9911796707
TMI Blog1971 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ng so produced all relevant records in connection with this case so that conscionable Justice may be administered by quashing the same or making such other directions as to the court seem fit and proper. And in the matter of an interim order of injunction restraining the respondents and each of them from giving any effect to any of the said purported orders or from any way dealing with or disposing of the gold purported to be confiscated, until the final disposal of the present application. An order of confiscation of gold under section 167(8) of Sea Custom Act, 1878 read with section 23A of the Foreign Exchange Regulations Act 1947 passed by the Collector of Land Customs, Calcutta and affirmed on appeal by the Central Board of Excise and Customs as also in revision by the Central Government, is the subject matter of challenge in this Rule which was issued on a writ petition. 2.It would be necessary to recount the relevant facts which led to the confiscation and they are shortly as follows: The petitioner Shyamlal Sen Company is a partnership firm and an established bullion merchant at Calcutta. It deals in purchase and sale of gold and bullion at its shop at No. 7, Nalini Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of gold was made from various persons more than 140 in number and over a long period commencing from a date much too earlier than 12-1-1960. On August 1, 1960 petitioner showed cause. In showing cause the petitioner pleaded—as it had earlier pleaded also at the time of the seizure—that of the total quantity of gold found in petitioner's custody 290 tolas of I. G. Mint gold (not seized) together with 64 and odd tolas (out of seized gold) belonged to a sister concern Phani Bhusan Sen and Sons which carries on its business at a nearby premises No. 3, Mir Bahar Gaht Street, Calcutta. According to the petitioner such gold of the sister concern lay with it for the sake of safety and security. The rest 118 and odd tolas was claimed to be its own stock of gold. The petitioner at the adjudication supported its case by producing the relevant documents and books of account. The petitioner further pleaded that the gold was not seized on any reasonable belief and as such it was for the departmental authorities to prove that it was smuggled gold. 6.On the petitioner's defence that a part of the stock seized belonged to Phani Bhusan Sen and Sons, the said firm was also given a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that such discrepancies were explained in the Collector's order it appears to be an obvious error inasmuch as the Collector nowhere relied on any such discrepancy in arriving at the findings which led to the order of confiscation by the Collector. The Chairman, however, allowed the appeal of Phani Bhusan Sen and Sons and directed release of 64 and odd tolas of gold seized from petitioner but claimed by the said firm. 9.The petitioner preferred a revision application before the Central Government but the same was rejected with the following order: "The Government of India have carefully considered the points made by the petitioners but see no reason to interfere with the order in appeal which is correct in law and based on facts. The application is rejected". It is against the aforesaid order of confiscation affirmed on appeal and in revision that the petitioner has moved this court with the writ petition on which this rule has been issued. The Rule is being contested by the respondents and an affidavit has been filed on their behalf. 10.Mr. Dutt appearing in support of this Rule has raised three points. In the first place, it has been contended by Mr. Dutt that when it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A could not have been invoked at all. 12.Though this part of Mr. Dutt's contention may have not much substance, in my view there is ample substance in the other aspect of this contention of Mr. Dutt. What he has objected is mechanical invoking of section 178A by the adjudicating authorities without adjudging whether the belief which led the Deputy Superintendent to seize the gold was reasonable or not. This aspect of Mr. Dutt's contention assumes importance in the particular facts of the present case where gold bearing no foreign mark or having no fineness of foreign gold has been seized from a bullion merchant held in a manner not at all abnormal to the trade. 13.In considering this contention of Mr. Dutt it would be necessary to appreciate the position in law. There is no doubt that the statute by section 178A has imposed a very difficult onus upon the person from whom the gold is seized to prove its licit origin. But such onus is imposed not on any and every seizure but subject to this limitation viz., where the seizure is made on a reasonable belief that the gold seized is smuggled. In upholding the constitutional validity of this provisions in the Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority making the seizure acted. In order to be a reasonable belief it must be begotten by attendant circumstances fairly creating it and honestly entertained. Reference may be made to a Bench decision of the Gujarat High Court in the case of Bapala v. Collector of Central Excise, A.I.R. 1965 Gujarat 135. 14.Judging on the aforesaid test it appears to me that Mr. Dutt is right in his contention that the adjudicating authorities were apparently oblivious of this obligation cast upon them by the statute. From the facts of the present case it is quite clear that the Deputy Superintendent, Land Customs who proceeded to take out a search warrant under section 172 and then seize the gold which constitutes a part of the stock found in the possession of the petitioner did so on an information. None of the three tribunals below has ever considered what was the nature of this information or the credibility thereof. It is not unknown in trade that unfair business rivalry may lead to false information. Therefore, if the seizing authority did arrive at the requisite belief on the basis of such information it was still more incumbent for the adjudicating authorities to review the credibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointing out that on such facts it was definitely necessary for the adjudicating authority to first consider whether the requirements for invoking the provisions of Section 178A had been properly fulfilled or not in the present case. 16.Now let me consider how the point was raised and whether it was at all gone into by the tribunals below. From the explanation to the show cause notice as also from the recitals by the Collector of the points raised before him it is clearly established that the petitioner had raised the issue at the first stage of the adjudication. It was its specific case before the Collector that the seizing officer did not appear to have any reasonable belief as to the contraband nature of the seized gold. Reliance was placed upon the decision of the Supreme Court explaining the law on the subject and the Collector was called upon to decide whether the seizure was based on any such belief or not. Unfortunately the order nowhere indicates that the Collector ever appreciated the legal obligation which lay upon him. There is nothing in the order which would indicate that the Collector ever applied his mind to examine the grounds or consider the reliability or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n application before the Central Government and the orders as served on the petition and as quoted hereinbefore gives no indication that it was gone into by the said authority either. But in course of the hearing and towards its close Mr. Das produced a note by the Secretary of the Ministry of Finance (Department of Revenue and Company Laws). Copies of the said note dated May 31, 1966 and an office note dated May 3, 1966 on which the aforesaid note of the Secretary is based have been taken in and marked as Exhibits A and B respectively. The note of the Secretary reads as follows: "I agree. The appellate order is based on a sound view of the case, though the reference in it to the original order instead of the show cause notice may be incorrect. The search, in my opinion, was made on a reasonable belief that the possession of the gold was unauthorised. I also hold that the party has failed to discharge their responsibility of proving the bona fide nature of their possession, in such circumstances the revision application should be rejected and the Board's order should stand". 19.Mr. Dutt strongly objects to the undisclosed note being considered as the order of the Central Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accepted the notice and supported the defence case. All these proceedings of reinvestigation were made without any notice to the petitioner. If it was thought necessary to examine the vendors on the order of the appellate authority it does not appear to me to be reasonable why such enquiry is to be held without any notice to the petitioner and that too by issuing notice only on fourteen of them. Given a Notice the petitioner might have produced at least a majority of such vendors to inspire a conclusion that the purchases were bona fide. It may be true that the petitioner could have done so even at the initial stage when the onus lay upon him b1ut he had failed to do so. But even then when a reinvestigation was thought necessary in my opinion it is neither fair nor lawful on the part of the authorities to hold such ex parte reinvestigation behind the back of the petitioner. The relevant allegations made in paragraphs 14, 17(e) and 20 of the petition have not been effectively denied by the respondents. Answer to the allegations made in paragraph 14 is only to the effect: "I make no admission save and except what appears from the records". No record has been produced before this co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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