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PETITIONER: ABDUL AZIZ AMINUDIN

       Vs.

RESPONDENT: STATE OF MAHARASHTRA

DATE OF JUDGMENT: 07/02/1963

BENCH: DAYAL, RAGHUBAR BENCH: DAYAL, RAGHUBAR IMAM, SYED JAFFER SUBBARAO, K. MUDHOLKAR, J.R.

CITATION:  1963 AIR 1470            1964 SCR  (1) 830  CITATOR INFO :  R          1966 SC1586  (12)  E          1973 SC 106  (37,146)

ACT: Import and Export--Powers to prohibit or restrict import and Export--Scope of--Licence to import goods issued subject  to condition  not to sell goods imported--Contravention of  the condition--Licensee,  if  liable to  punishment--Import  and Export (Control) Act, 1947 (XVIII of 1947), ss. 3, 5-Imports (Control) Order, 1955, Cl. 5, sub-cls. (2), (4).

HEADNOTE: The  appellant  as  the  Chairman  of  the  Powerloom   Sadi Manufacturer’s   Go-operative  Association,   obtained   the licence for the import of certain quantity of art silk  yarn by  the Association’ The licence was issued subject  to  the condition  that  the  goods  would  be  utilised  only   for consumption  as raw material or accessories in the  licence- holders’  factory and that no portion thereof would be  sold to  any party.  The Associa. tion could not arrange for  the necessary  finances  and therefore had  the  goods  imported through Warden & Co., who financed the transaction.  Part of the  goods  received  was utilised In  accordance  with  the condition  of  the  licence, the rest was  however  sold  by Warden & Co., and the amount was paid to the Association  by way of profits.  The appellant and the other members of  the Association were prosecuted for committing the office  under s.  5  of the Imports and Exports  (Control)  Act,1947,  for having  contravened the Imports (Control) Order,  1935,  but all  of them were acquitted by the trial court.   The  State appealed against the acquittal of the appellant alone  which was  allowed  by  the  High  Court  and  the  appellant  was convicted and sentenced to three months’ rigorous  imprison- ment alongwith a fine of Rs. 2,000/-. Held,  that the power conferred under s. 3(1) of the Act  is not restricted merely to prohibiting or restricting  imports at  the point of entry but extends also to  controlling  the subsequent  disposal of the goods imported.  It is  for  the appropri.  ate authority and not for the courts to  consider -the policy, which must depend on diverse consideration,  to

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be adopted in regard to the control of import of goods.  The provision  in  cl. 5 of the order empowering  the  licensing authority to attach   831 a  condition  to the effect that the goods  covered  by  the licence  shall  not  be disposed of  except  in  the  manner prescribed  by the licensing authority is a valid  provision which  comes within the powers conferred by s. 3 of the  Act on the Central Government. State  of  Bambay v. F. N. Balsara, [1931]  S.C.R.  682  and Glass  Chatons Importers and Users’ Association v. Union  of India, [1962] 1 S.C,R. 862, held inapplicable. Daya v. Joint Chief Controller of Imports and Export, [1963] 2 S.C.R. 73, referred to. Held,  that in the present case the licence has been  issued under the Order of 1955.  The language of sub-cl. (2) of cl. 5  of  that Order is wide and permits the imposition  of  ’a condition  which was outside sub-cl. (5) of cl. (a)  of  the Order  of  1948.  Sub.cl. (4) of cl. 5 makes  it  obligatory upon the licensee to comply with all the conditions  imposed or deemed to be imposed under cl. 5. The licensing authority is competent - under the Order to impose the condition  that the  imported  goods be not sold to any person and  thus  to effect   the   ordinary  rights  of   the   importer.    The contravention of any condition of a licence thus amounts  to the contravention of the provisions of sub-cl. 4 of cl. 5 of the Order and consequently to the contravention of the order made  under the Act and therefore the licensee makes  itself liable to punishment under s. 5 of the Act. East  India Commercial Co. v. Collector of Customs [19631  3 S.C.R.  338 and C. T. A. Pillai v. H. P. Lohia, A.I.R.  1957 Cal, 83, held inapplicable. Held,  that for contravening the condition of  the  licence, actual  possession of the imported goods is  not  necessary. Further, the possession of Warden & Co , would be possession of  the Association, as the former was its agent  to  import the goods. Held,  further  that the appellant aided  intentionally  the Association in disposing of the goods through Warden &  Co., and therefore abetted the contravention of the condition  of the  licence.   The case appears to be  deliberate  case  of securing  import licence with a view to mis-apply the  goods imported  and  therefore,  the  sentence  of  three  months’ rigorous imprisonment and fine of Rs. 2000/- is not severe.

JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 168 of 1961. 832 Appeal  by special leave from the judgment and  order  dated August 3, 1951, of the Bombay High Court in Criminal  Appeal No. 99 of 1961. Shaukat Husain and P. C. Agarwala, for the Appellant. C.   K. Daphtary, Solicitor-General of India, D.  R.    Prem and R. N. Sachthey, for the respondent. 1963.   February 7. The judgment of the Court was  delivered by RAGHUBAR DAYAL,J.-This appeal, by special leave, is  against the  order  of the High Court of Bombay allowing  the  State appeal and convicting the appellant of the offence under  s. 5   of  the  Imports  and  Exports  (Control)   Act,   1947, hereinafter  called  the  Act, for  having  contravened  the Imports (Control) Order, 1955, hereinafter called the Order,

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and  sentencing him to three months’  rigorous  imprisonment and a fine of Rs. 2,000/- . The  appellant  was the Chairman of the  Malegaon  Powerloom Sadi    Manufacturer’s   Cooperative    Association    Ltd., hereinafter  called the Association.  There were  six  other members of the Association.  All the members were  powerloom weavers.   The  appellant, as Chairman of  the  Association, applied for and obtained the licence dated January 2,  1956, for  the import of certain quantity of art silk yarn by  the Association.    The  licence  was  issued  subject  to   the condition  that  the  good,;  would  be  utilised  only  for consumption  as raw material or accessories in the  licence- holders’  factory and that no portion thereof would be  sold to  any  party.  The Association could not arrange  for  the necessary  finances  and therefore had  the  goods  imported through Warden & Co., who financed the transaction.  Part of the goods received was utilised  833 in  accordance with the condition of the licence,  the  rest was  however sold by the said Warden & Co., as a  result  of the  correspondence  ending by a letter dated  November  13, 1956,  from the appellant as Chairman of the Association  to Warden & Co. The relevant portion of this letter is               "In this connection we have to inform you that               as  the  price  of Art silk  yarn  has  fallen               greatly it is not possible for our Association               to  take  delivery of the balance  goods.   As               such,  you are therefore requested to  dispose               of  the balance goods lying with you  in  such               manner  that our Association suffers  no  loss               whatsoever, but gets a net profit of at  least               4% on these goods." After the disposal of the goods Warden & Co;, did pay to the Association  a sum of Rs. 5,040/- by way of profits  of  the Association. The appellant and the other members of the Association  were prosecuted for committing the offence under s. 5 of the Act. They were acquitted by the trial Court.  The State  appealed against  the acquittal of the appellant alone.   The  appeal was  allowed,  with  the  result  that  the  appellant   was convicted of the offence under s. 5 of the Act.  He has come up in appeal. The  various contentions raised for the appellant are :  (i) The  Act  was  intended for the purpose  of  prohibiting  or controlling  imports  and exports which, according to  s.  2 thereof,  meant respectively bringing goods into and  taking out  of  India  by  sea, land  or  air,  and  therefore  any provision in the Order providing for the issue of a  licence to  import  goods subject to the condition  that  the  goods covered  by  the licence be not disposed of  except  in  the manner  prescribed by the licensing authority could  not  be validly made in the exercise of the powers conferred 834 on  the Central Government under s. 3 of the Act, as such  a condition deals with the conduct of the licensee  subsequent to the import’ of the goods. (ii) the Order does not provide for the imposition of the condition in the licence that  the licensee  is  not  to sell the  imported  goods.  (iii)  The contravention  of  any  condition of the  licence  does  not amount to a contravention of the provisions of the Act or an Order made thereunder and therefore is not punishable  under s.  5 of the Act. (iv) The Association was the licensee  and therefore any contravention of the condition of the  licence would  be  committed  by  the Association  and  not  by  its Chairman and consequently it would be the Association  which

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should have been tried for the alleged offence under s. 5 of the  Act  and not the Chairman. (v) The  possession  of  the goods  had not passed to the Association and  therefore  the Association  could  not be guilty of the offence.  (vi)  The appellant  has  no  mens  rea  to  commit  the  offence  and therefore could not be guilty of the offence. (vii)  Lastly, the sentence is severe. The  relevant provisions of the Act and the Order  to  which reference  is necessary may now be quoted.  The preamble  of the Act reads :               "’An  act  to continue for  a  limited  period               powers  to  prohibit or  control  imports  and               exports.               Whereas  it  is expedient to  continue  for  a               limited  period, powers to prohibit,  restrict               or otherwise control imports and exports." Section 2 says that in the Act, ’import’ and ’export’  means respectively  bringing into and taking out of India by  sea, land or air.  Section 3 empowers the Central Government,  by order published in the Official Gazette, to make  provisions for  prohibiting, restricting or otherwise  controlling,  in all  cases or in specified classes of cases, and subject  to such exceptions  835 if any, as may be made by or under the order, the import and export  of goods of any specified description.   Section  5, the penalty section, provided, at the relevant time, that if any person contravened or attempted to contravene or abetted a  contravention  of any order made or deemed to  have  been made under the Act, he would be punishable with imprisonment for  a  term which may extend to one year, or with  fine  or with both.  The section was amended in 1960 and as a  result of  the amendment the contravening of any condition  of  the licence  granted under the order, was also made  punishable. The  amended  provision, however, is not applicable  to  the present case. Clause 5 of the Order deals with the conditions of  licence. Its relevant provisions read "(1)  The licensing authority issuing a licence  under  this order may issue the same subject to one or   more   of   the conditions stated below :- (i)  that the goods covered by the licence shall not   be disposed  of,  except  in  the  -manner  prescribed  by  the licensing  authority, or otherwise dealt with,  without  the written permission of the licensing authority or any  person duly authorised by it; x       x             x         x         x     x      x (2)  A  licence  granted under this order may  contain  such other  conditions,  not inconsistent with the  Act  or  this order, as the -licensing authority may deem fit. x            x              x          x      x    x     x (4)  The  licensee shall comply with all conditions  imposed or deemed to be imposed under this clause." 836 In support of the contention that the power conferred on the Central  Government for making provisions  for  prohibiting, restricting or otherwise controlling import of goods can  be exercised only with respect to the actual entry of the goods into  the  territory of India and not with  respect  to  the control  of  the imported goods subsequent  to  their  being brought  into the territory, reference was made to the  case reported as The State of Bombay v. F. N. Balsara (1).   That case  dealt  with  a different matter.  It  related  to  the powers   under  the  Bombay  Prohibition  Act,  1949.    The contention  was  that the Provincial Legislature  could  not

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make  a law regarding production,  manufacture,  possession, transport,  purchase and sale of intoxicating liquor in  the exercise  of the powers under Entry 31 of List  II,  Seventh Schedule  to the Government of India Act, 1935, as the  word ’import’ used in Entry 19 of List 1 of the same Schedule did not end with mere landing of the goods on the shore or their arrival in the customs house but did imply that the imported goods must reach the hands of the importer, and he should be able  to possess them.  It was argued that the impugned  Act dealt with import of goods and therefore encroached upon the legislative  powers of the Central Legislature.  It  was  in this context and in view of the principles applicable to the construing  of  the provisions laying down  the  legislative limits of different legislatures that it was said at p. 70O.               "Under  the  provisions of the  Government  of               India Act, a limited meaning must be given  to               the  word  ’import’ in entry 19 of List  1  in               order to give effect to the very general words               used in entry 31 of List II." This observation cannot be applicable to the  interpretation of the content of the words ’import’ and ’export’ in the Act in the present case. In Glass Chatons Importers & Users’ Association v. Union  of India (2), it was contended that s. 3 (1) (1951) S.C.R. C82.    (2) [1962] 1 S.C.R. 862,  837 of  the Act, insofar as it permitted the Central  Government to  make the order contemplated by sub cl. (h) of cl.  6  of the order which provides for the refusal to grant a  licence if  the licensing authority decided to canalize imports  and the  distribution  thereof through  special  or  specialized agencies  or  channels,  was invalid.   The  contention  was repelled, it being held that such a restriction on the right to   carry  on  trade  and  to  acquire  property  was   not unreasonable.   The point urged before us was not argued  in that  case,  but the case dealt with the  provision  in  the order  relating  to the distribution of the  imported  goods through selected agencies, a stage subsequent to the  actual import of goods and the Court held that provision good. In  Daya v. Joint Chief Controller of Imports  and  Export-3 (1), it was held that the provisions contained in cl. 6  (h) of the order, empowering the Chief Controller of Imports and Exports  to refuse a licence if the licensing authority  had decided to canalize imports and distribution thereof through a  special channel or agency, could be made in the  exercise of the power conferred on the Central Government under s.  3 of the Act. It  is clear therefore that the power conferred under  s.  3 (1)  of the Act is not restricted merely to  prohibiting  or restricting  imports at the point of entry but extends  also to   controlling  the  subsequent  disposal  of  the   goods imported.   It is for the appropriate authority and not  for the  Courts  to consider the policy, which  must  depend  on diverse  considerations,  to  be adopted in  regard  to  the control of import of goods.  The import of goods can be con- trolled  in several ways.  If it is desired that goods of  a particular  kind  should not enter the country at  all,  the import  of those goods can be totally prohibited.   In  case total prohibition is not desired, the goods could be allowed to come into -the country in limited (1)  [1963] 2 S.C.R. 73. 838 quantities.   That would necessitate empowering  persons  to import under licences certain fixed quantities of the goods. The  quantity  of  goods ’to be imported  will  have  to  be

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determined  on  consideration of the  necessity  for  having those  goods in the country and that again, would depend  on the  use  to be made of those goods.  It  follows  therefore that  the persons licensed to import goods up to  a  certain quantity  should be amenable to the orders of the  licensing authority  with respect to the way in which those goods  are to  be  utilised.  If the licensing authority  has  no  such power, its control over the import cannot be effective.   It may have considered it necessary to have goods imported  for a   particular   purpose.   If  it  cannot   control   their utilisation  for  that purpose, the  imported  goods,  after import, can be diverted to different uses, defeating thereby the very purpose for which the import was allowed and  power had  been  conferred on the Central  Government  to  control imports.  It is therefore not possible to restrict the scope of the provision about the control of import to the stage of importing  of  the goods at the frontiers  of  the  country. Their  content is much wider and extends to every  stage  at which  the  Government feels it necessary to  see  that  the imported  goods  are properly utilised for the  purpose  for which their import was considered necessary in the interests of the country. We  are therefore of opinion that the provision in cl. 5  of the  Order  empowering the licensing authority to  attach  a condition  to  the  effect that the  goods  covered  by  the licence  shall  not  be disposed of  except  in  the  manner prescribed  by the licensing authority is a valid  provision which comes within’ the powers conferred by s. 3 of the  Act on’ the Central Government. In  support of the second contention that the.   Order  does not provide for imposing the condition  839 that  the imported goods be not sold, reliance is placed  on the  decision in East India Commercial Co. v.  Collector  of Customs  (1).  In that case, a condition was imposed in  the licence  prohibiting the importer from selling the  imported goods.  Sub-cl. (1) of cl. (a) of Notification No.  2/ITC/48 dated  March 6, 1948, provided for imposing a  condition  in the  licence  to  the effect that  the  importer  shall  not dispose  of  or otherwise deal. with the goods  without  the written permission of the licensing authority or any  person duly authorised.  Sub-cl. (v) of cl. (a) of the Notification provided :               "that  such  other conditions may  be  imposed               which the licensing authority considers to  be               expedient  from  the administrative  point  of               view  and which are not inconsistent with  the               provisions of the said Act;" The  actual condition imposed, however, did not fall’  under sub-cl.  (1)  of cl. (a) and was sought to be  supported  by relying  on  sub-cl. (v).  This Court held that  under  that clause  a licensing authority was competent to  impose  only such  condition as may be expedient from the  administrative point’.  of view.  This Court further held that  prohibiting an importer from disposing of the goods imported affects the rights of that person and therefore such a condition  cannot be  prescribed  in  the licence in the  absence  of  a  rule permitting  that  to be done.  In the case  before  us,  the licence  has  been  issued under the  Order  of  1955.   The language  of sub-cl. (2) of cl. 5 of that Order is wide  and permits the imposition of a condition which was outside sub- cl. (v) of cl. (a) of the order of 1948.  Sub-cl. (4) of cl. 5  further makes it obligatory upon the licensee  to  comply with  all  the conditions imposed or deemed  to  be  imposed under  cl.  5.  We therefore do not agree  with  the  second

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contention   and  hold  that  the  licensing  authority   is competent under the Order to impose the condition that the (1) [1963] 3 S.C.R. 338, 840 imported goods be not sold to any person and thus to  affect the ordinary rights of the importer. The third contention too has no force.  Sub-cl. (4) of cl. 5 provides that the licensee shall comply with all  conditions imposed  or  deemed to be imposed under  that  clause.   The contravention of any condition of a licence thus amounts  to the Contravention of the provisions of sub-cl. (4) of’ cl. 5 of  the Order and consequently to the contravention  of  the Order   made  under  the  Act.   It  follows  that  if   the Association,   the  licensee,  does  not  comply  with   the conditions  of  the  licence about use of the  goods  to  be imported,  it contravenes the Order made under the  Act  and makes itself liable to punishment under s. 5 of the Act. The  cases reported as C. T. A. Pillai v. H. P.  Lohia  (1), and  East India Commercial Co. v. Collector of Customs  (2), holding that the infringement of a condition in the  licence not  to  sell  goods imported to third  parties  is  not  an infringement of the Order, are not of help as they deal with the  contravention of the conditions of the licence  granted under orders dated July 1, 1943 and March 6, 194S which  did not  contain a provision comparable with the  provisions  of sub-cl(4) of cl. 5 of the Order of 1955. We accept the fourth contention that it is the  Association, the licensee, which alone could contravene the condition  of the licence and thus contravene the Order, but do not  agree with the fifth contention that it could not be guilty of the offence as it had not got actual possession of the  imported goods.   For  contravening  the condition  of  the  licence, actual  possession of the imported goods is  not  necessary. Further, the possession of Warden & Co., would be possession of  the Association, as the former was its agent  to  import the goods. Re : the sixth point that the appellant had no intention  to commit the offence, the finding of the (1) A.I.R. 1957 Cal. 83.                   (2) [1963] 3 S.C.R. 338,  841 High Court is against the appellant.  The High Court rightly held  him guilty of the offence under S. 5 of the Act  on  a finding  that  he intentionally aided the  Association,  the licensee,  in committing the offence under s. 5 of the  Act, and  thus  abetted the contravention of the offence  by  the Association.  The appellant, as Chairman, authorised  Warden & Co., to dispose of the goods which the Association did not want to utilise on account of the decline in price.  He thus aided  intentionally  the Association in  disposing  of  the goods  through  Warden  & Co.,  and  therefore  abetted  the contravention of the condition of the licence to the  effect that  the goods imported would be utilised by  the  licensee alone and would not be sold to any other party. We  do  not  consider that the sentence  is  severe  in  the circumstances of the case which indicate that from the  very beginning  the  appellant, as Chairman of  the  Association, knew  that the Association would not be able to utilise  all the yarn to be imported under the licence applied for.   The fact  that  Warden’ & Co., did pay over Rs. 5,000/-  to  the Association  indicates  that  the goods did  fetch  a  price higher than the price paid for their importation.  The  case appears  to be a deliberate case of securing import  licence with a view to mis-apply the goods imported. We therefore dismiss the appeal.

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Appeal dismissed. 842