# Shcnti,Pr"'a' Jain v. Director of Enjoru ment, For1ign !xda.ngt Regu/atit1n

- **Citation:** [1963] Supp. 1 S.C.R. 514
- **Court:** Supreme Court of India
- **Decided:** 1960-10-27
- **Case number:** Civil Appeal No. 617of1961
- **Bench:** B. P. Sinha, P. B. Gajendragadkar, K. N. Wanchoo, K. C. Das Gupta, J.C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/shcnti-pr-a-jain-v-director-of-enjoru-ment-for1ign-xda-ngt-regu-atit1n-2725
- **Pages:** 11

## Headnote

Foreign Exchange-Acquieition by Central Govtrnment0ff'1' for sale by owner-If must co1!tr acquisition both before
and aftu Notification-When must /Je madr<-l'oreign Exchange
Regukition Act, 1947 (7 of 1947), ss .. 9,23-Notification dated
March 25, 1947.
The , first appellant accompanied by his wife, the second
appellant, visited foreign countries on business. He was allowed
foreign exchange amounting to 337 and 1410 U. S. dollars,
the visit being limited to two months. The second appellant
was not allowed any foreign exchage and was allowed to go on
the representation that a foreign company would bear all her
expenses for the trip.
When after three mouths the appellants
returned to Delhi, the Customs authoriti~s found on the person
of the first appellant travellers cheques of the value of 2590 U.S.
dollars. The· Director of Enforcement
took the appellant's
explanation and on adjudication found that the appellants had
received a sum of 3500 U. S. doliars as gift, 'vcre O\Vners of it
and contravened s. 9 of the F'oreign
Exchange Regulation
;\ct, 1947, read with Notifjcation dated March 2'>., 1947, issued
l S.C.R.
SUPREME COURT REPORTS
515
thereunder, for failing to offer the foreign exchange for sale as
required thereunder within a month of their becoming owners
thereof. He, therefore, forfeited the travellers cheques to the
extent of 1990 U. S. dollars found with them and imposed a
penalty of Rs. 18000 on the first appellant under s. 23 of the
Act. The appellants appealed to the Appellate Board which
confirmed the order of the Director.
Hekl, that s. 9 of the Foreign Regulation Act applied not
merely to foreign exchange owned or held at the date the Act
came into force but also to foreign exchange acquired after
that date. The words "or who
may hereafter become the
owner of any foregin exchange" h the Notification, therefore,
were not ultra vires the section. It must be held that those
words were implied in the section and the main purpose of the
Notification was to specify what kind of foregin exchange was
to be offered for sale thereunder.
The Notification was clear that the ,,ffer of sale was to be
made within a month of acquisition of ownership of the foreign
exchange and not within a month of arrival in India.

## Text

Sh.•iir Hussein Bh•lu
v.
St«te •J M«Urc.slttt«
Mudhalk«r,_J,
J§li2
October, ~-
514 SUPREME COURT REPORTS [1963) SUPP.
appellant and that the High Court was in error in
setting aside the order of discharge and directing the
Chief Presidency Magistrate to proceed on the basis
that the complaint was made after following the
procedure laid down in ss. 4 76 to s.4 79, Code of Criminal Procedure.
Appeal aUowed.
SHANTI PRASAD JAIN AND ANOTHER
v.
DIRECTOR OF ENFORCEMENT, FOREIGN
EXCHANGE REGULATION AND ANOTHER
(B. P. SINHA, c. ]., P. B. GAJENDRAGADKAR, K. N.
WANCHOO, K. C. DAS GUPTA and J.C. SHAH,JJ.)
Foreign Exchange-Acquieition by Central Govtrnment0ff'1' for sale by owner-If must co1!tr acquisition both before
and aftu Notification-When must /Je madr<-l'oreign Exchange
Regukition Act, 1947 (7 of 1947), ss .. 9,23-Notification dated
March 25, 1947.
The , first appellant accompanied by his wife, the second
appellant, visited foreign countries on business. He was allowed
foreign exchange amounting to 337 and 1410 U. S. dollars,
the visit being limited to two months. The second appellant
was not allowed any foreign exchage and was allowed to go on
the representation that a foreign company would bear all her
expenses for the trip.
When after three mouths the appellants
returned to Delhi, the Customs authoriti~s found on the person
of the first appellant travellers cheques of the value of 2590 U.S.
dollars. The· Director of Enforcement
took the appellant's
explanation and on adjudication found that the appellants had
received a sum of 3500 U. S. doliars as gift, 'vcre O\Vners of it
and contravened s. 9 of the F'oreign
Exchange Regulation
;\ct, 1947, read with Notifjcation dated March 2'>., 1947, issued
l S.C.R.
SUPREME COURT REPORTS
515
thereunder, for failing to offer the foreign exchange for sale as
required thereunder within a month of their becoming owners
thereof. He, therefore, forfeited the travellers cheques to the
extent of 1990 U. S. dollars found with them and imposed a
penalty of Rs. 18000 on the first appellant under s. 23 of the
Act. The appellants appealed to the Appellate Board which
confirmed the order of the Director.
Hekl, that s. 9 of the Foreign Regulation Act applied not
merely to foreign exchange owned or held at the date the Act
came into force but also to foreign exchange acquired after
that date. The words "or who
may hereafter become the
owner of any foregin exchange" h the Notification, therefore,
were not ultra vires the section. It must be held that those
words were implied in the section and the main purpose of the
Notification was to specify what kind of foregin exchange was
to be offered for sale thereunder.
The Notification was clear that the ,,ffer of sale was to be
made within a month of acquisition of ownership of the foreign
exchange and not within a month of arrival in India.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 617of1961.
Appeal by special leave from the order dated
October 27,
1960, of
the
Foreign Exchange
Regulation Appellate Board, New Delhi in Appeal
No. 61 of 1960.
Sachin CTM:mdhri,
N.
Bajoria and B. P.
Maheshwari, for the appellants.
Bishan Narain, V. D. 111ahi'Jjan and P. D.
Menon, for the respondents.
1962. October 4.
The Judgment of the Court
was delivered by
WANOHOO, J.-This is an appeal from the
order of the Foreign Exchange Regulation Appellate
Board and arises in the following circumstances ;
19i2
Shanti Pr~aJ Ill
v.
DirlftlT of Enf11c
111lnt. Fflfeip
Exchonte Re:ulatW,
1962
Shcnti,Pr"'a' Jain
v.
Director of Enjoru ..
ment, For1ign
!xda.ngt Regu/atit1n
Wanchoo, J.
516 SUPREME COURT REPORTS (1963] SUPP.
Appellant No. l went to Europe and the United
States of America in connection with business, and
his wife, appellant No. 2, accompanied him.
The
first appellant is the Chairman of Sahu Jain Limited.
They left India on June 30, 1958 and visited several
countries in Europe including West Germany. Eventually they reached the United States of America on
August 5, 1958. They left the United States on
September 22, and arrived at Delhi on October 1,
1958. The first appellant had been allowed foreign
exchange amounting to£ 337 (rqual to Rs. 4500/-J
and 1410 U.S. Dollars (equal to Rs. 6,750/-).
Further, Messrs. Sahu Jain Limited had been informed
that the exchange was sanctioned on condition that
the visit was limited to a period of two months. The
second appellant was not allowed any foreign exchange, but her visit was sanctioned on the representation that a certain company in the United States
would bear all the expenses of her trip to that
country.
When the appellants returned to Delhi on the
1st of October, the Customs authorities found travellers cheques of the total value of 2590 U. S. dollars
on the person of the first appellant. They were
detained and the travellers cheques were handed over
to the Enforcement Directorate under the orders of a
magistrate.
Thereafter the appellants were required
to furnish certain information about their trip a broad
including particulars about how they came to be in
possession of these cheques. It will be noticed that
the amount of these cheques was n:10re than the total
dollar exchange sanctioned to the first appellant. The
explanation given by the appellant was that travellers
cheques worth 1500 U:· S. dollars :-vere receh·ed as
gift from Messrs. Maschmenbau Scho1z and Company,
West Germany, and travellers cheques worth 1,000
U. S. dollars were received from l\.fessrs. Chemiobau,
Dr. A. Zieren, West Germany, and a sum of 1,000
U.S. dollars was received from Messrs. HlllJS Tobeason,
I S.C.R.
SUPREME COURT REPORTS
517
Inc., New York. It was further explained that
travellers cheques worth 1990 U. S. dollars, out of the
total amount seized on October !st, represented the
unspent balance from the two gifts received in West
Germany and the remaining travellers cheques worth
600 U. S. dollars formed the unspent balance of the
foreign exchange sanctioned when the appellant had
left India. It was also stated that the entire amount
of 1,000 U.S. dollars received in New York was spent
in the United States.
On receipt of this explanation,
the Director of Enforcement issued notices to the
appellants to show cause why adjudication should not
be commenced against them for contravention of the
provisions of s. \J of the Foreign Exchange Regulation
Act, No. VII of 194 i, (hereinafter referred to as the
Act) read with Notification dated March 25, 1947,
issued thereunder.
The notices said that the appellants had failed to sell the foreign exchange amounting to 3500 U. S. dollars referred to abqve acquired
by them abroad within one month of their becoming
owners thereof as required by s. 9 of the Act read
with the said notification. The appellants 6howed
"ause which was more or less the same as the explanation they had already given earlier.
The Director
of Enforcement then held adjudication proceedings
and came to the conclusion that the sum of 3500
U. S. dollars was received by the appellants as gift
and they were owners of it, and as they had not
offered to sell this foreign exchange as required by
s. 9 and the notification made thereunder, they were
liable to penalties for contravening s. fl.
The Director ordered the forfeiture of the travellers cheques
to the extent of 1990 U. S. dollars found with the
appellants. He also imposed a penalty of Rs. 18,000/-
on the first appellant under s. 23 of the Act; no
penalty was imposed on the second appellant.
The appellants then went in appeal to the
Appellate Board, and the contention thar was raised
there was that they were not the owners of this foreign
1962
Shcnti Prasati J•in
v.
Dirtctor of Enforcemerit, Foreigtt
Exchanze &zulation
1962
ShotCti Pros•d J11in
v.
Director oj' Enforce~
ment, Foreign
'ixch,1nge Re1;ulation
W.nchos, J.
518 SUPREME COURT REPORTS [1963] SUPP.
exchange which had been given to them merely to
defray their expenses in the United States and that
instead of the various foreign companies spending the
money on them directly, they gave the money to the
appellants to be spent by them. It was also urged
before the Appellate Board that the notification was
ultra vires s. 9 of the Act, inasmuch as it dealt not
only with the foreign exchange owned or held by
persons at the time the notification was issued but also
· foreign exchange which might thereafter come into
the ownership of any person. Certain other contentions were also raised before the Appellate Board, but
these contentions have not been raised before us in
view of the judgment of this Court in ,Shanti Praaall
Jain v. TM Director of Enforcernent(1).
The two
points therefore that arise for consideration arc whether the appellants were owners of this foreign exchange and whether the notification is ultra vire& •· 9 of
the Act. Both these points were decided against the
appellants by the Appellate Board, which confirmed
the order of the Director of Enforcement. Thereupon the appellants obtained special leave from this
Court and that is how the matter has come up before
us.
The question whether the appellants were owners of this foreign exchange is in our opinion concluded by the concurrent finding of fact of the Director of Enforcement and the Appellate Board. The
Appellate Board has pointed out that the contention
that the appellants were not the owners of this foreign exchange was ingenious but unacceptable. The
appellants wanted to make out that though they had
actually received the money, they were really spending it on themselves on behalf of the foreign companies, which gave them the money for their expenses in the United States. The Appellate Board has
rightly pointed out that this foreign exchange given
to the appellants was nothing but a gift received by
them and that the appellants themselves in the
(I) [1!161) 2 11. C.R. 7!¥1.
,
1·-·
I S.C.R. SUPREME COURT REPORTS
519
beginning had admitted that they had received these
amounts as gift. It was only later that the ingenious
argument was put forward on their behalf that though
they had received the money, they were merely agents
of the three companies which gave them the money
for the purpose of spending it on themselves. We
have no doubt that this is an absurd explanation and
the fact is that the appellants received this
foreign
exchange as gift, even though the intention might
have been to spend the amount on their trip in the
United States of America.
Further, as the Appellate
Board has rightly pointed out, it is obvious that the
money was given to the appellants outright, as otherwise the appellants would not have offered the amount found on them on October 1, 1958, for sale through the Reserve Bank as they did on October 25, 1958.
There can therefore be no doubt that the appellants
became owners of this foreign exchange.
This brings us to the main point that was urged
before us that the notification is beyond the terms
of s. 9. Section. IJ (omitting the portion not relevant
for the purpose of this appeal) is in these terms:-
"\). Acquisit-ion by Central Government of Fore-
·i(Jn exchan(Je.--The Central Government may,
by notification in the Official Gazette, order
every person in, or resident in, India--
(a) who owns or holds such foreign exchange
as may be specified in the notification, to offer
it, or cause it to be offered for sale to the
Reserve Bank on behalf of the Central Government or to such person, as fhe Reserve Bank
may authorise for the purpose, at such price as
the Central Government may fix, being a price
which is in the opinion of the Central Government not less than the market rate of the foreign exchange whe::i it is offered for sale;
(b)
••
**
Shanti Prasad Jaitt
v.
Dirt~·tor 11{ En/Mce--
menl, Foreign
Exchange Reguluti11n
W«nChH, J.
1962
Shanti Prasad Jain
v.
Director of Enforcement, For1ign
Exchange Regulation
•
520 SUPREME COURT REPORTS [l963)SUPP.
Provided that the Central Government by
the said notification or another order exempt
any persons or class of persons from the operation of such order.
Provided
"
The notification which was issued on March 25, 194 7,
is in. these terms:-
"In exercise of the powers conferred by section
9 of the Foreign Exchange Regulation Act, 194 7
(VII of 194 7), the Central Government is pleased
to direct that every person resident in India who
owns or who may hereafter become the owner
of any foreign exchange whether held in India
or abroad expressed in the currency of any
country or territory specified in the schedule
annexed to this Order, shall before the expiration of one month from the date of this Order,
or in the case of a person hereafter becoming
stich owner, within one month of the date of
his so becoming, offer such foreign exchange or
cause it to be offered for sale to an authorised
dealer being a person authorised by the Reserve
Bank for the purpose, "against payment in
rupees at the rate for the time being authorised
by the Reserve Bank in pursuance of sub-section
(2) ofsection 4 of the said Act for the conversion into Indian currency of the foreign currency in
which such
foreign exchange is
expressed.
"Provided that this order shall not apply to
foreign exchange held by authorised dealers
within the scope of their authority or to persons
authorised by the Reserve Bank to hold foreign
exchange for business or other purpos.es, or to
persons not being citizens of India, who have
obtained the permission of the Reserve Bank in
this behalf .
.
T
,
'
l S.C.R.
SUPREME COURT REPORTS
521
Schedule
"United States of America, Philippine Island.·•
The contention on behalf of the appellants is
that what s. 9 contemplates is that any person who
owns or holds foreign exchange on the date of the
notification has to
offerit for sale as provided
therein but it does not contemplate that a person who
comes to be owner of foreign exchange after the
date of the notification has also to offer it for sale.
We are of opinion that there is no force in this
contention. The section lays down that every peison
who owns or holds such foreign exchange as may be
specified in the notification has to offer it for sale as
provided thereunder. The reason why the section
provides for a notification is that it was left to the
discretion of the Central Government to decide on a
consideration of the foreign exchange situation at a
particular time as to which kind of foreign exchange
would have to be offered for sale as directed by s. 9.
For example, the notification may direct that U. S.
dollars must be offered for sale but may not direct
that English pounds should be so offered for sale.
The section as it stands is clearly applicable to foreign
exchange owned or held at the date the Act came
into force as well as to foreign exchange which a
person may acquire after the Act came into force.
Learned counsel for the appellants conceded that
s. 9 was not confined only to foreign exchange held
or owned by persons in. or resident in, India on the
date the Act came into force but would also apply to
any foreign exchange subsequently owned or held;
but his contention is that though the section applies
not only to foreign exchange owned or held on the
date the Act came into force but also on any subsequent date so long as the Act continues in force, the
notification could only be issued with reference to
foreign exchange owned or held on the date of the
notification. It is therefore contended that the words
"or who may hereafter become the owner of any
1962
Shanti i'rruad Jai'lt
v.
Di.rector oj Enforce·
ment, Foreign
Exchange Ragu/atit)n
l1'11nchoo, J.
1962
Shanti Prasad Jain
v.
Director of Er!force~
mmt, Foreitn
&chnnge
Re~ulatio1l
Wanchoo. J,
522 SUPREME COURT REPORTS [1963] SUPP.
foreign exchange" appearing in the notification go
beyond the power conferred by s. 9 of the Act and
the notification could only apply to foreign exchange
owned or held up to the date of the notification.
We
are unable to accept this construction of s. 9. The
Act is a perm<1nent statute and s. 9 clearly provides
that every person holding. or owning such foreign
exchange as may be specified in the notification
contemplated thereunder has to offer it for sale as
provided therein. The words of the section are not
confined only to foreign exchange owned or held by
persons on the date the Act was passed, they apply
also to foreign exchange which may be owned or held
by persons even after the Act came into force and
such foreign exchange had to be offered for sale if
there is a notification in that behalf.
It is true that
words corresponding to "who may hereafter become
the owner of any foreign exchange" do not apl?ear in
the section. But the words of the section lD our
opinion are clear and it is implicit in them that they
apply not only to those persons who owned or held
foreign exchange on the date the Act came into force
but to those also who own or hold foreign exchange
after that date, and the notification is mainly for the
purpose of specifying the kind of foreign exchange
which has to be offered for sale. The notification in the
present case by using the words "or who may hereafter become the owner of any foreign exchange"
merely makes explicit what was already implicit in
the section. In fact, even if the impugned clause had
not been included in the notification, it would have
made no difference to_ the meaning.
Like the main
section, the remaining part would have covered cases
of owning and holding foreign exchange in the past
as well as in the future.
The clause has been added
only to clarify the position, and that is all.
Further, if we were to accept the argument raised on behalf of the appellants we would reach the
startling result that a notification will have to be issued
1 S.C.R.
SUI'RiME COURT REPOR.TS
523
every day in order that the purpose of s. 9 which is to
control foreign_exchange which any person might own
or hold on the date the Act came into force as wdl as
foreign exchange which any person might come to
own or hold after the enactment of the Act, might be
carried out.
An interpretation which leads to such
a startling result cannot possibly be accepted. Besides,
as we have already said, the words of s. 9 are clear
and they apply not only to foreign exchange owned
or held at the date of the Act but to foreign exchange
which might be held or owned at any time thereafter
and the notification is mainly required to indicate
the kind of foreign exchange which may have to be
offered fpr sale under s. 9.
We are therefore of opinion that the notification is completely intra vires s. !J.
If that is so, it is not disputed by the appel!ants that
s. 9 read with the notification was contravened in this
case in view of the finding of fact that the foreign
exchange to the extent of 3500 U. S. dollars was gifted to the appellants and was owned by them.
It was also urged on behalf of the appellants
that all that the notification required was that they
should offer the foreign exchange within one month of
their return to India and that the appellants complied
with that. This contention has no force for the notification requires that the offer should be made within
one month of a person becoming the -0wner of foreign
exchange. There is no warrant for reading in the
notification that the offer has to be made within a
month of the return of the person to India in case
the foreign exchange is acquired while the person is
:ibroad .. 1:he notification clearly requires an offer
to sell w1thm one. month of a person becoming the
owner of the foreign exchange. It has not been disputed that there was no impediment in the way of
the appellants making such an offer within one month
of their acquiring the foreign exchange.
As thrv
undoubtedly failed to do so, they have clearly contravened the notification read with s. 9 of the Act.
1962
Shanti Prasad Jain
v.
lJiuctor of Enforce
ment, .Foreign
E1::har1ge Regulutio1
H 'm1rhoo, J.
1962
Shanti Prasad Jain
v.
Dir~c:or oj' Enforce~
ment, Foreign
Exchange Regulation
W1tnchoo, J.
1961
Oc!t11Jtr, lfJ.
524 SUPREME COURT REPORTS [1963] SUPP.
Lastly, it is urged that the penalty imposed in
this case is too heavy. This matter has been considered by the Appellate Board and we see no reason to
differ from the Board on this question. We may
only add that the first appellant who is the Chairman
of the Sahu Jain Limited is a person of responsibility
and position, and it is not expected tha.t such a person
would contravene the provisions of the Act. The
appeal is hereby dismissed with costs.
A fl peal di~mia!td.
M/s. BHIKUSA YAMASA KAHATRIYA
v.
SANGAMNER AK.OLA TALUKA BIDI
KAMGAR UNION
(B. P. SINHA, c. J., P. B. GAJENDRAGADKAR,
K. N. WANoHoo, K. C. DAS GUPTA and
J.C. SHAH, .lJ.)
Minimum W!UJM-StaMe dek(Jati11Q '[l'7'h.r t,o Gov.rnMtnt
f,o fix UJ04M-lf cowfer• arbitrary a.W, uncontrolkd pmcer8Notijfr.atiort .fizillflJ minimum W!UJe8-Valiaity of-Notifeation
iaud Apri.l 19, 1965, of Got!.rnm.,d of Bombay-Mintn&um
Wag"1 Aot, 1948(XI of 1948), •.3(3}(w).
Section 3(1) of the Minimum Wages Act, 1948, authori""8
the appropriate Government to fix rates of minimum Wligl'S
payable to employees in the scheduled employments. Section
3(3)(iv) authorises the government, in fixing or revising minimum wages,
to fix different minimum rates for difl"crent
localities. By Notification dated April 19, 1955, the Government of Bombay revised the minimum rates of W"!,'CS for workers
employed in the bidi manufactories and fixed for localities of
Sangamner and. ~kola.~ plac~ .within seven miles of their
respective Mun1c1pal bm1ts, a m1h1mum rate of Rs. 2/2/· for