iminal Appeal Nos 211  212 of 1969 and Review Petition No 37 of 1970
Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18 1969 in Criminal Appeal No 183 of 1961
C K Daphtary and section K Dholakia for the petitioner
V A Seyid Muhammad and section P Nayar for the respondents
The Judgment of the Court on August 18 1970 was delivered by Sikri J
These appeals by special leave are directed against the judgment of the High Court at Calcutta whereby the High Court A K Das and K K Mitra JJ set aside the order of acuittal and convicted the appellants before us under section 231A of the Foreign Exchange Regulation Act VII of 1947 hereinafter refered to as the Act
The appellant Girdharilal Gupta and the appellant Puranmall Jain were sentenced to rigorous imprisonment for six months each and to pay 750 a fine of Rs 2000 each in default to rigorous imprisonment  for a further period of three months each
The appellant Bhagwandeo Tewari was sentenced to rigorous imprisonment for three months and to pay a fine of Rs 1000  in default to rigorous imprisonment for two months
The firm was sentenced to pay a fine of Rs 2000 
It does not appear that any special leave was obtained on behalf of the firm
In order to appreciate the contentions made before us it is ncessary to state the relevant facts
On October 25 1958 Customs Preventive Officer B Roy examined a parcel wooden case which purported to contain Rasogolla Achar papar and dried vegetable booked for Hongkong to be taken by the Swiss Air of which the Indian Airlines Corporation was the cargo handling agent
The articles had been declared to be worth Rs 20 but the freight which had been paid came to Rs 12773 nP
This excited the suspicion of the Customs Preventive Officer B Roy and on opening the parcel and breaking down the case five hundred ten currency notes of the denomination of hundred rupees each valuing Rs 510001  were found
The name of the consignor was Ramghawan Singh at Karnani Mansion Park Street Calcutta but on enquiry no trace could be found of this Ramghawan Singh at Karnani Mansion
In the course of further investigation suspicion fell on Ms Agarwala Trading Corporation of which the appellants Girdharilal Gupta and Fumanmall Jain were the partners and the appellant Bhagwandeo Tewri was an employee
On January 22 1959 the office of the firm at 191 Mahatma Gandhi Road and the alleged residence of the partners at 11 B Jatindra Mohan Avenue was searched
The appellant Bhagwandeo Tewari on being identified by the Traffic Assistant of the Indian Airlines Corporation Ambar Nath Sen PW 4 and one loader of Thai Airways section K Battu PW 26 was arrested
Certain incriminating documents including account slips and cash books of the firm were seized
On June 3 1959 a complaint was lodged at the instance of the Assistant Collector of Customs Calcutta
After stating the above facts it was alleged in the complaint that sending out money in Indian currency was prohibited under section 82 of the Act and any attempt to do the same was punishable under section 23B of the Act
At the trial a number of witnesses were examined
B Roy Customs Preventive Officer gave evidence regarding the dis covery of Rs 510001 in Indian currency notes apart from Rasogollas pickles etc
on October 25 1958
No cross examination was directed to show that this did not happen on October 25 1958
751 section A D Moira Traffic Assistant of the Indian Airlines Corporation PW 2 who checks freight and does other transshipment work in course of his duties at Dum Dum airport deposed that he received the relevant documents on October 25 1958 from Calcutta office
H  said that the documents were in the handwriting of N Sen of the Freight Section of the Calcutta Office
Armed with the letter of authority he took the parcel to the Customs Officer and PW 1 B Roy asked him to open the parcel and currency notes of the value of Rs 51000  along with other things were discovered
R R Mukherjee Traffic Officer of the Indian Airlines Corporation PW 3 is another witness to the recovery of the currency notes
PW 4 Ambare Nath Sen was the Traffic Assistant in the Indian Airlines Corporation who had typed out the consignment note in respect of this parcel after seeing the shipping bill Ext 1
He identified the appellant Bhagwandeo Tewari as the person who had handed over the shipping bill to him and the letter of authority Ext 11 He said that he calculated the freight and received the freight from this appellant
He further said that this appellant signed the consignment notes in Hindi in his presence and he remembered having seen this appellant writing a postcard on the adjoining table while he was preparing the consignment notes
He further stated that his immediate superior officer P K Chatterjee was also present at the time this consignment was being booked
Apparently this is not the first time that hiss appellant had gone to the Indian Airlines Corporation because PW 4 says that seven days ahead of October 24 1958 this appellant had called on him with another shipment although that consignment was booked by P K Chatterji
Some days after October 25 1958 this witness PW 4was taken by the Customs Officer to some place to find the man who is alleged to have booked the Parcel
Two or three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area which was the place of Agarwal Trading Corporation and he said that he Pointed out the appellant Bhagwandeo Tiwari as the one who had taken the Parcel to him on October 24 1958
He was cross examined in order to show that he could not remember customers
He admitted that it was not always possible for him to remember all the men who came in contact with him in the course of his work but he said that he had told C R Basu who wag investigating the case that the person who brought the parcel was an oldish man and lean one and had also described his nose
He further admitted that at the place he identified appellant Bhagwandeo Tiwari he was the only oldish man there
He 4 Ll 100SupCI71 752 said that he did not think that he committed a mistake unless the man he identified had a double in the shape of a twin brother and the like
He further admitted that he had been trying to recollect the appearance of the man to reconstruct in his mind the outline of his appearance as far as he could
The evidence of PW 4 impresses us and there is no reason why we should not place reliance on his evidence
P K Chatterjee PW 5 speaks of the earlier visit of the appellant Bhagwandeo Tiwari as the person who called on him with the shipping bill on October 17 1958
C R Basu PW 6 Officer of the Customs who investigated the case said that after making enquiries he applied for the issue of search warrant to search the premises No 191 Mahatama Gandhi Road
He also applied for a search warrant to search the premises of the partners of the firm at 11 B Jatindra Mohan Avenue
He did not himself search 11 B Jatindra Mohan Avenue but went to execute the search warrant at 191 Mahatma Gandhi Road where on the identification of PW4 he arrested the appellant Bhagwandeo Tiwari
He then conducted the search of the premises in the presence of the witnesses and took into possession one Rokar one khata bahi one nakal bahi the attendance register and three account slips which he marked 8 9 and 10 Ext
9 and 91 and 92 respectively
We may reproduce his evidence regarding the discovery of these account slips because a great deal of argument has been addressed to us on the recovery of these slips
He stated The three slips about which I have spoken just now are in the same condition to day as I found them on the day when they were seized
The witnesses to the search I conducted are Radhesyam Gupta and Lalit Kumar Chandu Lal Parekh
Here is the search list over my signature and the signature of the witnesses
Ext 10
 In his cross examined he stated You are right that Exhibits 9 91 and 92 are included in Serial No 38 of the search list
The search list does not mention the slips separately but only mentions loose sheets in a sealed parcel
It has been urged that there is no evidence to show when the seal was opened
It is suggested that these slips have been fabricated and planted
No such question was put to the witnesses and we are 753 unable to presume that the investigating officer would go about fabricating account slips in order to rope in the appellants
The prosecution produced two witnesses who had signed the recovery list
The evidence of Radheshyam Gupta PW 7 must be discarded because although he was examined before the Chief Presidency Magistrate he was not made available for cross examination
The learned counsel Mr Bhattacharya suggested that if this witness had been produced for cross examination he would have deposed against the prosecution
We are unable to draw any such presumption
The other witness was Lalit C L Parekh PW 8
He had signed the search list but on cross examination he stated that Basu had taken slips of paper from the Agal Bagal  of the guddy by which I mean from underneath the Takia on the bed
He further said that bits of paper Basu found from a wooden case as well He further stated as follows You are right that Basu placed all these bits of papers at one and the same place
How many pieces  I cannot say
I did not count
By guess I can say that the number of bits of paper would run to 50 or 60 1 signed all the pieces of paper which were found so
 The learned counsel fastens on the last line and says that these slips do not bear the signature of Lalit C L Parekh and therefore it is clear that these have been fabricated later
We are unable to sustain this contention
The witness had signed a number of documents including the search list and he pay well have thought that he had signed every piece of paper which was seized
No such question was put to the investigating officer
PW 11 N R Paul who was the assistant attached to the Appraising Department of the Calcutta Customs deposed re garding the preparation of the shipping bill
It appears that the shipping bill bore the words Thai Airways Co and these words were scored out and Swiss Air written in hand
He could not say who corrected the entry but nothing turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons it was not possible to send that parcel through this airways
The prosecution led evidence to show that as a matter of fact appellant Bhagwandeo Tiwari had approached some body in Thai Airways but we need not dwell on this part of the case
754 The prosecution also produced Shridhar Chatterjee hand writing expert who examined the signature reading as Ram Chandra writing in Hindi and in pencil in the two way bills Ext 3 and 4 and the specimen writing He was of the opinion that the writer of the specimen writing was the writer of the signature Ram Chandra appearing in the airway bill
We may mention that Bhagwandeo Tiwari is alleged to have signed as Ram Chandra
The expert also gave the opinion that
the type written papers Exts 11 and IX had been typed on the same machine
Exhibit 92 one of the seized account slips is a very im portant document
The official translation is printed in the records and reads Translation of EXT92 dated 24 10 58   28 4 cases Godown AC 1    8 3 opened below and goods brought
In Cash Paper Torn cases bound Pettis   4 Case I  Illegible 2 Illegible Paper tom Cases PettisIllegi ble 2 RB 151 for coming and going to IAC Rs2238 451 12773 HongkongShanghai torn  illegible The High Court had to translate it again and the last line was translated into Hongkong Lagaya in place of Hongkong Shanghai
In the account books of Ms Agarwala Trading Corporation Exts 21 and 211 under the entries dated October 24 1958 on which date the booking is alleged by the prosecution to have been done on entry appears as follows Rs 415 Through Bhagwan Deo 8 Colli Janka 115 Rickshaw fare 2 14 Cart Charge Rs 18 Through Ghanshyam  Pandey 4 Bus fair 14 Bus fair 14 Bus Tarm It will be noticed that the same items appear in Ext
The breakup in exhibit 92 is slightly different but in the account book 755 the four annas and two annas entries have been added to Rs 28to make Rs 214 as cart charge
Again the entries in Ext
91 are as follows 1 But hire for going home
14 Caine from home to Thai  Taxi 12 Riksha hire from Thai 1 Coolie 4 Thai Office Colie ______________________ 26 Rs 14710 In Cash The corresponding entry in the account books are as follows Rs 26 Bus fare 1Taxi fare Rs 14 Rickshaw Rs 12 Cooli 151  It is true that the entry of Rs 12773 which exists in Ext
92 has not been carried over into the account books but perhaps that would have been even too much for an accountant to do
He never dreamt that these entries of Rs 45 and Rs 26 in the account books would be seized upon by the prosecution to complete the case against the appellants
Be that as it may the entries in the account books demolish the case of defence that these slips were fabricated and that they had nothing to do with the firm
exhibit 92 on the other hand clearly shows that somebody had gone to the IAC office and paid 15 for going and coming to the IAC office and paid the incidental charges
Mr Bhattacharya who followed Mr Chagla for the appellants contends that a serious question of law is involved the question being that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated
It is a novel proposition and he has not been able to cite any authority or principle in support of it
It all depends on the facts in each case
At any rate here we have the corroborative evidence of PW 8 who signed the search document and also the entries themselves in the account books and their tallying with the slips
It was urged on behalf of the defence counsel that these slips could not be taken into consideration at all because they are not evidence
We are unable to appreciate why they are not evidence
These are part of the things discovered during search and 756 if the entries therein are carried into the account books there is no reason why these things could not be looked at
The learned counsel has taken us through the judgments of the Chief Presidency Magistrate and the High Court
We are in agreement with the conclusions arrived at by the High Court
We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or two places made minor mistakes
Mr Chagla while arguing on behalf of the partners said that there was evidence that one partner was not in Calcutta on the 24th or 25th October 1958as he was in Japan
But even if we take this fact into consideration which fact was not brought to the notice of the Chief Presidency Magistrate or the High Court it does not help him at all
Entries were made in the account books and it was the firm s money which was spent and he being an active partner is clearly liable under section 23C1 of the Act which reads  23C1 If the person committing a contravention is a company every person who at the time the contravention was committed was in charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to pre vent such contravention
 This sub section deems the appellant Girdhari Lal Gupta guilty
The question is  Has he proved that the contravention took place without his knowledge and he exercised due diligence to prevent such contravention  What he said in his statement under section 342 Cr PC was that he alone looks after the affairs of the firm
There is also no evidence to show that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention
The entries were there in his account books and the only thing that he had to say about these entries in his account books is that they pertain to the routine work of the firm
Under the circumstances we are unable to exonerate him of the charge
As far as the other partner Puramnall Jain is concerned  he stated that he does not look after the affairs of the firm and further 757 that he stays all along at Sriganganagar in Rajasthan and does not stay in Calcutta
The prosecution has not led any reliable evidence to prove that he took any active part in the conduct of the business of the firm
In these circumstances we are inclined to give him the benefit of doubt and acquit him
In the result the appeal of Puranmall Jain is allowed and he is acquitted of the charge
Ms bail bond shall stand cancelled
The appeals of Girdhari Lal and Bhagwandeo Tewari are dismissed
After the above judgment was delivered Review Petition No 37 of 1970 was filed
The judgment of the Court thereon was delivered on February 18 1971 by Sikri CJ We disposed of Criminal Appeals Nos 211 and 212 of 1959 by our judgment dated August 18 1970 whereby the appeals of Girdharilal Gupta and Bhagwandeo Tewari against
their convictions were dismissed
Girdharilal Gupta put in this review petition stating that the counsel had omitted to bring to our notice the provisions of section 23C2 of the Foreign Exchange Regulation Act 1947 hereinafter referred to as the Act which has a vital bearing on the case
The judgment in Criminal Appeal No 211 of 1959 has therefore been re opened
We may mention that Bhagwandeo Tiwari has not filed a review petition against his conviction upheld by this Court
Mr Daphtary contends that on the facts as found by us the appellant Girdhari Lal Gupta does not come within the purview of section 23C1 or section 23C2 of the Act
Sections 23C1 and 23C2 read as follows 23C 1 If the person committing a contravention is a company every person who at the time the contravention was committed was in charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly  Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention
23C 2 Notwithstanding anything contained in sub section 1 where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of or is attributable to any neglect on the 758 part of any director manager secretary or other officer of the company such director manager secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly
Explanation
For the purposes of this section a  company means any body corporate and includes a firm or other association of individuals and b director in relation to a firm means a partner in the firm
Mr Daphtary contends that there is no evidence to show that the appellant was in charge of the conduct of the business of the firm at the relevant time and therefore section 23C1 does not apply
He further says that as the appellant was abroad the contravention took place without his knowledge
We may mention however that the defence that he was abroad at the relevant time was not taken in the courts below
At the time of the last hearing learned counsel produced the passport of the appellant before us from which it appears that he was abroad at that time and came back a few days after the alleged contravention
Mr Daphtary further contends that section 23C2 also does not apply because there is no evidence that the contravention took place with the consent or connivance of or was attributable to any neglect on the part of the appellant
He referred to us a number of authorities of the High Courts in India which have interpreted similar provisions and we shall refer to them later
It seems to us quite clear that section 23C1 is a highly penal section as it makes a person who was in charge and responsible to the company for the conduct of its business vicariously liable for an offence committed by the company
Therefore in accordance with well settled principles this section should be construed strictly
What then does the expression a person in charge and responsible for the conduct of the affairs of a company mean   It will be noticed that the word company includes a firm or other association and the same test must apply to a director in charge and a partner of a firm in charge of a business
It seems to us that in the context a person in charge  must mean that the person should be in over all control of the day to day business of the company or firm
This inference follows from the wording of section 23C2
It mentions director who may be a party to the policy being followed by a company and yet not be in charge of the business of the company
Further it mentions manager who 75 9 usually is in charge of the business but not in over all charge
Similarly the other officers may be in charge of only some part of business
In State vs section P Bhadani1 Kanhaiya Singh J in construing a similar provision of the Employees Provident Fund Act 1952
Section 14A held that the first sub section would be confined only to officers in the immediate charge of the management of the company
Later he observed that it is therefore manifest that all the officers of the company not in direct charge of the management of the business are immune from the liability for the offence unless they have contributed to its commission by consent connivance or neglect In R K Khandelwal vs State 2 D section Mathur J in construing section 27 of the Drugs Act 1940 a provision similar to the one we are concerned with observed  There can in directors who merely lay down the policy and are not concerned with the day to day working of the Company
Consequently the mere fact that the accused person is a partner or director of the Company shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable
 In The Public Prosecutor vs R Karuppian3 Somasundaram J while dealing with a case arising under the section 171 observed that the Secretary of the Co operative Milk Society on the facts of the case could not be held to be a person in charge of the Society
On the facts of that case the business of selling milk was done by the clerk of the Society and the Secretary was only an honorary Secretary and was not coming to
the Society daily
The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker
He stated in examination in chief  Who exactly the proprietors of the said firm are I cannot say
But I can say this much that whenever I had been there I was referred to Girdharilal Gupta accused No 2 and Puranmal Jain accused No 3 as the Maliks of the firm
I see accused No 2 Girdharilal Gupta in court identified him
I know that Bhagwandeo Tewari accused No 4 is the Cashier of that firm
I see him here in court identifies accused No 4
1 AIR 1959 Pat9
2 3 AIR 1958 Mad
760 lm15
I know of another employee of the firm the manager Jagdish Prasad
I know another employee of the firm the accountant Shyamlal
 The appellant in his statement under section 342 Cr
PC stated thus You ask me Sir if I have to say anything about the evidence led in this case to the effect that I happen to be a partner of accused No 1 firm
To that Sir my answer is that I am  The evidence to that end is correct
I shall only add that I alone look after the affairs of _this firm Mr Daphtary says that on this evidence it cannot be held that the appellant was in charge of the conduct of the business
We are unable to agree with him on this point
The appellant has himself stated that he alone looked after the affairs of the firm
This means that the is in charge of the business of the firm within the meaning of the section though there may be a Manager working under him
The question then arises whether the appellant was in charge of the conduct of the business of the firm at the time the contravention was committed
He was not physically present in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad
was the manager of the firm
It is true that the onus of proving that the appellant was in charge of the conduct of the business of the company at the time the contravention took place lies on the Prosecution but when a partner in charge of a business proceeds abroad it does not mean that he ceases to be charge unless there is evidence that he gave up charge in favour of another person  Therefore we must hold that the appellant was in charge of the business of the firm within the meaning of sec
23C1
But while imposing sentence a Court might take notice of the fact that a person is being vicariously punished for an offence and if he shows that it is possible that the contravention of the Act took place without his knowledge or neglect a sentence of imprisonment may not be imposed
In this case he was abroad at the time of contravention and it is possible that the contravention took place without his knowledge or because of lack of diligence
It seems to us that on the facts of this case a sentence of fine of Rs 2000 will meet the ends of justice
The learned counsel for the respondent State urges that this is not a case fit for review because it is only a case of mistaken judgment
But we are unable to agree with this submission 761 because at the time of the arguments our attention was not drawn
 specifically to sub section 23C2 and the light it throws on the interpretation of sub section
In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No 211 of 1969 modified to the extent that the sentence of six months  rigorous
imprisonment imposed on Girdharilal is set aside
The sentence  of fine of Rs 2000 shall however stand
GC Ordered accordingly


Summary:
An air parcel declared by the consigner to contain rasogollas and other edibles was found to contain Rs 51000 worth of Indian currency notes
The parcel was booked to be sent from Calcutta to Hong Kong
The consignor s name as given
on the parcel was found to be false and on investigation the suspicion of the customs authorities fell on the appellants two of whom were partners in a firm the third being an employee of the firm
The office of the firm was searched
Certain incriminating documents including account slips and cash books of the firm were seized
In a complaint filed by the Assistant Collector of Customs against the appellants and their firm it was alleged that sending out money in Indian currency was prohibited by section 82 of the Foreign Exchange Regulation 7 of 1947 and any attempt to do the same was punishable under section 23B of the Act
The trial court acquitted the appellants but the High Court in appeal convicted them under section 231A
By special leave appeals were filed in this Court
Judgment was delivered on August 18 1970
Thereafter review petition No 37 of 1970 was filed
A further judgment in respect of the contention raised therein as to the interpretation of section 23Ci was delivered on February 18 1971
HELD  i The proposition that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated is a novel one with no principle or authority to support it
It all depends on the facts of each case
In the present case there was the corroborative evidence of PW 8 who signed the search document and also the entries themselves in the account books and their tallying with the slips
755 G ii There was no substance in the argument that the account slips could not be taken into consideration because they were not evidence
These were part of the things discovered during search and if the entries therein were carried into the account books there was no reason why they could not be looked at 755 H iii In the context of section 23C1 a person in charge  must mean that the person should be in over all control of the day to day business of the company or firm
The inference follows from the wording of section 23C2
It mentions director who may be a party to the policy being followed by 749 a company and yet not be in charge of the business of the company
Further it mentions manager who usually is in charge of the business not in over all charge
Similarly the other officers may be in charge of only some part of the business
758 G 759 A State vs section P Bhadani AIR 1959 Pat 9 R K Khandelwal vs State and Public Prosecutor vs R K Karuppian AIR 1958 Mad
183 referred to
In the present case the appellant G had himself stated that he alone looked after the affairs of the firm
This meant that he was in charge within the meaning of the section though there may be a manager working under him 760 C D When a partner in charge of a business proceeds abroad it does not mean that he ceased to be in charge unless there is evidence that he gave up charge in favour of another person
Therefore it must be held that the appellant was in charge of the business of the firm within the meaning of section 23C1
760 E F
In view of the fact that G was abroad at the time of contravention it was possible that the contravention took place without his knowledge or lack of diligence
He was being vicariously punished
In such a case a sentence of imprisonment may not be imposed but a sentence of fine only would meet the ends of justice
760 G iv As regards appellant P the prosecution had been unable to prove by any reliable evidence that he took any active part in the conduct of the business of the firm
He must therefore be given the benefit of doubt and acquitted
757 A v The case was fit for review because at the time of arguments the attention of the court was not drawn specifically to sub section 23C2 and the light it throws on the interpretation of sub s1
761 A