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PETITIONER: M/s.  FRENCH INDIA IMPORTING CORPORATION, DELHI

       Vs.

RESPONDENT: THE CHIEF CONTROLLER OF IMPORTS & EXPORTS AND OTHERS.

DATE OF JUDGMENT: 26/04/1961

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA GAJENDRAGADKAR, P.B. SARKAR, A.K. WANCHOO, K.N. GUPTA, K.C. DAS

CITATION:  1961 AIR 1752            1962 SCR  (2) 410

ACT: French  Establishments-Agreement to import   goods-De  facto transfer  of administration to India-Importer, if liable  to Pay   penalty   and  customs  duty   French   Establishments (Application   of   Laws)  order,   1954,   cl.   (6)-French Establishments (Administration) Order, 1954-Sea Customs Act, 1878 (8 of 1878), s. 167(8).

HEADNOTE: The petitioners entered into agreements with certain British firms  for  the import of cycles and cycle-parts  to  Pondi- cherry, which was then a French Establishment, in the manner provided  by French law.  The goods arrived  at  Pondicherry after the French Establishments had merged into India on the basis  of the Agreement dated October 21, 1954, between  the Union  of India and France, which was to be  operative  from November  1,  1954.   By virtue of the  said  Agreement  two Orders, dated October 30, 1954, were issued by the  Ministry of  External  Affairs under the  Foreign  jurisdiction  Act, 1947,   being   S.R.O.  3314,  the   French   Establishments (Administration)  Order, 1954, and S.R.O. 3315,  the  French Establishments (Application of Laws) Order, 1954.  The first saved the operation of the preexisting French Law except  in so  far as it was repealed by the second, which extended  to French Settlements certain Indian Statutes specified in  the Schedule  and amongst these were the Sea Customs Act,  1878, the  Tariff Act, 1934, the Import and Export (Control)  Act, 1947, and the Foreign Exchange Regulation Act, 1947.   These Orders came into force on November 1, 1954.  On the same day the  Government  of India, by a  Notification,  appointed  a Controller   of   Imports  and  Exports   for   the   French Settlements.   Paragraph 4 Of this notification called  upon the  licence-holders  under the French Law to apply  to  the Controller  for  validation of the licences  held  by  them. Paragraph 17 Of the Agreement, while saving import of  goods validly  ordered prior to the de facto transfer,  made  such goods  liable  to  customs duty.  As the  goods  arrived  at Pondicherry  on  December 4, 1954, the  Customs  Authorities took  the view that the import was in contravention  of  the

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Indian Statutes and ordered the petitioners to pay a penalty under  s.  i67(8) of the Sea Customs Act,  as  also  customs duty.   The  Central Board of Revenue on appeal  upheld  the order   and  the  Central  Government  in  revision,   while affirming  that decision, reduced the penalty.  Paragraph  6 of S.R.O. 3315 provided as follows,- 411 "  Unless therefore specially provided in the  schedule  all laws  in  force  in the  French  Establishments  immediately before  the commencement of this order which  correspond  to the enactments specified in the schedule shall cease to have effect,  save as respects things done or omitted to be  done before such commencement". The  question for determination was whether the  petitioners were  liable to pay the penalty under s. i67(8) of  the  Sea Customs Act, and also the Customs Duty. Held,  (per curiam), that in view of, the decision  of  this Court in Universal Imports Agency v. The Chief Controller of Imports and Exports, the petitioners were not liable to  pay the penalty under s.     i67(8) of the Sea Customs Act. Universal Imports Agency v. The Chief Controller of  Imports and Exports, [1961] 1 S.C.R. 305, followed. Per Gajendragadkar, Wanchoo and Ayyangar, JJ.-That  decision of  this  Court, however, did not apply to  or  absolve  the petitioners from the liability to pay the customs duty. In  order to determine the exact scope of the words  "things done"  occurring in para. 6 of S.R.O. 3315, the two  orders, S.R.O. 3314 and S.R.O. 3315 must be read along with para. 17 of the Agreement and para. 4 Of the Notification of November 1,  1954, appointing the Controller and so determined  there could  be  no  doubt  that the  saving  clause  afforded  no protection  to the petitioners so far as their liability  to pay the customs duty was concerned. Per  Sarkar  and  Das Gupta,  JJ.-The  words  "things  done" occurring  in  para. 6 of S.R.O. 3315 as construed  by  this Court in Universal Imports Agency v. The Chief Controller of Imports and Exports, cover the petitioners’ liability to pay not  only the penalty but also the customs duty and so  long as that decision stands, it has to be followed. Universal Imports Agency v. The Chief Controller of  Imports and Exports, [1961] 1 S.C.R. 305, discussed. There  is  nothing  in the Order S.R.O.  3315  itself  which renders the saving provision in para. 6 inapplicable to  the levy  of  customs duty nor does any later  law  deprive  the petitioners   of   its   protection.   There   can   be   no justification  for  reading  into  the  Order  S.R.O.   3315 anything  to  the  contrary contained in  para.  17  of  the Articles of the Indo- French Agreement.

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 36 of 1960. Petition under Art. 32 of the Constitution of India for  the enforcement of fundamental rights. N.  C.  Chatterjee,  D. R. Prem, B. Ganapathy  Iyer  and  G. Gopalakrishnan, for the petitioner. 412 B.   Sen, R. H. Dhebar and T. M. Sen, for the respondents. 1961.   April 26.  The Judgment of  Gajendragadkar,  Wanchoo and  Ayyangar, JJ., was delivered by Ayyangar, J., and  that of Sarkar and Das Gupta, JJ., was delivered by Das Gupta, J. AYYANGAR,  J.-This  is  a petition, under  Art.  32  of  the Constitution  praying for a writ, order or direction in  the nature of certiorari calling for the records relating to the

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levy  of  customs  duty and penalty on  certain  cycles  and cycle-parts  imported by the petitioners, to quash the  said order and for a direction to the respondents to restore  and refund to the petitioners the customs duty and the penalties realised  from  them for releasing their goods.   The  Chief Controller   of  Imports  and  Exports,   Pondicherry,   The Collector  of  Customs, Pondicherry, The  Central  Board  of Revenue, New Delhi, Chief Commissioner, Pondicherry and  the Union of India have been made respondents to the petition. From  the  nature of the order sought and the array  of  the respondents it would be apparent that the matter involved in this  petition is whether the respondents were justified  in (a)  levying  customs duties on the goods  imported  by  the petitioner and (b) imposing a penalty on them for  effecting these imports. We  shall  now  briefly  narrate  the  facts  necessary   to understand the points arising for decision.  The petitioners who are citizens of India placed an order on August 6, 1954, with certain firms in the United Kingdom for the despatch of cycles and cycle-parts to Pondicherry which was at that date the  principal French establishment in India.  According  to the  law  which  then  obtained  in  Pondicherry  territory, merchants  desiring  to  do business there had  to  have  "a patent" or licence from the authorities for carrying on such business.   The petitioners applied for such a  "patent"  to the  authorities on August 14, 1954, and they  were  granted one  on August 18, which was to be effective from August  1, 1954.   The order placed with U. K. firms was  accepted  and the goods covered by the indents were shipped from the U. K. ports on                             413 October 11, 1954.  The foreign exchange needed for effecting this  import could under the French Law have  been  obtained either  from  or  on the authorization of the  Head  of  the Department of Economic Affairs at Pondicherry or by what has been  termed purchase in the open market.  In  pursuance  of these  facilities  the  moneys  required  were   transmitted through   bankers  who  made  payments  on  behalf  of   the petitioners  in the United Kingdom and the goods arrived  in Pondicherry  on  December 4, 1954, the Bill of  Entry  being presented  to the Customs Authorities for clearance  on  the 17th of that month. Meanwhile, political changes took place in the governance of Pondicherry and other French settlements.  An agreement  was entered  into between the Governments of the Union of  India and  of France under which the administration of the  French Settlements,  including Pondicherry, was ceded to the  Union Government.   This agreement which was signed on  behalf  of the two Governments on October 21, 1954, was to be effective from   November   1,  1954.   On  October  30,   1954,   two notifications  were  issued  by  the  Ministry  of  External Affairs  in  pursuance of the agreement  dated  October  21, 1954,  between the two Governments.  They were  respectively S.R.O.  3314 and S.R.O. 3315.  As the questions arising  for decision in the petition turn on the proper construction and legal  effect  of  these  two  notifications,  it  would  be necessary  to  deal with them in some detail,  but  for  the purpose of the narration of facts, it would be sufficient to say  that while S.R.O. 3314 saved the operation of the  pre- existing French Law except in so far as it had been affected by S.R.O. 3315, the latter repealed such laws to the  extent they were inconsistent with the Indian enactments set out in the Schedule whose operation was extended to Pondicherry and the  French  settlements.  Among the  Indian  enactments  so applied to Pondicherry were the Foreign Exchange  Regulation

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Act,  1947, the Import and Export (Control) Act,  1947,  the Sea Customs Act, 1878, and the Tariff Act, 1934. 53 414 The  Bill of Entry was, as stated earlier, presented to  the Customs Authorities at Pondicherry on December 17, 1954, and it  would  be seen that by that date Pondicherry  was  being administered as part of the Union territory with the  Indian laws  referred  to  operating  in  the  area.   The  customs authorities  at  Pondicherry  took the  view  that  as  the, consignment  imported by the petitioners did not  reach  the port of Pondicherry before November 1, 1954, when the  Union Government  took  over the territory,  the  importation  was without  authorization  of the Indian law and  therefore  in contravention  of the Import and Export Control Act and  the Orders  issued therein, the Sea Customs Act, the Tariff  Act and  the provisions of other relevant enactments.   After  a notice to the petitioners to show cause why the goods should not  be  treated as having been imported without  a  licence granted  under  the  lmport and Export  (Control)  Act,  the Customs  authorities at Pondicherry after considering  their explanation  decided  against the petitioners  and  directed them to clear the goods on payment of duty and of a  penalty which  was  levied under s. 167(8) of the Sea  Customs  Act. This  order  was passed on March 3, 1955.   The  petitioners thereupon  preferred  an  appeal to  the  Central  Board  of Revenue who dismissed it by their order dated July 31, 1956, and thereafter the petitioners filed a revision to the  Cen- tral  Government  who  dismissed it  by  their  order  dated January 8, 1957, but reduced the penalty imposed.  It is  in these  circumstances  that the petitioners  have  approached this Court for the reliefs set out at the beginning of  this judgment. The  following facts would emerge from the above  narration: (1)  that  firm  contracts  had been  entered  into  by  the petitioners with the foreign-sellers long before November 1, 1954-the  date of the transfer of Pondicherry, (2) that  the petitioners  had  the  authorization of the  French  law  by holding the "patent" granted to them on August 18, 1954, and effective  from  August  1, 1954, to carry  on  business  in Pondicherry, (3) that the foreign-exchange requirements  for effecting the importation had been provided for by the                             415 petitioners  in a manner authorized by the French  law,  (4) the goods, however, arrived in Pondicherry after the date of the de facto transfer.  In these circumstances the questions raised for decision are: (1) whether under the terms of  the relevant notifications, to which we shall immediately refer, the  importation  was  unauthorized for  want  of  an import licence so as to render the petitioners subject to the  levy of  a  penalty under s. 167(8) of the Sea Customs  Act,  (2) whether  the  petitioners have a right  under  the  relevant notifications  to have the imported goods cleared  from  the Pondicherry  port  without the payment of the  customs  duty leviable  under  Indian  law  in the  area  from  and  after November 1, 1954. We  have  already referred to the two notifications  by  the External Affairs Ministry, the details of which we shall now proceed to state.  By virtue of the jurisdiction obtained by the  Union  Government under the agreement between  the  two Governments  dated October 21, 1954, S.R.O. 3314 was  issued in   exercise  of  the  powers  conferred  by  the   Foreign Jurisdiction  Act, 1947, and came into force on November  1, 1954,  when the agreement became effective.   Its  principal function was to provide for the continuance of the law which

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previously  prevailed in Pondicherry except in so far as  it was  varied  by  other notifications  issued  by  the  Union Government   extending  Indian  Laws  to   that   territory. Paragraph 5 of S. R.O. 3314 provided:               "5.   All   laws  in  force  in   the   French               Establishments or any part thereof immediately               before the commencement of this order and  not               repealed   by  paragraph  6  of   the   French               Establishments  (Application of  Laws)  Order,               1954,  shall  continue to be  in  force  until               repealed  or  amended by  a  competent  autho-               rity." The  other  provisions of this order are designed  with  the same  objective, viz., the continuance of laws  until  other provisions are made by a competent Legislature or authority. The  provisions  contained  in  S.R.O.  3315  are  of   more immediate  consequence  for the purpose  of  this  petition. Paragraph 3(1) of this order provided; 416 "The enactments specified in column 3 of the schedule as  in force  before  the  commencement of this  order  are  hereby applied   to,   and  shall  be  in  force  in   the   French Establishments subject to: (a)...................................................... (b)...................................................... (c) The subsequent provisions of the order." Paragraph 6 which was in the nature of a saving clause ran: "Unless  therefore specially provided in the  schedule,  all laws  in  force  in the  French  Establishments  immediately before the commencement of this order, which corresponds  to the enactments specified in the schedule shall cease to have effect  save as respects things done or omitted to  be  done before such commencement." Among  the  laws extended to Pondicherry under  S.R.O.  3315 were,  as  already noticed, the Sea Customs Act,  1878,  the Reserve  Bank  of India Act, 1934, the Imports  and  Exports Trade  (Control) Act, 1947, the Foreign Exchange  Regulation Act, 1947, and the Indian Tariff Act, 1934.  In the  absence of the saving contained in the last words of paragraph 6  of S.R.O.  3315 "as respects things done or omitted to be  done before  such commencement", the previous French law  or  the authorizations  or permits obtained thereunder,  would  have become  repealed  or exhausted and the import  to  be  legal would have to be in conformity with the laws applied to  the territory by virtue of paragraph 3 with the result that  the orders of the Customs Authorities in the present case  could not be open to challenge. The questions therefore are whether this saving protects the petitioners from: (a) the liability to the penalty, and  (b) from payment of customs duty.  We shall deal first with  the levy  of  the penalty.  This matter is wholly  concluded  in favour  of the petitioner by the judgment of this  Court  in Universal Imports Agency v. The Chief Controller of  Imports and  Exports  (1).   There, as here,  a  contract  had  been entered  into  with a foreign supplier for the  despatch  of goods (1)  [1961] 1 S.C.R. 305. 417 to  the  port  of Pondicherry in the  months  preceding  the transfer.  The goods however arrived after November 1, 1954, and  the customs authorities acting under the provisions  of the Sea Customs Act, treated the import as unauthorized, and adjudged  the  goods to confiscation and  also  inflicted  a fine.  Petitions were then filed under Art. 32 for  quashing

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these orders of confiscation and fine and for directing  the return  of the goods.  It may be mentioned that the  present petitioner  was an intervener in the petitions  then  before this Court.  This Court held that the words "things done" in paragraph  6  of  S.R.O. 3315 were comprehensive  so  as  to include a contract effected before November 1, 1954,  though its  legal effect and consequence projected into  the  post- transfer  period  and  the goods were  imported  only  after November  1,  1954.  The petitioners then before  the  Court having authority under the French law which prevailed before November 1, 1954, to import the goods and having placed  the orders  and effected the imports in pursuance of  that  law, this   Court  held  that  the  imported  goods  could   not, notwithstanding  that  they were actually brought  into  the territory  after  November 1, 1954, be  confiscated  on  the ground  that they were imported without a  licence  required under the Imports and Exports (Control) Act and the Sea Cus- toms Act. Mr. Sen learned Counsel for the respondent-urged some points of  distinction between the facts in the  Universal  Imports Agency’s  case(’)  and the case now before  us,  but  having examined them we find there is no substance in the argument. Learned  Counsel  submitted  that in the  present  case  the import was effected not by opening Letters of Credit but  by payment  by  bankers’ draft and secondly, that  the  foreign exchange required for payment to the U. K. supplier was  met in the present case by open market purchases and not by  the purchase   of   foreign   exchange   from   French   Banking Establishments.    In   our  opinion,   these   are   wholly immaterial.  Learned Counsel had to admit that there was  no legal requirement to have a (1)  [1961] 1 S.C.R. 305. 418 Letter  of Credit and also that it was not in  contravention of  French law which prevailed before November 1,  1954,  to obtain  foreign  exchange requirements by  what  are  termed "open  market  purchases".   In fact, in  the  case  of  the Universal Imports Agency(’)  the orders impugned were passed and  were sought to ’be supported before this Court  on  the ground  that the foreign exchange requirements were  met  by "open   market  purchases"  and  that  in  consequence   the importation  was not authorized by the French law, and  this contention was expressly negatived.  We therefore hold  that the  petitioners  are  entitled  to relief  so  far  as  the petition  relates to the quashing of the order imposing  the penalty and for a direction to refund the same. We  now  proceed  to  examine  whether  the  claim  of   the petitioners  that  they  are entitled to  import  the  goods without payment of duty is justified by the saving contained in  the  last  words of paragraph 6  of  S.R.O.  3315.   Mr. Chatterjee learned Counsel for the petitioners-had to  admit that this matter was not the subject of decision in Univeral Imports Agency’8 case (1).  Nor is it a matter for  surprise that  it was not, because the petitioners then  before  this Court  had  never objected to the payment of the  duty,  and indeed the request they made to the Customs Authorities  and which was rejected, which led to the petition, was that  the authorisation which they had under the French law should  be re-validated  by  the Indian Customs Authorities  so  as  to permit  the importation on payment of normal duty as if  the same  were  licensed under the Import and  Export  (Control) Order; and that on payment of the duty they were entitled to a  customs clearance under ss. 87 and 89 of the Sea  Customs Act.   This  being the nature of the controversy  raised  in this  Court,  the  petitioners  relied on  Art.  17  of  the

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Articles of Agreement between the two Governments, to  which we  shall advert later, in support of their submission  that while  the  Indian authorities were entitled  to  levy  such customs  duties  as  were fixed under law  for  the  several articles imported, the import (1)  [1961] 1 S.C.R. 305.                             419 itself  should be treated as authorised by the previous  law whose operation was continued by the last words of cl. 6  of S.R.O. 3315 of 1954. Further,  as we shall presently show, there are passages  in the  judgment of Subba Rao, J., who spoke for the  majority, that  on  an importation effected after  November  1,  1954, customs  duty would have to be paid according to  the  rates fixed under the relevant Indian legislation.  The submission of  Mr.  Chatterji  however was that this  relief  which  he claimed followed logically from the reasoning of Subba  Rao, J., and in particular he relied on the following passage:               ".........  A  purchase by import  involved  a               series  of  integrated  activities  commencing               from  the contract of purchase with a  foreign               firm and ending with the bringing of the goods               into  the importing country and  the  purchase               and  resultant import formed parts of  a  same               transaction.   If so, in the present case  the               bringing  of  the  goods into  India  and  the               relevant   contracts  entered  into   by   the               petitioners,  with the foreign dealers  formed               parts  of the same transaction.  The  imports,               therefore,  were  the  effect  or  the   legal               consequence  of the ’things done’, i. e.,  the               contracts entered into by the petitioners with               the foreign dealers before merger." The  argument of the learned counsel based on  this  passage was  on the following lines: This Court has held that it  is the agreement concluded with the foreign seller under  which goods  are contracted to be imported, which constituted  the "thing  done".  The legal consequence of that  "thing  done" was the act of importation, because that was the object  and purpose of the contract, so far as the buyer was  concerned. This  Court has held that the previous authorization by  the French  law,  as it were, projected into the  post  transfer period  so  as  to justify the importer  claiming  that  the importation  was  authorized and this is the  ratio  of  the decision.  But this does not, learned counsel urged, exhaust the  entirety of the rights of the importer.   The  previous French law authorized the import into a territory which  was "a  free port".  When therefore the importation was made  by virtue 420 of  the  authorization contained in the  previous  law,  its effect should extend not merely to justify the claim to have the  import  treated as one authorized  under  the  relevant Indian  law,  but logically also as entitling the  party  to effect the importation without payment of  customs duty. We  find  ourselves  unable to accept  this  argument.   The expression  "free  port" in the case of  Pondicherry  merely meant  freedom  from restriction as to  importation  in  the shape of licence, etc., and not a complete absence of duties leviable on importation.  But that apart, if the  submission of  the  learned counsel amounted to saying that  the  point about  the  exemption  of the  petitioner  from  payment  of customs  duty is also covered by the decision of this  Court in  Universal  Imports  Agency’s case (1),  we  consider  it wholly unjustified. As we have already shown, the  liability

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to  pay customs duty was admitted by the petitioner and  the reasoning by which he sought relief in this Court  proceeded on  the basis that such duties were exigible.  Besides,  the entire reasoning of Subba Rao, J., was directed to show that the authorization under the French law to effect the  import should  be held to protect the petitioners then  before  the Court from being treated as having imported goods without  a licence under the Import and Export (Control) Act, and  that is  why  in  the  penultimate paragraph  of  the  order  the conclusion reached is thus set down:               "We  would therefore hold that paragraph 6  of               the  order saves the transaction entered  into               by  the petitioners and that  the  respondents               had no rights to confiscate their goods on the               ground   that  they  were   imported   without               licence." It  is  in  this context  that  the  observations  extracted earlier on which Mr. Chatterji relies have to be understood. Besides, there are passages in the judgment which  expressly refer  to  the fact that goods imported  after  November  1, 1954, would be liable to be charged duty under the  relevant Indian  fiscal statute.  In making this observation we  have in   mind  the  reference  by  the  learned  Judge  to   the Notification (1)  [1961] 1 S.C.R. 305.                             421 of the Central Government dated November 1, 1954, and to the terms of Art. 17 of the Articles of Agreement dated  October 21,  1954, between the two Governments (to both of which  we shall  advert  later).  The decision of this Court  is  not, therefore,  an  authority to support the petitioner  on  the point regarding the  right to import without payment of duty and  we have to deal with the matter on the footing that  it is res integra. Nor  can  the plea based on the logic of the  ratio  of  the decision  in the Universal Imports Agency’s case (1)  assist Mr. Chatterji to any material extent, because the content of the  saving  as respects "things done", must  ultimately  be determined  not by any interpretation of these two words  in vacuo, but in the context of the entire scheme of the two S. R.  Os.  read  in the light of other  material  which  could assist  in arriving at their scope.  Thus, for instance,  if S.R.O. 3315 contained a specific proviso excepting from  the saving as regards ’-things done" the obligation, say, to pay duties of customs, it could hardly be contended that as  the imports under pre-transfer contracts should be deemed to  be authorised even if the goods arrive subsequent thereto, they should  be exempt from the payment of duty.  No doubt  there is  no such express provision but such a situation can  also arise by necessary intendment. The  right to exemption from payment of duty claimed by  the petitioners  would  therefore have to depend on  the  proper interpretation  of  the relevant notifications,  because  as already  seen  as the Sea Customs Act and  the  Tariff  Act, etc.,  having been extended to Pondicherry territory,  etc., from  and after November 1, 1954, prima facie duty would  be payable  on  the import.  We have already  pointed  out  the inter-relation  between  S.R.O.  3314 and  3315  which  were issued on the same date and by virtue of the same provisions and  power.  Paragraph 6 of S.R.O. 3314 which  provided  for the continuance of the previous existing laws ran: (1)  [1961] 1 S.C.R. 305. 54 422               "All  taxes,  duties, cesses  or  fees  which,

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             immediately  before the commencement  of  this               order were being lawfully levied in the French               Establishments  or any part thereof shall,  in               so far as such levy has not been  discontinued               by  any  of the laws extended  to  the  French               Establishments by the French    Establishments               (Application of Laws) Order, 1954, continue to               be  levied  and applied for the  same  purpose               until other provisions are made by a competent               Legislature or authority". This would be some indication that taxes, duties, cesses and fees  imposed by reason of the extension to that  territory, of Indian laws under the French Establishments  (Application of Laws) Order, 1954, (S.R.O. 3315) would be operative  from and  after  November  1, 1954.  On  November  1,  1954,  the Government  of India appointed a Controller of  Imports  and Exports  for  the French Establishments and paragraph  4  of that notification also contained the following:               "   As  regards  orders  placed  outside   the               Establishments and finalised through the grant               of licence by the competent French Authorities               in accordance with the Laws and Regulations in               force  prior to 1st November,  1954,  licence-               holders are advised to apply to the Controller               of  Imports  and  Exports  for  validation  of               licences  held  by  them.   No  fees  will  be               charged for these applications". This  notification,  though it has no statutory  force,  was obviously part and parcel of S.R.O. 3314 and 3315, in so far as  these  related to the administration of the  Import  and Export (Control) Act, the Sea Customs Act and the Tariff Act and  would  therefore throw considerable light on  what  was intended by the framers of S.R.O. 3315.  The effect of  this notification  was that the authorization granted by  or  the permission acquired from the French authorities was made  to serve  the same purpose as the grant of a licence to  import under the Import and Export (Control) Act and nothing  more. If its effect was in terms confined to this, there could  be no  contention  that  goods imported  in  pursuance  of  the authorization should be exempted from customs duty. 423 Besides  this, we might also draw attention to paragraph 17 of  the Articles of Agreement dated October 21, 1954,  under the terms of which the transfer of Pondicherry to the  Union Government  was effected.  No doubt, that was  an  agreement between  two Governments whose terms and covenants  are  not justiciable  in  municipal  courts but as  the  two  S.R.0s. themselves  proceed on the basis of this agreement and  have been issued by virtue of the authority acquired by the Union Government  under  the Agreement, a reference to  the  terms thereof  would be pertinent for understanding the  scope  or intent of the provisions in these two orders S.R.O. 3314 and 3315.   Paragraph  17 of the  Agreement--dated  October  21, 1954-which  has been referred to also by Subba Rao,  J.,  in the  Universal lmports Agency’s case (1) in support  of  the position  that  the authorization under the  French  law  to effect  importation  of goods into  Pondicherry  was  tanta- mount  to  and  had the same effect as the  obtaining  of  a licence  under  the Import and Export (Control)  Act,  1947- expressly  made  provision  for  the  Government  of   India applying  to  the  Establishment the  relevant  Indian  laws relating  to the imposition of customs and other  duties  in respect  of goods which entered the port after  November  1, 1954.  It reads:               " All orders placed outside the Establishments

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             and  finalised through the grant of a  Licence               by  competent authorities in  accordance               with the laws and regulations in force,  prior               to the date of the de facto transfer, shall be               fulfilled  and the necessary foreign  currency               granted,  as  far as the  goods  are  imported               within the period of validity of the  relevant               Licence.  The goods shall, however, be  liable               to  customs  duty  and  other  taxes  normally               leviable               at               Indian               ports....................... As  we  have already pointed out, this is  exactly  what  is sought to be achieved by the conjoint operation of paragraph 6  of  S.R.O.  3314  and the extension  of  fiscal  laws  to Pondicherry  effected by paragraph 3 of S.R.O. 3315.  It  is precisely  this that is also brought out by paragraph  4  of the notification dated November 1, 1954, extracted  earlier. In the circumstances (1)  [1961] 1 S.C.R. 305. 424 it  looks somewhat curious that the petitioners  now  before us,  who  as interveners in the petitions by  the  Universal Imports  Agency, etc., supported the invoking of para. 6  of S.R.O.  3314,  or Art. 17 of the Articles of  Agreement  and para.  4 of the notification dated November 1, 1954,  as  an aid to the construction  of the words "things done" in para. 6  of S.R.O. 3315 -the Government resisting their use as  an aid,  should now take up the position that  these  materials are  irrelevant for determining the scope of  those  crucial words.   In our opinion the petitioners are not entitled  to have their goods imported into Pondicherry after November 1, 1954,  without  payment  of duty  notwithstanding  that  the contracts, by reason of which the goods were imported,  were entered into or the shipment took place before that date. The result is that the petition is allowed and the orders of the  Government,  of the Central Board of  Revenue  and  the Collector  of  Customs are quashed only in so  far  as  they impose  a  penalty  on the petitioner  for  importing  goods without a licence under the Import and Export (Control) Act, 1947,  and the Import Control Order.  The  respondents  were entitled  to  demand and to enforce the payment  of  customs duty  and the relief prayed in the petition in so far as  it relates to the quashing of the order in that respect and the refund of the duty collected, fails and is rejected. In the circumstances there would be no order as to costs. DAS GUPTA, J.-We agree that in view of this Court’s decision in M/s.  Universal Imports Agency v. The Chief Controller of Imports  and  Exports (1) the petitioners  are  entitled  to relief as against the order imposing penalty for importation of   goods   into  Pondicherry,  even  though   the   actual importation  took  place,  after November 1,  1954,  as  the contract  in pursuance of which the importation  took  place had  been concluded prior to that date.  We are not able  to agree however that the position is different as regards the (1)  [1061] 1 S.C.R. 305.                             425 petitioners’  prayer for relief against the levy of  customs duty  on this very importation.  With great respect  to  our learned  brethren, who have taken the contrary view, we  are of opinion that as long as the Universal Imports Agency case (1)  is not held to have been wrongly decided, we are  bound by  the  authority    of  that  decision  to  hold  that the petitioners  are  entitled  to relief against  the  levy  of customs duty as well.  In all the three petitions which were before  the Court in the Universal Imports Agency Case,  the

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petitioners  had entered into firm contracts of purchase  by import  with foreign sellers, before the date of  merger  of Pondicherry with India; in all the cases, the goods  reached the destination, the port of Pondicherry, after the date  of merger.   By that date (which was November 1, 1954)  however the  entire administration of Pondicherry had become  vested in the Government of India, but Pondicherry still remained a foreign  territory.  Under s. 4 of the Foreign  Jurisdiction Act,  an  order  had been made on October  30,  1954,  being notification S.R.O. 3315, in consequence of which the Import and  Export  (Control) Act, 1947, and the Sea  Customs  Act, 1878,  along with several other Indian statutes became  laws in force in Pondicherry.  Para. 6 of this order was in these words:-               "Unless otherwise specifically provided in the               Schedule,  all  laws in force  in  the  French               Establishments    immediately    before    the               commencement  of this order which  corresponds               to  the enactments specified in  the  Schedule               shall  cease to have effect, save as  respects               things done or omitted to be done before  such               commencement." When the goods arrived at the Port of Pondicherry they  were confiscated,  on  the  ground that they  had  been  imported without  licence.  But an option was given to pay a  penalty in  lieu of confiscation.  The petitioners paid the  penalty and then came to this Court for relief In making the order of confiscation and giving an option  to the  petitioners to pay penalty in lieu of confiscation  the Collector of Customs proceeded on the (1)  [1961] 1 S.C.R. 305. 426 basis of s. 3(2) of the Imports and Exports Trade  (Control) Act  read with s. 67(8) of the Sea Customs Act.  The  ground on which relief was sought from this Court was that to  this act  of  importation,  the  Indian  statutes  mentioned   in notification S.R.O. 3315 did not  apply because this was  "a thing  done" before the commencement of the order.  If  this contention   succeeded,  there  was  no  escape   from   the conclusion  that  the  order of confiscation  had  no  legal basis,  for the laws in force in the  French  Establishments regarding the importation of goods into Pondicherry did  not require  such  licence.  The controversy  before  the  Court therefore  was  whether the import was or was not  "a  thing done" within the meaning of the saving provisions of para. 6 of  the order.  On the one hand, it was urged that only  the conclusion  of  the contract was "a thing done"  before  the commencement  of the order and the importation-the  bringing of the goods across the customs barrier at Pondicherry port- which  was the mere consequence of the contract  could  not, without undue strain on the language, be said to be a  thing done before the commencement of the order.  Against this  it was  urged  on  behalf of the  petitioners  that  the  words "things done" included not only the things actually done and completed,   but  also  their  consequence.   The   majority decision of this Court accepted the petitioners’  contention and  also held that an import was the legal  consequence  of the  contract that had been entered into by the  petitioners with  the  foreign  dealers and so where  the  contract  was concluded before the date of commencement of the order,  the import by bringing the goods into Pondicherry Port was  also a "thing done" before the commencement of the order.  It  is helpful  in this connection to reread what was said  by  our brother  Subba  Rao, J., speaking for the  majority.   After setting out the relevant facts he proceeded to say:-

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             "On  the  said facts a short  question  arises               whether paragraph 6 of the Order protects  the               petitioners.   While learned counsel  for  the               petitioners  contends that "things done"  take               in  not only things done but also their  legal               consequences, learned                                    427               counsel  for the State contends that,  as  the               goods  were not brought into India before  the               merger,  it  was not a thing done  before  the               merger,  and therefore, would be  governed  by               the enactments specified in the Schedule.   It               is  not  necessary to consider  in  this  case               whether the concept of import not only(  takes               in the factual bringing, of goods into  India,               but   also  the  entire  process   of   Import               commencing  from the date of  the  application               for  permission to import and ending with  the               crossing of the customs barrier in India.  The               words  "things  done"  in  para.  6  must   be               reasonably interpreted and, if so  interpreted               they  can mean not only things done  but  also               the legal consequences flowing therefrom.   If               the  interpretation suggested by  the  learned               counsel  for the respondents be accepted,  the               saving  clause would become  unnecessary.   If               what it saves, is only the executed contracts,               i.e., the contracts where under the goods have               been imported and received by the buyer before               the merger, no further protection is necessary               as  ordinarily no question of  enforcement  of               the contracts under the preexisting law  would               arise." After pointing out that the phraseology used had been copied from  various  previous statutes and  referring  to  several English decisions as regards the interpretation of the words "things  done" the conclusion of the majority was stated  in these words:-               "We  therefore  hold that  the  words  "things               done"  in  paragraph  6  of  the,  Order   are               comprehensive enough to take in a  transaction               effected before the merger, though some of its               legal effects and consequences projected  into               the post- merger period."               The  question whether imports were the  conse-               quences of the contract that had been  entered               into  before  the  date  of  merger  was  next               examined  even though this position  does  not               appear  to have been seriously  disputed,  and               the conclusion was stated thus:               "......... It may be stated that a purchase by               import   involves  a  series   of   integrated               activities  commencing  from the  contract  of               purchase  with a foreign firm and ending  with               the bringing of the goods               428               into  the  importing  country  and  that   the               purchase  and resultant import form  parts  of               the  same transaction.  If so, in the  present               case the bringing of the goods into India  and               the  relevant  contracts entered into  by  the               petitioners  with  the  foreign  dealers  form               parts  of the same transaction.  The  imports,               therefore,  were the effect or the legal  con-               sequences  of  the "things  done",  i.e.,  the

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             contracts entered into by the petitioners with               the foreign dealers." Applying the principles of law thus enunciated the  majority held  that  para.  6 of the  order  saved  the  transactions entered into by the petitioners and that the respondent  had no  right to confiscate their goods on the ground that  they were  imported  without licence.  Accordingly  it  gave  the petitioners the relief they sought for. In the present case also the question is whether the act  of importation can get the benefit of the saving provisions  in para. 6 of the order.  We cannot see how that benefit can be denied in respect of customs duty, unless we refuse to apply the  principles  laid down in the Universal  Imports  Agency case;  and  we cannot see how we can refuse to  apply  these principles.  It is true that in that case the Court had  not to  deal with the question of customs duty.   The  questions for decision were however pure questions of law: (i) whether the imports were the effect or the legal consequence of  the "things  done",  i.e.,  the contracts entered  into  by  the Indian buyers with foreign dealers and (ii) whether  "things done"  mean  not  only  things  done  but  also  the   legal consequences flowing therefrom.  Whether these questions  of law  fell to be decided in a case, where the benefit of  the saving clause is sought against an order of confiscation  or as  in  the present case it is sought against an  order  for payment  of  customs  duty  is  wholly  irrelevant  for  the decisions  of these  questions of law.  We wish to  make  it clear  that  we have no opinion to express  as  regards  the decisions  of these questions of law by the majority in  the Universal  Imports  Agency case.  What we cannot  ignore  is that the law laid down by the majority on 429 those  questions in that case is law and should be  followed by this Court as it has to be followed by other courts,  the only  difference  being that this Court can  overrule  those decisions.  But so long as that is not done the law as  laid down  there  is good law, which we in deciding  the  present case must obey.  Applying c. that law we are of opinion that we are bound to hold that the provisions in the Sea  Customs Act  for levy of customs duty on imports of the goods  which were imported by the petitioners in the present case do  not apply  to  these imports-unless there is  something  in  the order itself-which deprives the act of importation from  the benefit of the saving clause in respect of the customs duty. No  such thing can be seen in the order.  Of the 6 paras  of which  it consists the first merely gives its name and  says that  it  will come into force on the 1st day  of  November, 1954.   The second para. defines the French  Establishments. The  third para. which is the operative para. says that  the enactments  specified in col. 3 of the Schedule as in  force before the commencement of this order are hereby applied to, and  shall be in force in French Establishments  subject  to (a)  amendments,  (b) modifications, if  any,  specified  in column  4 of the Schedule and (c) the subsequent  provisions of  the  order.  Para. 4 contains a  rule  of  construction, viz., reference in any enactment, notification, rule,  order or regulation. applied to the French Establishments by  this order,  to  India or to States or State generally  shall  be construed   as   including  a  reference   to   the   French Establishments; and some other similar provisions.  Para.  5 empowers  the  court,  tribunal  or  authority  required  or empowered to enforce any specified enactment, in the  French Establishments,  to construe the enactment with  such  alte- rations, not affecting the substance as may be necessary  or proper.  Para. 6 which has already been set out contains the

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saving  clause.  It is worth noting that the provisions  for the   application   of   the  enactments   to   the   French Establishments  is  in  terms  made  subject  to  subsequent provisions  of the order and thus clearly to the  provisions of para. 6. There is thus 55 430 nothing  in  the  order  itself,  which  makes  the   saving provision  in  para. 6 inapplicable to the levy  of  customs duties.   Nor has our attention been drawn to any later  law which  would  have the effect of depriving  the  petitioners from the benefit of those saving  clauses.   On behalf of the State reference was made to para.  17  of the  Articles of Indo-French Agreement.  After stating  that all  orders placed outside the Establishments and  finalised through  the  grant of a licence  by  competent  authorities shall  be  fulfilled  and  the  necessary  foreign  currency granted, so far as the goods are imported within the  period of the validity of the relevant licence, goes on to say, the goods  shall  however be liable to customs  duty  and  other taxes normally leviable at Indian ports.  It is argued  that this  expression of intention by the Government of India  as mentioned in this Agreement to realise customs duty on goods imported after the merger should be taken into consideration in   applying  the  saving  provisions  of  the   order   in notification  S.  R.  O. 3315.  We are  unable  to  persuade ourselves  that there is any justification in  reading  into the order S. R. O. 3315 anything to the contrary that  might have  been  expressed in the Indo-French Agreement.   It  is true  that the provisions of this para. of  the  Indo-French Agreement  were referred to in the majority judgment in  the Universal  Imports  Agency  case and it was  said  that  the conclusion already reached were reinforced by what  appeared in  para.  17.   It  is one thing however  for  a  court  to consider that conclusions reached on legal principles is  in keeping  with the intention expressed in a document  between high  contracting parties, it is quite another thing to  say that  the conclusion reached on legal principles  should  be departed  from because it seems to be at variance with  what has  been  said  in such a document.  In view  of  what  was agreed  to  in para. 17 of the Indo-French  Agreement  there would have been no difficulty for the Government of India to make  provision  when  providing  for  the  saving  of   the operation  of  certain  laws to be  applied  to  the  French Establishments in respect of "things done" 431 before  the commencement of the order to exempt the levy  of customs duty from such saving.  That was not done.  There is nothing  in law that we are aware of which would compel  the Government of India because of the above Agreement in  para. 17  to extend the provisions of levy of customs duty in  the Sea  Customs Act in respect of things done before  the  com- mencement  of  the order.  Though the  Government  of  India could have well made the exception when inserting the saving clause  in  the order S. R. O. 3315 in respect  of  levy  of customs duty they did not do so.  It will be improper in our opinion to hold that even though the Government of India did not  expect  it we should do so to give effect  to  what  is considered  to  be the Government of  India’s  intention  as expressed in the Indo-French Agreement.  Reference has  also been made to another order made by the Government of  India, i.e.,  S.  R.  O.  3314 which saved  the  operation  of  the preexisting  French  law  except in so far as  it  had  been affected by S. R. O. 3315. Paragraph 5 of this order provides that all laws in force in

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the    French   Establishments   immediately   before    the commencement of the order and not repealed by paragraph 6 of the  French Establishments (Application of Laws Order)  1954 that  is the order in S. R. O. 3315 shall continue to be  in force  until  repealed or amended  by  competent  authority. Para. 6 of the same order (S.  R. O. 3314) provides that all taxes,  duties, cesses or fees which immediately before  the commencement of the order were being lawfully levied in  the French  Establishments in so far as such levy has  not  been discontinued  by  any  of the laws extended  to  the  French Establishment  by the French Establishments (Application  of Laws  Order)  1954  continued to be  levied.   Thus  if  any customs  duty had been pay. able under the French law  which was  in  force prior to November 1, 1954,  that  would  have continued  to be payable in respect of "things  done"  which are  saved  from  the operation of the Indian  laws  in  the matter by para. 6 of S. R. O. 3315. We  are  unable  to see how either of  these  provisions  in S.R.O. 3314 or anything else therein can deprive 432 the  petitioners  from the benefit of the saving  clause  in para.  6 of the French Establishments (Application  of  Laws Order) 1954, in respect of the levy of customs duty. What  is  it that is saved by this  saving  provision     in para.  6? It is the things done before the  commencement  of the  order.  If the thing done did not include the  bringing of  the goods across the customs barrier, it would not  have been  saved.   It was held in the Universal  Imports  Agency case that bringing the goods across the customs barrier  was a "thing done" before the commencement of the order when the contract in pursuance of which this was done, was  concluded before  the  date of commencement of the order.   Under  the saving  clause  in  para. 6, this "thing  done"  -i.e.,  the bringing the goods across the customs barrier-is saved  from a body of Indian laws and is intended to be controlled by  a corresponding body of the previously prevailing French laws. It is not possible without reading into para. 6, some  words like"provided that in respect of levy of customs duty  under the Sea Customs Act, the corresponding French law will cease to  have effect, if the actual import takes place after  the commencement of the order"-to hold that the levy of  customs duty will be governed by the Indian law, in respect even  of an  import-which was a "thing done" before the  commencement of the order. We  are  of  opinion that on the law as  laid  down  in  the Universal  Imports Agency case the importation of  goods  in the  present  case  in pursuance of  a  contract  which  was concluded  before the date of the commencement of the  order (S.R.O. 3315) was governed by the French laws and not by the Indian  laws,  no less as regards the question  of  levy  of customs  duty  than  as  regards  the  question  of   import licences.  Under the French law no duty was payable on these imports.  Consequently these petitioners were not liable  to pay duty on these imports. In  our opinion, the petitioners are entitled to the  relief they have prayed for, both against the levy of 433 customs  duty  and against the order  imposing  penalty  for importation without licence. We would accordingly allow the petition. By  COURT.  In accordance with the opinion of the  majority, the  petition  is  allowed in part and  the  orders  of  the Government  in  so  far  as they impose  a  penalty  on  the petitioners  for importing goods without a licence, are  set aside;  except  to  this extent, the  petition  shall  stand

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dismissed.