9911796707
TMI Blog1979 (10) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... torn), dated 22-3-1973 of Industrial Steel Corporation of 40 Strand Road, Calcutta and Challan No. 152/73, dated 22-3-1973, issued to Messrs Ganapat Rani Sagarmal by the said Industrial Steel Corporation and one sealed packet containing 2 locker keys. On the statements as made, it further appear that thereafter on 7th April.1975, by the said search order, locker No. 1882, belonging to the petitioner No. 1 Sm. Gayatri Devi Agarwala and locker No. 1702, belonging to the petitioners jointly, in the branch of the Bank of India at Vivekananda Road, were searched by the respondent No. 4 as mentioned above and ornaments were seized under the Customs Act, 1962 and the Gold (Control) Act, 1968. 3. The petitioners have alleged that the said respondent No. 4 viz. the Inspector concerned has wrongly described the gold ornaments as gold in the shape of rod, diced and rounded, which are known as bangles. It is their case that 10 British gold coins were also said to have been found by the Customs Officers. The petitioner have stated that by a letter dated 19th April, 1975, they informed the Assistant Collector of Customs, West Bengal, Respondent No.3 that inspite of repeated requests and deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the officers under the Gold Control Act, they having acted as Officers under that Act, the entire search and seizure was unauthorised and as such, the seized goods were and are liable to be released from such confiscation. By this letter, the petitioners also required the respondent Nos. 3 and 4, to furnish them the materials and/or the basis upon which they had reasons to believe that the goods were liable to confiscation forthwith, and failing which they made it dear that ft should be presumed that those authorities had neither any reasonable belief nor any basis for the formation of such belief before the issue and execution of the said search order. In fact, a demand was made by the petitioners asking the respondents concerned to return The seized goods for the reasons as mentioned above and more particularly when, according to them the conditions precedent for the exercise of power in the instant case were hot satisfied. 4. The said search order has also been claimed by the petitioners to be bad, illegal and without jurisdiction, as according to them the respondents concerned did neither record the reasons as contemplated under Section 165 of the code of criminal procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smuggling Activities Act, 1974 (hereinafter referred to as the said COFEPOSA Act). Such statements have also been denied to have been made and it been alleged that the petitioners were also kept under constant vigilence of the Customs and police authorities. 6. It is the case of the petitioners that excepting the ornaments as seized illegal and ma/a fide, there was no material, before the respondents, upon which any proceedings under the said COFEPOSA Actor any Act, for the purported smuggling of goods, could have been taken or initiated against them. It is their case that the ornaments in question were in their possession long before and some of the ornaments were given to the petitioner No. 1 at the time of her marriage, by her near relations. It has been claimed that the husband of the petitioner No. 1 was a well to do person and was regularly assessed under the provisions of the Income Tax Act, so also under the Wealth Tax Act, 1953 and on various occasions he gave the petitioner No. 1 various ornaments. In fact, It has been claimed that some ornaments were manufactured about 15/20 years ago. It has also been stated that some of the ornaments belonged to the relations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by him, the place of manufacture of the said cadmium anode was not shown. He further stated that there were altogether 3 lockers, 2 of which stood in the name of his wife Smt. Gayatri Devi Agarwalla in the Vivekananda Road Branch of Bank of India and one in the name of Kanaiha Lal Lohariwalla, the key of which could not be traced. The statements as mentioned above have been said to be written by Shri Kanaiha Lal Lohariwalla under the dictation of his father Rameshwar. 9. In the above circumstances, it has been observed that the said 28 pieces of pure cadmium anode were found and observed to be of foreign origin and were seized under Section 110(1) of the Customs Act and as quoted above. In the reasonable belief, that those were smuggled and liable to be confiscation under Section 111 (d) of the said Customs Act, which is to the following effect : Section 111 : (a) ........... (b) ........... (c) ........... (d) any goods which are imported or attempted to be imported or are brought within the Indian Customs waters for the purpose of being Imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. (e) ........ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Act, on the reasonable belief that those were smuggled and liable to confiscation under Section 111 (d) of that Act and also under Section 71 of the Gold (Control) Act, which is to the following effect: Section 71 : Confiscation of gold. - (1) Any gold in respect of which any provision of this Act or any rule or order made thereunder has been, or is being, or is attempted to be, contravened shall be liable to confiscation. (2) Any package, covering or receptacle (including its other contents) in which any gold liable to confiscation under sub-section (1) is found shall also be liable to confiscation. (3) Where any gold liable to confiscation under sub-section (1) is mixed with other goods in such manner that such gold cannot be separated from those other goods, the whole of such good shall be liable to be confiscation. (4) Any gold which is liable to confiscation under sub-section (1) shall be so liable notwithstanding any change in Its form. The respondents have stated that these apart, all the documents recovered from the lockers were also seized under Section 110(3) of the Customs Act. 12. It is their case that on 8th April, 1975, locker No. 1677 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that those were liable to confiscation. The total value of the seizure according to the respondents came to Rs. 5,83,150/-. 13. The respondents have stated that a notice was issued on the 15th April, 1975, by the Superintendent, Divisional Preventive Unit, to Shri Rameshwar Lal Lohariwalla, Smt. Gayatri Devi Agarwalla and Shri Kanaiha Lal Lohariwalla, for attending the examination of the seized diamonds by the Customs Officers on 17th April, 1975. But all those persons asked for adjournment and as such, another notice was issued to them for attending the necessary examination on 22nd April, 1975. It has been stated that on 22nd April, 1975, Smt. Gayatri Devi Agarwalla, Shri Kanaiha Lal Lohariwalla, Shri Rameshwar Lal Lohariwalla, again prayed for a fortnight's adjournment and as such another date had to be fixed. The respondents have stated that in view of the conduct as mentioned above, they formed the opinion that the parties were adopting a dilatory tactics, for the purpose of avoiding the examination of the seized diamonds. According to them, all opportunities to the persons concerned were given, but they could not produce any evidence establishing the legal ownership of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interim outers modified. 16. The Respondents have also claimed the application, to be not maintainable, as the petitioners have falled to disclose informations regarding ownership or acquisition or possession of the goods as seized and as the points in issue In this case, would be hit by resjudicata or principles analogous thereto, because of the determinations dated 5th July, 1977 made by Chittatosh Mookherjee. J. in CMI Rule No. 18l02(w) of 1975. In this Rule, the challenge was against the search and seizure and also the extension of time for the issue of the show cause notice. 17. It has also been contended by the Respondents that the petitioners have violated the provisions of the said COFEPOSA Act or have aided and abated others In committing offences thereunder. It has been stated that the said premises was searched with due authority, validly and In accordance with law and seizures as were made or done, were also due, legal, proper and bona fide. It has further been stated that at the time of search, the concerned search warrant was duly exhibited, shown and produced. The Respondents have stated that the gold ornaments were not bangles as claimed, but they were just gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe. This deponent has stated that on such informations, he duly formed or had reasons to believe that the concerned goods were liable to be confiscated. 20. The said deponent has stated that accordingly, he issued the said order on 4th April, 1975, authorising Shri P.K. Mitra, under Section 105 of the Customs Act, to search the lockers in the Bank of India, In the names of the persons as mentioned above at the said Bank's branch at Vivekananda Road and also the said premises belonging to. Mahadevi Lohariwalla. The said order has been stated to be signed by witnesses, apart from Kanhaiyalal and Rameshwarlal Lohariwalla on 5th April, 1975. This dependent has also stated to have Issued the search authorisation No. 35 of 1975, on 10th April, 1975, In favour of Shri P.K. Mitra i.e. the Inspector concerned, under Section 105 of the Customs Act, to search, not only the said premises, but also the other two premises as mentioned above. The copies of the search warrants and the seizure Memos have been disclosed with this affidavit. 21. The validity of the receipt of the Informations as alleged in the supplementary affidavit, has been denied by the petitioners in their further reply date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended by him that the reasonable belief in the instant case has neither been duty formed nor the conditions precedent for holding such belief were either formed or even proved and infact the conditions precedent for the assumption of jurisdiction to issue the said search order or to seize, were not satisfied and furthermore, the belief as said to be formed viz. that the subject goods were liable to confiscation, was on no materials at all. It was thirdly contended by him that the Respondent Nos. 3 and 4 being officers under the Gold Control Act and. they having acted as officers under that Act, the entire search and seizure was also unauthorised. He fourthly contended that the officers concerned, not having recorded the reasons as contemplated -under Section 165 of the Code of Criminal Procedure, 1973,the terms whereof are as under :- Section 165 : Search by police officer. - (1) Whenever an officer in change of a police officer making an investigation has reasonable ground for believing that anything necessary for the purposes of an Investigation necessary for the purposes of an investigation into any offence Which he is authorised to into any offence which he is authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sixth submissions as mentioned hereinbefore viz. the arguments on Section 105 of the Customs Act, Mr. Ghosh, on a reference to the said search order, contended that the location of lockers not having been mentioned and when the said search, order was for the said premises only, the search of them and the consequent seizure of the contents thereof, was improper: In fact, ft was his submissions, that if at all, by virtue of the said search order, only the said premises could be searched and not the lockers at the Bank's premises. That the lockers In question were searched on the basis of the said search order or pursuant thereto, cannot be in dispute. To substantiate this branch or submissions and so also the submissions' on formation of opinion on due satisfaction and the meaning and impart of the word "belief", reference was made by Mr. Ghosh firstly, to the case of Assistant Collector of Customs for Prevention and Others v. The New Central Jute Mills Co. Ltd., 77 C.W.N. K In that case it has been observed that there is nothing in Section 105(1) of the Customs Act, 1962 which requires the Customs authority to specify the name of the individual whose premises, are to be searche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abused the power entrusted to him under Section 105 of the Act, and it is not possible to lay down precisely or exhaustively as to what constitutes reason to believe. It would depend on various circumstances. The issue of a warrant and the reason to believe for issue of such warrant would involve the following elements (1) Articles of search; (2) Place in which they are secreted; (3) Manner in which they are secreted; (4) Person who is in possession of the articles of search or the place where they are secreted; (5) Person who is in where they are secreted. It may be that the information which the warrant officer has regarding each of the elements is not precise or absolutely certain without any possibility of doubt. But still, if the information is such as lends him to believe that articles of search are secreted in a place which is concrete, he may thereby have reason to believe as contemplated in Section 105. He may in such circumstances issue a warrant even if he does not know for certain the name of the person who is in possession of the articles of search or the place where they are secreted. All that the court can consider is whether there is ground which prima facie justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention had taken place is a pre-condition for seizure and such reason to believe must relate to the period of time when the seizure was made. Any subsequent acquisition of belief would be of no avail. 26. On the question of the formation of "belief" it was contended that such formation must be the reasonable formation or the formation of such belief by a reasonable man and those tests have not been satisfied in this case. In support of such submission, reference was placed on the determination in the case of Sheo Nath Singh v. The Appellate Assistant Commissioner of Income-tax (Central), Calcutta and Others - A.I.R. 1971 S.C. 2451, which is a determination under Section 34 of the Income-tax Act, 1922 and wherein the words "Reasons for belief has been construed to suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. He will be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) is quasi-judicial and at any rate one requiring a judicial approach. While the power of seizure under Section 110(1) can be exercised on the basis of reasonable belief on the part of the concerned officer, the power of extending the period to give notice under Section 124a) is to be exercised only on "sufficient cause being shown". This expression envisages at least some sort of enquiry on facts placed before the authority and determination by him of those facts. Extension order is not to be passed mechanically. The Power under sub-section (1) cannot be equated with the power under the proviso to Section 110(2), was contended by Mr. Ghosh to be objective and not subjective and he contended on a reference to the affidavits, that such tests have not been fulfilled or complied with as the basis of the process or for proceeding in the matter, was only on informations received. Thus, on the basis of the determinations as aforesaid and also on the basis of the determinations in the case of The Collector, Central Excise, Allahabad and Others v. L. Kashinath Jewellers - A.I.R. 1972 All. 231, it was contended by Mr. Ghosh that the officer concerned in this case, had no reasonable belief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and search. - (1) Any Gold Control Officer authorised in this behalf by the Administrator may, if he has any reason to suspect that any provision of this Act has been, or is being, or is about to be, contravened, enter and search, at any reasonable time any refinery or the business premises of a licensed dealer or a certified goldsmith. (2) Any Gold Control Officer not below the rank of a Superintendent of Central Excise, empowered in this behalf by the Central Government may, if he has any reason to suspect that any provision of this Act has been, or is being, or is about to be, contravened, authorize any officer of Government to enter and to search any premises, vaults, lockers or any other place, whether above or belowground, or may himself do so. Mr. Ghosh wanted to establish that since there was no authority reposed under the said Gold Control Act, so the seizure of Gold or the gold ornaments as made, was neither possible nor permissible or authorised. In fact, this was the third submissions of Mr. Ghosh. While on the question of recording the reasons, in terms of Section 165 of the code of criminal procedure, Mr. Ghosh contended that there was object failure of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese safeguards, which in our opinion apply to searches under sub-section (2) also dearly show that the power to search under sub-section ) is not arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the code of Criminal Procedure which also apply so far as may be to searches made under sub-section (2) we can see no reason to hold that the restriction, If any on the right to hold property and to carry on trade, by the search provided in subsection (2) is not a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax. For similar construction, reference was also made by Mr. Ghosh to the case of S.K. Srivastava v. Gajanand Patriwalla - A. I. R. 1956 Calcutta 609, which is of course a case under the provisions of the Sea Customs Act, 1878 and the words "may issue" in Section 172 of the same so also the said section itself, was construed. It has been observed in that case that since the search warrant issued under Section 172. Sea Customs Act must be executed In the same way and shall have the same effect as a search warrant issued under the code, the requirement of producing the goods and papers seized befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions were made on a reference to the order authorising the search which was made on information. Mr. Chakravarty contended that even if such steps were taken only on information, as duly pointed out in the concerned order, that would not take away the right to search and seize. On construction of Section 105 as aforesaid, Mr. Chakravarty also claimed that the provisions therein do also authorise the search of the place. In fact, Mr. Chakravarty contended that if on the basis of a search order duly issued, contraband goods or articles are seized from the place as mentioned In the said order, which incidentally is the fact In this case, and from such place, during the course of the necessary search and seizure, it appears that other goods or articles are kept concealed elsewhere, then on that basis and as a continuation of the same action, the other places may be searched and subject items may also be seized, without any further search order, such prohibited and or acts being considered as part of the same action. He contended further that power to search under Section 105 of the Customs Act is a general power, the resultant effect whereof in this case was the recovery of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on 3rd February, 1966). Such claim was made by him on production of the necessary records and he contended that since in that case, B.N. Banerjee, J., has observed that mere irregularities in the search would not vitiated the seizure, the same principle should also be applied here. It was also contended by Mr. Chakravarty, on a reference to the determinations in the case of Radha Kissen v. State of Uttar Pradesh - A.I.R. 1963 S.C. 822, that even if search was vitiated by an order not properly issued or there was illegality in the search, that would not vitiate the seizure. In such a case, of course the High Court would have restricted power of Interference. 32. Mr. Chakravarty argued that search under Section 105 of the Customs Act and search under Section 165(2) of the Code of Criminal Procedure, are two different and distinct process and method. For incidence of search under Section 105, he relied on the observations in the case of R.S. Seth Gopiksan Agarwal v. R.N. Sen, Assistant Collector of Customs and Central Excise, Raipur and Others - A.I.R. 1967 S.C. 1298. In that case, it has been laid down that the words 'Reason to believe' need not be present OT the order and it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly argued that the conditions precedent under Section 110 of the Customs Act were duty satisfied. It was further contended by him that be it under the Customs Act or under the Gold Control Act, the act or action must be taken by the person authorised and in the instant case Customs officers being the Gold Control Officers, there was no illegality or any irregularity. 34. In any event, it was contended by him that there having no challenge to the seizure under the Gold Control Act, the petitioner should not be allowed to urge the same. The power to seize under the Gold Control Act is laid down in Section 66. It was also argued by Mr. Chakravarty that the determinations in the case of Assistant Collector of Customs v. Charan Das Malhotra (supra), in fact helps the Respondents, as reasonable belief in terms of Section 110(1) of the Customs Act, was duly formed at the time of seizure. 35. Mr. Chakravarty, then on a reference to Section 123 of the Customs Act, which deals with burden of proof in certain cases and to the following effect: Section 123 : Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oller of Aluminium and Others (supra) and Pooran Mal v. Director of Inspector (Investigation), Income-tax, New Delhi and Others -931.T.R. 505. Mr. Ghosh, in effect contended on the basis of the determinations as referred to hereinbefore, that if and when the seizure was illegal or if the case was such, in respect of search, the subject goods were liable to be returned and they could neither be detained for enabling the authorities to have the defects rectified or to work out further evidence, nor in view such defective character, the petitioner could be asked to appear in the ad-judication. 37. Mr. Ghosh sought to distinguish the cases as cited by Mr. Chakraborty, on facts. It was contended by him that for a proper search and seizure, some belief would be necessary and such belief or the formation to opinion on that basis is conspicuously absent In this case. It was contended by Mr. Ghosh that the contentions of Mr. Chakravarty that there is no challenge under the Gold Control Act, would be correct. In fact. on a reference to the pleadings, he wanted to establish that due challenges against the seizure of gold under the Gold Control Act, would be correct. In fact on a reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e auspicious occasions, have not been disclosed at any point of time or any where and such conduct would itself be enough to hold the belief or the basis to form the opinion of improper or irregular acquisition. I n proceedings involving search and seizure, conduct of the party ^against whom default is alleged, certainly plays a very Important part and such conduct of the petitioners in the instant case, was not free from doubt or suspicion and in fact, such doubt or suspicion, which was entertained on informations, was amply proved and established on the subsequent recovery of the valuables on necessary search and seizure. 40. The question, on the pleadings as mentioned hereinbefore, would thus be to find out and answer, whether the search and seizure in the instant case, was property held on due formation of opinion and if there was violation of principles of natural justice. The respective contentions of the parties, on those points, have also been recorded earlier. It is no doubt that there in the said search Order, the particulars of the said premises and not that of the Bank as involved or where the lockers were located were only mentioned. It is also true that while search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as mentioned above or as involved. 42. It cannot also be doubted that since the authorisation specifically mentioned the search of the said premises, including the lockers and to seize the concerned valuables, so any one found to be involved in the matter, even through subsequently discovered or discovered consequent to the search, may be proceeded with and the valuables found in the possession of such person, may be seized. I am also of the view that under Section 105 of the Customs Act, the authorities concerned would be authorised to search every places and seize valuable therefrom, if on the search of the original place, it appears that other valuables have been secreted elsewhere and not only at the place as mentioned in the original order. These search and seizer, in such facts, would be considered as a continuing action, flowing from the original order. There is no doubt that the power to search under Section 105 of the Customs Act is a general one and the word "secreted" as used therein, would mean secreted improperly and without due disclosure at any place. 43. The word "secreted" in Section 105, as observed in the case of Durga Prosad v. H.R. Gomes and Others (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search himself. Section 165 of the Code of Criminal Procedure lays down various steps to be followed In making a search. The recording of reasons is an important steps in the matter of search and to ignore It, is no ignore the material part of the provisions governing searches. Under Section 105 of the Customs Act, it is not possible to lay down precisely or exhaustively as to what constitutes "reason to believe". It would depend on various circumstances. The issue of a warrant and reason to believe for issue of the same, would involve amongst others, (1) articles of search. (2) place in which they are secreted, (3) manner in which they are secreted, (4) person who is in possession of the articles of search or the place where they are secreted. It may be, that the information which the officers concerned have recorded against each of the items, are not precise or absolutely certain without any possibility of doubt. But still, if the Information is such as to lead him to believe that articles of search are secreted in a place which is concrete, he may thereby have "reason to believe" as contemplated in the section. On the question of what constitutes 'reason to believe", the determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Cnaran Das Malthotra -1983 ELT 1477. The condition precedent under Section 110 and Section 105, is formation of the belief, which must again be that of a reasonable man and I do not find any justification in upholding the contentions of Mr. Ghosh that such belief was not duly formed in this case. 46. It is true that that be it under the Customs Act or the Gold Control Act, the actions must be taken by the persons or officers duly authorised and since Mr. Chakravarty has established that in the instant case, the Customs Officers were and are also the officers wider the Gold Control, there would be no justification in holding that the-search and seizure, was improper or irregular. Thus, I do not find any grave irregularity or illegality in the matter, for which, in terms of the submissions of Mr. Ghosh, the search and seizure should he held there could be no cause or any occasion for the return of the seized goods in terms of the determinations In Wajir Chand and Another v. The State of Himachal Pradesh and Others (supra). It is of course true that if the search and the consequent seizure was illegal, irregular, manifestly without jurisdiction and authority or defective, then i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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