Vithaldas Madhavji Alias ... vs The State And Another
1989 Latest Caselaw 489 Del

JUDGMENT

1. This criminal appeal has been brought against judgment dated February 9, 1976 of Shri O. P. Singla, Additional Sessions Judge by which the appellant was convicted for an offence punishable under Section 5 of Imports & Exports (Control) Act 1947 and was sentenced to undergo rigorous imprisonment for one year and to pay a fine of Rs. 20,000/- and in default of payment of fine, to undergo further rigorous imprisonment for six months.

2. During the pendency of this appeal appellant had died and his legal representatives has been brought on record for continuing this appeal. The fine which was imposed by the learned Additional Sessions Judge is stated to have been deposited.

3. A complaint was instituted by Joint Chief Controller of Imports & Exports, New Delhi against 13 persons namely, (1) Harcharan Singh (2) S. N. Kaul (3) C. M. Puri (4) D. G. Bharwani (5) Vithaldass Madhavji alias Babubhai Khakkar (appellant) (6) R. A. Mehta (7) Bhagwandas Madhavji Khakkar (8) Ramnik Dhupalia (9) Dilbaghrai (10) Y. E. Rangwala (11) B. K. Parekh (12) B. M. Wagh (13) Purshotam Sanghvi with regard to commission of offences punishable under section 120-B IPC, 420, 467 and 471 IPC and Section 5 of the Imports & Exports (Control) Act 1947.

4. Accused No. 1 was formerly Assistant Controller in the office of C.C.I. & E, New Delhi and Accused No. 2 was Upper Division Clerk in the same office. Remaining accused persons are merchants and businessmen who had dealt with the import and sale of the goods in question. Three Import licenses came to be issued in between the period May 1957 and October 1957 in favor of (1) National Industrial Chemicals, Lucknow (2) Agnihotri Energy Food Products, Faridabad and (3) Northern India Chemical Industry, Faridabad. According to the allegations made in the complaint these licenses were actual user licenses meaning thereby that the goods to be imported vide these licenses were to be user by the existing industries in whose favor the licenses have been issued. It has been alleged that all these three concerns were later on found to be fictitious concerns and even copies of Income-tax Certificates placed on the record for the getting the licenses were fictitious and it was due to acts of omission and commission of accused Nos. 1 and 2 that these licenses came to be issued in the names of fictitious firms and accused Nos. 3, 4 and 8 in fact had taken the delivery of these licenses and a letter of authority was got issued in the name of another fictitious firm M/s. Vijay & Company in respect of license issued in favor of firm M/s. National Industrial Chemicals Lucknow and similarly letter of authority was obtained in the name of Kirti Kumar C. Shah in respect of license issued in respect of M/s. Agnihotri Food Products Faridabad and letter of authority was obtained in favor of M/s. Fedco (P) Ltd. in respect of the license issued to Northern India Chemical Limited, Faridabad. It was alleged that even Vijay & Company firm was found to be fictitious firm which was allegedly located in the premises of M/s. Wakefield Paints (P) Ltd., Bombay and correspondence addressed to said firm was being received by Accused No. 7 who was Director of M/s. Wakefield Paints (P) Ltd., Bombay. It was alleged that letter of credit was obtained in the name of M/s. Vijay & Company in which Accused No. 6 stood as guarantor and accused Nos. 5 and 6 are real brothers. It was alleged that imports have been effected in respect of these licenses in Calcutta and Bombay and consignments received were sold to different parties by Accused No. 5 and his brother-in-law, accused No. 8. It was further averred that accused No. 5 had sent money by Air Parcels to Accused No. 2 through one Girdhari Lal nephew of accused No. 2 and a sum of Rs. 70,000/- had been deposited by accused No. 2 at Sri Nagar and Delhi and the entries made in the diary of Accused No. 5 show that certain payments have been made to accused No. 2.

5. It was alleged that in the case of license issued to M/s. Agnihotri Energy Food Products, the letter of authority was opened by Accused No. 13 and goods were imported in Calcutta and sold to different parties under the instructions of accused No. 5 by accused No. 13 and similarly in the case of license of M/s. Northern India Chemical Faridabad, goods were imported by M/s. Fedco (P) Ltd. and the imports were arranged by accused No. 10 and accused No. 11 whereas accused No. 12 had ordered the delivery of goods to one V. K. Shah who could not be traced. It was further alleged that V. K. Shah purported to act on behalf of Vijay & Company. So, it was alleged that the goods which were imported on the basis of actual user licenses in the names of fictitious firms had been illegally imported and sold away by these accused persons in conspiracy with each other with a view to earn illegal profits. After recording the preliminary evidence, Shri N. L. Kakkar, Special Magistrate vide his order dated September 23, 1969 held that there was no sufficient grounds for committing the accused namely, C. M. Puri, Dilbagh Rai, B. M. Wagh, R. A. Mehta, Ramnik Duphalia and S. N. Kaul and he proceeded to discharge them. He committed 7 other accused to Court of Session for facing the trial for the offences and he had framed the charges against the said seven accused as follows :

"I, O. P. Singla, Additional Sessions Judge, hereby charge you as under :

1. Shri Harcharan Singh.

2. Shri D. G. Bharvani.

3. Shri Vithal Dass Madhavji @ Babubhai Khakkar.

4. Shri Bhagwan Dass Madhavji Khakkar.

5. Shri Purushottam Sanghvi.

along with others and deceased Y. E. Rangwala between first quarter of 1957 and end of 1958 became parties to a criminal conspiracy at Delhi, Bombay, Calcutta and other places to commit or cause to be committed illegal acts namely to dishonestly and fraudulently obtain import licenses under the actual users category in the names of fictitious firms for those items import of which was highly profitable, with the help of certain officials of the office of the C.C.I. & E. by dishonestly or fraudulently preparing false Treasury Challan purported to have been issued by a Public Servant namely an official of the State Bank of India, New Delhi making or causing to be made applications in the names of the fictitious firms and dishonestly or fraudulently preparing or causing to be prepared false recommendatory letters purported to have been emanated from the officials of the Development Wing allegedly containing the recommendations in regard to the essentiality, of the goods for the fictitious firms and thereby dishonestly inducing the Import Trade Control Organisation with the active assistance and connivance of certain officials who are co-accused and others to issue Import licenses in favor of fictitious firms namely M/s. National Industrial Chemicals, Hazrat Ganj, Lucknow; M/s. Agnihotri Energy Food Products, Faridabad; M/s. Northern India Chemical, Faridabad and collecting or causing to be collected the said licenses, which were in the name of fictitious firms by your co-accused and others and obtaining further letters of authorities with the assistance of certain officials of the C.C.I. & E's office on the strength of fictitious letters purported to be made by fictitious firms in the name of M/s. Vijay & Co., M/s. Kirti Kumar Shah and M/s. Fedeo Pvt. Ltd., Bombay and importing or causing to be imported the goods covered under the licenses on or on behalf of the fictitious firms and disposing of the goods so illegally imported, and further even in the license issued in the name of M/s. National Industrial Chemicals, Lucknow dishonestly and fraudulently changing or causing to be changed the list of items and their values and importing goods of much higher value and that as such committed offences punishable under section 120-B IPC and within the cognizance of the Court of Session;

And I, hereby direct you to be tried on the said charge by me.

Secondly that you Harcharan Singh, Babubhai Khakkar, D. G. Bharwani along with others in pursuance of the criminal conspiracy for which you have been charged separately, dishonestly by making false representations of fact and in the name of fictitious firm obtained import license in the name of National Industrial Chemicals, Nalwasia Market, Hazrat Ganj, Lucknow from the Import Trade Control Organization and that you thereby committed an offence punishable under section 420 IPC.

3. That you in furtherance of the criminal conspiracy prepared or caused to be prepared or abetted the preparation of the false documents purported to be issued by the Public Servant namely the treasury challan by the officials of the State Bank of India, New Delhi and recommendatory letters purported to be issued by the Development Wing in order to support the application made in the name of the fictitious firm and that you, thereby abetted the commission of the offence under section 109 IPC and within the cognizance of this Court.

4. That further you Babubhai Khakkar along with others dishonestly or fraudulently altered or caused to be altered the value of tiles in the list of goods attached to the license of M/s. National Industrial Chemicals, Lucknow knowing or having reasons to believe that the said list was false, you dishonestly used it as genuine for importing or causing to be imported tiles of higher value and you, thereby committed an offence punishable under Section 471 IPC r/w Section 466 IPC.

5. That you Babubhai Khakkar, Bhagwan Dass Khakkar illegally disposed of goods imported against the import license issued in favor of M/s. National Industrial Chemicals, which was the license under the Actual Users Category and you, thereby committed an offence under section 5 of the Imports & Exports Control Act 1947.

6. That you Harcharan Singh, Babu Bhai Kakkar, Purushottam Sanghvi and others dishonestly obtained Import license in the name of M/s. Agnihotri Food Products, Faridabad when you know that the said firm was fictitious firm and that the treasury challan and the recommendatory letter purported to be issued by the Development Wing were false documents and that you thereby committed an offence under section 420 IPC.

7. That you Harcharan Singh, Babu Bhai Khakkar along with others in pursuance of the criminal conspiracy for which you have been charged separately dishonestly or fraudulently forged or caused to be forged Treasury Challan, which was purported to have been made by the Public Servant, an employee of the State Bank of India and that you, thereby committed an offence punishable under Section 466 IPC r/w Section 109 IPC and within the cognizance of this Court.

8. That you Harcharan Singh, Babu Bhai Khakkar along with others in pursuance of the conspiracy for which you have been charged by me separately forged or caused to be forged dishonestly recommendatory letter from the Development Wing and used it as genuine to support the case of M/s. Agnihotri Food Products for the issue of the Import license and you thereby committed offence punishable under section 471 IPC r/w Section 466 IPC.

9. That you Babu Bhai Khakkar, Bhagwan Dass Khakkar, Purshottam Sanghvi imported goods against Import license for M/s. Agnihotri Food Products, which was actual user license and disposed it of illegally and that you thereby committed an offence under section 5 of the Imports and Exports Control Act 1947.

10. That you Harcharan Singh along with Babu Bhai Khakkar, deceased, Y. E. Rangwala and others in pursuance of the criminal conspiracy for which you have been charged separately dishonestly obtained Import license in the name of M/s. Northern India Chemical, Faridabad, which was a fictitious firm by submitting or causing to be submitted an application in the name of the fictitious firm by submitting or causing to be submitted an application in the name of the fictitious firm, false Treasury Challan and false recommendatory letter from the Development Wing to dishonestly establish the claim of a fictitious firm and it was an actual user and thereby obtained an import license in the name of the said firm, and committed an offence under section 420 IPC.

11. That you Harcharan Singh along with Babu Bhai Khakkar, deceased Y. E. Rangwala and others in pursuance of the criminal conspiracy for which you have been charged by me earlier prepared or caused to be prepared or abetted the preparation of the false documents purported to have been issued by a Public Servant namely an official of the State Bank of Indian and that you, thereby committed an offence punishable under section 466 IPC r/w Section 109 IPC.

12. That you Harcharan Singh along with Babu Bhai Khakkar, deceased, Y. E. Rangwala and others dishonestly and fraudulently used as genuine the Treasury Challan and recommendatory letter purported to be issued by the Development Wing when you knew that the firm was bogus and letters were fictitious, as genuine, to obtain import license in the name of Northern Industrial Chemical; Faridabad and you thereby committed an offence punishable under Section 471 IPC read with Section 466 IPC.

13. That you Babu Bhai Khakkar, deceased Y. E. Rangwala along with others imported goods against the import license for Northern India Chemical which was actual users license and disposed it of through the said firm did not exist and that you thereby committed an offence under section 5 of the Imports and Exports Control Act 1947.

And I, thereby charge you to stand trial before me."

6. Out of these seven accused persons accused Y. E. Rangwala died in November 1969, accused D. G. Bharwani died during the pendency of the proceedings before the trial Court while accused B. K. Parekh had been discharged under orders of this Court. So, only four accused face the trial and vide judgment of the Additional Sessions Judge, all other accused had been acquitted and only the appellant had been convicted.

7. It is not a disputed fact that the Import licenses were obtained in the names of fictitious firms. In respect of licenses issued in the name of National Industrial Chemicals, Lucknow, it was proved on record that a letter of authority had been obtained in the name of Vijay & Company. This license pertained to import of broken tiles, palm oil etc. of the value of Rs. 73,750/- and the number of this license was A-998070 AU-CCI dated May 31, 1957. The case against the appellant in brief was that the said license was taken delivery of by D. G. Bharwani in collusion with C. M. Puri and the letter of authority was obtained in the name of M/s. Vijay & Company in respect of that license and the letter of authority was issued in the hand of Harcharan Singh accused and the said Vijay & Company was functioning from the premises of M/s. Wakefield Paints Pvt. Ltd. and the correspondence of M/s. Vijay & Company was being received by R. A. Mehta accused, Director of the said company and the letters of credit were opened by Vijay & Co. and Bhagwandas Madhavji Khakkar stood as guarantor who is the brother of the appellant. The goods in respect of these licenses were received in Calcutta and Bombay and they were sold to different firms by the appellant in association with his brother-in-law Ramnik Dhupalia.

8. It has come out in evidence of Inderjit Boda, PW 29 of M/s. Radia Sons & Co. Pvt. Ltd. which deals in the business of importing goods from foreign suppliers that appellant had approached him and had placed the indent for the tiles to be imported on the basis of the aforesaid license and he had made the entry Ex. PW 29/A1 in that respect in the indenting Register of the firm Ex. PW 229/A. He also deposed that appellant had directed him that indent for import of the said tiles be shown in the name of Vijay & Co. He also deposed that he had presented this indent for signatures by the appellant but he refused to sign the same and that after the indent was placed with the foreign supplier, a confirmation was received and appellant was told to arrange for opening the letter of credits and it is the appellant who later on furnishing the details of the letter of credit being opened and the order was placed on the foreign supplier for supply of the goods and the necessary commission was paid to the clearing agents United Shipping Corporation, Calcutta on behalf of M/s. Vijay & Company.

9. In evidence, a letter Ex. PW 24A issued by M/s. Vithal Dass & Co. of which the appellant was admittedly a proprietor dated September 17, 1957 addressed to M/s. R. D. Bansal & Co. was proved which was to the following effect :

 "To                                           17th September 1987 
 R. D. Bansal & Company, Bombay 
 Dear Sirs, 
         Re : English white glazed tiles              Richards IIIrd - 6"x 6" x 1/4" 
 
 

As per the personal conversation with your Shri Ram Dass Bansal in Bombay, we hereby confirm of having booked your order for the above mentioned tiles 800 to 1000 crates (800 crates/1000 crates) @ Rs. 9/4 per dozen FOB Calcutta Port and clearing charges duty paid only. The shipment from UK mostly will take place in the month of September/October, 1957. We will inform you the exact date and month in a short period which please note.

Further we are pleased to enclose herewith our documents for the Czecho Tiles (400 crates) shipped per S. S. Hainan. We also enclose herewith the license No. E-5971070/56 and the release order No. S/31-3149/572 dated 9-9-1957, receipt of which may please be acknowledged.

Thank you in the meantime for your valued order and assure you of our prompt services at all time.

Yours faithfully, For M/s. Vithal Das & Co.

(B. M. Khakkar)"

Encl :

Invoice of 400 crates of Czecho Tiles along with insurance certificate, release order, license and other documents.

N.B. We shall thank you if you will please confirm the above order of 800/1000 crates.

10. Appellant in his defense took the plea that he had not asked PW 29 to place an indent with the foreign suppliers or he had not confirmed the order with PW 29 for import of the tiles on the basis of the said license. However, he admitted that he had agreed to have the said tiles and after the tiles were imported he sold them in good faith in regular course of his business and he admitted that PW 48/DB indicated the transactions made by him in respect of the said goods imported on the basis of the aforesaid import license to various parties. So, according to him he had no knowledge with regard to the nature of the license whether the same was actual users license or not. According to him he made the purchase of the said tiles legally from M/s. Vijay & Company in usual course of business.

11. For deciding this appeal, it is not necessary to refer to other evidence led on the record which pertains to commission of offences by other accused who have been acquitted. The learned Additional Sessions Judge has recorded the findings in para 68 of his judgment with regard to conviction of the appellant for the aforesaid offence which I reproduce as under :

"However, accused Babubhai Khakkar appears to be clearly guilty of the offence punishable under S. 5 of the Imports & Exports Control Act 1947. It is in the evidence that PW 29 Inderjit Boda that the order was booked at the place of Vithal Dass & Co. and he was instructed by Babubhai accused that it should be in the name of Vijay & Co. No businessman would ask for order to be placed with an indenting agent without having seen the license or a copy of it, and even a cursory look at the license number would show that it included words "AU" meaning Actual Users license. The letter PW 24/A of Vithal Dass & Co. dated 17th September 1957 to M/s. R. D. Bansal & Co. mentions that enclosed with the letter was license and other documents in relation to 400 crts. of Czecho tiles, which were expected per S. S. Hainan. The letter PW 24/A lends further assurance to what would otherwise be clear that no businessman would entertain any request for purchase of tiles from a party, who has not even placed the indent for the tiles which he intends to import. The evidence of PW 29 Mr. Inderjit Boda is clear that it was Babubhai to whom the indent was placed for signatures, though he did not sign it. Further it was Babubhai accused to whom the confirmation of the foreign suppliers before placing the indent was intimated. It was Babubhai who was asked to open letters of credit and Babubhai agreed to do it. After opening Letters of Credit, the details were furnished to Inderjit Boda for Babubhai accused and these were forwarded to the foreign supplier. The details of Letters of Credit must mention the import license number and that import license No. 1 itself included the words "AU" in the number indicating to Babubhai Khakkar accused that it was 'Actual Users' license. The prosecution evidence clearly and unambiguously, points to Babubhai Khakkar accused as the person who knew that the license in the name of National Industrial Chemicals, Lucknow for the import glazed tiles etc. for the amount of Rs. 73,750/- was an 'Actual Users' license and he made the purchases and made the sales of these imported goods knowingly and in contravention of the conditions of A. U. license of National Industrial Chemicals, Lucknow."

12. The learned counsel for the appellant has vehemently argued that there was no satisfactory evidence led on the record to prove that in fact appellant was aware that the goods have been imported in respect of a license meant for Actual User and thus appellant could not be held guilty of any offence punishable under S. 5 of the Act. In the alternate he has contended that even though it may be held that appellant knew that the goods to be imported in respect of the license in question were meant for Actual User by the licensee even than if any violation has taken place in respect of the said term of the license, the appellant could not be held guilty of the same and it is only the licensee or M/s. Vijay & Company in whose favor the Letter of Authority had been issued are guilty of the offence punishable under S. 5 of the Act. Statement of PW 29 who was an independent witness coupled with the entries made in the Register Ex. PW 29/A and keeping in view the contents of the letter Ex. PW 24/A issued by the appellant himself, there remains no doubt that it was the appellant who arranged for the import of the goods very well knowing the contents of the license and he sold those goods to different parties in clear violation of the terms of the license. Section 5 of Imports & Exports (Control) Act 1957 reads as follows :

"5. Penalty - If any person contravenes or attempts to contravene or abets a contravention of, any order made or deemed to have been made under this Act, or any condition or a license granted under any such order or for any authority under which imported goods were received from or through a recognised agency, he shall, without prejudice to any confiscation or penalty to which he may be liable under the provisions of the Customs Act 1962 be punishable :-

(a) where the value of the goods, in relation to which such contravention or attempted contravention or abetment of contravention has been made, exceeds ten lakh rupees, with imprisonment for a term which may extend to seven years and also with fine, and

(b) in any other case, with imprisonment for a term which may extend to three years and also with fine;

Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, such imprisonment shall not be for less than six months.

The very wording of the Section makes it clear that any person violating the terms of the Import license is guilty of the offence. It is not correct to say that only the licensee in whose favor the license had been issued would be guilty of an offence if the goods are sold or dealt with in violation of any term of the license. A similar question arose for consideration in Bank of India v. The National Iron and Steel Co. Ltd., . Certain goods have been imported issued in the name of Nisco. The goods came into possession of a receiver appointed by the Court and receiver entered into an agreement for sale of the goods with M/s. Modi Steels. The contention was raised before the single Bench of the High Court that receiver could not enter into any such sale agreement which is in violation of S. 5 of Imports & Exports (Control) Act 1947. A contention was raised before the said Bench that if goods are sold in violation of the terms of the license, it is only the licensee who could be held liable and not any one else. This contention was repelled and it was held that the person or the persons who would be involved in alienation, transfer or sale of such goods in violation of the terms of the license, would be guilty of contravention of these terms of the license. A contention was also raised before the Court that liability under the Statute is restricted to the license holder only and not to the third party and reliance was placed on certain observations made by the Supreme Court in the case of Abdul Aziz v. State of Maharashtra, which was to the following effect (para 15) :

"We accept the fourth contention that it is the association, the licensee which alone could contravene the conditions of the license and thus contravene the order ..........."

On perusal of the above judgment it is clear that the fourth contention referred to above was to the effect that the Association was the licensee and therefore a contravention of the condition of the license would be committed only by the Association and not by its Chairman and consequently it would be the Association which should have been tried for the alleged offence under S. 5 of the Imports & Exports (Control) Act 1947 and not the Chairman. There were seven members who were powerloom weavers who had formed the Association. On behalf of the Association the Chairman had applied for and obtained a license for the import of certain quantity of Art silk yarn. There were similar restrictions regarding the user of the goods in the said license. The goods could be used only in the factory of the license-holders and could not be sold to any other party. The goods were imported. The Chairman of the Association requested the firm which was engaged for importing the goods to sell all those goods and give minimum profits of at least 4% to the Association. The goods were disposed of. The Chairman and the Members of the Association were prosecuted. The High Court convicted the Chairman under S. 5 of the Act. The question which was considered by the Supreme Court was whether the Chairman was the licensee or the Association was the licensee and the Supreme Court made the aforesaid observations that it was the Association which was the licensee and not the Chairman. The Supreme Court further held Chairman also guilty of the offence punishable under S. 5 of the Act on the ground that the Chairman intentionally aided the Association in committing the offence under S. 5 of the Act. So, it is evident that even though a third person may not be licensee himself yet if he abets or facilitates the violation of the terms of the license, he is also guilty of abetment of the offence. The aforesaid judgment of the Supreme Court was thus distinguished by the single Bench of the Calcutta High Court on these reasonings and had opined that even a person other than a licensee could be held guilty of an offence punishable under S. 5 of the Act. I entirely agree with the reasons given in this judgment and hold that the appellant in the present case had been rightly convicted by the Additional Sessions Judge in as much as he with the full knowledge regarding the terms of the license got imported goods under the said license and also sold the said goods in clear violation of the terms of the license.

13. Hence, I maintain the conviction and sentence and dismiss the appeal. However, as the appellant is stated to be dead so, question of his undergoing any imprisonment does not arise.

14. Appeal dismissed.