# PIONEER TRADERS AND OTHERS v. CHIEF CONTROLLER OF IMPORTS AND EXPORTS PONDICHERRY

- **Citation:** [1963] Supp. 1 S.C.R. 349
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** B. P. SrnHA, P. B. Gajendragadkar, K. N. Wanchoo, K. C. Das Gupta, ]. C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/pioneer-traders-and-others-v-chief-controller-of-imports-and-exports-pondicherry-2714
- **Pages:** 33

## Headnote

French
Establishments-Administrative integration with
India-Confiscation of goods imported and imposition of penalty
in the alternative-Petition in enforcement of fundamental rights--
Maintainability-Constitution of India, Arts. 19 (1) (f), .12French Establishments (Application of Laws)
Order, 1%4,
8. R. 0. 3315, para 6-Sea C1wfom8 Act, 1878 (8 of 1878),
s. 67 (8)-Import< and EJ<ports (Control)
Act, IM7 (JR rif
1947), s. 3 (2).
The petitioners, on patrnfP,s issued to then1 hy the French
Ad1ninistration, imported goods to Pondicherry after its adnti~
nistration had been taken over by the Union of India on
November 1, 1954. They had placed orders for the imports in
England before
August 1.5, 195-1-,
after acquiring forf'ign
exchange by modes approved by the French .:\dn1inistration.
Before the goods arrived in Pondicherry, the Govermnent of
India had issued S. R. 0. 3315 under s. 4 of the Foreign
Jurisdiction 1\ct, 1947. By this notification the Sea Customs
Act, 1878, the Imports and Exports (Control) Act, 1947, and
various other Acts mentioned in the schedule were extended to
French Establishments.
l~y a
pre~'> communique issued by the
Government of India, French licen<>c-holders were asked to apply
to the (~ontroller of Imports and l~xports for validation of their
licences before the shipping of goods.
i\s it was too late for
the petitioners to stop shipment, they applied to the Controller
for the validation of their authoris:ition but this 'vas refused and
the goods arrived after November l,
1954.
The Collector
confiscated them under s. 167 (8) of the Sea Customs Act 1878
read with s __ 3(2) of the !mp?rts and Exports (Control) Act,
1947, and imposed penalties m the alternative for clearing
them. The petitioners preferred appeals to the Central Board
of Revenue on the basis of para 6 of S. R. 0. 3315 but the
Bo~r~ dismisserl the appeals reducing the penalties.
Revision
pet1t!ons made to ~l;e Gove~nment ?f India were also rejectc<l.
Relying on the dec1s10n of this Court mN:essrs Universal Imports
Agency v. The Chief Controller of Import8 and EJ:ports that
para 6 of S. R. 0. 3315 had the effect of protecting the imports
"1962
September, 27.
1962
Pioneer Traders
v.
350 SUPREME COURT REPORTS [1963] SUPP.
Chit/Controller of
Imports and ExPorls
Pondiche"y
made in similar circumstances such as in the present cases, the
petitioners came up to this Court under Art. 32 of the Constitution for enforcement of their fundamental rights under Art. 19
( 1) (f). A preliminary objection to the maintainability of the
writ petitions was taken on behalf of the Union of India on
basis of the decision of this Court in Smt. Ujjarnbai v. The
Stat,, of Uttar Pradesh.
Held (per Sinha, C. ]., Gajendragadkar, Wanchoo and
Shah,JJ.), that the decision of this Court in Ujjamba1'.'s case
applied and the petitions under Art. 32 must fail. The questions
that were raised in U1)'ambai's case not having been raised in
the case of Messrs Universal Imports Agency this Court had no
occasion to consider in the latter case whether the quasi-judicial
authority in that case had jurisdiction to decide the matter.
The petitioners could not, therefore, get out of the decision in
Ujjambai's case on the ground that the tax authorities in the
present cases had no inherellt jurisdiction to do so.
The observations of Das,]., and Kapur J., in Ujjamhai's
case with regard to Messrs Universal A.qency's case must be held
to be per incuriam.
M/s. Universal Imports Agency v. The Chief Controller of
Imports and Exports, [1961 J 1 S. C. R. 305, discussed.
Smt. Ujjambai v. The Stat< of Uttar Prailes/1, (1963]
I S.C.R 778, explained and applied.
Kailash Nath v. State of U. P., A. I. R. ( 19.17) S. C. 790,
referred to.
Paragraph 6 of S. R. 0. 3315, properly construed, must
be deemed to have been inserted in each one of the Acts mentioned in the Schedule and in the Sea Customs Act to have
taken the place of original s. 2 of that Act. There was t hercfore
no scope for the contention that Uj

## Text

_Characters 0–39,913 of 68,611. This is a partial read: ask again with offset=39913 for what follows._

1 S.C.R. SUPREME COURT REPORTS
349
PIONEER TRADERS AND OTHERS
v.
CHIEF CONTROLLER OF IMPORTS AND
EXPORTS PONDICHERRY
(B. P. SrnHA, C. ]., P. B. GAJENDRAGADKAR, K. N.
WANCHOO, K. C. DAS GUPTA and]. C. SHAH, JJ.)
French
Establishments-Administrative integration with
India-Confiscation of goods imported and imposition of penalty
in the alternative-Petition in enforcement of fundamental rights--
Maintainability-Constitution of India, Arts. 19 (1) (f), .12French Establishments (Application of Laws)
Order, 1%4,
8. R. 0. 3315, para 6-Sea C1wfom8 Act, 1878 (8 of 1878),
s. 67 (8)-Import< and EJ<ports (Control)
Act, IM7 (JR rif
1947), s. 3 (2).
The petitioners, on patrnfP,s issued to then1 hy the French
Ad1ninistration, imported goods to Pondicherry after its adnti~
nistration had been taken over by the Union of India on
November 1, 1954. They had placed orders for the imports in
England before
August 1.5, 195-1-,
after acquiring forf'ign
exchange by modes approved by the French .:\dn1inistration.
Before the goods arrived in Pondicherry, the Govermnent of
India had issued S. R. 0. 3315 under s. 4 of the Foreign
Jurisdiction 1\ct, 1947. By this notification the Sea Customs
Act, 1878, the Imports and Exports (Control) Act, 1947, and
various other Acts mentioned in the schedule were extended to
French Establishments.
l~y a
pre~'> communique issued by the
Government of India, French licen<>c-holders were asked to apply
to the (~ontroller of Imports and l~xports for validation of their
licences before the shipping of goods.
i\s it was too late for
the petitioners to stop shipment, they applied to the Controller
for the validation of their authoris:ition but this 'vas refused and
the goods arrived after November l,
1954.
The Collector
confiscated them under s. 167 (8) of the Sea Customs Act 1878
read with s __ 3(2) of the !mp?rts and Exports (Control) Act,
1947, and imposed penalties m the alternative for clearing
them. The petitioners preferred appeals to the Central Board
of Revenue on the basis of para 6 of S. R. 0. 3315 but the
Bo~r~ dismisserl the appeals reducing the penalties.
Revision
pet1t!ons made to ~l;e Gove~nment ?f India were also rejectc<l.
Relying on the dec1s10n of this Court mN:essrs Universal Imports
Agency v. The Chief Controller of Import8 and EJ:ports that
para 6 of S. R. 0. 3315 had the effect of protecting the imports
"1962
September, 27.
1962
Pioneer Traders
v.
350 SUPREME COURT REPORTS [1963] SUPP.
Chit/Controller of
Imports and ExPorls
Pondiche"y
made in similar circumstances such as in the present cases, the
petitioners came up to this Court under Art. 32 of the Constitution for enforcement of their fundamental rights under Art. 19
( 1) (f). A preliminary objection to the maintainability of the
writ petitions was taken on behalf of the Union of India on
basis of the decision of this Court in Smt. Ujjarnbai v. The
Stat,, of Uttar Pradesh.
Held (per Sinha, C. ]., Gajendragadkar, Wanchoo and
Shah,JJ.), that the decision of this Court in Ujjamba1'.'s case
applied and the petitions under Art. 32 must fail. The questions
that were raised in U1)'ambai's case not having been raised in
the case of Messrs Universal Imports Agency this Court had no
occasion to consider in the latter case whether the quasi-judicial
authority in that case had jurisdiction to decide the matter.
The petitioners could not, therefore, get out of the decision in
Ujjambai's case on the ground that the tax authorities in the
present cases had no inherellt jurisdiction to do so.
The observations of Das,]., and Kapur J., in Ujjamhai's
case with regard to Messrs Universal A.qency's case must be held
to be per incuriam.
M/s. Universal Imports Agency v. The Chief Controller of
Imports and Exports, [1961 J 1 S. C. R. 305, discussed.
Smt. Ujjambai v. The Stat< of Uttar Prailes/1, (1963]
I S.C.R 778, explained and applied.
Kailash Nath v. State of U. P., A. I. R. ( 19.17) S. C. 790,
referred to.
Paragraph 6 of S. R. 0. 3315, properly construed, must
be deemed to have been inserted in each one of the Acts mentioned in the Schedule and in the Sea Customs Act to have
taken the place of original s. 2 of that Act. There was t hercfore
no scope for the contention that Ujjambai's case had no application inasmuch as no misconstruction of any provisions of the
Sea Customs Act was involved.
Held, further, that the order of a Custo1ns authority
imposing confiscation and penalty under s. 167 (8) of the Sea
Customs Act, 1878,.was a quasi~judicial order and the Custon1.'i
authorities had the duty to act judicially in deciding questions
of confiscation and penalty.
Leo Roy Frey v. The Superintenilent T!istricf .Jail, Amritsar,
(1958) S. C.R. 822, referred to.
Per Das Gupta, J .-If. the importations in the pres.ent
cases we1e made on the basts of contracts concluded before
1 S.C.R. SUPREMECOURT REPORTS
351
November 1 1954, the Sea Customs Act would have no appli·
cation becau'.se of para 6 of S. R. 0. 3315 as construed by this
Court in .M/s. Universal Agency's case and the customs authorities who derived their jurisdiction from that Act would have
no jurisdiction to make the orders they did, and so the present
petitions under Art. 32 of the Constitution would be maintainable.
An inferior tribunal could not give itself jurisdiction by
wrongly deciding a collateral fact.
Universal Imports Agency v. The Chief Controller of
Imports&; Export•, [1961]! S. C. R. 306, Smt. Ujjambai v.
The StaU of U. P., [1963] I S. C. R. 778, The State Trading
Corporation of India v. The State of Myso", [196313 S. C. R.
792 and Rex v. Shorerlitch As<es.1ment Committ•e, [1910] 2 K. B.
859, relied on.
Where a judicial or quasi-judicial authority had in law
no jurisdiction, the omission of the party to canvass that question before the authority could not also give it jurisdiction.
ORIGINAL JuRISDICTJON : Petitions Nos. 314 to
342 of 1961.
Petition under Art. 32 of the Constitution of
India for enforcement of Fundamental Rights.
N. C.
Chatterjee, R. Ganapathy Iyer, and G.
Gopalalcrishnan, for the petitioners.
C. K. Daphtary, Solicitor General of India,
B. R. L. Iyengar and R.H. Dhebar, for the respondents.
1962. September 27. The Judgment of Sinha,
C. ]., Gajcndragadkar, Wanchoo and Shah, JJ., was
delivered by Wanchoo, J., Das Gupta, J., delivered
a separate Judgment.
WANCHOO, ].-These twenty-nine petitions
under Art. 32 of the Constitution raise common questions and will be dealt with together. They have
been filed by two firms who obtained patentes to carry
on busine~s in Pondicherry in September, 1954, for
the first time.
As the facts in all the petitions are
similar, we shall only give the facts generally to understand the questions raised before us.
The two finns,
1962
Pioneer TraJJrs
v.
ChkfConlroller o.fa
Importr and F.xpor
Pondichtrry
1962
Pioneer Traders
v.
Chief Controller of
Imports and Exports
Pondicherr_v
352 SUPRE.ME COURT REPORTS [1963) SUPP.
it may be mentioned, did not carry on any business
in Pondicherry before September, 1954, when they
got a patente each and the proprietor of one of them
is a resident of New Delhi while the proprietor of the
other is a resident of Bombay.
The administration of Pondicherry was taken
over by the Union of India from November l, 1954.
Before that Ponclicherry was under the administration
of the Government of France and was a free port.
Import into Pondicherry was thus not subject to any
restriction, except with regard to certain goods with
which we are not concerned in the present petitions.
Any merchant desiring to carry on bussiness in the
territory of Pondicherry had however to obtain a
patente before he could do so. These patentes were
of five kinds one of which was a patente authorising
the trader to carry on the business of import of goods
other than those which were under restriction. Though
the importers were entitled by virtue of the patente
to import goods subject to certain restrictions, this
right could only be exercised by securing foreign
exchange which was subject to certain limitations and
was controlled by the Department of Economic Affairs at Pondicherry. There were two ways in which
foreign exchange could be acquired, namely, (i) at
the official rate through the Department of Economic
Affairs, or (ii) in the open market at such rate as
might be available; and both these ways were considered valid before November 1, 1954.
Further there
used to be authorisations for the purpose of import
and the authorisations indicated the limit within
which foreign exchange could be acquired either at
the official rate or through the open market.
The petitioners' case is that though the patentes
were secured in September, 1954;. orders for import
were placed before August 15, 1954. Thereafter
after authorisations had been obtained
from the
French authorities, foreign exchange was acquired in
the open market for ·the purpose of financing the
1 S.C.R. SUPREME COURT REPORTS
353
import. There were in all twenty-nine transactions
by ·the two firms, which are the subject-matter of
these petitions; and in certain cases advances were
paid, the balance being payable by means of bills of
exchange drawn on "documents against payment"
basis. But though the orders were placed before
August 15, 1954, and necessary foreign exchange had
also been secured in the open market later, shipments
could not be made because of an unexpected dock
strike in E,ngland and on the Continent and also for
want of shippmg space, and therefore most of the
consignments on the basis of the twenty-nine orders
were shipped after November 1, 1954, and only three
consignments out of twenty-nine could be shipped in
October, 1954, that is, before the administration of
Pondicherry was taken over by the Government of
India. The goods in all these cases arrived at Pondicherry after November 1, 1954. In the meantime,
the administration of Pondicherry was taken over by
the Government of India from November 1, 1954, in
pursuance of an agreement between the Government
of India and the Government of France, and two
notifications were issued by the Government of India,
namely, S. R. O's Nos. 3314 and 3315. By S. R. 0.
3315, which was made under s,4 of the Foreign Jurisdiction Act, No XLVII of 1947, the Sea Customs
Act, 1878, the Reserve Bank of India Act, 1934, the
Imports and Exports (Control) Act, 1947, the Foreign
Exchange Regulation Act, 1947, and the Indian Tariff
Act, 1934, were extended to Pondicherry. This S.R.O.
contained a saving clause which laid down that-
"Unless otherwise specially provided .in the
schedule, all laws in force in the French Establishments immediately before the commencement
of this Order, which correspond to the enactments specified in the Schedule, shall cease to
have effect, save as respects things done or
omitted to be done before such commencement."
1~2
Pioneer Traders
VChiefContr•l/lr of
Imports iDid Exports,
Pondichm-y
Wanchoo, J.
1962
Pionur Traders
v.
Chief ContTolkr of
Imports and Exports,
Pondicherry
Wanchoo,J.
354 SUPREME COURT REPORTS [1963] SUPP.
As a consequence of these two S. R. O's a press
communique was issued by the Government of India
on November 1, 1954, explaining the effect of these
notifications, in which it was stated that imports into
and exports from the French Establishments would be
regulated in accordance with the provisions of the
Imports and Exports (Control} Act, 1947. It was
further stated that as regards orders placed outside
the Establishments and finalised through grant of a
licence by competent French authorities in accordance
with the laws and regulations in force prior to
November 1, 1954, licence-holders were advised to
apply to the Controller of Imports and Exports for
validation of licences held by them. Licence-holders
were further advised not to arrange for shipment of
goods until the licences held by them had been
validated by the Controller of Imports and Exports.
In view of this press communique, the petitioners tried
to stop shipment until the authorisations held by them
were validated by the Chief Controller of Imports and
Exports, Pondicherry. But their suppliers told them
that this could not be done, as the goods were in the
course of shipment and it was too late to stop the
shipment. The petitioners then applied for validation
of the authorisations, but the Chief Controller of
Imports and Exports, Pondicherry refused to validate
them. The petitioners' case is that this refusal was
arbitrary. Eventually, when the goods arrived at
Pondicherry
after
November
1, 1954,
the
petitioners
approached the Collector of Customs
at Pondicherry to permit clearance of the goods.
They were not .• however, allowed to clear them,
and notices were issued to them to show cause why
the goods should not be forfeited on the ground that
the import had been made in contravention of the
Imports and Exports (Control) Act, 1947 and the Sea
Customs Act, 1878. The petitioners thereupon showed
cause and their case was that orders had been placed
before August 15, 1954, and the imports had been
;~ade strictly in accordance with the law in force in
l S.C.R. SUPREME COURT REPORTS
355
Pondicherry before November 1, 1954, and therefore
could not be said to be unauthorised. The Collector
of Customs however refused to accept this explanation
and ordered confiscation of the goods, and in the
alternative imposed penalties for clearing them. These
penalties amounted to over Rs. 64,000/· in the case of
one of the firms and over Rs. 96.000/- in the case of
the other firm. There were then appeals by the petitioners before the Central Board of Revenue against the
orders
imposing penalties.
These appeals
were
dismissed, -though the penalty was reduced to over
Rs.35,000/- in the case of one firm and Rs. 60,000/- in
the case of other firm.
The petitioners then went in
revision to the Government of India but their revisions
were rejected on January 23, 1957. It appears that
the petitioners paid the penalty though the date is not
clear from the petitions and cleared the goods. The
petitioners were apparently satisfied with the orders
passed against them for they took no steps to go to
Court after the revisions had been dismissed by the
Government of India in January, 1957, though they
say that they have been making representations to the
Government of India in that behalf without any effect ·
and that the last communication from the Government of India was received by them in this connection
in August, 1961.
In the meantime, certain importers of Pondicherry filed petitio!JS in this Court in 1959 challenging
the order of confiscation and the alternative order
imposing penalties on them by the Collector of Customs,
Pondicherry, in somewhat similar circumstances : (see
Messrs. Universal lrnports Agency v. The Chief Controller of Irnports and Exports(')). Those petitions were
decided on August 23, 1960 and this Court held that
in view of para. 6 of S. R. 0. 3315, already referred to,
which saved the effect of all laws in force in the French
Establishments immediately before the commencement
of the order even though those laws were repealed by
the order, with respect to things done or omitted to be
(I) (1961] I S.C.R.. :l05.
1962
Pionee1 Tratlns
v.
Chu/ Controller qf
rmports and Exports,
Pondiclurry
Wanehoo, J.
1962
Pion1er Traders
v.
356 SUPREME COURT REPORTS [1963] SUPP.
Chi•f Controller of
lmporlS and Exports,
Pondicherry
done before such commencement, the authorisations
granted by the French authorities before November 1,
1954, for import were sufficient to protect the goods
imported on the basis of those authorisations whether
the exchange was secured officially or from the open
market, from the operation of the Imports and
Exports (Control) Act, 1947, and other provisions to
the same effect. This view was taken on the ground
that para. 6 saved "things done" before November l,
1954 and as firm contracts had been entered into and
authorisations granted before November 1, 1954, the
subsequent arrival of goods in Pondicherry after
November 1, 1954,
as
the consequence of the
contracts and the authorisations was a "thing done"
under para. 6 of S.R.0. 3315.
It was held that the
words "things done" must be reasonably interpreted
and if so interpreted they not only meant things done
but also the legal consequence flowing therefrom.
Consequently, it was held that the imported goods in
those cases were not liable to confiscation under the
Imports and Exports (Control) Act and similar
provisions of any other law, as firm contracts had
been made before November 1, 1954 and exchange
had been arranged either officially or through the
open market in full or in part under authorisations
granted by the French Government, and the subsequent import after November 1, 1954 was a consequence of these things which had been done before
November 1, 1954 and was therefore protected by
para. 6.
In the result the penalty collected was
ordered to be refunded.
Wanchoo, J.
This decision was given in August 1960, and
it seems that after this decision, the petitioners wrote to
the Government of India in September, 1960, for
refund of penalties in their cases also; they were
informed in February, 1961, that no refund could be
made. The petitioners seem to have written again
to the Government of India in June, 1961, and to this
the Government of India gave a final reply in
-I
1 S.C.R.
SUPREME COURT REPORTS
357
August, 1961. Thereafter the present writ petitions
were filed in October, 1961. The petitioners rely on
the decision of this Court in Messrs. Universal Imports
Agency (1) and contend that they are entitled to refund
of penalty as their cases are exactly similar to the
case of Messrs. Universal Imports Agency. (1) They
pray for a writ, order or direction in the nature of
certiorari quashing the orders resulting in the imposition of penalty beginning with the orders of the
Collector of Customs Pondicherry, and ending with
those of the Government of India in" revision and
also for
a direction requiring the respondents to
refund to the petitioners the sum realised as penalty.
The petitions have been opposed on behalf of
the Union of India on a number of grounds. It is
however unnecessary for us to detail all the grounds
raised on behalf of the Union of India in view of an
objection that has been taken to the maintainability
of these petitions based on the decision of this Court in
Smt. Ujjamhai v. The State of Uttar Prarlesh.(') We
shall therefore refer only to such parts of the counteraffidavit filed on behalf of the Union of India as will
suffice to explain the preliminary objection raised on
its behalf.
The Union's case is that the talks for the de
fact,o transfer of the French-Indian Establishments to
the Government of India were resumed in August
1954, and that as a result of these talks, an agreement
dated October 20, 1954, between the Government of
India and the Government of France for the settlement of the CJ.Uestion of the future of the French
Establishments m India was arrived at.
Pursuant
to tliis agreement, the administration of the French
Establishments (including Pondicherry) was transferred
to the Government of India from November 1, 1954.
In consequence, the Government of India promulgated
two orders, namely, S. R. O's 3314 and 3315 on
October 30, 1954, to come into force from November
l, 1954. The first of these orders was known as the
pml961] 1 S.C.R. 305.
(2) [1963] I S. C. R. 77&.
1962
Pioneer Tradlr1
v.
Chief Controller of
Imports and &port,
Pondichtrry
Wan<hoo, J.
1962
Pionm Trad1rs
v.
Chiq Controllrr of
Imports and &ports,
Pongiclrcrr-,
-·-
Wanchoo,J.
358 SUPREME COURT REPORTS [1963] SUPP.
French Establishments (Administration) Order while
the second order was known as the French Establishments (Applications of laws) Order, 1954, by which
the Sea Customs Act, 1878, and the Imports and
Exports
(Control) Act, 194 7, and certain other
Acts were made applicable to the said settlements.
Some persons, including the petitioners, who had no
business in Pondicherry from before mala fide with
intent to defeat the laws in force in the Indian Union
which were legally to be extended to the French
Establishments when their administration was taken
over by the Government of India, managed to procure
some colourable documents on the strength of which
they claimed that they had placed firm orders with
foreign firms for import of goods which were restricted
under the Indian Import Control Regulations. After
the Government of India had applied S. R. O's 3314
and 3315 to the French Establishments and taken
over their administration from November l, 1954, a
press communique was issued on November l, 1954,
that orders placed outside the French Establishments
and finalised through a grant of licence by the competent French authorities in accordance with the laws
and regulations in force prior to November l, 1954
should be got validated by the Controller of Imports
and Exports appointed for Pondicherry. Further,
the licence-holders were advised not to arrange for
shipments of goods until the licences held by them
were validated. Later on January 5, 1955, the
Union of India issued another press communique in
view of certain representations received on the basis
of Art. 17 of the lndo-French Agreement and the
public was informed that import of goods against
open market transactions after November 1, 1954,
would
be treated as unauthorised. But having
regard to the hardship likely to be caused to genuine
importers who had placed orders in pursuance of
their normal trading operations against which goods
were in the normal course shipped by the suppliers
prior to the date of merger, the Collector of Cl!Stoms1
•
l S.C.R.
SUPREME COURT REPORTS
359
Pondicherry was being authorised to accord certain
concessions to genuine importers. One of these
concession was that goods shipped before November
l, 1954, but" ordered before August 15, 1954, would
be cleared without penalty irrespective of origin and
value. The petitioners tried to take advanta;;e of
this concession and therefore tried to show before the
Collector of Customs, Pondicherry that they had
placed firm orders before August 15, 1954, though
shipments could only be made in three cases before
November l, 1954, and were delayed in others
because of dock strik:e in England and in Continental
countries. This case was scrutinised by the Collector
of Customs and he pointed out in his order that
though the orders for ·.these goods are said to have
been placed before August 15, 1954, the two firms
could only start functioning in Pondicherry from the
month of September in which month they had
obtained patente for conducting business there le~ally.
The Collector also pointed out that in the ordmary
course of business, commitments were not made without entering into correspondence with the suppliers
regarding the prices, terms of payment etc., but in
these cases, the petitioners produced no such correspondence. It was also found that the petitioners had
not done any business of this kind even in the Indian
Union before·this. The Collector therefore held that
it had not been proved that the goods had in fact
been ordered before August 15, 1954, and therefore
ordered their confiscation and imposed penalty in
lieu thereof. The appeals of the petitioners to the
Central Board of Revenue failed except to the extent
that the penalty was reduced. The Board's order was
silent on the point whether the goods had in fact been
·ordered before August 15, 1954. But the Board held
that as. the goods were imported without licence at a
time when a licence was required for their import,
the appeal must fail. The petitioners then went in
revision to the Government of India but faileq
th~rc;
a~o.
1962
Pione~r Tra<Urs
v.
Chief Controller of
Imports and Exports
Pondicherry
Wanchoo, J.
1962
Pionar Traders
v.
Chi#f Controlkr of
rm,orts and Exports,
Pondic/urry
Wanchoo, J.
360 SUPREME COURT REPORTS [1963] SUPP.
The preliminary objection is that the orders imposing penalty are quasi-judicial orders passed by a
competent authority having jurisdiction under a taxing statute. It is not the case of the petitioners that
the statute under which the orders had been made
read with S.R.O. 3315of1954 is in any way ultra
vires.
The sole basis of these petitions is that para.
6 of S. R. 0. 3315 has been misconstrued by the
authorities concerned and thus a penalty has been levied which could not be levied if para. 6 had not been
misconstrued. The petitioners therefore question the
validity of the order imposing penalty based on a misconstruction of para. 6 of S.R.O. 3315 of 1954 and
this they cannot do by petition under Art. 32, whatever other remedies they might have against such an
order, in view of the decision of this Court in
Ujjambai's case.(') It is therefore contended on behalf of the Union of India that these petitions under
Art. 32 of the Constitution are not maintainable and
should be dismissed on this ground alone.
In reply, it is submitted on behalf of the petitioners that Ujjambai's case.(1) does not apply in the
circumstances of these petitions. It is not seriously
disputed that the orders imposing penalty were quasijudicial orders; but it is urged that these orders were
passed without jurisdiction and infringe the fundamental right of the petitioners undt;r Art. 19 (1) (f) and
Art. 19 (1) (g), and would be liable to challenge by
petition under Art. 32 and the actual decision in
Ujjamhai's case(') will not be applicable.
It is therefore necessary to consider the .effect of
the decision in Ujjam~ai's case.(') That case was heard
by a Bench of seven learned Judges of this Court, and
the final decision was by a majority of five to two.
The following two questions came up for decision in
that case:-
"l. Is an order of assessment made by an
autliority under a taxing statute which ~
\1) [1963) I S. C.R. 77~.
1 S.C.R.
SUPREME GOUR T REPORTS
361
intra vires, open to challenge as repugnant
to Art. 19 (1) (g}, on the sole ground that
it is based on a misconstruction of a provision of the Act or of a notification issued
thereunder?·
2. Can the validity of such an order be questioned in a petition under Art. 32 of the
Constitution?"
As was pointed out by Das, J., in that case, the two
questions were inter-connected and substantially related to one matter, namely, "is the validity of an
order made with jurisdiction under an Act which is
intra vires and good law in all respects, or a notification properly issued thereunder, liable to be questioned in a petition under Art. 32 of the Constitution on
the sole ground that the provisions of the Act, or the
terms of the notification issued thereunder, have
been misconstrued?" It was not disputed in that
case that where the statute or a provision thereof is ultra
vires,
any
action
taken
under
such ultra vires provision by a quasi-judicial
authority which violates or threatens to violate a
fundamental right does give rise to a question
of
enforcement
of that right and a
petition
under Art. 32 of the Constitution will lie. Further, _it
was not disputed that when the assessing authority
sought to tax a transaction _the taxation of which
came within the constitutional prohibition," the violation of fundamental right must be taken to have been
established and such cases were treated as on a par
with those cases where the provision itself was ultra
vires. It was also not disputed that where the
statute was intra vires but the action taken under it
was without inherent jurisdiction, a petition under
Art. 32 would lie. Finally, it was also not disputed
in that case that where the action taken is procedurally
ultra vires, the case is assimilated to a case of an
action taken without inherent jurisdiction and would
i:)e open to challenge by a petition under .t\rt. 32.
1962
Pioneer T radns
v.
Chuf Control/" oj
lmport1 and &;Mt.
PondichmJ
Wqchoo, J.
1962
Pioneer Traders
v.
Chi1f Controller of
/1nporls and Exports,
Pondicherry
Wanchoo, J.
362 SUPREME COURT REPORTS [1963] SUPP.
The controversy was "what is the position with regard
to an order made by a quasi-judicial authority in the
undoubted exercise of its jurisdiction in pursuance of
a provision of law which is adr:nittedly intra vires ?"
It was in that connection where the authority has
inherent jurisdiction to decide the matter and the law
under which it proceeds is intra vires that the question
arose whether the desision of such an authority could
be challenged by a petition under Art.
32 on the
sole ground that it was based on a misconstruction of
the provision of law or of the notification properly
issued thereunder.
Five of the learned Judges
composing the Bench answered both the questions
raised in that case in the negative. Das, J., held as
follows:-
"An order of assessment made by an authority
under a taxing statute which is intra vires and
in the undoubted exercise of its jurisdiction
cannot be challenged on the sole ground that it
is passed on a misconstruction of a provision of
the Act or of a notification issued thereunder.
Nor can the validity of such an order be
questioned in a petition under Art. 32 of the
Constitution."
Kapur, J., held as follows :-
"If the statute and its constitutionality is not
challenged then every part of it is constitutionally valid including the provisions authorising the levying of a tax and the mode and
procedure for assessment and appeals etc. A
determination of a question by a Sales-Tax
Officer acting within his jurisdiction must be
equally valid and legal. In such a case, an
erroneous construction, assuming it is erroneous,
is in respGct of a matter which the statute has
given the authority complete jurisdiction to
decide.
The decision is therefore a valid act
irrespective qf its being erroneous,
I S.C.R. SUPREME COURT REPORTS
363
An
order of assessment passed by a quasi·
judicial tribunal under a statute which is 11ltra
vires cannot be equated with an assessment
order passed by that tribunal under an intra
vires statute even
though erroneous. The
former being without authority of law is wholly
unauthorised and has no existence in law and
therefore the order is an infringement of
fundamental rights under Art.
19 (l) (f) and
(g) and can be challen~ed under Art. 32. The
latter is not unconstitutional and has the protec·
tion of law being under the authority of a valid
Jaw and therefore it does not in fringe any
fundamental right and cannot be impugned
under Art. 32."
Sarkar, J., agreed with Das and Kapur, JJ.
Hidayatullah, J., held as follows:-
"But where the law is made validly and in
conformity with the fundamental rights and the
officer enforcing it acts with jurisdiction, other
considerations arise. If, in the course of '.tis
duties, he has to construe provisions of law and
miscarries, it gives a right of appeal and revision,
where such lie and in other appropriate cases,
resort can be had to the provisions of Arts. 226
and 227 of the Constitution, and the matter
brought before this Court by further appeals.
This is
because
every
erroneous decision
"does not give rise to a breach of fundamental
rights.
Every
right
of appeal or revision
cannot be said to merge in the enforcement of
fundamental rights. Such errors can only be
corrected by the processes of appeals and revi.
sions. Art. 32 does not, as already stated, confer
an appellate or revisional jurisdiction on this
Court, and if the law is valid and the decision
with jurisdiction, the protection of Art. 265 is
1962
PioJU•' Trad11s
v.
Chu{ C°"troU.r of
Imports and &port1
Pondich1rry
w .. eoloo, .r.
1962
Pioneer Traders
v.
Chief Controller of
Imports and Exportsi
Pondicheny
Wanchoo, J.
36'1 SUPREME COURT REPORTS (1963]SUPP.
not destroyed. There is only one exception to
this, and it lies within extremely narrow limits.
That exception also bears upon jurisdiction,
where by a misconstruction the State Officer or
a quasi.judicial tribunal embarks upon an action wholly outside the pale of the law he is
enforcing. If, in those circumstances, his action
constitutes a breach of fundamental rights, then
a petition under Art. 32 may lie.'"
Mudholkar, J ., summarised his conclusions as below:-
"]. The question of enforcement of a fundamental right will arise if a tax ·is assessed
under a law which is (a) void under Art. 13
or (b) is ultra vires the Constitution, or ( c)
where it is subordinate legislation, it is
ultra vires the law under which it is made
or inconsistent with any other law in
force.
2.
A similar question will also arise if the tax is
assessed and/or levied by an authority (a)
other than the one empowered to do so
under the taxing law or (b) in violation
of the procedure prescribed by the law or
(c) in colourable exercise of the powers
conferred by the law.
3. No fundamental right is breached and consequently no question of enforcing a fundamental right arises where a tax is assessed
and levied bona :fied by a competent authority under a valid law by following the
procedure laid down by that law, even
though it be based upon an erroneous
construction of the law except when by
reason of the construction placed upon the
law a tax is assessed anrl levied which is
beyond the competence of the legislature
or is violative of the provisions of Part Ill
t $.C.R.
SUPREME COURT REPORTS
365
or of any other provisions of the Constitu ·
tion.
4.
A mere misconstruction of a provision of
law does not render the decision of a quasijudicial tribunal void (as being beyond its
jurisdiction). It is a good and valid decision in law until and unless it is corrected
in the appropriate manner. So long as
that decision stands, despite its being erro·
neous, it must be regarded as one authorised by law and where, under such a decision a person is held liable to pay a tax
that person cannot treat the decision as a
nullity and contend that "what is deman·
ded of him is something which is not authorised by law. The position would be the
same even though upon a proper construe~
tion, the law under which the decision was
given did not authorise such a levy."
Mudholkar, J., therefore, agreed with Das, J., and was
of the view that the two questions must be answered in
the negative.
The other two learned Judges, Subha Rao and
Ayyangar, JJ., took the contrary view. They were of
the view that there could be no valid distinction between an order passed by an authority without
jurisdiction, in the. sense that the authority is not
duly constituted under the Act or that it has inherent
want of jurisdiction, and a wrong order passed by the
authority on a misconstruction of the relevant provisions of the Act; in either case if the order affects a
fundamental right it will be open to challenge by
petition under Art. 32 on the ground that by a wrong
construction, a fundamental right either under Art.
19 (1) (f) or under Art. 19 (1) (g) is violated.
.
It will be seen from the above summary of the
views of the learned Judges who constituted the
majority that, though the reasons given for coming to
1962
Pioneer Tr1Jd1r1
v.
Chief Controller .o ..
Imports and &porl
Pondiclurry
Wanchoo, J.
1962
Pioneer Traders
v.
•Chief Cantroller of
Imports and E<r:ports,
Pondicherrv
Wanchoo, J.
366 SUPREME COURT REPORTS [1963] SUPP.
their conclusion were slightly different they were all
agreed that where an order of assessment is made by
an authority with jurisdiction under a taxing statute
which is intra vfres, ·it is not open to challenge
as repugnant to Art. 19 ( 1) (g) on the sole ground that
it is based on a misconstruction of a provision of the
Act or of a notification issued thereunder and the
validity of such an order cannot be questioned in a
petition under Art. 32 of the Constitution, though it
may be open to question such an order on appeal or
in revision in case the statute provides for that remedy
or by a petition under Arts. 226 and 227 in appropriate
cases.
The contention on behalf of the Union is that
the orders in the present case are orders of an autho·
rity with jurisdiction acting quasi-judicially and even
if they are based on a misconstruction of para. 6 of
S.R.O. 3315 they will not be open to challenge by
petition under Art. 32 of the Constitution, whatever
other remedies the petitioners might have against
them. It is urged that in principle there is no dif·
ference between an order of assessment under a taxing
statute and an order of confiscation, with an altema·
tive penalty, for both are orders of a quasi-judicial
authority under a taxing statute which is intra vir,es;
and if orders are pa!!Sed with jurisdiction in either
case they will not be open to challenge under Art. 32
on the sole ground that they are passed on a miscons·
truction of a provision of an Act or a notification
issued thereunder.
It has not been disputed that the order of a
customs authority imposing confiscation and penalties
under s. 167 (8) of the Sea Customs Act (No. 8 of
1878) is quasi-judicial and the customs authority has
the duty to act judicially in deciding the question of
confiscation and penalty: (see Leo Roy Frey v. The
Sp,perintendent District Jail, Amritsar(')). But it is
urged on behalf of the petitioners that the orde{S in
this case were passed without inherent jurisdiction and
(I} [I~] S. C. 1l. 822. -
,,
I s.c.R.
SUPREME COURT REPORTS 367
would thm be open to challenge and in this connection reliance W6.s placed on the observations of
Kapur, J., in Ujjamhai's mse(1) in connection with the
decision in the case of Mess/'8. Universal Imports
Agency.(') Kapur. J., observed with respect to this
decision that "in anv case this is an instance of want
of jurisdiction to ta:X: transactions which the law excludes from the taxing powers of the authority levying
the tax", though he pointed out further that the
question of the applicability of Art. 32 to quasi-judicial
determinations was not raised in that case.
With
respect, it may be pointed out that as the question of
the applicability of Art. 32 to quasi-judicial determinations was not raised at all in the case of 1l1 essrs.
Universal Imports Agency('), the Court had no occasion to consider the question whether the authority
in that case had inherent jurisdiction to decide the
matter. The majority judgment on which the petitioners rely has nowhere considered the question
whether the authority in that case suffered from inherent lack of jurisdiction when it decided to confi scate the goods imported and levy penalties in the
alternative.
All that the learned counsel for the
petitioners could draw our attention to was a sentence
in the majority judgment to the following effect :
"We would, therefore, hold that paragraph 6
of the Order saves the transactions entered into
by the petitioners and that the respondents had
no right to confiscate their goods on the ground
that tliey were imported without licence."
It is urged that when the majority said that the
authorities had no right to confiscate the goods, it was
meant that they had no inherent jurisdiction to do so.
As we read the majority judgment, however, we do
not find any warrant for coming to the conclusion
that it was decided in that case that the authorities
in that case had no inherent jurisdiction to confiscate
the goods or impose penalties in lieu thereof. It is
true that it was said in the majority judgment that
(I) [1963] I S. C. R. 778.
(2) [1961] l S. C. R. 805.
1962
Pion.ier Traders
v.
ChiefController oJ
Imports and ExporbPondichMry
Wanchoo, J.
1962
Pioneer Traders
v.
Chi<J Controllv of
...ports and Exports,
Pondicherry
Wanchoo. J.
368 SUPREME COURT REPORTS [1963j SUPP·
the respondents had no right to confiscate the goods
but that was because just before in that very sentence
it was held that para. 6 of the Order saved the transactions.
Therefore, when the majority in that case
said that the authorities had no right to confiscate the
goods, all that was meant was that the authorities had
misconstrued para. 6 and so confacated the goods,
but that on a correct construction of para.