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Nagar Mohan Rao and anr. Vs. the Collector of Central Excise, Bangalore - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKarnataka High Court
Decided On
Case NumberWrit Petn. No. 164 of 1960
Judge
Reported inAIR1961Kant203; AIR1961Mys203; ILR1960KAR534
ActsConstitution of India - Articles 226 and 311; Sea Customs Act, 1878 - Sections 167(8), 168 and 182; Foreign Exchange Regulation Act - Sections 23A; Evidence Act; Motor Vehicles Act - Sections 47
AppellantNagar Mohan Rao and anr.
RespondentThe Collector of Central Excise, Bangalore
Appellant AdvocateG.K. Govinda Bhat, Adv.
Respondent AdvocateAdv. General
Excerpt:
.....prior to and as on 1.3.1974. - if these rules are satisfied, the enquiry is not open to attack on the ground that the procedure laid down in the evidence act for taking evidence was not strictly followed'.as i mentioned before, in the subsequent decisions of the supreme court these observations of their lordships were accepted as laying down the correct proposition with regard to the principles of natural justice. such a report is meant more for the use of the authority in making or refusing a grant than for the use of the several applicants or any one of them'.in other words',their lordships continued 'it is in the nature of information supplied by the police in order to assist the authority in making up its mind'.these observations of his lordship which immediately follow the..........by the collector of central excise, bangalore, there has been total violation of the principles of natural justice, inasmuch as the statement of all the witnesses were recorded behind the back of the petitioners and none-of them was produced for cross-examination although there was a specific request for that purpose-made by the petitioners.the learned advocate contended that the collector in proceeding with the enquiry in the manner as aforesaid, has violated the principles of natural justice and the order passed by him should be set aside on that ground. the learned advocate in support of his contention relied on several decisions of the supreme court reported in state of u. p. v. mohammad nooh, air 1958 sc 86; union of india v. t. r. vaima, (s) : (1958)iillj259sc & phul bari tea.....
Judgment:

Das Gupta, C.J.

1. The petitioners before us are challenging in this petition the order of the Collector of Central Excise, Bangalore, dated 12-2-1960 confiscating their Vauxhai car under section 168 of the Sea Customs Act read with Section 23-A of the Foreign Exchange Regulation Act and also imposing a penalty of Rs. 1000/- on each of the petitioners under Section 167(8) at the Sea Customs Act. The matter arises in this, way:--

2. The petitioners, who are two in number, are partners of a firm known as M/s. Nagar Srinivasa Rao. The said firm carries on business at Man-galore. They were originally called upon by the Collector of Central Excise, Bangalore to show cause, why a penalty under Section 167 (8) should not be imposed upon them for having illegally imported. 41 belts, weighing 20,500 tolas of gold into India in a vessel known as Osama.

They were served with another show-cause notice asking them to show cause as to why their two cars, being Studehakar and Vauxhai, should not be confiscated under Section 168 of the Sea Customs-Act for having been used for the purpose of removal of the said goods. On 15-11-1958 the Collector of the Central Excise passed an order confiscating both the cars and imposing a penalty of Rs. 1000 on each, of the petitioners. Against that order a writ petition, being W. P. 571/58, was filed by the petitioners in this court.

On 16-11-59 a memo was filed before this court by the parties in the said writ petition and this court made an order on the said memo. In the said memo it was stated that as there was no finding by the Collector of Central Excise, Bangalore, in his order dated 15-11-1958 that the gold was brought or sent from any place outside India, the respondents agree that the said order may be set aside. The 1st respondent under the said memo reserved the right to take evidence and make a finding whether the gold was brought or sent from any place Outside India.

Thereafter, on 13-1-1960, fresh proceedings were started against the petitioners by giving them, notice to show cause- The petitioners sent their reply and ultimately the Collector of Central Excise, Bangalore, passed an order on 12-2-1960 which is-impugned in this writ petition. By this order the Collector confiscated only one of the said two cars, i.e., Vauxhai Car, and imposed a penalty of Rs. 1000 on each of the petitioners. As I said before, the petitioners are challenging this order in this writ petition.

3. Several grounds are urged by the learned! Advocate for the petitioners in support of this petition. In my opinion, one of the said grounds is sufficient to dispose or this appeal and this petition should succeed on that ground.

4. It is contended in the first place by the learned Advocate for the petitioners that in the enquiry, which was conducted by the Collector of Central Excise, Bangalore, there has been total violation of the principles of natural justice, inasmuch as the statement of all the witnesses were recorded behind the back of the petitioners and none-of them was produced for cross-examination although there was a specific request for that purpose-made by the petitioners.

The learned Advocate contended that the Collector in proceeding with the enquiry in the manner as aforesaid, has violated the principles of natural justice and the order passed by him should be set aside on that ground. The learned Advocate in support of his contention relied on several decisions of the Supreme Court reported in State of U. P. v. Mohammad Nooh, AIR 1958 SC 86; Union of India v. T. R. Vaima, (S) : (1958)IILLJ259SC & Phul bari Tea Estate v. Its workmen, : (1959)IILLJ663SC .

In all these cases, it has been held that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies and that the evidence of the opponent should be taken in his presence and that he should be given opportunity to cross-examine the witnesses examined by the opponent and that no material should be relied on against him without his being given an opportunity of explaining them. The learned Advocate contended before us, on the authority of these decisions, that in this case the principles of natural justice, as laid down by their Lordships, have been violated and the order in question therefore has to be set aside.

5. It cannot be disputed that in the Supreme Court cases, to which reference has been made by the learned Advocate for the petitioners, it has been held that the rules of natural justice require that evidence of the opponent should be taken in the presence of the party and that he should he given an opportunity to cross-examine the witnesses examined by the opponent. In this case, it is not disputed, the evidence of the witnesses have been taken behind the back of the petitioners and they were not given an opportunity of cross-examining the witnesses. So, on the authority of the said decisions of the Supreme Court, it should be held that the enquiry held in this case was conducted in a manner violative of all principles of natural justice.

6. But the learned Advocate-General tried to distinguish the said decisions of the Supreme Court on the ground that those decisions related only to a case under Article 311 of the Constitution. The learned Advocate-General contended before us that their Lordships were not considering in those decisions a case of the present nature. He further contended that the present case is not a case governed by Article 311 of the Constitution. The learned Advocate-General mainly relied on another decision of the Supreme Court in New Prakash Transport Co. Ltd. v. New Suwarnn Transport Co. Ltd., (S) : [1957]1SCR98 and on the observations of Mr. Justice Sirtha, as he then was, made in the said case. The particular observation, on which the learned Advocate-General relied in support of his contention, was as follows :

'.-.... it has got to be observed! that the question whether the rules of natural justice have been observed in a particular case must itself be judged in the light of the constitution of the statutory body which has to function in accordance with the rules laid down by the legislature and in that sense the rules themselves must vary.'

Relying on this observation, the learned Advocate-General contended before us, that the rules of natural justice would not be the same in every case and what is true in a case coming under Article 311 would not be true in the present case. The learned Advocate-General conceded before us that if it be held that the rules of natural justice have been violated in this particular case, then the petitioners would be entitled to obtain the relief they have asked for in this petition.

But, he contended, the only rule of natural justice so far as the present case is concerned is that the petitioners should be given an opportunity of being heard. The rules of natural justice do not extend to their getting an opportunity to cross-examine the witnesses of the other side or to have them examined in their presence. The learned Advocate-General contended that although such may be the rules of natural justice in a case coming under Article 311 of the Constitution, there are no such rules of natural justice in a case coming under the Sea Customs Act,

7. I am unable to accept this contention of the learned Advocate-General. In the first place it should be mentioned that their Lordships of the Supreme Court in the decisions, to which I have referred, did not restrict their observations relating to the application of the principles of natural justice only to cases coming under Article 311. The observations made by their Lordships were wide enough to cover all cases, for example in the case reported in AIR 1958 SG 86. Chief Justice Das, as he then was, observed as follows :

'If an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court's sense of fairplay the superior Court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the Court or tribunal of first instance, even if an appeal to another inferior court or tribunal was available and recourse was not had to it or if recourse was had to it, it confirmed what ex facie was a nullity for reasons aforementioned. This would be so all the more if the tribunals holding the original trials and the tribunals hearing the appeal or revision were merely departmental tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally come to our notice.'

These observations, in my opinion, are wide enough to cover all cases of investigation by a judicial or quasi-judicial tribunal. They cannot be restricted only to a case of departmental punishment coming under Article 311 of the Constitution. Similarly the observations made in the case reported in (S) : (1958)IILLJ259SC , which have been approved in the subsequent decisions of the Supreme Court, are equally of wide application and cannot be said to have been limited merely to cases coming under Article 311 of the Constitution. Their Lordships in the said case observed as follows :

'Now, it is no doubt true that the evidence of the respondent and his witnesses was not taken in the mode prescribed in the Evidence Act, but that Act has no application to the enquiries conducted by tribunals, even though they may be judicial in character. The law requires that such tribunals should observe rules of natural justice in the conduct of the enquiry, and jf they do so, their decision is not liable to be impeached on the ground that the procedure followed was not in accordance with that, which obtain in a Court of Law.

Stating it broadly and without intending it to be exhaustive, it may be observed that rules or natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party, and that no materials should be relied on against him without his being given an opportunity of explaining them.

If these rules are satisfied, the enquiry is not open to attack on the ground that the procedure laid down in the Evidence Act for taking evidence was not strictly followed'.

As I mentioned before, in the subsequent decisions of the Supreme Court these observations of their Lordships were accepted as laying down the correct proposition with regard to the principles of natural justice. Neither in this case nor in the subsequent decisions of the Supreme Court the view taken by their Lordships on this point was limited only to cases coming under Article 311 of the Constitution. The said view was wide enough to cover all cases of enquiry by a judicial or quasi-judicial authority.

The decision of the Supreme Court reported in (6) : [1957]1SCR98 on which the learned Advocate General relied was a decision on the Motor Vehicles Act. The question with which their Lordships were concerned in the said case was whether or not the transport authority was justified in allowing certain written representations made by the police authority before him for being admitted for consideration. In dealing with that question, their Lordships referred to Section 47 of the Motor Vehicles Act and held as follows:

'...... .the Statute requires that authority to have regard to the matters set forth in Sec, 47 of Act, as already indicated. The Police authority within whose local jurisdiction any part of the proposed route lies has also been given the right to make representations. But the police report submitted to the Regional Transport Authority or to the Appellate Authority, if it requires the police authority to do so, is not intended to be anything more than an expression of opinion by an authority interested in the maintenance of law and order, with particular reference to the question as to whether any of the applicants for a permit had anything to its credit or discredit as supplier of transport facilities. Such a report is meant more for the use of the authority in making or refusing a grant than for the use of the several applicants or any one of them'.

'In other words', their Lordships continued 'it is in the nature of information supplied by the police in order to assist the authority in making up its mind'.

'These observations of His Lordship which immediately follow the observation on which the learned Advocate General relied, to my mind, clearly brings out the true meaning and effect thereof. In other words, if the legislature requires certain things to be done then there is no scope for the argument that by doing it principles oE natural justice have been violated and in that! sense rules themselves must vary. That in my opinion is the true effect of the said observation.

Their Lordships further held that when the subsequent police report was read out, neither the appellant nor the first respondent nor for the matter of that any of the other parties, raised any objection to the use of that document or asked for an adjournment on the ground that it had been taken by surprise or that it had materials to offer in Opposition to the report. Their Lordships in that case were not concerned with a case as at present. In my opinion the case, which was before their Lordships, stood entirely on a different footing. In my view, this case does not support the present contention of the learned Advocate-General.

8. There is however, a case which, in my opinion is a direct authority on this point. That is a decision of the Bombay High Court reported in Ganesh Mahadev v. Secy, of State, ILR 43 Bom. 221 ; (AIR 1919 Bom 30). In that case their Lordships had to deal with the very questions with which we are. concerned in this writ petition that is to say, how far the Customs authority in adjudging confiscation or penalty under the Sea Customs Act can permit evidence to be taken in the absence of the accused who had no opportunity of cross-examining the witnesses. Mr. Justice Heaton, in the course of his judgment in the said case, dealing with this point observed as follows:

'The general nature of the proceedings of the Tribunal is indicated by the use of the word 'adjudge' especially as it is used in connection with what is described as an offence. We have, therefore to consider whether the Customs officer has really adjudged the confiscation and the penalty, in other words, we have to consider whether there has been an adjudication. Now the plaintiff alleges that the officer who claims to have adjudged the confiscation and the penalty never himself took the evidence of the witnesses that he never saw the plaintiff who may be described as the person accused or heard what he had to say; that the person who did take the evidence was a subordinate official; that he took it in the absence of the accused who had no opportunity of cross-examining the witnesses; and that the accused was not given any opportunity of adducing evidence in his own favour. As I began by saying, we must for the purposes of the argument, take these facts to be true, although it may be, when the case comes to be inquired into, it will be found that they are not true. Now assuming them to be true, it seems to me quite clear that there never was an adjudication of the land contemplated by the Sea Customs Act. I will not attempt to define what such an adjudication should be beyond this, that it must be a fair hearing of both sides'.

The learned Advocate-General sought to distinguish this case by contending before us that the fact that the evidence of the other party was taken in the absence of the accused and the accused had no opportunity of cross-examining the witnesses is not the only matter which induced their Lordships to hold that there was no fair hearing of both sides, but all the matters mentioned in the said judgment taken together induced their Lordships to take that view. I am unable to agree with the learned Advocate-General.

The effect of that observations, to which I have referred, in my opinion, is that if any one of the things mentioned therein is wanting, then it cannot be said that there has been a fair hearing of both sides. I cannot agree with the learned Advocate General that if none of the matters mentioned in the said portion of the judgment is to be found, then alone it can be said that there has not been a fair hearing of both sides. I am of the opinion that applying the principle laid down by their Lordships of the Bombay High Court, in this case there has not been any adjudication within the meaning of that expression as appearing in Section 182 of thee Sea Customs Act.

9. Before concluding, I should refer to another decision of the Bombay High Court reported in Pukhraj Champalai v. D. R. Kohle, 61 Bom LR 1230. A Division Bench of the Bombay High Court in that case laid down in clear terms that if an enquiry is a quasi-judicial enquiry, respondent No. 1 was bound to follow the principles of natural justice in holding the enquiry. Their Lordships referred to the observations, which I have already quoted, in the decision of the Supreme Court in (S) : (1958)IILLJ259SC .

10. In the result, therefore, I hold that the manner in which the enquiry in this case has been conducted is violative of all principles of natural justice. On that ground the order of the Collector of Central Excise, Bangalore, dated 12-2-1960 has to be set aside.

11. Having come to this conclusion, it becomes unnecessary for us to go into the other contentions raised before us by the learned Advocate for the petitioners and we express no opinion on the said contentions.

12. In the result, therefore, this petition succeeds and we make an order quashing the impugned order, i.e., the order of the Collector of Central Excise, Bangalore, dated 12lh February, 1960. There will be no order as to costs of this petition.

Somnath Iyer, J.

13. I agree.

14. Petition allowed.


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