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Abdus Shukoor Shaikh Dawood Vs. A.M. Chatterjea and anr. - Court Judgment

LegalCrystal Citation
SubjectFERA
CourtMumbai High Court
Decided On
Case NumberSpl Civil Appn No. 2095 of 1963
Judge
Reported inAIR1966Bom109; (1965)67BOMLR532; ILR1966Bom224
ActsForeign Exchange Regulation Act, 1947 - Sections 2
AppellantAbdus Shukoor Shaikh Dawood
RespondentA.M. Chatterjea and anr.
Appellant AdvocateSharad Manohar and ;H.J. Aranha, Advs.
Respondent AdvocateV.H. Gumaste, Addl Govt .pleader and ;A.A. Chaudhury, Adv.
Excerpt:
.....2(d), 4(1), 5(1)(b), 23, 5(1)(f) & (e) - defence of india rules. rule 91(1)--cheque-drawn in indian currency payable in indian as well as foreign currency--whether such cheque foreign exchange within section 2(d)--construction of statute--two views reasonably possible of provisions of penal statute--court should prefer which.;a cheque or a bill of exchange expressed or drawn in indian currency, which is payable in indian as well as in foreign currency, is not foreign exchange within the meaning of the foreign exchange regulation act, 1947.;where two views are reasonably possible about the provisions of a penal statute, the court must prefer the one which imposes a lesser restriction and a lesser obligation on a citizen and which does not make a citizen liable to a penalty in a..........second cheque which has given rise to this proceeding , was drawn by the american oil company in indian currency on 29th september 1959. it was drawn on the ' nether lands trading society , alkhobar through the netherlands trading society , bombay' . alkhobar is in saudi arabia . the cheque the bore the endorsement ' pay to the order of abdus shukoor ( the petitioner) rs. 16504.31'. the petitioner brought this cheque to india and gave it to one badshah & co , bombay who according to the petitioner, paid him the amount due on it . it appears that badshah & co then sent the cheque by post to bhatkal provision stores alkhobar . the cheque was intercepted in transmission and was sent to the enforcement directorate . an enquiry was started . notice was issued to the petitioner and he was.....
Judgment:

Chainani, C.J.

(1) The petitioner was formerly employed in Arabian American Oil Company at Dhahran in Saudi Arabia. Some time about September 1959 his services came to an end . The petitioner was then given two cheques , one of which he encashed in Saudi Arabia . The second cheque which has given rise to this proceeding , was drawn by the American Oil Company in Indian Currency on 29th September 1959. It was drawn on the ' Nether lands Trading Society , Alkhobar through the Netherlands Trading Society , Bombay' . Alkhobar is in Saudi Arabia . The cheque the bore the endorsement ' Pay to the order of Abdus Shukoor ( the petitioner) Rs. 16504.31'. the petitioner brought this cheque to India and gave it to one Badshah & Co , Bombay who according to the petitioner, paid him the amount due on it . It appears that Badshah & Co then sent the cheque by post to Bhatkal Provision Stores Alkhobar . The cheque was intercepted in transmission and was sent to the Enforcement Directorate . an enquiry was started . Notice was issued to the petitioner and he was asked to show cause why adjudication proceedings as contemplated by S. 23D of the Foreign Exchange Regulation Act 1947 should not be held against him for his having contravened the provisions of S. 4(1) of the Act. In reply the petitioner stated that he did not know that the cheque was foreign exchange or that the Act applied to it. He admitted that he had encashed the same with Badshah & Co , Bombay , but he stated that he had done so in ignorance of law. The respondent No.1 held that the petitioner was guilty of contravening the provisions of S.4(1) of the Act and imposed upon him a penalty of Rs. 2,000. That order is being challenged in the present petition.

(2) subsection 1 of section 4 of the Foreign Exchange Regulation Act, state that except with the previous general or tension permission of the Reserve Bank, no person other than an authorized dealer shall buy, sell or exchange with, any person not been an authorized dealer, any foreign exchange. It is not in dispute that Badshah and Co. were not authorized dealers. Consequently, if the cheque which the petitioner had given to Badshah and Co. was foreign exchange then the petitioner will be held to have contravened the provisions of this section. The main question to be decided in this application, therefore, is whether this cheque was foreign exchange within the meaning of the Act.

(3)'Foreign Exchange' Is defined in clause [d] of section 2 as under: 'foreign exchange' means foreign currency and included all deposits, credits and balance payable in any foreign currency, and any drafts, travellers cheque, letter of credit and bills of exchange, expressed or brown in Indian currency but payable in any foreign currency'. At our instance inquiry on certain points were made by the Reserve Bank from the branches of the Netherlands trading Society now called Algemene Bank Netherlands, at Alkhobar and Bombay and the replies which have been received have been filled along with the affinity of the superintendent of the enforcement Directorate. The cheque was brown on the Alkhobar branch of the Bank, evidently because the American oil Co. had an account it branch. Is the cheque had been presented at this branch, the amount would have been paid in Saudi Arabian Riyals as Indian rupees are not legal tender money in Saudi Arabian, Dole Saudi Arabian Riyals so obtained could thereafter hath been exchanged for Indian rupees. The information now made available also shows that under an agreement between the Bank and the oil Co. cheque marked 'through Netherlands trading Society Bombay', is presented at the Bombay branch of the Bank are paid by that branch without reference to its Alkhobar office. The petitioner could therefore have presented the cheque for ancient Act the Netherlands trading Society Bombay and received from it the amount payable on the cheque. Although therefore the cheque was expressed and brown in favor of Indian currency it could have been paid board in Indian currency is 8 was presented for payment in Bombay as in foreign currency [Saudi Arabian Riyals] is it had been presented at Alkhobar.

(4) The learned additional government pleaders has urged that the word 'payable' necessarily implies that it must be payable according to law. He has power conceded that the arrangement arrived at between the American oil Co. Act the two branches of the Netherlands trading Society was a lawful arrangement. Consequently the cheque would lawfully have been paid in India.

(5) The learned additional government pleaders has urged that as the cheque was also payable in foreign currency [Saudi Arabian Riyals] it was foreign exchange at defined in the Act. Mr. Sharad Manohar has on the other hand, contended that the word 'but' implies that in order to be foreign exchange the cheque mart be payable only in foreign currency. According to the Dictionary the ward 'but' is used in more than one sense. It is frequently used in the sense of 'only' as for instance in the sentence 'he is but a child'. It also means 'nevertheless; however; yet'. As to in what sense it is used in a particular provision must therefore be decided by reference to the context.

(6) Our attention has been invited to sub rule 1 of Rule 91 of the Defense of India Rules made under the Defense of India Act 1939 in which the expression 'foreign exchange' was defined to mean any been or promissory note, payable otherwise than in rupees, and any credit or balance otherwise than in rupees. For the words 'payable otherwise than in rupees' the words 'payable in foreign currency' have been used in the present definition. The Defense in the language does not however seem to be repeated, because if the bill of exchange was payable otherwise than in rupees, then it was necessary payable in foreign currency.

(7) One of the object of the Act is to regulate and control beings in foreign exchange. The provisions of the Act, therefore, required that such beatings should take place through authorized dealers. It has been urged that it be where to accept the argument which has been advanced on behalf of the petitioner a person win be able to acquire foreign exchange otherwise than through an authorized dealer. For instance is in the present case the cheque had not been interested in transmission, Badshah and Co. was have been able to acquire foreign exchange against his cheque through the person to whom they'll have dispatched it. They could however not have been so lawfully. Subsection 1b of section 5 read with section 23 makes it an offense to negotiate any bill of exchange so that a right to receive a payment is created in favor of any person outside India. Similarly section 5 (1) (f) read with clause e makes it punishable to negotiate any bill off exchange so that a right to receive a payment is created in favor of any arson at consideration for the acquisition by any person of property outside India. No foreign exchange could therefore have been lawfully acquired against the above cheque.

(8) As the cheque in the present case was able bolt in foreign currency, in order to hold it to be foreign exchange, we will have to add the word 'also' before the words 'in any foreign currency'. In any case as two viewers are reasonably possible we must refer the one which imposes a lesser restitution and a lesser obligation on a citizen and which does not make a citizen liable to a penalty in her doubtful case. As war observes by Lord Simons in London and North Eastern Railway Co. v. Berriman 1946-1 All ER 255 'a man is not to be put in peril upon an ambiguity'.

(9) we are therefore of the opinion that a cheque or a bill of exchange expressed or drawn in Indian currency, which is payable in Indian as well as in foreign currency, is not foreign exchange within the meaning of the Act. We therefore set aside the order made by the Director of Enforcement on 22-11-1963 imposing upon the petitioner a penalty of Rs.2000. as the point one which the petitioner has succeeded does not appear to have been raised previously, we make no order as to costs.

(10) Petition allowed.


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