PETITIONER: THE STATE OF MYSORE Vs. RESPONDENT: PADMANABHACHARYA ETC.[P. B. GAJENDRAGADKAR, C.J., K. DATE OF JUDGMENT: 05/10/1965 BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. (CJ) HIDAYATULLAH, M. SHAH, J.C. SIKRI, S.M. CITATION: 1966 AIR 602 1966 SCR (1) 994 CITATOR INFO : E 1969 SC 118 (20,26) D 1972 SC1767 (25) E 1973 SC 671 (1,4) R 1973 SC1146 (8) RF 1975 SC1646 (5) D 1976 SC2250 (18) ACT: Sea Customs Act (8 of 1878), s. 167(81)-Liability of person other than importer-"Concerned in or dealing with goods", meaning of. HEADNOTE: The 1st respondent had gone to, the 2nd respondent after previous arrangement with him, with a large sum of money to purchase gold which was known to them to be smuggled and to have been imported into India against the restrictions imposed on the import of gold. The police intervened. recovered the gold and arrested them. The gold was confiscated under s. 167(8) of the Sea Customs Act, 1878. The respondents were prosecuted for an offence under s. 167(81) and they were convicted by the trial court. On appeal the High Court acquitted the 1st respondent because it was of the view that as the 1st respondent merely attempted to purchase the gold it could not be said that he was concerned in dealing with the smuggled gold within the meaning of the section. The High Court also acquitted the 2nd respondent because it held that before a person could be convicted under s. 167(81), it must be shown that he was either a direct importer or concerned in some way in the import of the smuggled article,, and that the section did not include in its scope a person who subsequently obtained the smuggled -goods and then dealt with them, though the smuggled goods themselves might be liable to confiscation. In appeal to this Court, HELD, (per Wanchoo, Shah, Sikri and Ramaswami, JJ.) : (i) The High Court was in error in holding that simply because the purchase was not complete the 1st respondent was not concerned in dealing with the smuggled gold which was with the 2nd respondent. [14 D] The words "in any way concerned or in any manner dealing with any goods" in the section, are of very wide import. The words "concerned in" mean "interested in, involved in, mixed up with", while the words "deal with" mean "to have something to do with, to concern one self, to treat, to make arrangement, to negotiate with respect to some thing." Therefore, when a person enters, into some kind of transaction or attempts to enter into some kind of transaction with respect to prohibited goods, and it is clear that the act was done with some kind of prior arrangement or agreement, it must be held that such a person is concerned in dealing with prohibited goods. [13 A-B; H] (ii) On the language of the section, it applies not only to an actual smuggler or a person concerned in smuggling but also to all others who may be concerned with smuggled goods after the smuggling is over provided they know that the smuggled into the country in spite of a prohibition or restriction, or they knew that the duty thereon had not been paid. It follows that the 1st respondent had the necessary knowledge and intent or evade the prohibition or the restriction even though he dealt 2 with the gold after the smuggling was over and was not in any way concerned with the actual smuggling. He would therefore be guilty under the section. The 2nd respondent wag also guilty under -the section inasmuch as he was dealing with prohibited or restricted good sand had the necessary knowledge and intent as required under the section.[21 B, C, E] If the intention of the legislature was that the person guilty under s.167(81) could only be a person who was concerned in some way or other with the actual importation or exportation it would have been easy for it to use the same words as were used in the first part of s. 167(8) but it has not done so,. What s. 167(81) requires is that the person who comes inter alia into possession of prohibited goods must know that there is some prohibition in force with respect thereto. But before he is found guilty it has further to be shown that he intends to evade the prohibition. Where the case is not of prohibition but of duty, the person accused under the section must be shown to know that the duty has not been paid and also to have the intention to, defraud the government of the duty payable on the goods. So. long as the duty is payable and has not been paid or so long as the prohibition or restriction remains in force, any person acquiring possession of goods, on which duty has not been paid or with respect to which the restriction or prohibition has been evaded, would have the intent either to defraud the government of the duty payable, for he acquires goods at a lower price, or would have the intention to evade the restriction or prohibition because no one would take the risk of smuggling unless he can find a purchaser for the smuggled 'goods. If this were not so, there would be a premium on successful smuggling and the purpose of the section to punish smuggling and stop it if possible, would be completely defeated, as there would be a serious lacuna in the provision. [15 E-G; 17 A-D] Cases under the English Act referred to. Per Subba Rao, J. (Dissenting) : it had not been establish- ad that the respondents had dealt with the gold with an intention to evade any restriction or prohibition imposed on their import. [7 F] It is not open to the court to strain the language of a statute in order to read a causes omissus and the court cannot fill up a lacuna. Also, the court cannot construe the section with reference to the corresponding English Section and English decisions because, the Indian and English sections are not in pari materia. Under s. 167(81) the material ingredients constituting an offence are; (i) a person must have a knowledge that there is a prohibition or restriction against doing any of the enumerated acts with respect to goods imported or exported contrary to the restriction or prohibition imposed against their import or export, and (ii) he must have acted with an intention to evade such a restriction or prohibition. That is, the two elements of mens rea, namely, knowledge and intention must be established, because, knowledge of an offence cannot be equated with an intention to commit the offence. The crux of the offence is the import of goods with the requisite intent contrary to the prohibition. The importer who smuggles the goods is certainly guilty under the section because he imports them in derogation of the prohibition or restriction. Also, any person who deals with the goods in the context of the import in any of the connected ways set out in the section, with the requisite knowledge and intention would equally be guilty of the offence, because, the enumerated dealings with the goods prohibited or restricted may be necessary to complete the import vis-a-vis the importer, even though they cover a field beyond the point of import as normally understood, that is, when the goods cross the customs barrier. But the intention to contravene the prohibition cannot be imputed to subsequent dealers in 3 the goods after the importer parts with them, though the good.% themselves can be confiscated in the hands of whomsoever they are found. [4H; 5C, E-F; 6B-C, H] JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal Appeals Nos. 192
of 1961 and 183 of 1962.
Appeals from the judgment and orders dated August 11, 1961
of the Calcutta High Court in Criminal Appeals Nos. 360 of
1959 and 345 of 1959 respectively.
WITH
Criminal Appeals Nos. 41 of 1964 and 42 of 1964.
Appeals by special leave from the judgment and orders dated
March 25, 1963 of the Bombay High Court in Criminal Appeals
Nos. 1640 of 1962 and 1359 of 1962 respectively.
Niren De, Additional Solicitor-General, D. R. Prem, R. H.
Dhebar and B. R. G. K. Achar, for the appellant (in Cr. As.
Nos. 192 of 1961 and 183 of 1962).
D. R. Prem, B. R. G. K. Achar, Yogeshwar Prasad, for
appellant (in Cr. As. Nos. 123 of 1962 and 41 and 42 of
1964).
S. C. Mazumdar, for respondent No. 1 (in Cr. A. No. 123 of
1962).
P. K. Chatterjee and S. P. Varma, for respondent No. 1 (in
Cr. A. No., 123 of 1962).
B. M. Mistry, P. R, Vakil, J. B. Dadachanji, O. C. Mathur
and Ravinder Narain, for respondent (in Cr. A. No. 41 of
1964).
B. R. Agarwala and H. K. Puri, for respondent (in Cr. A.
No. 42 of 1964).
P. R. Vakil, B. M. Mistry, J. B. Dadachanji, for the
interveners (in Cr. A. Nos. 41 and 42 of 1964).
SUBBA RAO J. delivered a dissenting Opinion. The Judgment
of WANCHOO SHAH, SIKRI and PAMASWAMI JJ. was delivered by
WANCHOO J.
Subba Rao, J. I regret my inability to agree
on the construction of s. 167 (81) of the Sea
Customs Act, 1 8 7 8. The Acts have been
stated by my learned brother, Wanchoo, J., and
need not restate them.
Clause (81) of S. 167 of the Sea Customs Act
reads
“If any person knowingly, and with intent to
defraud the Government of any duty payable
thereon, or to
4
evade any prohibition or restriction for the
time being in force under or by virtue of this
Act with respect thereto acquires possession
of, 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 are chargeable with a
duty 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”;…………..
The penalty clause thereof reads : “such
person shall on conviction before a Magistrate
be liable to imprisonment for any term not
exceeding two years or to fine, or to both”.
This clause introduces a criminal offence. It
is triable by a Magistrate. The person con-
victed is liable to, imprisonment for a term
not exceeding two years or to fine or to both.
The rule of construction of such a clause
creating a criminal offence is well settled.
The following passage from the judgment of the
Judicial Committee in The Gauntlet(1) may be
quoted :
“No doubt all penal statutes are to be
construed strictly, that is to say, the court
must see that the thing charged as an offence
is within the plain meaning of the words used,
and must not strain the words on any notion
that there has been a slip, that there has
been a casus omissus that the thing is so
clearly within the mischief that it must have
been intended to be included, and would have
been included if thought of. On the other
hand, the person charged has a right to say
that the thing charged, although within the
words, is not within the spirit of the
enactment. But where the thing is brought
within the words and within the spirit, there
a penal enactment is to be construed, like any
other instrument, according to the fair
commonsense meaning of the language used, and
the court is not to find or make any doubt or
ambiguity in the language of a penal statute,
where such doubt or ambiguity would clearly
not be found or made in the same language in
any other instrument.”
The clause, therefore, must be construed strictly and it is
not open to the court to strain the language in order to
read a casus omissus. The court cannot fill up a lacuna:
that is the province
(1) (1872) L.R. 4 P.C. 184,191.
of the Legislature. The second rule of construction equally
well settled is that a court cannot construe a section of a
statute with reference to that of another unless the latter
is in pari materia with the former. It follows that
decisions made on a provision of a different statute in
India or elsewhere will be of no relevance unless the two
statutes are in pari materia. Any deviation from this rule
will destroy the fundamental principle of construction,
namely, the duty of a court is to ascertain the expressed
intention of the Legislature. I am led to make these
general remarks, as an attempt was made by the learned
counsel for the appellant to persuade us to interpret the
words of the clause in the light of the decisions of the
English courts on an analogous provision in an Act intended
to prevent smuggling. It is not possible to state that the
English and the Indian Acts are in pari materia, though
their general purposes are the same and though there is
some: resemblance in the terminology used in them. The
English decisions, therefore, must be kept aside in
construing the relevant provisions of the Indian statute.
Now coming to the relevant clause, the following material’
ingredients constitute an offence thereunder : (1) a person
must have a knowledge that there is a prohibition or
restriction against doing any of the enumerated acts with
respect to goods imported or exported contrary to the
restriction or prohibition imposed against their import or
export; (2) he must have acted with an, intention to evade
such a restriction or prohibition; there is no offence
unless the said two elements of mens rea, namely, knowledge
and intention, are established. It is not enough if a
person has only knowledge of such a prohibition or
restriction; in addition he shall have the intention to
evade such a prohibition or restriction against the import
or export of goods, as the case may be. A person who
knowingly purchases smuggled goods from an importer cannot
have an intention to evade a provision against import, for
the prohibited goods have already been imported. A person
who receives goods with the knowledge that they are stolen,.
goods cannot possibly have an intention to commit theft, for
the theft has already been committed, though he may have the
intention to receive the stolen goods. Knowledge of an
offence cannot be equated with an intention to commit the
offence. Such a construction effaces the distinction
between the two distinct elements of mens rea, knowledge and
intention, laid down in the clause.
The only possible way out of the inevitable effect of the
plain words used in the said clause is to give a meaning to
the expres-
6
sion “import” which that word cannot bear. To accept the
argument of the learned counsel for the appellant is to hold
that the process of import continues through innumerable
transactions between different persons without reference to
time or place and whether the goods existed or ceased to
exist. Ordinarily the process of import commences the
moment the goods cross the customs barrier. That is the
meaning given to that word by this Court in J. V. Gokal &
Co. v. Assistant Collector or Sales-Tax(1). But the said
clause gives that expression a wider meaning. The
enumerated dealings with the goods prohibited or restricted
covered a field beyond the point of import normally
understood by that expression. But all the said dealings
have an intimate nexus with the import of goods under the
Act. Goods may be imported through the machinery provided
under the Act; yet, a person may evade the restrictions by
fraud or otherwise. Goods may also be illegally imported
into India outside the machinery so provided. This is done
stealthily at different points of the vast sea line of our
country. But in either case different persons may take part
in carrying, removing, depositing, harbouring, keeping -or
concealing or in any other manner dealing with any goods so
imported. They are the necessary acts to complete the
process of import. Such acts may be done by persons between
whom there was a prearranged plan before the goods were
brought into India. Different persons may also take part in
such dealings with the requisite knowledge or intention for
the purpose of completing the import vis-a-vis the importer.
Under the said-clause, therefore, the process of import does
not end immediately the prohibited goods are brought into
India, but continues till the goods :are delivered to the
importer, physically or constructively. The importer who
smuggles the goods is certainly guilty under the -clause,
because he imports them in derogation of the prohibition -or
restriction. Any person who deals with the goods in the
context of the import as explained above in any one of the
connected ways -with the requisite knowledge and intention
would equally be guilty of the offence. But the subsequent
transactions in regard to the said goods are outside the
process of the enlarged definition of the expression,
“import”. It would be incongruous to hold that a purchaser
from the importer or a purchaser from the said purchaser,
and so on, has an intention to evade the prohibition or
restriction, though he may have the intention to receive the
smuggled goods. How does such a purchaser evade the prohi-
bition against import which has already been affected ? The
contrary construction will lead to the anomaly of a
purchaser,
(1) [1960] 2 S.C.R 852, 857, 858.
7
even after 20 years of the import, being attributed the
intention to evade the prohibition against import. Suppose
before the purchase of the goods by a stranger the
prohibition was lifted. In such a situation, does the
purchaser commit an offence ? If the contention is sound, he
does. This illustrates that the crux’ of the offence is the
import of goods with the requisite intent contrary to the
prohibition. For the said reasons the intention to
contravene the prohibition cannot be imputed to subsequent
dealers in the said goods after the importer parts with
them.
It is said that if the construction suggested by the learned
counsel for the appellant be not accepted, many a person who
purchases smuggled goods will escape punishment. A fair
reading of the Act discloses that the Act makes a
distinction between a customs offence and a criminal
offence. The smuggled goods in the hands of whomsoever they
are found can be confiscated and, therefore, the State can
always trace the smuggled goods to their ultimate
destination. The smuggler and the persons concerned in the
smuggling are guilty of both customs and criminal offences.
The Legislature, either intentionally or otherwise, has not
made the dealings in such goods by persons other than those
mentioned in cl. 81 of s. 167 of the Sea Customs Act a
criminal offence. When the clause does not bring them in,
the court cannot, by construction, bring such a class of
persons within the said clause. It is for the Legislature
to do so and we are told that it has recently amended the
section.
I, therefore, agree with the High Court that it has not been
established that the respondents have dealt with the goods
with an intention to evade any restriction or prohibition
imposed on the import of the said goods.
In the result, all the appeals should be dismissed.
Wanchoo, J. These two appeals on certificates granted by the
Calcutta High Court arise out of the same trial of the two
respondents for an offence under s. 167 (81) of the Sea
Customs Act,. No. 8 of 1878, (hereinafter referred to as
the Act) and will be dealt with together. The facts are not
in dispute and have been found as below.
On August 25, 1958, a constable attached to the Detective
Department, noticed Sitaram Agarwala respondent and another
person at the crossing of Hariram Goenka street and Kalakar
street. The constable had certain information with respect
to
8
these persons and decided to follow them. These two persons
got into a bus and the constable also boarded the same bus.
They got down at the unction of B. K. Pal Avenue and J. M.
Avenue and so did the constable. They then went to Narendra
Dev Square ‘Which is a kind of park. The constable kept
watch over them from a distance. After a short time these
two men came out of the park and stood on the western foot-
path of J. M. Avenue. Shortly thereafter a small taxi came
there from the South and stopped. Respondent Wang Chit Khaw
(hereinafter referred to as the Chinese accused) was in that
taxi. He came down and shook hands with Sitaram Agarwala
and the three got into the taxi. When the taxi was about to
start, the constable disclosed his identity to the driver
and asked him to stop. He also asked the ‘three persons to
accompany him to the thana. Thereupon Sitaram Agarwala and
the other man who was with him came out -of the taxi and
tried to run away. The constable caught hold of them and
put them in the police wagon which happened to come up just
then. The Chinese accused also tried to run away. The
constable -appealed to the members of the public to help him
in securing the Chinese accused and he was secured with the
help of two college students and one other youngman. As the
Chinese accused was running away he threw away three packets
-which were picked up. In the meantime Sergeant Mukherjee
came there on a motor-cycle from the opposite direction and
detained the Chinese accused. The three packets thrown away
‘by him were also handed over. by the three youngmen to the
‘Sergeant. Thereafter all the three persons who were
arrested ‘were taken to the police station along with the
three packets. It was found in the police station that the
three packets contained 23 gold bars of about sixteen tolas
each with Chinese inscription -thereon. On search of the
person of Sitaram Agarwala, a sum of Rs. 49,320 in notes of
various denomination was found on him. ‘The Customs
authorities were informed and took charge of the gold bars.
Eventually, the gold bars were confiscated under s. 167(8)
of the Act and thereafter the police after investigation
prosecuted the two respondents and the third man in respect
of -the offence under s. 167(81) of the Act.
These facts were held to be proved by the Magistrate so far
as the Chinese accused and Sitaram were concerned. He
therefore convicted them. The case against the third man
was held -to be doubtful and he was acquitted. Two
convicted persons then filed separate appeals in the High
Court. The High Court -accepted the findings of fact
recorded by the learned Magistrate and came to the
conclusion that on the facts proved there was
9
no doubt that Sitaram had gone with a large sum of money to
meet the Chinese accused in order to purchase the, gold bars
which had been recovered from the, packets thrown away by
the Chinese accused.
The High Court then addressed itself to the question whether
on the facts proved the conviction of the two respondents
could be sustained in law. The charge against Sitaram
Agarwala was that on the date in question and at the time
and place which appeared in the evidence he had gone there
by previous arrangement to purchase the smuggled gold bars
from the Chinese accused and was therefore concerned in
dealing with smuggled gold and thereby committed an offence
under S. 167(81) of the Act. The charge against the Chinese
accused was that he had in his possession 23 smuggled gold
bars which he wanted to sell to Sitaram Agarwala and another
person by previous arrangement and as such he was concerned
in dealing with smuggled gold and was guilty under s. 167
(81) of the Act. So far as Sitaram Agarwala was concerned,
the High Court held that by merely going to the park in
order to purchase smuggled gold by previous arrangement, it
could not be said that Sitaram Agarwala was in any manner
dealing with smuggled gold. The High Court was of the view
that there was a mere attempt to purchase smuggled gold on
the part of Sitaram Agarwala, but as the purchase was not
completed it could not be said that Sitaram Agarwala was
concerned in dealing with the smuggled gold. The High Court
therefore ordered the acquittal of Sitaram Agarwala,
respondent. As to the Chinese accused, the High Court held
that though he was found in possession of smuggled gold,
which he knew to be such, and had attempted to sell that
gold surreptitiously, s. 167(81) required knowledge that the
article in question was smuggled and intention 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 the Act. In view of the intent necessary,
the High Court was of the view that before a person could be
convicted under s. 167(81) it must be shown that he was
either a direct importer or concerned in some way in the
import of the smuggled article. In other words, the High
Court thought that the section dealt with goods while they
were being smuggled; it did not include in its scope a
person who subsequently obtained the smuggled goods and then
dealt with them, though the smuggled goods themselves might
be liable to confiscation when seized. Consequently, the
High Court ordered the acquittal of the Chinese accused
also. As the inter-
10
pretation of s. 167(81) was involved, the High Court granted
certificates; and that is how the two appeals have come up
before us.
The facts are not in dispute in this case and have been set
out above. Thus the question that arises before us is the
interpretation of s. 167(81) and two aspects of that section
have to be considered. The first aspect is the ambit of the
words “in any way concerned in or in any manner dealing with
any goods with respect to the importation of which any
prohibition or restriction is for the time being in force as
aforesaid”. The second aspect is with respect to the intent
necessary under the section and whether that intent can
arise where smuggling is over and smuggled goods are the
possession of persons other than those actually concerned in
the smuggling and are then dealt with by them in some manner
or other.
We may briefly indicate the scheme of the Act in order to
appreciate the purpose behind S. 167(81). The object of the
Act is to provide machinery for the collection inter alia of
import duties and for the prevention of smuggling. With
that object customs frontiers are defined, (Ch. 1); Customs
officers are appointed with, certain powers, (Ch. 11);
ports, wharves, customhouses, warehouses and boarding and
landing-stations are provided for, (Ch. III); prohibitions
and restrictions of imports and exports are envisaged, (Ch.
IV); levy of and exemption from custom duties and the manner
in which it has to be done is provided, (Ch. V); drawbacks,
i.e., refunds are provided in certain circumstances, (Ch.
VI); arrival and departure of vessels is controlled, (Ch.
VII and Ch. VIII); provision is made for the discharge of
cargo, (Ch. IX), and clearance of goods for home con-
sumption (Ch. X); provision is also made for warehousing
and transshipment, (Chapters XI, XII); provisions are also
made for exportation or shipment and re-landing (Ch. XIII);
special provisions have been made relating to spirit (Ch.
XIV) and coasting trade (Ch. XV). Then comes Ch. XVI
dealing with offences and penalties. Offences enumerated in
Ch. XVI are of two kinds; first there are contravention of
the Act and rules thereunder which are dealt with by Customs
officers and the penalty for which is imposed by them.
These may be compendiously called customs offences. Besides
these there are criminal offences which are dealt with by
Magistrates and which result in conviction and sentence of
imprisonment and/or fine. These two kinds of offences have
been created to ensure that no fraud is committed in the
matter of payment of duty and also to ensure that there is
11
no smuggling of goods, without payment of duty or in
defiance of any prohibition or restriction imposed under Ch.
IV of the Act.
It is necessary for our purpose to set out two provisions of
s. 167 which is in Ch. XVI. These are s. 167 (8) and 167
(81 Section 167 (8) is in these terms :-
“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:-
(1) Offences
“(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: or Etc.
Etc.
(2) Section of this Act to which offence has reference 18 &
19
(3) Penalties
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 thousand rupees.”
Section 167(81) with which we are particularly concerned
reads thus
(1) Offences (continue)..
“(81). If any person knowingly, 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 of, 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 unlaw-
fully removed from a warehouse or which are’ chargeable with
a duty 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; or
(2) Section of this Act to which offence has reference
General
(3) Penalties
such person shall on conviction before a Magistrate be
liable to imprisonment for any term not exceeding two years
or to fine, or to both;
L1sup. C.I/66-2
12
It will be seen that S. 167 (8) deals with what we have
called customs offences while s. 167(81) deals with criminal
offences. It is well-settled by the decisions of this Court
that goods which have been imported against the prohibition
or restriction imposed under Ch. IV of the Act are liable
to confiscation at any time after import and this liability
extends even in the hands of third persons who may not have
had anything to do with the actual import. So long as it is
proved that the goods had been imported against the
restrictions imposed under Ch. IV, the goods remain liable
to confiscation whenever found even if this is long after
the import is over and even if they are in possession of
persons who had nothing to do with the actual import. It is
also well-settled by the decisions of this Court that the
second part of the penalty relating to any person applies
only to a person concerned in the importation or exportation
of the goods and does not apply to a person found in
possession of the smuggled goods who had nothing to do with
the importation or exportation thereof: (see Shivanarayan
Mahato v. Collector of Central Excise and Land Customs(1).
The main contention of the respondents which has found
favour with the High Court was that s. 167(81) when it deals
with persons and subjects them to imprisonment and fine on
conviction by a Magistrate is also concerned with persons
who are in some way or other actually concerned in the
import and has no application to third persons who had
nothing to do with the actual import but might have come in
possession of smuggled goods even knowingly after they had
been smuggled. Before however we consider this contention
which has found favour with the High Court we should like to
dispose of the other contention which was raised on behalf
of Sitaram Agarwala and which also found favour with the
High Court. It will be seen that s. 1 67 (8 1 ) deals with
persons who do certain things with the knowledge and intent
therein specified and one such person with whom that pro-
vision deals is a person who is, in any way concerned in or
in any manner dealing with any goods with respect to
importation of which any prohibition or restriction is for
the time being in force. The High Court has held on the
facts in this case that Sitaram Agarwala cannot be said to
have been concerned in or in any manner dealing with
prohibited goods inasmuch as he was merely negotiating with
the Chinese accused for their purpose but the deal had not
been concluded. The view which found favour with the High
Court thus was that if the deal had been completed, Sitaram
Agarwala could be said to have been concerned in dealing
with the prohibited goods but as the deal was not completed
and he
(1) C.A. 288 of 1964, decided on 14-8-65.
13
was merely attempting to purchase the goods it could not be
said that he was in any way concerned in or in any manner
dealing with them. We are of opinion that the view taken by
the High Court is not correct. The words “in any way
concerned in or in any manner dealing with prohibited goods”
are of very wide import. It is neither desirable nor
necessary to define all manner of connection with the
prohibited goods which might come within the meaning of the
words “in any way concerned in or in any manner dealing with
such goods”. It will depend on the facts found in each case
whether it can be said that any person was concerned in
dealing with such goods. We shall therefore confine
ourselves to the facts of the present case and gee whether
on these facts, it can be said that Sitaram was in any way
concerned in or in any manner dealing with the goods. Now
the evidence which has been accepted by both the courts is
that Sitaram had gone with a large sum of money to purchase
the gold which was known to, be smuggled and to have been
imported into India against the restrictions imposed on the
import of gold. It has also been proved that Sitaram did so
after previous arrangement with the Chinese accused. If the
constable who was following Sitaram had’ not interfered the
deal would have gone through and Sitaram would have paid the
money and purchased the smuggled gold. ‘This was a case
therefore where by means of previous arrangement with a
person in possession of a smuggled article, the intending
purchaser had gone to purchase it and the deal did not go,
through only because the police intervened. In such
circumstances where by previous agreement or arrangement a
person goes to purchase an article which he knows to be
smuggled it would in our opinion be a case where such a
person must be held to be concerned in dealing with the
prohibited goods. Where a person does any overt act in
relation to prohibited goods which he knows to be such and
the act is done in consequence of a previous arrangement or
agreement it would in our opinion be a case were the person
doing the act is concerned in dealing with the, prohibited
goods. In other words any transaction relating to pro-
hibited goods which is done or attempted to be done after
some kind of prior arrangement or agreement would in our
opinion clearly amount to the person being concerned in
dealing with the prohibited goods. Both the words
“concerned” and “deal” have a wide connotation. The words
“concerned in” mean “interested in,, involved in, mixed up
with” while the words “deal with” mean “to have something to
do with, to concern one-self, to treat, to make arrangement,
to negotiate with respect to something”. Therefore when a
person enters into some kind of transaction or attempts tee
14
enter into some kind of transaction with respect to
prohibited goods and it is clear that the act is done with
some kind of prior arrangement or agreement, it must be held
that such a person is concerned in dealing with prohibited
goods. The fact that the act stopped at an attempt to
purchase as in the present case when the police intervened
does not in any way mean that Sitaram was not concerned in
dealing with the smuggled gold. The evidence shows that
there must have been a previous arrangement with the Chinese
accused to purchase the smuggled gold. Sitaram went to the
appointed place and met the Chinese accused surreptitiously
and had a large’ sum of money with him to pay for the gold.
He had sat down with the Chinese accused in the taxi and
there is no doubt that if the taxi had not been stopped, the
transaction for the purchase of the smuggled gold would have
gone through. In these circumstances even though Sitaram
had not come into actual possession of the smuggled gold
before the police intervened, there is no doubt that he was
concerned in -dealing with prohibited goods. We are
therefore of opinion that the High Court was in error in
holding simply because the purchase was not complete that
Sitaram was not concerned in dealing with the smuggled gold
which was found with the Chinese accused. The acquittal of
Sitaram on this ground must therefore be set aside.
This brings us to the main question which arises in the
present appeal, namely, what is the intent required in a
case coming under s. 167(81) and whether such intent can be
said to arise at all in a case where the import is complete
and the prohibited goods are in the possession of a third
person who had nothing; to do with the import. For this
purpose we shall refer to that part of s. 167(81) which
deals with the acquisition of possession of prohibited goods
and what we say about that part will equally apply to the
other parts of s. 167(81). We may add that we are dealing
here with the first half of s. 167(81) and not with the
second half. This part of s. 167(81) which we have taken
for the purpose of finding out what is the knowledge and
intent that s. 167(81) requires would run thus : “If any
person knowingly, 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 the Act with respect thereto acquires possession of any
goods with respect to which duty has not been paid or with
respect to the importation of which any prohibition or
restriction is for the time being in force.” The argument
which has found favour with the High Court is that the
section, requires knowledge on the part of the accused
15
that the goods were imported against the prohibition or
restriction in force. This is undoubtedly so. The section
further requires that the person who has this knowledge
should also have the intention either 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 the Act. Mere knowledge that the goods are
prohibited goods or goods on which duty has not been paid
would not be enough; the section further requires that there
should be an intent to defraud the Government of the duty
payable or to evade any prohibition or restriction. The
argument on behalf of the respondents which has been
accepted by the High Court is that once the goods have
evaded the payment of duty or have evaded the prohibition or
restriction. with respect to their import and the smuggling
whether of dutiable or prohibited goods is complete, a third
person who comes into possession of such goods thereafter
and who had nothing to, do with the smuggling itself cannot
be said to have the intent to defraud the Government of any
duty payable (for such defrauding had already taken place)
or to evade any prohibition or restriction (for such
prohibition or restriction had already been evaded). In
effect, the argument is that this part of s. 167(81)
corresponds to s. 167(8) where a person has to be concerned,
in the actual importation before he can be liable to a
penalty.
Now if the intention of the legislature was that the person
guilty under s. 167(81) could only be a person who was con-
cerned in some way or other with the actual importation or
exportation it would have been easy for it to use the same
words in s. 167(81) as were used in the first part of s.
167(8). But the legislature has not done so and the
question is whether the words used in s. 167(81) have a
different meaning from those used in s. 167(8). What s.
167(81) requires is that the person who comes inter alia
into possession of prohibited goods must know that there is
some prohibition in force with respect thereto. But before
he can be guilty under s. 167(81) it has further to be shown
that he intends to evade the prohibition. Where the case is
not of prohibition but of duty, the person accused under s.
167(81) must be shown to know that the duty has not been
paid and also to have the intention to defraud the
Government of the duty payable on the goods. The question
that arises is whether the third person who has come into
possession knowingly that the goods are prohibited or the
goods are dutiable and the duty has not been paid can be
said to have the intention of evading the prohibition or to
defraud the Government of the duty
16
payable, even though he may not have anything to do with the
smuggling of the goods.
It seems to us (taking a case of prohibition) that if the
prohibition is still in force, the person who acquires
possession of prohibited goods knowing them to be prohibited
intends to evade the prohibition by the action, even though
he may not have been concerned in the actual smuggling of
the goods. So long as the prohibition lasts any person who
comes into possession of prohibited goods, though he may not
be concerned in the actual smuggling would stiff in our
opinion have the intent to evade the prohibition when he
remains in possession of the goods which are prohibited.
The prohibition in our opinion does not come to an end as
soon as the Customs frontier is crossed. So long as
prohibition is in force and the goods are prohibited goods
any person in possession thereof, even though he may not be
concerned with the actual smuggling would still be guilty of
evading the prohibition by keeping the goods in his
possession. If this were not so, it would mean that once
the prohibition has been successfully evaded by the actual
smuggler the goods would be free from the taint of
prohibition and could be dealt with by any person as if
there is no prohibition with respect to them. If that were
to be the meaning of s. 167(81) there would be a serious
lacuna in this provision which is meant to prevent
smuggling. Smuggling does not only stop at importing the
goods in the face of prohibition; it envisages subsequent
transactions like sale of the smuggled goods, for no one
would take the risk of smuggling unless he can find a market
for smuggled goods. Therefore the purchaser of smuggled
goods though he may not be concerned in the smuggling would
in our opinion be equally guilty of evading the prohibition
by making the purchase. The same in our opinion applies to
defrauding the Government of the duty. Where goods had been
smuggled in without paying duty the smuggler in such a case
also intends to sell the goods and make profit thereby. The
purchaser of such smuggled goods even though he may have
nothing to do with actual smuggling, usually acquires the
goods at a lower price because the payment of duty has been
evaded. Therefore when such goods reach even third hands
there is always the intention to defraud the Government of
the duty payable on the goods. This appears to us to be the
true interpretation of s. 167(81), which as we have said
earlier is in different words from the first part of s.
167(8), which deals with actual importation or exportation.
Section 167(81) does not deal with actual importation or
exportation; it deals with defrauding the Government of the
duty payable or evading the prohibition or
17
restriction. So long as the duty is payable and has not
been paid, or so long as the prohibition or restriction
remains in force any person acquiring possession of goods on
which duty has not been paid or restriction or prohibition
has been evaded would have the intent either to defraud the
Government of the duty payable for he acquires goods at a
lower price or would have the intention to evade restriction
or prohibition. If this were not so, there would be a
premium on successful smuggling and once the goods have
entered the country without paying ‘duty or have entered the
country after evading the prohibition or restriction, they
can be dealt with as if they were duty paid goods or goods
which had not evaded the prohibition or restriction. The
purpose of S. 167(81) is to punish smuggling and stop it if
possible. That purpose in our opinion would be completely
defeated if the interpretation which has found favour with
the High Court were accepted. We cannot therefore accept
that the words used in S. 167(81) only apply up to the stage
of actual importation and the person who is guilty
thereunder must be -somehow concerned in the actual
importation. It seems to us that they apply in the case of
prohibited or restricted goods so long as the prohibition or
restriction lasts and whoever is in possession of such goods
or comes into possession thereof, even after the smuggling
is over must be attributed with the intention of evading the
prohibition or restriction provided he knows that the goods
were smuggled into the country in spite of the prohibition
or restriction. Similarly where the goods are dutiable and
the duty has not been paid on them any person acquires them
with the knowledge that the duty thereon has not been paid
would have the intention to defraud the Government of duty,
even though he may not be the person actually concerned in
the smuggling. We therefore hold that S. 167(81) has a
wider sweep than S. 167(8) and it does not only apply to a
person who may have been actually concerned in some way or
other with smuggling but also inter alia to persons who may
have come into possession of goods even after the smuggling
was over. So long as the prohibition or restriction remains
in force or the duty has not been paid even a third person
coming into possession of such goods would have the
intention either to evade the prohibition or restriction or
to defraud the Government of the duty payable thereon.
It remains now to refer to a few English cases because our
Act of 1878 was modeled on the English Customs Consolidation
Act, 1876. Decisions of English courts therefore with
respect to corresponding provisions of the English Act would
in our opinion be helpful in the matter of the
interpretation of S. 167(81).
18
Section 186 of the English Act corresponds to many of the
provisions contained in s. 167 of the Act. In particular,
the provision corresponding to s. 167(81) is in these
terms:-
“Every person who……. shall be in any way
knowingly concerned in carrying, removing,
depositing, concealing, or in any manner
dealing with any such goods with intent to
defraud Her Majesty of any duties due thereon
or to evade any prohibition or restriction of
or application to such goods……..”
Such goods” in the context of the section mean either
prohibited or restricted goods or goods on which duty is
leviable.
The other clauses of s. 186. of the English Act do not
specifically contain words relating to intent. But in
Frailey v. Charlton (1) it was decided that intent to
defraud the revenue or to evade a restriction or prohibition
would apply to other clauses of s. 186 also. Thus the
English Act by s. 186 also requires that a person who was
concerned in carrying, removing etc., or in any manner
dealing with any prohibited or restricted goods or dutiable
goods must do so knowingly and with intent to defraud His
Majesty of any duty due thereon or to evade any restriction
or prohibition.
The interpretation of this provision in s. 186 was
considered in Beck v. Binks (2). In that case the facts
were that a person was found in possession of uncustomed
goods in London and it was urged, as was urged before the
High Court in the present case, that the person concerned
could not be said to be carrying the uncustomed goods with
intent to defraud His Majesty of the duty because such an
offence could only be committed by the actual smugglers or
importers of goods or persons engaged in carrying the goods
from the ship etc. at the port of importation with intent to
evade the payment of duty or tax. This contention was nega-
tived and the court held that “the offence of knowingly
carrying or in any manner dealing with uncustomed goods with
intent to defraud His Majesty of the duty due thereon
contrary to s. 186 is not only committed at the port of
entry or the place where the goods are actually landed; it
is committed anywhere in the realm by a person acting in the
manner described by the sub-section”. Lord Goddard C.J.
made the following observations at p. 252
“If a person is knowingly carrying uncustomed
goods, he is assisting in the smuggling of the
goods; for while goods are no doubt smuggled
when they are brought into
(1) L.R. [1920] 1 K.B. 147.
(2) L.R. [1949] 1 K.B. 250.
19
the country it is no good bringing smuggled
goods into, the country unless something can
be done with them” Such a person is intending
to defraud His Majesty of the customs as much
as anybody else. The intent is there : it is
all part of one operation………….
Otherwise, a most extraordinary lacuna is left
in the Act, for it can then be said that, once
a man has got away from the port of entry or
from the place where the goods were actually
landed, no one dealing with the smuggled goods
and carrying them inland will ever be guilty
of an offence. I do not think that has ever
been held, and I am certainly not prepared to
hold it now, I think it clear that this
appellant was dealing with-that is, carrying
uncustomed goods and that he was carrying them
with intent to defraud His Majesty of the
duties thereon.”
The next case to which reference may be made is Rex v.
Cohen(1). In that case 352 Swiss watches which were
uncustomed were recovered from the accused and he was
charged with being in possession of uncustomed goods with
intent to defraud His, Majesty of the duties thereon
contrary to s. 186 of the English Act. Dealing with the
question of intent to defraud, it was held’ that if the
accused knew that the goods were uncustomed, the intention
to defraud the revenue may be inferred. Here also the
uncustomed goods were recovered from the house of the
accused at Edgware and there was nothing to show that he was
in any way concerned with actual smuggling. Even so, the
court held that he must be held to be intending to defraud
the revenue.
The next case to which reference may be, made is Sayce, v.
Coupe(2). In that case the accused-was in possession of
certain American cigarettes on which duty had not been paid.
It was held that where a person has in his possession goods
which are to. his knowledge uncustomed and which he intends
to use or sell,, he is guilty of the offence of keeping
uncustomed goods with intent to defraud the revenue of the
duties thereon contrary to s. 186. In that case there was
nothing to show that the accused had anything to do with the
importation or smuggling of the goods. Even so, it was held
that he had the intent to defraud the revenue.
The next case to which reference may be made is Schneider v.
Dawson(3). That was a case where a civilian bought from
American servicemen cigars and spirits which had been
imported free of duty for the use of United States
Servicemen under art
(1) L.R. [1951]1 K.B. 505. (2) L.R. [1953] 1 K.B. 1.
(3) L.R. [1960]2 Q.B. 106.
20
agreement between the British and American Governments and
kept them for his own use. He was charged with knowingly
and with intent to defraud Her Majesty of the duty payable
thereon being concerned in keeping goods which were
chargeable with duty on which duty had not been paid. It
was held that the person’s conduct clearly amounted to
keeping the smuggled goods and there was intent to defraud
the revenue. This case was under the English Customs and
Excise Act of 1952, but the principle under the English Act
of 1876 was followed.
These cases clearly indicate that the offence under the
corresponding provision of the English Act can be committed
long after the actual smuggling is over and even if the
person found in possesSion of goods on which duty had not
been paid had nothing to do with smuggling. These cases
thus clearly support the interpretation we have put on the
relevant words of s. 167(81).
Further the case of Schneider(2) shows that it has always
been held in England that if dutiable goods have been
brought into the country without paying the duty, the duty
attaches to the goods brought into the country and though it
may not have been paid at the moment of bringing the goods
for some special reasons (as, for example, where it is meant
for a foreign ambassador) the duty is leviable later on when
the goods pass into the hands of persons other than the
privileged person. The same in our view applies equally to
goods which are smuggled into the country and the duty has
been evaded. The duty always remains payable on goods which
have been brought in without payment of duty and whoever
deals with them even at a later stage after the operation of
smuggling is over would still be liable to pay the duty and
if he does not, he must have the intention to defraud the
Government of revenue. The same applies to prohibition and
restriction and so long as the prohibition or restriction
remains in force, the person dealing with the smuggled goods
which had evaded the prohibition or restriction must also be
held to evade the prohibition or restriction. In the view
that we have taken it is therefore unnecessary to consider
when the import or smuggling ends, for s. 167(81) hits not
only persons concerned in smuggling or importing but also
all others who come into possession of or deal with smuggled
goods after the smuggling is over.
Lastly learned counsel for the respondents refers us to s.
135 of the Customs Act (No. 52 of 1962). That section
provides for what was formerly provided in s. 167 (81) of
the Act. The argument is that it is in very different
terms. That is undoubtedly so.
(1) L.R. [1960] 2 Q. B. 106.
21
But it does not follow from the fact that the corresponding
section’ in the 1962 Act is differently worded that the
provision in s. 167 (81). cannot have the meaning which is
being pressed before us on behalf of the appellant. The
interpretation of s. 167(81) must depend upon the language
of that provision itself and on the language used in s.
167(8) we have, no doubt that it applies not only to an
actual smuggler or a person concerned in smuggling but also
to all others who may be concerned with smuggled goods after
the smuggling is over.
In the view that we have taken of the meaning of s. 167(81)
it follows that on facts found Sitaram Agarwala was
concerned in dealing with prohibited or restricted goods.
It also follows on facts found that he had the necessary
knowledge and intent to evade the prohibition or the
restriction even though he dealt with the goods after the
smuggling was over and was not in any way concerned with
actual smuggling. He would therefore be guilty under s.
167(81) of the Act. We therefore allow the appeal, set
aside the order of acquittal made by the High Court, restore
the order of the Presidency Magistrate and confirm the
sentence passed on Sitaram Agarwala by the Magistrate.
It also follows on facts found that Wang Chit Khaw is guilty
under s. 167 (81) inasmuch as he was dealing with prohibited
or restricted goods and had the necessary knowledge and
intent as required under that section. We therefore allow
the appeal, set aside the order of the High Court, restore
that of the Presidency Magistrate and confirm the sentence
passed on him by the Magistrate.
ORDER
In accordance with the opinion of the majority the appeals
are allowed, the orders of the High Court are set aside, the
orders of the Presidency Magistrate are restored and the
sentences on the respondents are confirmed.
22