PUKHRAJ versus D.R. KOHLI

GAJENDRAGADKAR, J.-On the 26th July, 1958, the Collector of Central Excise, Nagpur, pitssed an order directing absolute confiscation of five bars of gold weighing 290.6 Tolas found in the possession of the appellant Pukhraj and imposing upon him a personal penalty of Rs. 25,000/- under s. 167 (8) of the Sea Customs Act, 1878 read with s. 19 of the said Act and s. 23-A of the Foreign Exchange Regulation Act, 1947. Aggrieved by the said order, th.e appellant filed a writ petition in the High Court of. Bombay at Nagpur under Art". 226 and 227 of the Constitution on September 15, 1958. By this petition, the appellant claimed a writ of Certiorari or other appropriate writ or order quashing the impugned order. It was urged by him in support of his petition, inter alia, that s. l 78A of the Sea Customs Act was unconstitutional in that it infringed the appellant's fundamental right under Art. Ul (I) (r) and (g) of the Constitution. It was also urged that on the merits, the said impugned order waa nut justified by the relevant statutory provisions of the Sea Customs Act read with the .Foreign Exchange ItegulaLion Act. The High Court rejected the appellant's challenge to the validity of s. l 78A and held that the order directing the confiscation of five bars of gold was valid. The High Court, however, took the view that the direction issued by the Collector of Central Exciso imposing a personal penalty of P.s. 25,000/- on tho appellant was invalid and so, the said direction was set aside and a writ issued in that behalf. The appellant then applied for and obt:i.ined a certificato from the said High Court and it is with the said certificate that he has come to this Court for challenging the correctness of the order passed by the High Court by which tho confiscation of gold in . question has been held to be valid.

pp. 867–868

The main point on which tho certificate was grant..ed by the High Court to the appellant was in regard to the constitutional validity of s. I 78A. That question has, in the meanwhile, . been decided by this Court on September :!5, Hlfil, in Civil Appeals Nos. 408 tu 410 of 1960 and other companion appeals. The judgment of the constitutional Bench dealing with those appeals has upheld tho validity of s. I 78A and so, the principal point which the appellant wanted to raise before this Court is now concluded against him. For the appellant, Mr. Bubde has, however, urged three other contentions before us in support of hie case that the confiscation of gold is not justified.

p. 868

Beforn dealing with these cont.enLions, it is necessary to mention very briefly the relevant facts which led to the confiscation of gold. The appellant is a. goldsmith by profession and owns a gold and Rilver shop at Rajnandgaon in Madhya Pradesh. On October 25, 1956, whilst he was travelling by the passenger train from Calcutta on the Calcuttacum-Nagpur route, he was searched at Raigarh railway station and found to be in possession of five pieces of gold bullion weighing 290.6 tolas valued at Rs. 29,835/- approximately. The said gold was then s•iized by the Officer concerned acting on a reasonable belief that it was smuggled gold, and notice was issued against the appellant on May 20, 1957, calling upon him to show cause why action should not be taken against him for having contravened the notification issued by the Government of India No. 12 ( 11 )-F.I/48 dated August 26, 1948 under the foreign Exchange Regulation Act, 1947 read with s.23A of the said Act and s.19 of the Sea Customs Act and punishable under item (8) of s.167 of the Sea Customs Act. The appellant sent a reply and thereupon, the Collector of Central Excise held an enquiry. At the enquiry the appellant appeared by counsel and examined four witnesses in support of his plea that he was in possession of gold which belonged to him and which was not smuggled gold at all. Documentary evidence in the form of accountbooks was also produced by the appellant in sup· port of his plea. The Collector of Central Excise disbelieved the evidence adduced by the appellant and came to the conclusion that the presumption arising under s.l 78 of the Sea Customs Act had not been rebutted by the appellant and so,.he proceeded to pass the impugned order confiscating gold and imposing on the appellant a personal penalty of Rs.25,000-/. It is in the light of these facts that the three contentions raised by Mr.Bahde fall to be con. sidered in the present a ppea,J.

pp. 868–869

The first argument raised in suprort of the appeal is that the confiscation of g1 old is not justified under s.167(8) because it has be-in found by the High Court that the appellant is not a person concerned in the offence of importation of the said gold. It appears that in dealing with the question as to whether}ltho pcr8onal penalty imposed upon the appellant is valid or not, the High Court has relied on two considerations. It has he Id that the jurisdiction of the officer to impose a personal penalty was confined to the imposition of a penalty only up to Rs. I 000/-and no more, and in support of this conclusion, the High Court relied certain observations m1de by this Court in F.N.Roy v. Collector of C11stoms, Calcutta('). '!his question bas been recently consirlered Ly this Court in .M /s. Ranchlwddas Atnuuain v. The Union of India(') and it has be<'.n held that the l:inguage in item (8) of s.167 clear and it permits the imposition of a penalty in exc<>,ss of Rs.1000/- and that must he given effect to whatever may have been the intention in other provisions. So, it is clear that the High Court was in error in taking the view that under section lffi(8), it was not within the jurisdiction of the Collector of Central Excise to impose a penalty exceeding Rs.1000/·. The High Court has also held that the appellant not shown to have been eonccrnml with the import.ation of tho smuggled gold, though he found in po~ession of it and this finding, according to the High Court, justified the concluAion t.hat a personal penalty could not be imposed on him. We are not callPd upon to consider in the present appeal the correctness or propriety of this conclusion because there is no appeal hy the respondent Collector of Central Excise challenging this part. of the High Court's order. Basing himself on the finding of tho High Court that the nppellnnt was not concerned in the importation of smuggled gol<I, i\fr. Bohde arg1H'S that oven the goods cannot bi; confisc:~tcd unclcr s. 1Ui(8). In our opinion, this argument is clearly misconceived. 8ection IH7(8) clearly provides, inter alia, that if any goods, the importation of which is for the time being prohibited or restricted by or uuder Chapter IV of the Act, be imported into India contrary to such prohibition or restriction, such goods shall be liable to confiscation. If s.167(8) applies, then there can be · no doubt that as soon it is shown that certain goods have been imported contrary to the statutory prohibition or restriction, they are liable to confiscation and the confiscation of the said goods is not based on the fact that they are necessarily found with a person who was concerned with their importation. Therefore, once s.167(8) is held to be applicable, the validity of the order directing the confiscation of the smuggled goods is beyond any challenge.

pp. 869–871

The next question to consider is whether s.167(8) applies to the facts of this case, and that takes us to tbe relevant notification issued by the Government of India in 1948. This notification imposed restrictions on import of gold and silver and it has been !ssued under s.S(l) of the Foreign Exchange Regulation Act,1947. The effect of this notification, inter alia, is 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 any gold, coin, gold bullion, gold sheets or gold ingot, whe1 her refined or not. Thus, bringing into India gold from outside is prohibited by this notification unless the said gold is brought with tµe genera I or special permission of the Reserve Bank. Section 23 of the said Act provides for penalty and procedure in respect of contravention of its provisions and of rules, orders or directions issued thereunder. Section 23-A provides that without prejudice to the provisions of s. 23 or to any other provision contained in the said Act, the restrictions imposed by sub-s.( 1) and (2) of s. 8 shall be deemed to have been imposed under s. 19 of the Sea. Customs Act, and all the provisions or t4a.t Aot s4a.ll 4a.ve effect ~coordingly, except th~~ s.183 thereof shall have effect as if for the word "shall" therein the word "may" w11s substituted. It would, thus, be noticed that the combined effect of the aforesaid provisions of the two Acts a.nd the relevant notification is that the notification of 1948 has the force of a notification issued under s.19 of the Sea Customs Act, and in eonsequenco, gold importod in contravention of the said notification is liable to be seized under s. 171> of the said Act and renders the person in possossion of tho sllid gold liable for proceedings under s. !fl7(8) of the said Act; !Lnd since the matter falls to be considered under tlw relcvnnt provisions of the Sea Customs Act, s. l 78A is also applicable. This position is not disputed.

pp. 871–872

Now s. I iSA places the burden of proving that the goods aro not smuggled goods on tho porson from whose possession the said goods are seized where it appears that tho said goods are seized under the provisions of the Sea Customs Act in the reasonable belief that. they are smuggled goods. Once it is shown that the goods were seized in the manner contemplated by the fir.~t part of s. l 78A, it would he for the appellant to prove that the goods were not Rmugglcd goods; and since it has been hnld bv thi: Collector of Central Exci*~ that. the appellant had not <liRcharged the onus imposed on him by s. I 78A, thl) stn.tutory prneumption remained unrebutted ancl so, the goods must be dealt with on the basis that they are smuggled goods. As soon as we reach this conclusion, it follows t.hat under s. 167(8) of the Sea Customs Act, the said goods are liable to confiscation. That is the view taken bv the High Court when it rejected the appe!lantrs prayer for a writ q1rnshing the order of confiscation passed by the Collector of C~ntral Excise in respuct of the gold in question, and wo see no reason to interfere with it.

p. 872

'fhe nox.t argument urged by Mr. Bohclo is that certain witnesses whose evidence was recorded by the Collector of Central Excise in the enqu· iry before him, were not produced for cross-examination by the appellant. In our opinion, there is no substance in this argument. This complaint relates to the evidence of Anwar, Marotrao and his brother Rambhau. These three persons, it is alleged made their statements in the absence of the appel· lant, It was, however, stated before the High Court by Mr. Abhyankar for the department that Anwar was, in fact, examined in the presence ofthll appellant's counsel and the appellant's counsel did not cross-examine him. This statement was ·accepted by Mr. Sorabji who 8.ppeared for the appellant and so, no valid complaint can be ma.de that Anwar· gave evidence in the absence of the appellant and the appellant had no opportunity to cross-examine him. Then, as regards Marotrao and Ram bhau, their statements were intend'ed to show that the appellant's case that he had got the gold melted through them was not true. At the enquiry, the appellant gave up this stand and did not adhere to his earlier Tersion that the gold in question had been melted with the assistance of the said two witnesses. Since it became unnecessary to consider that plea because of the change of attitude adopted by the appellant, it was hardly necessary to allow the appellant to cross-examine the said two witnesses. Their version on the point was no longer inconsistent with the subsequent C'1Se set up by the appellant. Therefore there is no substance in the argument that the enquiry held by the Collector of Central Excise was oonducted unfairly and the procedure adpott>d at the said enquiry was inconsistent with the requirements of natural justice.

pp. 872–873

The last contention raised by Mr. Rohde was that there is nothing on record to show that the seizure of gold from the appellant had .been effected by the officer concerned acting on a reasonable be· lief that the said gold was smuggled. It woul4 recalled thats. l 78A of the Sea. Customs Act requires that before ihe burden can be imposed on the appellant to show that the goods in question wern not smuggled, it has to be shown that the goods had been seized irnder the said Act and in the reasona· hie belief that they are smuggled goods. The argument is that the question as to whether there was a reasonable belief or not is just iceablP, and since there is no material on the record to ~how that tho belief could have been reasonable, the statutory presumption cannot be raised. Tn our opinion, this argument is not well-founded. There are two broad features of this seizure whid1 cannot be ignored. The first feature on which th'l offieer relied is supplied by the quantity of gold in question. It was found that the appellant was carrying on his person five pieces of gold 'bullion weighing its much as 290.6 tolas, This lar!?e quantity of gold valued at nearly Rs. 30,000/- itself justified a reasonable belief in the mind of the officer that the gold may be smuggled. In that connection, it may not bo· irrelevant to remember that the said oflicer had received positive information in tho month of Sep· wmber, 1!)56, r<·gar<ling the smuggling of gold by the appellant.. That is why ho was intercepted by tho officer the 25th October, 1!)5(i, at the Raigarh railway st<1tion at lG.:m hours. Then the other faet on which tho reasonable belief can be founder! is the suspicious circumstances of the appellant'~ journey. Tho appellant w:i.s found travelliug with· out a Railwa,y ticket and his explanation as to bow he came to be in the said passenger train is obviously untrue. A person ea,rrying a large quantity of gold and found travelling without a ti<"ket. may well have raised n rea.Rona,ble belief in the minrl of tho officer that the gold wa,s smugglccl. The ol.jeot of travelling without a ticket must have been to con· ceal the~ fact that tho appellant tnwtilled all tho way from Calclj.tta at which place tho gold mqst have been smuggled. The story subsequently men• tioned by the appellant about his journey to Tatanagar which has been disbelieved brings into bold belief the purpose which the appellant had in mind in travelling without a ticket. After-all, when we are dealing with a question as to whether the belief in the mind of the officer who effected the seizure was reasonable or not, we are not sitting in appeal over the decision of the said officer. All that we can consider is whether there is ground which prima facie justifies the said reasonable belief. That being so, we do not think there is any substance in the argument that the seizure was effected without a reasonable belief and so is outside section l 78A.

pp. 873–875

In the result, the appeal fails and is dismissed' with costs. ·

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Appeal di8missed. MOHAMMADBHAI KHUDABUX CHHIPA

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AND ANOTHER THE STATE OF. GU,TARAT AND ANOTHER

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(And connected. petitions) (P. B. A. K. K. N.

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K. C. and N.

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JJ.)

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Agricu.lturaf Produc'! ]Jfarkets-Market committees-Levy of fees-Notijication-Validzt1;-A and B class traderslicences-Discrimination-Ruz;s. declared invalid-S1tbsequent amendments ena_ctment-Validzty of rules-Doctrine of eclipse -Saurashtra .Ag~icultural Produce Mai·kets (Gujarat Amendment and Va~1dating Provisions) Ordinance, 1961 (1of1961)- Bombay Agricultural Produce Market.s Ar;t, 7939 (Bam, 22 of

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a.~ fJ7- Constitutwn of India, Art.,.u, (.11)(1),

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Gula.m Mohammad The Jtate ~!Bombay, (1962] 2 S.C.R. 659, by 'l'hich rr. 53, 65,

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