ISSARDAS DAULAT RAM AND OTHERS versus THE UNION OF INDIA AND OTHERS

ISSARDAS DAULAT RAM AND OTHERS

THE UNION OF INDIA A.i.~D OTHERS (P. B. GAJEJWRAGADKAR, A. K. SARKAU, K. N. WANCHOO, K. c. DAS GUPTA ancl N. RAJAGOPALA AYYANGAR, JJ.)

Smuggled Good..-Confiscation by Co/l<clor of G1Uwma-Et>idente-lf dfr•cl evidmce ea•enlial-lnter/erc11ce of findi719 by wm-Sea 01Uwms Act, 1878 (8 of 1878), a. 167(8)-Con· •luulion of India, A11. 226.

On September 14, 1954, the appellant sent quantity of gold to refinery in Bombay for the purpose of melting it. On receipt of information that the gold which was being melted was believed to be smuggled, the customs authorities made some enquiries at the refinery and seized the gold. The Collector of Customs found that the gold was of foreign origin and had been importd into India in contravention of the Foreign Exchange Regulations Act, 1947, and made an order confiscating it under s. 167(8) of the Sea Customs Act, 1878. The a1,>pcllant filed petition under Art. 226 of the Constitution of India before the Punjab High Court challenging the legality of the order of confiscation on the ground that there was no evidence before the Collector of Customs to show that the gold had been imported after restrictions had been imposed in March 19+7 by notification under the Foreign Exchange Regulations Act, 1947, and consequently the finding that the gold had been smuggled was unsustainable. In reaching the conclusion that the gold had been smuggled the Colletor of Customs considered the credibility of the story put forward by the appellant about the purchase of the gold and the price at which the gold was stated to have been purchased which was less than the market price and also the conduct of the appellant in trying to get the gold melted at the refinery with small bit ohilvcr added so as to reduce the fineness of the gold and thus approximate the resultant product to licit gold found in the maket.

Held, that though there was no direct evidence to show that the gold had been imported in contravention of the notification i!sucd under the Foreign Exchange Regulations Act, 1947, the evidence relied on by the Collector of Customs in coming to the conclusion that the gold was smuggled could justify the finding and that the matter did not call for inter· fcrcncc under Art. 226 of the Constitution.

(1) S.C.R. SUPREME COURT RFPORTS 359

CIVIL .APPELLATE JURISDICTION : Civil Appeal No. 591 of 1960.

Appeal by special leave from the jmlgment and order dated November 6, 1958, of the Punjab High Court (Circuit Bench) at Delhi in Civil Writ No. 417-D of 1958.

A. V. Viswanatha Sustri, J. B. Dadachunji,

0. C. Mathur and Ravinder Narain, for the appel-lants.

P. K. Chatterjee and T. M. Sen, for the respon-dents.

1961. November 13. The Judgment of the Court was delivered by

AYYANGAR, J.-This appeal comes before us by

virtue of leave granted by this Court uuder Art.136(1) of the constitution and is directed against the judg-ment and order of the Punjab High Court by which Writ Petition filed before it by the appellants, under Art. 226 of the constitution was summarily dismissed.

The point raised for our consideration relates

to the legality of an order of confiscation, by the Customs Authorities, of certain gold belonging to the appellants on the ground of its being smuggled. The appellants are the pa1tners ofa Joint Hindu Family firm carrying on business in Bombay in inter alia gold and jewellery. On September 14, 1954, the appellant-firm had despatched to the Bombay Bul-lion Refinery for the purpo8'3 of melting about 500 tolas of gold. Certain Customs Officers received information that some quantity of gold which was believed to be smuggled was being sent to the refinery for melting and in pursuance of this information they went to the refinery and found the gold bullion which is the subject of these pro-ceedings JJ!aced in crucible for the pui·pose of being melted. These officers ascertained from the Mana.ger of the refinery that this gold belongecl to the appellant-firm who were later contacted and

lssardas Daiiiat Ram v. Tk Union of India

AyJangar J.

JUI lssardas Dauiat RtU11 'Fht U11fon '· of India AJ7angar J,

who addmittcd their ownership of the gold. The gold was thereupon seized and investigation started for ascertaining whether the gold was or was not smuggled gold after which the ABBistant Collec-tor of Customs issued notice to the appellants on January 31, 1955, to show cause why the gold should not be confiscated under s. 167 (8) of the Sea Customs Act. The appellants appeared in res· ponse to this notice and were granted personal hearing, their Counsel being heard in support of their plea that the gold was not smuggled and so not liable to be confiscated. Their defence was however rejected and the Colletor of Customs who adjudicated in this matter under s.182 of the Sea Customs Act passed an order on August 25, 1955, directing the confiscation. From this order appeals and revisions were preferred which were unsuccessful. Thereafter the appellants filed Writ Petition before the High Court of Punjab with the result already stated.

It will be seen from the above narrative

that the case is not covered by s. 178 (A) of the Sea Customs Act which was enacted by C'.-entral Act 21 of 1955 since the seizure and the proceedings in this case were long anterior to the enactment of that section and cannot obviously be governed by its provisions. For the reason that s. 178 (A) was in foroe at the stage of the appeals from the order of the Collector of Customs to the Central Board of Revenue and the Central Government and possibly under the impression that their case had been decided by throwing on them the bur-den of proving that the gold was not smuggled, the appellants raised in their Writ Petition to the Punjab High Court points regarding the cons-truction and constitutionality of s. 178 (A). When their Petition was summarily dismissed these points were repeated in the petition for special leave to appeal filed in this Court, and special leave appears to have been granted mainly for the reason that

the appeal invoved the question of the constitu· tionality of s. 178 (A) cf the Sea Customs Act. The appeal has for that reason been posted for hearing after tho decision of this Court in Collector of Gus· toms, .JJfadras v. Nathella Smnpathu Chettey (1), in which the validity of section was considered and upheld.

Section 178 (A) being put aside, it mll.y be

added, the only question now arising for decision is whether the order of the Collector of Customs holding the appellant's gold seized at the refinery to be smuggled gold so as to be liable to confiscation under s. 167 (8) of the Sea Customs Act is vitiated by any error such as to call for interference under Art. 226 of the Constitution. Section. 167 (8) runs in these terms.

"167. The offences mentioned in the first eolumn of the following schedule shall be punish-able to the extent mentioned in the third column of the same with reference to such offences res· pectively :-Offences . Section of this Penalties Act to which offence has reference. (8) lf any goods 18 & 19 such goods shall

(8) lf any goods the importation or exportation of which is for the time being prohi· bited or restric-ted by or under Chapter IV of this Act, be im-ported into or ex-ported from India contrary to such prohibition or res· triction; .................. . . . . . . . . . .. . . . . . . .

such goods shall be liable to con-fiscation; & any perl!on concern· ed in any such offence sh>tll be liable to penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees."

(I) [1962) 3 S.C.R. 786.

lssardas Dau/at Ram Y. Thi Union of India Ayyangar J.

1961 /s;atdds DaJJlal Ra"' v. 11~ lJniotr •f India AyJ<Ullar J.

362 SUPREME COL'RT REPORTS (1962] SUPP.

The finding of the Collector is recorded in para. graph 6 of his order in these wrms :

"Taking all the available evidence into

consideration, I am satisfi<'d that the gold bullion in question is of foreign origin and h1>d boon imporU>d into India in contraven· tion of Foreign Exchange Hegulations Act, and Section 19 of the Sea Customs Act there by establishing an offence attracting the provisions of Section 167(8) of the Sea Customs Act."

It ~as not disputed that if there was material

to support this decision the appeal must fail. The conclusion of the Collector involves findings on two di8tinct matters : (I) that the gold which was the subject of adjudir.atlon was of foreign origin, and (2) that that gold had been imported in contravention of the Foreign Exchange Regulations Act. Mr. Viswanatha Sastri-learnL'<i Counsel for the appel-lant submitted that though the several facta mentioned by the Collector in paragraph 5 of his order which form the basis of the finding recorded in paragraph 6 might show that the gold was of foreign origin, there was no evidence before the Collt"ctor that this foreign gold had been imported nftcr restrictions had been imposed in March 1947 by notification under the Foreign Exchange Regula· tionB Act, fa.ct the onus to prove which was also on the department, am] that in the absence of any material supporting that conclusion the finding that the gold was smuggled was unsustainable and that the confiscation should therefore be set aside.

'We find our8elves 1m1ble to accept the sub-miSBion of learned Counsel. Though, no doubt, there was no direct evidence that the gold which

Ill

(I) S.C.R. SUPREME COURT REPOHTS

was the subject of adjudication had eome into the country after March 25, 1947, when the first notification under the Foreign Exchange Regulations Act placing ban on the importation of gold was issued, it is not. as if this could not be deduced or inferred otherwise. There has been little or no importation of gold from outside the country since 1947. If the gold now in question had been import-ed earlier it would be extremely improbable that the gold would remain in the same shape of bars and with the same fineness as when imported after the passage of this length of time. It was precisely for this reason that at the stage of the enquiry before the Collector the principal point which wns urged on behalf of the appellants was to deny that the seized gold was of foreign origin and it is the nature of the defence that accounts for the order of the Collector dealing almost wholly with the consideration of that question. In order to reach his finding about the gold being smuggled; the Collector bas referred to the conduct of the appel-lants in connection with (a) the credibility of the story about the purchase of this gold from three parties, (b) the price at which the gold was stated to have been purchased which was' less than the market price, and (c) the hurry exhibited in trying to get the gold melted at the refinery with small bit of ail ver added so as to reduce the fineness of the gold and thus approximate the resultant product to licit gold found in: the market. These were undoubtedly relevant pieces of evidence which bore on the question regarding the character of the gold, whether it was licit or illicit. Learned Counsel is, therefore, not right in his submission regarding the absence of material before the CQllector to justify the finding recorded in paragra.hp 6 we have set out earlier. The Writ Petition was therefore properly dismissed by the learned Judges of the High Court.

The appeal is dismissed with costs.

Appeal diBmisaed.

lssardas Daulcit Ram v. The Union of India Ayyangar J.