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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

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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

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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

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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

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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

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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

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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

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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