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TMI Blog1968 (11) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciate how the existence of section 167(37), section 167(72) and section 167(81) is of any assistance for the purpose of interpreting section 23A and section 12(1) of the Exchange Act. It may be —I do not decide it—that an exporter, like the respondents, will also be liable to be proceeded against under these items of section 167. Taking the facts as alleged by the customs authorities to be true, as they must be taken to be true for the purpose of this application under article 226, it seems to me that no case for the issue of a writ of prohibition has been made out. In the result the judgment of the appeal court is reversed and that of the learned single judge restored. - 45 TO 49 OF 1968 - - - Dated:- 19-11-1968 - S.M. SIKRI, R.S. BAGHAWAT AND K.S. HEGDE, JJ. C.K. Daphtary, Niren De, N.S. Bindra, Mohan Kumaramangalam, R.H. Dhebar, A.S. Nambiar, S.P. Nayar and S.P. Nayar for the Appellant. A.K. Sen, Soli Sorabji, S.R. Vakil, B.D. Barucha, G.L. Sanghi, S.K. Dholakia, N.A. Palkhivala, Soli Sorabji, D.N. Misra, S.R. Vakil, B.D. Barucha, G.L. Sanghi, S.R. Vakil and B.D. Barucha for the Respondent. P.P. Ginewala, D.N. Mukherjee, Ajit Choudhury, S.D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... memorandum that the shippers had derived financial benefits in respect of the subject export over and above those revealed to the Customs Authorities and/or other concerned authorities and the information about them was deliberately suppressed. It was further alleged that this constituted a contravention of section 12(1) of the Foreign Exchange Regulation Act, 1947, read with Notification No. 12 (17)-F. 1/47 dated August 4, 1947, as amended, issued thereunder and the Foreign Exchange Regulation Rules, 1952. I may mention that by this notification the Central Government had prohibited "the export otherwise than by post of any goods either directly or indirectly to any place outside India other than any of the countries or territories in the Schedule annexed to this order unless a declaration supported by such evidence as may be prescribed is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been or will within the prescribed period be paid in the prescribed manner." According to the Deputy Collector of Customs, the goods have been thus exported in contravention of the restrictions and prohibitions imposed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that before the Division Bench the case of the revenue was clarified in an affidavit and we may set out paragraph 5 thereof: " Since the court has now directed the respondents to file a supplemental affidavit clarifying the stand taken by the department I state respectfully that the stand taken by the department both in the show cause memo and here is that the essence of the offence committed by the appellants is that in the declaration required under section 12(1) of the Foreign Exchange Regulation Act, they have deliberately given false particulars supported by false evidence. By giving this fraudulent declaration, they have secured the export of their goods. This fraud vitiates the declaration itself, thereby making the export one in violation of the prohibition contained in section 12(1) of the Foreign Exchange Regulation Act." It is not necessary to set out the modus operandi adopted by the petitioners but I may mention that it was contended that a scheme was entered into prior to the actual export and the goods were undervalued deliberately and the department was induced to accept their declarations by means of false evidence and fraudulent suppression of facts. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an in the prescribed manner or does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid: Provided that no proceedings in respect of any contravention of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full amount as aforesaid has not been made in the prescribed manner. (3) Where in relation to any such goods the said period has expired and the goods have not been sold and payment therefor has not been made as aforesaid, the Reserve Bank may give to any person entitled to sell the goods or to procure the sale thereof, such directions as appear to it to be expedient for the purpose of securing the sale of the goods and payment therefor as aforesaid, and without prejudice to the generality of the foregoing provision, may direct that the goods shall be assigned to the Central Government or to a person specified in the directions. (4) Where any goods are assigned in accordance with sub-section (3), the Central Government shall pay to the person assigning them suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and section 19 shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both; ( b )any direction or order made under section 19 shall, upon conviction by a court, be punishable with fine which may extend to two thousand rupees. (IB) Any court trying, a contravention under sub-section (I) or subsection (1A) and the authority adjudging any contravention under clause ( a ) of sub-section (1) may, if it thinks fit, and in addition to any sentence or penalty which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or any other money or property, in respect of which the contravention has taken place, shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the person committing the contravention or any part thereof shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf. Explanation. For the purposes of this sub-section, property in respect of which contravention has taken place shall include deposits in a bank, where the said propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction ; or 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 18 19 such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. Foreign Exchange Regulation Rules, 1952. " 3. Form of declarations. (1) A declaration under section 12 of the Act shall be in one of the forms set out in the First Schedule as the Reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been or will within the prescribed period be paid in the prescribed manner " ? Is it necessary that the declaration shall be made honestly or in good faith ? Should it disclose the true export value ? Is it a breach of the sub-section if a declaration is made honestly but happens to show incorrect export value to a small but not material extent ? Does hot a deliberately false declaration contravene the provisions of section 12(1). (3)If an action is a contravention of section 12(1) and other provisions of the Exchange Act, e.g., sections 22, 23, 12(2), 12(3) and 12(5), was it the intention that it should be treated as a contravention of section 12(1) ? Before dealing with point (1) mentioned above, a few preliminary observations may be made. I have to construe an Act which was enacted in the interests of the national economy. A deliberate large-scale contravention of its provisions would affect the interests of every man, woman and child in the country. Such an Act, I apprehend, should be construed so as to make it workable ; it should, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12(1) must be treated as restrictions imposed by section 12(1). Section 12(1) itself contemplates rules being made on three points, i.e., (1) the evidence which is to support the declaration, (2) the authority to which the declaration is to be furnished, and (3) manner of payment. It was said that the words " by section 12(1)" exclude the restrictions made under the Rules. But though in some contexts and scheme of an Act this proposition may be true, the general rule is as stated by Lord Alverstone C.J. in Willingale v. Norris [1909] 1 K.B. 57, 64 , as follows: " If it be said that a regulation is not a provision of an Act, I am of opinion that Rex v. Walker [1875] L.R. 10 Q.B. 355 is an authority against that proposition. I should certainly have been prepared to hold apart from authority that, where a statute enables an authority to make regulations, a regulation made under the Act becomes for the purpose of obedience or disobedience a provision of the Act. The regulation is only the machinery by which Parliament has determined whether certain things shall or shall not be done." These observations were approved by the House of Lords in Wicks v. Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred by the Act , for, in the context, the expression conferred by the Act would mean conferred expressly or by necessary implication by the Act itself ...The words under the Act would, in that context, signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done ; in other words, bylaws made by a subordinate law-making authority which is empowered to do so by the parent Act. The distinction is thus between what is directly done by the enactment and what is done indirectly by rule-making authorities what are vested with powers in that behalf by the Act (vide Hubli Electricity Co. Ltd. v. Province of Bombay [1949] L.R. 76 I.A. 57. 66.; A.I.R. 1949 P.C. 136 and Narayana-swami Naidu v. Krishna Murthi I.L.R. [1958] Mad. 513, 547; A.I.R. 1958 Mad. 343)." The observations of Subba Rao J., as he then was, at page 775, relied upon by the appellants, are these : "I would, therefore, construe the words by or under this Act, or as may be prescribed as follows : by this Act applies to powers assigned proprio vigore by the provisions of the Act; under this Act applies to an assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, as section 12(1) itself does not impose any restrictions and contemplates certain things to be prescribed. Coming now to the construction of section 12(1), it seems to me that what it requires is a declaration of some actual figure which according to the declarant represents "the full export value". Otherwise there is no point in requiring support of such evidence as may be prescribed. Further, it is clear that some actual figure has to be mentioned when the exporter declares that he has received the amount representing the full export value. I apprehend that the same applies in the case where the amount has not yet been received. The rules make this clear. Rule 5(2)( ii ) which requires the invoice value stated in the declaration to be the full export value of goods, is referable to section 12(1) of the Exchange Act and may be taken to indicate that an actual figure has to be mentioned. It may be an estimate if the goods have not been sold before the export, but a figure must be indicated. Coming to the crux of the problem, does section 12(1) by itself require absolutely correct particulars ? It is said that section 12(1) does not require it, for section 22 requires the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the persons concerned in the export which in most cases enable the exporter to successfully evade the provisions of the Exchange Act. These persons are taken care of only under the Customs Act. If they are covered by section 167(8), there is no reason to exclude the exporter himself. It is not unusual to make persons liable both to penalties under the Sea Customs Act and the Exchange Act. It is indeed conceded that if no declaration is given under section 12(1) and the goods are exported., the exporter and the persons concerned in the export would be liable to be proceeded both under section 167(8) of the Sea Customs Act and the Exchange Control Act. I can draw no distinction between such an exporter and an exporter who gives a deliberately false declaration for the purpose of the applicability of section 167(8) of the Sea Customs Act. I am not impressed by the argument that the Foreign Exchange Act deals with the basic policy regarding foreign exchange and it was not the intention to punish offenders who violate foreign exchange restrictions under the Sea Customs Act. It is section. 23A of the Exchange Act which itself deems the restrictions imposed under section 12(1) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The respondents in these appeals are exporters of manganese ore. It is said that they had exported large quantities of manganese ore after ostensibly complying with the formalities of law but in reality they had under-invoiced the various consignments sent by them and further that they had failed to repatriate foreign exchange of the value of about three crores of rupees obtained by them as the price of the manganese ore exported. It .is said that by so doing they had contravened section 12(1) of the Foreign Exchange Regulation Act, 1947 (to be hereinafter referred to as the Act), read with section 23(A) of that Act and sections 19 and 167(8) of the Sea Customs Act. The case for the appellants is that during the search of the house of some of the respondents on suspicion that they had hoarded gold, certain documents from the house of some of the respondents were seized and those documents disclosed the facts set out above, On the basis of the said information the Deputy Collector of Customs, Visakhapatnam, issued several notices to the respondents requiring them to show cause why action should not be taken against them under the aforementioned provisions. On receipt of those notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to furnish such evidence in support of the declaration as may satisfy them that the exporter is a person resident in India or has a place of business in India. These authorities may also require the exporter to produce in support of the declaration such evidence as may be in his possession or power to satisfy them ( i ) that the destination stated in the declaration is the final place of destination of the goods exported; ( ii ) that the invoice value stated in the declaration is the full export value of the goods, and ( iii ) that the amount representing the full export value of the goods has been or will be paid to the exporter. Form G. R. 1 stipulates that the exporter should furnish the information called for therein. Therein the exporter is also required to make the following declaration: " I hereby declare that I am the seller/consignor of the goods in respect of which this declaration is made and that the particulars given above are true and ( a )that the invoice value declared is the full export value of the goods and is the same as that contracted with the buyer ; ( b )that this is a fair valuation of the goods which are unsold. I/My principals undertake that I/th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods shall, except with the permission of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which has the effect of securing that... ( b ) payment for the goods is made otherwise than in the prescribed manner or does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any,, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid..." The contravention of the above provisions is punishable under section 23. Hence the respondents failure to repatriate any part of the foreign exchange earned by them by the sale of the manganese ore exported can be penalised by imposing on them a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention had taken place or Rs. 5,000, whichever is more, as may be adjudged by the Director of Enforcement in the manner provided in the Act. Hence, it is open to the Director of Enforcement to levy on such of the respondents as have contravened section 12(2) penalty not exceeding three times the value of the foreign exchange not repatriated which in the present case can be abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 18 19 such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. If an offence falls under section 23-A the fact that the said offence is" also punishable under section 23 is immaterial. The provisions of section 23-A.are without prejudice to the provisions of section 23. The mere fact that the offences alleged against the respondents are punishable under section 23 would not exclude the application of section 23-A. Therefore, all that we have to see is whether those offences fall within the ambit of section 23-A. If they do then the impugned show cause notices must be held to be valid. If they do not, then n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns both the goods sold to the foreign buyers as well as those sent on consignment basis. So far as the goods sold to the foreign buyer are concerned it is generally possible for the exporter to know the exact value but that would not be the position when the goods are sent on consignment basis. In the case of goods sent on consignment basis the exporter can give only an estimated value. The main purpose of section 12(1) is to get a declaration from the exporter that he has either brought or will bring back the amount representing the full export value of the goods exported. There are other provisions in the Act to deal with other situations. We shall presently refer to them. If we are to hold that every declaration which does not state accurately the full export value of the goods exported is a contravention of the restrictions imposed by section 12(1) then all exports on consignment basis must be held to contravene the restrictions imposed by section 12(1). Admittedly, section 12(1) governs every type of export. Again it is hard to believe that the legislature intended that any minor mistake in giving the full export value should be penalised in the manner provided in section 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples laid down succinctly by Lord Esher in Tuck and Sons v. Priester [1887] 19 Q.B D. 629 ." In London and North Eastern Rly. Co. v. Berriman [1946] A.C. 278, 295, Lord Macmillan observed: "Where penalties for infringement are imposed it is not legitimate to stretch the language of a rule, however beneficent its intention, beyond the fair and ordinary meaning of its language." This court in Tolaram Relumal v. State of Bombay [1955] 1 S C.R. 158, 164, speaking through Mahajan C.J., observed: " It is not competent to the court to stretch the meaning of an expression used by the legislatnre in order to carry out the intention of the legislature." Hereinbefore we have examined the language of section 12(1) and its purpose. We have also referred to the provisions which provide for the punishment of the contraventions complained of in these cases. Those provisions are adequate to meet the situation. In Our opinion the language of section 12(1) does not permit the acceptance of the interpretation placed on it by the appellants nor are we able to come to the conclusion that the legislature intended that the offences complained of in these proceedings should be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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