http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 11  

PETITIONER: AGRAWAL TRADING CORPORATION & ORS.

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS AND ORS.

DATE OF JUDGMENT17/01/1972

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN HEGDE, K.S. PALEKAR, D.G.

CITATION:  1972 AIR  648            1972 SCR  (3)  85  1972 SCC  (1) 553

ACT: Foreign Exchange Regulations Act, 1947-Section 8 and 23A-Its scope-Sea Customs Act S. 19, 167(3), (8) (37)-Does the  word ’goods’ in the said Sections include Currency Notes.

HEADNOTE: The  appellant,  a  partnership  firm  having  2   partners, carried,  on business of importers and exporters, etc.   The Cashier of the firm handed over a wooden case, to the  Swiss Airways  at  Dum  Dum for being sent to Hong  Kong  by  air. According to the consignment note, the consignment was being sent  by  one R. of Karnani mansions, Calcutta,  who  was  a fictitious  person.   The  shipping  bill  showed  that  the consignment  purported to contain food and dried  vegetables and  was sent to 1, of Hong Kong, also a fictitious  person. After the consignment was accepted and when customs examined it for clearance, it was found that it contained Rs.  51,000 in Indian currency.  On investigation, a search warrant  was issued  by the Presidency Magistrate and the office  of  the firm  and the residence of partners were searched.   In  the course  of search, accounts books and other  documents  were seized.  Investigation revealed that the Cashier, had signed the  consignment  note  as  Rs,  which,  as  the  subsequent writings  showed,  were in his hand.  Even  the  consignment note  appears to have been typed on the type-writer  of  the appellant  firm.  Thereafter, Customs authorities  served  a notice,  on the appellant pointing out that  exportation  of Indian  currency out of India was in contravention of  S.  8 (2) of the Foreign Exchange Regulations Act, 1947 read  with Reserve  Bank  Notification  dated  27-2-1951  as  specified therein and it was asked to show cause and to produce within 4  days  the permit, if any, of the Reserve Bank  of  India, failing  which,  it would be liable  for  prosecution  under Section  23(1)  read with S. 8(2) of  the  Foreign  Exchange Regulations  Act.   The appellant denied that the  firm  bad anything to do with the case. Apart  from  criminal prosecutions against the  partners,  a fine  of Rs. 1,000 under section 167(3) of the  Sea  Customs Act  with  a further personal liability of  Rs.  1,000  u/s. 167(37)  of  the Act was imposed against the firm.   It  was further fined Rs. 51,000 u/s. 167(8) of the Act read with s.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 11  

23(1)  of the Foreign Exchange Regulations Act.  Apart  from these,  the currency notes of Rs. 51,000 which were  seized, were also confiscated. This  order  was challenged before the single judge  of  the Calcutta  High Court who issued a rule-but later  discharged it.   An appeal against that order was also  dismissed.   In appeal  to  this  Court, three  points,  raised  before  the Appellate  Court were also reiterated : (1)  Currency  Notes are not ’goods’ and therefore, the provisions of s.  167(3), (8) and (37) of the Sea Customs Act are not attracted. (2) A firm  is  not a legal entity and therefore, it cannot  be  a ’person’  within the meaning of any of the above  provisions of law. (3) Even if a ’firm’ be a ’person, no penalty can be imposed on the firm or any of its members unless the members have consciously taken any step to violate the provisions of law; 8 6 even  so,  only  the partner-member against  whom  there  is evidence of guilt can be held liable. Dismissing the appeal, HELD :P (i) S. 23A of the Foreign Exchange Regulations  Act, incorporates,  by  reference,  the  provisions  of  the  Sea Customs  Act by deeming the restrictions under section 8  of the Foreign Exchange Regulations Act, to be prohibiting  and restricting  under  s.  19  of the  Sea  Customs  Act.   The legislature   can  always  incorporate  by  reference,   the provisions  of some other Act, if they are relevant for  the purposes of the scheme and object of that Act.  Restrictions specified  in s. 8 of the Foreign Exchange  Regulations  Act are  deemed  to be prohibitions and  restrictions  mentioned under  s.  19  of the Sea  Customs  Act.   The  prohibitions mentioned  under s. 8 are not necessarily confined to  goods alone  but  must  be deemed, for  the  purposes  of  Foreign Exchange Regulations Act, to include therein restrictions in respect of the articles specified in s. 8 thereof, including currency notes as well. [94 B] (ii) Although there is no definition of the word ’person’ in either  of.  the  Acts, the definition in s.  2(42)  of  the General Clauses Act, 1897 or Section 2(3) of the Act of 1863 would  be applicable to the present Acts. in both of  which, person  has  been  defined  as  including  any  Company   or association, or body of individuals whether incorporated  or not.   Further, the explanation to s. 23C clearly  envisages that  a company for the purposes of that Section is  defined to  mean  any body corporate and includes a  firm  or  other association  of individuals and a Director in relation to  a firm  also means a partner of the firm.  Therefore, for  "he purposes of Foreign Exchange Regulations Act and Sea Customs Act.  a registered partnership firm L is a  ’legal  entity’. [94G] (iii)     From the evidence, it was clear that the appellant attempted to hoodwink the customs officials (currency  notes secreted in a cavity), that the consigner and consignee were not  shown  as  real  persons,  the  charges  and   expenses incurred. in connection with the despatch were found in  the entry  in the books of account of the firm that the  amount, sought  to  be sent was half a lakh of  rupees  which  could hardly  be  within the mean’, of the Cashier  and  the  High Court  was right in holding that it was the firm  which  was interested in sending the currency notes out of India .,II a clandestine manner.[198 A] Radha  Krishna  Bliatia v. Union of India & Ors.,  [1965]  2 S.C.R. 213 Thomas Dana v. The State of Punjab, [1959]  Supp. 1  S.C.R. 274 and Additional Collector of Custo is  v.  Sita Ram  Agarwal,  C.A.  No. 492 of 1962  decided  on  14-9-1962

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 11  

referred to and distinguished.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 357 of 1967. Appeal from the judgment and order dated December 9, 1963 of the  Calcutta High Court in Appeal from Original Order No. 110 of 1960. B.   Sen, Sadhu Singh, Jagmohan Khanna, R. N. Kapoor and S.   K. Dholakia, for the appellants. G. L. Sanghi, B. Dutta and S. P. Nayar, for the respondents.  87 The Judgment of the Court was delivered by P.   Jaganmoban  Reddy, J. This is an appeal by  certificate under  Article 1 3 3 ( 1 ) (b) of the  Constitution  against the  judgment of the Calcutta High Court which dismissed  an appeal  from  an  order of the single Judge  of  that  Court discharging  a rule granted by it to the appellants  calling on  the respondents-the Collector of Customs  and  others-to show cause why certain orders under various sections of  the Sea  Customs  Act and the Foreign  Exchange  Regulation  Act should  not be quashed and why a written complaint  made  by the  respondents under the Foreign Exchange  Regulation  Act and  the case pending in the Court of the Presidency  Magis- trate, Calcutta, should not be stayed. The  appellant is a registered partnership firm carrying  on business of importers, exporters, commission agents, brokers and  general  merchants.   It  consists  of  two   partners, Girdhari Lal Gupta and Pooran Mal Jain.  On the 25th October 1958. the Cashier of the appellant Bhagwandeo Tiwari  handed over  a consignment of wooden case to the Swiss  Airways  at Dum  Dum Airport for being sent by air freight to  Hongkong. According  to  ,the consignment note,  the  consignment  was being sent by one Ramghawan Singh of Karnani Mansions,  Park Street, Calcutta, who in fact was a fictitious person.   The Shipping  Bill  showed  that the  consignment  purported  to contain Rassoglla, Achar, Papar and dried vegetables and  it was being sent to one Ishwar Lal, 41, Wyndham St.,  Hongkong who  is also alleged to be, a fictitious person.  After  the consignment  was accepted and when The Customs  examined  it for  clearance  on  25th  October  1958  before  its  onward despatch  to  Hongkong,  there  was  found  concealed  in  a specially  made secret cavity on the battens nailed  to  the inner  sides  of  the case, Indian  currency  notes  of  Rs. 51,000/-.   An  investigation was set on foot  and  on  22nd January  1959 a search warrant was issued by the  Presidency Magistrate, pursuant to which the Customs Officers caused  a search  to  be  made  of the office  of  the  firm  and  the residences  of the appellant’s partners.  In the  course  of search account books and other documents were seized.   This investigation  revealed that the Cashier, Bhagwandeo  Tiwari had signed the consignment note as Ramchandra which, as  the subsequent  writings  showed, were in his  hand.   Even  the consignment   note  appears  to  have  been  typed  on   the typewriter  of the appellant firm.  It was  further  alleged that from a comparison of the consignment note with a letter admittedly sent out by the appellant firm and signed by  one of its partners, Girdhari Lal  Gupta, it became evident that the  slip seized from the office of the appellant  firm  had contained  entries, to show that Bhagwandeo Tiwari  was  the person  who  actually transported and booked  the  offending consignment in question and that he made an entry 88 of  Rs. 123.73 being the Air freight paid for its  transport

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 11  

to  Hongkong  which  was  the  exact  amount  shown  on  the consignmer the account slip was in his handwriting, and that the  expense note.  Bhagwandeo Tiwari, it was said,  had  in fact admitted the and charges shown therein were also  found in  the books of account of the appellant firm.  In view  of this  evidence, the customer authorities served a notice  on the  appellant firm on April 2, 1959 by which after  setting out  in  detail the aforesaid facts and after  pointing  out that the exportation of Indian currency out of India was  in contravention  of  section  8 (2) of  the  Foreign  Exchange Regulations  Act  1947 read with the Reserve Bank  of  India Notification  dated 27-2-1951 as specified therein,  it  was asked  to show cause and to produce within four days of  the receipts  of the notice, the permit, if any, of the  Reserve Bank  of India, for export of the Indian currency and if  it did  not  do so, it would be liable  for  prosecution  under section 23(1) read with section 8(2) of the Foreign Exchange Regulations  Act.  On 13-4-1959, the appellant firm  replied to the notice denying that the firm had anything to do  with the  despatch of the box containing currency notes; that  it was  not aware of any person by the name of Ramghawan  Singh or Ishwar Lal, or that Bhagwandeo Tiwari had ever despatched the  consignment  in question or visited any Air  office  in connection  therewith.  It may be mentioned en passant  that in the High Court, in the reply affidavit affirmed on  11-1- 1960 to the affidavit in opposition, Girdhari Lal Gupta, one of  the partners of the firm went even to extent of  denying that Bhagwandeo Tiwari was the Cashier of the firm, notwith- standing  the  fact that in the earlier reply  to  the  show cause  notice as also in the Writ Petition, it  was  tacitly assumed that he was the Cashier. Apart  from  the criminal prosecutions  that  were  launched against the partners, in the penalty proceedings which  were initiated  by the aforesaid show cause notice, the firm  was held   to  be  knowingly  concerned  in  the   offence   and accordingly,  a fine of Rs. 1,000/- was imposed on it  under section  167(3)  of  the  Sea Customs  Act  with  a  further personal liability of Rs. 1,000/under section 167(37) of the said  Act.  It was further fined Rs. 51,0001- under  section 167(8)  of the Act read with section 23 (1) of  the  Foreign Exchange  Regulations  Act.   Apart from  these  fines,  the currency  notes  of  Rs. 51,000/-  which  were  seized  were confiscated. This  order  was challenged before the single Judge  of  the Calcutta  High  Court who, as already stated, had  issued  a rule but later discharged it.  Against that order an  appeal was filed  89 Reddy, J.) but  that also was dismissed.  Of the four points that  were urged  in that appeal, the first three have been  reiterated before us on behalf of the appellant, viz. :-               (1)   Currency  notes  are  not  ’goods’   and there fore  the provisions of section  167(3),               (8)  and (37) of the Sea Customs Act  are  not               attracted;               (2)   A  ’firm’  is  not a  legal  entity  and               therefore  it cannot be a ’person  within  the               meaning of any of the above provisions of law;               (3)   Even  if a firm be a person  within  the               meaning of the said provisions no penalty  can               be  imposed on the firm or any of its  members               unless  it appears from the evidence that  the               members of the firm had consciously taken  any               steps  to violate the provisions of law;  even

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 11  

             so  only  the particular member  against  whom               there is evidence of guilt can be held liable. Before  dealing  with  the  above  contentions  it  will  be necessary to consider the relevant provisions of the Foreign Exchange Regulations Act as also those under the Sea Customs Act,  Sections 8(1), 23(a), (b), (1A), 23A, 23B and  23C  of the Foreign Exchange Regulations Act and section 19, 167(3). (8)  and  (37) of the Sea Customs Act are relevant  for  the purpose of this appeal.  These are given below :--               8   (1).   The  Central  Government  may,   by               notification  in the Official  Gazette,  order               that,  subject o such exemptions, if  any,  as               may  be  contained  in  the  notification,  no               person  shall,  except  with  the  general  or               special permission of the Reserve Bank and  on               payment  of the fee, if any, prescribed  bring               or  send into India any gold or silver or  any               currency  notes or bank notes or coin  whether               Indian or foreign. Explanation-The bringing or sending into any port or  place, in  India  of any such article is aforesaid intended  to  be taken  out of India without being removed from the  ship  or conveyance in which it is being carried shall nonetheless be deemed to be a bringing L864SupCI/72 90               or  as the case may be sending, into India  of               that article for the purposes of this section.               (2)               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  time,-,  the value of the  foreign  ex-               change  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  punish-               able  with imprisonment for a term  which  may               extend  to  two years, or with fine,  or  with               both.               23(1A) 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 subsection (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  sec-               tion 19 shall, upon conviction by a court,  be               punishable  with fine which may extend to  two               thousand rupees.               23A.   Without prejudice to the 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 subsection               (1) of section 13 shall be deemed to have been               imposed  under section 19 of the  Sea  Customs               Act, 1878 (8 of 1878), and all the  provisions               of  that  Act shall have  effect accordingly

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 11  

             except that section 183 thereof               shall have effect as if for the word  ’shall’,               therein the word ’may’ were substituted.               23B.   Whoever attempts to contravene  any  of               the  provisions  of this Act or of  any  rule,               direction  or order made thereunder  shall  be               deemed  to  have contravened  that  provision,               rule, direction or order, as the case may be.               23C(1)    If   the   person    committing    a               contravention is a company, every person  who,               at  the time the contravention was  committed,               was  incharge of, and was responsible, to  the               company for the conduct of the business of the               Company  as  well  as the  company,  shall  be               deemed  to be guilty of the contravention  and               Shall  be liable to be proceeded  against  and               punished accordingly               Provided  that nothing contained in this  sub-               section shall render any such person liable to               punishment, it’ he proves that the  contraven-               tion took place without his knowledge or  that               he exercised ill due diligence to prevent such               contravention.               (2)   Notwithstanding  anything  contained  in               subsection  (1), where a contravention  tinder               this  Act has been committed by a company               and  it is proved that the  contravention  has               taken place with the consent or connivance of,               or is attributable to any neglect on the  part               of, any director, manager, secretary or  other               officer   of  the  company,   such   director,               manager, secretary or other officer shall also               be  deemed  to be guilty of that  offence  and               shall  be liable to be proceeded  against  and               punished accordingly".               Sea Customs Act:               "19.  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 descrip-               tion into or out of India across any  customs               frontier as defined by the Central Government.               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               9 2               same   with   reference   to   such   offences               respectively Offences                Section of   Penalties.                 this Act to                 which offence                 has reference. 1                             2                   3 3.   If any person ship or  General  such person shall be aid on the shipment or lan-          liable to a penalty ding of goods, or knowing            not exceeding one keep or conceal, or knowingly        thousand rupees. permit or procure to be kept or concealed to be shipped or landed or intended to be shipped or landed, contrary to provision of this Act; or if any person be found to have     11  been on board of any vessel

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 11  

liable to confiscation on account of the commission of  an offence under (No. 4) of this section, while such vessel is within any bay, river, creek or arm of the sea which is  not a port for the shipment and landing of goods. 8. If any goods, the importation    18 & 19  such good shall or exportation of which  is for              be liable to the time being prohibited  or rest-        to confiscation; restricted by or under Chapter IV of this      and Act, be imported into or exported from India contrary to such prohibition    any person conc- or restriction or                          erned in any such                                            offence shall be                                            liable to a pena-                                           lty not exceedig                                           three times the                                            value of the                                           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 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. 93 37.  If it be found, when any   86 & 137  such package, tog- goods are entered at, or brought             ether with the to be passed through,  a                   whole of the good custom house, either for                  contained therein importation or exportation, that-         shall be liable                                           to confiscation,                                           and every person                                           concerned in any                                           such offence shall                                            liable to a pen-                                            lty not exceeding                                            one thousand                                            rupees. (a)the packages in which they are contained differ widely from the description given in the bill-of entry or application for passing them; or (b)  the contents thereof have been wrongly described in such bill or application as regards   the  denominations, characters, or conditions according to which such goods  are chargeable with duty or are being imported or exported; or (c)  the contents of such packages  have  been misstated in regard to sort, quality, quantity or  value; or (d)goods not stated in the bill-of-entry or application

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 11  

have been concealed in, or mixed with, the articles specified therein, or have apparently  been  packed so as  to deceive  the  officers  of Customs. and  such circumstance is not accounted for to the satisfaction of the Customs Collector." A  perusal  of these provisions would show that no  gold  or silver or any currency notes or Bank notes or coin,  whether Indian or foreign, can be sent to or brought into India, nor can any gold, precious stones or Indian currency or foreign- exchange  other  than  foreign  exchange  obtained  from  an authorised  dealer  can  be sent out of  India  without  the general or special permission of the Reserve Bank of  India. These  restrictions by virtue of section 23A of the  Foreign Exchange  Regulation  Act are deemed to  have  been  imposed under  section  19  of  the Sea  Customs  Act  and  all  the provisions of the latter Act shall  have effect  accordingly except  section 183 thereof shall have the effect as if  for the  word ’shall’ therein the word ’may’  were  substituted. What  section  23A does is to incorporate by  reference  the provisions   of   the  Sea  Customs  Act  by   deeming   the restrictions  under  section  8  of  the  Foreign   Exchange Regulation  Act to be prohibitions and  restrictions  under section 19 of the Sea Customs Act.  The contention is  ’that since section 19 restricts the bringing or taking by sea  or by  land goods of ,my specified description into or out  of India, these restrictions are not applicable to the bringing in or taking out the currency notes which are not goods 94 within  the  meaning of that section,  and,  therefore,  the appellant  is not guilty of any contravention of section  19 of the Sea Customs Act and cannot be subjected to the  penal provisions of the said Act.  This argument, in our view,  is misconceived,  because  firstly,  it  is  a  well   accepted Legislative  practice  to incorporate by reference,  if  the Legislature so chooses, the provisions of some other Act  in so  far  as they are relevant for the purposes  of  and  in- furtherance  of  the  scheme and objects  of  that  Act  and secondly, that merely because the restrictions specified  in section 8 of the Foreign Exchange Regulation Act are  deemed to be prohibitions and restrictions under section 19 of  the Sea Customs Act, those prohibitions and restrictions are not necessarily  confined to goods alone but must be deemed  for the  purposes  of the Foreign Exchange,  Regulation  Act  to include  therein  restrictions in respect  of  the  articles specified in section 8 thereof, including currency notes  as well.  The High Court thought that there is no definition of goods  in the General Clauses Act and that contained in  the Sale  of  Goods  Act which excludes  money  is  inapplicable inasmuch  as that Act was a much later statute than the  Sea Customs  Act.  It is, however, unnecessary to consider  this aspect because even if the currency notes are not goods, the restrictions prescribed in section 8 of the Foreign Exchange Act  cannot  be  nullified  by  section  23A  thereof  which incorporates  section 19 of the Sea Customs Act.  We  cannot attribute to the Legislature the intention to obliterate one provision  by  another provision of the same  Act.   On  the other  hand, we construe it as furthering die object of  the Act  which is to restrict the import into or export  out  of India of currency notes and to punish contravention of  such restrictions. The  second contention that because the firm is not a  legal

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 11  

entity, it cannot be a person within the meaning of  Section 8  of the Foreign Exchange Regulation Act or of section  167 (3),  (8)  and  (37)  of the Sea  Customs  Act,  is  equally untenable.  There is of course, no definition of ’person’ in either of these Acts but the definition in section 2 (42) of the General Clauses Act 1897. or section 2(3) of the Act  of 1868  would be applicable to the said Acts in both of  which ’person’  has  been  defined as  including  any  company  or association or body of individual,, whether incorporated  or not.   It is of course contended that this  definition  does not apply to a firm which is not a natural person and has no legal  existence,  as  such clauses (3),  (8)  and  (37)  of section  167 of the Sea Customs Act are inapplicable to  the appellant firm.  In our view, the explanation to section 23C clearly negatives this contention, in that a company for the purposes  of  that  section  is defined  to  mean  any  body corporate  and  includes  a firm  or  other  association  of individuals and a Director in relation to a firm  9 5 means  a  partner in the firm.  The High Court  was  clearly right in holding that once it is found that there has been a contravention  of  any  of thee provisions  of  the  Foreign Exchange Regulation Act read with Sea Customs Act by a firm, the partners of it who are in-charge of its business or  are responsible  for  the  conduct of the  same,  cannot  escape liability,   unless   it  is  proved  by   them   that   .he contravention  took  place without their  knowledge  or  the exercised all due diligence to prevent such contravention. There  is,  also no warrant for the  third  submission  that unless it appears from the evidence that members of the firm had consciously taken any steps to violate the provisions of law  and even then only the particular members against  whom there is evidence of guilt, can alone be held liable.   This contention was said to be based on a decision of this  Court in  Radha  Krishan Bhatia v. Union of India  and  others,(1) that  as the ’person concerned’ specified in section  167(8) of  the Sea Customs Act is the person actually  involved  or engaged or mixed up in contravening the restrictions imposed under  the Foreign Exchange Act or the Sea Customs  Act,  he must  be  the  person  who must be,  shown  to  be  actually concerned.  That was also a case under section 167(8) of the Sea  Customs Act where, in fact, a number of gold bars  held to  be  smuggled  were  recovered from  the  person  of  the ,appellant.   The single Bench of the Punjab High Court  ha( allowed  the Writ Petition of the appellant on  ’,he  ground that  the  Collector  had not recorded a  finding  that  the appellant was connected with the act of smuggling gold  into the country.  This finding was set aside on a Letters Patent Appeal  and  the writ petition was dismissed.   This  Court held that the concern of the appellant in the commission  of the  offence must be at a stage prior to the  completion  of the offence of illegal importation of gold into the country. The  mere  finding  of fact recorded  by  the  Collector  of Customs  about the smuggled -old being recovered  from  the person of .he appellant was not sufficient to conclude  that the  appellant was concerned in the illegal  importation  of gold  into  the country and, therefore, liable  for  penalty under  section  167(8) of the Act.  What the  order  of  the Collector of Customs must show is that be had considered the question of the person being concerned in the commission  of the offence of illegal importation of the goods.  It  should further  indicate that the matters he had considered  had  a bearing on the question and the reasons for his arriving at that conclusion.  This has really no bearing on the question before  us  because under section 23B, even  an  attempt  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 11  

contravene any of the provisions of the Act or of any  rule, direction  or order made thereunder shall be deemed to  have contravened that provision, rule, direction or order as the (1)  [1965] 2 S.C.R. 213. 96 case  may  be. in respect of this very  incident  where  the petitioners  were  prosecuted it was held by this  Court  in Girdhari  Lal  Gupta and another v. D. N.  Mehta,  Assistant Collector  of  Customs  and another,(1)  that  Girdhari  Lal Gupta,  one  of  the two  partners  and  Bhagwandeo  Tiwari, Cashier, have been rightly convicted under the provisions of the Foreign Exchange Regulation Act for contravention of the restrictions  imposed under section 8(2) read  with  section 23(1A) of the Foreign Exchange Regulation Act.  In that case it was contended that there is no evidence to show that  the contravention took place with the knowledge of Girdhari  Lai Gupta  or that he did not exercise due diligence to  prevent such  contravention.  That contention was negatived  because he  had  ’not only stated under section 342, that  he  alone looks-after  the affairs of the firm but it had  been  found that  there were entries in his account books.  It is  true, that  the  relevant provisions of the Sea  Customs  Act  are penal in character and the burden of proof is on the Customs authorities to bring home the guilt to the person alleged to have  committed a particular offence under the said  Act  by adducing satisfactory evidence.  But that is not to say that the absence of direct evidence to connect a person with  the offence  will not attract the penal provisions to  establish the  guilt  in a criminal proceeding of the type  which  the customs authorities have to take.  The evidence of the  kind which  has been adduced in this case would be sufficient  to lead  to  the conclusion that the partner of  the  firm  was interested  in  or involved in attempting to  export  Indian currency  notes out of India.  As observed by this Court  in Thomas  Dana v. The State of Punjab(2), while  dealing  with section  167  of  the Sea Customs Act,  that  "All  criminal offences  ’are  offences but all offences in  the  sense  of infringement  of law are not criminal  offences.   Likewise, the other expressions have bean used in their generic  sense and  not as they are understood in the Indian Penal Code  or other  laws relating to criminal offences .... Out  of  more than  82 entries in the schedule to section 167, it is  only about  a dozen entries which contemplate prosecution in  the criminal sense, the remaining entries contemplate  penalties other than punishments for a criminal offence". In  the  Additional  Collector  of  Customs  v.  Sita   Ran? Agarwal(3), to which the High Court has referred, while dis- missing  the appeal from the judgment of the  Calcutta  High Court, this Court had stated that "the High Court was  right when   it  observed  that  if  any  one  is  interested   or consciously  takes any step whatever to promote the,  object of illegally bringing bullion into the country, then even if no  physical connection is established between him  and  the thing  brought,  he  will  be guilty."  In  that  case,  the respondent, Sita Ram Agarwal who was seen moving (1)  [1970] 2 S.C.C. 530. (3)  Civil Appeal No. 492/162 decided on 14-9-62. (2) [1959] Suppl. (1) S.C.R. 274, 97 in  the  company  of one Bhola Nath  Gupta  on  the  western Pavement  of Jatindra Mohan Avenue, Calcutta, had  proceeded in the direction of a taxi which had come to the place where they were, and on a signal being flashed, a Chinese national alighted  therefrom, shook hands, with the respondent  after which  all the three boarded the taxi.  A  police  constable

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 11  

who  was  on  the  spot raised  an  alarm  and  secured  the respondent and his companion with the help of the members of the  public.  All of them were taken to the  police  station for  the purpose of interrogation but the  Chinese  national tried  to  get away and started to run.  He was  chased  and eventually  secured.  Before his apprehension.  however,  he was  seen to drop three packets which were found to  contain 23  bars of illicit gold.  The respondent was charged  as  a person  concerned  in the offence of  attempting  to  import contraband gold under section 167(8) of the Sea Customs Act. The  High Court while holding that there was no evidence  to establish  that he was in conscious relation with the  gold, observed,  "in  order  that a person may be said  to  be  so concerned, some facts have to be proved which will establish that  he was in conscious relation with the gold in  one  or other  of the several successive steps preceding its  actual receipt  into the country".  In order that he was  concerned in  the  offence, the High Court further  pointed  out  that there  need be no physical connection between the  gold  and the person charged and "if the offence did not relate to his being concerned in the importation of the gold. but  related to  his  having  something to do  with  smuggled  gold,  the position  might  have  been different".  The  facts  of  the instant case clearly disclosed, as was observed by the  High Court,  " a well laid plain".  We have earlier  stated  that the currency notes were secreted in a cavity and were sought to  be  despatched  out of the country in  a  package  which ostensibly looked inocuous. containing eatables.  The manner in  which the attempt was made was to hood-wink the  Customs officials   and  escape  their  detection.    Further,   the consignor  and the consignee were not shown as real  persons but  were fictitious so that even if the attempt to  smuggle out of the country the currency notes was detected, the real persons  could  not  be traced.  The  charges  and  expenses incurred  in  connection  with the  despatch  found  in  the entries in the books of account of the firm were the same  a those  relating  to the offending package  which  was  being despatched  to  Hongkong.   The  freight  mentioned  in  the account   slip  the  exact  amount  which  appears  on   the consignment note in respect of that offending package.   The amount sought to be sent is half a lakh of rupees which  can hardly  be within the means of the Cashier. leading  to  the inescapable inference that the firm through its partners was concerned  in  the attempt to  transgress  the  restrictions under  section 8 of the Foreign Exchange Regulation Act  and liable to penal action by virtue of section 23A 98 under the provisions of the Sea Customs Act.  On these facts as established, the High Court came to the conclusion and in our view rightly, that it was not unreasonable to infer that it was the firm which was interested in sending the currency notes out of India in a clandestine manner. In  this view, the appeal has no merits and it is  dismissed with costs. S.N.                                     Appeal dismissed. 99