UNION OF INDIA AND ANOTHER versus VIJAY CHAND JAIN

Citation: [1977] 2 S.C.R. 952 · Decided: 09-02-1977 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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952 
UNION OF INDIA AND ANOTHER 
v. 
VIJA Y CHAND JAIN 
February 9, 1977 
[V. R. KRISHNA IYER AND A. c. GUPTA, JJ.] 
. Foreign Exchange Regulation Act, 1947-s. 23(18)-Foreign Currency--
Sale proceeds in Indian c11rrency seized and confiscated-Government. if com-
petent to confiscate. 
Words a'nd Phrases-"in respect of"-Meaning of. 
Under s. 2(d) of the ·Foreign Exchange Regulation Act, 1947 foreign ex-
change means foreign currency. 
Section 4(1) prohibits the sale or purchase 
of foreign exchange by a person other than an authorised dealer except with 
the Permission of the Reserve Bank. Section 23(1)(a) prescribes a penalty for 
contravention of s. 4. Section 23 (lB) provides that, in addition to the penalty 
which may be imposed for such 
contravention, a court may direct that any 
curren.cy or any ot!J,er money or. property in respect of which the contravention 
has taken place shall be confiscated to the Central Government. The explana-
tion to this sub-section provides that for the purpose of the sub-section property 
in respect of which contravention has taken place shall include deposits in a 
bank where the said property is converted into such deposits. 
A large sum of Indian currency, _which was the sale proceeds of foreign 
currency, was recovered from the respondent. . In addition to imposing 
a 
penalty, the Director of Enforcement confiscated the Indian currency seized 
from the respondent. In . a petition under art. 226 of the Constitution, the 
High .Court held that the Director of Enforcement had no competence to order 
confiscation of Indian currency because the contravention had taken place in 
respect of some foreign currency and not in respect of the Indian currency 
seized. 
Al)owing the a.ppeal, 
HELD : The currency in respect of which there has been contravention 
covers the sale proceeds of foreign currency, sale of which is prohibited under 
s. 4(1). [954HJ 
The High Court was wrong in quashing the order of confiscation. 
The 
intention of the legislature is clear from the Explanation to s. 23(1B). If, for 
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this sub-section any property in respect of which a contravention has taken pl,ilce 
includes deposits into which the property may be converted and can be reached, 
even where the deposits are in a bank, it is not reasonable to hold that the 
sale proceeds in Indian currency of foreign exchange would be outside the 
scope of s. 23(1B) and, therefore not liable to be confiscated. [955 A] 
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The words "in respect of" admit of a wide connotation. In the context 
of s. 23(1B) "in respect of" has been used in the sense of being "connected 
with". [954 GJ 
Cuperd's Trustees v. Inland Revenue Commissioners 174 L.T. Rep. 133 
and S. S. Li ii ht Railway Co. Ltd. v. Upper Doab Sugar Mills Ltd. & A nr 
fl960) 2 S.C.R. 926 referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2081 of 1968. 
Appeal from the Judgment and Order dated the 30-3-1967 of the 
Delhi High Court in Civil Appl. No. 112 .of 1966. 
G. L. Sa11ghi and Girish Chandra for the Appellant. 
Y. S. Chitley and Ashok Grover for Respondent. 
UNION v. VIJAY CHAND JAIN (Gupta, J.) 
953 
The Judgment of the Court was delivered by 
GuPTA, J.-This appeal on certificate of fitness turns on the mean-
ing of the words "in respect of" occurring in section 23(1B) of_ 
~he 
Fmeign Exchange Regulation Act, 1947. For a proper appreciatton 
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of the question, it is necessary to refer to two other sections of ~he 
Act, section 4(1) and section 23(1) (a), before we turn to section 
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23(1B). 
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J. 
Section 4(1) lays down : 
"Exliept with the previous general or special permis~ion 
of the Reserve Bank, no person other than an atithonsed 
dealer shall in India and no pers'on resident in India other 
than an authorised dealer shall outside India, puy or otber-
wise acquire m borrow from, or sell or otherwise transfer or 
lend to, or exchange with, any person not being an autho-
rised dealer, any foreign exchange." 
Section 23(1) (a) provides: 
"If any person contravenes the provisions of section 4, 
section 5, section 9, section 10, sub-section (2) of section 12, 
section 17, section 18A or section 18B or any rule, direc-
tion or order made thereunder, he shall -
(a) be liable to such penalty not exceeding thi;ee times 
the value of the foreign exchange in respect of which . the 
contravention has taken place, or five 
thousand rupees, 
whichever is more, as may be adjudged by the Director of 
Enforcement in the manner
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