PETITIONER:
GIAN CHAND AND OTHERS
Vs.
RESPONDENT:
THE STATE OF PUNJAB.
DATE OF JUDGMENT:
13/11/1961
BENCH:
AYYANGAR, N. RAJAGOPALA
BENCH:
AYYANGAR, N. RAJAGOPALA
GAJENDRAGADKAR, P.B.
SARKAR, A.K.
WANCHOO, K.N.
GUPTA, K.C. DAS
CITATION:
1962 AIR 496 1962 SCR Supl. (1) 364
CITATOR INFO :
D 1966 SC1209 (9)
RF 1975 SC 182 (7,8)
RF 1975 SC2083 (5)
ACT:
Smuggled Goods-Goods Seized by the police-
Delivery of goods to customs authorities-
Prosecution for offence under Sea Customs Act-Onus
of proof-Goods, if seized under the Act-"Seized",
meaning of-Sea Customs Act, 1878 (8 of 1878), ss.
167 (81), 178, 178A, 180.
HEADNOTE:
On receipt of information that some smugglers
were transporting gold from Amritsar into
Jullundur, the police made a raid of the house of
the first appellant in Jullundur and in the course
of the search certain bars of gold were found on
the person of some of the inmates of the house and
in the house itself. The gold found was seized by
the police and the appellants were prosecuted on a
charge of receiving stolen property. The case
however was not proceeded with and, in the
meantime, the customs authorities contacted the
police and on the order of the Magistrate on an
application under s. 180 of the Sea Customs Act,
1878, made by them the gold bars were delivered to
them. Proceedings were taken by the Collector of
Customs for confiscation of the gold under s. 167
(8) of the Act, and the appellants were prosecuted
for an offence under s. 167 (81) of the Act on the
ground that the gold was smuggled and that the
appellants, did the acts specified in that section
knowing that the gold was of that character. The
Magistrate took the view that s. 178A of the Act
was applicable to the case so that the burden of
proving that the gold was not smuggled could be
laid on the appellants. The question was whether
the possession obtained by the customs authorities
under s. 180 of the Act was such that the goods
could be treated as that seized under the Act
within the meaning of s. 178A of the Act.
^
Held, that the taking possession of the goods
by the customs authorities when they were
delivered to them under s. 180 of the Sea Customs
Act, 1878, did not amount to a seizure under the
Act within the meaning of s. 178A of the Act.
A seizure under the authority of law involved
a deprivation of possession and when the police
seized the goods the appellants lost possession
which vested in the police so
365
that when the possession was transferred to the
customs authorities by virtue of the provisions in
s. 180 there was no fresh seizure under the Act.
Accordingly, s. 178 was not applicable to the
case.
The term "seized" in s. 178A means "taken
possession of contrary to the wishes of the owner
of property".
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 194 of 1960.
Appeal by special leave from the Judgment and
Order dated January 20, 1960, of the Punjab High
Court in Criminal Revision No. 1485 of 1959.
Porus A. Mehta, J. B. Dadachanji, O. C.
Mathur and Ravinder Narain, for the appellants.
H. R. Khanna and P. D. Menon, for the
respondent.
1961. November 13. The Judgment of the Court
was delivered by
AYYANGAR, J.-The three appellants were
convicted by the First Class Magistrate of
Jullundur of an offence under s. 167 (81) of the
Sea Customs Act for “having acquired possession of
smuggled gold and for carrying, keeping and
concealing the said gold with intent to defraud
the Government knowing that the gold had been
smuggled into India from a foreign country and
that no duty had been paid thereon,” and were
sentenced to terms of imprisonment. Appeals were
filed by the accused to the Sessions Judge,
Jullundur but the convictions were upheld though
the sentence was reduced in the case of the third
appellant. A revision petition preferred therefrom
to the High Court of Punjab was dismissed and
thereafter the appellants obtained leave from this
Court under Art. 136 of the Constitution and filed
the appeal which is now before us.
A few facts are necessary to be stated to
appreciate the point raised for decision. The City
Inspector of Police, Jullundur is stated to have
366
received information that some smugglers were on
the point of transporting gold from Amritsar into
Jullundur and at about mid-night on July 16, 1958,
further information that some of these had
actually come and were present in the house of
Gian Chand-the first appellant. A raid-party was
accordingly orgainsed and the house of the first
appellant was cordoned and raided at about 3 A.M.
on the early morning of July 17,1958. In the
course of the search certain bars of gold were
found on the person of some of the inmates of the
house and in the house itself, as also a large
amount of cash. Thereafter the first appellant,
his wife-the third appellant-and her brother-the
second appellant-were arrested, the gold found was
seized and a complaint filed charging the three
accused of offences under ss. 411 and 414 of the
Indian Penal Code. This charge of receiving stolen
property preferred against the three appellants
was, however, not proceeded with and the Police
Inspector made a report to the Court on January 7,
1959, that no case had been made out against them,
and the case was thereupon dropped. Meanwhile, the
Assistant Collector of Customs contacted the City
Police at Jullundur and made an application to the
Court of the First Class Magistrate, Jullundur for
the delivery of these gold-bars to the Customs
authorities obviously under s. 180 of the Sea
Customs Act to the terms of which we shall refer
later, and they were delivered to the Customs
authorities on January 7, 1959, this being the
date on which the case against the appellants
under ss. 411 and 414 of the Indian Penal Code was
dismissed.
Very soon thereafter a notice was issued to
the appellants to show cause why the gold in the
possession of the Customs authorities should not
confiscated under s. 167 (8) of the Sea Customs
Act, and after considering the explanations of the
appellants the Collector passed an order directing
the confiscation of the gold. That order has
367
become final and this appeal is not concerned with
the correctness of the order of confiscation of
the gold under s. 167 (8).
During the proceedings before the Customs
authorities for confiscation, sanction was
accorded to prosecute the appellants for an
offence under s. 167 (81) which runs in these
terms:
“167. The offences mentioned in the
first column of the following schedule shall
be punishable to the extent mentioned in the
third column of the same with reference to
such offences respectively:-
Section of
this Act to
Offences which off-
Penalties
ence has
reference.
If any person General
such person
knowingly, and with
shall on con-
intent to defraud the
viction before
Government of any duty a
Magistrate
payable thereon, or to be
liable to
evade any prohibition or
imprisonment
restriction for the time for
any term
being in force under or not
exceeding
by virtue of this Act with two
years, or
respect thereto acquires to
fine, or to
possession of, or is in both.
any way concerned in
carrying, removing, depo-
siting, harbouring, keep-
ing or concealing or in
any manner dealing with
any goods which have
been unlawfully removed
from a ware-house or
which are chargeable with
a duty which has not
been paid or with respect
368
to the importation or
exportation of which any
prohibition or restriction
is for the time being in
force as aforesaid; or
If any person is in
relation to any goods in
any way knowingly con-
cerned in any fraudulent
evasion or attempt at
evasion of any duty
chargeable thereon or of
any such prohibition or
restriction as aforesaid
or of any provision of
this Act applicable to
those goods,”
and it is the correctness of the conviction in the
prosecution that followed which is the subject-
matter of the appeal now before us.
It will be seen from the terms of s. 167 (81)
that there are two distinct matters which have to
be established before a person could be held
guilty of the offence there set out: (1) that the
goods in this case (gold) were smuggled, i.e.,
imported into the country either without payment
of duty or in contravention of any restriction or
prohibition imposed as regards the entry of those
goods, and (2) that the accused knowing that the
goods were of that character did the acts
specified in the latter part of the provision. It
is clear that in the absence of any valid
statutory provision in that behalf the onus of
establishing the two ingredients necessary to
bring home the offence to an accused is on the
prosecution.
In regard to the first of the above matters
the position stands thus: With a view to conserve
the foreign exchange resources of this country, in
line with provisions framed for a like object by
369
several other Governments, the Foreign Exchange
Regulation Act, 1947, was enacted which came into
force on March 25, 1947. Section 8(1) of the Act
enacted:
“8. (1) The Central Government may, by
notification in the Official Gazette, order
that, subject to such exemptions, if any, as
may be contained in the notification, no
person shall, except with the general or
special permission of the Reserve Bank and on
payment of the fee, if any, prescribed bring
or send into India any gold or silver or any
currency notes or bank notes or coin whether
Indian or foreign.
Explanation.-The bringing or sending
into any port or place in India of any such
article as aforesaid intended to be taken out
of India without being removed from the ship
of conveyance in which it is being carried
shall nonetheless be deemed to be a bringing,
or as the case may be sending, into India of
that article for the purposes of this
section.”
On the same day on which the Act came into force a
notification was issued under this section
reading:
“(1) Restrictions on import of gold and
silver.-
In exercise of the powers conferred by
sub-s. 1 of s. 8 of the Foreign Exchange
Regulation Act, 1947 (Act 7 of 1947) and in
supersession of the notification of the
Government of India in the late Finance
Department No. 12 (11) FI/47, dated the 25th
March, 1947, the Central Government is
pleased to direct that except with the
general or special permission of the Reserve
Bank no person shall bring or send into India
from any place outside India-
(a) any gold coin, gold bullion, gold
sheets or gold ingot whether refined or not;
”
370
Virtually therefore a ban was imposed on the
import of gold into the country. This prohibition
naturally resulted in the rise of the internal
price of gold compared to its external price,
i.e., its price in the international markets and
this gave a great incentive to smuggling in the
commodity. As a result Parliament enacted a
provision (s. 178 A of the Sea Customs Act)
reading:
“178 A. (1) Where any goods to which
this section applies are seized under this
Act in the reasonable belief that they are
smuggled goods, the burden of proving that
they are not smuggled goods shall be on the
person from whose possession the goods were
seized.
shifting the onus of proof in respect of
particular commodities seized under the Act in
stated circumstances that the goods were not
smuggled, on the person from whose possession they
were taken. Sub-section (2) set out the
commodities to which the section applied and gold
was specified as one such. The details of the
circumstances in which this provision found its
place in the statute book as well as its
construction have been dealt with in Collector of
Customs, Madras v. Nathella Sampathu Chetty and
need not here be repeated. Suffice it to say that
if the terms of the section were satisfied the
gold seized in the present case would be presumed
to be smuggled and the burden of proving that they
are not, would be on the person from whom they
were seized.
Without much of a discussion or a
consideration of the several provisions the
learned First Class Magistrate held that s. 178 A
of the Sea Customs Act was applicable to the case
and that accordingly the onus was properly on the
accused. Before considering his reasoning it is
necessary to refer to a few other provisions of
the Sea Customs Act
371
which have a bearing on the point now under
discussion. Section 178 of the Act which empowers
Customs Officers to effect a seizure of goods
suspected by them to be smuggled, enacts:
“178. Any thing liable to confiscation
under this Act may be seized in any place in
India either upon land or water, or within
the Indian customs waters by any officer of
Customs or other person duly employed for the
prevention of smuggling.”
Section 180 under the provisions of which the gold
seized by the police as a result of their search
on July 17, 1958, came into the possession of the
Customs authorities, runs in these terms:
“180. When any things liable to
confiscation under this Act are seized by any
Police-officer on suspicion that they have
been stolen, he may carry them to any police-
station or Court at which a complaint
connected with the stealing or receiving of
such things has been made, or an enquiry
connected with such stealing or receiving is
in progress, and there detain such things
until the dismissal of such complaint or the
conclusion of such enquiry or of any trial
thence resulting.
In every such case the Police-officer
seizing the things shall send written notice
of their seizure and detention to the nearest
custom-house; and immediately after the
dismissal of the complaint or the conclusion
of the enquiry or trial, he shall cause such
things to be conveyed to, and deposited at,
the nearest custom-house, to be there
proceeded against according to law.”
The question that now arises is whether the
possession obtained by the Customs department by
goods being “conveyed to and deposited at the
nearest Custom-house” within the last words of the
second
372
paragraph of s. 180 are goods which have been
seized under the Act within the opening words of
s. 178A. In the first place, it would be seen that
these three sections which have to be read
together draw a distinction between seizure under
the Act and a seizure under provisions of other
laws. A seizure under the Act is one for which the
authority to seize is conferred by the Act and in
the context it could be referred to as a seizure
under s. 178. The seizure from the owner of the
property under s. 180 is not a seizure under the
Act but by a police officer effecting the seizure
under other provisions of the law, for instance
the Criminal Procedure Code. And that is made
clear by appropriate language in the first
paragraph of s. 180. Learned Counsel for the
respondent-State has urged that “the conveyance
and deposit” in the office of the Customs
authority under the second paragraph of s. 180
also involves a seizure under the Act and for this
purpose relied on the meaning of the word ‘seize’
given in Ballantyne’s Law Dictionary where it is
equated to “taking a thing into possession”. This
however might be the meaning in particular
contexts when used in the sense of the cognate
Latin expression “Seized” while in the context in
which it is used in the Act in s. 178A it means
‘take possession of contrary to the wishes of the
owner of the property’. No doubt, in cases where a
delivery is effected by an owner of the goods in
pursuance of a demand under legal right, whether
oral or backed by a warrant, it would certainly be
a case of seizure but the idea that it is the
unilateral act of the person seizing is the very
essence of the concept.
There is another matter to which reference
should be made which, in our opinion, conclusively
establishes that the delivery of the goods to the
Customs authorities under the latter part of s.
180 is not seizure under the Act within the
meaning of s. 178A. The last part of sub-s. (1) of
s. 178A lays
373
the burden of proving that the goods are not
smuggled on “the person from whose possession the
goods are taken”. Assuredly when the goods are
delivered to the Customs authorities by the
Magistrate they are not taken from the possession
of the persons accused in criminal case so as to
throw the burden of proof on them and it would
lead to an absurdity to hold that the section
contemplated “proof to the contrary” by the
Magistrate under whose orders the delivery was
effected. For the purpose of deciding the point
arising in this case we do not think it necessary
to enter into the philosophy or refinements of the
law as to the nature of possession. When the goods
were seized by the police they ceased to be in the
possession of the accused and passed into the
possession of the police and when they were with
the Magistrate it is unnecessary to consider
whether the Magistrate had possession or merely
custody of the goods. The suggestion that the
goods continued to be, at that stage, in the
possession of the accused does not embody a
correct appreciation of the law as regards
possession. A ‘seizure’ under the authority of law
does not involve a deprivation of possession and
not merely of custody and so when the police
officer seized the goods, the accused lost
possession which vested in the police. When that
possession is transferred, by virtue of the
provisions contained in s. 180 to the Customs
authorities, there is no fresh seizure under the
Sea Customs Act. It would, therefore, follow that,
having regard to the circumstances in which the
gold came into the possession of the Customs
authorities, the terms of s. 178A which requires a
seizure under the Act were not satisfied and
consequently that provision cannot be availed of
to throw the burden of proving that the gold was
not smuggled, on the accused.
Through the learned Magistrate held that s.
178A applied to the case, he also entered into an
elaborate discussion of the positive evidence in
the case, so that it is not quite clear whether he
would
374
have reached the same conclusion, viz., that the
gold was smuggled, even without reference to the
rule as to onus enacted by that section.
When the matter was before the learned
Sessions Judge he first held that s. 178A of the
Customs Act did apply to the case before him but
proceeded also to deal with the case on an
alternative footing that the provisions of s. 178A
were not applicable to the case and set out the
circumstances which led him to that conclusion.
The learned Single Judge who heard the revision in
the High Court, however, dealt with the case
solely on the footing that s. 178A was applicable.
The constitutional validity of that section was
challenged before the High Court and figured
prominently in the grounds of appeal to this Court
but this point has been decided against the
appellants by this Court and is therefore no
longer a live issue. If, as we have pointed out
earlier, the delivery to the Customs authorities
under s. 180 is not a seizure under the Act within
s. 178A it would follow that the judgment of the
High Court cannot be upheld for it has proceeded
on the sole basis of the provisions of that
section being attracted. We have already pointed
out that the learned Sessions Judge had upheld the
conviction of the appellants by an independent
finding that the prosecution had positively
established that the goods were smuggled and that
the accused had knowingly done the acts referred
to in s. 167(81) with which they were charged.
This part of the case of the prosecution has not
been considered by the learned Judge in the High
Court and this would have to be done before the
revision petition of the appellants could properly
be disposed of. The appeal is accordingly allowed
and the order of the High Court set aside. The
case will be remitted to the High Court for the
revision petition of the appellants being disposed
of in the light of this judgment and in accordance
with law.
Appeal allowed. Case remitted
375