LexRAI BAHADUR SETH SHREERAM DURGAPRASAD versus DIRECTOR OF ENFORCEMENT
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RAI BAHADUR SETH SHREERAM DURGAPRASAD
A
v.
DIRECTOR OF ENFORCEMENT
MAY 1, 1987
[A.P. SEN AND V. BALAKRISHNA ERADI, JJ.]
Foreign Exchange Regulation Act, 1947-Section 23 ( 1)-
'Whoever' -Interpretation of-Comprehensive enough to include an
association of persons such as a firm-Does not connote a natural
person alone.
B
c
The Director of Enforcement initiated adjudication proceedings
against the appellants-a partnership firm, under Section 23(1), as
amended, for failure to repatriate the full value in foreign exchange
earned by it against export shipments of manganese ore made during
1952-1958, and thereby contravening Section 12(2), as well as Section D
4(1) of the Foreign Exchange Regulation Act, 1947. The appellants did
not contest the charge under Section 12(2) of the Act but questioned the
liability or the firm on the ground that the amended Section 23(1) as
well as Section 23C introduced by the Amendment Act came into force
on September 20, 1957 and were, therefore, inapplicable to the export
shipments from the year 1952 onwards till that date and if at all, the
firm could only he held liable under the amended Section 23(1) read E
with Section 23C as from that date. It was contended that the word
'whoever' in sub-section (1) of Section 23 of the Act before its amend-
ment denoted only a natural person, and association of persons, such as
a firm, would not fall within the connotation of the word 'whoever'.
The Director of Enforcement held that the firm and its partners had F
deliberately underinvoiced shipments at the time of export &nd also
diverted the undeclared proceeds to their accounts with foreign banks
with an intention not to repatriate the sale proceeds in the prescribed
manner within the prescribed period in respect of each shipment. He
also held that the two persons incharge of, and responstble for, the
conduct of the business of the partnership firm during the relevant G
period did not produce any evidence to show that the contravention in
question had taken place without their knowledge or that they had
exercised due diligence to prevent such contravention, and they were
accordingly made liable for contravention of Section 12(2) of the Act for
failure to repatriate the foreign exchange earned on the shipments and a
penalty was imposed on the partnership firm.
H
137
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SUPREME COURT REPORTS
[ 1987) 3 S.C.R.
A
The Foreign Exchange Regulation Appellate Board, however, dis-
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agreed with the Director of Enforcement, accepted the contention of the
appellants and accordingly reduced the amount of penalty.
The High Court allowed the appeal of the Director of Enforce-
ment and restored the original order of the Director of Enforcement.
B
In appeal to this Court it was submitted on behalf of the appel-
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lants that though Article 20(1) of the Constitution would not in terms
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apply, the principles embodied therem would still govern and that the
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word 'whoever' in sub-section (1) of Section 23 before its amendment by
Act XXXIX of 1957 connoted only a natural person i.e. those who
c actually contravened the provisions of Section 12(1) of the Act by failure
to repatriate full value of foreign exchange earned or exports and
would not take in corporate liability and, therefore, association of
persons, such as a firm, would not fall within the connotation of the
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word 'whoever', that by the Amendment Act, a new Section 2JI•: .. ~,
substituted and Section 23C was introducted and the effect of these
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provisions was that after September 20, 1987 adjudication proceedings
or criminal proceedings could be taken in respect of a contravention
mentioned in Section 23(1), while before the amendment only criminal
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proceedings before a court could be instituted to punish the offender.
On behalf of the respondents it was contended that on a combined
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reading of Section 23(1) and 12(2), the only possible construction was
that the word 'whoever' includes a person and, therefore, initiation of
adjudication proceedings against the partnership firm was permissible -
and sub-section (4) of Section 23 clearly contemplates prosecution of a
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company or other body corporate.
F
Dismissing the appeal, this Court,
HELD: 1. It is clear from Sections 4(1), 12(2), 23(1), 23(4) and
23C that the word 'whoever' in sub-section (1) of Section 23 of the Act
before its am~ndment was comprehensive enough to include an associa-
tion of persons, Excerpt shown. Read the full judgment & AI analysis in Lexace.