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TMI Blog1960 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Bombay Bullion Association Refinery for the purpose of melting and assaying. It was further alleged that as the respondents required more gold of the same fineness, they sent a further quantity of 151 tolas of gold from out of their stock with one of their employees named Jitendra Bhagwandas, to have the same melted with the earlier lot in order to have one lot of uniform fineness with one certificate of assaying. The petition went on to allege that as their employee Jitendra was about to handover the 151 tolas of gold to an employee of the Refinery for being put in the same crucible in which the earlier lot of 385 tolas of gold had been put, he was stopped by one B. M. Kamat, an officer in the Customs Department. It was further alleged that Kamat took charge of the said 151 tolas of gold within the premises of the Refinery and that thereafter Kamat and the said Jitendra went to the respondents' shop with the said 151 tolas of gold. The respondents alleged that Kamat, after going to that shop, checked the stock of gold with their stock as shown in their books of account and other documents and found that there was a shortage of about 24 tolas of gold, which had to be explaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eventive Department, issued a show cause notice on 9th August, 1956 against the firm of Ambalal Amichand and Co. to show cause why the balance of the gold should not be confiscated. In the notice it was stated that the said Jitendra was noticed by an Intelligence Officer of the Customs House rushing hurriedly straight to the place where gold was melted in the Bombay Bullion Refinery, without waiting near the counter where gold was weighed before melting. Inasmuch as his behaviour appeared to be suspicious, the notice went on to state, he was followed by the Intelligence Officer inside the Refinery where he was seen taking out some gold pieces in the form of Rawa and handing over the same to one of the servants of the Refinery for placing the same in the furnace. Jitendra was questioned as to why he did not get the gold weighed, to which he replied that the gold pieces which he was handing over were in addition to the gold which had already been handed over to the Refinery for melting. It was further stated in the notice that a casual perusal of the account books of the shops from where the gold was purchased by Messrs. Ambalal Amichand and Co. showed the acquisition of some quantit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y had purchased the said gold from the said Shantilal Kalidas, that there was a Dharma Khata Chit of weighment in respect of the said gold and that they were bona fide purchasers of the said gold. By the same letter the respondents further stated that they deal in gold to the time of thousands of tolas, that everyday they purchased and sold a very large quantity of gold, that they had their own Lagdis bearing their distinctive trade mark, which was popular in the market, and that such Lagdis bearing that mark in sizes of quarter tola, half tola, one tola and five tolas were popular in the market and were sold by them. They further contended that before Section 178A of the Sea Customs Act could be made applicable, the goods must be seized in the reasonable belief that they were smuggled goods, that in the present case the goods were not seized under any such belief and that therefore, the presumption contemplated by that section would not arise. They denied that any offence had been committed by them or that the goods were liable to confiscation. On 12th October, 1956, a personal hearing was given to the respondents by the Additional Collector of Customs and on 27th October, 1956 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply denying the allegations made by the respondents in the petition. In the course of this affidavit, in paragraph 8 thereof it was inter alia stated : "I say that the servant of the petitioners, Jitendra Bhagwandas, was observed running hurriedly straight to the place where gold is melted in the Bombay Bullion Refinery at Zaveri Bazar without waiting near the counter where gold is weighed and is taken over by the officials of the refinery before melting. I say that the behaviour of Jitendra Bhngwandas aroused the suspicions of Mr. Kamat, Intelligence Officer of the New Customs House in plain clothes on duty near the Bombay Bullion Refinery..................... I say that the conduct of the petitioners in attempting to get the gold melted in the refinery without entering the particulars in the refinery's books was suspicious and open to question... ............... I say that Mr. Kamat was justified in suspecting from the manner and behaviour of Jitendra and the unusual haste of his actions and the irregularity of the procedure followed by him and other attendant circumstances that the said 151 tolas were not of lawful origin." 5.In paragraph 9 of the affidavit in reply it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was aroused by reason of the movements of Jitendra and the inability of the respondents to satisfy the Customs Officers from their books of account as to whether the amount of gold which was sent to the refinery for melting was theirs or not, the order passed by the Additional Collector of Customs was not tenable and that for that reason also it deserved to be set aside. The learned Judge accordingly allowed the petition filed by the respondents, issued the writ of certiorari quashing the order passed by the Additional Collector of Customs and also issued a writ of mandamus requiring the Additional Collector of Customs as well as the Union of India to withdraw the order that was passed and/or to cancel it. It is against that order of the learned Judge that the Additional Collector of Customs and the Union of India have filed the present appeal. 9.It was contended by Mr. Gupte, the learned Counsel for the appellants, that the learned Judge in the Court below was in error in coming to the conclusion on merits that the gold in question was not seized under the reasonable belief that it was smuggled. In order to sustain this argument Mr. Gupte sought to put a construction upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eizing was smuggled gold. The Inquiry Officer thereafter would issue the notice to show cause to the person from whose possession the gold was seized, as to why the gold which was seized should not be confiscated under Section 167(8) of the Sea Customs Act. But he would do that only after considering the material placed before him by the investigating officers in order to enable him to find, as claimed by the investigating officers themselves if at all, that the gold seized by them was seized under a reasonable belief that it was smuggled gold. What the Inquiry Officer, as expressed by us in the judgment in that case, should do is to consider the material placed before him by the investigating officers before issuing the show cause notice itself, so that in case he comes to the conclusion that there was such a reasonable belief in the minds of the seizing officers at the time of the seizure, he could straightaway point out to the persons to whom the notice is addressed that the burden would lie upon them to show that the gold that was seized by the officers was not smuggled. In other words, we are of the opinion that it is at the stage of issuing the show cause notice that the Inqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at contention and observed as follows at p. 149 : "Such a result could be achieved only if we delete the words from Section 178A(1) 'in the reasonable belief that they are smuggled goods' and read the section as 'where any goods to which the Section applies are seized under this Act, the burden of proving they are not smuggled goods shall be on the person from whose possession the goods were seized'. Such a reading is not permissible to interpret the plain words of the Section." 11.Then on the same page the learned Judges further observed as follows : "We must uphold the contention of the learned Counsel for the petitioners that unless it is established that the gold was seized in the reasonable belief that it was smuggled gold, Section 178A(1) cannot apply. The reasonable belief must be that of the officer who effected the seizure. It is belief and reasonable belief that the section requires, and not for instance mere suspicion which is all that Section 178 requires to justify arrest, or Section 180 requires to justify seizure and detention of goods. The reasonable belief that precede or at least coincide with the seizure; formation of the belief subsequent to the seizure, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made no secret of the object which it had in view while formulating the policy in regard to the amendment which was sought to be made in the Act. By this section the Government proposed to give absolute authority to Customs Officers to seize precious metal and precious stones, wherever they suspected them to be smuggled, and immediately call upon the persons from whom they were seized to show that they were not smuggled. Realising, however, the danger of the exercise of such an arbitrary power to the common people in the country, Parliament advisedly amended the proposed section by adding the words "in the reasonable belief that they are smuggled goods" after the words "are seized under this Act" in sub-section (1) of Section 178A of the Act. By adding these words Parliament placed a restriction upon the powers of the Customs Officers to the extent that the person from whom any goods falling within the ambit of Section 178A were seized by them could be called upon to prove that they were not smuggled goods only where they were seized in a reasonable belief that they were smuggled goods. The amendment introduced by Parliament in the section, in our opinion, is a salutary one. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Section 178A of the Sea Customs Act must be a reasonable one, not a belief of a man who just catches at some slight circumstances which only creates a sort of guess or speculation in his mind that something might exist or might not exist. The belief must be such as any other reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. In regard to Section 178A of the Act the reasonable belief may be based upon some definite information acquired from a reliable source that a certain person is in possession of smuggled goods. The Customs Officer receiving such information again must be confident about the validity and the reliability of the source of information itself. It may arise, for instance, in cases where in the presence of a Customs Officer in disguise, some shady dealing in regard to some goods takes place, whereupon he may be able to find sufficient material to entertain a reasonable belief that the dealing, to which he was a witness, was in respect of smuggled goods. The restrictions placed upon the powers of the Customs Officers under Section 178A of the Act cannot be lightly treated. They are serious and it is neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, we must give the natural meaning to the words employed in the section itself and construe it in a manner consistent with the canons of construction of statutes. Accordingly, the contention raised by Mr. Gupte that Section 178A of the Act should be construed in the manner which he suggested cannot be accepted. 14.Mr. Gupte then contended that on merits it could be said that the Customs Officer, who seized the gold in question, had a reasonable belief in his mind that it was smuggled gold. We are afraid, however, that Mr. Gupte's arguments on this question were entirely halting. Had it not been for the fact that he was not strong on this aspect of the case on merits, he would not have taken great pains in persuading us to put a construction upon Section 178A of the Act which he wanted us to put. As a matter of fact, the order itself, which is the subject matter of the challenge in this petition, proceeds by saying that the gold in question was seized on suspicion, pending further inquiries into the legal origin thereof. The words actually used in the order are as follows :- "On 12-9-1955, Customs Officers in plain clothes on duty in the Zaveri Bazar, detained one Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge in this petition, these were the two circumstances which aroused the suspicion of the Customs Officers with regard to the 151 tolas of gold which he had seized on the ground that it was smuggled gold. In these circumstances, therefore, in our opinion, the learned Judge in the Court below was perfectly right in coming to the conclusion, that the Customs Authorities had failed to prove that the gold that was seized by one of their officers was seized in a reasonable belief that it was smuggled gold, and that therefore they could not call upon the respondents to show that the gold that was seized by them was not smuggled gold. In other words, the Department could not avail of the provisions of Section 178A of the Sea Customs Act and that therefore nothing would really turn on the failure of the respondents to satisfy the Customs Authorities that the gold was seized by them was not smuggled gold. It was for the Customs Officer who had seized the gold themselves to satisfy the Inquiry Officer that the gold was smuggled as a matter of fact. In view, however, of the fact that the Inquiry Officer made an order under Section 178A of the Sea Customs Act, and in so far as he found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (2) that even on the assumption that Section 178A of the Act was ultra vires and valid in law, the order of the Additional Collector of Customs was bad, in as much as it was not proved that the seizure of the gold in question was effected by the Customs Officer concerned in a reasonable belief that it was smuggled gold. The trial Court accepted both the contentions raised by the respondents in their petition and accordingly made the order for costs in their favour, as on a long cause scale. In the appeal before us the appellants, viz., the Additional Collector of Customs and the Union of India, did not have to challenge the decision of the lower Court on the question as to the vires of Section 178A of the Act, because of the decision of the Division Bench of this Court in their favour. The appeal was confined only to the question on merits, viz., as to whether the Customs Officers who seized the gold did so in a reasonable belief that it was smuggled gold. The result is that whereas the respondents succeeded on both the points in the trial Court, they can be said to have lost on the first of the two points in this Court, by reason of the decision of the Division Bench of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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