Superintendent and Remembrancer of Legal Affairs vs Eastern Silk Manufacturing Company (P) Ltd.

N.C. Talukdar, J.—This Rule is at the instance of the Superintendent and Remembrancer of Legal Affairs, Government of West Bengal, on behalf of the State of West Bengal, and is directed against an order dated March 13,1972, passed by Sri B. M. Chaklanabis, Presidency Magistrate, Fifth Court, Calcutta, in G.R. Case No. 1187 of 1971, discharging the three accused opposite parties u/s 251A(2), Code of Criminal Procedure, on the footing that there is no case against them u/s 417 or 420, Indian Penal Code, or u/s 132, Customs Act, 1962.

The facts leading on to the Rule are short and simple. The prosecution case, inter, alia, is that M/s Eastern Silk Manufacturing Company (P.) Ltd. and M/s Lakshmi Textile Mills (P.) Ltd. of 9 Jagamohan Mallick Lane, Calcutta, and others were illegally exporting silk fabrics, tashar silk, etc. by way of under-invoicing to various buyers in the foreign countries by making false declaration or statements in the shipping bills and the invoices in transacting the -business. It was further alleged that the accused were under-invoicing the exports by preparing invoices in less yardage and calculating the value on the footing of the said invoices. In the packing notes or the despatch notes, which were sent to the overseas buyers, "the accused put the full quantities actually exporting by mentioning at the end ''less hundred yards'' or so. The accused had been receiving payments from different buyers outside the invoice-value and accumulating the foreign exchange secretly in foreign countries. It was further alleged that G.R. I form was prepared for the said quantity as was shown in the invoices and the goods were exported. An information was, accordingly, lodged under Sections 12(1)(2)/4(1)/23 of the Foreign Exchange Regulation Act, 1947, and the same was registered as R.C. 5 /BOW/ 69, N Calcutta, dated February 17, 1969. Thereafter, an application was made on February 17,1969, by Sri T. P. Ghatak, Supdt.. of Police, C.B. I./BOW, Calcutta, before the Chief Presidency Magistrate, Calcutta, praying for permission to investigate into the allegations u/s 155(2) of the Code of Criminal Procedure and the Chief Presidency Magistrate, Calcutta, by his order of the same date accorded sanction for investigation as prayed for. On completing the investigation and obtaining a sanction for prosecution from the Collector of Customs, Calcutta, u/s 137 of the Customs Act, 1962, a charge-sheet was filed on June 29,1971, against (i) M/s Eastern Silk Manufacturing Company (P.) Ltd., (ii) M/s Lakshmi Textile Mills (P.) Ltd. and (iii) Shyamsunder Shah, the Managing Director of both the companies u/s 420, Indian Penal Code, and Section 132, Customs Act, 1962. The case was ultimately transferred to the Presidency Magistrate, Fifth Court, Calcutta, for disposal. The accused appeared before the learned Magistrate and documents referred to in Section 173, Code of Criminal Procedure, were supplied to them. On a consideration of the said documents and on hearing the parties Sri B. M. Chaklanabis, Presidency Magistrate, Fifth Court, Calcutta, discharged the three accused u/s 251A(2), Code of Criminal Procedure, on March 13,1972- The said order has been impugned and forms the subject-matter of the present Rule issued on June 19, 1972.

Mr. Promode Ranjan Roy, Junior Government Advocate, appearing for the Superintendent and Remembrancer of Legal Affairs, Government of West Bengal, on behalf of the State of West Bengal, contended that the order of discharge is clearly based on a misconception of law and facts, resulting in a grave miscarriage of justice and, as such, should ex debito justified be set aside. Mr. Roy in this context referred to the three dimensions of the reasons on which the ultimate order of discharge,, as passed by the Court below, is based and submitted that those are unwarranted and untenable and resulted in a failure of justice. The said three dimensions are (i) a non-conformance to the mandatory provisions of Section 155(2), Code of Criminal Procedure, (ii) the "absence of a proper sanction u/s 137 of the, Customs Act, 1962, for a prosecution u/s 132 of the said Act, vitiating thereby the cognizance taken and the resultant trial and (iii) the absence in any event of the essential ingredients of an offence u/s 420, Indian Penal Code. Mr. Roy, however, did not join issue with the ultimate findings arrived at by the learned trying -Magistrate on the fourth branch of the defence contention advanced in the Court below, namely, that in view of the pendency of the adjudication proceedings, at the time, u/s 23(1)(a) of the Foreign Exchange Regulation Act, 1947, a further proceeding u/s 23(1)(b) of the said Act, based on the same set of facts, would not be permissible in law although the same may not rule out any prosecution on an offence under the Indian Penal Code. Mr. Ajit Kumar Dutt, - Advocate, with Mr. Biswanath Sanyal and Miss Lovely Sinha Roy, Advocates, appearing on behalf of the accused opposite parties, joined issue. Mr. Dutt contended that the findings arrived at by the learned Presidency Magistrate on the three dimensions, now impugned by the Petitioner, are quite pertinent findings sustainable in law and merits. As to the fourth dimension, Mr. Dutt agreed with the findings of the learned trying Magistrate arrived at on the first facet, and with regard to the second facet Mr. Dutt contended that the'' learned Presidency Magistrate. should have come to a definite decision in favour of the accused. Mr. Dutt further submitted that there is no grave miscarriage of justice, and that the presumption of innocence with which the accused persons started has been reinforced by the factum of discharge by the learned trying Magistrate

Having heard the learned Advocates appearing oh behalf of the respective parties and on going through the materials on record, we find that there is no force behind the contention of Mr. Roy on the first dimension of reasons, relating to the absence of any permission taken u/s 155(2), Code of Criminal Procedure, required for investigating an offence u/s 132, Customs Act, 1962, which is a non-cognizable offence. Mr. Roy contended in this context that there has been no non-conformance as alleged or at all or as held by the learned trying Magistrate in view of the. fact that the materials disclosed a cognizable offence u/s 420, Indian Penal Code, in course of the investigation and, as such, the failure to obtain the requisite permission of the Court u/s 155(2), Code of Criminal Procedure, would not vitiate the ultimate charge-sheet submitted thereunder. It is difficult to agree with the said contention of Mr. Roy. It may be urged in a proper case that in view of the disclosure of a cognizable offence the investigation would not be bad, but the facts in the present case are entirely different. An offence u/s 132 of the Customs Act, 1962, is a non-cognizable offence. No permission was taken undoubtedly u/s 155(2), Code of Criminal Procedure, by the prosecution before investigating into such a non-cognizable offence. This is not all. Even when a cognizable offence was disclosed u/s 420, Indian Penal Code, no formal First Information Report was drawn up and in the absence thereof the failure to obtain the requisite permission u/s 155(2), Code of Criminal Procedure, has resulted in a material non-conformance to the procedure established by law vitiating ultimately the charge-sheet submitted. The learned Presidency Magistrate relied, in this context, on the well-known principle that when sanction is accorded to do a certain thing in a certain way, it must be done in that way or not at all. The principle referred to above is as old as the hills. In the well-known case of Taylor v. Taylor (1876) 1 Ch.D 426 (431) Jessel M.R. observed that

when a statutory power is conferred for the first time upon a Court, and the mode of exercising'' it is pointed out, it means that no other mode is to be adopted....

The same principle has been approved of by the Judicial Committee and, also the Supreme Court. In the case of Nazir Ahmed v. The King-Emperor 63 LA. 372 (381-82), Lord Roche delivering the judgment of the Judicial Committee observed that

the rule which applies is a different and not less well-recognised rule, viz. that where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden.

The Supreme Court approved of the said principles in the case of State of Uttar Pradesh Vs. Singhara Singh and Others, . A. K. SarkarJ. (as his Lordship then was) delivering the judgment of the Court observed that

the rule adopted in Taylor v. Taylor, (1876) 1. Ch.D.426, is well-recognised and is founded on sound principle.

We respectfully agree with the said observations and we hold that in the facts and circumstances of the present case there has been a material non-conformance to the procedure established by law vitiating ultimately the charge-sheet submitted. The non-conformance to Section 155(2), Code of Criminal Procedure, sticks out for miles and cannot be explained away on the footing of the materials subsequently disclosing an offence u/s 420, Indian Penal Code, for which no formal First Information Report was however drawn up. The first contention of Mr. Roy accordingly fails.

The contention of the learned junior Government Advocate with regard to the second dimension again does not stand on a better footing. The same relates to a sanction u/s 137 of the Customs Act, 1962. Mr. Dutt contended that there has been a nonconformance to the mandatory provisions of Section 137 of the Customs Act, 1962, whereunder it is enjoined that no Court shall take cognizance of any offence u/s 132, Section 133, Section 134 or Section 135, except with the previous sanction of the Collector of Customs. In this context, Mr. Dutt referred to the sanction obtained by the prosecution that is on record. It clearly and unequivocally accorded sanction for filing a complaint for offence u/s 132, Customs Act, before the Chief Presidency Magistrate, Calcutta. A charge-sheet was submitted on investigation and that cannot do duty for a complaint that was permitted to be filed for an offence u/s 132 of the Customs Act etc. as incorporated in the sanction accorded. It brings to light the fact that the sanctioning authority did not apply his mind properly to the facts of the case. Mr. Roy''s contention that a charge-sheet is also a complaint does not commend to us in this context and his second submission also fails.

The third contention raised on behalf of the Petitioner now abides our consideration, viz. whether the facts alleged constitute an offence of cheating within the bounds of s- 420, Indian Penal Code. The submissions made in this behalf by Mr. Roy leave certain gaps through which the inherent infirmities of the prosecution case, in this behalf, can be seen. The prosecution case, in this connection, is that at different times and in different transactions the accused persons exported goods in excess of quantities as declared in different invoices and the payment by way of such under-invoicing involved loss of foreign exchange to the extent of "the excess export and, as such, by dishonest concealment as to the quantities of goods actually exported, and causing loss thereby, the accused persons cheated the Customs authority or the Reserve Bank of India. It is difficult to understand how in the facts of the case the Customs authorities were cheated. In the case of Union of India (UOI) and Others Vs. Rai Bahadur Shreeram Durga Prasad (P) Ltd. and Others, . It was observed by HegdeJ. delivering the majority judgment of the Court that--

If we bear in mind the scheme of the Act, it is clear that so far as the Customs authorities are concerned all that they have to see is that no goods are exported without furnishing the declaration prescribed u/s 12(1). Once that stage is passed the rest of the matter is left in the hands of the Reserve Bank and the Director of Enforcement.

In view thereof, we are unable to agree that it can be contemplated that the Customs authority is the person deceived. As to the alternative argument that at any rate it was the Reserve Bank of India that was created because of an initial deception made by the accused persons in the form of concealing material fact and exporting more quantity of goods than was declared causing thereby a loss of foreign exchange, we are again unable to agree with the same on a consideration of the materials on record as also the argument advanced at the Bar. In order to bring the case within the bounds of Section 415 of the Indian Penal Code the person charged must intentionally deceive the person cheated to omit to do anything which he would not have otherwise done but for such deception and which act or omission causes or is likely to cause damages or harm to that person in body, mind, reputation and property. In the instant case, even if it be assumed that the accused had exported goods in excess of the declared quantity, it cannot be held on the basis of the materials on record that this was so done with the intention to deceive the Reserve Bank of India. Apart from the question of merit as to whether the Reserve Bank of India was actually deceived, it is to be borne in mind that the goods in question are duty-free and on an overall consideration of the materials it is difficult to hold that the Reserve Bank of India had delivered any property to the accused persons. The third and last contention also of Mr. Promode Ranjan Roy, accordingly, fails.

In view of our findings above, any further consideration of the fourth dimension of ''the argument advanced on behalf of the Petitioner in the Court below and the findings arrived at by the learned Presidency Magistrate thereupon would not have been necessary. In view of the sustained arguments, however, made at the bar, We; will briefly consider the point. Mr. Roy, the learned junior Government Advocate, did not object to the ultimate findings arrived at by the Court of fact. The fourth dimension of the argument is that since the adjudication proceedings are pending u/s 23(1)(a) of the Foreign Exchange Regulation Act, 1947, a further prosecution on then same set of facts, would not be permissible. The learned trying Magistrate resolved the point of issue into two facets. As to the first facet, he held that the pendency of the adjudication proceedings u/s 23(1)(a) of the Foreign Exchange Regulation Act, 1947, at the time, would rule out a further prosecution u/s 23(1)(b) of the said Act. In this context, it appears from the order ultimately passed in the adjudication proceedings on November 27,1971, that one of the accused, M/s Eastern Silk Manufacturing Go. (P.) Ltd., was found guilty of a contravention of Section 5(1)(a) of the Foreign Exchange Regulation Act, 1947, and a penalty of Rs. 7,000 was imposed u/s 23(1)(a) of the same Act; and that further penalties under the said section were imposed on the accused for a contravention of Sections 5(1 )(a) and 5(1)(c) of the said Act. In the Court below it was submitted that an appeal against that order was pending at that time. We agree with the findings arrived at by the learned trying Magistrate on the first facet.

The learned trying Magistrate thereafter proceeded to consider the second facet, viz. whether the pendency of an adjudication proceeding under the Foreign Exchange Regulation Act, 1947, would bar any further prosecution on the same facts under any other. Act, to wit, under the Indian Penal Code. He did not ultimately come to any decision on the point as he was not shown any authority by the defence in support of its contention on this proposition of law. It is pertinent in this context to refer to the provisions of the Foreign Exchange Regulation Act, 1947, to find out whether there is any bar of a sanction. There is one such bar contained in the proviso to Section 23D whereunder it has been laid down that if at any stage of the inquiry, the Director of Enforcement is of opinion that having regard to the circumstances of the case the penalty which he is empowered to impose would not be adequate, he shall, instead of imposing any penalty himself, make a complaint in writing to the Court, The second bar is a bar of cognizance u/s 23(3) which provides that no Court shall take cognizance of the offences referred to thereunder without the previous sanction'' of the Central Government or the Director of Enforcement or any officer authorised in this behalf by the Central Government of the Reserve Bank, as incorporated in the different provisions. For a proper Consideration of the point one. has to refer also the provisions of the General Clauses Act, 1897, Section 26 whereof provides that--

Where an act or omission constitutes an offence, under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of this enactment but shall not be liable to be punished twice for the same offence.

There is therefore, no bar in limine to such a prosecution subject of course to the over-riding consideration of double jeopardy. Difficulties, however, would arise and the proceedings would be bad if the same is institute of under the general Act to evade the bar of a section under the special Act. The principles involved have been clearly laid down in the case of Basir-ul-huq and Others Vs. The State of West Bengal, , wherein Mahajah J. delivering the judgment of the Court observed that--

Though in our judgment Section 195 does not bar the trial of an accused person for a distinct offence disclosed by the same facts and which is not included within the ambit of that section, it has also to be borne in mind that the provisions of that section cannot be evaded by resorting to devices or camouflages.

The Supreme Court further proceeded to observe that.

the provisions of the section cannot be evaded by the device of charging a person with an offence to which that section does not apply and then convicting him of an offence to which it does, upon the ground that such latter offence is a minor offence of the same character....

The position, however, has been made further clear in a later decision of the Supreme Court in the case of (i) Chandrika Sao (In Cr. A. No. 35 of 61 and (ii) Hazari Lal In Cr. A.No. 36 of 61) v. State of Bihar AIR 1967 S.C. 170 (173)

wherein Mudholkar J. observed that in choosing to prosecute the Appellant for a graver offence under the general law, the prosecution cannot be regarded as having acted colourably....for, if the prosecution were to. be so restricted, grave offences will go unpunished.

We respectfully agree with the said principles and we cannot overlook the import thereof on the present case u/s 132 of the Customs Act, 1962, and Section 420 of the Indian Penal Code, A sanction is required u/s 137 of the Customs Act, 1962, for a prosecution u/s 132 of the Act and it is clear, therefore, that by opting out for the Customs Act, 1962, in place of the Foreign Exchange Regulation Act, 1947, the prosecution was not ultimately resorting to ''devices or camouflages'' or avoiding any sanction whatsoever. Such a prosecution would not again be bad, being u/s 420, Indian Penal Code, which is an offence under the general Act enjoining a higher sentence. As was observed by Mudholkar J. in Chandrika Sao''s case (6) that

in choosing to prosecute the Appellant for a graver offence under the general law, a prosecution cannot be regarded as having acted colourably.

We, accordingly, hold that the prosecution u/s 420 of the Indian Penal Code and Section 132 of the Customs Act, 1962, would not be bad merely because the same is based on the same facts as constituting the adjudication proceedings u/s 23(1)(a) of the Foreign Exchange Regulation Act, 1947. In our view, this is the answer to the second facet of the fourth dimension of the argument advanced on behalf of the defence in the Court below. Such a consideration, however, is not ultimately necessary and is more academic than real in view of the findings arrived at by us earlier on the three other dimensions which are sufficient to dispose of the Rule.

In the result, we discharge the Rule and we uphold the order dated March 13, 1972, passed by B. Chaklanabis, the Presidency Magistrate, Fifth Court, Calcutta, discharging the three accused opposite parties u/s 251A(2), Code of Criminal Procedure, in G.R. Case No. 1187 of 1971.

R. Bhattacharyya, J.

I agree.