1. This is a writ petition filed by one Punamchand R. Shah (since deceased, whose legal representatives have been brought on record), a businessman, and a director of South India Flour Mills Private Ltd. praying for the issue of a writ of certiorari so as to quash an order dated 19th December, 1972, passed under Section 132(5) of the Income-tax Act, 1961, under the following circumstances :
On receipt of information that the petitioner and his brother, Milapchand R. Shah, had extensive assets outside the books acquired out of untaxed resources, the intelligence wing of the income-tax department conducted a search on 23rd June, 1971, at the second floor of the premises No. 1/2, Royapuram Beach Road, then used as the residence of the petitioner. The relevant authorisation was made by the Commissioner of Income-tax in favour of the Assistant Director of Inspection to enter and search the said premises, to place identification marks on such books of account and documents as may be found in the course of the search and considered relevant to or useful for the proceedings under the Income-tax Act, to seize any such books of account, documents, money, bullion or jewellery or other valuable article or thing and to make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing. The authorisation included the exercise of all other powers and performance of all other functions under Section 132 of the Income-tax Act. During the search the Assistant Director of Inspection came across large holdings of silverware, gold and diamond jewellery and cash at the said residence. A panchanama was prepared and attested by two witnesses on 23rd June, 1971, in respect of the articles seized between 10-30 a.m. and 8-40 p.m. It described certain books of account and documents as having been taken possession of. It also set out certain articles which were not seized. Similarly, the jewellery found in the premises as described in the annexure to the panchanama was shown to have been kept in a Godrej safe and placed under prohibitory order under Rule 112(3) of the Income-tax Rules, pending valuation. It was stated therein that the search proceedings under Section 132 of the Act had not come to an end. A copy of the panchanama was handed over to the petitioner.
2. On the same day, a prohibitory order under Section 132(3) of the Act was made ordering the petitioner not to remove, part with or otherwise deal with the books of account, documents, money, bullion, jewellery, etc., described in the annexure to the panchanama. They were described as being in the possession or control of the petitioner. If there was any contravention, then it was stated that the petitioner was liable to be punished with rigorous imprisonment extending to two years and a fine in accordance with Section 275A of the Income-tax Act. This prohibitory order describes also that the silverware of the petitioner and his brother, Milapchand, had been duly weighed and kept in a Godrej cupboard, sealed in the presence of two witnesses.
3. It appears that the petitioner's representatives met the Income-tax Officer concerned from time to time thereafter. Nothing tangible happened until 7th July, 1971, on which date the Income-tax Officer wrote to the petitioner asking him to explain the source of the acquisition of the assets seen at the time of the search. It was stated that the said communication should be treated as adequate notice under Rule 112A of the Income-tax Rules and that if the petitioner did not appear on 5th of August, 1971, on which date the explanation was to be offered, then adverse inference would be drawn and an order under Section 132(5) of the Act would be made treating the assets as undisclosed income. On the 5th of August, 1971, the petitioner wrote to the Income-tax Officer saying that the gold and diamond jewellery seen in the course of the search were not his and that the acquisition of silver articles had been fully disclosed in his return of wealth-tax from time to time. It was further pointed out that even if the silver articles were considered as unaccounted, as they had not been seized, they did not come within the purview of Section 132(5) of the Act. It was added that 'in any case, no assets have been seized and, therefore, in all humility, I would submit that there is no necessity for an order under Section 132(5) of the Income-tax Act, 1961'. It was, therefore, requested that the action proposed to be taken in his letter dated 7th July, 1971, might be dropped. On 10th August, 1971, a valuer who had been appointed by the income-tax department to value the gold and diamond jewellery and the silverware seen in search, valued the jewellery at Rs. 5,94,140 and the silverware at Rs. 1,22,380. For the purpose of valuation the seals were removed and they were reaffixed after the valuation was over.
4. On 29th January, 1972, there was a letter to the advocate for the petitioner asking him to 'settle the issues'. It was added that as the Commissioner was pressing for a report with particular reference to the prohibitory order still in existence, the Assistant Director of Inspection looked forward to the advocate's immediate response for speedy closure of the proceedings. It is not clear as to what happened subsequent to that letter. But from the counter-affidavit it appears that from or about 3rd March, 1972, there was a strike in the mill premises and that the situation worsened as a result of which the petitioner had to seek out a new residence. The petitioner, it was stated, was not willing to allow access to the premises to seize the gold and silver articles kept under the prohibitory order. The Assistant Director of Inspection was said to have been requested to wait till the dust settled. There was; according to the respondents, an attempted burglary at the residence in the mill premises during that time. Since nothing was heard till the beginning of June, 1972, the petitioner was called upon to deliver the keys of the iron safe containing the gold jewellery covered by the prohibitory order. The petitioner, accordingly, delivered the keys on 6th June, 1972, The keys of the iron safe and Godrej almirah have been in the possession of the respondents since then, A receipt was issued under date 6th June, 1972, for the receipt of the keys.
5. Thereafter, the petitioner offered on 3rd July, 1972, security in the shape of life insurance policy and title deeds so as to enable the respondents to release the jewellery and the silverware. However, on 18th October, 1972, these items of security were returned by the respondents. In the meantime, on the 22nd of September, 1972, the Additional Director of Inspection is said to have searched the premises and expressed his intention to seize the silverware and gold jewellery earlier kept under the prohibitory order. It was explained to the petitioner that the seizure would be symbolical but that the entire jewellery and silverware would thenceforth be under the personal custody of the Commissioner of Income-tax, Madras. The earlier seals affixed on the iron safe and steel cupboard were not disturbed. A paper was pasted on the outer door of the room in which the iron safe and almirah were kept saying that the contents of the room were under the personal custody of the Commissioner of Income-tax 'pursuant to the prohibitory orders under Section 132(3) of the Income-tax Act in force from 23rd June, 1971'. A statement was recorded from the petitioner on the same date in which the petitioner assured that the contents of the safe and the steel cupboard would be kept under strict vigilance and watch and that the safety of their contents would be ensured. The petitioner asked for early orders under Section 132(5) of the Act and release of the seized articles. On 28th September, 1972, there was a letter purporting to be a notice under Section 132(5) read with Rule 112A(1) of the Indian Income-tax Rules, 1962, proposing to treat the value of the articles seized as income from undisclosed sources. The petitioner was also required to explain the source of the acquisition on 18th October, 1972. On that day the petitioner wanted the queries on which the explanation was asked to be put in writing. Nearly two months after the said notice, on the 25th November, 1972, there was a letter from the Income-tax Officer running to about 6 typed papers in which details of the various queries were set out. The petitioner was required to give an explanation by 4th of December, 1972. This letter itself came to be served on the petitioner on 29th of November, 1972. On 4th December, 1972, the petitioner asked for extension by 15 days which would have taken us to 19th December. This request was declined. However, the petitioner was asked to submit his reply by 8th of December, 1972, under a letter of 7th December, 1972, from the Income-tax Officer. The petitioner filed an elaborate reply on 16th December, 1972. By an order under Section 132(5), dated 19th December, 1972, in which there is no reference to the reply of the 16th December, 1972, the Income-tax Officer observed that the acquisition of unexplained amounts as detailed in the said order amounted to Rs. 9,98,000 and that the tax thereon came to Rs. 9,32,845. Since the value of the seized articles was less than the tax so calculated, the seized articles were retained. This order was served on 21st December, 1972, and the petitioner filed this writ petition on 21st March, 1973, seeking to quash this order.
6. It may be mentioned here that the order of 19th December underwent rectification by an order dated 22nd March, 1973. The unaccounted value for silver is shown therein as Rs. 60,000 (as against Rs. 1,22,380 in the original order), and jewellery as Rs. 1,79,350 (as against Rs. 5,94,140 in the original order dated December 19, 1972). The balance of silver of the value of Rs. 62,380 and jewellery of the value of Rs. 4,14,790 was stated, in this order, to be returnable. They were not, however, actually returned as the stay order obtained by the petitioner in the writ proceedings was construed as affecting this return also. Subsequently, in some interim proceedings when this order of rectification was brought to our notice, we directed the return of the alleged unaccounted jewellery also on security being furnished. The petitioner did not furnish security and silver and jewellery continued in the possession of the respondents.
7. It would be useful at this stage to make a brief reference to Section 132 and Rule 112A. Under Section 132(1) where the Director of Inspection or the Commissioner, in consequence of information in his possession, had reason to believe that any person is in possession of any money, bullion, jewellery, etc., and that such money, etc., represented either wholly or partly income from an undisclosed source, then he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner of Income-tax or Assistant Director of Inspection or Income-tax Officer to enter and search any building, break open the lock of any door, box, etc., seize any books of account, money, bullion, jewellery, etc., place marks of identification on any books of account or other documents and make a note or an inventory of any such money, bullion, jewellery, etc. Where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery, etc., Clause (3) empowers the authorised officer to serve an order on the owner or the person who is in immediate possession or control of the said items directing him not to remove, part with or otherwise deal with it except with the previous permission of such officer. This would have the effect of attachment of the items covered by the prohibitory order. Where any money, bullion, jewellery, etc., were seized under Sub-section (1), then the Income-tax Officer was empowered by Clause (5) to give the person concerned an opportunity of being heard and also to make his own enquiry. Within 90 days of the seizure he had to make an order with the previous approval of the Commissioner estimating this undisclosed income in a summary manner to the best of his judgment on the basis of such materials as were available to him, calculating the amount of tax on the income so estimated, and specifying the amount that would be required to satisfy any existing tax liability. He could retain in his custody the seized assets or any part thereof as were in his opinion sufficient to satisfy the aggregate of the tax liability and release the remaining portion to the person from whose custody they were seized. Where the person had paid or made satisfactory arrangements for payment of tax liability referred to above, then the Income-tax Officer could, with the previous approval of the Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case. If any person had any objection to the order passed under Sub-section (5), he could within 30 days from the date of such order make an application to the appropriate authority, viz., the Central Board of Direct Taxes. Rule 112A of the Income-tax Rules provides for the enquiry under Section 132. Within 15 days of the seizure, the Income-tax Officer has to issue to the person in respect of whom the enquiry under Sub-section (5) of Section 132 is to be made, a notice asking him to explain or produce evidence regarding the source of the acquisition of the assets. The Income-tax Officer has 10 weeks (roughly) thereafter to complete the enquiry. Before any material gathered in the course of the examination or enquiry under this rule is used, the Income-tax Officer has to give a reasonable notice to the assessee to show cause why such material should not be used against him. It is in the background of these provisions that we consider this case.
8. Basing himself on a notice dated 7th July, 1971, issued under Rule 112A, the learned counsel for the petitioner contended that the search had become full and complete by 23rd June, 1971, and that the order dated 19th December, 1972, was hopelessly beyond time. In any event, according to him, on the 6th of June, 1972, the respondents having taken the keys from the petitioner, they had reduced to their possession all the assets so that the seizure was complete by that date. Even on the basis that the seizure was completed only on 6th June, 1972, the order of 19th December, 1972, was said to be barred by limitation. Learned counsel sought to show how the order under Section 132(5) was passed without a proper opportunity to the petitioner to make his submissions so as to result in the violation of the principles of natural justice and the requirements of the statute.
9. For the respondents, Mr. Jayaraman, the learned counsel, who put forward a very well-thought out argument submitted broadly :
(1) that the writ petition should be dismissed in limine as the petitioner had availed himself of the right of appeal conferred by Section 132(11) of the Act, which was in effect an alternative remedy;
(2) that the facts clearly show that the proceedings resulting in the seizure were completed only on 22nd September, 1972, so that the order passed on 19th December, 1972, was very much within time; and
(3) that ample opportunities were given to the petitioner to make his representations to the enquiry proposed under Section 132(5) and that the petitioner was trying to unreasonably prolong the enquiry so as to get the proceedings time-barred.
10. The first point that arises for consideration is whether the appeal filed by the petitioner before the Central Board of Direct taxes is a bar to the present writ proceedings. It is not disputed that the petitioner has filed an appeal within the time prescribed by Section 132(11). The rule of exhaustion of statutory remedies before a writ is granted is a self-imposed limitation, a rule of policy and discretion rather than a rule of law and the court may, therefore, in exceptional cases, issue a writ of certiorari notwithstanding the fact that the statutory remedies have not been exhausted. See Rashid Ahmed v. Municipal Board, Kairana : 1SCR566 . and Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad : 1SCR518 . The Supreme Court has qualified this rule of fetter with two exceptions, viz., (1) where the provision under which the order is purported to be made is ultra vires; and (2) where the impugned order is made in violation of the principles of natural justice. There are decisions holding that where there is patent lack of jurisdiction, the court can issue a writ, even though there is an alternative remedy. This is thus a third exception.
11. The legal position about the effect of alternative remedies has also been set out in volume 11 of the third edition of Halsbury's Laws of England as follows at page 140 :
'269. Application by party aggrieved.--Although the order is not of course it will though discretionary nevertheless be granted ex debito justitiae to quash proceedings which the court has power to quash, where it is shown that the court below has acted without jurisdiction or in excess of jurisdiction, if the application is made by an aggrieved party and not merely by one of the public and if the conduct of the party applying has not been such as to disentitle him to relief; and this is the case even though certiorari is taken away by statute, and although there is an alternative remedy.'
12. It was pointed out by Lord Goddard C.J. in R. v. Comptroller-General of Patents : Ex parte Parke, Davis & Co.,  1 All ER 862 (QB) in dealing with the objection to issue a writ of prohibition in a case where an appeal was provided for against the order impugned as follows :
'Objection to jurisdiction can always be taken by plea, and, if an appeal lies from the court, or tribunal in which such a plea is raised, the appellate court could, no doubt, decide the question of jurisdiction, but it by no means follows that, because there is an appeal, the power of this court to issue a prohibition is taken away. There is no technical obstacle to the co-existence of a right to appeal and to a prohibition......
If the defect of jurisdiction is apparent on the face of the proceedings, the order of prohibition must go as of right and is not a matter of discretion.........'
13. There is no essential difference between a writ of prohibition and a writ of certiorari as far as this aspect is concerned. In either case though the grant of writ is discretionary, still it will issue where there is a prima facie case of absence of jurisdiction. The presence of a right of appeal does not in any manner qualify the power of this court to issue a writ if the facts so warrant.
14. We have now to consider the question as to when the seizure was effected and see whether the impugned order is time-barred. There are 3 dates in this connection, viz., (1) 23rd June, 1971, (2) 6th June, 1972, and (3) 22nd September, 1972. Unless the seizure could be said to have been effected on 22nd September, 1972, the order of 19th December, 1972, would manifestly be time-barred and, therefore, lack jurisdiction.
15. Mr. Swaminathan, the learned counsel for the petitioner, vehemently contended that the proceedings for the seizure were completed on 23rd June, 1971, that nothing was done thereafter and that on 7th July, 1971, the respondents had themselves issued a notice under Section 132(5) of the Act which could be issued only if there was already a seizure. For the respondents the submission was that even the panchanama prepared on the 23rd June, 1971, showed that the search and seizure were incomplete and that even in the assessee's letter of 5th August, 1971, which was in response to the notice of 7th July, 1971, the petitioner had stated that there was no seizure. According to the learned counsel for the department the petitioner could not now be heard to say that the seizure was complete on 23rd June, 1971, itself.
16. We consider that there is substance in the submission of the department. In order to see whether the seizure was complete on 23rd June, 1971, we have to find out and ascertain the meaning of the word 'seizure' occurring in Section 132(1) of the Act. As to what constitutes 'seizure' has been described in paragraph 84 of volume 16 of Halsbury's Laws of England, third edition, as follows :
'84. What constitutes seizure.--For an act of the sheriff or his bailiff to constitute a seizure of goods, it is not necessary that there should be any physical contact with the goods seized, nor does such contact necessarily amount to seizure. An entry upon the premises on which the goods are situate, together with an intimation of an intention to seize the goods, will amount to a valid seizure............but some act must be done sufficient to intimate to the judgment-debtor or his servants that a seizure has been made............'
17. Though the almirah and the iron safe were sealed on the 23rd June, 1971, still the sealing by itself cannot be taken as seizure as the contemporaneous correspondence expressly say so. It is true that the goods can be taken as seized when, e.g., the godown in which the goods are stored is sealed. See Multan Chand Kanyalal v. Bank of Madras, ILR  Mad 346. The mode of seizure would vary with the type of goods. In the case of intangible property, it can only be symbolic as in Champarun Sugar Co. v. Haridas Mundra : AIR1966Cal134 . As pointed out in the passage in Halsbury's Laws of England, the question is one of intention in all cases. If the intention was to seize the goods by sealing the almirah and the iron safe, then the sealing by itself could be taken as seizure. However, on the facts herein, we are unable to hold that the sealing could be taken as equivalent to seizure. If the intention of the authorised officers was to seize the goods on the 23rd June, 1971, then there was no need for the prohibitory order served on 29th June, 1971, under Section 132(3) of the Act for the panchanama to say so. Section 132(3) contemplates an order being made thereunder only where it is not practicable to seize any books of account, documents, money, bullion, jewellery or other valuable articles. It is for the concerned authority to determine whether it is practicable to seize the books of account, jewellery, valuable articles, etc. It is not possible for this court to go into the practicability of the seizure of the relevant items and substitute its own judgment for that of the authorised officer. In other words, the discretion of the authorised officer would have to be allowed full play in determining a question of this nature. Both in the panchanama and also in the letter dated 18th November, 1971, addressed by the Income-tax Officer to the petitioner and referred to in the counter-affidavit it is clearly stated that there was no seizure of the goods. Even the petitioner in his reply of the 5th August, 1971, has stated that there was no seizure. The petitioner's argument that there was a seizure on 23rd June, 1971, at this stage is contradicted by them and appears to be born out of convenience and cannot be accepted. As it is largely a matter of intention and as the intention in this case is clear that the authorised officer did not want to seize the goods on 23rd June, 1971, there is no question of the goods being taken as seized on that date.
18. It is true that there was a letter of 7th July, 1971, asking for an explanation with reference to the proposed proceedings under Section 132(5) of the Act. Section 132(5) would come in for application only where any money, bullion or other articles are seized. Where there is no seizure, there is no scope for taking up proceedings under that provision. The question as to whether there was a seizure or not has to be determined by what happened on 23rd June, 1971, or by any overt act subsequent to that date. The assumption that there was a seizure on the 23rd June, 1971, on the basis of which the letter of 7th July, 1971, came to be issued cannot be taken as conclusive. On 23rd 'June, 1971, a prohibitory order was served and it was based on the postulate that it is not practicable to seize the goods and that, therefore, there was no seizure of the goods. Nothing happened between 23rd June, 1971, and 7th July, 1971, which can give raise to the inference that there was a seizure by that date. We are not satisfied on the facts that the letter of 7th July, 1971, came to be written on a proper comprehension of the position regarding the seizure of the goods. We, therefore, hold that there was no seizure of the relevant articles on the 23rd of June, 1971.
19. We have now to examine the alternative case of the petitioner that the seizure took place, at any rate, on 6th June, 1972. As we have already seen, on that date the keys of the almirah and the iron safe were handed over to the respondents. It was stated on behalf of the respondents that the keys were taken not with the intention of seizing the goods but only with the idea of securing them against any theft or damage. On this aspect the affidavits of the respondents are at best vague. In paragraph 8 of the counter-affidavit of the second respondent it is mentioned that the petitioner was not willing to allow access to the premises to seize the gold and silver articles kept under prohibitory order and that since the department was interested in the articles kept under prohibitory order on the face of the unruly behaviour of the labour, it became expedient to take over the keys from the petitioner. It is difficult to accept this part of the case of the respondents. If there was apprehension of theft or damage as a result of the unruly behaviour of the labourers, then one would have expected the Commissioner not to leave the jewellery, etc., in the premises. There is no material to show how long the strike which started in March continued. It was pointed out for the respondents that the petitioner was unwilling to allow access to the premises. But it is curious to find the respondents taking an undertaking from the petitioner himself to see to the safety of the items. Thus the case of the department on this part is neither consistent nor convincing.
20. It is not clear also as to how the delivery of the keys by the petitioner to the respondents is likely to act as a kind of security against the theft or damage to the goods or articles in which the department was interested. There is no magic in the possession of keys which would ward off the danger to the articles. Having considered the facts, we are of the view that the keys were taken only to reduce the attached items to the possession of the respondents. We are unable to find any other purpose behind the taking over of the keys. The respondents acquired complete control over the valuables in the almirah or the iron safe on 6th June, 1972, by having the keys with them.
21. We have already extracted the passage from volume 16 of Halsbwy's Laws of England and noticed that seizure is largely a matter of intention. Possession may be actual or constructive. One of the well-known modes of acquiring constructive possession is to take over the keys, say of a godown where goods are stored. To determine as to who has possession, it is not always possible to rely on physical possession. Even the custody of keys would show as to who has the control over or custody of the goods. The inevitable result of seizure is to divest the person till then in possession of his possession and vest the possession on the person who seizes. Till the keys were with the petitioner, he was not divested of his possession. He continued to have possession and had to be restrained from dealing with the goods. By surrendering the keys as required by the respondents, he lost all rights over the goods. He had only a kind of reversionary right over the items. The seizure was thus complete on the 6th June, 1972.
22. Learned counsel for the revenue based his case heavily Bhagwandas Narayandas v. Commissioner of Income-tax,  90 ITR 194 . In that case the keys of a cupboard were taken by the officer who searched the premises of an assessee. The contention for the assessee was that there was a seizure when the keys were taken over. The Gujarat High Court pointed out at page 199 that the officer concerned was obliged to take the keys only with a view to see that the articles in the cupboard were not tampered with. The effect of the taking over of the keys was thus determined on the facts. We are unable to take the view that the Gujarat High Court intended in that case to lay down any proposition of law, much less a universal proposition of law, that the taking over of the keys could in no circumstances be construed as seizure.
23. It has thus become unnecessary to go into any other contention based on what happened on the 22nd September, 1972. As we have held that the seizure was complete on 6th June, 1972, nothing further remained to be done thereafter. The further procedure contemplated by Section 132(5) and Rule 112A should have been gone through within the prescribed period. As this has not been done, the seized goods have to be returned. As the power of search and seizure is an extraordinary power, Parliament hedged this power with sufficient safeguards in favour of the subject. The safeguard is to see that the seized articles were not kept indefinitely unless there was a prima facie case for their retention. If there was such a case for retention, then the necessary order had to be passed within 90 days of the search. Failure to do so would result in the seized goods having to be returned. This is the consequence here.
24. We do not think it necessary to go into the contention that the principles of natural justice were violated. This application of principles of natural justice would arise only if there was an order within 90 days. There is no such order. We may at this stage add that a search and seizure conducted in the premises of the petitioner's brother ended in an order under Section 132(5) of the Act similarly passed. The Central Board of Direct Taxes has cancelled that order on the ground that the Income-tax Officer had not acted properly in ignoring the objections filed by the petitioner's brother. That is only by the way. As the goods were seized on the 6th June, 1972, the order of the 19th December, 1972, would be wholly without jurisdiction, as it was passed beyond the period of 90 days provided in the statute.
25. In our opinion, the petitioner is entitled to the writ of certiorari. The order of 19th December, 1972, is accordingly quashed and the petitioner is entitled to the return of the articles of jewellery and the silverware in the possession of the department. We direct the return of those items within four weeks from this date. The rule nisi is made absolute. The writ petition is allowed. The petitioner will have his costs. Counsel's fee, Rs. 250.