RAI BAHADUR SETH SHREERAM DURGAPRASADversusDIRECTOR OF ENFORCEMENT

             RAI BAHADUR SETH SHREERAM DURGAPRASAD                                   A
                                            v.
                          DIRECTOR OF ENFORCEMENT

                                      MAY 1, 1987
                                                                                     B
                [A.P. SEN AND V. BALAKRISHNA ERADI, JJ.]

               Foreign Exchange Regulation Act, 1947-Section 23 (1)-
         'Whoever'-Interpretation of-Comprehensive enough to include an
         association of persons such as a firm-Does not connote a natural
         person alone.
                                                                                     c
                The Director of Enforcement initiated adjudication proceedings
         against the appellants-a partnership firm, under Section 23(1), as
         amended, for failure to repatriate the full value in foreign exchange
         earned by it against export shipments of manganese ore made during
    ~-   1952-1958, and thereby contravening Section 12(2), as well as Section       D
         4(1) of the Foreign Exchange Regulation Act, 1947. The appellants did
i        not contest the charge under Section 12(2) of the Act but questioned the
         liability or the firm on the ground that the amended Section 23(1) as
         well as Section 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 onwards till that date and if at all, the
         firm could only he held liable under the amended Section 23(1) read         E
         with Section 23C as from that date. It was contended that the word
         'whoever' in sub-section (1) of Section 23 of the Act before its amend-
         ment denoted only a natural person, and association of persons, such as
         a firm, would not fall within the connotation of the word 'whoever'.
         The Director of Enforcement held that the firm and its partners had         F
         deliberately underinvoiced shipments at the time of export &nd 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
         also held that the two persons incharge of, and responstble for, the
         conduct of the business of the partnership firm during the relevant         G
         period did not produce 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, and they were
         accordingly made liable for contravention of Section 12(2) of the Act for
         failure to repatriate the foreign exchange earned on the shipments and a
         penalty was imposed on the partnership firm.                                H
                                            137
    i38                   SUPREME COURT REPORTS             [ 1987) 3 S.C.R.

          The Foreign Exchange Regulation Appellate Board, however, dis-
A
    agreed with the Director of Enforcement, accepted the contention of the
                                                                                   .-,6·
    appellants and accordingly reduced the amount of penalty.

         The High Court allowed the appeal of the Director of Enforce-
    ment and restored the original order of the Director of Enforcement.
B
          In appeal to this Court it was submitted on behalf of the appel-       _J
    lants that though Article 20(1) of the Constitution would not in terms                 •
    apply, the principles embodied therem would still govern and that the
    word 'whoever' in sub-section (1) of Section 23 before its amendment by      '1°
    Act XXXIX of 1957 connoted only a natural person i.e. those who
    actually contravened the provisions of Section 12(1) of the Act by failure
c   to repatriate full value of foreign exchange earned or exports and
    would not take in corporate liability and, therefore, association of
    persons, such as a firm, would not fall within the connotation of the           y
    word 'whoever', that by the Amendment Act, a new Section 2JI•: .. ~,

D
    substituted and Section 23C was introducted and the effect of these
    provisions was that after September 20, 1987 adjudication proceedings
                                                                                           '"
    or criminal proceedings could be taken in respect of a contravention
    mentioned in Section 23(1), while before the amendment only criminal           -(
    proceedings before a court could be instituted to punish the offender.

          On behalf of the respondents it was contended that on a combined



                                                                                        -
E   reading of Section 23(1) and 12(2), the only possible construction was
    that the word 'whoever' includes a person and, therefore, initiation of
    adjudication proceedings against the partnership firm was permissible
    and sub-section (4) of Section 23 clearly contemplates prosecution of a      ·--{
    company or other body corporate.

F         Dismissing the appeal, this Court,

        HELD: 1. It is clear from Sections 4(1), 12(2), 23(1), 23(4) and
  23C that the word 'whoever' in sub-section (1) of Section 23 of the Act
  before its am~ndment was comprehensive enough to include an associa-
  tion of persons, such as a firm, and did not connote a natural person
G alone. The word
                . 'whoever' in the unamended Section  '
                                                            23(1) must be
  read in juxtaposition with Seeton 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. Such a construction is borne out by the plain
H language of sub-section (4) of Section 23 inserted by the Act XXXIV of
                RA! BAHADUR v. DIRECTOR OF ENFORCEMENT [SEN, J.l             139

          1950 which provides that if the person committing an offence punish- A
          able under sub-section (1) of Si:ction 23 is a company or other body
          corporate, every director, manager, secretary or other officer thereof,
          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 contem-
          plated that adjudication proceedings under sub-section (1) of Section 23 B
          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. [143FH; 144A-CJ

                The High Court was right in setting aside the order of the Foreign C
          Exchange Regulation Appellate Board and restoring that of the
          Director of Enforcement levying a penalty of Rs.15,00,000 on the appel-
          lants for failure to repatriate foreign exchange in contravention of
          Section 12(2) of the Act. The initiation of adjudication proceedings for
          failure to repatriate foreign exchange on shipments of manganese ore
          prior to September 20, 1957, the date when the Amendment Act came D
          into force, was permissible. [144D; Fl

                Union of India v. Sukumar Pyne, [1966] 2 SCR 34, referred to.

               CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
          No. 627 of 1986.                                                          E

                From the Judgment and Order dated 7.3.1986 of the Bombay
     'r High Court in Crl. Appeal No. 119of 1981.
---f.          Ashok Sen, Kapil Sibbal, A.K. Sanghi and R.L. Sanghi for the
1          Appellants.                                                              F

                M.S. Rao, A.S.. Rao and C.V. Sobba Rao for the Respondents.
                                                        '
                The Judgment of the Court was delivered by

                 SEN, J. The short question involved in this appeal by special G
    • t    leave directed against the judgment and order of the High Court of
           Bombay dated March 7, 1986 is whether the word 'whoever' in sub-s.
           (1) of s. 23 of the Foreign Exchange Regulation Act, 1947 before its
           amendment by Act XXXIX of 1957 denoted only a natural person and
           association of persons, such as a firm, would not fall within the conno-
           tation of the word 'whoever'. By the judgment, a learned Single Judge H


                                                 - - - · . -..0   • ..,....__ _ _ _ _r _ __
     140                  SUPREME COURT REPORTS           [1987] 3 S.C.R.

A  of the High Court allowed the appeal of the Director of Enforcement
   under s. 54 of the Act and set aside the order of the Foreign Exchange
  Regulation Appellate Board, Bombay dated January 30, 1981 and
  restored the order of the Director of Enforcement dated August 17,
   1978 holding the appellants guilty of contravention of s. 12(2) of the
  Act read with the notification issued by the Government of India in the
B Ministry of Finance, New Delhi dated April 22, 1952 and levying a
  penalty of Rs.15,00,000. By its order the Foreign Exchange Regula-
  tion Appellate Board held that there could be no levy of penalty on the
  appellants-firm for failure to repatriate foreign exchange on shipments
  of manganese ore made prior to September 20, 1957 i.e. prior to the
  amendment of s. 23(1} of the A~t and the introduction of s. 23C by the
  Amendment Act and accordingly reduced the amount of penalty to
c Rs.3, 10,000. As a result of the decision of the High Court, the order of
  the Director of Enforcement levying a penalty of Rs.15,00,000 on the
  appellants has been restored.

         The facts giving rise to the appeal are as follows. Messrs Rai
D  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
E foreign exchange against the aforesaid 52 shipments and thereby con-
   travened 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 ass. 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
F 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 Septem- .
  her 20, 1957 and were therefore inapplicable to the export shipments
  from the year 1952 onwards till that date; and if at all, the firm could
  only be held liable under the amended s. 23(1) read withs. 23C as from
  that date. It was contended that the word 'whoever' in sub-s. (1) of
G s. 23 of the Act before its amendment denoted only a natural person
  and association of persons, such as a firm, would not fall 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
H accounts with foreign banks with an intention not to repatriate the sale
                 RA! BAHADUR v. DIRECTOR OF ENFORCEMENT (SEN. J.]            141

 <4        proceeds in the prescribed manner within the prescribed period in A
           respect of each shipment. He dealt with the evidence in detail with
           reference to th·e 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 B
      ~    knowledge or that they had exercised due diligence to prevent such
           contravention. They were accordingly made liable for contravention of
      -r   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. The Foreign Exchange Regula-
            tion Appellate Board however disagreed with the Director of Enforce-
            ment and accepted the contention of the appellants and accordingly
                                                                                     c
            reduced the amount of penalty to Rs.3, 10,000.

                  Shri Asoke Sen, learned counsel appearing for the appellants
           with his usual fairness frankly concedes that Art. 20( I) of the Cons ti tu-
           tion would not in terms apply but, he contends, the principles em- D
           bodied therein would still govern. He has confined his submissions to
  'y       only one point, namely, thaHhe.word 'whoever' in sub-s. (1) of s. 23
           before its amendment by Act XXXIX of 1957 connoted only a natural
           person i.e. those who actually contravened the provisions of s. 12(1) of
           the Act by failure to repatriate full value of foreign exchange earned
           on exports and would not take in corporate liability and therefore E
           association of persons, such as a firm, would not fall within the conno-
--- 'r     talion of the word 'whoever'. The learned counsel further contends
           that by the Amendment Act, new s. 23(1) was substituted and s. 23C
           introducted w .e.f. September 20, 1957 and the effect of these provi-
 --...(    sions was that after that date, adjudication proceedings or criminal
           proceedings could be taken in respect of a contravention mentioned in F
           s. 23( 1) while before the amendment only criminal proceedings before
            a Court could be instituted to punish the offender. We are afraid, the
            contention cannot prevail. It is not correct to say that the amended
            s. 23(1) of the Act does not apply to contraventions which took place
           before the Amendment Act came into force. Shri Madhusudan Rao,
            learned counsel appearing for the respondents rightly contends that on G
  ~
      +     a combined reading of ss. 23(1) and 12(2), the only possible construe-
            tion is that the word 'whoever' includes a person and therefore initia-
            tion of adjudication proceedings against the partnership firm was
            permissible. He d)-aws sustenance from the provision contained in sub-
            s. (4) of s. 23 which clearly contemplates prosecution of a company or
            other body corporate. As regards the applicability of the amended H
     1-12                 SUPREME COURT REPORTS            (1987] 3 S.C.R.

A s. 23( 1) read with s. 23C with regard to initiation of adjudication                  ~""i..
  proceedings in respect of contraventions
                              \
                                            which took place before the
  Amendment Act came into force, he rightly contends that the matter is
  concluded by the decision of this Court in Union of India v. Sukumar
  Pyne, [1966] 2 SCR 34.

B         In order to appreciate the contentions raised, it is necessary to
    set out the statutory provisions insofar as relevant.                         ._)..

                "4. (1) Except with the previous general or special per-
                mission of the Reserve Bank, no person other than an

c
                authorised dealer shall ...... sell or lend to, or exchange
                with, any person not being an authorised dealer, any
                foreign exchange.
                                                                                           -
               12.2. Where any export of goods has been made to which a
               notification under sub-section (1) applies, no person en-
               titled to sell, or procure the sale of, the said goods shall,
D              except with the permission of the Reserve Bank, do or
               refrain from doing any act with intent to secure that-

                     (a) the sale of goods is delayed to an extent which is
               unreasonable having regard to the ordinary course of
               trade, or
E
                     (b) payment for the goods is made otherwise than in
               the prescribed manner or does not represent the full
                                                                               "----(
               amount payable by the foreign buyer in respect of the
               goods, subject to such deductions, if any as may be allowed
               by the Reserve Bank, or is delayed to such extent as
F              aforesaid:

                     Provided that no proceedings in respect of any con-
               travention of this sub-section shall be instituted unless the
               prescribed period has expired and payment for the goods
               representing the full amount as aforesaid has not been
G              made in the prescribed manner."

         Section 23(1) prior to its amendment and the original sub-s. (3)
    now renumbered ass. 23(4) are as follows:

               "23. (1) Whoever contravenes any of the prov1S1ons of
H              this Act or of any rule, direction or order made thereunder
      RA! BAHADUR v. DIRE<TOR OF ENFORCEMENT (SEN, J.]            143

           shall be punishable with impril;onment for a term which A
           may extend to two years or with fine or with both, and any
           Court trying any such contravention may, if it thinks fit and
           in addition to any sentence which it may impose for such
           contravention, direct that any currency, security, gold or
           silver, or goods or other property in respect of which the
           contravention has taken place shall be confiscated.           B

            23.(4). If the person committing an offence punishable
            under this section 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 C
            to prevent its commission, be deemed to be guilty of such
            offence."

Sub-s.(1) of s. 23C is as follows:

            "23C. Offences by companies-(!) If the person commit- D
            ting a contravention is a company, every person who, at the
            time the contravention was committed, was incharge 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:            E

                  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
            know ledge or that he exercised all due diligence to prevent
            such contravention."                                         F

      It is clear from these provisions that the word 'whoever' in sub-s.
( !) 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 mean- G
ing. 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( !) must be read in jux-
 taposition with s. 12(2) and must mean any person who commits a H
       144                            SUPREME COURT REPORTS   [1987] 3 S.C.R.

 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
 B is a company or other body corporate, every director, manager, secret-
    ary 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
 C only against the person who actually commits contravention but also
   casts vicarious liability on an association of persons such as a partner-
   ship 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 to 1958. Upon that view, the
 D 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 failure to repatriate foreign exchange in contravention
   of s. 12(2) of the Act.

 E        The contention of the learned counsel that recourse could not be
    had to the amended s. 23(1) read withs. 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 adjudi-
    cation proceedings under the amended s. 23(1) read withs. 23C or levy
 F of penalty on the appellants must also fail for another reason. In
    Sukumar Pyne's case the Court reversed the decision of the Calcutta
    High Court in Sukumar Pyne v. Union of India & Ors., AIR (1962)
    Cal. 590 striking downs. 23(l)(a) as being violative of Art. 14 of the
    Constitution. Regarding the point, namely, whether s. 23( l)(a) having
    been substituted by Amendment Act XXXIX of 1957 would have
G 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
   Jacie, it was not a question of procedure. Therefore, the High Court
H came to the conclusion that the provision as to adjudication by the



 ~=ITT"'-~-,~-·-•,.._--~~~.,......   --r---
      RA! BAHADUR v. DIRECTOR OF ENFORCEMENT !SEN, J.]               145

Director of Enforcement could not have any retrospective operation.         A
It was held that" 'the impairment of a right 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
                                                                            B
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 Court observed:                                                  c
            "In our opinion, there is force in the contention 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      D
            court or a particular procedure except in so far as there is
            any constitutional objection by way of discrimination or the
            violation of any ~ther 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          E
            prevail in the pre<Pnt 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 proceed-      F
ings for failure to repatriate foreign exchange on shipments of man-
ganese ore prior to September 20, 1957, the date when the Amend-
ment Act came into force, was permissible.

      The appeal must therefore fail and is dismissed with costs.
                                                                            G
N.P.V.                                                Appeal dismissed.