P.JAGANMOHAN REDDY - (1.) THIS is an appeal by certificate under Article 133 (1) (b) of the Constitution against the judgment of the Calcutta High Court which dismissed an appeal from an order of the single Judge of that Court discharging a rule granted by it to the appellants calling on the respondents - the Collector of Customs and others - to show cause why certain orders passed under various sections of the Sea Customs Act and the Foreign Exchange Regulation Act should not be quashed and why a written complaint made by the respondents under the Foreign Exchange Regulations Act and the Case pending in the Court of the Presidency Magistrate, Calcutta, should not be stayed.
(2.) THE appellant is a registered partnership firm carrying on business of importers, exporters, commission agents, brokers and general merchants. It consists of two partners, Girdhari Lal Gupta and Pooran mal Jain On the 25/10/1958, the Cashier of the appellant - Bhagwandeo Tiwari handed over a consignment of wooden case to the Swiss Airways at Dum Dum Airport for being sent by air freight to Hongkong. According to the consignment note, the consignment was being sent by one Ramghawan Singh of Karnani Mansions, Park Street, Calcutta, who in fact was a fictitious person. THE Shipping Bill showed that the consignment purported to contain Reassogolla, Achar, Paper and dried vegetables and it was being sent to one Ishwar Lal, 41 Wyndham St., Hongkong who is also alleged to be a fictitious person. After the consignment was accepted and when the Customs examined it for clearance on 25/10/1958 before its onward despatch of Hongkong, there was found concealed in a specially made secret cavity on the battens nailed to the inner sides of the case, Indian Currency notes of Rupees 51,000/- An investigation was set on foot and on 22/01/1959 a search warrant was issued by the Presidency Magistrate, pursuant to which the Customs Officers caused a search to be made of the office of the firm and the residences of the appellant's partners. In the course of search account books and other documents were seized. This investigation revealed that the Cashier, Bhagwandeo Tiwari had signed the consignment note as Ramchandra which, as the subsequent writings showed, were in his hand even the consignment note appears to have been typed on the typewriter of the appellant firm. It was further alleged that from a comparison of the consignment note with a letter admittedly sent out by the appellant firm and signed by one of its partners. Girdhari Lal Gupta, it became evident that the slip seized from the office of the appellant firm had contained entries, to show that Bhagwandeo Tiwari was the person who actually transported and booked the offending consignment in question and that he made an entry of Rupees 123.73 being the Air freight paid for its transport to Hongkong which was the exact amount shown on the consignment note. Bhagwandoe Tiwari, it was said; had in fact admitted that the account ship was in his handwriting, and that the expenses and charges shown therein were also found in the books of account of the appellant firm. In view of this evidence, the customs authorities served a notice on the appellant firm on 2/04/1959 by which after setting out in detail the aforesaid facts and after pointing out that the exportation of Indian Currency out of India was in contravention of Section 8 (2) of the Foreign Exchange Regulation Act, 1947 read with the Reserve Ban of India Notification dated 27-2-1951 as specified therein , it was asked to show cause and to produce within four days of the receipt of the notice, the permit, if any, of the Reserve Bank of India, for export of the Indian currency and if it did not do so, it would be liable for prosecution under Section 23 (1) read with Section 5 (2) of the Foreign Exchange Regulation Act. On 13-4-1959, the appellant firm replied to the notice denying that the firm and anything to do with the despatch of the box containing currency notes; that it was not aware of any person by the name of Ramghawan Singh or Ishwar Lal, or that Bhagwandeo Tiwari had ever despatched the consignment in question or visited any Air Office in connection therewith. It may be mentioned eo passant that in the High Court, in the reply affidavit affirmed on 11-1-1960 to the affidavit in opposition, Girdhari Lal Gupta, one of the partners of the firm went even to the extent of denying that Bhagwandeo Tiwari was the Cashier of the firm, notwithstanding the fact that in the earlier reply to the show cause notice as also in the writ petition, it was tacitly assumed that he was the Cashier. Apart from the Criminal Prosecutions that were launched against the partners, in the penalty proceedings which were initiated by the aforesaid show cause notice, the firm was held to be knowingly concerned in the offence and accordingly, a fine of Rupees 1,000/- was imposed on it under Section 167 (3) of the Sea Customs Act with a further personal liability of Rupees 1,000/- under Section 167 (37) of the said Act. It was further fined Rupees 51,000/- under Section 167 (8) of the Act read with Section 23 (1) of the Foreign Exchange Regulation Act. Apart from these fines, the currency notes of Rupees 51,000/- which were seized were confiscated. This order was challenged before the single Judge of the Calcutta High Court who, as already stated, had issued a rule but later discharged it. Against that order an appeal was filed but that also was dismissed. Of the four points that were urged in that appeal, the first three have been reiterated before us on behalf of the appellant, viz. (1) Currency notes are not 'goods and therefore the provisions of Sections 167 (3), (8) and (37) of the Sea Customs Act are not attracted: (2) A 'firm' is not a legal entity and therefore it cannot be a 'person' within the meaning of any of the above provisions of law; (3) Even if a firm be a person within the meaning of the said provisions no penalty can be imposed on the firm or any of its members unless it appears from the evidence that the members of the firm had consciously taken any steps to violate the provisions of law; even so only the particular member against whom there is evidence of guilt can be held liable.
(3.) BEFORE dealing with the above contentions it will be necessary to consider the relevant provisions of the Foreign Exchange Regulation Act as also those under the Sea Customs Act. Sessions 8 (1), 23 (1) (a), (b) (1-A0, 23-A, 23-B and 23-C of the Foreign Exchange Regulation Act and Sections 19, 167 (3)(8) and (37) of the Sea Customs Act are relevant for the purpose of this appeal. These are given below:- "8 (1). The Central Government may, by notification in the Official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any,. Prescribed bring or send into India any gold or silver or any currency notes or bank notes or coin whether Indian or Foreign. Explanation - The bringing or sending into any port or place in India of any such Article as aforesaid intended to be taken out of India without being removed from the ship or conveyance in which it is being carried shall nonetheless be deemed to be a bringing, or as the case may be sending into India of that Article for the purposes of this section. (2)xxxxx 23 (1). If any person contravenes the provisions of Section 4. Section 5, Section 9 or sub-section (2) of Sec. 12 or of any rule, direction or order made thereunder, he shall (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more; as may be adjudged by the Director of Enforcement in the manner hereinafter provided. Or (b) upon conviction by a Court be punishable with imprisonment for a term which may extend to two years, or with fine, or with both. 23 (1-A) Whoever contravenes - (a) any of the provisions of this Act or of any rule, direction or order made thereunder other than those referred to in subsection (1) of this section and Section 19 shall, upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both. (b) any direction or order made under S. 19 shall, upon conviction by a Court, be punishable with fine which may extend to two thousand rupees. 23-A. Without prejudice to the provisions of Section 23 or to any other provision contained in this Act, the restrictions imposed by sub-sections (1) and (2) of Section 8, sub-section (1) of Section 12 and Clause (a) of sub-section (1) of Section 13 shall be deemed to have been imposed under S. 19 of the Sea Customs Act, 1878 (8 of 1878), and all the provisions of that Act shall have effect accordingly except that S. 183 thereof shall have effect as if for the word 'shall" therein the word 'may' were substituted. 23-B. Whoever attempts to contravene any of the provisions of this Act or of any rule, direction or order made thereunder shall be deemed to have contravened that provision, rule. direction or order, as the case may be. 23-C (1). If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in-charge of, and was responsible, to the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against the punished accordingly.; Provided that nothing contained in this sub-section shall render any such person liable to punishment, if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub-section (1). Where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly." Sea Customs Act: "19. The Central Government may from time to time, by notification in the official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government. 167. The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively:- JUDGEMENT_553_1_1972Html1.htm A perusal of these provisions would show that no gold or silver or any currency notes or Bank notes or coin, whether Indian or foreign, can be sent to or brought into India, nor can any gold, precious stones or Indian currency, or foreign-exchange other than foreign exchange obtained from an authorised dealer can be sent out of India without the general or special permission of the Reserve Bank of India. These restrictions by virtue of section 23A of the Foreign Exchange Regulation Act are deemed to have been imposed under section 9 of the Sea Customs Act and all the provisions of the latter Act shall have effect accordingly, except section 183 thereof shall have the effect as if for the word 'shall" therein the word 'may' were substituted. What section 23A does is to incorporate by reference the provisions of the Sea Customs Act by deeming the restrictions under section 8 of the Foreign Exchange Regulation Act to be prohibitions and restrictions under section 19 of the Sea Customs Act. The contention is that since section 19 restricts the bringing or taking by Sea or by land goods of any specified description into or out of India, these restrictions are not applicable to the bringing in or taking out the currency notes which are not goods within the meaning of that section, and, therefore, the appellant is not guilty of any contravention of section 19 of the Sea Customs Act and cannot be subjected to the penal provisions of the said Act. This argument, in our view, is misconceived, because firstly, it is a well accepted Legislative practice to incorporate by reference, if the Legislature so chooses, the provisions of some other Act in so far as they are relevant for the purposes of and in furtherance of the scheme and objects of that Act and secondly, that merely because the restrictions specified in section 8 of the Foreign Exchange Regulation Act are deemed to be prohibitions and restrictions under S. 19 of the Sea Customs Act, those prohibitions and restrictions are not necessarily confined to goods alone but must be deemed for the purposes of the Foreign Exchange Regulation Act to include therein restrictions in respect of the articles specified in section 8 thereof. Including currency notes as well. The High Court thought that there is no definition of goods in the General Clauses Act and that contained in the Sale of Goods Act which excludes money is inapplicable inasmuch as that Act was a much later statute than the Sea Customs Act. It is, however, unnecessary to consider this aspect because even if the currency notes are not goods, the restrictions prescribed in section 8 of the Foreign Exchange Act cannot be nullified by section 23A thereof which incorporates section 19 of the Sea Customs Act. We cannot attribute to the Legislature the intention to obliterate one provision by another provision of the same Act. On the provisions of the same Act which is to restrict the import into or export out of India of currency notes and to punish contravention's of such restrictions.;