Manharlal Bhogilal Shah Vs. State of
Maharashtra  INSC 109 (5 April 1971)
SIKRI, S.M. (CJ) MITTER, G.K.
REDDY, P. JAGANMOHAN
CITATION: 1971 AIR 1511 1971 SCR 359 1971 SCC
Sea Customs Act, 1878, s. 167, items 87 and
81, and s. 187AIf s. 187A confers arbitrary powers on customs officials-If
ultra vires Art. 14 of Constitution.
The appellant imported consignments of contraband
and prohibited goods. He was prosecuted for an offence under s. 167, item 81.
of the Sea Customs Act, 1878, on a complaint by the appropriate authority under
s. 187A, and was convicted.
On the question whether s. 187-A violated
Art. 14 of the Constitution on the grounds; (1) that the Customs authorities
had an absolute discretion to proceed either under s. 167(8); in which case
there would be only an imposition of a fiscal penalty and confiscator of goods;
or to file a complaint in the criminal court, under s. 187A for the offence
under s. 167 item 81, in which case there could also be a sentence of
imprisonment up to two years. and (2) the customs officials have a wide
latitude in choosing cases for criminal prosecution,
HELD (1) the proceedings under the Foreign
Exchange Regulation Act. 1947,unlike under the sea customs Act could be taken
in the alternative and the punishment could also be imposed in the alternative'
Any person guilty of contravention of s. 23(1)(a) of that Act could not be made
liable for a penalty under s. 23(1) (b) also to prosecution and imprisonment
under s. 23(1) (b)Therefore s. 23D, which empowers the Director of Enforcement
of file complaint instead of imposing a penalty under s. 23(1)(a) only if he
was satisfied that in, the circumstances of a case a penalty under s. 23(1)(a)a
would be inadequate, was necessary to prevent arbitrary exercise of discretion
by the Director under. that Act. Such a provision however, is not necessary
under the Sea Customs Act, because, if a person is found guilty under s. 167,
item 8, and if his case is also covered by item 81, there is no choice in the
matter of imposing penalty or punishment. A penalty can be, imposed under item
8, and he will also be liable to criminal prosecution under item 81. [3-63B-F;
364X-B] Reyala Corporation (P) Ltd. v. Director of Enforcement, New Delhi,
 1 S.C.R. 639, referred to.
(2) It cannot be said that s. 187A confers an
unguided power on the customs' authorities for not filing a complaint against a
person although he was liable to a criminal prosecution under s. 167, item 81.
While deciding whether a complaint should be
instituted for an offence which is covered both by items 8 and 81 of a.167, a
customs officer must take into *count the enormity and magnitude of the
contravention, the evidence which is available , and whether the evidence is
sufficient to take the matter to a criminal court: The officers who are
authorised to make a complaint under s. 187A are senior officials holding
responsible positions 360 and they have to act in a reasonable and bonafide
They cannot discriminate between similar
cases according to their whim and fancy. The power conferred by the section is
to be exercised for effectuating the object and purpose of the Act keeping in
view the entire scheme of the Act to ensure that goods do not escape the levy
of duty and that the prohibitions and restrictions imposed on importation and
exportation are rigidly en forced. [365C-E, G-H; 366B-C, DF] Matajog Dobey v.
H. C. Dhari  2 S.C.R. 925, 932 and Nirmala Textiles Furnishing Mills Ltd.
v. The Second Industrial Tribunal,  S.C.R. 335, followed.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 44 of 1967.
Appeal from the judgment and order dated
January 23. 1967 of the Bombay High Court in Criminal Appeal No. 525 of 1965.
R. Jethmalani, S. B. Jaisinghani and K.
Hingorani, for the appellant.
Jagadish Swarup, Solicitor-General, H. R.
Khanna, B. D. Sharma and S. P. Nayar, for the respondent.
The Judgment of the Court was delivered by
Grover, J.-This is an appeal by certificate from a judgment of the Bombay High
Court upholding the conviction and sentence of the appellant under S. 167(81)
of the Sea Customs Act, 1878, hereinafter called the 'Act' and S. 120-B of the
Indian Penal Code read with the aforesaid section and S. 5 of the Import and
Export (Control) Act 1947. The main point for determination is whether s. 187-A
of the Act is unconstitutional on the ground that it is violative of Art.
14 of the Constitution. The facts to the
extent they are necessary may be set out.
The appellant carried on business in the name
of M/s. Jaihind Ex-Import Coporation as its sole proprietor. He also carried on
business as a partner in another firm run under the name and style of Alram
Optics (India) Corporation. The offices of the two firms were situate at New
Charni Road, Bombay. According to the case of the prosecution the appellant
with the object of defrauding the Government of customs duty payable on certain
goods and with a view to evading prohibition imposed on the import of such
goods was a party to criminal conspiracy, some of the other parties being M/s.
0. & K. Heydegger and M/s. Winter Optics in West Germany. The conspiracy
was stated to have been entered into for the purpose of acquiring possession of
contraband goods such as spectacle frames, welding glasses etc.
The import of spectable frames was totally
prohibited and the import 361 of welding glasses was greatly restricted. It was
alleged that in pursuance of the conspiracy the appellant imported three
consignments by three different ships ; the first one arrived by s.s.
Bialy.stock and the other two came on September 22, 1960 and March 5, 1960 by
two other ships s.s. Fraunfels and s.s. Laurenskerk. Out ,of the four cases
which arrived in the first consignment two cases ,contained contraband goods.
As regards the other two consignments one case in each consignment contained
goods the import of which was prohibited. The modus operandi was highly ingenious
and interesting but we need not recapitulate the same.
The defence of the appellant was that it was
owing to the mistake of shippers that the cases containing contraband goods
arrived. It may be mentioned that no bill of entry was lodged by the appellant
regarding the cases which contained contraband goods of the first consignment
and the other consignment which: were not got cleared. The learned Presidency
Magistrate found the appellant guilty and sentenced him to six months' rigorous
imprisonment and a fine of Rs. 1000 for each of the four charges directing the
substantive sentences to run concurrently. The appellant filed an appeal to the
High Court and the State preferred a petition for revision for enhancement of
the sentence. The High Court dismissed both the appeal and the revision. The
'High Court further directed that the contraband goods should stand confiscated
in favour of the Government of India.
During the pendency of the appeal in this
court a petition was filed on behalf of the respondent (Cr. Misc. Petition No.
362/70). ,It was prayed therein that a constitutional point as to the vires of
s. 187A read with s. 167(81) of the Act be allowed to be raised. Thereupon the
Division Bench made an order that the appeal be placed before a larger bench.
The question being one of constitutional validity of s. 187A of the Act counsel
for the appellant has addressed arguments before us with our permission on the
aforesaid point. It has been contended inter alia that the offenses of
smuggling of goods and in particular the acts with which the appellant has been
charged could be dealt with by the customs authorities by proceeding under s.
167(8) of the Act as well as in the alternative or in addition by instituting a
prosecution in a criminal court by filing a complaint under s. 187A read with
s. 167(81) of the Act. The former can result only in the imposition of a fiscal
penalty not exceeding three times the value of the goods and confiscation of
the goods themselves. The latter can result in a sentence of imprisonment upto
two years or fine or both. Thus it has been left to the unfettered and unguided
discretion of the customs authorities to proceed against certain per-sons under
s. 167(8) and others under s. 167(81) or under both the sections. In a large
number of cases no criminal prosecutions 362 were filed at all and proceedings
under s. 167`8) alone were taken which resulted in imposition of penalties.
This leads to discrimination and has actually resulted in discrimination.
We may now refer to s. 187A of the Act. It
provides that no court shall take cognizance of any offence relating to
smuggling of goods punishable under item 81 of the Schedule to s. 167 except
upon complaint in writing made by the Chief Customs Officer or any other
officer of customs not lower in rank than an Assistant Collector of Customs.
Items 8 and 81 of s. 167 to the extent they are material are as follows:Offences:
8. If any goods the importation 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
restrictions; or If any attempt be made so to import or export any such goods;
81. If any Person knowingly, General and with
intent to defraud the Government of any duty payable thereon, or to evade any
prohibition or restriction for the time being in force under or by virtue of
this Act with respect thereto acquires possession or, or is in any way
concerned in carrying, removing depositing, harbouring, keeping or concealing
or in any manner dealing with any goods which have been unlawfully removed from
a warehouse or which has not been paid or with respect to the importation or
exportation of which any prohibition or restriction is for the time being in
force as aforesaid;
......................................" Section of this Act to which
offence has reference :18 & 19 Penalities:such goods shall be liable to
confiscation; and any person concerned any such offence shall be liable to
penalty not exceeding three times the value of the goods or not exceeding one
thousand rupees." General:Such persons hall on conviction before a
Magistrate be liable to imprisonment for any term not exceeding two years, or
to fine, or to both." Even though item 8 of s. 167 does not employ the
word "knowingly" which is to be found in item 81 international
smugglers are bound to be covered by both the items. The argument on behalf of
the appellant is based on there being no guidelines in s. 187A in the matter of
filing a complaint for an offence under item 81. It is suggested that if there
is a option to the officers mentioned therein to file a complaint or not to
file the complaint then there will be clear infringement of Art. 14. Counsel
for the appellant 363 has gone to the extent of submitting that the, power to
give sanction or to make a 'complaint without any guidelines would itself be
hit by Art. 14.
Our attention has been invited to Ravala
Corporation (P) Ltd. & Ors. v. Director of Enforcement, New Delhi(1), in
which one of the points canvassed was that s. 23(1)(b) of the Foreign Exchange
Regulation Act 1947 as amended by the Foreign Exchange Regulation (Amendment)
Act 1957 was violative of Art. 14 of the Constitution inasmuch as it provided
for punishment severer than the punishment or penalty provided for the same
acts under s. 23(1)(a) of that Act. It was pointed out in the judgment of this
court that two different proceedings could be taken for contravention of
certain provisions of the aforesaid Act. Under s.
23(1)(a) a person was liable to a penalty
only and that penalty could not exceed three times the value of foreign
exchange in respect of which contravention had taken place or Rs. 5,000
whichever was more. That penalty could be imposed by adjudication made by the
Director of Enforcement in the manner provided in s. 23(D) of the said Act. The
alternative punishment provided by s. 23(1)(b) upon conviction by a court was a
sentence of imprisonment for a term which could extend to two years or with
fine or with both. The argument that the section laid down no principles for
determining when a person concerned should be proceeded against under s.
23(1)(a) and when under s. 23(1)(b) and that it was left to the arbitrary
discretion of the Director of Enforcement to decide which proceeding should be
taken was repelled by relying on the provisions of s. 23D. Under that section
the Director of Enforcement was first to hold an inquiry for the purpose of
adjudging whether there had been contravention under s. 23(1)(a) and if he was
satisfied that the person had committed a contravention he could impose a
penalty provided thereby. According to the proviso, however, if at any stage of
the enquiry he was of the opinion that having regard to the circumstances of
the case the penalty would not be adequate he was bound to make a complaint in
writing to the court instead of imposing any penalty himself.
Counsel for the appellant has laid great
emphasis on the absence of any such provision in the Act as was to be found in
s. 23D of the Foreign Exchange Regulation Act 1947. But it is significant that
under the aforesaid enactment the proceedings could be taken in the alternative
and the punishment also could be imposed only in the alternative and any person
guilty of contravention' could not be made liable for a penalty provided by s.
23(1)(a) as also imposed a sentence of imprisonment under (1)  1 S. C. R.
364 S. 23 (1) (b). According to the provision
of S. 167, items 8 and 81 of the Act there is no choice in the matter of
imposing penalty or punishment. If a person is found guilty a penalty can be
imposed under item 8 and he will also be liable to criminal prosecution and
conviction if his case is covered by item 81 of that section.
In numerous Acts provisions are found
according to which no court can take cognizance unless either sanction is
granted by the competent. authority for the prosecution of an accused person or
a complaint in writing is made by an officer or authority empowered in that
behalf. Nothing is indicated or expressly stated in most of the provisions as
to the circumstances in which sanction should be withheld or granted or a
complaint should be instituted or not. One of such provisions came up for
examination in Gokulchand Dwarkadas Moraka v. The King (1). Under clause 23 of
the Cotton Cloth and Yam Control Order 1943 no prosecution for contravention of
any of the provisions of the Order could be instituted without the previous
sanction of the Provincial Government etc. It was laid down that in order to
comply with the provisions of clause 23 it must be proved that the sanction was
given in respect of the facts constituting the offence charged. Counsel for the
appellant has relied a great deal on the following observations of their lordships:
"They can refuse, sanction on any ground
which commends itself to them, for example that on political or economic
grounds they regard a prosecution as inexpedient." It is argued that if
the same wide latitude is given to the customs officers mentioned in S. 187A
they can import even political or economic considerations for not filing a
complaint although a person is liable to criminal prosecution for an offence
under s.167(81). We consider it unnecessary to pronounce, with respect, on the
correctness or otherwise of the above observations. We have no doubt that the
authorities concerned are expected to take into account the changed conditions
obtaining after the enforcement of our Constitution which guarantees
fundamental rights including Art. 14, They are bound to examine the facts of a
particular case and then decide whether prosecution should be launched or not.
Even if any policy or guidelines have to be
found they can certainly be discovered from the object, purpose and scheme of
the Act. The preamble reads: "Whereas it is expedient to consolidate and
amend the law relating to the levy of Sea Customs duties it is enacted as
follows". Chapter IV deals with prohibitions and restrictions (1) A. I. R.
1948 P. C. 82.
365 on importations and exportation and Chapter
V, with levy of and exemption from customs duties. Elaborate provisions have
been made to ensure that goods do not escape the levy of duty and that the
prohibitions and restrictions which have been imposed on importation and
exportation are rigidly enforced. Chapter XVI provides for offenses and
penalties and S. 167 therein is an omnibus section which contains 81 items
dealing with offenses and penalties. Chapter XVII contains procedural
provisions relating to offenses, appeals etc. Section 187A appears in this
The procedural provisions must be read in the
light of the object and purpose. of the Act. While deciding whether a complaint
should be instituted for an offence which is covered both by items 8 and 81 of
S. 167 a customs officer must take into account the enormity and magnitude of
the contravention and, the evidence which is available. It is possible that in
certain cases the evidence may not be sufficient for. taking the matter to a
criminal court and in view of the entire facts a complaint may not be lodged
'for contravention of offence under item 81 but in all cases the customs
officers have to act in a reasonable and bona fide manner and they cannot just
discriminate between similar cases according to their whim and fancy. For-if that
is done it is always open to a person against whom complaint has been
instituted to challenge their exercise of discretion in appropriate
proceedings. We are fortified in the view that we are taking by the following
observations in Matajog Dobay v. H. C.Bhari(1). where the argument that Section
197 of the Criminal Procedure Code vested an absolutely arbitrary power in the
Government to grant or withhold sanction at their sweet, will and pleasure was
"If the government gives sanction against
one public servant but, declines to do. so against another, then the government
servant against whom sanction is given may. possibly complain of
discrimination. But the petitioners who are complainants cannot be heard to say
so for there is no discrimination as against any complainant. It has to be
borne in mind that a discretionary power is not necessarily a discriminatory
power and. that abuse of power is not to be easily assumed where' the
discretion is vested in the government and not in a minor official." The
officer who is authorised to make the complaint under S. 187A of the Act is the
Chief Customs Officer or any other officer of customs not lower in rank than
the Assistant Collector of Customs authorised by the Chief Customs Officer.
These officers cannot be regarded to be, minor officials and they hold
responsible positions (1)  2 S. C. R. 925,932.
366 in the hierarchy of customs authorities.
In Niemla Textiles Finishing Mills Ltd. v. The 2nd Industrial Tribunal(1) the
validity of the Industrial Disputes Act 1957 including S. 10 was challenged,
inter alia on the ground that the appropriate government had unregulated and
arbitrary power to discriminate between different parties and it was open to it
to refer the industrial dispute to a Board for promoting the settlement or a
Court of Inquiry or the Industrial Tribunal and that there were no guidelines
as to which class of cases were to be referred to one or the other. It was
pointed out by this court that the purpose sought to be achieved by the said
Act had been well defined in the preamble to it. The provisions sufficiently
indicated the purpose and scope of the enactment as also the industrial
disputes which might arise between the employers and their workmen which had to
be referred for settlement to the various authorities under the Industrial
Disputes Act. The achievement of one or other objects in view by such reference
to the Board of Conciliation or Court of Enquiry or Industrial Tribunal must
guide and control the exercise of the discretion and there was no question of
the government being in a position to discriminate between one party and the
other. In our judgment the ratio of this decision appositely applies to the
present case. The object and purpose of the Act has already been noticed as
also its scheme and the relevant provisions. The power conferred by S. 187A has
to be exercised for effectuating the object and purpose of the Act keeping in
view the entire scheme. It cannot, therefore, be said that any unguided
discretion or power has been conferred of the nature which would come within
the inhibition of Art. 14. The principal contention of the learned counsel for
the appellant based on Art. 14 must fail.
On the merits counsel for the appellant has
brought to our notice the various facts and circumstances relating to the case.
We are satisfied that the High Court rightly upheld the conviction for the
offences in question but taking into consideration every aspect of the matter
we consider that the sentence of imprisonment already undergone by the
appellant together with the fine which has been imposed apart from the order
relating to the confiscation of goods will serve the ends of justice.
The appeal is consequently allowed only to
the extent that the sentence of imprisonment for each offence is reduced to one
already undergone. In all other respects the appeal shall stand dismissed. The
bailbonds of the appellant, who was ordered to be released on bail, shall stand
Appeal allowed in part.
(1)  S. C. R. 335.