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L. Kashi Nath Seth Vs. Collector, Central Excise, Allahabad and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 204 of 1975
Judge
Reported inAIR1979All128
ActsConstitution of India - Article 226; Code of Civil Procedure (CPC) , 1908 - Sections 11 and 141 - Order 2, Rule 2; Explanation (Inserted by Code of Civil Procedure (CPC) (Amendment) Act, 1976; ;Gold (Control) Act, 1968 - Sections 71
AppellantL. Kashi Nath Seth
RespondentCollector, Central Excise, Allahabad and ors.
Appellant AdvocateSri Dhar and ;R.P. Tripathi, Advs.
Respondent AdvocateV.K. Burman, Adv.
DispositionPetition dismissed
Excerpt:
.....them - writ for quashing order not maintainable. - - appendix 'b' is the list of the 'gold and gold ornaments recovered from the artisan's section on the second floor and from the safe on the first floor'.the total weight of the 'gold and gold ornaments found from the manufacturing section and from the possession of the artisan' on the second floor is 119.050 grams comprising of several items,while the total weight of the 'gold and gold ornaments found from the safe' on the first floor, is 1079.000 grams. 447 of 1971) .3,770.415 balance still in the custodyof the department .3 141.715 ,seized from the safe on thearound floor vide appendix 'a' to the show cause notice 2,599.330 2,768.450 ,seized from the first floorvide appendix 'b' to the show cause notice .169.100 373.285 gms. from..........proceedings; that however, the respondent collector, central excise, did not return tha remaining gold ornaments and continued to proceed with the adjudication proceedings on the basis of a show cause notice issued by him; that the petitioner-appellant was entitled to the return of the remaining ornaments seized from the ground floor and the second floor of its business premises, but its applications for the same did not bear any fruit.4. the surviving relief claimed in the writ petition is for the quashing of the show cause notice which is annexure iii to the writ petition. this notice is dated 11th oct. 1971 and has been issued by the respondent assistant collector, central excise. it requires the petitioner appellant to show cause why the goods mentioned in the annexure to that.....
Judgment:

Deoki Nandan, J.

1. This special appeal is directed against the judgment of a learned single Judge of this Court dismissing Civil Misc. Writ Petition No. 6429 of 1971. The judgment under appeal is dated May 19, 1975. Two writ petitions were disposed by the same judgment. The other writ petition was numbered 563 of 1972. Munshi Ram v. Collector, Central Excise. That was partly allowed. The present special appeal does not relate to that part of the judgment.

2. The only point raised by the petitioner in the writ petition No. 6429 of 1971 before the learned single Judge was that the provisions of Sections 71 and 73 of the Gold (Control) Act, 1968 were unconstitutional and void. The learned single Judge found that although Sections 71 and 73 of the Gold (Control) Act, 1968 (hereinafter referred to as the Act) were held to be unconstitutional by the Supreme Court in Badri Prasad v. Collector of Central Excise, (AIR 1971 SC 1170), the vice pointed out by the Supreme Court was removed by amendment of thosesections by the Gold Control (Amendment) Act, 1971 and that neither of the two sections, as they stood after the amendment, could be said to be unconstitutional.

3. Therefore, in the special appeal as originally filed, the only grievance which could be raised, was against the view of the learned single Judge that Sections 71 and 73 of the Act are not unconstitutional. However, by an application presented on 9th Aug., 1977 (Civil Misc. Application No. 5859 of 1977) before the Special Appeal Bench, the petitioner-appellant was allowed by order dated 21st Dec., 1977, to amend the writ petition and to add certain new grounds in the special appeal. The supplementary affidavit filed along with the application, is the only surviving basis on which relief in now claimed by the petitioner-appellant. It has been stated therein that there was a search of the petitioner-appellant's business premises at 20, Jhandawala Park, Lucknow on April 27, 1971; that certain articles of gold were seized at that search; that the petitioner-appellant had challenged the search and seizure by a Writ Petition No. 2939 of 1971; that all the articles seized from the first floor of the petitioner-appellant's business premises, except some ornaments were returned as they were found to be accounted for in its books of account; that the articles so returned were sold by the petitioner-appellant in due course of business and were, therefore, no longer available for being proceeded against; that the said writ petition was allowed by judgment dated 10th Aug. 1971 reported as L. Kashi Nath v. Collector Central Excise in AIR 1972 All 16; that the respondents appealed from that judgment, that was Special Appeal No. 447 of 1971 and was dismissed by a Division Bench of this Court by judgment dated December 9, 1971 which is reported as Collector Central Excise v. L. Kashi Nath Jewellers in AIR 1972 All 231; that the writ petition giving rise to the present special appeal was filed during the pendency of that special appeal; that it was held by this Court in that special appeal that there was no breach of either Section 55 of the Act orof any rules and only penalty couldbe levied but no confiscation could be ordered; that the judgment in the earlier writ petition operates as res judicata in the present proceedings; that however, the respondent Collector, Central Excise, did not return tha remaining gold ornaments and continued to proceed with the adjudication proceedings on the basis of a show cause notice issued by him; that the petitioner-appellant was entitled to the return of the remaining ornaments seized from the ground floor and the second floor of its business premises, but its applications for the same did not bear any fruit.

4. The surviving relief claimed in the writ petition is for the quashing of the show cause notice which is Annexure III to the writ petition. This notice is dated 11th Oct. 1971 and has been issued by the respondent Assistant Collector, Central Excise. It requires the petitioner appellant to show cause why the goods mentioned in the annexure to that notice should not be confiscated under Section 71 of the Act and why penalty should not be imposed on it under Sections 74-75 of the Act. The annexure referred to in the show cause notice contains several appendices. Appendix 'A' is a list of the 'gold and gold ornaments recovered from the unlicensed premises' of the petitioner-appellant at 20. Jhande Wala Park, Lucknow on April 27, 1971. This list contains 20 items weighing 2599.350 grams. Appendix 'B' is the list of the 'gold and gold ornaments recovered from the artisan's section on the second floor and from the safe on the first floor'. The total weight of the 'gold and gold ornaments found from the manufacturing section and from the possession of the artisan' on the second floor is 119.050 grams comprising of several items,while the total weight of the 'gold and gold ornaments found from the safe' on the first floor, is 1079.000 grams.

5. The adjudication proceedings which had been commenced by the said show cause notice were sought to be stayed by an application dated 10th January, 1978 and by order passed on the same day we directed that the adjudication proceedings before the respondent Collector, Central Excise, shall continue, but final orders will not be singed until further orders of this Court.

6. By the newly added grounds of appeal, it has been urged that the judgment given in Special Appeal No. 447 of 1971 : (AIR 1972 All 231) operates as res judicata; that it was decided thereby that there was no breach of any of the provisions of the act or the Rules framed thereunder and the search and seizure were illegal; that the respondents were consequently bound to re-deliver to the petitioner-appellant the remaining articles out of those seized on April 27, 1971, which had not been returned yet; that the show cause notice covers even those gold ornaments which had already been returned and even sold away; and that no article can be confiscated unless it is in the custody of the department and the custody proceeds from lawful seizure.

7. In the arguments before us it has been urged on behalf of the petitioner-appellant that the weight of the seized articles as recorded by the respondent Authorities was not correct; that the ornaments were reweighed and the accounts of the petitioner-appellant were checked during the pendency of the earlier writ petition; and that on the result thereof the true position which emerges is as follows:--

Required balance ofornaments is per registers on 27th April, 1971

24,722.79 gms.

Returned during the pendencyof the earlier writ petition ...

17,810.085

gms.

21581.080 ,,

Released after the decisionof the earlier special appeal(Sneoial Appeal No. 447 of 1971) ...

3,770.415

,,

Balance still in the custodyof the Department ...

3 141.715 ,,

Seized From the safe on thearound floor vide Appendix 'A' to the show cause notice

2,599.330

,,

2,768.450 ,,

Seized from the first floorVide Appendix 'B' to the show cause notice ...

169.100

,,

373.285 gms.

Shortage

349.645

,,

373.625 ,,

Discrepanoy between theweights recorded by the Department and those recorded by the Dharam Kanta

23.620

,,

8. The main thrust of the arguments advanced by the learned counsel for the petitioner-appellant has been for the return of the aforesaid balance of the ornaments in the custody of the Department and for the quashing of the adjudication proceedings initiated by the show cause notice.

9. On a perusal of the judgment of this Court in Special Appeal No. 447 of 1971: (AIR 1972 All 231) which has become final between the parties, we find that this Court has finally held the seizure in question to be illegal and has directed. the return of all the seized ornaments. From the table of the ornaments seized and returned given above it is clear that ornaments weighing 3770.450 grains were returned after the decision of the special appeal. In the recital of the facts given in the judgment in the said special appeal it appears that the Court was concerned in that case with the seizure of 2583 pieces of ornaments weighing in all 22,151.370 grams and that the claim before the Special Appeal Bench in that case was confined to 3770.015 grams of gold ornaments, which alone were said to be under detention with the departmental authorities after the judgment in the writ petition giving rise to that special appeal. From the chart given above the gold ornaments which are now said to be still in detention are those seized from the safe on the ground floor (Vide Appendix 'A' to the show cause notice) and from the first floor (Vide Appendix 'B' to the show cause notice). They weigh 2599.350 and 169.100. total 2768.450 grams.

10. It is not disputed that these ornaments which are still said to be in the custody of the department were seized at the same search and seizure which was the subject-matter of the earlier writ petition and the Special Appeal No. 447 of 1971 arising therefrom. From the recital of the facts in the judgment given in the earlier writ petition reported in AIR 1972 All 16, L. Kashi Nath v. Collector, Central Excise it appears that 2583 pieces of ornaments weighing 22,151.370 grams were said to have been taken into custody by the departmental officers, and although it is mentioned that 275 pieces of gold ornaments were foundfrom the ground floor portion of the petitioner's shop which was not a part of his licensed premises and a piece of foreign gold was recovered from the possession of one Shaukat Husain who was working on the second floor of the licensed premises of the petitioner, it is not clear whether the total number of 2583 pieces weighing 22,151.370 grams which were said to have been seized by the departmental officer included the said 275 pieces of gold ornaments recovered from the unlicensed premises on the ground floor and the one piece of foreign gold recovered from the artisan Shaukat Husain who was working on the second floor of the petitioner's licensed premises. From the break up of the figures of the seized articles given before us it does appear that the ornaments seized from the safe on the ground floor and those seized from the first floor which are now in question were not included in the said 2583 pieces weighing 22,151.370 grams, and to which alone the findings and the relief in the earlier writ petition were confined. It may be clarified that according to the case now set up on behalf of the petitioner-appellant before us the correct weight of the said 2583 pieces of gold ornaments was found on re-weighment to be 21,581.080 grams only and was not 22,151.370 grams, and that the whole of this quantity has been returned to it. It may be that the petitioner did not challenge the seizure of 275 pieces of gold ornaments recovered from the ground floor portion of his shop which was not included within the licenced premises, and the one piece of foreign gold recovered from the possession of Shaukat Husain artisan, on account of the fact that the recovery of the 275 pieces was from premises which were not licensed, and the recovery of one piece of foreign gold was in respect of an article which was contraband. The petitioner did not even own the recovery of the contraband to have been made from him. We accordingly find that the gold ornaments to which the earlier writ petition and the special appeal related, have already been returned by the departmental authorities, and the quantity still retained by them and which is now sought to be re-turned by the present special appeal, was not the subject-matter of the earlier writ petition or the special appeal arising therefrom.

11. The question of res judicata raised by the petitioner-appellant will have to be considered in this context. In Raj Laxmi Dassi v. Banmali Sen (AIR 1953 SC 33) the Supreme Court laid down that the test of res judicata is the identity of title in the two litigations and not the identity of the actual property involved. It has been found above that the property involved in the earlier writ petition and the special appeal arising therefrom, and that involved in the present special appeal, is not identical. The search at which the two sets or properties were seized, was however the same. Nevertheless it cannot be said that there was identity of title in the two litigations, for if the grounds on which the seizure of the ornaments involved in the earlier writ petition was challenged were the same as those on which the seizure of the ornaments in the present case is, or could be, challenged, there does not appear to be any explanation for the petitioner's omission to also challenge in the earlier case the seizure of the ornaments involved in the present case. On the other hand, it appears that the seizure of the ornaments recovered from the ground floor having been made from that part of the petitioner's premises which were not licensed, and the one piece of gold seized from the artisan Shaukat Husain being contraband, the petitioner must have thought it wise not to raise any question about them for fear of damaging its case in respect of the bulk of the seized ornaments, the seizure of which was found to be illegal. It cannot, therefore, be said that the seizure of the ornaments which are still detained by the departmental authorities could be held to be Illegal by applying the rule of res judicata. Mr. S. C. Khare, learned counsel for the petitioner-appellant, did not advance any new ground or place any fresh facts to show that the seizure of these articles was illegal. He only relied upon the judgment in the earlier writ petition and the special appeal arising therefrom, and the fact that these ornaments were seized at the same search at which the otherornaments were held to have been illegally seized. That being so, we find ourselves unable, on the material before us, to hold that the seizure of the ornaments weighing 2599.350 grams seized from the safe on the ground floor (vide Appendix 'A' to the show cause notice) and 169.100 grams seized from the first floor (Vide Appendix 'B' to the show cause notice) was illegal or unlawful. We are supported in this conclusion by the conduct of the petitioner-appellant in not challenging the seizure of these ornaments and claiming their return in the earlier writ petition. We believe that if the seizure was really wrongful as now contended for on behalf of the petitioner-appellant, it would not have deliberately omitted to put forth that claim in the earlier writ petition. The principle invoked by us for arriving at this conclusion is the one underlying the rule prescribed by Order II, Rule 2, C. P. C. in the case of civil suits.

12. Mr. V.K. Barman, learned Standing Counsel for the respondent Authorities contended that the omission of the petitioner-appellant in the earlier writ petition to claim a return of the ornaments now in question amounts to waiver and it must be deemed that it had given up the relief. That is also one of the principles on which the rule prescribed by Order II, Rule 2, C. P. C. is founded. Mr. Barman, however, also relied on the rule of construtive res judicata. We do not think that the rule of constructive res judicata can be applied to the facts of the case. The proper rule to be applied is the one contained in Order II, Rule 2, C. P. C. We are conscious of the Explanation inserted in Section 141 by the Civil P. C. (Amendment) Act, 1976. The effect of that amendment is that the procedure prescribed by the Code does not apply of its own force to proceedings under Article 226 of the Constitution. It does not, however, lay down that some of the salutary principles enshrined in the Civil P. C. governing the trial of civil suits may not be applied even where it enshrines a general principle of law, to the trial of civil proceedings other than suits, like a writ petition under Article 226 of the Constitution of India. We need not, how-ever, dilate on this aspect inasmuch as the writ petition in the present case was filed and decided before the amendment of the Code and according to Clause (p) of Section 97 (2) of the Amendment Act, as the special appeal has been pending since before the amendment, it has to be dealt with as if the said amendment in Section 141 of the Code had not come into force- Before the amendment the undisputed position was that the rules of res judicata and the like were applied to writ petitions aa general principles of law. With regard to O, II, Rule 2 it was, however, observed in Devendra Pratap Narain Rai Sharma v. State of Uttar Pradesh AIR 1962 SC 1334 (in para. 12 all p. 1337) that the bar of Order II, Rule 2 of the C. P. C. on which the High Court apparently relied upon may not apply to a petition for a high prerogative writ under Art, 226 of the Constitution, In that case the appellant had in a suit filed by him omitted to - claim salary for the period before the suit and it was in that context that the claim for salary for that period was refused by the High Court on his writ petition under Article 226 of the Constitution. In spite of the aforesaid observation the Supreme Court did not reverse the High Court's order, and observed that 'the High Court having disallowed the claim of the appellant for salary prior to the date of the suit we do not think we would be Justified in interfering with the exercise of its discretion by the High Court'. The principle that the bar of Order II, Rule 2, C. P. C. may not apply toa writ petition under Article 226 of the Constitution was followed by a Division Bench of this court in Ram Kishore Sharma v. Addl. Dist, J., Saharanpur 1969 All LJ 225 : (1970 Lab IC 582). In that case the petitioner had challenged the order of the Payment of Wages Authority refusing him arrears of salary on tha ground that he had omitted to claim the same in the civil suit filed by him earlier for a declaration that his removal from service was illegal. That case is also distinguishable like Devendra Pratap Narain's case, inasmuch as the earlier proceeding in both the cases was a civil suit, and the latter proceeding in Devendra Pratap Narain's case before the Supreme Court was awrit petition and in Ram Kishore Sharma's case before this Court, it was a proceeding under tha Payment of Wages Act. In the present case, however, both the proceedings, the earlier as well as the subsequent, are on writ petitions under Article 226 of the Constitution. If the principle of Order II, Rule 2 C, P. C. is not applied to writ petitions as a general principle of law even in such a case as the present one, it may lead to a multiplicity of writ petitions arising from the same cause of action. To permit such a course would not be conducive to justice, We would rather endorse the view of the majority in the Full Bench decision of the Kerala High Court in M.P. Ragawan Nair v. State Insurance Officer (AIR 1971 Ker 175) (FB). In that case the petitioner had not claimed the relief which he was claiming in the subsequent writ petition, in an earlier writ petition filed by him. The full Bench, per majority, held (Paras 16 & 17 pp. 179-180) as follows:

16. There is another impediment in the petitioner's way. When he came to Court on the 31st March 1963 with O. P. No. 778 of 1963, he had already suffered what he now alleges to be the trespass by respondents 3 and 4 over his right to the superintendents, category -- he was still only in the upper division. As we have said more than once, he did not make any complaint of this and was content with asking for the determination of his seniority in the upper division. Not having then questioned the appointment of respondents 3 and 4 to the superintendts' category, we do not think he can be allowed to question that now in this new petition which he had brought.

17. The principles underlying statutory provisions like the Limitation Act and Section 11 and Order II, Rule 2 of the Civil P. C, are, we should think applicable to petitions under Article 226 of the Constitution. These provisions are not to be regarded as embodying technical rules of procedure. They are based upon principles of public policy aiming at justice, the securing of which is the very object of Article 226. The principles are principles of repose and peace. 'Long dormant dims have of-ten more of cruelty than of justice in them' said Best C. J. In A.' Court v. Cross, (1825) 130 ER 540. And so, we might add, has the fighting of the same legal battle over again with the same adversary, or, once a wrong has been suffered, the fighting of the battle for redress piecemeal.'

13. This takes us to the relief claimed by the petitioner-appellant for quashing of the show cause notice (Annexure 3 to the writ petition) and the adjudication proceedings commenced thereby. The main ground on which the legality of the notice and the adjudication proceedings has been challenged is that no article can be confiscated unless it is in the custody of the Department and the custody proceeds from lawful seizure. The notice (Annexure 3 to the writ petition) requires the petitioner-appellant to show cause why the goods mentioned in the annexure thereto should not be confiscated under Section 71 of the Gold (Control) Act and that penalty should not be imposed on the petitioner-appellant and Shaukat Husain under Sections 74 and 75 of the said Act. The Annexure to the show cause notice specifies not only the gold ornaments still in the custody of the department, but also those which have already been returned to the petitioner-appellant The annexure to the show cause notice sets out in detail the department's, case against the petitioner-appellant against which the latter was required to show cause.

14. In support of his contention Mr. Section C. Khare elaborated the point thus, Under Section 71 of the Act only that gold is liable to be confiscated along with its package or covering or receptacle in which it is found, in. respect of which any provision of the Act is being, or is attempted to be contravened. He emphasised that the word 'found' shows that the provisions apply to only that gold which is found on search and seized. He then referred to Chap. XII of the Act begining with Section 58, which deals with power of search and seizure conferred by Sections 58 and 66. These provisions precede the provisions relating to confiscation and penalty contained in Chapter XIII beginning with Section 71. Khare contended that the first step to be takenby a Gold Control Officer where ha suspects the contravention of any provision of the Act is to make a search of the premises of a dealer under Section 58, and then, under Section 66, if he has reason to believe that any provision of the Act has been, or is being or is attempted to be contravened, seize such gold along with the package, covering or receptacle etc. in which the gold is found, Mr. Khare. further contended that something which was not already in possession of the Departmental Authorities could not be confiscated, and the very provision relating to confiscation showed that the gold or the package, covering or receptacle in which it was found must be in the custody of the authority concerned before an order of confiscation could be passed in respect thereof. The logic of Mr, Khare's argument appears to be sound and on an examination of the scheme of the Act it is not easily possible to say that an article which is not in its custody could be ordered to be confiscated by the adjudicating authority under the Act. Mr. Khare then made the further submission that the custody must be lawful. We do not propose to examine this aspect of the question in view of the fact that the bulk of the ornaments have already been returned to the petitioner-appellant in accordance with the directions of this Court in the earlier writ! petition and the special appeal arising therefrom, and the seizure of the small quantity that remains in the custody of the department has noil been found by us to be prima facia unlawful. The result is that proceedings for confiscation of the gold ornaments already released in pursuance of the directions issued by this Court in the earlier writ petition must be stopped, but the same proceedings, for confiscation of the ornaments which are still in the custody of the department can go on and be concluded after a proper inquiry into the matter in accordance with the provisions of the Act.

15. It has been seen above that apart of the show cause notice relatesto imposition of penalty under Sections 74and 75 of the Act. Under these sections penalty can be imposed for contravention of a provision of the Actor of any rule or order made thereunder, or for doing or attempting to do anything in relation to any gold which rendered it liable to confiscation. Since the inquiry for confiscation in respect of the gold still in possession of the department has to go and to be concluded by the authority competent to do so, we do not want to prejudge the issue. It has also to be clarified that in the earlier writ petition, although it was held that the seizure of the gold ornaments which were the subject matter of that writ petition, and have already been returned to the petitioner-appellant, was unlawful, it was not held that the petitioner-appellant was not liable to penalty under the Act. On the other hand, it has been observed by the Special Appeal Bench in that case: (at page 236, para 17 of AIR 1972 All 231) 'The failure to maintain accounts in G. S. Forms is an offence punishable under Section 87 of the Act. When the vouchers exist but the G. S. Forms are not posted the case might fall under Section 87 of the Act and the dealer may be punished for a breach thereof.' It was, on the finding that, on the facts of the case, the provisions of Section 66 of the Act were not attracted, that the seizure was held to be unlawful. There is no finding that the penalty provisions of the Act were also not attracted. Under the circumstances, we are unable to hold that the notice to show cause why penalty should not be imposed, under Section 74 of the Act, in respect of that gold which is still in the custody of the department and may be found liable to be confiscated on inquiry under Section 71; and under Section 75, in respect of the entire gold ornaments etc., which were the subject matter of the search and the seizure including those which have already been returned, if it is found on inquiry that the petitioner appellant has contravened any provisions of the Act or of any rule or any order made thereunder.

16. The result is that the show cause notice (Annexure 3 to the writ petition) and the adjudication proceedings initiated thereby are not liable to be quashed. The respondents authorities shall, however limit the inquiry for the purposes of confiscation, and of penalty under Section 74 to the Gold Ornaments which are still in their custody. With regard to the inquiry for the purposes of imposition of penalty under Section 75 of the Act there is no such limitation.

17. In the result, the appeal fails and the writ petition shall stand dismissed with costs subject to the reservation that the inquiry pursuant to the show cause notice (Annexure 3 to the writ petition) shall be confined for the purposes of confiscation under Section 71 and of imposition of penalty under Section 74 of the Act, to the gold ornaments still in the custody of the respondent authorities. Under the circumstances, the parties shall bear their own costs of the appeal.


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