# OF CUSTOMS v. SITARAM AGARW ALA AND ANOTHER

- **Citation:** [1966] 2 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1965-10-05
- **Case number:** Criminal Appeals Nos. 192 of 1961
- **Bench:** K. SUBBA RAo, K. N. Wanchoo, J. C. SHAH. S. M. SlKRI, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/of-customs-v-sitaram-agarw-ala-and-another-3526
- **Pages:** 21

## Headnote

Sea Customs Act (8 of 1878), s. 167(8!)-Liability of person other
than importer-"Concerned in or dealing with goods", n1ea11i11g of.
The !st respondent had gone to' the 2nd respondent after previous,
arrangement with him, with a large sum of money to purchase gold which
was known to them lo be smuggled and lo have been imported into India
against the restrictions impo~ed on the import of gold: The police intervened, recovered the gold and arrested them.
The gold was confiscated
under s. 167 ( 8) of the Sea Customs Act',, 1878.
The respondents were
prosecuted for an offence under s. 167(81) and they were convicted by
the trial court.
On appeal the High Court acquitted the !st respondent
because it was of the view that as the !st respondent merely attempted to
purchase the gold it could not be said that he was concerned in dealing
with the smuggled gold within the meaning of the section. The High Court
also acquitted the 2nd r~pondent because it held that before a person
could be convicted under s. 167(81), it must be shown that he was
either a direct importer or concerned in some way in the import of the
sn1uggled article,
and that the ~ection did not include in its scope a
person who subsequently obtained the smuggled goods and then dealt with
them, though the smuggled goods themselYes might be li.1hlc to confiscation.
In appeal to this Court,
HELD (per Wanchoo, Shah, Sikri and Ramaswami, JJ.) :
(i) The
High Court \Vas in error in holding that simply because the purchase \Vas
not complete the 1st respondent was not concerned in dealing \vith the
smuggled gold which was with 1he 2nd respond·ont. [ 14 D]
T'ne \VOrds "in any \Vay concerned in or in any manner <lcalirig \Vilh
any goods" in the section, are of very \.\'ide import.
The words
"con~
<.:crnetl in" nu.:an ."interested in, involved in, 1nixcd up with",
\Vhile the
\vords "deal with" n1ean "to have something to do with, to concern one
self, to treat, to make arrangement, to negotiate \Vith respect to so1ne~
thing."
Therefore, when a person enters. into some kind of transaction
or attempts to enter into so-me kind of transaction with respect to prohibited
goods, and it is clear that the act \Vas done with some kind of prior
arrangement or agreement, it must be held that such a person is concerned
in dealing wi<h prohibited goods. (13 A-B; HJ
(ii) On the language of the section. it applies not only to an actual
smuggler or a person concerned in smuggling but also to all others who
may be concerned with smuggled goods after the smuggling is over provided they knew that the goods were smuggled into the country in spite of
a prohibition or restriction, or they knew that the duty thereon had not
been paid. It follows that the !st respondent had the necessary knowledge
an\! intent to evade the prohibition or the restriction even though he dealt
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with the gold after the smuggling was over and was not in any way
A
concerned with the actual smuggling. He would therefore be guilty under
the section. The 2nd respondent wa• also guilty under the section inasmuch as he was dealing with prohibited or restricted goods and had the
necessary knowledge and intent as required under the section. [21 B, C, E]
If the intention of the legislature was that the person guilty under
s. 167(81) could only be a person who was concerned in some way or
other with the actual importation or exportation it would have been easy
B
for it to use the same words as were used in the first part of s. 167(8) but
it bas not done so. Whats. 167(81) requires is ,that the person who comes
inter alia into possession of prohibited goods must know that there is son1e
prohibition in force with respect thereto.
But before he is found guilty
it bas further to be shown that he intends to evade the prohibition. Where
the case is not of prohibition but of duty, the person accused under the
section must be shown to know that the duty has not been paid and also
to have the intention to defr

## Text

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.. ,..
A
SACHIDANA~DA BENERJI, ASSISTANT COLLECTOR
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OF CUSTOMS
v.
SITARAM AGARW ALA AND ANOTHER
October 5, 1965
[K. SUBBA RAo, K. N. WANCHOO, J. C. SHAH. S. M. SlKRI AND
V. RAMASWAMI, JJ.]
Sea Customs Act (8 of 1878), s. 167(8!)-Liability of person other
than importer-"Concerned in or dealing with goods", n1ea11i11g of.
The !st respondent had gone to' the 2nd respondent after previous,
arrangement with him, with a large sum of money to purchase gold which
was known to them lo be smuggled and lo have been imported into India
against the restrictions impo~ed on the import of gold: The police intervened, recovered the gold and arrested them.
The gold was confiscated
under s. 167 ( 8) of the Sea Customs Act',, 1878.
The respondents were
prosecuted for an offence under s. 167(81) and they were convicted by
the trial court.
On appeal the High Court acquitted the !st respondent
because it was of the view that as the !st respondent merely attempted to
purchase the gold it could not be said that he was concerned in dealing
with the smuggled gold within the meaning of the section. The High Court
also acquitted the 2nd r~pondent because it held that before a person
could be convicted under s. 167(81), it must be shown that he was
either a direct importer or concerned in some way in the import of the
sn1uggled article,
and that the ~ection did not include in its scope a
person who subsequently obtained the smuggled goods and then dealt with
them, though the smuggled goods themselYes might be li.1hlc to confiscation.
In appeal to this Court,
HELD (per Wanchoo, Shah, Sikri and Ramaswami, JJ.) :
(i) The
High Court \Vas in error in holding that simply because the purchase \Vas
not complete the 1st respondent was not concerned in dealing \vith the
smuggled gold which was with 1he 2nd respond·ont. [ 14 D]
T'ne \VOrds "in any \Vay concerned in or in any manner <lcalirig \Vilh
any goods" in the section, are of very \.\'ide import.
The words
"con~
<.:crnetl in" nu.:an ."interested in, involved in, 1nixcd up with",
\Vhile the
\vords "deal with" n1ean "to have something to do with, to concern one
self, to treat, to make arrangement, to negotiate \Vith respect to so1ne~
thing."
Therefore, when a person enters. into some kind of transaction
or attempts to enter into so-me kind of transaction with respect to prohibited
goods, and it is clear that the act \Vas done with some kind of prior
arrangement or agreement, it must be held that such a person is concerned
in dealing wi<h prohibited goods. (13 A-B; HJ
(ii) On the language of the section. it applies not only to an actual
smuggler or a person concerned in smuggling but also to all others who
may be concerned with smuggled goods after the smuggling is over provided they knew that the goods were smuggled into the country in spite of
a prohibition or restriction, or they knew that the duty thereon had not
been paid. It follows that the !st respondent had the necessary knowledge
an\! intent to evade the prohibition or the restriction even though he dealt
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with the gold after the smuggling was over and was not in any way
A
concerned with the actual smuggling. He would therefore be guilty under
the section. The 2nd respondent wa• also guilty under the section inasmuch as he was dealing with prohibited or restricted goods and had the
necessary knowledge and intent as required under the section. [21 B, C, E]
If the intention of the legislature was that the person guilty under
s. 167(81) could only be a person who was concerned in some way or
other with the actual importation or exportation it would have been easy
B
for it to use the same words as were used in the first part of s. 167(8) but
it bas not done so. Whats. 167(81) requires is ,that the person who comes
inter alia into possession of prohibited goods must know that there is son1e
prohibition in force with respect thereto.
But before he is found guilty
it bas further to be shown that he intends to evade the prohibition. Where
the case is not of prohibition but of duty, the person accused under the
section must be shown to know that the duty has not been paid and also
to have the intention to defraud the government of the duty payable on
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the goods. So long as the duty is payable and has not been paid or so long as
the prohibition or restriction remains in force,
any person acquiring
possession of goods, on which duty has not been paid or with respect
to which the restriction or prohibition has been evaded, would have the
intent either to defraud the government of the duty payable, for he
acquires goods at a lower price, or would have the intention to evade
the r~triction or prohibition because no one would take the risk of
D
smuggling unless he can find a purchaser for the smuggled goods.
If
this were not so, there would be a premium on successful smuggling and
the purpose of the section to punish smuggling and stop it if possible,
would be completely defeated, as there would be a '°rious lacuna in the
provision. [15 E-G; 17 A·D]
Cases under the English Act referred to.
Per Subba Rao, J. (Dissenting) : It had not been established that the
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respondents had dealt with the gold with an intention to evade any restriction or prohibition imposed on their import. [7 F]
It is not open to the court to strain the language of a sta.tutc in order
to read a causus omissus and the court cannot Jill up a lacuna.
Also,
the court cannot construe the section with reference to the corre9P0nding
English Section and English decisions because, the Indian and English
sections ar-e not in pari materia. Under s. 167(81) the material ingredients
constituting an offence are; (i) a p·erson must have a knowleilge that there
is a prohibition or restriction against doing any of the enumerated acts
'vith respect to goods imported or exported contrary to the restriction or
prohibition imposed against their import or export, and (ii) he n1ust
have acted with an intention to evade such a restriction or prohibition.
That is., the two elements of n1ens rea, namely, kno,vledge and intention
must be established, because, knowledge of an offence cannot be equated
with an intention to commit the offence. The crux of the offence is the
import of goods with the requisite intent contrary to the prohibition.
The importer who smuggle• the goods is
certainly
guilty under the
section because he imports them in derogation of the prohibition or restriction.
Also, any person who deals with the goods in the context of
the import in any of the connected ways set out in the section, with the
requisite knowledge and intention would equally be guilty of the offence,
because, the enumerated dealings with the goods prohibited or restricted
may be necessary to complete the import vis-a-vis the 'importer, even though
they cover a field beyond the point of import as normally understood, that
ls,
when the goods cross the customs barrier.
But the intention to
contravene the prohibition cannot be imputed to subsequent dealers in
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COLLECTOR OF CUSTOMS v. SITARAM (Subba Rao, J.)
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the goods after the importer parts with them, though the goods themselves can be confiscated in th.::: hand3 of whomsoever they
are
found.
[4H; SC, E-F; 6B-C, HJ
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CRIMINAL APPELLATE JURISDICTION:
Criminal
Appeals
Nos. 192 of 1961 and 183 of 1962.
Appeals from the judgment and orders dated August
11,
1961 of the Calcutta High Court in Criminal Appeals Nos. 360
of 1959 and 345 of 1959 respectively.
WITH
Criminal Appeals Nos. 41 of 1964 and 42 of 1964.
Appeals by special leave from the judgment and orders dated
March 25, 1963 of the Bombay High Court in Criminal Appeals
Nos. 1640 of 1962 and 1359 of 1962 respectively.
Niren De, Additional Solicitor-General, D. R. Prem,
R. H.
Dhebar and B. R. G. K. Achar, for the appellant (in Cr. As. Nos.
D
192 of 1961 and 183 of 1962).
D.R. Prem, R.R. G. K. Achar, Yogeshwar Prasad, for appellant (in Cr. As. Nos. 123 of 1962 and 41 and 42 of 1964).
S. C. Mazumdar, for respondent No. 1 (in Cr. A. No. 123 of
1962).
P. K. Chatterjee and S. P. Varma, for respondent No. 1 (in
Cr. A. No. 123 of 1962).
B. M. Mistry, P. R. Vakil, J. B. Dadachanji, 0. C. Mathur
and Ravinder Narain, for respondent (in Cr. A. No. 41of1964).
B. R. Agarwala and H.K. Puri, for respondent (in Cr. A. No.
F
42 of 1964).
P. R. Vakil, B. M. Mistry, J. B. Dadachanji, for the interveners (in Cr. A. Nos. 41and42 of 1964).
SUBBA RAo J. delivered a dissenting Opinion. The Judgment of
WANCHOO SHAH, S!KRI and RAMASWAMI JJ. was delivered by
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WANCHOO J.
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Subba Rao, J.
I regret my inability to agree on the construction of s. 167 (81) of the Sea Customs Act, 1878. The facts have
been stated by my learned brother, Wanchoo, J., and I need not
restate them.
Clause ( 81) of s. 167 of the Sea Customs Act reads :
"If any person knowingly, and with intent to defraud
the Government of any duty payable thereon, or to
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evade any prohibition or restriction for the time being in
A
force under or by virtue of this Act with respect thereto
acquires possession of, or is in any way concerned in
carrying, removing, depositing, harbouring, keeping or
conceaJ.ing or in any manner dealing with any goods
which have been unlawfully removed from a warehouse
or which are chargeable with a duty which has not been
B·
paid 9r~ with respect to the importation or exportation of
which any prohibition or restriction is for the time being
in force as aforesaid"; ............. .
The penalty clause thereof reads : "such person shall on conviction
before a Magistrate be liable to imprisonment for any term not
C
exceeding two years or to fine, or to both". This clause introduces
a criminal offence. It is triable by a Magistrate. The person convicted is liable to imprisonment for a term not exceeding two
years or to fine or to both.
The rule of construction of such a
clause creating a criminal offence is well settled.
The following
passage from the judgment of the Judicial Committee in The
D,
Gauntlet(') may be quoted :
"No doubt all penal statutes are to be construed
strictly, that is to say, the court must see tliat the thing
charged as an offence is within the plain meaning of the
words used, and must no( strain the words on any notion
that there has been a slip, that there has been a casus
omissus that the thing is so clearly within the mischief
that it must have been intended to be included, and would
have been included if thought of.
On the other hand,
the person charged has a right to say that the thing
charged, although within the words, is not within the
spirit of the enactment. But where the thing is brought
within the words and within the spirit, there a penal
enactment is to be construed, like any other instrument,
according to the fair commonsense meaning of the
language used, and the court is not to find or make any
doubt or ambiguity in the language of a penal statute,
where such doubt or ambiguit)! would clearly not be
found or made in the same language in any other instrument."
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G
The clause, therefore, must be construed strictly and it is not
open to the court to strain the language in order to read a casus
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omissus. The court cannot fill up a lacuna : that is the province
(I} (1872) L.R. 4 P.C. 184, 191.
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COLLECTOR OF CUSTOMS v. SITARAM (Subba Rao, J.)
5·
A of the Legislature.
The second rule of construction equally well
settled is that a court cannot construe a section of a statute with
reference to that of another unless the latter is in pari materia
with the former.
It follows that decisions made on a provision
of a different statute in India or elsewhere will be of no relevance
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unless the two statutes are in pari materia. Any deviation from
this rule will destroy the fundamental principle of construction,
namely, the duty of a court is to ascertain the expressed intention.
of the Legislature. I am led to make these general remarks, as
an attempt was made by the learned counsel for the appellant to
persuade us to interpret the words of the. clause in the light of
the decisions of the English courts on an analogous provision in
an Act intended to prevent smuggling. It is not possible to state
that the English and the Indian Acts are in pari materia, though
their general purposes are the same and though there is some·
resemblance in the terminology used in them. The English decisions, therefore, must be kept aside in construing the relevant provisions of the Indian statute.
Now coming to the relevant clause, the following material'
ingredients constitute an offence thereunder : (I) a person must
have a knowledge that there is a prohibition or restriction against
doing any of the enumerated acts with respect to goods imported
or exported contrary to the restriction or prohibition imposed
against their import or export; (2) he must have acted with all'
intention to evade such a restriction or prohibition; there is no
offence unle5s the said two elements of mens rea, namely, know-·
ledge and intention, are established. It is not enough if a person
has only knowledge of such a prohibition or restriction; in addition he shall have the intention to evade such a prohibition or restriction against the import or export of goods, as the case may
be. A person who knowingly purchases smuggled goods from an
importer cannot have an intention to evade a provision against
import, for the prohibited goods have already been imported. A
person who receives goods with the knowledge that they are stolen·
goods cannot possibly have an intention to commit theft, for the
theft has already been committed, though he may have the intention to receive the stolen goods. Knowledge of an offence cannot
be equated with an intention to commit the offence.
Such a
construction effaces the distinction between the two distinct
elements of mens rea, knowledge and intention, laid down in the
clause.
The only possible way out of the inevitable effect of the plain
words used in the said clause is to give a meaning to the expres-
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sion "import" which that word cannot bear.
To accept .the
argument of the learned counsel for the appellant is to hold that
the process of import continues through innumerable transactions
between different persons without reference to time or place and
whether the goods existed or ceased to exist.
Ordinarily the
process of import commences the moment the goods cross the
customs barrier. That is the meaning given to that word by this
Court in /. V. Gokal & Co. v. Assistant Collector or Sales-Tax(').
But the said clause gives that expression a wider meaning.
The
enumerated dealings with the goods prohibited or restricted covered
a field beyond the point of import normally understood by that
expression. But all the said dealings have an intimate nexus with
the import of goods under the Act.
Goods may be imported
through the machinery provided under the Act; yet, a person
ma~ evade the restrictions by fraud or otherwise.
Goods may
also be illegally imported into India outside the machinery so
provided.
This is done stealthily at different points of the vast
sea line of our country. But in either case different persons may
take part in carrying, removing, depositing, harbouring, keeping
or concealing or in any other manner dealing with any goods so
imported.
They are the necessary acts to complete the process
of import.
Such acts may be done by persons between whom
there was a pre-arranged plan before the goods were brought into
India. Different persons may also take part in such dealings with
the requisite knowledge or intention for the purpose of completing
the import vis-a-vis the importer. Under the said· clause, therefore, the process of import does not end immediately the prohibited goods are brought into India, but continues till the goods
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are delivered to the importer, physically or constructively.
The
importer who smuggles the goods is certainly guilty under the F
clause, because he imports them in derogation of the prohibition
.<Jr restriction. Any person who deals with the goods in the context
of the import as explained above in any one of the connected ways
with the requisite knowledge and intention would equally be guilty
G
<Jf the offence. But the subsequent transactions in regard to the
said goods a!e outside the process of the enlarged definition of the
expression "import". It would be incongruous to hold that a
purchaser from the importer or a purchaser from the said purchaser, and so on, has an intention to evade the prohibition or
restriction, though he may have the intention to receive the
smuggled goods .. How does such a purchaser evade the prohibition against import which has already been affected ?
The H
contrary construction will lead to the anomaly of a purchaser,
.(1) [1960]2 S.C.R. 852, 857, 858.
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COLLECTOR OF CUSTOMS v. SITARAM (Wanchoo, !.)
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even after 20 years of the import, being attributed the intention:
to evade the prohibition against import. Suppose before the purchase of the goods by a stranger the prohibition was lifted.
Jn,
such a situation, does the purchaser commit an offence ? If the
contention is sound, he does. This illustrates that the crux of
the offence is the import of goods with the requisite intent contrary to the prohibition.
For the said reasons the intention to·
contravene the prohibition cannot be imputed to subsequent.
dealers in the said goods after the importer parts with them.
It is said that if the construction suggested by the learned.
counsel for the appellant be not accepted, many a person who·
purchases smuggled goods will escape punishment.
A fair read-·
ing of the Act discloses that the Act makes a distinction between
a customs offence and a criminal offence.
The smuggled goods
in the hands of whomsoever they are found can be confiscated
and, therefore, the State can always trace the smuggled goods
to their ultimate destination. The smuggler and the persons concerned in the smuggling are guilty of both customs and criminal
offences.
The Legislature, either intentionally or otherwise, has
not made the dealings in such goods by persons other than those
mentioned in cl. 81 of s. 167 of the Sea Customs Act a criminal
offence.
When the clause does not bring them in, the court
cannot, by construction, bring such a class of persons within the
said clause. It is for the Legislature to do so and we are told
that it has recently amended the section.
I, therefore, agree with the High Court that it has not been
established that the respondents have dealt with the goods with
an intention to evade any restriction or prohibition imposed on·
the import of the said goods.
In the result, all the appeals should be dismissed.
Wanchoo, J.
These two appeals on certificates granted by the
G Calcut!a High Court arise out of the same trial of the two respondents for an offence under s. 167 (81) of the Sea Customs Act,
No. 8 of 1878, (hereinafter referred to as the Act) and will be
dealt with together. The facts are not in dispute and have been
found as below.
On August 25, 1958, a constable attached to the Detectiv~
H
Department, noticed Sitaram Agarwala respondent and another
person at the crossing of Hariram Goenka street and Kalakar
street.
The constable had certain information with respect to·
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·these persons and decided to follow them.
These two persons got
into a bus and the constable also boarded the same bus.
They
got down at the junction of B. K. Pal Avenue and J. M. Avenue
and so did the constable. They then went to Narendra Dev Square
which is a kind of park.
The constable kept watch over them
Jrom a distance.
After a short time these two men came out of
the park and stood on the western foot-path of J. M. Avenue .
. Shortly thereafter a small taxi came there from the South and
stopped.
Respondent Wang Chit Khaw (hereinafter referred to
.as the Chinese accused) was in that taxi.
He came down and
shook hands with Sitaram Agarwala and the three got into the
taxi. When the taxi was about to start, the constable disclosed his
identity to the driver and asked him to stop.
He also asked the
three persons to accompany hiin to the thana.
Thereupon Sitaram Agarwala and the other man who was with him came out
.of the taxi and tried to run away.
The constable caught hold
of them and put them in the police wagon which happened to
come up just then. The Chinese accused also tried to run away.
The constable appealed to the members of the public to help him
'in securing the Chinese accused and he was secured with the
help of two college students and one other youngman.
As the
.,Chinese accused was running away he threw away three packets
which were picked up.
In the meantime Sergeant Mukherjee
came there on a motor-cycle from the opposite direction and
·detained the Chinese accused.
The three packets thrown away
by him were also handed over by the three youngmen to the
Sergeant.
Thereafter all the three persons who were arrested
were taken to the police station along with the three packets.
It was found in the police station that the three packets contained
23 gold bars of about sixteen tolas each with Chinese inscription
·thereon.
On search of the person of Sitaram Agarwala, a sum
of Rs. 49,320 in notes of various denomi.nation was found on him.
·The Customs authorities were informed and took charge of the
gold bars.
Eventually, the gold bars were confiscated under
s. 167 ( 8) of the Act and thereafter the police after investigation
prosecuted the two respondents and the third man in respect of
·the offence under s. 167(81) of the Act.
These facts were held to be proved by the Magistrate so far
·as the Chinese accused and Sitaram were concerned.
He therefore convicted them.
The case against the third man was held
to be doubtful and he was acquitted.
Two convicted persons
then filed separate appeals in the High Court.
The High Court
·accepted the findings of fact recorded by the learned Magistrate
: and came to the conclusion that on the facts proved there was
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COLLECTOR OF CUSTOMS v. S!TARAM (Wanchoo, J.)
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A no doubt that Sitaram had gone with a large sum of money to
meet the Chinese accused in order to purchase the gold bars which
had been recovered from the packets thrown away by the Chinese
accused.
B
The High Court then addressed itself to the question whether
on the facts proved the conviction of the two respondents could
be sustained in Jaw.
The charge against Sitaram Agarwala was
that on the date in question and at; the time and place which
appeared in the evidence he had gone there by previous arrangement to purchase the smuggled gold bars from the Chinese
accused and was therefore concerned in dealing with smuggled
C
gold and thereby committed an offence under s. 167 ( 81) of the
Act.
The charge against the Chinese accused was that he had
in his possession 23 smuggled gold bars which he wanted to sell
to Sitaram Agarwala and another person by previous arrangement and as such he was concerned in dealing with smuggled
gold and was guilty under s. 167(81) of the Act.
So far as
D
Sitaram Agarwala was concerned, the High Court held that by
merely going to the park in order to purchase smuggled gold by
previous arrangement, it could not be said that Sitaram Agarwala
was in any manner dealing with smuggled gold. The High Court
was of the view that there was a mere attempt to purchase
E
smuggled gold on the part of Sitaram Agarwala, but as the purchase was not completed it could not be said that Sitaram Agarwala was concerned in dealing with the smuggled gold.
The
High Court therefore .ordered the acquittal of Sitaram Agarwala,
respondent. As to the Chinese accused, the High Court held that
though be was found in possession of smuggled gold, which he
F
knew t.o be such, and had attempted to sell that gold surreptitiously, s. 167 ( 81) required knowledge that the article in question was smuggled and intention to defraud the Government of
any duty payable thereon or to evade any prohibition or restriction for the time being in force under or by virtue of the Act.
G
H
In view of the intent necessary, the High Court was of the view
that before a person could be convicted under s. 167(81) it must
be shown that he was either a direct importer or concerned in
some way in the import of the smuggled article. In other words,
the High Court thought that the section dealt with goods while
they were being smuggled; it did not include in its scope a person
who subsequently obtained the smuggled goods and then dealt
with them, though the smuggled goods themselves might be liable
to confiscation when seized.
Consequently, the High Court
ordered the acquittal of the Chinese accused also.
As the inter-
IO
SUPREME
COURT
REPORTS
[1966]"2 S.C.R.
pretation of s. 167(81) was involved, the High Court granted
A
certificates; and that is how the two appeals have come up before
us.
The facts are not in dispute in this case and have been set out
above. Thus the question that arises before us is the interpretation of s. 167(81) and two aspects of that section have to be
B
considered.
The first aspect is the ambit of the words "in any
way concerned in or in any manner dealing with any goods with respect to the importation of which any prohibition or restriction is for
the time being in force as aforesaid". The second aspect is with
respect to the intent necessary under the section and whether that
intent can arise where smuggling is over and smuggled goods are
C
in the possession of persons other than those actually concerned
in the smuggling and are then dealt with by them in some manner
or other.
We may briefly indicate the scheme of the Act in order to
appreciate the purpose behind s. 16.7(81 ). The object of the
D
Act is to provide machinery for the collection inter a/ia of import
duties and for the prevention of smuggling.
With that object
customs frontiers are defined, (Ch. I); Customs officers are
appointed with certain powers, (Ch. II); ports, wharves, customhouses, warehouses and boarding and landing-stations are provided for, (Ch. III); prohibitions and restrictions of imports and
E
exports are envisaged, (Ch. IV); levy of and exemption from
custom duties and the manner in which it has to be done is provided, (Ch. V); drawbacks, i.e., refunds are provided in certain
circumstances, (Ch. VI); arrival and departure of vessels is controlled, (Ch. VII and Ch. VIII); provision is made for the discharge of cargo, (Ch. IX), and clearance of goods for home conF
sumption (Ch. X); provision is also made for warehousing and
transhipment, (Chapters XI, XII); provisions are also made for
exportation or shipment and re-landing (Ch. XIII); special provisions have been made relating to spirit (Ch. :((IV) and coasting
trade (Ch. XV). Then comes Ch. XVI dealing with offences
and penalties.
Offences enumerated in Ch. XVI are of two
G
kinds; first there are contraventions of the Act and rules thereunder which are dealt with by Customs officers and the penalty
for which is imposed by them.
These may be compendiously
called customs offences. Besides these there are criminal offences
which are dealt with by Magistrates and which result in conviction
H
and sentence of imprisonment and/ or fine.
These two kinds of
offences have been created to ensure that no fraud is committed
in the matter of payment of duty and also to ensure that there is
t
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' COLLECTOR OF CUSTOMS v. SITARAM (Wanchoo, J.)
11
A no smuggling of goods, without payment of duty or in defiance
of any prohibition or restriction imposed under Ch. IV of the Act.
c
D
E
F
G
H
It is necessary for our purpose to set out two provisions . of
s. 167 which is in Ch. XVI. These ares. 167(8) and-167(81).
Section 167 (8) is in these terms:-
"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 same with reference
to such offences respectively :-
Offences
Section of
this Act
to which
offence
has reference
Penalties
-----·--·--·------------------
(I)
(2)
"(8) If any goods, the importa18 & J 9
tion or exportation of which is
for the tin1e being prohibited or
restricted by or under Chapter
IV of this Act, be imported into
or exported from India contrary
to such prohibition or restriction;
or
Etc.
Etc.
(3)
such goods shall be liable to confiscation; and
;:tny person concerned in any suc!1
offence shall be liable to a penalty not exceeding three times the
value of the goods, or not exceeding one thousand rupees."
Section 167(81) with which we are particularly concerned reads
thus:
"'(81). If any person knowingly, General
and with intent to defraud the
Government of any duty payable
thereon, or to evade any prohibition or restriction for the time
being in force under or by virtue
of this Act with respect thereto
acquires possession of, or is in
any way concerned in carrying,
removing, depositing, harbouring, keeping or concealing or
in any manner dealing with any
goods which have been unlawfully removed from a warehouse
or which are chargeable with a
duty which has not been paid or
with respect to the importation
or exportation -of which any prohibition or restriction is for the
time being in force as af.:>rcsaid;
or
such person shall on conviction
h;:fore a M:igistrate be liable to
in1prisonmcnt for any term not
exceeding l\vo years or to fine,
or to both;
----·------ ---·-------- _, ----
L!Sup. C.I./66-2
"
12
SUPREME COURT REPORTS
I
[1966] 2 S.C.R.
It will be seen that s. 167(8) deals with what we have called
A
customs offences whiles. 167(81) deals with criminal offences.
It is well-settled by the decisions of this Court that goods which
have been imported against the prohibition or restriction imposed
under Ch. IV of the Act are liable to confiscation at any time
after import and this liability extends even in the hands of third
persons who may not have had anything to do with the actual
B
import. So long as it is proved that the goods had been imported
against the restrictions imposed under Ch. IV, the goods remain
liable to confiscation whenever found even if this is long after the
import is over and even if they are in possession of persons who
had nothing to do with the actual import. It is also well-settled
by the decisions of this Court that the second part of the penalty C
relating to any person applies only to a person concerned in the
importation or exportation of the goods and does not apply to a
person found in possession of the smuggled goods who had nothing
to do with the importation or exportation thereof: (see Shivanar«yan Mahato v. Collector of Central Excise and Land Customs(').
The main contention of the respondents which has found favour
with the High Court was that s. 167(81) when it deals with
persons and subjects them to imprisonment and fine on conviction
D
by a Magistrate is also concerned with persons who are in some
way or other actually concerned in the import and has no application to third persons who had nothing to do with the actual E
import but might have come in possession of smuggled goods
even knowingly after they had been smuggled. Before however
we consider this contention which has found favour with the
High Court we should like to dispose of the other contention
which was raised on behalf of Sitaram Agarwala and which also
found favour with the High Court. It will be seen thats. 167(81)
F
deals with persons who do certain things with the knowledge and
intent therein specified and one such person with whom that provision deals is a person who is in any way concerned in or in any
manner dealing with any goods with respect to importation of
which any prohibition or restriction is for the time being in force.
The High Court has held on the facts in this case that Sitaram
G
Agar\vala cannot be said to have be.en concerned in or in any manner dealing with prohibited goods inasmuch as he was merely negotfating with the Chinese accused for their purpose but the deal had
not been concluded.
The view which found favour with the
High Court thus was that if the deal had been completed, Sitaram
Agarwala could be said to have been concerned in dealing with
H
the prohibite'd goods but as the deal was not completed and he
(I) C.A. 288 of 1964, decided on 14-8-65.
•
A
B
l )
c
D
E
F
G
i
H
COLLECTOR OF CUSTOMS v. SITARAM (Wanchoo, J.)
was merely attempting to purchase the goods it could not be said
that he was in any way concerned in or in any mariner dealing with
them. We are of opinion that the view taken by the High Court
is not correct. The words "in any way concerned in or in any
manner dealing with prohibited goods" are of very wide import.
It is neither desirable nor necessary to define all manner of connection with the prohibited goods which might come within the
meaning of the words "in any way concerned in or in any manner
dealing with such goods". It will depend on the facts found in
each case whether it can be said that any person was concerned
in dealing with such goods. We shall therefore confine ourselves
to the facts of the present case and see whether on these facts
it can be said that Sitaram was in any way concerned in or in any
manner dealing with the goods.
Now the evidence which has
been accepted by both the courts is that Sitaram had gone with
a large sum of money to purchase the gold which was known to
be smuggled and to have o~en imported into India against the
restrictions imposed on the 'import of gold.
It has also been
proved that Sitaram did so after previous arrangement with the
Chinese accused. If the constable who was following Sitaram had
not interfered the deal would have gone through and Sitaram
would have paid the money and purchased the smuggled gold.
This was a case therefore where by means of previous arrangement with a person in possession of a smuggled article, the intending purchaser had gone to purchase it and the deal did not go
through only because the police intervened. In such circumstances
where by previous agreement or arrangement a person goes to
purchase an article which he knows to be smuggled it would in
onr opinion be a case where such a person must be held to be
concerned in dealing with the prohibited goods. Where_ a person
does any overt act in relation to prohibited goods which he knows
to be such and the act is done in consequence of a previous
arrangement or agreement it would in our opinion be a case
were the person doing the act is concerned in dealing with the
prohibited goods.
In other words aμy transaction relating to prohibited goods which is done or attemP,ted to be done after some
kind of prior arrangement or agreement would in our opinion
clearly amount to the person being concerned in dealing with
the prohibited goods. Both the words "concerned" and "deal" have
a wide connotation. The words "concerned in" mean "interested in,
involved in, mixed up with" while the words "deal with" mean "to
have something to do with, to concern one-self, to treat, to make
arrangement, to negotiate with respect to something". Therefore
when a person enters into some kind cf transaction or attempts to
14
SUPREME COURT REPORTS
[1966] 2 S.C.R.
· -enter into some kind of transaction with respect to prohibited A
goods and it is clear that the act is done with some kind of prior
arrangement or agreement, it must be held that such a person is
concerned in dealing with prohibited goods.
The fact that the
act stopped at an attempt to purchase as in the present case when
the police intervened does not in any way mean that Sitaram was
not concerned in dealing with the smuggled gold.
The evidence B
shows that there must have been a previous arrangement with the
Chinese accused to purchase the smuggled gold.
Sitaram went
to the appointed place and met the Chinese accused surreptitiously and had a large -sum of money with him to pay for the
gold.
He had sat down with the Chinese accused in the taxi
and there is no doubt that if the taxi had not been stopped, the
C
transaction for the purchase of the smuggled gold would have
gone through. In these circumstances even though Sitaram had
not come into actual possession of the smuggled gold before the
police intervened, there is no doubt that he was concerned in
dealing with prohibited goods. We are therefore of opinion that
the High Court was in error in holding simply because the purD
chase was not complete that Sitaram was not concerned in dealing with the smuggled gold which was found with the Chinese
accused.
The acquittal of Sitaram on this ground must therefore be set aside.
This brings us to the main question which arises in the present E
appeal, namely, what is the intent required jn a case coming under
s. 167 ( 81) and whether such intent can be said to arise at all
in a case where the import is complete and the prohibited goods
are in the possession of a third person who had nothing; to do
with the import. For this purpose we shall refer to that part of
s. 167 ( 81) which deals with the acquisition of possession of F
prohibited goods and what we say about that part will equally
apply to the other parts of s. 167(81). We may add that we
are dealing here with the first half of s. 167 ( 81) and not 'with
· the second half. This part of s. 167 ( 81) which we have taken
for the purpose of finding out what is the knowledge and intent
that s. 167 (81) requires would run thus : "If any person knowG
ingly, and with intent to defraud the Government of any duty
payable thereon, or to evade any prohibition or restriction for the
time being in force under or by virtue of the Act with respect
thereto acquires possession of any goods with respect to which
duty has not been paid or with respect to the importation of
which any prohibition or restriction is for the time being in force."
H
The argument which has found favour with the High Court is
that the section requires knowledge on the part of the accused
..
"
.....
.. ~
~
I~
,
,.
COLLECTOR OF CUSTOMS v. SITARAM (Wanchoo, /.)
15
A that the goods were imported against the prohibition or restriction in force.
This is undoubtedly so.
The section further
requires that the person who has this know ledge should also have
the intention either to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the
time being in force under or by virtue of the Act. Mere knowB ledge that the goods are prohibited goods or goods on which
duty has not been paid would not be enough; the section further
requires that there should be an intent to defraud the. Government of the duty payable or to evade any prohibition or restriction. The argument on behalf of the respondents which has been
accepted by the High Court is that once the goods have evaded
C the payment of duty or have evaded the prohibition or restriction
with respect to their import and the smuggling whether of dutiable or prohibited goods is complete, a third person who comes
into possession of such goods thereafter and who had nothing to
do with the smuggling itself cannot be said to have the intent to
defraud the Government of any duty payable (for such defraudD
ing had already taken place) or to evade any prohibition or restriction (for such prohibition or restriction had already been
evaded). In effect, the argument is that this part of s. 167 ( 81)
corresponds to s. 167 ( 8) where a person has to be concerned
in the actual importation before he can be liable to a penalty.
E
Now if the intention of the legislature was that the person
guilty under s. 167 ( 81) could only be a person who was concerned in some way Qr other with the actual importation or
exportation it would have been easy for it to use the same words
ins. 167(81) as were used in the first part of s. 167(8). But
F
the legislature has not done so and the question is whether the
words used ins. 167(81) have a different meaning from those
used ins. 167(8). Whats.