Judgment

THAKKAR, J.:- Whether S. 12(2)* of Foreign Exchange Regulation Act of 1947 (Act) designed to prevent wholesale or partial evasion of repatriation of earnings from export of goods covers only sale proceeds of goods exported "for sale" as held by the High Court of Calcutta by the judgment under appeal, or to sale proceeds of goods exported "on sale" in the context of sales completed before export also, as held by the Madras High Court R. Venkatasubbu v. Director of Enforcement, Enforcement Directorate, New Delhi, ILR. 1968) 3 Mad 18 and as contended by the appellants is the problem.

*"12(2) Where any export of goods has been made to which a notification under sub-sec. (1) applies, no person entitled to sell. or procure the sale of the said goods shall, except with the permission of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which has the effect of securing that -

(a) the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade, or

(b) payment for the goods is made otherwise than in the prescribed manner or does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid.

Provided that no proceedings in respect of any contravention of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full amount as aforesaid has not been made in the prescribed manner."

2. The learned single Judge of the Calcutta High Court dismissed a Writ Petition instituted by the Respondent-Company and refused to quash two show cause notices dated November 5, 1966 issued under S. 12(2) of the Act as it stood at the material time on taking the view canvassed by the appellants in this appeal. A Division Bench of the High Court (reported in AIR 1973 Cal 33) however allowed the appeal preferred by the Respondent-Company, reversed the order of the learned single Judge dismissing the Writ Petition, and issued a Writ of Mandamus commanding the competent authorities under the Act (appellants herein) to forbear from giving effect to the said notices and from commencing any proceedings pursuant thereto. The competent authorities under the Act have approached this Court by way of the present appeal by a certificate under Art. 133(1)(a) of the Constitution of India. The hub of the argument addressed by the respondent company, which found favour with the Calcutta High Court, but failed to impress the Madras High Court, is the expression " no person entitled to sell or procure the sale of the said goods" employed by the legislature in the opening part of S. 12(2) of the Act, which to the material extent deserves to be quoted:-

"12(2) Where any export of goods has been made to which a notification under sub-sec. (1) applies. no person entitled to sell, or procure the sale of the said goods shall, except with the permission of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which has the effect of securing that ............"

3. The argument runs thus:

Section 12(2) of the Foreign Exchange Regulation Act 1947, on its plain terms, applies only to "persons" who are "entitled to sell or procure the sale of the said goods." The word ..entitled" governs the word "sell" as well as the expression "procure the sale of". Further, both these expressions are used with respect. to the "said goods" - which means the goods which have already been exported. It is in these premises submitted that S. 12(2) applies only to such persons who are entitled to sell or procure the sale of goods which have already been exported.

4. We are not impressed by this submission that the aforesaid expression can be so narrowly construed so as to govern the scope of S. 12(2) in such a truncated manner which renders it virtually impotent in so far as trans