1. Import of goods in breach of Section 19, Sea Customs Act, 1878 — Imposition of penalties under Section 167, item 8. (Para 2 , 11 )
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1961 Supreme(SC) 39
SUPREME COURT OF INDIA
3rd February, 1961
B.P. SINHA, C.J.I., S.K. DAS, A.K. SARKAR, N. RAJAGOPALA AYYANGAR AND J.R. MUDHOLKAR, JJ.
M/s. Ranchhoddas Atmaram and another, Petitioners
Versus
The Union of India and others, Petition No .300 of 1960.
Advocates appeared
M/s. Porus A. Mehta and S. J. Sorabjee, Advocates and M/s. S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, Advocates of M/s. Rajinder Narain & Co., for Petitioners; Mr. C. K. Daphtary, Solicitor-General of India, (M/s. H. R. Khanna, Y. S. Parmar and D. Gupta, Advocates, with him), for Respondents (In Petn. No. 300 of 60); M/s. Porus A. Mehta and S. J. Sorabjee, Advocates and M/s. J. R. Gagrat and G. Gopalakrishnan, Advocates of M/s. Gagrat and Co., for Intervener ; Mr. N. C. Chatterjee, Senior Advocate, (Mr. R. L. Aggarwal, Advocate with him), for Appellant; M/s. H. R. Khanna and R. H. Dhebar, Advocates, for Respondents (In Cr. A. No. 107 of 58).
Advocates:
C.K.DAFTARY, D.GUTPA, G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, H.R.KHANNA, J.B.DADACHAN, J.R.GAGRAT JANEDRA LAL, N.C.CHATTERJI, P.L.VOHRA, PORUS A.MEHTA, R.H.Dhebar, R.L.AGARWAL, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.J.SORABJEE, S.N.ANDLEY, SOLI J.SORABJI, Y.S.PARMAR
C.K.DAFTARY, D.GUTPA, G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, H.R.KHANNA, J.B.DADACHAN, J.R.GAGRAT JANEDRA LAL, N.C.CHATTERJI, P.L.VOHRA, PORUS A.MEHTA, R.H.Dhebar, R.L.AGARWAL, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.J.SORABJEE, S.N.ANDLEY, SOLI J.SORABJI, Y.S.PARMAR
In an affirmative sentence, the word 'or' creates an alternative. In a penalty provision stating 'not exceeding [X] or not exceeding [Y]', the authorities may impose a penalty up to either limit, meaning the lower limit does not act as an absolute cap if the other alternative is higher.
Headnote:(A) Sea Customs Act, 1878 - Section 167, Item 8 - Interpretation of penalty clause - "penalty not exceeding three times the value of the goods, or not exceeding one-thousand rupees" - The sentence is affirmative as it establishes liability for a penalty - In an affirmative sentence, the word "or" creates an alternative, meaning either of the two conditions may be fulfilled - The phrase "not exceeding" is a qualifying clause equivalent to "up to" and does not render the sentence negative - Therefore, a penalty exceeding Rs. 1,000 can be imposed provided it does not exceed three times the value of the goods. (Paras 12-17, 19)
(B) Construction of penal statutes - The rule that a penal statute must be construed in favor of the citizen is applicable only where the meaning of the statute is not clear; it cannot be used to override clear and unambiguous language. (Para 24)
Facts of the case:
Importers were found to have imported goods in breach of the statutory prohibitions. The authorities imposed pecuniary penalties exceeding Rs. 1,000, calculating the amount based on three times the value of the imported goods. The importers challenged the validity of these penalties, contending that the maximum penalty permissible under the relevant item of the schedule to the Act was capped at Rs. 1,000.
Findings of Court:
The court found that the provision in question is an affirmative sentence providing two alternative maximums for the penalty. The authorities have the discretion to choose either the limit of three times the value of the goods or the limit of Rs. 1,000. Consequently, if three times the value of the goods exceeds Rs. 1,000, such a higher penalty can be legally imposed.
Issues: Whether the phrase "penalty not exceeding three times the value of the goods, or not exceeding one-thousand rupees" should be interpreted as a conjunctive limit (capping the penalty at Rs. 1,000) or as an alternative limit (allowing the higher of the two).
Ratio Decidendi: The court ruled that since the sentence is affirmative, the word "or" denotes an alternative. The negative term "not exceeding" qualifies the amount but does not change the nature of the sentence from affirmative to negative. Thus, the authorities can opt for either of the two specified limits, and the penalty is not restricted to Rs. 1,000 if the value-based penalty is higher.
Result: Petition and appeal dismissed.
Legal Category Hierarchy
- customs law
- statutory interpretation
- constitutional law
Table of Contents
2. Whether the maximum penalty under Section 167, item 8 is limited to one thousand rupees or allows for three times the value of the goods. (Para 3 , 4 )
3. Analysis of the grammatical structure of Section 167, item 8 — Determination that the provision is affirmative and provides two alternative maximum penalties. (Para 5 , 6 , 7 , 8 , 9 , 10 , 12 , 14 , 16 , 17 , 18 , 20 , 21 , 22 , 23 , 24 , 25 , 26 )
4. In an affirmative sentence, the word "or" creates an alternative, allowing the imposition of either of the specified maximum penalties. (Para 13 , 15 , 19 )
6. Does the word "or" in Section 167, item 8 of the Sea Customs Act, 1878, create a conjunctive or alternative limit on penalties?
It creates an alternative. Since the sentence is affirmative, the authorities may choose either of the two alternatives—a penalty up to three times the value of the goods or a penalty up to one thousand rupees. (Para 12 , 13 , 15 , 19 )
7. Does the phrase "not exceeding" make a sentence negative, thereby changing the interpretation of the word "or"?
No. The phrase "not exceeding" is a qualifying clause limiting the amount of the penalty, equivalent to "up to." It does not make the sentence negative or prohibitory. (Para 16 , 17 , 19 )
8. When should a penal statute be construed in favor of the citizen?
The rule of constructing a penal statute in favor of the citizen applies only when the meaning of the statute is not clear. If the language is plain, it must be given effect. (Para 24 )
9. Is the discretion to impose a penalty under Section 167, item 8, arbitrary or uncontrolled?
No. The discretion is not arbitrary because each alternative penalty has a specific limit attached to it, and the discretion is vested in high Customs officers subject to appeal. (Para 8 , 22 )
Judgment
SARKAR, J. : These two matters have been heard together as they raise a common question. One of these matters is a petition under Art. 32 of the Constitution and the other, an appeal from a judgment of the High Court at Bombay.
2. The petitioner and the appellant were found by the Customs authorities, in proceedings under the SEA CUSTOMS ACT , 1878, to have imported goods in breach of S. 19 of that Act. The petitioner had without authority imported gold of the value of Rs. 25,000 and the appellant, steel pipes of the value of Rs. 1,28,182. The Customs authorities by independent orders, imposed a penalty of Rs. 5,000 on the petitioner and of Rs. 25,630 on the appellant for these offences, under item, 8 of the schedule to S. 167 of the Act. The Customs authorities further confiscated the petitioner s gold under the same provision. There was no order of confiscation of the steel pipes for reasons to which it is unnecessary to refer.
3. The appeal is against an order the result of which was to direct realisation of the penalty imposed on the appellant, by execution of a distress warrant. The petition challenges the validity of the order imposing the pecuniary penalty. Neither the petitioner nor the appellant, however, questions the decisions of the Customs authorities that they had been guilty of breach of S. 19 or that penalties could be imposed on them under item 8 in S. 167. The petitioner does not, further, challenge the order confiscating the gold.
4. The only contention of the petitioner and the appellant is that the orders of the Customs authorities are invalid as they impose penalties in excess of Rs. 1,000. They contend that the maximum penalty that can be imposed under item 8 in S. 167 is Rs. 1,000. This contention is based on two grounds. First it is said that, it has been so held by this Court. Then it is said that in any case, on a proper construction, item 8 in S. 167 does not permit the imposition of a penalty in excess of Rs. 1,000.
5. First, as to the decisions of this Court, we were referred to three. The earliest is Maqbool Hussain v. State of Bombay , 1953 S C R 730. That was a case in which the question was whether a person on whom a penalty of confiscation of goods had been imposed under item 8 in S. 167, could later be prosecuted on the same facts for an offence under S. 23 of the Foreign Exchange Regulation Act, 1947, in view of the provisions of Art. 20 (2) of the Constitution against, what has been called, double jeopardy. It was held that Art. 20 (2) was no bar to the prosecution under the Foreign Exchange Regulation Act for, the authority under the SEA CUSTOMS ACT imposing the penalty under item 8 in S. 167 was not a judicial tribunal and the proceeding resulting in the imposition of the penalty of confiscation was, therefore, not a prosecution. No question arose in that case as to the maximum penalty that could be imposed under item 8 in S. 167. While discussing whether a Customs authority exercising the power to order confiscation and levy a penalty under S. 167 formed a judicial tribunal, this Court observed at p. 742 (of SCR).
"Even though the customs officers are invested with the power of adjudging confiscation, increased rates of duty or penalty the highest penalty which can be inflicted is Rs. 1,000".
6. It is quite obvious that this observation was made in a different context and was not intended to decide that the provision did not permit the imposition of a higher penalty, as to which no question had then arisen. It is clear that if the highest penalty which the Custom officers had the power to impose was in excess of Rs. 1,000 but subject to another limit, it would not have followed that they were judicial tribunals. The judgment of this Court was not based on the amount of the maximum penalty which the Customs authorities could impose. It seems rather to have been assumed that the maximum penalty was Rs. 1,000 for the question about maximum penalty was neither argued, nor discussed in t
