The Central Government has the power to control the import of goods beyond the point of entry and can impose conditions on the subsequent disposal of imported goods.

Headnote:
IMPORTS AND EXPORTS (CONTROL) ACT, 1947 - SECTION 5 - IMPORTS (CONTROL) ORDER, 1955 - CLAUSE 5 - VALIDITY OF CONDITION IN LICENCE PROHIBITING SALE OF IMPORTED GOODS - POWER OF CENTRAL GOVERNMENT TO CONTROL IMPORT OF GOODS - SCOPE OF SECTION 3 OF THE ACT - INTERPRETATION OF WORDS "IMPORT" AND "EXPORT" - MEANING OF "CONTRAVENTION OF ORDER" - LIABILITY OF LICENSEE FOR BREACH OF CONDITION IN LICENCE - ABETMENT OF OFFENCE BY CHAIRMAN OF LICENSEE ASSOCIATION - SEVERITY OF SENTENCE.
Fact of the Case:

The appellant, as Chairman of the Malegaon Powerloom Sadi Manufacturer's Cooperative Association Ltd., obtained a license to import art silk yarn subject to the condition that the goods would be utilized only as raw material or accessories in the licensee's factory and not sold to any party. Due to financial constraints, the Association had the goods imported through Warden and Co., who financed the transaction. A portion of the goods was utilized as per the license condition, but the rest was sold by Warden and Co. with the appellant's authorization. The appellant and other Association members were prosecuted for contravening the Imports and Exports (Control) Act, 1947, and the Imports (Control) Order, 1955. The trial court acquitted them, but the High Court convicted the appellant, prompting him to file an appeal.
Finding of the Court:

The Supreme Court upheld the High Court's decision, finding that the appellant had abetted the Association's contravention of the license condition by authorizing Warden and Co. to sell the imported goods. The Court held that the Central Government had the power to control the import of goods beyond the point of entry and could impose conditions on the subsequent disposal of imported goods. The Court also found that the appellant's actions constituted an abetment of the offense under Section 5 of the Act.
Issues: 1. Whether the condition in the license prohibiting the sale of imported goods was valid. 2. Whether the Central Government had the power to control the import of goods beyond the point of entry. 3. Whether the contravention of the license condition amounted to a contravention of the Act or the Order. 4. Whether the Association or its Chairman was liable for the breach of the license condition. 5. Whether the appellant had the necessary mens rea to commit the offense.
Ratio Decidendi: 1. The Court held that the condition in the license prohibiting the sale of imported goods was valid as it fell within the powers conferred on the Central Government under Section 3 of the Act. The Court interpreted the words "import" and "export" in the Act to include the subsequent disposal of imported goods. 2. The Court held that the Central Government had the power to control the import of goods beyond the point of entry, including the subsequent disposal of imported goods. This power was necessary to ensure that imported goods were properly utilized for the purpose for which their import was considered necessary. 3. The Court held that the contravention of the license condition amounted to a contravention of the Order and, consequently, the Act. This was because the Order made it obligatory upon the licensee to comply with all conditions imposed in the license. 4. The Court held that the Association, as the licensee, was liable for the breach of the license condition. However, the Court also held that the appellant, as Chairman of the Association, could be held liable for abetting the Association's offense. 5. The Court found that the appellant had the necessary mens rea to commit the offense as he intentionally aided the Association in disposing of the imported goods in contravention of the license condition.
Final Decision: The Supreme Court dismissed the appellant's appeal, upholding the High Court's conviction.

Judgment

RAGHUBAR DAYAL, J. : This appeal, by special leave, is against the order of the High Court of Bombay allowing the State appeal and convicting the appellant of the offence under S.5 of the Imports and Exports (Control) Act.1947, hereinafter called the Act, for having contravened the Imports (control) Order, 1955, hereinafter called the Order and sentencing him to three months rigorous imprisonment and fine of Rs. 2,000/-

2. The appellant was the Chairman of the Malegaon Powerloom Sadi Manufacturer s Cooperative, Association Ltd. hereinafter called the Association. There were six other members of the Association. All the members were powerloom weavers. The appellant as Chairman of the Association, applied for and obtained the licence dated January 2, 1956, for the import of certain quantity of art silk yarn by the Association The Licence was issued subject to the condition that the goods would be utilised only for consumption as raw material or accessories in the licence-holders factory and that no portion thereof would be sold to any party. The Association could not arrange for the necessary finances and therefore had the goods imported through Warden and Co., who financed the transaction. Part of the goods received was utilised in accordance with the condition of the licence, the rest was however sold by the said Warden and Co., as a result of the correspondence ending by a letter dated November 13, 1956, from the appellant as Chairman of the Association to Warden and Co. The relevant portion of this letter is :

"In this connection we have to inform you that as the price of Art silk yarn has fallen greatly it is not possible for our Association to take delivery of the balance goods. As such you are therefore requested to dispose of the balance goods lying with you in such manner that our Association suffers no loss whatsoever, but gets a net profit of at least 4 per cent on these goods".

After the disposal of the goods Warden and Co., did pay to the Association a sum of Rs 5,040/- by way of profits of the Association.

3. The appellant and the other members of the Association were prosecuted for committing the offence under S.5 of the Act. They were acquitted by the trial Court. The State appealed against the acquittal of the appellant alone. The appeal was allowed, with the result that the appellant was convicted of the offence under S. 5 of the Act. He has come up in appeal.

4. The various contentions raised for the appellant are :

(i) The Act was intended for the purpose of prohibiting or controlling imports and exports which, according to S.2 thereof, meant respectively bringing goods into and taking out of India by sea, land or air, and therefore any provision in the order providing for the issue of a licence to import goods subject to the condition that the goods covered by the licence be not disposed of except in the manner prescribed by the licensing authority could not be validly made in the exercise of the powers conferred on the Central Government under S. 3 of the Act. as such a condition deals with the conduct of the licensee subsequent to the import of the goods. (ii) The order does not provide for the imposition of the condition in the licence that the licensee is not to sell the imported goods. (iii) The contravention of the provisions of the licence does not amount to a contravention of the provisions of the Act or an order made there under and therefore is not punishable under S. 5 of the Act. (iv) The Association was the licensee and therefore any contravention of the condition of the licence would be committed by the Association and not by its Chairman and consequently it would be the Association which should have been tried for the alleged offence under S. 5 of the Act and not the Chariman (v) The possession of the goods had not passed to the Association and therefore the Association could not be guilty of the offence. (vi) The appellant has no mens rea to commit the offence and therefore could not be g

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1963 Supreme(SC) 29

The Central Government has the power to control the import of goods beyond the point of entry and can impose conditions on the subsequent disposal of imported goods.

Cases Referred (4)