Report No. 47

15.31. Foreign Exchange Act-Amendment regarding seizure recommended.-

It has been stated1 that Enforcement Officers under the Foreign Exchange Act may be empowered to seize or confiscate vehicles or containers except in cases where they have been used without the knowledge or fault of the owner or his agent. We accept the suggestion, and recommend an amendment accordingly.

1. Suggestion of a Ministry of the Government of India.

15.32. Foreign Exchange Act-Suggestion for confiscation where offence is committed in Indian currency.-

It has been suggested1 that the Foreign Exchange Act should be amended to provide for confiscation where the currency in respect of which an offence is committed has been converted into, say, rupees. We accept the suggestions, which appears to be a useful one.2

1. Suggestion of a Ministry of the Government of India.

2. Amendment to be drafted.

15.33. Amendment of section 23(1), Foreign Exchange Act as to punishment.-

In accordance with our general recommendation for increase in the maximum punishment1 (on the basis of the pecuniary test), and for minimum imprisonment and fine, it will be necessary to revise section 23(1) of the Foreign Exchange Act.2

1. Para. 7.20, supra.

2. Actual amendment will be indicated separately.

15.34. Mens rea and burden of proof under Foreign Exchange Act.-

We have made a general recommendation as to the burden of proof1 regarding mens rea.

1. Para. 7.12, supra.

There is some difficulty in giving effect to this recommendation in the Foreign Exchange Act, and it is necessary to examine the case law.

It is generally assumed that offences under the Foreign Exchange Act do not require mens rea. There is a Supreme Court judgment1 dealing with the question how far ignorance of a notification under the Foreign Exchange Act, is a defence. The accused in that case was charged with being in possession of 34 kilos of gold, which he had not declared as required by a notification issued under the Foreign Exchange Regulation Act. The defence plea was that the accused could not have known of the notification published in India three days before he left Zurich.

Ayyangar, J., speaking for the majority, felt that in the interpretation of an Act intended to deal with a grave economic situation, the object of the Act, viz., conservation of foreign exchange, could not be overlooked. He was not prepared to read conditions in the Act if that would frustrate its purpose.

The majority view2 was thus elaborated-

"When one turns to the main provision whose contravention is the subject of the penalty imposed by section 23(1A) viz., section 8(1) in the present context, one reaches the conclusion that there is no scope for the invocation of the rule of mens rea. It lays an absolute embargo upon persons who without the special or general permission of the Reserve Bank and after satisfying the conditions, if any, prescribed by the Bank, bring or send into India any gold etc., the absoluteness being emphasised, as we have already pointed out, by the terms of section 24(1) of the Act. No doubt, the very concept of "bringing" or "sending" would exclude an involuntary bringing or an involuntary sending.

Thus, for instance, if without the knowledge of the person a packet of gold was slipped into his pocket, it is possible to accept the contention that such a person did not "bring" the gold into India within the meaning of section 8(1). Similar considerations would apply to a case where the aircraft on a through flight which did not include any landing in India has to make a forced landing in India-owing, say, to engine trouble. But if the bringing into India was a conscious act and was done with the intention of bringing it into India, the mere bringing constitutes the offence and there is no other ingredient that is necessary in order to constitute a contravention of section 8(1) than that conscious physical act of bringing.

If, then, under section 8(1) the conscious physical act of "bringing" constitutes the offence, section 23(1A) does not import any further condition for the imposition of liability than what is provided for in section 8(1). On the language, therefore, of section 8(1) read with section 24(1) we are clearly of the opinion that there is do scope for the invocation of the rule that besides the mere act of voluntarily bringing gold into India any further mental condition is postulated as necessary to constitute an offence of the contravention referred to in section 23(1A)."

Subba Rao, J., (in his dissenting judgment) seems to have included within the concept of mens rea the ignorance of law.

It was in the context of ignorance of the notification that the question of mens rea was at issue. But the observations in both the majority and in the minority judgments go far, and deal with the concept of mens rea in its generality. We ourselves would read the majority judgment as excluding mens rea in its generality, and we agree with it. That is why we do not think it necessary to recommend any rule shifting the burden of proof as to the absence of mens rea in respect of the Foreign Exchange Act.

1. State v. M.H. George, AIR 1965 SC 722, paras. 40,41.

2. Ibid., para. 35.

15.35. Foreign Exchange Act-Cancellation of Passports.-

One of the suggestions1 made to us with reference to the Foreign Exchange Act related to cancellation of the passport of a person convicted of a serious offence under the Act- the intention, of course, being that such action could be appropriately used where the offender is one who may repeat such offence if he is permitted to go out of India.

We found the suggestion to be of interest. The matter, however, does not involve an amendment of the Foreign Exchange Act. The Passports Act itself confers powers on the passport authority to revoke a passport in the specified circumstances. The relevant portion of the provision in the Passports Act is quoted below.2

"10. (3) The passport authority may impound or cause to be impounded or revoke a passport or travel documents

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(c) if the passport authority deems it necessary so to do in the interests of the sovereignty and integrity of India, the security of India, friendly relations of India with any foreign country, or in the interests of the general public;

(d) if the holder of the passport or travel document has, at any time after the issue of the passport or travel document, been convicted by a court in India for any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than two years;

(e) if proceedings in respect of an offence alleged to have been committed by the holder of the passport or travel document, are pending before a criminal court in India.

We recommend that there should be no hesitation in exercising this power in suitable cases.

1. Oral discussion with Shri Jethamalani, Bar Council of India (4-1-1992).

2. Section 10(3)(c)(d)and(e), Passports Act, 1967 (16 of 1967).