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Rai Bahadur Shreeram Durga Prasad Private Ltd. and ors. Vs. the Union of India (Uoi) Represented by the Secretary to the Government of India, Ministry of Finance and ors. - Court Judgment

LegalCrystal Citation
CourtChennai High Court
Decided On
Reported in(1969)1MLJ547
AppellantRai Bahadur Shreeram Durga Prasad Private Ltd. and ors.
RespondentThe Union of India (Uoi) Represented by the Secretary to the Government of India, Ministry of Financ
Cases ReferredMalik Damsaz Khan v. Commissioner of Income
- m. anantanarayanan, c.j.1. in g. narasingdas agarawal v. union of india (1967) 1 m.l.j. 197, kailasam, j., dismissed a number of writ petitions, declining to issue writs of prohibition in. those cases, restraining the respondents, namely, the union of india, the collector of customs, madras, and the deputy collector of customs, vishakhapatnam, from taking further action in pursuance of a large number, of show cause memorandum; served on the writ appellants. the present appeals are from this judgment, and essentially, they involve the issue whether, under the stated circumstances, the respondent authorities would have jurisdiction to proceed further, in respect of an alleged offence under section 12 (1) read with section 23-a of the foreign exchange regulation act, 1947, and section 167.....

M. Anantanarayanan, C.J.

1. In G. Narasingdas Agarawal v. Union of India (1967) 1 M.L.J. 197, Kailasam, J., dismissed a number of writ petitions, declining to issue Writs of prohibition in. those cases, restraining the respondents, namely, the Union of India, the Collector of Customs, Madras, and the Deputy Collector of Customs, Vishakhapatnam, from taking further action in pursuance of a large number, of show cause memorandum; served on the writ appellants. The present appeals are from this judgment, and essentially, they involve the issue whether, under the stated circumstances, the respondent authorities would have jurisdiction to proceed further, in respect of an alleged offence under Section 12 (1) read with Section 23-A of the Foreign Exchange Regulation Act, 1947, and Section 167 (8) of the Sea Customs Act. The matter has been elaborately argued before us, and admittedly, it involves a question of interest and significance. The facts have been dealt with by the learned Judge (Kailasam, J.) in his judgment, but we propose to refer to them again here, in some detail and also to set forth the several provisions of law involved in their juxtaposition, to enable us to proceed with the discussion of the main issue, of the interpretation of Section 12 (1) of the Foreign Exchange Regulation Act.

2. Without dilating further on the background of the facts, which may not be here necessary, it is sufficient for us to state that 62 show cause memoranda were issued by the Deputy Collector of Customs Visakhapatnam, in the following context of events. In connection with certain searches and seizures of gold and silver articles, which do not new concern us, on the 19th and 20th of August, 1963, the authorities came into possession of a number of documents, inclusive of accounts, which are the basis of the averments of infringments. They related to shipping of mineral ores particularly manganese ores; after declarations under Section 12(1) had been filed by the concerned appellants, together with production of the necessary documents, the authorities had been satisfied, ex facie, that the papers were in order, and that exports should be permitted, the exports actually occurred, in consequence. The essence of the show cause notices is that, notwithstanding this apparent compliance with the formalities of the law, the appellants really exported manganese ore, or were concerned in the exports in contravention of the restrictions and prohibitions imposed under Section 19 of the Sea Customs Act, read with Section 12 (1) of the Foreign Exchange Regulation Act, and Section 23-A of that Act; that brought into play Section 167 (8) of the Sea Customs Act, with the result that all the goods were liable to confiscation under that Act; admittedly, a heavy penal provision. The main question is, whether, in the juxtaposition of the several provisions of law, and in the situation of admission by the authorities that the exports were in apparent compliance with the requirements of the law, there would be jurisdiction to proceed further, because of the alleged suppression of material particulars, with fraudulant motive or the alleged furnishing of details that were deliberately false in the G.R. 1 Form, which led to the authorization of these exports.

3. Before proceeding further with the relevant provisions of the law, it may be necessary to refer to the form that the arguments took before us. When Mr. Joshi for the appellants, and Mr. Kumaramangalam for the respondent authorities, had submitted certain arguments; it emerged that the authorities sought to maintain their jurisdiction, as against the prayer for the issue of a Writ of prohibition, on the ground that a very elaborate fraud had been practised by the writ appellants with the result that not merely had the value of the exports been under invoiced to a very substantial degree, but also that there had been substantial deprivation to the State, of the benefits of repatriated foreign exchange. The gravamen of this charge was cryptically indicated in the original show cause notice, in paragraph 20, in. the following words:

From the foregoing it is disclosed that the financial benefits derived by the shippers, in respect of the subject exports, over and above those revealed to the customs authorities and or other concerned authorities, were not disclosed to the said authorities, and the information about them Was deliberately suppressed.

4. An argument was sought to be built on this, that the fraud rendered the proceedings non est and that what Section 12 (1) required was a true declaration, that is, not false to the knowledge of the intending exporter, so that the authorities were entitled, even a considerable time later, to treat a false declaration as no compliance with the law at all. The substance of the argument of Mr. Kumaramangalam here was that, while he fully conceded that the declaration under Section 12 (1) might be later proved incorrect, as to full export value, under several contingencies, and that the mere error would not detract from the indisputable compliance by the exporter with the law, such protection was not available to an exporter, who makes a deliberately false declaration; fraud vitiates all proceedings, and a permission to export procured through such means, was tantamount to illegal export. We then considered it necessary that the particulars of the fraud should be communicated to the appellants, in sheer fairness, before this argument could even be examined. For this reason, by mutual consent, a supplementary affidavit has been filed on behalf of the respondents, in clarification of the attitude of the Departmental Authorities. Before proceeding further, we might dilate upon what the supplementary affidavit purports to disclose, in expansion of the very terse passage in paragraph 20 of the original show cause notice already set forth.

5. It appears that, from the documents that were seized and that we have earlier referred to, the respondent authorities came to know of, or entertained a belief in the following facts, and scheme of modus operandi. With regard to these exports of manganese ores to a foreign country, there was a secret arrangement between the exporters and the foreign buyer, for an extra payment, at specified rates, over and above the rate mentioned in the original contract shown to the Department at the time of exports, and in the invoices, the particulars of which are embodied in the G.R. 1 Form. This extra payment was deposited, either by the buyer himself or the agent of the exporters, a certain named foreign individual, into the foreign bank account of G. N. Agarwal or Vittaldas. Under this scheme, the goods were undervalued deliberately and:

the Department was induced to accept their declarations by means of false evidence and fraudulent suppression of facts.

6. It is alleged that there has been a suppression of an amount of over three crores, and a failure to repatriate the corresponding amount of foreign exchange earned by surreptitious means. This is the basis of the charge that, even though these exports occurred in apparent compliance with Section 12 (1), by declarations duly filed, accompanied by the production of required documents, and after permission to export had been obtained from the authorities, all these proceedings were vitiated, for the reason that the declarations were not true, but deliberately false. That being the case, Section 167 (8) of the Sea Customs Act was attracted by the vigour of certain provisions, to which we shall immediately refer, and the authorities have a jurisdiction to seize and confiscate the goods, unless due cause is shown for a contrary conclusion. Since an appreciation of the real issue involves the analysis, not merely of the provisions of the Foreign Exchange Regulation Act and the Sea Customs Act, referred to by the learned Judge (Kailasam, J) in his judgment, but also of one or two other provisions, which were not then examined, no apology is necessary for setting forth these provisions in extenso here.

7. The most vital of the provisions, upon the interpretation of which the entire matter may be really said to turn, is Section 12 (1) of the Foreign Exchange Regulation Act (Act VII of 1947). It is in the following terms:

The Central Government may, by notification in the official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of any goods or class of goods specified in the notification from India, directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or so specified, is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been, or will within the prescribed period be, paid. in the prescribed 'manner.'

8. While upon this aspect of the provisions of the several enactments, it is essential to immediately examine Section 12 (2) and Section 12 (5) of the same Act. We have had occasion to examine the implications of Section 12 (2), at very great length, earlier in our judgment in Venkata Subbu v Director of Enforcement : (1969)1MLJ281 . But we are again setting forth the section here, as the juxtaposition will show the intendment of the Legislature in respect of Section 12 (1) as distinguished from Section 12 (2). It appears to be clear to us that what Section 12 (1) does is to enjoin, or to make mandatory, the filing of the declaration by the exporter, and thereby his obtaining a permission to export; any export which avoids this, would be prohibited export. Section 12 (2) on the contrary, is primarily intended to enforce the obligation of the exporter, to repatriate the full amount of foreign exchange earned by the goods in the foreign market. Where the goods have been under valued as to the full export value which is the vice of under invoicing, Section 12 (5) reserves a power in the authorities of the Reserve Bank, to freeze the shipping documents with the holder thereof, till the Reserve Bank is satisfied that an amount representing the full export value of the goods will be actually realised. Section 12 (2) and Section 12 (5) are in the following terms,

(2) Where any export of goods has been made to which a notification under Sub-section (1) applies, no person entitled to sell, or procure the sale of, the said goods shall, except with the permission of the Reserve Bank, do or refrain front doing anything or take or refrain from taking any action which has the effect of securing that:

(a) the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade, or

(b) payment for the goods is made otherwise than in the prescribed manner does not represent the full amount payable by the foreign buyer in respect of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid:

Provided that no proceedings in respect of any contravention of this subsection shall be instituted unless the prescribed period has expired and payment for the goods representing the full amount as aforesaid has not been made in. the prescribed manner.***

(5) Where in relation to any such goods the value as stated in the invoice is less than the amount which in the opinion of the Reserve Bank represents the full export value of those goods, the Reserve Bank may issue an order requiring the person holding the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which represents in the opinion of the Reserve Bank the full export value of the goods.

9. We may immediately proceed to Section 22 of the same Act. This is a very-important provision, for it directly renders punishable any false application or declaration made to any of the authorities, under the Act; indisputably, it would include the false or fraudulent suppression of material particulars. The point of Mr. Kumaramangalam is not that this provision will not apply, or that it may not be brought into play by the requisite authority, who is not the Collector of Customs. His point is not even that Section 12 (2) of the Act may not apply to the facts, for, obviously, the essence of the charge, particularly as disclosed by the supplementary affidavit, is the vice of under invoicing; he concedes that the Director of Enforcement will have full jurisdiction, to proceed to impose the penalties under Section 12 (2) if the facts are established. But his point is that, on the interpretation of Section 12 (1), which ought to prevail, the Collector of Customs has a parallel and independant authority to ask the appellants to show cause, why the goods should not be confiscated under Section 167 (8) of the Sea Customs Act.

10. Section 23 (1) of the Foreign Exchange Regulation Act provides for contravention of the provisions of Section 4, Section 5, Section 9, Section 10, Sub-section (2) of Section 12, Section 17, Section 18-A or Section 18-B or of any rule, direction or order made thereunder; it is important to note that this provision, which has two Sub-clauses (a) and (b), does not comprise Section 12 (1) of the Act. Section 23-A of the same Act is in the following terms:

Without prejudice to the provisions of Section 23 or to any other provision contained in this Act, the restrictions imposed by sub sections (1) and (2) of Section 8, Sub-section (1) of Section 12 and Clause (a) of Sub-section (1) of Section 13 shall be deemed to have been imposed under Section 11 of the Customs Act., 1962 and all the provisions of that Act shall have effect accordingly.

11. We might immediately proceed to the Sea Customs Act (VIII of 1878), and its relevant provisions. Section 19 of that Act is in the following terms:

The Central Government may from time to time by notification in the Official Gazette, prohibit, or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.

12. As we have seen earlier, by virtue of Section 23-A of the Foreign Exchange Regulation Act, the restrictions under Section 12 (1) must be deemed to have been imposed under the Sea Customs Act, and, hence, by virtue of this incorporation by reference, any export in contravention of Section 12 (1) will amount to a prohibited export under the Sea Customs Act. Section 167 (8) of the Sea Customs Act is set forth as a table in three columns, namely (1) offences (2) section of this Act to which offence has reference and (3) penalties. The entire part of the table relating to Section 167 (8) may be extracted here:

(1) (2) (3)8. If any goods, the importation or exporatation of 18 & 19 Such goods shall which is for the time being prohibited or restricted be liable to con-by or under Chapter IV of this Act, be imported fiscation and into or exported from India contrary to such prohi- any person con-tion or restriction, or if any attempt be made so to cemed in any import or export any such goods; or such offence shallif any such goods be found in any package produced to be liable to aany officer of Customs as containing no such goods, penalty notor if any such goods, or any dutiable goods be found exceeding threeeither before or after landing or shipment to have times the valuebeen concealed in any manner on board of any vessel of the goods, orwithin the limits of any port in India; or if any goods, not exceedingthe exportation of which is prohibited or restricted one thousandas aforesaid, be brought to any wharf in order to be rupees.put on board of any vessel for exportation contrary to such prohibition or restriction :

13. While upon this aspect of the inter-dependence of the several provisions of the law we may note certain provisions that have not been examined by the learned Judge (Kailasam, J.,) and were, apparently, not brought to his attention. They are of some significance, in the light of the particular argument that we have to examine. One of these provisions is Section 167 (72) of the Sea Customs Act, and the columns relating to this item are as follows:

(1) (2) (3)72. If any person makes or signs or uses, any declara- General Such person shalltion or document used in the transaction of any busi- on convictionness relating to the Customs, knowing such declara- of any suchtion or document to be false in any particular; or offence before acounterfeits, falsifies or fraudulently alters or destroys Magistrate, beany such document, or any seal, signature, initials liable to a fineor other mark made or impressed by any officer of not exceedingCustoms in the transaction of any business relating to One Thousandthe Customs; or being required under this Act to rupees.produce any document, refuses or neglects to produce such document; or being required under this Act to, answer any question put to him by an officer of customs, does not truly answer such question.

14. Next, we may note Section 190-A of the Sea Customs Act, again not cited before the learned Judge, which deals with the powers of revision of the Chief Customs Authority. It is of some significance, for, on the facts, there can be no doubt that these exports occurred a considerable time prior to the discovery of certain documents, which has sparked off the present proceedings; equally, there can be no doubt that the exports took place in apparent and full compliance with the formalities required by the law, and the rules. We have experienced great difficulty in tracing out what really happened at that time, viz., which particular documents, most probably inclusive of the originals of the contracts with the foreign buyers were produced by the intending exporters, and how the authorities were satisfied that these exports were proper, and should be permitted. But there can be no doubt whatever that the exports took place, under the seal and approval of such permission by the Customs Authorities, after scrutiny of the Section 12 (1) declarations and other documents; whether a separate order to that effect was passed, or this was merely effected by affixing the seal to the shipping documents, need not be now laboured upon. But, assuming that this was a proceeding permitting the export, and, subsequently, the Customs Authority discovers facts which would show that the permission was obtained by the practice of any fraudulent representation, Section 190-A is important, as embodying the power of the Chief Customs Authority to rescind such permission. Under Section 190-A (1) proviso, the enactment is clear that the person aggrieved must have a reasonable opportunity to show cause, and under Section 190-A (3) there is a limitation of two years within which the power could be exercised.

15. Section 190-A is in the following terms:

(1) The Chief Customs-Authority may of its own motion or otherwise call for and examine the record of any proceeding in which an Officer of Customs has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may pass such order thereon as it thinks fit:

Provided that no order prejudicial to any person shall be passed under this section unless such person has been given a reasonable opportunity of making a representation against the proposed order.(2) The powers conferred upon the Chief Customs Authority under Sub-section (1) may also, in the like manner and subject to the like conditions, be exercised by the Chief Customs Officer in respect of any decision or order passed under this Act by any officer of Customs subordinate to him.

(3) No decision or order passed by an officer of Customs shall be revised under this section by the Chief Customs-authority or a Chief Customs Officer, as the case may be after the expiry of two years from the date of the decision or order.

16. As the learned Judge (Kailasam, J.) points out, Section 27 of the Foreign Exchange Regulation Act, empowers the Central Government to make rules for carrying into effect the provisions of the Act and Sub-section 2 (a) of Section 27, confers specific powers on Government to make rules prescribing forms, and their modes of use. This led to the promulgation of the Foreign Exchange Regulation Rules, 1952, which are of some importance. They will be found, together with the forms, in Vakil's Law Relating to Foreign Exchange (second edition) at page 239 et seq. Under Rule 3, the form of the declaration under Section 12 (1) is referred to, and the Reserve Bank is authorised to set it out in the first schedule. Rule 5 is important, for under Sub-clause (2) of Rule 5, the Reserve Bank or the Collector of Customs.

may require any exporter to produce, in support of the declaration, such evidence as may be in his possession or power, to satisfy them


(ii) that the invoice value stated in the declaration is the full export value of the goods; and

(iii) that the amount representing the full export value of the goods has been or will be paid to the exporter.

17. The essential form to be filled in by the intending exporter, is admittedly, form G.R. 1 (page 242), and the part of it which now concerns us is the following declaration:

I hereby declare that I am the seller/consignor of the goods in respect of which this declaration is made and that the particulars given above are true and

(a) that the invoice value declared is the full export value of the goods and is the same as that contracted with the buyer.

(b) that this is a fair valuation of the goods which are unsold.

I/My principals undertake that I/they will deliver to the bank mentioned below the foreign exchange/rupee proceeds resulting from the export of these goods on or before....

18. The main argument can now be clearly exposed to view. Mr. Kumaramangalam for the respondents does not deny that the formalities were complied with in the case of the exports in question. .Section 12 (1) declarations were duly made, they were scrutinised by the authorities, the requisite documents, which probably included the original contracts with the foreign buyers, were called for and examined, and the exports were permitted under the law. How then it is possible to contend that these goods were either exported or attempted to be exported, in violation of the prohibitions or restrictions imposed by law, and are, therefore, liable to be confiscated under Section 167 (8) of the Sea Customs Act? There can be no doubt that the provision is a very stringent and penal one . The learned Judge (Kailasam, J.) puts the matter thus at page 200:

The punishment under Section 167 (8) of the Sea Customs Act is far more severe, in that the goods are liable to be confiscated and the penalty may extend to three times the value of the entire goods, whereas under Section 23 (1) (a) the penalty can only be three times the value of the foreign exchange in respect of which the contravention has taken place.

19. As we said earlier, Mr. Kumaramangalam further concedes that Section 12 (2) will, in all probability, be applicable to the facts, taking the averments as they are expressed in the affidavit and the supplementary affidavit; equally, Section 22 will apply. But according to learned Counsel, these are independent punitive measures, which have to be initiated by other authorities. There is a parallel power in the Collector of Customs to confiscate these goods, on the proper interpretation of Section 12 (1) of the Act.

20. When the wording of Section 12 (1) is carefully examined, for this purpose, it becomes apparent that, as the substantive section stands, it does not even require the intending exporter to furnish particular figures of the full export value of the goods, declared as such. On the contrary, the declaration required, supported by such evidence as may be prescribed, has only to be confined to the undertaking,

that the amount representing the full export value of the goods has been or will within the prescribed period be, paid in the prescribed manner.

21. But Mr. Kumaramangalam contends that it is significant that the words are not, as they conceivably could be, that the full export value of the goods has been or will be paid; the Legislature deliberately introduced the expression the amount representing the full export value, and that implies that, by the very force of this language, the declaration should include the figures. We are not at all clear that such an interpretation flows, as a necessary consequence, from the phraseology of Section 12 (1), particularly as this is followed by Section 12 (2) which specifically deals with the vice of under-invoicing, or furnishing a value below the full export value. But the point is really academic, for, as we have seen the rules made, as delegated legislation, apply with equal force, and the G.R. form is part of the mandatory procedure. That certainly requires the intending exporter to declare the full export value and not merely this, to give an assurance that this is the same as that contracted with the buyer. If the present averments are true, that certificate would be a false one, thereby rendering applicable the penal provisions of Section 22, and Section 12 (2) of the Act. But the real point is, how can the interpretation be sustained, that Section 12 (1) itself is infringed, because, though the formalities were complied, with, the declaration was not true to the knowledge of the intending exporter? If the Legislature had intended this, as an essential part of this mandatory provision of Section 12 (1), one would certainly expect that the requisite words would have been employed, so that the essence of the obligation is not merely to file a declaration, supported by documents, but to file a declaration with no particular that is false to the know-lodge of the exporter.

22. Of the various precedents that have been cited before us, the decision of Desai, J., of the Bombay High Court in Hamad Sultan v. N.G. Abrol and Anr. Misc. Application No. 376 of 1957, was noticed by Kailasam, J., also; but it is really not necessary to scrutinise this precedent at any length. Actually, Kailasam. J., appears to accept the statement of the law in a vital portion of the judgment, that the offence of the violation of Section 22 by making a false statement, was quite distinct from the violation of Section 12 (1), and that

the provisions of Section 12 (1) are violated when no declaration is furnished at all, or when the purported declaration is one which cannot be regarded as a declaration within the meaning of Section 12 (1) of the Foreign Exchange Regulation Act, 1947.

23. Kailasam, J., adds at page 203:

The correctness of this statement standing by itself cannot be questioned.

24. The Bombay High Court further took the view, which Kailasam, J., was unable to accept, that the provisions of Section 12 (1) would be satisfied by the petitioner undertaking to pay in the prescribed manner the amount representing the full export value of the goods, and that, incidental to this, if the particulars were falsely furnished, it was not a violation of Section 12 (1). Mr. Kumaramangalam would here argue that the question whether Section 12(1) would be violated if an incorrect statement is made need not detain us in the present context; he concedes that under-invoicing may occur owing to causes beyond the control of intending exporter; it may even be that there is a clerical error, or that subsequent facts establish that more is due from the foreign buyer, to be repatriated as foreign exchange. But he claims that this kind of extenuation, even if it is permissible will not extend to a deliberately false statement or figure, and that such a declaration is no declaration at all. It is liable to be treated as non est.

25. It is this distinction that we find it very difficult to accept. The words are not to be found in the section, which would enable such a distinction to be sustained on an ex facie interpretation of the section itself. Further, it is not as if the Legislature has not provided for the admittedly serious offence of an apparent compliance with the formalities, and the obtaining of permission to export, by deceiving the authorities into accepting documents that are not true, or figures that are not true. Section 22 specifically provides for this, and Section 12 (2) equally makes liable the exporter who attempts to get the benefit of an undeclared and un-repatriated foreign exchange, by such means. We must here note that Section 167 (8) of the Sea Customs Act obviously refers to Sections 18 and 19 of the same Act, as will be clear from the second column. Under Section 18 there are certain outright prohibitions in respect of categories of goods, such as counterfeit coin, obscene publications, etc. The law not merely imposes such prohibition as to import or export, but also imposes restrictions; restrictions are certainly imposed with regard to export by Section 12 (1) of the Foreign Exchange Regulation Act, and the rules made thereunder. But the idea obviously is to render such goods liable to confiscation, only where there is an export evading such restrictions, or infringing them. It is very difficult to sustain the interpretation that Section 167 (8) of the Sea Customs Act was also intended to apply to a cue, where the goods are exported strictly within the ambit of the restrictions but the necessary permission had been obtained by inducing the authorities to accept declarations or documents which were false in certain particulars. We must here point out that, if the authorities detect this, they will have the power to cancel the permission altogether, under Section 190-A earlier referred to.

26. It has been stressed that this interpretation of ours is considerably fortified by the observations in the majority judgment in East India Commrl. Co. v. Collector of Customs : 1983(13)ELT1342(SC) . It is not necessary, here to set forth the facts of that case at any length. But in the judgment of Subba Rao, J., (as he then was), the following statement occurs, which expresses the crux of the matter on the facts as embodied in the show cause notice in that case at page 1902:

It was stated in the notice that the special licence was issued on the express condition that the goods covered by the said licence should be utilised for consumption as raw material or accessories in the factory of the licence holder and that no part thereof should be sold or permitted to be utilised by any other party, that the appellants sold a portion of the goods imported under the said licence to others in breach, of the said condition and that, as the appellants infringed the said condition, the goods, or the money substituted in its place, were liable to be confiscated.

The, close parallel is here obvious, for this was also a case where the licence had been obtained by misrepresentation, which Was really fraudulent, since the appellants did sell the goods in violation of the undertaking and thus obtained a fraudulent benefit. The Supreme Court observed in a subsequent passage at page 1907:

Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable; it is good till avoided in the manner prescribed by law....In the circumstances, we must hold that when the goods were imported, they were imported, under a Valid licence, and therefore it is not possible to say that the goods imported were those prohibited or restricted by or under Ch. IV of the Act within the meaning of Clause (8) of Section 167 of the Sea Customs Act.

27. On a parity of reasoning, we are constrained to come to the same conclusion here. Mr. Kumaramangalam sought to base a distinction between the granted licence in that case which, though obtained by misrepresentation, was voidable at the instance of the authorities, and a declaration under Section 12 (1), which per se, cannot be cancelled or revoked. The argument is unsustainable. Even if the declaration contained false particulars which were not then detected, it was accepted, along with the documents called for from the parties, and whether due to concealment as to the real facts or otherwise, the export was permitted, and it took place under the law. Thereafter, we are quite unable to see how the authorities can turn round and say that the export occurred beyond the rigour of the provisions of law, particularly Section 12 (1) and hence, that the goods themselves were liable to be confiscated. Mr. Kumaramangalam has relied on two reported precedents in customs cases, available in a special publication of such judgments; but we are unable to see how either helps him.

28. The first of these cases is Mrs. J. Essardas v. Shri A. V. Venkateswaran, Collector of Customs Misc. Application Nos. 132, 133 to 141, 184 of 1958, dealt with by Shelat, J. in the Bombay High Court. The essential fact, in this case, was that the importers were able to import goods beyond the value declared in the bill of entry by means of fraudulent mis-statements and under valuations, and without the cover of a valid licence. The question was whether such goods were liable to be confiscated under Section 167 (8) of the Sea Customs Act, and the Court held that the goods were liable to be confiscated, as they were, indisputably goods illicitly imported without the cover of a licence. That conclusion, upon the facts of that case, cannot be canvassed here. There is an observation of the learned Judge approbating the dictum of De Crey, C.J., that fraud vitiates even the most solemn proceedings of the Courts of justice. But as we shall see a little later, that fraud, in order to vitiate the judgment or order, must be extrinsic or collateral to what has been adjudicated upon, and cannot be part of that which was dealt with by the Court. The conclusion, on the facts in the case, is that goods of a particular value

were imported and cleared through the customs without a licence;

Once that is established, they were clearly liable to confiscation. The other decision is of the same Court in Sattanathan v. Rameschandra & Co. Misc. Application No. 99 of 1954, before Chagla, C.J., and Shah, J. The case involved the fraudulent transfer of a licence, and acts done in pursuance of that, and, on the facts, the Court held that the Collector of Customs had authority, under Section 167 (8), to ascertain if the import had been in violation of legal restrictions. Further, it had been actually established that the import was illicit.

29. Upon fraud, which has the consequence of vitiating or rendering non est any act of any authority, the position in law is very clear, and settled by the Full Bench decision of this Court in Kadhirvelu Nainar v. Kuppuswami Naicker : (1918)34MLJ590 . This is a very brief judgment of Wallis, C.J., following the elaborate exposition earlier given in Chinnayya v. Ramanna : (1913)25MLJ228 . That precedent refers to the very early English decision of The Duches of Kingston's case (1776) 2 S.L.C. 731, 11th Edn. Even with regard to a declaratory suit, to set aside a prior judgment on the ground of alleged fraud, the fraud to vitiate, must be

extrinsic or collateral to every thing that has been adjudicated upon, but not one that has been or must be deemed to have been dealt with by the Court.

In approbating this principle, the learned Judges observed that, indubitably, it was highly improper or immoral on the part of parties to let in false evidence or to practise deceit on the Court, in any form. But that is a matter for consideration, which is intrinsic to the case, and, however erroneous or patent be the fraudulent representations, such an adjudication would be res judicata between the parties. Mr. Joshi for the appellants has drawn our attention to the decision of the Judicial Committee in Malik Damsaz Khan v. Commissioner of Income-tax, Punjab 1947 L.R. 74 IndAp 98 : (1947) 2 M.L.J. 556, which is certainly helpful in the present case. It was the assessee in that case, who contended that the return of income rendered by him was not a return within the meaning of Section 22 (2) of the Act, and hence that it must be deemed to be non est. The Income-tax Officer could, thereafter, assess only under Section 23 (4) of the Act and not under Section 23 (3). Their Lordships observed at page 558:

Neither in the incompleteness of the return nor in the fact that in an accompanying statement the appellant referred to his return as an estimate can their Lordships find any possible justification for the plea that the assessment was incompetent or that the Appellate Assistant Commissioner had no jurisdiction to entertain the appeal proceedings which the appellant himself initiated.

30. Mr. Kumaramangalam has relied on In re, Abhey Ram Chunni Lal : AIR1933All197 , in which the learned Judges of the Division Bench held that, if the return of the assessee was bona fide Section 23 (2) would apply. But that provision would not apply to a case, where the assessee deliberately failed to comply with the rule. We do not think it is necessary to proceed into this aspect, or the prior precedents in this judgment. The reason is that the question is not whether one provision, or another of a statute applies or does not, to a return which may be incorrect but is not deliberately false, as distinguished from a return which is deliberately false. The real point here is that the gist of the offence under Section 12 (1) of the Foreign Exchange Regulation Act read with Sections 19 and 167 (8) of the Sea Customs Act, is an export or attempted export, which is in violation of the obligation of the intending exporter to make a declaration) to furnish documents called for, to satisfy the authorities, and to obtain permission to export. Where he has done all this, clearly he has not violated Section 12(1). If he has misled the authorities by false representations, or failed thereby to repatriate foreign exchange, by virtue of his obligation under Section 12 (2) those are different offences, for which separate and specific penalties can be imposed. The fact that the penalty that can be imposed, upon proof of such offences, may not be as heavy in the monetary sense, as that involved in confiscation under Section 167 (8) of the Sea Customs Act, appears to us to be quite irrelevant; for that matter a criminal prosecution, and the consequent and possible imprisonment, may be far heavier punishment to be visited on a wrong-doer.

31. It follows that the respondents have really no jurisdiction to proceed further in this matter. The law relating to the issue of a writ of prohibition need not be discussed here, for the principles are well-settled. That writ does not issue at the instance of a party, where a jurisdiction can conceivably arise, on the avernments and information before the quasi-judicial authority; but where it cannot arise, the writ has to issue, in the interests of justice. Accordingly, we allow these appeals and direct the issue of writs of prohibition in these cases. There will be no order of costs.

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