1. Import of goods into a former French settlement — contracts and payments made before merger with India — goods arrived after merger — confiscation for lack of license. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 )
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1960 Supreme(SC) 186
SUPREME COURT OF INDIA
23rd August 1960.
B.P. SINHA, C.J.I., S.J. IMAM, A.K. SARKAR, K. SUBBA RAO AND J.C. SHAH, JJ.
(1) M/S. Universal Imports Agency and another (in Petns. Nos. 123 to 125 of 57) and (2) M/s. Victory Traders (In Petn. No. 118 of 1959), Petitioners
Versus
The Chief Controller of Imports and Exports and others (In all the Petitions), Respondents.
Petitions Nos. 123 to 125 of 1957 and 118 of 1959.
Advocates Appeared
Mr. N. C. Chatterjee, Senior Advocate, (Mr. SC Mazumdar, Advocate, with him)for Petitioners (In Petns. Nos. 123 to 125 of 1957);
Mr. A. V. Vishwanatha Sastri, Senior Advocate, (Mr. R. Ganapathy Iyer, Advocate with Mr. G. Gopalakrishnan, Advocate of M/s. Gagrat & Co., with him), for Petitioners (In Petn. No. 118 of 1959);
M/s. H. J. Umrigar, B. R. L. Iyengar and T. M. Sen, Advocates, for Respondents (In all the petitions);
Mr. Harnam Singh, Senior Advocate, (Mr. Sadhu Singh, Advocate, with him), for Intervenr No. 1;
Mr. D. R. Prem, Senior Advocate, (Mr. Sadhu Singh, Advocate, with him), for Intervener No. 2.
Advocates:
A.V.VISHWANATHA SASTRI, B.R.L.Iyengar, D.R.Prem, G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, H.J.Umrigar, Harnam Singh, N.C.CHATTERJI, R.Ganapathy Iyer, S.C.MAJUMDER, SADHU SINGH, T.M.SEN
A.V.VISHWANATHA SASTRI, B.R.L.Iyengar, D.R.Prem, G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, H.J.Umrigar, Harnam Singh, N.C.CHATTERJI, R.Ganapathy Iyer, S.C.MAJUMDER, SADHU SINGH, T.M.SEN
The phrase "things done" in a saving clause includes the legal consequences of acts performed before the law changed. Import is an integrated transaction; thus, contracts entered into before a merger protect the subsequent import of goods from new restrictive licensing requirements.
Headnote:(A) Sea Customs Act, 1878 - Section 167(8) and Section 19; Imports & Exports (Trade Control) Act, 1947 - Section 3 and Section 4; Foreign Jurisdiction Act, 1947 - Section 4; French Establishments (Application of Laws) Order, 1954 - Paragraph 6; General Clauses Act, 1897 - Section 6 - Confiscation of goods imported without license after transfer of administration - Interpretation of saving clause "things done or omitted to be done" - Whether transactions initiated before the transfer of administration are protected from subsequent restrictive laws - Import as a series of integrated activities - Legal consequences of acts done before the commencement of the Order are saved. (Paras 12, 16, 18, 20)
(B) Interpretation of saving clauses - The phrase "things done" in a saving clause must be reasonably interpreted to include not only the acts performed but also the legal consequences flowing therefrom. (Para 16)
(C) Nature of import transactions - A purchase by import involves a series of integrated activities commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods into the importing country; the purchase and resultant import form parts of the same transaction. (Paras 19, 20)
Facts of the case:
Petitioners entered into firm contracts for import and arranged foreign exchange under the laws of a foreign administration before the territory was transferred to the Union. The goods arrived after the transfer. The customs authorities confiscated the goods on the ground that they were imported without a license required under the laws now applicable to the territory. The petitioners paid penalties under protest and sought a refund.
Findings of Court:
The saving clause in the Application of Laws Order protects transactions entered into before the merger. The act of importing is an integrated process; since the contracts were legally entered into before the transfer, the subsequent arrival of goods is a legal consequence of those "things done."
Issues: Whether the expression "things done or omitted to be done" in the saving clause of the Application of Laws Order includes the legal consequences of transactions initiated before the transfer of administration, thereby protecting imports that arrived after the transfer.
Ratio Decidendi: The court held that "things done" is comprehensive enough to include transactions effected before the merger, even if their legal effects project into the post-merger period. Since import is a series of integrated activities (contract to delivery), the bringing of goods into the country is the effect of the contracts entered into previously.
Result: Petitions allowed.
Legal Category Hierarchy
- constitutional law
- customs and trade law
- statutory interpretation
- administrative law
Table of Contents
2. Whether the saving clause protecting things done before the merger includes the legal consequences of contracts entered into prior to the application of Indian laws. (Para 12 , 31 , 33 )
3. Import is a series of integrated activities starting from the contract; things done must be reasonably interpreted to include legal consequences flowing from those acts. (Para 16 , 18 , 19 , 20 , 21 )
4. A saving clause preserving things done before a legal transition covers transactions effected before the transition, including their legal effects and consequences projecting into the future. (Para 18 , 20 )
5. Confiscation orders quashed and respondents directed to refund the amounts illegally collected. (Para 23 , 57 )
6. Does the phrase things done in a saving clause include the legal consequences of those acts?
Yes, the court held that things done should be reasonably interpreted to include not only the acts themselves but also the legal consequences flowing from them, ensuring that transactions effected before a merger are protected even if their effects project into the post-merger period. (Para 16 , 18 )
7. Is the act of import considered a single event or a series of integrated activities?
The court determined that a purchase by import involves a series of integrated activities, commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods into the importing country, forming a single transaction. (Para 19 , 20 )
8. How does a saving clause operate when Indian laws supersede laws of a foreign administration in a merged territory?
The saving clause ensures that the pre-existing law continues to govern things done before the transition date, protecting transactions entered into under the previous regime from being invalidated by the subsequent application of new laws. (Para 18 , 22 )
Judgment
SUBBA RAO J. : These four petitions are filed under Art. 32 of the Constitution for quashing the orders of the Assistant Controller of Imports and Exports, the Collector of Customs and Central Excise, Pondicherry, the Board of Revenue, and the Government of India, and for an appropriate direction requiring the respondents to refund the amount realised from the petitioners.
2. Messrs. Universal Imports Agency and the proprietor of the agency are the petitioners in the first three petitioners and Messrs. Victory Traders and the petitioners in the last one. The Chief Controller of Imports and Exports, Pondicherry, the Collector of Customs and Central Excise, Pondi-cherry, the Central Board of Revenue, and the Government of India are the respondents in all the petitions.
3. Messrs. French India Importing Corporation and Messrs. B. S. & Co. intervened in the Writ Petitions.
4. Pondicherry was a French Possession in India. On October 21, 1954 the Government of India and the Government of France entered into an agreement (hereinafter called the Indo-French Agreement), whereunder there was a de facto transfer of the administration of the French Settlements to the Government of India (hereinafter called the merger) as and from November 1, 1954. The de jure transfer was postponed.
5. Messrs. Universal Imports Agency are a proprietary concern registered with the Services Des Contribution, Pondicherry, having its principal place of business at Pondicherry. Sri Mohanlal B. Gandhi is the proprietor of the said Agency. They are established importers and general merchants dealing in ball bearings, mill stores, porcelain ware, glass marbles, beltings and various other goods. They commenced their business at Pondicherry on or about April 14, 1954, under "patente No. 70 of 1954 issued by the Controller of the Contributions Department of the French Government at Pondicherry. In the middle of August 1954, they placed 8 indents with Messrs. Shimada Trading Co., Ltd., Osaka, Japan, for importing porcelain wares, glass marbles and beltings and; the total value thereof amounted to Rs. 57, 41-12-0. About the end of August 1954, they opened three irrevocable Letters of Credit with Messrs. Banque De L Indo-Chine in favour of the said suppliers. The bankers obtained authorization from the Bureau Des Affaires Economique Pondicherry, for the requisite foreign exchange from the open market and sold the same to the petitioners for the amount involved in the Letters of Credit. The petitioners made full payment for the said foreign exchange and the said Bank kept the said foreign exchange and credit irrevocably available with their Overseas Agent at Japan for the benefit of the suppliers against full set of shipping documents. All the said Letters of Credit were valid for three months and under the agreement the suppliers were to ship the goods within the said time. On or about November 1, 1954, the said goods were in different stages of shipment; in some cases they were in the course of shipment, and in others awaiting shipment in a matter of a few days and indeed a large part of the goods had already been placed on board "S. S. Shillong and "S. S. Cambodge and the balance of the goods were in the course of being loaded in "S. S. Sunda . In January and February, 1955 and thereafter the goods arrived at the Port of Pondicherry. The Collector of Customs confiscated all the goods on the ground that they were imported without a licence and gave an option to the petitioners to pay in the lien of confiscation fine amoiunting to Rs. 30,390/-. The petitioners took up the matter with the Government of India without any success and finally they paid the said penalty under protest and cleared the goods.
6. On or about September 1954 the petitioners placed several indents with their overseas suppliers, Messrs. Shimada. Trading Co., Limited, Osaka, Japan, and others and the total C. I. F. value thereof amounted to Rs. 40, 470-14-0. They arranged for the full pay
