M/S. Universal Imports Agencyand... vs The Chief Controller Of Importsand...

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

Court: supreme-court

Case Number: Petitions Nos. 123 to 125 of 1957 and 118 of 1959

Decision Date: 23 August 1960

Coram: Bhuvneshwar P. Sinha, Syed Jaffer Imam, A.K. Sarkar, J.C. Shah

In this matter the petitioner, M/s Universal Imports Agency and another, challenged the actions of the Chief Controller of Imports and Exports and other respondents. The case was decided by the Supreme Court of India on 23 August 1960. The bench that heard the appeal consisted of Chief Justice Bhuvneshwar P Sinha, Justice Syed Jaffer Imam, Justice A.K. Sarkar and Justice J.C. Shah. The judgment was recorded on the same date, 23 August 1960, and the decision was reported in the All India Reporter at volume 1961, page 41, as well as in the Supreme Court Reports (1961) in volume 1, page 305. Subsequent citations of the decision appear in various law reports, including the 1961 Supreme Court citation number F 1961 SC 1752, the 1962 Supreme Court reference RF 1962 SC 1621, the 1963 Supreme Court entry E 1963 SC 734, the 1965 Supreme Court reference R 1965 SC 40, the 1967 Supreme Court citation R 1967 SC 1742, and the 1985 Supreme Court note R 1985 SC 1729.

The dispute arose under the French Establishments‑Agreement, which dealt with the import of goods and the de facto transfer of administration of French settlements, including Pondicherry, to the Government of India. The core issue involved the confiscation of goods that had been imported and the legal validity of the actions taken under the provision that the expression “things done or omitted to be done” should be interpreted. The relevant statutory framework comprised the French Establishments’ (Application of Laws) Order, 1954, specifically clause 6 of that Order, and the Sea Customs Act, 1878, section 167(8). The Order extended certain statutes listed in column 3 of its Schedule—among them the Sea Customs Act of 1878, the Imports & Exports Trade (Control) Act of 1947, and the Foreign Exchange Regulation Act of 1947—to Pondicherry. Paragraph 6 of the Order provided that, unless expressly stated otherwise, all laws in force in the French establishments before the Order’s commencement would cease to have effect, “save as respect things done or omitted to be done before such commencement.” The parties contested whether the import transactions fell within this saving clause, leading the Court to examine the scope and meaning of the phrase “things done” in the context of the Order.

In this matter, the Collector of Customs classified the goods as unauthorised, seized them, and offered the petitioners the option of paying a penalty instead of confiscation, reasoning that the petitioners had failed to obtain a licence for bringing the goods into Pondicherry and that section 167(8) of the Sea Customs Act, 1878, had been violated. The petitioners contended, among other points, that the transactions they had entered into with foreign dealers fell within the meaning of “things done” as defined in paragraph 6 of the French Establishments’ (Application of Laws) Order, 1954, and therefore asserted that their imports were protected by the saving clause contained in that paragraph. The Court, by a majority comprising the Chief Justice and Justices Imam and Subba Rao, held that a proper interpretation of the phrase “things done” in paragraph 6 of the French Establishments’ Order was broad enough to encompass not only the acts themselves but also the legal consequences and effects flowing from those acts. In support of this view, the Court referred to the authorities Queen v. Justices of the West Riding of Yorkshire (1876) 1 Q.B.D. 220 and Heston and Isleworth Urban District Council v. Gutter (1897) 2 Ch. 306. The majority further observed that the act of bringing the goods into India and the related contracts entered into with the foreign dealers constituted parts of a single transaction; consequently, the imports represented the effect or legal consequence of the “things done”, namely the contracts executed by the petitioners. To substantiate this reasoning, the Court cited State of Travancore‑Cochin v. The Bombay Co. Ltd. (1952) S.C.R. 1112 and State of Travancore‑Cochin v. Shanmugha Vilas Cashew Nut Factory (1954) S.C.R. 53. Accordingly, the majority concluded that paragraph 6 of the Order saved the petitioners’ transactions and that the Collector of Customs therefore lacked authority to confiscate the goods on the ground that they had been imported without a licence. Justice Sarkar, dissenting, argued that merely concluding contracts and opening letters of credit, without the physical arrival of the goods in Pondicherry, did not amount to an “import”, and therefore such activities could not be embraced within the saving clause of paragraph 6 as “things done” prior to the commencement of the Application of Laws Order. He further contended that, in the absence of explicit wording extending the application of French law to the effects or rights derived from those acts, the saving clause could not shield the petitioners’ imports from the operation of Indian law governing the French establishments. Justice Shah, also dissenting, maintained that preliminary steps leading to an import, even if closely linked, are not encompassed by the concept of import for the purposes of the Sea Customs Act and the Imports and Exports Trade (Control) Act. He noted that the expression “things done or omitted to be done before such commencement” in clause 6 of the French Establishments’ Order, 1954, was intended to apply only to acts and omissions prior to the specified date and not to the subsequent legal consequences that followed.

French law was held to govern only the acts and omissions that occurred before 1 November 1954, and it did not extend to the legal consequences of those acts and omissions that arose after that date. Consequently, the Court found that importing goods across the customs frontier at Pondicherry Port after 1 November 1954 without obtaining a licence for that purpose violated the provisions of the Sea Customs Act as well as the Import and Exports Trade (Control) Act. This conclusion was based on the interpretation that the French legal saving clause applied solely to pre‑November 1954 conduct and could not shield post‑date import activities from the operation of Indian customs law.

The judgment concerned several writ petitions—Petition Nos. 123 to 125 of 1957 and Petition No. 118 of 1959—filed under Article 32 of the Constitution of India for the enforcement of fundamental rights. The petitions sought to set aside orders issued by the Assistant Controller of Imports and Exports, the Collector of Customs and Central Excise, Pondicherry, the Board of Revenue, and the Government of India, and also requested that the respondents refund amounts that had been realised from the petitioners. The petitioners in the first three petitions were Messrs Universal Imports Agency and its proprietor, while the petitioners in the fourth petition were Messrs Victory Traders. The respondents in all the petitions were the Chief Controller of Imports and Exports, Pondicherry, the Collector of Customs and Central Excise, Pondicherry, the Central Board of Revenue, and the Government of India. Messrs French India Importing Corporation and Messrs B S & Co. intervened in the writ proceedings. The case arose from the status of Pondicherry, which had been a French possession in India. On 21 October 1954 the Governments of India and France entered into the Indo‑French Agreement, under which the administration of the French settlements was transferred de facto to India effective 1 November 1954, although the de jure transfer was postponed. Messrs Universal Imports Agency was a proprietary concern registered with the Services Des Contribution, Pondicherry, and conducted its business from Pondicherry. Its proprietor, Sri Mohanlal B Gandhi, described the firm as an established importer and general merchant dealing in ball bearings, mill stores, porcelain ware, glass marbles, beltings and other goods. The agency had commenced business in Pondicherry on or about 14 April 1954 under patent No. 70 of 1954 issued by the Controller of the Contributions Department of the French Government at Pondicherry. In the middle of August 1954 the agency placed several indents with overseas suppliers and opened irrevocable letters of credit to finance the imports. The judgment was delivered on 23 August 1960 by the Chief Justice and the puisne judges, with a separate opinion authored by Justice Subba Rao and concurring opinions by Justices Sarkar and Shah.

In August 1954 the petitioners placed eight purchase orders with Messrs. Shimada Trading Co., Ltd., Osaka, Japan, for porcelain wares, glass marbles and beltings, the total contract value being Rs 57,418‑12‑0. About the end of that month they opened three irrevocable letters of credit with Messrs. Banque De L’Indo‑Chine in favour of those suppliers. The bank obtained the necessary foreign‑exchange authorisation from the Bureau Des Affaires Economique, Pondicherry, purchased the foreign exchange on the open market and sold it to the petitioners for the amount required under the letters of credit. The petitioners fully paid for the foreign exchange and the bank retained the foreign exchange and the letters of credit irrevocably with its overseas agent in Japan so that the suppliers could draw against the full set of shipping documents. All three letters of credit were valid for three months and the contractual terms required the suppliers to ship the goods within that period. By 1 November 1954 the ordered goods were at various stages of shipment: some were already on board the vessels S.S. Shillong and S.S. Cambodge, the remainder were being loaded onto S.S. Sunda, while a few were still awaiting shipment but were expected to be dispatched within a few days. The cargoes arrived at the Port of Pondicherry during January and February 1955. The Collector of Customs seized the entire consignment on the ground that the imports had been made without a licence and offered the petitioners the option of paying a confiscation fine of Rs 30,390. The petitioners approached the Government of India for relief but obtained no assistance; consequently they paid the penalty under protest and were allowed to clear the goods. In September 1954 the petitioners placed additional purchase orders with their overseas suppliers, including Messrs. Shimada Trading Co., Ltd., and other vendors, the total C.I.F. value of these orders amounting to Rs 40,470‑14‑0. They arranged full payment of eight cheques to the suppliers through Messrs. Banque De L’Indo‑Chine. Their bankers again secured authorisation from the Bureau Des Affaires Economique, Pondicherry, obtained the requisite foreign exchange from the open market and sold it to the petitioners for the cheque amounts, keeping the foreign exchange available to the suppliers. By 1 November 1954 the goods ordered under these later indents were also at different stages of shipment, some already in transit and others ready to be shipped within a few days. The cargoes arrived at Pondicherry Port in January and February 1955, where the Collector of Customs again treated the imports as unauthorised, confiscated them and offered the petitioners the option of paying a confiscation penalty.

The petitioners were ordered to pay a confiscation penalty of twenty thousand seven hundred rupees. After unsuccessfully appealing to the Government, they ultimately paid the penalty while protesting and consequently cleared the seized goods. In August 1954 the petitioners again placed several purchase orders with their overseas suppliers for items such as hair belting, torches, belt fasteners, electric lighting torch bulbs and primus stoves, the total cost of which amounted to fifty‑two thousand five hundred seventy‑two rupees and twelve annas. They opened irrevocable letters of credit and issued cheques as full‑advance remittance in favour of the suppliers through the Banque De L' Indo‑Chine. Their bankers, acting through the Bureau Des Affaires Economique in Pondicherry, obtained the necessary foreign exchange from the open market and sold it to the petitioners for the amounts covered by the letters of credit and cheques. The petitioners made full payment for this foreign exchange; the bank retained the foreign exchange and kept the letters of credit irrevocably available to the overseas agents for the benefit of the suppliers against the complete set of shipping documents. The cheques drawn on overseas banks were forwarded to the suppliers as full‑advance payment under the contracts. In January and February 1955 the goods arrived at Pondicherry port, where the Collector of Customs confiscated them and offered the petitioners the alternative of paying a fine of twenty‑four thousand two hundred ten rupees. Although the petitioners again raised the matter with the Government of India, no relief was obtained, and they paid the fine under protest and cleared the goods.

Messrs Victory Traders, the petitioners in Petition No. 118 of 1959, have been engaged in the import, export and general merchandise business in Pondicherry since 1949. They imported various articles from several countries under patent number 126 of 1954 issued by the Contrôleur, Pondicherry. On 20 August 1954 they applied to the Chief Bureau Economique, Pondicherry, for permission to import foreign goods; the bureau responded that no import licence was required for the entry of such goods into the territory. Following this reply, the petitioners placed orders with foreign dealers. In mid‑August and early September 1954 they issued a number of purchase orders to their principals abroad for items including fan belts, corn emery, soda‑water bottles and glass marbles, with a total value of thirteen thousand eight hundred seventy pounds. Many of these orders were backed by full payment, and at least half of the payments were made by demand drafts drawn on the Banque De L' Indo‑Chine. The goods arrived at Pondicherry port in January and February 1955, and were again confiscated by the Collector of Customs, who offered an option to pay a confiscation fine totalling ninety‑one thousand one hundred rupees. After filing appeals to the Central Board of Revenue and a subsequent revision petition to the Government of India, which yielded no result, the petitioners finally paid the fine under protest and cleared the goods.

In the present matter, the petitioners had paid the penalty imposed on their goods while protesting the order. From the facts already established, it was clear that the petitioners had entered into firm contracts of sale for the import of goods with foreign sellers before the merger of the French Settlements into India. The foreign exchange required for these purchases was made available either through letters of credit or by other means. The shipments of the contracted goods were effected either before or after the merger, but the goods reached Pondicherry only after the merger had taken place. Upon arrival, the goods were seized by the Collector of Customs under a set of circumstances that stemmed from the Indo‑French Agreement. That agreement transferred the entire administration of the French Settlements to the Government of India effective 1 November 1954, although the formal legal transfer was postponed. Pursuant to the agreement, the Ministry of External Affairs issued Notification No S R O 3315 on 30 October 1954, invoking section 4 of the Foreign Jurisdiction Act, 1947, and thereby establishing the French Establishments’ (Application of Laws) Order, 1954, hereinafter referred to as the Order. Paragraph 3 of the Order extended the provisions of the Sea Customs Act, 1879; the Reserve Bank of India Act, 1934; the Imports & Exports Trade (Control) Act, 1947; the Foreign Exchange Regulation Act, 1947; and the Indian Tariff Act, 1934 to the territory of Pondicherry. On 1 November 1954, the Government of India appointed a Controller of Imports & Exports for the French Establishments. Paragraph 4 of the same notification communicated to the public the following guidance: “As regards orders placed outside the Establishments and finalised through the grant of licence by the competent French Authorities in accordance with the Laws and Regulations in force prior to 1st November, 1954, licence‑holders are advised to apply to the Controller of Imports & Exports for validation of licences held by them. No fees will be charged for these applications. The applications should be accompanied by the original licence and should give particulars about............” Licence‑holders were further advised not to arrange for shipments of goods until their licences had been validated by the Controller of Imports & Exports at Pondicherry. Acting with great caution, the petitioners applied to the Chief Controller of Imports & Exports for licences to clear their goods, but each application was rejected. The authorities informed the petitioners that their goods would be treated as unauthorized imports and directed them to approach the Collector of Customs and the Central Excise authorities for conditions of release. As previously noted, after the goods arrived at the port of Pondicherry, the Collector of Customs and the Central Excise officials issued orders confiscating the goods and offered the petitioners the option of paying a penalty in lieu of confiscation. The petitioners paid the penalties, again under protest, and thereby obtained clearance of the goods. Subsequent appeals to the Central Board of Revenue were dismissed, and revisions of those orders to the Government of India were also rejected. Consequently, the petitioners instituted petitions under article 32 of the Constitution, challenging the validity of the confiscation orders.

The respondents, in the counter‑affidavits filed by them, asserted that the confiscation orders they issued were valid and were made in accordance with the law. Counsel for the petitioners advanced numerous arguments in support of the writ petitions, but the Court indicated that it was unnecessary to list each argument individually because the petitions could be disposed of on the basis of a single, decisive contention. That central contention was presented as follows: the petitioners possessed a fundamental constitutional right to own and conduct their import business, and they argued that Notification No. S. R. O. 3315 dated 30 October 1954, which served as the basis for the confiscation orders, contained a saving clause that excluded the operation of the Notification with respect to transactions whereby the confiscated goods had been purchased and imported. The saving clause, set out in paragraph 6 of the Notification, read: “Unless otherwise specifically provided in the Schedule, all laws in force in the French Establishments immediately before the commencement of the Order, which correspond to enactments specified in the Schedule, shall cease to have effect, save as respect things done or omitted to be done before such commencement.” Relying on this wording, the petitioners maintained that the contracts they had entered into with foreign dealers constituted “things done” within the meaning of the clause and therefore were protected from the operation of the Notification. The respondents, on the other hand, contended that because the goods were brought into India after the Notification had commenced, the confiscated items fell outside the protection of the saving clause. The dispute therefore required a true construction of the language of paragraph 6 of the Notification.

To apply paragraph 6 to the facts of the present case, the Court identified three matters that needed to be clarified: first, the specific laws listed in the Schedule attached to the Notification; second, the statutes that were in force in the French Establishments immediately before the Notification’s commencement and that corresponded to the enactments enumerated in the Schedule; and third, the exact nature of the “things done” or omissions contemplated under those statutes. The Court stated that an exhaustive survey of every law listed in the Schedule was unnecessary. In general terms, the Imports & Exports (Trade Control) Act empowered the Central Government to issue orders that could prohibit, restrict, or otherwise regulate the import or export of goods of any described category. The Act prescribed that any violation of such restrictions constituted an offence punishable by imprisonment for a term that could extend to one year, by a fine, or by both. Moreover, the Act declared that goods imported in contravention of the restrictions would be deemed to be goods whose importation had been prohibited or restricted under section 19 of the Sea Customs Act. Acting under the authority conferred by sections 3 and 4A of the Imports & Exports (Trade Control) Act, the Central Government subsequently issued the order dated 7 December 1955, which formed the operative basis for the confiscation orders at issue.

In this case, the Court noted that the Central Government had issued an order dated 7 December 1955. Section 3 of that order expressly prohibited any person from importing any goods that were specified in Schedule 1 unless the import was made in accordance with a licence or a customs‑clearance permit that had been granted either by the Central Government itself or by any authority identified in Schedule 2 of the order. The order also laid down detailed provisions prescribing the procedure for obtaining such licences, the conditions that would be attached to the licences, and the circumstances in which a licence could be cancelled or modified. Accordingly, the Court observed that, under the Imports and Exports (Trade Control) Act, no goods could be brought into India without first securing a licence in the manner prescribed by the Act from the authorities designated in the order. The Court further explained that the Sea Customs Act provided for the levy of sea customs duty, imposed prohibitions and restrictions on the import and export of certain goods, and prescribed punishments for any breach of its provisions. Under section 167(8) of the Sea Customs Act, read in conjunction with section 3(2) of the Imports and Exports Trade (Control) Act, 1947, any goods whose importation or exportation was prohibited or restricted and that were nevertheless brought into or sent out of India in violation of those restrictions were liable to be confiscated, and the persons involved were also liable to penalties. The Court then turned to the Foreign Exchange Regulation Act, 1947, which regulated payments, dealings in foreign exchange and securities, and the import and export of currency and bullion. That Act prohibited any dealings in foreign exchange except by persons who were authorized to do so and provided penalties for contravention of any of its provisions. In summary, the Court stated that the Indian legal framework, as disclosed by the aforementioned Acts, made it unlawful to import goods into India without a licence, mandated that goods imported in violation of the imposed restrictions could be confiscated, and required that foreign exchange could be obtained only under the provisions of the Foreign Exchange Regulation Act. Anyone who infringed these laws faced prosecution in addition to the confiscation of the goods involved. The Court then examined the pre‑existing law in Pondicherry that corresponded to the enactments listed in the Schedule. Although no statutes governing imports or any authoritative textbooks on the relevant law had been placed before the Court, the affidavits filed in the case allowed the Court to ascertain the state of the law referred to in paragraph 3 of the order. The affidavits showed that Pondicherry had been a free port where there were essentially no restrictions on imports, except for a few items such as gold and rock‑salt. To make payment for those imports, importers in Pondicherry could obtain foreign exchange either at the official rate or at the open‑market rate, whichever was conveniently available, and both methods were recognised by the French Government as valid. The Court also recorded that, according to the counter‑affidavit filed by the State, the method of obtaining foreign exchange for imports had been clearly described: two kinds of permits for obtaining official exchange by importers were issued by the Chief Commissioner in Pondicherry, known respectively as “authorization” and “attestation.”

They were signed either by the Governor‑General of the French Indian Establishments himself or by his Secretary‑General. The Government of France made an overall allocation of foreign exchange to the French territories and, in addition, made separate currency allocations in accordance with trade agreements that France had concluded with other countries. Authorisations were issued for goods imported from countries with which France had trade agreements, while attestations were issued for goods imported from France and other French colonies. For other foreign‑exchange transactions, importers obtained the necessary funds through banks that dealt in foreign exchange; such bank transactions were authorised by the Department of Affaires of Economics. In short, Pondicherry functioned as a free port, with only a few items such as gold and rock‑salt subject to restriction, and importers could acquire foreign exchange either at the official rate for certain transactions or at the open‑market rate for others.

The petitioners, in the course of their import business, obtained foreign‑exchange authorisation through their bankers and consequently entered into firm contracts with foreign sellers on a cost‑insurance‑and‑freight (C.I.F.) basis. In some instances they opened irrevocable letters of credit, and in other instances they transmitted bank drafts to effect the contracts. Under the terms of those contracts, the foreign sellers were obliged to load the goods onto ships at various foreign ports, and the Indian buyers were to receive physical delivery of the goods after the cargoes had cleared the customs barrier in India. Some of the shipments were placed on board before the merger of Pondicherry with India, while others were placed on board after that merger, and all of the goods arrived at the Pondicherry port after the merger had taken place. The purchase price for each consignment was paid in full to the foreign seller, and the Indian buyers took possession of the goods after they examined them upon arrival. Prior to the merger, if the Customs authorities had imposed any restriction that was not authorised by law, the affected parties could have sought a court order to enforce the free entry of the goods.

A concise question therefore arose as to whether paragraph 6 of the Order extended protection to the petitioners. Counsel for the petitioners argued that the expression “things done” should be interpreted to include not only the acts themselves but also their legal consequences. Counsel for the State, by contrast, submitted that because the goods had not been brought into India before the merger, the transactions did not constitute “things done” prior to the merger and therefore were subject to the enactments listed in the Schedule. The Court noted that it was unnecessary to decide whether the concept of import encompassed the entire process—from the filing of an application for permission to import through to the crossing of the customs barrier in India. The wording “things done” in

In considering paragraph 6, the Court explained that the provision should be read in a manner that allows “things done” to include not only the acts themselves but also the legal consequences that follow from those acts. The Court observed that if the interpretation proposed by the counsel for the respondents were adopted, the saving clause would become superfluous because the clause would then only preserve executed contracts—those contracts under which the goods had already been imported and received by the buyer before the merger. In such a situation, no additional protection would be required, since ordinarily there would be no question of enforcing those contracts under the law that existed before the merger. The Court further noted that the wording employed in paragraph 6 is not a novel invention; it is drawn from other statutory saving clauses. For example, Section 6 of the General Clauses Act of 1897 provides that, unless a contrary intention appears, the repeal of an Act shall not affect anything duly done or suffered under it. Similarly, the Public Health Act of 1875, which repealed the Public Health Act of 1848, contained a proviso to section 343 stating that the repeal “shall not affect anything duly done or suffered under the enactment hereby repealed.” The Court referred to the judicial examination of that proviso in the case of The Queen v. Justices of the West Riding of Yorkshire (1). In that case, a local board of health gave notice of its intention to levy a rate under the 1848 Act and its amending Acts. Before the notice expired, the 1848 Acts were repealed by the 1875 Act, which saved “anything duly done” under the repealed statutes and authorized the making of a similar rate upon giving a comparable notice. Unaware of the repeal, the board proceeded to levy a rate as if it were still under the old Acts. The learned judges held that because the notice had been given before the repeal, the subsequent making of the rate was also saved by the phrase “anything duly done” in the repealing legislation. This decision illustrated that it is not essential for the impugned act itself to have been performed before the repeal; it is sufficient that the act is integrally connected with, and is a legal consequence of, a step that was completed before the repeal.

The Court also cited the judgment of Lindley, L.J., in Heston and Isleworth Urban District Council v. Grout (2), where the validity of a rate made pursuant to a notice issued prior to repeal was affirmed. The judge succinctly encapsulated the principle at page 313, stating, “That to my mind preserves that notice and the effect of it.” Relying on that principle, the Court of Appeal concluded that the rate, being the effect of the earlier notice, was valid. The Court suggested that the language used in the saving clauses of English statutes and of the General Clauses Act of 1897 carries broader significance than merely preserving rights created by a repealed enactment. The cited authorities—(1) (1876) 1 Q.B.D. 220 and (2) [1897] 2 Ch. 306—demonstrate the established judicial approach to interpreting saving clauses, supporting the view that the phraseology of paragraph 6 should be read to protect not only the acts themselves but also their legal consequences.

The Court observed that the saving clause contained in paragraph 6 of the Order could not be interpreted by reference to the English decisions because those authorities dealt only with a saving clause that preserved rights created by a repealed Act, whereas paragraph 6 dealt with a different factual matrix. The Court noted that the English rulings applied solely to a situation in which one statute repealed another but expressly saved the right that the earlier statute had generated, and found no justification for extending that narrow construction to the present provision. It further rejected the argument that paragraph 6 required a separate construction, stating that the wording of paragraph 6 was essentially the same as the language found in the relevant saving clause of the English statutes and the General Clauses Act of 1897. Consequently, the Court could not accept the second criticism raised by the respondents. In the facts before it, the legal situation mirrored the English scenario: the Government of India, under the Indo‑French Agreement and exercising powers under the Foreign Jurisdiction Act, issued the Order that applied Indian law to Pondicherry, thereby repealing the French laws that had previously governed the same field, subject to a saving clause. This arrangement was analogous to a statute that repeals another statute while preserving certain rights, and therefore the English decisions on such repeals were equally applicable here. Both contexts allowed the pre‑existing law to continue governing acts performed before a specified date, even though some legal effects of those acts extended into the post‑merger period. Accordingly, the Court held that the expression “things done” in paragraph 6 was broad enough to encompass transactions effected prior to the merger, even though the consequences of those transactions might manifest after the merger. The Court then examined the relationship between those “things done” and the act of importing goods into India. Under the pre‑existing legal regime, the contracts concluded were capable of being performed without any customs prohibition on the importation. In order to interpret the phrase “in the course of export or import” under Article 286(1)(b) of the Constitution, the Court referred to the earlier decision in State of Travancore‑Cochin v. The Bombay Co Ltd. (1). In that case, Chief Justice Patanjali Sastri explained that an export sale necessarily involves a series of integrated activities, beginning with the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country, and that the sale and the export constitute a single, inseparable transaction. The Court adopted this principle and applied it to import transactions, concluding that a purchase by import likewise consists of integrated activities starting from the purchase contract with a foreign supplier and culminating in the physical entry of the goods into India, thus making the purchase and the import parts of the same transaction. As a result, the Court found that the act of bringing the goods into India and the contractual arrangements entered into by the petitioners with foreign dealers formed a single transaction, and the imports were the legal consequences of those contracts.

The Court observed that the principle articulated by the learned Chief Justice in State of Travancore‑Cochin v Shanmugha Vilas Cashew Nut Factory had been restated. At page sixty‑three the Chief Justice explained that the expression “integrated activities” was employed in an earlier decision to convey that a sale which triggers an export cannot be separated from the export itself, because the export is indispensable for the sale’s completion and the two together constitute a single transaction. The Court then applied this reasoning to the context of an import purchase. It held that a purchase made through import involves a chain of integrated activities that begins with the contractual agreement with a foreign seller and culminates in the physical entry of the goods into the importing country, and that the purchase and the resulting import are inseparable components of the same overall transaction. Consequently, in the present case the act of bringing the goods into India and the contracts that the petitioners entered into with foreign dealers were part of one continuous transaction. The Court therefore concluded that the importations were the legal effect of the contracts executed by the petitioners with the foreign dealers, and that this conclusion was further supported by the terms of the Indo‑French Agreement, which, although not enforceable in an Indian municipal court, shed light on the proper interpretation of the saving clause contained in the relevant Order.

The Court examined Article seventeen of the Indo‑French Agreement, which provided that, for the purposes of the case, all orders placed outside the French Establishments and finalized through the granting of a licence by the competent authority, in accordance with the laws and regulations in force prior to the de facto transfer date, were to be fulfilled by the Government of India, with the requisite foreign‑exchange made available if the goods were imported within the licence’s period of validity, subject to the payment of customs duty and other taxes normally levied at Indian ports. The Court interpreted the term “licence” in this article in a broad sense, allowing it to include any permit or authorization, because a narrow construction would create an anomaly whereby transactions protected by a formal licence would be covered, while those requiring only a permit would be excluded. It noted that the petitioners had obtained authorisations from the Economics Department for their orders, and that Article seventeen clearly manifested the intention of both governments to honour such orders. The Court warned that if paragraph six of the Order were read in the manner suggested by the State, it would imply that the framers of the Order consciously violated the terms of the bilateral Agreement, since orders covered by Article seventeen would otherwise be excluded from the saving clause. Accordingly, the Court held that paragraph six must be interpreted to save the petitioners’ transactions, precluding the respondents from seizing the goods on the basis that they were imported without a licence.

The Court concluded that, if paragraph 6 of the Order were interpreted as the State suggested, it would conflict with the terms of the bilateral Agreement because even transactions covered by Article 17 of that Agreement would be excluded from the saving clause. Consequently, the Court held that paragraph 6 of the Order must be read to protect the transactions entered into by the petitioners, and that the respondents possessed no authority to confiscate the petitioners’ goods on the ground that the imports had been made without a licence. In that view, no further issue required consideration. Accordingly, the Court set aside the orders labelled 2, 3 and 4 issued by the respondents, mandated that those orders be vacated, and directed the respondents to refund to the petitioners the amounts that had been collected unlawfully. The Court also ordered that the petitioners be awarded costs in all of the petitions.

Justice Sarkar, however, expressed the opinion that the petitions should fail. He noted that, in the latter half of 1954, the petitioners, while operating in Pondicherry – then a French establishment in India – had concluded agreements with foreign suppliers for importing a variety of goods into Pondicherry. At that time, the French authorities reportedly did not require licences for such imports, although they did allocate a certain amount of foreign exchange for the transactions. Importers who could not obtain an allocation of foreign exchange from the French authorities often resorted to obtaining it on the open market through banks. From 1 July 1954, the French authorities prohibited banks in Pondicherry from acquiring foreign exchange on the open market without their permission for the purpose of financing imports. The petitioners, with the consent of the French authorities, nevertheless obtained foreign exchange from the open market through those banks, and used the proceeds to open irrevocable letters of credit in favour of their foreign suppliers, covering the price of the goods to be supplied.

The petitioners completed these steps shortly before the administration of Pondicherry and other French establishments in India was transferred to India on 1 November 1954, an action undertaken pursuant to an agreement dated 21 October 1954 between the Governments of France and India. The goods covered by the import contracts were shipped and arrived at Pondicherry port after the transfer of administration, and were subsequently confiscated by the Government of India, which by that time had assumed control of Pondicherry. The confiscation orders allowed the petitioners to obtain release of the goods by paying a fine, an option the petitioners chose to exercise. The petitions were filed under Article 32 of the Constitution, challenging the legality of the confiscation and seeking a refund of the fine on the basis that the confiscation violated the petitioners’ constitutional rights to hold property and to conduct business. The confiscation orders were issued under section 167(8) of the Sea Customs Act, 1878, which authorises confiscation of goods imported in contravention of import prohibition orders made under section 19 of the same Act. Section 3 of the Imports and Exports (Control) Act was also referenced in the statutory context.

Section 3 of the Imports and Exports (Control) Act, 1947, empowered the Central Government to issue orders that prohibited the import of goods of any specified description. The provision further stipulated that any goods to which such an order applied would be treated as goods whose import had been prohibited under section 19 of the Sea Customs Act, and consequently the provisions of the Sea Customs Act would operate on those goods. Section 4 of the same Act declared that all orders made under rule 84 of the Defence of India Rules and that were in force immediately before the commencement of the Imports and Exports (Control) Act would be deemed to have been made under that Act. In accordance with this statutory scheme, the Government of India issued an order under rule 84 of the Defence of India Rules through Notification of the Department of Commerce No. 23 I.T.C. 43 dated 1 July 1943, which prohibited the import of the very goods that the petitioners later brought into the territory. The confiscation orders issued against those goods would have been proper provided that the statutes and the aforementioned order were applicable to the imports in question. It became evident that these statutes were intended to apply to Pondicherry from 1 November 1954, a conclusion that derived from the French Establishments (Application of Laws) Order issued by the Government of India on 30 October 1954 under the Foreign Jurisdiction Act, 1947. That order, which was designated as Ministry of External Affairs Notification No. S.R.O. 3315, was intended to take effect on the date of the transfer of administration, namely 1 November 1954, and was issued in view of the Indo‑French agreement concerning the transfer of authority. The validity of this order was not contested. Paragraph 3 of the French Establishments (Application of Laws) Order provided that the enactments listed in its Schedule, together with all orders made under those enactments and that were in force on 1 November 1954, would be applicable to the French Establishments, subject to any later provisions of the same order. The Schedule expressly listed the Sea Customs Act and the Imports and Exports (Control) Act. There was no dispute that the order issued under rule 84 of the Defence of India Rules was also in force on that date. Consequently, the Application of Laws Order brought the Sea Customs Act, the Imports and Exports (Control) Act, and the order made under the Defence of India Rules into force in Pondicherry from 1 November 1954.

The petitioners, however, argued—reasons for which the Court will examine later—that the order made under the Defence of India Rules had not been brought into operation in the French Establishments by the Application of Laws Order. Notwithstanding this contention, the petitioners did not dispute that the Sea Customs Act and the Imports and Exports (Control) Act had been applied to Pondicherry. Their principal reliance was on the saving clause contained in paragraph 6 of the French Establishments (Application of Laws) Order. The material portion of that clause reads: “All laws in force in the French Establishments immediately before the commencement of this Order, which correspond to the enactments in the Schedule, shall cease to have effect save as respect things done or omitted to be done before such commencement.” This saving provision formed the basis of the petitioners’ challenge to the application of the order made under the Defence of India Rules.

The petitioners advanced three separate submissions, two of which could be resolved together. Their first submission contended that the Order issued under the Defence of India Rules did not extend to the French Establishments because paragraph 3 of the Application of Laws Order applied only those Orders that were made under the enactments listed in the Schedule, and the Defence of India Act and Rules were not among the enactments enumerated therein. While it was correct that the Defence of India Act and its Rules were not mentioned in the Schedule, the Court noted that section 4 of the Imports and Exports (Control) Act provided that any Order made under rule 84 of the Defence of India Rules was to be deemed to have been made under the Imports and Exports (Control) Act. Consequently, the Court could not accept the petitioners’ position that an Order which, by operation of law, was deemed to be made under the Imports and Exports (Control) Act could be treated as something other than an Order made under that Act for the purpose of applying paragraph 3 of the Application of Laws Order. The Court explained that when a statute deems an Order to be made under a particular enactment, the deemed status has the same legal effect as an actual Order made under that enactment; otherwise, the deeming provision would be rendered pointless. Accordingly, paragraph 3 rendered the Order applicable to Pondicherry. The petitioners’ second submission argued that the imports in question were completed before the Application of Laws Order became operative because the contracts had been concluded and the letters of credit opened prior to that date, even though the physical goods had not yet crossed the customs barrier at Pondicherry. They maintained that, under the saving clause in paragraph 6 of the Application of Laws Order, such pre‑commencement activities – the placing of indents and the opening of letters of credit – should be preserved, and that the Sea Customs Act, the Imports and Exports (Control) Act and the Order under the Defence of India Rules would therefore continue to apply. The Court found this argument to be without merit. The Court observed that the three statutes and the Order had been in force for Pondicherry from 1 November 1954, and that their effect was to prohibit imports thereafter and to render any goods imported in violation of that prohibition liable to confiscation. The definition of “import” under those statutes and the Order required the bringing of goods into India, which, by virtue of paragraph 4 of the Application of Laws Order, also encompassed the French Establishments. Consequently, any goods that crossed the customs barrier into Pondicherry after 1 November 1954 qualified as imports and were subject to the prohibitions and penalties of the Sea Customs Act, the Imports and Exports (Control) Act and the Order, regardless of whether the underlying contracts and letters of credit had been executed before that date.

The Court observed that it could not determine the meaning of the term “import” in the present case by referring to other statutes or concepts, nor could it accept the contention that an import had occurred merely by the execution of a contract and the opening of a letter of credit without the physical entry of the goods into Pondicherry, as the learned counsel for the petitioners had attempted to argue. The principal submission advanced by the petitioners, however, was that the phrase “save as respects things done or omitted to be done” appearing in paragraph 6 of the Application of Laws Order was intended not only to preserve the acts performed before the Order came into force—specifically the placement of the indents and the opening of the letters of credit—but also to preserve the consequences of those acts and the rights that had arisen from them. The petitioners asserted that the indents had been lawfully placed and that the letters of credit had been lawfully opened using foreign exchange that had been obtained with the explicit permission of the French Administration, a permission that could not have been obtained without such a provision. They further contended that the saving clause would cause French law to govern the imports that were the result of those pre‑November 1, 1954 actions, and that it would also shield the rights derived from those actions from the operation of Indian law, thereby rendering the confiscations effected under Indian statutes wholly illegal. The Court noted, however, that the saving clause does not expressly state that French law would apply to the consequences of earlier acts or that it would protect rights accrued from those acts. The Court found no authority in the absence of such language to extend the operation of French law to the effects of the earlier acts or to the rights obtained by them. While the petitioners argued that otherwise the saving clause would be meaningless, the Court disagreed. The Court held that if a question concerning an act performed before the transfer arose after the transfer, the saving clause would require that question to be decided according to French law. In the absence of the saving clause, it would have been open to debate what the legal effect of the transfer was with respect to acts already completed. The Court also referred to section 6 of the General Clauses Act, which provides that when one enactment is repealed by another, and unless a different intention is expressed, the repeal does not affect anything lawfully done or suffered under the repealed enactment nor any right accrued thereunder. The Court observed that if the preservation of an act under a repealed enactment automatically preserved its consequences and the rights arising therefrom, there would have been no need to expressly provide for the preservation of such rights. Consequently, the Court concluded that the saving of “things done” does not automatically extend to the saving of their effects or the rights acquired from them.

The argument that the saving clause protecting the imports derived its effect from two English decisions, namely The Queen v. Justices of the West Riding of Yorkshire (1) and Heston and Isleworth Urban District Council v. Grout (2), was examined in detail. Those cases interpreted statutes that resembled section 6 of the General Clauses Act, which declares that when one enactment is repealed by another, the repeal shall not affect anything duly done or suffered under the repealed enactment or any right acquired thereunder. Because those statutes expressly preserved rights acquired under a repealed law, the Court observed that they differed materially from the present saving clause, which does not expressly save such acquired rights. In the first case, the judges held that the two statutes served essentially the same purpose of imposing a rate, and therefore a notice issued under the repealed Act continued to operate after repeal, since the saving clause would have allowed the same notice to be issued under the new Act. The Court noted that applying that principle becomes difficult when the two statutes do not share the same purpose, and further stressed that, in the present matter, there are not two statutes at all; the Indian statutes in question represent a complete break from the legal position that existed during the French administration. In the second English case, the court ruled that when an act performed under a repealed enactment is saved by a saving clause, the effect of that act is also saved. However, the judgment emphasized that the effect was saved because the saving clause expressly provided that the repeal shall not affect any right acquired under the repealed enactment, thereby removing any doubt that might arise from alternative reasoning. The act in question in that case involved a local authority issuing a notice to certain house owners to provide sewers and construct a private street, and the saved effect was the authority’s right to recover the costs of sewers and street construction from owners who failed to comply. Those processes required time, and during that period the Act under which the notice was issued ceased to apply. The Court therefore concluded that the observation in that case could not be transferred to the present situation. Moreover, the Court found a substantial distinction between the saving clause examined in the English authorities and the saving clause currently before it. The English saving clauses, like section 6 of the General Clauses Act, operate when a later statute repeals an earlier statute enacted by the same legislature. That scenario does not obtain here, where Indian legislation replaces French law.

In this case, the Court observed that statutes enacted by the Indian legislature had replaced the earlier French statutes governing the territory. The Court considered whether, absent any additional provision, the French statutes would have remained in force after the transfer of authority. It appeared that this difficulty was recognised, and therefore paragraph five of the French Establishments (Administration) Order expressly addressed it. The Order was issued by Notification No. 3314 on 30 October 1954 by the Ministry of External Affairs. It declared that any law remaining in force in the French Establishments and not repealed by paragraph six of the Application of Laws Order would remain in effect until it was separately repealed. The Court then explained that the saving clauses examined in the English authorities preserved only actions taken under the repealed enactment and the rights acquired thereunder. By contrast, the saving clause under consideration saves all acts performed before the Application of Laws Order commenced, regardless of whether they were done under any law. It does not intend to preserve a right that originated from a statute that has been repealed. The Court cited Hamilton Gell v. White, observing that section 38 of the English Interpretation Act 1889 was not intended to preserve the abstract rights created by the repealed Act. The Court added that the provision corresponded to section 6 of our General Clauses Act. The Court also referred to Abbott v. Minister for Lands, stating that a right existing in community or a class of persons, without individual action to claim it, could not be considered an accrued right. Thus, the earlier decisions did not protect a collective or abstract entitlement that had not been claimed by any individual. The Court concluded that the English principles relied upon by the petitioners would apply only to protect rights that had been acquired under repealed statutes. In the present matter, the petitioners were unable to demonstrate that they had obtained any right under any French law to import the goods. The Court noted that no statute conferred upon the petitioners a right to import, and the only circumstance was the absence of a law prohibiting such imports. Such an absence did not create a legal entitlement, nor did it constitute a right arising from a repealed statute. The Court observed that the French authorities had merely allowed the petitioners to obtain foreign exchange in the open market for financing their imports, which did not amount to a statutory right of import. Consequently, the Court found it impossible to say that the petitioners had acquired any right under any French law to import goods. Finally, the Court held that the principle from the two English cases applied only where there was no contrary legislative intention, and here the Court perceived an intention to the

In this case, the Court observed that Clause 17 of the agreement between India and France specified that imports completed through a licence granted before the transfer would be honored, but the goods would still be subject to the customs duties normally levied at Indian ports. Consequently, the Court concluded that the parties did not intend for Pondicherry to continue as a free port after the transfer, even for imports covered by agreements concluded prior to the transfer and made under a licence. The Court explained that duties on such imports were required to be paid after the transfer, indicating that the right to import without duty was not meant to be preserved. The Court further held that there could be no intention to protect a right of free import under an agreement made before the transfer where no licence had been issued for the import, citing the principle from (1) [1895] A.C. 425. 431. The petitioners, the Court noted, had not obtained any such licence.

The Court therefore determined that the English cases relied upon by the petitioners offered no assistance in the present matter. The Court also explained that it could not interpret the saving clause in this case as being equivalent to section 6 of the General Clauses Act or the comparable provision in the English Interpretation Act of 1889, and thus could not draw guidance from decisions based on those statutes. On this basis, the Court concluded that the saving clause in paragraph 6 of the Application of Laws Order did not shield the petitioners’ imports from the operation of Indian law applicable to the French establishments. Accordingly, the Court dismissed the petitions.

Shah J. further noted that Petition No. 123 of 1957 concerned the period before 1 November 1954, when Pondicherry was administered by the Government of France as one of the French establishments in India. Under French administration, all commodities could be imported into the Pondicherry port without a licence, except for certain categories such as gold, rock‑salt and specific medicinal preparations. The French authorities exercised indirect control over imports by allocating the necessary foreign‑exchange. The Government of France made an overall foreign‑exchange allocation for the French establishments in India, and persons wishing to import goods into Pondicherry and other French Indian settlements could obtain foreign‑exchange facilities for financing their imports by applying to the Chief Commissioner of French Settlements. In addition to this general allocation, the French Government also provided other currency allocations pursuant to trade agreements with foreign countries. The Chief Commissioner of Pondicherry issued permits for the import of commodities specified in those trade agreements up to the ceilings fixed in the agreements. Two types of permits for obtaining official exchange were issued by the Chief Commissioner, known as “Authorisation” for goods from countries with which France had trade agreements, and “Attestation” for goods from other countries.

In that period, the Government of France issued two categories of permits for obtaining official foreign exchange, namely “Authorisation” and “Attestation”. “Authorisation” applied to imports from countries with which France had concluded Trade Agreements, while “Attestation” covered imports originating from France itself or from nations with which France had not concluded such agreements. By granting these permits, the Government pledged to supply the foreign exchange necessary to finance the corresponding imports. Beginning on 1 April 1954, the Chief Commissioner of Pondicherry permitted prospective importers to acquire foreign exchange in the open market for the purpose of financing merchandise imports. The Department of Economic Affairs subsequently endorsed the term “authorise” on applications submitted by the importers’ bankers in connection with these transactions; however, this endorsement did not constitute a commitment by the Government to provide foreign exchange. Because official exchange for imports was being released without restriction, only a limited number of imports were financed before July 1954 using exchange purchased on the open market.

During the same interval, negotiations were underway between the Government of India and the Government of France concerning the transfer of the French Establishments in India to the Union of India. When it became apparent that the transfer was imminent, a surge of activity occurred as businesses sought to import goods into the French Settlements utilizing foreign exchange obtained from the open market. In the months of August, September and October, importers placed orders with foreign suppliers for commodities valued at approximately Rs 280 lakhs, intending to finance these purchases with exchange procured openly. Additionally, traders who normally did not conduct business in Pondicherry and who had no prior commercial interest in the French Establishments established offices in Pondicherry and began indenting goods to be financed with open‑market foreign exchange. An agreement effecting the de facto transfer of the administration of the French Establishments in India was executed between the two governments on 21 October 1954, and it became operative on 1 November 1954. Exercising the authority conferred by section 4 of the Foreign Jurisdiction Act, 1947, the Government of India issued two statutory orders on 31 October 1954: S.R.O. 3314, the French Establishments (Administration) Order, 1954, and S.R.O. 3315, the French Establishments (Application of Laws) Order, 1954. By virtue of S.R.O. 3315, specific statutes enumerated in column (3) of the accompanying Schedule—namely the Sea Customs Act, 1878; the Reserve Bank of India Act, 1934; the Imports and Exports Trade (Control) Act, 1947; the Foreign Exchange Regulation Act, 1947; and the Indian Tariff Act, 1934—were extended to the French Establishments of Pondicherry, Karaikal, Mahe and Yanam, with the amendment that references in those enactments, notifications, orders and regulations to India or to any State were to be read as also referring to the French Establishments. Both orders came into force on 1 November 1954. The petitioners, who carried on trade in various commodities in Bombay, opened a place of business in Pondicherry on 14 April 1954 and subsequently placed eight indents with Messrs Shimada Trading Co., Ltd., Osaka, Japan, for the import of porcelain ware, glass.

In this matter the petitioners had placed orders for marbles and beltings and, through their bank Bankque D. L’ Indo‑China, applied for the necessary foreign‑exchange. The Bureau Des Affaires Economique in Pondicherry endorsed the application, authorising the purchase of the required foreign‑exchange in the open market. The foreign‑exchange thus obtained was sold to the petitioners to meet the amounts specified in their letters of credit. Between 28 August 1954 and 31 August 1954 the petitioners opened three irrevocable letters of credit totalling £12,850. According to those letters, M/s Shimada Trading Co., Ltd. shipped the ordered goods to Pondicherry. The shipping documents arrived with the petitioners on 30 November 1954. It is acknowledged that the foreign suppliers dispatched the goods after the de facto transfer of Pondicherry to India. The petitioners then applied for customs permits to clear the goods, but the Controller of Imports and Exports at Pondicherry rejected those applications.

On 5 January 1955 the Chief Controller of Imports and Exports issued a public notification. After considering representations made by certain importers who sought permission to import goods for which foreign‑exchange had been obtained in the open market through Pondicherry bankers, the notification clarified that such open‑market transactions were not covered by the Indo‑French Agreement. Consequently, imports effected against open‑market transactions after 1 November 1954 were to be treated as unauthorised. However, the notification also noted that genuine importers who had placed orders in the ordinary course of trade might suffer hardship. Accordingly, the Collector of Customs, Pondicherry, was authorised to grant specific concessions to such genuine importers. One concession permitted goods shipped before 1 November 1954 to be cleared without penalty, regardless of their origin or value. Another concession allowed consignments that were fully paid for in foreign currency, shipped after 1 November 1954, and ordered before 15 August 1954 to be cleared without penalty.

Despite these concessions, the customs authorities seized the goods that the petitioners had indented, invoking the powers conferred by section 167(8) of the Sea Customs Act. The seizure was based on the allegation that the goods had been imported without a valid licence and in violation of Department of Commerce and Industries Notification No. 43‑1 T.C./43 dated 1 July 1943, as amended, together with sub‑section 2 of section 3 of the Imports and Exports Trade (Control) Act, 1947. Between 28 February and 4 March 1955 the customs authority issued orders giving the petitioners the option to clear the seized goods for home consumption upon payment of the assessed customs duty and a specified fine. Those orders were subsequently confirmed on appeal by the Board of Revenue and upheld by the Government of India exercising its revisional jurisdiction. In the interim the petitioners complied with the orders, paid the required duty and fine, and consequently obtained clearance of the goods.

The Union Government had refused the revision applications filed against the earlier orders, and consequently the petitioners filed a petition under Article 32 of the Constitution seeking a writ of certiorari to set aside the orders issued by the Chief Controller of Imports and Exports, Pondicherry, the Collector of Customs and Central Excise, Pondicherry, the Central Board of Revenue and the Union of India. They also asked for a mandamus directing those respondents to refrain from implementing or acting upon the customs orders and from the Union of India. Additionally, they requested a further order directing the respondents to refund the sum of Rs. 30,890 that had been paid as a penalty for the release of the goods. The petitioners had placed import indents for various goods before 1 November 1954, acquiring foreign exchange through their banks in the open market. They had also opened irrevocable letters of credit in favour of Japanese suppliers for those purchases. Although there was no direct evidence, it could be presumed that after opening such irrevocable letters of credit the petitioners were unable to cancel the import indents. Section 167, clause (8) of the Sea Customs Act provided that goods whose importation was prohibited or restricted under Chapter IV of that Act, if imported contrary to such prohibition, were liable to confiscation. Section 3 of the Imports and Exports Trade (Control) Act, 1947 authorised the Central Government, by order published in the official Gazette, to prohibit, restrict or otherwise control the import of goods of any description, either generally or in specified cases. Section 4 of the same Act stipulated that all orders made under rule 84 of the Defence of India Rules, or that rule as continued by the Emergency Provisions (Continuation) Ordinance 1946 and existing immediately before the Act, continued to be in force to the extent that they were not inconsistent with the Act. Under the rules framed under rule 84 of the Defence of India Rules, the import of the goods described in the petitioners’ indents was prohibited, a fact that was not contested. Those rules, by operation of Section 4, remained applicable and were treated as if they had been made under the 1947 Act. When the 1947 Act was extended to the French Establishment of Pondicherry, those same rules and orders automatically became applicable to that territory as well.

In this case the Court explained that, under section 19 of the Sea Customs Act, the Central Government may, by means of a notification, prohibit or restrict the entry by sea of goods of any description into India across any customs frontier that the Government defines. Section 2(b) of the Imports and Exports Trade (Control) Act, 1947, defines “import” as the act of bringing goods into India by sea, land or air, and therefore import means the movement of goods across the customs frontier declared by the Government of India. The Court noted that there was no dispute that, pursuant to section 19, the Port of Pondicherry had been declared a customs frontier. It was also admitted that the goods which the petitioners had indented were brought into India after 1 November 1954 and therefore were imported into India. Because those goods were brought into the Pondicherry Port without a licence that was required under a notification made under the Imports and Exports Trade (Control) Act, the Court held that, on the face of it, section 167(8) of the Sea Customs Act had been contravened.

The petitioners argued, however, that the agreement dated 21 October 1954 between the Government of India and the Government of France, together with two orders issued under the powers conferred by section 4 of the Foreign Jurisdiction Act, 1947, meant that the provisions of the Sea Customs Act and the orders deemed to have been made under the Imports and Exports Trade (Control) Act, 1947, did not apply to the goods in question. Clause 3 of that agreement provided that the Government of India succeeded to the rights and obligations that had arisen from acts of the French administration in the establishments, insofar as those acts were binding on the territory. Paragraph 5 of Article 10 stated that acts or deeds constituting rights that were established before the de facto transfer, in accordance with French law, would retain the value and validity that the same law had conferred at that time. Article 17 further provided that, to the extent it was material, all orders placed outside the establishments and completed through the grant of a licence by competent authorities under the laws and regulations in force before the de facto transfer were to be fulfilled by the Government of India, which would also supply the necessary foreign currency if the goods were imported within the licence’s period of validity, subject to the payment of customs duty and other taxes normally levied at Indian ports.

The Court observed that the agreement was strictly between the two governments and that its covenants did not purport to grant, nor could they create, any enforceable rights in favour of individual citizens of Pondicherry or of India. While section 3 of the Foreign Jurisdiction Act imposed certain obligations on the Government of India that were enforceable against the French administration, no corresponding obligations were undertaken by the Indian Government that the petitioners could enforce. Paragraph 5 of Article 10 fell within the “Judicial Matters” chapter and merely declared that acts and deeds constituting rights would retain their value; it did not create a personal right enforceable by the petitioners.

In this case, the Court observed that rights that were governed by French law were to retain their value after the territories merged with the Union of India, and that under Article 17 the Government of India was obligated to fulfil orders that had been placed outside the former French Establishments and that had been finalised by the grant of a licence issued by a competent authority. The Court noted, however, that the petitioners had never obtained any licence from any competent authority either for importing the goods or even for placing an indent for the goods. The petitioners argued that the orders identified as S.R.O. 3314 and S.R.O. 3315, which were issued under the Foreign Jurisdiction Act, should be interpreted in the context of the agreement between the Government of India and the Government of France. The Court explained that S.R.O. 3314 provided for the administration of the former French Establishments by the Government of India, and that clause 5 of that notification stipulated that all laws that were in force in the French Establishments, or any part thereof, immediately before the commencement of the order and that were not repealed by clause 6 of the French Establishments (Application of Laws) Order, 1954, would continue to remain in force until they were repealed or amended by a competent authority.

The Court further recorded that any law relating to the import of goods into India that had been applicable in the French Establishments before 1 November 1954 was expressly repealed by clause 3 of S.R.O. 3315. Clause 3 provided that the enactments listed in column 3 of the Schedule to that order, which had been in force before the order commenced, would be applied to the French Establishments subject to three qualifications: (a) any amendments that were generally applicable to those enactments in the territories to which they extended; (b) any modifications specified in column 4 of the Schedule; and (c) the subsequent provisions of the order itself. The Court pointed out that column 3 of the Schedule expressly applied the Sea Customs Act, the Reserve Bank of India Act and the Imports and Exports Trade (Control) Act to the French Establishments. Consequently, under the provisions of those Acts and the notifications issued thereunder, effective from 1 November 1954, no person could import goods of the nature that the petitioners had indented without first obtaining a licence for that purpose.

Finally, the Court noted that clause 6 of S.R.O. 3315 stated that, unless the Schedule specifically provided otherwise, all laws that had been in force in the French Establishments immediately before the commencement of the order and that corresponded to the enactments listed in the Schedule would cease to have effect, except with respect to acts done or omitted to be done before such commencement. The Court explained that this clause meant that the Sea Customs Act and the Imports and Exports Trade (Control) Act were expressly made applicable to the Pondicherry Establishment, and that all corresponding local laws ceased to have effect, except as they related to transactions completed before the commencement date. The Court emphasized that clause 6 did not authorise any act that was expressly forbidden by the provisions of the Acts made applicable by Schedule 3 in the Pondicherry Establishment, and that the use of the expression “things done or omitted to be done” was limited to protecting French laws that corresponded to the Schedule‑specified enactments only insofar as they concerned acts completed before the order took effect.

In this case the Court examined the meaning of the expression “things done or omitted to be done” that appeared in clause 6 of S. R. O. 3315. The Court explained that the phrase related only to rights or legal consequences that would have arisen, but for the application of the enactments listed in schedule 3, from acts that had already been done or omitted before the clause took effect. Consequently, the French law did not continue to apply to any later acts. The Court held that clause 6 unmistakably protected those French statutes that corresponded to the enactments in schedule 3, but only insofar as they concerned matters that had been completed before the commencement of S. R. O. 3315. By superseding the French law that was in force on the prescribed date, clause 6 emphasized that the enactments in schedule 3 possessed no retrospective operation; rather, the clause provided that any transactions concluded before 1 November 1954 would remain governed by the French law despite the introduction of the new Indian statutes. The Court noted that from the date of the de facto transfer of the French Establishments to the Indian Union, every import of goods across the customs frontier at Pondicherry fell under the Sea Customs Act and the Imports and Exports Trade (Control) Act. Goods that were shipped after 1 November 1954 on the basis of indents placed before that date were not expressly exempted from the restrictive provisions of those Acts. Accordingly, from and after 1 November 1954 any law, if any, relating to the import of goods that operated in the French territory was superseded, and imports brought into Pondicherry Port after that date were governed by the Sea Customs Act and the Imports and Exports Trade (Control) Act, not by any French law. The Court further explained that the supersession of the French statutes by the statutes listed in schedule III was, on 1 November 1954, complete, “save as respects things done or omitted to be done.” The Court then considered whether the expression “things done” might include consequences that could have arisen in the future but for the merger agreement. It concluded that, on its face, clause 6 kept the French law alive only for “things done or omitted to be done,” meaning actions performed or omitted in the past, and did not preserve the law for future actions. Accordingly, all transactions completed after 1 November 1954, according to the plain language of clause 6, were to be governed by the statutes made applicable by virtue of clause 3 of S. R. O. 3315. The Court observed that section 6 of the General Clauses Act, 1897, did not apply when the court needed to determine the effect of the supersession of French law by the statutes specified in clause 6 of S. R. O. 3315, because that provision of the General Clauses Act concerned the repeal of enactments of the Indian legislature, and there was nothing in S. R. O. 3315 that brought the French law within its scope.

In this case the Court examined the effect of S. R. O. 3315 and considered the argument that the provision should be read as if the French law that governed the French Establishments prior to their merger were treated as a statute passed by the Indian legislature. Accepting that premise, the Court found it difficult to see how decisions of English courts interpreting section 38 of the Interpretation Act, 1889 – a provision whose wording closely mirrors that of section 6 of the General Clauses Act, 1897 – could assist in giving meaning to the phrase “things done or omitted to be done” contained in clause 6 of S. R. O. 3315. The enactment of S. R. O. 3315 did not expressly preserve the French law for any right or privilege that had arisen from activities carried out under that law, and the Court held that it would be an improper legislative intrusion to use the General Clauses Act to extend the protection of the French law to transactions that occurred after the specified date. Moreover, the Court observed that the relationship between a purchase agreement with a foreign seller, the subsequent handling of the goods by a carrier, and the final import of the goods does not bring within the expression “things done” in clause 6 of S. R. O. 3315 any future consequences of those earlier acts. The Constitution’s phrase “in the course of import of the goods into the territory of India” (Article 286(1)(b)) may describe a series of coordinated steps that lead to the movement of goods across the customs frontier. However, the Imports and Exports Trade (Control) Act defines “import” narrowly as the act of bringing a commodity into Indian territory, and it excludes preliminary steps even when they are closely linked to the import process. Because those preliminary steps are not part of the legal definition of import, the Court concluded that it would be difficult, under the Sea Customs Act and the Imports and Exports Trade (Control) Act, to grant the French law protection – as provided by clause 6 of S. R. O. 3315 – to such pre‑date preliminary activities, nor could the legislature be said to have created an exemption for imports that result from those steps. Accordingly, the Court held that the wording “things done or omitted to be done before such commencement” in clause 6 of S. R. O. 3315 limits the application of French law to acts and omissions that occurred before 1 November 1954 and does not extend to the legal consequences of those acts after that date. Consequently, the import of goods into the Pondicherry Port after 1 November 1954 without a licence violates the Sea Customs Act and the Imports and Exports Trade (Control) Act.

The Court examined the statutory framework created by the Sea Customs Act and the Imports and Exports Trade (Control) Act and observed that the restrictions imposed on the import and export of goods by those statutes were not, by themselves, unreasonable. The Court further noted that if the petitioners were not entitled to rely on clause 6 of the Indo‑French Agreement, then they possessed no other basis upon which they could successfully challenge the validity of the orders that imposed duty and penalty. Accordingly, the Court expressed the view that the petition before it ought to be dismissed and that the petitioners should bear the costs of that petition. In addition, the Court held that, for the reasons set out in the principal petition, petitions numbered 124 and 125 of 1957 and petition number 118 of 1959 should also be dismissed with costs. By the Court’s own record, however, because a majority judgment was reached, the petitions were ultimately allowed, and the Court ordered that the petitioners in all of the petitions would be awarded costs. The final direction of the Court therefore permitted the petitions and granted costs to the petitioners.