GIAN CHAND AND OTHERS versus THE STATE OF PUNJAB

Nottmbn 13.

364 8VP.kEME COURT REPORTS [1962] SUPP.

GIAN CHAND AND OTHERS

THE STATE OF PUNJAB.

(P. B. GAJENDRAOADKAR, A. K. SARKAR, K. N. WANr:aoo, K. C. DAs GUPTA and N. RAJAOOPALA AYYANOAR, JJ.)

Smuggled Gooda-Good• Seiu.d by lht polic.-Iklirtry of goods to c.,.tom• autharilies-Proaecution far of!<nc. unckr Sea Cusl071111 Act-Onus of proof-Goods, if .eized under the Act-"Seized", meaning of-8ea Custom.a Act, 1878 (8 of 1878), "· 167 (81), 178, 178A, 180.

On receipt of information thal some smugglers were transporiing gold from Amrilsar inio Jullundur, 1he police made raid of the house of the first appellanl in Jullundur and in 1he course of 1he search cerlain 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 proseculed on 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 w.re delivered to them. Proceedings were taken by the Collector of Customs for coufiscalion of the gold under s. 167 \8) of the Act, and the appel-lants were prosecuted for an offence under s. 167 (81) of the .\ct on the ground that the gold was smuggled and that the appellants did the acts spcciJied in that section knowing that the gold was of that character. The Magistrate took the view that •· l 78A of the Act was applicable to the case so that the burden of proving that lhe gold was not smug· gled could be laid on 1he appellants. The question was whelhcr the possession obiained 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. l 78A of the Act.

H.ld, that the taking posaession of the good• by the customs authorities when they were delivered to them under s. 180 of the Sea Customs Act, 1878, did not amount to seizure under the Act within the meaning of s. 1 78A of the Act.

seizure unc[1]er the authority of law involved dcpri· vation of po•scssio11 and when the police seized the goods the appellants lost possession which vested in the police so

(1) s.c.R. SUPREME COURT REPORTS

that when the possession was transferred to the cmtoms authorities by virtue of the provisions in s. JS(} there was no fresh seizure under the Act. Accordingly, s. 178!\ wa' not appllicable to the case.

The tcnn "seized" in s. l 78A means "taken possession of contrary to the ·wishes of the owner of property".

CRIMINAL APPELLATE JUR1snrnT10N: Criminal I 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. Daclachanji, 0. O. Jfathur and Ravinder Narain, for the appellants.

H. R. Khanna and P. D. Menon, for the res·

pondent.

1961. November 13. The Judgment of the

Court was delivered by

AYYANGAR,J.-Thethree appellants were con·

victed 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 know-ing that the gold had been smuggled into India from 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 convic-tions were upheld though tho sentence was reduced· in the case of the third appellant. ·revision ~tition · 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. few faca are. aeceaaary to be llC&ted to ap.preoiate.the p"int ~d for decillioo. ··The City Inspector of Police, Jullundur is atated to hAT•

1961 Gi11n Olua11J , v. Th, Sia" of Punjab

Gian Chand v. TM Store of /'ufijob .4 JJOntor J.

366 SUPREME CX>URT REPORTS [1962] SUPP.

received information that some smu~lers 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 oome ~.nd were present in the house of Gian Chand-the first appellant. raid-party was accordingly organi•ed ~nd the house of the fast appellant was cordoned a.nd raided at about 3 A. M. on the ea.riv morning of July 17, 1958. In the course of the search certain ha.rs of gold were found on the per-son of some of the inmates of the house and in the hon~e itself, as a.lso 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 eha.rging the three accused of offen-ces under ss. 411and414 of the Indian Penal Code. This charge of receiving stolen property preferred ag.dnst the three appellants was, however. not pro-ceederl with and the Police Inspector ma.de report to the Court on J anua.ry 7, 1959, that no case had been made out aga.instthem, and the case was there-upon dropped. Meanwhile, the Assistant Collector of Customs contacted the City Police at Jullundur and made an application to the Court of the Fir st Class Magistrate, Ju llundur for the delivery of these gold-bars to the Customs authorities obvi0usly under s. 180 of the Sea. Customs Ar.t to the terms of which we shall refer later, and they ~ere deli-vered to the Customs 1mthorities on Ja.nua.ry 7, 1939, this being the date on which the ease against the appellants under ss. 411 and 414 of the Indian Penni Code was dismissed.

Verv soon thereafter notice was iSBued to

the appellants to show cause why the gold in the poB11Cssion of the Customs authorities should not be 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 bas

(1) S.C.R. SUPREME COURT REPORTS

become final and this appeal is not concernrd with the correctness of the order of confiscation of the gold under s. 167 (8).

During t.he proceedings before the Customs

authorities for confiiscation, sanction was accorded to prosecute the appellants for an offence under s. 167 (81) which runs in these tefllls :

"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 which off· ence has reference. General

Penalties

Offences

If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depo-siting, harbouring, keep-ing or concealing or in any manner dealing with any goods which h~I"e ·., been unlawfully remove.dlft frorr. ware-house or·· whiph are chargeable with duty which has not been paid or with respect

such person shall on con-viction before Magistrate he liable to imprisonment for any term not exceeding two years, or to fine, or to both.

1981 Jian Chand v. The Stale of l'wii•b AJ,....C"' J.

IHI GU.. O..nd •• Tht Stolt of l'ot!iab A.'!)'GlllOF J.

to the importation or

exportation of which any prohibition or re11triction is for the time being in foroe as aforesaid; or

U any person is in

relation to any gqods in any way knowingly con-cerned in any fra.udulent evasion or attempt at evasion of any duty chargeable thereon or of &ny such prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods,"

and it is the correctness of tho conviction in the

prosecution that followed which is the eubject-ma tter of the appeal now before us.

It will be Peen from the terms of e. 167 (81)

that there are two distinct matters which have to be established before person could be held guilty of the offenoe there set out: ( l) that the goods in this case (gold) were smuggled, i.e., imported into the country either without p!!yment of duty or in contrnvention 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 pa.rt of tho provision. It is clear that in the ab-sence of any valid statutory provision in that be-half the onus of establishing the two ingredients necessary to bring l>ome th_e offence to an accused is on the prosecution .• \,,j-

In regard to thP. first of the above matters

the position stands thus: With view to oonllE't've the foreign exchange reBOUrees of this country, in line with provisions framed for like object by

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 per-son shall, except with the general or special permission of the Reserve Bank and on pay-ment 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 bringing, or as the case may be sending, into India of that artiC'le for the purposes of this section."

On the same day on which the Act came into force notification was issued under this section reading: "( l) Restrictions on import of gold and silver.-

In excercise 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 noti1kation of the Govern-ment of India in the late Finance Depart-ment No. 12 (11) FI/47, dated the 25th March, 1947, the Central Government is pleaaed 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; ,, .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '. . ............... .

1961 Gian Chand v. The Steir. of Punjab A))'flll,.,;'ar J.

l~l Gian CAo:nd v. Thi 5141• of Punjd A;yct11_(U J,

Virtually therefore ban waR 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 great incentive to smuggling in the commodity. As rosnlt Parliament enacted provision (R. 178 of the ~ca. Customs Act) reading:

"I 78 A. (I) Whero any goods to which

this section applies are seized under this Act in the reasonable belief that they a.re smug· gled goods, the burden of proving that they aro not smuggled goods shall he ou the per-lon from whose possession the goods· were seized .

seized . . . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................ " shifting the onus of proof in respect of particular commodities seized under thA Act in stated circum-stances that the goods wero not smuggled, on the person from whose possession they were ta.ken. Sub-section (2) set out the commodities to which the section applied and gold was specified a1 one such. The details of tho circumstances in which this pro. vision found its place in the statute book as well as its construction have been dealt with in Collector nf Oustmris, Madras v. Nathellti .'fompathu Chetty(') and need not here be repeated. Suffice it to say that if the terms of the section were satisfied tho gold seized in the prosont case would bo presumed to be smuggled and tho burden of proving that they are not, would be on the person from whom they were seized.

Without much of discuS8ion or considera-

tion of tho several provisions tho learned First Class Magistrate held that s. 178 of the Sea Cua. toms Act was applicable to the case and that accord· ingly the onus was properly on the accwmd. Before considering his reasoning it is necesRary to refer to few other provisions of the Sea Customs Act

(I) [1962] 9 S. C.R. 186.

(1) S.C.R. SUPREME COURT REPORTS

which have a. bearing on the point now under discussion. Section 178 of the Act which empowers Customs Officers to effect seizure of goods suspec-ted 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 Cus-toms or other person duly employed for the prevention of smuggling.''

Section 180 under the provisions of which the gold seized by the police as 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 oon-

fisoa.tion under this Act a.re seized by any Police-officer on suspicion that they have been stolen, he may oa.rry them to any police-station or Court at which complaint con-nected with the stealing or receiving of such things has been made, or an enquiry connec-ted with such stealing or receiving is in pro-gress, and there detain such things until the dismissal of such complaint or the conclusion of such enquiry or of any trial thence result-ing.

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 enq11iry or trial, he shall cause such things to be conveyed to, and deposited at, the nearest custom-house, to be there procee-ded against according to law."

The question tha.t now a.rises is whether the posses·

sion obtained by the Customs department by goods being "conveyed to and deposited a.t the nearest Custom-house" within the last words of the second

1961 Gian Cl1a11d v. Tk Stat1 of P1mj11b

Gian GIUJnd v. Tht State of Pun}a6 A)J'nngar J.

paragraph of s. 180 are goods which have been seized under tJie Act within t.he opening word8 of A. 178A. In the first place, it would be seen that these three sections which have to be read together draw distinction between seizure under the Act and seizure under proYisions of other laws. seizure under tlie Act is one for whith the authority to seize is conferred by the Act. and in the contex it could be referred to as seizure under s. l 78. The seizure from the owner of the property under s. 180 is not seizure under the Act but by police officer effecting the seizure under other provisions of the law, for instance the Criminal Procedure Code. And that is made clear by appropriate lan-guage in the first paragrapli of R. 180. Learned Counsel for t.ho respondent-Sta tc has urged that "the conveyance and deposit" in the office of the Customs authority und~r the second paragraph of s. 180 also involves seizure under the Act and for this purpose relied on the meaning of the word 'seize' given in Ballantyne's Law Dictiona1y where it is equated to "taking thing into possession". This howc\·or might be the meaning in p:irticular context8 when used in thn nensc of the cognate Latin expression "Seized" while in tho context in which it is t1scd in the Aet in s. l 78A it means 'take possession of contrary to the wishes of the owner of the property'. No <loubt, in cases where delivery is effected by an owner of tho goods in pursuancn of demand under legal right, whether oral or backed by warrant, it would certainly be case of seizure but the idea that it iR the uni-lateral act of the pers<>n 8<'iZing i8 the very ns.~ence of the concept.

There is another matter to which reference should ho made which, in our opinion, conclusively establishes that the deli\·cry of the goo<lR t.o the Customs authorities uncler thn lattM part of s. 180 is not seizure under the Act within the meaning of 8 [. ][178A. ][The last part of1mb-s. ][(I) ][ofK. ][17i;A ][lays ]

(l) s.c.B.. SUPHEME COURT REPORTS

the burden of proving that the goods are not smug-gled on "the person from whose possession the goods are taken". Asauredly when the goods are delivered to the Customs authorities hy 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 dellvery 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 tho 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. 'rhe suggestion that the goods continued to be, at that stage, in the possession of the accused does not embody correct appreciation of the law as regards possession. 'seizure' under the authority of law does not involve 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 ins. 180 to the Customs authorities, there is no fresh seizure under the Sea Customs Act. It would, therefore, fol!ow t.hat, having regard to the circumstances in which the gold came into the possession of the Customs authorities, the terms of s. I 78A which requires seizure under the Act were not satisfied and consequently that provision can· not be availed of to throw the burden of proving that t.he gold was not smuggled, on the accused.

Through the leamed Magistrate held that s. l 78A 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

1961 Gian Ohand v. The Stale of P1111job Ayyan~ar J.

J:iGJ Gian Chand V. 1iit Stale of l'wzjab

374 SUPREME OOURT REPORTS [1962] SUPP.

have reached the same conclusion, viz., that the gold was smuggled, even without referent'0 to the rule as to onus enacted by that section.

When the matter was before the learned Sessions Judge he first held tb.at s. I 78A of the Customs Act did apply to the case before him but proceeded also to deal with the case on an alterna· tive footing that the provisions of s. l78A were not applicable to the case and set out the cir<'umstanccs which led him to that conclusion. The learned Single Judge who heard the revision in the High Court, however, dealt with t.he case solely on the footing that s. l 78A was applicable. The constitu-tional validity of that sec:tion was challenged before the High Court and figured prominently in the growids of appeal to this Court but this point has been decided against the appellants by this Court and is therefore no longer live issue. If, as we have pointed out earlier, the delivery to the Cus-toms authorities under s. 180 is not seizure under the Act within s. l 78A it would follow that the judgment of the High Court cannot be upheld for it has proceeded on the sole basis of the provi-sioDB 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 bas 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 di8poscd of in the light of this jndirment and in accordance with law.

.Appeal allowed. Case remittecL