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PETITIONER: MANHARLAL BHOGILAL SHAH

       Vs.

RESPONDENT: STATE OF MAHARASHTRRA

DATE OF JUDGMENT05/04/1971

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SIKRI, S.M. (CJ) MITTER, G.K. HEGDE, K.S. REDDY, P. JAGANMOHAN

CITATION:  1971 AIR 1511            1971 SCR  359  1971 SCC  (2) 119

ACT: Sea Customs Act, 1878, s. 167, items 87 and 81, and s. 187A- If s. 187A confers arbitrary powers on customs  officials-If ultra vires Art. 14 of Constitution.

HEADNOTE: The  appellant  imported  consignments  of  contraband   and prohibited goods.  He was prosecuted for an offence under s. 167,  item 81. of the Sea Customs Act, 1878, on a  complaint by the appropriate authority under s.   187A,    and     was convicted. On  the  question whether s. 187-A violated Art. 14  of  the Constitution   on   the  grounds;  (1)  that   the   Customs authorities  had  an absolute discretion to  proceed  either under  s.  167(8);  in which case there  would  be  only  an imposition of a fiscal penalty and confiscator of goods;  or to file a complaint in the criminal court, under s. 187A for the offence under s. 167 item 81, in which case there  could also be a sentence of imprisonment up to two years. and  (2) the customs officials have a wide latitude in choosing cases for criminal prosecution, HELD   (1)  the  proceedings  under  the  Foreign   Exchange Regulation Act. 1947,unlike under the sea customs Act  could be taken in the alternative and the punishment could also be imposed   in   the  alternative’  Any   person   guilty   of contravention  of s. 23(1)(a) of that Act could not be  made liable for a penalty under s. 23(1) (b) also to  prosecution and  imprisonment under s. 23(1) (b)Therefore s. 23D,  which empowers  the  Director  of Enforcement  of  file  complaint instead  of imposing a penalty under s. 23(1)(a) only if  he was satisfied that in, the circumstances of a case a penalty under  s.  23(1)(a)a would be inadequate, was  necessary  to prevent  arbitrary  exercise of discretion by  the  Director under. that Act.  Such a provision however, is not necessary under  the  Sea Customs Act, because, if a person  is  found guilty under s. 167, item 8, and if his case is also covered by  item  81, there is no choice in the matter  of  imposing penalty or punishment.  A penalty can be, imposed under item 8, and he will also be liable to criminal prosecution  under

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item 81. [3-63B-F; 364X-B] Reyala Corporation (P) Ltd. v. Director of Enforcement,  New Delhi, [1971] 1 S.C.R. 639, referred to. (2)  It  cannot  be said that s. 187A  confers  an  unguided power  on  the  customs’  authorities  for  not    filing   a complaint  against  a  person although he was  liable  to  a criminal prosecution under s. 167, item 81. While deciding whether a complaint should be instituted  for an  offence  which is covered both by items 8 and 81  of  a. 167,  a customs officer must take into *count the  enormity and  magnitude of the contravention, the evidence  which  is available  , and whether the evidence is sufficient to  take the  matter  to  a  criminal court:  The  officers  who  are authorised  to  make a complaint under s.  187A  are  senior officials holding responsible positions 360 and  they have to act in a reasonable and  bonafide  manner. They cannot discriminate between similar cases according  to their whim and fancy.  The power conferred by the section is to  be exercised for effectuating the object and purpose  of the  Act  keeping in view the entire scheme of  the  Act  to ensure  that goods do not escape the levy of duty  and  that the prohibitions and restrictions imposed on importation and exportation are rigidly en forced. [365C-E, G-H; 366B-C,  D- F] Matajog  Dobey v. H. C. Dhari [1955] 2 S.C.R. 925,  932  and Nirmala  Textiles  Furnishing  Mills  Ltd.  v.  The   Second Industrial Tribunal, [1957] S.C.R. 335, followed.

JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 44  of 1967. Appeal from the judgment and order dated January 23. 1967 of the Bombay High Court in Criminal Appeal No. 525 of 1965. R.   Jethmalani, S. B. Jaisinghani and K. Hingorani, for the appellant. Jagadish  Swarup,  Solicitor-General, H. R.  Khanna,  B.  D. Sharma and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by Grover, J.-This is an appeal by certificate from a  judgment of  the Bombay High Court upholding the conviction and  sen- tence  of the appellant under S. 167(81) of the Sea  Customs Act, 1878, hereinafter called the ’Act’ and S. 120-B of  the Indian  Penal Code read with the aforesaid section and S.  5 of the Import and Export (Control) Act 1947.  The main point for  determination  is  whether  s.  187-A  of  the  Act  is unconstitutional on the ground that it is violative of  Art. 14  of the Constitution.  The facts to the extent  they  are necessary may be set out. The  appellant  carried  on business in  the  name  of  M/s. Jaihind  Ex-Import  Coporation as its sole  proprietor.   He also  carried on business as a partner in another  firm  run under   the   name  and  style  of  Alram   Optics   (India) Corporation.   The offices of the two firms were situate  at New  Charni  Road,  Bombay.  According to the  case  of  the prosecution the appellant with the object of defrauding  the Government of customs duty payable on certain goods and with a view to evading prohibition imposed on the import of  such goods was a party to criminal conspiracy, some of the  other parties being M/s. 0. & K. Heydegger and M/s.  Winter Optics in  West  Germany.  The conspiracy was stated to  have  been entered into for the purpose of acquiring possession of con- traband goods such as spectacle frames, welding glasses etc.

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The  import of spectable frames was totally  prohibited  and the import 361 of  welding glasses was greatly restricted.  It was  alleged that  in pursuance of the conspiracy the appellant  imported three consignments by three different ships ; the first  one arrived  by  s.s.  Bialy.stock and the  other  two  came  on September 22, 1960 and March 5, 1960 by two other ships s.s. Fraunfels  and  s.s. Laurenskerk.  Out ,of  the  four  cases which arrived in the first consignment two cases  ,contained contraband goods.  As regards the other two consignments one case in each consignment contained goods the import of which was prohibited.  The modus operandi was highly ingenious and interesting but we need not recapitulate the same. The  defence of the appellant was that it was owing  to  the mistake  of  shippers that the cases  containing  contraband goods  arrived.  It may be mentioned that no bill  of  entry was  lodged  by  the appellant  regarding  the  cases  which contained contraband :goods of the first consignment and the other consignment which: were not got cleared.  The  learned Presidency  Magistrate  found the  appellant  guilty   and sentenced  him  to six months’ rigorous imprisonment  and  a fine of Rs. 1000 for each of the four charges directing  the substantive  sentences to run concurrently.  The appellant filed an appeal to the High Court and the State preferred  a petition for revision for enhancement of the sentence.   The High Court dismissed both the appeal and the revision.   The ’High  Court  further  directed that  the  contraband  goods should  stand  confiscated in favour of  the  Government  of India. During  the pendency of the appeal in this court a  petition was filed on behalf of the respondent (Cr.  Misc.   Petition No.  362/70). ,It was prayed therein that  a  constitutional point as to the vires of s. 187A read with s. 167(81) of the Act  be allowed to be raised. Thereupon the Division  Bench made  an  order that the appeal be placed  before  a  larger bench.  The question being one of constitutional validity of s.  187A of the Act counsel for the appellant has  addressed arguments  before us with our permission on  the aforesaid point.   It has been contended inter alia that the  offenses of smuggling of goods and in particular the acts with  which the appellant has been charged could be dealt with by  the customs authorities by proceeding under s. 167(8) of the Act as well as in the alternative or in addition by  instituting a  prosecution  in a criminal court by  filing  a  complaint under  s. 187A read with s. 167(81) of the Act.  The  former can  result only in the imposition of a fiscal  penalty  not exceeding   three   times  the  value  of  the   goods   and confiscation of the goods themselves.  The latter can result in  a  sentence of imprisonment upto two years  or  fine  or both.  Thus it has been left to the unfettered and  unguided discretion  of  the customs authorities to  proceed  against certain per-sons under s. 167(8) and others under s. 167(81) or  under both the sections.  In a large number of cases  no criminal prosecutions 362 were  filed  at all and proceedings under  s.  167‘8)  alone were taken which resulted in imposition of penalties.   This leads  to  discrimination  and  has  actually  resulted   in discrimination. We may now refer to s. 187A of the Act.  It provides that no court  shall  take  cognizance of any  offence  relating  to smuggling of goods punishable under item 81 of the  Schedule to s. 167 except upon complaint in writing made by the Chief Customs Officer or any other officer of customs not lower in

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rank than an Assistant Collector of Customs.  Items 8 and 81 of s. 167 to the extent they are material are as follows:- Offences:- 8.  If  any goods the importation of which is for  the  time being  Prohibited  or restricted by or under Chapter  IV  of this  Act, be imported into or exported from India  contrary to  such Prohibition or restrictions; or If any  attempt  be made   so   to   import   or   export   any   such    goods; or .............................." 81.  If  any  Person knowingly,General and  with  intent  to defraud  the Government of any duty payable thereon,  or  to evade  any prohibition or restriction for the time being  in force  under or by virtue of this Act with  respect  thereto acquires  possession  or,  or is in  any  way  concerned  in carrying,   removing   depositing,   harbouring,keeping   or concealing  or  in any manner dealing with any  goods  which have  been unlawfully removed from a warehouse or which  has not  been  paid  or  with  respect  to  the  importation  or exportation  of  which any  prohibition  or  restriction  is for    the    time   being   in    force    as    aforesaid; or  ......................................" Section of this Act to which offence has reference :- 18 & 19 Penalities:- such  goods shall be liable to confiscation; and any  person concerned  any such offence shall be liable to  penalty  not exceeding  three  times  the  value  of  the  goods  or  not exceeding one thousand rupees." General:- Such  persons  hall  on conviction before  a  Magistrate  be liable to imprisonment for any term not exceeding two years, or to fine, or to both." Even though item 8 of s. 167 does not employ the word "know- ingly"  which  is  to  be found  in  item  81  international smugglers  are bound to be covered by both the  items.   The argument on behalf of the appellant is based on there  being no guidelines in s. 187A in the matter of filing a complaint for an offence under item 81.  It is suggested that if there is  a  option to the officers mentioned therein  to  file  a complaint  or not to file the complaint then there  will  be clear infringement of Art. 14.  Counsel for the appellant 363 has gone to the extent of submitting that the, power to give sanction  or  to make a ’complaint  without  any  guidelines would itself be hit by Art. 14. Our  attention  has been invited to Ravala  Corporation  (P) Ltd.  &  Ors. v. Director of Enforcement, New  Delhi(1),  in which  one of the points canvassed was that s.  23(1)(b)  of the  Foreign Exchange Regulation Act 1947 as amended by  the Foreign   Exchange  Regulation  (Amendment)  Act  1957   was violative  of  Art. 14 of the Constitution  inasmuch  as  it provided  for  punishment  severer than  the  punishment  or penalty provided for the same acts under s. 23(1)(a) of that Act.  It was pointed out in the judgment of this court  that two  different proceedings could be taken for  contravention of  certain  provisions  of the  aforesaid  Act.   Under  s. 23(1)(a)  a  person was liable to a penalty  only  and  that penalty  could not exceed three times the value  of  foreign exchange  in respect of which contravention had taken  place or  Rs.  5,000 whichever was more.  That  penalty  could  be imposed by adjudication made by the Director of  Enforcement in  the  manner provided in s. 23(D) of the said  Act.   The alternative   punishment  provided  by  s.   23(1)(b)   upon conviction  by a court was a sentence of imprisonment for  a term  which could extend to two years or with fine  or  with

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both.  The argument that the section laid down no principles for determining when a person concerned should be  proceeded against  under  s. 23(1)(a) and when under s.  23(1)(b)  and that it was left to the arbitrary discretion of the Director of  Enforcement to decide which proceeding should  be  taken was repelled by relying on the provisions of s. 23D.   Under that  section the Director of Enforcement was first to  hold an  inquiry for the purpose of adjudging whether  there  had been contravention under s. 23(1)(a) and if he was satisfied that  the  person  had committed a  contravention  he  could impose  a  penalty  provided  thereby.   According  to   the proviso, however, if at any stage of the enquiry he  was  of the  opinion that having regard to the circumstances of  the case the penalty would not be adequate he was bound to  make a complaint in writing to the court instead of imposing  any penalty himself. Counsel  for  the appellant has laid great emphasis  on  the absence of any such provision in the Act as was to be  found in s. 23D of the Foreign Exchange Regulation Act 1947.   But it  is  significant that under the aforesaid  enactment  the proceedings  could  be  taken in  the  alternative  and  the punishment also could be imposed only in the alternative and any person guilty of contravention’ could not be made liable for a penalty provided by s.  23(1)(a)  as  also  imposed  a sentence of imprisonment under (1) [1971] 1 S. C. R. 639. 364 S.   23  (1)  (b).  According to the provision  of  S.  167, items 8 and 81 of  the Act there is no choice in the  matter of imposing penalty or   punishment.   If a person is  found guilty  a  penalty can be imposed under item 8 and  he  will also be liable to criminal prosecution and conviction if his case is covered by item 81 of that section. In numerous Acts provisions are found according to which  no court can take cognizance unless either sanction is  granted by  the  competent.  authority for  the  prosecution  of  an accused  person  or  a complaint in writing is  made  by  an officer  or authority empowered in that behalf.  Nothing  is indicated  or expressly stated in most of the provisions  as to the circumstances in which sanction should be withheld or granted or a complaint should be instituted or not.  One  of such  provisions  came  up  for  examination  in  Gokulchand Dwarkadas  Moraka v. The King (1).  Under clause 23  of  the Cotton  Cloth and Yam Control Order 1943 no prosecution  for contravention of any of the provisions of the Order could be instituted  without the previous sanction of the  Provincial Government  etc.  It was laid down that in order  to  comply with the provisions of clause 23 it must be proved that  the sanction was given in respect of the facts constituting  the offence  charged.   Counsel for the appellant has  relied  a great deal on the following observations of their lordships:               "They can refuse, sanction on any ground which               commends  itself to them, for example that  on               political  or economic grounds they  regard  a               prosecution as inexpedient." It is argued that if the same wide latitude is given to  the customs  officers mentioned in S. 187A they can import  even political  or  economic  considerations  for  not  filing  a complaint   although   a  person  is  liable   to   criminal prosecution  for an offence under s.167(81). We consider  it unnecessary  to pronounce, with respect, on the  correctness or  otherwise of the above observations.  We have  no  doubt that  the  authorities concerned are expected to  take  into account   the   changed  conditions  obtaining   after   the enforcement of our Constitution which guarantees fundamental

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rights  including  Art. 14, They are bound  to  examine  the facts   of  a  particular  case  and  then  decide   whether prosecution should be launched or not. Even  if any policy or guidelines have to be found they  can certainly be discovered from the object, purpose and  scheme of the Act.  The preamble reads: "Whereas it is expedient to consolidate  and amend the law relating to the levy  of  Sea Customs duties it is enacted as follows".  Chapter IV  deals with prohibitions and restrictions (1) A. I. R. 1948 P. C. 82. 365 on importations and exportation and Chapter V, with levy  of and  exemption  from customs duties.   Elaborate  provisions have  been made to ensure that goods do not escape the  levy of  duty  and that the prohibitions and  restrictions  which have been imposed on importation and exportation are rigidly enforced.   Chapter XVI provides for offenses and  penalties and  S. 167 therein is an omnibus section which contains  81 items  dealing  with offenses and penalties.   Chapter  XVII contains procedural provisions relating to offenses, appeals etc.  Section 187A appears in this Chapter. The  procedural provisions must be read in the light of  the object  and purpose. of the Act.  While deciding  whether  a complaint  should  be  instituted for an  offence  which  is covered  both by items 8 and 81 of S. 167 a customs  officer must  take  into account the enormity and magnitude  of  the contravention  and, the evidence which is available.  It  is possible  that  in  certain cases the evidence  may  not  be sufficient for. taking the matter to a criminal court and in view of the entire facts a complaint may not be lodged  ’for contravention of offence under item 81 but in all cases  the customs  officers have to act in a reasonable and bona  fide manner  and  they cannot just discriminate  between  similar cases  according  to their whim and fancy.  For-if  that  is done  it is always open to a person against  whom  complaint has   been  instituted  to  challenge  their   exercise   of discretion in appropriate proceedings.  We are fortified  in the view that we are taking by the following observations in Matajog  Dobay v. H. C.- Bhari(1). where the  argument  that Section  197  of  the  Criminal  Procedure  Code  vested  an absolutely  arbitrary power in the Government to  grant  or withhold  sanction  at their sweet, will  and  pleasure  was considered :               "If the government gives sanction against one               public servant but, declines to do. so against               another,  then the government servant  against               whom sanction is given may. possibly  complain               of  discrimination.  But the  petitioners  who               are complainants cannot be heard to say so for               there  is  no discrimination  as  against  any               complainant.  It has to be borne in mind  that               a  discretionary  power is not  necessarily  a               discriminatory power and. that abuse of  power               is  not  to  be  easily  assumed  where’   the               discretion is vested in the government and not               in a minor official." The  officer who is authorised to make the complaint  under S. 187A of the Act is the Chief Customs Officer or any other officer  of  customs not lower in rank  than  the  Assistant Collector  of  Customs  authorised  by  the  Chief   Customs Officer.   These  officers cannot be regarded to  be,  minor officials and they hold responsible positions (1)  [1955] 2 S. C. R. 925,932. 366 in the hierarchy of customs authorities.  In Niemla Textiles

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Finishing  Mills Ltd. v. The 2nd Industrial Tribunal(1)  the validity of the Industrial Disputes Act 1957 including S. 10 was   challenged,  inter  alia  on  the  ground   that   the appropriate  government had unregulated and arbitrary  power to discriminate between different parties and it was open to it to refer the industrial dispute to a Board for  promoting the settlement or a Court of Inquiry or the Industrial  Tri- bunal and that there were no guidelines as to which class of cases  were  to  be referred to one or the  other.   It  was pointed  out  by this court that the purpose  sought  to  be achieved  by  the  said Act had been  well  defined  in  the preamble  to it.  The provisions sufficiently indicated  the purpose  and scope of the enactment as also  the  industrial disputes  which might arise between the employers and  their workmen  which  had  to be referred for  settlement  to  the various authorities under the Industrial Disputes Act.   The achievement  of  one  or  other  objects  in  view  by  such reference  to the Board of Conciliation or Court of  Enquiry or  Industrial Tribunal must guide and control the  exercise of  the  discretion  and  there  was  no  question  of   the government  being in a position to discriminate between  one party  and  the other.  In our judgment the  ratio  of  this decision appositely applies to the present case.  The object and purpose of the Act has already been noticed as also  its scheme and the relevant provisions.  The power conferred  by S. 187A has to be exercised for effectuating the object  and purpose  of the Act keeping in view the entire  scheme.   It cannot,  therefore, be said that any unguided discretion  or power  has  been conferred of the nature  which  would  come within the inhibition of Art. 14.  The principal  contention of  the learned counsel for the appellant based on  Art.  14 must fail. On  the merits counsel for the appellant has brought to  our notice  the various facts and circumstances relating to  the case.   We are satisfied that the High Court rightly  upheld the conviction for the offences in question but taking  into consideration  every aspect of the matter we  consider  that the  sentence  of  imprisonment  already  undergone  by  the appellant  together  with the fine which  has  been  imposed apart  from the order relating to the confiscation of  goods will serve the ends of justice. The  appeal is consequently allowed only to the extent  that the sentence of imprisonment for each offence is reduced  to one  already  undergone.  In all other respects  the  appeal shall stand dismissed.  The bailbonds of the appellant,  who was ordered to be released on bail, shall stand discharged. Appeal allowed in part. V.P.S. (1)  [1957] S. C. R. 335. 367