1. The petitioner is a commission agent dealing in grain. He has been served with a notice dated April 22, 1970, under Section 11 of the Emergency Risks (Goods) Insurance Act, 1962. The notice has been issued by the Chief Enforcement Officer, Emergency Risks Insurance Scheme, for the purpose of verifying whether the petitioner had complied with the requirements of that Act and the Scheme framed thereunder and for the examination of his emergency risks insurance policy. On April 22, 1970, the Chief Enforcement Officer served another notice under Section 11 of the Act requiring the petitioner to produce a number of documents.
2. In Writ Petition No. 2262 of 1970, the petitioner, who carries on the same business, has received similar notices from the Chief Enforcement Officer.
3. In Writ Petition No. 2996 of 1970, the petitioner, who is also a commission agent in the grain market, was served with a notice dated April 29, 1970, by the Chief Enforcement Officer pointing out that a cheque issued by the petitioner in payment of the premium due on certain emergency risks insurance policies had been dishonoured. The petitioner was charged with cheating the Government and was asked to show cause why criminal proceedings should not be initiated against him. On June 29, 1970, the Chief Enforcement Officer made an order under Section 8(1) of the Act determining an amount of Rs. 477 as emergency risks insurance premia, payment of which had been evaded by the petitioner for the quarters comprised in the period commencing April 1, 1963, to December 31, 1967.
4. In Writ Petition No. 2997 of 1970, the facts are similar to those in Writ Petition No. 2996 of 1970, except that it does not appear that any final determination has yet been made under Section 8(1) of the Act.
5. In Writ Petition No. 2998 of 1970 the facts are similar to those in Writ Petition No. 2262 of 1970.
6. In Writ Petition No. 3075 of 1970 the position is similar to that obtaining in Writ Petition No. 2997 of 1970.
7. The several petitioners contend that no action can now be initiated under the Emergency Risks.(Goods) Insurance Act, 1962, because the Act was a temporary statute and has already expired.
8. Upon the invasion of the northern frontier of India by the Chinese military forces, the President of India issued a proclamation under Article 352(1) of the Constitution, declaring that a grave emergency existed threatening the security of India. The proclamation of emergency continued in force until revoked under Article 352(2) of the Constitution, by a subsequent proclamation issued on January 10, 1968.
9. In order to make provision for the insurance of goods in India against damage by enemy action during the period of the emergency, Parliament enacted the Emergency Risks (Goods) Insurance Act, 1962. The material provisions may be noticed. Section 3 specifies the goods insurable under the Act. Section 5 empowers the Central Government to put into operation a scheme whereby the Government would undertake the liability of insurance against emergency risks. Section 7 prohibits a person from carrying on business in India, while the scheme is in operation, as a seller or supplier of goods unless in respect of insurable goods owned by him in the course of that business there is in force an insurance policy against emergency risks issued in accordance with the scheme. The prohibition does not extend to persons whose insurable goods do not exceed Rs. 30,000 in value. Contravention of the prohibition is punishable with fine. Section 8 provides:
'8. (1) Without prejudice to the provisions of Sub-section (2) of Section 7, where any person has failed to insure as, or to the full amount, required by this Act, and has thereby evaded 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 an arrear of land revenue and shall be a first charge on the goods in respect of which the default was made.
(2) 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.'
10. Section 11 confers power upon the Central Government to obtain information for the purpose of ascertaining whether or not the requirements of the Act have been complied with. We are not concerned with the remaining provisions.
11. The Emergency Risks (Goods) Insurance Scheme was put into operation by the Central Government with effect from January 1, 1963. By paragraph 3 of the Scheme the Central Government undertook in relation to persons carrying on business in India as sellers or suppliers of goods the liability of insurance against emergency risks in respect of goods insurable under the Act. Under paragraph 4 every person carrying on such business was obliged to take out an insurance policy against emergency risks except where the insurable value of the goods in any one presidency town or district did not exceed Rs. 30,000. Paragraph 8 provided that every application for insurance under the Scheme would be in accordance with the form set out in the First Schedule and would be accompanied by a treasury chalan evidencing payment of the requisite premium. Paragraph 9 declared that the insurable value of goods would be arrived at on the basis of the price prevailing at the time that the insurance policy covering the goods took effect or was intended to take effect. The rate of premium was prescribed by paragraph 10. Under paragraph 11, as soon as an application with the accompanying treasury chalan was received and found to be in order, the Government agent was required to issue an insurance policy. Paragraph 13(1) is important. It provided :
' 13. Date of effect of policies.--(1) Where the policy of insurance is in relation to goods in respect of which the person who is the owner or is deemed to be the owner thereof is compelled to take out a policy of insurance in accordance with the provisions of paragraph 4, the policy shall be issued so as to take effect from the date on which he becomes so liable, if the premium is paid in advance or within seven days of the date on which he became so liable, or from the date of payment of the premium, if the premium is paid after the expiry of seven days from the date on which he becomes so liable.'
12. Paragraph 14, with which we are immediately concerned, reads :
' 14. Failure to pay premium and evasion.--(1) Where any person has failed to pay the premium due from him or to insure as, or to the full amount, required by the Act and has thereby evaded the payment 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 (1) 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 in accordance with the provisions of sub-paragraph (1) or sub-paragraph (2) is fully recovered, the Government agent shall, as soon as possible after such recovery, send the requisite application forms to the defaulter for completion and return, and a policy or supplementary policy of insurance, according as the recovery is in respect of non-insurance or under-insurance, shall be issued by the Government agent on the receipt of the applications correctly filled in, the said policy or supplementary policy being made out so as to take effect from the date on which the amount was fully recovered.'
13. Upon an analysis of the Act and the Scheme it appears that a statutory obligation is imposed upon a person, carrying on business in India as a seller or supplier of goods, to take out an insurance policy against emergency risks in respect of insurable goods where the insurable value exceeds Rs. 30,000. Pursuant to that obligation, such person must apply for an insurance policy and deposit the requisite premium. Upon such application and payment of premium the Government issues an insurance policy. It is clear from the recitals in the insurance policy, the statutory form being setout in the Second Schedule to the Scheme, that in consideration of the insured paying the premium, the President of India agrees that, if during the period of insurance mentioned in the policy the goods suffer any loss or damage caused by any act comprised in the expression ' emergency risks' as defined in the Act, the President would, where the loss or damage was suffered while the goods affected were situated in India, indemnify the insured against diminution in value caused by that loss or damage. It is clear that on the payment of the premium and an application for an insurance policy, when the Government issues an insurance policy, a contract comes into existence between the Government and the insured. There is a statutory obligation on a person to take out insurance and pursuant to that statutory obligation he enters into a contract with the Government under which he pays the premium and the Government issues an insurance policy undertaking to indemnify him against loss or damage.
14. Admittedly, the action contemplated by the Chief Enforcement Officer against the petitioners was under Section 8 of the Act. The petitioners contend that, inasmuch as the Act expired with the revocation of the proclamation of emergency, no action under the Act can now be taken. The question, therefore, is whether it can
15. Section 8 contemplates the recovery of premium the payment of which has been evaded. In other words, it contemplates the payment of premium which a person was liable to pay pursuant to Section 7 of the Act and which he has failed to pay. The Scheme makes detailed provision in paragraph 14 for the procedure to be followed. Sub-paragraph (1) provides for the determination of the amount which would have been paid as premium if the payment had not been evaded. Sub-paragraph (3) requires that after the evaded amount so determined has been fully recovered the Government agent must forthwith send the requisite application form to the defaulter for completion and return, and on receipt of the application, he must issue an insurance policy. The insurance policy takes effect from the date on which the amount was fully recovered. Now, it is clear that the insurance policy must relate to a period which has expired, either wholly or in part. It may also be that the goods covered by the policy may have already been sold or supplied by the insured. Nevertheless, the insurance policy covers the emergency risks in the sense that any diminution in the value of the goods during the period covered by the policy caused by loss or damage by an act comprised in the expression 'emergency risks' will entitle the insured to be indemnified by the Government. It is immaterial that in some cases the period has expired and the goods never suffer any loss or damage during that period, so that no risk in the usual sense can possibly be said to be in contemplation when the insurance policy is issued. In those cases, it would seem that the issue of an insurance policy is a meaningless orunnecessary act. But regard must be had to the object of Section 8, which is to recover the premium the payment of which has been evaded. The Act and the Scheme created an absolute obligation on persons liable under it to take out insurance. Any attempt to avoid the statutory obligation was intended to be foiled by enacting Section 8. The intention appears to be to put the insured in the same position which he would have occupied if he had applied for an insurance policy from the very outset as the law intended him to. In its practical consequences, an insurance policy issued under paragraph 14 of the Scheme stands on the same footing as an insurance policy issued under paragraph 11 of the Scheme, the essential difference between them lying only with regard to the date on which they take effect.
16. It is urged on behalf of the petitioners that while Section 8 of the Act and paragraph 14 of the Scheme could have been applied so long as the Act was in force, they cannot be invoked upon the expiry of the Act.
17. It is now settled law that, unless a temporary Act contains some special provision to the contrary, after it has expired no proceeding can be taken under it and it ceases to have any further effect. The legislature may expressly insert some special provision stipulating that, even after the temporary Act expires, its operation and impact may be saved in relation to particular matters. The scope of such operation and effect is a matter of construction. The law in this respect was propounded as long ago as Steavenson v. Oliver,  8 M. & W. 234 ; 151 E.R. 1024, 1026-7 per Parker J. .
18. There can be no dispute that the Emergency Risks (Goods) Insurance Act, 1962, is a temporary Act. But Section 1(3) provides :
' It shall remain in force during the period of operation of the proclamation of emergency issued on the 26th October, 1962, and for such further period as the Central Government may, by notification in the official gazette, declare to be the period of emergency for the purposes of this Act, but its expiry shall not affect anything done or omitted to be done before such expiry and Section 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.'
19. Pursuant to the first part of Section 1(3) the Act ceased to be in force on January 10, 1968, when the proclamation of emergency was revoked. Admittedly, there is no notification by the Central Government extending the period during which the Act remained in force. But the second part of Section 1(3) contains two provisions. It declares that the expiry of the Act shall not affect anything done or omitted to be done before such expiry. It also provides that Section 6 of the General Clauses Act, 1897, shall apply on the expiry of the Act as if it had been repealed by the Central Act. The first provision relates to all those acts and proceedings which were taken while the Act was in force. It ensures that their validity will not be effected by the expiry of the Act. The scope of that provision, however, stops there. It does not sanction the taking of fresh action or proceeding under the Act after its expiry and, therefore, the second provision was enacted. Section 6 of the General Clauses Act has been applied. The result is that the expiry of the Emergency Risks (Goods) Insurance Act does not ' affect any right, privilege, obligation or liability acquired, accrued or incurred ' under it. While the Act was in force the petitioners incurred a liability to be proceeded against under Section 8 and paragraph 14. That liability was not affected when the Act expired. It continued thereafter. The Act continued to operate in respect of such liability although otherwise it had expired.
20. The field over which saving provisions of the nature enacted in the second part of Section 1(3) operate have been the subject of judicial consideration over the years. The first provision envisages a category to which Jugmendar Das v. State : AIR1951All703 and Rayala Corporation v. Director of Enforcement, A.I.R. 1970 S.C. 494 belong. They are cases where the expiry of the Act does not affect things done or omitted to be done before such expiry. In other words, the expiry of the Act does not affect the continued validity and status of what was done or commenced while the Act was in force, and any proceeding commenced could be continued as if the Act had not expired. The second provision in Section 1(3), which brings into play Section 6 of the General Clauses Act, contemplates such cases as J.K. Gas Plant . v. King Emperor,  F.C.R. 141 ; A.I.R. 1947 F.C. 38 and State of Madhya Pradesh v. Hiralal Sutwala : AIR1959MP93 . Those cases proceeded to lay down that by reason of Section 6 being applied the liability incurred under a temporary Act continued to subsist upon its expiry, and proceedings could be commenced to give effect to that liability. In adopting this view the learned judges were influenced by the exposition of the law by the Court of Appeal in R. v. Wicks,  2 All E.R. 529 (C.C.A.) which was affirmed by the House of Lords in Wicks v. Director of Public Prosecutions,  A.C. 362 ;  1 All E.R. 205 (H.L.) .
21. The distinction between the two categories of cases was carefully brought out by the Supreme Court in Rayala Corporation . The petitioner there was said to have contravened Rule 132A of the Defence of India Rules. When proceedings for such contravention were taken against him, he raised the plea that Rule 132A had already been deleted from the rules and no proceeding could be commenced now. The Director of Enforcement relied upon Wicks, Hiralal Sutwala and J.K. Gas Plant . Specifically dealing with the decision in Wicks 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 that Act itself was not to be affected by the expiry as respects things previously done or omitted to be done. The Act could, 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. In the case before us the operation of Rule 132A of the Defence of India Rules has not been continued after its omission. The language used in the notification only affords protection to things already done under the rule, so that, it cannot permit further application of that rule by instituting a new prosecution in respect of something already done.'
22. It will be noticed that a distinction has been maintained between the two positions. One is where the validity of something done under the Act while it was in force has been saved after its expiry. The other is where the Act is kept alive for certain purposes even though otherwise it has ceased to operate. The distinction was emphasised when the Supreme Court further observed in Rayala Corporation :
' If Section 6 of the General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132A of the Defence of India Rules could have been instituted even after the repeal of that rule.'
23. And, while referring to J.K. Gas Plant ., it pointed out:
'...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 6 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. '
24. In the case before us, we are dealing with a provision, namely, Section 1(3) of the Emergency Risks (Goods) Insurance Act, 1962, which, apart from other things, provides for the application of Section 6 of the General Clauses Act. By virtue of that provision, the appropriate authority is competent to take proceedings against the petitioners under Section 8 and paragraph 14, on the basis that the Act continues to operate for the purpose of such proceeding although otherwise it may have expired. In our judgment, the proceedings have been validly commenced and are not incompetent. We are supported in this view by the recent decision of the Andhra Pradesh High Court in Union of India v. Thammana Sitaramanjaneyulu, Writ Appeals Nos. 620 and 621 of 1969 decided by Ekbote and Venkateshwara Rao, JJ. on March 12, 1970.-- 41 Comp. Cas. 1030.
25. The petitions fail and are dismissed with costs.