Full Judgment Text
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PETITIONER:
RANCHHODDAS ATMARAM
Vs.
RESPONDENT:
THE UNION OF INDIA.
DATE OF JUDGMENT:
03/02/1961
BENCH:
SARKAR, A.K.
BENCH:
SARKAR, A.K.
SINHA, BHUVNESHWAR P.(CJ)
DAS, S.K.
AYYANGAR, N. RAJAGOPALA
MUDHOLKAR, J.R.
CITATION:
1961 AIR 935 1961 SCR (3) 718
CITATOR INFO :
F 1962 SC1559 (4)
RF 1966 SC 197 (43)
ACT:
Sea Customs--Import of prohibited goods--Maximum Penalty--
Whether can be levied in excess of Rs 1,000/- Sea Customs
Act, 1878 (VIII of 1878), ss. 167, item No. 8.
HEADNOTE:
Item 8 of the schedule to s. 167, Sea Customs Act, 1878,
provides that any person concerned in the importation or
exportation of prohibited goods shall be liable to a penalty
"not exceeding three times the value of the goods, or not
exceeding one thousand rupees." The petitioner was found to
have imported gold of the value of Rs’ 25,000/- and the
Customs authorities imposed a penalty of Rs. 5,000/-. The
petitioner challenged the validity of the order imposing the
penalty on the ground that the. maximum penalty that could
be imposed under item 8 of s. 167 was Rs. 1,000/-.
Held, that the orders imposing the penalty was valid. It is
open to the Customs authorities to impose any of the
alternative penalties provided though the amount of it
exceeds the amount of the maximum in the other alternative.
None of the previous decisions of the Supreme Court were
authority for the proposition that the maximum penalty which
can be imposed under item 8 of s. 167 is Rs. 1,000/- as this
question did not arise in those cases. On the plain
language of the provision which was in the affirmative form
it gave ail option to the Customs authorities to impose any
one of the two penalties provided. The relevant words could
not be read as "shall not be liable to a penalty exceeding
three times the value of the goods, or exceeding one
thousand rupees. "
Maqbool Hussain v. State of Bombay [1953] S.C.R. 730,
Babulal Amthalal Mehta v. The Collector of Customs [1957]
S.C.R. 1110 and F.N ’ Roy v. The Collector of Customs.
Calcutta [1957] S.C.R. 1151, explained and distinguished.
The Metropolitan Board of Works v. Steed (1881) L.R. 8
Q.B.D. 445, referred to.
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JUDGMENT:
ORIGINAL JURISDICTION 1. Petition No. 300 of 1960.
Petition under Art. 32 of the Constitution of India for
enforcement of Fundamental Rights
and
Criminal Appeal No. 107 of 1958,
716
Appeal by special leave from the judgment and order dated
April 5, 1957, of the Bombay High Court in Criminal Revision
Application No. 1100 of 1956.
Porus A. Mehta, S. J. Sorabjee, S. N. Andley, J. B.
Dadachanji, Rameshwar Nath and P. L. Vohra, for the
petitioners.
C. K. Daphtary, Solicitor-General of India, H. B. Khanna,
Y. S. Parmar and G. Gupta, for respondents (In Petn. No.
300 of 1960).
N. C. Chatterjee and B. L. Aggarwal, for the appellant.
H. R. Khanna and R. H. Dhebar, for respondents (In Cr. A.
No. 107 of 1958.)
1961. February 3. The Judgment of the Court was delivered
by
SARKAR, J.-These two matters have been heard together as
they raise a common question. One of these matters is a
petition under Art. 32 of the Constitution and the other, an
appeal from a judgment of the High Court at Bombay.
The petitioner and the appellant were found by the Customs
authorities in proceedings under the Sea Customs Act, 1878,
to have imported goods in breach of s. 19 of that Act. The
petitioner had without authority imported gold of the value
of Rs. 25,000/and the appellant, steel pipes ’of the value
of Rs. 1,28,182/-. The Customs authorities by independent
orders, imposed a penalty of Rs. 5,000/- on the petitioner
and of Rs. 25,630/- on the appellant for these offences,
under item 8 of the schedule to s. 167 of the Act. The
Customs authorities further confiscated the petitioner’s
gold under the same provision. There was no order of
confiscation of the steel pipes for reasons to which it is
unnecessary to refer.
The appeal is against an order the result of which was to
direct realisation of the penalty imposed on the appellant,
by execution of a distress warrant. The petition challenges
the validity of the order imposing the pecuniary penalty.
Neither the petitioner nor the appellant, however, questions
the decisions of the Customs authorities that they had been
guilty of
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breach of a. 19 or that penalties could be imposed on them
under item 8 in a. 167. The petitioner does not, further,
challenge the order confiscating the gold.
The only contention of the petitioner and the appellant is
that the orders of the Customs authorities are invalid as
they impose penalties in excess of Rs. 1,000/-. They
contend that the maximum penalty that can be imposed under
item 8 in s. 167 is Rs. 1,000/-. This contention is based
on two grounds. First it is said that, it has been so held
by this Court. Then it is said that, in any case, on a
proper construction, item 8 in s. 167 does not premit the
imposition of a penalty in excess of Rs. 1,000/-
First, as to the decisions of this Court, we were referred
to three. The earliest is Maqbool Hussain v. The State of
Bombay (1). That was a case in which the question was
whether a person on whom a penalty of confiscation of goods
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had been imposed under item 8 in s. 167, could later be
prosecuted on the same facts for an offence under s. 23 of
the Foreign Exchange Regulation Act, 1947, in view of the
provisions of Art. 20(2) of the Constitution against, what
has been called, double jeopardy. It was held that Art.
20(2) was no bar to the prosecution under the Foreign
Exchange Regulation Act for, the authority under the Sea
Customs Act imposing the penalty under item 8 in s., 167 was
not a judicial tribunal and the proceeding resulting in the
imposition of the penalty of confiscation was, therefore,
not a prosecution. No question arose in that case as to the
maximum penalty that could be imposed under item 8 in s,
167. While discussing whether a Customs authority
exercising the power to order confiscation and levy a
penalty under s. 167 formed a judicial tribunal, this Court
observed at p. 742:
" Even though the customs officers are
invested with the power of adjudging
confiscation, increased rates of duty or
penalty the highest penalty which can be
inflicted is Rs. 1,000/-."
It is quite obvious that this observation was made in a
different context and was not intended to decide
(1) [1953] S.C.R. 730,
721
that the provision did not permit the imposition of a higher
penalty, as to which no question had then arisen. It is
clear that if the highest penalty which the Customs officers
had the power to impose was in excess of Rs. 1,000/- but
subject to another limit, it would not have followed that
they were judicial tribunals. The judgment of this Court
was not based on ,the amount of the maximum penalty which
the Customs authorities could impose. It seems rather to
have been assumed that the maximum penalty was Rs. 1,000/-,
for the question about maximum penalty was neither argued,
nor discussed in the judgment at all.
The second case is Babulal Amthalal Mehta v. The Collector
of Customs (1). The only question that arose there was
whether s. 178A of the Sea Customs Act, which placed on the
person from whose possession any goods mentioned in the
section and reasonably believed to have been smuggled were
seized, the burden of proving that they were not so, was
void as offending Art. 14 of the Constitution. In
discussing the scheme of the Act, it was observed in
connection with item 8 in s. 167 that "This Court has held
that the minimum is the alternative: see Maqbool Hussain v.
The State of Bombay "(2) . Here again, it is clear that the
Court was not deciding the question that has now arisen
before us. It only made a passing reference to the
observation in Maqbool Hussein’s case(2). It was not
necessary for the decision of Babulal’s case (1) to have
pronounced on the correctness of the observation in Maqbool
Hussain’s case (2) and no such pronouncement was clearly
intended. Nor was it necessary in Babulal’s case (1) to
express any view as to the maximum penalty that could be
imposed under item 8 in s. 167.
The last case referred to is F. N. Roy v. The Collector of
Customs,Calcutta (1). That was a case where an order had
been made under item 8 in s. 167 confiscating certain goods
imported without authority and imposing a penalty of Rs.
1,000/- in respect of that import. The importer filed a
petition in this Court under Art. 32
(1) [1937] S.C.R. 1110, 1116.
(2) [1953] S.C.R. 730.
(3) [1957] S.C.R. 1151.
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of the Constitution challenging the validity of the
penalties levied. The main part of the argument of the
learned counsel for the petitioner was based on the Imports
and Exports (Control) Act, 1947, and raised questions which
do not concern us in the present cases.. It appears however
that it was also contended that item 8 in s. 167 offended
Art. 14 of the Constitution, a point which again does not
arise in the cases in hand. That contention was dealt with
in the following words at p. 1158:
"Another similar argument was that s. 167,
item 8 of the Sea Customs Act itself offended
Art. 14 in that it left to the uncontrolled
discretion of the Customs authorities to
decide the amount of the penalty’ to be
imposed. The section’ makes it clear that the
maximum penalty that might be imposed under it
is Rs. 1,000/-. The discretion that the
section gives must be exercised within the
limit so fixed. This is not an uncontrolled
or unreasonable discretion. Furthermore, the
discretion is vested in high Customs officers
and there are appeals from their orders. The
imposition of the fine is really a quasi-
judicial act and the test of the quantum of it
is in the gravity of the offence. The object
of the Act is to prevent unauthorised
importation of goods and the discretion has to
be exercised with that object in view. "
It will be observed that the fine imposed was Rs. 1,000/-.
It was not therefore a case in which any question could
arise as to whether a penalty in excess of Rs. 1,000/-,
could be imposed and in fact no such question arose. The
question that arose was, whether the section offended Art.
14, so that, no penalty could be imposed under it at all.
It was in this connection that it was observed that item 8
in s. 167 did not leave it to the uncontrolled discretion of
the Customs authorities to decide the amount of the penalty
because it had imposed a limit on that amount. It is true
that the limit was there mentioned as Rs. 1,000/-. But it
is clear that the reasoning would have held equally if
it .had been said that the limit imposed was either three
times the value of the goods or: Rs. 1,000/-. The point
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that was sought to be made in the judgment was that there
was a limit and that that was a reason for saying that the
discretion given was not uncontrolled and, therefore, there
was no violation of Art. 14. For this purpose, it made no
difference what the limit was.
Some of the High Courts have thought that this Court had
decided in these cases that the maximum penalty permissible
under the provision is Rs. 1,000/-. The fact is that the
question was never required to be decided in any of these-
cases and could not, therefore, have been, or be treated as,
decided by this Court. In Leo Boy Frey v. The
Superintendent, ’District JailAmritsar (1), this Court
observed that " No question I has been raised as to the
maximum amount of penalty that can be imposed under s.
167(8) and we are notcalled upon to express any opinion on
that point. " This would show that this Court had taken
notice of the fact that the High Courts were interpreting
the judgment in F. N. Roy’s case(") and the other case,% in
a manner which was not intended and desired to strike a note
of warning against the misconception. None of these cases
is authority for the proposition that the maximum penalty
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which can be imposed under item 8in s. 167, is RE;. 1,000/-.
The argument that this Court has already held that the
maximum penalty that can be awarded under it is Rs. 1,000/-
must therefore fail.
We now come to the construction of the provision, the
relevant portion of which is in these terms:
S. 167. The offences mentioned in the first column of the
following schedule shall be punishable to the extent
mentioned in the third column of the same with reference to
such offences respectively:
----------------------------------------------------------
Sections of
Offences this Act to Penalties
which offence
has reference
----------------------------------------------------------
....................................... . . . . . . . . .
8.If any goods, the importation or exportation 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 prohibition or restriction.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 & 19
such goods shall be liable to confiscation; and any person
concerned in any such offence shall be liable to a penalty
not exceeding three times the value of the goods, or not
exceeding one thousand rupees.
..........................................................
----------------------------------------------------------
(1) [1958] S.C.R. 822, 827. (2) [1957]S.C.R. 1151.
724
The words which are material to this case are, "Any person
concerned in any such offence shall be liable to a penalty
not exceeding three times the value of the goods or not
exceeding one thousand rupees. " The question is whether,
in imposing a penalty, the conditions laid down in both the
alternative clauses joined by the word " or " have to be
fulfilled or the condition in any one of them only ?
It is clear that if the words form an affirmative sentence,
then the condition of one of the clauses only need be
fulfilled. In such a case ,for " really means It either " "
or ". In the Shorter Oxford Dictionary one of the meanings
of the word " or " is given as " A participle coordinating
two (or more)-words, phrases or clauses between which there
is an alternative. " It is also there stated, " The
alternative expressed by " or " is emphasised by prefixing
to the first member or adding after the last, the associated
adv. EITHER." So, even without " either ", " or " alone
creates an alternative. If, therefore, the sentence before
us is an affirmative one, then we get two alternatives, any
one of which may be chosen without the other being con-
sidered at all. In such a case it must be held that a
penalty exceeding Rs. 1,000/- can be imposed.
If, however, the sentence is a negative one, then the
position becomes different. The word " or " between the two
clauses would then spread the negative influence over the
clause following it. This rule of grammar is not in
dispute. In such a case the conditions of both the clauses
must be fulfilled and the result would be that the penalty
that can be imposed can never exceed Rs. 1,000/-.
The question then really comes to this: Is the sentence
before us a negative or an affirmative one ? It seems to us
that the sentence is an affirmative sentence. The substance
of the sentence is that a certain, person shall be liable to
a penalty. That is a positive concept. The sentence is
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therefore not negative in its import.
The learned counsel for the petitioner and the appellant
said that the sentence began with a negative, namely,the
words not exceeding " and therefore it
725
is a negative sentence and the word " or " occurring later
in the sentence must spread the negative influence over that
part of the sentence which follows it. This contention is
clearly fallacious. The word " not " refers only to the
word " exceeding " following it and the two together
constitute a qualifying clause limiting the amount of the
penalty that can be imposed. There is no negative sense to
spread over and influence the rest of the sentence. If the
learned counsel were right, the words " not exceeding "
would not have been repeated after the word " or " for the
word " or " would have carried the negative influence
forward and another negative would not,have been necessary.
The acceptance of learned counsel’s argument that "or"
carried any negative influence forward, would make nonsense
of the sentence.
It seems to us that the learned counsel really wants us to
read the section as if the words were, " shall not be liable
to a penalty exceeding three times the value of the goods,
or exceeding one thousand rupees. " So read the sentence
would be a negative one and the word "I or " would carry the
negative influence forward. To do that would, however,
bere-enacting and not interpreting. It is clear that each
time the expression " not exceeding " is used, it qualifies
the extent of the punishment that is stated after it. That
expression is really equivalent to the words " up to " and
can be easily substituted by them without affecting the
sentence in any way. There is really no negative in the
sentence and what we have, is a purely affirm. active
provision laying down two alternative penalties to choose
from, with a maximum for each.
The distinction between affirmative and negative sentences
may be illustrated by the case of The, .Metropolitan Board
of Works v. Steed (1). The provision there considered was,
" No existing road, being of less width than forty feet,
shall be ... formed as a street for the purposes of carriage
traffic, unless such road be widened to the full width of
forty feet ...or for the purposes of foot traffic only,
unless such road be widened to the full width of twenty
feet or unless such
(1) (1881) L.R. S Q.B.D. 415.
726
streets respectively shall be open at both ends. " It was
held that both the conditions had to be fulfilled and the
street had to be of the prescribed width and also open at
both ends. One of the reasons given for this view was that
the sentence was a negative one and the word " or " (being
the one underlined by us*) in it carried forward the
negative influence and made it necessary to fulfil both the
conditions. ’It was said at pp. 447-48 :
" We might have referred to authorities by
good writers, shewing that where the word ’or’
is preceded by a negative or prohibitory
provision, it frequently has a different sense
from that which it has when it is preceded by
an affirmative provision., For instance,
suppose an order that ’you must have your
house either drained or ventilated. The word
I or’ would be clearly used in the
alternative. Suppose again, the order was
that I you must have your house drained or
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ventilated, that conveys the idea to my mind
that you must have your house either drained
or ventilated. But supposing the order were
that ’you must not have your house undrained
or unventilated.’ The second negative words
are coupled by the word I or’, and the nega-
tive in the preceding sentence governs both.
In a. 98 there is a negative preceding a
sentence no existing road’ shall be formed."
It is obvious that the sentence before us contains, no
negative or prohibitory provision. It only contains a
positive provision empowering one of the two alternative
penalties laid down to be imposed. The fact that the
penalties are directed not to exceed a certain limit does
not change the sentence from affirmative to negative; the
sentence remains permissive and does not become prohibitory.
It follows that any of the. alternative penalties provided
may be imposed though the amount of it exceeds the amount of
the maximum in the ’Other alternative. A consideration of
the object of the Act also supports that view. The Act is
vital for the country’s economic stability. It is: intended
to prevent smuggling in goods and such goods may be of large
value. A small fine of Rs. 1,000/- would
Here printed in italics.
727
often be quite inadequate to serve these objects. It would
be in consonance with such objects if power is given to the
authorities concerned to impose a higher penalty when the
occasion requires it.
The learned counsel for the petitioner and the appellant
then referred us to Webster’s New International Dictionary
(2nd ed.) where one of the meanings of the word " nor " has
been given as " or not ". The learned counsel say that the
word " or " and the word " not " following it have to be
read together and on the authority of Webster, ask us to
substitute for them the word " nor " in order to get at the
intention of the Legislature. But we do not have here the
word "nor ". Nor are we able to find anything in Webster’s
Dictionary authorising the substitution of " nor " in all
places for the words " or not ". We are clear that here no "
or not " occurs which can be substituted by " nor without
doing violence to the sentence. The wordnot, following the
word " or ", is really joined to and qualifies the word "
exceeding " which comes after it and cannot be joined to the
preceding word "or" at all. To read the words " or not " as
joined to each other, and to substitute them by " nor "
would be to change the structure of the whole sentence and,
therefore, its meaning. An interpretation which so
radically alters the meaning of the clause, cannot be
accepted.
These were the main arguments advanced by the learned
counsel for the petitioner and the appellant. There remain,
however, certain other points raised by them to deal with.
It was said that the fact that two alternative penalties had
been provided would indicate that one of them was the
maximum. It is somewhat difficult to comprehend this
argument. By itself it does not show that the maximum
penalty would be Rs. 1,000/- and that is what the learned
counsel want us to hold. We have earlier held that either
of the two penalties provided may be chosen by the
authorities concerned as they consider fit. Suppose three
times the value of the goods with which the offence is
concerned, exceeds Rs. 1,000/-. Then that would be larger
of the two penalties that can be awarded in that case and
the present argument does
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93
728
not establish that this larger penalty cannot be imposed.
Which is the maximum in a particular case, would depend on
the value of the goods. Further, there seems to us to be
good reason why two alternative penalties were provided.
Where the value of the goods is very large, it may be that a
penalty of Rs. 1,000 /- would be too inadequate a
punishment. Again, it may be that three times the value of
the goods may be ’Much smaller than Rs. 1,000/-. It may
conceivably be necessary in such a case by reason, for
example, of the person concerned having on earlier occasions
committed the same offence or having shown a determined
state of mind to commit the offence, to inflict a penalty
higher than three times that value. Then it may also happen
that the value of the thing concerned may, in conceivable
circumstances, not be properly ascertainable. In such a
case the alternative penalty up to Rs. 1,000/- has to be
adopted if any penalty at all is to be awarded.
The learned counsel then said that if both the alternatives
were available to the authorities concerned to choose from,
then the provision would give them a very arbitrary
discretion which, whether it offended Art. 14 or not, there
is no reason to think was intended by the Legislature. We
do not think that this argument is of force. Each of the
alternative penalties provided, has a limit attached to it.
Therefore the discretion is neither unlimited nor arbitrary.
It may be that three times the value may amount to an
enormous sum but that will be so only when the value of the
goods with which the offence is concerned, is high. If
goods of high value are the subject matter of the offence,
then there is no reason for saying that the provision for
imposing a penalty of three times that value, is not
intended by the Legislature.
Another argument advanced on behalf of the petitioner and
the appellant was that no other item in s. 167 provided for
a penalty in money, as distinguished from confiscation, in
excess of Rs. 1,000/- and this indicated the intention of
the Legislature not to impose a higher penalty. It was
therefore said that item 8 should be construed in accordance
with this
729
intention as not enabling the imposition of a pecuniary
penalty higher than Rs. 1,000/-. The first answer to this
contention is that the intention in item 8 has to be
gathered from the language used in it. If that language is
clear, that must be given effect to whatever may have been
the intention in other provisions. In our view, the
language in item 8 is clear and it permits the imposition of
a penalty in excess of Rs. 1,000/-. No question of
gathering the intention of the Legislature from the other
items arises. The second answer is that the learned counsel
are not right when they say that the other items do not
provide for a pecuniary penalty in excess of Rs. 1,000/-.
Thus under item 29 when goods are found in a boat without a
boat-note as required by s. 76 of the Act, the person in
charge of the boat shall be liable to a penalty not
exceeding twice the amount of the duty leviable on the
goods. Now it is conceivable that such duty may be in
excess of Rs. 1,000/-. Provisions for similar penalty will
be found in items 17, 29, 31, 38, 48 and others. There are
also several items which permit the imposition of a penalty
calculated at large sums like Rs. 500/- and Rs. 1,000/- per
package. In these the amount of the penalty might easily
exceed Rs. 1,000/-: see items 17, 36, 49, 56. There is
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another group of items which permits the imposition of
penalty calculated on the value of the goods, and such
penalty may, of course, be far in excess of Rs. 1,000/- :
see items 58, 59 and 73. It would indeed be strange if a
statute like the Sea Customs Act, on the proper working of
which the finances and commerce of the country largely
depend, considered a pecuniary penalty of Rs. 1,000/- enough
for a breach of any of its provisions. We feel no doubt
that the Act did not intend this.
It was also argued that a penal statute like the one before
us, must be construed in favour of a citizen and therefore
item 8 should be construed as permitting the imposition of a
penalty up to Rs. 1,000/- and no more. This rule of
construction of a penal statute is applicable only where the
meaning of the statute is not clear. This is not the case
with the present statute. The appellant and the petitioner
can therefore derive no assistance from this rule.
730
The learned counsel for the petitioner and the appellant
also said that the Sea Customs Act was modelled on 39 and 40
Vict., Ch. 36, an English statute to consolidate the Customs
laws, s. 186 of which corresponds to s. 167 of our Act.
They said that the English section expressly provided that
the authority concerned would have the option to choose any
of the punishments specified, but our statute deliberately
departed from this and did not use the words " at the
election of " which occur in the English statute. In our
view, even without these words the meaning in our provision
is plain. It also seems to us that the English statute used
the words " at the election of " by way of abundant caution.
The effect of that statute would have been the same even
without those words. It may be that in our statute similar
words were not used because it is somewhat differently
framed; the use of them may have been considered
inappropriate. The English statute gives a choice between
two fixed penalties of " treble the value of the goods" and
"one hundred pounds." In our statute, each of the two
alternative penalties is flexible ; each penalty is not to
exceed a certain limit.
The last argument was based on the word " extent appearing
in the main part of s. 167 which, it is said, indicated that
the third column laid down the extent of the punishment that
could be awarded. This argument does not carry the matter
further at all for, whichever of the two competing
interpretations is accepted, in each case there would be the
extent of the punishment specified and that word cannot help
in deciding what the correct interpretation is.
For these reasons it seems to us that under item 8 in s. 167
a penalty in excess of Rs. 1,000/- can be imposed and so the
orders that the Customs authorities had made in these cases
are not open to any challenge. It is not in dispute that
the penalties imposed did not exceed three times the value
of the goods concerned.
The petition and the appeal are accordingly dismissed.
There will be no order for costs.
Petition and appeal dismissed.
731