A) ABSTRACT / HEADNOTE

This case examines the critical legal question of when a Magistrate can be said to have “taken cognizance” of an offence, particularly under the Foreign Exchange Regulation Act, 1947 (FERA), and its interplay with the Code of Criminal Procedure, 1898. The appellant, Narayandas Bhagwandas Madhavdas, was intercepted at Dum Dum Airport in 1952 with ₹25,000 in Indian currency notes, undisclosed in the customs declaration form and without the mandatory Reserve Bank of India (RBI) permit. He was prosecuted under Section 8(2) of FERA read with Section 19 of the Sea Customs Act. The defence contended that the Magistrate took cognizance unlawfully on 16 September 1952 before the statutory requirement of RBI-authorised complaint was fulfilled under Section 23(3) FERA. The Supreme Court held that issuing a search warrant or warrant of arrest during investigation does not amount to taking cognizance. Cognizance arises only when the Magistrate applies his mind for the purpose of proceeding under Sections 200–204 CrPC. In this case, cognizance was taken only on 2 February 1953, after a valid RBI-authorised complaint had been filed. The Court also held that the accused’s actions amounted to an attempt to export currency without permission, punishable under both the Sea Customs Act and FERA. The judgment affirms the principle that procedural authorisation requirements under special statutes like FERA are mandatory, but investigation steps do not constitute cognizance. The decision relies on precedents including Superintendent & Remembrancer of Legal Affairs, West Bengal v. Abani Kumar Banerji, AIR 1950 Cal 437 and R.R. Chari v. State of Uttar Pradesh, (1951) SCR 312, cementing the jurisprudence on cognizance in Indian criminal law.

Keywords:
Foreign Exchange Regulation Act, Cognizance of offence, Search warrant, Warrant of arrest, Attempt to export currency, Sea Customs Act, Criminal Procedure Code, Non-cognizable offence, Reserve Bank authorisation.

B) CASE DETAILS

i) Judgement Cause Title: Narayandas Bhagwandas Madhavdas v. The State of West Bengal

ii) Case Number: Criminal Appeal No. 12 of 1957

iii) Judgement Date: 7 May 1959

iv) Court: Supreme Court of India

v) Quorum: Justice Jafar Imam, Justice J.L. Kapur

vi) Author: Justice Jafar Imam

vii) Citation: [1960] 1 SCR 93

viii) Legal Provisions Involved:

• Section 8(2), Section 19(3), Section 23(3) & Section 23B of Foreign Exchange Regulation Act, 1947

• Section 19 & Section 167 Item 8 of Sea Customs Act, 1878

• *Sections 153, 155, 169, 200–204 CrPC, 1898

ix) Judgments overruled by the Case: None explicitly overruled.

x) Related Law Subjects: Criminal Law, Procedural Law, Economic Offences, Customs Law.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

This case emerges from the enforcement of foreign exchange and customs control laws in post-Independence India, when strict restrictions were placed on the movement of currency and goods across borders. The Foreign Exchange Regulation Act, 1947 (FERA) was designed to regulate foreign exchange and prohibit unauthorised export of currency. Under this regime, carrying Indian currency abroad without prior RBI approval constituted a punishable offence.

The appellant’s case raised a fundamental procedural law question — when does a Magistrate legally “take cognizance” of an offence, particularly in prosecutions under special statutes requiring prior sanction or authorisation? This issue was intertwined with the facts of an attempted export of a substantial amount of currency.

The High Court of Calcutta had reversed the acquittal of the appellant by the Magistrate, convicting him on both factual and legal grounds. The appellant obtained a certificate of appeal to the Supreme Court under Article 134(1)(c) of the Constitution, primarily challenging jurisdiction and procedural legality.

D) FACTS OF THE CASE

On 7 September 1952, the appellant, intending to travel to Hong Kong, arrived at Dum Dum Aerodrome to board an aircraft scheduled for 8:30 a.m. During customs clearance, he filed a declaration form omitting any mention of additional currency. A personal search, prompted by suspicion over a large pouch in his clothing, revealed ₹25,000 in Indian currency concealed in secret trouser pockets.

The appellant lacked the RBI permit required under Section 8(2) FERA. On 11 September 1952, RBI authorised Inspector S.B. Mitra of the Special Police Establishment to move the Additional District Magistrate (ADM), 24 Parganas under Section 19(3) FERA for a search warrant. On 16 September 1952, Mitra applied for both a search warrant and a warrant of arrest; both were issued. The appellant was arrested, bailed, and directed to appear on 19 September 1952.

The ADM extended the investigation period multiple times. Only on 27 January 1953 did RBI authorise Inspector Mitra under Section 23(3)(b) FERA to file a formal complaint. This complaint was lodged on 2 February 1953, upon which the ADM transferred the case to a First Class Magistrate for trial.

The trial court acquitted the appellant, accepting his version that he intended to deposit the currency with customs for safekeeping, having failed to obtain the RBI permit in time. The High Court, on State appeal, disbelieved this explanation, convicted the appellant, and imposed a fine of ₹1,000 with a default sentence.

E) LEGAL ISSUES RAISED

i) Whether the Magistrate had taken cognizance of the offence on 16 September 1952, rendering the proceedings void for lack of RBI-authorised complaint under Section 23(3) FERA at that time.

ii) Whether the appellant’s conduct amounted to an attempt to take currency out of India without a permit, punishable under FERA and the Sea Customs Act.

iii) Whether the High Court erred in overturning the acquittal of the trial court on factual appreciation.

F) PETITIONER / APPELLANT’S ARGUMENTS

i) The defence contended that cognizance was unlawfully taken on 16 September 1952, when the ADM issued a warrant of arrest. Under Section 23(3) FERA, cognizance could only be taken upon a written complaint by an officer authorised by RBI or the Central Government. Since such authorisation was granted only on 27 January 1953, the proceedings before both the ADM and trial Magistrate were void ab initio.

ii) The appellant argued that at the time of interception he had not crossed the “customs frontier” as defined under the Sea Customs Act, hence Section 19 was not attracted.

iii) It was submitted that his version—that he voluntarily handed over the money to customs for safe custody after failing to obtain a permit—was wrongly disbelieved by the High Court despite acceptance by the trial court.

iv) It was further argued that at most his actions amounted to preparation, not an attempt, since he had not actually boarded the aircraft.

G) RESPONDENT’S ARGUMENTS

i) The State argued that issuance of warrants during investigation does not constitute taking cognizance. Cognizance occurred only on 2 February 1953, upon filing of a valid RBI-authorised complaint.

ii) The concealment of ₹25,000 in secret trouser pockets, false declaration to customs, and possession of a ticket to Hong Kong established beyond reasonable doubt an attempt to export currency without permission.

iii) The High Court was justified in rejecting the defence story, particularly given the suspicious delay and probable antedating of the alleged RBI permit application.

H) RELATED LEGAL PROVISIONS

i) Section 8(2) FERA, 1947 – Prohibits taking currency out of India without RBI permission.

ii) Section 19(3) FERA – Empowers Magistrates to issue search warrants upon representation by authorised officers.

iii) Section 23(3)(b) FERA – Bars cognizance without complaint by authorised officer.

iv) Section 23B FERA – Criminalises attempt to contravene provisions of the Act.

v) Section 19, Sea Customs Act, 1878 – Restricts export of specified goods without permission.

vi) Sections 155(2), 200–204 CrPC, 1898 – Lay down procedures for investigation and taking cognizance of offences.

I) JUDGEMENT

a. Ratio Decidendi

The Court held that:

• Cognizance is taken only when the Magistrate applies his mind to proceed under Sections 200–204 CrPC or related provisions, not when issuing warrants for investigation.

• In this case, cognizance was taken only on 2 February 1953, after a proper RBI-authorised complaint was filed, satisfying Section 23(3) FERA.

• The appellant’s actions—concealment, false customs declaration, and possession of a Hong Kong ticket—went beyond preparation and constituted an attempt to export currency without permission.

b. Obiter Dicta

The Court reiterated that the exact point of cognizance depends on case facts and cannot be rigidly defined. Warrants issued for investigation purposes do not constitute cognizance.

c. Guidelines

• Magistrates must distinguish between investigative orders (e.g., under Section 155(2) CrPC) and acts of taking cognizance.

• Special statutes requiring prior sanction/authorisation bar cognizance until procedural requirements are met.

• Attempt under criminal law is established once actions move beyond preparation towards commission, even if interrupted before completion.

J) CONCLUSION & COMMENTS

This decision is pivotal in defining the procedural moment when a court “takes cognizance” under Indian criminal law, especially in economic offences under special statutes like FERA. The Supreme Court clarified that investigation-related orders—such as search and arrest warrants—do not amount to cognizance. This protects investigative flexibility while ensuring statutory safeguards against premature prosecution.

The judgment also firmly establishes that attempt provisions apply to economic offences, underscoring the seriousness with which currency control violations were treated in the 1950s. By upholding the High Court’s factual findings, the Supreme Court reinforced appellate scrutiny powers while respecting procedural legality.

K) REFERENCES

1. Narayandas Bhagwandas Madhavdas v. The State of West Bengal, [1960] 1 SCR 93.

2. Superintendent & Remembrancer of Legal Affairs, West Bengal v. Abani Kumar Banerji, AIR 1950 Cal 437.

3. R.R. Chari v. State of Uttar Pradesh, (1951) SCR 312.

4. Foreign Exchange Regulation Act, 1947, Sections 8(2), 19(3), 23(3), 23B.

5. Sea Customs Act, 1878, Sections 19, 167 Item 8.

6. Code of Criminal Procedure, 1898, Sections 153, 155, 169, 200–204.