Case: M/S. Universal Imports Agencyand Another  Vs. The Chief Controller Of Importsand Exports And Others. (And Connected Petitions)

2. Messrs. Universal Imports Agency and the proprietor of the agency are the petitioners in the first three petitioners and Messrs. Victory Traders and the petitioners in the last one. The Chief Controller of Imports and Exports, Pondicherry, the Collector of Customs and Central Excise,Pondicherry, the Central Board ofRevenue, and the Government of India are the respondents in all the petitions.3. Messrs. French India Importing Corporation and Messrs. B. S. and Co. intervened in the Writ Petitions.4. Pondicherry was a French Possession in India. On October 21, 1954 the Government of India and the Government of France entered into an agreement (hereinafter called theAgreement), whereunder there was a de facto transfer of the administration of the French Settlements to the Government of India (hereinafter called the merger) as and from November 1, 1954. The de jure transfer was postponed.5. Messrs. Universal Imports Agency are a proprietary concern registered with the Services Des Contribution, Pondicherry, having its principal place of business at Pondicherry. Sri Mohanlal B. Gandhi is the proprietor of the said Agency. They are established importers and general merchants dealing in ball bearings, mill stores, porcelain ware, glass marbles, beltings and various other goods. They commenced their business at Pondicherry on or about April 14, 1954, under "patente No. 70 of 1954 issued by the Controller of the Contributions Department of the French Government at Pondicherry. In the middle of August 1954, they placed 8 indents with Messrs. Shimada Trading Co., Ltd., Osaka, Japan, for importing porcelain wares, glass marbles and beltings and; the total value thereof amounted to Rs. 57,About the end of August 1954, they opened three irrevocable Letters of Credit with Messrs. Banque De Lin favour of the said suppliers. The bankers obtained authorization from the Bureau Des Affaires Economique Pondicherry, for the requisite foreign exchange from the open market and sold the same to the petitioners for the amount involved in the Letters of Credit. The petitioners made full payment for the said foreign exchange and the said Bank kept the said foreign exchange and credit irrevocably available with their Overseas Agent at Japan for the benefit of the suppliers against full set of shipping documents. All the said Letters of Credit were valid for three months and under the agreement the suppliers were to ship the goods within the said time. On or about November 1, 1954, the said goods were in different stages of shipment; in some cases they were in the course of shipment, and in others awaiting shipment in a matter of a few days and indeed a large part of the goods had already been placed on board "S. S. Shillong and "S. S. Cambodge and the balance of the goods were in the course of being loaded in "S. S. Sunda. In January and February, 1955 and thereafter the goods arrived at the Port of Pondicherry. The Collector of Customs confiscated all the goods on the ground that they were imported without a licence and gave an option to the petitioners to pay in the lien of confiscation fine amoiunting to Rs.The petitioners took up the matter with the Government of India without any success and finally they paid the said penalty under protest and cleared the goods.6. On or about September 1954 the petitioners placed several indents with their overseas suppliers, Messrs. Shimada. Trading Co., Limited, Osaka, Japan, and others and the total C. I. F. value thereof amounted to Rs. 40,They arranged for the full payment of eight cheques to the said suppliers of the value of the goods through the Banzue De LTheir bankers duly obtained authorization from the Bureau Des Affaires Economique, Pondicherry, for the requisite foreign exchange and sold the same to the petitioners for the amount involved in the cheques, and the said foreign exchange was kept available to the suppliers. On or about November 1, 1954, the goods ordered were in different stages of shipment and in some cases the goods were in the course of shipment and in others awaiting shipment in a matter of a few days. In January and February, 1955 the goods arrived at the port of Pondicherry. The Collector of Customs treated the imports of the goods as unauthorized and confiscated the same and gave the petitioners an option to pay in lieu of confiscation a penalty amounting to Rs. 20,The petitioners carried the matter to the Government without any success. Ultimately the petitioners paid the penalty under protest and cleared the goods.7. The petitioners again in the middle of August 1954 placed several indents with their overseas suppliers for importing hair belting, torches, belt fasterners, electric lighting torch bulbs and primus stoves, and the total C. I. F. value was Rs.They opened irrevocable Letters of Credit and issued cheques against full advance remittance in favour of their suppliers through the said Banque De LTheir bankers arranged through the Burean Des Affaires Economique, Pondicherry, for the requisite foreign exchange from the open market and sold the same to the petitioners for the amount involved in the said Letters of Credit and cheques. The petitioners made full payment for the said foreign exchange and the said bank kept the said foreign exchange and the Letters of Credit irrevocably available with their overseas agents for the benefit of the suppliers against full set of shipping documents and the cheques issued by the bank on overseas banks were sent to the suppliers as full advance remittance against the contracts. In January and February, 1955 the goods arrived at the port of Pondicherry. The Collector of Customs confiscated the goods and gave the petitioners an option to pay in lieu of confiscation fine amounting to Rs. 24,Though the petitioners took up the matter with the Government of India, nothing came out of it. They paid the penalty under protest and cleared the goods.8. Messrs. Victory Traders, the petitioners in Petition No. 118 of 1959, are carrying on business of import and export and general merchandise in Pondicherry from the year 1949. The petitioners were importing into Pondicherry a number of article from various countries under "patente No. 126 of 1954 granted by La Controleur Pondicherry. On 20th August 1954, they applied to the Chief Bureau Economique, Pondicherry, requesting them to grant permits to import goods from foreign countries. The said Bureau replied that no import licence was required for goods to enter the territory. Thereafter the petitioners placed orders with foreign dealers. In the middle of August, 1954 and early in September, 1954 they placed a number of indents with their principals in foreign countries for importing fan belts, corn emery, soda water bottles, glass marbles, etc., of value LThe orders were backed by full payments in many cases and at least half the payments in others. These payments were made by demand drafts issued by the Banque De LIn January and February, 1955 and thereafter the goods arrived at the port of Pondicherry, and they were confiscated by the Collector of Customs who gave the petitioners an option to pay in lieu of confiscation fine agregating to Rs. 91,After filing appeals to the Central Board of Revenue and, thereafter, a revision to the Government of India with no success, the petitioners cleared the goods after paying the penalty under protest.9. It is clear from the foregoing facts that the petitioners entered into, before the merger, firm contracts of sales by import with foreign sellers, made available foreign exchange either under Letters of Credit or otherwise, and the goods were shipped either before or after the merger, though they reached their destination after the merger. The said goods were confiscated by the Collector of Customs under the following circumstances. Under theAgreement, the entire administration of the French Settlements was vested with the Government of India from 1st November 1954, though de jure transfer had been postponed. In pursuance of theAgreement, the Ministry of External Affairs published a Notification No. S. R. O. 3315 dated 3oth October 1954, purporting to be under S. 4 of the Foreign Jurisdiction Act, 1947, and called the French Establishments (Application of Laws) Order, 1954, (hereinafter referred to as the Order). Under paragraph 3 of the said Order, the Sea Customs Act, 1878, the Reserve Bank of India Act, 1934, the Imports and Exports Trade (Control) Act, 1947, the Foreign Exchange Regulation Act, 1947, and the Indian Tariff Act, 1934, were extended to Pondicherry. On 1st November 1954, the Government of India appointed a Controller of Imports and Exports for the French Establishments, and paragraph 4 of the same notification gave the following information and guidance to theregards orders placed outside the Establishments and finalised through the grant of licence by the competent French Authorities in accordance with the Laws and Regulations in force prior to 1st November, 1954,are advised to apply to the Controller of Imports and Exports for validation of licences held be them. No fees will be charged for these applications. The applications should be accompanied by the original licence and should give particularsare advised not to arrange for shipments of goods until the licences held by them have been validated by the Controller of Imports and Exports at Pondicherry.The petitioners by way of abundant caution applied to the Chief Controller of Imports and Exports for licences for clearance of goods, but they were all rejected and the petitioners were told that their goods would be treated as unauthorized imports and they were advised to approach the Collector of Customs and Central Excise for conditions regarding their release. As stated supra, after the goods arrived at the port of Pondicherry, the Collector of Customs and Central Excise made the various orders confiscating the goods and giving the petitioners option to pay penalties in lien of confiscation. All of them paid the penalties, under protest, and cleared the goods. The appeals filed to the Central Board of Revenue were dismissed and the revisions filed against the orders of the Central Board of Revenue to the Government of India were also dismissed. The petitioners filed the petitions under Art. 32 of the Constitution questioning the validity of the orders of confiscation.

Reasoning:
Briefly stated, the Indian law as disclosed by the aforesaid Acts is that imports into India without a licence are prohibited, the goods so imported in contravention of the restrictions imposed are liable to be confiscated and that foreign exchange cannot be obtained otherwise than under the provisions of the Act. Persons infringing the laws are liable to prosecution in addition to confiscation of the goodsthe Acts governing the imports nor any authoritativedisclosing the relevant law have been place before us. But from the affidavits filed in the case the state of law corresponding to the relevant Acts referred to in Para. 3 of the Order can easily be ascertained. Pondicherry had been a free port, there being no restrictions on imports except on a few items like gold,etc. For effecting payment for the imports, the importers of Pondicherry could acquire foreign exchange either at the official rate or at the open market rate, whichever might be conveniently available, both methods being recognised by the French Government askinds of permits for obtaining official exchange by importers were issued by the Chief Commissioner in Pondicherry, which were known as authorization and attestation respectively. They were signed by theof the French Indian Establishments himself or by hisThe Government of France used to make an overall allotment of foreign exchange to the French territories. Apart from that allotment, it made other currency allotments in the light of trade agreements entered into by France with other countries. Authorizations were issued in respect of goods imported from countries with which France had entered into trade agreements and attestations in respect of goods imported from France and other French colonies. Further, in respect of other transactions exchange was arranged by importance through banks dealing in foreign exchange. The Department of Affairs of Economics used to authorize the banks in respect of such transactions. Shortly stated, Pondicherry was a free port without any restrictions on imports, except on a few items, and the importers could acquire foreign exchange either at the official rate in respect of some transactions or at the open market in respect ofpetitioners in the course of their import trade, having obtained authorization for the foreign exchange through their bankers, entered into firm contracts with foreign dealers on C.I.F., terms. In some cases irrevocable Letters of Credit were opened and in other bank drafts were sent towards the contracts. Under the terms of the contracts the sellers had to ship the goods from various foreign ports and the buyers were to have physical delivery of the goods after they had crossed the customs barrier in India. Pursuant to the terms of the contracts, the sellers placed the goods on board the various ships, some before and others after the merger and the goods arrived at Pondicherry port after its merger with India. The prices for the goods were paid in full to the foreign sellers and the goods were taken delivery of by the buyers after examining them on arrival. Before the merger if the Customs Authorities had imposed any restrictions not authorized by laws, the affected parties could have enforced the free entry of the goods in a court ofis not necessary to consider in this case whether the concept of import not only takes in the factual bringing of goods into India, but also the entire process of import commencing from the date of application for permission to import and ending, with the crossing of the customs barrier in India. The words "things done" in paragraph 6 must be reasonably interpreted and if so interpreted, they can mean not only things done but also the legal consequences flowing therefrom. If the interpretation suggested by the learned counsel for the respondents be accepted, the saving clause would become unnecessary. If what it saves is only the executed contracts i.e., the contracts whereunder the goods have been imported and received by the buyer before the merger, no further protection is necessary as ordinarily no question of enforcement of the contracts under thelaw would arise. The phraseology used is not an innovation but is copied from other statutory clauses. Section 6 of theAct (X of 1897) says that unless a different intention appears, the repeal of an Act shall not affect anything duly done or suffered thereunder. So too, the Public Health Act of 1875 (38 and 39 Vict c. 55) which repealed the Public Health Act of 1848 contained a proviso to S. 343 to the effect that the repeal "shall not affect anything duly done or suffered under the enactment hereby repealed.Nor can we find any justification for the second criticism. In the instant case the legal position is exactly the same. By reason of theAgreement the Government of India made the Order under the Foreign Jurisdiction Act applying the India laws toeffect of that Order was that the French law were repealed by the application of the Indian laws in the same field occupied by the French laws subject to a saving clause. The position is analogous to that of a statute repealing another with a saving clause. If the English decisions apply to the latter situation, we do not see how they do not apply to the former. In both the cases thelaw continues to govern the things done before a particular date.We, therefore, hold that the words "things done" in paragraph 6 of the Order are comprehensive enough to take in a transaction effected before the merger, though some of its legal effects and consequences projected into thee effect of the contracts under thelaw was that the terms thereof could have been implemented without any customs bar, placed against the import.Applying the said principles to an import sale it may be stated that a purchase by import involves a series of integrated activities commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods into the importing country and that the purchase and resultant import form parts of a same transaction. If so, in the present case the bringing of the goods into India and the relevant contracts entered into by the petitioners with the foreign dealers form parts of a same transaction. The imports, therefore, were the effect or the legal consequences of the "things done" i.e., the contracts entered into by the petitioners with the foreign dealers.21. This conclusion is also reinforced by the terms of theAgreement. It is common case that the terms of the said Agreement cannot be enforced in a municipal court of India. We are only referring to it as the terms thereof throw some light on the proper understanding of the saving clause. By Art. 17 of the Agreement, in so for as material for our purpose all orders placed outside the Establishments and finalised through the grants of a licence by competent authorities in accordance with laws and regulations in force prior to the date of the de facto transfer were to be fulfilled by the Government of India and the necessary foreign exchange granted if the goods were imported within the period of validity of the relevant licences subject to payment of customs duty and other taxes normally leviable at Indian ports. That is, orders placed outside the Establishemnts and finalised through the grant of a licence were to be honoured by the Government of India. The word "licence" in this Article may be construed rather widely to take in a permit or an authorization; otherwise it would lead to the anomaly that when a licence, strictly so called, is required for a transaction and therefore obtained, the transaction is protected by the Article, whereas the transaction which requires only a permit is excluded therefrom. It may be recalled that the petitioners obtained authorizations of the Economics Department in respect of their orders. This Article indicates the intention of the two Governments that the orders so placed outside the Establishments should be honoured. If paragraph 6 of the Order is construed in the manner suggested by the State, we would be imputing to the framers of the Order a conscious breach of the terms of the Agreement between the two countries, for even the orders covered by Art. 17 of the Agreement would be excluded from the operation of the saving clause.