SIKRI, - (1.) THE Judgment of the court was delivered by-
(2.) THESE five appeals by certificate are directed against thejudgment of the High court of Madras whereby the High court accepted theWrit Appeals against the judgment of Kailasam, J., in Writ PetitionsNos. 1592, 1593, 1594 and 1601 of 1966 and 3948 of 1965, and directed theissue of writs of prohibition to the Union of India, the Collector of CustomsMadras, and the Deputy Collector of Customs, Visakhapatnam, appellantsbefore us, prohibiting them from taking any action in pursuance of certainshow-cause notices issued by the Deputy Collector of Customs, Visakhapatnam.Common questions of law are involved in these appeals and it would sufficeif we give facts in Writ Petition No. 1592 of 1966 out of which Civil AppealNo. 45 of 1968 arises. (2) The relevant facts in that writ petition, for appreciating the pointsraised before us, are as follows : On 17/02/1965, the Deputy Collec-tor of Customs, Visakhapatnam, issued Memorandum No. S/2 I/I 4/65 to M/sRai Bahadur Seth Shreeram Durga Prasad (Private) Ltd., Tumsar and fiveothers, hereinafter referred to as the Shippers. In this Memorandum inbrief, it was stated that the Shippers had entered into a formal contract on 13/10/1965, with M/s Intercontinental Ores Supply Corporation,New York, for the shipment of 20,000.00 tons of Indian Manganese Ore of thegrade of 43% Mn., from the port of Visakhapatnam at a price of 10.67 perunit of Manganese per dry long ton, f.o.b. Visakhapatnam/Bombay. TheShippers exported from the port of Visakhapatnam 3,300 tons of IndianManganese per s.s. 'ALPHEM' under the cover of Shipping Bill No. 187dated 20/03/1967, declaring therein that the export was being made inpursuance of the aforesaid contract. A. G. R. I form was attached. It wasstated that a certain note-book which had been seized earlier in August, 1963disclosed that a sum of 125298.24 was received on 21/04/1957 fromINOSCO, i.e. Intercontinental Ores Supply Corporation, New York the93consignee of the subject goods) the amount having been credited to anaccount in the name of Gangadhar Narsinghdas Agrawal with the TrustCo. of North America, 115, Broadway; New York. It was further allegedin the Memorandum that the Shippers had derived financial benefits inrespect of the subject export over and above those revealed to the CustomsAuthorities and/or other concerned authorities and the information aboutthem was deliberately suppressed. It was further alleged that this consti-tuted a contravention of Section 12(1) of the Foreign Exchange RegulationAct, 1947, read with Notification No. 12(17)-F. 1/47, dated 4/08/1947,as amended, issued thereunder and the Foreign Exchange RegulationRules, 1952. (3) I may mention that by this notification the central government hadprohibited "the export otherwise than by post of any goods either directlyor indirectly to any place outside India other than any of the countries orterritories in the Schedule annexed to this order unless a declaration suppor-ted by such evidence as may be prescribed is furnished by the exporter tothe prescribed authority that the amount representing the full export valueof the goods has been or will within the prescribed period be paid in theprescribed manner." (4) According to the Deputy Collector of Customs, the goods have beenthus exported in contravention of the restrictions and prohibitions imposedundersection 19 of the Sea Customs Act, 1878, read with Section 12(1) andthe Notification No. 12(17)-F. 1/47, dated 4/08/1947, issued thereunder,and Section 23-A of the Foreign Exchange Regulation Act, 1947, whichexportation constituted an offence liable to be punished under Section 167(8)of the Sea Customs Act, 1878. Accordingly, the parties concerned werecalled upon to explain the matter and show cause in writing to the Collectorof Customs, Madras, why a penalty should not be imposed on them/himunder Section 167(8) of the Sea Customs Act, 1878. (5) It appears that a number of such memoranda were issued in respect ofdiverse shipments. Thereupon five petitions were filed in the High court ofMadras. In Writ Petition No. 1592 of 1966 it was alleged that 125 show-cause notices had been issued to the petitioners on various dates and it wasprayed that a writ of prohibition or other appropriate writ, order or directionunder Article 226 of the Constitution of India prohibiting the respondentsfrom taking any action in pursuance of the said show cause memos, maybe issued. (6) Various allegations were made but I need only mention the followingallegations. It was submitted that the petitioners had complied with thestatutory provisions inasmuch as a declaration in statutory form had beenfurnished to the prescribed authority, to wit, the Collector of Customs, andthe Collector of Customs, having passed the consignments for shipment, hadno further right or jurisdiction to take proceedings relating to the consign-ments in question. It was contended that if a declaration is found to befalse, it did not mean that there was a breach of the provisions "of Sec-tion 12(1). (7) In reply it was contended that what was required under Section 12(1)of the Foreign Exchange Regulation Act and the Rules was not any valuebut the actual amount representing the full export value, and a meredeclaration of any value would not be sufficient compliance with theprovisions of Section 12(1) of the Foreign Exchange Act. 94 (8) The learned single Judge, Kailasam, J., dismissed the petitions.Various points were urged but on the point addressed to us he held that thedeclaration to be given by the exporters meant not only that the value of thegoods will be paid in the prescribed manner but also that the full exportvalue of the goods given is the correct value. (9} I may mention that before the division bench the case of the Revenuewas clarified in an affidavit and we may set out para ra 5 thereof : "Since the court has now directed the respondents to file a supple-mental affidavit clarifying the stand taken by the department I staterespectfully that the stand taken by the department both in the showcause memo and here is that the essence of the offence committed by theappellants is that in the declaration required under Section 12(1) of the-Foreign Exchange Regulation Act, they have deliberately given falseparticulars supported by false evidence. By giving this fraudulentdeclaration, they have secured the export of their goods. This fraudvitiates the declaration itself) thereby making the export one in violationof the prohibition contained in Section 12(1) of the Foreign ExchangeRegulation Act." (10) It is not necessary to set out the modus operandi adopted by the peti-tioners but I may mention that it was contended that a scheme was entered intoprior to the actual export and the goods were under-valued deliberately andthe Department was induced to accept their declarations by means of falseevidence and fraudulent suppression of facts. It is suggested that by thismethod a sum of Rs. 3,20,00,000.00 had been suppressed and there has beena failure to repatriate a corresponding amount of foreign exchange whichhad been earned surreptitiously. It was further stated that this scheme wasadopted for all the shipments covered by the show cause notices, and alsofor many other shipments in respect of which show cause notices yet remainto be issued. (11) The division bench on appeal came to the conclusion that as thedeclarations were made under Section 12(1) and as they were scrutinisedby the authorities it is not possible to contend that these goods were eitherexported or attempted to be exported in violation of the prohibitions orrestrictions imposed by law and are, therefore, liable to be confiscated underSection 167(8) -of the Sea Customs Act. The Division Bench further heldthat the alleged fraud on the part of the petitioners did not make anydifference. According to the division bench "if the petitioners had misledthe authorities by false representations or failed thereby to repatriate foreignexchange, by virtue of his obligation under Section 12(2), these are differentoffences for which separate and specific penalties can be imposed." (12) The relevant statutory provisions at the time of exportation were as follows: "The Foreign Exchange Regulation Act, 1947: Section 12(1).- TheCentral government may, by notification in the Official Gazette, prohibitthe taking or sending out by land, sea or air (hereafter in this sectionreferred to as export) of any goods or class of goods specified in thenotification from India directly or indirectly to any place so specifiedunless a declaration supported by such evidence as may be prescribed orso specified, is furnished, by the exporter to the prescribed authority thatthe amount representing the full export value of the goods has been,or will within the prescribed period be, paid in the prescribed manner. 95 (2) Where any export of goods has been made to which a notifi-cation under Ss. (1) applies, no person entitled to sell, or procurethe sale of the said goods shall, except with the permission of the ReserveBank, do or refrain from doing any act with intent to secure that- (a) the sale of the goods is delayed to an extent which is unreason-able having regard to the ordinary course of trade, or (b) payment for the goods is made otherwise than in the pres-cribed manner or does not represent the full amountpayable by the foreign buyer in respect of the goods, subjectto such deductions, if any, as may be allowed by theReserve Bank, or is delayed to such extent as aforesaid : Provided that no proceedings in respect of any contravention ofthis Ss. shall be instituted unless the prescribedperiod has expired and payment for the goods representingthe full amount as aforesaid has not been made in theprescribed manner. (3) Where in relation to any such goods the said period has expiredand the goods have not been sold and payment therefor has not beenmade as aforesaid, the Reserve Bank may give to any person entitled tosell the goods or to procure the sale thereof, such directions as appear toit to be expedient for the purpose of securing the sale of the goods andpayment therefor as aforesaid, and without prejudice to the generality ofthe foregoing provision, may direct that the goods shall be assigned to theCentral government or to a person specified in the directions. (4) Where any goods are assigned in accordance with sub-section(3), the central government shall pay to the person assigning them suchsum in consideration of the net sum recovered by or on behalf of theCentral government in respect of the goods as may be determined bythe central government. (5) Where in relation to any such goods the value as stated in theinvoice is less than the amount which in opinion of the Reserve Bankrepresents the full export value of those goods, the Reserve Bank mayissue an order requiring the person holding the shipping documents toretain possession thereof until such time as the exporter of the goods hasmade arrangements for the Reserve Bank or a person authorised by theReserve Bank to receive on behalf of the exporter payment in the pres-cribed manner of an amount which represents in the opinion of theReserve Bank the full export value of the goods. (6) For the purpose of ensuring compliance with the provisions ofthis section any order or directions made thereunder, the Reserve Bankmay require any person making any export of-goods to which anotifi-cation under Ss. (1) applies to exhibit contracts with his foreignbuyer or other evidence to show that the full amount payable by thesaid buyer in respect of the goods has been, or will within the prescribedperiod be, paid in the prescribed manner. S.22.-No person shall, when complying with any order ordirections under Section 19 or with any requirement under Section 19-Bor when making any application or declaration to any authority orperson for any purpose under this Act, give any information or makeany statement which he knows or has reasonable cause to believe to befalse, or not true, in any material particulars. 96 S.23.--(1) If any person contravenes the provisions ofSection 4, Section 5, Section 9 or Ss. (2) of Section 12 or of anyrule, direction or order made thereunder, he shall- (a) be liable to such penality not exceeding three times the valueof the foreign exchange in respect of which the contra-vention has taken place, or five thousand rupees, which-ever is more, as may be adjudged by the Director ofEnforcement in the manner hereinafter provided) or {b) upon conviction by a court, be punishable with imprison-ment for a term which may extend to two years, or withfine, or with both. (1-A) whoever contravenes- (a) any of the provisions of this Act or of any rule, direction ororder made thereunder, other than those referred to insub-section (1) of this section and Section 19, shall, uponconviction by a court, be punishable with imprisonmentfor a term which may extend to two years, or with fine,or with both; (b) any direction or order made under Section 19 shall, uponconviction by a court, be punishable with fine which mayextend to two thousand rupees. (1-B) Any court trying a contravention under Ss. (1) orsub-section (1-A) and the authority adjudging any contraventionunder clause (a) of Ss. (1) may, if it thinks fit, and inaddition to any sentence or penalty which it may impose for such contra-vention) direct that any currency, security, gold or silver, or goods orany other 'money or property, in respect of which the contravention hastaken place, shall be confiscated to the central government and furtherdirect that the foreign exchange holdings, if any, of the person commit-ting the contravention or any part thereof shall be brought back into Indiaor shall be retained outside India in accordance with the directions madein this behalf. Explanation.-For the purposes of this sub-section, property in respectof which contravention has taken place shall include deposits in a bank,where the said property is converted into such deposits. (2) Notwithstanding anything contained in Section 32 of the Codeof Criminal Procedure, 1898, it shall be lawful for any Magistrate ofthe first class, specially empowered in this behalf by the State Govern-ment, and for any Presidency Magistrate to pass a sentence of fineexceeding two thousand rupees on any person convicted of an offencepunishable under this section. (3) No court shall take cognizance- (a) of any offence punishable under Ss. (1) except uponcomplaint in writing made by the Director of Enforcement,or (b) of any offence punishable under Ss. (1-A) of thissection or under Section 54 of the Indian Income-tax Act,1922, as applied by Section 19 of this Act, except uponcomplaint in writing made by the Director of Enforcementor any officer authorised in this behalf by the central97Government or the Reserve Bank by a general or specialorder: Provided that where any such offence is the contravention of anyof the provisions of this Act or any rule, direction or ordermade thereunder which prohibits the doing of an act with-out permission, no such complaint shall be made unless theperson accused of the offence has been given an opportu-nity of showing that he had such permission. (4) Nothing in the first proviso to Section 188 of the Code ofCriminal Procedure, 1898, shall apply to any offence punishable underthis section. S.23-A.-Without prejudice to any provisions of Section 23or to any other provisions contained in this Act, the restrictions imposedby Ss. (1) and (2) of Section 8, Ss. (1) of Section 12and clause (a) of Ss. (1) of Section 13 shall be deemed to havebeen imposed under Section 19 of the Sea Customs Act, 1879, and allthe provisions of that Act shall have effect accordingly, except thatSection 183 thereof shall have effect as if for the word "shall" thereinthe word "may" were. substituted. THE SEA CUSTOMS ACT, 1878 JUDGEMENT_91_1_1969Html1.htm FOREIGN EXCHANGE REGULATION RULES, 1952 Form nf declaration.-(1) A declaration under Section 12 of the Actshall be in one of the forms set out in the First Schedule as the ReserveBank may by notification in the Gazette of India specify as appropriateto the requirements of a case. (2) Declarations shall be executed in sets of such number as indica-ted on the forms. luthority to whom decimation to be furnished.-(1) The original of thedeclaration shall be furnished to the Collector of Customs : providedthat when export is by post, the original of the declaration shall befurnished to the postal authorities. Copies of the declaration shall be submitted to the authorities and in the manner specified on forms. (3) The documents pertaining to every export passed by the Customsshall within 21 days from the date of the export, be submitted to theauthorished dealer mentioned on the relevant declaration form, unlessthe Reserve Bank, in its discretion, authorises otherwise. Evidence insupport of declaration-(l)The Reserve Bank, or subjectto such directions, if any, as may be given by the Reserve Bank, theCollector of Customs or the postal authorities, may, to satisfy themselvesof due compliance with Section 12 of the Act, require such evidence insupport of the declaration as may satisfy them that the exporter is aperson resident in India, or has a place of business in India. (2) The Reserve Bank, or subject to such directions, if any, as maybe given by the Reserve Bank, the Collector of Customs, or the Postalauthorities may require any exporter to produce in support of thedeclaration such evidence as may be in his possession or power to satisfythem. (i) .... (ii) that the invoice value stated in the declaration is the full value of the goods ; and (iii) that the amount representing the full export value of thegoods has been or will be paid to the exporter. Explana-tion......" 99 (13) The points which have emerged from the discussion at the Barand which require determination may be formulated thus : (1) What is the meaning of the expression "restrictions imposed bysub-section (1) of Section 12" occurring in Section 23-A of theExchange Act ? Can other S. of the Exchange Act belooked at for determining the ambit of the restrictions imposedby Section 12(1) ? Do restrictions imposed under the Rulesmade under the Exchange Act and relating to Section 12(1)come within the meaning of this expression ? (2) What is the true meaning of the words "declaration supportedby such evidence as may be prescribed or so specified is furni-shed by the exporter to the prescribed authortity that theamount representing the full export value of goods has beenor will within the prescribed period be paid in the prescribedmanner" ? Is it necessary that the declaration shall be madehonestly or in good faith ? Should it disclose the true exportvalue ? Is it a breach of the Ss. if a declaration ismade honestly but happens to show incorrect export value to asmall but not material extent ? Does not a deliberately falsedeclaration contravene the provisions of Section 12(1) ? (3) If an action is a contravention of Section 12(1) and otherprovisions of the Exchange Act, e.g., S. 22)23,12(2),12(3) and 12(5), was it the intention that it should be treatedas a contravention of Section 12(1) ? (14) Before dealing with point (1) mentioned above, a few preliminaryobservations may be made. I have to construe an Act which was enacted inthe interest of the national economy. A deliberate large-scale contraventionof its provisions would affect the interests of every man, woman and childin the country. Such an Act, I apprehend, should be construed so as tomake it workable ; it should, however, receive a fair construction, doing noviolence to the language employed by the Legislature. It was said that iftwo constructions are possible the one that is in favour of the subject shouldbe accepted. It is not necessary to pronounce on this proposition for I havecome to the conclusion that there is one true construction of Section 12(1).But I should not be taken to be assenting to this proposition in so far as itis applicable to an enactment like the Exchange Act, for no subject has aright to sabotage the national economy. (15) Coming to the first point, I find that the following words of LordBlackburn express my views as to how the construction of Section 23A shouldbe approached. He was dealing with a case where a single section of an Actof Parliament has been introduced into another Act. He said in The Mayorof Portsmouth v. Charles Smith : "When a single section of an Act of Parliament is introduced intoanother Act, I think it must be read in the sense which it bore in theoriginal Act from which it is taken, and that consequently it is perfectlylegitimate to refer to all the rest of that Act in order to ascertain whatthe section meant, though those other S. are not incorporated inthe new Act. I do not mean that if there was in the original Act asection not incorporated, which came by the way of a proviso orexception on that which is incorporated, that should be referred to.100 But all others, including the interpretation clause, if there be one, maybe referred to." (16) It seems to me that this is the correct way of looking at Section 23-Aof the Exchange Act for another reason. The restrictions imposed by Sec-tion 12(1) cannot be different for the purpose of the Exchange Act from thatfor the purposes of Section 167(8) of the Sea Customs Act, for a breach of Sec-tion 12(1) may also be punishable under the Exchange Act. In other words,the same contravention may attract penalties under the Sea Customs Act aswell as the Exchange Act, and it would be incongruous to hold that therestrictions imposed by a section are different for different Acts. (17) Then am I entitled to take into account the restrictions imposed bythe Rules made under Section 27 of the Exchange Act ? It seems to me thatrules not referrable to Section 12(1) cannot be taken into account, but anyrestrictions imposed by rules referrable to Section 12(1) must be treated asrestrictions imposed by Section 12(1). Section 12(1) itself contemplates rulesbeing made on three points, i. e. (1) the evidence which is to support thedeclaration, (2} the authority to which the declaration is to be furnished ;and (3) manner of payment. It was said that the words "by Section 12(1)"exclude the restrictions made under the Rules. But though in some contextand scheme of an Act this proposition may be true, the general rule is asstated by Lord Alverstone, C. J., in Wellingdale v. Norris as follows: "If it be said that a regulation is not a provision of an Act, I amof opinion that Rex v. Walker, is an authority against that proposition.I should certainly have been prepared to hold apart from authority that,where a statute enables an authority to make regulations, a regulationmade under the Act becomes for the purpose of obedience or disobediencea provisions of the Act. The regulation is only the machinery by whichParliament has determined whether certain things shall or shall not bedone." (18) THESE observations were approved by the House of Lords in Wicksv. Director of Public Prosecution thus : "There is, ofcourse, no doubt that, when a statute like the Eme-gency Powers (Defence) Art, 1939, enables an authority to make regula-tions, a regulation which is validly made under the Act, i. e. which isintra vires of the regulation-making authority, should be regarded asthough it were itself an enactment. As the court of Criminal Appealhas pointed out in its judgment, that was decided by the DivisionalCourt in Willingdale v. Norris, and it appears to me that that decisionis perfectly correct. Consequently, the charge against the appellanthere was) in effect, that he had committed crimes defined or containedin the Act of Parliament." 19) The court of Criminal Appeals had stated in R. v. Wick , asfollows: "The first observation which the court would make is that they arein complete agreement with the decision of the Divisional court inWillingdale v. Norris. that, where a statute enables an authority to makeregulations, a regulation made under the Act becomes for the purpose101of obedience or disobedience a provision of the Act. The regulation isonly the machinery by which Parliament has determined whether certainthings shall or shall not be done. It is, therefore, clear that the regulationsmust be read as though they were contained in the Act itself. Theyderive their efficacy solely from the Act and accordingly expire withthe Act, but it may be that the Legislature has provided that somerestrictions or consequences shall remain effective notwithstanding theexpiration of the Act." (20) In a recent case, Rathbone v. Bundock the Divisional court follow-ing these cases held that Regulation 89 of the Motor Vehicles (Constructionand Use) Regulations, 1955, was for the purpose of obedience or disobediencea provision of the Road Traffic Act, 1930. (21) In Dr. Indramani Pyarelal Gupta v. W. R. Nathu and Others this courtwas concerned, inter alia, with the interpretation of Section 3(1) of the ForwardContract (Regulation) Act, 1952, which used the words "such duties as maybe assigned by or under this Act". Ayyangar,J., speaking for the majority,observed : "Learned Counsel is undoubtedly right in his submission that apower conferred by a bye-law is not one conferred 'by the Act' for inthe context the expression 'conferred by the Act' would mean 'con-ferred expressly or by necessary implication by the Act itself. .... .Thewords 'under the Act' would, in that context, signify what is not directlyto be found in the statute itself but is conferred or imposed by virtue ofpowers enabling this to be done ; in other words, bye-laws made by asubordinate law-making authority which is empowered to do soby the parent Act. This distinction is thus between what is directlydone by the enactment and what is done indirectly by rule-makingauthorities which are vested with powers in that behalf by the Act.(Vide Hubli Electricity Bombay Ltd. v. Province of Bombay and Narayana-swami Naidu v. Krishna Murthi ." (22) The observations of Subba Rao,J., as he then was, at p. 775,relied upon by the appellants are these : "I would, therefore, construe the words "by or under this Act, or asmay be prescribed" as follows : 'by this Act' applies to powers assignedproprio vigore by the provisions of the Act ; 'under this Act' applies to anassignment made in exercise of an express power conferred under theprovisions of the Act ; and 'may be prescribed' takes in an assignmentmade in exercise of a power conferred under a rule. This construc-tion gives a natural meaning to the plain words used in the sectionand avoids stretching the language of a statutory provision to save anillegal bye-law." (23) In my opinion that case does not assist me because the court wasconstruing the words 'by or under the Act', and Ayyangar, J., specificallydiscussed the meaning of 'by the Act' in the context. (24) Regarding the case of United States v. George R. Eaton relied onappellants' behalf, I find that the Supreme court of the United States ex-plained and distinguished that case in Singer v. United States as follows : "United States v. Eaton turned on its special facts, as United States v. Grimaud emphasizes. It has not been construed to state a fixed principle102that a regulation can never be a 'law' for purposes of criminal prosecu-tions. It may or may not be, depending on the structure of the par-ticular statute. The Eaton case involved a statute which levied a tax oncleomargarine and regulated in detail cleomargarine manufacturers.Section 5 of the statute provided for the keeping of such books andrecords as the secretary of the Treasury might require. But it providedno penalty for non-compliance. Other sections, however, laid downother requirements for manufacturers and prescribed penalties for viola-tions. Section 20 gave the secretary the power to make 'all needfulregulations' for enforcing the Act. A regulation was promulgatedunder Section 20 requiring wholesalers to keep a prescribed record. Theprosecution was for non-compliance with that regulation. Section 18imposed criminal penalties for failure to do any of the things 'requiredby law. ' The court held that the violation of the regulation promul-gated under Section 20 was not anoffence. It reasoned that since Congresshad prescribed penalties for certain acts but not for the failure to keepbooks, the omission could not be supplied by regulation. And Congresshad not added criminal sanctions to the rules promulgated underSection 20 of that Act." (25) I would in this connection prefer to apply the English decisionsreferred to above, as Section 12(1) itself does not impose any restrictions and contemplates certain things to be prescribed. (26) Coming now to the construction of Section 12(1), it seems to me thatwhat it requires is a declaration of some actual figure which according to thedeclarant represents 'the full export value'. Otherwise there is no point inrequiring support of such evidence as may be prescribed. Further it is clear thatsome actual figure has to be mentioned when the exporter declares that hehas received the amount representing the full export value. I apprehendthat the same applies in the case where the amount has not yet been received.The rules make this clear. Rule 5(2) (ii) which requires the invoice valuestated in the declaration to be the full export value of goods, is referrable toSection 12(1) of the Exchange Act and maybe taken to indicate that anactual figure has to be mentioned. It may be an estimate if the goods havenot been sold before the export, but a figure must be indicated. (27) Coming to the crux of the problem, does Section 12(1) by itselfrequire absolutely correct particulars ? It is said that Section 12(1) does notrequire it for Section 22 requires the exporter only to make a declaration"which he knows or has reasonable cause to be false or not true in any materialparticulars." How could it be that if Section 12.1) itself requires absolutelycorrect particulars. Section 22 limits the requirement ? It seems to me thatthere is force in this contention but only to a limited extent. Section 12(1)and the notification, dated 4/08/1947, made under it, impose acondi-tional prohibition. The section confers a power on an exporter to lift thebar by a unilateral declaration. When such a power is conferred on anexporter by a statute, good faith on his part must at least be implied andbe a condition pre-requisite. This construction is necessary in order toprevent abuse of the power given by the Act. (See Maxwell on Interpreta-tion of Statutes, 11th Edition,?. 116). If the exporter makes a deliberatelyfalse declaration he contravenes Section 12(1) because he has not made thestatutory declaration in good faith. It is not necessary to say that thedeclaration becomes anullity because the breach of good faith, a conditionprerequisite, is itself a contravention of the conditional prohibition or restric-tion, within Section 167(8) of the Sea Customs Act, read with Section 23-A103and Section 12(1) of the Exchange Act. Clerical mistakes and mistakesmade bonafide even in respect of material particulars are not within themischief of Section 12(1), but a deliberate falsehood and a deliberate evasionof the provisions of Section 12(1) come within Section 12(1). Otherwise theambit of Section 12(1), read with Section 23-A, would be narrowed to thepoint of extinction. An exporter and persons concerned in the export couldwith impunity give a deliberately false declaration but in apparent compliancewith Section 12(1), and deprive this country of foreign exchange. I cannotgive an interpretation which will make a mockery of the section. But it issaid that other S. of the Exchange Act will take care of such an exporter.He can be prosecuted under Section 23 (1-A), read with Section 22. He canbe sentenced to imprisonment which may extend to two years. He can alsobe fined to an unlimited extent. The Foreign Exchange lost can be retrievedby a court acting under Section 23( 1-B). This may be true that the exporteris liable as stated above. But what about persons concerned in the illegalexport ? It is the persons concerned in the export which in most casesenable the exporter to successfully evade the provisions of the Exchange Act.THESE persons are taken care of only under the Customs Act. If they arecovered by Section 167(8), there is no reason to exclude the exporter himself.It is not unusual to make persons liable both to penalties under the SeaCustoms Act and the Exchange Act. It is indeed conceded that if no declara-tion is given under Section 12(1) and the goods are exported, the exporterand the persons concerned in the export would be liable to be proceeded bothunder Section 167(8) of the Sea Customs Act and the Exchange ControlAct. I can draw no distinction between such anexporter and an exporterwho gives a deliberately false declaration for the purpose of the applicability of Section 167 (8) of the Sea Customs Act. (28) I am not impressed by the argument that the Foreign Exchange Actdeals with the basic policy regarding foreign exchange and it was not theintention to punish offenders who violate foreign exchange restrictions underthe Sea Customs Act. It is-Section 23-A of the Exchange Act which itselfdeems the restrictions imposed under Section 12(1) to have been imposedunder Section 19 of the Sea Customs Act. Not only that, the openingsentence of Section 23-A makes it clear that this is without prejudice toSection 23 and to any other provisions in the Exchange Act. In other words,the provisions of Section 23 and other relevant S. are not affected orlimited. They will have their full operation. (29) The fact that the exporter may be proceeded under Section 12(2)(I may assume that this is so for the purpose of this case) for non-payment ofthe full amount payable by the foreign buyer, or that the Reserve Bank canin the eventualities mentioned in Section 12(5) require the holding up ofshipping document or that the Reserve Bank by exercising powers underSection 12(6) secure contracts and other evidence to discover the full amountpayable, do not throw any light on the construction of Section 23-A and Sec-tion 12(1) except that the Legislature is anxious that the 'full export value'shall be received in this country. Section 23-A, read with Section 12(1) callsin the aid of Customs authorities to achieve the same object, but ropes inalongwith the exporter the persons concerned in the prohibited export. (30) I am not able to appreciate how the existence of Section 167(37),Section 167(72) and Section 167(81) is of any assistance for the purpose ofinterpreting Section 23-A and Section 12(1) of the Exchange Act. It may be-1 do not decide it-that an exporter, like the respondents, will also be liableto be proceeded against under these items of Section 167. 104 (31) Taking the facts as alleged by the Customs authorities to be true, asthey must be taken to be true for the purpose of this application underArticle 226, it seems to me that no case for the issue of a writ of prohibitionhas been made out. In the result the judgment of the Appeal court isreversed and that of the learned Single judge restored. The appellants willhave costs incurred in this court. One hearing fee. (32) ORDER; In accordance with the opinion of the majority, theseappeals are dismissed with costs. One hearing fee. The Judgment of the court was delivered byHEDGE, J.- (33)We had the advantage of studying the judgment just nowdelivered by our brother Sikri, J., but we regret that we are unable to agreewith the conclusions reached by him. After carefully analysing the argu-ments advanced before us we have come to the conclusion that no groundswere made out to interfere with the order of the Appellate bench of theMadras High court. We shall now proceed to give our reasons in supportof our conclusion. (34) The respondents in these appeals are exporters of manganese ore. It issaid that they had exported large quantities of manganese ore after ostensiblycomplying with the formalities of law but in reality they had under-invoicedthe various consignments sent by them and further that they had failedto repatriate foreign exchange of the value of about three crores of rupeesobtained by them as the price of the manganese ore exported. It is saidthat by so doing they had contravened Section 12(1) of the ForeignExchange Regulation Act, 1947 (to be hereinafter referred to as the Act)read with Section 23(A) of that Act and S. 19 and 167(8) of theSea Customs Act. The case for the appellants is that during the searchof the houses of some of the respondents on suspicion that they had hoardedgold, certain documents from the house of some of the respondents wereseized and those documents disclosed the facts set out above. On the basisof the said information the Deputy Collector of Customs, Vishakhapatnamissued several notices to the respondents requiring them to show causewhy action should not be taken against them under the aforementionedprovisions. On receipt of those notices the respondents moved the HighCourt of Madras under Article 226 of the Constitution praying that that courtmay be pleased to quash the show cause notices in question and prohibitthe appellants from taking any further action on the basis of those notices. (35) Those petitions were dismissed by Kailasam.J., on September,1966, but his orders were reversed by the Appellate bench of that court byits Judgment, dated 12/09/1967. The Appellate bench granted thereliefs prayed for by the respondents. It is as against that decision theseappeals have been brought after obtaining the necessary certificates from the High court. (36) The only question that arises for decision in these appeals is whetheron the facts set out in the show cause notices, which facts have to be assumedto be correct for the purpose of these proceedings, the respondents can beheld to have contravened Section 12(1) which reads : "The central government may, by notification in the OfficialGazette, prohibit the taking or sending out by land, sea or air (hereinafterin this section referred to as export) of any goods or class of goodsspecified in the notification from India directly or indirectly to any105place so specified unless a declaration supported by such evidence asmay be prescribed or specified, is furnished by the exporter to theprescribed authority that the amount representing the full export valueof the goods has been, or will within the prescribed period be, paid inthe prescribed manner." (37) On 4/08/1947, the central government issued a notificationprohibiting the export of all goods to any place outside India unless adeclaration supported by such evidence as may be prescribed is furnishedby the exporter to the prescribed authority that the amount representingthe full export value of the goods has been or will within the prescribedperiod be, paid in the prescribed manner. Rule 3 of the Foreign ExchangeRegulation Rules, 1952, framed under Section 27 of the Act provides that adeclaration under Section 12 of the Act shall be in one of the forms set outin the First Schedule as the Reserve Bank may by notification in the OfficialGazette specify as appropriate to the requirements of a case. The form thatis relevant for our present purpose is G.R. 1. Rule 5 empowers theReserve Bank, the Collector of Customs or the postal authorities to requirethe exporter to furnish such evidence in support of the declaration as maysatisfy them, that the exporter is a person resident in India or has a placeof business in India. THESE authorities may also require the exporter toproduce in support of the declaration such evidence as may be in hispossession or power to satisfy them, (i) that the destination stated on thedeclaration is the final place of destination of the goods exported, (ii) thatthe invoice value stated in the declaration is the full export value of thegoods and (iii) that the amount representing the full export value of thegoods has been or will be paid to the exporter. Form G. R.1 stipulatesthat the exporter should furnish the information called for therein. Thereinthe exporter is also required to make the following declaration : "I hereby declare that I am the seller/consignor of the goods inrespect of which this declaration is made and that the particulars givenabove are true and (a) that the invoice value declared is the full exportvalue of the goods and is the same as that contracted with the buyer ; (b)that this is a fair valuation of the goods which are unsold. I/My principals undertake that I/they will deliver to the bankmentioned below the foreign exchange/rupee proceeds resulting fromthe export of these goods or before. ........." (38) It is not denied that the respondents before exporting the goods inquestion had furnished declarations in the prescribed forms. Therein theyhad declared that the full export value of the goods has been or will withinthe prescribed period be paid in the prescribed manner. It is also notdenied that they had furnished to the appropriate authorities the prescribedevidence. The case against them as mentioned earlier, is that they had under-invoiced the goods and failed to repatriate a portion of the foreign exchangeearned by them. It is also alleged that they gave incorrect information intheir declarations. If these allegations are correct which we have toassume to be correct for the purpose of this case, then it is obvious that the declarations given by the respondents do not comply with the requirements of Rule 5. (39) Section 22 of the Act provides that no person when making an appli-cation or declaration to any authority or person for any purpose under the Actshall give any information or make any statement which he knows or hasreasonable cause to believe to be false or not true, in any material particular. 106 (40) Section 23 prescribes that if any person contravenes the provisions ofSection 12 or of any rule, direction or order made thereunder he shall (a) beliable- to such penalty not exceeding three times the value of the foreignexchange in respect of which the contravention has taken place, or five thousandrupees, whichever is more, as may be adjudged by the Director of Enforce-ment in the manner provided in the Act or (b) upon conviction by a court, bepunishable with imprisonment for a term which may extend to two years, orwith fine, or with both. In view of these provisions it was not disputedbefore us that if the information given by the respondents in the afore-mentioned declarations was false to the knowledge of those who madethose declarations or if they had reasonable cause to believe that it was falseor not true in any material particular then they are liable to be dealt withunder Section 23. (41) Ss. (2) of Section 12 provides that- "where any export of goods has been made to which a notificationunder Ss. (1) applies, no person entitled to sell, or procurethe sale of the said goods shall, except with the permission of theReserve Bank, do or refrain from doing anything or take or refrainfrom taking any action which has the effect of securing that- (b) payment for the goods is made otherwise than in the pres-cribed manner or does not represent the full amountpayable by the foreign buyer in respect of the goods,subject to such deductions, if any) as may be allowed bythe Reserve Bank, or Is delayed to such extent as afore-said........" (42) The contravention of the above provisions is punishable under Sec-tion 23. Hence the respondents' failure to repatriate any part of the foreignexchange earned by them by the sale of the manganese ore exported can bepenalised by imposing on them a penalty not exceeding three times thevalue of the foreign exchange in respect of which the contravention hadtaken place or Rs. 5,000.00 whichever is more as may be adjudged by theDirector of Enforcement in the manner provided in the Act. Hence it isopen to the Director of Enforcement to levy on such of the respondents ashave contravened Section 12(2), penalty not exceeding three timesthe value of the foreign exchange not repatriated which in the present casecan be about nine crores of rupees. They may also be punished underSection 23(1 ) (b). This position is conceded by the Counsel appearingfor the appellants. But it is urged on behalf of the appellants that for theoffences committed by the respondents they are not only liable to be punishedunder Section 23 but also under Section 23 (A). The Appellate bench ofthe Madras High court negatived that contention. Section 23 (A) as itstood at the relevant time provided that- "without prejudice to the provisions of Section 23 or any otherprovision contained in this Act, the restrictions imposed by..........sub-section (1) of Section 12. .... .shall be deemed to have been imposedunder Section 19 of the Sea Customs Act, 1878, and all provisions ofthat Act shall have effect accordingly, except that Section 183 thereofshall have effect as if for the word 'shall' therein the word 'may' weresubstituted." (43) If the allegations mentioned in the show cause notices come withinthe scope of Section 23(a) then it necessarily follows that they will be governedby the provisions of Section 19 and Section 167(8) of the Sea Customs Act,1878. Section 19 of the Sea Customs Act provides- 107 "that the central government may from time to time by notifica-tion in the Official Gazette prohibit or restrict the bringing or taking bysea or by land goods of any specified description into or out of Indiaacross any customs frontiers as defined by the central government." (44) This section is similar to Section 12(1) of the Act. Section 167(8)provides for punishments for offences under that Act. That section to theextent material for our present purpose reads : "The offences mentioned in the first column of the followingschedule shall be punishable to the extent mentioned in the third columnof the same with reference to such offences respectively :- JUDGEMENT_91_1_1969Html2.htm 108 (45) If an offence falls under Section 23-A the fact that the said offenceis also punishable under Section 23 is immaterial. The provisions of Sec-tion 23 (A) are without prejudice to the provisions of Section 23. The merefact that the offences alleged against the respondents are punishable underSection 23 would not exclude the application of Section 23 (A). Thereforeall that we have to see is whether those offences fall within the ambit ofSection 23 (A). If they do then the impugned show cause notices must beheld to be valid. If they do not, then no proceedings can be taken on thebasis of those Notices. (46) Before a case can be held to fall within the scope of Section 23 (A) itmust be shown that there has been a contravention of the restrictions imposedby Section 12(1). Therefore we have to find out what those restrictions are ?The only restrictriction placed by Section 12(1), read with the centralGovernment Notification, dated 4/08/1947, is that no one should exportany goods from this country without furnishing the declaration mentionedin Section 12(1). Admittedly the stipulated declarations in the prescribedforms have been furnished. The evidence specified have also been given.Therefore, prima facie, there was no contravention of Section 12(1). Whatis said against the respondents is that the invoice price mentioned by themin the declarations did not represent the full export value ; hence thedeclarations given by them are invalid declarations which means that theconcerned goods were exported without furnishing the declarations requiredby Section 12(1). It is not possible to accept this argument. The declara-tions given do satisfy the requirements of Section 12(1), though they do notcorrectly furnish all the informations asked for in the form. Such declara-tions cannot be considered as non-est. The informations called for in- theprescribed form cannot be considered as restrictions imposed by Sec-tions 12(1). They are merely informations called for the proper exercise of thepowers under the Act. Many of them do not relate to the restrictionsimposed by Section 12(1). Neither Section 12(1), nor any other provisionin the Act empower the rule making authority to add to the restrictionsimposed by Section 12(1). For finding out the restrictions imposed bySection 12(1) we have only to look to that section. The requirement ofthat section is satisfied if the stipulated declaration supported by theevidence prescribed or specified is furnished. The contravention complainedof in this case is really the contravention of Section 12(2) and Rule 5.The former is punishable under Section 23 and the latter under Section 23,read with Section 22. (47) The declaration required by Section 12(1) is only to the effect thatthe amount representing the full export value of the goods has been or willwithin the prescribed period be, paid in the prescribed manner. This isas it should be because this section governs both the goods sold to theforeign buyers as well as to those sent on consignment basis. So far as thegoods sold to the foreign buyer are concerned it is generally possible forthe exporter to know the exact export value but that would not be theposition when the goods are sent on consignment basis. In the case ofgoods sent on consignment basis, the exporter can give only an estimatedvalue. The main purpose of Section 12(1) is to get a declaration from theexporter that he has either brought or will bring back the amount representingthe full export value of the goods exported. There are other provisions inthe Act to deal with other situations. We shall presently refer to them. (48) If we are to hold that every declaration which does not state accura-tely the full export value of the goods exported is a contravention of the res-rictions imposed by Section 12(1) then all exports on consignment basis must109be held to contravene the restrictions imposed by Section 12(1). AdmittedlySection 12(1) governs every type of export. Again it is hard to believe thatthe Legislature intended that any minor mistake in giving the full exportvalue should be penalised in the manner provided in Section 23 (A). Thewording of Section 12(1) does not support such a conclusion. Such aconclusion does not accord with the purpose of Section 12(1). (49) It is true that the regulations contained in the Act are enacted inthe economic and financial interest of this country. The contravention ofthose regulations, which we were told are widespread are affecting vitaleconomic interest of this country. Therefore the rigour and sanctity ofthose regulations should be maintained but at the same time it should not beforgotten that Section 12(1) is a penal section. The true rule of constructionof a section like Section 12(1) is, if we may say so with respect, as mentionedby Plowman,J., in Re H. P. C. Productions Ltd Therein the learned Judgeobserved: "I approach the question of the construction of the ExchangeControl Act in the light of the principles stated by Upjohn, J., inLondon and Country Commercial Properties Investments v. Attorney-General towhich Mr. Begnall referred. In that case the court was concernedwith the construction of the Borrowing (Control and Guarantees)Act, 1946 and the Control of Borrowing Orders, 1947. Upjohn,J.,said : "The first question I have to consider is what are the principlesof construction which I must adopt in construing this Act and thisorder ........I have to bear in mind that this is a penal statute. Itindeed, I suppose, represents the high water-mark of the Parliamentaryinvasion of the traditional rights of the subjects of this realm". Thenhe went on to explain why that was so and continued: "In thosecircumstances what are the canons of construction to be adopted ?I do not propose to refer to the authorities at length. I think thatthe proper approach to the construction of such a statute as this is that Imust construe it as I would any other instrument, that is to say,I must look at all the surrounding circumstances, I must look at themischief intended to be remedied, I must above all give effect to thewords that have been used in the section. That is plain from thedecision in Dyke v. Elliot , see, in particular, the judgment of James, L. J.,but if on construing the relevant S. of the Act and the orderthere appears any reasonable doubt or ambiguity, then being a penalstatute I must apply the principles laid down succinctly by Lord Esherin Tuck and Sons v. Priester ." (50) In London and North Eastern Rly. Co. v. Berriman , Lord Macmillan observed: "Where penalties for infringement are imposed it is not legitimateto stretch the language of a rule, however beneficient its intention,beyond the fair and ordinary meaning of its language." This court in Tolaram Relumal and another v.State ofBombay , speaking through Mahajan, C. J., observed : "It is not competent to the court to stretch the meaning of anexpression used by the Legislature in order to carry out the intentionof the Legislature." 110 (51) Herein before we have examined the language of Section 12(1) andits purpose. We have also referred to the provisions which provide for thepunishment of the contraventions complained of in these cases. Thoseprovisions are adequate to meet the situation. In our opinion the languageof Section 12(1) does not permit the acceptance of the interpretation placedon it by the appellants nor are we able to come to the conclusion that theLegislature intended that the offences complained of in these proceedingsshould be made punishable under Section 23 (A). If the interpretationsought to be placed by the appellants on Section 12(1) is accepted it mayresult in unnecessary hardship in numerous cases. (52) There are two facets in every export, one relating to the goods ex-ported and the other relating to the foreign exchange earned as a result of theexport. Broadly speaking the former aspect is dealt with by the Customsauthorities and the latter either by the Reserve Bank or by the Directorof Enforcement. The price of the goods exported has to be mentioned inthe invoice. But the Reserve Bank has power to examine whether theprice mentioned in the invoice is correct. Section 12(5) provides that wherein relation to any goods exported the value as stated in the invoice is lessthan the amount which in the opinion of the Reserve Bank represents thefull export value of those goods, the Reserve Bank may issue an orderrequiring the person holding the shipping documents to retain possessionthereof until such lime as the exporter of the goods has made arrangementsfor the Reserve Bank or a person authorised by the Reserve Bank to receiveon behalf of the exporter payment in the prescribed manner of an amountwhich represents in the opinion of the Reserve Bank the full export valueof the goods. Ss. (6) of Section 12 says that for the purpose ofensuring compliance with the provisions of that section and any orders ordirections made thereunder, the Reserve Bank may require any personmaking any exports of goods to which a notification under Ss. (1)applies to exhibit contracts with his foreign buyer or other evidence to showthat the full amount payable by the said buyer in respect of the goods hasbeen. or will within the prescribed period be paid in the prescribed manner.THESE provisions go to indicate that so far as the value of the goods exportedis concerned the matter is left primarily in the hands of the Reserve Bank,and the Customs authorities are not burdened with that work. This aspectbecomes relevant in ascertaining the true scope of Section 12(1). If webear in mind the scheme of the Act. It is clear that so far as the Customsauthorities are concerned all that they have to see is that no goods areexported without furnishing the declaration prescribed under Section 12(1).Once that stage is passed the rest of the matter is left in the hands of theReserve Bank and the Director of Enforcement. (53) In view of our above conclusion it is unnecessary for us to examinethe other contentions advanced on behalf of the parties. In the result theseappeals fail and they are dismissed with costs. One hearing fee.;