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Bhoormal Premchand Vs. Collector of Customs, Madras - Court Judgment

LegalCrystal Citation
SubjectCustoms;Constitution
CourtChennai High Court
Decided On
Case NumberWrit Appeal Nos. 112 and 113 of 1963
Judge
Reported inAIR1967Mad39
ActsSea Customs Act - Sections 19, 178 and 178-A; Foreign Exchange Regulation Act - Sections 8(1)
AppellantBhoormal Premchand
RespondentCollector of Customs, Madras
Cases ReferredAngus v. Clifford
Excerpt:
.....were detained by the police. subsequently, the police passed on the gold and the letter to the customs authorities for investigation and necessary action under the sea customs act (viii of 1878). the appellant gave his explanation and also the source of getting the gold. but the customs authorities came to the conclusion that the gold had not been acquired from the source referred to in the customs act and that it had been imported in contravention of section 19 of the sea customs act read with section 8(1) of the foreign exchange regulation act (vii of 1947) and confiscated the gold under section 178 of the sea customs act and threw the burden of proof on the appellant under section 178-a of the sea customs act to prove that it was not smuggled gold. the appellant produced..........proud imposed on the appellant shifts on to the customs authorities to prove that it was smuggled gold. burden of proof has only one meaning. it means an obligation to prove a fact. but the obligation arises in different circumstances and it is the circumstances which result in different application of the phrase. various statutes provide that when the prosecution has proved certain facts the accused shall be deemed to have committed the alleged offence or one of its component, unless the contrary is proved. the burden of proof is intimately connected with the standard or quantum of proof. when it has been ascertained where the burden of proof lies, it is necessary to know what evidence is required to decide it. equally, the standard of proof required to make out such a case depends on.....
Judgment:
(1) These two writ appeals arise out of two writ petitions filed by the appellant to quash the order passed by the Collector of Customs in order No. S. No. 363/27/57 dated 26-3-1958 as illegal, void and inoperative in law and in violation or the fundamental rights granted and guaranteed to the citizens of India under the Constitution particularly under Arts. 19(1)(f) and(g) and 20(3), or, in the alternative, to issue a writ of mandamus directing the Collector of Customs to return to the petitioner about 305-56 tools of gold wrongfully seized and confiscated by the respondent. When these two writ petitions came up for hearing before Jagadisan J., he dismissed the petitions on the ground that the appellant failed to make out a case either for the issue of a writ of certiorari or that there were sufficient grounds for the issue of a writ of mandamus directing the Collector of Customs to return the gold to the appellant. The facts that are necessary for the disposal of these two appeals are as follows:

(2) The appellant is carrying on a bullion trade under the name and style of "Jain Jewellers" at No. 111 Avenue Road, Bangalore. In the couse of his business he entered into a contract through telephone on the 6th and 7th of October 1957 with Messrs. Amirchand Nagindas, Jewellers, Madras, to sell 305-56 tolas of gold. The appellant informed them through phone that he would send his man with the gold the next morning by train. Accordingly the appellant entrusted the gold with his employee one Ghavarchand to hand it over to his letter-head paper addressed to Messrs. Amirchand Nagindas, stating therein that the gold had been dispatched through Ghavarchand and that the amount should be paid at the agreed price to the said person delivering the gold. On 8-10-1957 when the said Ghavarchand alighted at the Madras Central station from the express train from Bangalore at about 4-30 p.m. he was intercepted by the police and on a search of his person it was found that he was carrying a substantial quantity of gold in a piece of cloth tied round his waist. The police officers immediately prepared a mahazar for the seizure. They also seized the letter addressed to Amirchand Nagindas. After he was examined by the police officers at the Central Station he was asked to go away, but the gold and the letter were detained by the police. Subsequently the police passed on the gold and the letter to the Customs authorities for investigation and necessary action under the Sea Customs Act. The appellant interviewed the Assistant Collector of Customs, Preventive Department on the evening of the 9th October 1957 and he made a statement before him in writing wherein he stated, among other things, that in pursuance of a telephonic conversation on 7-10-1957, he entered into a contract with Messrs. Amirchand Nagindas to sell gold and informed them that he would be sending the gold through his man for which payment should be made to the bearer at the agreed price. In order to prove that he was in possession of the said gold at the time of the contract he produced his bills, No. 342 dated 28-9-1957 and No. 360 dated 7-10-1957 issued by Messrs. Hindustan Jewellery Mart, Bangalore, and the total purchase of gold under these two bills came to about 235 goals. When the customs authorities examined Messrs. Amirchand Nagindas, they denied that they had placed any orders with the appellate and pleaded ignorance about the whole transaction. The Customs authorities came to the conclusion that there was reasonable belief to hold that the gold had not been acquired from the sources referred to in the Customs Act and that it had been imported in contravention of S. 19 of the Sea Customs Act, read with S. 8(1) of the Foreign Exchange Regulation Act, and as such it was liable confiscation. They therefore, seized the gold under S. 178 of the Sea Customs Act, and threw the burden of proof on the appellant under S. 178-A of the Sea Customs Act to prove that it was not smuggled gold. Accordingly they issued a memo calling upon him to prove by documentary evidence, within 7 days from the receipt of the said memo, that the gold in detention was not smuggled gold, failing which they would confiscate the gold. The appellant produced all the bill books and his accounts to prove that the purchased the gold from Hindustan Jewellery Mart. The account books showed that at the time of the transaction, he had already a stock of gold in his possession, about 80 tolas which was balance of gold purchased from the Bombay agents, and 235 tolas purchased from the Hindustan Jewellery Mart. Thus in all, he had about 305 tolas of gold at the time of the transaction. In spite of these account books and bills, the Customs authorities were not satisfied that the appellant had established that the gold found in the possession of his agent, Ghavarchand, was not smuggled gold. They felt that the account books, at the most, would show that the appellant had acquired roughly about 305 tolas of gold, but "there was no definite means of relating the gold seized in Madras to the gold covered by these records". Thereafter the Customs authorities passed an order that as the appellant had not discharged the burden of proof imposed upon him by S. 178-A of the Sea Customs Act, they had no option but to hold that the gold was smuggled and accordingly they confiscated the gold weighing about 305-56 tolas valued at Rs. 275000-40 under S. 167(8) of the Sea Act read with S. 23-A of the Foreign Exchange Regulation Act.

(3) It is against this order that the appellant filed the two writ petitions.

(4) The question that now arises for our consideration is, as observed by His Lordship Justice Rajagopala Aiyangar in Gianchand v. State of Punjab, , whether there was a seizure under S. 178-A or under S. 180 of the Sea Customs Act. Under S. 1780-A of the Sea Customs Act, the burden of proof is on the present that the goods in his possession are not smuggled, and future at the time of the seizure made by the Customs officer he should entertain a reasonable belief that the goods are smuggled and in that sense the reasonable belief of the seizing officer is a prerequisite for the statutory onus to arise. When the appellant's agent, Ghavarchand alighted the Madras Central station, he was intercepted not by the Customs Officers, but by the police officers at the Central station. The police officers detained the gold under a mahazar. Evidently they should have seized the gold under S. 550 of the Crl. P.C. and under S. 27 of the Madras City Police Act, which says that "any police officer may seize any property or thing which may be found in possession of any person where the possession by such person of such property or thing creates a reasonable suspicion of the committal of an offence..." The police officer interrogated the appellant's agent Ghavarchand at the Central station itself on 8-10-1957. They also seized from him the letter addressed to Amirchand Nagindas, intimating him that the appellant had dispatched 305 tolas of gold for delivery and directing him to pay the agreed price to the bearer. On the preliminary investigation made by the police officers on the spot, they suspected that it was accuse of smuggled gold and therefore they passed on the gold and the letter seized under the Mahazar to the Customs department for further action. Now the question is, when the customs authorities received the gold and the letter addressed to Amirchand Nagindas from the police officers, can it be said that it was a seizure under Section 178-A of the Sea Customs Act? As we have already stated, two things are absolutely necessary for the applicability of the section, namely, that the customs authorities should entertain a reasonable belief, at the time of the seizure, that the goods in the possession of the person are smuggled goods, and the person who was in possession of the alleged smuggled goods should prove that they are not smuggled goods. It cannot be said that, when the customs authorities received the gold from the police officers on the evening of 8-10-1957, they seized the gold in the reasonable belief that they were smuggled gold. It was only subsequently that the customs authorities made an elaborate enquiry and investigation in regard to the good in question, and then only they entertained a reasonable belief that the gold in question might be smuggled gold and they began to act under S. 178-A of the Sea Customs Act. Now it is useful to refer to the principle laid down in , where the facts were: On information the City

Inspector of Police raided a house and in the course of such a raid certain bars of gold were found on the person of certain mates of the house and also there was found a large amount of cash. The gold was seized and a complaint was filed charging the persons caned under Ss. 411 and 414 of the I.P.C. The charge of receiving stolen property preferred against the persons was not, proceeded with, and police inspector made a report to the court that no case had been made out against them and the case was thereupon dropped, Meanwhile, the Assistant Collector of Customs contacted the City Police and made an application to the court of the First Class Magistrate for the delivery of these gold bard to the customs department, obviously under S. 180 of the Sea Customs Act, and they were delivered to the customs authorities. Thereafter they issued a show cause notice to the person concerned why the gold should not be confiscated under Section 167(8) of the Sea Customs Act. The persons concerned there naturally had to prove under S. 178-A of the Sea Customs Act that the goods were not smuggled goods, It was in those circumstances that His Lordship Justice Rajagopala Aiyangar had to consider the question whether it was a seizure under S. 178-A of the Sea Customs Act or one under S. 180 of the Sea Customs Act, and he made the following observations:

"............In our opinion, the delivery of the goods to the customs authorities under the later part of S. 180 is not seizure under the Act within the meaning of S. 178-A. The last part of sub-section(1) of S. 178-A lays the burden of proving that the goods are not smuggled on ' the person from whose possession the goods are taken'. Assuredly when the goods are delivered to the Customs authorities by the Magistrate they are not taken from the possession of the persons accused in criminal case so as to throw the burden of proof on them and it would lead to an absurdity to hold that the section contemplated "proof to the contrary" by the magistrate under whose orders the delivery was effected,. For the purpose of deciding the point arising in this case we do not think it necessary to enter into the philosophy or refinements of the law as to the nature of possession. When the goods were seized by the police they ceased to be in the possession of the accused and passed into the possession of the police and when they were with the Magistrate it is unnecessary to consider whether the Magistrate had possession or merely custody of the goods. The suggestion that the goods continued to be, at that state, in the possession of the accused does not embody a correct appreciation of the law as regards possession. A 'seizure' under the authority of law does involve a deprivation of possession and not merely of custody and so when the police officer seized the goods, the accused lost possession which vested in the police When that possession is transferred, by virtue of the provisions contained in S. 180 to the customs authorities, there is no fresh seizure under the Sea Customs Act. It would, therefore, follow that, having regard to the circumstances in which the gold came into the possession of the Customs authorities the terms of S. 178-A which requires a seizure under the Act were not satisfied........"

(5) In the instant case, the above principle has to be applied as the facts in this case reveal that the police officers detained the agent of the appellant. They seized the gold and the letter from him under a mahazar. The seizure was done by them under the provisions of the Madras City Police Act and the Criminal Procedure Code. Subsequently they transferred the gold to the customs authorities for further action. It cannot, therefore, be said that it was a seizure under S. 178-A of the Sea Customs Act. But Jagadisan J. observed that when the police officers of the Central station seized the gold and detained the person, it was only a case of detention, and the seizure occurred very much later when the customs authorities after due investigation determined to seize the gold. With great respect, we do not agree with this observation, because at the time of the receipt of the gold by the customs authorities the prerequisite condition of "reasonable belief" did not exist. The Customs authorities did not seize the gold at the Central station directly from the appellant's agent, but they received the gold from the police officers. They had not yet started any enquiry of investigation. It was only after the receipt of the gold they began to investigate the case and then they came to the conclusion that it might be smuggled gold. It was only then that the customs authorities began to take proceedings under S. 178-A of the Sea Customs Act. Jagadisan J. however applied the principle laid down in the Collector of Customs, Madras v. Sampathu Chetti, where,

according to him, the facts were almost identical with those of the present case. Here again, with great respect, we have to differ, because the facts there were: An employee of there respondent merchant in the city of Madras alighted at the Madras Central station from the Bombay express. He was intercepted and questioned by a Head constable of the State Police attached to the Prohibition Intelligence department. He admitted that he was in possession of gold which he was bringing for his firm from Bombay. The head constable immediately contacted the officer of the Preventive Section of the Customs department who were then on duty at the Central Station. They interrogated the person and seized from his four blocks of gold weighing in all about 1000 tolas. Thereafter they started investigation and the Collector of Customs being prima facie of the view that the gold seized had been smuggled issued notice to the respondent to show cause why the said gold should not be confiscated. These facts do not certainly correspond to the facts in the instant case. In the above case it was a direct seizure by the Customs department on the spot at the Central station, whereas in this case seizure was effected by the police officers. It was only thereafter that they transferred the gold in question to the customs authorities. There is a vital difference, as observed by His Lordship Justice Rajagopala Aiyangar, between a seizure under S. 178-A and seizure under S. 180 of the Sea Customs Act. Therefore, we are of the opinion that there was no scope for the application of S. 178-A of the Sea Customs Act inasmuch as the original seizure was not by the police department. We further hold that at the time of the receipt of the gold by the Customs Officers, it cannot be said that they had a reasonable belief that the gold was smuggled.

(6) Even assuming that S. 178-A of the Sea Customs Act, applies to the facts of the present case, we shall consider how far the appellant has discharged the burden of proof that the gold was not smuggled. In while considering the scope and validity of S. 178-A His Lordship Justice Rajagopala Aiyangar observed:--

".....it would be applied also in case where a person is able to prove that his acquisition was bona fide by that the persons from whom he acquired or one higher up in the series of prior owners is unable to explain satisfactorily his possession, and it is only in these marginal or extreme cases that the onus created by the section might be contended to be harsh and unreasonable"

The facts in the instant case certainly fall into the latter class of case mentioned above.

(7) The uncontroverted facts are that the appellant was previously a partner in the firm called the Hindustan Jewellery Mart from 29-12-1949. He left the firm and started his own business, styled as "Jain Jewellers" on 2-7-1957. In the course of the business, he entered into a contract with Amirchand Nagindas, through trunk telephone on 6-10-1957. At the time he received the order on 6-10-1957, he had certainly not enough gold in his hands to effect the supply. On 7-10-1957 he purchased gold, about 235 tolas, from Hindustan Jewellery Mart, Bangalore, He melted the gold thus purchased into blocks in the gold refinery at No. E. 61 Chandeswari temple Street, Banglore City of which one Padmanabha Setti was the manager, and handed over the blocks to his again Ghavarchand with a letter to Amirchand Nagindas. At the time of the enquiry the appellant produced his day book, ledger, purchase bill books as well as bill book. But before he produced these account books, the investigating officer had already contacted Hindustan Jewellery Mart and Padmanabha Setty and verified their accounts, and as a result of the investigation it was found that the particulars furnished by the appellant tallied with the accounts of Hindustan Jewellery Mart and T.A. Padmanabha Setty. It is true that a statutory condition has been imposed upon the appellant of establishing his innocence, namely, that the gold was not smuggled; in other words, the burden of proof on his is fixed. Surely it cannot be altered nor does it shift during the course of the enquiry. When once the appellant had placed all the available materials before the Customs authorities and also when the Customs Authorities were possessed of all the materials as a result of the investigation, after certain stage, the burden of proud imposed on the appellant shifts on to the Customs authorities to prove that it was smuggled gold. Burden of proof has only one meaning. It means an obligation to prove a fact. But the obligation arises in different circumstances and it is the circumstances which result in different application of the phrase. Various statutes provide that when the prosecution has proved certain facts the accused shall be deemed to have committed the alleged offence or one of its component, unless the contrary is proved. The burden of proof is intimately connected with the standard or quantum of proof. When it has been ascertained where the burden of proof lies, it is necessary to know what evidence is required to decide it. Equally, the standard of proof required to make out such a case depends on the type of the proceedings. In any event, in all such cases, the burden of the accused in lighter than that of the prosecution even in cases where the law throws the onus of proof on the defence. In this connection, it is useful to refer to the Digest of the Law of Evidence, by Stephen, Art. 104, where it is stated that:

"the burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any lass that the burden of proving the fact shall lie on bay particular person; but the burden may in the course of a case be shifted from one is to the other, and in considering the amount of evidence necessary to shift the burden of proof the court has regard to the opportunities of knowledge with respect to the fact to be proved which may be possessed by the parties respectively."

(8) The above principle has been applied in a number of cases where the statute imposes the burden of proof on the accused. In the King v. Ward, 1915-3 KB 696 a question arose whether the accused had discharged the burden of proof. It was a case under S. 58 of the Larceny Act, which provides that whosoever "shall be found by night having in his possession without lawful excuse(the proof of which shall lie on such person) any pick lock key, crowjack, bit or other implement of house-breaking" shall be guilty of a misdemeanour. The accused in that case was a bricklayer. He pleaded that he had a lawful excuse for having the tools in his possession. While discussing the scope of S. 58 of the Larceny Act, Lord Reading C. J. observed:

"That being so, and the tools being admittedly bricklayers' tools, the appellant had established prima facie that he had a lawful excuse for being in the possession of the tools, and the onus was shifted on to the prosecution to prove to the satisfaction of the jury, if they could, from the other circumstances of the case that the appellant was not in the possession of the goods for an innocent purpose but for the purpose of house breaking".

This case has been referred to in Rex v. Carr Briant, 1943-1 KB 607 at p. 612. The case related to a charge under S. 2 of the Prevention of Corruption Act 1916, which says:

"Where in any proceedings against a person for an offence under the Prevention of Corruption Act 1906 it is proved that any money, gift, or other consideration has been paid forgiven to or received by a person in the employment of His Majesty or any Government department or a public body by or from a person, or agent of a person, holding or seeking to obtain a contract from His Majesty or any Government Department or public body the money, gift or consideration shall be deemed to have been paid or given and received corruptly as an inducement or reward for doing or forbearing to do an act in relation to the affairs or business of that person's principal, or showing or forbearing to show favour or disfavour in relation to his principal's affairs or business unless the contrary is proved".

(9) While considering the question whether the burden of proud imposed on the accused was less than that of the prosecution of proving because beyond all reasonable doubt, Humphreys J. observed:

"Where either by statute or at common law, some matter is presumed against an accused person, unless the contrary is proved the jury should be directed that it is or them to decide whether the contrary is proved, that the burden of proof required is less than that required at the hands of the prosecution in proving the case beyond a reasonable doubt, and that the burden may be discharged by evidence satisfying the jury of the probability of that which the accused is called upon to establish".

Once again the same principle has been applied in Rex v. Cohen, 1951-1 KB 505 at p. 508. The case here was one under S. 259 of the Customs consolidation Act, which is in the following words:

"If in any prosecution in respect of any goods seized for non-payment of duties... or for the recovering any penalty or penalties under the Customs Acts, any dispute shall arise whether the duties of customs have been paid in respect of such goods.....then and in every such case the proof thereof shall be on the defendant in such prosecution".

It was contended by the prosecution in that case that once it was established that the defendant harboured goods knowingly with intent to defraud the revenue, he would be guilty of an offence of unlawful harbouring. On the other hand, it was contended for the defendant that when an explanation was given by the defendant which raised a doubt in the minds of the jury whether or not he knew that the property had been stolen, the defendant was entitled to an acquittal. Lord Goddard C. J. who delivered the judgment in that case, observed:

"So, in the present class of case, once it is proved that the accused person was knowingly in possession of dutiable goods on which he had not proved, that duty has been paid; if he gives no explanation, he may be convicted of harboring. If he does give an explanation, the jury should be told that if it either satisfied them that he did not know the goods were uncustomed, or leaves them in doubt whether he knew, he should be acquitted".

(10) Applying the above principle to the facts of the present case, we feel that, after the first stage the burden of proof has shifted to the Customs authorities to prove that it was smuggled gold. In this case, the Customs Authorities no doubt relied on the deposition of Amirchand Nagindas. But, at the same time, the appellant explained that Amirchand Nagindas was not one of his established customers and that he had paid no advance for the purchase of the gold; that it was common knowledge that when police or customs officials enquire about a transaction, ordinary people, especially businessmen of the community to which Chunnilal belonged, were disposed to disown any knowledge of the transaction under enquiry to avoid bringing their business under a cloud. No doubt, the statement given by Amirchand Nagindas was made available to the appellant. But it was the duty of the Customs authorities to produce Amirchand Nagindas at the time of the enquiry and afford an opportunity to the appellant to cross examine him to prove his case. But here the Customs Authorities on mere suspicion and surmise had come to the conclusion that the gold was smuggled.

(11) Another extraneous consideration which was taken by the Customs authorities was that the appellant did not gain much in the transaction. We feel that this matter should not have been taken into consideration, when considering an important issue, namely, whether the gold was smuggled or not. It is not in our province, to consider whether the appellant acted prudently and whether he exercised his proper judgment in this transaction. The appellant had, however, explained that on the date of the said transaction the price of gold at Bangalore was Rs. 104 and he made a bargain with Amirchand Nagindas for sale at Rs. 104-8-0. He further explained that in a fluctuating market, the merchants, especially reported firms, would not mind the loss or profit and would stick up to their business obligations; that, accordingly, in order to maintain his high reputation and integrity he wanted to supply the goods as per the contract although it entailed a loss, and that such a feature was not uncommon in bullion dealings. Even Jagadisan J. observed that the contention put forward by the appellant seemed to be impressive. It is very difficult for the court to adjudge the state of a man's mind.

(12) Lord Justice Bowen observed that:

"The state of a man's mind is as such a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man's mind at a particular time is but if it can be ascertained it is as much a fact as anything else" (Edgington v. Fitzmaurice, (1884) 29 Ch D 459 at p. 483).

In another cae Angus v. Clifford, (1891) 2 Ch 449 at p. 470, Lord Justice Bowen said:

"A man may tell a lie about the state of own mind, just as much as he can tell a lie about the state of the weather, or the state of his own digestion., It makes, to be sure, the enquiry a difficult and complicated one......."

(13) Therefore taking all the facts and circumstances of the case into consideration we feel that it was not a seizure under S. 178-A of the Sea Customs Act, and even assuming that it was a seizure under S. 178-A of the Sea Customs Act, and even assuming that it was a seizure under S.178A of the Sea Customs Act, it must be held that the appellant had discharged the statutory burden of proof imposed on him. We are satisfied that there are no sufficient materials to show that this is a case of smuggled gold; and once we come to the conclusion that it was not smuggled gold, the appellant is entitled to come to this court for quashing the order passed by the Collector of Customs and directing him to return the gold confiscated by him. Accordingly these appeals are allowed, but in the circumstances no costs.

(14) Petition allowed.


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