1964 (8) TMI 40 - SC - Companies Law

Supreme Court restores conviction under Foreign Exchange Regulation Act without requiring mens rea

The Supreme Court allowed the appeal, restoring the respondent's conviction under section 8(1) of the Foreign Exchange Regulation Act, 1947. The court ... Whether High Court of Bombay was correct in setting aside the conviction of the respondent under section 8(1) of the Foreign Exchange Regulation Act, 1947, hereinafter called the 'Act', read with a notification of the Reserve Bank of India dated November 8, 1962, and directing his acquittal Held that:- In our opinion, the very object and purpose of the Act and its effectiveness as an instrument for the prevention of smuggling would be entirely frustrated if a condition were to be read into section 8(1) or section 23(1-A) of the Act qualifying the plain words of the enactment, that the accused should be proved to have knowledge that he was contravening the law before he could be held to have contravened the provision. If a person chooses to carry on his person what is not personal baggage or luggage understood in the legal sense but what should properly be declared and entered in the manifest of the aircraft there can be no complaint of the unreasonableness of the Indian law on the topic. The result, therefore, is that we consider that the learned judges of the High Court erred in acquitting the respondent. The appeal has, therefore, to be allowed and the conviction of the respondent restored. The respondent was accordingly arrested and though the Magistrate directed his release on bail pending the disposal of the appeal in this court, the respondent was unable to furnish the bail required and hence suffered imprisonment, though it would be noticed that such imprisonment was not in pursuance of the conviction and sentence passed on him by the Magistrate. Such imprisonment continued till May 8, 1964, when the decision of this court was pronounced, so that virtually the respondent had suffered the imprisonment that had been inflicted on him by the order of the Presidency Magistrate. In these circumstances, we directed that though the appeal was allowed, the sentence would be reduced to the period already undergone which was only a technical interference with the sentence passed by the Presidency Magistrate, though in substance it was not. Issues Involved:1. Scope of the ban under the Foreign Exchange Regulation Act, 1947.2. Interpretation of the notifications issued under the Act.3. Mens rea (guilty mind) as an essential ingredient of the offence.4. Effective date and publication of the notification.5. Definition and applicability of 'cargo' in the context of the notification.Issue-wise Detailed Analysis:1. Scope of the Ban under the Foreign Exchange Regulation Act, 1947:The appeal raises the question of the scope of the ban imposed by the Central Government and the Central Board of Revenue under section 8 of the Foreign Exchange Regulation Act, 1947, against persons transporting prohibited articles through India. The Government of India issued a notification on August 25, 1948, prohibiting the import of gold into India without the permission of the Reserve Bank of India. The Reserve Bank initially provided a general permission for gold in transit to a place outside India but later imposed further restrictions on November 8, 1962, requiring such gold to be declared in the manifest for transit as 'same bottom cargo' or 'transhipment cargo'.2. Interpretation of the Notifications Issued under the Act:The combined effect of the terms of section 8 and the notifications is that no gold can be brought into or sent to India, even if it is in transit to a place outside India, except with the general or special permission of the Reserve Bank of India. The notification dated November 8, 1962, imposed an additional condition that such gold must be declared in the manifest for transit as 'same bottom cargo' or 'transhipment cargo'. The court held that the general permission could only be availed of if the gold was declared in the manifest, and the failure to do so constituted a contravention of the Act.3. Mens rea (Guilty Mind) as an Essential Ingredient of the Offence:The court examined whether mens rea is an essential ingredient of the offence under section 8 of the Act, read with section 23(1A). The court held that the doctrine of mens rea is a common law principle and is presumed to be an essential ingredient of any statutory crime unless expressly or by necessary implication excluded by the statute. The court concluded that the Act and the notifications did not expressly exclude mens rea and that it could not be excluded by necessary implication. Therefore, a person could only be held guilty if they knowingly brought gold into India without complying with the terms of the notification.4. Effective Date and Publication of the Notification:The court considered whether the notification dated November 8, 1962, was in force and effective at the time the respondent brought gold into India. The notification was published in the Official Gazette on November 24, 1962. The court held that the notification was effective from the date of its publication in the Gazette and that the respondent could not be held guilty if he did not have knowledge of the notification before he brought gold into India. The court relied on the principle that ignorance of law is no excuse only when the law is adequately published and accessible.5. Definition and Applicability of 'Cargo' in the Context of the Notification:The court examined the meaning of 'cargo' in the context of the notification. The court held that 'cargo' includes all goods carried in a ship or plane, whether under the personal care of the passenger or entrusted to the care of the carrier. The court rejected the argument that the second proviso to the notification applied only to goods handed over to the carrier and not to goods carried on the person of a passenger. The court concluded that the gold carried by the respondent on his person was 'cargo' and should have been declared in the manifest.Separate Judgments:- Subba Rao, J. delivered a separate judgment, dissenting from the majority view. He held that mens rea was an essential ingredient of the offence and that the respondent could not be held guilty without knowledge of the notification.- Rajagopala Ayyangar and Mudholkar JJ. delivered a joint judgment, concluding that mens rea was not necessary for the offence and that the respondent was guilty of contravening section 8(1) of the Act. They restored the conviction but reduced the sentence to the period already undergone.Conclusion:The Supreme Court, by majority, allowed the appeal, restored the conviction of the respondent under section 8(1) of the Foreign Exchange Regulation Act, 1947, but reduced the sentence to the period already undergone. The court held that the notification dated November 8, 1962, was effective from its publication date, and the respondent's act of bringing gold into India without declaring it in the manifest constituted a contravention of the Act.