ition No 461 of 1971
Under article 32 of the Constitution of India AND Civil Appeals Nos 506 510 842 844  1710 1713 of 1971 From the Judgment and order dated the 12 3 1970 and 27 4 1971 of the Andhra Pradesh High Court in WP Nos
360 364 of 1970 4365 436669 270471 and 295 297 298 30170 respectively
AND Civil Appeals Nos 2319 to 2354 of 1972 From the Judgment and order dated the 24 2 1971 of The Madras High Court in Writ Petitions Nos 1794 2544 2563 2570
733 2598 2600 2634 2635 2636 2642 2643 2644 2764 2795 2806
2807 3409 3459 3679 3698 and 3699 of 1969 and 161 162 307 308 1071 1512 1514 1779 2279 2282 2283 2285 3164 3534 and 3535 of 1970 respectively
A V Koteswara Rao and K Rajendra Chowdhary for the Petitioners In WP No 46171
B Sen G section Rama Rao for the Appellants in CAs
506510 and 1710 to 171371
Naunit Lal K Srinivasamurthy and Lalita Kohli for the Appellants In CAs
2319 235472 and for Respondents In CAs Nos
506 to 510 and 842 to 84471
Gopalaratnam and A T M Sampath for the Respondents In CAs
2328 2332 2343 and 233772
B Sen section Gopalakrishnan Mrs for Respondents In CAs
2323 2327 2331 2335 36 2342 and 2344 4772
The Judgment of the Court was delivered by MATHEW J
We first take up for consideration Civil Appeals Nos
506 510 of 1971
The appellants in these appeals filed writ petitions before the Andhra Pradesh High Court questioning the validity of notices issued by the 2nd respondent therein under the Emergency Risks Goods insurance Act Act 62 of 1962 and the Emergency Risks Factories Insurance Act Act 63 of 1962 hereinafter referred to as the Acts collectively and individually as the Goods Act  and the Factories Act  respectively
The impugned notices stated that the appellants had evaded payments of emergency risks insurance premia in respect of goods or factories is the case may be by undervaluing the goods or factories for the purpose of insuring them under the Acts
A learned Single Judge of the High Court allowed the writ petitions on the ground that after the expiry of the Acts there could be no authorized officer to determine the quantum of the evaded premia on the basis of the correct value of the goods or factories
Appeals were filed against the orders and a Division Bench of the Court by a common judgment held that the liability to pay the evaded premia arose during the currency of the Acts and that the extent of the liability could be ascertained by authorized officer even after the expiry of the Acts and allowed the appeals
These appeals are directed against the common judgment
The President of India after the Chinese aggression in October 1962 proclaimed an Emergency under Article 352 of the Constitution on 26 10 1962
The proclamation was revoked by the President on 10 1 1968
The Acts came into force with effect from 1 1 1963
The Acts were in substance similar to War Risks Insurance Acts which were in force in the United Kingdom during the Second World 734 War
It was realised after the Chinese aggression that it was necessary to make provision if possible on war footing for reinstating the factories damaged or ruined by enemy action and for reimbursing the loss or damage of goods and continue the commercial and economic activity with a view to stabilize the economy of the country
In view of the magnitude of the task no private agency in the field of insurance could have undertaken it
By the Acts the Central Government undertook the task of insuring factories and goods against loss damage sustained by enemy action
The Acts in substance provided for compulsory insurance against emergency risks of every person carrying on business as a seller or supplier of goods in respect of the insurable goods which were from time to time owned or deemed to have been 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 exceeded Rs 30000 and of all factories falling within the purview of the Factories 1948
The schemes framed under the Acts provided for procedural matters relating to the mode of valuation of the insurable goods and assets receipt of applications for the issue of policies payment of premium the terms and conditions attaching to such policies and settlement of claims and other matters
The provisions of the two Acts were more or less similar
We would now refer to certain provisions of the Factories
Act 
Under section 13 of that Act it was provided that the Act would 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 might declare to be the period of emergency for the purpose of the Act
It was also provided in that section that the expiry of the Act shall not affect anything done or omitted to be done before such expiry and section 6 of the  shall apply upon the expiry of the Act as if it were repealed by a Central Act
Section 2f of that Act defined insurable value  of property as the value of the property as ascertained for the purpose of insurance under the Act
Section 2j defined quarter  as meaning a period of three months commencing on the first day of January April July or October and section 2i defined emergency risks 
Section 3 of that Act empowered the Central Government to put into operation a scheme called the Emergency Risk Factories Insurance Scheme where by the Central Government would undertake in relation to factories the liability of insuring property against emergency risks
Under section 33 a the liability of the Central Government as insurer did not extend to more than 80 per cent of the insurable value of the property insurable
Under section 33 c the premium under a policy was payable at a rate not exceeding 3 per cent per annum of the sum insured as may be specified in the scheme
Section 37 enjoined that every scheme shall be laid before each House of Parliament for a total period of thirty days
735 Section 51 said that while a scheme was in operation every owner of a factory shall take out a policy of insurance against emergency risk issued in accordance with the scheme for a sum not less than the insurable value of the property and if any owner of factory failed to fulfil the obligation under section 51 and failed to pay the premium on the policy which was subsequently due he was liable to be convicted of an offence under section 54 punishable with fine and that would be without prejudice to any other penalty or liability incurred in consequence of the failure
Section 6 placed restrictions on carrying on certain insurance business
By section 7 the Central Government was authorised to create an Emergency Risks Factories Insurance Fund
The Central Government was authorized under section 8 to require the owner or occupier to furnish any document or information to a person authorized by it
Section 11 provided that where any person had failed to insure as or to the full amount required by the Act and had thereby evaded the payment by way of premium of any money which would have had to pay but for such failure an officer authorized in that behalf by the Central Government might determine the amount the payment of which had been so evaded
The amount so determined shall be payable by such person and shall be recoverable from him as provided in sub section 2 of section 11
And sub section 2 stated that any installment of premium due on a policy of insurance issued under the scheme and any amount determined as payable under sub section 1 shall be recoverable as an arrear of land revenue and shall be a first charge on the property in respect of which the default was made
Section 113 stated that a person against whom a determination is made under sub section 1 could within the period specified in the scheme appeal against such determination to the Central Government whose decision therein shall be final
Now we will note a few relevant provisions of the Emergency Risk Factories Insurance Scheme
The Scheme was put into operation with effect from 1 1 1963
In clause 6 of the Scheme it was provided that an application for insurance should be made in the form set out in Part A or Part of the First Schedule thereto according as the application was for the original or supplementary policy and that it should be made to the government agent or such other officer of the government agent as might be authorized by that agent in this behalf and the application must be accompanied by a treasury challan evidencing the payment of the requisite premium into the Government treasury
Clause 7 pertained to the method of valuation of insurable property
It laid down that the insurable value of the property shall be ascertained in accordance with the principles mentioned therein
Clause 8 fixed the rate of premium to be 25 paise for every 100 rupees or any part thereof in respect of the quarter ending 31 3 1963
Clause 9 related to issue of policy and verification of previous policies
Clause 12 mentioned the date from which the policies would be effective
736 Clause 131 provided that where any person had failed to pay any premium due from him or to insure as or to the full amount required by the Act and had 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 and sub clause 2 provided for appeal against the determination
Sub clause 3 of clause 13 stated that where the amount determined under the provisions of sub clause 1 or sub clause 2 was 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 in respect of the property concerned according as the recovery was in respect of non insurance or under insurance shall be issued by the government agent on receipt of the application correctly filled in the said policy being made out so as to take effect from the date the amount was fully recovered
Clause 16 declared that the insured person shall bear 20 per cent of the loss or damage
It also declared that if the total value of the property insured exceeded the sum insured the insured person shall be considered as his own insurer for the excess as well as for 20 per cent of the sum insured
The First Schedule to the Scheme contained forms of applications for a policy or supplementary policy and other matters
The Second Schedule gave a model form of the policy to be Issued
According to the Third Schedule the authorized officer when he k had reason to believe that the owner or occupier of any property insurable under the Act had failed to pay any premium and had 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 or to full amount as 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 insurable value of the property and the amount of premium the payment of which had been evaded
The Schedule made provisions for appeal to the Central Government
The provisions of the Scheme framed under the Goods Act  were practically the same
The appellants challenged the finding of the High Court that the liability to pay the evaded premia arose during the currency of the Acts and contended that the liability itself was dependent on the ascertainment by the authorized officer of the insurable value of the factory or goods in accordance with the Third Schedule and that until the extent of the liability was so ascertained there could be no liability and so section of the was not attracted
In other words the contention was that until the liability of the insured was determined by the authorized officer by ascertaining the correct 737 insurable value in accordance with the provisions of the Third Schedule no liability to pay the evaded premia arose and therefore no liability was incurred before the expiry of the Acts which could be enforced under the provisions of section 6 of the after their expiry
It is clear from the provisions of the Acts that the duty to take out insurance policy for the full insurable value of the factory of goods was mandatory and that the failure to do so was an offence
Besides in the case of failure to insure for the full insurable value provisions were made for recovery of the relative premia
To effectuate this purpose the procedure for determination of the insurable value of the factory or goods and of the premia evaded was also provided
There is no compulsion in a voluntary insurance that the cover should be made for the entire insurable value of the property
The premium collected in a voluntary insurance is related to the quantum of the risk undertaken in the light of the insurable value suggested by the insured
Generally in a voluntary insurance the premium is paid in consideration of the cover provided
In other words premium is paid in order to enable the insurer to indemnify the insured against loss or damage on account of the risk specified
The scheme of insurance envisaged by the Acts was different
There was no element of consensus on the fundamental terms of insurance in the scheme
The liability to take insurance policy for the full insurable value of the factory or goods was compulsory
The terms and conditions of the policy to be taken were governed solely by the provisions of the Acts and the Schemes
It is a mistake to assume that the rights and liabilities of the parties in this statutory scheme were similar to those of a voluntary contract of insurance
If the liability to take the insurance policy for the full insurable value was absolute and if the terms and conditions of insurance were settled by the terms of the statutes and the Schemes read with the Schedules there is no merit in the contention of counsel for the appellants that the obligation of the President as insurer was same as that of an insurer in a contract of voluntary insurance
The liability to pay premia ill case of under valuation was not dependent upon the subsequent determination of the full insurable value of the factory or goods insured
If the factory or goods was under valued when the insurance policy was taken the liability to pay premia on the basis of the full insurable value arose at the time when the policy was taken
That liability was not dependent upon the ascertainment of the full insurable value by the authorized officer in accordance with the Third Schedule
In Ekambarappa vs Excess Profits Tax officerll this Court held that the liability for excess profits tax arose at the close of the accounting year and was not dependent upon its ascertainment by an order of assessment
In the same way the liability to pay the premia on the basis of the full insurable value of the factory or goods insured was incurred Acts and the schemes were in operation The 1  738 liability to pay premia on the basis of the full insurable value of the factory or goods is one thing the quantification of the amount is another
But it was argued that if a policy was taken not for the full in surable value the authorized officer should have ascertained the cor rect insurable value within the quarter and a supplementary policy should have been issued on the basis of the full insurable value also within the quarter so that the liability to pay premia on the basis of the full insurable value might arise
In other words the argument was that the liability to pay premia on the basis of the full insurable value in case of under insurance was conditioned by the capacity on the part of the insurer to issue a supplementary policy within the quarter undertaking to indemnify the insured on the basis of the correct value against emergency risks and as the insurer ceased to have the capacity after the expiry of the quarter and a fortiort after the expiry of the Acts to issue a supplementary policy undertaking the liability to indemnify against loss arising out of emergency risk on the basis of the full insured value the obligation to pay premia on the full insurance value ceased as after the expiry of the Acts there could no longer be any emergency risk
We do not think that the argument is correct
As we said the obligation to insure for full insurable value of the factory or goods was an obligation which was not dependent upon the corresponding liability of the insurer to indemnify
If the owner of factory or goods failed to take insurance policy at the time he ought to have taken it and pay the premia the liability of the insured to pay the premia could be enforced under clause 13 or 14 respectively of the Schemes under the Goods Act  or the Factories Act 
In such a case there would be no obligation on the part of the President to indemnify the insured in case of loss or damage on account of emergency risk the insured did not take out the policy of insurance
The obligation to issue the policy or supplementary policy as the case may be would arise only after payment or recovery of the evaded premia and even then the liability of the insurer under the policy or supplementary policy would be from the date of payment or recovery of the evaded premia
The fact therefore that no supplementary policy was issued before the expiry of the Acts is no answer for not fulfilling the obligation of the insured to pay the premia in accordance with the correct insurable value of the factory or goods as determined under the Third Schedule to the Schemes
Therefore if under 6
S of the Factories Act  or under section 7 of the Goods Act  the liability to pay the premia on the full insurable value was incurred before he expiry of the Act section 6 of the would enable the ascertainment of the extent of liability for the evaded premia by an officer who was authorized when the Act was in force or by an officer authorised after the expiry of the Act
The principle behind section 6 of the is that all the provisions of the Acts would continue in force for purposes of enforcing the liability incurred when the Acts were in force and any investigation legal proceeding remedy may be instituted continued or enforced as if the Acts had not expired
739 The Third Schedule to the Schemes provides for the method of ascertaining the liability in case of under insurance
The provisions of the Third Schedule show that the officer has to give an opportunity to the insured to show cause why he should not be made to pay the premia on the basis of correct value of the factory or goods under valued
It was contended for the petitioner in Writ Petition No 461 of 971 that the provisions of the Acts contravened Articles 14 19 and Article 19 is not available to the petitioner for challenging the validity of the provisions of the Acts as these Acts were passed during the currency of the proclamation of emergency under Article 352
No doubt when the proclamation of emergency was revoked in 1968 the provisions of the Acts became liable to be challenged on the ground that they violated Article 191 but the liability incured for acts or omissions during the currency of the proclamation of emergency cannot be nullified even if it be assumed that the provisions of the Acts were violative of Article 19
In other words liability crated by an act or omission when the Acts were in operation during the currency of the proclamation of emergency cannot be challenged even after the revocation of the proclamation on the ground that the provisions of the Acts violated Article 19
This we think is the principle laid down by this Court after reading Article 358 of the constitution in Makhan Singh vs State of Punjab1
We also think that the procedure for ascertaining the correct in surable value of the factory or goods is reasonable having regard to the provisions of the Third Schedule in that behalf and cannot therefore violate Article 191f or g
The writ petitioner has not shown how the provisions of the Acts violated Article 14
And as regards the contention of the petitioner that the provisions of the Acts violated Article 311 we do not think that the petitioner was deprived of any property without the authority of law
he petitioner has not succeeded in showing law the law which deprived him of his property could be challenged on the ground that it was violative of any of the provisions in of the Constitution We dismiss Writ Petition No 461 of 1971 and Civil Appeals Nos
506 510 842 844 and 1710 1713 of 1971 and allow Civil Appeals Nos
2319 2364 of 1972 without any order as to costs
PHP Appeals partly allowed


Summary:
The President of India after the Chinese aggression in 1962 proclaimed emergency under Article 352 of the Constitution
The Parliament passed the Emergency Risks Goods Insurance Act 1962 and the Emergency Risks Factories Insurance Act 1962 which came into force from 1 1 1963
It was realised after the Chinese aggression that it was necessary to make provision for reinstating the factories damaged or ruined by enemy action and for reimbursing the less or damage of goods and continue the commercial and economic activity with a view to stabilize the economy of the country
The Acts therefore provided for compulsory insurance of factories and goods against loss or damage sustained by enemy action
The Acts further provided that if any person failed to insure the goods or factories or insured for a lesser value than what was required by the Acts and thereby evaded the payment by way of permium such amounts would be payable by such person
Proclamation of Emergency was revoked by the President on 10 9 1968
After the expiry of the acts notices were issued to the appellants stating that they evaded payment of Emergency Risk Insurance Premia in respect of goods or factories by undervaluing the goods or factories
The appellant filed a writ petition in the High Court challenging the said notices which were allowed by a learned Single Judge on the ground that after P the expiry of the Acts there could be no authorised officer to determine the quantum of the evaded premia on the basis of the correct value of the goods or factories
In an appeal the Division Bench of the High Court held that the liability to pay the evaded premia arose during the currency of the Acts and that the extent of the liability could be ascertained by an authorised officer even after the expiry of the Acts
In the present appellant filed said judgment of the Division Bench is challenged
G The appellants contended 1
That the liability to pay the evaded premia was dependent on the ascertainment by the authorised officer of the insurable value of the factory or goods and that until the extent of the liability was so ascertained there can be no liability and therefore section 6 of the General Clauses Act was not attracted
The provisions of the Acts contravened the Articles 14 19 and 31 of the Constitution
732  HELD 1 The duty to take out insurance policy for the full insurable value of the factory or goods was mandatory and that the failure to do so was an offence
To effectuate this purpose the procedure for determination of the insurable value of the factory or goods and of the premium evaded was provided
The scheme of the insurance envisaged by the Acts was different from a voluntary insurance
There was no element of consensus on the fundamental terms of insurance
The liability to take insurance policy for the full insurable value of the factory or goods was compulsory
Terms and conditions of the policy to be taken were governed solely by the provisions of the Acts and the schemes
The liability to pay premia in case of under valuation was not dependent on the subsequent determination of the full insurable value of the factory or goods insured
The decision in the case of Ekambarappa vs Excess Profits Tax officer holding that the liability for excess profits tax arose at the close of the accounting year and was not dependent upon its ascertainment by order of assessment is approved
737 B C D FG 2 The argument that the liability to pay premia on the basis of the full insurable value in case of under insurance was conditioned by the capacity on the part of the insurer to issue a supplementary policy negatived
The obligation to insure for full insurable value was obligation which was not dependent upon corresponding liability of the insurer to indemnity
738 B E 3 Since the liability to pay the premia on the full insurable value was incurred before the expiry of the Act section 6 of the General Clauses Act would enable the ascertainment of the extent of liability for evaded premia by an officer who was authorised when the Act was in force or by an officer authorised after the expiry of the Act
The principle behind section 6 of the General Clauses Act is that all the provisions of the Acts would continue ill force for purposes of enforcing the liability incurred when the Acts were in force and any investigation legal proceeding remedy may be instituted continued or enforced as if the Acts had not expired
738 G H 4 Article 19 is not available to the petitioner as these Acts were passed during the proclamation of Emergency under Article 352
The liability incurred being acts or omissions during the currency of the proclamation of emergency f cannot be nullified even if it be assumed that provisions of the Acts were violative of Article 19
The procedure for ascertaining correct insurable value of the factory or goods is reasonable having regard to the previsions of Third Schedule in that behalf and cannot therefore violate Article 191f or g
739 B D E 5 The petitioners were not deprived of any property without the authority of law
There is therefore
no violation of Article 311
Theprovisions are not violative of any provisions in Part III of the Constitution
739 F