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TMI Blog2016 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... osing simultaneous penalties on both partners and partnership firm?" This reference arose as in the view of the Division Bench in Amritlakshmi Machine Works (supra) there was a cleavage of opinion on the above issue between the decisions of two Division Benches of this Court. In Texoplast Industries v/s. Additional Commissioner of Customs -272 ELT 513 the Division Bench answered the above question in the negative i.e. in favour of the Revenue while in Commissioner of Customs (EP) v/s. Jupiter Exports -213 ELT 641 the Division bench answered the above question in the affirmative i.e. in favour of the Appellant-Assessee. 2. In view of the above conflict, the following questions have been referred to us for our opinion: "(a) Whether under the Customs Act, 1962 and particularly in exercise of the powers conferred by Section 112(a) thereof, simultaneous penalties on both the Partner and Partnership firm can be imposed? (b) Whether, the judgment in the case of Commissioner of Customs (E.P.) v/s. Jupiter Exports reported in 2007 (213) E.L.T. 641 (Bom.), holding that separate penalty on a partnership firm and a partner cannot be imposed, lays down the correct law or whether, as held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chine Works and transferred in the names of these firms and that this duplicate advance license was issued against the original license No. 03014593 dated 28-11-1996. The limits of this license and terms thereof are referred to and it is alleged that in the light of information received, the bills of entry were collected, documents were scrutinized and which reveal details of the transaction. The details of good covered by another 29 bills of entry are referred to and in the light of further disclosures, what has been alleged is that M/s. Amrit Laxmi Machine Works, Khar, Mumbai, the license holder and Shri N. Nagdutt Bramhachari, Directo of the license holding firm for the advance license No. 0111434 dated 22-11-1996 read with license No. 03014593 dated 28111996 have caused the obtaining of the advance license duplicate copy of the advance license, amendment to the list attached to the license so as to cover the goods which were not used in the export product and made misrepresentation in obtaining duplicate copy of the license. But, for the said license being obtained in the manner in which it has been so obtained fraudulently, based on misrepresentation/ false documents, the clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm. This is so as this court in Jupiter Exports (supra) has held that when a penalty is imposed upon the partnership firm, separate penalty cannot be imposed upon the partner of the firm. As against the above, the Revenue contended that in view of the later decision of this Court in Textoplast Industries (supra) rendered after considering the decision in Jupiter Exports (supra), simultaneous penalties are imposable upon both the partnership firm and its partner under Section 112(a) of the Act. 6. The Division Bench in Amritlakshmi Machine Works (supra) observing the apparent conflict between the decisions rendered by the two Division Benches in Jupiter Exports (supra) and Textoplast Industries(supra) referred the above questions to the Hon'ble the Chief Justice. This for constituting a larger Bench of this court so as to resolve the conflicting views of the two earlier Division Benches. 7. It is in the above context that the two questions as formulated herein above have been referred by the Hon'ble the Chief Justice for consideration of this Court. 8. On reading of the questions framed for our consideration, the counsel for the parties jointly submit that it is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 140 of the Act is applicable only to offences under Chapter XVI of the Act which when contrasted with Section 138B of the Act, which is also a part of Chapter XVI is made applicable across the Act. Thus, the provisions of Section 140 of the Act have to be restricted in its application; (c) It was submitted that Chapter XVI of the Act applies to offences and prosecution alone as evident from the heading of the Chapter XVI of the Act. In contrast Chapter XIV of the Act (Section 112 is a part thereof) deals with confiscation of goods and imposition of penalties and not with offences as specified in Chapter XVI of the Act; (d) In any view, it is submitted that on a plain reading of Section 112(a) of the Act, no penalty is simultaneously imposable upon the partnershipfirm and its partners. The penalty under Section 112(a) of the Act is imposable upon a person also who does or omits to do any act which renders the imported goods liable to confiscation. A person not being defined under the Act, has to be understood as defined in the General Clauses Act and would include a partnershipfirm. However, a firm is not distinct from its partners. A firm name is merely a compendious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try, it can be visited with penalty in its capacity as an importer. This is so as a firm is a person as defined under the General Clauses Act, 1897. A partner of the Partnershipfirm can be visited with penalty along with the firm under the Act. This is so as a partner is a person different from the importer i.e. the partnershipfirm. Section 112 of the Act does not restrict the number of persons on whom penalty can be imposed; and (d) The application of the decision of the Apex Court in Standard Chartered (supra) while dealing with Section 68 of the FERA is apposite while considering Section 140 of the Act. This is so as in fact, there is no difference in the scheme of FERA and the Act particularly with regard to Section 140 of the Act and Section 68 of FERA. The penalty which is imposed under Section 112(a) of the Act is in respect of goods which are liable for confiscation under Section 111 of the Act. The goods which are liable for confiscation under Section 111 of the Act arises out of acts which would also amount to an offence for the purposes of Chapter XVI of the Act and provided under Section 135(1)(a) of the Act. Thus, the provisions of Section 140 of the Act could be rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than goods inadvertently unloaded but included in the record kept under subsection (2) of section 45; (h) any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34; (i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof; (j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission; (k) any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein; (l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77; (m) [any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the difference between the declared value and the value thereof or five thousand rupees],whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest]." CHAPTER - XVI OFFENCES AND PROSECUTIONS 135: Evasion of duty or prohibitions -(1) Without prejudice to any action that may be taken under this Act, if any person (a) is in relation to any goods in any way knowingly concerned in misdeclaration of value or in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods; or (b) acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 or section 113, as the case may be; or (c) and (d) .... .... . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravenes any of the provisions of this Act [other than section 13, clause (a) of subsection (1) of [section 18, section 18A], clause (a) of subsection (1) of section 19, subsection (2) of section 44 and sections 57 and 58], or of any rule, direction or order made thereunder he shall, upon conviction by a Court, be punishable, - (i) .... .... .... .... (ii) .... .... .... .... (2) to 6 .... .... ...." "68:-Offences by companies - (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of 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 subsection shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in subsection(1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Jupiter Exports (supra) and Textoplast Industries (supra). It is submitted that in the case of Jupiter Exports (supra), though the Court did observe that it is well settled that simultaneous penalties cannot be imposed upon the partnershipfirm and its partners, the same was in fact, not a question raised in the appeal before it. The questions raised before this Court in Jupiter Exports (supra) were as under: "(a) Whether exports made by manipulating and forging the documents and creating false records and exporting items other than that declared in the shipping bill are liable for confiscation? (b) Whether the license obtained by manipulation and forging the documents for creating false record so that the requirement of the DEEC scheme is fulfilled, is valid and legal? (c) Whether the license holder or the transferee of the license obtained by manipulation and forging documents are entitled to import validly, illegally and exempted from payment of duty?" It is, therefore, submitted that the issue of simultaneous penalties upon the partnershipfirm and its partners was not an issue for consideration by the Court in Jupiter Exports (supra). Consequently, there is only one dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Division Bench of this Court did not raise the issue of simultaneous penalties being imposed upon the partnershipfirm and its partners yet, in the context of the submissions made before it, the Court gave its findings on the issue viz. simultaneous penalties not being imposable. Therefore to the above extent, the order of the Commissioner of Customs which was sought to be restored by the Revenue, could not be done, in its entirety. Thus, it cannot be now urged by the Revenue that the issue did not arise for consideration before the Division Bench of this Court in Jupiter Exports (supra); and (c) In any case, the Division Bench of this Court in Amritlaxmi Machine Works (supra) was certainly of the view that the later Division Bench's decision in Textoplast Industries (supra), was not acceptable in view of the distinction made therein for not following the decision of this Court in Jupiter Exports (supra). The occasion to refer a question of law to the Larger Bench need not emanate only on account of difference of opinion between two Coordinate Benches but could also arise where a Bench of the Court is unable to subscribe to the earlier view of a Bench of equal strength ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The bare reading of Section 111 of the Act which is a part of Chapter XIV of the Act indicates all acts and/or omissions which would render the goods being imported liable for confiscation as they would become prohibited goods as defined under Section 2(33) of the Act. This action under Section 111 of the Act is an action against the offending goods alone. Section 112 of the Act provides for imposition of penalty in respect of persons concerned with the import of offending goods which are hit by Section 111 of the Act. Section 112(a) of the Act which concerns us, makes any person who has done or omitted to do any act or abets the doing or omitting the doing of any act which would render the imported goods liable for confiscation under Section 111 of the Act liable to penalty. Section 112(b) of the Act provides for imposition of penalty when any person acquires possession of the offending goods or is concerned with carrying, depositing, concealing, selling or dealing with goods which he knows or has reason to believe are liable to confiscation under Section 111 of the Act. Thus the liability under Section 112(a) of the Act is a strict liability (save and except in case of abetment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is an offence for the purposes of Chapter XVI of the Act. However, knowledge is a sinequanon for applicability of any of the two provisions. The words in Section 135(1)(a) of the Act are very wide viz. "in any way knowingly concerned in". Section 140 which is a part of Chapter XVI of the Act, provides that where an offence is committed under Chapter XVI of the Act is a company which by an explanation thereto includes a partnership firm, then every person who was at the time when the offence was committed was the Officer incharge of and/or responsible to the Company and/or Firm for its conduct, shall be deemed to be guilty of the offence and be proceeded accordingly. This of course is subject to a caveat that where such director/partner is able to establish/prove that the offence has been committed without his knowledge, then the prosecution must fail. Thus, criminal prosecution can be initiated against the partnershipfirm and its partner as prescribed in Chapter XVI of the Act. 18. From the aforesaid Scheme of the Act with regard to import of goods, it is clear that though the charge under the Act is on import/export of the goods, action can be initiated against offending goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 140 of the Act and Section 68 of FERA. Thus the interpretation put by the Apex Court on Section 68 of FERA cannot be applied to Section 140 of the Act. This is contested by the Revenue who submit that there is, in fact, no distinction in the scheme of FERA and the Act in the context of Section 140 of the Act and Section 68 of FERA. Therefore, the application of the decision of the Apex Court in Standard Chartered Bank (supra) while dealing with Section 68 of the FERA is appropriate while considering Section 140 of the Act. It is submitted that the absence of Chapterisation in FERA is not such a difference as would warrant ignoring the principles laid down by the Apex Court while dealing with FERA. It is submitted that the basis of the penalty under the FERA is contravention of its provisions while basis of the proceedings under Section 140 of the Act, is committing an offence under the provisions of Chapter XVI of the Act. The penalty which is imposed under Section 112(a) of the Act is in respect of goods which are liable for confiscation under Section 111 of the Act, which is also an offence. 20. We note that it is undisputed that the decision in the case of Standard Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression "offence" cannot be narrowly confined to a commission of a crime alone, but would comprehend within its purview, the commission of an act which is prohibited by law; (iii) The deeming fiction which is created in the case of an offence by a Company so as to bring within its purview, a person in charge of or responsible for the affairs of the Company as well as its stated officers would apply not only to a criminal prosecution, but to an adjudication as well. This would in our view necessarily extend to a situation where in terms of the explanation, the 'Company' as defined is a partnership firm. In the case of a partnership firm, the expression 'Director' is extended by the explanation to mean a partner of a firm. The principles which have been enunciated by the Supreme Court were sought to be distinguished, however, on the ground that unlike in the case of the FERA, the Customs Act, 1962 contains a separate Chapter on offences and prosecutions and that hence, the deeming fiction can only be confined for the purposes of prosecutions under the Chapter. Hence, it was urged that where an adjudication proceeding is commenced against a partnership firm, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Therefore, we do not agree with the view of the Division Bench in Textoplast Industries (supra) to the extent it holds that the decision of the Apex Court in Standard Chartered Bank (supra) would apply to Section 140 of the Act so as to govern adjudication proceedings under Section 112(a) of the Act as in the case of Section 68 of FERA being applicable to Section 50 of FERA. 23. Similarly, the reliance by the Revenue upon the decision of the Apex Court in Prakash Metal Works v/s. Collector of Central Excise -216 ELT 600 - referred to in passing by the Division Bench in Textoplast Industries (supra) seems inappropriate as the observations therein to the effect that "we uphold the impugned order of the Tribunal imposing penalty on the partners and the firm of partnership" were casual observations. We say so after due consideration, as we are conscious of our obligation to follow and implement the decisions of the Apex Court. It was in the above circumstances that we closely read the decision of the Supreme Court in Prakash Metal Works (supra) and find that the issue of simultaneous penalty on the partnership firm and the partner was not the question raised before it.Consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of acts and/or omissions which would also be an offence for the purposes of Chapter XVI of the Act as provided for under Section 135(1)(a) of the Act. Thus, the provisions of Section 140 of the Act could be read into Section 112(a) of the Act while invoking the same for the purpose of imposition of penalty upon the partners as well as the firm. This is contested by the Appellant contending that the offence listed out in Section 135 of the Act are only criminal offences and require knowledge. Thus, it could have no application where penalty is being imposed for a civil wrong under Section 112 of the Act. More particularly so when it provides for strict liability. 25. We note that Section 135 of the Act begins with the words 'without prejudice to any action that may be taken under the Act' while listing out the offence of evasion of duty or prohibition under Chapter XVI of the Act. The offences listed out in Section 135(1)(a) of the Act would include within it all acts and/or omission to act on the part of any person in relation to any goods, in any way, knowingly, concerned with misdeclaration of value, fraudulent evasion of duty or evasion of any prohibition either un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly involved in the act or omission to act, which has led the goods becoming liable for confiscation cannot be made liable unless some knowledge is attributed to them. Therefore, it is to cover such cases that Section 112(a) of the Act also includes a person who abets the act or omission to act which has rendered the goods liable to confiscation. Imposing penalty upon an abettor without any mens rea on his part would bring all business to a halt as even innocent facilitation provided by a person which has made possible the act or omission to act possible could result in imposing of penalty. To illustrate innocent transferee of a license which enabled the purchaser of the license to misuse the license could be imposed with penalty. This could never be the intent or objective of Section 112 (a) of the Act. 26. It must be noted that the Division Bench of this Court in State Vs. Abdul Aziz =AIR 1962 Bom. 243, did observe in a Criminal Appeal that mens rea may not be required to establish the charge of abetment in case, the context so requires. The Court was concerned with Section 5 of the Imports and Exports (Control) Act, 1947, which at the relevant time, read as under:- "If any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 112(a) of the Act as the observation of presence of mens rea in case of abetment, not being necessary was in the nature of obiter. We would do well to keep in mind the manner in which a judgment is to be read as observed by the Supreme Court in Natural Resources Allocation -2012 (10) SCC 1 "It is important to read a judgment as a whole keeping in mind that it is not an abstract academic discourse with universal applicability, but heavily grounded in the facts and circumstances of the case. Every part of a judgment is intricately linked to others constituting a larger whole and thus, must be read keeping the logical thread intact". Thus, in the facts of Abdul Aziz (Supra) mens rea on the part of respondent no.1 was established. Moreover, in the context of Section 112(a) of the Act, we do not find anything repugnant in its subject or context so as not to apply the definition / meaning of abet as given in the General Clauses Act, 1897. 27. It, therefore, follows that in all cases (other than abatement) falling under Section 112(a) of the Act, unlike Section 112(b) of the Act, mens rea is not a sina qua non for the imposition of penalty. The Supreme Court in Chairman, SEBI v/s. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rying to restrict the meaning and ambit of the word offence to only criminal offences was subject matter of consideration by the Apex Court in Standard Chartered Bank (supra). However the same was negatived in the following words: "27:-Both, Section 50 providing for imposition of penalty and Section 56 providing for prosecution, speak of contravention of the provisions of the Act. Contravention is the basic element. The contravention makes a person liable both for penalty and for prosecution. Even though the heading to Section 56 refers to offences and prosecutions, what is made punishable by the Section is the contravention of the provisions of the Act and the prosecution is without prejudice to any award of penalty. The award of penalty is also based on the same contravention. Section 63 is the power of confiscation of currency, security or any other money or property in respect of which a contravention of the provisions of the Act has taken place conferred equally on the Adjudicating Authority and the Court, whether it be during an adjudication of the penalty or during a prosecution. Whereas Section 64 (1) relating to preparation or attempt at contravention is confined to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights punishable under criminal law. In Brown v. Allweather Mechanical co. [(1954) 2 QB 443], it was described as "a failure to do something prescribed by a statute may be described as an offence, though no criminal sanction is imposed but merely a pecuniary sanction recoverable as a civil debt." The expression 'offence' as defined in Section 3(38) of the General Clauses Act means an act or omission made punishable by any law for the time being in force. 'Punishable' as noticed by this Court in Sube Singh & Ors. Vs. State of Haryana & Ors. [(1989) 1 SCC 235] is ordinarily defined as deserving of, or capable or liable to punishment. According to Concise Oxford English Dictionary, 'punish' means, 'inflict a penalty on as retribution for an offence, inflict a penalty on someone for (an offence)'. In the New Shorter Oxford English Dictionary (Vol. 2, 3rd ed., reprint 1993), the meaning of punishment is given as, "infliction of a penalty in retribution for an offence; penalty imposed to ensure application and enforcement of a law." Going by Black's Law Dictionary (8th ed.) it is, "a sanctionsuch as a fine, penalty, confinement, or loss of property, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such cases i.e. where the importer is a partnership firm inasmuch as it is in possession of IEC code number and has filed a Bill of Entry for the import of goods and the allegation is not of abetment but of doing an act or omitting to do an act which rendered the goods liable for confiscation. It has nothing to do with mens rea/knowledge. In such a case a penalty imposed upon the firm would be a penalty imposed upon all the partners of the firm as this has nothing to do with the knowledge of the breach rendering the goods liable for confiscation under Section 111 of the Act. It is a case of strict liability. However, in such cases, if the Revenue seeks to impose a penalty upon the partner, then the notice must make out a case of knowledge on the part of the partner in his individual capacity so as to make it a case of abetment by the partner in respect of the acts and/or omission of the partnership firm. This is on a plain reading of Section 112(a) of the Act. This is so as the breach on the part of the partner concerned is independent of the breach committed by the firm. To the above extent, it is a penalty imposed upon two separate persons for distinct breaches. It cannot be im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;person' has not been defined under the Act. Therefore, the meaning as ascribed to the word 'person' in Section 2(42) of the General Clause Act, 1897 which defines a person to include any company or association or body of individuals whether incorporated or not. Thus, it is not disputed before us that a partnershipfirm is a person for the purpose of Section 112 of the Act. However, according to the Appellants, though a partnershipfirm is a person for the purpose of Section 112 of the Act, yet it has no separate legal existence from its partners. It is only a compendious name to describe all the partners collectively. In as much as it is not an entitydistinct and different from its partners. In support reliance is placed upon the decisions of the Supreme Court in Controller and Auditor General v/s. Kamlesh V. Mehta -2003(2) SCC 349 and N. Khadevvali Saheb v/s. N. Gudu Saheb -2003(3) SCC 229. There can be no dispute to the above general proposition of law. The above position is also clear by virtue of Sections 4, 25 and 26 of the Indian Partnership Act, 1932. However where the legislation, specifically provides otherwise, then a partnership firm should be accorded a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t but are only required to consider the provisions of the Act. Further the Apex Court in Agarwal Trading(supra) was not concerned with Section 112(a) of the Act. Thus the above case does not in the context of the question raised for our consideration advance the cause of the Revenue. 34. In fact the IEC number is in the name of the partnership firm which collectively represents all the partners as laid down under the Partnership Act. Therefore in the absence of Section 140 of the Act, a partnership firm does not have an identity different from its partners. Section 140 of the Act alone bestows an independent identity upon the firm and has application only in respect of such a partner who is the person responsible to the firm for its business. Further Section 140 of the Act has limited application only in respect of an offence specified under Chapter XVI of the Act of which Section 140 is a part. It cannot be read into Section 112 (a) of the Act, against the firm unless the notice issued invokes Section 135 of the Act. This breach is not only for imposition of penalty under Section 112(a) of the Act but also an offence under Chapter XVI the Act. 35. We may point out that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice makes out a case of an offence under Section 112(a) of the Act read with Section 135 (1)(a) of the Act, then alone, Section 140 of the Act is applicable for penalty upon the partner; or (b) where the show cause notice makes out an independent case of abetment by the partner for the act or omission done by the partnership firm which has rendered the goods liable for confiscation under Section 111 of the Act. The notice in such a case need not invoke Sections 135 or 140 of the Act for simultaneous imposition of penalties. However, we would like to clarify that (a) above are not cases where Section 112(a) of the Act is alone invoked for breaches under Section 111 of the Act. These are cases where penalty is being imposed for an offence under Section 135(1)(a) of the Act r/w Section 112(a) of the Act. Thus, it would cover cases where the allegation is that the importer (firm) is knowingly concerned with acting or omitting to act rendering the goods liable to confiscate then, the partner incharge of the affairs of the firm would be liable (Section 140 of the Act). 38. In both the above cases simultaneous penalties is imposable upon the partnership firm and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in the above cases. 41. It is made clear that the issue posed before us was only in respect of a partnership firm registered under the Indian Partnership Act 1932. We have not in any manner dealt with partnership firm registered under the Limited liability Partnership Act, 2008 and the liability of its partners under Section 112(a) of the Act. 42. This Reference is disposed of in above terms. No order as to costs. (M.S.SANKLECHA, J.) 43. M. S. Sonak, J:-I have read the judgment of my brother - M. S. Sanklecha. J and find myself respectfully in agreement with his views on the two questions raised for our opinion. (M.S.SONAK,J.) JUDGMENT (Dissenting): (Per G.S.Kulkarni, J.) 44. I have had the advantage of going through the Judgment of my learned brother M.S.Sanklecha, J. I am of the view, that, as the statutory provision stands, simultaneous penalties can be imposed on the partnership firm and the partners under Section 112(a) of the Customs Act 1962 (for short 'the Act'). I am, therefore, unable to persuade myself to the following view by my learned brother M.S.Sanklecha, J. as observed in paragraph 39 of the judgment, as a condition on which simultaneous penaltie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision bench, the following questions of law are referred for the opinion of the Larger Bench:- (i) Whether, under the Customs Act,1962 and particularly in exercise of the powers conferred by Section 112(a) thereof, simultaneous penalties on both the Partner and Partnership firm can be imposed ? (ii) Whether, the judgment in the case of "Commissioner of Customs (E.P.) Vs. Jupiter Exports" reported in "2007 (213) E.L.T. 641 (Bom.) " holding that separate penalty on a partnership firm and a partner cannot be imposed, lays down the correct law or whether, as held by the later Division Bench in the case of Textoplast Industries Vs. Additional Commissioner of Customs reported in 2011(272) E.L.T. 513 (Bom.), it is permissible to impose penalty separately on a partnership firm and a partner particularly in adjudication proceedings under the Customs Act,1962 ? 46. The issues are pure questions of law. The facts of the case, which are subject matter of the appeals, leading to the reference of the above questions for the opinion of the larger Bench have been extensively set out in the referral order of the Division Bench as also in the judgment rendered by my learned brother M.S.Sankle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posable on "person" who does/omits to do or abets an act rendering goods liable for confiscation under Section 111; (ii) there is no definition of 'person' under the Act, therefore, Section 3(42) of the General Clauses Act,1897 is applicable, under which 'person' includes body of individuals, whether incorporated or not. Therefore, partnership firm is required to be treated as 'person' under Section 112(a) of the Act; (iii) A firm acts through its partners, therefore, act of the partner on behalf of the firm is an act of the firm. An imposition of penalty on the firm would in effect be imposition of penalty on all the individual partners since 'person' referred to in Section 112(a) is the body of individuals as a whole; (iv) Separate penalty on the individual partners would amount to double penalty. This is against Article 20(2) of the Constitution of India; (v) Section 140 does not override the entire Act which applies only to offences under Chapter XVI. (vi) The deeming fiction created under Section 140 of the Act cannot be extended to apply to Section 112(a) of the Act as it cannot be extended beyond the purpose for which it is created; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings and thus simultaneous penalties can be imposed on the partners and the firm. It is, therefore submitted that the questions as referred to the Larger Bench do not arise. 49. As noted above, the Division Bench of this Court in the case of "Commissioner of Customs (E.P.) Vs. Jupiter Exports" (supra) has held that that separate penalty on a partnership firm and a partner cannot be imposed. Whereas the Division Bench in the case of "Textoplast Industries Vs. Additional Commissioner of Customs" (supra) has held that it is permissible to impose penalty separately on a partnership firm and partners in adjudication of the proceedings under the Customs Act. The referral Bench having noted the diverse views in these two decisions have referred the above questions to be answered by the larger Bench. For the reasons which are elaborately set out in the referral order, the submission on behalf of the Revenue that no referable question arises for consideration of the Larger Bench, cannot be accepted. 50. At the outset, it would be appropriate to refer to the said two decisions of the Division Bench of this Court. In "Commissioner of Customs (E.P.) Vs. Jupiter Exports" (supra), the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 68 of the Foreign Exchange Regulation Act which deals with the offences by companies and more particularly the following Explanation to the said provision which would make the firm and its partners liable if the offence is committed by a firm:- "Explanation.- For the purposes of this section- (i) "company" means any body corporate and includes a firm or other association of individuals; and (ii) "director", in relation to a firm, means a partner in the firm." The Division Bench in "Textoplast Industries" noted that as in Section 68 of the FERA, Section 140 of the Act, which also provides for offences by Companies, incorporates a similar 'explanation' (supra) and thus applying the deeming fiction as created by Section 140 of the Act to the penalty proceedings under Section 112(a) of the Act, simultaneous penalties can be imposed on the firm and its partners. 52. A question thus arises 'whether apart from the true and correct meaning to be attributed to the words "any person" as used in Section 112(a), the legal fiction as created under Section 140 more particularly by the "Explanation" to the said provision can be read into the provisions of Section 112(a) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and popularly known as 'customs'. In India these duties are the prerogative of the Parliament under the Constitution. It is well settled, that the Act is held to be an important legislation from the point of view of the country's economic stability by preventing smuggling in goods. It is clear from the preamble that the Act consolidates and amends the law relating to customs. One of the principal rules of interpretation to interpret such an enactment as held by the Supreme Court in Ravalu Subba Rao versus CIT (AIR 1956 SC 604) would be to interpret the provisions as forming an Act, being complete in itself and exhaustive of the matters dealt therein. Further an interpretation, keeping in view the object, the Act seeks to achieve would be required to be resorted. The Supreme Court in a recent decision in the case of "Nemai Chandra Kumar & Ors. Vs. Mani Square Ltd. & Ors., (AIR 2015 SC 2955)", considering catena of decisions on the principles of interpretation, has observed that ordinarily, the court would resort to a plain meaning rule (also known as literal rule) for statutory interpretation which emphasizes that the starting point in the statutory interpretation is sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words are general, and include various classes of persons, I know of no authority, which would justify the court in restricting them to one class, or in giving them the narrowest interpretation, where the mischief to be redressed by the statute is equally applicable to all of them. And where a word is used in a statue, which has various known significations, I know of no rule, that requires the court to adopt one in preference to another, simply because it is more restrained, if the objects of the statute equally apply to the largest and broadest sense of the word." [United States V. Winn, 3 Sumn 209, Fed Case No.16, 740; referred to in Johnson V. Southern Pacific Company, 196 US 1, pp.18, 19: 49 Law Ed 362, pp.3 69, 370. See further Kanwar Singh v. Delhi Administration, AIR 1965 SC871: 1965(1) SCR 7.]" (emphasis supplied) 56. In the light of the above principles of interpretation, Section 112(a) needs to be examined. Section 112(a) begins with the word "any person", who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act. The words "in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Legislature which can be discerned from the use of the words 'any person' in framing Section 112 of the Act on a plain reading would include every category of person who can be said to render himself liable for a penalty, as a result of confiscation of goods imported in contravention of the provisions of the Act. The Customs Act has not defined the word "person" and therefore the definition and rules of interpretation contained in the General Clauses Act 1897, can be to be taken recourse of, provided there is nothing repugnant to it in the other provisions of the Act or any different intention can otherwise be read in the enactment, as Section 3 of the General Clauses Act would provide. 60. Section 3(42) of the General Clauses Act defines "person" to mean "person shall include any company or association or body of individuals, whether incorporated or not". A partnership firm therefore falls within the definition of 'person' as defined in the General Clauses Act. Though under the Common law of England, a firm is not a juristic person, the firm name being only a compendious expression to designate the various partners constituting it, however as held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty has been further clarified by proviso (d) which declares the quantum of penalty payable by firms, registered as well as unregistered." (emphasis supplied) 63. The Supreme Court in "M/s. Agarwal & Co. Vs. Commissioner of Income Tax, U.P., (AIR 1970 SC 1343)" in considering the Section 3(42) of the General Clauses Act which defines "person", has observed that the definition of "person" under Section 3(42) of the General Clauses Act cannot be imported into the Partnership Act, the provisions of which alone are relevant to find out as to who could join as partners. It was observed that it is a partnership constituted according to the Partnership Act that can be considered as partnership under the Act. Whereas the definition of 'person' under the Income Tax Act is intended for the purpose of levying incometax and for other cognate matters. 64. In "D. K. Cassim and Sons v. Abdul Rahman, reported in AIR 1930 Rangoon 272", the Division Bench held that a firm can be considered to be 'person' under Order 33 Rule 1 of the Code of Civil Procedure. This was a case where the plaintifffirm had applied for leave to appeal as a pauper. Order 33 Rule 1 of the Civil Proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 979 SC 734)", "RBI Vs. Peerless General Finance and Investment Co.Ltd., (AIR 1987 SC 1023)" and "Central Bank of India Vs. State of Kerala ((2009)4 SCC 94))". It was thus observed that the word "person" would include human being and a body of individuals which may have juridical or nonjuridical status. The above position in law with certitude indicates that for the purposes of Section 112(a) of the Act when it uses the word "any person" would include its partners distinct from the firm. It may therefore be observed that in a generic sense the legislature has considered the partnership firm and the partners to be distinct and independent for the purposes of Section 112(a) of the Act for the purpose of levy of penalty. There is no different legislative intent which can be gathered. When the firm by itself is required to be regarded as a distinct entity, then the partners are required to be considered as independent 'persons' in the word 'person' as incorporated in Section 112(a) of the Act. 68. Now as regards the question 'whether simultaneous penalties can be imposed on a partnership firm and its partners in relation to the acts and omissions as contemplated und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The existing provisions do not provide for personal penalty on the concerned persons for every contravention specified in the existing provisions corresponding to the new clause 111. Under the proposed clause 112, the persons concerned in every contravention mentioned in clause 111 will become liable to a personal penalty. (ii) under the existing provisions even where a personal penalty is provided in respect of a contravention, it is leviable only on the persons actually concerned in the contravention. Under the proposed clause any person who abets such contravention will also become liable to a personal penalty. Thus a financier who finances smuggling or a dealer who helps in the disposal of smuggled goods will also be liable to a personal penalty. (iii) under the existing provisions, the maximum personal penalty that may be imposed for a contravention involving evasion of revenue is one thousand rupees. This is being enhanced to three times the duty sought to be evaded or one thousand rupees, whichever is the higher. The maximum penalty of one thousand rupees is inadequate considering that duty amounting to several thousands of rupees is many a time sought to be evaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) cannot be read in isolation but is required to seen in the context of Section 111 and other provisions in the scheme of the Act. It is needless to observe that before imposing a penalty adequate safeguards are provided in Chapter XIV of the Act. A reference can be made to the provisions of Section 122A of the Act which provides for the 'adjudication procedure' to say that the adjudicating authority shall in a proceeding under Chapter XIV or any other provision under the Act, give an opportunity of being heard to a party in a proceeding. Section 123 of the Act provides for the 'burden of proof'. Section 124 provides for issuance of a show cause notice and provides that no order confiscating any goods or imposing any penalty on any person shall be made under the said chapter unless the owner of the goods or such person is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; and is given an opportunity of making a representation and a reasonable opportunity of being heard in the matter. Section 125 provides for an option to pay fine in lieu of confiscation. Section 127 is a significant provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty should serve as a deterrent not only for the act of commission or omission in question, in a given contravention, but also for all times to come. Assuming that only firm is imposed a penalty and not its partners or other persons through whom the firm has acted, then in that case the authorities would have no record of the persons who have actually indulged in such subversion of law. These partners or other persons who are connected in such activities can still indulge in such activities through another firm or any other legal entity. If such situations do not find a recognition in the provision, the same would be rendered otiose. Section 154B of the Act as inserted by Amendment Act No.29 of 2006 is the acceptance of this position which provides for publishing the names of any person and any other particulars relating to 'any proceedings' or 'prosecutions' under the Act in respect of such persons. A reference also needs to be made to Section 147 of the Act which provides for the liability of principal and agent. This provision throws a light that the Act seeks to bring within its purview, the contravention if any by the agent of the owner or importer or ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Sea Customs Act titled 'Offences and Penalties'. Section 167 as it stood was a composite provision dealing with penalties as also offences. It would be apt to extract the relevant provisions of the Sea Customs Act which fell for consideration of the Supreme Court:- "CHAPTER XVI OFFENCES AND PENALTIES Punishments for Offences: 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 same with reference to such offences respectively: Offence Section of this Act to which offence has reference Penalties 3. If any person ship or land goods, or aid in the shipment or landing of goods, or knowingly keep or conceal, or knowingly permit or procure to be kept or concealed, any goods shipped or landed, or intended to be shipped or landed, contrary to the provisions of this Act, or if any person be found to have been on board of any vessel 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, General 11 such person shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuting a criminal offence though the provision in some of the other clauses spoke of a conviction before a Magistrate (clauses 76 onwards). The other provision with which the Supreme Court was concerned in the case, was Section 23C of the Foreign Exchange Regulation Act,1947. This provision deals with offences by Companies and reads thus: "23-C: Offences by companies - (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 subsection shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in subsection (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een a contravention of any of the provisions of the Sea Customs act read with the Foreign Exchange Regulation Act by a firm, the partners of it who are incharge of its business or are responsible for the conduct of the same, cannot escape liability, unless it is proved by them that the contravention took place without their knowledge or they exercised all due diligence to prevent such contravention. The explanation under Section 23C of the FERA Act,1947 was clearly applied to the penalty provision under the Sea Customs Act. In other words, the Supreme Court applied the deeming fiction under Section 23C of the FERA,1947 to the penalty provisions as contained under Section 167 of the Sea Customs Act in confirming the penalty on the firm and its partners. Thus, the penalty on the firm and the partners under the Sea Customs Act was upheld. It is pertinent to note the observations of the Supreme Court which read thus:- "7. The second contention that because the firm is not a legal 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Statute Book long after the Sea Customs Act. But under Section 23C of the Foreign Exchange Regulation Act and the explanation thereto where the contravention is by a firm every person who at the time the contravention was committed, was in charge of, and was responsible to the firm for the conduct of its business as well as the firm itself shall be deemed to be guilty of the same and liable to be proceeded against and punished. The result is that once it is found that there has been a contravention of any provision of the Foreign Exchange Regulation Act read with the Sea Customs Act by a firm the partners of it who were in charge of its business or were responsible for the conduct of the same cannot escape liability unless it is proved by them that the contravention took place without their knowledge or that they exercised all due diligence to prevent such contravention. 21. In my opinion, the further argument that an attempt to contravene any provision of the Sea Customs Act is not an offence under the said Act is without any substance. If the offence relates to Foreign Exchange the provisions of Sections 23A and 23B of the Foreign Exchange Regulation Act are attracted dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a law, are not criminal offences. Likewise, the other expressions have been used in their generic sense and not as they are understood in the Indian Penal Code or other laws relating to criminal offences Section 167 speaks of offences mentioned in the first column in the Schedule, and the third column in that Schedule lays down the penalties in respect of each of the contraventions of the rules or of the sections in the Act. There are as many as 81 entries in the Schedule to Section 167, besides those added later, but each one of those is and more entries, though an offence, being an act infringing certain provisions of the sections and rules under the Act, is not a criminal offence. Out of the more than 81 entries in the Schedule to Section 167, it is only about a dozen entries, when contemplate prosecution in the criminal case, the remaining entries contemplate penalties other than punishments for a criminal offence." (emphasis supplied) From the above decision, it is quite clear that the firm and its partners are 'persons' described under Section 112(a) of the Act and can be held to be separately liable for imposition of a penalty under Section 112(a) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted was incharge of and was responsible to, the Company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. However, with a safeguard that nothing contained in the provision shall render any such person liable to such punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. Subsection (2) provides that notwithstanding anything contained in subsection (1), where an offence under this Chapter has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence 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. The Explanation extends the scope of the provision by bringing within the ambit of the expression "Company" a firm or an association of individuals and within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as contemplated under Section 111 of the Act can be regarded as an offence and the deeming fiction under Section 140 of the Act becomes squarely applicable. This is also for the reason and in the sense, that infringement of law as contemplated under the said provision though is not made a criminal offence but can still be regarded as an offence for the purpose of applying the deeming fiction created under section 140 of the Act, so as to make the firm and the partners simultaneously liable for imposing a penalty. A purposive interpretation of these provisions in my submission explicitly say so. It is a well settled that all criminal offences are offences but all offences in the sense of infringement of a law, are not criminal offences as held in "Thomas Dana v. State of Punjab, AIR 1959 SC 375." This also finds support from Section 3(38) the General Clauses Act which defines an offence to include any act or omission made punishable by any law for the time being in force. 79. It is significant that the above position in law as laid down in "M/s.Agarwal Trading Corporation and others Vs. The Assistant Collector of Customs" (supra) can also be noted from the decision of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible to the company for the conduct of the business of the company, shall also be deemed to be guilty along with the company of the contravention of the provisions of the Act and liable to be proceeded against and punished accordingly. The proviso, no doubt, indicates that a person liable to punishment could prove that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. SubSection (2) again speaks only of a contravention of the provisions of the Act and the persons referred to in that subsection are also to be deemed to be guilty of the contravention liable to be proceeded against and punished accordingly. The word 'offence' is not defined in the Act. According to Concise Oxford English Dictionary, it means, 'an act or instance of offending'. Offend means, 'commit an illegal act' and illegal means, 'contrary to or forbidden by law'. According to New Shorter Oxford English Dictionary, an offence is "a breach of law, rules, duty, propriety, etiquette, an illegal act, a transgression, sin, wrong, misdemeanour, misdeed, fault." Thus, an offence only means the commission of an act contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There does not appear to be any reason to confine the operation of Section 68 only to a prosecution and to exclude its operation from a penalty proceeding under Section 50 of the Act, since the essential ingredient of both is the contravention of the provisions of the Act. A company is liable to be proceeded against under both the provisions. Section 68 is only a provision indicating who all in addition can be proceeded against when the contravention is by a company or who all should or can be roped in, in a contravention by a company. Section 68 only clarifies the nature and mode of proceeding when the contravention of any of the provisions of the Act is by a company, whether it be by way of adjudication to impose a penalty or by way of prosecution leading to imprisonment and a fine. 28. ... ... ... 29. There does not appear to be any reason to confine the operation of Section 68 of the Act as was done by the High Court. Merely because the expression 'punished' is used, it does not mean that it is confined to a prosecution under Section 56 of the Act, since the element that attracts the imposition of penalty and the prosecution is the same, namely, the contravention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court it is clear that imposing of a penalty is also regarded as a punishment. In the context of the Act, Section 140 when it speaks of an offence, it is required to be considered as an act contrary to or forbidden by law or a breach /contravention of the provisions of the Act and only indicates a manner in which a contravention and/or violation of the provisions of the Act is to be dealt. As regards the deeming fiction created by it, the deeming fiction cannot be confined only in respect of prosecutions against the firm but also to the penalty proceedings which can be initiated under Section 112(a) of the Act. Thus, even on this count the deeming fiction created under Section 140 can be taken recourse in applying Section 112(a) of the Act. In view of the enunciation of law in "Standard Chartered Bank" (supra), the reliance of the appellants on the observations in "Rajkumar Khurana Vs. State of (NCT of Delhi) and Anr., (2009)6 SCC 72" and "Union of India and Anr. Vs. Samrat Raj Dugar & Anr., (1972(2) SCC 66), is not well founded. 80. Thus also from the decisions in "M/s.Agarwal Trading Corporation and others Vs. The Assistant Collector of Customs" (supra) and in "Stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offences. In "Agarwal Trading Corporation" (supra) a penalty on the partners and the partnership firm was confirmed, whereas in Standard Chartered Bank (supra) the Directors were held liable for a personal penalty by application of the above principle. The Act in question, in my opinion, cannot be differently interpreted on the grounds as urged by the appellants looking at the Scheme of the Act and the object which it seeks to achieve. In view of principles of law as enunciated in the decision of the Supreme Court in the case of "M/s.Agarwal Trading Corporation and others" (supra) and "Standard Chartered Bank" (supra), the submissions on behalf of the Appellant that only because the deeming fiction as created in Section 140 of the Customs Act falls under Chapter XVI which pertains to offences cannot be read in Chapter XIV in its application to Section 112(a) of the Act, cannot be accepted. Even otherwise, it is a settled principle of law that the Legislation in its entirety is required to be considered to construe the real intention of the Legislature. In view of the clear position in law as laid down in the above decisions of the Supreme Court, the Appellant cannot be successful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly indicates that there is no requirement of a mens rea for imposing a penalty for an act of abetment. Abetment in this context would be abetment to contravene the provisions of the Act. This can be noted from the fact that the legislature has not used the words 'knowingly', 'willfully' etc. It may not, therefore, be appropriate to read such words into the provision which would render it nugatory. Whenever the legislature wanted to include such prior knowledge or intention in contravening the provisions of the Act, it has been so expressly included. A perusal of Section 112(a) clearly indicates that abetment as envisaged in this provision would not require any mens rea. The position in law in interpreting such provisions wherein it is held that mens rea is not to be read in statutory contraventions/offences, can be noted from some decisions. 85. In a Constitution Bench decision of the Supreme Court in "Indo China Steam Navigation Co. Vs. Jasjit Singh, the Addl.Collector of Customs, Calcutta, (AIR 1964 SC 1140)", the Supreme Court was considering the question 'whether contravention of Section 52A of the Sea Customs Act,1878 could be established unless mens rea w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of mens rea. Thus, where the legislature wanted to introduce the knowledge or intention actuating the commission of the offence as an essential element of the offence, it has used appropriate words to indicate that intention. The failure to use a similar word in S.167(12A) cannot, therefore, be regarded as accidental, but must be held to be deliberate. In our opinion, there is some force in this argument as well. Besides, there can be no doubt that in construing a section, it would be relevant for the Court to consider whether the construction for which Mr. Choudhary contends would not make the provisions of S.52A read with S.167(12A) substantially nugatory. If it appears that the adoption of the said construction would substantially defeat the very purpose and intention of the legislature in enacting the said section, that would be a legitimate reason for rejecting the said construction. If the words used in s. 52A are capable of only one construction and no other, and that construction is the one suggested by Mr. Choudhary, the fact that by adopting the said construction the section would be rendered nugatory, would not be of any material significance. If, on the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such a manner as would not be easily detected or discovered. Therefore, it seems to us plain that if we are to accept the construction suggested by Mr. Choudhary, mens rea would rarely be proved against the owners of the vessel, or even its master and the section, in substance, would remain a dead letter on the statutebook." (emphasis supplied) 86. A useful reference can also be made to the decision of the Supreme Court in the case of "J.K.Industries Ltd. & Ors. Vs. Chief Inspector of Factories and Boilers & Ors., [(1996)6 SCC 665]". In this case the issue which fell for consideration before the Supreme Court was the interpretation of 'occupier of a factory' as defined under proviso (ii) to Section 2(n) of the Factories Act,1948. The question being 'whether in the case of a company which owns and runs a factory, it is only Directors of a Company who can be notified as the occupier of the company in the meaning of proviso (ii) to Section 2(n) of the Factories Act,1948', or whether the Company can nominate any other employee to be an occupier by passing a resolution to the effect that the said employee shall have ultimate control over the affairs of the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain, Mr Nariman and Mr Tripathi, appearing for the appellants, however, argued that since Section 92 imposes a liability for imprisonment and/or fine, both on the occupier (the notified director) and the manager of the factory, jointly and severally, for the contravention of any of the provisions of the Act or any rule made thereunder or of any order in writing given thereunder, irrespective of the fact whether the occupier (the notified director) or manager, had any mens rea in respect of that contravention or that the contravention was not committed by him or was committed by any other person in the factory without his knowledge, consent or connivance, it is an unreasonable restriction. The learned counsel argued that in criminal law, the doctrine of vicarious liability is unknown and if a director is to be punished for something of which he is not actually guilty, it would violate his fundamental right as enshrined in Article 21 of the Constitution. It was urged that on account of advancement in science and technology, most of the companies, appoint professionally qualified men to run the factories and nominate such a person to be the 'occupier' of the factory and make h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of Section 30, 111, 112 of the Customs Act, relying on the decision of the Supreme Court in the case "IndoChina Steam Navigation Co. Vs. Jasjit Singh, the Addl. Collector of Customs, Calcutta, (AIR 1964 SC 1140)". The Court made the following significant observations in para.15 and 16 of the judgment: "15. Now bearing in mind the value to be attached to the absence of mens rea in a statutory offence under section 52A read with Section 167 (12A) as laid down by the Supreme Court, I have to see how far those considerations apply in interpreting Sections 30,111 and 112 of the Customs Act. There is no dispute that the goods seized from the vessel are all prohibited goods, within meaning of Section 2 (33) of the Customs Act. They were brought to India form places outside India. Thus even though the petitioners were not aware that the offending goods were being brought to India, they were in fact being carried to India by their vessel from places outside India. Does this alone make the petitioner no.1 an importer and stamp upon the goods with the character of imported goods ? The definitions of "import" (as in Section 2 (33) and of "imported goods" as in Section (2 (25) do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory duty will render the person responsible therefor to a penalty under section 112, are all meant to safeguard the economies of the country form the danger of uncontrolled clandestine importation. To hold that an innocent Master of a vessel who is unable to contro l illegal importation of large quantities of prohibited goods should not be visited with the penalty under section 112, may render the safeguards wholly nugatory. When importation of prohibited are discovered form hidden nooks and corners of a vessel it may be difficult to establish that the Master of the vessel had knowledge of the illegal importation. He may always come out with the explanation as done in this case that he had warned the crew against indulging in illegal importation and had taken all precautions to see that prohibited goods did not enter the vessel without complying with the legal formalities and thus escape the provisions of section 112, read with sections 111 and 30. An interpretation of section 30, 111 (f) and 112 in a manner which may render imposition of penalty for importation of prohibited goods in India impossible should be avoided." (emphasis supplied) 88. In the case of "State Vs. Abdul Az ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 112(a) which can be noted in other provisions, and this is certainly not accidental. If such words which can be considered to be deliberately avoided to be used by the Legislature, if read into the provisions of Section 112(a), it would render Section 112(a) nugatory resulting in defeating what is intended by the Legislature. The firm and the partners thus can in a given case be subjected to a simultaneous penalties for the contravention of Section 111 of the Act resulting into confiscation of the goods, however the same would be subject to the either of the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention, which is a safeguard inherently provided by the Act. Thus as regards use of the word "abets" in Section 112(a) of the Act, it may be observed that same would not attract the Rule of mens rea. Further it is well settled that a penalty is imposed under the Act for such acts which are in the nature of breach of a civil obligation and by an adjudicatory proceeding, different from criminal proceedings before a Criminal Court and thus would not attract the Rule of mens rea. 90. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty can be availed by the person to prove that a penalty need not be imposed under Section 112(a) of the Act. The principle of mens rea is not attracted under Section 112(a) of the Act to impose penalty on those who can be said to abet the contravention. Section 112(a) is an independent provision. Section 135(i)(a) is a provision dealing with a criminal offence and thus, cannot have a relevance in penalty proceedings adopted under Section 112(a) of the Act, as the essential ingredient in respect of a criminal offence is mens rea. This is how Section 135(i)(a) specifically refers to a prior knowledge. Reading Section 135(i)(a) even remotely in the implementation of Section 112(a) would result into a legal absurdity and a violence to the provisions of Section 112(a) and defeat the clear intention of the legislature, as it would amount to incorporating a foreign ingredient or something which the legislature never intended. In the entire scheme of Chapter XIV of the Act which deals with "Confiscation of Goods and Conveyances and Imposition of Penalties", in the matter of imposing of penalties, the legislature has clearly left it to the wisdom of the executing agencies of course subject ..... X X X X Extracts X X X X X X X X Extracts X X X X
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