A) ABSTRACT / HEADNOTE

The Supreme Court in Shewpujanrai Indrasanrai Ltd. v. The Collector of Customs & Others adjudicated upon the complex interplay between the Sea Customs Act, 1878 and the Foreign Exchange Regulation Act, 1947 (FERA), focusing on the jurisdiction and powers of the customs authorities concerning confiscation of smuggled gold. The appellant, a bullion merchant, challenged the seizure and confiscation of gold alleging that proceedings under the Sea Customs Act were ultra vires, especially in light of the penal provisions under FERA. The apex court, while distinguishing actions in rem from those in personam, clarified that the confiscation of smuggled goods under Section 167(8) of the Sea Customs Act constitutes an action in rem and does not prejudice the penal provisions under Section 23 of FERA, which apply in personam. Furthermore, the Court invalidated certain conditions imposed by the Collector of Customs for the release of confiscated gold, holding them as severable from the order of confiscation itself. This judgment remains pivotal in clarifying the jurisdiction of customs authorities and harmonizing the application of dual statutes in cases of smuggling and foreign exchange violations.

Keywords: Sea Customs Act, 1878; Foreign Exchange Regulation Act, 1947; Confiscation; Smuggling; Action in rem; Jurisdiction; Penal provisions; Customs authority powers; Supreme Court of India; Writ of Certiorari.

B) CASE DETAILS

i) Judgement Cause Title
Shewpujanrai Indrasanrai Ltd. v. The Collector of Customs & Others

ii) Case Number
Civil Appeal No. 256 of 1954

iii) Judgement Date
May 9, 1958

iv) Court
Supreme Court of India

v) Quorum
S.R. Das, C.J., Bhagwati, S.K. Das, Subba Rao, and Vivian Bose, JJ.

vi) Author
Justice S.K. Das

vii) Citation
[1959] S.C.R. 821

viii) Legal Provisions Involved
Sections 19, 167(8), 182, 183 of the Sea Customs Act, 1878
Sections 8, 23 of the Foreign Exchange Regulation Act, 1947

ix) Judgments overruled by the Case (if any)
None

x) Case is Related to which Law Subjects
Customs Law, Foreign Exchange Law, Constitutional Law, Administrative Law, Criminal Law.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The judgment addresses a significant legal dispute involving the seizure of 9478 tolas of gold by the customs authorities under the Sea Customs Act, 1878, in alleged contravention of the import restrictions under FERA. The appellant, Shewpujanrai Indrasanrai Ltd., a bullion merchant company, questioned the legality of the confiscation order on grounds that customs authorities lacked jurisdiction to act under Sea Customs Act provisions where penal proceedings were already covered by FERA. The Supreme Court undertook a detailed examination of the jurisdictional boundaries between administrative confiscatory powers and penal prosecutorial powers under these statutes.

D) FACTS OF THE CASE

The appellant purchased 9478 tolas of gold between 14th and 20th November 1950. This gold was deposited with two banks—Nationale Handels Bank N.V. and Bharat Bank Ltd.—as security for loans. Subsequently, the customs authorities seized the gold from the Calcutta Mint on November 21, 1950, suspecting it to be smuggled gold imported in violation of import restrictions under Section 8 of FERA read with Section 19 of the Sea Customs Act. A notice was served on the appellant on June 20, 1951, initiating adjudication under Sections 167(8) and 182 of the Sea Customs Act.

The Collector of Customs, after multiple hearings conducted by successive officers, ultimately passed an order on May 14, 1952, confiscating the seized gold but offering an option to the appellant to pay a fine of ₹10,00,000 under Section 183 of the Sea Customs Act along with requisite customs duties and production of Reserve Bank of India permits for release.

E) LEGAL ISSUES RAISED

i) Whether the customs authorities had jurisdiction to proceed under the Sea Customs Act, 1878 for confiscation when penal provisions under FERA, 1947 were attracted.

ii) Whether the conditions imposed by the Collector of Customs for payment of fine along with production of RBI permits were valid.

iii) Whether the composite order passed by the Collector was severable in law.

iv) Whether the pledgee banks’ rights under Article 19(1)(f) of the Constitution were violated.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that

The action under Section 167(8) of the Sea Customs Act was ultra vires because Section 8(3) of FERA clearly states that restrictions are imposed without prejudice to Section 23, which provides penal consequences for contraventions of FERA. Therefore, the customs authorities could not simultaneously proceed under the Sea Customs Act for confiscation when penal prosecution under FERA was available.

The appellant further argued that the composite order of confiscation and the conditional release infringed statutory limits as the Collector could not mandate production of RBI permits for release nor could he lawfully impose additional payment of duties after confiscation under Section 183.

The appellant also asserted that the entire adjudication was ultra vires, as it infringed the protection of the company and its pledgee banks’ property rights guaranteed under Article 19(1)(f) of the Constitution of India.

Reliance was placed on strict statutory interpretation doctrines such as Expressio unius est exclusio alterius and Generalibus specialia derogant to argue that once Parliament specifically legislated penal consequences under FERA, recourse to customs law was impliedly ousted[5].

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that

The Solicitor-General contended that Section 8(3) of FERA does not create a bar on proceedings under the Sea Customs Act but rather operates concurrently. The term “without prejudice” preserves remedies under both enactments and empowers customs authorities to exercise confiscatory jurisdiction against smuggled goods regardless of FERA’s penal consequences.

It was further argued that confiscation under Sea Customs Act operates as an action in rem directed against the goods, whereas prosecution under Section 23 of FERA operates in personam against offenders. Since the Customs Collector confined his order to confiscation alone, no conflict with Section 23 of FERA arose.

The respondents contended that conditions imposed by the Collector regarding RBI permits and duties were severable from the valid part of the confiscation order and that the remaining valid portion should be enforced under severability principles laid down in R.M.D. Chamarbaugwalla v. Union of India [(1957) SCR 930][5].

H) RELATED LEGAL PROVISIONS

i) Sea Customs Act, 1878

• Section 19 – Power to prohibit or restrict importation

• Section 167(8) – Penalty for illegal import/export

• Section 182 – Adjudication procedure

• Section 183 – Option to pay fine in lieu of confiscation

• Section 184 – Vesting of confiscated goods in the Government

• Section 186 – Punishment under other laws preserved

ii) Foreign Exchange Regulation Act, 1947

• Section 8(1), 8(3) – Restrictions on import of gold

• Section 23 – Penal provisions for contraventions

iii) Constitution of India

• Article 19(1)(f) – Right to property

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Court held that Section 167(8) of the Sea Customs Act creates an action in rem for confiscation of prohibited goods, distinct from criminal prosecution under Section 23 of FERA which is in personam. The customs authorities acted within jurisdiction in proceeding under the Sea Customs Act, as confiscation under this Act was independent of penal prosecution under FERA.

The Court emphasized the legal distinction between the phrases “any person concerned in such offence” in the Sea Customs Act and “whoever contravenes” in FERA. The former contemplates liability upon possession or indirect association with smuggled goods, while the latter necessitates direct culpability.

The Collector’s imposition of conditions regarding Reserve Bank permits and additional duties was ultra vires as neither statute authorized retrospective regularization or post-adjudication levies once confiscation had occurred.

The invalid conditions imposed were severable from the otherwise valid confiscation order under settled principles of severability as reiterated in R.M.D. Chamarbaugwalla v. Union of India [(1957) SCR 930][5].

b. OBITER DICTA 

i) The Court noted that interesting constitutional questions concerning concurrent jurisdiction and procedural safeguards may arise if both statutes were applied simultaneously. However, since the customs authorities dropped personal penal proceedings, these broader questions were left open for future adjudication.

c. GUIDELINES 

1. Confiscation under Sea Customs Act is distinct from prosecution under FERA.

2. Section 8(3) of FERA preserves dual jurisdiction without creating mutual exclusivity.

3. Action in rem (confiscation) can proceed even where the smuggler is unknown.

4. Collector of Customs cannot impose conditions beyond statutory powers under Section 183.

5. Ultra vires conditions, if severable, do not invalidate the entire confiscation order.

6. A pledgee’s rights must be separately litigated and cannot challenge confiscation orders belatedly without independent legal recourse.

J) CONCLUSION & COMMENTS

The Supreme Court’s judgment harmonizes overlapping statutory frameworks by differentiating confiscatory and penal jurisdictions. It clarified the application of action in rem in customs proceedings which remains enforceable even in the absence of identified offenders, preserving the sovereign power to prevent the circulation of smuggled goods. Moreover, by applying severability doctrines, the Court upheld administrative authority while simultaneously protecting citizens from ultra vires overreach. The judgment sets a precedent in safeguarding statutory interpretation coherence while maintaining effective customs enforcement.

K) REFERENCES

a. Important Cases Referred

i) R.M.D. Chamarbaugwalla v. Union of India, [1957] S.C.R. 930
ii) Shri Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar & Ors., [1959] S.C.R. 279
iii) F.N. Roy v. Collector of Customs, [1957] S.C.R. 1151
iv) Leo Roy Frey v. The Superintendent, District Jail, Amritsar, [1958] S.C.R. 822
v) The King v. Willesden Justices, Ex Parte Utley [1948] 1 K.B. 397

b. Important Statutes Referred

i) Sea Customs Act, 1878
ii) Foreign Exchange Regulation Act, 1947
iii) Constitution of India, 1950