judgement:
Appeal No. 256 of 1954.
Appeal from the judgment and decree dated July 3, 1953, of the Calcutta High Court in Appeal from Original Order No. 7 of 1953, arising out of the judgment and decree dated August 5, 1952, of the said High Court in Matter No. 84 of 1952.
823 N. C. Chatterjee, section K. Kapur and I. N. Shroff, for the appellant.
C. K. Daphtary Solicitor General of India, H. J. Umrigar and R. H. Dhebar, for respondents Nos. 1 to 3.
B. Sen, section N. Mukherjee, and B. N. Ghosh, for respondent No. 4.
Veda Vyasa and B. P. Maheshwari, for respondent No. 5. 1958.
May 9.
The Judgment of the Court was delivered by section K. DAS J.
This appeal has come to us on a certificate granted by the High Court of Judicature at Calcutta that the case is a fit one for appeal to this Court.
The appellant is Shewpujanrai lndrasanrai Ltd., a private limited company incorporated under the Indian Companies Act, 1913 and carrying on business at 69, Manohar Das Street, Calcutta.
Respondents I and 3 are the Customs authorities concerned; respondent 2 is the Union of India, and respondents 4 and 5 are two banks, called respectively Nationale Handels Bank N. V., a foreign company carrying On business at 1, Royal Exchange Place, Calcutta, and Bharat Bank Ltd., a company incorporated under the Indian Companies Act, 1913, and having its registered office at 143, Cotton Street, Calcutta.
The material facts are these.
The appellant Company carries on business as a bullion merchant and in that capacity used to buy gold and silver in the Calcutta and Bombay markets and sell the same either direct or through bankers at the aforesaid two places.
It is stated that between November 14,1950, and November 20, 1950, the appellant Company, ill the usual course of its business, purchased about 9,478 tolas of gold, and in respect of the said purchases, borrowed money from respondents 4 and 5.
The gold so purchased was deposited with the respondent banks as security for the loans taken, 7,044 tolas being deposited with respondent 4 and about 2,437 tolas 105 824 with respondent 5.
With the consent of the appellant Company, the two Banks respondents 4 and 5, sent the gold to the Calcutta Min for the purpose of assaying.
On November 20, 1950, the Collector of Customs, Calcutta, asked the Mint authorities not to part with the gold, and on November 21, 1950, the gold was seized at the instance of the Customs authorities, Calcutta, in pursuance of a search warrant issued by the Chief Presidency Magistrate, Calcutta.
On the same day, certain books of account of the appellant company were.
also seized from its place of business at 69, Manohar Das Street.
Oil November 22, 1950, the appellant Company received a letter signed by one Jasjit Singh of the Customs Department, requesting the presence of the appellant at the Customs House on November 27, 1950, for opening and checking the bags of bullion which had been seized from the Mint.
Thereafter followed some correspondence, details whereof are not necessary for our purpose, between the Customs authorities and Messrs. Sawday & Co., acting on behalf of the appellant Company.
On December 19, 1950, the appellant Company made an application in the High Court of Calcutta under article 226 of the Constitution in which it asked for the issue of appropriate writs or orders quashing the orders of seizure and detention of its gold and books of account, and for a further direction that the Customs authorities be prohibited from giving effect to the said orders of detention and seizure or from taking any steps in connection with the gold or the books of account seized.
This writ application was heard and disposed of by an order made by Bose J. of the Calcutta High Court on April 23, 1951, the result of which was that the rule was made absolute to this extent only that the seizure of the books of account was declared to be illegal and a direction was made that the books be returned forthwith to the appellant Company.
No order was made about the gold seized and detained.
On June 20, 1951, the Customs authorities sent a notice to the appellant Company which was in these terms: 825 Subject : Seizure of 9,478 19 tolas of gold at the Government of India Mint, Strand Road, Calcutta.
I have been directed by the Collector of Customs to inform you that the above case has been placed before him for adjudication by the Superintendent, Preventive Service.
A copy of the note submitted by the latter together with copies of the assay reports therein referred to are enclosed herewith.
You are requested to show cause in writing within fourteen days from date hereof why penal action should not be taken against you and the 9,478.19 tolas of gold in question under the provisions of sections 167 clause 8 and 168 of the , for alleged violation of section 19 of the same Act read with section 8 of the Foreign Exchange Regulation Act, 1947.
You are also requested to send copies of all documentary evidence including all books of account, vouchers etc., along with your explanation.
On receipt of your explanation, the Collector has directed me to further inform you that in this case a date and time will be fixed for hearing at which you will be required to produce all oral evidence in support of your explanation and also to make your submissions.
" This notice was issued on the strength of an information contained in a note which the Superintendent, Preventive Service of the Customs authorities, submitted and which said that the gold in question had been smuggled into India in violation of the provisions of the (hereinafter referred to as the ) and the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Foreign Exchange Act) and that the gold had been sent to the Mint for processing; that is, for melting and casting the same into bars, weighing and stamping the same with the Mint Marks, and also assaying small portions thereof.
On July 3, 1951, the appellant Company submitted its explanation in answer to the aforesaid notice.
The parties were then heard by the then Collector of Customs, Sri Raja Ram Rao; but before the hearing could conclude, Sri Raja Ram.
826 Rao was transferred.
His successor, Mr. J. W. Orr, heard the parties on some days; but on October 11, 1951, Mr. Orr was succeeded by Sri A. N. Puri.
This latter officer heard the parties afresh and concluded the hearing on February 8, 1952.
On May 14, 1952, Sri A. N. Puri passed the order impugned in this case, in which he came to the conclusion that the gold in question (9,478.19 tolas) was smuggled gold and that there was a contravention of the provisions of section 19 of the read with section 8 of the Foreign Exchange Act.
The final order which he made was in these terms : " I accordingly order that the entire quantity of the gold seized on the 21st November, 1950, amounting to 9,478.19 tolas be confiscated under section 167(8) of the .
In lieu of confiscation, however, I give the owner of the said gold an option under section 183 ibid to pay a fine of Rs. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charge leviable thereon within four months from the date of the despatch of this order.
The release of the gold will be further subject to the production of a permit from Reserve Bank of India within the aforesaid period.
" On June 19, 1952, the appellant Company filed a second writ petition in the High Court of Calcutta in which it asked that (a) a writ of certiorari do issue against respondents I to 3 calling upon them to produce the record of the proceeding resulting in the impugned order of May 14,1952, and for quashing the same; (b) a writ of mandamus do issue requiring respondents 1 to 3 to forbear from giving effect to the orders of seizure, detention and confiscation of the appellant 's gold and further requiring the said respondents to return the gold to the appellant; and (e) a writ of prohibition do issue restraining the said respondents from taking any further steps in pursuance of the order of confiscation etc.
This second writ application was dealt with and disposed of by Bose J. by his order dated August 5, 1952.
Broadly speaking, the two main grounds on which he held the impugned order to be bad ",ere these.
The learned Judge held 827 that by purporting to proceed under 182 of the in the present case, the Customs authorities had acted in prejudice to the provisions of section 23 of the Foreign Exchange Act and this was in violation of section 8(3) of the Foreign Exchange Act as it stood at the relevant time.
He said: " If the petitioners had not been implicated in the charge it might have been open to the Customs authorities to proceed under section 182 if steps were intended to be taken only against the offending goods but the notice to show cause makes it clear that that is not the case.
Although I am not prepared to go to the length of holding that section 23 of the Foreign Exchange Regulation Act altogether excludes the operation of section 182 of the and although I have no doubt, that in appropriate cases where section 23 is not attracted, recourse can be had to section 182 of the , the present case is one in which adoption of the procedure under section 182 of the has prejudiced section 23 of the Foreign Exchange Regulation Act.
The entire proceedings before the Customs authorities must therefore be held to be without jurisdiction.
" Secondly, he held that the conditions which the Collector of Customs had imposed in the impugned order for release of the confiscated gold were not warranted by the statute, and as the impugned order was one composite order, different parts whereof could not be severed one from the other, the entire order must be held to have been made without jurisdiction.
On these findings, the rule was made absolute, the impugned order was quashed and respondents I to 3 were directed to forbear from giving effect to the order.
Then there was an appeal which was heard by a Division Bench consisting of Das and Mookerjee JJ.
That Bench held that the proceeding under the was in the nature of a proceeding in rem and an order of confiscation or penalty passed in such a proceeding was not a quasi judicial act, but an administrative or executive act, in respect of which no application for the issue of a writ of certiorari under 828 article 226 of the Constitution lay.
On a construction of section 8(3) of the Foreign Exchange Act, as it stood at the relevant time, it held that the restrictions mentioned therein had a double effect and the remedies available under section 167(8) of the and under section 23 of the Foreign Exchange Act were cumulative in nature.
It said: " The former remedy (meaning the remedy under the ) is intended to levy the customs duties and is mainly directed against the goods; the latter is penal, intended to punish the person concerned in the act of smuggling.
There is thus no question of the former proceeding prejudicing the latter proceeding. " Accordingly the Division Bench held that the first ground on which Bose J. had held the impugned order to be bad was not sustainable.
With regard to the conditions imposed in the impugned order for the release of the confiscated gold, it held that the invalidity, if any, of the imposition of such conditions did not affect the main order of confiscation.
It said Section 183 casts an imerative duty on the officer adjudging confiscation to give the owner of the goods an option to party such a fine as the officer thinks fit in lieu of confiscation.
The duty so cast is an exercise of jurisdiction by the officer concerned quite separate from the exercise of his jurisdiction under section 167(8) imposing confiscation and penalty.
If any illegality has attached in the matter of exercise of his jurisdiction under section 183, the illegal condition may be set aside.
" In the result, it accepted the appeal and set aside the judgment and order of Bose J.
The present appeal is from the aforesaid judgment and order of the Division Bench dated July 3, 1953.
There are two preliminary points which we may conveniently dispose of here, before we go on to the main contentions urged on behalf of the appellant Company.
In giving a certificate in this case the learned Chief Justice, with whom Das Gupta J. agreed, expressed the view that the question whether the proceeding in which the order appealed from was 829 made was of a civil or crinlinal nature, or was, in the language of article 132 of the Constitution, other proceeding ' was not free from difficulty; he added that, in any event, article 135 of the Constitution applied in the present case, because it was not disputed that certain questions of interpretation of the Constitution were involved and, therefore, the case was clearly one where an appeal would lie to the Federal Court immediately before the commencement of the Constitution.
The learned Solicitoreneral, who has appeared before us on behalf ' of respondents I to 3, has not accepted as correct the view that article 135 justified the grant of a certificate in this case.
He has not, however, pressed us to decide in this case the question of the competency of the certificate given by the High Court, and has raised no objection to a decision of the appeal on merits.
The question whether a proceeding on a writ application is of a civil or criminal nature within the meaning of those expressions in articles 133 and 134 of the Constitution has led to some divergence of opinion in the High Courts, and we understand that it is one of the questions for decision in some cases which we have recently admitted.
In the view which we have taken of the present case on merits and the further eircumstance that it is open to us to give special leave to the appellant under Art,. 136 of the Constitution, we do not think that it is necessary in the present case to decide the question mooted by the learned Chief Justice in his order dated December 1, 1953, and we prefer not to express any opinion thereon.
The other point relates to the view expressed by the High Court in the order under appeal that an order of confiscation or penalty under the is a mere administrative or executive act, in respect of whic` no application for a writ of certiorari lies.
It is necessary to state that the point is now concluded by two recent decisions of this Court.
In F. N. Roy vs Collector Of Customs, Calcutta (1), this Court held that the imposition of a fine under section 167(8) of the was really a quasi judicial act and in the (1) ; 830 later decision of Leo Roy Frey vs The Superintendent, District Jail, Amritsar and another (1), it has been held that in imposing confiscation and penalties under the , the Collector acts judicially.
Therefore, the view that an order of confiscation or penalty under the is a mere administrative or executive act is no longer tenable.
Now, we proceed to a consideration of the two main points urged on behalf of the appellant Company.
It has been argued before us that on a proper construction of section 8 (3) of the Foreign Exchange Act (as it stood at the relevant time) read with section 19 of the , it was not legally open to the customs authorities in the present case to take any action against the appellant Company under the , as such action prejudiced the provisions of section 23 of the Foreign Exchange Act.
To appreciate this point it is necessary to read some of the relevant sections of the Foreign Exchange Act and the .
Sub sections (1) and (2) of section 8 of the Foreign Exchange Act impose restrictions on import and export of currency and bullion.
Sub section (1) states, inter alia, that the Central Government may, by notification in the official gazette, order that, subject to such exemption, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank, bring or send into the States any gold or silver.
Such a notification was published on August 25, 1948, which said in substance that except with the permission of the Reserve Bank, no person shall bring into the States from any place outside India.
any gold, bullion, etc, sub section (3) was at the relevant time in these terms 8 (3) The restrictions imposed by subsections (1) and (2) shall be deemed to have been imposed under section 19 of the , without prejudice to the provisions of section 23 of this Act, and all the provisions of that Act shall have effect accordingly.
" The aforesaid sub section was later deleted by Act (i) ; 831 VIII of 1952, and a new section, namely, section 23A,was introduced which provided inter alia that the restrictions imposed by sub sections
(1) and (2) of section 8 shall be deemed to have been imposed under section 19 of the and all the provisions of that Act shall have effect accordingly except that section 183 thereof shall have effect as if for the word " shall " therein, the word " may " were substituted.
At the time relevant for the purpose of the present case, sub section
(3) of section 8 was in full force and effect and the question under our consideration has to be decided with reference to that sub section.
We then come to section 23 of the Foreign Exchange Act which at the relevant time was in these terms: " 23.
Penalty and Procedure. (1) Whoever contravenes any of the provisions of this Act or of any rule, direction or order made thereunder shall be punishable with imprisonment for a term which 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.
(2). . . . . . . . . . (3) No Court shall take cognisaince of any offence punishable under this section. except upon a complaint in writing made by a person authorised in this behalf by the Central Government or the Reserve Bank by a general or special order: Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
(4) If the person committing an offence punishable under this section is a company or other body corporate, every director, manager, secretary, or other 106 832 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.
" Turning now to the , we start with section 19 which is in Chapter IV.
It says " 19.
The Central Government may, from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.
" Section 167 occurs in Chapter XVI of the and in so far as it is relevant for our purpose, it states " 167.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Section of Offences.
this Act to Penalties.
which offence has reference.
If any goods the Such goods shall be importation or liable to confiscation exportation of and any person concerned which is for the in any such offence shall time being prohibited be liable to a penalty or restricted by or 18 $ 19 not exceeding three times under Chapter IV of this the value of the goods, Act, be imported into or not exceeding one or exported from India thousand rupees contrary to such prohibition or restriction; Section 182 of the deals with adjudication of confiscation and penalties referred to in section 167 aforesaid.
It states 833 " 182.
In every case, except the cases mentioned in section 167, Nos 26, 72 and 74 to 76, both inclusive, in which, under this Act, anything is liable to confiscation or to increased rates of duty; or any person is liable to a penalty, such confiscation, increased rate of duty or penalty may be adjudged (a) without limit, by a Deputy Commissioner Deputy Collector of Customs, or a Customs collector; (b) up to confiscation of goods not exceeding two hundred and fifty rupees in value, and imposition of penalty or increased duty, not exceeding one hundred rupees, by an Assistant Commissioner or Assistant Collector of Customs; (c) up to confiscation of goods not exceeding fifty rupees in value, and imposition of penalty or increased duty not exceeding ten rupees, by such other subordinate officers of Customs as the Chief Customs authority may, from time to time, empower in that behalf in virtue of their office: Provided that the Chief Customs authority may, in the case of any officer performing the duties of a Customs collector, limit his powers to those indicated in clause (b) or in clause (c) of this section, and may confer on any officer, by name or in virtue of his office, the powers indicated in clauses (a), (b) or (c) of this section.
" Section 183 has an important bearing on one of the questions urged before us and is in these terms: " 183.
Whenever confiscation is authorised by this Act, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit.
" Section 184 of the states that whenever anything is confiscated under section 182, such thing shall thereupon vest in Government, and the officer adjudging confiscation shall take and hold possession of the thing confiscated and every officer of police, on the requisition of such officer, shall assist in taking and holding such possession.
Section 186 of the states, inter alia, that the award of any confiscation, penalty or increased rate of duty under the Act by an officer of Customs shall not prevent the 834 infliction of any punishment to which the person affected thereby is liable under any other law.
Now, the argument urged on behalf of the appellant arising as it does out of section 8(3) of the Foreign Exchange Act and section 19 of the is this.
Under sub section
(3) of section 8 a restriction imposed by a notification made under sub section
(1) of the section shall be deemed to have been imposed under section 19 of the and all the provisions of the shall have effect accordingly; but the argument is that this deeming provision is subject to an important qualification contained in the words without prejudice to the provisions of section 23 of this Act ', meaning thereby the Foreign Exchange Act.
The contention is that though the restriction imposed under sub section
(1) of section 8 is to be deemed to have been imposed under section 19 of the , such deeming is to be without prejudice to, that is, subject to the provisions of section 23 of the Foreign Exchange Act; therefore, where a contravention of any of the provisions of the Foreign Exchange Act has taken place such as is punishable under section 23 thereof, the only remedy available in such a case is the one under section 23 and it is not open to the Customs authorities to take action against the offender under sections 167 (8), 182 and 183 of the .
It is contended that this is the true scope and effect of sub section
(3) of section 8 of the Foreign Exchange Act, if due regard is paid to the clause 'without prejudice to the provisions of section 23 of this Act occurring therein.
It is further pointed out that there is power under section 23 itself to confiscate the goods in respect of which the contravention has taken place.
On behalf of respondents I to 3, however, it is contended that the clause " without prejudice to the provisions of section 23 " does not mean "subject to the provisions of section 23 " and its true effect is merely this: when there is contravention of the restrictions imposed by sub section
(1) and (2) of section 8, which restrictions are deemed to have been imposed under section 19 of the , the contravention may have a double effect; it involves a violation of the provisions of the and may at the same time involve 835 a violation of the provisions of the ForeignExchange Act and, if the offender is known, two remedies may be available to the authoritiesconcerned; one remedy is to proceed under the relevant provisions of the and the other under the relevant provisions of the Foreign Exchange Act.
These two are concurrent remedies, which are not mutually exclusive, though in the matter of punishment the question may arise whether a person can be punished twice for the same act or offence.
On a careful consideration of these rival contentions we have come to the conclusion that it is not necessary on the facts of the present case to decide the larger question as to whether two remedies are available to the authorities concerned in respect of a contravention which comes both under the and the Foreign Exchange Act and if so, to what extent the two remedies are concurrent, cumulative or otherwise.
Let us confine ourselves to the application of sub section
(3) of section 8 of the Foreign Exchange Act to the facts of this case.
That sub section states firstly, that the restrictions imposed by sub sections
(1) and (2) shall be deemed to have been imposed under section 19 of the ; secondly, it states that the aforesaid deeming provision shall be without prejudice to the provisions of section 23 of the Foreign Exchange Act; and thirdly, it states that all the provisions of the shall have effect accordingly.
The construction put forward on behalf of the appellant Company is that where section 23 of the Foreign Exchange Act is applicable, any other remedy under the is barred; because that is the effect of the second part of the sub section which says that the deeming provision shall be without prejudice to the provisions of section 23 and the concluding part of the sub section which says that all the provisions of the shall have effect accordingly is controlled by the second part, as is indicated by the use of the word ' accordingly therein.
The learned Solicitor General has put forward a different construction.
According to him, the second part of the sub section when it says without prejudice to the provisions of section 23 ' merely 836 means that the remedy under section 23 is also available in an appropriate case, but it does not bar the remedy available under the ; otherwise, the third and concluding part of the sub section is renderedotiose.
He has further suported his contention by a reference to section 23A, inserted in 1952, which repeats the phraseology of deleted sub section
(3) of section 8 but makes it sufficiently clear what the meaning of the clause I without prejudice to the provisions of section 23 is.
We do not so decide, but let us assume that the construction put forward on behalf of the appellant is the one that should be accepted in this case.
The question then is does section 23 of the Foreign Exchange Act apply to the facts of this case and could the appellant Company be proceeded against under that section ? A distinction must at once be drawn between an action in rem and a proceeding in personal.
Section 23 of the Foreign Exchange Act is a proceeding against the offender, and is applicable to the person who contravenes any of the provisions of that Act, even though on a conviction for such contravention, the Court may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that the goods in respect of which the contravention has taken place be confiscated.
In substance it is a proceeding against a person for the purpose of penalising him for a contravention of the provisions of the Foreign Exchange Act, and such a proceeding is available when the offender is known.
Take, however, a case where the offender (the smuggler, for example) is not known, but the goods in respect of which the contravention has taken place are known and have been seized.
Section 167(8) of the contemplates a case of this nature, when it describes the offence in col. 1 in the following words ,, If any goods, the importation or exportation of which is. . prohibited or restricted be imported into or exported from India contrary to such prohibition or restriction.
" The penalty provided is that the goods shall be liable to confiscation.
There is a further provision in the penalty column that any person concerned in any such 837 offence shall be liable to a penalty not exceeding three times the value of the goods etc.
The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in and the penalty is enforced against the goods whether the offender is known or not known; the order of confiscation under section 182, , operates directly upon the status of the property, and under section 184 transfers an absolute title to Government.
Therefore, in a case where the Customs authorities can proceed only against the goods, there can be no question of applying section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant Company as respects section 8(3), the remedy under the against the smuggled goods cannot be barred; when on the facts of the case section 23 can have no application, no question of prejudicing its provisions by the adoption of the procedure under the can at all arise.
Bose J. was fully aware of this distinction between section 23 of the Foreign Exchange Act and section 167(8) of the .
Indeed, he expressly said that he had no doubt that in appropriate cases where section 23 is not attracted, recourse can be had to section 182 of the ; but lie thought that the notice which was issued to the appellant Company in this case on June 20, 1951, showed that the intention was to proceed against the offender also, and this, according to him, made a difference and brought in section 23.
We are unable to agree.
We have quoted.
the notice in an earlier part of this judgment.
The notice asked the appellant to show cause why penal action should not be taken against it and the gold under the provisions of section 167(8) for alleged violation of section 19, , and section 8, Foreign Exchange Act.
Neither the notice, nor the note of the Superintendent, Preventive Service (enclosed with the notice) suggested that the appellant was the smuggler and, therefore, liable to penalty under section 23 of the Foreign Exchange Act.
Section 167(8) of the provides for two kinds of penalties when contraband goods are imported into or exported from India; one is confiscation of the 838 goods which is an order in rem and the other is a penalty on the person concerned in any such offence; that is, the offence described in column I of item (8).
Taking the view most favourable to the appellant, it may be said that the notice contemplated both kinds of proceedings namely one in rem and the other in personam and asked the appellant to show cause against the imposition of both penalties mentioned in the third column of section 167(8); but the notice did not show any intention, nor did it suggest even a pos sibility, of proceeding against the appellant under section 23 of the Foreign Exchange Act.
There is, we think, an appreciable difference between the expression any person concerned in any such offence ' occurring in the third column of section 167(8) of the and the expression whoever contravenes any of the provisions of this Act occurring in section 23 of the Foreign Exchange Act.
A person may be concerned in the importation of smuggled gold, without being a smuggler himself or without himself contravening any of the provisions of the Foreign Exchange Act.
In this sense, the scope of section 167(8), , is different from that of section 23 of the Foreign Exchange Act.
Moreover, in the case under our consideration, the only penalty imposed under section 167(8) was the confiscation of the gold which indicates that the authorities proceeded with the proceeding in rem and dropped the proceeding in personam; therefore, no question of prejudicing the provisions of section 23, Foreign Exchange Act, arose in this case.
We think that Bose J. was in error in thinking that the adoption of the procedure under the prejudiced in any way the provisions of section 23, Foreign Exchange Act, in the present case.
On this finding, it is unnecessary to go into any of the larger questions which were canvassed before us in the course of arguments.
We were addressed at some length on (1) what would happen to the smuggled goods if the offender died in the course of a trial tinder section 23 and the provisions of the were not available; (ii) what would be the position if two contradictory findings were given with regard to the 839 goods one by the Customs authorities under the and the other by the Court tinder section 23, Foreign Exchange Act in case two concurrent remedies were open; and (iii) what would happen to the safeguards given to an accused person under section 23, if it were open to the Customs authorities to by pass section 23,and proceed under the .
These are interesting and, may be, important questions; and we have no doubt that they will be decided when they really fall for decision in an appropriate case.
In the case under present consideration, it is sufficient to state that on the facts found, no prejudice was caused to the provisions of section 23 by adopting the procedure resulting in the impugned order of confiscation, and the contention of the appellant that the Customs authorities had no jurisdiction to adopt the procedure under the cannot be accepted as correct.
This brings us to the second main contention urged on behalf of the appellant.
By the impugned order the Collector of Customs confiscated the gold, and in lieu thereof gave the appellant an option to pay a fine of Rs 10,00,000 (Rupees ten lakhs).
It is not disputed that the impugned order up to the extent stated above was within his jurisdiction to make.
The Collector, however, imposed two other conditions for the release of the confiscated gold; one was the production of a permit from the Reserve Bank of India in respect of the gold within four months from the date of despatch of the impugned order and the other was the payment of proper customs duties and other charges leviable in respect of the gold within the same period of four months.
The High Court held, rightly in our opinion that the Collector had no jurisdictin to imposposed the aforesaid two conditions.
It has been fairly concened by the learned Solicitor General that there is no provision in the Foreign Exchange Act or the under which the Reserve Bank could give permission in respect of smuggled gold with retrospective effect; if it could, there would be no offence under section 167(8) and the order of confiscation itself would be 107 840 bad.
As to the second condition of payment of customs duty etc., the learned Solicitor General referred us to a decision of the Bombay High Court in Keki Hormasji Elavia vs The Union of India (Civil Application No. 1296 of 1953 decided on August 18, 1953) referred to in a Compilation of.
Judgments in Customs Cases, published by the Central Board of Revenue, and submitted that customs duty was payable under section 88 of the , as in the Bombay case.
The facts of the Bombay case were entirely different; it was found there that the goods, which were toilet and perfumery goods, had been smuggled through the port of Kantiajal near Surat without payment of any duty and in those circumstances, it was held that section 88 applied.
In the case before us there is no finding by what means the gold was smuggled by sea or landand it is difficult to see how section 88, which relates to goods not cleared or warehoused within four months after entry of vessel, can be of any help in the present Case.
We are, therefore, of the view that the Collector of Customs had no jurisdiction to impose any of the two conditions mentioned above .
What then is the result? On behalf of the appellant it has been argued that the order being a composite and integrated order, it is not severable; and secondly, it is contended that on an application for a writ of certiorari, the superior Court must quash the whole order when it is found to be bad and in excess of jurisdiction even as to a part thereof The question of severability does not present any great difficulty.
It has been the subject of consideration in more than one decision of this Court, and in the recent decision in R. M. D. Chamarbaugwalla vs Union of India (1) the principles governing it have been summarised.
Applying those principles we find no difficulty in holding that the invalid conditions imposed by the Collector are not so inextricably mixed up that they cannot be separated from the valid order of confiscation and fine in lieu thereof; there is also no doubt that the Collector would have passed the order of confiscation and fine in lieu thereof on his finding (1)[1957] S.C.R. 930.
841 that the gold was smuggled gold, even if he realised that the conditions he was imposing were invalid; it is also clear that the conditions do not form part of a single scheme which can be operative only as a whole.
Learned counsel for the appellant has referred us to the sixth rule enunciated in Chamarbaugwalla 's decision (supra) and has contended that if the invalid conditions are expunged, what remains of the impugned order cannot be enforced without making an alteration or modification as to the time limit fixed, and therefore the whole order must be struck down as void.
We are unable to agree.
The sixth rule aforesaid is based on the ground that the Court cannot make alterations or modifications in order to enforce what remains of a statute after expunging the invalid portions thereof ; otherwise it will amount to judicial legislation.
No such consideration arises in the case before us.
There is no legal difficulty in enforcing the rest of the impugned order after separating the invalid conditions therefrom; on the passing of the order of confiscation, the gold vests in Government and section 183 does not make it obligatory on the Collector to fix a time limit for payment of the fine in lieu of confiscation.
It is really for the benefit of the owner that a time is fixed for payment of the fine.
Even if the time limit is altered, by no stretch of imagination can it be said that such alteration amounts to judicial legisla tion.
For these reasons we agree with the Division Bench of the High Court that the invalid conditions imposed by the Collector in this case are severable from the rest of the impugned order.
Learned counsel has relied on the decision in The King vs Willesden Justices, Ex parte Utley(1) for his contention that the High Court has no power, on certiorari, to amend the impugned order by striking out the invalid conditions; nor has this Court, on an appeal from an order on an application for the issue of a writ of certiorari, any power higher than that of the High Court.
He has contended that the essence of the remedy of certiorari is that it necessarily involves revising the decision of the inferior court to which it is (1)[1948] 1 K. B. 397. 842 directed in one of three ways: (a) by quashing it ; (b) by removing the case and trying it in a court of competent jurisdiction ; or (c) by causing it to be reheard.
According to English precedents, so argues learned counsel, certiorari involves an examination of a decision of the Court to which it is addressed to see " What of right and according to the law and custom of England we shall see fit to be done " (see Short and Mellor 's Practice of the Crown Office, 2nd Edn.
504 505).
We do not think that we are called upon in this case to go into the early history of the prerogative writ of certiorari in England or even to decide.
what is the extent of the power of the High Court, on a prayer for the issue of a writ in the nature of a, writ of certiorari, under article 226 of the Constitution.
Broadly speaking, it is true that an essential feature of a writ of certiorari is that the control which is exercised through it over judicial or quasi judicial tribunals or bodies is not in an appellate but supervisory capacity.
This Court observed in T. C. Basappa vs T. Nagappa and Another (1), at p. 257 " In granting a writ of certiorari the superior Court does not exercise the powers of an appellate Tribunal.
It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based.
It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal.
The offending order or proceeding so to say is put out of the way as one which should not be used to the detriment of any person.
" In the same decision, it was also observed: " In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges.
We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep (1)[1955] 1 S.C.R 250.
843 to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law.
" In King vs Willesden Justices (supra) the applicant was convicted and fined pound 15 for failure to stop his vehicle on being so required by a police constable in uniform, contrary to the Road Traffic Act, 1930, section 20, sub section 3.
The ground for the application was that the maximum penalty prescribed by section 20, subsection 3, for the offence in question was a fine of pound 5 and that therefore the penalty of pound 15 imposed by the justices was bad in law and in excess of their jurisdiction.
Lord Goddard C. J. said: " Our attention has been called to several cases, including Reg.
vs Stade, , Reg.
vs Kay, (1873) L. R. 8 Q. B. 324, and Reg.
vs Cridland, (1857) 7 E. & B. 853, but having considered them all, my opinion remains as it was at the outset, that if a sentence be imposed which is not authorised by law for the offence for which the defendant is convicted, that makes the conviction bad on its face and being a bad conviction, it can be brought up here to be quashed, and when so brought up, must be quashed, for this court has no power, and never has had any power, on certiorari, to amend the conviction.
" It is worthy of note that the decision proceeded on the footing that the man had a penalty imposed upon him which the law did not permit him to suffer and that made the conviction bad; and the conviction being bad, the applicant was entitled to his order of certiorari.
But we think that there is a more convincing answer to the contention urged on behalf of the appellant.
In an earlier part of this judgment.
we have quoted in extenso the prayers which the appellant had made in its petition in the High Court.
The appellant did not confine itself to asking for a writ of certiorari only, but asked for a mandamus requiring respondents I to 3 to forbear from giving effect to the orders of seizure, detention and confiscation of the gold and further requiring them to return the gold, and also asked for a writ of prohibition restraining respondents 844 1 to 3 from taking further steps in pursuance of the order of confiscation.
These prayers were neither unnecessary nor a inere surplusage; they were appropriate for the purpose of avoiding the conditions which the Collector had imposed for release of the gold.
It is well settled that where proceedings in an inferior court or tribunal are partly within and partly without its jurisdiction, prohibition will lie against doing what is in excess of jurisdiction.
(see Halsbury 's Laws of England, 3rd Edn.
11, para.
216, p. 116).
In the recent decision in Dalmia 's case, Shri Ram Krishna Dalmia V. Shri Justice section R. Tendolkar and others(1), this Court held a part of a notification made under section 3 of the Commission of Enquiry Act (LX of 1952) to be bad, and holding that it was severable from the rest of the notification, deleted it and held that rest of the notification to be good.
Therefore, we do not see any insuperable difficulty in the present case in prohibiting respondents I to 3 from enforcing the two invalid conditions which the Collector of Customs had imposed for release of the gold on payment of the fine in lieu of confiscation, and the time limit of four months fixed by the Collector must accordingly run from the date of this order.
The only other points that require consideration are the points urged on behalf of the two banks, respondents 4 and 5.
These respondents say that though the general property in the goods pledged remained with the pledgor, a special property passed to the pledgee in order that he might be able to sell the pledge if and when his right to sell arose.
They complain that they have been deprived of this special property by reason of the proceeding resulting in the impugned order, adopted under the by the Collector of Customs; they contend that their right is guaranteed under article 19(1)(f) of the Constitution, and the provisions of the in so far as they take away the pledgee 's right without providing for a notice to the pledgee or an option to pay the fine in lieu of confiscation are not reasonable restrictions in the interests of the general (1)[1959] S.C.R. 279.
845 public within the meaning of el.
(5) of the said Article.
Our attention has been drawn to section 19A of the which enables the Central Government to make regulations, either general or special, respecting the detention and confiscation of goods the importation of which is prohibited, and the conditions, if any, to be fulfilled before such detention and confiscation, and also to subsection (1) thereof under which the Chief Customs Officer may require the regulations to be complied with and may satisfy himself in accordance with those regulations that the goods are such as are prohibited to be imported.
It is pointed out that no regulations have yet been made, and in the absence of any regulations the Customs officers have an uncontrolled and unguided power in the matter of detention and confiscation of goods.
So far as the Nationale Handels Bank N. V., respondent 4, is concerned, it has no right under article 19.
Assuming that a company can be a citizen as defined in the Constitution, respondent 4 admittedly is a foreign Company possessing no rights of a citizen of this country.
On the same assumption the Bharat Bank Ltd., respondent 5, being an Indian Company may have the rights of a citizen under article 19; but in the circumstances which we shall presently state, we do not think that its complaint as to the infraction of a fundamental right can be raised at this stage.
Apart altogether from the considerations which the learned Solicitor General has pressed (as to which it is un necessary for us to express any final opinion), namely, (1) that a pledgee cannot have a right higher than that of the pleader, (ii) that the pledgor does not cease to be the owner by reason of the pledge, and (iii) that in an action in rem the order operators directly upon the status of the property and, as in this case, vests the property absolutely in Government, there are certain other circumstances which militate against the claim now put forward by respondent 5.
The order of the Collector shows that all throughout the adjudication proceedings respondent 5 was represented by counsel before the Collector.
The Collector passed his order oil May 14, 1952, and a copy was forwarded 846 to respondent 5.
The respondent took no steps against the order, but was content with its position as respondent to the application which the present appellant filed in the High Court.
It is also to be noticed that the Collector 's order shows that he was not fully satisfied with the story of the appellant that the gold had been pledged with the Banks in the manner suggested.
So far as the transactions with the Bharat Bank are concerned, he said: " The Majud Bahi (stock book) of the firm showed a closing balance of gold weighing tolas 2,457 6 0 as lying with the Bharat Bank Ltd., on 17th November, 1950, whereas the closing balance on that date according to the Bank 's statement was tolas 4,651 14 0.
The firm 's representative gave reasons for this difference which was mainly that instructions were given to the Bharat Bank on the 17th November, 1950 to send gold weighing tolas 2,236 7 0 to Sewadin Bansilal of Bombay but the actual delivery of this gold to this person at Bombay did not take place until the 22nd November 1950.
The Auditors, however, observed that they had not seen any correspondence with the Bank in support of the above information which they received verbally.
" In the High Court when the case was before Bose J. respondent 5 challenged the order of the Collector on several points including the alleged infraction of his fundamental right.
This objection was not, however, accepted, and Bose J. allowed the writ application on two other grounds which we have mentioned earlier.
In the appeal before the Division Bench, respondent 5 again relied on article 19 (1) (f ), and the Division Bench affirmed the finding of Bose J. that as the did not directly legislate in respect of the freedom guaranteed by article 19 (1) (f ), that Article had no application.
Again, respondent No. 5 took no steps against the judgment and order of the Division Bench dated July 3, 1953 a judgment and order which it now challenges as incorrect.
All along the line, it preferred to sail with the appellant but figuring as a respondent only; it was the appellant who moved the High Court for a certificate, obtained such 847 certificate and brought this appeal to this Court.
Respondent 5 took no action against the judgment and order of which it now complains.
In these circumstances, we do not think that respondent 5 can now be allowed to complain of a violation of its fundamental right, apart from and independently of the appellant.
The result, therefore, is as follows.
The impugned order is good as to the confiscation of the gold and the payment of fine in lieu thereof.
The Collector of Customs had jurisdiction to make that order on his finding that the gold was smuggled gold.
He, however, had no jurisdiction to impose the other two conditions which he imposed for the release of the gold.
Though the High Court held on appeal that the invalid conditions were severable from the rest of the order, it did not give any appropriate direction regard ing those conditions as it should have done, but allowed the appeal and dismissed the writ application in too.
We think that the appropriate order to pass in this case is to dismiss the writ application in so far as it seeks to quash the impugned order of confiscation of the gold and the payment of fine in lieu thereof, and to allow it in so far as it wants a direction restraining respondents 1 to 3 from enforcing the two invalid conditions imposed by the Collector of Customs, which the Collector had no jurisdiction to impose.
The time limit of four months given by the Collector will accordingly run from the date of this order.
The appeal is accordingly allowed to the very limited extent indicated above but dismissed as to the rest, and in the circumstances of this case, particularly in view of the invalid conditions imposed by the Collector, we direct that the parties must bear their own costs of the hearing in this Court.
Appeal allowed in part.

summary/full:
The appellant company was carrying on business as a bullion merchant and in that capacity purchased about 9478 tolas of gold.
On information that the gold in question was smuggled, the customs authorities issued a notice to the appellant to the effect that the case had been placed before the Collector of Customs for adjudication by the Superintendent, Preventive Service, The notice stated inter alia : " You are requested to show cause . why penal action should not be taken against you and the 9478,19 tolas of gold in question under the provisions of sections 167(8) and 168 of the , for alleged violation of section 19 of the same Act read with section 8 of the Foreign Exchange Regulation Act, 1947 ".
The Collector of Customs, after hearing the parties, came to the conclusion that the gold in question was smuggled gold and that there was a contravention of the provisions of section 19 of the read with section 8 of the Foreign Exchange Regulation Act, and made an order in these terms: " I accordingly order that the entire quantity of the gold seized on the 21st November, 1950, amounting to 9478.19 tolas be confiscated under section 167(8) of the .
In lieu of confiscation, however, I give the owner of the said gold an option, under section 183 ibid to pay a fine of Rs. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charge leviable thereon within four months from the date of the despatch of this order.
The release of the gold will be further subject to the production of a permit from the Reserve Bank of India within the aforesaid period ".
The appellant challenged the validity of the order and contended (i) that on a proper construction of section 8(3) of the Foreign Exchange Regulation Act read with section 19 of the , it was not legally open to the customs authorities to take any action against it under the , as such action would prejudice the provisions of section 23 of the Foreign Exchange Regulation Act, and (2) that, in any case, the conditions which the Collector of Customs had imposed in the impugned order for release of the confiscated gold were not warranted by the statute, 822 and that as the order was a composite and integrated one it was not severable and, therefore, should be quashed : Held, (1) that the scope of section 167(8) of the , is different from that of section 23 Of the Foreign Exchange Regulation Act, 1947.
Whereas under section 23 Of the Foreign Exchange Regulation Act proceedings are taken in Personam against the offender for the purpose of penalising him for the contravention of the provisions of the Act, an order for confiscation of the smuggled goods under section 167(8) Of the is one in rem.
There is a difference between the expression " any person concerned in any such offence " occurring in the third column of section 167(8) of the and the expression "whoever contravenes any of the provisions of this Act " occurring in section 23 of the Foreign Exchange Regulation Act.
A person may be concerned in the importation of smuggled goods, without being a smuggler himself or without himself contravening any of the provisions of the Foreign Exchange Regulation Act.
In this case, the only penalty imposed under section 167(8) Of the was confiscation of the gold, which indicated that the customs authorities had dropped the proceedings in personam; consequently, the adoption of the procedure under the did not prejudice in any manner the provisions Of. section 23 Of the Foreign Exchange Regulation Act.
The question whether two remedies are available to the authorities concerned in respect of a contravention which comes both under the and the Foreign Exchange Act was left open.
(2) The Collector of Customs had no jurisdiction to impose the two conditions for the release of the confiscated gold ; but, as the aforesaid conditions are severable from the rest of the impugned order, the latter is valid as to the confiscation of the gold and the payment of fine in lieu thereof.
R. M. D. Chamarbaugwalla vs Union of India, [1957] S.C.R. 930 and Shri Ram Krishna.
Dalmia vs Shri justice section R. Tendolkar and others; , , applied.
The relevant sections of the , and the Foreign Exchange Regulation Act, 1947, are set out in the judgment.


judgement:
vil Appeal Nos. 3187 and 3188 of 1988.
From the Judgment and Order dated 4.4.1988 of the Madhya Pradesh High Court in CR No. 26 of 1988.
Anil B. Dewan, J.B. Dadachanji, Mrs. A.K. Verma for the appellant.
K. Parasaran, A. Mariarputham, Miss A. Subhashini and C.L. Sahu for the Respondents.
131 The following Order of the Court was delivered: ORDER The Bhopal Gas Leak tragedy that occurred at midnight on 2nd December, 1984, by the escape of deadly chemical fumes from the appellant 's pesticide factory was a horrendous industrial mass disaster, unparalleled in its magnitude and devastation and remains a ghastly monument to the de huma nising influence of inherently dangerous technologies.
The tragedy took an immediate toll of 2,660 innocent human lives and left tens of thousands of innocent citizens of Bhopal physically impaired or affected in various degrees.
What added grim poignance to the tragedy was that the industrial enterprise was using Methyl Iso cyanate, a lethal toxic poison, whose potentiality for destruction of life and biotic communities was, apparently, matched only by the lack of a pre package of relief procedures for management of any accident based on adequate scientific knowledge as to the ameliorative medical procedures for immediate neutralisation of its effects.
It is unnecessary for the present purpose to refer, in any detail, to the somewhat meandering course of the legal proceedings for the recovery of compensation initiated against the multi national company initially in the Courts in the United States of America and later in the District Court at Bhopal in Suit No. 113 of 1986.
It would suffice to refer to the order dated 4 April, 1988 of the High Court of Madhya Pradesh which, in modification of the interlocutory order dated 17 December, 1987 made by the learned District Judge, granted an interim compensation of Rs.250 crores.
Both the Union of India and the Union Carbide Corporation appealed against that order.
This Court by its order dated 14 February, 1989 made in those appeals directed that there be an overall settlement of the claims in the suit, for 470 million US dollars and termination of all civil and criminal proceedings.
The opening words of the order said: "Having given our careful considera tion for these several days to the facts and circumstances of the case placed before us by the parties in these proceedings, including the pleadings of the parties, the mass of data placed before us, the material relating to the proceedings in the Courts in the United States of America, the offers and counter offers made between the parties at different stages 132 during the various proceedings, as well as the complex issues of law and fact raised before us and the submission made thereon, and in particular the enormity of human suffering occasioned by the Bhopal Gas disaster and the pressing urgency to provide immediate and substantial relief to victims of the disaster, we are of opinion that the case is pre emi nently fit for an overall settlement between the parties covering all litigations, claims, rights and liabilities related to and arising out of the disaster . . " (Emphasis Supplied) It appears to us that the reasons that persuaded this Court to make the order for settlement should be set out, so that those who have sought a review might be able effec tively to assist the Court in satisfactorily dealing with the prayer for a review.
The statement of the reasons is not made with any sense of finality as to the infallibility of the decision; but with an open mind to be able to appreciate any tenable and compelling legal or factual infirmities that may be brought out, calling for remedy in Review under Arti cle 137 of the Constitution.
The points on which we propose to set out brief reasons are the following: (a) How did this Court arrive at the sum of 470 million US dollars for an over all settle ment? (b) Why did the Court consider this sum of 470 million US dollars as 'just, equitable and reasonable '? (c) Why did the Court not pronounce on certain important legal questions of far reaching importance said to arise in the appeals as to the principles of liability of monolithic, economically entrenched multi national compa nies operating with inherently dangerous technologies in the developing countries of the third world questions said to be of great contemporary relevance to the democracies of the third world? There is yet another aspect of the Review pertaining to the part of the settlement which terminated the criminal proceedings.
The questions raised on the point in the Re view petitions, prima facie, merit consideration and we should, therefore, abstain from saying anything which might tend to pre judge this issue one way or the other.
133 The basic consideration motivating the conclusion of the settlement was the compelling need for urgent relief.
The suffering of the victims has been intense and unrelieved.
Thousands of persons who pursued their own occupations for an humble and honest living have been rendered destitute by this ghastly disaster.
Even after four years of litigation, basic questions of the fundamentals of the law as to liabil ity of the Union Carbide Corporation and the quantum of damages are yet being debated.
These, of course, are impor tant issues which need to be decided.
But, when thousands of innocent citizens were in near destitute conditions, without adequate subsistential needs of food and medicine and with every coming morrow haunted by the spectre of death and continued agony, it would be heartless abstention, if the possibilities of immediate sources of relief were not ex plored.
Considerations of excellence and niceties of legal principles were greatly over shadowed by the pressing prob lems of very survival for a large number of victims.
The Law 's delays are, indeed, proverbial.
It has been the unfortunate bane of the judicial process that even ordinary cases, where evidence consists of a few documents and the oral testimony of a few witnesses, require some years to realise the fruits of litigation.
This is so even in cases of great and unquestionable urgency such as fatal accident actions brought by the dependents.
These are hard realities.
The present case is one where damages are sought on behalf of the victims of a mass disaster and, having regard to the complexities and the legal questions involved, any person with an unbiased vision would not miss the time consuming prospect for the course of the litigation in its sojourn through the various courts, both in India and later in United States.
It is indeed a matter for national introspection that public response to this great tragedy which affected a large number of poor and helpless persons limited itself to the expression of understandable anger against the industrial enterprise but did not channel itself in any effort to put together a public supported relief fund so that the victims were not left in distress, till the final decision in the litigation.
It is well known that during the recent drought in Gujarat, the devoted efforts of public spirited persons mitigated, in great measure, the loss of cattle wealth in the near famine conditions that prevailed.
This Court, considered it a compelling duty, both judi cial and humane, to secure immediate relief to the victims.
In doing so, the Court did not enter upon any forbidden ground.
Indeed, efforts had 134 earlier been made in this direction by Judge Keenan in the United States and by the learned District Judge at Bhopal.
What this Court did was in continuation of what had already been initiated.
Even at the opening of the arguments in the appeals, the Court had suggested to learned counsel on both sides to reach a just and fair settlement.
Again, when counsel met for re scheduling of the hearings the suggestion was reiterated.
The response of learned counsel on both sides was positive in attempting a settlement, but they expressed a certain degree of uneasiness and scepticism at the prospects of success in view of their past experience of such negotiations when, as they stated, there had been uninformed and even irresponsible criticism of the attempts at settlement.
The learned Attorney General submitted that even the most bona fide, sincere and devoted efforts at settlement were likely to come in for motivated criticism.
The Court asked learned counsel to make available the particulars of offers and counter offers made on previous occasions for a mutual settlement.
Learned counsel for both parties furnished particulars of the earlier offers made for an overall settlement and what had been considered as a reasonable basis in that behalf.
The progress made by previ ous negotiations was graphically indicated and these docu ments form part of the record.
Shri Nariman stated that his client would stand by its earlier offer of Three Hundred and Fifty Million US dollars and also submitted that his client had also offered to add appropriate interest, at the rates prevailing in the U.S.A., to the sum of 350 million US dollars which raised the figure to 426 million US dollars.
Shri Nariman stated that his client was of the view that amount was the highest it could go upto.
In regard to this offer of 426 million US dollars the learned Attorney General submitted that he could not accept this offer.
He submitted that any sum less than 500 million US dollars would not be reasonable.
Learned counsel for both parties stated that they would leave it to the Court to decide what should be the figure of compensation.
The range of choice for the Court in regard to the figure was, therefore, between the maximum of 426 million US dollars offered by Shri Nariman and the minimum of 500 million US dollars suggested by the learned Attorney General.
In these circumstances, the Court examined the prima facie material as to the basis of quantification of a sum which, having regard to all the circumstances including the prospect of delays inherent in the judicial process in India and thereafter in the matter of domestication of the decree in the United States for the purpose of execution and di rected that 470 million US dollars, which upon immediate payment 135 and with interest over a reasonable period, pending actual distribution amongst the claimants, would aggregate very nearly to 500 million US dollars or its rupee equivalent of approximately Rs.750 crores which the learned Attorney General had suggested, be made the basis of the settlement.
Both the parties accepted this direction.
The settlement proposals were considered on the premise that Government had the exclusive statutory authority to represent and act on behalf of the victims and neither counsel had any reservation as to this.
The order was also made on the premise that the Bhopal Gas Leak Disaster (Registration and Processing of Claims) Act, 1985 was a valid law.
In the event the Act is declared void in the pending proceedings challenging its validity, the order dated 14, February, 1989 would require to be examined in the light of that decision.
We should make it clear that if any material is placed before this Court from which a reasonable inference is possible that the Union Carbide Corporation had, at any time earlier, offered to pay any sum higher than an out right down payment of US 470 million dollars, this Court would straightaway initiate suo motu action requiring the con cerned parties to show cause why the order dated 14 Febru ary, 1989 should not be set aside and the parties relegated to their respective original positions.
The next question is as to the basis on which this Court considered this sum to be a reasonable one.
This is not independent of its quantification, the idea of reasonable ness for the present purpose is necessarily a broad and general estimate in the context of a settlement of the dispute and not on the basis of an accurate assessment by adjudication.
The question is how good or reasonable it is as a settlement, which would avoid delays, uncertainties and assure immediate payment.
The estimate, in the very nature of things, cannot share the accuracy of an adjudication.
Here again one of the important considerations was the range disclosed by the offers and counter offers which was between 426 million US dollars and 500 million US dollars.
The Court also examined certain materials available on record includ ing the figures mentioned in the pleadings, the estimate made by the High Court and also certain figures referred to in the course of the arguments.
There are a large number of claims under the Act.
In the very nature of the situation, doubts that a sizeable number of them are either without any just basis or were otherwise exaggerated could not 136 be ruled out.
It was, therefore, thought not unreasonable to proceed on some prima facie undisputed figures of cases of death and of substantially compensatable personal injuries.
The particulars of the number of persons treated at the hospitals was an important indicator in that behalf.
This Court had no reason to doubt the bona fides of the figures furnished by the plaintiff itself in the pleadings as to the number of persons suffering serious injuries.
From the order of the High Court and the admitted posi tion on the plaintiff 's own side, a reasonable, prima facie, estimate of the number of fatal cases and serious personal injury cases, was possible to be made.
The High Court said: " . .
In the circumstances, leaving a small margin for the possibility of some of the claims relating to death and personal injuries made by the multitude of claims before the Director of Claims of the State Government being spurious, there is no reason to doubt that the figure furnished by the plaintiff Union of India in its amended plaint can be safely accepted for the purpose of granting the relief ' of interim payment of damages.
It has been stated by the plaintiff Union of India that a total number of 2660 persons suffered agonising and excruciating deaths and between 30,000 to 40,000 sustained serious injuries as a result of the disas ter . . " (Emphasis supplied) There is no scope for any doubt that the cases referred to as those of 'Serious injuries ' include both types of cases of permanent total and partial disabilities of various degrees as also cases of temporary total or partial disabil ities of different degrees.
The High Court relied upon the averments and claims in the amended pleadings of the plain tiff, the Union of India, to reach this prima facie finding.
Then, in assessing the quantum of interim compensation the High Court did not adopt the standards of compensation usually awarded in fatal accidents actions or personal injury actions arising under the Motor Vehicles Act.
It is well known that in fatal accidentactions where children are concerned, the compensation awardable is in conventional sums ranging from Rs.15,000 to Rs.30,000 in each case.
In the present case a large number of deaths was of children of very young age.
Even in the case of adults, according to the general run of damages in comparable cases, the damages assessed on the 137 usual multiplier method in the case of income groups com parable to those of the deceased persons, would be anywhere between Rs.80,000 and Rs. 1,00,000.
But the High Court discarded, and rightly, these ordi nary standards which, if applied, would have limited the aggregate of compensation payable in fatal cases to a sum less than Rs.20 crores in all.
The High Court thought it should adopt the broader principle in M.C. Mehta vs Union of India, AIR 1987 SC 1086.
Stressing the need to apply such a higher standard, the High Court said: "As mentioned earlier, the measure of damages payable by the alleged tort teaser as per the nature of tort involved in the suit has to be correlated to the magnitude and the capacity of the enterprises because such compensation must have a deterrent effect . . (Emphasis supplied) Applying these higher standards of compensa tion, the High Court proceeded to assess damage in the following manner: "Bearing in mind, the above factors, in the opinion of this Court, it would not be unrea sonable to assume that if the suit proceeded to trial the plaintiff Union of India would obtain judgment in respect of the claims relating to deaths and personal injuries at least in the following amounts: (a) Rs.2 lakhs in each case of death: (b) Rs.2 lakhs in each case of total permanent disability; (c) Rs.1 lakh in each case of permanent partial disa blement and (d) Rs.50,000 in each case of temporary partial disablement." (Emphasis supplied) Half of these amounts were awarded as interim compensation.
An amount of Rs.250 crores was awarded.
The figures adopted by the High Court in regard to the number of fatal cases and cases of serious personal injuries do not appear to have been disputed by anybody before the High Court.
These data and estimates of the High Court had a particular significance in the settlement.
Then again, it was not disputed before us that the total number of fatal cases was about 3000 and of grievous and serious personal injuries, as verifiable from the records of the hospitals of cases treated 138 at Bhopal, was in the neighbourhood of 30,000.
It would not be unreasonable to expect that persons suffering serious and substantially compensable injuries would have gone to hospi tals for treatment.
It would also appear that within about 8 months of the occurrence, a survey had been conducted for purposes of identification of cases of death and grievous and serious injuries for purposes of distribution of certain ex gratia payments sanctioned by Government.
These figures were, it would appear, less than ten thousand.
In these circumstances, as a rough and ready estimate, this Court took into consideration the prima facie findings of the High Court and estimated the number of fatal cases at 3000 where compensation could range from Rs.l lakh to Rs.3 lakhs.
This would account for Rs.70 crores, nearly 3 times higher than what would, otherwise, be awarded in comparable casses in motor vehicles accident claims.
Death has an inexorable finality about it.
Human lives that have been lost were precious and in that sense price less and invaluable.
But the law can compensate the estate of a person whose life is lost by the wrongful act of anoth er only in the way of the law is equipped to compensate i.e. by monetary compensations calculated on certain well recog nised principles.
"Loss to the estate" which is the entitle ment of the estate and the 'loss of dependancy ' estimated on the basis of capitalised present value awardable to the heirs and dependants, are the main components in the compu tation of compensation in fatal accident actions.
But, the High Court in estimating the value of compensation had adopted a higher basis.
So far as personal injury cases are concerned, about 30,000 was estimated as cases of permanent total or partial disability.
Compensation ranging from Rs.2 lakhs to Rs.50,000 per individual according as the disability is total or partial and degrees of the latter was envisaged.
This alone would account for Rs.250 crores.
In another 20,000 cases of temporary total or partial disability com pensation ranging from Rs. 1 lakh down to Rs.25,000 depend ing on the nature and extent of the injuries and extent and degree of the temporary incapacitation accounting for a further allocation of Rs. 100 crores, was envisaged.
Again, there might be possibility of injuries of utmost severity in which case even Rs.4 lakhs per individual might have to be considered.
Rs.80 crores, additionally for about 2000 of such cases were envisaged.
A sum of Rs.500 crores approxi mately was thought of as allocable to the fatal cases and 42,000 cases of such serious personal injuries leaving behind in their trail total or partial incapacitation either of permanent or temporary character.
139 It was considered that some outlays would have to be made for specialised institutional medical treatment for cases requiring such expert medical attention and for reha bilitation and after care.
Rs.25 crores for the creation of such facilities was envisaged.
That would leave another Rs.225 crores.
It is true that in assessing the interim compensation the High Court had taken into account only the cases of injuries resulting in permanent or temporary disabilities total or partial and had not adverted to the large number of other claims, said to run into lakhs, filed by other claimants.
Such cases of claims do not, apparently, pertain to serious cases of permanent or temporary disabilities but are cases of a less serious nature, comprising claims for minor injuries, loss of personal belongings, loss of live stock etc.
for which there was a general allocation of Rs.225 crores.
If in respect of these claims allocations are made at Rs.20,000, Rs. 15,000 and Rs. 10,000 for about 50,000 person or claims in each category accounting for about one and half lakhs more claims the sums required would be met by Rs.225 crores.
Looked at from another angle, if the corpus of Rs.750 crores along with the current market rates of interest on corporate borrowings, of say 14% or 14 1/2 % is spent over a period of eight years it would make available Rs. 150 crores each year; or even if interest alone is taken, about Rs. 105 to 110 crores per year could be spent, year afteryear, perpetually towards compensation and relief to the victims.
The court also took into consideration the general run of damages in comparable accident claim cases and in cases under workmens compensation laws.
The broad allocations made are higher than those awarded or awardable in such claims.
These apportionments are merely broad considerations gener ally guiding the idea of reasonableness of the overall basis of settlement.
This exercise is not a predetermination of the quantum of compensation amongst the claimants either individually or category wise.
No individual claimant shall be entitled to claim a particular quantum of compensation even if his case is found to fall within any of the broad categories indicated above.
The determination of the actual quantum of compensation payable to the claimants has to be done by the authorities under the Act, on the basis of the facts of each case and without reference to the hypothetical quantifications made only for purposes of an overall view of the adequacy of the amount.
140 These are the broad and general assumptions underlying the concept of 'justness ' of the determination of the quan tum.
If the total number of cases of death or of permanent, total or partial, disabilities or of what may be called 'catastrophic ' injuries is shown to be so large that the basic assumptions underlying the settlement become wholly unrelated to the realities, the element of 'justness ' of the determination and of the 'truth ' of its factual foundation would seriously be impaired.
The 'justness ' of the settle ment is based on these assumptions of truth.
Indeed, there might be different opinions on the interpretation of laws or on questions of policy or even on what may be considered wise or unwise; but when one speaks of justice and truth, these words mean the same thing to all men whose judgment is uncommitted.
Of Truth and Justice, Anatole France said: "Truth passes within herself a penetrating force unknown alike to error and falsehood.
I say truth and you must understand my meaning.
For the beautiful words Truth and Justice need not be defined in order to be understood in their true sense.
They bear within them a shining beauty and a heavenly light.
I firmly believe in the triumph of truth and justice.
That is what upholds me in times of trial . " As to the remaining question, it has been said that many vital juristic principles of great contemporary relevance to the Third World generally, and to India in particular, touching problems emerging from the pursuit of such danger ous technologies for economic gains by multi nationals arose in this case.
It is said that this is an instance of lost opportunity to this apex Court to give the law the new direction on vital issues emerging from the increasing dimensions of the economic exploitation of developing coun tries by economic forces of the rich ones.
This case also, it is said, concerns the legal limits to be envisaged, in the vital interests of the protection of the constitutional rights of the citizenry, and of the environment, on the permissibility of such ultra hazardous technologies and to prescribe absolute and deterrent standards of liability if harm is caused by such enterprises.
The prospect of exploi tation of cheap labour and of captive markets, it is said, induces multi nationals to enter into the developing coun tries for such economic exploitation and that this was eminently an appropriate case for a careful assessment of the legal and Constitutional safeguards stemming from these vital issues of great contemporary relevance.
These issues and certain cognate areas of even wider signif icance 141 and the limits of the adjudicative disposition of some of their aspects are indeed questions of seminal importance.
The culture of modern industrial technologies, which is sustained on processes of such pernicious potentialities, in the ultimate analysis, has thrown open vital and fundamental issues of technology options.
Associated problems of the adequacy of legal protection against such exploitative and hazardous industrial adventurism, and whether the citizens of the country are assured the protection of a legal system which could be said to be adequate in a comprehensive sense in such contexts arise.
These, indeed, are issues of vital importance and this tragedy, and the conditions that enabled it happen, are of particular concern.
The chemical pesticide industry is a concomitant, and indeed, an integral part, of the Technology of Chemical Farming.
Some experts think that it is time to return from the high risk, resource intensive, high input, anti ecologi cal, monopolistic 'hard ' technology which feeds, and is fed on, its self assertive attribute, to a more human and hu mane, flexible, eco conformable, "soft" technology with its systemic wisdom and opportunities for human creativity and initiative.
"Wisdom demands" says Schumacher" a new orienta tion of science and technology towards the organic, the gentle, the non violent, the elegant and beautiful".
The other view stressing the spectacular success of agricultural production in the new era of chemical farming, with high yielding strains, points to the break through achieved by the Green Revolution with its effective response to, and successful management of, the great challenges of feeding the millions.
This technology in agriculture has given a big impetus to enterprises of chemical fertilizers and pesti cides.
This, say its critics, has brought in its trail its own serious problems.
The technology options before scien tists and planners have been difficult.
Indeed, there is also need to evolve a national policy to protect national interests from such ultra hazardous pursuits of economic gains.
Jurists, technologists and other experts in Economics, environmentology, futurology, sociolo gy and public health etc.
should identify areas of common concern and help in evolving proper criteria which may receive judicial recognition and legal sanction.
One aspect of this matter was dealt with by this Court in M.C. Mehta vs Union of India, (supra) which marked a significant stage in the development of the law.
But, at the hearing there was more than a mere hint in the submissions of the Union Carbide that in this case the law was altered with only the Union Carbide Corporation in mind, and 142 was altered to its disadvantage even before the case had reached this Court.
The criticism of the Mehta principle, perhaps, ignores the emerging postulates of tortious liabil ity whose principal focus is the social limits on economic adventurism.
There are certain things that a civilised society simply cannot permit to be done to its members, even if they are compensated for their resulting losses.
We may note a passage in "Theories of Compensation," R.E. Goodin: Oxford Journal of Legal Studies, "It would, however, be wrong to presume that we as a society can do anything we like to people, just so long as we compensate them for their losses.
Such a proposition would mistake part of the policy universe for the whole.
The set of policies to which it points policies that are 'permissible ' but only with compensa tion ' is bounded on the one side by a set of policies that are 'permissible, even without compensation ' and on the other side by a set of policies that are 'impermissible, even with compensation '.
" But, in the present case, the compulsions of the need for immediate relief to tens of thousands of suffering victims could not, in our opinion, wait till these ques tions, vital though they be, are resolved in the due course of judicial proceedings.
The tremendous suffering of thou sands of persons compelled us to move into the direction of immediate relief which, we thought, should not be subordi nated to the uncertain promises of the law, and when the assessment of fairness of the amount was based on certain factors and assumptions not disputed even by the plaintiff.
A few words in conclusion.
A settlement has been record ed upon material and in circumstances which persuaded the Court that it was a just settlement.
This is not to say that this Court will shut out any important material and compel ling circumstances which might impose the duty on it to exercise the powers of review.
Like all other human institu tions, this court is human and fallible.
What appears to the court to be just and reasonable in that particular context and setting, need not necessarily appear to others in the same way.
Which view is right,in the ultimate analysis, is to be judged by what it does to relieve the undeserved suffering of thousands of innocent citizens of this country.
As a learned author said: Wallace Mendelson: Supreme Court Statecraft The Rule of Law and Men. "In this imperfect legal setting we expect judges to clear 143 their endless dockets, uphold the Rule of Law, 'and yet not utterly disregard our need for the discretionary justice of Plato 's philoso pher king.
Judges must be sometimes cautious and sometimes bold.
Judges must respect both the traditions of the past and the convenience of the present. . " But the course of the decisions of courts cannot be reached or altered or determined by agitational pressures.
If a decision is wrong, the process of correction must be in a manner recognised by law.
Here, many persons and social action groups claim to speak for the victims, quite a few in different voices.
The factual allegations on which they rest their approach are conflicting in some areas and it becomes difficult to distinguish truth from false hood and half truth, and to distinguish as to who speaks for whom.
However, all of those who invoke the corrective process es in accordance with law shall be heard and the court will do what the law and the course of justice requires.
The matter concerns the interests of a large number of victims of a mass disaster.
The Court directed the settlement with the earnest hope that it would do them good and bring them immediate relief, for, tomorrow might be too late for many of them.
But the case equally concerns the credibility of, and the public confidence in, the judicial process.
If, owing to the pre settlement procedures being limited to the main contestants in the appeal, the benefit of some contrary or supplemental information or material, having a crucial bearing on the fundamental assumptions basic to the settle ment, have been denied to the Court and that, as a result, serious miscarriage of justice, violating the constitutional and legal rights of the persons affected, has been occa sioned, it will be the endeavour of this Court to undo any such injustice.
But that, we reiterate, must be by proce dures recognised by law.
Those who trust this Court will not have cause for despair.

dataset_name: IN-Abs

summary/full:
The Bhopal Gas Leak Tragedy that occurred at midnight of 2nd December, 1984, by the escape of deadly chemical fumes from the appellant 's factory was a great industrial disaster and it took an immediate toil of 2600 human lives and left tens of thousands of innocent citizens of Bhopal physically affected in various ways.
As per the figures furnished by the Union of India in its amended plaint a total number of 2,660 persons suffered agonising and excruciating deaths between 30,000 to 40,000 persons sustained serious injuries as a result of the said disaster.
Legal proceedings for the recovery of compensation for the victims were initiated against the multi national compa ny first in the U.S. Courts and later in Distt.
Court at Bhopal in Suit No. 113 of 1986.
The present appeals concern with the order dated 4th April, 1988 passed by the Madhya Pradesh High Court whereby it modified the interlocutory order dated 17.12.1987 made by the Distt.
Judge and granted interim compensation of Rs.250 crores.
Both the Union of India and the Union Carbide Corporation have appealed to this Court against that order.
The Court by its order dated the 14th February, 1989 made in these appeals directed that there shall be an over all settlement of the claims in the suit for 470 million U.S. Dollars and termination of all civil and criminal proceedings.
On May 4, 1989 the Court pronounced its reasons for its aforesaid order dated 14.2.89thus: The Statement of the reasons is not made with any sense of finality as to the infallibility of the decision; but with an open mind to be able to appreciate any tenable and compelling legal or factual infirmities that may be brought out, calling for remedy in review under Article 137 of the Constitution.
[132C D] 129 The basic consideration motivating the conclusion of the settlement was the compelling need for urgent relief.
Con siderations of excellence and niceties of legal principles were greatly over shadowed by the pressing problems of very survival for a large number of victims.
[133A, C] The instant case is one where damages are sought on behalf of the victims of a mass disaster, and having regard to the complexities and the legal question involved, any person with an unbiased vision would not miss the time consuming prospect for the course of the litigation in its sojourn through the various courts, both in India and later in United States.
This Court considered it a compelling duty.
both judicial and humane, to secure immediate relief to the victims.
In doing so, the Court did not enter upon any forbidden ground.
What this Court did was in continua tion of what had already been initiated.
[133E F, H; 134A] The range of choice for the Court in regard to the figures was, therefore, between the maximum of 426 million U.S. Dollars offered by Shri Nariman and the minimum of 500 million U.S. Dollars suggested by the Attorney General.
[134F G] Having regard to all the circumstances including the prospect of delays inherent in the judicial process in India and thereafter in the matter of domestication of the decree in the United States for the purpose of execution, the Court directed that 470 million U.S. Dollars which upon immediate payment and with interest over a reasonable period, pending actual distribution amongst the claimants, would aggregate very nearly to 500 million U.S. Dollars or its rupee equiva lent of approximately Rs.750 crores which the Attorney General had suggested.
be made the basis of the Settlement.
[134G H; 135A B] The Settlement proposals were considered on the premises that the Government had the exclusive statutory authority to represent and act on behalf of the victims and neither counsel had any reservation as to this.
The order was also made on the premises that the Bhopal Gas Leak Disaster (Registration and Processing of Claims) Act 1985 was a valid law.
[135B C] There might be different opinions on the interpretation of laws or on questions of policy or even on what may be considered wise or unwise; but when one speaks of justice and truth, these words mean the same thing to all men whose judgment is uncommitted.
[140B C] The compulsions of the need for immediate relief to tens of 130 thousands of suffering victims could not wait till these questions, vital though they be, are resolved in due course of judicial proceedings.
[142D E] A settlement has been recorded upon material and in circumstances which persuaded the Court that it was a just settlement.
This is not to say that this Court will shut out any important material and any compelling circumstances which might impose a duty on it to exercise the powers of review.
Like all other human institutions, this Court is human and fallible.
What appears to the Court to be just and reasonable in that particular context and setting, need not necessarily appear to others in the same day.
Which view is right, in the ultimate analysis, is to be judged by what it does to relieve the undeserved suffering of thousands of innocent citizens of this country.
[142F G] Decisions of courts cannot be reacted or altered or determined by agitational pressures.
If a decision is wrong, the process of correction must be in a manner recognised by law.
All of those who invoke the corrective processes in accordance with law shall be heard and the court will do what the law and the course of justice requires.
The matter concerns the interests of a large number of victims of a mass disaster.
The Court directed the settlement with the earnest hope that it would do hem good and bring them imme diate relief, for, tomorrow might be too ate for many of them.
But the case equally concerns the credibility of, and the public confidence in, the judicial process.
[143B, D E] Those who trust this Court will not have cause for despair.
[143F] M.C. Mehta vs Union of India, AIR 1987 SC 1(186; Theo ries of Compensation, R.E. Goodin: Oxford journal of Legal Studies, 1989 p.57 and Wallace Mendelson.
Supreme Court Statecraft The Rule of Law and men, referred to.