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Shew Pujan Rai Indrasan Rai Ltd. Vs. Collector of Customs and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Constitution
CourtKolkata High Court
Decided On
Case NumberCivil Matter No. 84 of 1952
Judge
Reported inAIR1952Cal789
ActsSea Customs Act, 1878 - Sections 19, 19A, 167(8), 182 and 183; ; Foreign Exchange Regulation Act, 1947 - Sections 8 and 23; ; Constitution of India - Articles 19, 19(1), 19A, 31, 31(1) and 226; ; ; Code of Civil Procedure (CPC) , 1908
AppellantShew Pujan Rai Indrasan Rai Ltd.
RespondentCollector of Customs and ors.
Appellant AdvocateA.N. Ray, Adv.; Shankar Bannarjee, Standing Counsel ; Subimal C. Roy, Adv.
Respondent AdvocateS. Chaudhury, Adv. Respondent Nos. 1, 2 and 3
Cases Referred and Md. Safi v. State of West Bengal
Excerpt:
- orderbose, j.1. this is an application under article 226 of the constitution for an appropriate writ for quashing of an order of confiscation of the petitioner's gold of the value of about rs. 10,00,000 passed by the collector of customs under the provisions of the sea customs act, 1878, and for direction upon the respondents 1 to 3 to return the said gold to the petitioner.2. the petitioner is a private limited company and carries on business as bullion merchants. the case of the petitioner is that prior to its incorporation this business was being carried on by a firm of the same name on a very large scale for about the last twenty years. the petitioner purchases gold at calcutta or bombay and does not import any gold from any foreign country. between 14th november 1950 and 20th.....
Judgment:
ORDER

Bose, J.

1. This is an application under Article 226 of the Constitution for an appropriate writ for quashing of an order of confiscation of the petitioner's gold of the value of about Rs. 10,00,000 passed by the Collector of Customs under the provisions of the Sea Customs Act, 1878, and for direction upon the respondents 1 to 3 to return the said gold to the petitioner.

2. The petitioner is a private limited company and carries on business as bullion merchants. The case of the petitioner is that prior to its incorporation this business was being carried on by a firm of the same name on a very large scale for about the last twenty years. The petitioner purchases gold at Calcutta or Bombay and does not import any gold from any foreign country. Between 14th November 1950 and 20th November 1950 the petitioner in the usual course of business purchased gold in the market and in respect of such purchases borrowed moneys from its bankers Messrs. National Hendels Bank N. V. and Messrs. Bharat Bank Ltd. who are respondents 4 and 5 in this application. The gold so purchased was deposited with the respondent banks as security for the said loans. It is alleged that between the said two dates the petitioner deposited 7041 tolas of gold with respondent 4 and 2437 tolas of gold -with respondent 5. After the purchase of the said gold the petitioner with the knowledge and consent of the respondents 4 and 5 entered into Forward Control (Contract ?) for the sale of the same at Bombay. 'The said respondents 4 and S at the request of the petitioner sent the said gold on petitioner's account to the Calcutta Mint for the purpose of assaying.

On 20th November 1950 the Collector of Customs asked the Mint authorities not to part with the petitioner's gold and on 21st November 1950 the said gold was seized in the presence of the petitioner's representative at the Mint premises pursuant to a search warrant issued by the Chief Presidency Magistrate, Calcutta, at the instance of the Customs Authorities. On the same day the petitioner's Books of Account were also seized from its place of business at No. 69 Monohar Das Street. It is alleged that before the seizure was effected no notice was given to the petitioner nor was the petitioner allowed any opportunity of making any representation against the said seizure. On 19th December 1950 the petitioner made an application under Article 226 of the Constitution for appropriate writ directing the Collector of Customs not to give effect to the order of seizure or detention of, the gold and books of account and to release the same. On 23rd April 1951 this Court held that the seizure of the books of account was illegal and accordingly directed the return of the said books to the petitioner. But no relief was given in that application in respect of the order of seizure or detention of the petitioner's gold.

3. By a notice dated l0/20th June 1951 the Superintendent, Correspondence Department of the Customs Collectorate, called upon the petitioner to show cause before the Collector of Customs as to why penal action should not be taken against the petitioner and in respect of the said gold under the provisions of the Sea Customs Act. The relevant portion of such notice is set out hereunder :

'You are requested to show cause in writing within 14 days from date hereof why penal action should not be taken against you and the 9478'19 tolas of gold in question under the provisions of Sections 167 (8) and 168, Sea Customs Act 1878, for alleged violation of Section 19 of the same Act read with Section 8, Foreign Exchange Regulation Act 1947.'

The Notice further directed the petitioner to send copies of all documentary evidence along with the explanation and further gave intimation to the petitioner that a date and time will be fixed for hearing at which the petitioner would be required to produce all oral evidence in support of the explanation and to make its submissions.

4. On 3rd July 1951 the petitioner submitted its explanation in answer to the notice to show cause. On or about 21st July 1951 Messrs. Orr Dignam & Co. wrote a letter to the Collector on behalf of their clients, the respondent 4, asking that they should be given notice of the time and place for adjudication as the respondent 4 desired to be represented in the proceedings. The hearing of the case commenced before Mr. Raja Ram Rao, the then Collector from 26th July 1951. After the second day's hearing Mr. Raja Ram Rao was transferred from Calcutta on 22nd August 1951. Mr. Rao made over charge to Mr. J. W. Orr. Thereafter the 3rd and 4th hearing of the case took place before Mr. Orr on 7th and 8th September 1951. On llth October 1951 Mr. Orr made over charge to Mr. A. N. Puri. Thereafter the hearing commenced before Mr. Puri from 3rd December 1951 and after several sittings the hearing was concluded on 8th February 1952.

It appears that the respondent 4 was represented in the proceedings before the Collector at the second day's hearing and at the subsequent hearings till it was concluded on 8th February 1952. The respondent 5 was not given any notice to show cause by the Customs authorities but the Manager of the Calcutta office of the Bharat Bank gave evidence as one of the petitioner's witnesses and although respondent 5 was not made formally a party to the proceedings it appears that during the subsequent stage of the proceedings its representative attended the sittings and at the last sitting it was represented by counsel who made submissions and shortly explained its position to Mr. A. N. Puri. On 9th May 1952 Mr. Puri signed the order of adjudication. It appears from the said order that after considering the evidence in the case and the arguments of the parties he came to the conclusion that the gold in question was smuggled gold and that there had been contravention of the provisions of Section 19, Sea Customs Act read with Section 8, Foreign Exchange Regulation Act 1947.

The material portion of the order is as follows:

'I accordingly order that the entire quantity of the gold seized on 21st November 1950 amounting to 9478.19 tolas be confiscated under Section 167 (8), Sea Customs Act. In lieu of confiscation, however, I give the owner of the said gold an option under Section 183 ibid to pay a fine of Es. 10,00,000 (Rupees ten lakhs only) in addition to the proper customs duty and other charges leviable thereon within four months from the date of the despatch of this order. The release of the gold will be further subject to the production of a permit from Reserve Bank of India within the aforesaid period.' Memo No. Pr. 88 (Con)/50 of 14-5-52. Sd. A. N. Puri Collector of Customs.Copy forwarded for information to :1. Messrs. Shepujanrai Indrasanrai Ltd., Calcutta.2. ' P. N. Sen & Co., Solicitors, Calcutta.3. ' S. K. Sawday & Co., Calcutta.4. ' The Nationale Handels Bank N.V., Calcutta.5. ' The Bharat Bank Ltd., Calcutta.6. ' The Asst. Controller, Reserve Bank of India, Calcutta.Custom House, Calcutta Sd. A. N. Puri,14th May 1952. Collector of Customs.

5. The petitioner has challenged the validity of the order on various grounds set out in para. 24 of the petition. The Rule nisi was issued on 19th June 1952.

6. It has been contended by Mr. A. N. Roy, the learned, counsel for the petitioner that the finding of. the Collector is that the gold was smuggled gold but as smuggling has not been made an offence by the Sea Customs Act and it does not fall within any of the items specified in Section 167 (8) of the Act the order of confiscation was made without jurisdiction. The first item of Clause (8) of Section 167 is :

'If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chap. 4 of this Act, be imported into or exported from India contrary to such prohibition or restriction' etc. . .

7. Smuggling is nothing but importation or exportation of goods secretly or clandestinely without payment of duty, and I fail to see why it is not covered by the wordings of Clause (8) of Section 167 set out above. In the case of Ganesh Mahadeo v. Secretary of State, 43 Bom. 221, the offence was importation of some silver ingots without payment of duty or in other words smuggling of silver and nobody raised the point that the offence did not come within the ambit of the provisions of the Sea Customs Act. So also in the case of Chochalingam Chettiar v. Government of Madras, A. I. R. 1942 Mad. 704 silk goods had been smuggled but this point was never agitated before the Court.

8. This contention of Mr. Roy has no substance and need not be dealt with any further.

9. The next contention of Mr. Roy is that as there is no finding that the petitioner has imported the gold or has made any attempt to deface or obliterate the traces of the identity of the gold the finding of the gold being smuggled gold and the order of confiscation was not justified and is not in accordance with law. It is submitted that without finding that a particular person has smuggled the gold it was not open to the Collector to find that the 9478 tolas of gold were contraband goods. According to Mr. Roy there cannot be a finding of an offence in respect of the goods in vacuo. Mr. Roy has referred to Craies on Statutes 497, 502, 505, 509 and 511 (Latest Ed.) and to the cases reported in Shoppee v. Nathan & Co., (1892) 1 Q. B. 245; Lee v. Danger Grant & Co., (1892) 2 Q. B. 337; Bholaprosadlal v. The King, 53 Cal. W. N. 300 and W. H. King v. Be-public of India, (1952) S. C. A. (C. W. N.) 306 and submits that unless mens rea is established, no offence is proved and consequently no penalty can be inflicted and as such unless a particular person is found to have the guilty mind there can be no offence committed in respect of the goods. In other words the offence in respect of the goods cannot be dissociated from the person committing the offence.

10. Mr. Subimal Roy, the learned counsel appearing for respondent 5 has supported this contention of Mr. A. N. Roy.

11. In the case of Shoppee v. Nathan & Co., (1892) 1 Q. B. 245, the question of construction of Section 29, Sheriff's Act 1887 (50 & 51 vict Ch. 55) came up before the Court. The section which is quoted at p. 248 makes the 'person' committing the offence liable for the penalty, on the ground that he is guilty of misdemeanour (p. 252). It was, held on the facts that the person charged had no intention of committing the alleged offence but there was an unintentional overcharge due to a clerical error made by a clerk in the employ of the Sheriff's office. In the next case cited by Mr. Roy; Leev. Dangar Grant & Co., (1892) 2 Q. B. 337, the same Section 29 of Sheriff's Act was considered and the same view was taken as in the case of Shoppee v. Nathan & Co. It was pointed out that under Section 29 the penalty was inflicted for the doing of an act in the nature of a criminal offence, and that to constitute such an offence there must be mens rea.

12. In the case of Bhola Prosad Lal v. The King, 53 Cal. W. N. 300, the question was whether a servant who did not know that he was committing an offence could be convicted and it was held that he could not be so convicted, on the ground that he had no mens rea.

13. The other case cited by Mr. A. N. Roy is the case of W. H. King v. Republic of India, (1952) S. C. A. (C. W. N.) 300 which merely lays down the canon of construction that when a statute creates an offence and imposes a penalty of fine and imprisonment, the words of the statute must be strictly construed in favour of the subject.

14. Item I of Clause (8) of Section 167, Sea Customs Act (If any goods, the importation of which etc. ......or restriction) makes the goods which are imported or exported contrary to prohibition or restriction liable to confiscation. In other words the offending or contraband goods are subjected to forfeiture, if the Customs authorities are of opinion that goods are imported goods- and importation has taken place at a time when there was prohibition against such importation. It is not essential for confiscating the goods that the person who actually imported the goods has to be found out, tried and convicted. If of course such person can be detected and his implication is established then personal pecuniary penalty can be imposed upon him also.

15. If, for example, certain contraband goods are found in a Eailway Compartment, the goods can be confiscated, although the person responsible for importation or smuggling of such goods cannot be traced and the offence is not established against him. If, again, a vessel or ship is used for smuggling without the knowledge of the owner of the ship even then the vessel or ship is liable to be condemned and confiscated,(Section 168, Sea Customs Act) the remedy of the owner being against the person for whose act the forfeiture took place : see Blewitt v. Hill, (1810) 104 E. R. 270.

16. Section 167 (8), Sea Customs Act is similarly worded as Section 177, Customs Consolidation Act 1876 and appears to be based on this section (39 and 40 Victoria ch. 36). This Section 177 of the English Act is placed in the group of sections under the heading 'Smuggling.' This shows that Section 167 (8) of Sea Customs Act 1878 also deals with smuggling and like the English Section 177 it imposes the penalty on the goods themselves,-goods which have committed the offence-if I may be permitted to use such an expression. In such a case the question of mens rea is irrelevant. But when the question is whether a particular person is concerned with the offence of unlawful importation it may be necessary to find mens rea in such person before pecuniary penalty can be imposed on his person.

17. The English Act (39 & 40 Vict. Ch. 36) enacts two separate and independent sections - one dealing with offending goods and the penalty of forfeiture, and the other dealing with the person committing the offence and the penalty to be imposed upon such person ( Sections 177 and 186 of the English Act). To establish an offence under Section 186 of the Act (39 & 40 vic. Ch. 36) it has to be shown that the person acted with the intention of defrauding-the Customs or evading a prohibition, under the section. (See Frailey v. Charlton, (1920) 1 K. B. 147). But such a question cannot arise when steps are taken against the goods themselves for contravention of Section 177 of the English Act. All such contraventions are offences but they are not necessarily crimes. See Madhowji Thawor v. Yar Hussain Hydar Dasti, A. I. R. 1926 Sind 40.

18. It appears to me that an order of confiscation can be properly and validly made in respect of the goods without finding any person actually guilty of unlawfully importing or smuggling such goods. This contention of Mr. Roy therefore fails.

19. The next point that was argued by Mr. A. N. .Roy is that as the charge in the present ease was contravention of Section 19, Sea Customs Act read with Section 8 of Foreign Exchange Regulation Act 1947 the Customs Collector had no jurisdiction to proceed under Section 182, Sea Customs Act and adjudge confiscation in respect of the gold in question, inasmuch as adoption of such a course has the effect of prejudicing Section 23, Foreign Exchange Regulation Act-a thing which is not permitted by Section 8 (3), Foreign Exchange Regulation Act. It is submitted that contravention of any restriction imposed -by Section 8 (l) and 8 (2), Foreign Exchange Regulation Act can be punished only in the manner prescribed by Section 23, Foreign Exchange Regulation Act.

20. Section 8 (3) is as follows :

'The restrictions imposed by Sub Section (1) and (2) shall be deemed to have been imposed under Section 19, Sea Customs-Act, 1878, VIII [8] of 1878 without prejudice to the provisions of Section 23 of this Act; and all the provisions of that Act shall have effect accordingly.'

21. This Section 8 (3) has been repealed by the Amending Act VIII [8] of 1952 (Section 4) and has been re-enacted with certain modifications as-Section 23A by the said Amending Act VIII [8] of 1952 (Section 9).

22. Section 23A -provides as follows :

'23A. Application of Sea Customs Act, 1878.- Without, prejudice to the provisions of Section 23 or to any other provision contained in this Act, the restrictions imposed by sub-sections (1) and (2) of Section 8, Sub Section (1) of Section 12 and Clause (a) of Sub-Section (1) of Section 13 shall be deemed to have been imposed under Section 19, Sea Customs Act, 1878 (VIII [8] of 1878), and 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.'

23. Section 23 of the Act is as follows :

'23. (1) Whoever contravenes any of the provisions of this Act or of any rule, direction or order made thereunder shall be punishable with imprisonment for a terra which may extend to two years or with fine or with both, and any Court trying any such contravention may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or other property in respect of which the contravention has taken place shall be confiscated.

(2) No Court shall take cognisance of any offence-punishable under this section or under Section 54, Income-tax Act, 1922, as applied by Section 19 of this Act, except upon complaint in writing made by a person authorised in this behalf by the Central Government or the Reserve-Bank:

Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.

(3) If the person committing an offence punishable under this section is a company or other body corporate, every director, manager, secretary, or other officer thereof shall, unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent its commission, be deemed to be guilty of such offence.'

24. It is clear from Section 23 of the Act that if a person is charged with contravention of any provision of the Foreign Exchange Regulation Act and it is proposed to put him on his trial for such contravention such trial has to take place in a Court of law. Further a complaint has to be made in writing by a person who is specially authorised in this behalf by the Central Government or the Reserve Bank, and before such complaint is made the person accused of the offence-must be given an opportunity of showing that he had permission when he is accused of contravening a provision or rule of the Act which prohibits doing of an act without permission. Moreover under Section 23 the principal penalty is imprisonment or fine and incidentally the Magistrate may direct confiscation of the goods. In other words unless the contravention in respect of which the trial takes place is established and the person charged is convicted, the Magistrate is not likely to order confiscation of the goods. If the prosecution fails to prove the case against the accused person, the goods may escape confiscation.

25. It is further clear that it is only when a person is charged for contravention of the Act or the Rules that Section 23 is attracted.

26. Although in para..17 of the main affidavit affirmed by Singh J. it is stated that the petitioners were not charged with smuggling gold themselves, it is clear from the Notice to show cause dated 19/20-6-1951 which contains the charges, that the petitioners were charged with violation of Section 19 of Sea Customs Act read with Section 8, Foreign Exchange Regulation Act 1947. The wording of the Notice is 'why penal action should not be taken against you and the 9478.19 tolas of gold etc.....for alleged violation of etc......'

27. So the petitioner's case comes within Section 23, Foreign Exchange Act, and if the procedure prescribed under Section 23 had been applied, then a complaint had to be filed against the petitioner by a responsible person, duly authorised, who would think carefully before filing a complaint, and the petitioner would have got an opportunity of showing whether it had the necessary permission or not; further the petitioner would have the benefit of a trial in a Court of law by an experienced judicial officer who is bound to observe the strict rules of judicial procedure, and the petitioners would have the advantage of their gold not running the positive risk of confiscation unless the prosecution succeeded in proving its case against the petitioner. The petitioner has been deprived of all these advantages by reason of the proceedings being initiated before the Collector of Customs, he charge against the petitioner has not been established and yet the petitioner's gold has been confiscated.

It is clear that the Customs authorities by purporting to proceed under Section 182, Sea Customs Act in the present case have prejudiced the provisions of Section 23, Foreign Exchange Regulation Act 1947. If the petitioners had not been implicated in the charge it might have been open to the Customs authorities to proceed under Section 182 if steps were intended to be taken only against the offending goods but the Notice to show cause makes it clear that that is not the case. Although I am not prepared to go to the length of holding that Section 23, Foreign Exchange Regulation Act, altogether excludes the operation of Section 182, Sea Customs Act and although I have no doubt, that in appropriate cases, whereas. 23 is not attracted, recourse can be had to Section 182, Sea Customs Act, the present case is one in which adoption of the procedure under Section 182, Sea' Customs Act has prejudiced Section 23 of the Act. The entire proceedings before the Customs authorities must therefore be held to be without jurisdiction.

28. Mr. A. N. Roy also submitted that although unlawful importation of gold before the passing of the Foreign Exchange Regulation Act 1947 might be dealt with under the provisions of the Sea Customs Act and penalty and confiscation might be adjudged in exercise of the power under Section 182, Sea Customs Act, after the enactment of Section 23, Foreign Exchange Regulation Act 1947, the only method by which the offence of unlawful importation of gold can be dealt with is the procedure prescribed in Section 23, Foreign Exchange Regulation Act. Reliance is placed on the well-settled rule of construction that if a later Statute again describes an offence created by a previous one and imposes a different punishment or varies the procedure, the earlier Statute is repealed by the later Statute (Craies-on Statutes pages 342-343 (Ed. 9); Mitchell v. Brown, (1858) 1 El. & El. 267 at p. 274, Fortescue v. St. Matthew Bethnal Green, (1891) 2 Q. B. 170 at p. 178 and Smith v. Benabo, (1937) 1 K. B. 518 at p. 525). As I have pointed out already, Section 182 cannot be treated as abrogated for all purposes, in cases of unlawful importation of gold. It is only when an individual is sought to be proceeded against for any offence of contravention of Foreign Exchange Regulation Act that Section 182 must be deemed to have been abrogated, but when contraband goods themselves are proceeded against and the smuggler cannot be found out or cannot be proceeded against, Section 23 cannot be invoked and recourse can be had to Section 182, Sea Customs Act. It is only to this limited extent that the principle enunciated in Mitchell v. Brown and other cases referred to above, is attracted.

29. Mr. A. N. Roy and Mr. S. Banerjee have both taken some pains to argue that as the elements or ingredients necessary to establish the offence contemplated in Section 167 (8), Sea Customs Act do not exist in the present case, at least have not been found to exist, the order of the Collector is bad. It is submitted that the reasoning of the Collector to the effect, that as the gold is of foreign origin, and as it bears marks of hammering to indicate that attempt has been made to obliterate the identity of the gold and further as the books of account produced on behalf of the petitioner cannot be relied on, so the gold is smuggled gold, and therefore there has been contravention of Section 167 (8) of Sea Customs Act and Section 8, Foreign Exchange Regulation Act 1947, is a reasoning which is clearly erroneous and therefore the order should be quashed.

It has been repeatedly pointed out by this Court that while exercising its jurisdiction under Article 226 of the Constitution this Court does not function as a Court of Appeal. In the case of Rex v. Northumberland Compensation Appeal Tribunal, (1951) 1 K. B. 711 at p. 719 Lord Goddard C. J. observed as follows :

'Lord Summer pointed out that if the inferior Court was acting within its jurisdiction, the superior Court could only examine the order and could not consider evidence to show that the order was come by some process of reasoning which was incorrect, or by the admission of evidence that was not admissible or even on the ground that there was no evidence at all, because all those were matters of appeal.'

30. It is only when the order of the Inferior Tribunal or body is a Speaking order and there is an error of law on the face of the record that the Superior Court has power to quash it by Certiorari (See the judgment of the Court of Appeal in the Bex v. Northumberland Compensation Appeal Tribunal, (1952) 1 ALL E. R. 122 which affirmed the judgment of Goddard C. J. reported in Bex v. Northumberland Compensation Appeal Tribunal, (1951) 1 K. B. 711.)

31. Mr. Sankar Banerjee argued that in the present case the order of the Collector of Customs is a Speaking order as it sets out the reason on the face of it and as it is clear from the records and the order itself that the Collector has placed the onus of proving the innocence of the accused on the accused and has not placed the burden of proving the guilt of the petitioner on the Prosecutors who are the Customs authorities in this case, there is an error of law apparent on the face of the record and hence the order of the Collector should be quashed. Mr. Banerjee's argument is that as no Regulations as contemplated by Section 19A (2), Sea Customs Act have been framed laying down the procedure for adjudication of confiscation and penalty under Section 182, Sea Customs Act, the provisions of the Indian Evidence Act will apply to the proceedings before the Collector by virtue of Section 1, Evidence Act and as in an ordinary Criminal trial the onus is on the Prosecution to prove the guilt of the accused, so the onus is on the Customs Department to establish that the gold is, smuggled gold or the petitioner is guilty of the offence with which it is charged. This contention of Mr. Banerjee appears to me to be based upon a misconception of the true functions and duties of the Collector when he is exercising his jurisdiction under Section 182, Sea Customs Act.

The Collator when exercising his power under Section 182, does not function as a Court of Justice. The proceedings before him are not in the nature of judicial proceedings as in a Court of law. He has no power to administer oath. He is not bound to follow the strict rules of judicial procedure. The Criminal Procedure Code has nothing whatever to do with the proceedings before the Collector nor is he bound to follow the strict rules of evidence. See 46 Bom. 732 Mahadeo Ganesh v. Secretary of State; See also Board of Education v. Rice, (1911) A. C. 179. He can rely on evidence which is hearsay.

32. In the case of Maclean v. Workers' Union, (1929) 1 Ch. 602 at p. 620 Maugham J. in dealing with powers of domestic tribunals exercising quasi-judicial functions made the following observations:

'Speaking generally it is useful to bear in mind the very wide differences between the principles applicable to Courts of justice and those applicable to domestic tribunals. In the former the accused is entitled to be tried by a Judge according to the evidence .legally adduced and has a right to be represented by a skilled legal advocate. All the procedure of a modern trial, including the examination and cross-examination of the witnesses and the summing up if any, is based on these two circumstances. A domestic tribunal is in general a tribunal composed of laymen. It has no power to administer an oath and a circumstance which is of greater importance, no party has the power to compel the attendance of witnesses. It is not bound by the rules of evidence. It is indeed probably ignorant of them. It may act and some times must act on mere hearsay and in many cases the members present or some of them are themselves both the witnesses and judges.'

33. These observations of Maugham J. have been approved by the Judicial Committee in the case of Lennox Arthur Patrick O'Beilley v. Cyril Cuthbert Gittens, 54 Cal. W. N. 124 (P. C.) at p. 130.

34. In the absence of any Regulations framed under Section 19A, Sea Customs Act, the Customs Authorities are masters of their own procedure Local Government Board v. Arlidge, (1915) A. C. 120 at p. 137 (last para.). It is immaterial that there are no regulations framed under that section. The absence of such regulations does not affect the jurisdiction of the Customs Collector to act and proceed under Section 182 of the Act. (See the observations of Maclean C. J. in Nemi Chand v. Secretary of State, 34 Cal. 511 at p. 514 (last para.)

35. So long as principles of natural justice are] observed and the Customs authorities have given a

'fair opportunity to those who are parties in the controversy, to correct or contradict any relevant statement' prejudicial to their view,'.

they have discharged the obligation or duty cast) upon them by the Statute.

36. So this contention of Mr. Banerjee must be rejected.

37. Mr. Subimal Roy, the learned Counsel for Respondent 5, has contended that penalty of confiscation can be imposed on the goods only when they are in the custody or possession of the Smuggler or the owner, but when such goods, 1 hough contraband, have been acquired by a bona fide purchaser for value or the interest therein has passed to a bona fide pledgee or mortgagee, the goods cannot be subjected to the penalty of forfeiture. Mr. Roy has referred to various sections of the Sea Customs Act, such as 183, 184, 189, 190, 192, 195 and submitted that it is clear from these sections and the general scheme of the Act that by an adjudication of confiscation, the only person sought to be affected is the owner of the goods, and the rights of, pledgees are not affected. In other words pledgees or mortgagees are outside the purview of the Act.

38. Now, it is true that the provisions of the Sea Customs Act do not expressly deal with the case of pledgee or mortgagee of goods and the Act looks to the owner of the goods for payment of duties and pecuniary penalties and purports to affect the rights of the owner alone in respect of the goods. This is| because the owner is primarily liable to pay duty in respect of the goods. As soon as the goods are imported without payment of duty, or in contravention of any restriction or prohibition on their importation they become liable to confiscation. The goods become impressed with infirmity and anybody who takes such goods takes them subject to that infirmity or defect. If the goods are adjudged as confiscated and the pledgee is deprived of the goods the remedy of the pledgee is against the pledgor alone. If it were not so then smugglers would successfully deprive the State of its revenues by creating collusive pledges or mortgages or fictitious transactions of sale.

In construing the provision of an English Act which made goods chargeable with duty of excise in the hands of manufacturers or persons holding the goods to the use of or in trust for the maker or manufacturer and which also provided that if goods had been acquired bona fide by purchase, the liability would stand discharged by such purchase, it was held that a Pawnee could not escape liability of payment of duty. The goods were seized from the custody of a person who was a pledgee. It was held that a pledgee was a mere Pawnee and he was not a factor or an agent or a person holding the goods in trust for the owner nor was he purchaser of the goods and so his case did not fall within the words of the section but he was a pawnee and had only a special interest in the goods and this interest he took subject to the claim of the Crown and subject to the liability which attached to the goods. Attorney General v. Trueman, (1843) 11 M. & W. 694: 152 E.R. 983. The principles enunciated in this case apply to the case before me and it must be held that adjudging of confiscation extinguishes the interest of the pledgees also in the goods and vests the goods in the Government.

39. It is also true that the Sea Customs Act does not recognise any other interest than the interest of the owner in the goods and the rights and remedies given under the Act are all given to the owner ( Sections 183, 188, 189, 190, 191, 192) but this fact by itself does riot justify the Court in holding that the interests of other persons derived through the owner are not affected by adjudication of confiscation against the owner. If such persons desire to protect their interest and take advantage of the rights and remedies given to the owner they must take proper steps through the owner.

40. Mr. Subimal Roy drew my attention to the case of Attorney General v. Brown, (1920) 1 K. B. 773 and submitted that a construction which would avoid confiscation of the interest of the pledgees should be adopted if possible, especially when the provisions of the Statute are uncertain and equivocal. The learned Counsel relied on the following observations of Lord Esher quoted by Sankey J.:

'We must be very careful in construing that section because it imposed a penalty. If there is a reasonable interpretation which will avoid the penalty in any particular case we must adopt that construction. If there are two reasonable constructions we must give the more lenient one.'

41. These observations were applied in construing Section 43, Customs Consolidation Act 1876 which provided that 'The importation of arms, ammunitions, gunpowder or any other goods may be prohibited by Proclamation or Order in Council', and it was held that a Proclamation prohibiting importation of chemicals of all descriptions did not come within the words 'any other goods' which were to be construed ejusdem generis.

42. It is an elementary cannon of interpretation that a construction which facilitates evasion of a Statute should be avoided, and Acts like penal Acts are not to be so construed as to furnish a chance of escape and a means of evasion. It appears to me that an adjudication of confiscation, not merely puts an end to the interest of the owner but also all subordinate interests created by the owner.

43. It was next contended by Mr. Subimal Roy that if the Sea Customs Act does affect interest of pledgees, the Act must be held to be void as it imposes unreasonable restrictions on the fundamental rights of the pledgee guaranteed by Article 31 and Article 19(l)(f) of the Constitution. It is submitted that as the provisions of the Act do not give any facilities to the pledgee for protection of its interest against confiscation the provisions are unreasonable and are not saved by Article 19(5) of the Constitution.

44. It is to be noted however that Article 31(l) provides that no person shall be deprived of his property save by authority of law, thereby implying that a person can be deprived of his property provided he is so deprived by authority of law. Further it is clear that no question arises for payment of compensation under el. (l) of Article 31 Charanjit Lal v. Union of India, : [1950]1SCR869 per Das J.

45. This is what is known in American Constitution as the exercise of the 'Police power' of the State by which a person may be deprived of his property under the provision of any state law for the purpose of imposing any tax or penalty or for promotion of public health or for prevention of damage to life and property. As contrasted with this Clause (l) Article 31(2) embodies what is known in America as the right of eminent domain-that is the right of the State to take and appropriate private property for public use.

46. In providing for confiscation under the Sea Customs Act the Government has purported to exercise the Police power, and as such the Legislation is one which falls under Article 31(l) of the Constitution. Now, it is well settled that if a legislation is not directly of any of the subjects mentioned in Article 19(l) of the Constitution but as a result of the operation of other legislation, the right under any of the sub-clauses under Article 19(1) is abridged, the question of applicability of Article 19 does not arise. See Gopalan v. State of Madras, : 1950CriLJ1383 . In Chiranjit Lal's case, : [1950]1SCR869 - para. 74 Das J. observed :

'Therefore it will be necessary to consider first whether the Shareholder or the Company has been deprived of his or its property by authority of law under Article 31 for if he or it has been so deprived then the question of his or its fundamental right under Art, 19(1)(J) will not arise.'

47. The same principle is reaffirmed and followed in Ram Singh v. State of Delhi, (1951) S. C. R. 451 at pp. 455-457 and also in Suryapal Singh v. U. P. Govt., : AIR1951All674 ; Dwarkadas Shrinivas v. Sholapur Spg. & Wvg. Co. Ltd., : AIR1951Bom86 and Abdul Majid v. P. B. Nayak, : AIR1951Bom440 ; Sudhindra Nath v. Sailendra Nath, 87 Cal. L. J. 140 and Md. Safi v. State of West Bengal, 55 Cal. W. N. 463.

48. The question of reasonableness of the Statute therefore becomes immaterial.

49. It was further contended by Mr. Subimal Roy that as no notice to show cause was served upon Respondent 5, and the Bank was not a party to the proceedings the order of the Collector was made in violation of the principles of natural justice and therefore without jurisdiction. It may be noted that the Notice to show cause was given only to the petitioner who claimed to be the owner of the goods, as is enjoined under the Act. Although the adjudication was purported to be against the petitioner Respondent 4 asked for permission to be present at and to take part in the proceedings and it was represented by Solicitor and Counsel and took a very active part in the proceedings.

Respondent 5's manager also gave evidence on behalf of the petitioner and the minutes of the proceedings show that during the material stages of the proceedings Respondent 5 was represented by one Mr. Goswami who took keen interest in the proceedings and adopted the arguments of the learned counsel for Respondent 4. At the last sitting Mr. Subimal Roy appeared for Respondent 5 and made a few submissions and stated that he adopted the argument of Mr. Banerjee, the learned counsel for Respondent 4. There is correspondence to show that notices had been given from time to time about the progress of the proceedings to Respondents 4 and 5, and sometimes copies of the correspondence addressed to the petitioner were sent to Respondents 4 and 5. I am unable to hpld that the principles of natural justice were violated in this case.

50. The further point raised by Mr. Subimal Roy is that the conditions which have been imposed by the Collector for release of the confiscated gold are not warranted by the Statute and hence the order should be quashed. It is submitted that the order makes payment of not only the fine of Rs. 10,00,000 but in addition, the proper customs duty which has not been ascertained and other charges, not specified, as conditions for avoiding confiscation. This is not contemplated by the Act. Further release of the gold is made subject to the condition of producing a permit from the Reserve Bank within the prescribed period. This is not also contemplated by the Act.

Mr. Sachin Chaudhuri has submitted in answer to this contention that the conditions imposed even if bad, are severable and therefore can be ignored. It appears to me that the contention of Mr. Roy is not without substance. Section 183 of the Act enjoins that the officer adjudging confiscation must give the owner an option to pay a fine in lieu of confiscation. So the section entitles the owner to avoid confiscation by paying only the fine imposed. But the order does not give that option to the owner. The option given is that the owner must pay not only the fine imposed but in addition unascertained customs duty and certain unspecified charges or otherwise the gold will suffer confiscation. It is thus clear that the option contemplated by Section 183 has not been given but a different kind of option has been given. As the old Section 183 as existing before its amendment made by Section 23A, Foreign Exchange Regulation Act, applies to this case and as the old section is mandatory in character the order of confiscation must be held to be bad.

51. Further, it appears that the release of the gold confiscated is made conditional on the production of a permit from Reserve Bank. It has not been shown to me, where does the Collector derive his power from, to impose such a condition. The Collector of Customs or the adjudging officer is the creature of Statute, his powers are circumscribed by the provisions of the Statute and in the absence of any express or implied power conferred by the Statute the condition must be held to have been imposed without jurisdiction. As the order is one composite order and the different parts are unseverable from the order, the entire order must be held to have been made without jurisdiction. In view of this finding and the finding that the action taken under Section 182 in the facts and circumstances of this case has prejudiced Section 23, Foreign Exchange Regulation Act 1947, this petition must succeed. The Rule is therefore made absolute to the extent that the order of the Collector of Customs dated the 9th/l4th May 1952 is quashed and the Respondents 1 to 3 are directed to forbear from giving effect to the said order. The petitioner is entitled to the costs of the present proceedings from respondents 1 to 3. Respondents 1 to 3 are directed to act according to law.


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