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TMI Blog1975 (3) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... he court concurred with the decision of the trial court and dismissed the revision. This appeal, by special leave, is against that order. The question for consideration is whether section 23(1A) of the Act violates article 14 of the Constitution. Section 23(1) as it originally stood in the Act provided that whoever contravenes any of the provisions of the 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. Section 23 was amended in 1950 and 1952. We are not concerned with those amendments. In 1957, the section was further amended by the Foreign Exchange Regulation (Amendment) Act, 1957 (Act No. 39 of 1957). This amendment provided for departmental adjudication in respect of contravention of certain provisions of the Act. The section as amended read as under: "23. (1) If any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d are found guilty by the Director of Enforcement need not face prosecution in a criminal court if the Director is of opinion that the penalty he is empowered to impose would be adequate punishment, whereas the persons alleged to contravene the other provisions of the Act have necessarily to face prosecution in a criminal court without being given the benefit of an inquiry by the Director of Enforcement and the opportunity to the delinquents to convince him that imposition of penalty by him would be adequate punishment even if they are found guilty. The question, therefore, is whether persons contravening the provisions specified in section 23(1)(a) are similarly situated with persons contravening the other provisions of the Act with respect to the purpose or object of the Act or whether by reason of the nature of the offences resulting from the contravention of the provisions specified in section 23(1)(a) the persons contravening them form a class by themselves distinct from the persons contravening the other provisions of the Act and, therefore, the legislative judgment to deal with them under a different procedure was justified with reference to the ultimate purpose of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible advantage of escaping with penalty even if they are found guilty of the offences. Their grievance, therefore, is that the classification made in section 23(1) is under-inclusive and is, therefore, unreasonable. Oftentimes the courts hold that under-inclusion does not deny the equal protection of laws under article 14. In strict theory, this involves an abandonment of the principle that classification must include all who are similarly situated with respect to the purpose. This under-inclusion is often explained by saying that the legislature is free to remedy parts of a mischief or to recognize degrees of evil and strike at the harm where it thinks it most acute. The courts have recognised the very real difficulties under which legislatures operate-difficulties arising out of both the nature of the legislative process and of the society which legislation attempts perennially to reshape -and they have refused to strike down indiscriminately all legislation embodying classificatory inequality here under consideration. Mr. Justice Holmes, in urging tolerance of under-inclusive classifications, stated that such legislation should not be disturbed by the court unless it can cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort, export of gold and silver. The bank had an enforcement section. In 1952, the Central Government authorised the Customs and Central Excise officers to investigate and prosecute cases of import or export of gold and silver in contravention of the provisions relating to them. In May, 1956, the Central Government took over the work relating to enforcement, i.e., the residuary work done by the Reserve Bank other than those entrusted to Customs department. A Directorate of Enforcement was set up in May, 1956, with the idea that there should be a specialized agency to deal with specified categories of offences. Between April, 1949, and April, 1956, when the duty of enforcement was with the Reserve Bank, the bank had completed investigation in about 200 cases but prosecutions could be launched in respect of 66 cases only and out of these 60 cases ended in convictions. No prosecution could be launched in respect of other cases in view of the fact that evidence legally necessary to secure conviction in a court was not forthcoming. When the work was transferred to the Enforcement Directorate of the Ministry of Finance, its experience was also similar. From May, 1956, till about 1957, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 23(1)(a). The introduction of these sections within section 23(1)(a) was the result of further experience gained during the succeeding years. It was only on the basis of the experience gained by the working of the Act that a decision could be taken about the classification of offences in respect of which trial by a court would be expedient and those in respect of which summary procedure visualized by section 23(1)(a) might be necessary. Generally speaking, therefore, the basis of the classification was that in cases where there was likelihood of getting sufficiently unimpeachable evidence as, for instance, in cases involving contravention of sections 14, 13(2), 15, 18, etc., where the Reserve Bank of India as a specialized agency comes into the picture and be in possession of relevant materials, those cases were left to be dealt with under section 23(1A) by criminal courts. In paragraph 17 of the affidavit of Shri M.L. Sharma, Under Secretary, Ministry of Finance, Department of Economic Affairs, filed with the permission of this court, the reasons why the legislature selected the contravention of certain provisions of the Act for being dealt with by the criminal courts in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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