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PETITIONER: UNION OF INDIA & ORS.

       Vs.

RESPONDENT: M/S. RAI BAHADUR SHREE RAM DURGA PRASAD (P)LTD. & ORS.

DATE OF JUDGMENT: 19/11/1968

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. BACHAWAT, R.S. HEGDE, K.S.

CITATION:  1970 AIR 1597            1969 SCR  (2) 727  1969 SCC  (1)  91  CITATOR INFO :  F          1971 SC 116  (3)  RF         1976 SC1527  (5)  R          1986 SC2014  (6)

ACT: Foreign Exchange Regulation Act (7 of 1947), ss. 12, 22.  23 and  23A--Foreign Exchange Regulation Rules, 1952 r.  5  and Sea  Customs  Act (8 of 1878), s.  167(8)--Scope  of--  Form requiring  declaration   of  correct  invoice  value  before export--If  restriction  under  s.  12(1)  of   the  Foreign Exchange  Regulation  Act--Sea Customs Act,  provisions  of, when can be invoked.

HEADNOTE: By a notification dated August 4. 1947 issued under s. 12(1) of  the’  Foreign Exchange Regulation. Act,  1947  and  the, Foreign   Exchange  Regulation  Rules,  1952,  and   amended thereunder, the Central Government prohibited the export  to countries  mentioned  in its Schedule. of goods,  except  by post.  unless  a declaration supported by such  evidence  as may  be  prescribed  is furnished by  the  exporter  to  the prescribed  authority that the amount representing the  full export  value  of the goods has been paid or would  be  paid within  the  prescribed period.  In  1957,  the  respondents shipped   goods   after   furnishing   to   the   prescribed authority, namely, the Collector of Customs a declaration in the  statutory  form prescribed under the  Foreign  Exchange Regulation  Rules, and the Collector of Customs passed  the, goods  for shipment.  In 1965, the Dy. Collector of  Customs issued a notice to the respondents calling upon them to show cause why a penalty under s. 167(8) of the Sea Customs  Act, 1878,  should  not  be  imposed,  on  the  basis  that   the respondents  under valued the goods deliberately, that  they gave  in the prescribed form false particulars supported  by false evidence, that there was a failure to repatriate large amounts  of foreign exchange contrary to the    requirements of s. 12(2) and r. 5, that s. 12(1) of the Foreign  Exchange Regulation  Act  and  Rules required a  declaration  of  the actual amount representing the full export value and a  mere declaration of any value would not be sufficient  compliance

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with the provisions, that under the circumstances by  virtue of  s.  23  A of the Foreign Exchange  Regulation  Act,  the exportation  constituted an offence. under s. 167(8) of  the Sea  Customs Act.  the respondents thereupon. filed  a  writ petition contending that the declaration to the Collector of Customs  was  sufficient  compliance  with    the  statutory provisions   and  that  the  Collector  having  passed   the consignments  for shipment, had no further  jurisdiction  to take  proceedings against them.  A single Judge of the  High Court dismissed the petitions, but on appeal, the Divisional Bench allowed the petitions.  In ’appeal to this Court.     HELD:  Per Bachawat and Hegde, JJ.. On the facts set out in  the show cause notice the respondents could not be  held to have   contravened s.  12(1).     (1) The regulations contained in the Act are enacted  in the   economic  and  financial  interest  of  the   country. Therefore,   the  rigour  and sanctity  of  the  regulations should  be maintained but at the same time it should not  be forgotten  that  s.  12(1)  is  a  penal  section,  and   in interpreting   it.  it  is not competent  to  the  Court  to stretch its language in order to carry out the intention  of the’ Legislature. [752 E] 728     Tolaram  Rehumal  v. State of Bombay  [1955]  1  S.C.R., 158,  164, followed;     Re. H.P.C. Production Ltd. [1962] Ch. Dn. 466, 473, ,red London & North Eastern Ry. Co. v. Beriman, [1946] A.C.  286, 295, applied.     (2) Neither s. 12(1) nor any other provision of the  Act empowers   the   rule-making  authority  to   add   to   the restrictions imposed by the section, and for finding out the restrictions  imposed  by the section one can only  look  at that section.  The only restriction placed by s. 12(1)  read with  the notification dated August 4, 1947 is that  no  one should export any goods from this country without furnishing the  declaration  mentioned  in    s.12(1).   The  items  of information  called  for  in the prescribed form  cannot  be considered  as restrictions imposed by s. 12(1).   They  are merely  information  called for the proper exercise  of  the powers under the Act. In fact many of them do not relate  to the restrictions imposed if the section. [751 C--F]     (3)  So  far  as goods sold to  the  foreign  buyer  are concerned it is possible for the exporter to know the, exact export  value, but that would not be the position  when  the goods  are  sent on consignment basis, and, in such  a  case the:  exporter can give only an estimated value.   If  every declaration which does not state accurately the full  export value  of the goods exported is held to be, a  contravention of  s. 12(1) then all exports on consignment basis  must  be held to contravene the restriction imposed by s..12(1), but, the Legislature could not have intended that  minor mistakes in giving the full export value should be punished under  s. 23A.  Therefore, the declarations given in the present  case do satisfy the requirements of s. 12(1) though they did  not correctly furnish all the information asked for in the form, and  hence, there was no contravention of the section.  [751 H--752 D] (4)  The  main purpose of s. 12(1) is to get  a  declaration from  the  exporter  that  he  has   either    brought    or will   bring  back  the amount representing the full  export value of the goods.  The scheme of the Act is that so far as customs authorities are concerned all that they  have to see is  that  no  goods  are  exported  without  furnishing  the declaration  prescribed under s. 12(1).  Once that stage  is passed  the rest of the matter is left in the hands  of  the

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Reserve Bank and the Director of Enforcement under ss. 12(5) and (6). [752 B, 754 F]     (5)  Before a case can be held to fall within the  scope of ss. 23A and 167(8) of the Sea Customs Act, 1878, could be invoked,   it   must  be  shown  that  there  has   been   a contravention  of the restrictions imposed by s. 12(1);  but the language of s. 12(1) does not permit the  interpretation that  the Legislature intended that the offences  complained in these proceedings should be punishable under s. 23A.  The contravention   complained  of  in  this  case  are   really contraventions of s. 12(2) and r. 5 and they are punishable, the former, under s. 23 and the latter. under ss. 22 and 23. [751 B--C, G]     Per Sikri, J.  dissenting.  On the facts alleged by  the Customs  authorities no case for the issue of a writ to  the authorities had been made out.     (1)  The  Act was enacted in the interests  of  national economy.  Since a deliberate large. scale  contravention  of its  provisions  would have serious effects,  it  should  be construed   so  as to  make it  workable.  No   subject  can insist  on an interpretation which will have the  effect  of sabotaging the national economy. [739 H--740 A] 729     (2) As s. 12(1) itself does not impose any  restrictions and contemplates rules being made on: (a) evidence which  is to   support  declaration;  (b)  authority   to  which   the declaration  is  to  be furnished;  and (c)  the  manner  of payment;  the  restrictions  imposed  by  rules  which   are deferrable  to the section must be treated  as  restrictions imposed by the section. [740 H] Wellingdale  v.  Norris   [1909]   1  K.B.  ’57,  64,  Wicks v.   Director  of  Public Prosecution, [1947]  1  All   E.R. 205,  206,  R. v.       Wicks,  [1946] 2 All E.R.  529,  53t and  Rathbone v. Bumlock, [1962]            2 All E.R.  257, applied. Dr.  Indramani  Payarelal Gupta v.  W.R.  Nathu,  [1963]   1 S.C.R.  721, 737, distinguished. U.S.v. George R. Eaton, 36 L.Ed. 591 and Singer v.  U.S.  89 L.Ed.258, 290. referred to. (3)  Even in a case where the amount has not been  received, there   must  be declaration of some actual  figure,  which, according  to  the declaration represents the  ’full  export value’  It may be an estimate  if  the   goods have not been sold before the export, but a figure must be indicated.  The requirement of supporting evidence and r. 5(2)(ii) requiring the  statement  of  the invoice  value  in  the  declaration indicate  that    an  actual figure  has  to  be  mentioned. SeCtion  12(1)  and the notification  impose  a  conditional prohibition  an  on  exporter  which  he  can  lift    by  a unilateral declaration. When such a power is conferred on an exporter  by  a  statute good faith,  on his  part  must  be implied and is a condition prerequisite. Section 22 provides that  the declare shall not   give any information which  he knows  or has reasonable cause to believe   to be  false  or not  true Clerical mistakes and mistakes  made   bona   fide even  in  respect  of material particulars  would  not  come within  the  mischief  of  the  section.  but  a  deliberate falsehood and deliberate evasion of   the provisions of  the section would be a contravention of s. 12(1) for   otherwise the ambit of the section read with s. 23A would be  narrowed to  the  point  of  extinction.   An  exporter  and  persons concerned  in  the    export, could  with  impunity  give  a deliberately false declaration but in   apparent  compliance with   s.  12(1)  and  deprive  this  country   of   foreign exchange.    There   is   no   distinction,    between    an

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exporter   and   the  persons  concerned   in   the   export when  no  declaration  under  s.   12(1) is given at all and in  a case where the exporter gives a  deliberately    false declaration  for  the  purpose of the  applicability  of  s. 167(8) of the   Sea Customs Act. [1744 D--745 D]      (4) Since the same contravention may attract  penalties under  the  Sea Customs Act as well as the Foreign  Exchange Act  it  will be incongruous to hold that  the  restrictions imposed  by s. 12(1) are different   for the two acts.  [740 F--G] The Mayor of Portsmouth v. Charles Smith, 10 A.C. 364,  371, applied.      (5) Section 23A of the Foreign Exchange, Act deems  the restrictions   imposed under s. 12(1) to have  been  imposed under  s, 19 of the Sea   Customs Act, without prejudice  to the provisions in s. 23 dealing with   penalty and procedure for  contravention of the provisions of s. 12 or   any  rule or  direction or order made thereunder of  Foreign  Exchange Act     and   therefore,   offenders   who   violate   those restrictions  could be proceed with both under the  Foreign, Exchange  Regulation Act as well as the   Sea  Customs  Act. It  may be that action can be  taken against  an    exporter under other sections of the Foreign Exchange ReguLation Act 730 or  the  Sea Customs Act, but that does not  prevent  action under  s.  23A read with s. 12(1) with the  aid  of  customs authorities, both against exporters and persons concerned in the prohibited export. [745 E--H]

JUDGMENT: CIVIL APPELLATE JURISDICTION:  Civil Appeal Nos. 45 to 49 of 1968.       Appeals  from the judgment and order  dated  September 20,     1967 of the Madras High Court in Writ  Appeals  Nos. 247 to 251 of 1966.      C.K.    Daphtary,   Attorney-General,     Niren     De, Solicitor  General, N.S. Bindra, Mohan Kumaramangalam,  R.H. Dhebar,  A.S. Nambiar and’ S.P. Nayar, for  the   appellants (in  C.As. Nos. 45 and 47 to 49 of 1968 ).      Niren De, Solicitor-General, Mohan Kumaramangalam, N.S. Bindra,  R.H. Dhebar, A.S. Nambiar and S.P. Nayar, for   the appellants (in C.A. No. 46 of 1968).      A.K. Sen, Soli Sorabji, S.R. Vakil, B.D. Barucha,  G.L. Sanghi, and S.K. Dholakia, for the respondents (in C.A.  No. 45 of 1968).      N.A.  Palkhivala, Soli Sorabji, D.N. Misra, S.R.  Vakil and  B.D. Barucha, for the respondent (in C.As. Nos. 46  and 49 of 1968).     G.L.   Sanghi,   S.R.  Vakil  and  B.D.   Barucha,   for respondents  ’(in C.A. No. 47 of 1968) and their  respondent (in C.A. No. 48 -of 1968).     N.A. Palkhivala, P.P. Ginewala, D.N. Mukherjee and  Ajit Chaudhury, for interveners Nos. 1 to 4. A.K. Sen, S.D. Khetri, Avadh Behari and R.N. Bajoria, for intervener No. 5.   N.A. Palkhivala and D.N. Gupta, for intervener No. 6. M. C, Chagla and D.N. Gupta, for intervener No. 8.     N.A.  Palkhivala,  A.K.  Basu, S.C.  Mitter  and  1.  N. Shroff, for intervener No. 7. M.C. Setalvad and M.K. Banerjee, for intervener No. 9.     SIKRI, J. delivered a dissenting Opinion.  The  Judgment of BACHAWAT and HEGDE JJ. was delivered by HEGDE, J. SiKri,  J.  These five appeals by certificate  are  directed

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against the judgment of the High Court of Madras whereby the High   Court accepted the Writ Appeals against the  judgment of Kailasam, J., in Writ Petitions Nos. 1592, 1593, 1594 and 1601  of  1966 and 3948 of 1965, and directed the  issue  of writs of prohi- 731 bition  to  the Union of India, the  Collector  of  Customs, Madras, and the Deputy Collector of Customs,  Visakhapatnam, appellants  before  us,  prohibiting them  from  taking  any action in pursuance of certain show-cause notices issued  by the   Deputy  Collector  Customs,   Visakhapatnam.    Common questions of law are involved in these appeals and it  would suffice  if I give facts in Writ Petition No. 1592  of  1966 out of which Civil Appeal No. 45 of 1968 arises.     The   relevant   facts  in  that  writ   petition,   for appreciating the points raised before us, are as follows: On February   17,  1965,  the  Deputy  Collector  of   Customs, Visakhapatnam, issued memorandum No. S/21/14/65 to M/s.  Rai Bahadur  Seth Shreeram Durgaprasad (Private)  Ltd.,  Tumsar, and  five others, hereinafter referred to as  the  Shippers. In  this  memorandum,  in  brief, it  was  stated  that  the Shippers  had entered into a formal contract on October  13, 1965, with M/s.  Intercontinental  Ores  Supply Corporation, New  York,  for  the  shipment  of  20,000  tons  of  Indian Manganese  Ore  of the grade of 43% Mn., from  the  port  of Visakhapatnam at a price of $0.67 per unit of Manganese  per dry  long  ton, f.o.b. Visakhapatnam/Bombay.   The  Shippers exported from the port of Visakhapatnam 3,300 tons of Indian Manganese per’s.s. ’ALPHEM’ under the cover of Shipping Bill No.  187  dated March 20, 1957, declaring therein  that  the export  was  being  made  in  pursuance  of  the   aforesaid contract.  A G.R.I. form was attached.  It was stated that a certain  note-book which had been seized earlier  in  August 1963 disclosed that a sum of $25298.24 was received on April 21,  1957, from INOSCO, i.e., Intercontinental  Ores  Supply Corporation,  New York, the consignee of the subject  goods, the amount having been credited to an account in the name of Gangadhar  Narsinghdas Agrawal with the Trust Co.  of  North America,   115, Broadway, New York.  It was further  alleged in  the memorandum that the Shippers had  derived  financial benefits  in  respect of the subject export over  and  above those  revealed  to  the Customs  Authorities  and/or  other concerned  authorities  and the information about  them  was deliberately  suppressed.  It was further alleged that  this constituted  a  contravention  of s. 12(1)  of  the  Foreign Exchange  Regulation Act, 1947, read with  Notification  No. 12(17)-F.  1/47  dated August 4, 1947,  as  amended,  issued thereunder and the Foreign Exchange Regulation Rules, 1952.     I  may  mention that by this  notification  the  Central Government had prohibited "the export otherwise than by post of  any  goods either directly or indirectly  to  any  place outside India other than any of the countries or territories in  the Schedule annexed to this order unless a  declaration supported by such evidence as may be prescribed is furnished by the exporter to the prescribed 732 authority that the amount representing the full export value of  the goods has been or will within the prescribed  period be paid in the prescribed manner."     According  to  the Deputy Collector Customs,  the  goods have been thus exported in contravention of the restrictions and prohibitions imposed under s. 19 of the Sea Customs Act, 1878, read with s. 12(1) and the Notification No. 12( 17)-F. 1/47 dated August 4, 1947, issued thereunder, and s. 23A  of the Foreign Exchange Regulation Act, 1947, which exportation

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constituted an offence liable to be punished under s. 167(8) of  the  Sea Customs Act, 1878.   Accordingly,  the  parties concerned  were called upon to explain the matter  and  show cause in writing to the Collector of Customs, Madras, why  a penalty  should not be imposed on them/ him under s.  167(8) of the Sea Customs Act, 1878.     It  appears that a number of such memoranda were  issued in  respect of diverse shipments.  Thereupon five  petitions were  filed in the High Court of Madras.  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 was  prayed that a writ of prohibition or other  appropriate writ, order or direction under Art. 226 of the  Constitution of India prohibiting the respondents from taking any  action in pursuance of the said show-cause memos, may be issued.     Various  allegations were made but I need  only  mention the  following  allegations.   It  was  submitted  that  the petitioners  had  complied  with  the  statutory  provisions inasmuch  as  a  declaration  in  statutory  form  had  been furnished to the prescribed authority. to wit, the Collector of Customs, and the Collector of Customs, having passed  the consignments   for  shipment,  had  no  further   right   or jurisdiction   to   take   proceedings   relating   to   the consignments  in  question.   It was  contended  that  if  a declaration is found to be false, it did not mean that there was a breach of the provisions of s. 12(1).     In  reply it was contended that what was required  under s.  12(1)  of the Foreign Exchange Regulation  Act  and  the Rules  was not any value but the actual amount  representing the  full export value, and a mere declaration of any  value would not be sufficient compliance with the provisions of s. 12(1) of the Foreign Exchange Act.     The  learned Single Judge, Kailasam, J.,  dismissed  the petitions.   Various  points  were urged but  on  the  point addressed to us he held that the declaration to be given  by the  exporters  meant not only that the value of  the  goods will be paid in the prescribed manner but also that the full export value of the goods given is the correct value. 733     I may mention that before the Division Bench the case of the Revenue was clarified in an affidavit and we may set out para 5 thereof:                     "Since  the Court has now  directed  the               respondents  to file a supplemental  affidavit               clarifying the stand taken by the department 1               state respectfully that the stand taken by the               department  both  in the show-cause  memo  and               here  is  that  the  essence  of  the  offence               committed  by  the appellants is that  in  the               declaration  required under section  12(1)  of               the Foreign Exchange Regulation Act, they have               deliberately given false particulars supported               by  false evidence. By giving this  fraudulent               declaration,  they have secured the export  of               their   goods.    This  fraud   vitiates   the               declaration itself, thereby making the  export               one in violation of the prohibition  contained               in  Section  12(1)  of  the  Foreign  Exchange               Regulation Act     It  is  not  necessary to set  out  the  modus  operandi adopted  by  the petitioners but 1 may mention that  it  was contended that a scheme was entered into prior to the actual export  and the goods were undervalued deliberately and  the department was induced to accept their declarations by means of  false evidence and fraudulent suppression of facts.   It

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is  suggested that by this method a sum of  Rs.  3,20,00,000 had  been  suppressed  and  there  has  been  a  failure  to repatriate a corresponding amount of foreign exchange  which had been earned surreptitiously.  It was further stated that this scheme was adopted for all the shipments covered by the show-cause  notices,  and also for many other  shipments  in respect of which show-cause notices yet remain to be issued.     The Division Bench on appeal came to the conclusion that as  the  declarations were made under s. 12(1) and  as  they were  scrutinised by the authorities it is not  possible  to contend  that these goods were either exported or  attempted be exported in violation of the prohibitions or restrictions imposed  by law and are therefore, liable to be  confiscated under  s. 167(8)of the Sea Customs Act.  The Division  Bench further  held  that  the alleged fraud on the  part  of  the petitioners  did not make any difference. According  to  the Division   Bench   "if  the  petitioners  had   misled   the authorities  by false representations or failed  thereby  to repatriate  foreign  exchange, by virtue of  his  obligation under  s.  12(2),  these are different  offences  for  which separate and specific penalties can be imposed."     The  relevant  statutory  provisions  at  the  time   of exportation were as follows:        "The Foreign Exchange Regulation Act,  1947 s.  12(1) The Central Government may, by notification in 4 Sup. CI,/69-14 734 the Official Gazette, prohibit the taking or sending out  by land, sea or air (hereinafter in this section referred to as export)  of  any goods or class of goods  specified  in  the notification from India directly or indirectly to any  place so specified unless a declaration supported by such evidence as  may be prescribed or so specified, is furnished  by  the exporter  to  the  prescribed  authority  that  the   amount representing the full export value of the goods has been, or will within the prescribed period be, paid in the prescribed manner.       (2) Where any export of goods has been made to which a notification  under  sub-section  (1)  applies,  no   person entitled  to  sell  or procure the sale of  the  said  goods shall,  .except with the permission of the Reserve Bank,  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 unreasonable having regard to the ordinary  course of trade, or       (b)  payment for the goods is made otherwise  than  in the prescribed manner or does not represent the full  amount payable  by  the  foreign buyer in  respect  of  the  goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid:        Provided  that  no  proceedings  in  respect  of  any contravention  of  this sub-section   shall   be  instituted unless the prescribed period has expired and payment for the goods representing the full amount as aforesaid has not been made in the prescribed manner.        (3)  Where  in relation to any such  goods  the  said period  has  expired and the goods have not  been  sold  and payment therefor has not been made as aforesaid, the Reserve Bank may give to any person entitled to sell the goods or to pro.cure  the sale thereof, such directions as appear to  it to be expedient for the purpose of securing the sale of  the goods  and  payment  therefor  as  aforesaid,  and   without prejudice to the generality of the foregoing provision   may direct  that  the  goods shall be assigned  to  the  Central Government or to a person specified in the directions.

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      (4)  Where any goods are assigned in accordance  with sub-section  (3)  the Central Government shall  pay  to  the person  assigning them such sum in consideration of the  net sum recovered by or on behalf. of the Central 735 Government  in respect of the goods as may be determined  by the Central Government.     (5)  Where  in relation to any such goods the  value  as stated  in the invoice is less than the amount which in  the opinion of the Reserve Bank represents the full export value of  those  goods,  the  Reserve  Bank  may  issue  an  order requiring  the  person  holding the  shipping  documents  to retain  possession thereof until such time as  the  exporter of  the  goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of  the  exporter  payment in the prescribed  manner  of  an amount  which represents in the opinion of the Reserve  Bank the full export value of the goods.     (6)  For  the purpose of ensuring  compliance  with  the provisions of this section and any order or directions  made thereunder,  the Reserve Bank may require any person  making any  export  of  goods to which a  notification  under  sub- section  (1) applies to exhibit contracts with  his  foreign buyer or other evidence to show that the full amount payable by the said buyer in respect of the goods has been, or  will within  the  prescribed period be, paid  in  the  prescribed manner.     S. 22.  No person shall when complying with any order or direction  under  section 19 or with any  requirement  under section 19B or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or  has reasonable cause to believe to be false, or not true, in any material particulars.     S.  23. (1) If any person contravenes the provisions  of section  4,  section  5, section 9  or  sub-section  (2)  of section  12  or  of  any  rule,  direction  or  order   made thereunder, he shall--     (a) be liable to such penalty not exceeding three  times the  value of the foreign exchange in respect of  which  the contravention  has  taken place, or  five  thousand  rupees, whichever  is  more, as may be adjudged by the  Director  of Enforcement in the manner hereinafter provided, or     (b)  upon  conviction  by a Court,  be  punishable  with imprisonment  for a term which may extend to two  years,  or with line, or with both. 736 (IA) Whoever contravenes-       (a) any of the provisions of this Act or of any  rule, direction  or  order  made  thereunder,  other  than   those referred  to in sub-section (1) of this section and  section 19,  shall, upon conviction by a Court, be  punishable  with imprisonment  for a term which may extend to two  years,  or with fine, or with both;       (b)  any  direction  or order made  under  section  19 shall,  upon conviction by a Court, be punishable with  fine which may extend to two thousand rupees.       (1B) Any Court trying a contravention under subsection (1)  or  sub-section (IA) and the  authority  adjudging  any contravention under clause (a) of sub-section (1) may, if it thinks fit, and in addition to any sentence or penalty which it  may  impose  for such  contravention,  direct  that  any currency,  security,  gold or silver, or goods or any  other money or property, in respect of which the contravention has taken place, shall be confiscated to the Central  Government

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and  further direct that the foreign exchange  holdings,  if any, or the person committing the contravention or any  part thereof  shall  be  brought  back into  India  or  shall  be retained  outside  India in accordance with  the  directions made in this behalf.       Explanation.--For  the purposes of  this  sub-section, property in respect of which contravention  has  taken place shall include deposits in the bank, where the said  property is converted into such deposits       (2)  Notwithstanding anything contained in section  32 of the Code of Criminal Procedure, 1898, it shall be  lawful for  any Magistrate of the first class, specially  empowered in  this  behalf  by  the  State  Government,  and  for  any Presidency  Magistrate to pass a sentence of fine  exceeding two  thousand rupees on any person convicted of  an  offence punishable under this section. (3) No Court shall take cognizance--       (a)  of any offence punishable under  sub-section  (1) except  upon  complaint in writing made by the  Director  of Enforcement, or       (b) of any offence punishable under sub-section (1  A) of this section or under section 54 of the Indian Income-tax Act, 1922, as applied by section 19 of this Act, except upon complaint in writing made by the Director of Enforcement  or any officer authorised in 737 this behalf by the Central Government or the Reserve Bank by a general or special order:     Provided   that   where   any  such   offence   is   the contravention  of any of the provisions of this Act  or  any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint  shall be  made  unless the person accused of the offence has  been given an opportunity of showing that he had such permission.     (4)  Nothing in the first proviso to section 188 of  the Code of Criminal Procedure, 1898, shall apply to any offence punishable under this section.     S.  23A. Without prejudice to any provisions of  section 23  or  to any other provision contained in  this  Act,  the restrictions imposed by sub-sections (1) and (2) of  section 8,  sub-section  (1) of section 12 and clause  (a)  of  sub- section  (1  ) of section 13 shall be deemed  to  have  been imposed  under section 19 of the Sea Customs Act, 1879,  and all   the   provisions  of  that  Act  shall   have   effect accordingly,  except  that section 183  thereof  shall  have effect  as  if for the word "shall" therein the  word  "may" were substituted." "The Sea Customs Act, 1878 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: ------------------------------------------------------------                       Sections                       of this Act     Offences          to which            Penalties                       offence has                       reference ------------------------------------------------------------- 8. If any goods, the importation   18    Such  goods   shall be         liable or exportation of which is for     &     to confiscation; the time being prohibited or       19    and restricted by or under Chapter IV  of  this  Act,  be  imported               Any    person

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concerned       in into  or exported from India              any such   offence shall be contrary to such prohibition or          liable to a penalty not ex-                                         ceeding three  times the  value restriction;  or                          of the  goods,  or not exceeding If  any  attempt  be made  so  to              one  thousand rupees. import or export any such goods; or If  any such goods be found in any package produced  to  any officer of Customs as containing no such goods; or 738 -------------------------------------------------------- Offences                                       Penalties If  any such goods, or any dutiable goods, be  found  either before  or after landing or shipment to have been  concealed in  any manner on board of any vessel within the  limits  of any port in India; or If  any  goods, the exportation of which  is  prohibited  or restricted as aforesaid, be brought to any wharf in order to be  put on board of any vessel for exportation  contrary  to such prohibition or restriction. "Foreign Exchange Regulation Rules, 1952.                     3.    Form   of   declaration.--(1)    A               declaration under section 12 of the Act  shall               be  in one of the forms set out in  the  First               Schedule   as   the  Reserve   Bank   may   by               notification  in the Gazette of India  specify               as appropriate to the requirements of a case.                     (2)  Declarations shall be  executed  in               sets of such number as indicated on the forms.               4.   Authority  to  whom  declaration  to   be               furnished.                     (1)  The  original  of  the  declaration               shall   be  furnished  to  the  Collector   of               Customs: provided that when export is by post,               the  original  of  the  declaration  shall  be               furnished to the postal authorities.                     (2)  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 Customs shall within  21               days from the date of the export, be submitted               to  the  authorised dealer  mentioned  on  the               relevant declaration form, unless the  Reserve               Bank, in its discretion, authorises otherwise.                     5.  Evidence in support of  declaration.               (1)  The  Reserve  Bank, or  subject  to  such               directions,  if  any, as may be given  by  the               Reserve Bank, the Collector of Customs or  the               postal authorities, may, to satisfy themselves               of due compliance with section 12 of the Act,               379               require  such  evidence  in  support  of   the               declaration  as  may  satisfy  them  that  the               exporter is a person resident in India, or has               a place of business in India.               (2)  The  Reserve  Bank, or  subject  to  such               directions,  if  any, as may be given  by  the               Reserve Bank, the Collector of Customs, or the

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             Postal authorities may require any exporter to               produce  in  support of the  declaration  such               evidence as may be in his possession or  power               to satisfy them.                     (ii)  that the invoice value  stated  in               the declaration the full value. of the  goods;               and  (iii)  that the amount  representing  the               full  export  value of the goods has  been  or               will be paid to the exporter.               Explanation.--"                   The  points  which have emerged  from  the               discussion  at  the  Bar  and  which   require               determination may be formulated thus: (1)   What  is the meaning of the  expression  "restrictions mean-posed    by sub-section (1) of section 12" occurring in s.  23-A  of the Exchange Act ?  Can other sections  of  the Exchange Act be  looked at for determining the ambit of  the restrictions  imposed by s. 12(1) ? Do restrictions  imposed under the Rules made under the Exchange Act and relating  to s. 12(1) come within the meaning of this expression ?     (2) What is the true meaning of the words "a declaration supported  by  such  evidence as may be  prescribed  .or  so specified  is  furnished by the exporter to  the  prescribed authority that the amount representing the full export value of  goods has been or will within the prescribed  period  be paid in the prescribed manner" ’?  Is it necessary that  the declaration  shall  be  made honestly or in  good  faith  ’? Should it disclose the true export value it a breach of  the sub-section if a declaration is made honestly but happens to show  incorrect  export value to a small  but  not  material extent   ?   Does  not  a  deliberately  false   declaration contravene the provisions of s. 12(1) ?      (3)  If  an action is a contravention of s.  12(1)  and other  provisions  of the Exchange Act, e.g.,  ss.  22,  23, 12(2), 12(3) and 12(5), was it the intention that it  should be treated as a contravention  of s. 12(1)?      Before  dealing with point (1) mentioned above,  a  few preliminary observations may be made.  I have to construe an Act  which  was  enacted in the  interest  of  the  national economy.   A  deliberate large-scale  contravention  of  its provisions would affect 740 the interests of every man, woman and child in the  country. Such an Act, 1 apprehend, should be construed so as to  make it   workable;   it   should,  however,   receive   a   fair construction, doing no violence to the language employed  by the Legislature.  It was said that if two constructions  are possible the one that is in favour of the subject should  be accepted.   It  is  not  necessary  to  pronounce  on   this proposition for I have come to the conclusion that there  is one  true  construction of s. 12(1).  But I  should  not  be taken to be assenting to this proposition in so far as it is applicable   to an enactment like the Exchange Act,  for  no subject has a right to sabotage the national economy.     Coming  to  the first pointed find  that  the  following words  of  Lord  Blackman express my views  as  to  how  the construction  of  s.  23A should  be   approached.   He  was dealing  with  a case where a single section of  an  Act  of Parliament has been introduced into another Act.  He said in The  Mayor  of  Portsmouth  v. Charles Smith (1):                      "When  a  single section of an  Act  of               Parliament  is introduced into another Act,  I               think  it must be read in the sense  which  it               bore  in  the original Act from  which  it  is               taken,  and that consequently it is  perfectly

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             legitimate  to refer to all the rest  of  that               Act  in  order to ascertain what  the  section               meant,  though  those other sections  are  not               incorporated  in. the new Act.  I do not  mean               that  if  there  was in  the  original  Act  a               section  not incorporated, which came  by  the               way  of a proviso or exception on that  which.               is  incorporated, that should be referred  to.               But  all others, including the  interpretation               clause, if there be one, may be referred to."     It  seems to me that this is the correct way of  looking at  s.  23A  of the Exchange Act for  another  reason.   The restrictions imposed by s. 12(1) cannot be different for the purpose of the Exchange Act from that for the purposes of s. 167(8)  of the Sea Customs Act, for the breach of  s.  12(1) may  also  be punishable under the Exchange Act.   In  other words,  the same contravention may attract  penalties  under the  Sea  Customs Act as well as the Exchange  Act,  and  it would  be incongruous to hold that the restrictions  imposed by a section are different for different Acts.     Then am I entitled to take into account the restrictions imposed by the Rules made under s. 27 of the Exchange Act  ? It seems to me that rules not deferrable to s. 12(1)  cannot be taken into account, but any restrictions imposed by rules referrable  to  s.  12(1) must be  treated  as  restrictions imposed  by  s. 12(1).  Section  12(1)  itself  contemplates rules being made on three points. (1) 10  A.C. 364. 371 741 i.e. (1 ) the evidence which is to support the  declaration, (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 contexts and scheme of an Act this proposition may be true, the general rule is as  stated by  Lord  Alverstone. C.J., in Wellingdale v.  Norris(1)  as follows:                     "If it be said that a regulation is  not               a  provision of an Act, I am of  opinion  that               Rex v. Walker(2) 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 regulation made’ under  the               Act  becomes for the purpose of  obedience  or               disobedience  a  provision of  the  Act.   The               regulation  is  only the  machinery  by  which               Parliament  has  determined  whether   certain               things shall be or shall not be done."               These observations were approved by the  House               of  Lords  in  Wicks  v.  Director  of  Public               Prosecution(3) thus:                     "There  is, of ’course, no  doubt  that,               when  a  statute  like  the  Emergency  Powers               (Defence)  Act, 1939, enables an authority  to               make   regulations,  a  regulation  which   is               validly  made  under the Act, i.e.,  which  is               intra    vires        the    regulation-making               authority,  should  be regarded as  though  it               were  itself  an enactment.  As the  Court  of               Criminal   Appeal  has  pointed  out  in   its               judgment,  that was decided by the  Divisional               Court  in  Willingdale v. Norris(1),   and  it               appears  to  me that   decision  is  perfectly               correct.  Consequently, the charge against the               appellant  here  was in effect,  that  he  had

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             committed  crimes defined or contained in  the               Act of Parliament."                   The  Court of Criminal Appeals had  stated               in R.v. Wicks(4), as follows:               "The  first observation which the court  would               make  is that they are in  complete  agreement               with  the  decision        of  the  Divisional               Court in Willingdale v. Norris(1) that where a               statute   enables   an   authority   to   make               regulations,  a regulation made under the  Act               becomes  for  the  purpose  of  obedience   or               disobedience  a  provision of  the  Act.   The               regulation  is  only the  machinery  by  which               Parliament  has  determined  whether   certain               things  shall  or shall not be done.   It  is,               therefore, clear that the                (1)      [1909]      1      K.B.       57,64.               (2) [1875] L.R. 10Q.B. 355.                (3)    [1947]   1   All   E.R.   205.    206.               (4) [1946] 2 All E.R. 529, 531.               742               regulations  must be read as though they  were               contained  in  the Act  itself.   They  derive               their   efficacy  solely  from  the  Act   and               accordingly expire with the Act, but it may be               that  the legislature has provided  that  some               restrictions  or  consequences  shall   remain               effective  notwithstanding the  expiration  of               the Act."     In   a  recent  case,  Rathbone  v.   Bundock(1),    the Divisional Court following these cases held that  regulation 89 of the Motor Vehicles (Construction and Use) Regulations, 1955,  was  for the purpose of obedience or  disobedience  a provision of the Road Traffic Acl,  1930.     In  Dr. Indramani Pyarelal Gupta  v.  W. R.  Nathu   and Others(2)  this  Court was concerned, inter alia.  with  the interpretation   of  s.  3(1  )  of  the  Forward   Contract (Regulation) Act, 1952, which used the words "such duties as may  be  assigned  by or under  this  Act".   Ayyangar,  J., speaking for the majority, observed:                      "Learned  Counsel is undoubtedly  right               in his submission that a power conferred by  a               bye-law is not one conferred "by the Act"  for               in  the context the expression  "conferred  by               the Act" would mean "conferred expressly or by               necessary implication by the Act itself   ....               The  words,  "under the Act"  would,  in  that               context,  signify what is not directly  to  be               found  in the statute itself but is  conferred               or  imposed by virtue of powers enabling  this               to be done; in other words, by laws made by  a               subordinate  law-making  authority  which   is               empowered  to do so by the parent  Act.   This               distinction  is thus between what is  directly               done  by  the  enactment  and  what  is   done               indirectly  by rule-making  authorities  which               are  vested with powers in that behalf by  the               Act.   (vide  Hubli Electricity Bombay Ltd  v.               Province   of   Bombay(2),  and  Narayanaswami               Naidu v. Krishna Murthi(4)".               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  as

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 may  be               prescribed" as follows: "by this Act"  applies               to  powers  assigned  proprio  vigore  by  the               provisions  of  the  Act;  "under  this   Act"               applies  to an assignment made in exercise  of               an   express   power   conferred   under   the               provisions of the Act; and "may be prescribed"               takes in an assignment made in exercise of               (1) [1962] 2 All E.R. 257.         (2)  [1963]               1 S.C.R. 721,737.               (3)  67  I.A. 57. 66.              (4)  I.L.R.               (1958) Mad. 513. 547.               743               a   power   conferred  under  a   rule.   This               construction  gives a natural meaning  to  the               plain  words  used in the section  and  avoids               stretching   the  language  of   a   statutory               provision to save an illegal bye-law."     In  my opinion that case does not assist me because  the Court  was construing the words "by or under the  Act",  and Ayyangar, J., specifically discussed the meaning of "by  the Act" in the context.     Regarding  the  case  of  United  States  v.  George  R. Eaton,(1)  relied  on appellants’ behalf, I  find  that  the Supreme   Court   of  the  United   States   explained   and distinguished that case in Singer v. United States ( 2 )  as follows:                      "United  States v. Eaton(1)  turned  on               its   special  facts,  as  United  States   v.               Grirnaud(3)  emphasizes.   It  has  not   been               construed  to state a fixed principle  that  a               regulation  can never be a "law" for  purposes               of  criminal prosecutions.  It may or may  not               be,   depending  on  the  structure   of   the               particular statute.  The Eaton case involved a               statute  which levied a tax  on  oleomargarine               and   regulated   in   detail    oleomargarine               manufacturers.   Section  5  of  the   statute               provided  for  the keeping of such  books  and               records as the Secretary of the Treasury might               require.  But it provided no penalty for  non-               compliance.   Other sections,   however,  laid               down other requirements for manufacturers  and               prescribed penaLties for violations.   Section               20  gave the Secretary the power to. make  all                             needful regulations" for enforcing the  Act.  A               regulation   was.  promulgated  under  s.   20               requiring  wholesalers  to keep  a  prescribed               record.    The   prosecution  was   for   non-               compliance  with that regulation.  Section  18               imposed  criminal penalties for failure to  do               any  of  the things "required  by  law."   The               Court   held   that  the  violation   of   the               regulation promulgated under s. 20 was not  an               offence.  It reasoned that since Congress  had               prescribed penalties for certain acts but  not               for  the  failure to keep books  the  omission               could  not  be  supplied  by  regulation.  And               Congress  had not added criminal sanctions  to               the.  rules  promulgated under s. 20  of  that               Act."      I would in this connection prefer to apply the  English decisions  referred  to above, as s. 12(1) itself  does  not impose  any restrictions and contemplates certain things  to

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be prescribed. (1) 36 L. Ed 591. (2) 89 L. Ed 285, 290. (3) 220 US 506, 518, 519:55 L. Ed 563, 568:31 S. Ct. 480. 744     Coming now to the construction of s. 12(1), it seems  to me  that  what it requires is a declaration of  some  actual figure which according to the declarant represents ’the full export  value’.  Otherwise there is no  point  in  requiring support  of such evidence as may be prescribed.  Further  it is  clear that some actual figure has to be  mentioned  when the  exporter  declares  that he  has  received  the  amount representing  the full export value.  I apprehend  that  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 value stated in the declaration to  be the full export value of goods, is referrable to s. 12(1) of the Exchange Act and may be taken to indicate that an actual figure  has to be mentioned.  It may be an estimate’ if  the goods  have  not been sold before the export, but  a  figure must be indicated.     Coming  to  the crux of the problem, does  s.  12(1)  by itself require absolutely correct particulars ?  It is  said that  s.  12(1) does not require it for s. 22  requires  the exporter  only to make a declaration "which he knows or  has reasonable  cause  to be false or not true in  any  material particulars."   How  could  it be that if  s.  12(1)  itself requires  absolutely correct particulars,  s. 22 limits  the requirement  ?  It seems to me that there is force  in  this contention but only to a limited extent.  Section 12(1)  and the notification dated August 4, 1947, made under it, impose a  conditional prohibition.  The section confers a power  on an  exporter  to lift the bar by a  unilateral  declaration. When such a power is conferred on an exporter by a  statute, good  faith  on his part must at least be implied and  be  a condition  prerequisite. This construction is  necessary  in order to prevent abuse of the power given by the Act.   (See Maxwell  on  Interpretation of Statutes,  11th  Edition,  p. 116).    If   the  exporter  makes  a   deliberately   false declaration he contravenes s. 12(1) because he has not  made the  statutory  declaration  in  good  faith.   It  is   not necessary  to  say  that  the  declaration  becomes  nullity because the breach of good faith, a condition  prerequisite, is itself a contravention of the conditional prohibition  or restriction,  within s. 167(8) of the Sea Customs  Act  read with  s.  23A  and s. 12(1) of the  Exchange  Act.  Clerical mistakes  and  mistakes made bona fide even  in  respect  of material  particulars  are  not within the  mischief  of  s. 12(1),  but a deliberate falsehood and a deliberate  evasion of  the  provisions  of  s.  12(1)  come  within  s.  12(1). Otherwise the ambit of s. 12(1), read with s. 23A, would  be narrowed  to  the  point of  extinction.   An  exporter  and persons  concerned in the export could with impunity give  a deliberately  false declaration but in  apparent  compliance with s. 12(1), and deprive this country of foreign exchange. I cannot give an interpretation which will make 745 a  mockery  of  the  section.  But it  is  said  that  other sections  of  the  Exchange Act will take care  of  such  an exporter.  He can be prosecuted under s. 23(1A) read with s. 22.  He can be sentenced to imprisonment which may extend to two  years.   He can also be fined to an  unlimited  extent. The Foreign Exchange lost can be retrieved by a court acting 1  under  s. 23(B). This may be true that  the  exporter  is liable as stated above.  But what about persons concerned in

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the  illegal  export ?  It is the persons concerned  in  the export   which  in  most  cases  enables  the  exporter   to successfully  evade  the  provisions of  the  Exchange  Act. These persons are taken care of only under the Customs  Act. If  they  are covered by s. 167(8), there is  no  reason  to exclude  the  exporter himself.  It is not unusual  to  make persons  liable both to penalties under the Sea Customs  Act and  the  Exchange Act.  It is indeed conceded  that  if  no declaration  is  given  under s. 12(1)  and  the  goods  are exported,  the  exporter and the persons  concerned  in  the export would be liable to be proceeded both under s.  167(8) of the Sea Customs Act and the Exchange Control Act.  I  can draw no distinction between such an exporter and an exporter who  gives a deliberately false declaration for the  purpose of the applicability of s. 167(8) of the Sea Customs Act.     I  am  not impressed by the argument  that  the  Foreign Exchange  Act deals with the basic policy regarding  foreign exchange  and it was not the intention to  punish  offenders who  violate  foreign exchange restrictions  under  the  Sea Customs Act.  It is s. 23A of the Exchange Act which  itself deems  the restrictions imposed under s. 12(1) to have  been imposed under s. 19 of the Sea Customs Act.  Not only  that. The  opening sentence of s. 23A makes it clear that this  is without  prejudice to s. 23 and to any other  provisions  in the  Exchange Act.  In other words, the provisions of s.  23 and  other  relevant sections are not affected  or  limited. They will have their full operation.     The  fact  that the exporter may be proceeded  under  s. 12(2)  I may assume that this is so for the purpose of  this case)  for  non-payment of the full amount  payable  by  the foreign  buyer,  or  that  the  Reserve  Bank  can  in   the eventualities  mentioned in s. 12(5) require the holding  up of shipping documents or that the Reserve Bank by exercising powers under s. 12(6) secure contracts and other evidence to discover  the full amount payable do not throw any light  on the  construction  of s. 23A and s. 12(1)  except  that  the Legislature is anxious that the "full export value" shall be received  in this country.  Section 23A read with  s.  12(1) calls in the aid of Customs authorities to achieve the  same object.  but  ropes in alongwith the  exporter  the  persons concerned in the prohibited export. 746     I  am  not able to appreciate how the  existence  of  s. 167(37), s. 167(72) and s. 167(81) is of any assistance  for the  purpose  of  interpreting s. 23A and s.  12(1)  of  the Exchange  Act.   It  may be---I do not  decide  it--that  an exporter,  like the respondents, will also be liable  to  be proceeded against under these items of s. 167.     Taking  the facts as alleged by the Customs  authorities to be true, as they must be taken to be true for the purpose of  this application under Art. 226, it seems to me that  no case  for the issue of a writ of prohibition has  been  made out.   In  the result the judgment of the  Appeal  Court  is reversed and that of the learned Single Judge restored.  The appellants  will  have costs incurred in  this  Court.   One hearing fee.     Hegde, J.  We had the advantage of studying the judgment just  now delivered by our brother Sikri 3.  but  we  regret that we are unable to agree with the conclusions reached  by him. After carefully analysing the arguments advanced before us we have come to the conclusion that no grounds were  made out  to interfere with the order of the Appellate  Bench  of the  Madras  High Court.  We shall now proceed to  give  our reasons in support of our conclusion.     The  respondents  in  these  appeals  are  exporters  of

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manganese  ore.   It is said that they  had  exported  large quantities of manganese ore after ostensibly complying  with the  formalities  of  law but in  reality  they  had  under- invoiced  the various consignments sent by them and  further that  they had failed to repatriate foreign exchange of  the value  of about three chores of rupees obtained by  them  as the price of the manganese ore exported.  It is said that by so  doing  they  had contravened s.  12(1)  of  the  Foreign Exchange  ReguLation Act,  1947 (to be hereinafter  referred to as the Act) read with s. 23(A) of that Act and ss. 19 and 167(8) of the Sea Customs Act.  The case for the  appellants is  that  dying  the search of the houses  of  some  of  the respondents on suspicion that they had hoarded gold, certain documents  from  the house of some of the  respondents  were seized  and  those  documents disclosed the  facts  set  out above.   On  the basis of the said  information  the  Deputy Collector  of Customs, Visakhapatnam issued several  notices to  the  respondents  requiring them to show  cause  why  no action   should  not  be  taken  against  them   under   the aforementioned provisions.  On receipt of those notices  the respondents moved the High Court of Madras under Art. 226 of the Constitution praying that court may be pleased to  quash the  show  cause  notices  in  question  and  prohibit   the appellants  from taking any further ,action on the basis  of those  notices.  Those petitions were dismissed by  Kailasam J. on September 1. 1966   747 but his orders were reversed by the Appellate Bench of  that Court  by  its  Judgment  dated  September  12,  1967.   The Appellate  Bench  granted  the reliefs  prayed  for  by  the respondents.   It is as against that decision these  appeals have been brought after obtaining the necessary certificates from the High Court.     The  only  question that arises for  decision  in  these appeals  is whether on the facts set out in the  show  cause notices,  which facts have to be assumed to be  correct  for the  purpose  of these proceedings, the respondents  can  be held to have contravened s. 12(1) which reads:                     "The   Central   Government   may,    by               notification in the Official Gazette, prohibit               the taking or sending out by land. sea or  air               (hereinafter  in this section referred  to  as               export)  of  any  goods  or  class  of   goods               specified  in  the  notification  from   India               directly   or  indirectly  to  any  place   so               specified  unless a declaration  supported  by               such   evidence  as  may  be   prescribed   or               specified, is furnished by the exporter to the               prescribed    authority   that   the    amount               representing  the  full export  value  of  the               goods has been, or will within the  prescribed               period be, paid in the prescribed manner."     On  August  4,  1947, the Central  Government  issued  a notification  prohibiting  the export of all  goods  to  any place  outside India unless a declaration supported by  such evidence  as may be prescribed is furnished by the  exporter to the prescribed authority that the amount representing the full  export value of the goods has been or will within  the prescribed period be, paid in the prescribed manner.  Rule 3 of  the Foreign Exchange Regulation Rules 1952 framed  under s. 27 of the Act provides that a declaration under s. 12  of the  Act shall be in one of the forms set out in  the  First Schedule  as  the Reserve Bank may by  notification  in  the Official Gazette specify as appropriate to the  requirements of  a  case.   The form that is  relevant  for  our  present

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purpose  is  G.R.I.  Rule 5 empowers the Reserve  Bank,  the Collector  of Customs or the postal authorities, to  require the  exporter  to furnish such evidence in  support  of  the declaration  as  may  satisfy them that the  exporter  is  a person  resident  in India or has a place  of  business   in India.   These authorities may also require the exporter  to produce  in support of the declaration such evidence as  may be  in his possession or power to satisfy them (1) that  the destination stated on the declaration is the final place  of destination  of  the goods exported; (ii) that  the  invoice value stated in the declaration is the full export value  of the goods, and (iii) that the’ amount representing the  full export  value of the goods has been or will be paid  to  the exporter.   Form G.R. 1 stipulates that the exporter  should furnish the information called for therein. 748 Therein the exporter is also required to make the  following declaration.                      "I  hereby   declare   that  I  am  the               seller/consignor  of the goods in  respect  of               which  this declaration is made and  that  the               particulars given above are true and (a)  that               the invoice value declared is the full  export               value  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.                      1/My  principals undertake that  1/they               will  deliver to the bank mentioned below  the               foreign exchange/rupee proceeds resulting from               the export of these goods or before   ........               "     It  is not denied that the respondents before  exporting the  goods  in  question had furnished  declaration  in  the prescribed  forms.  Therein they had declared that the  full export  value  of  the goods has been  or  will  within  the prescribed  period be paid in the prescribed manner.  It  is also  not denied that they had furnished to the  appropriate authorities  the prescribed evidence. The case against  them as  mentioned earlier, is that they had  under-invoiced  the goods  and  failed to repatriate a portion  of  the  foreign exchange earned by them.  It is also alleged that they  gave incorrect  information  in  their  declarations.   If  these allegations  are  correct  which we have  to  assume  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.     Section  22  of  the Act provides that  no  person  when making  an  application or declaration to any  authority  or person  for  any  purpose  under  the  Act  shall  give  any information  or  make any statement which he  knows  or  has reasonable cause to believe to be false or not true,  in any material  particular.   Section 23 prescribes  that  if  any person  contravenes the provisions of s. 12 or of any  rule, direction or order made thereunder he shall (a) be liable to such  penalty  not exceeding three times the  value  of  the foreign  exchange in respect of which the contravention  has taken  place,  or five thousand rupees,  whichever is  more, as  may  be adjudged by the Director of Enforcement  in  the manner  provided  in  the Act or (b) upon  conviction  by  a court, be punishable with imprisonment for a term which  may extend to two years, or with fine, or with both.  In view of these  provisions it was not disputed before us that if  the information  given by the respondents in the  aforementioned declarations  was false to the knowledge of those  who  made those  declarations  or  if they  had  reasonable  cause  to

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believe that it was false or not true in any 749 material  particular then they are liable to be  dealt  with under s. 23. Sub-section (2) of s. 12 provides that:                     "where any export of goods has been made               to  which  a  notification  under  sub-s.  (1)               applies,  no  person  entitled  to  sell,   or               procure  the  sale of the  said  goods  shall,               except  with  the permission  of  the  Reserve               Bank,  do  or refrain from doing  anything  or               take or refrain from taking any action  which_               has the effect of securing that:                     (b)  payment  for  the  goods  is   made               otherwise  than  in the prescribed  manner  or               does not represent the full amount payable  by               the  foreign  buyer in respect of  the  goods,               subject to such deductions, if any, as may  be               allowed by the Reserve Bank, or is delayed  to               such extent as aforesaid  ......  "   The   contravention   of  the    above    provisions    is punishable  under s. 23.  Hence the respondents  failure  to repatriate  any part of the foreign exchange earned by  them by  the sale of the manganese ore exported can be  penalised by imposing on them a penalty not exceeding three times  the value  of  the  foreign exchange in  respect  of  which  the contravention  had taken place or Rs. 5,000/-  whichever  is more  as may be adjudged by the Director of  Enforcement  in the  manner provided in  the  Act. Hence it is open  to  the Director  of Enforcement to levy on such of the  respondents as  have contravened s. 12(2) panelist not exceeding   three times   the value of the foreign  exchange  not  repatriated which  in  the  present case can be  about  nine  crores  of rupees.  They may also be punished under s. 23(1)(b).  This position  is  conceded  by the  Counsel  appearing  for  the appellants.But it is urged on behalf of the appellants  that for  the offences committed by the respondents they are  not only  liable  to be punished under s. 23 but also  under  s. 23(A).   The  Appellate  Bench  of  the  Madras  High  Court negatived that contention. Section 23(A) as it stood at  the relevant time provided that:                   "without prejudice to the provisions of s.               23 or any   other provision contained in  this               Act,  the restrictions   imposed by   ........               sub-s.  (1)  of  s.  12            shall    be               deemed to have been imposed Under s. 19 of the               Sea    Customs Act 1878 and all provisions  of               that  Act  shall    have  effect  accordingly,               except that s. 183 thereof shall   have effect               as  if for the word ’shall’ therein  the  word               may were substituted." the  allegations  mentioned in the show cause  notices  come with the scope of s. 23(A) then it necessarily follows  that they will Sup. CI/69--15 750 be governed by the provisions of s. 19 and s. 167(8) of  the Sea  Customs Act, 1878.  Section 19 of the Sea Customs.  Act provides:                     "that  the Central Government  may  from               time  to time by notification in the  official               gazette  prohibit or restrict the bringing  or               taking  by  sea  or  by  land  goods  of   any               specified  description  into or out  of  India               across any customs frontiers as defined by the

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             Central Government." This  section  is similar to s. 12(1) of the  Act.   Section 167(8) provides for punishments for offences under that Act. That section to the extent material for our present  purpose reads:        "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- ------------------------------------------------------------    Offences               Sections of          Penalties                           this Act to                           which offen-                           ce has refe-                           rence --------------------------------------------------------------- 8.  If any goods, the importation     18 and     Such  goods shall be liable or exportation of  which is for                         19 to confiscation; and the time being prohibited or restricted  by or under Chapter                  any  person concerned in any IV of this Act, be imported into               such  offence shall be liable or exported from India contrary                to a  penalty not exceeding to  such prohibition or restriction;            three  times the value of the or                                        goods,   or    not exceeding one                                                  thousand rupees.   if any attempt be made so to   import  or  export  any  such   goods; or if  any such goods be found in any package produced  to  any officer of Customs as containing no such goods; or if  any such goods, or any dutiable goods, be  found  either before  or after land or shipment to have been concealed  in any  manner on board of any vessel within the limits of  any port in India; or if  any  goods, the exportation of which  is  prohibited  or restricted as aforesaid, be brought to any wharf in order to be  put on board of any vessel for exportation  contrary  to such prohibition or restriction.      If an offence falls under s. 23A the fact that the said offence  is also punishable under s. 23 is immaterial.   The provisions of 751 s.  23(A) are without prejudice to the provisions of s.  23. The  mere  fact  that  the  offences  alleged  against   the respondents are punishable under s. 23 would not exclude the application of s. 23(A).  Therefore all that we have to  see is whether those offences fall within the ambit of s. 23(A). If they do then the impugned show cause notices must be held to  be  valid.  If they do not, then no proceedings  can  be taken on the basis of those notices.     Before a case can be held to fall within the scope of s. 23(A)  it must be shown that there has been a  contravention of  the restrictions imposed by s. 12(1). Therefore we  have to  find  out  what  those  restrictions  are  ?   The  only restriction  placed  by  s.  12(1)  read  with  the  Central Government Notification dated August 4, 1947, is that no one

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should  export any goods from this country  without  furnish the  declaration  mentioned in s.   12(1).   Admittedly  the stipulated  declarations in the prescribed forms  have  been furnished.   The  evidence specified have also  been  given. Therefore  prima  facie there was no  contravention  of   s. 12(1).  What  is said against the respondents  is  that  the invoice price mentioned by them in the declarations did  not represent  the  full export value;  hence  the  declarations given by them are invalid declarations which means that  the concerned   goods  were  exported  without  furnishing   the declarations  required by s. 12(1).  It is not  possible  to accept this argument.  The declarations given to satisfy the requirements  of  s.  12(1) though  they  do  not  correctly furnish  all  the information asked for in the  form.   Such declarations   cannot   be  considered  as   non-est.    The information  called  for in the prescribed  form  cannot  be considered  as restrictions imposed by s. 12(1).   They  are merely  informations called for the proper exercise  of  the powers  under  the Act.  Many of them do not relate  to  the restrictions imposed by s. 12(1).  Neither s. 12(1) nor  any other provision in the Act empower the rule making authority to add to the restrictions imposed by s. 12(1).  For finding out the restrictions imposed by s. 12(1)we have only to look to  that  section.   The  requirement  of  that  section  is satisfied    if the stipulated declaration supported by  the evidence   prescribed  or  specified  is   furnished.    The contravention  complained  of  in this case  is  really  the contravention  of  s.  12(2)  and  Rule  5.  The  former  is punishable under s. 23 and the latter under s. 23 read  with s. 22.     The  declaration  required by s. 12(1) is  only  to  the effect that the amount representing the full export value of the goods has been or will within the prescribed period  be, paid  in  the prescribed manner.  This is as  it  should  be because  this  section governs both the goods  sold  to  the foreign  buyers  as  well as to those  sent  on  consignment basis.  So far as the’ goods sold to 752 the  foreign buy are concerned it is generally possible  for the  exporter to know the exact export value but that  would not  be the position when the goods are sent on  consignment basis.  In the case of goods sent on consignment  basis, the exporter can give only an estimated value. The main  purpose of  s. 12(1) is to get a declaration from the exporter  that he  has  either  brought  or  will  bring  back  the  amount representing  the full export value of the goods   exported. There  are  other provisions in the Act to deal  with  other situations.  We shall presently refer to them.     If we are to hold that every declaration which does  not state accurately the full export value of the goods exported is  a contravention of the restrictions imposed by s.  12(1) then  all  exports  on consignment basis  must  be  held  to contravene the restrictions imposed by s. 12(1).  Admittedly s. 12(1) governs every type of export.  Again it is hard  to believe that the legislature intended that any minor mistake in  giving the full export value should be penalised in  the magnet  provided in s. 23(A).  The wording of s. 12(1)  does not  support such a conclusion.  Such a conclusion does  not accord with the purpose of s. 12(1).     It is true that the regulations contained in the Act are enacted  in  the  economic and financial  interest  of  this country.   The contravention of those regulations  which  we were  told  are  widespread  are  affecting  vital  economic interest  of  this  country.  Therefore  the  rigorous   and sanctity  of those regulations should be maintained  but  at

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the same time it should not be forgotten that s. 12(1) is  a penal  section.  The true rule of construction of a  section like  s.  12(1)  is,  if we may  say  so  with  respect,  as mentioned  by  Plowman J. in Re H.P.C.  Productions  Ltd.(1) Therein the learned Judge observed:                      "I   approach  the  question   of   the               construction  of the Exchange Control  Act  in               the  light of the principles stated by  Upjohn               J. in London and Country Commercial Properties               Investment v. Attorney-General(2) to which Mr.               Bagnall referred.  In that case the court  was               concerned   with  the  construction   of   the               Borrowing  (Control and Guarantees) Act,  1946               and  the  Control  of  Borrowing  Order  1947.               Upjohn J. said: "The first question I have  to               consider   is  what  are  the  principles   of               construction which I must adopt in  construing               this Act and this order  ....  I have to  bear               in  mind  that this is a  penal  statute.   It               indeed,  I suppose, represents the high  water               mark  of  the Parliamentary  invasion  of  the               traditional  rights  of the subjects  of  this               realm."  Then he went on               (1)    [1962]    Ch.   Dn.    466    at    473               (2) [1953] 1, All E.R. 43&               753               to explain why that was so and continued:  "in               those  circumstances  what are the  canons  of               construction to be adopted ?  I do not propose               to  refer  to the authorities  at  length.   I               think   that  the  proper  approach   to   the               construction of such a statute as this is that               I  must  construe  it as  I  would  any  other               instrument, that is to say, I must look at               all the surrounding circumstances, I must look               at  the  mischief intended to be  remedied,  I               must  above all give effect to the words  that               have been used in the section.  That is  plain               from the decision in Dyke v. Elliot(1) see, in               particular, the judgment of  James L.J. but if               on construing the relevant sections of the Act               and  the  order there appears  any  reasonable               doubt or ambiguity, then being a penal statute               I   must  apply  the  principles   laid   down               succinctly  by Lord Esher in Tuck and sons  v.               Prester. ( 2 )               In  London  and  North  Eastern  Rly.  Co.  v.               Berriman,(3)  Lord Macmillan observed:                     "Where  penalties for  infringement  are               imposed  it is not legitimate to  stretch  the               language  of  a rule, however  beneficent  its               intention,   beyond  the  fair  and   ordinary               meaning of its language."               This  Court  in Tolaram Relumal  and  anr.  v.               State  of Bombay(4) speaking  through  Mahajan               C.J. observed:                     "It  is  not competent to the  Court  to               stretch  the meaning of an expression used  by               the  Legislature  in order to  carry  out  the               intention of the Legislature." Hereinbefore  we have examined the language of s. 12(1)  and its purpose.  We have also referred to the provisions  which provide  for the punishment of the contravention  complained of  in these cases.  Those provisions are adequate  to  meet the situation.  In our opinion the language of s. 12(1) does

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not permit the acceptance of the interpretation placed on it by the appellants nor are we able to come to the  conclusion that  the legislature intended that the offences  complained of  in these proceedings should be made punishable under  s. 23(A).   If  the interpretation sought to be placed  by  the appellants  on  s.  12(1)  is  accepted  it  may  result  in unnecessary hardship in numerous cases.     There  are two facets in every export, one  relating  to the  goods  exported and the other relating to  the  foreign exchange earned as a result of the export.  Broadly speaking the  former aspect is dealt with by the customs  authorities and the latter either by the  (1) [1872] LR. 4 P.C. 184, 191. (2) [1887] 19 Q.B.D. 629. (3) [1946] A.C. 286 at 295. (4) [1955] 1 S.C.R. 158 at p. 164. 754 Reserve  Bank or by the Director of Enforcement.  The  price of  the goods exported has to be mentioned in  the  invoice. But the Reserve Bank has power to examine whether the  price mentioned in the invoice is correct.  Section 12(5) provides that  where in relation to any goods exported the  value  as stated  in the invoice is less than the amount which in  the opinion of the Reserve Bank represents the full export value of  those  goods,  the  Reserve  Bank  may  issue  an  order requiring  the  person  holding the  shipping  documents  to retain possession thereof until such time as the exporter of the  goods has made arrangements for the Reserve Bank  or  a person  authorised by the Reserve Bank to receive on  behalf of  the  exporter  payment in the prescribed  manner  of  an amount  which represents in the opinion of the Reserve  Bank the  full export value of the goods.  Sub-Section (6) of  s. 12 says that for the purpose of ensuring compliance with the provisions of that section and any orders or directions made thereunder,  the Reserve Bank may require any person  making any  ,export of goods to which a notification  under  sub-s. (1)  applies to exhibit contracts with his foreign buyer  or other  evidence to show that the full amount payable by  the said  buyer in respect of the goods has been 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 exported is concerned the matter is left primarily in   the  hands  of  the  Reserve  Bank,  and  the   Customs authorities  are  not burdened with that work.  This  aspect becomes relevant in ascertaining the true scope of s. 12(1). If  we bear in mind the scheme of the Act, it is clear  that so  far  as the Customs authorities are concerned  all  that they  have  to  see is that no goods  are  exported  without furnishing the declaration prescribed under s. 12(1).   Once that  stage is passed the rest of the matter is left in  the hands of the Reserve Bank and the Director of Enforcement.     In view of our above conclusion it is unnecessary for us to  examine the other contention advanced on behalf  of  the parties.  In  the  result these appeals fail  and  they  are dismissed with costs. One hearing fee.                  ORDER     In  accordance with the opinion of the  majority,  these appeals are dismissed with costs.  One hearing fee. 755