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PETITIONER: THE STATE OF MYSORE

       Vs.

RESPONDENT: PADMANABHACHARYA ETC.[P.    B.   GAJENDRAGADKAR,   C.J.,  K.

DATE OF JUDGMENT: 05/10/1965

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. (CJ) HIDAYATULLAH, M. SHAH, J.C. SIKRI, S.M.

CITATION:  1966 AIR  602            1966 SCR  (1) 994  CITATOR INFO :  E          1969 SC 118  (20,26)  D          1972 SC1767  (25)  E          1973 SC 671  (1,4)  R          1973 SC1146  (8)  RF         1975 SC1646  (5)  D          1976 SC2250  (18)

ACT: Sea Customs Act (8 of 1878), s. 167(81)-Liability of  person other  than importer-"Concerned in or dealing  with  goods", meaning of.

HEADNOTE: The  1st  respondent had gone to, the 2nd  respondent  after previous arrangement with him, with a large sum of money  to purchase gold which was known to them to be smuggled and  to have  been  imported  into India  against  the  restrictions imposed  on  the  import of gold.   The  police  intervened. recovered  the  gold  and  arrested  them.   The  gold   was confiscated  under s. 167(8) of the Sea Customs  Act,  1878. The  respondents  were prosecuted for an  offence  under  s. 167(81)  and  they were convicted by the  trial  court.   On appeal  the High Court acquitted the 1st respondent  because it  was  of  the  view that as  the  1st  respondent  merely attempted to purchase the gold it could not be said that  he was  concerned in dealing with the smuggled gold within  the meaning  of the section.  The High Court also acquitted  the 2nd respondent because it held that before a person could be convicted  under  s. 167(81), it must be shown that  he  was either  a  direct importer or concerned in some way  in  the import  of the smuggled article,, and that the  section  did not include in its scope a person who subsequently  obtained the  smuggled  -goods and then dealt with them,  though  the smuggled goods themselves might be liable to confiscation. In appeal to this Court, HELD,  (per Wanchoo, Shah, Sikri and Ramaswami, JJ.)  :  (i) The  High Court was in error in holding that simply  because the  purchase  was not complete the 1st respondent  was  not concerned  in dealing with the smuggled gold which was  with

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the 2nd respondent. [14 D] The  words  "in any way concerned or in any  manner  dealing with  any  goods" in the section, are of very  wide  import. The  words "concerned in" mean "interested in, involved  in, mixed  up with", while the words "deal with" mean  "to  have something to do with, to concern one self, to treat, to make arrangement,  to  negotiate  with respect  to  some  thing." Therefore,   when  a  person  enters,  into  some  kind   of transaction   or  attempts  to  enter  into  some  kind   of transaction  with  respect to prohibited goods,  and  it  is clear  that  the  act  was done  with  some  kind  of  prior arrangement or agreement, it must be held that such a person is concerned in dealing with prohibited goods. [13 A-B; H] (ii) On the language of the section, it applies not only  to an  actual smuggler or a person concerned in  smuggling  but also to all others who may be concerned with smuggled  goods after  the  smuggling is over provided they  know  that  the smuggled  into  the  country in spite of  a  prohibition  or restriction,  or  they knew that the duty  thereon  had  not been  paid.   It  follows that the 1st  respondent  had  the necessary  knowledge and intent or evade the prohibition  or the restriction even though he dealt 2 with  the gold after the smuggling was over and was  not  in any  way  concerned  with the  actual  smuggling.  He  would therefore  be guilty under the section. The  2nd  respondent wag  also  guilty  under -the section  inasmuch  as  he  was dealing  with  prohibited or restricted good  sand  had  the necessary  knowledge  and  intent  as  required  under   the section.[21 B, C, E] If   the   intention  of  the  legislature  was   that   the person guilty under s.167(81) could only be a person  who was  concerned  in  some  way  or  other  with  the   actual importation or exportation it would have been easy for it to use  the  same words as were used in the first  part  of  s. 167(8) but it has not done so,.  What s. 167(81) requires is that  the  person who comes inter alia  into  possession  of prohibited goods must know that there is some prohibition in force  with respect thereto.  But before he is found  guilty it  has  further to be shown that he intends  to  evade  the prohibition.   Where the case is not of prohibition  but  of duty, the person accused under the section must be shown  to know  that the duty has not been paid and also to  have  the intention to, defraud the government of the duty payable  on the goods.  So. long as the duty is payable and has not been paid or so long as the prohibition or restriction remains in force,  any person acquiring possession of goods,  on  which duty  has  not  been  paid or  with  respect  to  which  the restriction  or prohibition has been evaded, would have  the intent either to defraud the government of the duty payable, for  he acquires goods at a lower price, or would  have  the intention to evade the restriction or prohibition because no one  would take the risk of smuggling unless he can  find  a purchaser  for  the smuggled ’goods.  If this were  not  so, there  would  be a premium on successful smuggling  and  the purpose  of the section to punish smuggling and stop  it  if possible, would be completely defeated, as there would be  a serious lacuna in the provision. [15 E-G; 17 A-D] Cases under the English Act referred to. Per Subba Rao, J. (Dissenting) : it had not been  establish- ad  that  the respondents had dealt with the  gold  with  an intention to evade any restriction or prohibition imposed on their import. [7 F] It  is  not open to the court to strain the  language  of  a statute  in  order to read a causes omissus  and  the  court

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cannot  fill up a lacuna.  Also, the court  cannot  construe the  section  with reference to  the  corresponding  English Section  and  English  decisions  because,  the  Indian  and English sections are not in pari materia.  Under s.  167(81) the material ingredients constituting an offence are; (i)  a person must have a knowledge that there is a prohibition  or restriction  against doing any of the enumerated  acts  with respect  to  goods  imported or  exported  contrary  to  the restriction  or prohibition imposed against their import  or export,  and  (ii) he must have acted with an  intention  to evade  such a restriction or prohibition.  That is, the  two elements  of mens rea, namely, knowledge and intention  must be  established, because, knowledge of an offence cannot  be equated  with an intention to commit the offence.  The  crux of  the  offence is the import of goods with  the  requisite intent  contrary  to  the  prohibition.   The  importer  who smuggles  the  goods is certainly guilty under  the  section because he imports them in derogation of the prohibition  or restriction.   Also, any person who deals with the goods  in the  context of the import in any of the connected ways  set out  in  the  section,  with  the  requisite  knowledge  and intention  would equally be guilty of the offence,  because, the  enumerated  dealings  with  the  goods  prohibited   or restricted may be necessary to complete the import vis-a-vis the  importer,  even though they cover a  field  beyond  the point  of import as normally understood, that is,  when  the goods  cross  the  customs barrier.  But  the  intention  to contravene  the prohibition cannot be imputed to  subsequent dealers in 3 the  goods  after the importer parts with them,  though  the good.%  themselves  can  be  confiscated  in  the  hands  of whomsoever they are found. [4H; 5C, E-F; 6B-C, H]

JUDGMENT: CRIMINAL  APPELLATE JURISDICTION: Criminal Appeals Nos.  192 of 1961 and 183 of 1962. Appeals  from the judgment and orders dated August 11,  1961 of  the Calcutta High Court in Criminal Appeals Nos. 360  of 1959 and 345 of 1959 respectively.                             WITH Criminal Appeals Nos. 41 of 1964 and 42 of 1964. Appeals by special leave from the judgment and orders  dated March 25, 1963 of the Bombay High Court in Criminal  Appeals Nos. 1640 of 1962 and 1359 of 1962 respectively. Niren  De, Additional Solicitor-General, D. R. Prem,  R.  H. Dhebar and B. R. G. K. Achar, for the appellant (in Cr.  As. Nos. 192 of 1961 and 183 of 1962). D.   R.  Prem,  B.  R. G. K. Achar,  Yogeshwar  Prasad,  for appellant  (in Cr.  As.  Nos. 123 of 1962 and 41 and  42  of 1964). S.   C. Mazumdar, for respondent No. 1 (in Cr. A. No. 123 of 1962). P.   K. Chatterjee and S. P. Varma, for respondent No. 1 (in Cr. A.    No., 123 of 1962). B.   M. Mistry, P. R, Vakil, J. B. Dadachanji, O. C. Mathur and  Ravinder Narain, for respondent (in Cr.  A. No.  41  of 1964). B.   R. Agarwala and H. K. Puri, for respondent (in Cr.   A. No. 42 of 1964). P.   R.  Vakil,  B.  M. Mistry, J. B.  Dadachanji,  for  the interveners (in Cr.  A. Nos. 41 and 42 of 1964). SUBBA  RAO J. delivered a dissenting Opinion.  The  Judgment

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of  WANCHOO SHAH, SIKRI and PAMASWAMI JJ. was  delivered  by WANCHOO J.                Subba Rao, J. I regret my inability to  agree               on the construction of s. 167 (81) of the  Sea               Customs  Act,  1  8 7 8. The  Acts  have  been               stated by my learned brother, Wanchoo, J., and               need not restate them.                Clause (81) of S. 167 of the Sea Customs  Act               reads                "If any person knowingly, and with intent  to               defraud  the  Government of any  duty  payable               thereon, or to 4                evade any prohibition or restriction for  the               time being in force under or by virtue of this               Act  with respect thereto acquires  possession               of,  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 are chargeable  with  a               duty  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";..............                The  penalty  clause thereof  reads  :  "such               person shall on conviction before a Magistrate               be  liable  to imprisonment for any  term  not               exceeding  two years or to fine, or to  both".               This clause introduces a criminal offence.  It               is  triable by a Magistrate.  The person  con-               victed  is liable to, imprisonment for a  term               not exceeding two years or to fine or to both.               The  rule  of construction of  such  a  clause               creating  a criminal offence is well  settled.               The following passage from the judgment of the               Judicial  Committee in The Gauntlet(1) may  be               quoted :                "No  doubt  all  penal  statutes  are  to  be               construed strictly, that is to say, the  court               must see that the thing charged as an  offence               is within the plain meaning of the words used,               and  must not strain the words on  any  notion               that  there  has been a slip, that  there  has               been  a  casus omissus that the  thing  is  so               clearly within the mischief that it must  have               been  intended to be included, and would  have               been  included  if thought of.  On  the  other               hand,  the person charged has a right  to  say               that  the thing charged, although  within  the               words,  is  not  within  the  spirit  of   the               enactment.   But  where the thing  is  brought               within the words and within the spirit,  there               a penal enactment is to be construed, like any               other   instrument,  according  to  the   fair               commonsense meaning of the language used,  and               the court is not to find or make any doubt  or               ambiguity in the language of a penal  statute,               where  such doubt or ambiguity  would  clearly               not  be found or made in the same language  in               any other instrument." The clause, therefore, must be construed strictly and it  is not  open  to the court to strain the language in  order  to read  a casus omissus.  The court cannot fill up  a  lacuna:

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that is the province (1)  (1872) L.R. 4 P.C. 184,191. of the Legislature.  The second rule of construction equally well settled is that a court cannot construe a section of  a statute with reference to that of another unless the  latter is  in  pari  materia  with the  former.   It  follows  that decisions  made  on a provision of a  different  statute  in India  or elsewhere will be of no relevance unless  the  two statutes are in pari materia.  Any deviation from this  rule will  destroy  the fundamental  principle  of  construction, namely,  the duty of a court is to ascertain  the  expressed intention  of  the  Legislature.  I am  led  to  make  these general  remarks,  as  an attempt was made  by  the  learned counsel  for the appellant to persuade us to  interpret  the words  of  the clause in the light of the decisions  of  the English courts on an analogous provision in an Act  intended to prevent smuggling.  It is not possible to state that  the English  and  the Indian Acts are in  pari  materia,  though their  general  purposes are the same and  though  there  is some:  resemblance  in the terminology used  in  them.   The English   decisions,  therefore,  must  be  kept  aside   in construing the relevant provisions of the Indian statute. Now  coming to the relevant clause, the following  material’ ingredients constitute an offence thereunder : (1) a  person must  have  a  knowledge  that there  is  a  prohibition  or restriction  against doing any of the enumerated  acts  with respect  to  goods  imported or  exported  contrary  to  the restriction  or prohibition imposed against their import  or export;  (2) he must have acted with an, intention to  evade such  a  restriction  or prohibition; there  is  no  offence unless the said two elements of mens rea, namely,  knowledge and  intention,  are  established.  It is not  enough  if  a person   has  only  knowledge  of  such  a  prohibition   or restriction;  in  addition he shall have  the  intention  to evade  such a prohibition or restriction against the  import or  export  of  goods,  as the case may  be.  A  person  who knowingly  purchases smuggled goods from an importer  cannot have  an intention to evade a provision against import,  for the  prohibited goods have already been imported.  A  person who receives goods with the knowledge that they are stolen,. goods cannot possibly have an intention to commit theft, for the theft has already been committed, though he may have the intention  to  receive the stolen goods.   Knowledge  of  an offence  cannot be equated with an intention to  commit  the offence.   Such  a  construction  effaces  the   distinction between the two distinct elements of mens rea, knowledge and intention, laid down in the clause. The  only possible way out of the inevitable effect  of  the plain words used in the said clause is to give a meaning  to the expres- 6 sion  "import" which that word cannot bear.  To  accept  the argument of the learned counsel for the appellant is to hold that  the  process of import continues  through  innumerable transactions between different persons without reference  to time  or  place and whether the goods existed or  ceased  to exist.   Ordinarily  the  process of  import  commences  the moment  the  goods cross the customs barrier.  That  is  the meaning  given to that word by this Court in J. V.  Gokal  & Co.  v. Assistant Collector or Sales-Tax(1).  But  the  said clause   gives  that  expression  a  wider   meaning.    The enumerated dealings with the goods prohibited or  restricted covered  a  field  beyond  the  point  of  import   normally understood  by that expression.  But all the  said  dealings have  an intimate nexus with the import of goods  under  the

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Act.   Goods may be imported through the machinery  provided under  the Act; yet, a person may evade the restrictions  by fraud  or otherwise.  Goods may also be  illegally  imported into India outside the machinery so provided.  This is  done stealthily  at different points of the vast sea line of  our country.  But in either case different persons may take part in  carrying, removing, depositing, harbouring, keeping  -or concealing or in any other manner dealing with any goods  so imported.   They  are  the necessary acts  to  complete  the process of import.  Such acts may be done by persons between whom  there  was a prearranged plan before  the  goods  were brought into India.  Different persons may also take part in such dealings with the requisite knowledge or intention  for the purpose of completing the import vis-a-vis the importer. Under the said-clause, therefore, the process of import does not  end immediately the prohibited goods are  brought  into India,  but continues till the goods :are delivered  to  the importer,  physically or constructively.  The  importer  who smuggles  the goods is certainly guilty under  the  -clause, because he imports them in derogation of the prohibition -or restriction.   Any  person who deals with the goods  in  the context  of the import as explained above in any one of  the connected  ways -with the requisite knowledge and  intention would equally be guilty of the offence.  But the  subsequent transactions  in  regard to the said goods are  outside  the process  of  the  enlarged  definition  of  the  expression, "import".  It would be incongruous to hold that a  purchaser from  the importer or a purchaser from the  said  purchaser, and  so  on, has an intention to evade  the  prohibition  or restriction, though he may have the intention to receive the smuggled goods.  How does such a purchaser evade the  prohi- bition against import which has already been affected ?  The contrary  construction  will  lead  to  the  anomaly  of   a purchaser, (1) [1960] 2 S.C.R 852, 857, 858.                              7 even  after  20 years of the import,  being  attributed  the intention to evade the prohibition against import.   Suppose before  the  purchase  of  the  goods  by  a  stranger   the prohibition  was  lifted.   In such a  situation,  does  the purchaser commit an offence ? If the contention is sound, he does.  This illustrates that the crux’ of the offence is the import  of goods with the requisite intent contrary  to  the prohibition.    For  the  said  reasons  the  intention   to contravene  the prohibition cannot be imputed to  subsequent dealers  in  the said goods after the  importer  parts  with them. It is said that if the construction suggested by the learned counsel for the appellant be not accepted, many a person who purchases  smuggled  goods will escape punishment.   A  fair reading   of  the  Act  discloses  that  the  Act  makes   a distinction  between  a  customs  offence  and  a   criminal offence.  The smuggled goods in the hands of whomsoever they are  found can be confiscated and, therefore, the State  can always   trace   the  smuggled  goods  to   their   ultimate destination.  The smuggler and the persons concerned in  the smuggling are guilty of both customs and criminal  offences. The Legislature, either intentionally or otherwise, has  not made the dealings in such goods by persons other than  those mentioned  in  cl.  81 of s. 167 of the Sea  Customs  Act  a criminal  offence.  When the clause does not bring them  in, the  court  cannot, by construction, bring such a  class  of persons  within the said clause.  It is for the  Legislature to  do so and we are told that it has recently  amended  the section.

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I, therefore, agree with the High Court that it has not been established  that the respondents have dealt with the  goods with  an intention to evade any restriction  or  prohibition imposed on the import of the said goods. In the result, all the appeals should be dismissed. Wanchoo, J. These two appeals on certificates granted by the Calcutta  High Court arise out of the same trial of the  two respondents  for  an offence under s. 167 (81)  of  the  Sea Customs  Act,.  No. 8 of 1878, (hereinafter referred  to  as the Act) and will be dealt with together.  The facts are not in dispute and have been found as below. On  August 25, 1958, a constable attached to  the  Detective Department, noticed Sitaram Agarwala respondent and  another person at the crossing of Hariram Goenka street and  Kalakar street.  The constable had certain information with  respect to 8 these persons and decided to follow them.  These two persons got into a bus and the constable also boarded the same  bus. They  got down at the unction of B. K. Pal Avenue and J.  M. Avenue and so did the constable.  They then went to Narendra Dev  Square  ’Which is a kind of park.  The  constable  kept watch  over them from a distance.  After a short time  these two men came out of the park and stood on the western  foot- path  of J. M. Avenue. Shortly thereafter a small taxi  came there from the South and stopped.  Respondent Wang Chit Khaw (hereinafter referred to as the Chinese accused) was in that taxi.   He came down and shook hands with  Sitaram  Agarwala and the three got into the taxi.  When the taxi was about to start,  the constable disclosed his identity to  the  driver and asked him to stop.  He also asked the ’three persons  to accompany him to the thana.  Thereupon Sitaram Agarwala  and the  other  man who was with him came out -of the  taxi  and tried  to run away.  The constable caught hold of  them  and put them in the police wagon which happened to come up  just then.   The  Chinese accused also tried to  run  away.   The constable -appealed to the members of the public to help him in securing the Chinese accused and he was secured with  the help of two college students and one other youngman.  As the Chinese accused was running away he threw away three packets -which  were picked up.  In the meantime Sergeant  Mukherjee came there on a motor-cycle from the opposite direction  and detained the Chinese accused.  The three packets thrown away ’by him were also handed over. by the three youngmen to  the ’Sergeant.   Thereafter  all  the  three  persons  who  were arrested  ’were taken to the police station along  with  the three packets.  It was found in the police station that  the three packets contained 23 gold bars of about sixteen  tolas each  with Chinese inscription -thereon.  On search  of  the person of Sitaram Agarwala, a sum of Rs. 49,320 in notes  of various  denomination  was  found  on  him.   ’The   Customs authorities were informed and took charge of the gold  bars. Eventually,  the gold bars were confiscated under s.  167(8) of  the  Act and thereafter the police  after  investigation prosecuted the two respondents and the third man in  respect of -the offence under s. 167(81) of the Act. These facts were held to be proved by the Magistrate so  far as  the  Chinese  accused and Sitaram  were  concerned.   He therefore  convicted them.  The case against the  third  man was  held  -to  be  doubtful  and  he  was  acquitted.   Two convicted  persons then filed separate appeals in  the  High Court.   The  High  Court -accepted  the  findings  of  fact recorded   by  the  learned  Magistrate  and  came  to   the conclusion that on the facts proved there was 9

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no doubt that Sitaram had gone with a large sum of money  to meet the Chinese accused in order to purchase the, gold bars which  had been recovered from the, packets thrown  away  by the Chinese accused. The High Court then addressed itself to the question whether on  the facts proved the conviction of the  two  respondents could  be  sustained  in law.  The  charge  against  Sitaram Agarwala  was that on the date in question and at  the  time and  place which appeared in the evidence he had gone  there by  previous arrangement to purchase the smuggled gold  bars from  the  Chinese accused and was  therefore  concerned  in dealing with smuggled gold and thereby committed an  offence under S. 167(81) of the Act.  The charge against the Chinese accused  was that he had in his possession 23 smuggled  gold bars which he wanted to sell to Sitaram Agarwala and another person by previous arrangement and as such he was  concerned in  dealing with smuggled gold and was guilty under  s.  167 (81) of the Act.  So far as Sitaram Agarwala was  concerned, the  High  Court held that by merely going to  the  park  in order to purchase smuggled gold by previous arrangement,  it could  not be said that Sitaram Agarwala was in  any  manner dealing with smuggled gold.  The High Court was of the  view that  there was a mere attempt to purchase smuggled gold  on the  part of Sitaram Agarwala, but as the purchase  was  not completed  it  could not be said that Sitaram  Agarwala  was concerned in dealing with the smuggled gold.  The High Court therefore   ordered  the  acquittal  of  Sitaram   Agarwala, respondent.  As to the Chinese accused, the High Court  held that  though  he was found in possession of  smuggled  gold, which  he  knew to be such, and had attempted to  sell  that gold surreptitiously, s. 167(81) required knowledge that the article  in question was smuggled and intention  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 the Act.  In view of the intent  necessary, the High Court was of the view that before a person could be convicted  under  s. 167(81) it must be shown  that  he  was either  a  direct importer or concerned in some way  in  the import  of the smuggled article.  In other words,  the  High Court  thought that the section dealt with goods while  they were  being  smuggled;  it did not include in  its  scope  a person who subsequently obtained the smuggled goods and then dealt with them, though the smuggled goods themselves  might be  liable to confiscation when seized.   Consequently,  the High  Court  ordered the acquittal of  the  Chinese  accused also.  As the inter- 10 pretation of s. 167(81) was involved, the High Court granted certificates;  and that is how the two appeals have come  up before us.  The facts are not in dispute in this case and have been set out  above.  Thus the question that arises before us is  the interpretation of s. 167(81) and two aspects of that section have to be considered.  The first aspect is the ambit of the words "in any way concerned in or in any manner dealing with any  goods  with  respect to the importation  of  which  any prohibition or restriction is for the time being in force as aforesaid".  The second aspect is with respect to the intent necessary  under  the section and whether  that  intent  can arise  where  smuggling is over and smuggled goods  are  the possession of persons other than those actually concerned in the smuggling and are then dealt with by them in some manner or other. We  may briefly indicate the scheme of the Act in  order  to appreciate the purpose behind S. 167(81).  The object of the

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Act is to provide machinery for the collection inter alia of import  duties  and for the prevention of  smuggling.   With that object customs frontiers are defined, (Ch. 1);  Customs officers  are  appointed  with, certain  powers,  (Ch.  11); ports,  wharves, customhouses, warehouses and  boarding  and landing-stations are provided for, (Ch.  III);  prohibitions and restrictions of imports and exports are envisaged,  (Ch. IV); levy of and exemption from custom duties and the manner in which it has to be done is provided, (Ch.  V); drawbacks, i.e.,  refunds are provided in certain  circumstances,  (Ch. VI);  arrival and departure of vessels is  controlled,  (Ch. VII  and Ch.  VIII); provision is made for the discharge  of cargo,  (Ch.   IX),  and clearance of goods  for  home  con- sumption  (Ch.  X); provision is also made  for  warehousing and  transshipment, (Chapters XI, XII); provisions are  also made for exportation or shipment and re-landing (Ch.  XIII); special  provisions have been made relating to  spirit  (Ch. XIV)  and  coasting trade (Ch.  XV).  Then  comes  Ch.   XVI dealing with offences and penalties.  Offences enumerated in Ch.  XVI are of two kinds; first there are contravention  of the Act and rules thereunder which are dealt with by Customs officers  and  the  penalty for which is  imposed  by  them. These may be compendiously called customs offences.  Besides these  there are criminal offences which are dealt  with  by Magistrates  and which result in conviction and sentence  of imprisonment and/or fine.  These two kinds of offences  have been  created  to ensure that no fraud is committed  in  the matter of payment of duty and also to ensure that there is 11 no   smuggling  of  goods,  without payment of  duty  or  in defiance of any prohibition or restriction imposed under Ch. IV of the Act. It is necessary for our purpose to set out two provisions of s.   167 which is in Ch.  XVI.  These are s. 167 (8) and 167 (81 Section 167 (8) is in these terms :- "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:- (1) Offences "(8)  If any goods, the importation or exportation 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 restriction: or  Etc. Etc. (2) Section of this Act to which offence has reference 18  & 19 (3) Penalties such  goods shall be liable to confiscation; and any  person concerned  in any such offence shall be liable to a  penalty not  exceeding  three times the value of the goods,  or  not exceeding one thousand rupees." Section  167(81)  with which we are  particularly  concerned reads thus (1) Offences (continue).. "(81).  If any person knowingly,  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  of,  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  unlaw- fully removed from a warehouse or which are’ chargeable with a  duty  which  has not been paid or  with  respect  to  the importation  or  exportation  of which  any  prohibition  or

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restriction is for the time being in force as aforesaid; or (2) Section of this Act to which offence has reference General (3) Penalties such  person  shall  on conviction before  a  Magistrate  be liable to imprisonment for any term not exceeding two  years or to fine, or to both; L1sup. C.I/66-2 12 It  will  be seen that S. 167 (8) deals with  what  we  have called customs offences while s. 167(81) deals with criminal offences.  It is well-settled by the decisions of this Court that goods which have been imported against the  prohibition or  restriction imposed under Ch.  IV of the Act are  liable to confiscation at any time after import and this  liability extends even in the hands of third persons who may not  have had anything to do with the actual import.  So long as it is proved  that  the  goods  had  been  imported  against   the restrictions imposed under Ch.  IV, the goods remain  liable to  confiscation whenever found even if this is  long  after the  import  is over and even if they are in  possession  of persons who had nothing to do with the actual import.  It is also  well-settled by the decisions of this Court  that  the second  part of the penalty relating to any  person  applies only to a person concerned in the importation or exportation of  the  goods  and  does not apply to  a  person  found  in possession of the smuggled goods who had nothing to do  with the  importation or exportation thereof:  (see  Shivanarayan Mahato v. Collector of Central Excise and Land Customs(1). The  main  contention  of the respondents  which  has  found favour with the High Court was that s. 167(81) when it deals with  persons and subjects them to imprisonment and fine  on conviction  by a Magistrate is also concerned  with  persons who  are  in  some way or other actually  concerned  in  the import  and  has  no application to third  persons  who  had nothing to do with the actual import but might have come  in possession  of smuggled goods even knowingly after they  had been  smuggled.  Before however we consider this  contention which has found favour with the High Court we should like to dispose  of the other contention which was raised on  behalf of  Sitaram  Agarwala and which also found favour  with  the High Court.  It will be seen that s. 1 67 (8 1 ) deals  with persons who do certain things with the knowledge and  intent therein  specified and one such person with whom  that  pro- vision deals is a person who is, in any way concerned in  or in  any  manner  dealing  with any  goods  with  respect  to importation  of which any prohibition or restriction is  for the  time  being in force.  The High Court has held  on  the facts  in this case that Sitaram Agarwala cannot be said  to have  been  concerned  in  or in  any  manner  dealing  with prohibited goods inasmuch as he was merely negotiating  with the  Chinese accused for their purpose but the deal had  not been  concluded.  The view which found favour with the  High Court thus was that if the deal had been completed,  Sitaram Agarwala  could  be said to have been concerned  in  dealing with the prohibited goods but as the deal was not  completed and he (1)  C.A. 288 of 1964, decided on 14-8-65.                              13 was merely attempting to purchase the goods it could not  be said  that he was in any way concerned in or in  any  manner dealing with them.  We are of opinion that the view taken by the  High  Court  is not correct.  The  words  "in  any  way concerned in or in any manner dealing with prohibited goods" are  of  very  wide import.  It  is  neither  desirable  nor

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necessary  to  define  all manner  of  connection  with  the prohibited goods which might come within the meaning of  the words "in any way concerned in or in any manner dealing with such goods".  It will depend on the facts found in each case whether  it  can be said that any person  was  concerned  in dealing  with  such  goods.   We  shall  therefore   confine ourselves  to the facts of the present case and gee  whether on  these facts, it can be said that Sitaram was in any  way concerned  in or in any manner dealing with the goods.   Now the  evidence which has been accepted by both the courts  is that Sitaram had gone with a large sum of money to  purchase the  gold which was known to, be smuggled and to  have  been imported into India against the restrictions imposed on  the import of gold.  It has also been proved that Sitaram did so after previous arrangement with the Chinese accused.  If the constable who was following Sitaram had’ not interfered  the deal would have gone through and Sitaram would have paid the money  and  purchased the smuggled gold.  ’This was  a  case therefore  where  by means of previous  arrangement  with  a person  in possession of a smuggled article,  the  intending purchaser  had gone to purchase it and the deal did not  go, through  only  because  the  police  intervened.   In   such circumstances  where by previous agreement or arrangement  a person  goes  to purchase an article which he  knows  to  be smuggled  it  would in our opinion be a case  where  such  a person  must  be held to be concerned in  dealing  with  the prohibited  goods.   Where a person does any  overt  act  in relation  to prohibited goods which he knows to be such  and the act is done in consequence of a previous arrangement  or agreement it would in our opinion be a case were the  person doing  the act is concerned in dealing with the,  prohibited goods.   In  other words any transaction  relating  to  pro- hibited  goods which is done or attempted to be  done  after some  kind  of prior arrangement or agreement would  in  our opinion  clearly  amount to the person  being  concerned  in dealing   with  the  prohibited  goods.   Both   the   words "concerned"  and "deal" have a wide connotation.  The  words "concerned  in" mean "interested in,, involved in, mixed  up with" while the words "deal with" mean "to have something to do with, to concern one-self, to treat, to make arrangement, to  negotiate with respect to something".  Therefore when  a person enters into some kind of transaction or attempts tee 14 enter  into  some  kind  of  transaction  with  respect   to prohibited  goods and it is clear that the act is done  with some kind of prior arrangement or agreement, it must be held that  such a person is concerned in dealing with  prohibited goods.   The  fact  that the act stopped at  an  attempt  to purchase  as in the present case when the police  intervened does  not in any way mean that Sitaram was not concerned  in dealing  with  the smuggled gold.  The evidence  shows  that there must have been a previous arrangement with the Chinese accused to purchase the smuggled gold.  Sitaram went to  the appointed place and met the Chinese accused  surreptitiously and had a large’ sum of money with him to pay for the  gold. He  had  sat down with the Chinese accused in the  taxi  and there is no doubt that if the taxi had not been stopped, the transaction for the purchase of the smuggled gold would have gone  through.  In these circumstances even  though  Sitaram had  not  come into actual possession of the  smuggled  gold before the police intervened, there is no doubt that he  was concerned  in  -dealing  with  prohibited  goods.   We   are therefore  of  opinion that the High Court was in  error  in holding  simply because the purchase was not  complete  that Sitaram was not concerned in dealing with the smuggled  gold

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which was found with the Chinese accused.  The acquittal  of Sitaram on this ground must therefore be set aside. This  brings  us to the main question which  arises  in  the present  appeal,  namely, what is the intent required  in  a case coming under s. 167(81) and whether such intent can  be said to arise at all in a case where the import is  complete and  the prohibited goods are in the possession of  a  third person  who  had nothing; to do with the import.   For  this purpose  we  shall refer to that part of  s.  167(81)  which deals with the acquisition of possession of prohibited goods and  what we say about that part will equally apply  to  the other  parts of s. 167(81).  We may add that we are  dealing here  with  the first half of s. 167(81) and  not  with  the second half.    This part of s. 167(81) which we have  taken for  the  purpose of finding out what is the  knowledge  and intent that s. 167(81)   requires  would run thus : "If  any person knowingly, 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  the Act with respect thereto acquires possession of  any goods  with respect to which duty has not been paid or  with respect  to  the  importation of which  any  prohibition  or restriction  is for the time being in force."  The  argument which  has  found  favour with the High Court  is  that  the section, requires knowledge on the part of the accused                              15 that  the  goods were imported against  the  prohibition  or restriction in force.  This is undoubtedly so.  The  section further  requires  that the person who  has  this  knowledge should  also  have  the  intention  either  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 the Act.  Mere knowledge that the goods  are prohibited  goods or goods on which duty has not  been  paid would not be enough; the section further requires that there should  be an intent to defraud the Government of  the  duty payable  or  to evade any prohibition or  restriction.   The argument  on  behalf  of  the  respondents  which  has  been accepted  by  the  High Court is that once  the  goods  have evaded the payment of duty or have evaded the prohibition or restriction. with respect to their import and the  smuggling whether of dutiable or prohibited goods is complete, a third person  who comes into possession of such  goods  thereafter and who had nothing to, do with the smuggling itself  cannot be said to have the intent to defraud the Government of  any duty  payable (for such defrauding had already taken  place) or  to  evade  any  prohibition  or  restriction  (for  such prohibition  or  restriction had already been  evaded).   In effect,  the  argument  is  that this  part  of  s.  167(81) corresponds to s. 167(8) where a person has to be concerned, in  the  actual  importation before he can be  liable  to  a penalty. Now if the intention of the legislature was that the  person guilty under s. 167(81) could only be a person who was  con- cerned  in some way or other with the actual importation  or exportation  it would have been easy for it to use the  same words  in  s. 167(81) as were used in the first part  of  s. 167(8).   But  the  legislature  has not  done  so  and  the question  is  whether the words used in s.  167(81)  have  a different  meaning  from those used in s. 167(8).   What  s. 167(81)  requires  is that the person who comes  inter  alia into possession of prohibited goods must know that there  is some prohibition in force with respect thereto.  But  before he can be guilty under s. 167(81) it has further to be shown that he intends to evade the prohibition.  Where the case is

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not of prohibition but of duty, the person accused under  s. 167(81)  must  be shown to know that the duty has  not  been paid  and  also  to  have  the  intention  to  defraud   the Government  of the duty payable on the goods.  The  question that  arises is whether the third person who has  come  into possession  knowingly that the goods are prohibited  or  the goods  are  dutiable and the duty has not been paid  can  be said to have the intention of evading the prohibition or  to defraud the Government of the duty 16 payable, even though he may not have anything to do with the smuggling of the goods.  It  seems to us (taking a case of prohibition) that if  the prohibition  is  still  in force, the  person  who  acquires possession of prohibited goods knowing them to be prohibited intends to evade the prohibition by the action, even  though he  may not have been concerned in the actual  smuggling  of the goods.  So long as the prohibition lasts any person  who comes into possession of prohibited goods, though he may not be  concerned  in the actual smuggling would  stiff  in  our opinion  have  the intent to evade the prohibition  when  he remains  in  possession of the goods which  are  prohibited. The  prohibition in our opinion does not come to an  end  as soon  as  the  Customs  frontier is  crossed.   So  long  as prohibition  is in force and the goods are prohibited  goods any person in possession thereof, even though he may not  be concerned with the actual smuggling would still be guilty of evading  the  prohibition  by  keeping  the  goods  in   his possession.   If this were not so, it would mean  that  once the  prohibition has been successfully evaded by the  actual smuggler  the  goods  would  be  free  from  the  taint   of prohibition  and  could be dealt with by any  person  as  if there is no prohibition with respect to them.  If that  were to  be  the meaning of s. 167(81) there would be  a  serious lacuna   in  this  provision  which  is  meant  to   prevent smuggling.   Smuggling does not only stop at  importing  the goods  in the face of prohibition; it  envisages  subsequent transactions  like  sale of the smuggled goods, for  no  one would take the risk of smuggling unless he can find a market for  smuggled  goods.  Therefore the purchaser  of  smuggled goods though he may not be concerned in the smuggling  would in our opinion be equally guilty of evading the  prohibition by making the purchase.  The same in our opinion applies  to defrauding the Government of the duty.  Where goods had been smuggled in without paying duty the smuggler in such a  case also intends to sell the goods and make profit thereby.  The purchaser  of  such smuggled goods even though he  may  have nothing  to do with actual smuggling, usually  acquires  the goods at a lower price because the payment of duty has  been evaded.   Therefore when such goods reach even  third  hands there  is always the intention to defraud the Government  of the duty payable on the goods.  This appears to us to be the true  interpretation  of s. 167(81), which as we  have  said earlier  is  in different words from the first  part  of  s. 167(8), which deals with actual importation or  exportation. Section  167(81)  does not deal with actual  importation  or exportation; it deals with defrauding the Government of  the duty payable or evading the prohibition or                              17 restriction.   So  long as the duty is payable and  has  not been  paid,  or so long as the  prohibition  or  restriction remains in force any person acquiring possession of goods on which  duty has not been paid or restriction or  prohibition has been evaded would have the intent either to defraud  the Government  of the duty payable for he acquires goods  at  a

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lower price or would have the intention to evade restriction or  prohibition.   If  this were not so, there  would  be  a premium  on  successful smuggling and once  the  goods  have entered the country without paying ’duty or have entered the country  after evading the prohibition or restriction,  they can  be dealt with as if they were duty paid goods or  goods which  had not evaded the prohibition or  restriction.   The purpose of S. 167(81) is to punish smuggling and stop it  if possible.   That purpose in our opinion would be  completely defeated  if the interpretation which has found favour  with the  High Court were accepted.  We cannot  therefore  accept that the words used in S. 167(81) only apply up to the stage of   actual  importation  and  the  person  who  is   guilty thereunder   must  be  -somehow  concerned  in  the   actual importation.  It seems to us that they apply in the case  of prohibited or restricted goods so long as the prohibition or restriction lasts and whoever is in possession of such goods or  comes into possession thereof, even after the  smuggling is over must be attributed with the intention of evading the prohibition or restriction provided he knows that the  goods were  smuggled into the country in spite of the  prohibition or restriction.  Similarly where the goods are dutiable  and the duty has not been paid on them any person acquires  them with  the knowledge that the duty thereon has not been  paid would have the intention to defraud the Government of  duty, even  though he may not be the person actually concerned  in the  smuggling.   We therefore hold that S.  167(81)  has  a wider  sweep than S. 167(8) and it does not only apply to  a person  who may have been actually concerned in some way  or other with smuggling but also inter alia to persons who  may have come into possession of goods even after the  smuggling was over.  So long as the prohibition or restriction remains in  force or the duty has not been paid even a third  person coming  into  possession  of  such  goods  would  have   the intention either to evade the prohibition or restriction  or to defraud the Government of the duty payable thereon. It  remains now to refer to a few English cases because  our Act of 1878 was modeled on the English Customs Consolidation Act,  1876.   Decisions  of English  courts  therefore  with respect to corresponding provisions of the English Act would in   our   opinion  be  helpful  in  the   matter   of   the interpretation of S. 167(81). 18 Section  186 of the English Act corresponds to many  of  the provisions  contained in s. 167 of the Act.  In  particular, the  provision  corresponding  to s.  167(81)  is  in  these terms:-               "Every  person who....... shall be in any  way               knowingly  concerned  in  carrying,  removing,               depositing,  concealing,  or  in  any   manner               dealing  with  any such goods with  intent  to               defraud Her Majesty of any duties due  thereon               or to evade any prohibition or restriction  of               or application to such goods........" Such  goods"  in  the context of  the  section  mean  either prohibited  or  restricted goods or goods on which  duty  is leviable. The  other  clauses  of s. 186. of the English  Act  do  not specifically  contain  words  relating to  intent.   But  in Frailey  v.  Charlton  (1) it was  decided  that  intent  to defraud the revenue or to evade a restriction or prohibition would  apply  to  other clauses of s. 186  also.   Thus  the English  Act by s. 186 also requires that a person  who  was concerned  in  carrying,  removing etc., or  in  any  manner dealing with any prohibited or restricted goods or  dutiable

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goods  must do so knowingly and with intent to  defraud  His Majesty of any duty due thereon or to evade any  restriction or prohibition. The   interpretation  of  this  provision  in  s.  186   was considered  in  Beck v. Binks (2).  In that case  the  facts were  that  a person was found in possession  of  uncustomed goods  in London and it was urged, as was urged  before  the High  Court in the present case, that the  person  concerned could  not be said to be carrying the uncustomed goods  with intent  to defraud His Majesty of the duty because  such  an offence  could only be committed by the actual smugglers  or importers of goods or persons engaged in carrying the  goods from the ship etc. at the port of importation with intent to evade the payment of duty or tax.  This contention was nega- tived  and  the court held that "the  offence  of  knowingly carrying or in any manner dealing with uncustomed goods with intent  to  defraud  His Majesty of  the  duty  due  thereon contrary  to  s. 186 is not only committed at  the  port  of entry  or the place where the goods are actually landed;  it is committed anywhere in the realm by a person acting in the manner  described  by the sub-section".  Lord  Goddard  C.J. made the following observations at p. 252               "If a person is knowingly carrying  uncustomed               goods, he is assisting in the smuggling of the               goods;  for while goods are no doubt  smuggled               when they are brought into               (1) L.R. [1920] 1 K.B. 147.               (2) L.R. [1949] 1 K.B. 250.               19               the  country it is no good  bringing  smuggled               goods  into, the country unless something  can               be done with them" Such a person is  intending               to defraud His Majesty of the customs as  much               as anybody else.  The intent is there : it  is               all   part   of   one   operation.............               Otherwise, a most extraordinary lacuna is left               in the Act, for it can then be said that, once               a  man has got away from the port of entry  or               from  the place where the goods were  actually               landed, no one dealing with the smuggled goods               and  carrying them inland will ever be  guilty               of  an offence.  I do not think that has  ever               been held, and I am certainly not prepared  to               hold  it  now,  I think  it  clear  that  this               appellant  was dealing with-that is,  carrying               uncustomed goods and that he was carrying them               with  intent  to defraud His  Majesty  of  the               duties thereon." The  next  case  to which reference may be made  is  Rex  v. Cohen(1).   In  that  case  352  Swiss  watches  which  were uncustomed  were  recovered  from the  accused  and  he  was charged  with being in possession of uncustomed  goods  with intent  to  defraud  His,  Majesty  of  the  duties  thereon contrary  to  s. 186 of the English Act.  Dealing  with  the question  of  intent to defraud, it was held’  that  if  the accused  knew that the goods were uncustomed, the  intention to  defraud  the  revenue may be inferred.   Here  also  the uncustomed  goods  were  recovered from  the  house  of  the accused at Edgware and there was nothing to show that he was in  any way concerned with actual smuggling.  Even  so,  the court  held that he must be held to be intending to  defraud the revenue. The  next case to which reference may be, made is Sayce,  v. Coupe(2).   In  that case the accused-was in  possession  of certain American cigarettes on which duty had not been paid.

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It was held that where a person has in his possession  goods which are to. his knowledge uncustomed and which he  intends to  use  or sell,, he is guilty of the  offence  of  keeping uncustomed  goods with intent to defraud the revenue of  the duties  thereon contrary to s. 186.  In that case there  was nothing to show that the accused had anything to do with the importation or smuggling of the goods.  Even so, it was held that he had the intent to defraud the revenue. The next case to which reference may be made is Schneider v. Dawson(3).   That  was a case where a civilian  bought  from American  servicemen  cigars  and  spirits  which  had  been imported  free  of  duty  for  the  use  of  United   States Servicemen under art (1) L.R. [1951]1 K.B. 505.       (2) L.R. [1953] 1 K.B. 1. (3)  L.R. [1960]2 Q.B. 106. 20 agreement  between the British and American Governments  and kept  them for his own use.  He was charged  with  knowingly and  with intent to defraud Her Majesty of the duty  payable thereon   being  concerned  in  keeping  goods  which   were chargeable  with duty on which duty had not been  paid.   It was  held  that  the person’s conduct  clearly  amounted  to keeping  the smuggled goods and there was intent to  defraud the  revenue.  This case was under the English  Customs  and Excise Act of 1952, but the principle under the English  Act of 1876 was followed. These  cases  clearly indicate that the  offence  under  the corresponding provision of the English Act can be  committed long  after  the actual smuggling is over and  even  if  the person  found in possesSion of goods on which duty  had  not been  paid  had nothing to do with smuggling.   These  cases thus  clearly support the interpretation we have put on  the relevant words of s. 167(81). Further  the case of Schneider(2) shows that it  has  always been  held  in  England that if  dutiable  goods  have  been brought  into the country without paying the duty, the  duty attaches to the goods brought into the country and though it may  not have been paid at the moment of bringing the  goods for some special reasons (as, for example, where it is meant for a foreign ambassador) the duty is leviable later on when the  goods  pass into the hands of persons  other  than  the privileged person.  The same in our view applies equally  to goods  which are smuggled into the country and the duty  has been evaded.  The duty always remains payable on goods which have  been  brought in without payment of duty  and  whoever deals with them even at a later stage after the operation of smuggling is over would still be liable to pay the duty  and if  he does not, he must have the intention to  defraud  the Government of revenue.  The same applies to prohibition  and restriction  and so long as the prohibition  or  restriction remains in force, the person dealing with the smuggled goods which had evaded the prohibition or restriction must also be held  to evade the prohibition or restriction.  In the  view that  we have taken it is therefore unnecessary to  consider when  the import or smuggling ends, for s. 167(81) hits  not only  persons concerned in smuggling or importing  but  also all others who come into possession of or deal with smuggled goods after the smuggling is over. Lastly  learned counsel for the respondents refers us to  s. 135  of  the  Customs Act (No. 52 of  1962).   That  section provides  for what was formerly provided in s. 167  (81)  of the  Act.   The  argument is that it is  in  very  different terms.  That is undoubtedly so. (1)  L.R. [1960] 2 Q. B. 106. 21

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But it does not follow from the fact that the  corresponding section’ in    the  1962 Act is differently worded that  the provision  in s. 167 (81). cannot have the meaning which  is being pressed before us  on  behalf of the  appellant.   The interpretation  of s. 167(81) must depend upon the  language of  that  provision itself and on the language  used  in  s. 167(8)  we  have, no doubt that it applies not  only  to  an actual smuggler or a person concerned in smuggling but  also to all others who may be concerned with smuggled goods after the smuggling is over. In the view that we have taken of the meaning of s.  167(81) it  follows  that  on  facts  found  Sitaram  Agarwala   was concerned  in dealing with prohibited or  restricted  goods. It  also  follows on facts found that he had  the  necessary knowledge  and  intent  to  evade  the  prohibition  or  the restriction  even though he dealt with the goods  after  the smuggling  was  over and was not in any way  concerned  with actual  smuggling.   He would therefore be guilty  under  s. 167(81)  of  the Act.  We therefore allow  the  appeal,  set aside the order of acquittal made by the High Court, restore the  order  of  the Presidency Magistrate  and  confirm  the sentence passed on Sitaram Agarwala by the Magistrate. It also follows on facts found that Wang Chit Khaw is guilty under s. 167 (81) inasmuch as he was dealing with prohibited or  restricted  goods and had the  necessary  knowledge  and intent  as required under that section.  We therefore  allow the  appeal, set aside the order of the High Court,  restore that  of the Presidency Magistrate and confirm the  sentence passed on him by the Magistrate.                            ORDER In  accordance with the opinion of the majority the  appeals are allowed, the orders of the High Court are set aside, the orders  of  the Presidency Magistrate are restored  and  the sentences on the respondents are confirmed. 22