Shewpujanrai Indrasanrai Ltd vs The Collector Of Customs and Others

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 256 of 1954

Decision Date: 9 May 1958

Coram: S.K. Das, Natwarlal H. Bhagwati, Bose, Vivian Das, Sudhi Ranjan, K. Subbarao

In the matter of Shewpujanrai Indrasanrai Ltd versus the Collector of Customs and others, a judgment was delivered by the Supreme Court of India on 9 May 1958. The judgment was authored by Justice S.K. Das, who sat together with Justices Natwarlal H. Bhagwati, B. V. Dawson, Vivian D. Das, Sudhi Ranjan (Chief Justice), Bhagwati, Natwar Lal H. Subbarao and K. Subbarao. The case is reported in the 1958 volume of the All India Reporter at page 845 and in the 1959 Supplementary Court Reports at page 821. The dispute concerned alleged violations of the Sea Customs Act, 1878 and the Foreign Exchange Regulation Act, 1947, specifically the powers of the Collector of Customs to confiscate smuggled goods, the imposition of a fine in lieu of confiscation, and the legality of attaching conditions to the release of the seized gold under sections 19, 167(8), 182 and 183 of the Sea Customs Act and sections 8 and 23 of the Foreign Exchange Regulation Act.

The petitioner, Shewpujanrai Indrasanrai Ltd, conducted its business as a bullion merchant and, in that capacity, had purchased approximately 9,478 tolas of gold. Upon receiving information that the gold had been imported in contravention of customs law, the customs authorities issued a notice to the company indicating that the matter had been referred to the Collector of Customs for adjudication by the Superintendent of the Preventive Service. The notice invited the company to show cause why penal action should not be taken against it under sections 167(8) and 168 of the Sea Customs Act, alleging a breach of section 19 of that Act read in conjunction with section 8 of the Foreign Exchange Regulation Act, 1947. After conducting a hearing, the Collector concluded that the gold was indeed smuggled and that a contravention of the relevant provisions had occurred. Consequently, the Collector issued an order confiscating the entire quantity of gold seized on 21 November 1950, amounting to 9,478.19 tolas, pursuant to section 167(8) of the Sea Customs Act. The order also offered the owner, in lieu of confiscation, the option to pay a fine of ten lakh rupees under section 183, together with the applicable customs duty and other charges, within four months of the order’s dispatch. Release of the gold was conditioned upon the production of a permit from the Reserve Bank of India within the same period. The petitioner challenged the order, contending that a proper construction of section 8(3) of the Foreign Exchange Regulation Act read with section 19 of the Sea Customs Act did not permit the customs authorities to act under the Sea Customs Act, as doing so would prejudice the provisions of the Foreign Exchange Regulation Act.

The appellant contended that the two principal grounds advanced by the Customs authority were legally untenable. First, it was argued that the provisions of section 23 of the Foreign Exchange Regulation Act, 1947, could not be invoked to support the conditions that the Collector of Customs had imposed for the release of the gold that had been confiscated. Second, the appellant maintained that, irrespective of the first ground, the conditions set by the Collector in the impugned order were not authorized by the relevant statutes. The appellant further claimed that the order issued by the Collector was a composite, integrated order and that, as a result, the order could not be severed into separate parts. Consequently, the appellant prayed that the entire order, including the conditions for release, should be declared void and set aside.

The Court held that the scope of section 167(8) of the Sea Customs Act, 1878, is distinct from the scope of section 23 of the Foreign Exchange Regulation Act, 1947. Under section 23 of the Foreign Exchange Regulation Act, proceedings are instituted in personam against an offender for the purpose of imposing a penal sanction for contravening the provisions of that Act. By contrast, an order for confiscation of smuggled goods made pursuant to section 167(8) of the Sea Customs Act is a proceeding in rem, directed against the goods themselves rather than against a particular individual. The Court observed a material difference between the expression “any person concerned in any such offence” that appears in the third column of section 167(8) of the Sea Customs Act and the expression “whoever contravenes any of the provisions of this Act” that appears in section 23 of the Foreign Exchange Regulation Act. It follows that a person may be involved in the importation of smuggled articles without being a smuggler himself or without himself violating any provision of the Foreign Exchange Regulation Act. In the present case, the only penalty imposed under section 167(8) of the Sea Customs Act was the confiscation of the gold, which demonstrated that the customs authorities had abandoned any in-personam proceedings against the owner. Accordingly, the adoption of the confiscation procedure under the Sea Customs Act did not prejudice the operation of section 23 of the Foreign Exchange Regulation Act. While the Court noted that the question of whether both statutes permit separate remedies for the same contravention remained open, it concluded that the Collector of Customs had no jurisdiction to impose the two conditions that were attached to the order for release of the confiscated gold. However, the Court found that those conditions were severable from the remainder of the impugned order. As a result, the portion of the order dealing with the confiscation of the gold and the alternative imposition of a fine in lieu of confiscation was upheld as valid. The Court relied upon the authorities set out in R. M. D. Chamarbaugwalla v. Union of India, [1957] S.C.R. 930 and Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar and others, [1959] S.C.R. 279. The relevant provisions of the Sea Customs Act, 1878, and the Foreign Exchange Regulation Act, 1947, were reproduced in the judgment for reference.

The judgment was delivered in the civil appellate jurisdiction of the Supreme Court of India. The appeal, designated as Civil Appeal No. 256 of 1954, arose from a judgment and decree dated 3 July 1953 passed by the Calcutta High Court in appeal from Original Order No. 7 of 1953. That original order itself stemmed from a judgment and decree dated 5 August 1952 issued by the same High Court in Matter No. 84 of 1952. Counsel appearing for the appellant were N. C. Chatterjee, S. K. Kapur and I. N. Shroff. The Solicitor-General of India, C. K. Daphtary, appeared on behalf of the Union of India and the respondents, assisted by H. The judgment set out the factual background, the statutory framework, and the legal analysis upon which the Court based its conclusions, and it concluded with the directions stated above.

Counsel Umrigar and R. H. Dhebar appeared on behalf of respondents 1 to 3, while counsel B. Sen, S. N. Mukherjee and B. N. Ghosh represented respondent 4. Counsel Veda Vyasa and B. P. Maheshwari acted for respondent 5. The judgment was delivered on 9 May 1958 by S. K. Das, J. The appeal reached this Court on a certificate issued by the Calcutta High Court that the matter was fit for further appeal. The appellant, Shewpujanrai Indrasanrai Ltd., was a private limited company incorporated under the Indian Companies Act 1913 and conducted its business from 69, Manohar Das Street, Calcutta. Respondents 1 and 3 were the Customs authorities concerned, respondent 2 was the Union of India, and respondents 4 and 5 were two banks: Nationale Handels Bank N.V., a foreign company whose place of business was 1, Royal Exchange Place, Calcutta, and Bharat Bank Ltd., an Indian company incorporated under the Indian Companies Act 1913 with its registered office at 143, Cotton Street, Calcutta. The material facts were set out as follows. The appellant engaged in the business of a bullion merchant, buying gold and silver in the Calcutta and Bombay markets and selling the metal either directly or through bankers at the two locations mentioned. Between 14 November 1950 and 20 November 1950, the appellant, in the ordinary course of its trade, purchased approximately 9,478 tolas of gold. To finance these purchases, the appellant borrowed money from respondents 4 and 5. The gold acquired was then lodged with the two banks as security for the loans: 7,044 tolas were deposited with respondent 4 and about 2,437 tolas with respondent 5. With the appellant’s consent, the two banks forwarded the gold to the Calcutta Mint for assaying. On 20 November 1950, the Collector of Customs, Calcutta, instructed the Mint officials not to release the gold, and on the following day, 21 November 1950, the gold was seized by the Customs authorities in Calcutta pursuant to a search warrant issued by the Chief Presidency Magistrate, Calcutta. On the same day, certain books of account belonging to the appellant were also seized from its premises at 69, Manohar Das Street. On 22 November 1950, the appellant received a letter signed by Jasjit Singh of the Customs Department, requesting that the appellant appear at the Customs House on 27 November 1950 to open and inspect the bags of bullion that had been seized from the Mint. Subsequent correspondence ensued between the Customs authorities and Messrs. Sawday & Co., who were acting on behalf of the appellant; the details of that correspondence were not essential to the Court’s consideration. Finally, on 19 December 1950, the appellant filed an application before the Calcutta High Court under Article 226 of the Constitution, seeking the issuance of appropriate writs or orders that would set aside the orders of seizure and detention of its gold and books of account and that would prohibit the Customs authorities from acting upon those orders.

In this case, the appellant company filed a writ application seeking the removal of the orders that had authorised the seizure and detention of its gold and its books of account, and it further requested that the customs authorities be barred from giving effect to those orders or from taking any further steps in relation to the gold or the seized books. The application was heard by Justice Bose of the Calcutta High Court, and a decision was issued on 23 April 1951. That decision limited the relief to a declaration that the seizure of the books of account had been unlawful, and it directed that the books be returned to the appellant company without delay; the court made no determination or order concerning the gold that had been seized and detained. Subsequently, on 20 June 1951, the customs authorities served a formal notice on the appellant company. The notice, headed “Seizure of 9,478-19 tolas of gold at the Government of India Mint, Strand Road, Calcutta,” stated that the matter had been referred to the Superintendent of the Preventive Service for adjudication and that a copy of the Superintendent’s note together with the relevant assay reports was enclosed. The notice required the appellant to show cause in writing, within fourteen days, why penal action should not be taken against it and against the 9,478-19 tolas of gold under sections 167 clause 8 and 168 of the Sea Customs Act, 1878, for an alleged violation of section 19 of that Act read with section 8 of the Foreign Exchange Regulation Act, 1947. Additionally, the customs office asked the appellant to furnish copies of all documentary evidence, including all books of account, vouchers and related documents, together with an explanation of the facts. The notice further informed the appellant that, upon receipt of its explanation, the Collector would fix a date and time for a hearing at which the appellant would be required to present oral evidence in support of its explanation and to make its submissions.

The basis of the notice was an information note submitted by the Superintendent of the Preventive Service, which alleged that the gold in question had been smuggled into India in contravention of the Sea Customs Act, 1878 and the Foreign Exchange Regulation Act, 1947, and that the gold had subsequently been sent to the Mint for processing, that is, for melting, casting, weighing, stamping with the Mint marks, and for assaying small portions. In response to the customs notice, the appellant company filed its explanation on 3 July 1951, addressing the allegations set out in the notice. After the filing of the explanation, the parties were called before the then Collector of Customs, Sri Raja Ram Rao, for a hearing. However, before the hearing could be concluded, the Collector was transferred from his position, and the proceedings were subsequently continued before his successors.

Sri Raja Ram Rao was transferred from his position as Collector of Customs. His successor, Mr. J. W. Orr, conducted hearings on several days, but on 11 October 1951 Mr. Orr was in turn succeeded by Sri A. N. Puri. The new Collector, Sri Puri, reopened the proceedings, heard the parties anew, and concluded the hearing on 8 February 1952. After considering the evidence, on 14 May 1952 Sri Puri issued the order that is the subject of this appeal. In that order he determined that the gold involved, amounting to 9,478.19 tolas, had been smuggled and that the conduct violated section 19 of the Sea Customs Act read with section 8 of the Foreign Exchange Act. The final order read as follows: “I accordingly order that the entire quantity of the gold seized on 21 November 1950, amounting to 9,478.19 tolas be confiscated under section 167(8) of the Sea Customs Act. In lieu of confiscation, however, I give the owner of the said gold an option under section 183 of the same Act to pay a fine of Rs 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charges leviable thereon within four months from the date of the dispatch of this order. The release of the gold will be further subject to the production of a permit from the Reserve Bank of India within the aforesaid period.” On 19 June 1952 the appellant company filed a second writ petition before the High Court of Calcutta. The petition sought (a) a writ of certiorari directing respondents 1 to 3 to produce the records leading to the May 14 order and to set aside that order; (b) a writ of mandamus compelling respondents 1 to 3 to refrain from executing the seizure, detention and confiscation orders and to return the gold to the appellant; and (c) a writ of prohibition restraining the respondents from taking any further steps pursuant to the confiscation order. This second petition was heard by Justice Bose, whose order dated 5 August 1952 disposed of the application. Justice Bose found two principal grounds to deem the impugned order invalid. First, he held that the Customs authorities, by attempting to proceed under section 182 of the Sea Customs Act, acted in prejudice to the provisions of section 23 of the Foreign Exchange Act, thereby violating section 8(3) of the Foreign Exchange Act as it stood at the relevant time. He observed that “if the petitioners had not been implicated in the charge it might have been open to the Customs authorities to proceed under section 182 if steps were intended to be taken only against the offending goods, but the notice to show cause makes it clear that that is not the …”

In this case, the Court explained that it was not prepared to hold that section 23 of the Foreign Exchange Regulation Act completely barred the operation of section 182 of the Sea Customs Act, and it acknowledged that where section 23 did not apply, section 182 could properly be invoked. However, the Court found that in the present circumstances the use of the procedure authorized by section 182 had prejudiced the operation of section 23, and therefore the entire proceedings before the Customs authorities were without jurisdiction. The Court also examined the conditions that the Collector of Customs had attached to the order for releasing the confiscated gold and observed that those conditions were not supported by the relevant statute. Because the impugned order was a single, composite order in which the different parts could not be severed, the Court held that the whole order was made without jurisdiction. Consequently, the rule that had been made absolute was set aside, the impugned order was quashed, and respondents I to III were directed to refrain from giving effect to that order.

On appeal, a Division Bench consisting of Justices Das and Mookerjee considered the matters anew. The Bench held that a proceeding under the Sea Customs Act was a proceeding in rem, and that any order of confiscation or penalty arising from such a proceeding constituted an administrative or executive act, not a quasi-judicial act. For that reason, the Bench concluded that a writ of certiorari under article 226 of the Constitution was unavailable. In construing section 8(3) of the Foreign Exchange Act as it stood at the relevant time, the Bench observed that the restrictions mentioned in that provision had a double effect and that the remedies provided under section 167(8) of the Sea Customs Act and under section 23 of the Foreign Exchange Act were cumulative. The Bench explained that the remedy under the Sea Customs Act was intended primarily to levy customs duties and was directed against the goods themselves, whereas the remedy under the Foreign Exchange Act was penal in nature and aimed at punishing the person involved in smuggling. Accordingly, there was no question that the former proceeding prejudiced the latter.

Having reached that conclusion, the Division Bench held that the first ground on which Justice Bose had declared the impugned order invalid was not sustainable. Regarding the conditions imposed for the release of the confiscated gold, the Bench held that any invalidity in those conditions did not affect the principal order of confiscation. The Bench noted that section 183 imposed an imperative duty on the officer adjudicating confiscation to give the owner of the goods an option to pay a fine that the officer deemed appropriate in lieu of confiscation. This duty was a separate exercise of jurisdiction from that exercised under section 167(8) in imposing confiscation and penalty. Therefore, if any illegality had arisen in the exercise of the officer’s jurisdiction under section 183, the illegal condition could be set aside without disturbing the underlying confiscation order.

The Court observed that the officer’s power to impose confiscation and penalty under section 167(8) was distinct from his authority to impose a fine under section 183. Accordingly, if any illegality existed in the exercise of the jurisdiction conferred by section 183, the illegal condition could be set aside. On that basis the Court accepted the appeal, annulled the judgment and order of Bose J., and remitted the matter. The present appeal challenged the judgment and order of the Division Bench dated 3 July 1953. Before addressing the principal arguments raised on behalf of the appellant company, the Court decided to resolve two preliminary issues. First, in granting a certificate, the learned Chief Justice, together with Das Gupta J., expressed the difficulty of determining whether the proceeding from which the appealed order arose was civil, criminal, or, as articulated in Article 132 of the Constitution, an “other proceeding”. He further asserted that Article 135 of the Constitution was applicable because the case involved questions of constitutional interpretation, and therefore an appeal to the Federal Court would have been available before the Constitution came into force. The learned Solicitor-General, appearing for respondents I to III, disagreed with the view that Article 135 justified the issuance of the certificate. However, he did not ask the Court to rule on the validity of the High Court’s certificate and raised no objection to the appeal being decided on its merits. The Court noted that the classification of a writ application as civil or criminal within the meanings of Articles 133 and 134 has generated divergent opinions among the High Courts, and that this issue had been identified for resolution in several cases recently admitted by the Court.

The Court further explained that, given its assessment of the merits and the possibility of granting special leave to the appellant under Article 136, it was unnecessary to decide the specific question raised by the learned Chief Justice in his order of 1 December 1953, and it chose not to express an opinion on that matter. The second preliminary issue concerned the High Court’s view that an order of confiscation or penalty under the Sea Customs Act constituted a purely administrative or executive act, against which a writ of certiorari could not lie. The Court clarified that this position had been overruled by two recent decisions of this Court. In the case of F. N. Roy v. Collector of Customs, Calcutta, the Court held that imposing a fine under section 167(8) of the Sea Customs Act was a quasi-judicial act, and in a later decision, Leo Roy Frey v. The Superintendent, District Jail, Amritsar and another, the Court affirmed that the Collector, when imposing confiscation and penalties under the Sea Customs Act, acted in a judicial capacity. Consequently, the earlier view that such orders were merely administrative and not subject to judicial review was no longer tenable. The Court then proceeded to consider the two principal arguments advanced on behalf of the appellant company.

In the earlier decision of F. N. Roy v. Collector of Customs, Calcutta, the Court held that imposing a fine under section 167(8) of the Sea Customs Act constituted a quasi-judicial act, and in the later case of Leo Roy Frey v. Superintendent, District Jail, Amritsar and another, it further ruled that when the Collector imposes confiscation and penalties under the Sea Customs Act, he acts judicially; consequently, the view that an order of confiscation or penalty under the Sea Customs Act is merely an administrative or executive act could no longer be sustained. The Court then turned to the two principal points raised by the appellant company. The appellant argued that a proper construction of section 8(3) of the Foreign Exchange Act, as it stood at the relevant time, read together with section 19 of the Sea Customs Act, made it legally impossible for the customs authorities to take action against the company under the Sea Customs Act because such action would prejudice the provisions of section 23 of the Foreign Exchange Act. To appreciate this contention, the Court found it necessary to set out the relevant provisions of both statutes. Sub-sections (1) and (2) of section 8 of the Foreign Exchange Act imposed restrictions on the import and export of currency and bullion, and subsection (1) provided that the Central Government could, by notification in the official gazette, order that no person shall bring or send into the States any gold or silver except with the general or special permission of the Reserve Bank, subject to any exemptions contained in the notification. A notification issued on 25 August 1948 declared that, except with Reserve Bank permission, no person could bring into the States from any place outside India any gold, bullion, or similar articles. Sub-section (3) of section 8, at that time, read: “The restrictions imposed by subsections (1) and (2) shall be deemed to have been imposed under section 19 of the Sea Customs Act, 1878, without prejudice to the provisions of section 23 of this Act, and all the provisions of that Act shall have effect accordingly.” This subsection was later repealed by Act VIII of 1952, which introduced a new section 23A stating that the restrictions imposed by sub-ss. (1) and (2) of section 8 shall be deemed to have been imposed under section 19 of the Sea Customs Act and all its provisions shall have effect, except that section 183 thereof shall operate as if the word “shall” were replaced by the word “may.” At the time relevant for the present proceedings, sub-section (3) of section 8 was fully in force, and therefore the question before the Court had to be decided with reference to that provision.

The Court then turned to Section 23 of the Foreign Exchange Act, which was in force at the relevant time and read as follows: “Penalty and Procedure. (1) Whoever contravenes any provision of this Act or any rule, direction or order made thereunder shall be punishable with imprisonment for a term which may extend to two years or with fine or with both, and any Court trying any such contravention may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or other property in respect of which the contravention has taken place shall be confiscated. (2) … (3) No Court shall take cognisance of any offence punishable under this section except upon a complaint in writing made by a person authorised in this behalf by the Central Government or the Reserve Bank by a general or special order: Provided that where any such offence is the contravention of any provision of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission. (4) If the person committing an offence punishable under this section is a company or other body corporate, every director, manager, secretary or other officer thereof shall, unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent its commission, be deemed to be guilty of such offence.”

Next, the Court examined Section 19 of the Sea Customs Act, which appears in Chapter IV and provides: “The Central Government may, from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.”

The Court then considered Section 167 of the Sea Customs Act, situated in Chapter XVI, and stated that this provision enumerates the offences listed in the first column of the accompanying schedule and prescribes the punishments set out in the third column. The schedule includes, for example, the entry “8. If any goods … such goods shall be importation or liable to confiscation … and any person concerned … shall be liable to a penalty or restriction … not exceeding three times the value of the goods, or not exceeding one thousand rupees contrary to such prohibition or restriction;” and references Section 182 of the Sea Customs Act for matters relating to adjudication of confiscation and penalties.

The Court explained that the penalties mentioned in section 167 are to be applied according to the provisions of section 182 of the Sea Customs Act. Section 182 provides that, except for the cases specifically listed in section 167—namely numbers 26, 72 and 74 to 76, inclusive—where under the Act any article is liable to confiscation, to an increased rate of duty, or where any person is liable to a penalty, the adjudication of such confiscation, increased duty or penalty may be made in three different ways. First, the adjudication may be made without any monetary limit by a Deputy Commissioner, Deputy Collector of Customs, or a Customs-collector. Second, an Assistant Commissioner or Assistant Collector of Customs may adjudicate confiscation of goods whose value does not exceed two hundred and fifty rupees and may impose a penalty or increased duty not exceeding one hundred rupees. Third, other subordinate customs officers, who may be empowered by the Chief Customs-authority from time to time, may adjudicate confiscation of goods not exceeding fifty rupees in value and may impose a penalty or increased duty not exceeding ten rupees. The provision further states that the Chief Customs-authority may, when an officer is performing the duties of a Customs-collector, restrict his powers to those described in clauses (b) or (c), and may also confer on any officer, either by name or by virtue of his office, the powers set out in clauses (a), (b) or (c). Section 183, which the Court noted as material to one of the questions before it, declares that whenever confiscation is authorized by the Act, the officer who adjudicates it must give the owner of the goods the option to pay a fine, in lieu of confiscation, as the officer thinks appropriate. Section 184 stipulates that when anything is confiscated under section 182, ownership immediately vests in the Government; the adjudicating officer must take and hold possession of the confiscated item, and any police officer, upon requisition of that officer, must assist in taking and holding such possession. Section 186 further provides that an award of confiscation, penalty or increased rate of duty by a customs officer does not prevent the imposition of any punishment that the person affected may be liable for under any other law. The appellant’s argument, derived from section 8(3) of the Foreign Exchange Act and section 19 of the Sea Customs Act, was then set out. Under subsection (3) of section 8, a restriction imposed by a notification made under subsection (1) is deemed to have been imposed under section 19 of the Sea Customs Act, and consequently all provisions of the Sea Customs Act apply. However, the appellant contended that this deeming provision is qualified by the words “without prejudice to the provisions of section 23 of this Act,” referring to the Foreign Exchange Act. The contention was that the deeming is subject to the provisions of section 23, meaning that if a contravention of the Foreign Exchange Act occurs that is punishable under that section, the only remedy available is that provided in section 23, and the customs authorities cannot act against the offender under sections 167(8), 182 and 183 of the Sea Customs Act. The appellant further argued that this is the true scope and effect of subsection (3) of section 8, when the clause “without prejudice to the provisions of section 23” is given due regard, and observed that section 23 itself contains a power to confiscate the goods concerned.

In this case, the petitioners argued that although the restriction imposed under sub-section (1) of section 8 is deemed to have been imposed under section 19 of the Sea Customs Act, that deeming is expressly without prejudice to, that is, subject to, the provisions of section 23 of the Foreign Exchange Act. Consequently, they maintained that where a breach of any provision of the Foreign Exchange Act occurs and such breach is punishable under section 23, the only remedy available is the one provided by section 23, and the customs authorities are not empowered to proceed against the offender under sections 167(8), 182 and 183 of the Sea Customs Act. The petitioners further contended that this interpretation represents the true scope and effect of sub-section (3) of section 8 of the Foreign Exchange Act, provided that the phrase “without prejudice to the provisions of section 23 of this Act” is given its proper meaning. They also pointed out that section 23 itself confers a power to confiscate the goods that are the subject of the contravention. Respondents I to III, however, argued that the phrase “without prejudice to the provisions of section 23” does not mean “subject to the provisions of section 23”. According to them, the true effect of the clause is that when there is a contravention of the restrictions imposed by sub-sections (1) and (2) of section 8, which are deemed to have been imposed under section 19 of the Sea Customs Act, the contravention may have a double character: it may simultaneously violate the Sea Customs Act and the Foreign Exchange Act. Where the offender is known, two separate remedies may therefore be available to the authorities—one under the relevant provisions of the Sea Customs Act and another under the relevant provisions of the Foreign Exchange Act. The respondents described these two remedies as concurrent and not mutually exclusive, although they acknowledged that a question could arise as to whether a person may be punished twice for the same act. After careful consideration of the rival submissions, the Court concluded that it was unnecessary, based on the facts of the present case, to resolve the broader issue of whether two remedies are available for a contravention that falls within both statutes, and to determine the precise relationship between such remedies—whether they are concurrent, cumulative, or otherwise. The Court therefore limited its analysis to the application of sub-section (3) of section 8 of the Foreign Exchange Act to the facts before it. That sub-section first provides that the restrictions imposed by sub-sections (1) and (2) shall be deemed to have been imposed under section 19 of the Sea Customs Act; secondly, it provides that

The Court observed that the deeming provision in subsection (3) of section 8 of the Foreign Exchange Act states that the deeming provision is without prejudice to the provisions of section 23 of the Foreign Exchange Act, and further provides that all the provisions of the Sea Customs Act shall have effect accordingly. The appellant Company advanced the construction that, once section 23 of the Foreign Exchange Act applies, any other remedy under the Sea Customs Act is excluded, because the phrase “without prejudice to the provisions of section 23” and the concluding clause “all the provisions of the Sea Customs Act shall have effect accordingly” are controlled by that second part, as indicated by the word “accordingly”. The learned Solicitor-General presented a contrary construction, arguing that the phrase “without prejudice to the provisions of section 23” merely means that the remedy under section 23 remains available where appropriate and does not preclude the remedy provided by the Sea Customs Act; otherwise, the third and concluding part of the subsection would be rendered pointless. He supported his view by referring to section 23A, inserted in 1952, which repeats the language of the deleted subsection (3) of section 8 and clarifies the meaning of the clause “without prejudice to the provisions of section 23”. The Court did not adopt either construction but, for the purpose of analysis, assumed the appellant’s construction to be the correct one. The issue then became whether section 23 of the Foreign Exchange Act applied to the present facts and whether the appellant Company could be proceeded against under that section. The Court noted that a distinction must be drawn between an action in rem and a proceeding in personam. Section 23 of the Foreign Exchange Act is a proceeding against the offender; it applies to the person who contravenes any provision of that Act, even though, upon conviction, the Court may also order confiscation of the goods involved as an additional sanction. In substance, it is a penal proceeding directed at a known offender. Conversely, when the offender is unknown but the goods involved in the contravention have been seized, section 167(8) of the Sea Customs Act contemplates such a situation by describing the offence in column 1 as the import or export of goods whose importation or exportation is prohibited or restricted, thereby providing for confiscation of the goods and a penalty of up to three times the value of the goods, irrespective of the identity of the offender.

The provision quoted in the statute reads that the importation or exportation of goods “which is … prohibited or restricted” shall not be allowed to be brought into or taken out of India contrary to such prohibition or restriction. The penalty stipulated for such contravention is that the goods shall be liable to confiscation. In addition, the penalty column provides that any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods. It is significant that, with respect to confiscation, the proceeding is directed against the goods themselves and the penalty is enforced on the goods whether the offender is known or unknown. The confiscation order issued under section 182 of the Sea Customs Act operates directly upon the legal status of the property, and section 184 thereafter transfers an absolute title in the confiscated goods to the Government. Consequently, where the customs authority is able to proceed only against the goods, there is no basis for invoking section 23 of the Foreign Exchange Act. Even accepting the construction advanced on behalf of the appellant company with reference to section 8(3), the remedy available under the Sea Customs Act against the smuggled goods cannot be barred. When, on the facts, section 23 is inapplicable, there can be no question of prejudice to its provisions by the adoption of the procedure under the Sea Customs Act. Justice Bose was fully aware of this distinction between section 23 of the Foreign Exchange Act and section 167(8) of the Sea Customs Act. He expressly stated that he had no doubt that, in appropriate cases where section 23 does not apply, recourse can be had to section 182 of the Sea Customs Act; however, he thought that the notice issued to the appellant company on 20 June 1951 indicated an intention also to proceed against the offender, and that this intention, in his view, introduced the application of section 23. The Court does not agree with that view. The notice, as reproduced earlier in this judgment, asked the appellant to show cause why penal action should not be taken against it and the gold under the provisions of section 167(8) for alleged violation of section 19 of the Sea Customs Act and section 8 of the Foreign Exchange Act. Neither the notice nor the accompanying note of the Superintendent, Preventive Service, suggested that the appellant was the smuggler and therefore liable to a penalty under section 23 of the Foreign Exchange Act. Section 167(8) of the Sea Customs Act provides for two distinct penalties when contraband goods are imported into or exported from India: first, confiscation of the goods, which is an in-rem order; and second, a penalty on the person concerned in any such offence, as described in column I of item (8). Viewing the matter most favourably for the appellant, it may be said that the notice contemplated both kinds of proceedings.

In the notice issued to the appellant, the authorities invited the appellant to show cause against the two penalties specified in the third column of section 167(8) of the Sea Customs Act, namely an in-rem penalty and an in-personam penalty. However, the notice neither expressed any intention nor even hinted at the possibility of proceeding against the appellant under section 23 of the Foreign Exchange Act. The Court observed that a material distinction exists between the expression “any person concerned in any such offence” found in the third column of section 167(8) of the Sea Customs Act and the expression “whoever contravenes any of the provisions of this Act” that appears in section 23 of the Foreign Exchange Act. The former wording can encompass a person who is involved in the importation of smuggled gold without himself being a smuggler or without having breached any provision of the Foreign Exchange Act. Consequently, the scope of section 167(8) of the Sea Customs Act differs from the scope of section 23 of the Foreign Exchange Act. In the present matter, the only penalty that was actually imposed under section 167(8) was the confiscation of the gold, an in-rem proceeding, which indicates that the authorities pursued the in-rem remedy and abandoned any in-personam action. Because no in-personam penalty was pursued, the Court found that there was no prejudice to the operation of section 23 of the Foreign Exchange Act. The Court therefore concluded that the view expressed by Justice Bose, which suggested that the procedure adopted under the Sea Customs Act somehow prejudiced the provisions of section 23, was erroneous. On this factual finding, the Court deemed it unnecessary to address the broader questions that were raised during argument. Those questions included: (i) what would happen to smuggled goods if the alleged offender died during trial and the provisions of section 23 and the Sea Customs Act were unavailable; (ii) what would be the legal position if contradictory findings were rendered—one by the Customs authorities under the Sea Customs Act and another by a court under section 23 of the Foreign Exchange Act—thereby opening two concurrent remedies; and (iii) what would become of the safeguards afforded to an accused person under section 23 if the Customs authorities were permitted to bypass section 23 and proceed solely under the Sea Customs Act. The Court noted that these issues are indeed interesting and potentially important, and it expressed confidence that they would be resolved when an appropriate case presenting those specific factual circumstances arises. In the case before it, however, the Court held that, based on the facts established, the adoption of the confiscation procedure did not prejudice the provisions of section 23, and the appellant’s contention that the Customs authorities lacked jurisdiction to invoke the Sea Customs Act could not be accepted as correct. This conclusion led the Court to turn to the second principal contention raised on behalf of the appellant.

By the impugned order the Collector of Customs seized the gold belonging to the appellant and, in place of the confiscated metal, offered the appellant the alternative of paying a fine of ten lakh rupees. There was no dispute that the part of the order authorising the confiscation and the option of a monetary fine fell within the Collector’s statutory power. After making the confiscation, however, the Collector attached two further conditions that the appellant had to satisfy before the gold could be released. The first condition required the appellant, within four months of the dispatch of the impugned order, to produce a permit from the Reserve Bank of India concerning the gold. The second condition demanded that, within the same four-month period, the appellant pay the appropriate customs duties and any other charges that were lawfully leviable on the gold. The High Court, and in our view the Supreme Court as well, held correctly that the Collector lacked authority to impose those two additional conditions.

The learned Solicitor-General pointed out that neither the Foreign Exchange Act nor the Sea Customs Act contained any provision authorising the Reserve Bank to grant a retrospective permission for smuggled gold. He argued that, if such a permission could be granted, the offence under section 167(8) of the Foreign Exchange Act would disappear and the very order of confiscation would become invalid. Regarding the second condition, the Solicitor-General referred to the Bombay High Court decision in Keki Hormasji Elavia v. The Union of India (Civil Application No. 1296 of 1953, decided on 18 August 1953). That decision, cited in a compilation of customs judgments published by the Central Board of Revenue, held that customs duty was payable under section 88 of the Sea Customs Act in the circumstances of the Bombay case. In that case the goods involved were toilet and perfumery items that had been smuggled through the port of Kanti Ajal near Surat without any duty being paid, and the court accordingly applied section 88. The facts of the present case are entirely different; there is no finding on record as to whether the gold was smuggled by sea or by land, and section 88 deals with goods that have not been cleared or warehoused within four months after the vessel’s entry. Consequently, the provision could not be invoked to justify the Collector’s demand for payment of customs duty in the present matter.

We are therefore of the opinion that the Collector of Customs had no jurisdiction to impose either of the two conditions that were attached to the confiscation order. The next question was the effect of that lack of jurisdiction on the whole order. On behalf of the appellant it was submitted that the order, being a composite and integrated order, could not be severed, and that a writ of certiorari should result in the entire order being quashed because part of it was beyond the Collector’s authority. The issue of severability, however, does not present any substantial difficulty. The Supreme Court has examined the principle of severability in several decisions, and the recent judgment in R. M. D. Chamarbaugwalla v. Union of India summarised the applicable principles. Applying those principles, we find that the invalid conditions imposed by the Collector are not so inseparably interwoven with the valid portion of the order—that is, the confiscation and the option of paying a fine—that they cannot be separated. The valid parts of the order remain enforceable, and the invalid conditions can be struck down without nullifying the entire order.

In the recent decision of R. M. D. Chamarbaugwalla v. Union of India, the Court summarized the principles that govern the question of severability. Applying those principles, the Court found no difficulty in holding that the conditions imposed by the Collector, which were later declared invalid, were not so inseparably intertwined with the valid order of confiscation and the accompanying fine that they could not be separated. The Court also observed that the Collector would have issued the confiscation order and the fine on the basis of his finding that the gold was smuggled, even if he realized that the conditions he attached were invalid. Moreover, the conditions did not constitute a single scheme that could operate only as a whole.

The appellant’s counsel referred to the sixth rule articulated in the Chamarbaugwalla decision and argued that if the invalid conditions were removed, the remaining parts of the impugned order could not be enforced without altering the time limit fixed for payment of the fine, and consequently the entire order should be struck down as void. The Court disagreed with that contention. It explained that the sixth rule is based on the premise that a Court cannot amend a statute after expunging its invalid portions, for such amendment would amount to judicial legislation. The Court held that no such consideration arose in the present case. There was no legal difficulty in enforcing the balance of the impugned order after separating the invalid conditions. Once the confiscation order was passed, the gold vested in the Government, and Section 183 did not obligate the Collector to set a time limit for the fine. The time limit was a benefit to the owner, and even if it were altered, such alteration could not be characterized as judicial legislation.

Consequently, the Court agreed with the Division Bench of the High Court that the invalid conditions imposed by the Collector were severable from the remainder of the order. The appellant’s counsel also relied on The King v. Willesden Justices, Ex parte Utley for the proposition that the High Court, on a writ of certiorari, lacks the power to amend an order by striking out invalid conditions, and that this Court, on appeal from a certiorari order, possesses no greater power than the High Court. The counsel further argued that the essence of certiorari is to revise the decision of the inferior court, which can be done by (a) quashing the order, (b) removing the case and trying it before a competent court, or (c) ordering a rehearing.

In the third alternative, the Court could order that the case be reheard. Learned counsel argued, relying on English precedents, that a writ of certiorari required an examination of the decision of the lower court to determine “what of right and according to the law and custom of England we shall see fit to be done,” as stated in Short and Mellor’s Practice of the Crown Office, second edition, pages 504-505. The Court did not consider it necessary to delve into the early history of the prerogative writ of certiorati in England, nor to decide the precise limits of the High Court’s power when a party sought a writ of the nature of certiorari under Article 226 of the Constitution. In general, the Court observed, an essential characteristic of a writ of certiorari was that the supervision it provided over judicial or quasi-judicial tribunals was not an appellate function but a supervisory one. The Court referred to its earlier decision in T. C. Basappa v. T. Nagappa and Another, page 257, where it explained that when a superior court granted a writ of certiorari it did not assume the role of an appellate tribunal; it did not revisit or reweigh the evidence on which the lower tribunal based its determination. Rather, it set aside an order that it found to be without jurisdiction or plainly erroneous, without substituting its own view for that of the inferior tribunal, and thereby removed the offending order from the field so that it would not prejudice any person. The same judgment also observed that, because the Constitution expressly provided for such remedies, there was no need to return to the early history or procedural technicalities of the English writs, nor to feel constrained by any differing opinions expressed by English judges. The Court could issue a writ in the nature of certiorari in all appropriate cases, provided it adhered to the broad and fundamental principles that governed the exercise of jurisdiction for such writs in English law. The Court then turned to the authority cited by counsel, namely King v. Willesden Justices. In that case the applicant had been convicted and fined fifteen pounds for failing to stop his vehicle when ordered by a police constable in uniform, contrary to section 20, sub-section 3 of the Road Traffic Act, 1930. The applicant’s ground was that the maximum penalty prescribed by that provision was five pounds, making the fifteen-pound fine illegal and beyond the jurisdiction of the justices. Lord Goddard C. J. noted that several earlier cases, including Reg. v. Stade (1895) 64 L 232, Reg. v. Kay (1873) L. R. 8 Q. B. 324, and Reg. v. Cridland (1857) 7 E. & B. 853, had been considered, but he maintained that if a sentence was imposed that was not authorized by law for the offence, the conviction was void on its face and could be brought before this Court for quashing. He further stated that this Court possessed no power, and never had any power, on certiorari, to amend the conviction.

The Court noted that, after reviewing Reg. v. Kay (1873) L. R. 8 Q. B. 324 and Reg. v. Cridland (1857) 7 E. & B. 853, the opinion remained unchanged that imposing a sentence not authorized by law for the offence inevitably renders the conviction void on its face; a void conviction may be presented for quashing and, once so presented, must be set aside because the Court possesses no authority, now or ever, to amend a conviction by way of certiorari. It was emphasized that the earlier decision rested on the premise that the individual had been subjected to a penalty that the law did not permit, and that such an unlawful penalty rendered the conviction defective, thereby entitling the applicant to obtain a certiorari order. Nevertheless, the Court found a more persuasive answer to the arguments advanced on behalf of the appellant. In an earlier portion of the judgment, the Court reproduced in full the reliefs pleaded by the appellant in its petition to the High Court. The appellant did not limit its prayer to a writ of certiorari; it also sought a mandamus directing respondents 1, 2 and 3 to refrain from enforcing the orders of seizure, detention and confiscation of the gold, and to return the gold, and it additionally requested a writ of prohibition to prevent those respondents from taking any further steps pursuant to the confiscation order. The Court observed that these prayers were neither superfluous nor irrelevant; they were expressly intended to forestall the conditions that the Collector had imposed for the release of the gold. It is well settled that where proceedings before a lower court or tribunal are partly within its jurisdiction and partly beyond, a prohibition may lie to restrain actions that exceed the tribunal’s lawful authority, as reflected in Halsbury’s Laws of England, third edition, volume 11, paragraph 216, page 116. The Court also referred to the recent decision in Shri Ram Krishna Dalmia v. Justice S. R. Tendolkar and others, where a portion of a notification made under section 3 of the Commission of Enquiry Act (1952) was declared invalid, severed from the remainder of the notification, and the balance of the notification was held to be valid. Applying that principle, the Court saw no insurmountable difficulty in prohibiting respondents 1, 2 and 3 from enforcing the two invalid conditions that the Collector of Customs had imposed for the release of the gold on payment of a fine in lieu of confiscation, and it directed that the four-month time limit fixed by the Collector shall run from the date of this order. The only remaining matters for consideration were the points raised on behalf of respondents 4 and 5, the two banks.

In this case the respondents asserted that, while the general ownership of the pledged goods remained with the pledgor, a distinct “special property” transferred to the pledgee so that the pledgee could sell the pledged goods when the right to sell arose. They complained that this special property had been taken away from them by the proceedings that resulted in the order issued by the Collector of Customs under the Sea Customs Act, which they described as an impugned order. The respondents maintained that their right to the special property was protected by Article 19 (1)(f) of the Constitution, and they argued that the provisions of the Sea Customs Act which removed the pledgee’s right without giving notice or an option to pay a fine in place of confiscation were unreasonable restrictions on the general public as contemplated by clause (5) of the same article.

The Court turned its attention to section 19A of the Sea Customs Act, which authorises the Central Government to formulate regulations—either general or special—concerning the detention and confiscation of goods whose importation is prohibited, and to specify any conditions that must be satisfied before such detention or confiscation can occur. Sub-section (1) of that section empowers the Chief Customs Officer to enforce those regulations and to be satisfied, in accordance with them, that the goods in question are indeed prohibited from being imported. The Court observed that no regulations had yet been promulgated, and therefore, in the absence of such regulations, customs officers possessed an unchecked and unguided authority over the detention and confiscation of goods.

Regarding Nationale Handels Bank N.V., identified as respondent 4, the Court held that this bank possessed no right under Article 19. Even if a company could be regarded as a citizen for constitutional purposes, the Court noted that respondent 4 was a foreign company and therefore did not enjoy the rights of a citizen of the country. Concerning Bharat Bank Ltd., respondent 5, the Court recognised that, as an Indian company, it might claim the rights of a citizen under Article 19; however, the Court indicated that, given the circumstances that would be explained later, the bank’s grievance about an alleged violation of a fundamental right could not be entertained at this stage.

Beyond the points raised by the learned Solicitor-General—that a pledgee cannot enjoy a right superior to that of the pledgor, that the pledgor does not lose ownership by virtue of the pledge, and that an in-rem action directly affects the status of the property and, in a case such as this, vests the property absolutely in the Government—the Court identified additional factors that undermined respondent 5’s claim. The order issued by the Collector demonstrated that throughout the adjudication proceedings respondent 5 had been represented by counsel before the Collector, indicating that the bank had been afforded an opportunity to present its case before the customs authority.

On May 14, 1952, the Collector issued his order and sent a copy of that order to respondent 5. Respondent 5 did not move against the order; instead it remained satisfied with its role as the respondent to the application that the present appellant had filed in the High Court. It is also necessary to note that the Collector’s order indicates that the Collector was not completely convinced by the appellant’s explanation that the gold had been pledged to the banks in the manner claimed. Regarding the transactions with Bharat Bank Ltd., the Collector observed that the firm’s stock book recorded a closing balance of gold weighing 2,457-6-0 tolas as being held by the bank on 17 November 1950, whereas the bank’s own statement showed a closing balance of 4,651-14-0 tolas on the same date. The firm’s representative explained that the discrepancy arose mainly because, on 17 November 1950, instructions had been given to Bharat Bank to send gold weighing 2,236-7-0 tolas to Sewadin Bansilal of Bombay, but the actual delivery to that person in Bombay did not occur until 22 November 1950. The auditors, however, remarked that they had not seen any written correspondence with the bank to support the information that had been given to them verbally. When the matter was before the High Court, respondent 5, before Justice Bose, challenged the Collector’s order on several grounds, including an alleged infringement of its fundamental right. That objection was not accepted, and Justice Bose allowed the writ application on two other grounds that have been mentioned earlier. In the appeal before the Division Bench, respondent 5 again relied on article 19(1)(f) of the Constitution, and the Division Bench affirmed Justice Bose’s finding that the Sea Customs Act did not directly legislate on the freedom guaranteed by article 19(1)(f), and therefore that constitutional provision was inapplicable. Again, respondent 5 took no steps against the judgment and order of the Division Bench dated 3 July 1953, a judgment and order that it now alleges to be incorrect. Throughout the proceedings, respondent 5 aligned itself with the appellant but appeared only as a respondent; it was the appellant who moved the High Court for a certificate, obtained that certificate, and subsequently brought the present appeal before this Court. Respondent 5 did not take any action against the judgment and order that it now complains about. In this situation, the Court does not think that respondent 5 may now be permitted to complain of a violation of its fundamental right, independently of the appellant.

The Court therefore reaches the following conclusions. The order that is being challenged is valid with respect to the confiscation of the gold and the payment of a fine in lieu of the gold. The Collector of Customs possessed jurisdiction to make that order because he found that the gold involved was smuggled gold. However, the Collector did not have jurisdiction to impose the two additional conditions that he attached to the order for the release of the gold.

The Court observed that the High Court, on appeal, had held that the conditions which were later declared invalid could be severed from the remaining portion of the order. Nevertheless, the High Court had not issued any appropriate direction concerning those invalid conditions, even though it had allowed the appeal and dismissed the writ application. The Court then determined that the proper order to be made was to dismiss the writ application to the extent that it sought to set aside the order directing the confiscation of the gold and the payment of a fine in lieu of the gold, while permitting the writ insofar as it required a direction restraining respondents numbered one, two and three from enforcing the two invalid conditions that the Collector of Customs had imposed without jurisdiction. Accordingly, the four-month time limit previously stipulated by the Collector was ordered to commence from the date of this judgment. As a result, the appeal was allowed only to the very limited extent described above and was dismissed on all other grounds. In light of the circumstances of the case, particularly the imposition of the invalid conditions by the Collector, the Court directed that each party bear its own costs of the hearing before this Court. Accordingly, the appeal was allowed in part.