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of <h1>High Court Upholds Foreign Exchange Act Violation Decision; Dissenting Opinion Advocates Stricter Penalties</h1> <h3>Union of India Versus Rai Bahadur Shreeram Durga Prasad (P.) Ltd.</h3> Union of India Versus Rai Bahadur Shreeram Durga Prasad (P.) Ltd. - [1971] 41 COMP. CAS. 864 (SC), 1970 AIR 1597, 1969 (2) SCR 727, 1969 (1) SCC 91 Issues Involved:1. Meaning of 'restrictions imposed by sub-section (1) of section 12' in section 23-A of the Foreign Exchange Regulation Act.2. Interpretation of the declaration requirement under section 12(1) of the Foreign Exchange Regulation Act.3. Whether a contravention of section 12(1) also implicates other provisions of the Foreign Exchange Regulation Act.Issue-Wise Detailed Analysis:1. Meaning of 'restrictions imposed by sub-section (1) of section 12' in section 23-A of the Foreign Exchange Regulation Act:The court examined whether the restrictions imposed under section 12(1) of the Foreign Exchange Regulation Act (FERA) include those imposed by rules made under the Act. It was held that the restrictions imposed by section 12(1) cannot differ for the purposes of the Exchange Act and the Sea Customs Act. The court concluded that restrictions imposed by rules referable to section 12(1) must be treated as restrictions imposed by section 12(1) itself. This interpretation was supported by the principle that regulations made under an Act become part of the Act for enforcement purposes.2. Interpretation of the declaration requirement under section 12(1) of the Foreign Exchange Regulation Act:The court discussed whether the declaration under section 12(1) must be made honestly and in good faith, and whether it must disclose the true export value. It was held that section 12(1) requires a declaration of an actual figure representing the full export value. A declaration must be made in good faith, and a deliberately false declaration constitutes a contravention of section 12(1). The court emphasized that clerical mistakes and bona fide errors are not within the mischief of section 12(1), but deliberate falsehoods and evasion are.3. Whether a contravention of section 12(1) also implicates other provisions of the Foreign Exchange Regulation Act:The court considered whether actions that contravene section 12(1) also violate other provisions of the Exchange Act, such as sections 22, 23, 12(2), 12(3), and 12(5). It was concluded that a deliberate false declaration under section 12(1) also implicates section 167(8) of the Sea Customs Act. The court noted that the same contravention could attract penalties under both the Sea Customs Act and the Exchange Act. The court rejected the argument that the Foreign Exchange Act's basic policy excludes punishment under the Sea Customs Act, emphasizing that section 23A of the Exchange Act deems restrictions under section 12(1) to be imposed under section 19 of the Sea Customs Act.Separate Judgments:Majority Judgment:The majority held that the declarations given by the respondents satisfied the requirements of section 12(1) of the Foreign Exchange Regulation Act, even though they did not correctly furnish all the information. The declarations could not be considered non-est, and the contravention complained of was a violation of section 12(2) and rule 5, punishable under section 23 and section 22. The court emphasized that section 12(1) is a penal section and should be construed strictly, avoiding unnecessary hardship in numerous cases. The appeals were dismissed, and the judgment of the appellate Bench of the Madras High Court was upheld.Dissenting Judgment:The dissenting opinion held that a deliberate false declaration under section 12(1) constitutes a contravention of the section, implicating section 167(8) of the Sea Customs Act. The dissent emphasized that the declaration must be made in good faith, and a deliberate falsehood is a breach of the conditional prohibition under section 12(1). The dissenting judge argued that the same contravention could attract penalties under both the Sea Customs Act and the Exchange Act, and the exporter and persons concerned in the export could be liable under both Acts. The judgment of the appellate Bench was reversed, and the judgment of the learned single judge was restored.Conclusion:The appeals were dismissed with costs, and the judgment of the appellate Bench of the Madras High Court was upheld by the majority opinion. The dissenting opinion favored reversing the appellate Bench's judgment and restoring the learned single judge's decision.
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