Case Note & Summary
The Supreme Court of India heard a criminal appeal by the State of West Bengal against the judgment of the Calcutta High Court which had acquitted the respondent, Motilal Kanoria, of an offence under Section 5 of the Imports and Exports (Control) Act, 1947. The respondent was a director of Lachminarayan Jute Manufacturing Co. Ltd. and a partner in its managing firm. The company obtained an import licence in May 1955 for machinery to manufacture hackle and combing pins, subject to conditions including actual user and non-transferability. In December 1956, without prior permission, the company entered into an agreement to sell the machinery to Shalimar Wood Products (P) Ltd. The goods arrived in February 1957 and were cleared by the buyer. The company later informed the Chief Controller of Imports and sought approval, but the permission had not been obtained before the transfer. A complaint was filed against the company and the respondent under Section 5 read with Clause 5 of the Imports (Control) Order, 1955. The trial court convicted the respondent and imposed a fine of Rs 200. On revision, the High Court acquitted him, holding that at the time of the sale in December 1956, breach of a licence condition did not constitute an offence under the unamended Section 5. The State appealed to the Supreme Court. The core legal issues were whether the unauthorised sale of imported goods without permission amounted to an offence under Section 5 of the Act read with the 1955 Order, and whether the respondent was personally liable despite the complaint naming the company as accused. The State argued that clauses 5(3), 5(4) and 12 of the Imports (Control) Order, 1955 made the licence conditions statutory and their breach an offence. The respondent contended that Section 5 as it stood before the 1960 amendment did not expressly cover breach of licence conditions and that he was not properly prosecuted. The Supreme Court held that although Section 5 before its 1960 amendment did not specifically provide that breach of a licence condition would be deemed a breach of the Import Control Order, clauses 5(3) and 5(4) read with clause 12 of the 1955 Order had that effect. Clause 12 deemed any licence issued under earlier orders to have been issued under the 1955 Order. The sale of imported goods in violation of the actual user and non-transferability conditions effectively amounted to a transfer of the benefit of the licence, which was a breach. The Court distinguished East India Commercial Co. Ltd. v. Collector of Customs and applied State v. Abdul Aziz. It further held that the respondent was the person responsible for obtaining the licence and effecting the sale, and thus principally liable along with the company. Any error, omission or irregularity in the complaint was curable under Section 537 of the Code of Criminal Procedure, 1898, as no failure of justice had resulted. The Supreme Court allowed the appeal, set aside the High Court's acquittal, and restored the trial court's conviction and sentence.
Headnote
A) Import-Export Control - Breach of Licence Condition - Unauthorised Sale of Imported Goods - Imports and Exports (Control) Act, 1947 Section 5; Imports (Control) Order No. 17 of 1955 Clauses 5 and 12 - The respondent, director of licensee company, sold imported machinery without prior permission of licensing authority despite licence being subject to actual user condition and not transferable - Held that by virtue of clauses 5(3), 5(4) and 12 of the 1955 Order, conditions of licence were deemed part of every licence and breach of such conditions, including transfer of goods imported under licence, constituted an offence under Section 5; no distinction between transfer of licence and transfer of goods imported under it. B) Criminal Procedure - Irregularity in Complaint - Personal Liability of Accused - Code of Criminal Procedure, 1898 Section 537 - The complaint named the company as accused but respondent was arraigned and tried without objection, and respondent was the person responsible for obtaining licence and effecting sale - Held that respondent was principally liable along with company, and any error, omission or irregularity in complaint was curable under Section 537 as no failure of justice resulted.
Issue of Consideration
Whether unauthorised sale of imported goods without permission of licensing authority constitutes an offence under Section 5 of Imports and Exports (Control) Act, 1947 read with Clause 5 of Imports (Control) Order 1955; and whether respondent personally liable despite company being named as accused and any irregularity in complaint.
Final Decision
Appeal allowed; High Court acquittal set aside; conviction and sentence of respondent under Section 5 of Imports and Exports (Control) Act, 1947 restored.
Law Points
- Legal points not extracted
- Breach of licence condition under Imports (Control) Order 1955 constitutes offence under Section 5 Imports and Exports (Control) Act
- 1947 even before 1960 amendment
- Conditions of licence deemed part of licence under clauses 5(3)
- (4)
- Clause 12 applies 1955 Order to earlier licences
- Transfer of imported goods without permission is breach of condition and offence
- Irregularity in complaint curable under Section 537 CrPC if no failure of justice.
