1960 (8) TMI 81 - SC - Customs

Petitions are filed under Art. 32 of the Constitution for quashing the orders of the Assistant Controller of Imports and Exports. the Collector of Customs and Central Excise, Pondicherry, the Board of Revenue, and the Government of India, and for an appropriate direction requiring the respondents to refund the amount realised from the petitioners Held that - Paragraph 6 of the Order saves the transactions entered into by the petitioners and that the respondents had no right to confiscate their goods on the ground that they were imported without licence. In this view, no other question arises for consideration. In the result, the orders of the respondents 2, 3 and 4 are quashed and they are directed to refund to the petitioners the amounts illegally collected from them. Appeal allowed.

Issues Involved:
1. Validity of the orders of confiscation by the customs authorities.
2. Applicability of Indian laws to imports into Pondicherry post-merger.
3. Interpretation of the saving clause in paragraph 6 of the French Establishments (Application of Laws) Order, 1954.
4. Rights and obligations under the Indo-French Agreement.

Issue-wise Detailed Analysis:

1. Validity of the Orders of Confiscation by the Customs Authorities:
The petitioners challenged the confiscation of their goods by the customs authorities under Section 167(8) of the Sea Customs Act, 1878, on the grounds that the goods were imported without a valid licence. The goods were ordered before the de facto transfer of Pondicherry to India but arrived after November 1, 1954. The customs authorities confiscated the goods and imposed fines, which the petitioners paid under protest. The petitioners argued that their transactions were valid under the pre-existing French law and should be protected by the saving clause in paragraph 6 of the French Establishments (Application of Laws) Order, 1954.

2. Applicability of Indian Laws to Imports into Pondicherry Post-Merger:
The Government of India extended several Indian laws, including the Sea Customs Act, 1878, and the Imports and Exports (Control) Act, 1947, to Pondicherry effective from November 1, 1954, through the French Establishments (Application of Laws) Order, 1954. The petitioners contended that their imports, which were initiated under the French administration, should not be subject to these Indian laws. However, the respondents argued that since the goods arrived after November 1, 1954, they were subject to Indian laws, which required a valid import licence.

3. Interpretation of the Saving Clause in Paragraph 6 of the French Establishments (Application of Laws) Order, 1954:
The saving clause in paragraph 6 of the Order stated: "Unless otherwise specifically provided in the Schedule, all laws in force in the French Establishments immediately before the commencement of the Order, which correspond to enactments specified in the Schedule, shall cease to have effect, save as respects things done or omitted to be done before such commencement." The petitioners argued that their transactions were "things done" under the French law and should be protected. The respondents contended that the goods were imported after the commencement of the Order, and thus, the saving clause did not apply.

4. Rights and Obligations under the Indo-French Agreement:
The Indo-French Agreement of October 21, 1954, provided for the de facto transfer of Pondicherry to India from November 1, 1954. Article 17 of the Agreement stated that orders placed outside the Establishments and finalized 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 were to be fulfilled by the Government of India. The petitioners argued that their transactions fell under this provision and should be honored by the Indian authorities. However, the respondents maintained that the petitioners did not obtain any licences from competent authorities and that the goods were imported without authorization under Indian laws.

Judgment Analysis:

Majority Judgment:
The majority held that paragraph 6 of the Order was comprehensive enough to include transactions effected before the merger, even if some of their legal effects projected into the post-merger period. The Court reasoned that the phrase "things done" should be reasonably interpreted to include the legal consequences of actions taken before the merger. The majority concluded that the transactions entered into by the petitioners were protected by the saving clause, and thus, the respondents had no right to confiscate the goods on the grounds that they were imported without a licence. The orders of the customs authorities were quashed, and the respondents were directed to refund the amounts collected from the petitioners.

Dissenting Opinions:

Sarkar J.:
Justice Sarkar dissented, arguing that the saving clause did not protect the imports made by the petitioners from the operation of the Indian laws applied to Pondicherry. He contended that the saving clause only preserved the French laws concerning things done before the commencement of the Order, not the effects or rights accrued from those actions. He also noted that the Indo-French Agreement did not confer enforceable rights on the petitioners and that the imports were subject to Indian laws, which required a valid licence.

Shah J.:
Justice Shah also dissented, emphasizing that the expression "things done" in paragraph 6 of the Order did not include future legal consequences of actions taken before the merger. He argued that the import of goods across the customs frontier in Pondicherry after November 1, 1954, without a licence, was contrary to the provisions of the Sea Customs Act and the Imports and Exports (Control) Act. He concluded that the petitioners were not entitled to the benefit of the saving clause and that the orders imposing duty and penalty were valid.

Conclusion:
In view of the majority judgment, the petitions were allowed, and the orders of confiscation were quashed. The respondents were directed to refund the amounts collected from the petitioners, and the petitioners were awarded costs.

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