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Maniklal Pokhraj JaIn Vs. Collector of Customs (Preventive), Bombay and Others - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai High Court
Decided On
Case NumberCriminal Writ Petition No. 1004 of 1981
Judge
Reported in1986(26)ELT689(Bom)
ActsCustoms Act, 1962 - Sections 111, 112, 115(2), 121, 124, 127, 135, 135(1) and 135(2); Constitution of India - Article 226; Evidence Act
AppellantManiklal Pokhraj Jain
RespondentCollector of Customs (Preventive), Bombay and Others
Excerpt:
.....has failed to prove that the transistor was smuggled property'.relying upon this finding shri parkar urged that it would not be open to the custom authorities to adjudicate upon the very same facts and record inconsistant findings. this judgment therefore, is clearly distinguishable on facts. that we think in the circumstances it is true and correct position as to the effect of the failure of a criminal prosecution on a departmental enquiry'.relying upon this passage, shri parkar again reiterated the argument that the present adjudication proceedings and the findings recorded therein must be held to be barred by principles of re judicate and/or issue estoppel. the division bench has also considered in its judgment various authorities of the supreme court as well as of other..........on merits of the petition, we do not wish to dismiss the petition on the ground of laches.9. shri parkar, learned counsel appearing in support of this petition firstly urged that in view of the order of acquittal passed by the trial magistrate and on appeal confirmed by this court, the adjudication proceedings ought not to have been initiated and/or proceeded. according to the learned counsel, the effect of order of acquittal and especially reasons given by this court while confirming the order of acquittal shows that the prosecution has failed to establish the nexus between the amount rs. 83,100/- found at the premises of the petitioner and the contraband gold that was seized from the persons of the other two persons viz., dharamchand and jagdish. in the light of this finding,.....
Judgment:

Kurdukar, J.

1. By this Petition under Articles 226 and 227 of the Constitution, the Petitioner seeks to challenge the legality and correctness of the orders passed by the authorities below.

2. The present proceedings arise under Section 111(a), 112 and 115(2) of the Customs Act, 1962 in connection with the import of gold bullion into India in contravention of the provisions of the Customs Act.

3. On December 3, 1970, the First Respondent Collector of Customs issued the show cause notice which came to be duly served upon the Petitioner in connection with the adjudication proceedings for initiating the action under Section 111(d), 112 and 115(2) of the Customs Act, 1962, hereinafter referred to as 'the Customs Act'. Few facts leading to these adjudication proceedings may be stated as under :

On receipt of secret information on 18.6.1970 that a Car under Registration No. MRA 3267 was being used in transportation of contraband gold, the said car was intercepted by the officers of Customs Department at Mohammad Ali Road to Modi Street, Opp : G.P.O. At Modi Street, the said car stooped and two occupants of the car whose names were Dharamchand Lalchand Shah and Jagdish Indaji Keshav got out of the car and went in the direction of nearby lane. Both these persons entered Patel Mansion and after about 10 minutes they returned to their car and at that time, the Customs Officers found that they were moving in some suspicious circumstances. Both these persons after entering the car, the driver started the same. But in the meantime, the Customs Officers stopped the vehicle. On interrogation, both these persons admitted that they were carrying gold on their person. Thereafter, the vehicle was taken to the Office of the Inspector of Customs, Alexandra Docks and on further interrogation they told the Customs Authorities that they received the gold on their person from one Maniklal Pokharaj Jain (Petitioner) residing on the First Floor of the Patel Mansion. The Customs Authorities thereafter, immediately rushed to the premises of the petitioner and contacted him. The Petitioner was then brought to the Office of the Inspector of Customs, Alexandra Docks where the interrogation of the said two occupants of the car was in progress. The Petitioner was then confronted with the above two carriers of gold and at that stage, they recognised the Petitioner being the same person who had given them the gold which was recovered from their persons. The Customs Authorities thereafter carried out the search in the presence of panch-witnesses which resulted into finding of 29 bars of gold, each weighing 10 tolas from the person of Dharamchand and 11 bars of gold each weighing 10 tolas and one nugget from the person of Jagdish. These gold bars were having the foreign marked thereon. Statements of both these persons under Section 108 of the Customs Act came to be recorded. Statement of the driver of the said car also came to be recorded. This contraband gold was valued at Rs. 84,000/- (M.V.). The contraband gold bars were seized in the reasonable belief that the same was liable to confiscate under the provisions of Customs Act. The car was also seized in the reasonable belief that the same was used as means of transport in the carriage of gold under Section 115(2) of the Act.

4. On 18th June, 1970, the premises of the Petitioners are searched in the presence of the panch witnesses as well as the Petitioner and as a result of the said search Indian currency of Rs. 83,100/- and a transistor radio of foreign original was found which came to be seized under a panchanama. During the search of the said premises, the Petitioner was interrogated when he stated that the Indian currency was given to him by one person to whom he knew as Baba for safe custody. It is not disputed that the said Baba was nobody else than Dharamchand. The Petitioner further stated that he had concealed the money in the secret compartment for safe custody. In regard to the transistor radio he stated that he bought the same from some unknown person and that he did not possess a wireless licence for the same. Since the Petitioner could not satisfactorily account for the Indian Currency found concealed in his room and in view of the statements of Dharamchand Shah and Jagdish to the effect that the gold found on their person was given to them by the Petitioner, the Customs Authorities seized the currency notes in the reasonable belief that it represented the sale proceeds of the smuggled goods and liable to confiscation under the provisions of the Customs Act. The transistor also came to be seized. Thereafter, the statement of the Petitioner was recorded under Section 108 of the Customs Act. His further statement under Section 108 of the Customs Act also came to be recorded on July 20, 1970. In the later statement he had stated that he is innocent, he had not handed over the gold to Dharamchand or Jagdish nor the said currency notes represent the sale proceeds. According to him, Dharamchand had deposited the said amount with him for safe custody. In view of all these circumstances, the Customs Authorities carried a reasonable belief that the Indian currency seized was also liable to confiscation under Section 121 of the Customs Act as it represented the sale proceeds of smuggled goods.

5. After service of the show cause notice, the Petitioner appeared before the Additional Collector of Customs. He was represented by his Advocate Shri A. C. Krishnamurthi. Personal hearing was fixed on 6th August 1971 and on that day, the Additional Collector of Customs told the Petitioner and his Advocate that the other two persons had requested for a short adjournment and whether he has got any objection for the same. The Petitioner and his Advocate did not concede to this request of adjournment and stated that they want to proceed with the matter since the case of the Petitioner is different than Dharamchand and Jagdish. The Additional Collector thereafter heard the Petitioner's Advocate and after perusing the material placed before him, by his Order dated October 15, 1971 (Exhibit - A) directed that the gold under seizure shall be confiscated absolutely under Section 111(d) of the Customs Act and the Indian currency of Rs. 83,100/- shall also be confiscated under Section 121 of the Customs Act. The Additional Collector further directed that the car No. MRA-3267 be confiscated under Section 115(2) of the Customs Act. Transistor Radio shall also be confiscated under Section 111(d) of the Customs Act. In regard to the vehicle, the Additional Collector gave an option to the owner to redeem the same on payment of a fine of Rs. 10,000/-. The option was also given to the owner of the transistor radio to redeem the same on payment of fine of Rs. 50/-. The Additional Collector also imposed a penalty of Rs. 10,000/- on the Petitioner as well as on Dharamchand L. Shah. A penalty of Rs. 1,000/- was also imposed on Jagdish Indaji Keshav under Section 112 of the Customs Act.

6. Aggrieved by this Order, the Petitioner filed an appeal to the Central Board of Excise and Customs and the said Board vide its Order dated July 30, 1976 (Exhibit B) dismissed the appeal and confirmed the order passed by the Additional Collector. The Petitioner thereafter preferred Revision Application to the Central Government. The Special Secretary to the Government of India vide its Order dated 7.1.1978 (Exhibit 'C') dismissed the Revision Application and confirmed the Order passed by the Authorities below. It is this order passed by the Special Secretary to Government of India, is the subject matter of challenge in this Petition. At the outset, it be stated that the Petitioner even before us does not lay any claim to this amount of Rs. 83,100/-.

7. At this stage we may also refer to criminal proceedings which were also initiated by the Customs Department against the Petitioner and other accused persons. It was a prosecution for the offence punishable under Section 135(1)(2) read with Section 135(i)(a) and Section 135(b) of the Customs Act. Accused Nos. 2 and 3 Dharamchand Lalchand Shah and Jagdish Indaji Keshav in that criminal prosecution pleaded guilty and they were accordingly convicted by the trial Magistrate. The trial proceeding against the Petitioner who was accused No. 1 therein. The learned Additional Chief Metropolitan Magistrate by his order dated July 30, 1975 acquitted the Petitioner. Aggrieved by this Order, the Customs Department preferred an appeal to this Court being Criminal Appeal No. 744 of 1978 and this Court vide its Order dated March 18, 1980 dismissed the appeal and confirmed the Order of acquittal.

8. At this stage, we may point out that the first order made by the Additional Collector in the adjudication proceedings is dated 15th October 1971 much prior to the order of acquittal made by the Trial Magistrate i.e. on July 30, 1975. It is true that the Appeal before the Central Board of Excise and Customs came to be disposed of after the order of acquittal made by the Trial Court. It is pertinent to note that the Central Government vide its order dated 7, 1978 dismissed the Revision Application and the present Petition under Article 226 of the Constitution was presented to this Court on June 22, 1981. These dates clearly establish that after about the expiry of the period of three years present petition was filed in this Court. It is unfortunate that there was no return filed on behalf of the Respondents to oppose this petition on the ground of laches. The explanation given by the Petitioner for delay is neither satisfactory nor justified. But however, since we heard both the Counsel on merits of the Petition, we do not wish to dismiss the petition on the ground of laches.

9. Shri Parkar, learned Counsel appearing in support of this Petition firstly urged that in view of the order of acquittal passed by the Trial Magistrate and on appeal confirmed by this Court, the adjudication proceedings ought not to have been initiated and/or proceeded. According to the learned Counsel, the effect of order of acquittal and especially reasons given by this Court while confirming the order of acquittal shows that the prosecution has failed to establish the nexus between the amount Rs. 83,100/- found at the premises of the Petitioner and the contraband gold that was seized from the persons of the other two persons viz., Dharamchand and Jagdish. In the light of this finding, Shri Parkar urged that it would not be open to the adjudicating authorities to record contrary and inconsistant finding to that of the criminal Courts. Shri Parkar urged that the adjudication proceedings must be held barred by the principle of issue estoppel and/or res judicate. Shri M. R. Kotwal appearing for the Respondents supported the order.

10. Before we deal with this argument in fairness we must point out the finding recorded by this Court while disposing of the Criminal Appeal No. 744 of 1978. It may be stated that of us (Kurdukar, J) was a party to the Judgment in the above referred Criminal Appeal. This Court while dismissing the Appeal filed by the Assistant Collector of Customs Department has observed as follows :

'The prosecution had also not shown whether accused nos. 2 and 3 carried the contraband gold from Patel Mansion upto the motor car. The prosecution has also not shown that the contraband gold which was found in the motor car occupied by accused nos. 2 and 3 was in fact brought from the house of accused No. 1. There is no nexus shown by the prosecution between the finding of Rs. 83,100/- and 400 Tolas gold found with the accused Nos. 2 and 3. These being very material lacunae in the evidence of the prosecution, it is difficult to come to an irresistible conclusion that the amount of Rs. 83,100/- found with accused No. 1 was the price paid to him for the purchase of 400 Tolas of gold by accused Nos. 2 and 3'......... Accused No. 1 has not confessed that the amount of Rs. 83,100/- was paid for the price of gold. What he has stated is that Baba gave him the amount for keeping it for an hour or so. We are in agreement with the trial Court that the prosecution has failed to bring home the charge against accused No. 1 and the trail Court was right in acquitting accused No. 1 we are also in agreement with the trial Court that the prosecution has failed to prove that the transistor was smuggled property'.

Relying upon this finding Shri Parkar urged that it would not be open to the Custom Authorities to adjudicate upon the very same facts and record inconsistant findings. He therefore, submitted that the proceedings before the Customs Department must be held to be barred by the principle of issue estoppel. In support of this contention Shri Parkar heavily relied upon the Judgment of Kerala High Court in Subramania Moothan v. Collector of Customs 1972(2) I.T.R. 66. Relying upon this authority Shri Parkar urged that entire burden is upon the Customs Department to show that the goods seized were smuggled goods and secondly, the proceeds which were found with the person were the sale proceeds of the contraband articles and therefore liable to confiscation. According to learned Counsel, Section 121 of the Customs Act will come into operation only if the Customs Department by satisfactory evidence establishes the nexus between the contraband articles and the sale proceeds. In the absence of such evidence, no order of confiscation under Section 121 can be passed merely on the ground of having found an amount in possession of the person. We have gone through the judgment of this Kerala High Court and we find that the Customs Department which relied upon several circumstances which were enumerated in para 4 of the said judgment were held to be insufficient to hold that the said amount represented the sale proceeds of the contraband articles. The facts of Kerala High Court Judgment further show that the Petitioner was a dealer in gold. But at the relevant time he was not having a licence in that behalf. The Customs Authorities proceeded on the presumption that any currency found at the residence represents the sale proceeds of smuggled goods. The Kerala High Court after enumerating the various circumstances held that none of these circumstances would conclude that the amount seized represents the sale proceeds of the contraband articles. The Customs Department has to establish by cogent evidence the rational nexus between the amount seized and the contraband articles any since that important link was missing the Kerala High Court set aside the orders passed in the adjudicating proceedings. This Judgment therefore, is clearly distinguishable on facts. Shri Parkar then drew our attention to the Judgment of the Madras High Court in Shaik Kasim v. Supdt., Post Offices : (1965)ILLJ197Mad . This Judgment on principles is more or less nearer to the contentions raised by the learned Counsel Shri Parkar, before us. Madras High Court has held that where the Criminal Court has tried the concerned person and acquitted him, it would be improper to initiate disciplinary proceedings against him (government servant) and if such proceedings are initiated, are liable to be quashed as not in consonance with the principles of natural justice. The Madras High Court further held that where the acquittal is substantially on merits, on identical facts and charges, it will not be proper for a disciplinary Tribunal to record a finding of guilt, and to punish a person. It further held that this is a basic principle of jurisprudence, and it makes no difference that the departmental authority acts before the criminal proceedings or after it and the Court, in exercise of the jurisdiction under Article 226 of the Constitution, would be justified in striking down the action based on such findings, as not in consonance with principles of natural justice. According to Madras High Court, this course would give rise to grave anomalies. Relying upon these principles, Shri Parkar urged that since the Petitioner has been acquitted on merits by the Trial Court and said acquittal has been confirmed by this Court, the Customs Department cannot reach contrary findings in adjudication proceedings as it would lead to anamolous situation. This argument must be rejected in view of the Judgment of the Division Bench of this Court in Miscellaneous Petition No. 85 of 1978 (Chandurkar & Mehta JJ.) delivered on 27th/28th November and 1st December, 1981 which fairly and squarely answers the argument raised by Shri Parkar before us and we prefer to follow the Division Bench Judgment of this High Court. We will however, refer to this Division Bench Judgment of this High Court. We will however, refer to this Judgment at a little later stage, Shri Parkar then drew our attention to another Judgment of the Bombay High Court (Nagpur Bench) in Jeevanprakash v. State Bank of India & Anr. 1983 Mh.L.J. 508. This was a case where the question of res judicate and issue estoppel fell for consideration before the Division Bench and while dealing with that aspect, the Division Bench has observed as follows :-

'36. It seems to us that where an acquittal is based upon a finding of fact, either to be existing or not existing as alleged, either by the prosecution or by the accused, then to that extent such a finding of fact becomes a binding and conclusive fact in all proceedings against that party. It will acquire the status of an issue estoppel and would not be applicable of being further investigated or enquired into for the purpose of coming to a conclusion differently or contradictorily. The same can never form as a basis and considered as a basis for purposes of determining the desirability of the employee to be retained in service or his continuation. On the other hand where the acquittal is on account of a technical defect in the prosecution or trial, where the accused has been given a benefit of doubt and where no fact as such is found to have been established or is proved, then on the basis of the same fact and evidence relating to same matters, a departmental enquiry can be held. It is between these two decisions that twilight area occurs and presents difficulties. It seems to us that in such cases, the middle course which has been suggested by Rangarajan J. would be most properly suited. Nevertheless no had and fast rule of inflexible dictum can be laid down, that in no case, where a criminal prosecution has ended in an acquittal, can there be a departmental enquiry held on the basis of the same facts and allegations. It is equally also not true to hold the rule that notwithstanding an acquittal a departmental enquiry can be held even in respect of the same facts and on the same evidence, even though a contrary conclusion and finding is reached by the concerned Court. That we think in the circumstances it is true and correct position as to the effect of the failure of a criminal prosecution on a departmental enquiry'.

Relying upon this passage, Shri Parkar again reiterated the argument that the present adjudication proceedings and the findings recorded therein must be held to be barred by principles of re judicate and/or issue estoppel. The facts of this reported Judgment show that after termination of criminal proceedings, departmental action was initiate and in that context the principle of issue estoppel was held applicable. In the present case before us adjudication proceedings were initiated earlier and in a subsequent criminal trial petitioner was acquitted. In our opinion, at any rate, principle of issue estoppel is not applicable to the adjudication proceedings.

11. Turning to the unreported Judgment of this Court in Misc. Petition No. 85 of 1978 a direct question fell for consideration in connection with the ambit and powers of the Customs Department in initiating adjudication proceedings under Section 111 & 112 of the Customs Act and consequential order of confiscation under Section 121 of the Customs Act and also penalty under Section 135 of the Customs Act. The facts of this case show that the Petitioner was also tried in criminal Court for offences punishable under Section 135 of the Customs Act and ultimately, he was acquitted. The argument that was advanced before the Division Bench was as follows :

'At the very outset, Mr. Singhvi, appearing on behalf of the Petitioner, has contended that Captain Khan having been acquitted by the Additional Chief Presidency Magistrate and that acquittal having been confirmed by the learned Single Judge, it was not now open to the Central Government to proceed on the footing that diamonds were found in the coat brought by Captain Khan on 2nd November 1969 and that it was not permissible for the Central Government to proceed on the assumption that the finding was incorrect.......... according to the learned Counsel, it was wholly improper on the part of the Central Government as quasi-judicial Tribunal not to take into consideration of the finding recorded by the High Court'.

A very exhaustive and elaborate Judgment has been delivered by Chandurkar J. as he then was. The Division Bench has also considered in its Judgment various authorities of the Supreme Court as well as of other High Courts on this question. The Division Bench has also construed the ambit of Sections 111, 112 and 135 of the Customs Act and after taking into account all these factors the Division Bench has observed as follows :-

'15. Section 112 is an express provision which authorises the levy of penalty in respect of acts or omissions referred to therein. The procedure with regard to adjudication of confiscation and penalties is expressly provided for in Section 122 of the Act. The power to be exercised by the Collector of Customs or Deputy Collector of Customs or by an Assistant Collector of Customs or by Gazetted Officer of Customs lower in rank than an Assistant Collector of Customs in accordance with the value of the goods liable to confiscation. The procedure to deal with confiscation or imposition of penalty is prescribed in Section 124 and under that provision a notice in writing has to be given to the concerned person informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty, and he is to be given a reasonable opportunity of being heard in the matter. Then comes Section 127 which expressly provides that even though an order of confiscation and an order of penalty is made by the Customs Officer that does not affect the liability to punishment under the provision of Chapter XVI or under any other law. We already reproduced the provisions of Section 135 make in pointedly clear that the power to prosecute under Section 135 is without prejudice to the action which may be taken independently under the provisions relating to confiscation and penalty. Now, it cannot be the argument that while independent powers of making an order of confiscation and penalty can be made by the appropriate officer of the Customs, irrespective of a prosecution under Section 135 being resorted to or not, in case there is a prosecution and there is an acquittal, the power expressly bestowed under Section 112 must be treated as ineffective. Unless we are able to held that even in spite of the express provisions of Section 112 and Section 127, in case there is an acquittal in prosecution instituted under Section 135, their powers cannot be exercise the contention on behalf of the Petitioner could not be accepted. We see no warrant for the view that there is a prohibition against the Customs Officers to perform their statutory functions and exercise their statutory power under the Act because of a failure of the prosecution started under Section 135 and the acquittal of the person concerned. By its very nature, the two proceedings are independent of each other. In a given case, evidence which may be available for the purposes of proceedings under Section 112 may not be available or even if it is available, it may be admissible in regular Court of law in which the admissibility and relevance of the evidence is determined with reference to the provisions of the Evidence Act. In a Criminal prosecution the accused need not open his mouth nor make any statement while in the proceedings for adjudication or confiscation before the Customs Department, the statement made by the person from whom the contraband articles were seized can be looked into. The scheme of the Act, therefore, clearly indicated that the two proceedings have to be dealt with independently of each other on such material as is available and permissible in these proceedings'.

12. We have gone through the entire judgment of the Division Bench of this Court and in our opinion, this judgment fully answers the various conclusions raised by Shri Parkar in this Writ Petition. As stated earlier, this judgment is directly on the point and we are not able in complete agreement with the reasons recorded therein. coming to the other Judgment of this very Court in Jeevanprakash v. State Bank of India 1983 Mh.L.J. 508 we find that the question involved before the Division Bench was altogether different. Secondly, the provisions of para, 521 of the Sastry Award which fell for consideration before the Division Bench are materially different than Section 135 of the Customs Act. We, therefore do not find that the law laid down by the Division Bench, in the above referred case would be applicable to this case.

13. It was then urged by Shri Parkar that there was no material which could be said to be sufficient to come to the conclusion that the amount that was found from the house of the Petitioner represents the sale proceeds. The conclusion drawn by the Authorities below were far fetched and no prudent person would come to that conclusion. We are afraid in a Petition under Article 226 of the Constitution of India, sufficiency or insufficiency of the material would hardly be a ground of attack. This argument was also considered by the Division Bench of this Court in Miscellaneous Petition No. 85 of 1978 (supra) and this Court has observed as follows :

'It is now well established that in domestic enquiries the enquiry authorities and statutory authorities under the relevant Acts will be sole judges of facts, and sufficiency of evidence cannot be urged as ground for interference with the validity or the legality of the orders of the Departmental Authorities. If there is evidence in support of the finding, then it will not be permissible for this Court to undertake the task of reappreciating the evidence, unless of course it is possible for the Petitioner to show that the finding is really based on no legal evidence with the result that the finding becomes infirm'.

Thus, this submission cannot be accepted.

14. Lastly, it was urged by Shri Parkar that the amount of penalty imposed upon the Petitioner is too heavy especially in vies of the explanation given by the Petitioner that the said amount was deposited by Dharamchand with him by way of safe custody. We do not see any substance in this contention. This Petition has no substance and the same deserved to be dismissed. Accordingly, Rule is discharged. However, there will be no order as to costs.


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