Case Note & Summary
The appeal arose from a conviction under Section 5 of the Import and Export (Control) Act, 1947 for contravening conditions of an import licence. The appellant was the Chairman of Malegaon Powerloom Sadi Manufacturer's Cooperative Association Ltd., a cooperative of powerloom weavers. The Association obtained a licence dated January 2, 1956 for import of art silk yarn, subject to the condition that the goods would be used only as raw material in the licence holder's factory and no portion would be sold. Because the Association could not arrange finances, it imported the goods through Warden & Co., which financed the transaction. Part of the goods was used in accordance with the licence condition, but the remainder was sold by Warden & Co. after the appellant, as Chairman, wrote a letter dated November 13, 1956 requesting disposal of the balance goods to ensure at least four per cent net profit. Warden & Co. later paid Rs 5,040 to the Association as profit. The trial court acquitted the appellant and other members of the Association. The State appealed against the acquittal of the appellant alone. The Bombay High Court allowed the appeal, convicted the appellant under Section 5 of the Act, and sentenced him to three months' rigorous imprisonment and a fine of Rs 2,000. The appellant then appealed to the Supreme Court by special leave. The legal issues before the Supreme Court included the scope of the Central Government's power under Section 3(1) of the Act to control imports beyond the point of entry, the validity of the licence condition prohibiting sale under the Imports (Control) Order, 1955, whether contravention of a licence condition was punishable under Section 5, whether the Chairman could be held liable for the Association's acts, whether actual possession was necessary, whether mens rea was required, and the severity of the sentence. The appellant contended that the Act only regulated import at the point of entry, not post-import disposal; that the Order did not provide for the no-sale condition; that breach of a licence condition was not a breach of the Order; that only the Association, not the Chairman, should be prosecuted; that possession had not passed to the Association; and that there was no mens rea. The State argued that the condition was valid, the breach was punishable, the Association's agent's possession was sufficient, and the appellant had abetted the contravention. The Supreme Court rejected the appellant's contentions. It held that the power under Section 3(1) was not restricted to prohibiting or restricting imports at the point of entry but extended to controlling the subsequent disposal of imported goods. The Court observed that policy considerations were for the executive, not the judiciary. It further held that clause 5(2) of the Imports (Control) Order, 1955 was wide enough to permit the condition not to sell, and clause 5(4) made compliance obligatory. Therefore, contravention of the condition was a contravention of the Order and punishable under Section 5. The Court also held that actual possession of the imported goods was not necessary for contravention; the possession of Warden & Co. as agent was the possession of the Association. The appellant had intentionally aided the Association in disposing of the goods, thus abetting the contravention. The Court found the sentence not severe and dismissed the appeal, upholding the conviction and sentence.
Headnote
A) Import and Export Control - Scope of Power to Control Imports - Power under Section 3(1) not restricted to point of entry but extends to controlling subsequent disposal of imported goods - Import and Export (Control) Act, 1947, Section 3(1) - The court held that the power to prohibit, restrict or otherwise control imports includes regulating disposal after import; State of Bombay v. F.N. Balsara and Glass Chatons Importers and Users' Association v. Union of India held inapplicable - Held that condition in licence restricting sale is valid (Paras Not mentioned) B) Import and Export Control - Licence Conditions - Imports (Control) Order, 1955, Clause 5(2) and 5(4) - Licensing authority has power under clause 5 to impose condition that imported goods shall not be sold; contravention of any condition amounts to contravention of clause 5(4) and is punishable under Section 5 of the Act - East India Commercial Co. v. Collector of Customs and C.T.A. Pillai v. H.P. Lohia held inapplicable - Held that breach of licence condition is breach of Order and attracts penalty (Paras Not mentioned) C) Criminal Liability - Possession and Agency - Actual possession of imported goods not necessary for contravention; possession of agent is possession of licensee - Import and Export (Control) Act, 1947, Section 5 - The Association imported goods through Warden & Co. as its agent; Warden & Co.'s possession was deemed possession of the Association - Held that absence of physical possession did not absolve licensee (Paras Not mentioned) D) Criminal Liability - Abetment by Chairman - Appellant as Chairman intentionally aided Association in disposing of goods through Warden & Co., thereby abetted contravention - Import and Export (Control) Act, 1947, Section 5 - The appellant's letter of November 13, 1956 directing sale of remaining goods for profit established intentional participation - Held that sentence of three months' rigorous imprisonment and fine of Rs 2,000 was not severe (Paras Not mentioned)
Issue of Consideration
Whether the Central Government's power under Section 3 of Import and Export (Control) Act, 1947 to prohibit, restrict or otherwise control imports extends to controlling disposal of goods after import; whether condition in import licence not to sell goods is valid under Imports (Control) Order, 1955; whether contravention of such condition is punishable under Section 5 of the Act; whether Chairman can be held liable for Association's contravention; whether actual possession is necessary; whether mens rea is required; whether sentence is excessive.
Final Decision
The Supreme Court dismissed the appeal, upheld the conviction of the appellant under Section 5 of the Import and Export (Control) Act, 1947, and confirmed the sentence of three months' rigorous imprisonment and fine of Rs 2,000.
Law Points
- Power under Section 3(1) of Import and Export (Control) Act
- 1947 includes controlling post-import disposal of goods
- condition in import licence restricting sale is valid
- clause 5 of Imports (Control) Order
- 1955 permits wide conditions
- contravention of licence condition is contravention of clause 5(4) and punishable under Section 5
- actual possession not necessary for contravention
- possession of agent is possession of licensee
- chairman aiding disposal abets contravention
- mens rea not required when statute creates strict liability
