Ranchhoddas Atmaram Vs. The Union of
India  INSC 34 (3 February 1961)
SINHA, BHUVNESHWAR P.(CJ) DAS, S.K.
AYYANGAR, N. RAJAGOPALA MUDHOLKAR, J.R.
CITATION: 1961 AIR 935 1961 SCR (3) 718
CITATOR INFO :
F 1962 SC1559 (4) RF 1966 SC 197 (43)
Sea Customs--Import of prohibited
goods--Maximum Penalty-Whether can be levied in excess of Rs 1,000/Sea Customs
Act, 1878 (VIII of 1878), ss. 167, item No. 8.
Item 8 of the schedule to s. 167, Sea Customs
Act, 1878, provides that any person concerned in the importation or exportation
of prohibited goods shall be liable to a penalty "not exceeding three
times the value of the goods, or not exceeding one thousand rupees." The
petitioner was found to have imported gold of the value of Rs' 25,000/and the
Customs authorities imposed a penalty of Rs. 5,000/-. The petitioner challenged
the validity of the order imposing the penalty on the ground that the. maximum
penalty that could be imposed under item 8 of s. 167 was Rs. 1,000/-.
Held, that the orders imposing the penalty
was valid. It is open to the Customs authorities to impose any of the
alternative penalties provided though the amount of it exceeds the amount of
the maximum in the other alternative.
None of the previous decisions of the Supreme
Court were authority for the proposition that the maximum penalty which can be
imposed under item 8 of s. 167 is Rs. 1,000/as this question did not arise in
those cases. On the plain language of the provision which was in the
affirmative form it gave ail option to the Customs authorities to impose any
one of the two penalties provided. The relevant words could not be read as
"shall not be liable to a penalty exceeding three times the value of the
goods, or exceeding one thousand rupees. " Maqbool Hussain v. State of
Bombay  S.C.R. 730, Babulal Amthalal Mehta v. The Collector of Customs
 S.C.R. 1110 and F.N ' Roy v. The Collector of Customs.
Calcutta  S.C.R. 1151, explained and
The Metropolitan Board of Works v. Steed
(1881) L.R. 8 Q.B.D. 445, referred to.
ORIGINAL JURISDICTION 1. Petition No. 300 of
Petition under Art. 32 of the Constitution of
India for enforcement of Fundamental Rights and Criminal Appeal No. 107 of
1958, 716 Appeal by special leave from the judgment and order dated April 5,
1957, of the Bombay High Court in Criminal Revision Application No. 1100 of
Porus A. Mehta, S. J. Sorabjee, S. N. Andley,
J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioners.
C. K. Daphtary, Solicitor-General of India,
H. B. Khanna, Y. S. Parmar and G. Gupta, for respondents (In Petn. No. 300 of
N. C. Chatterjee and B. L. Aggarwal, for the
H. R. Khanna and R. H. Dhebar, for
respondents (In Cr. A. No. 107 of 1958.) 1961. February 3. The Judgment of the
Court was delivered by SARKAR, J.-These two matters have been heard together as
they raise a common question. One of these matters is a petition under Art. 32
of the Constitution and the other, an appeal from a judgment of the High Court
The petitioner and the appellant were found
by the Customs authorities in proceedings under the Sea Customs Act, 1878, to
have imported goods in breach of s. 19 of that Act. The petitioner had without
authority imported gold of the value of Rs. 25,000/and the appellant, steel
pipes 'of the value of Rs. 1,28,182/-. The Customs authorities by independent orders
imposed a penalty of Rs. 5,000/on the petitioner and of Rs. 25,630/on the
appellant for these offences, under item 8 of the schedule to s. 167 of the
Act. The Customs authorities further confiscated the petitioner's gold under
the same provision. There was no order of confiscation of the steel pipes for
reasons to which it is unnecessary to refer.
The appeal is against an order the result of
which was to direct realisation of the penalty imposed on the appellant, by
execution of a distress warrant. The petition challenges the validity of the
order imposing the pecuniary penalty.
Neither the petitioner nor the appellant,
however, questions the decisions of the Customs authorities that they had been
guilty of 720 breach of a. 19 or that penalties could be imposed on them under
item 8 in a. 167. The petitioner does not, further, challenge the order
confiscating the gold.
The only contention of the petitioner and the
appellant is that the orders of the Customs authorities are invalid as they
impose penalties in excess of Rs. 1,000/-. They contend that the maximum
penalty that can be imposed under item 8 in s. 167 is Rs. 1,000/-. This
contention is based on two grounds. First it is said that, it has been so held
by this Court. Then it is said that, in any case, on a proper construction,
item 8 in s. 167 does not premit the imposition of a penalty in excess of Rs.
1,000/First, as to the decisions of this Court, we were referred to three. The
earliest is Maqbool Hussain v. The State of Bombay (1). That was a case in
which the question was whether a person on whom a penalty of confiscation of
goods had been imposed under item 8 in s. 167, could later be prosecuted on the
same facts for an offence under s. 23 of the Foreign Exchange Regulation Act,
1947, in view of the provisions of Art. 20(2) of the Constitution against, what
has been called, double jeopardy. It was held that Art.
20(2) was no bar to the prosecution under the
Foreign Exchange Regulation Act for, the authority under the Sea Customs Act
imposing the penalty under item 8 in s., 167 was not a judicial tribunal and
the proceeding resulting in the imposition of the penalty of confiscation was,
therefore, not a prosecution. No question arose in that case as to the maximum
penalty that could be imposed under item 8 in s, 167. While discussing whether
a Customs authority exercising the power to order confiscation and levy a
penalty under s. 167 formed a judicial tribunal, this Court observed at p. 742:
" Even though the customs officers are
invested with the power of adjudging confiscation, increased rates of duty or
penalty the highest penalty which can be inflicted is Rs. 1,000/-." It is
quite obvious that this observation was made in a different context and was not
intended to decide (1)  S.C.R. 730, 721 that the provision did not permit
the imposition of a higher penalty, as to which no question had then arisen. It
is clear that if the highest penalty which the Customs officers had the power
to impose was in excess of Rs. 1,000/but subject to another limit, it would not
have followed that they were judicial tribunals. The judgment of this Court was
not based on ,the amount of the maximum penalty which the Customs authorities
could impose. It seems rather to have been assumed that the maximum penalty was
Rs. 1,000/-, for the question about maximum penalty was neither argued, nor
discussed in the judgment at all.
The second case is Babulal Amthalal Mehta v.
The Collector of Customs (1). The only question that arose there was whether s.
178A of the Sea Customs Act, which placed on the person from whose possession
any goods mentioned in the section and reasonably believed to have been
smuggled were seized, the burden of proving that they were not so, was void as
offending Art. 14 of the Constitution. In discussing the scheme of the Act, it
was observed in connection with item 8 in s. 167 that "This Court has held
that the minimum is the alternative: see Maqbool Hussain v. The State of Bombay
"(2) . Here again, it is clear that the Court was not deciding the
question that has now arisen before us. It only made a passing reference to the
observation in Maqbool Hussein's case(2). It was not necessary for the decision
of Babulal's case (1) to have pronounced on the correctness of the observation in
Maqbool Hussain's case (2) and no such pronouncement was clearly intended. Nor
was it necessary in Babulal's case (1) to express any view as to the maximum
penalty that could be imposed under item 8 in s. 167.
The last case referred to is F. N. Roy v. The
Collector of Customs, Calcutta (1). That was a case where an order had been
made under item 8 in s. 167 confiscating certain goods imported without
authority and imposing a penalty of Rs. 1,000/in respect of that import. The
importer filed a petition in this Court under Art. 32 (1)  S.C.R. 1110,
(2)  S.C.R. 730.
(3)  S.C.R. 1151.
722 of the Constitution challenging the
validity of the penalties levied. The main part of the argument of the learned
counsel for the petitioner was based on the Imports and Exports (Control) Act,
1947, and raised questions which do not concern us in the present cases.. It
appears however that it was also contended that item 8 in s. 167 offended Art.
14 of the Constitution, a point which again does not arise in the cases in
hand. That contention was dealt with in the following words at p. 1158:
"Another similar argument was that s.
167, item 8 of the Sea Customs Act itself offended Art. 14 in that it left to
the uncontrolled discretion of the Customs authorities to decide the amount of
the penalty' to be imposed. The section' makes it clear that the maximum
penalty that might be imposed under it is Rs. 1,000/-. The discretion that the
section gives must be exercised within the limit so fixed. This is not an
uncontrolled or unreasonable discretion. Furthermore, the discretion is vested
in high Customs officers and there are appeals from their orders. The
imposition of the fine is really a quasijudicial act and the test of the
quantum of it is in the gravity of the offence. The object of the Act is to
prevent unauthorised importation of goods and the discretion has to be
exercised with that object in view. " It will be observed that the fine
imposed was Rs. 1,000/-.
It was not therefore a case in which any
question could arise as to whether a penalty in excess of Rs. 1,000/-, could be
imposed and in fact no such question arose. The question that arose was,
whether the section offended Art.
14, so that, no penalty could be imposed
under it at all.
It was in this connection that it was
observed that item 8 in s. 167 did not leave it to the uncontrolled discretion
of the Customs authorities to decide the amount of the penalty because it had
imposed a limit on that amount. It is true that the limit was there mentioned
as Rs. 1,000/-. But it is clear that the reasoning would have held equally if
it .had been said that the limit imposed was either three times the value of
the goods or: Rs. 1,000/-. The point 723 that was sought to be made in the
judgment was that there was a limit and that that was a reason for saying that
the discretion given was not uncontrolled and, therefore, there was no
violation of Art. 14. For this purpose, it made no difference what the limit
Some of the High Courts have thought that
this Court had decided in these cases that the maximum penalty permissible
under the provision is Rs. 1,000/-. The fact is that the question was never
required to be decided in any of these cases and could not, therefore, have
been, or be treated as, decided by this Court. In Leo Boy Frey v. The
Superintendent, 'District Jail Amritsar (1), this Court observed that " No
question I has been raised as to the maximum amount of penalty that can be
imposed under s. 167(8) and we are not called upon to express any opinion on
that point. " This would show that this Court had taken notice of the fact
that the High Courts were interpreting the judgment in F. N. Roy's case(")
and the other case,% in a manner which was not intended and desired to strike a
note of warning against the misconception. None of these cases is authority for
the proposition that the maximum penalty which can be imposed under item 8in s.
167, is RE;. 1,000/-.
The argument that this Court has already held
that the maximum penalty that can be awarded under it is Rs. 1,000/must
We now come to the construction of the
provision, the relevant portion of which is in these terms:
S. 167. The offences mentioned in the first
column of the following schedule shall be punishable to the extent mentioned in
the third column of the same with reference to such offences respectively:
of Offences this Act to Penalties which offence has reference
. . . . . . . . .
8.If any goods, the importation or
exportation of which is for the time being prohibited or restricted by or under
Chapter IV of this Act. be imported into or exported from India contrary to
such prohibition or restriction.
. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
18 & 19 such goods shall be liable to
confiscation; and any person concerned in any such offence shall be liable to a
penalty not exceeding three times the value of the goods, or not exceeding one
 S.C.R. 822, 827. (2) S.C.R. 1151.
724 The words which are material to this case
are, "Any person concerned in any such offence shall be liable to a
penalty not exceeding three times the value of the goods or not exceeding one
thousand rupees. " The question is whether, in imposing a penalty, the
conditions laid down in both the alternative clauses joined by the word "
or " have to be fulfilled or the condition in any one of them only ? It is
clear that if the words form an affirmative sentence, then the condition of one
of the clauses only need be fulfilled. In such a case ,for " really means
It either " " or ". In the Shorter Oxford Dictionary one of the
meanings of the word " or " is given as " A participle
coordinating two (or more)-words, phrases or clauses between which there is an
alternative. " It is also there stated, " The alternative expressed
by " or " is emphasised by prefixing to the first member or adding
after the last, the associated adv. EITHER." So, even without "
either ", " or " alone creates an alternative. If, therefore,
the sentence before us is an affirmative one, then we get two alternatives, any
one of which may be chosen without the other being considered at all. In such a
case it must be held that a penalty exceeding Rs. 1,000/can be imposed.
If, however, the sentence is a negative one,
then the position becomes different. The word " or " between the two
clauses would then spread the negative influence over the clause following it.
This rule of grammar is not in dispute. In such a case the conditions of both
the clauses must be fulfilled and the result would be that the penalty that can
be imposed can never exceed Rs. 1,000/-.
The question then really comes to this: Is
the sentence before us a negative or an affirmative one ? It seems to us that
the sentence is an affirmative sentence. The substance of the sentence is that
a certain, person shall be liable to a penalty. That is a positive concept. The
sentence is therefore not negative in its import.
The learned counsel for the petitioner and
the appellant said that the sentence began with a negative, namely, the words
not exceeding " and therefore it 725 is a negative sentence and the word
" or " occurring later in the sentence must spread the negative
influence over that part of the sentence which follows it. This contention is
clearly fallacious. The word " not " refers only to the word "
exceeding " following it and the two together constitute a qualifying
clause limiting the amount of the penalty that can be imposed. There is no
negative sense to spread over and influence the rest of the sentence. If the
learned counsel were right, the words " not exceeding " would not
have been repeated after the word " or " for the word " or
" would have carried the negative influence forward and another negative
would not, have been necessary.
The acceptance of learned counsel's argument
that "or" carried any negative influence forward, would make nonsense
of the sentence.
It seems to us that the learned counsel
really wants us to read the section as if the words were, " shall not be
liable to a penalty exceeding three times the value of the goods, or exceeding
one thousand rupees. " So read the sentence would be a negative one and
the word "I or " would carry the negative influence forward. To do
that would, however, be reenacting and not interpreting. It is clear that each
time the expression " not exceeding " is used, it qualifies the
extent of the punishment that is stated after it. That expression is really equivalent
to the words " up to " and can be easily substituted by them without
affecting the sentence in any way. There is really no negative in the sentence
and what we have, is a purely affirm. active provision laying down two
alternative penalties to choose from, with a maximum for each.
The distinction between affirmative and
negative sentences may be illustrated by the case of The, .Metropolitan Board
of Works v. Steed (1). The provision there considered was, " No existing
road, being of less width than forty feet, shall be ... formed as a street for
the purposes of carriage traffic, unless such road be widened to the full width
of forty feet ...or for the purposes of foot traffic only, unless such road be
widened to the full width of twenty feet or unless such (1) (1881) L.R. S
726 streets respectively shall be open at
both ends. " It was held that both the conditions had to be fulfilled and
the street had to be of the prescribed width and also open at both ends. One of
the reasons given for this view was that the sentence was a negative one and
the word " or " (being the one underlined by us*) in it carried
forward the negative influence and made it necessary to fulfill both the
conditions. 'It was said at pp. 447-48 :
" We might have referred to authorities
by good writers, showing that where the word 'or' is preceded by a negative or
prohibitory provision, it frequently has a different sense from that which it
has when it is preceded by an affirmative provision., For instance, suppose an
order that 'you must have your house either drained or ventilated. The word I
or' would be clearly used in the alternative. Suppose again, the order was that
I you must have your house drained or ventilated, that conveys the idea to my
mind that you must have your house either drained or ventilated. But supposing
the order were that 'you must not have your house undrained or unventilated.'
The second negative words are coupled by the word I or', and the negative in
the preceding sentence governs both.
In a. 98 there is a negative preceding a
sentence no existing road' shall be formed." It is obvious that the
sentence before us contains, no negative or prohibitory provision. It only
contains a positive provision empowering one of the two alternative penalties
laid down to be imposed. The fact that the penalties are directed not to exceed
a certain limit does not change the sentence from affirmative to negative; the
sentence remains permissive and does not become prohibitory.
It follows that any of the. alternative
penalties provided may be imposed though the amount of it exceeds the amount of
the maximum in the 'Other alternative. A consideration of the object of the Act
also supports that view. The Act is vital for the country's economic stability.
It is: intended to prevent smuggling in goods and such goods may be of large
value. A small fine of Rs. 1,000/would Here printed in italics.
727 often be quite inadequate to serve these
objects. It would be in consonance with such objects if power is given to the
authorities concerned to impose a higher penalty when the occasion requires it.
The learned counsel for the petitioner and
the appellant then referred us to Webster's New International Dictionary (2nd
ed.) where one of the meanings of the word " nor " has been given as
" or not ". The learned counsel say that the word " or "
and the word " not " following it have to be read together and on the
authority of Webster, ask us to substitute for them the word " nor "
in order to get at the intention of the Legislature. But we do not have here
the word "nor ". Nor are we able to find anything in Webster's
Dictionary authorising the substitution of " nor " in all places for
the words " or not ". We are clear that here no " or not "
occurs which can be substituted by " nor without doing violence to the
sentence. The word not, following the word " or ", is really joined
to and qualifies the word " exceeding " which comes after it and
cannot be joined to the preceding word "or" at all. To read the words
" or not " as joined to each other, and to substitute them by "
nor " would be to change the structure of the whole sentence and,
therefore, its meaning. An interpretation which so radically alters the meaning
of the clause, cannot be accepted.
These were the main arguments advanced by the
learned counsel for the petitioner and the appellant. There remain, however,
certain other points raised by them to deal with.
It was said that the fact that two
alternative penalties had been provided would indicate that one of them was the
maximum. It is somewhat difficult to comprehend this argument. By itself it
does not show that the maximum penalty would be Rs. 1,000/and that is what the
learned counsel want us to hold. We have earlier held that either of the two
penalties provided may be chosen by the authorities concerned as they consider
fit. Suppose three times the value of the goods with which the offence is
concerned, exceeds Rs. 1,000/-. Then that would be larger of the two penalties
that can be awarded in that case and the present argument does 93 728 not
establish that this larger penalty cannot be imposed.
Which is the maximum in a particular case,
would depend on the value of the goods. Further, there seems to us to be good
reason why two alternative penalties were provided.
Where the value of the goods is very large,
it may be that a penalty of Rs. 1,000 /would be too inadequate a punishment.
Again, it may be that three times the value of the goods may be 'Much smaller
than Rs. 1,000/-. It may conceivably be necessary in such a case by reason, for
example, of the person concerned having on earlier occasions committed the same
offence or having shown a determined state of mind to commit the offence, to
inflict a penalty higher than three times that value. Then it may also happen
that the value of the thing concerned may, in conceivable circumstances, not be
properly ascertainable. In such a case the alternative penalty up to Rs. 1,000/has
to be adopted if any penalty at all is to be awarded.
The learned counsel then said that if both
the alternatives were available to the authorities concerned to choose from,
then the provision would give them a very arbitrary discretion which, whether
it offended Art. 14 or not, there is no reason to think was intended by the Legislature.
We do not think that this argument is of force. Each of the alternative
penalties provided, has a limit attached to it.
Therefore the discretion is neither unlimited
It may be that three times the value may
amount to an enormous sum but that will be so only when the value of the goods
with which the offence is concerned, is high. If goods of high value are the
subject matter of the offence, then there is no reason for saying that the
provision for imposing a penalty of three times that value, is not intended by
Another argument advanced on behalf of the
petitioner and the appellant was that no other item in s. 167 provided for a
penalty in money, as distinguished from confiscation, in excess of Rs. 1,000/and
this indicated the intention of the Legislature not to impose a higher penalty.
It was therefore said that item 8 should be construed in accordance with this
729 intention as not enabling the imposition of a pecuniary penalty higher than
Rs. 1,000/-. The first answer to this contention is that the intention in item
8 has to be gathered from the language used in it. If that language is clear,
that must be given effect to whatever may have been the intention in other
provisions. In our view, the language in item 8 is clear and it permits the
imposition of a penalty in excess of Rs. 1,000/-. No question of gathering the
intention of the Legislature from the other items arises. The second answer is
that the learned counsel are not right when they say that the other items do
not provide for a pecuniary penalty in excess of Rs. 1,000/-.
Thus under item 29 when goods are found in a
boat without a boat-note as required by s. 76 of the Act, the person in charge
of the boat shall be liable to a penalty not exceeding twice the amount of the
duty leviable on the goods. Now it is conceivable that such duty may be in
excess of Rs. 1,000/-. Provisions for similar penalty will be found in items
17, 29, 31, 38, 48 and others. There are also several items which permit the
imposition of a penalty calculated at large sums like Rs. 500/and Rs. 1,000/per
package. In these the amount of the penalty might easily exceed Rs. 1,000/-:
see items 17, 36, 49, 56. There is another group of items which permits the
imposition of penalty calculated on the value of the goods, and such penalty
may, of course, be far in excess of Rs. 1,000/:
see items 58, 59 and 73. It would indeed be
strange if a statute like the Sea Customs Act, on the proper working of which
the finances and commerce of the country largely depend, considered a pecuniary
penalty of Rs. 1,000/enough for a breach of any of its provisions. We feel no
doubt that the Act did not intend this.
It was also argued that a penal statute like
the one before us, must be construed in favour of a citizen and therefore item
8 should be construed as permitting the imposition of a penalty up to Rs.
1,000/and no more. This rule of construction of a penal statute is applicable
only where the meaning of the statute is not clear. This is not the case with
the present statute. The appellant and the petitioner can therefore derive no
assistance from this rule.
730 The learned counsel for the petitioner
and the appellant also said that the Sea Customs Act was modeled on 39 and 40
Vict., Ch. 36, an English statute to consolidate the Customs laws, s. 186 of
which corresponds to s. 167 of our Act.
They said that the English section expressly
provided that the authority concerned would have the option to choose any of
the punishments specified, but our statute deliberately departed from this and
did not use the words " at the election of " which occur in the English
statute. In our view, even without these words the meaning in our provision is
plain. It also seems to us that the English statute used the words " at
the election of " by way of abundant caution.
The effect of that statute would have been
the same even without those words. It may be that in our statute similar words
were not used because it is somewhat differently framed; the use of them may
have been considered inappropriate. The English statute gives a choice between
two fixed penalties of " treble the value of the goods" and "one
hundred pounds." In our statute, each of the two alternative penalties is
flexible ; each penalty is not to exceed a certain limit.
The last argument was based on the word
" extent appearing in the main part of s. 167 which, it is said, indicated
that the third column laid down the extent of the punishment that could be
awarded. This argument does not carry the matter further at all for, whichever
of the two competing interpretations is accepted, in each case there would be
the extent of the punishment specified and that word cannot help in deciding
what the correct interpretation is.
For these reasons it seems to us that under
item 8 in s. 167 a penalty in excess of Rs. 1,000/can be imposed and so the
orders that the Customs authorities had made in these cases are not open to any
challenge. It is not in dispute that the penalties imposed did not exceed three
times the value of the goods concerned.
The petition and the appeal are accordingly
There will be no order for costs.
Petition and appeal dismissed.