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State of Maharashtra Vs. Dr. Mahesh P. Mehta - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtMumbai High Court
Decided On
Case NumberCriminal Appeal No. 741 of 1983
Judge
Reported in1983(1)BomCR606
ActsCustoms Act - Sections 8, 8(1), 50, 52, 54, 71, 71(1), 71(3) and 135(1); Foreign Exchange Regulation Act, 1973 - Sections 8(1); Gold Control Act; Customs Act
AppellantState of Maharashtra
RespondentDr. Mahesh P. Mehta
Excerpt:
criminal - possession of foreign exchange - sections 8, 8 (1) 50, 52 and 135 (1) of customs act and section 8 (1) of foreign exchange regulation act, 1973 - on search of respondent's baggage currency notes found - respondent failed to provide permission or authorisation of reserve bank of india for such possession - every case of physical possession not amount to contravention as contemplated under section 8 (1) - presumption pertains to ownership contrary of which can be established by person concerned - carrier of foreign exchange cannot be punished for such possession - respondent only carrier of foreign exchange despite his having found in possession thereof he discharged burden which does not convert his possession into acquisition - possession being that of carrier not liable under.....1. the marriage is no doubt a happy event in one's life and so it was with the first respondent herein, who is a medical practitioner and who has settled down in united states holding a green card. he came to india for celebrating his own marriage and so did arrive in india his sister-in-law smt. datta mehta along with her infant sometime in december 1976, smt. datta resides with her husband in united states and also holds a green card. in fact, respondent i stays with his brother. after the purpose and celebration of the marriage, respondent 1 carried with him the happy memories of the said auspicious occasion and made arrangements for his return to united states. however, along with the said memories he also carried a packet containing certain foreign exchange, which according to him,.....
Judgment:

1. The marriage is no doubt a happy event in one's life and so it was with the first respondent herein, who is a Medical Practitioner and who has settled down in United States holding a Green Card. He came to India for celebrating his own marriage and so did arrive in India his sister-in-law Smt. Datta Mehta along with her infant sometime in December 1976, Smt. Datta resides with her husband in United States and also holds a Green Card. In fact, respondent I stays with his brother. After the purpose and celebration of the marriage, respondent 1 carried with him the happy memories of the said auspicious occasion and made arrangements for his return to United States. However, along with the said memories he also carried a packet containing certain foreign exchange, which according to him, was entrusted to him by Smt. Mehta to be handed over to her husband.

2. It was on 7-1-1976 that respondent 1 arrived at the Airport at Bombay with his baggage. The trained eye of the Customs Officer, however, insisted on search of the baggage when the said packet containing U.S. Dollars to the tune of 3501 in currency notes lodged in the suit-case were recovered, for which no proper explanation could be given nor was its possession supported by any permission or authorisation from the Reserve Bank. Those, therefore, came to be seized under the panchanama and further enquiries commenced during which his statement was recorded by the Enforcement Officer, first on the very day and second on the 15th January. So also statement of Smt. Mehta was recorded on the said two dates.

3. Adjudication proceedings were initiated against both of them by the Enforcement Director when respondent 1 was visited with the personal penalty of Rs. 10,000/- while Rs. 5,000/- were imposed on Smt. Datta Mehta as personal penalty. In addition thereto the Customs Department was equally active when adjudication proceedings were initiated against both of them in which the currency of foreign exchange came to be confiscated to the State while respondent 1 was imposed a personal penalty of Rs. 8,000/-, which, however, is claimed to have been scaled down to Rs. 1,000/- by the appellate authority along with an option to redeem the foreign exchange seized by payment of Rs. 5,000/- was given in favour of the respondent, who acted accordingly. Along with this adjudication proceeding on the two forums, respondent 1 was also prosecuted by the Customs Department under S. 135(1)(b), Customs Act, for attempting to export the foreign exchange wherein the respondent pleaded guilty, which was accepted by the learned Additional Metropolitan Magistrate, Esplanade, Bombay and who was pleased to impose a fine of Rs. 10,000/- on the respondent.

4. As stated, parallel adjudication proceedings were initiated by the Enforcement Director. The learned Additional Director of the Enforcement, Foreign Exchange Regulation Act, New Delhi, held that the respondent was found in physical possession of foreign exchange, which was obviously in contravention of S. 8(1), Foreign Exchange Regulation Act, 1973 (shortly stated as the said Act). This was obviously on the ground that respondent 1 herein has admitted clearly about the finding of that article with him and he practically accepted the charge, though he prayed for leniency. The learned Additional Director imposed a penalty of Rs. 10,000/- under S. 50 of the said Act accepting the plea of guilt of the respondent as being voluntary.

5. This order, recorded on 1st April, 1976, was impugned before the Foreign Exchange Appellate Board, New Delhi, by way of an appeal being No. 32 of 1979 presumably under S. 52 of the said Act. The learned Member of the Appellate Board took the view, which was contrary to the one taken by the forum at the first instance, to the effect that the possession by itself cannot be embraced by the provisions contained in S. 8(1) of the said Act, since according to the learned Member, it was satisfactorily established and it was equally accepted by the Department that the respondent was a mere carrier of the said article, which was entrusted to him by Smt. Mehta for being given to her husband. It was held that he had no mens rea nor could he have been said to have acquired the foreign exchange in question. In keeping with these findings, the appeal came to be allowed and the respondent was exonerated of the charge levelled against him and the penalty imposed by the Additional Director came to be quashed. It may also be observed that the appellate board held that the respondent could be legitimately exonerated, if so justified on merits notwithstanding that he had pleaded guilty before the Director. It is this order dt. 31-3-1979 recorded by the learned Member of the Appellate Board that is placed under challenge by the State under S. 54 of the said Act.

6. Before embarking on the merits and the thrust of the rival contentions, it would be necessary at the threshold to consider the proceedings of Criminal Application No. 970 of 1979, under which the State has prayed for condonation of delay, in which also rule was granted. No doubt, Shri Madhu Patel, the learned counsel for the respondents, has strenuously submitted that delay is not properly explained and, therefore, rule should be discharged, in which event it would not be necessary to consider the appeal on merits. Shri S. B. Patil, the learned Public Prosecutor for the State, however, submits to the contrary. According to him, the delay has been properly explained and the interest of justice would require a decision on merits of the appeal. It is true that it is incumbent on a litigant, who approached the Court after the statutory period prescribed therefore is over, to explain the delay in a satisfactory manner and if it is not so done, then the Court will be justified in refusing to condone the delay. The State also cannot be an exception to this general principle. As to whether the delay is explained satisfactorily or not would obviously depend on the facts and circumstances of each case and as such no generalisation can be enunciated. In the instant case, however, on going through the explanation tendered on behalf of the State it would be proper to condone the delay as it has been properly explained and which would also be essential in the interest of justice. The grounds have been well reflected in the petition, itself, which makes the repetition unnecessary. To illustrate, it has been stated that immediate steps were taken to obtain a certified copy and to move in the matter of approaching this Court by way of an appeal. The matter had to be tossed between some offices, which was inevitable on account of all the procedural channels. At the appropriate stage, the Law Ministry had to be consulted. It would be worth while to note that a copy of judgment was applied for immediately after the decision of the appeal and it was received on 7th April, 1979 when the Department went in action quite swiftly, though it had to anxiously await since the matter had to be routed through different channels. It is also suggested that on account of shifting the head-quarters of the Directorate at different premises at Delhi, the matter could not be attended to immediately. Thereafter it was sent to the Bombay Office and the Law Ministry granted green signal for proceedings further. The Department of Law and Judiciary received the papers on 11th June, 1979 and the Resolution was passed hardly within four days and within three days thereafter i.e. on 18th June, 1979 appeal came to be filed. These dates and developments thereunder are not seriously controverted on behalf of the respondents. The result, therefore, is inevitable, entailing into making the rule absolute.

7. This would, therefore, obviously raise the curtain for investigating into the validity of the impugned order while dealing with the appeal filed by the State. I have already indicated the course of events that occurred at two different forums in addition to which the respondent had also to face a criminal prosecution and it does appear that in all proceedings he pleaded guilty.

8. The most striking feature in this proceedings, which has been rightly relied upon by Shri Madhu Patel, the learned counsel for the respondents, pertains to the finding of fact recorded by the Additional Directorate. To recapitulate, respondent 1 had come to India sometime in December 1976 to celebrate his own marriage. His sister-in-law Smt. Datta Mehta along with her infant child had also come down to India. The respondents made a consistent statement throughout about the circumstances in which he happened to be in possession of the foreign exchange. His stand has been fully supported by Smt. Datta. According to both of them, a certain amount of foreign exchange was brought in India by Smt. Mehta, which was given to her by her husband. She was supposed to go back to United States along with respondent 1, by which time she was also expected to consume the said foreign exchange, as she wanted to make certain purchases. However, she discarded the plan to purchase the property in India for the time being and, therefore, the said foreign exchange just remained with her idle. Respondent 1 got married in December 1976. Smt. Mehta delayed her scheduled return to United States. According to both of them, Smt. Mehta thought that the foreign exchange, which she has brought, was really of not much help to her and, therefore, she gave the same to respondent 1 for being returned to her husband. The first respondent also maintains the same stance. According to him, this packet was given to him by his sister-in-law Smt. Mehta and he was thus carrying it without any control over the article just for the purpose of being given it to his brother. Though an attempt was made at some stage to suggest that he did not know the contents of the packet, still he had abandoned the said stand and accepted that he knew about the contents of the said packet and foreign exchange though he merely clarified by suggesting that he did not know the exact amount that was kept in the packet. Now, the relevant feature is that this defence of the respondents has been accepted even by the learned Additional Director and it was not controverted any further even by the Department before the appellate board. It is, therefore, on that premise that the appellate board proceeded to consider the involvement of the respondent. It is manifest that an appeal under S. 54 of the said Act against the order of the appellate board can be entertained by this Court only on questions of law, meaning thereby that the reassessment of fact is not permissible in this limited field. Shri Patel, the learned counsel for the appellant, therefore, rightly submits that the acceptance of defence under the circumstances brings in the process of assessment of fact by the two authorities below and, therefore, this appeal under S. 54 of the said Act will have to be considered and analysed only on that footing, without going backward and without disturbing the correctness of that finding of fact. This position is apparent and it is so accepted even by the State. In fact, the Officers have proceeded on that footing when they had completed the enquiry. In this proceeding also, therefore, the State does not dispute the correctness of that finding. Once this premise is accepted the residuary aspect left behind relates only to the question of law pertaining to the correct construction of S. 8(1) of the said Act. As stated, the learned Additional Director was of the opinion that the mere possession of foreign exchange without any authority or without having been received from a foreign agent lawfully would be embraced by the penal provision of S. 8(1) of the said Act since it was nothing short of acquiring foreign exchange without permission from the Reserve Bank of India. It is on that premise that the proceeding was conducted and the finding was arrived at. On the appellate forum, the learned Member held that on the, accepted premises of the respondent being just a carrier, the basic element of mens rea is missing. It is predominantly on this short ground that the appeal came to be allowed. No doubt, there is hardly any elaborate discussion regarding the controversy in the context of relevant provisions of the Act and the appellate order no doubt contains that deficiency prominently. However, since the matter is agitated on the aspects involved in this controversy the same can well be explored.

9. As regards the plea of guilt, the appellate board held and, rightly so, that in the first instance, there is no provision under the Act as such to base the order exclusively on such a plea and secondly on the broader premise, if ex facie taking all the evidence as it stands, no contravention is made out, then notwithstanding such a plea the person concerned facing the charge can well be exonerated. This position is not seriously controverted on behalf of the State and, therefore, that aspect need not detain us.

10. Shri S. B. Patil, the learned Public Prosecutor for the State, predominantly contends that on a proper analysis of S. 8(1) of the said Act, it would be clear that it contains several modes in respect of the contravention which can be attributable and according to him, there is a residuary mode such as the person 'otherwise acquires' foreign exchange which is so specious that would embrace any other situation and the further argument flows out of the same is to the effect that a mere physical possession of the foreign exchange would tantamount to it having been otherwise acquired. In substance, the learned Public Prosecutor submits that the possession of foreign exchange would be a contravention under S. 8(1) if it was without permission. Shri Madhu Patel, the learned counsel for the respondent, however, counters this contention by submitting that having regard to the scheme and object of the Act and in particular having regard to the terminology used in S. 8(1) in the context of the presumption with specific language used under S. 71(1) of the Act and also in contradistinction with the terminology used in other Acts, it would be clear that mere possession of foreign exchange is not covered by S. 8(1) and secondly acquisition and possession are not synonymous, inasmuch as in addition to the so-called possession, much more is required to be established to the effect that the concerned person has a full control or interest in the foreign exchange either as an owner or otherwise so that he is free to utilise the same. The controversy, therefore, revolves around the basic aspect as to whether the possession by itself not being annexed by any other feature and in all circumstances and at all times be taken as contravention under S. 8(1) of the Act in the context of the different concepts as contemplated by S. 8(1) including the concept of acquiring.

11. Reference to some of the provisions would not be out of place. The Act, which was enacted in 1947 has been substituted by an Act in 1973. The object is reflected in the Preamble being to the effect that it has been so enacted to consolidate and amend the law with a view to regulate certain payments and dealings in foreign exchange to achieve further object of conservation of foreign exchange resources of the country with an allied object so that the said resources could be put in for proper utilisation to achieve the aim being an interest of economic development of the country. This is the analysis of the preamble and which is self-contained unit.

12. Section 8(1) relates to the restriction on dealing in foreign exchange and reads as :-

'Except with the previous general or special permission of the Reserve Bank, no person other than an authorised dealer shall in India, and no person resident in India other than an authorised dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorised dealer, any foreign exchange :

Provided that nothing in this sub-section shall apply to any purchase or sale of foreign currency effected in India between any person and a money-changer.'

On proper analysis it would be clear that the absence of permission, either general or special, from the Reserve Bank is the foundation of the contravention indicated therein. The further restrictions are put on any person resident of India except the authorised dealer while a more generalised category is carved out which would include by any person, who may or may not be a resident of India, but who is not an authorised dealer. This, therefore, relates to the capacity of the person concerned. The third clause relates to the various modes which are annexed to the foreign exchange which can be tagged with the said person. The restriction suggests that any purchase or borrowing or selling or lending or otherwise transferring are various modes of contravention, and a residuary clause in that category includes when a person is said to have otherwise acquired foreign exchange. As to who is an authorised dealer and money-changer has been defined under the Act. The respondent 1 admittedly does not fall in that category. Similarly, admittedly no permission was obtained from the Reverse Bank and lastly fact that the respondent is not a resident of India would hardly make any difference since he can be covered by the other clause about his capacity as being a person not being an authorised dealer.

13. If the prosecution are in a position to satisfactorily establish on the facts and merits dehors of any other circumstance any of the modes as envisaged by that section, then it would not create any difficulty whatsoever in construing the said provision. Thus, for instance, process of purchase, borrowing, transfer, lending are the positive acts which in a given case may be established on evidence. If that is so done, then the contravention would obviously be complete provided of course the capacity of the person not being authorised dealer and the absence of permission from the Reserve Bank also co-exist.

14. Reliance was placed by Shri Patil, the learned Public Prosecutor on the explanation to S. 8(1) which reads as :-

'For the purposes of this sub-section, a person, who deposits foreign exchange with another person or opens an account in foreign exchange with another person, shall be deemed to lend foreign exchange to such other person.'

On that basis it was suggested that the user of the term 'deposit' would be tantamount to mere handing over of the currency notes by a person to any other person and the other person thus found in possession can come under the clutches of those provisions as it would amount to depositing the said currency notes. This submission, however, overlooks what is manifest. The explanation is really self explanatory, which has been incorporated only to elaborate the concept of 'lending', as it is made clear that such deposit would amount of lending. The mode 'deposit' is also in consonance thereof inasmuch as it indicates the opening of an account may be even with a Banker or depositing with some other person. The concept of lending in this sense is integrated with the process of depositing inasmuch as the other person viz., being the Banker or even otherwise can really use those amounts after observing further formalities, though for a temporary duration and a transaction of lending and borrowing thereby is complete creating unity of interest between the parties. The person depositing, whose mode would amount to lending may temporarily lose control where correspondingly the other person equally temporarily gets control over the same under which he can well utilise the said currency notes. The user of the term as lending or borrowing in the substantive clause has its own implications. The explanation thus read in the context of the substantive clause makes the concept of depositing quite clear. Therefore, it is not permissible to accept the interpretation, as suggested by the learned Public Prosecutor that by the merely handing over the currency notes to another, just for instance, to a carrier, who holds on behalf of master, it can be said that the notes have been deposited to him inasmuch as the mode of 'lending' is blissfully missing while what is in existence is the bare physical possession of the article. The further contravention and the clarification of certain aspects have been enunciated in Cls. (2) to (5) of S. 8, which however, need not be reproduced as being not germane to this proceeding.

15. In that context it is worth referring to the provisions contained in S. 71 of the said Act. It is split up in three clauses all of which pertain to the burden of proof shifting the same on the shoulders of the person concerned as it arises out of certain statutory presumption, which no doubt is a legal fiction, and is fully permissible. The first clause puts the burden on the person charged to prove that he had requisite permission if he is prosecuted or proceeded against for a contravention of any provision of the Act or Rules, which normally prohibits him from doing the same without permission. Reliance was then placed by the learned Public Prosecutor on sub-cl. (2) of S. 71 in support of his contention that the concept of acquiring and possession simpliciter are synonymous. The said sub-cl. (2) runs :-

'Where any person is prosecuted or proceeded against for contravening the provisions of sub-section (3) of S. 8, the burden of proving that the foreign exchange acquired by such person has been used for the purpose for which permission to acquire it was granted shall be on him.'

It is not possible to uphold the contention of the State in that behalf when it was suggested that user of the terminology 'acquire' in this clause with reference to S. 8 furnishes an answer to the question as regards the real meaning and concept of acquisition in S. 8 of the Act. However, it is overlooked that this presumption and the shifting of burden pertain to cl. (3) of S. 8, the basis of which is to the effect that a person after having lawfully acquired the foreign exchange for a specific purpose with such a specific condition, then its user cannot be permitted for any different purpose or otherwise that would amount to a contravention. This would, therefore, mean that basically acquisition of foreign exchange is expected to be authorised or lawful and thus the contravention does not relate to the acquiring as such. However, while acquiring such foreign exchange in a contingency the condition is annexed to suggest the mode and precise purpose of its user, then the person cannot travel beyond that by utilising it for different purpose and if he does, then he contravenes that provision. It is in that context that the said presumption and shifting of burden in sub-cl. (2) of S. 71 appears to have been introduced, indicating that in such a case it would be for that person to show that the user of the said foreign exchange which was admittedly lawfully acquired by him is for the same purpose for which permission was granted. In other words, he has to show that after the acquisition its user was also in consonance with the conditions annexed thereto. This, however, does not by itself support the State's contention that basically possession, bare and naked in the form, is tantamount to acquiring the same within the meaning of S. 8(1). Thus, the contention of the State in that behalf is only partially correct and this would be brought on the surface when a reference to sub-cl. (3) of S. 71 can be made. It reads as :-

'If any person is found or is proved to have been in possession of any foreign exchange exceeding in value two hundred and fifty rupees, the burden of proving that the foreign exchange came into his possession lawfully shall be on him.'

It no doubt speaks of a mere physical possession of foreign exchange, in which case the burden would be on the person charged to show that he lawfully came into possession of the same. This provision when read along with substantive cl. (1) of S. 8 in the context of the scheme and the object of the Act as reflected in the preamble, a clear solution is offered to this controversy.

16. Under substantive cl. (1) of S. 8, apart from and in addition to the different modes prescribed therein, one of the modes is 'otherwise acquiring' of foreign exchange. It is also worth nothing the arrangement of these different modes incorporated in that provision. In the first part with relation to different modes, the process of purchase, otherwise acquired, or borrowed from are clubbed together as obviously referring to the receiving end. The second part contains the modes which are exactly corresponding to the first part, though relating not to the receiving end but refers to the source from whom the person so receives. Thus, purchase has nexus with sale, borrow or lend and, therefore, user in the two clauses as 'otherwise acquired' and 'otherwise transferred' may have a similar nexus. The prosecution in a given case may be in a position dehors of the presumption under S. 71 to establish on facts any of these modes either at the receiving end or relating to the source from whom such is received. Thus, the prosecution may be able to establish that the person concerned had really purchased or had borrowed from other person, who has correspondingly sold or lent the foreign exchange in an unauthorised manner. In addition thereto even on facts the prosecution may be able to establish that the person at receiving end has otherwise acquired while the other person has otherwise transferred the foreign exchange unauthorisedly. Significantly, both the words 'acquired' and 'transferred' are in association with the prefix as 'otherwise' which would embrace acquisition of any kind and which may be even outside the modes prescribed in other category and the same may apply to the process of transfer and thus the two may not be necessarily on account of purchase or sale or account of borrowing or lending. This again no doubt would be a further indication about the real concept of acquiring which may be in contradistinction with the concept of bare physical possession. Such a concept of acquiring as per connotation given in dictionary no doubt indicates that in addition to physical possession, it is accompanied with the more elements such as an interest or control in some capacity over the article so that the person in possession would be a free agent on his own to deal with or utilise the same as he likes, the counterpart of which would be that he would not be obliged merely to retain the physical possession till the other person demands it back. An harmonious blending will have to be made between the three items viz., the object, substantive clause of S. 8(1) and presumption as to burden of proof under S. 71(3) of the Act, as the legislative intent is manifestly reflected through all these provisions. A line of distinction, though thin but still real, has been chalked out by the legislature distinguishing the concept of acquiring from the concept of bare physical possession, though in many cases both can and do overlap. By reason of presumption under S. 71(3), which refers to the term 'possession' and not to any of the terms prescribed in S. 8(1) and in particular the term 'acquiring', what has been conveyed is that in spite of different modes incorporated in substantive provision, most of which can be established by the prosecution dehors of this presumption, since those are about the positive overt acts such as lending, borrowing, purchasing or transferring or exchanging, the legislature is aware that there may be in the field several other contingencies in which a person can contravene the said provision, though the prosecution are unable to establish any of these modes catalogued earlier and that is how a sort of residuary clause 'otherwise acquired' has been carved out and incorporated with wisdom. Even in that mode, sometimes prosecution may be able to establish the a precise process by which the currency has been acquired, though it would normally cover the other modes which may thus overlap, such as purchase, lend, etc., in which event that specific mode comes into existence and as such it would be unnecessary to put it under the process of acquiring. If it falls outside those modes, then of course the prosecution may be able to substantiate independently that the currency has been acquired. It is also equally manifest that in each of the said modes, the process and factum of acquisition is the basis and is impliedly in existence, such as acquisition by purchase. It is precisely because of this that the Legislature advisedly used the term 'otherwise acquired', and not merely 'acquired.'

17. However, in the said mode as 'otherwise acquired', the prosecution may not be in a position to establish the precise process by which acquisition has been made. In such a case the prosecution can certainly take recourse to the presumption under S. 71(3). By that provision what has really been done is that even when the person is found in physical possession and only that bare fact is established without anything more, then it would be for that person to show that he has come in possession thereof lawfully. In other words, he will have to show that there is no contravention as contemplated by any of the items in S. 8(1) and he can further show that he had obtained permission from the Reserve Bank and it is thereafter that he obtained the foreign exchange from the authorised dealer through any of the modes prescribed therein. Negatively speaking, he may have to show that he has not purchased, borrowed or exchanged nor has there been any transaction of selling, lending or transferring of the said foreign exchange in contravention as contemplated thereunder. He may equally be required to show further that it was also not otherwise acquired in contravention of those provisions. Any penal consequence in respect of these aspects can be erased if he can successfully establish the authorised and permissible nature of the transaction. However, even otherwise, in some cases, an additional course would be open to him when he would be free to establish, as being the matter of his personal and exclusive knowledge, that he is in possession not under any of those items, but only in the capacity as possessor simpliciter, though the act of the other source putting him in such a possession may or may not be a matter of investigation or enquiry against him, and further he may have no control, right, title or interest or even an option of using the same and thus the said possession would not carry any incident or characteristic of acquisition. In S. 71(3) the user of the term 'possession' merely is sufficient, while its non-user and the employment of other terminology in S. 8(1) is not very material for obvious reasons, since there is a live nexus between these two provisions. It is apparent that each of the modes prescribed in S. 8(1) including the mode as 'otherwise acquired' has the same under current viz., that in each mode the person normally is in possession of the currency notes, at least at some point of time. This is equally so with his having otherwise acquired the currency. Therefore, the prerequisite before raising the presumption refers to the possession described as 'found or is proved to have been in possession'. The presumption thereafter would be that his possession was unlawful and, therefore, the burden will shift on him to show that the currency came into his possession lawfully. The lawful possession can be shown, as indicated earlier.

18. The unlawful nature of the possession under presumption would obviously have nexus with the contravention under S. 8(1), while the burden to prove the possession to be lawful would also have similar nexus with S. 8(1) to show that no contravention thereunder has been attracted. Therefore, as possession would normally be the basis of all those modes as prescribed in S. 8(1), it was not necessary to incorporate all those modes for the purpose of presumption and shifting of burden under S. 71(3).

19. Really, therefore, the harmonious reading of the substantive section provisions of presumption and burden would lead to unerring deduction that once the possession simpliciter is established or the person concerned has been found in such possession and if there is inability on his part to discharge the burden to establish his possession being lawful, then by necessary implication it is transplanted in S. 8(1) so as to embrace any of the said modes and in particular, may be more prominently as also equally in the normal course, the term 'otherwise acquired.' It is in that sense that the concept of possession and the acquisition become interchangeable.

20. In short, the inevitable but most rational outcome of this analysis would be that the prosecution may be able to establish its case in respect of any of the items or modes prescribed in S. 8(1) including even the clause 'otherwise acquired', independent of the presumption under S. 71(3). Otherwise prosecution would be entitled to take recourse to the said presumption being raised by virtue of mere possession of the person having been established. In that event, if he discharges the burden successfully then the chapter is closed in his favour, and if not, then factum of physical possession, which is the basic aspect and which is responsible for raising presumption, and which is equally impliedly in existence as the foundation in items prescribed in S. 8(1), is obviously converted into his 'otherwise acquiring' the foreign exchange without permission of the Reserve Bank which amounts to contravention under S. 8(1). It thus unmistakably becomes possession by acquisition. The user of the term 'otherwise acquired' should be thus construed.

21. It would thus be clear that though the word 'possession' is used in the said provision relating to presumption and burden of proof, it does not necessarily mean that in that case basically possession by itself is a contravention nor does it necessarily mean that physical possession has been ipso facto equated with the concept of acquiring. It further indicates that under the circumstances when there is inability to discharge the burden, even a physical possession by itself would be enough to make the person liable. It would be too specious to equate the concept of acquiring with the concept of physical possession and to hold that in every case of possession simpliciter the concept of acquisition is automatically introduced or is implicit, or to put it in other form, it would be too specious to hold that every case of physical possession would amount to contravention as contemplated by S. 8(1). There might be some cases, which are not difficult to imagine, where a mere possession may amount to a contravention though there can be some cases where a bare physical possession may not necessarily be amounting to any such contravention. Thus for instance, a person who is admittedly the owner of the exchange hands it over to his servant merely to carry it for being given to some one, the said servant, though undoubtedly in physical possession, cannot ipso facto be equated to be covered by S. 8(1) as having acquired the said currency notes. However, the prosecution in that case may not be required to establish anything further except the bare physical possession and the procedural law contemplates that it would be for the said servant to show as to how he came into possession and if he can satisfy that it was so given by his master he having no concern with the currency, that burden would be discharged meaning thereby that his physical possession remains only at the stage and in the form of physical possession by itself and is not converted into his acquiring the possession in contravention of the Act. As to whether his explanation is acceptable or not would certainly depend on the facts of each case. If he is unable to discharge the burden then consequences would follow inasmuch as his possession can well be converted into the concept of having acquired the same in contravention of the Act. Similarly, if a person has kept in his house large quantity of foreign exchange and he is the owner thereof, can he be permitted to say that he is only in possession of the currency and, therefore, it does not amount to any contravention. If he is unable to discharge the burden and if it is established even otherwise, having regard to the exclusive possession of the large quantity, that it was really owned by him, then in such a case and in such contingency the prosecution can well advance a legitimate argument which can be accepted that this possession was a mode of acquisition. In other words, this would not be possession simpliciter, but this was on account of otherwise having acquired the currency. It is in that context and in such case that the acquisition can be one of the modes of being in possession of the same. It is this harmonious blending that would be in consonance with the object and the scheme of the Act.

22. It is in that behalf worth referring to some of the observations enunciated more or less on the same lines in the ratio of Boormal v. Asst. Collector of Central Excise recorded by Madras High Court in Criminal Appeal No. 302 of 1967, a copy of which has been placed for perusal. It was no doubt a contravention under the Gold Control Act with the Defence of India Rules, wherein the controversy regarding the concept of acquiring or being in possession was placed under discussion and this was resolved also with the aid of a similar presumption available under R. 126(1)(ii) wherein the learned Judge observed :-

'A careful reading of the above provisions clearly indicates that what is controlled and regulated is the ownership of gold or acquisition, possession or control of any quantity of gold. Mere possession of gold under all circumstances, as the possession by a carrier, is not made punishable under these Rules as is made punishable under the Customs Act. This is further made clear by R. 126(1)(ii) ....... This provision presupposes that it is open for a person to show that his possession of gold is not as the owner thereof or a person having interest in it.'

23. No doubt it pertains to the other Act and the Rules, however, the line of reasoning has the same undercurrent. It is true that the presumption therein pertains to the ownership contrary of which can be established by the person concerned. Even in that context what has been emphasised is that mere possession under all circumstances is not punishable and in that category a carrier has been placed. This would indicate that what has been enunciated is that in some cases a mere possession may amount to a contravention whereas it cannot be so generalised so as to cover every case of possession.

24. In Criminal Appeal No. 1570 of 1967, recorded by the learned Single Judge of this Court on 9th April, 1969 it was observed while dealing with an offence under the Gold Control Act with reference to R. 126(P) that the accused therein though found in possession was held to be a mere carrier of gold and as such there was no evidence of his having brought or acquired the gold for himself. It is in that context that he was exonerated of the said contravention, though he has been found guilty under the provisions of the Customs Act which are wider in scope and application since a mere possession simpliciter is made punishable.

25. Reliance was placed by Shri Madhu Patel, the learned counsel on the decision of the learned Single Judge of this Court in Devilal Ganeshlal Mehta v. Director of Enforcement in Criminal Appeal No. 156 of 1979 decided on 16-3-1981 reported in 1982 Cri LR 263. In the said case certain premises were raided where admittedly the appellant was residing though he was not present at the relevant time. Some foreign currency along with the other documents were found and those documents contained notes and writings in the hand of the appellant. It was contended by the appellant that he was not in exclusive possession of the room and the foreign exchange found there did not belong to him. The learned Single Judge while dealing with the allegations of acquisition observed that for that purpose it must be shown that the person has purchased the property or has taken it by way of mortgage or by way of similar kind of transfer as contemplated by law relating to transfer of property and mere possession cannot be equivalent to acquisition and distinction between the two, according to the learned Judge, is well settled. It was further observed that to get into mere possession of any property cannot be said to be an act resulting into acquisition of the same. On this basis it was held that even the person in possession of the room cannot necessarily be said to have acquired the foreign currency. This was the first point posed by the learned Judge and answered in favour of the appellant. The other two points about the exclusive possession and the possibility of one out of the three occupants being responsible for the possession of currency notes were also answered in favour of the appellant. As regards these latter two counts, it was certainly a matter of fact and it was open for the Court to hold that even the possession of the appellant to the exclusion of others was not established. However, even the first count is answered against the department and the plain reading of those observations may tend to create an impression that the learned Judge wanted to make a distinction between the concept of acquisition and possession in a generalised manner being applicable to all cases. As I have already discussed these aspects in details, I can only say, with respect to the learned Single Judge, that these observations, if they are really of general nature tending to convey that in no case the possession itself of foreign exchange can be a contravention, cannot be accepted in their entirety. This is more so since the learned Single Judge has not considered the impact of the presumption under S. 71 of the said Act. Read in the context of those facts, the observations may be justified. However, once it is placed under larger canvass as of general application, then I am afraid, I am unable to subscribe to the same, as I have indicated earlier, this might be so in some cases where possession by itself may not be a contravention, though some cases can be visualised where the possession under the peculiar circumstances can be a contravention as being one of the modes of acquiring, or to put it in other form, in some cases possession can be by acquiring. This would be despite the normal concept of acquiring having interest or complete control over the same or having been received by transfer, gift or any other modes. Still in a generic sense and in some circumstances the possession can be equated with acquisition as being one of the modes. The real test, as indicated, obviously is that after getting the physical possession of the currency notes, whether the said person has at least some interest or control over the same so that he can deal with those as per his own choice. In such cases he may merely possess and yet can commit contravention. If on the contrary these features are absent and there is only a bare factum of possession, then his establishing such possession being lawful can exonerate him not because possession generally is not a contravention, but in that event the possession does not form any of the modes including 'otherwise acquiring' the foreign exchange. It is in that light that I am unable to subscribe to the said ratio of the learned Single Judge in its entirety. The same has to be accepted with obvious reservations.

26. In view of this position, it is not necessary to consider other plank of submission of Shri Patil, the learned Public Prosecutor, that in other Acts distinction has been made in the concept of acquisition and possession. It would thus be manifest that on the finding of fact as accepted by the two authorities below, the respondent was only a carrier of the said foreign currency and as such despite his having been found in possession thereof he has discharged the burden, which does not convert his possession into acquisition or any other mode and it remains only as the possession of a carrier, and as such it is not liable under S. 8(1) of the Act.

27. In this view of the matter, the decision of the appellate Board exonerating the respondent though being confirmed, it is entirely on different process of reasoning. Nontheless, the result is the same and the State's appeal cannot succeed.

28. In the result, Rule in Criminal Application No. 970 of 1979 is made absolute. The delay in filing the appeal is condoned.

29. Criminal Appeal No. 741 of 1983 filed by the State fails and is dismissed. The amount of penalty of Rs. 10,000/- as imposed by the Additional Director of Enforcement, Foreign Exchange Regulation Act, be refunded to the respondent as directed by the Appellate Board.

30. Order accordingly.


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