Case: Rai Bahadur Seth Shreeram Durgaprasad Vs. Director of Enforcement

The facts giving rise to the appeal are as follows. Messrs Rai Bahadur Seth Shreeram Durgaprasad were a partnership firm engaged in the business of winning, extracting and getting manganese ore from their manganese mines at Tumsar on a very large scale. During the period from 1952 to 1958, the partnership firm made 52 shipments of manganese ore to various foreign countries and earned huge amount of foreign exchange. It however failed to repatriate the full value in foreign exchange against the aforesaid 52 shipments and thereby contravened s. 12(2) of the Act. The Director of Enforcement accordingly initiated adjudication proceedings against the appellants under s. 23(1) as amended for contravention of s. 12(2) as well as s. 4(1) of the Act. The appellants stated before the Director of Enforcement that they did not contest the charge under s. 12(2) of the Act but questioned the liability of the firm on the ground that the amended s. 23(1) as well as s. 23C introduced by the Amendment Act came into force on September 20, 1957 and were therefore inapplicable to the export shipments from the year 1952 on wards till that date; and if at all, the firm could only be held liable under the amended s. 23(1) read with s. 23C as from that date. It was contended that the word whoever in sub-s. (1) of s. 23 of the Act before its amendment denoted only a natural person and association of persons, such as a firm, would not fail within the connotation of the word whoever. The Director of Enforcement by his order dated August 17, 1978 repelled the contention and held that the firm and its partners had deliberately underinvoiced shipments at the time of export and also diverted the undeclared proceeds to their accounts with foreign banks with an intention not to repatriate the sale proceeds in the prescribed manner within the prescribed period in respect of each shipment. He dealt with the evidence in detail with reference to the books of account and came to the conclusion that both Durgaprasad Saraf and Umashanker Aggarwal were incharge of, and responsible for, the conduct of the business of the partnership firm during the relevant period. Neither of them produced any evidence to show that the contravention in question had taken place without their knowledge or that they had exercised due diligence to prevent such contravention. They were accordingly made liable for contravention of s. 12(2) of the Act for failure to repatriate the foreign exchange earned on the aforesaid 52 shipments and were imposed a penalty of Rs. 15, 00, 000 on the partnership firm. T he Foreign Exchange Regulation Appellate Board however disagreed with the Director of Enforcement and accepted the contention of the appellants and accordingly reduced the amount of penalty to Rs.3, 10, 000.

Court's reasoning:
It is clear from these provisions that the word whoever in sub-s. (1) of s. 23 of the Act before its amendment was comprehensive enough to include an association of persons, such as a firm, and did not connote a natural person alone. There is no reason why the word whoever in the section should not receive its plain and natural meaning. According to the Shorter Oxford English Dictionary, vol. 2, p. 2543, whoever means any one who. any who. The meaning given in Webster Comprehensive Dictionary, International edn., vol. 2 at p. 1437 is any one without exception any person who. In our judgment. the word whoever in the unamended s. 23(1) must be read in juxtaposition with s. 12(2) and must mean any person who commits a contravention of that section without exception. That must be the legal connotation of the word whoever and it necessarily takes in corporate liability and includes any association of persons such as a partnership firm. That construction of ours is borne out by the plain language of sub-s. (4) of s. 23 inserted by Act XXXIV of 1950. It provides that if the person committing an offence punishable under sub-s. (1) of s. 23 is a company or other body corporate, every director, manager, secretary or other officer thereof shall, unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent its commission, be deemed to be guilty of such offence. The Act therefore clearly contemplated that adjudication proceedings under sub-s. (1) of s. 23 prior to its amendment could be initiated not only against the person who actually commits contravention but also casts vicarious liability on an association of persons such as a partnership firm or an artificial or a legal entity like a company. It is therefore idle to contend that the appellants were not liable to pay penalty for failure to repatriate foreign exchange on 52 shipments of manganese ore effected through the years 1952 t o 1958. Upon that view, the learned Single Judge was right in setting aside the order of the Foreign Exchange Regulation Appellate Board and restoring that of the Director of Enforcement levying a penalty of Rs. 15, 00, 000 on the appellants for fai lure to repatriate foreign exchange in contravention of s. 12(2) of the Act.The contention of the learned counsel that recourse could not be had to the amended s. 23(1) read with s. 23C of the Act in respect of the contravention of s. 12(2 ) for failure on the part of the appellants to repatriate foreign exchange on shipments of manganese ore made prior to September 20, 1957, and there could be no initiation of adjudication proceedings under the amended s. 23(1) read with s. 23C or levy of penalty on the appellants must also fail for another reason. In Sukumar Pynes case the Court reversed the decision of the Calcutta High Court in Sukumar Pyne v. Union of India &Ors., AIR (1962) Cal. 590  striking down s. 23(1)(a) as being violative of Art. 14 of the Constitution. Regarding the point, namely, whether s. 23(1)(a) having been substituted by Amendment Act XXXIX of 1957 would have retrospective operation in respect of the alleged offence which took place in 1954, the High Court came to the conclusion that the petitioner had a vested right to be tried by an ordinary court of the land with such rights of appeal as were open to all and although s. 23(1)(a) was procedural, where a vested right was affected, prima facie, it was not a question of procedure. Therefore, the High Court came to the conclusion that the provision as to adjudication by the Director of Enforcement could not have any retrospective operation. It was held that the impairment of a fig ht by putting a new restriction thereupon is not a matter of procedure only. It impairs a substantive right and an enactment that does so is not retrospective unless it says so expressly or by necessary intendment. The Court reversed the High Court and held that effect of these provisions was that after the amendment of 1957, adjudication or criminal proceedings could be taken up in respect of a contravention mentioned in s. 23(1) while before the amendment only criminal proceedings before a Court could be instituted to punish the offender. In repelling the contention advanced by Shri N.C. Chatterjee that the new amendments did not apply to contraventions which took place before the Act came into force, the Courtn our opinion, there is force in the conten- tion of the learned Solicitor-General. As observed by this Court in Rao Shiv Bahadur Singh v. The State of Vindhya Pradesh, [1953] SCR 1188 , a person accused of the commission of an offence has no vested right to be tried by a particular court or a particular proce- dure except in so far as there is any consti- tutional objection by way of discrimination or the violation of any other fundamental right is involved. It is well recognised that "no person has a vested right in any course of procedure "(vide Maxwell 11th Edition, p. 216), and we see no reason why this ordinary rule should not prevail in the present case. There is no principle underlying Art. 20 of the Constitution which makes a right to any course of procedure a vested right."These principles are clearly attracted to the facts and circumstances of the present case and therefore the initiation of adjudication proceedings for failure to repatriate foreign ex change on shipments of manganese ore prior to September 20, 1957, the date when the Amendment Act came into force, was permissible.