AMADALAVALASA COOPERATIVE. AGRICULTURAL & INDUSTRIAL SOCIETY LTD. & ANOTHER versus UNION OF INDIA & ANOTHER

Citation: [1976] 2 S.C.R. 731 · Decided: 17-11-1975 · Supreme Court of India · Bench: A.N. RAY · Disposal: Case Partly allowed

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Judgment (excerpt)

731 
AMADALAVALASA COOPERATIVE. AGRICULTURAL & 
INDUSTRIAL SOCIETY LTD. & ANOTHER 
v. 
UNION OF INDIA & ANOTHER 
November 17, 1975 
[A. N. RAY, C.J., K. K. MATHEW AND N. L. UNTWALIA, JJ.] 
Constitution of lndia, Art. 19(1) (f) (g) 31 (l )-359~Proclamation of Emer-
gency-Whether Statutes made during Emergency can be challenged under 
Article 19-Whether liability created during emergency by statutes violating 
Art. 19 can be enforced after the revocatidn of emergency-General Clauses Act, 
_sec. 6-Emergency Risks (Goods) Insurance 
Act, 
1962-Emergency 
Risks 
(Factories) insurance Act, 1962-Liability to pay deficit premium depend-
ent 011 quantification of evcded [JJ'emium-Whether liability to pay deficit pre-
miwn conditioned by insurer"s ability 
to 
issue a supplementary 
po/icy-
Distinction between a compulsory and voluntary insurance. 
The President of India after the Chinese aggression in 1962, proclaimed 
emergency under Article 3 52 of the Constitution. 
The Parliament passed the 
Eml:!rgency Risks ( Good5) 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 i~ was necessary to make provision for 
reinstating the factories damaged or ruined by enemy action and for reimburs-
ing the 1Q.s5 or damage of goods and. continue the commercial and economic 
activity with a view to stabilize ti)e economy of the counlry. The Acts, there-
fore, 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 immred for a lesser value than 
what was required by the Acts and thereby evaded the payment by way of pre-
mium 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Emergency was revoked by the President on 10-9-1968.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 is~ued to the appellants stating that they evaded payment 
of Emergency Risk Insurance Premia in respect of goods or factories by under-
valuing the goods or factories. 
' 
The a~pellant 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 
the expiry of the Acts there could be no authorised officer to determine the 
quantum of the evaded premia on the basb 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 appeals the said judgment of the Division Bench is challenged. 
The appellants contended : 
1. That the liability to pay the evaded premia was dependent on the ascer-
tainment by the authorised officer of the in5urable 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. 
2. The provisions of the Acts contravened the Articles 14, 19 and 3 J of 
the Constitution. 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
F 
G 
H 
732 
SUPREME COURT REPORTS 
[1976) 2 S.C.R. 
HELD : ( 1) The duty to take out in~urance policy for the full insurable 
value of the fa,ctory 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 provid-
ed. 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 depend· 
ent on the subsequent determination of the full insurable value of the factory or 
goods insured. The decision in the case of Ekambarappa v. 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 

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