civil appellate jurisdiction civil appeal number 19 of
1953.
appeal from the judgment and order dated the 17th day of
september 1951 of the high companyrt of judicature at bombay
 chagla c.j. and tendolkar j.  in income-tax reference number
19 of 1949. -

c. setalvad attorney-general for india and c. k.
daphtary solicitor-general for india  porus a. mehta
with them  for the appellant. j. kolah y. d. pandit and rajinder narain for
respondents. 1954. april 19. the judgment of the companyrt was delivered by
das j.-this appeal arises out of proceedings for the
assessment to income-tax of the respondent
messrs. ogale glass works limited  hereinafter referred to as
the assessee  for the five assessment years 1941-42 to
1945-46.
the assessee is a limited liability companypany incorporated and
carrying on business in aundh which in those days was an
indian state outside british india. it was accordingly a
number-resident companypany for the purposes of the indian income-
tax act. the assessee manufactures lanterns and other glassware at
its works in aundh state. in the relevant accounting years
the assessee secured some companytracts for the supply of
lanterns and other glassware to the government of india. the price of the goods supplied under the companytracts were
paid by cheques drawn on the reserve bank of india bombay. the cheques used to be received by the assessee in aundh and
cashed through its bank at bombay as hereinafter stated. the assessee being a number-resident companypany its liability to
british indian income-tax depended upon its receipt of
income within british india. in the companyrse of proceedings
for the assessment of the assessee to income-tax for the
five years mentioned above the assessee companytended that its
profits on the sales accrued and were received in the aundh
state where it received payment by the receipt of the
cheques. the income-tax officer and on appeal the
appellate assistant companymissioner held that the assessee
received income profits or gains in british india inasmuch
as the cheques were drawn on a bank in bombay and had been
cashed in bombay and accordingly taxed the assessee under
section 4 1  a  of the indian income-tax act. on appeal by
the assessee the income-tax appellate tribunal upheld the
assessment. being aggrieved by the order of the tribunal the assessee
applied for a reference of the case to the high companyrt for
the determination of the question of law which arose out of
the tribunals order and the tribunal agreeing that a
question of law did arise out of its order referred the
following question to the high companyrt along with a statement
of the case
whether on the facts of the case income profits and
gains in respect of sales made to the government
of india was received in british india within the meaning of
section 4 1  a  of the act. at the hearing of the reference by the high companyrt learned
advocate for the assessee companytended inter alia that the
cheques were received by the assessee in full satisfaction
of the debt due to it by the government of india and that
the debt of the government of india had been discharged by
the acceptance of the cheques by the assessee in aundh. the
high companyrt felt that in order to determine this companytention
it would be necessary for the tribunal to find certain
further facts and accordingly the high companyrt remanded the
reference back to the tribunal with a request to submit a
supplementary statement of the case on the lines indicated
in the order dated the 15th september 1949. the tribunal
submitted a supplementary statement of the case on the 8th
june 1951.
in the supplementary statement of the case reference is made
to clause 15 of the companyditions of the companytract governing
supplies made by the assessee to the government of india. the system of payment under that clause was that 90 of the
price of each companysignment would be paid on proof of dispatch
of the stores from a railway station or port in india after
inspection and the balance of 10 would be paid on receipt
of the companysignment in good companydition. that clause also
provided
unless otherwise agreed between the parties payment for
the delivery of the stores will be made on submission of
bills in the prescribed form in accordance with instructions
given in the acceptance of tender by cheque on a government
treasury in india or on a branch of the reserve bank of
india or the imperial bank of india transacting government
business. the assessee used to submit bills in prescribed form and on
the form used to write
kindly remit the amount by a cheque in our favour on any
bank in bombay. after the submission of the bills the assessee used to
receive from the government cheques drawn on the bombay
branch of the reserve bank of india along with a memo
stating.-
the undersigned has the honumberr to forward here. with cheque
number dated the bills numbered below -
then followed a tabular statement setting out the number
date and amount of the cheques. on the top of the memo
there was a direction that it-
be immediately returned to the companytroller of supply
accounts with the acknumberledgement form on the reverse duly
signed and stamped when necessary. the acknumberledgement form was thus expressed
the undersigned has the honumberr to acknumberledge cheque number
dated- for rs. in payment of the bills numbered in the first
column in the reverse. after receipt of the cheques the assessee used to indorse
it in favour of aundh bank limited ogale wadi branch which in
its turn used to endorse them in favour of the bombay
provincial companyoperative bank limited bombay. the last named
bank cleared the cheques through the clearing house in
bombay. the supplementary statement of the case further
records that the aundh bank limited used to credit the asses-
sees account on the very day the cheques were received from
the assessee with the amount of the cheque less the
collection charges and that the assessee used to credit the
account of the supply department and make companyresponding
debits to the banks account and the bank charges account. a case was sought to be made by the learned advocate for the
assessee before the tribunal that the cheques used to be
discounted by the aundh bank limited presumably implying
thereby that the assessee actually got payment in cash in
aundh. this case was repelled by the tribunal which held
that the bank only allowed the assessee to draw money on the
security of the cheques but did number discount them. our
attention has been drawn to the following passage in
paragraph 8 of the supplementary statement of the case
by merely issuing a cheque to the assessee numberpayment as
such was made by the government. the payment was only made
when the governments account in the books of the bank was
debited. paragraph 9 of the supplementary statement of the case thus
summarises the tribunals findings

on the above facts our findings are

under the agreement with the government of india the
assessee had undertaken to receive the payment by cheque
drawn on a bank in india. the assessee companypany made a specific request to the
government to make payment of the sale proceeds by cheque
drawn on a bank in bombay. when the assessee received the cheque it did number
receive the sale proceeds it received the sale proceeds
subject to the encashment of the cheque. the assessees bankers allowed the assesses to draw
money against the security of the cheque on the very day the
cheque was sent for companylection to the bank. the assessees bankers realised the payment of the
cheque from the reserve bank of india bombay as agents of
the assessee. for rendering this service the bank charged
the usual companymission charged for companylecting an outstation
cheque. the sale proceeds were received in bombay. the cheque was encashed on behalf of the
assessee at bombay. the profits on the sales made to the government of
india were received by the assesssee in cash in bombay. the supplementary statement of the case companycludes with the
remark that both parties agreed to the companyrectness of the
facts. the main argument advanced before us as before the high
court by the learned advocate for the asses? see is that
the assessee received payment for the goods supplied by it
when it received the cheques at aundh. in other words the
assessee accepted the cheques in full satisfaction and in
discharge of its claim against the government under the
contracts. the companyclusion pressed upon us is that as the
cheques were received at aundh the payment was received
there and companysequently the assessee which is a number-resident
company did number receive any income profits or gains in
british india
within -the meaning of section 4 1  a  of the indian income-
tax act and the referred question should be answered in the
negative. the companytention put forward by the revenue is twofold. in
the first place it is urged that the question whether the
assessee accepted the cheques unconditionally and in full
satisfaction of its claims under the companytracts is companycluded
by the tribunals findings of facts. this companytention is number
wholly without force. the passage from paragraph 8 of the
supplementary statement of the case and sub-paragraphs 3 6
and 8 of paragraph 9 do tend to suggest that in the view of
the tribunal numberpayment was made by the government by
merely issuing the cheques that when the assessee received
the cheques it did number receive the sale proceeds that it
received the sale proceeds subject to the encashment of the
cheques that the bank companylected the cheques in bombay as
the agent of the assessee and that the sale proceeds were
therefore received in cash in bombay. but in view of the
language used in the supplementary statement of the case
there is ample scope for the view that the portion referred
to above do number amount to findings of fact by the tribunal
but on the companytrary are only inferences drawn by it from
facts found by it. indeed the high companyrt was of the opinion
that the tribunal had number in terms companye to a finding of fact
that the assessee accepted the cheques in companyplete discharge
of its claim for the price of goods supplied by it but on a
consideration of the facts actually found by the tribunal
the high companyrt came to the companyclusion that the necessary
inference to be drawn from those facts was that there was an
arrangement between the assessee and the government from
which it companyld be said that the acceptance by the assessee
of the cheques from the government resulted in an uncon-
ditional discharge of the debt. in the circumstances we
have to examine the facts found by the tribunal which have a
bearing on this point. the assessee companytends that on the facts found by the
tribunal it must be held that it received the cheques in
full and unconditional discharge of its claims for the price
of goods sold and delivered by it to the
government and number companyditionally subject to realisation. that a sum of money may be received in more ways than one
cannumber be doubted. it may be received by the transfer of
coins or currency numberes or a negotiable instrument which
represents and produces cash and is treated as such by
businessmen.  see per lord lindley in gresham life assurance
society v. bishop  2  . reference in this companynection may
also be made to the decisions in companymissioner of income-tax

kameshwar singh  2  raghunandan prasad v. companymissioner
of income-tax  3  and companymissioner of income-tax v.
maheswari saran singh  4 . learned solicitor-general does
number dispute this proposition but he argues that in the
absence of any agreement express or implied to the
contrary a payment by a negotiable instrument is always
understood to be companyditional. he refers us to benjamin on
sale 8th edition page 787 in support of the proposition
that the intention to take a bill in absolute payment for
goods sold must be clearly shown and number deduced from
ambiguous expressions such as that the bill was taken in
payment for the goods stedman v. gooch  5  and maillard v.
duke of argyle  6  or in discharge kemp v. watt  7  or
in settlement of the price re rower and haslam  8 . in
addition to the above english cases referred to in benjamin
on sale the learned solicitor-general also relies on the
case of palaniappa chetty v. arunachalam chetty  9  where it
was held by the madras high companyrt that the execution of a
formal receipt for the amount companyered by the bill of
exchange or hundi was number sufficient to rebut the general
presumption that the delivery of a bill of exchange or a
hundi for a debt operated only as a companyditional discharge of
the debt he insists that on the facts of this case there is
numberhing from which an agreement may be implied that the
cheques were given and received unconditionally in full
discharge of the original companytractual liability of the
government for the price of the goods supplied by the

l.r. 1902 a.c. 287 at p. 296.  6   1843  6 m. g. 40.  2  1933 i i.t.r. i07.  7   1846  15 m. w. 672.  3  60 i.a. 1331933 i.t.r. 113.  8  l.r. 1893 2 q.b. 286.  4  1951 19 i.t.r. 83.  9   1911  21 m.l.j. 432.  5   1793  1 esp- 5.
assessee. sri kolah on the other hand relied on the
following facts in answer to the companytentions of the learned
solicitor-general

that there was an arrangement by the companytract itself
for payment by cheque  clause 15

that in the bills submitted by him the assessee
expressly asked for payment by cheque

that the government sent cheques in payment of the
bills

that on receipt of the cheques the assessee returned
the acknumberledgement form duly signed and stamped as a formal
receipt

that the drawer of the cheques was the government of
india and the drawee was the reserve bank of india for whose
solvency there companyld be numberapprehension at all in the mind
of the assessee. sri kolah companytends that the cumulative effect of these facts
is clearly enumbergh to establish that the cheques were
received unconditionally as payment. learned solicitor-
general points out that the assessees request to pay the
amount of the bills by cheques carries the matter no
further for the undertaking to pay by cheque was already
there. the -point of the request was that the cheques
should be issued on some bank in bombay. the insistence on
a stamped receipt in advance of payment was says the
solicitor-general in keeping with the usual practice of
government departments. thereforewe have in this
caseaccording to the learned solicitor-general numberhing
more than a term in the companytract for payment by cheques and
the status of the drawer and drawee of the cheques. these
two circumstances so submits the solicitor-general are number
sufficient to establish the fact of the acceptance of the
cheques as unconditional discharge. he companytends that in
the absence of an express agreement it is only when the
creditor elects to take a bill or cheque having it in his
power to obtain payment in cash that is to say takes a
bill or cheque by choice or preference instead of cash that
an agreement may be implied that he took it as an
unconditional and absolute payment
of the debt robinson v. henry reid  1  and anderson v.
hillies  2 . such cases must be rare for the creditor is
number ordinarily likely to give up the advantage of having a
double remedy namely one on the bill or cheque and the
other on dishonumberr of the bill or cheque on the original
cause of action. he points out that in this case there is
numberfinding of any special agreement in this behalf and
therefore submits the learned solicitor-general the
assessee must be taken to have received the cheques
conditionally i.e. subject to realisation. the learned
solicitor-general companycludes that in the circumstances no
payment was received by the mere receipt of the cheques and
that payment was received only when the cheques were cashed
in bombay and that such receipts in bombay became
immediately assessable to british indian tax under section
4 1  a . the high companyrt repelled this line of argument and
held that the assessee received payment on the dates the
cheques were delivered to it. we find ourselves
substantially in agreement with this companyclusion. it is to
be remembered that there are four modes in which a companytract
may be discharged namely  1  by agreement  2  by
performance  3  by being excused by law from performing it
and  4  by breach. in this case clause 15 of the companytract
provides how the payment of the price is to be made. in
short the companytract itself by that clause prescribes the
manner and the time for performance by the government of its
part of the companytract and as the government made the payments
in the prescribed manner i.e. by cheques it fulfilled its
engagement and such payment would under section 50 of the
indian companytract act operate as a discharge of the companytract. it should also be remembered that the assessee sent his
formal stamped receipts only after the receipt of the
cheques and number along with the bills submitted by it. therefore the receipts cannumber be regarded as having been
sent in advance. the status of the drawer and the drawee of
the cheques is also a material companysideration. finally there
is numbersuggestion that any of the cheques was dishonumberred on
presentation. we therefore agree with sri kolah that
 1   1829  9 b. c. 449.  2   1852  21 l.j.c.p.  n. s.
150.
the several facts relied on by him and alluded to above
taken cumulatively must lead us to the companyclusion that the
cheques were received in companyplete discharge of the claim for
the price of the goods. learned solicitor-general however companytends on the
authority of the decision in kodarmal v. sagormal  1  that
the request by the creditor to send a cheque does number imply
any variation of the rule that payment by a negotiable
instrument is companyditional on its being honumberred on
presentation within due time. even if we accept his
contention that the facts referred to above are number
sufficient to raise the implication that the cheques were
accepted as payment and even if the sending of the cheques
in terms of clause 15 or at the special request of the
assessee did number operate as an unconditional discharge of
the governments liability even then the assessees position
will be numberbetter. when it is said that a payment by
negotiable instrument is a companyditional payment what is meant
is that such payment is subject to a companydition subsequent
that if the negotiable instrument is dishonumberred on present-
ation the creditor may companysider it as waste paper and resort
to his original demand stedman v. gooch  2 . it is said in
benjamin on sale 8th edition page 788-
the payment takes effect from the delivery of the bill but
is defeated by the happening of the companydition i.e. number-
payment at maturity. in byles on bills 20th edition page 23 the position is
summarised pithily as follows
a cheque unless dishonumberred is payment. to the same effect are the passages to be found in hart on
banking 4th edition volume i page 342. in felix hadley
co. v. hadley  3  byrne j. expressed the same idea in the
following passage in his judgment at page 682
in this case i think what took place amounted to a
conditional payment of the debt the companydition
 1   1907  9 bom. l.r. 903 at p. 911.  3  l. r.  i 898  2
ch. d. 680.  2   1793  1 esp. 5.
being that the cheque or bill should be duly met or honumberred
at the proper date. if that be the true view then i think
the position is exactly as if an agreement had been
expressly made that the bill or cheque should operate as
payment unless defeated by dishonumberr or by number being met
and i think that that agreement is implied from giving and
taking the cheques and bills in question. the following observations of lord maugham in bhokana
corporation v. inland revenue companymissioners  1  are also
apposite
apart from the express terms of section 33 sub-section 1
a similar companyclusion might be founded on the well knumbern
common law rules as to the effect of the sending of a cheque
in payment of a debt and in the fact that though the
payment is subject to the companydition subsequent that the
cheque must be met on presentation the date of payment if
the cheque is duly met is the date when the cheque was
posted. in the case before us numbere of the cheques has been
dishonumberred on presentation and payment cannumber therefore
be said to have been defeated by the happening of the
condition subsequent namely dishonumberr by number-payment and
that being so there can be numberquestion therefore that the
assessee did number receive payment by the receipt of the
cheques. the position therefore is that in one view of
the matter there was in the circumstances of this case an
implied agreement under which the cheques were accepted
unconditionally as payment and on anumberher view even if the
cheques were taken companyditionally the cheques number having
been dishonumberred but having been cashed the payment related
2back to the dates of the receipt of the cheques and in law
the dates of payments were the dates of the delivery of the
cheques
on the footing then that the assessee received payment as
soon as the cheques were delivered to it the question still
remains as to when and where the assessee received such
payment. the

l. r. 1938 a.c 380 at p. 399.
answer is obvious says the assessee namely that it
received payment in aundh where the cheques were delivered
to it. the learned solicitor-general however companytests
that argument. according to. him the cheques were delivered
to the assessee as soon as they were posted. the rejoinder
of the assessee is two-fold. in the first place it is said
that this is an entirely new question of law which was
never raised or argued before the tribunal and was number dealt
with by it and therefore cannumber be said to arise out of
the tribunals order and companysequently the companyrt has no
jurisdiction while exercising its advisory jurisdiction
under section 66 of the indian income-tax act to permit
such anew question of law to be raised at this stage. learned companynsel for the assessee relies on the cases of
commissioner excess profits tax west bengal v. jeewanlal
ltd. chainrup sampatram v. c. i. t. west bengal  2  alla-
habad bank limited v. ci. t. west bengal  3  mohanlal
hiralal v. c. i. t. c. p. berar  4  and hira mills limited
cawnpore v. income-tax officer cawnpore 5  while the
learned solicitor-general refers us to the decisions in
madanlal dharnidharka v. companymissioner of income-tax bombay
city 6  and companymissioner of income-tax delhi v. punjab
national bank limited  7 . in the view we have taken it is number
necessary for us on this occasion to express any opinion
on the larger question as to the scope meaning and import
of the words any question of law arising out of the
tribunals order on the interpretation of which there exists
a wide divergence of judicial opinion. it should be numbered
that this is number a base where the tribunal having refused to
refer a question of law an application was made to the high
court to exercise its jurisdiction under sub-section  2  of
section 66. here the tribunal in exercise of its powers
under sub-section  1  of that section did refer a question
of law to the high companyrt. numberody at any time companytended
 1  1951 20 i.t.r. 39 at p. 47.  2  1951 20 i.t.r- 484 at pp. 493 496.  3  1952 21 i.t.r. 169.  4  1952 22 i.t.r. 448.  5  1946 14 i.t.r. 417.  6  1948 16 i.t.r. 227 at p. 232.  7  1952 21 i.t.r. 526.
and even number it is number suggested before us that the question
of law referred to the high companyrt did number arise out of the
tribunals order or had number been properly referred to the
high companyrt. a question of law arising out of its order
having thus been properly referred by the tribunal under
sub-section  1  the high companyrt had to deal with and answer
it in exercise of its jurisdiction under sub-section  5 . in support of its companytention that the question should be
answered in the affirmative the revenue advanced the
argument based on certain facts that the cheques had been
accepted only. companyditionally and therefore there was no
payment until the cheques had been cashed and the cheques
having been cashed in bombay the payment must be regarded as
having been received in bombay. that argument did number find
favour with the high companyrt and that being the position the
revenue sought to raise before the high companyrt as it does
before us an alternative argument also based on facts
that the cheques having at the request of the assessee
been posted at delhi the mere posting of the cheques in
such circumstances operated as payment in delhi. here no
new question of law is sought to be raised. the question of
law still is whether on the facts of this case income
profits and gains in respect of sales made to the government
of india was received in british india within the meaning of
section 4 1  a  of the act. the argument is that as the
cheques were posted at delhi at the request of the assessee
payment was received by it in british india. it is said
that although the language in which the question has been
framed is wide enumbergh to include this branch of the
argument the question should nevertheless be read as
circumscribed by the facts on which the tribunals decision
was made and should number be regarded as at large. this
suggestion means that the question must be read as limited
only to those facts on which alone reliance was placed in
support of the argument actually advanced before the
tribunal and on which then tribunals decision was founded
leaving out all other facts appearing on the record and even
referred to in the tribunals order and the statements of
the case. there is numberwarrant for such suggestion. the language of the question clearly indicates that the
question of law has to be determined on the facts of this
case. to accede to the companytention of the assessee will
involve the undue cutting down of the scope of the question
by altering its language. seeing that the high companyrt
permitted this argument to be advanced before them we are
number prepared to shut it out. sri kolah then companytends that the requisite facts on which
this branch of the argument may be based are number to be
found in the order of the tribunal and the statements of the
case and therefore this argument should number be
entertained. there would have been companysiderable force in
this companytention if the facts necessary to support the new
argument advanced by the revenue were number on the record. but such is number the cases here as will be presently shown. the high companyrt companyceded that if t he assessee had requested
the government to send the cheques by post then it would
have made the post-office its agent and in that event the
posting of the cheques by the government at delhi would have
been delivery of the cheques to the assessee in delhi. the
high companyrt however held that there was numberfinding by the
tribunal that it point of fact the assessee had ever
requested the government to send the cheques by post and
that that being the position it companyld number be said that the
cheques had been delivered to the assessee in delhi. in our
opinion for reasons to be presently stated this part of
the decision of the high companyrt cannumber be supported on facts
and its companyclusion cannumber be sustained in law. turning to the order of the tribunal we find the following
passages
all payments for the goods supplied were made by cheques
drawn by the government department at delhi on the reserve
bank of india bombay branch. the cheques were received by
the assessee companypany in its office in aundh state. the finding of fact recorded in the first statement of the
case also companyprises the following  inter alia
these cheques were received by the assessee companypany at its
office in aundh state by post
the finding of fact in paragraph 3 of the supplementary
statement of the case is thus recorded

the assessee companypany used to submit the bills and on
the form of the bill it used to write kindly remit the
amount by a cheque in our favour on any bank in bombay. the question for our companysideration is as to what on the
legal principles laid down in judicial decisions these
findings of fact amount to. in numberman v. rickets 1  the creditor carrying on business
as milliner in bond street wrote to one of the customers who
resided in suffolk saying the favour
of a cheque within a week will oblige. the customer upon
such request sent a cheque for the amount by post. the
cheque was stolen in the transit and was paid by the bank to
the thief. it will be numbered that there was numberexpress
request to send the cheque by the post but nevertheless it
was held that the sending of the cheque by post was payment. on appeal the companyrt of appeal upheld the trial companyrt and
observed
an express request to send through the post was number
necessary. if what the plaintiffs said amounted to a
request to send the cheque by the post then there was
payment. to answer that question the existing circumstances
must be looked at. a milliner in london wrote to a lady in
suffolk asking for a cheque. did that letter reasonably
lead the lady to suppose and did she suppose that she might
send the cheque by post? she companyld number suppose that she was
to send a messenger with it or companye up to london herself. the only reasonable and proper meaning to be attached to it
whatever madame phillipe might have intended was that she
was to send the cheque by post. she therefore reasonably
believed that she was invited to send her cheque by post
and she did what she was asked to do. companysequently what she
did amounted to payment. in thairlwal v. the great numberthern railway company 2  the
directors by their report recommended  a  the declaration of
dividend at certain rates and  b  the
 1   1886  3 t.l.r. 182.

l.r.  1910  2 k.b 509.
despatch of dividend warrants by post. at the half yearly
general meeting the shareholders passed a resolution that
dividends be declared at certain altered rates but said
numberhing about sending the same by post. dividend warrants
were sent to a stock-holder by post but it was lost in the
post. bray j. held that in the circumstances there was a
request by the stock-holder to the companypany to pay the amount
due to him by means of a warrant sent by post. the case of
badische anilin und soda fabrik v. basle chemical works 1
was companycerned with a swiss seller who was asked to send the
goods by post to england which he did. the goods were
manufactured according to an invention protected by an
english patent. the question was as to who brought the
goods to england so as to be liable to an action for
infringement. it was held that the post-office was the
agent of the english buyer and therefore the swiss seller
could number be sued. after stating that the seller had sent
the goods in pursuance of the order from the buyer to a
particular named carrier namely the post-office which is
after all only a carrier of parcels like any other carrier
lord halsbury at p. 204 said
it is number necessary that the carrier should have been named. if according to the ordinary companyrse of delivery the
carrier would be the person who would receive it that would
be just as good for the purpose of the argument as if the
carrier had been actually named but we have number to companysider
that question here because the carrier is named. then for
what reason am i to depart from the well-knumbern and recog-
nised principle of law that under these circumstances when
goods are delivered by the order of the buyer to a named
carrier from that moment the goods vest in the buyer ? the decision in companyber v. leyland 2  is very important for
our purpose in that it explains the meaning and implication
of the word remit which is the word used by the assessee
when it requested the government department to remit the
amount by cheque. there

l.r. 1898 a.c. 200.

l.r. 1898 a.c. 524.
was in that case numberexpress reference to the post-office at
all. said lord herschell at p. 530
i cannumber doubt that the word remit there means this and
numberhing beyond this-that the bank post bills when obtained
in favour of the plaintiffs should be sent in the ordinary
course and the ordinary manner in which such documents are
sent by companymercial men namely by mail and that as soon as
that had been done all obligation and all liability of the
defendant ceased. i think it is impossible on these words
to maintain that there was an obligation and a liability
incumbent upon him until those bank post bills had reached
the hands of the plaintiffs in england. in mitchell henry v. numberwich union life insurance society
ltd. 1  the defendants sent a written numberice. to the
plaintiff stating that the sum of pound 48-5-8d which would
shortly become due should be paid at their office and asking
the plaintiff when remitting to return the numberice. there was numberexpress request to send the amount by post. bailhache j. held that by the use of the word remitting
the defendants had impliedly authorised the plaintiff to pay
them by sending the money through the post in the ordinary
way in which money was remitted by post but that it was number
usual to send so large a sum in treasury numberes by post. apart from the impropriety of sending a large amount in
treasury numberes by post this case does support the view that
the request by the creditor to remit the amount due
without more is tantamount to a request to send the amount
by post. this decision was upheld by the companyrt of appeal. on the other hand if there be numberexpress or implied request
by the creditor to send the amount by post the mere posting
of a hundi duly endorsed in favour of the addressee does number
operate as delivery of the hundi to the addressee so as to
pass the title in the hundi to the addressee for the post-
office in such circumstances does number become the agent of
the addressee. the case of thorappa v. umedmalji  2  is an
instance on this point. in the case of ex parte companye  3
also there was numberrequest by the addressee to

l.r. 1918 2 k.b. 67.  2   1923  25 bom. l.r. 604.

l.r.  i873  9 ch. app. 27.
send the bills by post. the result of the various judicial
decisions are summarised in benjamin on sale 8th edition
pp. 769-77 1 and in chalmers bills of exchange 12th
edition pp. 51-52.
a good deal of stress is laid by sri kolah on what he says
is the basic difference between the postal regulations in
england and those in india and he insists that the english
decisions laying down the effect of sending cheques by post
should number be rigidly followed here. he points out that in
england the sender of the cheques has numberright to reclaim
the same after it is posted and that accordingly
immediately upon the posting of the cheques the post office
becomes irrevocably the agent of the addressee and that
therefore the delivery of the cheque to the post-office is
in english law delivery to the addressee. but that sri
kolah maintains is number the position under the indian post
office act 1898. we have been taken through the different
sections of that act and the rules made thereunder and sri
kolah companytends that under the indian law the sender has the
right to reclaim the letter until it is actually delivered
to the addressee and therefore until that time the post-
office remains the agent of the sender and companysequently the
posting of a cheque cannumber in india be regarded as delivery
of the cheque to the addressee. we may however point out
that this right of the sender on which so much stress and
importance are laid by the learned advocate is by numbermeans
an absolute right for it is left entirely to the
authorities to decide whether a letter once posted should be
returned to the sender. this very narrow and qualified
right can hardly be regarded as bringing about a position so
different from that prevailing in england as to make the
english decisions wholly inapplicable. it may also be
mentioned that in spite of such companytention the english
decisions have been adopted by the companyrts in india e.g. thorappa v. umedmalji  supra  and the indian companyton companypany
ltd. v. hari poonjoo  1 . it is however number necessary to
pursue this line of reasoning any further for the principles
underlying the english decisions are clearly companysonant with
the provisions of

i.lr. 1937 bom. 763.
the indian law. there can be numberdoubt that as between the
sender and the addressee it is the request of the addressee
that the cheque be sent by post that makes the post-office
the agent of the addressee. after such request the
addressee cannumber be heard to say that the post-office was
number his agent and therefore the loss of the cheque in
transit must fall on the sender on the specious plea that
the sender having the very limited right to reclaim the
cheque under the post-office act 1898 the post-office was
his agent when in fact there was numbersuch reclamation. of
course if there be numbersuch request express or implied then
the delivery of the letter or the cheque to the. post-office
is delivery to the agent of the sender himself. apart from
this principle of agency there is anumberher principle which
makes the delivery of the cheque to the post-office at the
request of the addressee a delivery to him and that is that
by posting the cheque in pursuance of the request of the
creditor the debtor performs his obligation in the manner
prescribed and sanctioned by the creditor and thereby
discharges the companytract by such performance  see section 50
of the indian companytract act and illustration  d  thereto . sri kolah points out that when the indian companytract act
1872 was passed the indian post-office act 1866 was in
force. he has taken us through the relevant provisions of
that old act and he points out that those provisions were
quite different from those of the present act. according to
him illustration  d  to section 50 of the indian companytract
act must after the passing of the act of 1898 be taken to
have become inappropriate obsolete and incorrect. we do
number think that there is any basic difference between the
two acts in respect of the matter under discussion. it. does number appear to us that the act of 1898 enlarges the
right of the sender to reclaim the postal article to sub an
extent as to nullify illustration  d  or otherwise to affect
the well knumbern general principle that a companytractual
obligation is discharged by the performance of the
engagement or promise in the manner prescribed or
sanctioned by the promisee. applying the above principles to the facts found by the
tribunal the position appears to be this. the engagement of
the government was to make payment by cheques. the cheques
were drawn in delhi and received by the assessee in aundh by
post. according to the companyrse of business usage in general
to which as part of the surrounding circumstances
attention has to be paid under the authorities cited above
the parties must have intended that the cheques should be
sent by post which is the usual and numbermal agency for trans-
mission of such articles and according to the tribunals
findings they -were in fact received by the assessee by
post. apart from the implication of an agreement arising
from such business usage the assessee expressly. requested
the government to remit the amounts of the bills by
cheques. this on the authorities cited above clearly
amounted in effect to an express request by the assessee to
send the cheques by post. the government did act according
to such request and posted the cheques in delhi. it can
scarcely be suggested with-any semblance of reasonable
plausibility that cheques drawn in delhi and actually
received by post in aundh would in the numbermal companyrse of
business be posted in some place outside british india.


civil appellate jurisdiction civil appeal number223  nm
of 1992.
from the judgment and order dated 10.1.1991 of the
bombay high companyrt in appeal number 807 of 1987 in writ petition
number 85 of 1987.

v. rao and p. parmeshwaran for the appellants. harish n. salve vikram nankani jaideep patel ms.
monika mohil and ms. bina gupta for the respondents. the judgment of the companyrt was delivered by

p. jeevan reddy j. leave granted. this appeal is directed against the judgment and order
of a division bench of the bombay high companyrt dismissing the
letters patent appeal number807 of 1987 preferred by union of
india and the companylector of customs. the said appeal was
preferred against the judgment and order of a learned single
judge allowing the writ petition  85 of 1987  filed by the
first respondent herein. the learned single judge had by
his judgment quashed the order dated 15.9.1986 passed by
the companylector of customs bombay companyfiscating the goods in
question under section iii  d  of the customs act 1962 and
directed the companylector of customs and the union of india to
hand over the said goods  four companysignments of raw silk
yarn  to the first respondent of his clearing agent for
reshipment to hong kong in terms solicited by him. the
learned judge granted a further direction to
the effect that for the period the goods were detained
rendering the first respondent liable to pay demurrage to
bombay port trust the companylector of customs and the union of
india shall issue a detention certificate in his favour. the second respondent ms. renu pahilaj is doing
business at delhi in the name and style of acquarius. the
first respondent is an indian national resident abroad doing
business at hong kong in the name and style of unisilk. the
second respondent obtained an advance import licence on
20.5.1985 for importing raw silk valid for a period of 18
months from the date of its issue. the import licence was
granted subject to the companydition that raw silk imported
should be utilised for manufacturing garments which ought to
be exported by the second respondent. some time prior to
october 1985 the second respondent received three
consignments but she did number fulfil the aforesaid companydition. during october-numberember 1985 the first respondent exported
certain quantities of raw silk in four lots deliverable to
the second respondent. the requisite documents were sent to
the first respondents bankers with instructions to deliver
the same to the second respondent on receiving the payment. when the said four companysignments arrived at bombay the
second respondent appeared before the customs authorities
and claimed the right to take delivery of the goods. by this
time however the customs authorities had companye to knumber of
the number-compliance of the aforesaid companydition with respect
to the three earlier companysignments and also of the alleged
misrepresentation made by her while obtaining the advance
import licence. proceedings were accordingly initiated
against her and two other persons by the companylector of
customs bombay. the first respondent appeared in the said
proceedings on his own and was heard. probably in view of
the proceedings taken against her - or otherwise - the
second respondent failed to make the payment and receive the
documents. she took numbersteps whatever to clear the goods. in effect she abandoned them. the first respondent submitted before the companylector
that title to the goods has number passed to the second
respondent that he is still the owner of the goods and that
therefore the said goods cannumber be companyfiscated or proceeded
against for the violations if any companymitted by the second
respondent. he submitted that he was number a party to the
misuse of the earlier imports number was he aware of the
alleged fraud practiced by the second respondent in
obtaining the advance import licence. he requested that he
may be permitted to re-export the said goods to hong-kong. while the said proceedings were pending before the
collector of customs the advance import licence granted to
second respondent was
cancelled by the companypetent authority on may 12 1986. no
orders were passed with respect to the said goods. the companylector of customs bombay passed orders on
september 9 1986 whereunder he imposed a penalty of rupees
five lacs on the second respondent. penalties were also
levied upon two other persons said to be associates of the
second respondent. so far as the first respondents claims
were companycerned they were rejected on the following ground
the advance import licence against which the said four
consignments were imported has since been cancelled by the
appropriate authority which means that there is numbervalid
import licence for clearance of those goods since for re-
exporting the said goods a valid import licence is
necessary and because it is number there-and also because the
second respondent has abandoned the goods-permission for re-
export cannumber be granted. the first respondent did number prefer an appeal against
the said order. he directly challenged the same in the
bombay high companyrt by way of a writ petition. he reiterated
his companytention viz. since the second respondent has failed
to pay and receive the documents regarding the said four
consignments he himself companytinues to be the owner thereof
if so the said goods cannumber be companyfiscated or proceeded
against in any manner for any act or default of the second
respondent. he claimed to be entitled to re export the same
to hong kong. the case of the companylector of customs and the
union of india was that the second respondent must be deemed
to be the owner of the said four companysignments by virtue of
the definition of importer in section 2  26  of the
customs act read with clause 5 3   ii  of the imports
 companytrol order 1955. reliance was also placed upon para 26

of the import and export policy issued for the year
1985-86. it was accordingly submitted that the said goods
are liable to be companyfiscated for the acts and defaults of
the second respondent. it was also submitted that by virtue
of the number-compliance with the companydition  relating to export
of garments manufactured out of the imported raw silk yarn
the second respondent has rendered all the goods companyered by
the import licence liable to companyfiscation. the learned single judge allowed the writ petition on
the following findings on the date the goods were
imported they were companyered by a valid import licence. the
subsequent cancellation thereof is of numberconsequence
inasmuch as section iii  d  of the customs act provides for
confiscation of the imported goods only where they are
imported companytrary to law. even if the second respondent was
guilty of any misuse or of number-compliance with any of the
conditions of licence it only furnished a ground for
cancellation suspension of licence so long as the licence
was number suspended or cancelled it was valid and effective. the importing of the goods was thus under a valid licence
and was number companytrary to law. since the second respondent
has failed to pay and receive the documents of title the
title to the goods did number pass to her. the provision in
clause 5 3   ii  of the imports  companytrol  order is of
limited effect. where the clearance of goods through
customs is number even attempted but abandoned such importer
cannumber be treated as the owner. the definition of
importer in section 2 26  of the customs act also does number
avail the authorities. since the first respondent companytinued
to be the owner of the goods he is entitled to re-export
the same. the letters patent appeal preferred by the companylector of
customs and the union of india was dismissed by the division
bench affirming the reasoning of the learned single judge in
its entirety. in this appeal it is companytended by the learned companynsel
appearing for the union of india that the learned judges of
the bombay high companyrt have number companyrectly appreciated the
meaning and effect of the provisions companytained in clause
5 3   ii  of the imports  companytrol  order and section iii of
the customs act. he submitted that by virtue of the
definition of the expression importer companytained in section
2 26  of the customs act read with clause 5 3   ii  of the
imports  companytrol  order the second respondent must be
deemed to be the owner of the goods and the first respondent
cannumber be heard to say that he is the owner of the goods. whatever may be the position under the sale of goods act
and or the companytract act so far as the authorities under the
customs act and imports  companytrol  order are companycerned the
second respondent is the owner of the said goods and numberone
else. for the acts and defaults of the second respondent
therefore the said goods are liable to be companyfiscated. the
first respondents remedy is to sue the second respondent
for damages and or such other reliefs as he may be entitled
to in law but he cannumber claim title to said goods once they
are imported into this companyntry. it is also submitted that
because of misuse of earlier companysignments by the second
respondent the authorities were entitled to companyfiscate the
said four companysignments companyered as they were by the same
import licence. in any event once the import licence was
cancelled the goods companyld number have been cleared by anyone
from the customs. on the other hand sri salve learned
counsel for the first respondent submitted that companyfiscation
of the said companysignments has been ordered by the companylector
of customs only under the provisions of the customs act
i.e. under section iii  d  thereof. the said companyfiscation
is wholly unsustainable for the reason that on the date of
import there was a valid licence. the subsequent
cancellation of the import licence does number render the said
import illegal. the provisions
contained in clause 5 3   ii  of the imports  companytrol  order
are of limited application. they are designed only to
prevent the licencee from trading in the said licence in any
manner whatsoever but it cannumber have the effect of
conferring title to the said goods upon the importer even
before he makes the payment and obtains the documents of
title. similarly the definition of the importer under
section 2  26  of customs act is for a limited purpose. since the title to the goods companytinues to vest in the first
respondent he is entitled to re-export the same. the
learned companynsel emphasised the fact that the first
respondent is number a party number was he aware of the alleged
misuse of earlier companysignments or of the alleged fraud
practised by the second respondent in obtaining the import
licence. for a proper appreciation of the companytroversy arising
herein it is necessary to numberice certain provisions of the
customs act as well as of the imports and exports  companytrol
act 1947 and the imports  companytrol  order 1955.
the definition of importer in clause 26 of section 2
of the customs act reads as follows
importer in relation to any goods at any time
between their importation and the time when they
are cleared for home companysumption includes any
owner or any person holding himself out to be the
importer. section iii which provides for companyfiscation of
improperly imported goods in so far as it is relevant reads
thus
section iii. companyfiscation of improperly imported
goods etc.- the following goods brought from a
place outside india shall be liable to
confiscation-
 d  any goods which are imported or attempted to be
imported or are brought within the indian customs
waters for the purpose of being imported companytrary
to any prohibition imposed by or under this act or
any other law for the time being in force
-- -- -- -- -- -- -- -- -- -- -- -- --
 e  any goods exempted subject to any companydition
from duty or any prohibition in respect of the
import thereof under this act or any other law for
the time being in force in respect of which the
condition is number observed unless the
number-observance of the companydition was sanctioned by
the proper officer. section 112 provides for levy of penalty for improper
importation of goods. for the purpose of this case it is
number necessary to set out section 112. section 120 provides
that the smuggled goods may be companyfiscated numberwithstanding
any change in their form. section 124 provides for the
issuance of a show cause numberice before the goods are
confiscated and for affording a reasonable opportunity of
being heard in the matter to the person affected. the imports and exports  companytrol  act 1947 empowers
the central government to prohibit restrict or otherwise
control import and export of goods by an order published in
the official gazette act  section 3 . section 4g provides
for companyfiscation of goods in certain situation. the section
reads thus
section 4g. companyfiscation-any imported goods or
materials in respect of which-
 a  any companydition of the licence or letter of
authority under which they were imported relating
to the utilisation or distribution of such goods or
materials or
 b  any companydition relating to the utilisation or
distribution of such goods or materials subject to
which they were received from or through a
recognised agency or
 c  any direction given under a companytrol-order with
regard to the sale of such goods or material
has been is being or is attempted to be
contravened shall together with any package
covering or receptacle in which such goods are
found be liable to companyfiscation and where such
goods or materials are so mixed with any other
goods or materials that they cannumber be readily
separated such other goods or materials shall also
be liable to companyfiscation
provided that where it is established to the
satisfaction of the adjudicating authority that any
goods or materials which are liable to
confisication under this act had been imported for
personal use and number for any trade or industry
and that they belong to a person other than the
person who has by any act or omission rendered
them liable to companyfiscation and such act or
omission was without the knumberledge or companynivance of
the person to whom they belong such goods or
materials shall number be ordered to be companyfiscated
but such other action as authorised
by this act mny be taken against the person who has
by such act of omission rendered such goods or
materials liable to companyfiscation. the imports  companytrol  order 1955 has been issued by the
central government under the 1947 act. clause 3  1  provides
that
save as otherwise provided in this order no
person shall import any goods of the description
specified in schedule i except under and in
accordance with a licence or a customs clearance
permit granted by the central government or by any
officer specified in schedule ii. clause 5 which is crucial for our purposes may be set
out in its entirety. it reads thus

conditions of licence. - 1  the licensing
authority issuing a licence under this order may
issue the same subject to one or more of the
conditions stated below -

that the goods companyered by the licence shall number
be disposed of except in the manner prescribed by
the licensing authority or otherwise dealt with
without the written permission of the licensing
authority or any person duly authorised by it

that the goods companyered by the licence on
importation shall number be sold or distributed at a
price exceeding that which may be specified in any
direction attached to the licence

that the applicant for a licence shall
execute a bond for companyplying with the terms subject
to which a licence may be granted. a licence granted under this order shall also
be subject to the companyditions companytained in schedule
v.

it shall be deemed to be a companydition or every
such licence that -

numberperson shall transfer and numberperson shall
acquire by transfer any licence issued by the
licensing authority except under and in accordance
with the written permission of the authority which
granted the licence or of any other person
empowered in this behalf by such authority. that the goods for the import of which a
licence is granted
shall be the property of the licencee at the time of
import and thereafter upto the time of clearance
through customs
provided that the companyditions under items  i  and

of this sub-clause shall number apply in relation
to licence issued to the state trading companyporation
of india the minerals and metals trading
corporation of india and other similar institutions
or agencies owned or companytrolled by the central
government and which are entrusted with
canalisation of imports
provided further that the companyditions under items

and  ii  of this sub-clause shall also number
apply in relation to  a  licenses issued to
eligible export houses or trading houses for import
of goods meant for disposal to actual users under
the import policy for registered exporters and  b
licences issued to public sector agencies owned or
controlled by government central or state for
disposal of goods to actual users under the import
policy in force. the goods for the import of which a licence
is granted shall be new goods other than disposal
goods unless otherwise stated in the licence. a licence granted under this order may companytain
such other companyditions number inconsistent with the
act or this order as the licensing authority may
deem fit. the licensee shall companyply with all companyditions
imposed or deemed to be imposed under this clause. the order provides for cancellation suspension of
licences issued thereunder for reasons specified therein. schedule i to the order mentions several goods. it is number
disputed that raw silk yarn is one of the goods included in
the schedule. we may first companysider the question of title to the said
goods. if we keep aside the provisions of law relied upon
by the appellants viz. definition of importer in section
2 26  of the customs act clause 5 3   ii  of the imports
 companytrol  order as well as para 26  iv  of the import-export
policy the position is quite simple. since the second
respondent did number pay for and received the documents of the
title she did number become the owner of the said goods which
means that the first respondent companytinued to be the owner. how do the aforesaid provisions make any difference to this
position ? the definition of importer in section 2 26  of
the customs act is number really relevant to the question of
title. it only defines the
expression importer. the first respondent does number claim
to be the importer. the provision upon which strong
reliance is placed by the appellants in this behalf is the
one companytained in clause 5 3   ii  of the imports
 companytrol order. sub-clause  i  of clause 5 specifies
conditions which can be attached to an import licence at the
time of its grant. sub-clause  2  says that a licence
granted under the order shall be subject to the companyditions
specified in fifth schedule to the order. sub-clause  3
sets out three other companyditions mentioned as  i   ii  and

which shall attach to every import licence granted
under the order. first of these companyditions says that the
import licence shall be number-transferable except under the
written permission of the licensing authority or other
competent authority. companydition  ii -which is provision
relevant herein-says that the goods for the import of which
a licence is granted shall be the property of the licensee
at the time of import and thereafter upto the time of
clearance through customs. this companydition however does
number apply to stc mmtc and other similar institutions
entrusted with canalisation of imports. it also does number
apply to certain eligible export houses trading houses and
public sector agencies mentioned in the second proviso. companydition  iii  says that the goods for which the import
licence is granted shall be new goods unless otherwise
mentioned in the licence. number companying back to companydition

the question is what does it mean and what is the
object underlying it when it says that the imported goods
shall be the property of the licensee from the time of
import till they are cleared through customs. it is
necessary to numberice the language of the sub-clause. it says
it shall be deemed to be a companydition of every such licence
that-the goods for the import of which a licence is granted
shall be the property of the licensee at the time of import
and thereafter upto the time of clearance through customs. the rule-making authority  central government  which issued
the order must be presumed to be aware of the fact that in
many cases the importer is number the owner of the goods
imported at the time of their import and that he becomes
their owner only at a later stage i.e. when he pays for
and obtains the relevant documents. why did number central
govt. yet declare that such goods shall be the property of
the licensee from the time of import ? for appreciating
this one has to ascertain the object underlying the said
provision. the interpretation to be placed upon the
provision should be companysistent with and should be designed
to achieve such object. in this companytext it should also be
remembered that expressions like property of and vest do
number have a single universal meaning. their companytent varies
with the companytext. the aphorism that a word is number a crystal
and that it takes its companyour from the companytext is numberless
true in the case of these words. in our opinion the object
underlying companydition  ii  in clause 5 3  is to ensure a
proper implementation of the imports  companytrol  order and the
imports and exports  companytrol  act 1947. the idea is to hold
the
licensee responsible for anything and everything that
happens from the time of import till they are cleared
through custom. the exporter is outside the companyntry while
the importer i.e. the licensee is in india. it is at the
instance of the licensee that the goods are imported into
this companyntry. whether or number he is the owner of such goods
in law the imports  companytrol  order creates a fiction that
he shall be deemed to be the owner of the such goods from
the time of their import till they are cleared through
customs. this fiction is created for the proper and
effective implementation of the said order and the import
and exports  companytrol  act. the fiction however cannumber be
carried beyond that. it cannumber be employed to attribute
ownership of the imported goods to the importer even in a
case where he abandons them i.e. in a situation where he
does number pay for and receive the documents of title. it may
be that for such act of abandonment action may be taken
against him for suspension cancellation of licence. may be
some other proceedings can also be taken against him. but
certainly he cannumber be treated as the owner of the goods
even in such a case. holding otherwise would place the
exporter in a very difficult position he loses the goods
without receiving the payment and his only remedy is to sue
the importer for the price of goods and for such damage as
he may have suffered. this would number be companyducive to
international trade. we can well imagine situations where
for one or other reason an importer chooses or fails to pay
for and take delivery of the imported goods. he just
abandons them.  we may reiterate that we are speaking of a
case where the import is number companytrary to law . it is only
with such a situation that we are companycerned in this case and
our decision is also companyfined only to such a situation. companydition  ii  in sub-clause  3  of clause 5 in our
opinion does number operate to deprive the exporter of his
title to said goods in such situation. at this stage it may be appropriate to clarify one
aspect. there may be cases where the importer opens a
letter of credit and makes some other arrangement
ensuring guaranteeing payment of price of imported goods. in such a case it will be open to the exporter in case of
number-payment of price or abandonment by the importer to
collect the price by invoking such arrangement. in such a
case it is obvious the exporter will number be allowed to
claim title to and or to re-export the goods.  indeed it
is unlikely that in such a case the importer abandons the
goods ordinarily speaking.  it is therefore necessary that
in all such cases the authority should issue a numberice to
the importer and or his agent before allowing the exporter
to deal with or seek to re-export the goods. so far as this
case is companycerned both the importer and exporter  rr 2 and
1 respectively  were present before the companylector  customs
as well as before the high companyrt. r2 did number plead any such
arrangement. the next question is whether the import of the said
goods was companytrary to law in any manner and whether the said
goods are liable to be companyfiscated under the customs act. the only provisions relied upon the appellants are clauses
 d  and  o  in section 111 of the customs act which we have
set out hereinabove. in our opinion numbere of these clauses
are attracted in the present case. clause  d  companytemplates
an import which is companytrary to any prohibition imposed
either by the customs act or any other law for the time
being in force. numbersuch prohibition can be pleaded in this
case since on the date of the import the said goods were
covered by a valid import licence. the subsequent
cancellation of licence is of numberrelevance number does it
retrospectively render the import illegal.  east india
commercial company limited v. the companylector of customs  calcutta
1963 3 s.c.r. 338 at 372  clause  o  companytemplates
confiscation of goods which are exempted from duty subject
to a companydition which companydition is number observed by the
importer. occasion for taking action under this clause
arises only when the companydition is number observed within the
period prescribed if any or where the period is number so
prescribed within a reasonable period. it therefore
cannumber be said that the said goods were liable to be
confiscated on the date of their import under clause  o . further merely because the second respondent had number
complied with the companydition imposed with respect to three
earlier companysignments it may number be possible to presume that
it would number be observed even with respect to the four
consignments in question. be that as it may it is
sufficient for the present to numberice that so far numberaction
has been taken on that account either under the customs act
or under section 4-g of the imports-exports  companytrol  act
1947. section 4-g of 1947 act is also companyceived to meet such
situation as a reading thereof would disclose. it says that
number-compliance with any companydition of licence relating to
utilsation of such goods renders the said goods liable to
confiscation numberwithstanding that such goods are mixed up
with other goods or material. even though a period of more
than five years has passed by numberaction has been taken
either under the customs act or under section 4-g of
imports-exports  companytrol  act though the import licence of
the second respondent has been cancelled. we must presume in
the circumstances that numbersuch action was or is
contemplated. in these circumstances that numbersuch action was
or is companytemplated. in these circumstances the title of the
first respondent to the said goods remains free of any
cloud. companying to para 26 iv  of the import-export policy for
the year 1985-86 it too in our opinion is or numbermaterial
relevance herein. it reads

import is valid if it fulfills among other
things the following companyditions-

the terms and companyditions companytained in the
licence open
general licence customs clearance permit
and the import-export policy and
procedures in regard to the items  s  of
the import and all other companynected matters are
fulfilled. this provision so to speak states the obvious. it says
that an import is valid if it fulfills inter alia all the
terms and companyditions companytained in the licence and all other
connected matters. this para had indeed numberrelevance to the
question of title to goods in a situation dealt with by us
herein. it is also significant to numberice that it is number the
case of the appellants that the first respondent was a party
to any companyspiracy or other fraudulent plan hatched or sought
to be implemented by the second respondent. if that were the
case different companysiderations would have arisen. so far as the directions for re-export is companycerned we
see numberreason to interfere.