Kapur Chand Pokhraj vs The State Of Bombay on 24 March, 1958

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 24 March 1958

Coram: Subba Rao J.

In this matter the Supreme Court of India considered two special leave appeals that challenged a decision of the High Court of Judicature at Bombay. The High Court judgment arose from three linked criminal revision applications. The central issue before the Court was whether a prosecution could be sustained against an individual for an offence that was alleged to have been committed under section 24(1)(b) of the Bombay Sales Tax Act, 1946, which the Court later refers to as the repealed Act.

The appellant, identified as Sri Kapur Chand Pokhraj, owned and operated the firm Messrs N. Deepaji Merawalla, a business engaged in the trade of bangles and registered under the Bombay Sales Tax Act, 1946. The appellant failed to disclose the true turnover of his sales to the Sales Tax Department in the quarterly returns that he filed for the periods ending 30 September 1950, 31 December 1950 and 31 March 1951. Instead, he maintained two separate sets of account books and deliberately submitted false returns for each of those three quarters to the Sales Tax Officer, thereby committing an offence punishable under section 24(1)(b) of the Act that was later repealed. Under that legislation, a prosecution for an offence under section 24(1) could not be instituted unless the Collector first gave his sanction, which was a condition precedent. The Bombay Sales Tax Act, 1952 (Bombay Act XXIV of 1952) repealed the 1946 Act and was published on 9 October 1952. Subsequently, on 11 December 1952, the Bombay High Court held that the 1952 Act was ultra vires, prompting the State of Bombay to appeal that judgment to the Supreme Court. To remedy the legal vacuum created by the High Court’s decision, the State Government issued the Bombay Sales Tax Ordinance II of 1952 on 22 December 1952, declaring that the 1946 Act would be deemed to have continued in force up to 1 November 1952. Two days later, on 24 December 1952, Ordinance III of 1952 was promulgated, further extending the life of the 1946 Act. On 25 March 1953, the Bombay State legislature enacted the Bombay Sales Tax Act, 1953 (Bombay Act III of 1953), referred to as the repealing Act, which repealed both the 1946 Act and Ordinance III of 1952. Importantly, the 1953 Act, while abolishing the earlier legislation, incorporated a provision for an offence that was substantially similar to that in section 24(1) of the repealed Act, prescribed a comparable procedure for prosecution, and preserved the liabilities that had arisen under the earlier law. During the period when Ordinance III of 1952 remained effective, the State Government also issued a notification under section 3 of that Ordinance appointing the Additional Collector of Bombay as a Collector under the Ordinance.

The State Government, under the Ordinance, had appointed the Additional Collector of Bombay to act as a Collector for the purposes of that Ordinance. After the Bombay Sales Tax Act, 1953 (Act III of 1953) had come into force, on 4 July 1953 the Additional Collector, identified as Mr Joshi, exercised his authority to grant sanction for instituting prosecution against the appellant for an offence that the appellant had allegedly committed under section 24(1)(b) of the repealed Bombay Sales Tax Act of 1946. Following the issuance of this sanction, the appellant was indeed prosecuted, the charge being framed precisely under section 24(1)(b) of the 1946 Act. When the matter came before the Presidency Magistrate, the appellant entered a plea of guilt to the charge. The learned Magistrate accepted this plea, found the appellant guilty of the alleged offence, and imposed a monetary penalty of two hundred rupees, stipulating that in the event of non‑payment the appellant would be required to undergo one month of rigorous imprisonment.

The State of Bombay was dissatisfied with the sentence imposed by the Magistrate and consequently filed a revision before the High Court of Judicature at Bombay. In the revision application the State argued that, because the appellant maintained duplicate sets of accounts and deliberately supplied false information, the interests of justice required that a more substantial and harsher sentence be imposed. Before the High Court the appellant contended that the repeal of the 1946 Sales Tax Act had extinguished any liability for the offence and further maintained that the prosecution was procedurally defective because the sanction had been issued by an Additional Collector rather than by the Collector of Sales Tax as required. The High Court rejected these submissions. In its order the High Court enhanced the penalty by adding a rigorous imprisonment term of one month for each of three separate proceedings, while leaving the fine of two hundred rupees unchanged. The Court also directed that the three imprisonment terms be to run concurrently.

Subsequently, the appellant obtained special leave from this Court to file appeals against the judgment of the High Court. The counsel appearing for the appellant raised before this Court the same arguments that had been advanced unsuccessfully before the High Court. The counsel’s principal contention was that the Bombay Sales Tax Act, 1953, in repealing the 1946 Act, had not made any saving provision for penalties relating to offences committed under the repealed statute, and therefore no prosecution for such offences could be sustained. To clarify the basis of this argument, reference was made to the relevant saving provisions incorporated in Act III of 1953 as well as to the provisions of the Bombay General Clauses Act. Section 48(2) of the Bombay Sales Tax Act, 1953 provides that, notwithstanding the repeal of the earlier Act and the associated entries, the repeal shall not affect or be deemed to affect (i) any right, title, obligation or liability already acquired, accrued or incurred; (ii) any legal proceeding that was pending on 1 November 1952; and the text of the provision continues in the subsequent portion of the judgment.

The judgment recorded that Section 48(2) of the Bombay Sales Tax Act, 1953 provides that, notwithstanding the repeal of the earlier Act, the repeal shall not affect or be deemed to affect any right, title, obligation or liability already acquired, accrued or incurred; it shall also not affect any matter concerning any right, title, obligation or liability or any act done or suffered before the specified date, and any such proceeding shall be continued and disposed of as if the new Act had not been enacted. Further, the provision states that the recovery of any tax or penalty that may have become payable under the earlier Act and the associated entries before that date shall be assessed, imposed and recovered, to the extent possible, in accordance with the provisions of the 1953 Act.

Section 7 of the Bombay General Clauses Act was then quoted in full. It provides that when this Act, or any later Bombay Act, repeals any enactment, unless a different intention appears, the repeal shall not revive anything that was not in force at the time the repeal takes effect; shall not affect the previous operation of any repealed enactment or anything duly done or suffered under it; shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactment; shall not affect any penalty, forfeiture or punishment incurred in respect of any offence committed against the repealed enactment; and shall not affect any investigation, legal proceeding or remedy concerning any such right, privilege, obligation, liability, penalty, forfeiture or punishment, which may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act had not been passed.

A comparative analysis of these provisions was undertaken. The analysis observed that Section 7 of the General Clauses Act explicitly saves penalties, forfeitures or punishments incurred for offences under a repealed enactment, thereby distinguishing criminal liability from civil rights and liabilities. By contrast, Section 48 of the 1953 Act does not separate civil and criminal matters; it saves legal proceedings pending on 1 November 1952 that relate to rights acquired or liabilities incurred under the repealed Act, without a distinct clause for penalties. The argument advanced that the inclusion of a specific saving clause in the repealing Act signals a “different intention” that excludes the operation of Section 7, and that the omission of a clause comparable to sub‑section (d) of Section 7 demonstrates that the liability saved under Section 48 excludes criminal liability.

The Court, however, held that it was unnecessary to delve further into Section 7 of the General Clauses Act because Section 48(2)(i) of the repealing Act already answered the question. That clause states that the repeal does not affect any right, title, obligation or liability already acquired, accrued or incurred. The Court noted that the expression “liability incurred” is broad and inclusive, covering both civil and criminal liabilities, and therefore the repeal does not extinguish liability for offences committed under the repealed Act.

In this case, the Court observed that the expression “liability incurred” was broad and ordinarily covered both civil and criminal responsibility. In criminal law, the term “liability” embraced any punishment that a person subjected himself to by contravening the law, and there was no reason to confine the comprehensive wording only to civil liability. The context of the provision did not impose such a limitation. Moreover, the Court found no plausible ground to attribute to the Legislature an intention to erase offences committed under the repealed Act, especially since the repealing Act expressly retained those offences. If the legislature had justified preserving civil liabilities that arose under the repealed Act, the same justification extended to preserving criminal liabilities arising under the same Act. The fact that section 7 of the Bombay General Clauses Act dealt separately with criminal and civil liabilities, while section 48(2) of the repealing Act amalgamated them in a single clause, was not decisive; the Court noted that section 48 might simply reflect a drafting effort to omit unnecessary words. Likewise, the special provision in section 48(2) for pending proceedings did not indicate a deliberate departure from the practice embodied in section 7, which would have signaled an intention to save only those offences for which legal proceedings were pending on the specified date. The Court agreed with the observation of the learned Judge of the Bombay High Court that clause 2 was introduced to prevent the argument that once a case was commenced the liability merged with the proceedings and required separate preservation. On a fair reading of the saving clause in section 48(2), the Court could not assign a restricted meaning to “liability incurred,” especially when the Act’s scheme did not show any legislative intention to exclude criminal liability. Consequently, the Court held that the liability incurred—that is, the offence committed—under the repealed Act fell within the saving clause of section 48 of the repealing Act. The Court stated that it was unnecessary to decide whether the saving clause manifested a different intention under section 7 of the Bombay General Clauses Act that would have excluded its operation in construing the repealing Act. Finally, the Court rejected the counsel’s argument that the appellant, having committed the offence under the repealed Act, should be tried only with the previous sanction of the Collector as provided by that Act; the Court noted that the sanction in the present case had been granted by the Additional Collector, and therefore the Magistrate possessed jurisdiction to take cognizance of the offence.

The argument that the Magistrate lacked jurisdiction because the sanction was given by the Additional Collector required examination of the sanction provisions contained in the repealing statute and in the earlier statutes and ordinances. The Bombay Sales Tax Act of 1946, in Section 24(1)(b), provided that a person who, without sufficient cause, failed to submit any return required by Section 10 or who knowingly submitted a false return would be liable, in addition to any tax that might be recoverable, to simple imprisonment for a term which could extend to six months, or to a fine not exceeding one thousand rupees, or to both punishments; if the offence was of a continuing nature, the provision further authorized a daily fine not exceeding fifty rupees for each day of continuation. Section 24(2) of the same Act stipulated that no court could take cognizance of any offence under the Act, or of any rule made thereunder, unless the Collector first gave his previous sanction, and that no court inferior to a Second Class Magistrate could try such an offence. Section 2(a) defined the term “Collector” as the Collector of Sales Tax appointed under sub‑section (1) of Section 3. Section 3(1) authorized the State Government, for the purpose of the Act, to appoint any person as Collector of Sales Tax and to appoint such other persons as assistants as it deemed fit. Ordinance No II of 1952 provided that the Bombay Sales Tax Act of 1946 and the entries relating to that Act in the third schedule of the Bombay Merged States (Laws) Act, 1950, were deemed to have remained in force up to and including 1 November 1952. Ordinance III of 1952 contained a Section 36 dealing with offences and penalties, which mirrored the earlier provision but prescribed a higher maximum fine of two thousand rupees and a daily fine of one hundred rupees for continuing offences. Section 37 of that Ordinance required that no court could take cognizance of any offence punishable under Section 36, or of any rule made under the Ordinance, unless the Collector had previously sanctioned the prosecution, and barred any court inferior to a Second Class Magistrate from trying the offence. Section 2(6) likewise defined “Collector” as the Collector of Sales Tax appointed under Section 3, and Section 3(1) repeated the power of the State Government to appoint a Collector and assistants as it saw fit. The next provision considered was Section 36 of the Bombay Sales Tax Act of 1953 (Act III).

The Court observed that Section 36 of the Bombay Sales Tax Act of 1953 provides that any person who, without sufficient cause, fails to furnish a return or statement required by Section 13 or Section 18, or who knowingly furnishes a false return or statement, shall be punishable in addition to the recovery of any tax that may be due, by simple imprisonment which may extend to six months, by a fine not exceeding two thousand rupees, or by both punishments; where the offence is a continuing one, a daily fine not exceeding one hundred rupees may be imposed for each day of its continuance. The Court further noted that Section 49(2) of the same Act declares that any appointment, notification, notice, order, rule, regulation or form made or deemed to have been made under the Ordinance that has been repealed shall continue in force and shall be deemed to have been made under the provisions of the 1953 Act, so long as such instrument is not inconsistent with the provisions of the Act, and it shall remain in effect until it is superseded by a new appointment, notification, notice, order, rule, regulation or form made under the 1953 Act. The Court then turned to the Bombay Sales Tax (Amendment) Act of 1956, Bombay Act No. XXXIX of 1956, which amended Section 3 of the 1953 Act by substituting a new subsection stating that, for the purpose of the Act, the State Government may appoint a person to be the Collector of Sales Tax, may appoint one or more persons to be Additional Collectors of Sales Tax, and may appoint such other persons as it thinks fit to assist the Collector. The Court also referred to a notification issued by the State Government under Section 3 of the 1952 Ordinance, whereby the Government of Bombay declared that the Additional Collector of Sales Tax, Bombay State, Bombay, shall be deemed the Collector of Sales Tax for the purposes of the Bombay Sales Tax (No. 2) Ordinance, 1952 (Ordinance No. III of 1952). It was pointed out that both the Acts and the Ordinances characterize the deliberate furnishing of a false return or statement as an offence punishable by simple imprisonment, a fine, or both, and that the sole distinction between the Ordinance and the 1953 Act lies in the ceiling of the fine, which is two thousand rupees under both the Ordinance and the Act of 1953, whereas earlier provisions limited the fine to one thousand rupees. The Court emphasized that, under both the Ordinance and the Acts, no court may take cognizance of the offence without first obtaining the prior sanction of the Collector. The term “Collector” is defined in substantially identical language in the Ordinance and in the Acts as a person appointed as Collector by the State Government. Accordingly, the notification issued under the 1952 Ordinance appointing the Additional Collector as Collector of Sales Tax must be deemed to continue in force under the Bombay Sales Tax Act of 1953 by virtue of Section 49(2), since no fresh notification under the 1953 Act has superseded the earlier appointment.

The notification that appointed the Additional Collector as Collector of Sales Tax was held to have continued in force under the Bombay Sales Tax Act, 1953, by virtue of section 49(2) of that Act, because it was common practice that no fresh notification under the 1953 Act had been issued to repeal the one made under the earlier Ordinance. In brief, the Bombay Act III of 1953 introduced the same offence and retained the same enforcement machinery that its predecessor statutes contained. On the basis of these provisions, the counsel for the appellant argued that the State Government had appointed the Additional Collector as Collector of Sales Tax by exercising the power granted by Ordinance III of 1952 and not by the power conferred under the repealed Act, and therefore the sanction issued by the Additional Collector to prosecute the appellant was invalid. The Court first responded that the State Government possessed the authority to appoint any person, including an Additional Collector, as Collector of Sales Tax both under the repealed Act and under Ordinance III of 1952; consequently, the appointment could reasonably be understood as having been made in the exercise of the appropriate power in relation to the offence preserved under the Ordinance. The Court then offered a more fundamental reply, emphasizing a clear distinction between an offence and the prosecution of an offence. An offence belongs to substantive law, representing a combination of acts or omissions punishable by law, whereas prosecution belongs to procedural law, representing the process by which a Court adjudicates those acts or omissions. The requirement of sanction or prior approval from an authority is a condition precedent to instituting prosecution for specified offences, and any prosecution initiated without the necessary sanction is void from the outset. Such a requirement serves as a safeguard against frivolous prosecutions and affords the concerned authority an opportunity to assess, in each case, whether prosecution is warranted. Thus, sanction to prosecute is not an element of the offence itself but a procedural matter. The Court cited Maxwell’s Interpretations of Statutes, page 225, stating: “Although to make a law punish that which, at the time when it was done, was not punishable, is contrary to sound principle, a slaw which merely alters the procedure may, with perfect propriety, be made applicable to past as well as future transactions.” In the present case, the repealing Act made no alteration to either the offence or the procedure for prosecuting that offence and expressly preserved the offence committed under the repealed Act. Accordingly, the Legislature’s intention could be inferred to be that the procedural scheme laid down in the new Act should apply even to offences committed under the repealed legislation. Since the sanction falls within the procedural domain, the sanction granted by the Additional Collector, who had been appointed by the State as Collector of Sales Tax, was therefore valid.

The Court observed that the sales‑tax statute under consideration was valid. Nevertheless, it was argued that the notification issued under Ordinance No II of 1952, which appointed the Additional Collector as Collector of Sales Tax, could not be used to support the prosecution that had been brought under Act III of 1953. The Court noted that this argument disregarded the clear language of section 49(2) of the 1953 Act, which had already been quoted earlier. That provision expressly declared that any notification or order issued under the repealed ordinance would be deemed to have been made under the new Act and would remain in effect until it was superseded by a subsequent order or notification made pursuant to the new legislation. The parties had not shown that a fresh notification, which would have revoked the original one, had been issued under the repealing Act. Consequently, the Court concluded that the original notification of 1952, which named the Additional Collector as the Collector of Sales Tax, continued to be operative at the time the Collector gave his sanction for the prosecution of the appellant. Because the notification was still valid, the Court held that it was unnecessary to examine the reach of the Bombay Sales Tax (Amendment) Act, 1956.

Turning to the question of sentence, the Court recorded that a vigorous petition had been filed seeking to substitute the term of imprisonment imposed by the High Court with a monetary fine. The petition argued that the Magistrate, exercising his discretion, had originally imposed a fine and that the High Court was not justified in converting that penalty into imprisonment without providing any explanatory reasons. The petition relied heavily on two earlier decisions of this Court: Dalip Singh v. State of Punjab ([1954] S.C.R. 145) and Bed Raj v. State of Uttar Pradesh. In the Dalip Singh case, the Sessions Judge had convicted each of seven accused persons under section 302 of the Indian Penal Code read with section 149 of the same Code. Because the fatal injuries could not be ascribed to any single accused, the Sessions Judge refrained from imposing the death penalty and instead sentenced them to life imprisonment. The High Court, however, altered those sentences to death without recording any reasons. Justice Bose, delivering the judgment of the Court, held that the High Court should not have interfered with the discretion exercised by the Sessions Judge. He observed at page 156 that “But the discretion is his if he gives reasons on which a judicial mind could properly found, an appellate Court should not interfere. The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest possible reasons. It is not enough for an appellate Court to say, or think, that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate Court but to the trial Judge and the only ground on which an appellate Court can interfere is that the discretion has been improperly exercised, as for example, where no reasons are given and none can be inferred from the”.

The Court explained that an appellate court may interfere with a sentence only when the trial judge’s discretion was exercised improperly, such as when the reasons for the sentence are not apparent from the record or when the facts are so extreme that a reasonable judicial mind could not have imposed a lesser penalty. In a separate case the appellant, together with another accused, had been convicted by the Sessions Judge under section 304 of the Indian Penal Code and sentenced to three years of rigorous imprisonment. On appeal the High Court increased that punishment to ten years, justifying the enhancement by noting that the deceased victim was unarmed, that the assault was carried out with a knife, and that it could not be said the appellant had not acted in a cruel or unusual manner. While allowing the appeal on the ground of sentence, the Court at page 588 observed that sentencing is a matter of discretion and that, when that discretion has been properly exercised in accordance with established judicial principles, an appellate court should not disturb the sentence to the detriment of the accused except for very strong reasons which must be stated openly in the judgment. The Court further emphasized that in cases of enhancement there should be no interference where the sentence imposed already represents substantial punishment; interference is warranted only when the sentence is manifestly inadequate. The Court stressed that these observations carry considerable weight, yet it cautioned that no rigid rule can be laid down because each case must be judged on its own facts and the correctness of the trial judge’s discretion depends on the particular circumstances. In the present matter the appellant had maintained duplicate sets of account books and had filed false returns for successive quarters, deliberately omitting large sums from the turnover reported in the returns. Section 24(1) of the relevant Act declares any breach of its provisions punishable, and the offences under that section vary in moral turpitude from simple rule infractions to intentional and deliberate falsification of returns. The statute prescribes a maximum penalty of simple imprisonment not exceeding six months, and it entrusts the magistrate who tries such offences with broad discretion to shape the punishment so that it fits the nature of the wrongdoing. Although the appellant employed a systematic scheme to defraud the State by keeping double books and therefore merited a deterrent penalty, the magistrate, apparently influenced by the appellant’s guilty plea, imposed only a fine of Rs 200 without providing any reasons. The Court noted that the severity of the sentence should reflect the gravity of the offence rather than the fact that the accused pleaded guilty or attempted a defence. Consequently, under the circumstances the High Court was rightly justified in upgrading the penalty from a fine to a combination of imprisonment and fine, and it had supplied adequate reasons for doing so. The High Court, in the Court’s view, correctly concluded that the nature of the appellant’s conduct warranted a substantive custodial sentence.

In this case, the Court observed that because the appellant had maintained duplicate sets of account books, the circumstances clearly called for a substantive custodial sentence rather than a mere fine. The Court held that the magistrate had exercised his discretionary power improperly, as indicated by the earlier observations of this Court, and therefore the High Court was justified in increasing the punishment imposed by the magistrate. However, the Court found that the High Court erred in sentencing the appellant to rigorous imprisonment for one month. Section 24(1) of the relevant Act authorized only simple imprisonment, with a maximum term of six months, and did not confer authority to impose rigorous imprisonment. Consequently, the High Court exceeded its jurisdiction by ordering rigorous imprisonment. The Court reasoned that any such error should be resolved in favour of the appellant. Had the High Court been aware that it lacked the power to impose rigorous imprisonment, it might have imposed a longer term of simple imprisonment within the statutory ceiling. Because the jurisdictional limitation existed, the Court substituted the sentence of rigorous imprisonment with simple imprisonment for the same period of one month in each of the two cases. With this alteration, the Court dismissed the appeals. The appeals were thereby dismissed.