1954 (7) TMI 31 - HC - Indian Laws

Conviction under High Denomination Bank Notes (Demonetisation) Ordinance, 1946 upheld; Sections 3, 4 valid, declaration within Section 6(5)

B. Ram Lal Versus State

Appellant's conviction under the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 for making a false/partially false declaration was upheld ... - ISSUES PRESENTED AND CONSIDERED 1. Whether the High Denomination Bank Notes (Demonetization) Ordinance promulgated between 27-6-1940 and 1-4-1946 lapsed before prosecution such that criminal proceedings under it could not be maintained. 2. Whether the previous sanction of the Central Government required by Section 7(3) of the Ordinance was proved and valid - specifically (a) whether the sanction need state the facts constituting the offence, (b) whether the sanctioning authority must be shown to have considered the specific allegations, and (c) whether authentication by an authorised officer makes the sanction unimpeachable under Section 40, Ninth Schedule, Government of India Act, 1935. 3. Whether Sections 3 and 4 of the Ordinance (demonetisation and prohibition of transfer/receipt of high denomination notes) contravened Article 19(1)(f) of the Constitution and, if so, whether subordinate provisions (Sections 5-7) fell with them. 4. Whether the confiscation/forfeiture order under Section 517, Cr.P.C., in respect of currency notes produced before the Court was ultra vires, unreasonable, or violative of Article 19. 5. Whether the declaration signed under Section 6 (alleged to be false or partially true) was in fact false and within the mens rea required by Section 7(1), and whether review on revision should disturb the trial courts' findings of fact. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Lapse of the Ordinance Legal framework: Government of India Act, Ninth Schedule and applicable rules for ordinances; concept of limited validity under Section 72, Sch. IX, Govt. of India Act (six months) where applicable. Interpretation and reasoning: The Court accepted that the Ordinance promulgated between 27-6-1940 and 1-4-1946 was not subject to the six months' limitation in Section 72 of Sch. IX because it was promulgated within the specified earlier period and therefore remained in force until repealed. Ratio vs. Obiter: Ratio - Ordinance did not lapse and could validly support prosecutions commenced after 1-4-1946. Conclusion: The Ordinance did not lapse before the prosecution; prosecutions under Section 7 could be instituted after the dates in question. Issue 2 - Validity and proof of Central Government sanction (Section 7(3)) Legal framework: Section 7(3) requires previous sanction of the Central Government for prosecution; Clause 23 jurisprudence (sanction must relate to facts constituting the offence) and Section 40, Ninth Schedule, Government of India Act, 1935 (authentication and non-questioning of duly signed orders). Precedent treatment: Followed and applied principles from authorities stating (a) sanction need not be in any particular form and need not itself recite facts, but if it does not, extraneous evidence may be required to show the sanction related to the facts of the case (leading case on Clause 23 and a later Privy Council decision on authentication). Distinguished a Preventive Detention Act line of cases where the statutory requirement of Governor's personal satisfaction exists and where subsidiary rules were material. Interpretation and reasoning: (a) The requirement of Section 7 is satisfied if the record shows a sanction by the Central Government for the specific acts forming the subject-matter of trial; the sanction need not itself narrate facts but, if it omits them, prosecution must prove by extraneous evidence that the sanction relates to the facts charged. (b) There is no legal requirement that the Court must be satisfied that the sanctioning authority personally considered the allegations or spent a specified amount of time doing so. (c) Under Section 40, Ninth Schedule, an order expressed to be by the Governor-General in Council and signed by an authorised Secretary/Deputy Secretary/Assistant Secretary is to be treated as duly made and cannot be called into question in legal proceedings on the ground that it was not duly made by the Governor-General in Council; consequently authentication by an authorised officer is a complete answer to challenges that the sanction was not that of the Central Government. (d) Where the sanction did not recite particulars, the prosecution produced extraneous evidence (testimony of an authorised officer) showing the sanction related to the acts charged; such proof was sufficient and the authentication rules and business allocation (Administrative Directory) supported treating the Deputy Secretary's act as that of the Central Government. Ratio vs. Obiter: Ratio - (i) A sanction signed by an authorised officer in accordance with Section 40 is to be treated as that of the Central Government and is not open to challenge on the ground that it was not duly made by the Governor-General in Council; (ii) where a sanction does not set out facts, extraneous evidence may be required and is sufficient to show the sanction relates to the facts charged; (iii) there is no statutory requirement that the Court must prove the sanctioning authority personally considered the allegations. Conclusion: The Central Government's sanction was validly proved and effective; the sanctioning authority's signature by an authorised officer made the sanction unimpeachable under Section 40; extraneous evidence established the sanction related to the specific acts charged. Issue 3 - Constitutionality of Sections 3 and 4 vis-à-vis Article 19(1)(f) Legal framework: Article 19(1)(f) guarantees right to acquire, hold and dispose of property; Article 19(5) permits reasonable restrictions in the interest of the general public; Ordinance provisions: Section 3 (withdrawal of legal tender status), Section 4 (prohibition on transfer/receipt of high denomination notes), and procedures for exchange under Section 6. Interpretation and reasoning: (a) Section 3 (cessation of legal tender) did not prevent holding, acquiring or disposing of the notes as property - it only withdrew legal tender status; (b) Section 4 restricted transfer/receipt of the physical high-denomination notes but did not bar obtaining equivalent value in smaller denominations through prescribed exchange procedures; (c) Given the emergency and public interest in currency stability, restrictions were reasonable under Article 19(5); (d) even assuming Sections 3 and 4 were challenged, the applicant was prosecuted under Section 6(2)/7(1) (false declaration), whose constitutionality was not attacked; thus the prosecution did not depend on the validity of Sections 3 and 4. Ratio vs. Obiter: Ratio - Sections 3 and 4 do not contravene Article 19(1)(f) and, in any event, the prosecution rested on a different provision (false declaration) whose constitutionality was not impugned. Conclusion: Sections 3 and 4 are not unconstitutional as unreasonable restrictions on Article 19 rights; prosecution under Section 6(2)/7(1) is unaffected. Issue 4 - Forfeiture/confiscation under Section 517, Cr.P.C. Legal framework: Sections 516-A and 517, Cr.P.C.; power of Criminal Courts to dispose of property produced before them or in custody at conclusion of inquiry or trial; Article 19 challenges to confiscation. Interpretation and reasoning: (a) Section 517 empowers a Court, at conclusion of inquiry/trial, to order disposal (including confiscation) of any property produced before it or in its custody, whether or not an offence appears to have been committed in respect of that property or it was used for commission of an offence; the power is wide and discretionary; (b) the explanation includes property that has come into being as a substitute for the original property; (c) confiscation by the Court under Section 517 does not, in itself, violate Article 19 because confiscation removes possession acquired by commission of an offence and such a restriction is reasonable in the public interest; (d) where no claimant appears and the court is satisfied confiscation is appropriate (especially where property was produced in the case and no rightful owner claims it), the exercise of discretion to confiscate is lawful and will not be interfered with on revision unless arbitrary; (e) the Court accepted that the seized smaller denomination notes were produced before the Court and no claimant came forward, and therefore confiscation was within jurisdiction and proper in the circumstances. Ratio vs. Obiter: Ratio - A Criminal Court has jurisdiction under Section 517 to confiscate property produced before it (or in its custody) at the conclusion of proceedings; such confiscation is not per se violative of Article 19 and is a reasonable restriction where property is unclaimed or implicated in offence. Conclusion: The forfeiture order under Section 517 was within jurisdiction, not violative of Article 19, and was a proper exercise of discretion in the absence of any claimant and given the circumstances of the case. Issue 5 - Falsity and mens rea of the declaration; revisional scope on questions of fact Legal framework: Section 6(5) (signatory of declaration deemed owner for purposes of Section 4), Section 7(1) (penalty for making false or partially true declaration knowingly), standards for revisional courts on findings of fact. Interpretation and reasoning: (a) Trial and appellate courts found, on evidence, that the declarant misrepresented ownership and that the declaration was false/partially false; documentary and testimonial evidence was held adequate to support finding that the declarant knew the notes were not temple property and that he was not the owner; (b) under Section 6(5) the signatory is deemed owner for purposes of the Ordinance and thus the false statement that the notes 'belong to me/us' was a clear misrepresentation; (c) revisional courts will not ordinarily reappraise primary fact findings unless there is no evidence or evidence is so weak that no reasonable tribunal could rely on it; here sufficient evidence existed and revision did not disturb the conviction. Ratio vs. Obiter: Ratio - The finding of a false/partially true declaration supported conviction under Section 7(1); revisional interference with factual findings is inappropriate where evidence adequately supports the trial courts' conclusions. Conclusion: The declaration was false/partially false within knowledge of the declarant; conviction and sentence were properly sustained and not subject to interference in revision. Cross-references and final disposition Cross-reference: Issues as to proof and validity of sanction (Issue 2) underpin the Court's power to try the accused (Issue 1) and to uphold conviction for false declaration (Issue 5); the confiscation analysis (Issue 4) is independent of the Ordinance's express confiscatory power and rests on Cr.P.C. jurisdiction. Overall conclusion: The Court upheld validity of the Ordinance as in force, found the Central Government sanction properly authenticated and proved, rejected Article 19 challenges to Sections 3 and 4, sustained the conviction for making a false/partially true declaration, and held the confiscation under Section 517, Cr.P.C. to be within jurisdiction and lawful; the revision application was dismissed.