(1965) 1 SCR 123 : AIR 1965 SC 722
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Facts:
•The appellant in this case was the State of Maharashtra, while the respondent was Mayer Hans George, a German national.
•On 25th August 1948, the Government of India issued a notification under Section 8 of the Foreign Exchange Regulation Act, 1947 (FERA) prohibiting the import or sending of gold and gold articles into India without prior permission of the Reserve Bank of India (RBI).
•On the same day, the RBI released another notification granting a general license for the transit of gold articles that were merely passing through India but intended for destinations outside India.
•Later, on 8th November 1962, the RBI imposed a stricter condition, requiring that any gold carried in transit must be declared in the aircraft’s manifest as either “same bottom cargo” or “trans-shipment cargo.” This amendment was officially published on 24th November 1962.
•The respondent, a German smuggler, was traveling from Zurich to Manila via a Swiss aircraft, which had a scheduled halt in India. On 27th November 1962, when the aircraft landed in Mumbai, customs officials—acting on prior intelligence—searched him and discovered 34 kilograms of gold concealed in his jacket.
•He was convicted by the Presidency Magistrate on 27th April 1963 and sentenced to imprisonment. However, the Bombay High Court acquitted him on the ground that he lacked knowledge of the 1962 notification.
•The State appealed to the Supreme Court of India, where his conviction was ultimately upheld, although his sentence was reduced since he had already served about five months in jail.
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Issues:
1.The key issue before the court was whether an individual could avoid liability under Section 23 of the Foreign Exchange Regulation Act, 1947, by claiming they didn’t know about the law or the government notification.
2.Did the respondent possess mens rea (criminal intent)?
3.Could he be punished under the doctrine of strict liability?
4.Was he at fault for not declaring the gold?
5.Was the government justified in imposing such a prohibition on goods in mere transit through Indian territory?
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Rules:
1.Mens Rea:
•The term denotes a guilty mind or criminal intent. Mere action (actus reus) is not sufficient for a crime unless accompanied by the requisite mental state.
•Under Section 39 of the IPC, an act is voluntary if the person either intends the outcome or is aware of its probable consequences.
2.Strict Liability:
•Under this principle, a person can be held criminally liable even without proof of mens rea.
•The maxim “Actus non facit reum nisi mens sit rea” means an act does not make a person guilty unless the mind is guilty. However, statutory offences may carve out exceptions where liability is absolute.
3.Foreign Exchange Regulation Act, 1947 (FERA):
•Section 8 prohibited the import or transit of gold into India without special or general permission of the RBI.
•This section empowered the government to control economic activities for safeguarding national financial security.
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Analysis:
(A) Appellant’s Arguments (State of Maharashtra):
•The Solicitor General emphasized that the restriction was introduced for safeguarding India’s economic security and to curb gold smuggling.
•Section 23(1-A) of FERA does not explicitly require proof of mens rea; thus, the offence was one of strict liability.
•Ignorance of law cannot be an excuse. Since the notification was published in the Official Gazette, it was considered to be in the public domain and binding.
•Justice N. Rajagopala Ayyangar’s opinion stressed that allowing ignorance as a defense would undermine the law, especially when national economic interest is at stake.
(B) Respondent’s Arguments (Mayer Hans George):
•Represented by Mr. Sorabjee, the respondent contended that:
•He was not importing gold into India but merely passing through as a transit passenger.
•He never left the aircraft, so his actions did not endanger Indian security or stability.
•The new RBI notification (8th November 1962) was published only on 24th November 1962, leaving little time for international passengers to be aware of the change.
•Unless the legislation explicitly excluded mens rea, liability could not be fastened. His lack of knowledge should excuse him.
(C) Court’s Decision:
•The Presidency Magistrate convicted him and imposed a year-long imprisonment.
•The Bombay High Court acquitted him, reasoning that he lacked mens rea.
•The Supreme Court, however, reversed the acquittal, holding that in statutory offences such as this, actus reus alone is sufficient, and mens rea is not essential.
•Nevertheless, given the time he had already spent in custody, the sentence was reduced.
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Conclusion:
The case highlights the tension between individual fairness and state interest. From a national security and economic standpoint, strict enforcement of gold control regulations was necessary. However, from the individual’s perspective, the respondent was caught in a legal trap due to the sudden change in rules and his lack of awareness.
Ultimately, the Supreme Court prioritized economic stability over individual ignorance, affirming that statutory offences can exclude mens rea. This judgment firmly established that in matters concerning foreign exchange and national economic policy, the doctrine of strict liability applies.