The main legal point established in the judgment is the need for a liberal interpretation of procedural statutes, such as S.193 of the Sea Customs Act, to ensure the efficient realization of penalties and prevent frauds upon the revenue.

1. The Collector of Central Excise, Madras imposed a penalty of Rs. 50,000 under S.167 [8] of the Sea Customs Act, VIII of 1878 on respondent No.1 by order dated 23rd October 1958 consequent on the seizure and confiscation of some 12,496 tolas of contraband gold from a vessel partly owned by the first respondent. The first respondent is an Arab National residing in Arabia and it has not therefore been possible for the Customs Authorities to recover the penalty. The second respondent, a resident of Kozhikode, has admitted in two signed statements made by him before the Superintendent of Central Excise [Customs Preventive], Madras and the Assistant Collector of Central Excise [Customs Preventive], Calicut that he is holding an amount of Rs. 35,530 on behalf of the first respondent and has also undertaken not to transfer the amount except under the orders of the Collector of Central Excise, Madras. On 13th December 1958 the Collector of Central Excise, Madras, notified to the District Magistrate, Kozhikode, regarding the case and requested him to take action under S.193 of the Sea Customs Act to enforce payment of penalty. The District Magistrate transferred those proceedings to the Additional First Class Magistrate, Kozhikode who by order, dated 20th January 1959 dismissed the petition and refused to take action for the recovery of the penalty.

2. This revision is filed by the Collector of Central Excise, Madras, against the said order.

3. The learned Magistrate refused to take action under S.193 on two grounds, the first of which was that there was no acceptable material from which it could be presumed that respondent No. 2 was holding the amount on behalf of counter-petitioner No.1 except a statement alleged to have been recorded from him by some Customs officials. The second ground is that:

"Even presuming that the said amount was held in trust by respondent 2 on behalf of respondent 1, as admittedly no goods were available to be sold in realisation of the amount as provided for in para 1 of S.193, application of the procedure set out in Para.2 did not arise."

4. It has to be mentioned even at the outset that the first ground, namely, whether the second respondent is holding any money on behalf of the first respondent would come up for consideration only after steps are taken for the realisation of the amount from the second respondent and any objection is put forward by him to the effect that he is not in possession of such money. The reasoning adopted by the learned Magistrate that application of the procedure set out in para 2 does not arise in the absence of goods to be proceeded against under para 1, is also faulty. On the other hand the question of proceeding under para 2 arises for consideration only when an officer of Customs is unable to realise the penalty from the sale of the goods of the offender as provided for in para 1 of the section.

5. The real question arising for consideration is whether the Magistrate had jurisdiction to proceed against the money in the hands of respondent 2. S.193 reads thus:

1. When a penalty or increased rate of duty is adjudged against any person under this Act by any officer of Customs, such officer, if such penalty or increased rate be not paid, may levy the same by sale of any goods of the said person which may be in his charge or in the charge of any other officer of Customs.

2. When an officer of Customs who has adjudged a penalty or increased rate of duty against any person under this Act is unable to realize the unpaid amount thereof from such goods, such officer may notify in writing to any Magistrate within the local limits of whose jurisdiction such person or any goods belonging to him may be, the name and residence of the said person and the amount of penalty or increased rate of duty unrecovered; and such Magistrate shall there-upon proceed to enforce payment of the said amount in like manner as if such penalty or increased rate had been a fine inflicted by himself."

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