.AGRAWAL TRADING CORPORATION & ORS. versus COLLECTOR OF CUSTOMS AND ORS.

Citation: [1972] 3 S.C.R. 85 · Decided: 17-01-1972 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

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85 
.AGRAWAL TRADING CORPORATION & ORS. 
v. 
COLLECTOR OF CUSTOMS AND ORS. 
January 17, 1972 
[K. S. HEGDE, P. JAGANMOHAN REDDY AND D. G. PALEKAR, JJ.J • 
Foreign Exchange Regulations Act, 1941-Section 8 and 23A-lt• 
scope-Sea Customs Act S. 19, 167(3), (8) (37)-Does the word 'goods' 
i11 the said Sections include Currency Notes. 
The appellant, a partnership firm having 2 partners, carried on busi· 
ness of importers and exporters, etc. The Cashier of the firm handed over 
a wooden case to the Swiss Airways at Dum Dum for being sent to Hong 
Kon& by air. 
According to .the consignment note, the consignment was 
being sent by one R. of Karnani mansions, Calcutta, who was a fictitious 
person. The shipping bill showed that the consignment purported to 
contain food and dried vegetables and was sent to I, of Hong Kong, 
al!o a fictitious person.. After the consignment was accepted and when 
customs examined it for clearance, it was found that it contained Rs. 
Sl,000 in Indian currency... On investigation, a search warrant was issued 
by the Presidency Magistrate and the office of the firm and the resi-
dence of partners w~re searched. In the course of search, 
accounts 
books and other documents were seized. 
Investigation revealed that the 
Cashier, had signed the consignment note ·as Rs, which, as the subsequ·ent 
writings showed; were in his hand. Even the consignment note appears 
to have been typed on the type-writer of the appellant firm. 
Thereafter, 
Customs authorities served a notice on the appellant pointing out that 
exportation of Indian currency out of India was in contravention of S. 8 
(2) of the Foreign Exchange Regulations Act, 1947 read with Reserve 
Bank Notification dated 27-2-1951 as specified therein and it was asked 
to show cause and to produce within 4 days the permit, if any, of the 
Reserve Bank of India, failing which, it would be liable for prosecunon 
under Section 23(1) read with S. 8(2) of the Foreign Excbanae Regula· 
!ions Act. The appellant denied that the firm had anything to do with· 
the case. 
Apart from criminal prosecutions 
against the 
partners, a fine 
of 
Rs. l,000 under section 167(3) of the Sea Customs Act with a further 
personal liability of Rs. 1,000 u/s. 167(37) of the Act was imposed against 
the firm. It was further fined Rs. S!,000 u/s. 167(8) of the Act reac! 
with s. 23 ( 1) of the Foreign Exchange Regulations Act. Apart from 
these, the currency notes of Rs. 51,000 which we·re seized, were also con· 
fiscated. 
This order was challenged before the single judge of lhe Calcutta 
High Court who issued a rule but later discharged it. An appeal against 
that order was also dismissed. In appeal to this Court, three 
points, 
raised before the Appellate Court were also reiterated : (I) Currency 
Notes are not 'goods' and therefore, the provisions of s. 167(3), (8) and 
(37) of the Sea Customs Act are not attracted. 
(2) A firm is not a 
legal entity and therefore, it cannot be a 'person' within the meaning of 
any of the abQ¥e provisions of law. (3) Even if a 'firm' be a 'perspn', 
no penalty can .be imposed on the firm or any of its members unless the 
members have consciously taken any step to violate the provisions of Jaw; 
86 
SUPREME COURT REPORTS 
[1972] 3 S.C.R 
even so, only the partner·member against whom there is evidence 
of 
guilt can be held liable. 
Dismissing the appeal, 
HELD : (i) s. 23A of the Foreign Exchange Regulations Act, incor· 
porates, by reference, the provisions of the Sea Customs Act by deeming 
the restrictions under section 8 of the Foreign &change Regulations Act, 
to be prohibiting and restricting under s. 19 of the Sea Customs Act. The 
legislature ca.n always incorporate· by reference, the pro,isions of some 
other Act, if they are relevant for the purposes of the scheme and object of 
that Act. Restrictions specified in s. 8 of the Foreign Exchange Regulations 
Act are deemed to be prohibitiona and restrictions mentioned under s. 19 of 
the Sea Customs Act. The prohibitions mentioned under s. 8 are not 
necessarily confined to goods alone but must be deemed, for the purposes 
of Foreign Exchange Regulations Act, to include therein restrictions in 
respect of tho articles specified in s. 8 thereof, including currency notes 
as well. [94 BJ 
(ii) Although there is no definition of the word 'person' in either of 
the Acts, the definition in s. 2(42) of the General Clauses Act, 1897 or 
Section 2(3) of tho Act of

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