# SUPREME COURT REPOR'fS [1963] EAST INDIA COMMERCIAL CO., LTD., CALCUTTA AND ANOTHER v. THE COLLECTOR OF CUSTOMS, CALCUTTA

- **Citation:** [1963] 3 S.C.R. 338
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** A. K. Sarkar, K. SmrnA RAo 11.nd J. R. MunnoLKAR
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/supreme-court-repor-fs-1963-east-india-commercial-co-ltd-calcutta-and-another-v-2625
- **Pages:** 38

## Headnote

Import-Law enabling Government to iasue notifications
prohibiting or restricting Import-Import licence-Breach
of
conditions-If amounts to import without licence-Law deo/ared
by High Oourt-lf binding on authorities or tribunals under its
superintendence-Sea OUBtnma Act, 1878 (8 of 1878), ss. 19,
167;8)-Imports and Exports (Oontrol) Act, 1947 (18 of 1947),
••· 3, ti-Oomtitution of India, Arts. 226, 227.
On October 8, 1948, the appellant company was granted
a licence to import from the U. S. A. a large quantity of
electrical instruments. The licence was issued subject to the
condition that the goods would be utilised only for consumption as raw material or accessories in the licence holder's
factory and that no portion thereof would be
sold to
any party. After the goods arrived in India in FebruaryMarch, 1949, the company took delivery of them on payment of customs duty. On information alleged to have been
received by the
authorities concerned that
the
goods
were being sold in the market io breach of the conditions of
the licence, the Police, after obtaining a search warrant from
the magistrate seized a large stock of the goods from the
godown of the appellant. On January 12, 1951, the customs
authorities filed a complaint before the Magistrate under s. 5
of the Imports and Exports (Control) Aet, 1947, against the
second appellant, who was a director of the company, and
others, on the allegation that the accused persons had, in
violation of the conditions of the licence, disposed of portions
of the goods covered by it. The Magistrate discharged the
accused and his order was confirmed by the Hi~ h Court on
March 3, 1955, on the ground thats. 5 of the Act penalised
only a contravention of an order made or deemed to have
been made under the said Act, but did not penalise the
contravention of the conditions of licence issued under the
Act or issued under a statutory order made under the Act,
On January
16, 1953, the High Court made an order
directing the seized goods to be sold and the sale proceeds
kept with the Chief Presidency Magistrate. On August 28,
~-;
3 S.C,R.
SUPREME COURT REPORTS
339
1955, the Collector Cuatoms served a notice on the appel·
!ants under s. 167(8) of the Sea Customs Act, 1871,
read
with s. 3 (2) of the Imports and Exports (Control) Act, 19-4-7
to show cause why the moneys lying with the Chief
Presidency Magistrate representing
the imported
goods
should not be confocated and also why penalty should not
be imposed on them, inasmuch as they had infringed the
conditions of the licence issued to them by selling a portion
of the goods imported to others. The appellants filed an
application under Art. 226 of the Constitution of India
before the High Court of Calcutta praying for a write of
prohibition restraining the respondent from proceeding with
the enquiry on the ground that it was without jurisidiction.
Held, ( Ptr Subba Rao and Mudholkar, JJ., Sarkar, J.,
dissenting), that: (I) that the application under Art. 226 of
the Constitution was maintainable, because, if on a true
construction of the provisions of law under which the notice
was issued, the respondent had no jurisdiction to initiate
proceedings in respect of the acts alleged to have been done
by the appellants, the respondent could be prohibited from
proceeding with the same.
(2)
under s. 167(8) of the Sea Customs Act, 1878, read·
with s.3(2) of the Imports and Exports (Control) Act, 1947,
only the goods imported in contravention of an order under
the latter Act were liable to be confiscated, but the section did
not expressly or
by necessarly implication empower the
authority concerned to consficate the goods imported under a
valid licence on the ground that a condition of the licence
not imposed by the order was infringed or violated. The
infringement of a condition in the licence was not an infringement of the order and did not, therefore, attract s.167(8) of
the Sea Customs Act.
(3)
public notices issued by the Government of India
governing the issu

## Text

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I
Moy I.
338
SUPREME COURT REPOR'fS [1963]
EAST INDIA COMMERCIAL CO., LTD.,
CALCUTTA AND ANOTHER
v.
THE COLLECTOR OF CUSTOMS, CALCUTTA
(A. K. SARKAR, K. SmrnA RAo 11.nd
J. R. MunnoLKAR, JJ.)
Import-Law enabling Government to iasue notifications
prohibiting or restricting Import-Import licence-Breach
of
conditions-If amounts to import without licence-Law deo/ared
by High Oourt-lf binding on authorities or tribunals under its
superintendence-Sea OUBtnma Act, 1878 (8 of 1878), ss. 19,
167;8)-Imports and Exports (Oontrol) Act, 1947 (18 of 1947),
••· 3, ti-Oomtitution of India, Arts. 226, 227.
On October 8, 1948, the appellant company was granted
a licence to import from the U. S. A. a large quantity of
electrical instruments. The licence was issued subject to the
condition that the goods would be utilised only for consumption as raw material or accessories in the licence holder's
factory and that no portion thereof would be
sold to
any party. After the goods arrived in India in FebruaryMarch, 1949, the company took delivery of them on payment of customs duty. On information alleged to have been
received by the
authorities concerned that
the
goods
were being sold in the market io breach of the conditions of
the licence, the Police, after obtaining a search warrant from
the magistrate seized a large stock of the goods from the
godown of the appellant. On January 12, 1951, the customs
authorities filed a complaint before the Magistrate under s. 5
of the Imports and Exports (Control) Aet, 1947, against the
second appellant, who was a director of the company, and
others, on the allegation that the accused persons had, in
violation of the conditions of the licence, disposed of portions
of the goods covered by it. The Magistrate discharged the
accused and his order was confirmed by the Hi~ h Court on
March 3, 1955, on the ground thats. 5 of the Act penalised
only a contravention of an order made or deemed to have
been made under the said Act, but did not penalise the
contravention of the conditions of licence issued under the
Act or issued under a statutory order made under the Act,
On January
16, 1953, the High Court made an order
directing the seized goods to be sold and the sale proceeds
kept with the Chief Presidency Magistrate. On August 28,
~-;
3 S.C,R.
SUPREME COURT REPORTS
339
1955, the Collector Cuatoms served a notice on the appel·
!ants under s. 167(8) of the Sea Customs Act, 1871,
read
with s. 3 (2) of the Imports and Exports (Control) Act, 19-4-7
to show cause why the moneys lying with the Chief
Presidency Magistrate representing
the imported
goods
should not be confocated and also why penalty should not
be imposed on them, inasmuch as they had infringed the
conditions of the licence issued to them by selling a portion
of the goods imported to others. The appellants filed an
application under Art. 226 of the Constitution of India
before the High Court of Calcutta praying for a write of
prohibition restraining the respondent from proceeding with
the enquiry on the ground that it was without jurisidiction.
Held, ( Ptr Subba Rao and Mudholkar, JJ., Sarkar, J.,
dissenting), that: (I) that the application under Art. 226 of
the Constitution was maintainable, because, if on a true
construction of the provisions of law under which the notice
was issued, the respondent had no jurisdiction to initiate
proceedings in respect of the acts alleged to have been done
by the appellants, the respondent could be prohibited from
proceeding with the same.
(2)
under s. 167(8) of the Sea Customs Act, 1878, read·
with s.3(2) of the Imports and Exports (Control) Act, 1947,
only the goods imported in contravention of an order under
the latter Act were liable to be confiscated, but the section did
not expressly or
by necessarly implication empower the
authority concerned to consficate the goods imported under a
valid licence on the ground that a condition of the licence
not imposed by the order was infringed or violated. The
infringement of a condition in the licence was not an infringement of the order and did not, therefore, attract s.167(8) of
the Sea Customs Act.
(3)
public notices issued by the Government of India
governing the issue of import licences were not orders issued
under s. 3 of the Imports and Exports (Control) Act.
(4)
in the present case, as the goods were imported
under a valid licence they could not be considered as goods
either prohibited or restricted within the meaning of s. 167 (8)
of the Sea Customs Act and,
therefore, the Collector of
cu~toms had no jurisdiction to proceed with the enquiry
under that section.
Per Subba Rao and Mudholkar,JJ.-The law declared
by the hi~hest Col\rt iq the Stat"' w~s binding on
'\Uthoritie~
19(1
Ea1t lniia
Comm1rcial Co.,
Ltd., CalcJttta
y,
Co/hctQr of Curt1m•
o.tcutta
11161
East India
Commercir:d Ct'.,
Ltd., Calcutta
••
Oo/lector of Cu•lorns,
C11lculta
340
SUPREME COURT REPORTS [1963]
or tribunals under its superintendence and that they could
not ignore it either in initiating a proceeding or deciding on
the rights involved in such a proceeding. Consequently, the
High Court of Calcutta, having by its order dated March 3,
1955, held that a contravention of a condition imposed by a
licence issued under the Act was not an offence under s. 5 of
the Act, the notice dated August 28, 1955, signifying the
launching of proceedings contrary to the law laid down by
the High Court, was invalid.
Per Sarkar, J.-(1)
The application under Art. 226
of the Constitution was not maintainable, because the Collector had jurisdiction t<> decide what was a breach of an
order and, therefore, whether the breach of a condition of a
licence was breach of an order.
(2)
Even assuming that the decision
of the High
Court dated March 3, 1955, was binding on the Collector,
··~
that would not afftct his jurisdiction in the present case to
deci<fe whether the goods were liable to confiscation.
(3)
A breach of a condition of a licence issued under
an order made under the Imports and Exports (Control) Act
1917, was a breach of the order itself.
( 4)
Where after crossing the customs barrier lawfully,
goods are disposed of in contravention of a restriction duly
imposed, they must be considered to have been imported
" ~
contrary to the restriction.
C:rvIL APPELLATE JURI!!DICTION : Civil Appeal
No. 383 of 1960.
Appeal by Rpeoial leave from the judgment
and order dated January 5, 1959, of the Calcutta
High Court in Appeal from Original Order No. 54
of 1957.
A.V. Vishvanatha Sastri, E. R. Mayer, Noni
Kumar Ghakrawrti and B. P. Maheshwari, for the
appellants.
Daulat Ram Prem and D. Gupla, for the respondent.
1962. May 4. Sarkar J. delivered his own
1--·.
Judgment and the judgment of Subba Rao and
Mndholkar! JJ.~ was delivered b! Subba Rao~ J,
- --',
•
3 S.O.R.
SUPREME COO.RT REPORTS
341
S.utJUJl., J.-The a.ppellants had brought into
India from the U.S.A. a lit.rge quantity of electrical instrument11 under a. licenre. The respondent,
the Collector of Customs, Calcutta, started uroceedings for confiscation of these goods under· s.167(8)
of the Sea Customs Act, 1878.
The appellants contend that the proceedings are entirely without
jurit1diction as the Collector can confiscate only
when there is an import in contravention of an
order prohibiting or re1tricting it and in the present
case the Collector was proceeding to confiscate on
the ground that a condition of the licence under
which the goods had been imported had been
disobeyed. The appel1ants, therefore, ask for a
writ of prohibition directing the Collector to stop
the proceedings.
The question is, has the Collector
jurisdiction to adjudicate whether the goods are
liable to be confiscated? '1 he decision of that question, however, depends on certain statutory provisions and the fact of the case to which, therefore,
I shall immediately turn.
Sub-section ( 1) of I!!. 3 of the Import and Export& (Control) Act, 1947, provide!!! that the Government may by order prohihit, restrict or otherwise
control the import of goods. By Notification No.
23-I.T.C./43 issued under r. 84 of the Defence of
India Rnles which by virtue of s, 4 of the Act of
194 7 is to be deemed to have been issued under that
Act, it waR ordered that no electrical instrument
could be brought into India except under a licence.
By another order made under B. 3 of the Act and
contained in Notification No. 2-ITC/48, dated March
6, 1948, it was provided that the licence to import
electrical instruments might be issued suject to the
condition that the goods would not be disposed of
or otherwise dealt with witho~t the written permission of the licensing authority.
The first appellant is a company and thll se9ond appellant, one of it~ dμ-e"Otors.
On October 8,
1961!
Ea1t I niia
Cornrn••ciaJ C•.,
Lrtl., C"/cuttc
v.
Co//eotor •f Cu1lom•
Calcutta
Sarkar J.
/___,..
-
1962
Ea.at India
Commdrcial Co.,
Ltd., C alcuUa
v.
Colltctar ofCUlltoms,
Calcutta
Sarkar J.
342
SUPREME COURT REPORTS [1963]
1948, a licence was granted to the appellant to import from the U.S.A. a large quantity of electrical
instruments, namely fluorescent tubes and fluorescent fixtures. In the application for the licence it
was stated that the goods were not required for
sale but for modernising the lighting system of the
appellant's factory at Ellore in Madras. The licence
was issued subject to the condition that the goods
would be utilised only for consumption as raw
material or accessories in the licence holder's
factory and that no portion thereof would be sold
to any party.
The goods duly arrived in India and were
cleared out of the customs sometime about the end
·~
of February, 1949.
Soon t,hereafter, the authorities
concerned are said to h'1ve got information that the
goods were being sold in the market in breach of
the condition of the licence. Thereupon the police
took steps and after obtaining a search warrant
from a Magistrate in Calcutta on August, 12, 194!),
seized a large stock of the goods from the godown
of the appellents.
1:· ~
Thereafter on January 12, 1951, two proceedings were started. One of them was a prosecution
of various officers of the appellant company including the second appellant under s. 420 read with s.
120 of the Indian Penal Code on the allegation that
the licence had been obtained on false and fraudulent representations as there was no intention at
any time to use the goods for any factory. After
certain proceedings to which it is unnecessary to
refer, the accused persons were discharged by a Presidency Magistrate of Calcutta on July 27, 1953
under s. 253 of the Code of Criminal Procedure and
the prosecution under ss. 420 and 120B of the Penal
Code came to an end. The learned Magistrate held
......
that it had not been proved that the licensing authority had been deceived by any representation of
the a,ocu.sed o~cers of the oompan~ nor that "ri~ht
.... ,
3 S.C.R.
SUPREME COURT REPORTS
343
from the time of applying for the licen0e, the intention was to sell the goods or part thereof''.
The other proceeding was a prosecution of the
second appellant and another person under s. 5 of
the Act of 194 7.
That section provides that "if
any person contravenes any order ... under this Aot,
he shall ... be punishable with imprisonment ... ". It
was alleged that the accused persona had in violation of the conditions of the licence disposed of
portions the goods covered by it and, therefore, com·
mitted an offence under s, 5 of the Aot of 1947. Thia
proceeding resulted in a acquittal by the trial Court
which was confirmed by the High Court at Calcutta
on March 3, 1955. Sen .r., who delivered the judgment
of the High Court said that it was difficult to hold
that a condition of the licence amounted to an order
under the Act and unless the penal section included
the contravention of the condition as an offence it
could not be held that such a contravention amounted to an offence under the section.
While these prooeedings were pending an
order was made by the High Court on January 16,
1953, directing the seized goods to be sold and the
sale proceeds kept with the Chief Presidency Magistrate, Calcutta. Pursuant to this order the goods
were sold for a sum of Ra. 4,15,000 and the sale
proceeds have since been lying with the Chief Presidency Magistrate.
After the aforesaid proceedings had come to
an end, the Collector of Customs, Calcutt.a on August 28, 1955, served a notice on the appellant to
show cause why the moneys lying with the Chief
presidency Magistrate representing the imported
goods should not be confiscated under s. 167(8) of
the Sea Customs Act read with a. 3(2} of the Act of
1947 and why further penalty should not be imposed on them under these provisions. It is this notice
which gave rise to the proceedings with which w~
Ea.& .India
Oommercial Co.,
Ltd., Calcutta
v.
Coll~c:or of Customs,
Calcutla
Sarkar J.
(_
199
East India
Ct>mtMrolal Co.,
Lid., Calcutea
v.
Collulot' oj Cu1tomB,
Ca/Mia
Sarkar J,
:I
,,
344
SUPREME COURT REPORTS [1963]
are concerned. The notice stated that a prohibition
on the import of the goods except under a special
licence and subject to the conditions stated in it
was imposed under s. 3( l) of the Act of 1947 and
that by virtue of this prohibition the importation
of the goods would be deemed to be illegal unless
"(I) at the time of importation of goods were covered by a valid special licence which had not been
caused to be issued by fraudulent misrepresentation,
(2) after importation the goods or any part of them
were not sold or permitted to be utilised by any
other party, except the importers for consumption
as raw material." It also stated that investigation
had revealed that portion of the goods were sold by
the appellants to other people.
After receipt of the notice the appellants
moved the High Court at Calcutta under Art. 226
of the Constitution for a writ of prohibition prohibiting the respondent, the Collector of Customs,
Calcutta, from taking any proceeding pursuant to
the notice under ss. 167 and 182 of the Sea Customs Act against the appellante. The application
was first heard by Sinha, J,, and was dismissed.
An appeal by the appellants to an appellate bench
of the High Court also failed.
The appellants
have now approached this Court in further appeal
by special leave.
Sub-section (2) ofs. 3 of the Act of 1947 provides that "all goods to which any order under
sub-section (1) applies shall be deemed to be
goods of which the import or export has been prohibited or restricted under s. 19 of the Sea Customs
Act, 1878 and all the provisions of that Act shall
have effect accordingly". Section 19 of the Sea
Customs Act is contained in Chapter IV of that
Act. Section 167(8) of the Sea Customs Act states
the "If any goods, the importation or exportatioq
', __
..... ,
---·
--
3 S.C.R.
SUPREME OOURT REPORTS
345
of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such
prohibitinn or restriction . . . such goods shall be
liable to confiscation; and any person concerned
in any such offence shall be liable to a penalty".
Section 182 of this Act authorises various Customs
Officers including a Customs Collector to adjudicate on questions of confiscation
and penalty
under s. 167(8).
As earlier stated the question is one of jurisdiction. The contention of learned conusel for the
appellant is that under s. 167(8) of the Sea Customs Act read withs. 182 of that Act under which
the Collector of Customs is proceeding, he has jurisdisction only to decide whether goods have been imported contrary to the prohibition or restriction imposed by an order made under s. 3( I) of the Act of 194 7
but he has no jurisdiction under these sections to
decide any question of confication of goods for
breach of a
condition of a licence issued under
suoh an order. It is said that it 'Lppeared from
the notice served by the Collector that he was
proceeding to decide whether the goods were liable
to confiscation because they had been disposed of
in breach of the condition of the licence under
which they had been imported which he has no
jurisdiction to do and hence the appellants were
entitled to a writ of prohibition which they sought.
For the purpose of this argument the appellants
proceed on the assumption that there has been a
breach of the condition but this they do not, of
course, admit.
The basis of the appellant's contention is the
proposition that a breaoh of the conditions of a
licence is not a breach of the order under which
the licence was granted and the condition imposed
and that no offence under s. 167(8) of the Sea
Cqstoms Act is committed if a condition of the
'
'
•
;
'
•f
1962
East India
Co111,,.,,cial Co.,
Lid., 0 o/&utta
v.
Co//ecto, of Customs,
CalouUa
Sarkar J.
-
I.
Eutlndii
Comrnlf'&iaZ Co.,
Ltd., Calcutta
••
Collutor of Oustoms,
Ca/culta
SarkarJ.
! .
346
SUPREME COURT REPORTS (1963)
licence is contravened. In my view this proposition is not well founded. But assume it is correct.
Even so it sJems to me that there is no lack of
jurisdiction in the Collector in the present case .
He has admittedly jurisdiction to decide whether
there has been a. breach of an order.
l t follows
that he has jurisdiction to decide what is a breach
of an order and, therefore, whether the breach of
a condition of a. licence is breach of an order. To
say that the breach of a condition is not a breach
of an order is only to set up a defence that the
goods cannot be confiscated for such a breach.
Such a contention does not oust the jurisdiction
of the Cullector to decide whether the breach of
a condition is breach of an order. If the Collector
decides that the breach of a condition is a breach
of an order. his decision, on the assnmption that
I have made, would be wrong but it would not be
a decision made without jurisdiction. This is the
view which all the learned Judges of the High
Court took and it seems to me to be the correct
view.
Further I think in the present case one of
the allegations in the notice is that the goods had
been imported without a licence and therefore in
direct violation of an order made under s. 3(1) of
the Act of 1947. Clearly, the Collector has juris·
diction to decide the question raised by such an
allegation. Now the notice served by the Collector on the appellants contains a statement that
an importation of goods would be illegal unless it
was covered by a licence which has not been procured by fraudulent misrepresentation and that
in the present case the licence had been obtained
by fraudulent misrepresentation. '.l'he notice hence
alleges that the goods had been imported really
without a licence, that is, in breach of an order.
Even if it be assumed, as the appellants contend
H1at an importation -qnder a licence fraq.dulently
I
•
1-
,... -
!
3 S.d.R.
SUPREME COURT REPORTS
347
procured is not an importation without & licence,
that would
only show that there has been no
importation without a licence, that is, in breach
of an order, but it would not deprive the Collector of his jurisdiction to decide that question.
Likewise the fact that a
Magistrat~ has decided
that the licensing authority had not been deceived
by the appellants in the matter of the issue of the
licence which, if binding on the Collector, would
only show that the licence had not been fraudulently procured and cannot affect the Collector's
jurisdiction in any way.
It is also said that the decision of a. High
Court on a point of law is binding on all inferior
Tribunals within its territorial jurisdiction. It
is, therefore, contended that the Collector is bound
by the decision of Sen. J., to which I have earlier
referred, that the breach of a condition of a licence
is not a breach of the order under which the licence
was issued and the condition imposed, As at present advised I : m not prepared to subscribe to
the view that the decision of a High Court is so
binding. But it seems to me that the question
does not arise, for even if the decision of the High
Court was binding on the Collector, that would not
affect his jurisdiction. All that it would establish
is that the Collector would have, while exercising
his jurisdiction, to hold that the breach of a condition of the licence is not a breach of an order.
Its only effF .i would be that the appellants would
not have to establish independently as a. proposition of law that a breach of a condition of a licence
is not the breach of an order under which it had
been issued but might for that purpose rely on
the judgment of Sen, J.
I think, therefore, that the Collector has
jurisdiction in this case to decide whether the
goods were liable to confiscation. If he has this
jurisdiction, he has clearly also the jurisdiction to
East India
Oommercial Co.,
Ltd , C•l•uUa
v.
CollUlor of Ousto1nr
Catoulla
Sarkar J,
1152
lla1t /n,ia
0tmmllf'eial Co.,
Lid., Caiculla
••
Colltelor ol Custom1,
Ca/OUlla
Sarkar .1.
348
StJPltEME 00Ult1' REPoRTS (196:lJ
decide whether the appellants are liable to have a.
further pecuniary penalty imposed on them under
s.167(8) of the Sea Customs Act. If this is the
correct view, as I think it is, then the appellants
are not entitled to the writ.
But suppose I am wrong in what I have said
so far about the Collector's jurisdiction. Suppose
as the appellants contend, he had in this case no
jurisdiction to decide whether the goods are liable
to confiscation. That would be because the breach
of a condition of a licence is not a breach of an
order under which it was issued and the Collector
has no jurisdiction to decide whether it is so or
not. This is how the appellants themselves put it.
It has not been contended, and indeed it cannot
be, that if the breach of a condition of a licence
is the breach of an order under which it was issued,
the Collector would have jurisdiction to decide
whether in the present case the goods are liable
to confiscation.
I am unable to agree that the breach of a condi·
tion of a licence issued under an order made under the
Actofl947 is not a breach of the order. In my view,
euch a breach is a breach of the order itself. Sub·
section ( l) of s
;{ of the Act of 194 7 empowers
the Government. to make orders prohibiting, restricting or otherwise controlling the import of
goods.
Now clearly, one method of restricting or
controlling the import of goods would be to regu.
late their use or disposition after they had been
brought into India.
Therefore, under the Act of
1947 the Government has power to restrict or control imports in this way; it could lawfully drovide
that the goods would not after import be dealt
with in a certain way. It would follow that Notification
No. 2-ITC(48 was quite competent and
intra vires the Act and, therefore, the condition in
the licence issued in this case that the goods
would not be sold after they had been brought
-
-
I
••
8 S.C.R.
SUPRElME OOURT REPORT$
349
into Iodia had been legitimately imposed. The
contrary has not indeed been seriously contended.
When, therefore, such a condition is contravened,
it is really the order authorising its imposition
that is contravened. That aeems to me to be the
clear intention of the legislature for otherwise the
efficacy of the Act of 1947 would be largely destroyed. That Act was intended to preserve and
advance the economy of the State on which the
welfare of the people depended. In such a statute
large powers have to be given to the Government
and they were undoubtedly so given in the present
case. The statute clearly intended and it 11hould
be so read that these power could be e.ffeotively
exercised. Therefore the breach of a condition of
a licence legitimately imposed in exercise of that
power has to be read as a breach of the order by
which the power was exercised and the condition
imposed. It follows that the Collector has jurisdiction to decide whether there has been a breach
of a condition of a licence and whether, therefore
confiscation should be ordered under s. 167(8) of
the Sea Customs Act and further penalty imposed.
I observed that Sen, J., in dealing with the
argument advanced on
behalf of the customs
authorities that a breach of a condition of a licence
imposed under an order issued under the Act would
be a. breach of that order said that there might be
some substance in it in the present case, if notification No. 23-ITC/43 which provided that electrical instrument could not be imported without a
licence had itself provided that the licence might
impose condition as to how the goods were to be
dealt with after they had been brought into India
but that that had not been done. I am unable to
appreciate this reasoning. Notification No. 23-ITC/
43 has to be read along with Notification No.
2-ITC/48. The latter provided that a licence to
import might hfl issued subject to a condition like
Ea•t India
Commerci•l Co ,
Ltd. Q•leulla
,,,
Oell11:tor oJOuatoms,
Cal<ulla
Sarkar J.
llOI
l!lu• lndia
Cmm8""6l 60,,
Lil., OtiletAla
v.
C4U"~ oj Ousto1111,
Ciilcutta
Sa1la,. J.
§50
SUPREME CouRT REPORTS [1963]
the one which we have in the present case. The
licence that was issued in this case was subject to
these notificB.tions and was issued under both of
them. The position, therefore, is the same as if
one order had provided that the goods
could
not be imported except under a licence which
could impose the condition. I am unable to agree
with Sen, J., and also Sinha, J., who expressed
the same view without giving any reason to
support it.
I find that the view that I have taken is
supported. by authority. WiUingale v. Norris (1)
is a case fully in point and is a much stronger case
That oa.se dealt with a prosecution under s. 19 of
the London Hackney Carriages Aot, 1853, which
provided that "for every offence against the provisions of this Act for which no special penalty is
hereinbefore appointed the offender shall be liable
to a penalty not exceeding forty shillings."
A cab
driver was prosecuted under the section for breach
of a regulation made under s. 4 of the Hackney
Carriages Act, 1850. Section 21 of the Hackney
Carriages Act, 1853, provided that the Acts of 1850
and 1853 were to be considered as one Act.
The
driver was held liable to be penalised under s. 19
of the Act of 1953. It was observed at p. 66.
"How a.re the words 'against the provisions of the Aot' to be read ? The two statutes
a.re to be construed as one. In my opinion,
to break the regulations made under the authority of a statute is to break the statute itself,
and therefore s. 19 of the London Hackney
Carriages Act, 1823 must be read thus: 'For
every offence against the regulations promulgated under these two Aet, which are to
be read as one, a penalty not exceeding forty
shillings may be imposed'."
,<Ii
(I) [ 1909] I K .B. 57, 66.
,
'
I
3 S.C.R.
SUPREME COURT REPORTS
351
That case received the full approval of the House
of Lords in Wicks v. Director of Public Prosecutions (1)
where Viscount Simon said,
"There is, of course, no doubt that when
a statute like the Emergency Powers (Defence)
Act, 1939, enables an authority to make regu·
lations, a regulation which is validly made
under tbe Act, i. e., which is intra vires of
the regulation-making authority, should be
regardod as though it were itself an enactment."
I think these observations fully apply to an Act
like the Imports and Exports (Control) Act. Then
I find that in our country too the same view has
been taken. Thus in Emperor v. Abdul Hamid(&),
Mullick, J., observed,
"When a notification is issued by an
executive authority in exercise of a power
conferred by statue, that notification is as
much a part of the law as if it had been
incorporated within the body of the statute
at the time of its enactment."
It has, therefore, to be held that where an order
passed under the Act authorises the impostion
of a condition a breach of the condition would be
punishable as a breach of the order under the Act.
I might now notice another argument. It
was this: Under s. 167 (8) of the Sea Customs Act,
it was the import in contravention of the restriction
that was an offence. The contention was that once
the goods hai been imported validly, tb.at is to say,
once they had been aliowed to cross the Customs
barrier under a valid licence, there could not be an
import contrary to any prohibtion or restriction.
It seems to me that this il!I taking too narrow a
view of s. 167 (8). Suppose the order under s. 3 (1)
of the Imports and Exports (Control) Act had itself
(I) [1947) A.C. S62, 365.
(2) A.I,R. 1923 Pat. I.
1961
Ealt India
Conim11cial Co.,
Ltd., Calcutta
'f.
C•ll1ctor of Cull•ms'
Caloutt,
Sttrler J.
1962
East lnditJ
Commercial Co.,
Ltd., Calcutt·i
••
Colltclor of Customs
CalcutttJ
Sarkar J.
352
SUPREME COURT REPORTS [1963]
said that goods imported shall not be sold in the
market without the permission of a certain authority and the goods imported were notwithstanding
this sold without such permission. It would to my
mind make nonsense of s. 167 (8) if it were to be
said even in buch a case that the goods had not
been imported in contravention of the restriction
imposed by a legitimate order duly made. I have
earlier stated that the coditions in the licence have
to be treated as conditions contained in an order
issued under the Act of 1947 itself. Therefore,
the breach of such a condition would amount to a
contravention of an order restricting the import
of goods.
Such a contravention is clearly punishable under s. 167 (8).
The word "import" has not
be< n defined in the Sea Customs Act. In order
that the Act of 1947 does not become infructuous,
which result the legislature could not have intended,
it must be held that where after crossing the Customs barrier lawfully, goods are disposed of in
contravention of a restriction duly imposed, they
have been imported contrary to the restriction.
It remains only to consider the argument
that under the Sea Customs Act only the goods
imported can be confiscated and therefore, the
money now lying with the Presidency Magistrate
cannot be confiscated. I think this argument is
wholly untenable. The money represents the goods.
The order for sale was made by the High Court
with the consent of both the parties because the
goods were deteriorating. Therefore there can be
no doubt that the sale proceeds of the goods which
could be confiscated, can also be confiscated.
I think that the appeal fails and should be
dismissed.
Suoba Rao J.
SUBBA RAO, J.-This appeal. by special leave
is directed against the judgment of a division Bench
of _the High Court at Calcutta dated Janu!lry
'
3 S.C.R.
SUPREME COURT REPORTS
353
5, 1957, confirming the order of a single Judge of
that Court dismissing the petition filed by the
appellants under Art. 226 of the Constitution.
The dispute which culminated in this appeal
has had a tortuous career and had its origin in
the year
19~8. To appreciate the contentions of
the parties it is necessary to survey broadly the
events covering a long period. The appellants are
Messrs. East India Commercial Co., Ltd., a company
having its registered office in Calcutta and the
Director of that Company. On September 27, 194~,
the appellant-Company filed an application with
the Chief Controller of Imports, New Delhi, for
the grant of a licence to import 20, 000 fluorescent
tubes and 2,000 fluorescent fixtures from the United
States of America. The application was accompanied by a covering letter. In the application it
was mentioned that the goods were required for
the Company's own use as industrial raw material
or accessories; but in the covering letter it was
stated that the goods were required primarily for
their mills at Ellore in the Madras Presidency where
they whe~e planning to arrange for an up-to-date
lighting system. The Chief Contoller of Imports
issued a special licence to the appellants on October
8, 1948.
The licence granted was in respect of
fluorescent tubes and fixtures of the approximate
CIF value of Ra. 3,33,333 equivalent to $100,000
and the shipment was to be made within one year
from the date of issue of the licence. The licence
issued had a rubber stamp which ran thus:
"This licence is issued subject to the condiJff tion that the goods will be utilised only for consumption as raw material or accessories in the
licence holder's factory and that no portion
thereof will be sold to any party."
The licence did not impose any restriction as
regards the number of tubes and fixtures to be
1962
East India
OommerciuJ Oo.,
Ltd., Calcutta
v.
Collector of Customs,
Calcutta
Subba Rao J.
1962
East India
Commercial Co.,
Ltd., Oalcvtt1
v.
Col/tctor of Customs,
Calcutta
Subba Ii ao J.
354
SUPREME COURT REPORTS [1963]
+
imported, but a ceiling was placed on the value of
the goods as stated supra. Between March 21,
1949, and March 26, 1949, the appellants took
delivery of the said tubes and fixtures of the specified value and cleared them on payment of customs
duty. The numbet of tubes and fixtures imported
was larger than that mentioned in the application,
but it is common case that the value did not
exceed the ceiling fixed under the licenne. On
information alleged to have been received by the
v
Chief controller of imports that the appellant-Company was selling the goods to various parties, the
matter was placed before the Special Police Establishment Government, of India, New Delhi. On
August 31, 1949, the said Police establishment
obtained a search warrant from the Chief presidency Magistrate, Calcutta, and seized, among
others, from the appellants' godown a large stock
of fluorescent tubes and fixtures, and left them
with the appellants on their executing a bond, It
may be mentioned at this stage that the value of
the stock imported was a.Lout Rs· 4,66,000 i. e.,
the purchase price of Rs. 3,33,333, together with
the customs duty paid on the said goods. In the
sale subsequently made at the instance of the High
Court, the stock seized fetched a sum of Rs.
4,15,000.
On December 9, 1951), the aμpellants
filed an application before the Chief Presidency
Magistrate, Calcutta, for the return of the seized
goods, whereupon the learned Magistrate called
for a report from the Special Police Establishment,
New Delhi. On January 9 12, 1951, the said Police
Establishment submitted a Challan against appellant No. 2 and others for alleged offences under
s. 420/120B of the Indian Penal Code and the same
was registered as Case No. C. 121 of 1951. On the
same day, the Assistant Collector of Customs filed
a complaint before the said Magistrate against
appellant No. 2 and others for committing an
\
;.
.,.
-f
I
I
~ s.c.R.
SUPREME COURT REPORTS
355
offenne under s. 5 of the Imports and Exports
(Control) Act, 194 7 (hereinafter called the Act, for
having sold a portion of the stock of fluorescent
tubes and fixtures in contravention of the terms of
the licence and the same was registered as Case
No. C. 120 of 1951. On June 28, 1951, the learned
Presidency Magistrate discharged all the accused in
both the cases under s. 253 of the Code of Criminal
Procedure after holding that no prima facie
case had been made out against any of them.
Two revisions were filed against that order in the
High Court-one by the State and the other by the
Customs Authorities. Chunder, J., who heard the
revisions, set aside the orders of discharge made
by the Presidency Magistrate and remanded the
cases for fresh disposal.
On June 8, 1952, the
appellants filed an application before the Chief
presidency Magistrate for the release of seized
goods on the ground that they were deteriorating,
but that was dismissed.
But in a revision against
that order, the High Court on January 16,1953,
directed the goods to be sold by the Presidency Magistrnte and the sale proceeds to be kept in his custody .
The goods were sold .accordingly and they fetched
a sum of Rs. 4, 15,000 and the money has since
then been in the custody of the said court. After
remand, the Presidency Magistrate took the evidence of innumerable witnesses for the prosecution
and for the defence, considered a number of documf1nts and discharged appellant No. 2 in· both the
cases. He held that appellant No. 2 was neither
guilty of the offence under s. 420 of the Indian
Penal Code, as, in his view, there wi:.s no fraudu·
lent or dishonest inducement at the time the application for licence was made, nor of any contravention of the provisions of the Act. Though he
discharged appellant No. 2. he did not make over
the sale proceeds to him. though the said appellant
filed an application for payment of the same: the
learned Magistrate adjourned the said application
1961
East Ind'a
Commercial Co.,
Ltd., Calcutta
v.
Colltetoroj Cuatoma,
Calcutta
S11bba Rao J.
1962
East lr.dia
Commercial Co.,
Ltd, Calcutta
v.
Collector of Customs,
Calcutta
Subba Rao J.
356
SUPREME COURT REPORTS [1963]
till August 29, 1953.
The Assistant Uollector of
Customs filed a revision to the High Court against
the order of discharge of appellant No. 2 passed in
case No. C. 120 of 1951' and the same was registered as Criminal Revision No. 1124 of 1953; he
also obtained an interim stay of the return
of the money to appellant
No. :I.
Bnt no
revision was filed against the order of the
Presidency Magistrate discharging appellant No- 2
of the offence under s. 420, Indian Penal Code.
The Criminal Revision (No. 1124 of 1953) came up
before a division Bench of the Calcutta High Court,
Consisting of Mitter and Sen, JJ., and the learned
Judges, by their judgment dated March 3, 1955,
dismissed the revision holding that there had been
no contravention of the order made or deemed to
be made under the Act.
The learned Judges construed s. 5 of the Act and held that the said section
penalised only a contravention of an order made
or deemed to have been made under the said Act,
buL did not penalise the contravention of the conditions of licence issued under the Act or issued
under a statutory order made under that Act, and
dismissed the revision. On March 24, 1955, the
appellants filed an application before the Chief
Presidency Magistrate for making over the aale
proceeds to them; and the said Magistrate issued
a notice to the Assistant Collector of Customs and
also to the Delhi Special Police Establishment to
~how cause on or before April 19, 1955. On April
19, 1955, the Superintendent, Special Police Establishment, did not show cause, but th11 Assistant
Collector of Customs asked for an adjournment and
the same was granted till May 7, 1955; and again
on May 7, 1955, he took another adjournment of
the hearing of the application on the ground that
depart.mental proceedings were pending against the
appellants. On May 9, Hi55, the appellants filed
a revisio111 in the High Court, presumably, against
the order adjourning the application and the said
revision was numbered as Hevision Case No. 582
of 1955 and it was adjourned from time to time at
3 S.C.R.
SUPREME COtJR'r REPORTS
357
the request of the respondent. On May 28, 1955,
the respondent started a proceeding purported to
be under s. 167(8) of the Sea Customs Act, read
' with s. 3(2) of the Act and called upon the appel·
!ants by notice to show cause within seven days
from the date thereof why the said proceeds,
namely, Rs. 4,15,001) should not be confiscated
and also why Penal action should not be taken
against them. It was stated in the notice that
the special licence was issued on the express condition that the goods covered by the said licence
should be utilised for consumption as raw material
or assessories in the factory of the licence holder
and that no part thereof should be sold or permitted to be utilised by any other party, that the
appellants sold a potti on of the goods imported
under the said licence to others in Breach of the
said condition and that, as the appellants infringed
the said condition, the goods, or the money substituted in its place, were \\a.ble to be confiscated.
On June 3, 1955, the appe\\ant fi.\ed an application
in the High Court at Calcutta under Art.