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Yasvadan and Bros. Vs. C.T.A. Pillai and ors. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai High Court
Decided On
Case NumberMisc. Appln. No. 269 of 1959
Judge
Reported inAIR1962Bom249; (1961)63BOMLR897
ActsSea Customs Act, 1878 - Sections 167(8); Imports and Exports (Control) Act, 1947 - Sections 3(2) and 5; Import Trade (Control ) Order, 1955
AppellantYasvadan and Bros.
RespondentC.T.A. Pillai and ors.
Appellant AdvocateSorabjee, Adv.
Respondent AdvocateRangnekar, Adv.
Excerpt:
.....trade control order, 1955. clauses 3, 5 -- sea customs act (viii of 1878), section 167(8) -- goods imported by person under licence issued to another party -- whether such goods liable to be confiscated -- goods imported without licence or by person not authorised to import goods or in breach of conditions in licence whether hit by section 167(8), sea customs act.;a licence to import certain goods was issued in favour of a partnership firm. one of the conditions of the licence was to the following effect: 'it shall be deemed to be a condition of every licence that the goods for the import of which the licence is granted shall be the property of the licencee at the time of the imports'. a person who had no connection with the firm imported the goods under a bill of lading which was..........to rely upon the conditions contained in a licence. even an importer is prohibited from importing goods mentioned in schedule except in accordance with a licence. the licence itself also contains conditions so that importation by an importer holding a licence after committing breach of conditions would necessarily be in contravention of clause 3 of the order.(18) apparently the condition no. 3 in the licence now relied upon by the petitioners is as contained in clause 5(3) (ii) of the control order. that condition accordingly is a provision of an 'order made' within the meaning of section 5 of the act and breach of that condition would necessarily amount to breach of the provisions of 'an order made under the act.'(19) it is at this stage relevant to refer to some parts of the licence.....
Judgment:
ORDER

(1) This is a petition under Art. 226 of the Constitution challenging the validity of an order dated May 15, 1959 whereby the 1st Respondent as Additional Collector of Customs ordered 52 cases of wired glass belonging to the petitioners to be confiscated under Section 167(8) of the Sea Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947.

(2) The relevant facts are as follows:-

The petitioners are a partnership firm carrying on business as importers and dealers in glass. By a contract dated march 31, 1958 the petitioners agreed to purchase from Messrs. B. H. Mehta and co., 140 cases of wired glass on the terms and conditions recorded in the contract. Rs. 25,000/- were agreed to be paid as advance and were paid on March 31st, 1958. The contract was a forward contract and the shipment was 'end of July 1958'. In the first week of September 1958 the 52 cases of the goods arrived at Bombay per S. S. Byton. The bill of lading in respect of the goods was in favour of the shipper or 'order' and appears to have been negotiated in favour of one P. Bhagvandas, proprietor of Hindustan Engineering and Trading Company. A letter of credit in respect of the price of the goods of the consignment was also opened on or about April 26, 1958 by P. Bhagvandas as proprietor of Hindustan Engineering and Trading Company through the Mercantile Bank of India Ltd. The goods were accordingly imported into India by P. Bhagvandas of Hindustan Engineering and Trading Co.

(3) P. Bhagvandas tendered to the Customs authority the bill of entry 'cash No. 981' dated 3rd September 1958 towards clearance of one consignment. The licence referred to in the bill of entry was 'No. 973117/57/CCI/HQ/NQQ dated March 19, 1958' issued in favour of 'Messrs. Hindustan Engineering and Trading Co., carrying on business at 80 Kavel Cross Lane No. 3, Bombay.'

(4) The goods were allowed clearance through clearing agents. One Pyarelal J. Munchi attended to the work of clearance of these goods. All the 52 cases were delivered to the Petitioners who paid over the whole of the balance of the price due to sellers Messrs. B.H. Mehta and Co.

(5) It was upon enquiries discovered that there was no concern of that name of Messrs. Hindustan Engineering and Trading Co, carrying on business at the address contained in the licence. Now, it is necessary to note in this connection that the application for licence was made on behalf of a partnership carrying on business in the firm name of Messrs Hindustan Engineering and Trading Co., at the above address. The partners of the firm as stated in the application for licence were 'Shri R. L. Sachdev' and 'Shri J. M. Mehta'. The application for licence was signed by J. M. Mehta as a partner of the firm. The application for licence appears to have been forwarded to the Ministry of Steel, Mines and Fuel (Department of Iron and Steel) by a limited company of the name of Hindustan Steel Private Ltd. That application was forwarded by the Dy. Secretary to the Government of India to the Chief Controller of Imports and Exports with a recommendation for a grant of licence. Ultimately the above referred licence was issued in favour of 'Messrs. Hindustan Engineering and Trading Co., 80 Kavel Cross Lane No.3, Bombay-2' which firm it must be held was a partnership firm belonging to two partners , viz., R. L. Sachdev and J. M. Mehta. A copy of the licence together with annexure thereto is annexed as Ex. 2 to the affidavit in reply made by Shri V. Maneklal.

(6) It became obvious to the Customs authority that P. Bhagvandas who had imported the goods was in no manner connected with the licence and that P. Bhagvandas had imported the goods unauthorisedly and contrary to law.

(7) In the circumstances a show cause memo dated January 20, 1950 was served on the Petitioners calling upon them to submit their written explanation in regard to the diverse facts as mentioned in the show cause memo. Prior to the service of the show cause memo the goods were seized from the Petitioners' godown. In the show cause memo reference was made to the preliminary enquiry made and also inter alia to the statement made by one Ram Pyarelal J. Munshi, who had attended to the clearing of the goods as also several other statements made by other parties. Copies of the statements made by several persons were furnished to the Petitioners. The Petitioners gave their written explanation dated March 5,1959 as regards the contents of the show cause memo and stated the whole of their case in the explanation. Personal hearing was given to the petitioners on May 11, 1959. Ultimately by the impugned order dated May 15,1959 and served on the Petitioners on June 24, 1959 the goods were ordered to be confiscated as already mentioned above.

(8) The Petitioners have challenged the order inter alia on the ground that the goods were validly imported under the import licence (copy whereof is annexed as Ex. 2 to the affidavit in reply), dated March 19, 1958. According to the Petitioners the clearance of these goods by P. Bhagvandas after importation thereof under the licence did not constitute violation of any of the restrictions and prohibitions imposed under the Import Trade Control Order, 1955, or the Imports and Exports (Control) Act, 1947. According to the Petitioners at the Highest the clearance of the goods by P. Bhagvandas constituted a breach of one of the conditions of a valid licence and accordingly did not constitute any breach of the provisions of the order, or the Act. According to the Petitioners in the circumstances there was no jurisdiction in the 1st Respondent to confiscate the goods as he purported to do under the provisions of 'Section 167(8) of the Sea Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947'. The Petitioners also rely upon the fact that in spite of requests made on their behalf the 1st Respondent failed to tender for cross-examination by the Petitioners Ram Payarelal J. Munshi, who had given his statement at the preliminary enquiry stage. The Petitioners also complain that reliance is placed in the impugned order about the illegal activities of Shri Mehta (of Messrs. B.H. Mehta and Co.,) and contended that the Petitioners were at no stage informed about the alleged illegal activities of Mehta and had no opportunity to put forward their case in respect of that allegation. For these reasons the Petitioners have submitted before me that the impugned order is entirely invalid.

(9) The Petitioners made two further grounds which they have not been able to prove before me having regard to the decisions of this Court which bind me. These two contentions are as follows:

(1) The Petitioners purchased the goods in question for valuable consideration without notice and knowledge of facts mentioned in the show cause memo and the findings in the impugned order. On a true construction of the provisions of the Sea Customs Act mens area was an essential ingredient for contravention of Section 1 67 (8) of the Act. As there was no evidence of the Petitioners being guilty of any knowledge of relevant facts and mens rea being absent, a finding could not be made against the Petitioners as was done by the impugned order.

(2) The provision in Section 167(8) of the Sea Customs Act vesting power of confiscation in the Customs authority was bad and unreasonable, for the Petitioners' fundamental rights to hold property and carry on business are guaranteed under Arts. 19(1)(f) and 19(1)(g) of the Constitution.

(10) These two last contentions could not be pressed in this Court and have for that reason only not been pressed.

(11) In developing his contentions Mr. Sorabjee for the Petitioners has relied upon the language of Section 5 of the Imports and Exports (Control) Act, 1947 and Cls. 3 and 5 of the Import Trade Control Order, 1955. The relevant part of section 5 of the Act runs as follows:

'5. If any person contravenes, or attempts to contravene or . . . . . . any order made or demand to have been made under this Act, be shall, without prejudice to any confiscation or penalty to which he may be liable under the provisions of the Sea Customs Act, 1878, as applied by sub-section (2) of Section 3, be punishable with . . . . . . . . .'

(12) The relevant parts of clauses 3 and 5 of the Order run as follows:

'(3) . . . .. . . . no person shall import any goods of the description specified in Schedule I, except under, and in accordance with, a licence or . . . . . . . .

'(5) Conditions of licence:- (1) The licensing authority issuing a licence under this Order may issue the same subject to one or more of the conditions stated below:

(I) that the goods covered by the licence shall not be disposed of, except in the manner prescribed by the licensing authority, or otherwise dealt with without the written permission of the licensing authority or any person duly authorised by it;

(ii) that the goods covered by the licence on importation shall not be sold or distributed at a price exceeding that which may be specified in any directions attached to the licence;

(iii) that the applicant for a licence shall execute a bond for complying with the terms subject to which a licence may be granted.

(2) x x x x x x x

(3) It shall be deemed to be a condition of every such licence, that:

(I) x x x x x x x

(ii) that the goods for the import of which a licence is granted shall be the property of the licensee at the time of clearance through customs; unless the said licence is covered by a letter of authority issued by the licensing authority.

(4) The licensee shall comply with all conditions imposed or deemed to be imposed under this clause.'

(13) Mr. Sorabjee has argued that under Clause 3 of the Order importation is sanctioned in respect of the goods as specified in the licence. Once a licence in respect of the goods of the import is produced it must be held that the goods were validly imported under the licence. Clearance of the goods has nothing to do with importation or licence. Importation is complete upon the landing in the goods into India. Clearance is altogether different from the landing of the goods and/or importation thereof into India. According to Mr. Sorabjee the words 'in accordance with a licence' as mentioned in clause 3 are not synonymous with the terms and conditions of licence. He has argued that breach of a term or a condition of a licence cannot make any person subject to penalty under Section 5 of the Act. The breach of a condition or a term of a licence will not amount to contravention of any order made or deemed to have been made under the Act. He contends that the importation of the goods was complete before P. Bhagvandas cleared the goods. The specification of the goods in the licence is the same as the goods under import and/or imported and it must therefore be held that the goods were imported under a licence as mentioned in clause 3 of the Order.

(14) The condition No (iii) is the same as contained in sub-clause (ii) of clause 5(3) of the order, viz.,

'it shall be deemed to be a condition of every licence that the goods for the import of which the licence is granted shall be the property of the licensee at the time of the imports.'

(15) According to Mr. Sorabjee even if there was a breach of this condition that breach does not amount to contravention of the order as referred to in Section 5 of the Act and accordingly penalty of confiscation could not be levied against the Petitioners.

(16) In this connection it is necessary to refer to Section 167(8) of the Sea Customs Act and the contents of the licence. Admittedly the provisions of Section 167(8) of the Sea Customs Act are applied to the goods specified in Schedule 1 to the Control Order import whereof without a licence is not permissible. Under Section 167(8) the offence is mentioned as follows:

'167(8) If any goods the importation . . . . . .of which is for the time being . . . . restricted . . . . . .be imported into . . . . . India contrary to such . . . . . .restriction.' The penalty prescribed in respect of such offence is that 'the goods shall be liable to confiscation'. The finding in the impugned order is that in this case the goods have been imported contrary to restrictions. The restrictions are as mentioned in section 3 of the Act and Cls. 3 and 5 of the Order.

(17) Under Clause 3 and 5 of the Order it is clearly provided that 'no person shall import any goods of the description specified in Schedule I, except under and in accordance with a license. In the context the words 'no person' (must be held to) refer to an importer and mean 'no importer'. It would accordingly be necessary for an importer to hold a licence for importation of goods specified in Schedule I of the Order. The act of import of such goods by an importer without a licence would directly contravene the provisions of Clause 3 of the Order. The goods, of the description specified in Schedule I, imported by an importer who does not hold a licence, must be held to have been imported in contravention of Clause 3 of the Order. For making such a finding it would be entirely unnecessary to rely upon the conditions contained in a licence. Even an importer is prohibited from importing goods mentioned in Schedule except in accordance with a licence. The licence itself also contains conditions so that importation by an importer holding a licence after committing breach of conditions would necessarily be in contravention of Clause 3 of the Order.

(18) Apparently the Condition No. 3 in the licence now relied upon by the Petitioners is as contained in Clause 5(3) (ii) of the Control Order. That condition accordingly is a provision of an 'order made' within the meaning of Section 5 of the Act and breach of that condition would necessarily amount to breach of the provisions of 'an order made under the Act.'

(19) It is at this stage relevant to refer to some parts of the licence relied upon. It is issued to the licensee by use of the following phrases:

'(Not transferable)'

'Messrs. Hindustan Engineering and Trading Co., 80 Kavel Cross lane No. 3, Bombay-2' (are)

'hereby authorised to import the goods of which particulars are given below;-'

Under this licence authority to import is accordingly given to the firm mentioned in the licence. By the very terms of the licence no one else can import any goods under this licence. If any permission was to be granted for any other party to import goods under this licence, the same would have to be authorised under the provisions of Clause 5 of the Control Order. There was no other method of permitting and/or allowing any party other than the firm mentioned in this licence to import the goods under this licence.

(20) As there is no doubt about the facts mentioned as regards the import of these 52 cases of wired glass I must make a finding that P. Bhagvandas imported these goods under the bill of lading which has already been mentioned above and he also cleared these goods under the bill of entry and the licence referred to above. P. Bhagvandas is not referred to in the licence at all. The firm of Messrs. Hindustan Engineering and Trading Co., as mentioned in the licence had no connection with P. Bhagvandas. That firm belonged to two partners. Viz., R. Sachdev and J. M. Mehta. It was having regard to the provisions of S. 3 of the Act and Cls. 3 and 5 of the Control Order, illegal for P. Bhagvandas to import goods of and/or under this licence. P. Bhagvandas was not vested with any permission under this licence to import the goods which were ultimately found in possession of the Petitioners. There has been a complete and clear violation of the provisions of Section 3 of the Act and Cls. 3 and 5 of the Order in this matter. The Petitioner's case accordingly suffers from no injustice at all and does not call for any intervention by the Court on any other grounds in this matter.

(21) In this connection Mr. Sorabjee has relied upon the decision of the Calcutta High Court in the case of C. T. A. Pillai v. H. P. Lohia, : AIR1957Cal83 . That was a revisional application against an order of discharge of an accused in respect of a prosecution for an offence under Section 5 of the Imports and Exports (Control) Act, 1947. The case of the prosecution was that the importer and the licence holder in that case was violating the conditions of the licence and was selling the goods in contravention of conditions mentioned in that behalf in his licence. In construing the provisions of Section 5 of the Act it was held that the section penalises only contravention of any order made or deemed to have been made under the Act. It was further held that it was difficult to hold that the licence or the conditions in the licence amounted to an order as mentioned in the section. A contravention of conditions imposed by the licensing officer could not prima facie be regarded as contravention of the notified order itself. Having regard to that finding the order of discharge was upheld and the rule given in revision was discharged. I do not see how this decision supports the contentions made on behalf of the Petitioners in this case.

(22) It is apparent on reading of the provisions of Section 5 of the Act that what is penalised thereunder is contravention of 'any order made or deemed to have been made under the Act'. A licence or conditions in licence can never be equated with an order made under the Act. The case of the Respondents before me is not that the licence or conditions of the licence should be equated with any order made under the Act.' This however does not justify the contention that importation without a licence of the goods mentioned in schedule I to the Control Order or importation of goods in breach of conditions of a licence does not constitute an offence as mentioned in Section 167(8) of the Sea Customs Act. The scope and effect of the section 167(8) is much wider than that of Section 5 of the Import and Export (Control) Act. It is not illegal nor impossible to make a finding that contravention of compulsory conditions as mentioned in Clause 5(3) of the Control Order as reproduced in a licence constitutes an offence as mentioned in Section 167(8) of the Sea Customs Act. Importation of goods mentioned in Schedule I of the Control Order without a licence or by a person who himself is not authorised to import the goods or in breach of conditions in a licence would directly constitute such an offence.

(23) As regards the contention that the Petitioners were not afforded any opportunity to cross-examine Munshi, it is sufficient to point out that in connection with the relevant facts as mentioned above no dispute has been made on behalf of the Petitioners. In the impugned order reliance has not been placed on any facts stated by Munshi which are now disputed on behalf of the Petitioners. The result is that the grievance that opportunity to cross-examine Munshi was not afforded is merely technical. In fact the Petitioners were furnished with a copy of the statement made by Munshi. The 1st respondent has in the impugned order not relied upon any facts mentioned by Munshi which are now disputed by the Petitioners. It is unnecessary therefore on this ground to interfere with the order made by the 1st Respondents.

(24) As regards the contention that in the impugned Order the 1st Respondent has relied upon the information regarding the illegal activities of Mehta, there is no doubt that the 1st Respondent has referred to that fact in the impugned order. The relevant facts however on which the finding as mentioned in the impugned order could be arrived at are all not disputed on behalf of the Petitioners as I have already mentioned. The result in the impugned order could not have been different even if reference was not made therein to the illegal activities of Mehta. On this ground also it is in the circumstances unnecessary to interfere with the decision arrived at by the 1st Respondent.

(25) In the result the petition is dismissed with costs.

(26) Petition dismissed.


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