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Bapalal Khushaldas Gosalia Vs. V.R. Prasad and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Appln. No. 841 of 1960
Judge
Reported in(1964)10GLR633
ActsSea Customs Act, 1978 - Sections 178-A; Constitution of India - Article 226
AppellantBapalal Khushaldas Gosalia
RespondentV.R. Prasad and anr.
Appellant Advocate J.M. Thakore, Adv. General and S.B.Vakil, Adv.
Respondent Advocate B.R. Sompura, Asst. Govt. Pleader
Cases ReferredM.G.Abrol v. Amichand Vallamji
Excerpt:
customs - jurisdiction - section 178-a of sea customs act, 1978 and article 226 of constitution of india - jurisdiction of adjudicating authority challenged - validity of enquiry itself or impugned order challenged on ground that there is an ex facie error - notice does not state that when goods were seized under reasonable belief they were smuggled goods - no evidence adduced to show that seizing officer possessed reasonable belief - section 178-a does not apply to facts and circumstances - statement of witnesses not sufficient to prove that goods seized were smuggled - enquiry conducted violative of principle of natural justice - petition allowed. - - it is however, well-settled that a petitioner challenges the jurisdiction of the adjudicating authority or the validity of the.....shelat, c.j.(1) this is a petition for the writs of certiorari, prohibition and mandamus, for quashing the order passed by the first respondent dated october 29, 1959, for prohibiting the respondents from enforcing, implementing or executing the said order and for directing the first respondent to withdraw and/or cancel the aforesaid order. the impugned order came to be passed in the following circumstances:(2) at all material times, the petitioner owned a house called 'manju villa' situate at jorawarnagar. in 1958 and 1959, the petitioner was ordinarily residing at marmagoa where he was carrying on the business of mining. it was the case of the petitioner that in about 1946, he purchased two ingots of gold in bombay from the open market at the rates then prevailing. in or about august.....
Judgment:

Shelat, C.J.

(1) This is a petition for the writs of certiorari, prohibition and mandamus, for quashing the order passed by the first respondent dated October 29, 1959, for prohibiting the respondents from enforcing, implementing or executing the said order and for directing the first respondent to withdraw and/or cancel the aforesaid order. The impugned order came to be passed in the following circumstances:

(2) At all material times, the petitioner owned a house called 'Manju Villa' situate at Jorawarnagar. In 1958 and 1959, the petitioner was ordinarily residing at Marmagoa where he was carrying on the business of mining. It was the case of the petitioner that in about 1946, he purchased two ingots of gold in Bombay from the open market at the rates then prevailing. In or about August 1958, he came to Jorawarnagar where he stayed in his aforesaid bungalow for about twenty to twenty-five days and returned thereafter to Marmagoa some time in September 1958. On December 4, 1958, the customs authorities visited the said bungalow for making a search thereof pursuant to a search warrant obtained by them under Section 172 of the Sea Customs Act, Act VIII of 1878. As the petitioner was absent, his Munim, one Soonderji Nagardas, informed the customs authorities that he did not have in his possession all the keys of the bungalow. On the authorities threatening to break open the lock of the bungalow, one Chunilal Umedchand undertook to produce the keys as early as possible. Nothing else happened on that day except that the officers sealed the doors of the said bungalow and posted custom guards threat. By his letter dated December 6, 1958 the Assistant Collector of Customs, Rajkot, informed the petitioner at Marmagoa to appear before him at Surendranagar on December 14, 1958 with the keys of the said bungalow as also of the cup-boards, safes, etc., therein, failing which, he was informed that the authorities would break open the bungalow as also the safes, cup-boards etc., placed therein. On December 17, 1958 the bungalow was searched by the customs authorities and in the purported exercise of their powers, inter alia seized two gold ingots weighing about 19 Tolas and 14 Annas. They also seized certain gold and silver ornaments which, according to the petitioners, belonged to his wife. After these articles were seized a panchnama was recorded and thereafter the customs on that day very day, one Amratial ratilal Shah made an application on behalf of the petitioner, calling upon the Collector of Central Excise, Baroda, to furnish the petitioner the statement of reasons for the seizure of the aforesaid articles. On December 27, 1958 the Assistant Collector of Customs intimated to the petitioner of the fact of the seizure of thesaid gold ingots and the ornaments, observing that enquiries were being made by the customs in connection with the importation of those articles. by that letter, the petitioner was called upon to produce the Assistant Collector of customs evidence regarding the importation of the said ornaments seized on December 17, 1958 in reply to the aforesaid letter dated December 17, 1958,the Collector of Central Excise, Baroda, by his letter dated January 8,1959 stated that the seizure of the said articles had been made by the customs authorities under a search warrant issued by a certain competent Magistrate as the said articles were believed to be dutiable and/or prohibited and therefore liable to confiscation. As the petitioner could not leave Marmagoa by reason of certain territorial restrictions then prevailing, he was represented by an advocate in the matter of the seizure the said articles by his letter dated March 12,1959 the petitioner's advocate pointed out to the customs authorities that the two ingots seized by the authorities had not been illegally imported or smuggled into the country and expressly stated that they were not of foreign origin as suspected by them and further that that the ornaments seized by them belonged to the petitioner's wife. These statements were repeated in a subsequent letter April 30, 1959,ion May 1, 1959 the Collector of Central Excise, Baroda, issued a show cause notice which, after affecting the fact off the search on suspicion of the said bungalow on December 17, 1958 and the recovery of the said gold ingots and ornaments as a result of the said search, stated that the petitioners was prima facie guilty of contravening the provisions of the notification dated August 25,1948 issued under Sec. 8(1) of the Foreign Exchange Regulation Act,1947 and Section 23-A of the Foreign Exchange Regulation Act, 1947. By the said notice the petitioners was called upon to show cause why personal penalty should not be imposed upon him under Sec.167 (8) of the Sea Customs and why the aforesaid gold and ornaments should not be confiscated. An annexure enclosed with the show cause notice, stated that the ornaments had been kept inside a box and further that the two bars of gold seized on the occasion of the search. bore foreign markings on them, namely 10-9999. The annexure further stated that gold with such foreign markings was not sold in the open market and theereffore the two ingots constituted smuggled gold. On May 21, 1959 the petitioner filed his reply to the said show cause notice wherein he maintained that the two ingots of gold were not of foreign origin, that he had purchased these two pieces of gold in the open market more than thirteen years ago and that their seizure was based merely on suspicion and was, therefore, not justified in law. On August 31, 1959 the first respondent held an enquiry at Porbandar where the petitioner was represented by his advocate. At the hearing, the petitioner's advocate insisted that the two individuals who had signed the panchanama as panchas at the time of the seizure should be examined by the authorities in his presence so that he would have an opportunity to cross-examined them in order to disprove the allegation that the ornaments seized were in the same box in which the said two ingots of gold were kept. This request, however, was not complied with. By his letter dated October 20, 1959 the petitioner's advocate placed on record the principal arguments which he had submitted before the adjudicating authority wherein he recorded the fact of the refusal of his request to have the panchas examined in his presence and to let him have the opportunity of cross-examining them. Thereafter, on October 29, 1959 the first respondent passed the impugned order wherein, after reciting the evidence before him as also the contentions that had been raised by the petitioner's advocate before him and his replies thereto, he recorded his finding in paragraph 16 thereof. That finding was as follows:

'From the evidence on record, I hold that the two gold bars owned by Shri Bapalal Khushaldas Gosalia were imported into India from foreign territory without a permit from the Reserve Bank of India. this involves contravention of the Government of India, Ministry of Finance Notification No. 12(11) F. I/48 dated 25-8-48, as amended issued under Section 2(1) of the Foreign Exchange Regulation Act, 1947. The gold bars are, therefore, liable to confiscation under Sec.167 (8) of the Sea Customs Act, read with Section 23-A of Foreign Exchange Regulation Act, 1947'.

The first respondent ordered confiscation of the two gold ingots under the provisions of Section 167(8) of the Sea Customs Act read with Sec.23-A of the Foreign Exchange Regulation Act, 11947,as also the confiscation of the said gold ornaments in respect of which he gave the petitioner an option to redeem them on payment of a fine of Rs. 5000/-. No personal penalty was imposed upon the petitioner on the ground that the Department had not proved beyond doubt that the said gold alleged to be contraband was imported by the petitioner himself.

(3) The learned Assistant Government Pleader raised a preliminary objection to the petition and the objection was that Sea Customs Act is a complete code by itself and sets up a machinery for investigation, and conduct of an enquiry to respect of offences committed thereunder and the remedies against the order passed thereunder. He contended that the being so, the petitioner ought to have exhausted his remedies given to him under the Act before filling this petition and that that not having been done, the petition should be dismissed.

It is however, well-settled that a petitioner challenges the jurisdiction of the adjudicating authority or the validity of the enquiry itself or the impugned order on the ground that there is an ex facie error thereunder, he need not wait until he has exhausted the alternative remedy ad therefore can filed a petition to set aside the impugned order without having recourse to such alternative remedy. In the present petition, the petitioner has challenged, amongst other things, the validity of the order on the ground that Section 178-A of the Act was wrongly applied by the adjudicating authority without the conditions precedent therefor having been satisfied, as also the validity of the seizure of the ingots in question on the ground that the seizure was made without the seizing authority having had a reasonable belief at the time of the seizure that the two ingots in question that were seized were gold and therefore, there was no jurisdiction in the adjudicating authority to cast under Section 178-A the burden of proof on the petitioner to prove that the two ingots in question were not smuggled gold. The learned Assistant Government Pleader, however, relied upon the decision in Smt. Ujjam Bal v. State of Uttar Pradesh AIR 1962 SC 1621, and contended that the Collector of Customs, whose order is challenged, had admittedly the authority to hold the enquiry and however erroneous his order may be, the petitioner was not entitled to file the present petition without first having recourse to the remedies given to him under the Sea Customs Act. the Supreme Court was, in the case of AIR 1962 SC 1621, considering the question as to whether a petitioner could challenge before it under Art. 32 of the Constitution, an order of assessment made by an authority under a taxing statute and it was in connection with that question that it observed that an order of assessment made by an authority under a taxing statute which was intra vires and in the undoubted exercises of his jurisdiction could not be challenged on the sole ground that it was passed on a misconstruction of a provision of the Act or a notification issued thereunder, nor could the validity of such an order be questioned in a petition under Art. 32 of the Constitution and that the proper remedy for correcting an error in such an order was to proceed by way of appeal, or if the error was an error apparent on the face of the record, then by an application under Art. 226 of the Constitution. The Supreme Court then observed that Art. 32 guaranteed the right to a constitutional remedy and related to the enforcement of the rights conferred by Part III of the Constitution. Therefore, unless a question of enforcement of a fundamental right arose, Art. 32 did not apply and there could be no question of the enforcement of a fundamental right if the order challenged was with jurisdiction, inspite of the allegation that it was erroneous. It is clear from those observations that the Supreme Court in this decision was considering its jurisdiction under Art. 32 and it was only while doing so that they observed that resort to that Article could be had only when a fundamental right was alleged to have been infringed and when a petition was filed for enforcing such a right. The Supreme court was not concerned with a contention of the type we have nor with a petition of the type we have before us and the decision relied upon by the learned Assistant Government Pleader, therefore, can not assist the respondents, for, the order in question before us is challenged, not on the ground only that it is an erroneous order, but on the ground that he basis on which the adjudicating authority involved the presumption under Section 178-A and threw upon the petitioner of proving that the two ingots in question were not smuggled gold, namely, a reasonable belief on the part of the seizing authority that two ingots were smuggled gold and on the further ground that the enquiry before the first respondent was a quasi-judicial enquiry and yet the adjudicating authority had no followed the principles of natural justice the preliminary objection raised by the learned Assistant Government Pleader must, therefore, be rejected.

(4) The principal raised by the learned Advocate General appearing for the Petitioner ere that the seizure of the two ingots of gold was on a mere suspicion on the par of the seizing authority that at the time of the said seizure there as no reasonable belief that the two ingots were smuggled gold and that the first respondent was not entitled to have recourse to the provisions of Section 178-A and was, therefore, not entitled to cast the burden of proof upon the petitioner to establish that the two ingots were not smuggled gold. The learned Advocate General contended that the it was a condition precedent to the applicability of Section 178-A that there must exist a reasonable belief in the mind of the seizing authority at the time of the seizure that the articles in question were smuggled article and therefore, if that condition precedent was not satisfied, the Department could have to prove that the ingots in question were imported at the time, place and date when restrictions against such import were existent. The learned Advocate General also contended that even assuming that Section 178-A were to be applicable, the enquiry before the first respondent being a quasi-judicial one, it was incumbent upon him to follow the principles off natural justice. He further contended that the enquiry was held in breach of the principle of natural justice and consequently, both the enquiry and the order passed by the first respondent were vitiated and were bad in law.

(5)Before we proceed to deal with these contentions, it is well to acquaint oneself with the provisions of law on which the enquiry proceeded. Section 8 of the Foreign Exchange Regulation Act, 1947, lays down certain restrictions on import and export inner alia of bullion. In exercise of the powers conferred by sub-sec (1) of that section, the Government of India issued a notification dated August 25, 1948 which laid down prohibition against Section 23 of the Act provides for penalty and procedure in respect of offences under the Act and Sec.23-A provides that without prejudice to the provision of Section 23 or under any other provisions contained in the Act, the restrictions imposed by sub-secs. (1) and (2) of Sec.8 and certain other sections shall be deemed to have been imposed under Section 19 of the Sea Customs Act, 1878 and further provides that all the provisions of that Act shall have effect accordingly, except that Section 183 thereof shall have effect as if for the word 'shall' therein, the word 'may' were substituted. The conjoint effect of Section 23-A of the Foreign Exchange Regulation Act, and Section 19 of the Sea Customs Act is that is that not withstanding the proceedings that maybe taken under the Sea Customs Act against a person for the contravention of the provisions of the Act, such a person would be liable to be proceeded against and punished on the same facts as if his act amounts to a contravention of any of the provisions of the Foreign Exchange Regulation Act. if a person, therefore, clandestinely brings or, in popular parlance, smuggles gold into India without the permission of the Reserve Bank of India from a place outside India, he is liable to be proceeded against under Section 176(8) of the Sea Customs Act and notwithstanding that he may be punished under the Sea Customs Act, he would also be liable to be prosecuted for the same act for contravention the Foreign Exchange Regulation Act, punishable under sec.23 thereof, Section 19 of the Sea Customs Act empowers the Central Government, by a notification in the Official Gazette, to prohibit or restrict importation or exportation of goods of any specified description and section 167(3) provides that if any goods, the importation or exportation of which is for the time being prohibited or restricted into or exported from India contrary to such prohibition or restriction, such goods shall be liable to confiscation and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods or not exceeding one thousand rupees. Section 172 deals with search warrants and empowers a Magistrate on an application by Customs Collector, stating his belief that dutiable or prohibited goods are secreted of such Magistrate to issue a warrant to search for such goods. but, before a Magistrate can issue such a search warrant, he must have before him an application by a Customs Collector stating a belief on his part that dutiable or prohibited goods are secreted in a particular place. Section 178 then empowers an officer of Customs to seize things which are liable to confiscation under the provisions of the Act. Section 178-A deals with burden of proof and we propose to cite the section as considerable reliance has been placed thereon. The section runs as follows:

'(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized.

* * * * * * * * * * * *'.

Normally, and except for Section 178-A, the rate of criminal jurisdictions is that it is the prosecution, under the Sea Customs Act, the Department, which has to prove its case, but where the provisions of Section 178-A apply, the burden is cast upon the person, against whom an enquiry is made, to prove that the goods in question are not smuggled goods. The section, however, requires that before the burden is thrown on such a person, the condition precedent for the application of the section must be satisfied and that the goods which are the subject-matter of such enquiry or in respect of which an enquiry is held must be goods which were seized (1) under Section 178, and (2) that there existed, at the time of the seizure, a reasonable belief in the mind of the seizing officer that the goods in question were smuggled goods. Realising the difficulty of the enforcement officers having to establish that the goods were smuggled goods, the Legislature decided to throw the burden of proving that the goods were not smuggled goods on the person from whose possession the goods are found. But realising that it was doing away with one of the most important rules of criminal jurisprudence, it laid down a safeguard by requiring that such a burden can only be thrown on the person against whom the enquiry is made provided that the officer seizing the goods under Section 178 had, at the time of seizure, a reasonable belief, in other words, a belief based on reasonable grounds that the goods seized were smuggled goods. Thus, under Sec.172, a search warrant can be obtained only on the basis of a belief that certain prohibited goods are secreted at a particular place and under Sec.178-A, if the goods are seized as a result of a search made under the authority of such search warrant and, if they are seized under a reasonable belief that they were smuggled goods, in that event only, the burden can be cast upon the person concerned to establish that the goods in question were not smuggled goods. In Collector of Customs v. Sampathu Chetty, AIR 1962 SC 316, where the constitutional validity of Section 178-A was challenged, the Supreme Court observed that the seizure by the officer in the belief that the goods were smuggled, did not by itself operate to effect the confiscation or deprive the owner of its property in the goods. This result followed only upon an order of an adjudicating authority who investigated into the complaint regarding the defendant's possession of the smuggled goods. The Court observed:

'As we shall have occasion to point out later, the entire evidence in the possession of the seizing officer would be and has to be before the officer adjudicating the confiscation under Sec.182 of the Sea Customs Act. No doubt, on the language of Sec.178-A the presumption of the goods being smuggled arises only when the seizure is made by an officer entertaining a reasonable belief that the goods are smuggled, and in that sense the reasonable belief of the seizing officer is a pre-requisite for the statutory onus to arise. It is also true that at the stage of the adjudication the reasonableness of the belief of the officer effecting the seizure that the goods are smuggled would be the subject-matter of an investigation by the adjudicating officer. Nevertheless, it is manifest that at the stage of the adjudication (when only the rule of evidence laid down by the section comes into operation) the very fact which led the seizing officer to effect the seizure, as distinguished from their significance as affording a reasonable belief for the seizing officer to hold that the goods are smuggled, are before the adjudicating officer. These facts which justified the seizing officer to reasonably believe that the goods were smuggled would certainly impart a rational connection between the facts on which the presumption is raised and the fact to be proved, so that whatever other constitutional infirmity might attach to the impugned provision, the lack of rational connection is not one of them.' According to this decision, before the adjudicating authority decides to invoke the presumption under Sec.178-A it has to satisfy itself that the seizure was made in a reasonable belief that the goods were smuggled goods. It follows that in order to so satisfy itself, the adjudicating authority must examine the grounds upon which that belief was said to have been entertained at the time of the seizure by the seizing authority. That would obviously be necessary to ascertain whether the belief was reasonable or not. How would the adjudicating authority proceed to do that unless the seizing officer, either by his own evidence or other materials placed before the adjudicating authority, proves to its satisfaction that there were grounds for him to reasonably believe that the goods were smuggled goods, that is to say, the goods were imported into the country and imported at the time and place when they were restricted or prohibited from being imported. If the adjudicating authority is not satisfied that the goods were seized upon a reasonable belief, Section 178-A cannot be invoked and in the event, it would be the customs authorities who would have to prove that the goods were smuggled goods and Sec.178-A in that event would have no application. If, therefore, Sec.178-A is wrongly applied and the presumption thereunder is raised without the condition precedent thereunder having been satisfied, the entire enquiry and the order passed therein would be vitiated. The question as to when Sec.178-A can be invoked was further explained by the Supreme Court in Pukhraj v. V.D.R.Kohil, AIR 1962 SC 1559, where the Supreme Court stated that when the Court was dealing with a question as to whether the belief in the mind of the officer who effected the seizure was reasonable or not, the Court was not sitting in appeal over the decision of the said officer. All that it could consider was whether there was any ground which prima facie justified a reasonable belief. The facts there were that the authorities had found the petitioner because there a person carrying a large quantity of gold and travelling without a ticket and the circumstance alone was held to be sufficient to raise a reasonable belief in the mind of the seizing officer that the gold was smuggled. The object of travelling without a ticket was held to be to conceal the fact that that person had travelled all the way from Calcutta at which place the gold must have been smuggled. Though a Court of law would not be sitting in appeal over the decision of the Inquiring officer, and must be content to consider whether there is a ground which prima facie justifies such a reasonable belief, the condition precedent that there was such a reasonable belief anterior to the seizure is necessary before the presumption under Sec.178-A can be invoked. Where Sec.178-A cannot be invoked and where the person against whom the order is passed contents that he was in possession of the goods as a result of a bona fide purchase by him and that the goods were not smuggled goods, it would be the customs authorities who would have to prove that the goods were imported after the restrictions against import were imposed. (Cf. Ambalal v. Union of India, AIR 1961 SC 264). Reasonable belief as required by Sec.178-A refers to the point of time when the goods in question are seized and not at a stage subsequent to the act of seizure. This has been made earlier in M.G.Abrol v. Amichand Vallamji, 62 Bom LR 1043 : (AIR 1961 Bom 227). That was also a case of gold. The panchnama recorded at the time of the seizure stated that the pieces of gold bullion in question were taken charge of by the customs officers to facilitate enquiries after the said gold pieces were placed in cloth bag which was sealed, as desired by the petitioner, with his own seal. One of the contentions urged on behalf of the customs authorities was that the goods referred to in Sec.178-A may be seized on mere suspicion, that thereafter enquiries may be made and that if thereafter the customs authorities entertain a reasonable belief that the goods were smuggled, then the presumption arises that the goods were smuggled goods and the burden of showing that they were not smuggled goods would be on the person from whose possession the goods had been seized. The learned trial Judge negatived the construction sought to be placed on behalf of the Department and upon the same construction being urged before the appellate Court, the learned Judges trying the appeal held that the belief as required by Sec.178-A must be a reasonable one, not a belief of a man who just catches at some slight circumstance which creates only a sort of guess or speculation in his mind that something might exist or might not exist. The belief must be such as any other reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. They further observed that the restriction placed upon the power of the customs officers under Sec.178-A cannot be lightly treated, as they are intended to check the exercise of the powers given to them under Section 178-A arbitrarily and without any foundation at all to the harassment of the general public. It would be necessary, therefore, that before any person could be called upon to prove that the goods seized from him were not smuggled goods, the customs officer making the seizure must proceed upon the foundation of a reasonable belief inspired in him by some definite material by way of some definite information or otherwise so that he could be said to have seized the goods in a reasonable belief that they were smuggled goods. it would be then for the enquiry officer to enquire and he satisfied as to whether the customs officer who had seized the goods was not wrong on his belief that the goods seized were smuggled goods or, in other words, he had a reasonable belief at the time of the seizure that the goods were smuggled goods. In case the enquiry officer is satisfied that the goods were seized in such a belief he would specify the same in his show cause notice which he would thereafter issue to the person from whom the goods were seized and call upon him under Section 178-A of the Act to prove that the goods were not smuggled goods.

(6) That being the position in law, it would be necessary for us to enquire as to whether the condition precedent in Section 178-A has been satisfied that is to say, whether the record before us shows that there was a reasonable belief in the mind of the seizing officer that the good which he had seized on December 17, 1958 were smuggled gods, and secondly whether the record also shows that the enquiry officer was satisfied on materials before him that the goods seized upon the basis of a reasonable belief of the seizing officer that they were smuggled goods, and it was only after such satisfaction that he invoked the presumption under Section 1780A whereunder the burden would be upon the petitioner to show that the gods in question were not smuggled goods. It will be noticed that the quantity of gold seized was to 19 Tola and odd of the value of Rs. 2,231 -10-3. It is not disputed that the petitioner came to the bungalow in question some time in August 1958 and resided there for a little over twenty days. On December 4,1958 the customs officers obtain a search warrant but nothing was done on that day except to seal the windows and doors of the bungalow. On December 17, 1958 the bungalow was searched and it was during the search or after the search was completed and the two ingots also the ornaments were seized by the customs officers and a panchnama thereof was thereafter recorded. It will be noticed that the show cause notice itself stated that it was on a mere suspicion that the bungalow 'Manju Villa ' was searched by the customs staff on December 17, 1958. This is admitted even in the affidavit of the first respondent. Neither the show notice nor the order of the first respondent states that anything happened after the search was made which could lead the seizing officer to entertain a reasonable belief that the goods recovered from the bungalow, namely, the two ingots ornaments, were smuggled goods, when the bed room was searched a sandal box was found containing Currency notes of Rs. 3000/- and gold ornaments of the weight of about 20 Tolas. From the safe in the cellar were found silver utensils and from the right hand drawer, currency notes again of Rs. 2500/- were found and the left drawer contained a jewellery box in which were the two ingots bearing marks 10.9999 to together with certain ornaments. The fact that the petitioner visited this bungalow in August- September 1958, coupled with the fact that currency notes of Rs. 3000/- and ornaments were found from a sandle box in the bed room would seem to indicate that the petitioner was in the habit of keeping valuables in this bungalow even though he was ordinarily residing at Marmagoa. There is nothing improbable in his keeping some valuables in this house it is on record that the petitioner had left the house in charge of his Munim and a relation. Therefore, the mere fact that a safe was found in a cellar of the house and contained currency notes and ornaments and two ingots of gold was not by itself a circumstances which would excite a reasonable belief in the mind of the seizing officer that the gold found from the safe was smuggled gold. The panchnama recorded on the occasion also does not include in any way that there was anything or note at the time of the seizure which would have excited a reasonable belief in the mind of the seizing officer that the two ingots were smuggled gold. The only thing that was noticed at the time of when the two ingots were seized was the fact that they bore the marks 10.9999. Even when the Assistant Collector Rajkot, wrote to the petitioner on December 27, 1958, it would seem that the authorities had not yet entertained a reasonable belief that the two ingots were smuggled goods. For, in that letter, the Assistant Collector informed the petitioner that he was 'marking enquiries in connection with the importation of the said goods'. If the seizing authority had entertained a reasonable belief on December 17, 1958, the Assistant Collector at least on December 27, 1958would have written to the petitioner that the two ingots were seized in consequence of a reasonable belief held by the sizing authority that the goods were smuggled goods. A already pointed out, there is nothing in the show cause notice to show when the search took place, which search was a result of a mere suspicion anything else had happened which would bring about a reasonable belief in the mind of the seizing officer that the two ingots were smuggled gold. The notice does not state that when the goods were seized they were seized as a result of a reasonable belief that they were smuggled goods. In the annexure enclosed with the show cause notice, two things, however, were stated, (1) that the gold and the ornaments when seized were in a box kept in the left drawer of the safe, and (2) that the two ingots had 'foreign markings' on them, namely, 10.9999. Now the fact that the gold ingots and the ornaments were kept in the same box really would mean nothing and could not possibly have given cause for a reasonable belief that the two ingots were smuggled goods. Being valuable articles, it would be quite natural that they would be kept in the safe and along with other valuable articles such as ornaments. That the bungalow had a celler and the safe was kept in that celler is also not an unusual circumstance, first because cellars in hot places in this part of the country are not uncommon, and secondly because the celler was not a secret place where the safe was surreptitiously kept. The panchnama indicates that there was a ladder by which the panchas and the officers could reach the celler. These facts, therefore, could not have been the facts upon which the seizing officer could have arrived at the necessary reasonable belief. Besides, there is nothing in the impugned order which would indicates as to what were the grounds for such reasonable belief on the part of the seizing officer that the two ingots were smuggled gold and on which the presumption under Section 178-A could be invoked by the enquiry officer or on which the enquiry officer could say that he was satisfied that the goods were seized on December 17, 1958 on the basis of a reasonable belief on the part of the seizing officer. Further, the impugned order does not indicate that the enquiry officer had applied his mind to the question whether the seizing officer had entertained a reasonable belief that the two ingots of gold were smuggled gold. There is nothing in that order to show that he had examined any materials before him to satisfy himself that the seizing officer had entertained such a reasonable belief at the time of the seizure. In this view of the matter, we are of the opinion that Sec.178-A did not apply to the facts and circumstances of the case and the enquiry officer was not entitled to and had no jurisdiction to invoke the presumption under that section.

(7) The learned Assistant Government Pleader, however, contended that there were three circumstances to this case which would justify the enquiry officer to come the conclusion that the seizure of the two ingots was made on the basis a reasonable belief on the part of the seizing officer. The circumstances relied upon by him are (1) that the petitioner was living at the material time ordinarily at Marmagoa, that being his place of business, (2) that the two ingots bore foreign markings, and (3) that though the seizing officer only took charge of the two ingots of gold and the ornaments found in the left-hand and drawer of the safe, indicating that he discriminated between articles in respect of which he had a reasonable belief that they were smuggled gold and the rest off the articles in respect of which he did not hold such a reasonable belief. Though the contention at sight appears to be somewhat attractive, when examined with a little scrutiny it loses its validity. The mere fact that the petitioner was at the material time residing in Marmagoa having had his business there does not, and cannot mean that he had illicitly imported into this country contraband gold. Though the show cause notice stated that the markings on the two ingots, viz., 10.9999 were foreign markings, no evidence was led before the enquiry officer that those were foreign markings except the bare assertion made by the enquiry officer his order. It is true that the seizing officer did not seize all the valuable that were found in the bungalow of the petitioner and that he seized only the two ingots and the ornaments found in the left-hand drawer of the safe. But that again would not mean that he seized these valuables because he had a reasonable belief relating to them. It is obvious that he could not have seized the currency notes that ere lying in a sandle box in the bed room not the ornaments therein kept, for the ornaments fund in that sandle box were admittedly old ornaments, similarly, the utensils also could not be seized and s also the currency noes found in the right-hand drawer of the safe. The mere fact, therefore, that these valuables were 'not seized cannot possibly lead to a conclusion that in respect of the articles that were seized the seized officer had come to a reasonable belief that those were smuggled articles. It is, therefore, difficult to accept the contention of the learned Assistant Government Pleader that because the officer had discriminate between certain valuables from the rest of the valuables articles that that meant that he had held a reasonable behalf relating to these articles. A pointed out earlier on construction of Section 178-A it is for the enquiry first to ascertain and come to a conclusion that the goods seized by the officer were seized on the footing of a reasonable belief that they were smuggled goods and it is only when he is so satisfied that he would make up his mind whether he would invoke the presumption under Section 178-A and then cal upon the person against whom he holds enquiry establish that the goods in question were not smuggled goods. There is nothing in the show cause notice or in he impugned order to indicate that the officer had applied his mind to this question or that he had come to the conclusion that the goods were seized after the seizing officer had entertained a reasonable belief that the goods were smuggled goods. That being the position, it is clear that Section 178A did not apply to the facts of the case.

(8) If our conclusion on the question as to Sec.178-A is correct, then the presumption thereunder was not available to the customs department and the burden then would be upon the customs authorities to prove (1) that the to ingots were articles which were imported, and (2) that they were imported against the restr5ictions, that is to say, a time when restriction against the import of gold were in force. It would appear from the impugned order that barring the statements recorded by the enquiry officer of the petitioner's Munim Sonderji Nagardas, Chunilal Umedchand and Amratlal Ratilal Shah, no other statements were recorded by that officer. The statements made by these three witnesses as summarised by the enquiry officer in the order, do not indicate that they established that the to ingots were either imported ingots much less that they were imported at a time when restrictions or prohibitions such import were in force. The statements of these three witnesses only prove that the petitioner had at some time brought the two ingots into his bungalow. The only there material that appears to have been enquiry officer was the fact that the two ingots and markings which, according to him, were foreign markings. It would seem that in order to show that these markings were foreign markings, that gold bars with such markings were not available in the open market and that no private refinery in India refined gold upto or over 9999.0 fineness, the enquiry officer relied upon certain enquiry as stated by him in the impugned order, made either by him or his subordinates. It is clear from the record as also from the affidavit made by the first respondent that these enquiries were made behind the back of the petitioner. No evidence was produced before the enquiry officer of persons who made the enquiries, and the petitioner obviously was not given any opportunity of setting the truth of the information arrived at as a result of these enquiries either by means of cross-examination or by giving an opportunity to him to lead evidence to controvert the information derive from such enquiries. in his affidavit in reply, the first respondent states that the information derived as a result of these enquiries was of a general nature. It would seem that by the expression 'general nature' the first respondent meant that the markings n the two ingots were foreign markings, that such markings were noticed only on imported gold bars of ten tolas and that gold bars having such markings were not available for sale in the open market. These three conclusion obviously were arrive at by him from the enquiries made by him or at his instance and upon which be laced reliance for his ultimate conclusion. If he wanted upon him to give an opportunity to the petitioner to test the truth of the information derived a result of these enquiries either through cross-examination or otherwise. In not giving that opportunity to the petitioner, the first respondent clearly violated the principles of fair-play and natural justice. Even assuming that the markings on the two ingots were foreign markings, there is nothing to show that the two ingots were not imported in this country before the restrictions and/or prohibition against such import were brought into force. As poinnted out earlier, the petitioner's case was that the ingots were purhased by him as early a 1946, that is to say, before the said notification of 1948. Barring the private enquiries said to have made by the first respondent and the references drawn therefrom, there is nothing on record to show that the petitioner's statement that he had purchased ingots in 1946 was untrue or was such as could not be accepted. In our view, the enquiry was conducted by the first respondent in a manner which was violative of the principle of natural justice and consequently, both the enquiry as also the impgned order were vitiated and were bad in la. We are, therefore, of the opinion that the first respondent wrongly applied by the provisions of Section 178-A and equally wrongly invoked the presumption therein cntained and cast therunder the burden of proving a negative thing upon the petitioner. We are of also of the view that in conducting the enquiry and passing the impugned order, the first respondent violated the principles of natural justice.

(9)In the result, the petition must be allowed and the impugned order dated October 29, 1959 must be set aside. The petitioner is also entitled to a writ of mandamus against he respondents directing the return of the to ingots wrongfully confiscated under the order dated October 29, 1950. It is however agreed by the learned Advocate General that the petitioner will not emand the return of the two ingots for a period of one month from today. Order accordingly. The respondents will pay to the petitioners the costs of this petition.

(10) Petition allowed.


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