# AGRAWAL TRADING CORPORATION & ORS v. COLLECTOR OF CUSTOMS AND ORS

- **Citation:** [1972] 3 S.C.R. 85
- **Court:** Supreme Court of India
- **Decided:** 1972-01-17
- **Case number:** Civil Appeal No. 357 of 1967
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/agrawal-trading-corporation-ors-v-collector-of-customs-and-ors-5622
- **Pages:** 14

## Headnote

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85
.AGRAWAL TRADING CORPORATION & ORS.
v.
COLLECTOR OF CUSTOMS AND ORS.
January 17, 1972
[K. S. HEGDE, P. JAGANMOHAN REDDY AND D. G. PALEKAR, JJ.J •
Foreign Exchange Regulations Act, 1941-Section 8 and 23A-lt•
scope-Sea Customs Act S. 19, 167(3), (8) (37)-Does the word 'goods'
i11 the said Sections include Currency Notes.
The appellant, a partnership firm having 2 partners, carried on busi·
ness of importers and exporters, etc. The Cashier of the firm handed over
a wooden case to the Swiss Airways at Dum Dum for being sent to Hong
Kon& by air.
According to .the consignment note, the consignment was
being sent by one R. of Karnani mansions, Calcutta, who was a fictitious
person. The shipping bill showed that the consignment purported to
contain food and dried vegetables and was sent to I, of Hong Kong,
al!o a fictitious person.. After the consignment was accepted and when
customs examined it for clearance, it was found that it contained Rs.
Sl,000 in Indian currency... On investigation, a search warrant was issued
by the Presidency Magistrate and the office of the firm and the residence of partners w~re searched. In the course of search,
accounts
books and other documents were seized.
Investigation revealed that the
Cashier, had signed the consignment note ·as Rs, which, as the subsequ·ent
writings showed; were in his hand. Even the consignment note appears
to have been typed on the type-writer of the appellant firm.
Thereafter,
Customs authorities served a notice on the appellant pointing out that
exportation of Indian currency out of India was in contravention of S. 8
(2) of the Foreign Exchange Regulations Act, 1947 read with Reserve
Bank Notification dated 27-2-1951 as specified therein and it was asked
to show cause and to produce within 4 days the permit, if any, of the
Reserve Bank of India, failing which, it would be liable for prosecunon
under Section 23(1) read with S. 8(2) of the Foreign Excbanae Regula·
!ions Act. The appellant denied that the firm had anything to do with·
the case.
Apart from criminal prosecutions
against the
partners, a fine
of
Rs. l,000 under section 167(3) of the Sea Customs Act with a further
personal liability of Rs. 1,000 u/s. 167(37) of the Act was imposed against
the firm. It was further fined Rs. S!,000 u/s. 167(8) of the Act reac!
with s. 23 ( 1) of the Foreign Exchange Regulations Act. Apart from
these, the currency notes of Rs. 51,000 which we·re seized, were also con·
fiscated.
This order was challenged before the single judge of lhe Calcutta
High Court who issued a rule but later discharged it. An appeal against
that order was also dismissed. In appeal to this Court, three
points,
raised before the Appellate Court were also reiterated : (I) Currency
Notes are not 'goods' and therefore, the provisions of s. 167(3), (8) and
(37) of the Sea Customs Act are not attracted.
(2) A firm is not a
legal entity and therefore, it cannot be a 'person' within the meaning of
any of the abQ¥e provisions of law. (3) Even if a 'firm' be a 'perspn',
no penalty can .be imposed on the firm or any of its members unless the
members have consciously taken any step to violate the provisions of Jaw;
86
SUPREME COURT REPORTS
[1972] 3 S.C.R
even so, only the partner·member against whom there is evidence
of
guilt can be held liable.
Dismissing the appeal,
HELD : (i) s. 23A of the Foreign Exchange Regulations Act, incor·
porates, by reference, the provisions of the Sea Customs Act by deeming
the restrictions under section 8 of the Foreign &change Regulations Act,
to be prohibiting and restricting under s. 19 of the Sea Customs Act. The
legislature ca.n always incorporate· by reference, the pro,isions of some
other Act, if they are relevant for the purposes of the scheme and object of
that Act. Restrictions specified in s. 8 of the Foreign Exchange Regulations
Act are deemed to be prohibitiona and restrictions mentioned under s. 19 of
the Sea Customs Act. The prohibitions mentioned under s. 8 are no

## Text

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.AGRAWAL TRADING CORPORATION & ORS.
v.
COLLECTOR OF CUSTOMS AND ORS.
January 17, 1972
[K. S. HEGDE, P. JAGANMOHAN REDDY AND D. G. PALEKAR, JJ.J •
Foreign Exchange Regulations Act, 1941-Section 8 and 23A-lt•
scope-Sea Customs Act S. 19, 167(3), (8) (37)-Does the word 'goods'
i11 the said Sections include Currency Notes.
The appellant, a partnership firm having 2 partners, carried on busi·
ness of importers and exporters, etc. The Cashier of the firm handed over
a wooden case to the Swiss Airways at Dum Dum for being sent to Hong
Kon& by air.
According to .the consignment note, the consignment was
being sent by one R. of Karnani mansions, Calcutta, who was a fictitious
person. The shipping bill showed that the consignment purported to
contain food and dried vegetables and was sent to I, of Hong Kong,
al!o a fictitious person.. After the consignment was accepted and when
customs examined it for clearance, it was found that it contained Rs.
Sl,000 in Indian currency... On investigation, a search warrant was issued
by the Presidency Magistrate and the office of the firm and the residence of partners w~re searched. In the course of search,
accounts
books and other documents were seized.
Investigation revealed that the
Cashier, had signed the consignment note ·as Rs, which, as the subsequ·ent
writings showed; were in his hand. Even the consignment note appears
to have been typed on the type-writer of the appellant firm.
Thereafter,
Customs authorities served a notice on the appellant pointing out that
exportation of Indian currency out of India was in contravention of S. 8
(2) of the Foreign Exchange Regulations Act, 1947 read with Reserve
Bank Notification dated 27-2-1951 as specified therein and it was asked
to show cause and to produce within 4 days the permit, if any, of the
Reserve Bank of India, failing which, it would be liable for prosecunon
under Section 23(1) read with S. 8(2) of the Foreign Excbanae Regula·
!ions Act. The appellant denied that the firm had anything to do with·
the case.
Apart from criminal prosecutions
against the
partners, a fine
of
Rs. l,000 under section 167(3) of the Sea Customs Act with a further
personal liability of Rs. 1,000 u/s. 167(37) of the Act was imposed against
the firm. It was further fined Rs. S!,000 u/s. 167(8) of the Act reac!
with s. 23 ( 1) of the Foreign Exchange Regulations Act. Apart from
these, the currency notes of Rs. 51,000 which we·re seized, were also con·
fiscated.
This order was challenged before the single judge of lhe Calcutta
High Court who issued a rule but later discharged it. An appeal against
that order was also dismissed. In appeal to this Court, three
points,
raised before the Appellate Court were also reiterated : (I) Currency
Notes are not 'goods' and therefore, the provisions of s. 167(3), (8) and
(37) of the Sea Customs Act are not attracted.
(2) A firm is not a
legal entity and therefore, it cannot be a 'person' within the meaning of
any of the abQ¥e provisions of law. (3) Even if a 'firm' be a 'perspn',
no penalty can .be imposed on the firm or any of its members unless the
members have consciously taken any step to violate the provisions of Jaw;
86
SUPREME COURT REPORTS
[1972] 3 S.C.R
even so, only the partner·member against whom there is evidence
of
guilt can be held liable.
Dismissing the appeal,
HELD : (i) s. 23A of the Foreign Exchange Regulations Act, incor·
porates, by reference, the provisions of the Sea Customs Act by deeming
the restrictions under section 8 of the Foreign &change Regulations Act,
to be prohibiting and restricting under s. 19 of the Sea Customs Act. The
legislature ca.n always incorporate· by reference, the pro,isions of some
other Act, if they are relevant for the purposes of the scheme and object of
that Act. Restrictions specified in s. 8 of the Foreign Exchange Regulations
Act are deemed to be prohibitiona and restrictions mentioned under s. 19 of
the Sea Customs Act. The prohibitions mentioned under s. 8 are not
necessarily confined to goods alone but must be deemed, for the purposes
of Foreign Exchange Regulations Act, to include therein restrictions in
respect of tho articles specified in s. 8 thereof, including currency notes
as well. [94 BJ
(ii) Although there is no definition of the word 'person' in either of
the Acts, the definition in s. 2(42) of the General Clauses Act, 1897 or
Section 2(3) of tho Act of 1863 would be applicable to the present Acts,
in both of which, person bas been defined as including any Company or
association, or body of individuals whether incorporated or not. Further,
tho
explanation to
s.
23C
clearly envisages
that
a
company
for the purposes of that Section is defined to mean any body corporate
and includes a firm or other association of individuals and a Director in
relation to a firm also means a partner of the firm.
Therefore, for the
purposes of Foreign Exchange Regulations Act and Sea Customs Act, a
ro111sterea partnersn1p flmi is a 'legal entity'. [94 G)
(iii) From the evidence, it was clear that tho appellant attempted to
hoodwink the customs officials (currency notes secreted in a cavity), that
the consijlllet and consi4nee were not shown as real persons, the charges
and expenses Incurred 1n connection with the de1patch wore found ill
tho entry in the books of account of tho fir,m that tho amount. sought to
be sent was half a lakb of rupees which could ibardly be within the means
;:if tho Cashier and tho ~
Court was riaht in holding that It was the
firm which was Interested 1n sending the currency notes out of India in
a clandestine manner. f98 Al
Radha Krishna Bhatia v. Union of India & Ors., (1965) .2 S.C.R. 213.
Thorrw Dana v. The State of Punjab, [1959] Supp. 1 S.C.R. 274 and
Additional Collector of Customs v. Sita Ram Agarwal, C.A. No. 492 of
1962 decided on 14-9-1962 referred to ancl distinguished.
CIVIL APPELLATE JURISDICTION:
Civil Appeal No. 357 of
1967.
Appeal from the judgment and order dated December 9, 1963
of the Calcutta ·High Court in Appeal from Original Order No.
110 of 1960.
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B. Sen, Sadhu Singh, lagmohan Khanna, R. N. Kapoor and
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S. K. Dho/akla, for the appellants.
G. L. Sangh/, B. DI tta and S. P. Nayar, for the respondents.
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AGRAWAL TRADING CORP. v. COLLECTOR (Jaganmohan
87
Reddy, 1.)
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The Judgment of the Court was delivered by
P •. Jaganmoban Reddy, J. This is an appeal by certificate
under Article 133 ( 1) (b) of the Constitu!ion against the judgment
of the Calcutta High Court which dismissed an appeal from an
order of the single Judge of that Court discharging a rule granted
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by it to the appellants calling on !he respondents-tire Collector
of Customs and others-to show cause why certain orders under
various sections of ithe Sea Customs Act and the Foreign Exchange
Regulation Aot should not be quashed and why a writ!en complaint
made by the r~spondents. under tire Foreign Exchange Regulation
Ac.t and the case pending in the Court of the Presidency MagisC
trate, Calcutta, should not be stayed.
The appellant is a registered partnership firm carrying on
business of importers, exporters, commission agents, brokers and
p;eneral merchants.
It consists of two partners, Girdhari Lal
Gupta and Pooran Mal Jain.
On the 25'.h October 1958, tire
Cashier of, the appellant-Bhag\Vandeo Tiwari handed over a
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consignment of wooden case to the Swiss Airways at Oum Dum
Airport for being sent by air freight to Hongkong. According to
the consignment note, the consignment was bein)1; sent by one
Ramghawan Singh of Kamani Mansions, Park Street, Calcutta,
who in fact was a fictitious person.
The Shipping Bill showed
!hat the consignment purported to contain Rassogolla, Achar,
Papar and dried vegeta~es and it was being sent to one Ishwar Lal;
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41, Wyndham St., Hongkonii: who is also alleged to be a fictitious
person.
After the consignment was accepted and when the
Customs examined it for clearance on 25th October 1958 before
i!s onward despatch to Honl!;kong, ithere was found concealed in
a specially made secret cavity on the bat~ns nailed to the inner
sides of the case, Indian currency notes of Rs. S 1,0001 •.
An
F in\'estigation was set on foot and on 22nd January 1959 a
search warrant was issued by the Presidency Magistrate, pursuan!
to which the Customs Officers caused a search to be made of the
office of the firm and the residences of the appellant's partners. In
the course of search account books and other documen!s were
seized.
This investigation revealed that the Cashier, Bhagwandeo
G Tiwari had signed the consignment note as Ramchandra which, as
the subsequent writings showed, were in his hand.
Even the
consignment note appears to have been typed on the typewriter
of the appellant firm.
It was further alleged that from a compa•
rison of the consignment no~ with a letter admittedly sent out by
the appellant firm and signed by one of its partners, Girdhari Lal
Gupta, it became evident that the slip seized from the office of
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the appellant firm had contained entries, to show that Bhagwandeo
Tiwari was tho person who actually transported and booked the
oflendinp; consignment in question and that he 111ade an entry
88
SUPREME COURT REPORTS
[l9'72J 3 S.C.R.
of Rs. l..23.73 being the Air freight paid for its
transport to
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Hongkong which was the exact amount shown on the consignment
the account slip was in his handwriting, and that the expenses
note. Bhagwandeo Tiwari, it was said, had in fact admitted that
and charl(es shown therein were also found in the books of account
of the appellant firm.
In view of this evidence, the customs
awthorities served a natice on the appellant firm on April 2, 1959
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by which after setting out in detail the aforesaid facts and after
pointing out that the exportation of lindian currency out of India
was in contravell'tion of section 8(2) of the Foreign Exchange
Regulations Act 194 7 read with the Reserve Bank of India Noti·
fication dated 27·2-1951 as specified therein, it was asked to
show cause and to produce within four days of the receipt (>f
the notice, 11he permit, if any, of the Reserve Bank of India, for
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export of the Indian currency and if it did not do so, it would
be liable for prosecution 1mder section 23 ( 1) read with Eection
8 (2) of the Foreign Exchange Regulations Act.
On 13·4-1959,
the appellant firm replied to the notice denying that the firm had
anything to do with the despatch of the box containing currency
notes; that i.t was not aware of any person by the name of D
Ramghawan Singh or Ishwar Lal, or that Bhagwandeo Tiwari
had ever despatched the consignment in question or visited any Air
office in connection therewith.
It may be mentioned en passant
that in the High Court, in the reply affidavit affirmed on
11-1-1960 to the affidavit in opposition, Girdhari Lal Gupta,
one of the partners of the firm went even to extent of den}ing
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that Bhagwandeo Tiwari was the Cashier of the firm, notwithstanding the fact that in' the earlier reply to the show cause notice
as also in the Writ Petition, it was tacitly assumed that he was
the Cashier.
Apart from the criminal prosecutions that were
launched
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against the partners, in the penalty proceedings which were
initiated by the aforesaid show cause notice, the firm was held
to be knowingly concerned in the offence and accordingly, a fine
of Rs. 1,000/· was imposed on it under section 167(3) of the
Sea Customs Act with a further personal liability of Rs. 1,000/-
under section 167 ( 37) of the said Act.
It was further fined
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Rs. 51,000/- under section 167(8) of the Act read with sei;tion
23 (I ) of the Foreign Exchange Regulations Act.
Apart from
these fines, the currency notes of Rs. 51,000/- which were seized
wen confiscated.
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This order was challenged before the. single Julge of the
Calcutta High Court who, as already stated, had issued a rule
but later discharged it.
Against that order an appeal was filed
AGRAWAL TRADING CORP. v. COLLECTOR (Jaganmohan
89
Reddy, I.)
A but that also was dismissed.
Of the four points that were urged
in that appeal, the first three have been reiterated before us on
behalf of the appellant. viz. :-
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(1) Currency notes are not 'goods' and ilierefore
the provisions of section 167(3), (8) and (37)
of the Sea Ctistoms Act are not attaroted;
(2) A 'firm' is not a legal entity and therefore it
cannot be a 'person' within the meaning of any
of the above provisions of law;
(3) Even if a firm be a person within the meaning
ot the said provisions no penalty can be imposed
on 1te firm or any of its members unless it
appears from the evidence that the members of
the firm had consciously taken any steps to
violate the provisions of law; even so only the
particular member a~
whom there is evi·
dence of guilt can be held liable.
Before dealing with the above contentions it will be
necessarY to consider the relevant provisions of
~he Foreign
E Exchange Regulations Aot · as also those under the Sea Customs
Act, Sections 8(1), 23(a), (b), (IA), 23A, 23B and 23C of
the Foreign Exchange Regulations Act and section 19, 167(3),
(8) and (37) of the Sea Customs Act are relevant for •the purpose
of this appeal. These are ~iven below :-
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"8(1). The Central Government may, by notification
in ~he Official Gazette, order that, sub.iect
to
such exemptions, if any, as may be contained
in the notification, no person shall, except with
the general or special permission of the Reserve
Bank and on payment of the fee, if any, prescribed bring or send into India any gold or
silver or any currency notes or bank notes or
coin whether Indian or forei)!n.
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Explanation-The bringing or sending into
any
port or place in India of any such article as aforesaid
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inttnded \Q be taken out of India without being removed from the ship or conveyance in which it is being
carried shall nonetheless be deemed to be a bringing,
7-864Supcl(72
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SUPREME COURT REPORTS
[1972) 3 S.C.R.
or as the case may be sending, into India of that article
for the purposes of this sec!ion.
(2)
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23 (I). If any person contravenes the provisions of
section 4, section 5, section 9 or sub-section (2)
of section 12 or of any rule, direction or order
made thereunder, he shall -
(a) be liable to such penalty not exceeding
three times the value of the foreign exchange in respect of which the contravention has taken place, or five
thousand
rupees, whichever is more,
as may
be
adjudged by the Director of Enforcement
in the manner hereinafter provided, or
(b) upon conviction by a Court, be punishable with imprisonment for a term which
may extend to two years, or with fine, or
with both.
23(1A) Whoever contravenes -
(a) any of the provisions of this Act or of
any rule, direction or order made thereunder, other than those referred to in subsection (1) of this section and section 19
shall, upon conviction by
a
court. be
punishable with imprisonment for a lel"m
which may extend to tw0 years, or with
fine or with both;
(b) any direction or order made under
section 19 shall, upon conviction by a court,
be punishable with fine which mav extend
to two thousand rupees.
23A. Without prejudice to the provisions
of section 23 or to any other provision contained
in this Act, the restrictions imposed by subsections (1) and (2) of section 8, sub-section
(1) of section 12 and clause (a)
of subsection (1) of section 13 shall be deemed to
have been imposed under section 19 of the
Sea Customs Act, 1878 (8 of 1878), and all
the provisions of that Act shall have effect
accordingly except that section 183 thereof
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AGRAWAL TRADING CORP. v. COLLECTOR (Jaganmohan
91
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shall have effect as if for the word 'shall',
therein the word 'may' were substituted.
23B. Whoever attempts to contravene any of the
provisions of ·this Act or of any rule, direction
or order made thereunder shall be deemed to
have contravened that provision, rule, direction or order, as the case may be:
23C(l) If t:he per~n committing a contri¥vention: is
a company, every person who, at the time the
Cl>ntravention
was
committed,
was
incharge
of,
and
was
responsible,
to
the
company for the conduct of the business of
the company as well as the company, shall be
deemed to be guilty of the contravention and
shall be liable to be proceeded against and
punished accordingly :
Provided that nothing contained
in
this
sub-section shall render any such person liable
to punishment, if he proves that the contravention took place without his knowledge or that
he exercised all due diligence to prevent such
contravention.
(2) Notwithstanding anything contained in subsection (1), where a contravention under this
Act has been committed by a company and it
is proved that the contravention has taken
place with the consent or connivance of, or is
attributable to any neglect on the part of, any
director, manager, secretary or other officer
of the company, such director, manager, secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be
proceeded against and punished accordingly''.
Sea Customs Act :
"19. The Central Government may from tiine to
tiine, by notification in the
official Gu.etlle,
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.
167. The offences mentioned in the first column of
the following schedule shall be punishable to
the extent mentioned in the third column of the
92
SUPREME COURT REPORTS
[1972] 3 S.C.R.
same with reference to such offences resA
pectively :-
Offences
Section of
this Act to
which offe·
nee bas
reference.
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3. If any person ship or land goods, or General
~d in the shipment or landing of goods,
or knowiagty keep or conceal, or
knowingly permit or procure to be
kept or concealed, any goods shipped
or landed, or intended to be shipped or
Janded, contrary to provisions of this
Act; or
if any person be found to have been on
board of any vessel liable to cou&<ation
on account of the commission of an
offence under (No. 4) of ,this section,
while such vessel is within any bay,
river, creek or arm of the sea which
is · not a port- for the shipment and
landing of goods.
8. If any goods, the importation or
exportation of which is for the time
being prohibited or restricted by or
under Chapter IV of 4bis Act, be im·
ported into or exported from India
contrary to such prohibition or restriction or
if any attem~ be made so to import
or export any such goods; or
if any such goods be found in any pacli:-
DJO produced to any officer of Customs
as containlna no such aooda; or
if any sncb aoods, or any dutiilblo aoods,
be found either before or after landing
or shipment to have beeo concealed in
any manner on board of any vessel
within the linlits of any port in India;
or
if any '-oods, tho exportation of which
is prohibited or restricted as aforesaid,
be brouahl to any wharf in order to be
put on 6olrd of any voesel for export&•
lion con11'11'y to sUch problbillon or
mtriclion.
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18 & 19
Penalties.
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such pe.rson
shall be
liable lo a penalty
not
exceedin&
one
thousand rupees.
such aoods shall be lia·
ble
to
confitcation;
and
any person concerned in
any such offence shall
be liable to a penalty
DOI teXCCedina
throe
limes the value
of
the aoods,
or DOI
oceedina one thou·
sand rupees.
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AGRAWAL TRADING CORP. v. COLLECTOR (Jaganmohan 93
Reddy, I.)
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37. If it be found, when any goods are 86 & 137
entered at, or brought to be ~
through, a custom house, either for
importation or exportation, that-
(a) th• packages in which they are
contained differ widely from the
description given in the bill-of•
entry or spplication for passing
them; or
(b) the contents thereof have been
wrongly described in such bill or
application as regards the denominations, characters, or conditions
according to which such goods are
chargeable with duty or arc being
imported or exported; or
(c) the
contents of such packages
have been miwtated in rcaard to
sort, quality, quantity or value; or
(d) goods not stated in the bill-of.entry
or application have been concealed
in1 or mixed with, the articles specined therein, or have apparently
been packed so as to deceive the
officers of Customs.
and such circ nnstance is not accounted
for to the satisfaction of the Customs·
Collector."
3
such packagea, together
with the whole of the
goods contained therein, shall be liable to
confiscation, and every
person concerned in
any such offence shall
be liable to a penally
not
exceeding
one
thousand rupees.
A perusal of these provisions would show that no gold or
silver or any currency no~ or Bank notes or coin, whether
Indian or foreign, can be sent to or brought into India,
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nor can
any gold, precious stones or Indian currency
or foreign-exchange other than foreign exchange obtained from
an authorised dealer can be sent out of India without the general
or special pennission of the Reserve Bank of India. These restrictions by virtue of section 23A of the Foreign Exchange Regulation Act are deemed to have been imposed under section 19
of the Sea Customs Act and all the provisions of the latter Act shall
G have effect accordingly, except seC'tion 183 thereof shall have the
effect as if for the word 'shall' !herein the word 'may' were substituted. What section 23A does is to incorporate by reference thn
provisions of the Sea Customs Act by deeming
~he restrictions
under section 8 of the Foreign Exchange Regulation Act to be
prohibitions and restrictions under section 19 of the Sea Customs
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Act. The contention is 'that since section 19 restricts the bringing or talcing by sea or by land goods of any specified description
into or out of India, these restrictions are not applicable to the
bringing in or taking out the currency notes which are not goods
94
SUPREME COURT REPORTS
( 1972] 3 s.c.R.
within the meaning of that section, and, therefore, the appellant
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is not guilty of any contravention of section 19 of ithe Sea Customs
Act and cannot be subjected to the penal provisions of the said
Act. This ar.gument, in our view,
is misconceived,
because
firstly, it is a well accepted Legislative praotice to incorporate by
reference, if the Legislature so chooses, the provisions of some
other Act in w far as they are relevant for the purposes of and B
in furtherance of the scheme and objecls of that Aot and secondly,
that merely because the restriotions specified in section 8 of the
Foreign Exchange Regulation Act are deemed to be prohibitions
and restri.ctions under section 19 of the Sea Customs Act, those
prohibitions and restrictions are not necessarily confined to goods
alone but must be deemed for the purposes of the Foreign Exchange Regulation Act to include therein rei!rictions in respect C
of the articles specified in section 8 thereof, including currency
notes as well.
The High Court thought that there is no definition
of goods in the General Clauses Act and that contained in the
Sale of Goods Act which excludes money is inapplicable inasmuch
as that Act was a much later statute than the Sea Customs Aot·
It is, however, unnecessary to consider this aspect because even
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if ·!he currency notes are not goods, the restrictions prescribed in
section 8 of the Foreign Exchange Act cannot be nullified by
section 23A thereof which incorporates section 19 of the Sea
Customs Act. We cannot attribute to the Legislature the intention to obliterate one provision by another provision of the same
Act. On the other hand, we construe it as furthering ithe object E
of the Act whiCh is to restrict the import into Or export out of
India of currency notes and to punish contraventions of such
res!rlctions.
The second contention that because the firm is not a legal
entity, it cannot be a person within the meaning of Section 8 of f
the Foreign Exchange Regulation Act or of section 167 (3), (8}
and· (37) of :he Sea Customs Act, is equally wrtenable. There
is of course, no definition of 'person' in either of these Acts but
the definition in section 2 (42) of the Genera,! Clauses Act 1897,
or section 2(3} of the Act of 1868 would be applicable to the
said Acts in both of which 'person' has been defined as including G
any company or associatioo or body of individuals whether incorporated or not. It is of course contended that this definition does
not apply to a firm which is not a na:tural person and has no legal
existence, as such clauses ( 3) , ( 8) and ( 3 7) of section 167 of
the Sea Customs Act are inapplicable !O the appellant firm.
In
our_ view, the explanation to section 23C clearly negatives this
H
contention, in that a company for the purposes of that section i5:
defined to mean any body corporate and includes a firm or otherassociation of individuals and a Director in relation to a firm
AGRAWAL TRADING CORP. v. COLLECTOR (Jaganmohan 95
Reddy, J.)
A means a partner in the finn.
The High Court was clearly right
in holding that once it is found that there has been a contravention
of any of th.e provisions of the ForeiAD Exchange Regulation Act
read with Sea Customs Act by a finn, the partners of it who are
in-charge of its business or are responsible for the conduct of the
same, cannot escape liability, unless it is proved by them that
B ·!he contravention took place without their knowledge or they
exercised all due diligence to prevent such contravention.
There is, also no warrant for the third submission that unless
it appears from the evidence that members of the finn had consciously taken any steps to viola!e the provisions of law and even
C
then only the particular members against whom there is evidence
Of guilt, can alone be held liable. This contention was said to be
based on a decision of this Court in Radha Krishlln Bhatia v.
Union of India and others,(') that as the 'person concerne4'
specified in section 167 ( 8) of the Sea Customs A" is the persdb
actually involved or engaged or mixed up in conttavelliq tbe
D
restrictions imposed under the Foreign Exchange Act or IJte S..
Customs Act, he must be the person who must be sllown to be
actually concerned. That was also a case under section 167 ( 8)
of the Sea Customs Act where, in fact, a number d. gold bars
held to be smuggled were recovered from the · person of the
appellant.
The single Bench of the Punjab , lfigh : Court hid
allowed the Writ Petition of the appellant on .ftle· l!Qlllif that die
E
Collector had not recorded a finding that the ajlpdlant was
connected with the act of smuggling gold into the country. This
finding was set aside on a Let+.ers Patent Appeal and the writ
l>Ctition was dismissed. This Court held that the concern of the
appellant in the commission of the offence must be at a stage ,
F
J)rior to the compje~on of the offence of illegal importation of;
gold into the country. The mere finding of fact recorded bf;
the Collector of Customs about the smuggled· ~Id being rec0vere1f
from the person of the appellant was not sufficient to concl~ ..
that the appellant was ooncerned in the illegal importation al goJil:::
into the country and, therefore, liable for penalty under _..
tion 167 ( 8 ) of the Act.
What the order of the Collecbof
Customs must show is that he had considered thc·question o~ tile
G person being concerned in the commission of the offence ol. ille~al
importation. of the p.oods.
It should further indicate that the
matters he had considered had a bearing on the question a,nd the
reasons for his arriving at that conclusion. This has really no
bearing on the question before us because under section 23B, even
ail attemp! to contravene any of the provisions of the Act or of
H any rule, direction or order made thereunder shall be deemed to
have contravened that provision, rule, direction or order as the
(I) (1965! 2 S.C.R. 213,
96
SUPREME COURT REPORTS
[1972] 3 S.C.R.
case may be. In respect of this very incident where the petitioo:iers
A
were prosecuted i! was held by this Coun in Girdhari Lal Gupta
and another v. D. N. Mehta, Assistant Collector of Customs and
another,(') that Girdhari Lal Gupta, one of the itwo partners and
B~andeo Tiwari, Cashier, have been rightly convicted under
the provisions of !he Foreign Exchange Regulation Act for contravention of the restrictions imposed under section 8 ( 2) read wiih
B
section 23(1A) of the Foreign Exchange Regulation Acl In
that case it was contended that there is no evidence to show that
the contravention took place with the knowledge of Girdhari Lal
Gupta or that he did not exercise due diligence to prevent such
contravention. That contentiOD was negatived because he had
not only stated under section 342, that he alone looks-after 1the
affairs of the firm but it had been found that there were entries
C
in his acco11nt books. It is itrue, that tbt relevant provisions of
the Sea Customs Act are penal in character and the burden of
proof is on the Customs authorities to bring home the guilt to
1he person alleged to have committed a particular offence under
the said Act by adducing satisfactory evidence. But that is not
to say that the absence of direct evidence to connect a person wilh
D
tho offence will not attract the penal provisions to establish the
guilt in a criminal proceedmg ol the type which the customs authorities have to take. The evidence of the kind which has been
adduced in this case would bie sufficient to lead to the conclusion
that the partner of the firm was interested in or involved iin attempting to export Indian currency notes out of India.
As observed
by this Conn in Thomas Dana v. The State of Punjab('). while
dealing with section 167 of the Sea Customs Act, that "All criminal offences 'are offences but all offences in the sense of infringement of law are not criminal offences. Likewise, the other expressions have been: used in their generic sense and not as the)' are
understood in the Indian Penal Code or other laws relating to criminal offences. . . . Out of more than 82 entries in the schedule
to section 167, it is ooly about a dozen entries which contemplate
prosecution in the crirnitial sense, the remaining entries contem.-
plate penalties other than punishments for a criminal offence".
E
F
In the Additional Collector of Customs v. Sita Ram
Agarwal('), to which the High Court has referred, while disG
missin11: the _appeal from the judgment of the Calcutta High Court,
this Court had stated that "the High Conn was right when--!it
observed that if any one is interes!ed or consciously takes any
step whatever to promote the object of illegally bringing bulljon
into the country, then even if no physical connection is established
between him and the !hin11: brought, he will be guilty." In thl!t
case, the respondent, Sita Ram Agarwal who was seen moving
H
(I) [1970) 2 S.C.C. 530.
(2) [1959] Suppl. (I) S.C.R. 274.
(3) Civil Appeal No. 492/62 decided on 14-9-62.
A
B
AGRAWAL TRADING CORP. V, COLLECTOR
(Jaganmohan Reddy,/,)
97
in the company of one Bhola Nath Gupta on the western pavement
of J atindra Mohan Avenue, Calcutta, had proceeded in the
direction of a taxi which had come to the place where they
were, and on a sigrial being flashed, a Chinese national alighted
therefrom, shook hands, with the respondent after which all the
three boarded the taxi.
A police constable who was on the spot
raised an ala_rm and secured the respondent and his companion
with the help of the members of the public. All of them were
taken to th~ police station for the purpose of interrogation but
the Chinese national tried to get away and started to run. He
was chased and eventually secured. Before his apprehension, .
however, he was seen to drop three packets which were found
c to contain ?.3 bars of illicit gold. The respondent was charged
as a person concerned in the off~nce of attempting to import
contraband gold' under sec!ion 167(8) of the Sea Customs Act.
The High Court while holding that there was no evidence to
establish that he was in conscious relation with the gold, observed,
"in order ithat a person may be said to be'ro concerned, some
facts have to be proved which will es!ablish that he was in consD cious relation with the gold in one or other of the several successive steps preceding its actual receipt into the country''.
In order <that he was concerned in the offence, <;he High Court
further winted out that there need be no physical connection
between the J!Old and the person charged and "if the offence did
E
not relate to his being concerned in ·'1le importation of the gold,
but related to his having something to do with smuggled gold, the
l>OSition might have been different''. The facts of •the instant
case clearly disclosed, as was observed by the High Court, "a
well laid plan". We have earlier stated that the currency notes
were secreted in a cavity and were sought to be despatched out
of the country in a package which ostensibly looked inocuous,
F
containing eatables. The manner in which the attempt was
made was to hood-wink the Customs officials and escape their
detection. Further, the consignor and the consignee were not
shown as real persons but were fictitious so that even if the
a!tempt to smuggle out of the country the currency nates was
detected, the real persons could not be traced. The charges and
G
H
expenses incurred in connection with the despatch found in tthe
entries in the books of account of the firm were the same as
those relating to the offending package which was being despatched to Hongkong. The freight mentioned in ithe account slip is
the exact amount which appears on the consignment note in
respect of that offending package. The amount sough! ito be
sent is half a lakh of rupees which can hardly be within the
means of the Cashier, leading to the inescapable Inference that
the firm through its partners was concerned in the attempt to
transl!Iess ithe restrictions under section 8 of the Foreign Exchange
Regulation Act and liable to penal action by virtue of section 23A
98
SUPREME COURT REPORTS
[1972] 3 s.c.R.
under !he provisions of the Sea Customs Act. On these facts as A
eatablished, the IDgh Court caine to the conclusion and in our
view rlditly, that it was not unreasonable to infer that it was the
finn which was interested in sending !he currency notes out of
India in a clandestine ~r.
In this view, the appeal has no merits and it is dismissed with
JI.
costs.
S.N.
Appeal dismissed.
I