C.J. and the answer which he gave as extracted above provide a complete answer to any such suggestion. The learned Chief Justice cited an example that 'if after the expiration and action of trepass either to the person or to the property were brought against on officer alleging detention without trial or the taking possession of land against the will of the owner.' the learned Chief Justice says, that 'the officer could plead that, at the time he did the act complained of, it was justified by the law then in force. Accordingly, we do not think that we ought to construe the sub-section as one inserted merely ex major cautela.'

39. The other and better view, as stated earlier, is that these words of Article 358 in reality are a saving clause and the full operation of that saving clause is to keep intact not only the past (from?) any attack or to immunising the officers who were responsible for those acts or omissions, but also to preserve the rights created or obligations incurred and for that purpose the expired Act itself continues in its operation, and consequently the law expired remains alive in regard to proceedings both in continuation and to be commence. In other words, the pending proceedings under the expires Act can be continued or fresh proceedings taken out in regard to rights or obligations arising during the subsistence of the Act. This view obviates the necessity of applying the provisions of Section 6 of the General Clauses Act. The argument that while these words not only provided immunity to the officers but they also preserve the proceedings already commenced before the expiry of the Act but do not preserve the initiation of fresh proceedings lacks coherence and logic. If the pending proceedings are saved because of these words and without the assistance of Section 6 of the General Clauses Act, then one may ask as to why the fresh proceeding relating to, offences committed during the subsistence of the Act or to rights and obligations which arose then cannot be initiated after the expiry of the Act. When the law continues in spite of its expiry for pending cases, why should it not continue even in regard to the initiation of fresh proceedings in regard to acts done or omitted to be done before its expiry. If that were not so. what object there was in enacting these words? Hidayatullah, C. J.'s observation quoted above is relevant when he says that the entire Act is, which expired, continues even in regard to prosecution to be commenced after its expiry.

40. It is pertinent in this connection to note that if the last few words Article 358 were intended to provide only immunity to the officers. then the absence of such words in Article 359 would mean that this Article does not provide immunity to the officers for the acts or omission coming under Art. 359. Article 359 suspends the right to move the Court for the enforcementof the named fundamental rights although the rights continue to exists. Was it contemplated that indemnity Acts is regard to Article 359 would be passed as and when necessary? We are, however, clear that it could hardly have been intended that laws and executive actions considered necessary in times of War, external expose the State and the Central Authorities to claim for damages or to other claims on the termination of the emergency. Consequently, the last words of Art. 358, which preserve the operation of law, must mean some-thing more than merely throwing round the officers a cloak of immunity.

41. The question which naturally arises is as to why in spite of these words appearing in Article 358 which continues the Act and the words in Section 1 (3)of the Act, the provisions of Section 6 of the General Clauses Act are made applicable The answer which we can think of is that such a provision was made in view of the language used in section 1 (30 which is to that extent different than the one used in Article 358. Section 6 was made applicable to remove any doubt and obviate any objection in that behalf. We have already noticed the observation of Lord Goddard. C.J. when he said 'Had the words of the sub-section been different that what they were they would have indicated confirmation of acts or a ratification of or excuse for omission that had already taken place.' To obviate any misunderstanding or to rule out any said contention that Sec. 6 of the General Clauses Act is made applicable. The usefulness of this device is abundantly proved by the following decision of the Supreme Court.

42. In Mesrs. Rauala Corporation v. Director of Enforcement, criminal Appeals Nos. 18 and 19 of 1969, D.0 2-5-1969/ 23-7-1969 = (Reported in AIR 1970 SC 494) of the Supreme Court, the rule in question read as under:

'In the Defence of India Rules, 1962, Rule 132-A (relating to prohibition of dealings in foreign exchange) shall be omitted except as respects things done or omitted to be done under that rule.'

43. The argument was that after the rule has been omitted, no prosecution in respect of its contravention can be instituted. It was conceded that if prosecution had already been started while Rule 132-A was in force, that prosecution might have been completely continued. The trial court held that 'the language contained in clause (2) of the Defence of India (Amendments) Rules. 1965 can only afford protection action already taken while the rule was inforce, but cannot justify initiation of new proceedings which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceedings after the rule had ceased to exist. On this interpretation, the complaint made for the offence under Rule 132-A (4) of the Defence of India Rules, after 1st April, 1965 when the rule was omitted has to be held invalid.'

44. It is seen that clause (2) did not contain any words which would attract the provisions of Section 6 of the General Clauses Act or create that effect.

45. The Supreme Court considered the decision of the Privy Council in (1947) 1 All ER 205 = 1947 AC 362. The Supreme Court observed:

'That case, however, is distinguishable from the case before us inasmuch as in that case, the saving provision laid down that the operation of the Act itself was not to be affected by the expiry as respects things previously done or omitted to be done. The Act would, therefore, be held to be in operation in respect of acts already committed, so that the conviction could be validly made even after the expiry of the Act in respect of an offence committed before the expiry.'

46. It would immediately be seen that when Article 358 says that any law so made shall, to the extent of the incompetence, cease to have effect as soon as the proclamation ceases to operate, except as respects things done or omitted to be done before the law so ceases to have effect, in truth means that the law so made shall continue to operate as respects things done or omitted to be done before the law ceased to have effect. In the words, it lays down that the operation of any law so made was not t be affected by its expiry as respects things previously done or omitted to be done. The Act in this case, in view of the Supreme Court's decision could be held to be in operations per Article 358 in respect of acts already committed so that the proceedings could be validly initiated even after the expiry of the Act.

47. Section 1 (3) however is negatively worded . It says that, 'its expiry shall not affect anything done or omitted to be done before such expiry.' this language may perhaps led strength to the arguments that the acts done before the expiry of the Act are alone saved but not the operation of the Act expired as respects things done or omitted to be done. That is why with a view of continue the operation of the law thus expired that it is continued as respects things done or omitted to be done. That is why with a view to continue the operation of the law thus expired that it is contend as respects things done or omitted to be done by applying the provisions of Section 6 of the General Clauses Act. If the words 'shall not affect anything done or omitted to be done' alone were there, the decision of the Supreme Court, in so far as Section 1 (3) of the Act is concerned would have governed the case, but by applying Section 6 of the General Clauses act, the expired Act was continued in operation in respect of acts already done or omitted to be done. Thus read, Section 1 (3) produces the same result as is produced by the last words of Art. 358. Under both these provisions, the law so made during the emergency would continue in operation as respects things done or omitted to be done.

48. In this view, it is unnecessary to consider as to whether there was any necessity to make such a provision in Section 1(3) of the Act in the presence of the last few words of Article 358.

49. The said Supreme Court decision then considered, : AIR1959MP93 , to which we have made reference and distinguished it on the ground that in that case Section 6 of the General Clauses Act had been made applicable. It was observed 'If Section 6 of the General Clauses Act had been applied, no double this complain against the two accused for the offence punishable under R. 132A of the Defence of India Rules could have been instituted even after the repeal of that rule.'

50. The Supreme Court also distinguished. AIR 1947 FC 38 = 1947 FCR 141, on the ground that 'in that case the prosecution had been started case the prosecution had been started before the Defence of India Act ceased to be in force, and secondly the language introduced in the amended sub-section (4) of Section 1 of the Act had the effect of making applicable the principles laid down in Section of the General Clauses Act, so that a legal proceeding could be instituted even after the repeal of the Act in respect of an offence committed during the time when the Act was in force.'

51. The distinction, therefore, which the Supreme Court makes is that when the operation of the Act is itself preserved as respects things done or omitted to be done, then fresh proceedings can be initiated even after the expiry of the temporary Act, whereas if the provision merely saves the things done or omitted to be done, then, it not only immunizes the Officers for the acts done during the emergency but it saves pending proceedings also. But it does not authorise new or fresh proceedings after the expiry of the temporary Act, unless of course the provisions of Sec. 6 of the General Clauses Act are made applicable or the Act itself provides for such a provision.

52. The above said Supreme Court's decision therefore far from doing any service to the petitioners does distinct disservice to them. We are therefore satisfied that both under Art. 358 as well as under Section 1 (3) of the Act, the operation of the Act itself is not affected by its expiry as respects things previously done or omitted to be done. The rights accrued and the liability incurred are preserved and any investigation, legal proceedings or remedy in regard to them may be instituted, continued or any penalty, forfeiture or punishment may be imposed as if the temporary act was repealed by a Central Act.

53. It is therefore difficult to agree with the view taken by the learned Judge that although the right to recover evaded premia survives the Act, the authorisation to determine the evaded premium expired with the Act. We also find it difficult to agree with the view that if the authorisation had been made in favour of a civil Court, collector or some other authority instead of the authorised officer under Section 7, the right to recovery of evaded premia could have been enforce. Since in our view the entire Act survives with respect to things previously done or omitted to be done during the time when the Act was in force, the authorised officer under Section 7 survives or even authority to designate an officer under Section 7 survives and such an officer can determine the evaded premia and the same can be recovered.

54. It was then contended by Sri P. A. Choudhary that with the expiry of the Act a citizen is free to attack its incompetency under Art. 19(1)(f) of the Constitution. No fresh proceedings to recover any amount from the petitioners can be initiated, according to him, as it will be contrary to Article 19(1)(f).

55. It is true that during a proclamation of emergency Article 19(1)(f) is suspended so that the legislative and executive power of the State is free from the restrictions imposed by Article 19(1)(f). However any law made during emergency ceases to have effect six months after the proclamation is revoked, except as to things done or omitted to be done. Parliament and the State Legislatures to make it otherwise vide Article 358. It is seen that while the principles of Parliamentary democracy and rule of law are kept unimpaired even in times of crisis. Constitution has endowned the executive make law or to take an executive action free from the fetters which Article 19(1)(f) imposes. it cannot be denied that in times of grave national danger even the fundamental rights in regard to property can be interfered with. That is why although the emergency may be over the law may be required to be continued for the purpose of settling all the relevant matters in regard to things done or omitted to be done during the emergency. Article 358 itself provides for such operation of a law made during the emergency. The result of which is that in so far as the continuation of the law so made is concerned. Article 19(1)(f) would continue to be in suspension with respect to things done or omitted to be done before such law ceases to have effect. No citizen is therefore permitted to attack the initiation of fresh proceedings under a law during emergency, the operation of which is continued, on the ground that it contravenes Art. 19(1)(f) of the Constitution.

56. We do not find any substance in the argument that a proceeding for the determination of evaded premia would be violative of Article 31 of the Constitution. The Act does not in our view, suffer from any infirmity on the ground. The evaded premia relates to a period covered by a voluntary insurance policy although the Act in a way makes insurance compulsory. No reasons are shown or any authority cited in support of the argument that the Act which continues to be operative after its expiry for a limited purpose becomes inconsistent with Article 31.

57. We do not find any force in the contention that the provisions of the Act contravene Article 14. The contention was that there is no classification of factories situated on the northern side border contiguous to China or Pakistan where the danger to the factories because of the enemy action was far greater than the factories situated in the southern part of the country. What is ignored in advancing this argument is that because of the aggression from China and Pakisthan the emergency was proclaimed and continued throughout the country on such occasions would be in more danger than the others could have no substance. And part of the country could be involved in the enemy action now a days at any moment. The definitions of 'enemy' and 'emergency' 'risks' must also be borne in mind in this connection. It is true that Article 14 can be attracted in cases where objects, persons or transactions essentially similar are treated dissimilarity or where they are dissimilar are given a uniform treatment. In such cases discrimination may result. It is true that may itself in some cases operate as denial of equality. But can it be said in this regard to factories as suggested in the argument could have been made during emergency when proclamation was made applicable to the whole of India? We do not think that any such classification was permissible. It would not have been in any case reasonable classification and would not have had a rational nexus with the object which the Act in issue seeks to achieve.

58. It was not contended that even if the authorised officer now determines the evaded premia, its recovery would not in fact relate to 'insurance' as the policy given for the relevant period the policy had already expired. it was therefore argued that it was beyond the legislative competence for the Parliament to provide in the Act for the determination and recovery of such amount as it does not fall within the purview of Entry 47, of the Union list which reads 'insurance.'

59. The learned Judge thought that there is considerable for in this submission. But he considered it unnecessary to decide it in view of this conclusion on the other question.

60. Now, it is true that ordinarily insurance is an act of providing against a possible loss by entering into a contract with one who is will in to give assurance, that is, binds himself to make good such a loss, should it occur. In such a contract the chances of benefit are equal to the insured and the insurer. The first actually pays a certain sum and the latter undertakes to pay a larger, if an accident should happen See Wharton's Law Lexicon.

61. In Australian Steamship v. Malcolm. (1915) 19 CLR 298 at p. 327 it is observed: 'Insurance is the act of providing against loss or damage which may be caused by contingent even such as fire marine accident, death and the like.'

62. These observations, as stated earlier, apply generally to insurance made under the Insurance Act. But even in such cases a contract of insurance is considered to be one of uberrima fidei and demands a full disclosure of all facts and circumstances affecting the risk and is vitiated by their non-disclosure whether innocent or fraudulent.

63. There can, however, be different kinds of insurance, whether contractual or statutory. The insurance may be for a term of any period or for life. It may be in regard to life or property. It may be voluntarily done or done because of some statutory provisions. In all such cases, it will be an insurance and nothing else. Any law relating to such insurance would inevitably fall within the ambit of Entry 47 of List I.

64. A legislation under this head would extend to provisions relating to dividends, publication of accounts, a value of policies, standard of policies, prescribing, investing, requiring deposits in money or in bonds preventing rate discrimination, limitation or risk and the lime. See Wynes on legislative and executive powers, page 144.

65. The said Entry is couched in wide terms. And it is now well settled that an Entry in the Constitution list should not be construed in a narrow or pedantic manner and that the construction most beneficial to the widest possible amplitude of its power must be adopted. Any subsidiary or ancillary legislation, which is necessary for the exercise of the power of legislation on the particular subject, necessarily goes with it.

66. What must follows fro above is that the power to determine and collect evaded premia, whether during the subsistence of the policy or of the contract or the statute provides for its determination and collection even after its expiry is included in the term insurance. And we have no doubt that these power provided by the Act fall within the ambit of Entry 47 of List I. It is true that because of a deliberate or unintentional undervaluation of insurable property after the expiry of the period of policy, the insured may be obliged to pay evaded premia without thereafter getting the benefit of any risk which was originally involved. But it is the insured who has to blame himself for such a situation. The statute or even a contract as seen above creates an obligation on the insured to get the property insured for a correct insurable amount. If he fails to discharge that obligation and if the statute makes provision for determination of the correct insurable amount. If he fails to discharge that obligation and if the statute makes provision for determination of the correct insurable value and permits the determination of evaded premia and allows its recovery as arrears of land revenue, we fail to see how these provisions would not relate to the subject of insurance. We do not therefore experience any difficulty in rejecting this contention.

67. We are also not impressed by the argument that the right to recover an evaded premium is not a right accrued within the meaning of Section 6 of the General Clauses Act. The decision relied upon a Director of Public Works v. Ho Po Sand, 1961 Appeal Cases 901 can be distinguished very easily. In that case on the relevant date the lessee did not and could not know whether he would or would not be given a re-building certificate. He had not an accrued right to one, and accordingly had no accrued right to vacant possession of the premises. He had not mere than a hope that a certificate would be given. The grant or refusal or such a certificate was in the discretion of the Director and the lessee concerned could not have claimed it as a matter of right.

68. In the instant case, under Section 11 of the Act read with clause 13 of the scheme and 3rd schedule, the authorised Officer is empowered to determine the amount of evaded premia. After its determination, it would be recovered as arrears of Land revenue. The right to recover an evaded premium is thus a statuary right conferred on the Union Government. It may be that a proceeding to determine the amount evaded may have to be taken, but because of that it will not be correct to argue that the right to recover evaded premia is dependent upon the discretion of the authorised officer or that it is merely a hope of the Central Government to get the amount determined and not a right accrued. The right is there. What is required under alone is done by the authorised officer. Even assuming that in some proceedings the claim of the union may not be accepted by the authorised officer, but that hardly alters the real situation. If there are evaded premia, there is a right accrued which is prescribed and can be enforced even after the expiry of the Act.

69. The last contention raised was that Section 3 (3) (c) of the Act is an excessive piece of delegated legislation. It is already seem that under that provision the Central Government is empowered to prepared a scheme to secure that any premium under a policy is payable at a rate not exceeding 3 % per annum of the sum insured as may be specified in the scheme. We have already noticed that the period of insurance is restricted to a quarter. This rate of premium is fixed by the Central Government for every quarter after consideration of the existence of real risk, political situation and various other factors. The rate can in no case go beyond 3% and if fact it does not seem to have exceeded 1% under the various notifications that starting with the rates of premium at twenty five paise per hundred rupees or part thereof the Emergency Risks (Factories) Insurance scheme and fifteen paise per hundred rupees or part thereof of the value of goods insurable under the Emergency Risks (Goods) Insurance Scheme for the first quarter of 1963, the rates of premium were gradually scaled down for the 2nd, 3rd and 4th quarter of 1963, those for the last quarter being ten paise for factory assets and six paise for goods. Having regard to the fact that there was no real risk the Central Government reduced the premium to nil in respect of policies in force as on 31st December 1963 and retained only nominal premia rates not exceeding ten paise per hundred rupees for factories' assets and six paise per hundred rupees for goods, for those becoming insurable for the first time on or after 1-1-1964 and for any increase in the value of insurable assets which had been insured earlier. The actual rates of premium were fixed at ten paise per hundred rupees for goods subject to the payment of a maximum of rupees twenty-five in each case, for the quarter commencing from 1st October, 1964. In respect of the policies in force as on 31-12-1963, where there was no increase in the value of the insured assets, no premium was payable but the cover of insurance was automatically extended. The aforesaid rates seem to have been continued upto 31st August, 1965. As a result of Pakistani Aggression, the Central Government fixed the rates per quarter at fifteen paise and ten paise per hundred rupees or part thereof respectively for the factories assets and goods, but the premia was payable at one third of these rates for the month of September 1965. From the 1st April, 1966, the effective rates have again been reduced to 'nil' and the same nominal rates introduced for the quarter January - March 1964 have been reimposed.

70. It will thus be seen that although a ceiling of 3% is fixed in the Act, in effect it never went beyond as stated earlier 1% in certain cases. But normally it never went beyond 25 paise per annum per hundred rupees.

71. In W. A. No. 125 of 1968 and W. Ps. Nos. 3701 of 1967, 1116 and 1439 of 1968, D/- 6-3-1970 (Andhra Pra), we had occasion to consider in detail permissible limits of delegated legislation. We have laid down certain principles for testing whether a particular piece of delegated legislation suffers from the vice of excessive delegation. It is not necessary to repeat what all was said there here. it is enough to say that if we keep in view those principles, it would not be difficult to reach the conclusion that the provision in question does not suffer from the vice of excessive delegation. First of all, the maximum is prescribed by the Parliament and secondly the authority is given to the Central Government. It is also seen that any scheme prepare under the Act or, notification issued, has to be laid on the table of both the Houses has retained with itself the poser to annual or modify or even not to bring the scheme into force. The power of judicial review always exists and if it is found that a particular rate is fixed unreasonably in the sense in which that term is used in administratively law, it can always be struck down. We have already noticed that it does not appear to be the intention of the legislature to make the Emergency Risks Insurance Acts a measure of fiscal levy. The Act, the Scheme and the Third Schedule in our view, not only prescribe the standard but provide sufficient guidance for the exercise of the delegated legislation. The safeguards and control serve as effective check on the exercise of the said delegated power. In these circumstances we are not satisfied that the impugned provisions suffer from the infirmity of excessive delegation.

72. The result of the foregoing is that the authorised officer is entitled to determine the evaded premia under Section 11 read with clause 13 of the scheme and the Third Schedule of the Act. But before he does so, he is bound to issue and serve notices upon the concerned persons and after providing them reasonable opportunity of being heard according to the provisions of the Act, Scheme and Third Schedule dispose of the claims. Admittedly, the notices issued in these cases are not notices issued by the authorised officer for the purpose of determining the evaded premia; and it is plaint that before such determination is made, no amount can be unilaterally determined by an other officer which can be recovered s arrears of land revenue. The same observation applies to the cases under the Goods Act. We are assured by the learned Advocate General who appeared for the Central Government that the authorised officers would issue proper notices impugned in the several writ petitions which were issued was not further pressed.

73. Subject to the aforesaid observation, the writ appeals are allowed and the writ petitions are dismissed with costs Advocate's fee Rs. 100/- in each of the appeals and in each of the writ petitions.

74. Order accordingly.


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