RAI BAHADUR SHREERAM DURGA PRASAD PRIVATE LTD. AND ORS. Vs. THE UNION OF INDIA (UOI) REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE AND ORS.

JUDGEMENT

(1.) IN G. Narasingdas Agarawal v. Union of India (1967) 1 M.L.J. 197, Kailasam, J., dismissed a number of writ petitions, declining to issue Writs of prohibition in. those cases, restraining the respondents, namely, the Union of India, the Collector of Customs, Madras, and the Deputy Collector of Customs, Vishakhapatnam, from taking further action in pursuance of a large number, of show cause memorandum; served on the writ appellants. The present appeals are from this judgment, and essentially, they involve the issue whether, under the stated circumstances, the respondent authorities would have jurisdiction to proceed further, in respect of an alleged offence under Section 12(1) read with Section 23 -A of the Foreign Exchange Regulation Act, 1947, and Section 167(8) of the Sea Customs Act. The matter has been elaborately argued before us, and admittedly, it involves a question of interest and significance. The facts have been dealt with by the learned Judge (Kailasam, J.) in his judgment, but we propose to refer to them again here, in some detail and also to set forth the several provisions of law involved in their juxtaposition, to enable us to proceed with the discussion of the main issue, of the interpretation of Section 12(1) of the Foreign Exchange Regulation Act.

(2.) WITHOUT dilating further on the background of the facts, which may not be here necessary, it is sufficient for us to state that 62 show cause memoranda were issued by the Deputy Collector of Customs Visakhapatnam, in the following context of events. In connection with certain searches and seizures of gold and silver articles, which do not new concern us, on the 19th and 20th of August, 1963, the authorities came into possession of a number of documents, inclusive of accounts, which are the basis of the averments of infringements .They related to shipping of mineral ores particularly manganese ores; after declarations under Section 12(1) had been filed by the concerned appellants, together with production of the necessary documents, the authorities had been satisfied, ex facie, that the papers were in order, and that exports should be permitted, the exports actually occurred, in consequence. The essence of the show cause notices is that, notwithstanding this apparent compliance with the formalities of the law, the appellants really exported manganese ore, or were concerned in the exports in contravention of the restrictions and prohibitions imposed under Section 19 of the Sea Customs Act, read with Section 12(1) of the Foreign Exchange Regulation Act, and Section 23 -A of that Act; that brought into play Section 167(8) of the Sea Customs Act, with the result that all the goods were liable to confiscation under that Act; admittedly, a heavy penal provision. The main question is, whether, in the juxtaposition of the several provisions of law, and in the situation of admission by the authorities that the exports were in apparent compliance with the requirements of the law, there would be jurisdiction to proceed further, because of the alleged suppression of material particulars, with fraudulent motive or the alleged furnishing of details that were deliberately false in the G.R. 1 Form, which led to the authorization of these exports.

(3.) BEFORE proceeding further with the relevant provisions of the law, it may be necessary to refer to the form that the arguments took before us. When Mr. Joshi for the appellants, and Mr. Kumaramangalam for the respondent authorities, had submitted certain arguments; it emerged that the authorities sought to maintain their jurisdiction, as against the prayer for the issue of a Writ of prohibition, on the ground that a very elaborate fraud had been practised by the writ appellants with the result that not merely had the value of the exports been under invoiced to a very substantial degree, but also that there had been substantial deprivation to the State, of the benefits of repatriated foreign exchange. The gravamen of this charge was cryptically indicated in the original show cause notice, in paragraph 20, in. the following words: From the foregoing it is disclosed that the financial benefits derived by the shippers, in respect of the subject exports, over and above those revealed to the customs authorities and or other concerned authorities, were not disclosed to the said authorities, and the information about them Was deliberately suppressed.