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PETITIONER: STATE OF BOMBAY (NOW GUJARAT)

       Vs.

RESPONDENT: MEMON MAHOMED HAJI HASAM

DATE OF JUDGMENT: 05/05/1967

BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. BACHAWAT, R.S. BHARGAVA, VISHISHTHA

CITATION:  1967 AIR 1885            1967 SCR  (3) 938

ACT: Junggarh Sea Customs Act II of S. Y. 1998-Seizure under said Act  of  some vehicles belonging to  respondent-After  being kept  for some years outside a police station vehicles  sold by  order  obtained  under s. 523 Cr.  P.  C.  as  unclaimed property-Revenue  Tribunal  in  appeal  ordering  return  of vehicles  to respondent-Suit by respondent to recover  value of vehicles-Liability of State.

HEADNOTE: Two  trucks and a station wagon belonging to the  respondent were  seized  by  the customs authorities of  the  State  of Junagarh  under  the provisions of the  Junagarh  State  Sea Customs  Act  of S.Y. 1998.  The Junagrah State  was  merged into  the  United  States of Saurashtra  and  after  further changes  became  part  of the present  Gujarat  State.   The respondent’s  appeal  against the aforesaid seizure  of  his goods  succeeded before the Revenue Tribunal  which  ordered the  return  of the said vehicles to the  respondent.   When however  he  applied for the return of the vehicles  he  was informed that they had been disposed of under an order of  a Magistrate  under s. 523 of the Code of Criminal  Procedure, and  that the sale proceeds had been paid to a  creditor  of the  ’respondent under an attachment order.  The  respondent thereupon filed a suit for the recovery of the value of  the vehicles. It appeared in the evidence that the vehicles were kept  for several  in  an. open place outside the  police  station  at Veraval  so that most of their parts were pilfered away  and only  the skeletons of the vehicles were left.   Finally  on the  report of the officer incharge of the aforesaid  police station  they were sold it an auction as unclaimed  property after obtaining the order of a Magistrate.  The trial  court on the above evidevice   decreed  the respondent’s suit  and the High Court upheld the decree   though  partly   reducing the amount.  The State appealed to this Court     It    wits contended on behalf of the appellant that the sale was under a  judicial  order and therefore there was no  liability  to pay; at the most one or the other officers of the Government could  be  held  guilty  of  negligence.   It  was   further contended  on  behalf  of the State that  it  could  not  be

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treated  as  a bailee because a bailment  could  arise  only under a contract. HELD  :  (i) The State Government no doubt seized  the  said vehicles pursuant to the power tinder the Customs Act.   But the  power  to  seize and confiscate was  dependent  upon  a customs  offence having been committed or a  suspicion  that such  offence had been committed.  The order of the  Customs Officer was not final as it was subject to appeal and if the              authority  found  that there  was  no  good ground for the exercise of that power the property Could  no longer be retained and  had under the Act to be returned  to the owner.  Thus there was a clear obligation to return  the vehicle to the owner if the appeal went his favour. [944E] There was also an implied legal obligation to preserve  tile property  intact and to take reasonable care of it so is  to enable it to be returned 93 9 in the same condition in which it was seized.  The  position of  the  State Government until the order became  final  was therefore  that of a bailee.  There can be bailment and  the ’relationship of a bailor and bailee in respect of  specific property  without there being an enforceable contract.   Nor is  consent indispensable for such a relationship to  arise. Even  a  finder  of goods of another  becomes  a  bailee  in certain circumstances. 1.944A-D; F-H] The High Court was right in confirming the decree passed  by the trial court on the basis that there was an obligation on the  State Government either to return the said vehicles  or in the alternative to pay their value. [945 E] State  of  Rajasthan  v. Mst.  Vidhyawati,  [1962]  Supp.  2 S.C.R.  989  and Kasturilal Jain v. State of U.P.  [1965]  1 S.C.R. 375, held inapplicable.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 215 of 1961. Appeal  by special leave from the judgment and decree  dated January 22, 1958 of the Bombay High Court at Rajkot in Civil First Appeal No. 93 of 1956. R.   H. Dhebar, for the appellant. H.   K. Puri and Bishamber Lal, for the respondents Nos.  4- 7. The Judgment of the Court was delivered by Shelat, J. In 1947 and prior thereto the respondent  carried on business as an exporter of fish in the State of  Junagadh in  the name and style of Ayub lqbal and Company.   In  1947 the Customs authorities of the, State of Junagadh seized two motor  trucks, a station wagon and other goods belonging  to the  respondent on the grounds, (a) that the respondent  had not  paid  import duties on the said trucks, (b)  that  they were used for smuggling goods in the State and (c) that some of  the  goods were smuggled goods.  The  action  was  taken under  the Junagadh State Sea Customs Act, II of  S.Y.  1998 then in vogue in the State.  The respondent filed an  appeal against  tbis  order  to the Home Member  of  the  State  as provided in the said Act.  Pending the appeal, the State  of Junagadh  merged  in the United States of  Saurashtra  which ultimately was converted into the State of Saurashtra.   The State of Saurashtra thereafter merged with the former  State of Bombay and on bifurcation of the Bombay State became part of  the  State of Gujarat.  In the meantime the  appeal  was transferred to the Revenue Tribunal which was constituted by the State of Saurashtra and which was the competent forum to hear  such  appeals.   On  February  6,  1952,  the  Revenue

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Tribunal  set  aside the said order of confiscation  of  the Customs  authority  and  directed the  return  of  the  said vehicles  to  the  respondent.   On  March  I’),  1952,  the respondent applied for the return of ’the said vehicles  but was  informed that they had been disposed of under an  order of a Magistrate passed under S. 523 of the Code of  Criminal Procedure and that the sale proceeds viz., Rs. 2213/8/- were handed  over  to  a  creditor of  the  respondent  under  an attachment order passed in his favour.  On February 5, 1954, the respondent filed 940 the  present suit for the return of the said vehicles or  in the  alternative for their value viz., Rs. 31786/8/- on  the ground  that  pursuant to the said order  of  the  Tribunal, which  in  the  absence of any proceedings  against  it  had become  final, the State Government was bound to  hand  over the  said  vehicles.   In its written  statement  the  State Government  denied  the  respondent’s claim  ’Lind  took  up diverse  pleas.  It is not necessary to go into the  details of  these pleas except to say that the State Government  did not raise any contention therein ’that it was not liable for any tortious act committed in respect of the said goods  and vehicle  s by any one of its servants.  On  these  pleadings the trial court raised various issues.  No issue with regard to  the  absence of liability for the tortious  act  of  any servant  of  the Government was or could be  raised  in  the aforesaid state of pleadings.  The evidence led by the State and  in particular of the police officer Trambaklal  Naranji showed (a) that the said vehicles were seized in 1947 by the Customs Officer of the State of Junagadli, (b) that  somehow they  were  kept  in an open space opposite  to  the  police station at Veraval, (c) that they remained -totally  uncared for  from  1947 to October, 1951 with the  result  that  the greater  part  of the machinery of the vehicles,  tyres  and even  some  wheels  were  pilfered  away  leaving  only  the skeletons of the vehicles, (d) that no entries were made  in any  of  the registers maintained at the police  station  to show  as to how these vehicles came to be kept in  the  said open space or whether the customs authority had handed  over the  said vehicles to the police for safe custody, (e)  that in  October, 1951, witness Trambaklal who was then  incharge of the police station reported to his superior officers  the fact  of  these  vehicles lying in the said  open  space  as uncared and unclaimed vehicles, (f) that on October 3, 1951, directions were given to him to apply to the Magistrate  for disposal of the said Vehicles as unclaimed property under S. 523,  (g)  that on October 21, 1951, the police  recorded  a Panchanama  as regards the condition of the  said  vehicles, and  (h)  that  on October 29. 1951  pursuant  to  the  said directions,  the  police officer made an  application  which mentioned  the fact that these vehicles were seized  by  the Port  Commissioner in 1947 from Memon Mahomed Haji Hasam  of Veraval,  the respondent.  It is clear that in spite of  the police  authorities being aware that the said vehicles  were seized  from the respondent, his name having been  mentioned in  the said application, no notice was served upon  him  of the  said application which, as aforesaid, was made  on  the footing that the said vehicles were unclaimed property.  The only notice which was issued by the Magistrate was a  public notice  which  was ordered to be pasted at a  public  place. Clearly,  the respondent was right when he said that he  was not aware of the said proceedings or the order passed by the Magistrate  therein.   It  appears from the  Rojkam  of  the Magistrate’s court that on February 9 41

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5,  1952, the said vehicles were auctioned in the  condition in which they were and only Rs. 2,000 and odd were  realised from that auction. The trial court found that the customs officer was competent to  seize  the said vehicles on a suspicion  that  a  custom offence  tinder the said Act had been committed.   It  held, however, that after the Tribunal had set aside his order and directed  the return of the said property to the  respondent it  was the duty of the State Government to return the  said property and on failure to do so the respondent had a  cause of action and the suit was maintainable.  On these findings, the trial court passed a decree against the State Government for Rs. 26797/8/-.  The State Government thereupon filed  an appeal in the High Court of Bombay at Rajkot taking a number of  grounds in its memorandum of appeal.  In the  memorandum of  appeal  the  State  Government  inter  alia  raised  the following grounds :               "The learned Civil Judge ought to have decided               that  the  State is not liable  for  any  acts               tortious  or otherwise of its servants and  of               the customs or the police authorities". The  High Court held that no such plea having been taken  in its  written statement nor any issue having been  raised  in the  trial court, the State Government was not  entitled  to raise the contention for the first time in the appeal.   The High  Court  confirmed the said decree except for  a  slight reduction  in the decretal amount from Rs. 26797/8/- to  Rs. 25532/10/-.  The High Court found (1) that the said vehicles were  sold on February 5, 1952 while the appeal  before  the Revenue  Tribunal  was  still pending,  (2)  that  the  said vehicles  were  sold at the instance of the  police  officer under  s.  523  on  the footing  that  they  were  unclaimed property,  (3)  that  such an assumption was  wrong  as  the vehicles  were lying with the authorities while  the  appeal was  still  pending  and when the issue,  whether  the  said vehicles  were  liable  to  confiscation,  was  not  finally decided,  (4)  that the said vehicles could not be  sold  by auction because they were liable to be returned in the event of   the  Tribunal  holding  that  the  said   seizure   and confiscation  were illegal and directing the vehicles to  be returned  to  the owner.  The High Court hold (a)  that  the Junagadh  Customs  Act  which applied to  the  instant  case provided   an  appeal  against  an  order  of  seizure   and confiscation, (b) that there being a provision for appeal in the said Act there was a statutory duty on the State to  see that the property which was seized was kept intact till  the appeal  was  disposed  of, (c) that  there  was  an  implied obligation  to see that the said property was  not  tampered with during the pendency of the appeal in which the order of confiscation was under scrutiny, (d) that the breach of  the said  obligation gave a cause of action to  the  respondent, and (e) that 942 the cause of action on which the said suit was grounded  was the  respondent’s right to the return of the  said  property and that the relief claimed on that cause of action was  the return of the said property or in the alternative the  value thereof  and  not damages for any negligence either  of  the State  Government or of any of its servants.  It is  against this judgment and decree of the High Court that this  appeal by special leave is directed. It  is  clear that both the trial court and the  High  Court concurrently found that the said vehicles were-seized by the customs -authority, that between 1947 and October, 1951 when they  were  disposed off they were lying uncared for  in  an

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open  space, that they were disposed of at the  instance  of the  Police as unclaimed property, that when they were  sold most of the valuable parts were missing and lastly that they were sold while the appeal against the order of seizure  and confiscation was still pending.  Mr. Dhebar’s contention was that  since  they were seized by a  ,competent  officer  the seizure  was  lawful  and that the  utmost  that  ,could  be alleged  in  the  circumstances was that one  or  the  other servants  of the State Government was guilty of  negligence. Fe  ,contended that the State Government was not liable  for any tor-tious act of any of its servants. Before  we  proceed  to  consider  this  contention  it   is necessary to examine some of the provisions of the said  Act which  both  the  parties  conceded  was  the  relevant  law applicable  to  the present ,case.  Section  150  lays  down various offences under the Act and the respective  penalties therefor.  Clause (8) of s. 150 provides that- if any goods, the  importation  or exportation of which is  for  the  time being  prohibited  or restricted by or under Chapter  IV  of this  Act, be imported into or exported from  the  Junagadli ’State  contrary to such prohibition or restriction,  or  if any  attempt is made so to import or export any such  goods, or  if any such goods are found in any package  produced  to any  officer  of Customs as containing no such  goods  etc., such  goods shall be liable to confiscation and  any  person concerned  in any such offence shall be liable to a  penalty as  set  out  therein.  Section 160 provides  that  a  thing liable to confiscation under this Act may be seized in  ’any place by an officer of Customs or other person duly employed for the prevention of smuggling.  Section 163 provides  that when a thing is seized the officer making such seizure shall on  demand  of the person in charge of the goods  so  seized give  him  a statement in writing of the  reasons  for  such seizure.    Section   166  provides  for   adjudication   of confiscation  and  penalties.  Section 172 providas  for  an appeal  from  a subordinate Customs officer  to  the  -Chief Customs  authority  and S. 175 provides a  revision  by  the Ruler of the Junagadh State.  The power of revision under S. 175 includes the power to reverse or modify the decision or, order  in  the  exercise  of  His  Highness’s  extraordinary revisional jurisdiction. 943 It  would appear from these provisions that the  seizure  of the said vehicles was carried out with jurisdiction and -the order of confiscation was also made, apart from the question as to its merits, by a competent officer with  jurisdiction. It  is  also possible to contend that as the  said  vehicles were  sold pursuant to a judicial order no liability can  be attached  on  the  State Government for  their  disposal  by public  auction.  But between their seizure and the  auction there was a duty implicit from the provisions of the Act  to take  reasonable  care of the property seized.  This  is  so because  .the  order of confiscation was not final  and  was subject  to an appeal and a revision before the Home  Member and  later  on before the Revenue  Tribunal  after  Junagadh merged   in  the  State  of  Saurashtra  in  1948-49.    The appellant-State  was  aware that the order  of  seizure  and confiscation  was not final being subject to an  appeal  and was liable to be set aside either in appeal or in  revision. It was also aware that if the said order was set aside,  the property  would have to be returned to the owner thereof  in the  same state in which it was seized except as  to  normal depreciation.   In spite of this clear position,  while  the appeal  was  still pending before the Revenue  Tribunal  and without  waiting  for its disposal, it  allowed  its  police

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authorities  to have it disposed of as  unclaimed  property. The State Government was fully aware, firstly, by reason  of the  pendency  of  the  appeal  and  secondly  because   the application  under  s. 523 expressly mentioned  -the  person from  whom the said vehicles were seized, that the  vehicles were and could not be said to be unclaimed property.  In the circumstances, the State Government was during the  pendency of the appeal under a statutory duty to take reasonable care of the said vehicles which on the said appeal being  decided against it were liable to be returned to their owner. The  contention  that the order of disposal was  a  judicial order  or  that the respondent could have filed  a  revision application  against that order and have it set aside  would be  beside  the point.  There being a  statutory  obligation under  the  Act  to return the property once  the  order  of seizure   and  confiscation  was  held  to  be  wrong,   the respondent  could  rely  on that obligation  and  claim  the return  of the said vehicles.  On behalf of the  respondent, the  contention urged was that though the seizure  might  be lawful  and  under the authority of the Statute,  the  State Government was from the time that the said goods were seized until the decision of the appeal, in a position of a  bailee and  was,  therefore, bound to take reasonable care  of  the said  vehicles.  That no such reasonable care was taken  and the vehicles remained totally uncared for is not in dispute. Mr.  Dhebar’s reply was that there was no bailment  nor  can such  bailment  be inferred as s. 148 of  the  Contract  Act requires  that  a bailment can arise only under  a  contract between  the parties.  That contention is  not  sustainable. Bailment is dealt with by the Contract Act only 944 in  cases  where  it arises from a contract but  it  is  not correct  to say that there cannot be a bailment  without  an enforceable  contract.   As  stated in  "Possession  in  the Common Law" by Pollock and Wright, p. 163, "Upon the  whole, it  is  conceived  that  in general  any  person  is  to  be considered  as  a  bailee who otherwise than  as  a  servant either  receives  possession  of a  thing  from  another  or consents  to  receive  or hold possession  of  a  thing  for another  upon an understanding with the other person  either to  keep and return or deliver to him the specific thing  or to  (convey and) apply the specific thing according  to  the directions  antecedent  or  future  of  the  other  person". ’Bailment  is  a relationship sui generis and unless  it  is sought to increase or diminish the burdens imposed upon  the bailee by the very fact of the bailment, it is not necessary to  incorporate it into the law of contract and to  prove  a consideration"(1). There can, therefore, be bailment and the relationship of  a bailee  in respect of specific property without there  being an  enforceable contract.  Nor is consent indispensable  for such a relationship to arise.  A finder of goods of  another has been held to be a bailee in certain circumstances. On  the facts of the present case, the State  Government  no doubt  seized the said vehicles pursuant to the power  under the Customs Act.  But the power to seize and confiscate  was dependent upon a customs offence having been committed or  a suspicion  that such offence had been committed.  The  order of the Customs Officer was not final as it was subject to an appeal  and if the appellate authority found that there  was no good ground for the exercise of that power, ’the property could  no  longer be retained and had under the  Act  to  be returned  to  the owner.  That being the  position  and  the property  being liable to be returned there was not  only  a statutory  obligation  to  return but  until  the  order  of

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confiscation became final an implied obligation to  preserve the  property intact and for that purpose to take such  care of  it  as  a reasonable person  in  like  circumstances  is expected to take.   Just  as  a finder of  property  has  to return it when its owner is   found  and demands it, so  the State Government was bound to return the said vehicles  once it  was  found that the seizure and  confiscation  were  not sustainable.   There  being  thus  a  legal  obligation   to preserve the property intact and also the obligation to take reasonable  care  of it so as to enable  the  Government  to return it in the same condition in which it was seized,  the position  of  the State Government until  the  order  became final  would  be that of a bailee.  If that is  the  correct position  once the Revenue Tribunal set aside the  order  of the  Customs  Officer and the Government  became  liable  to return the goods the owner (1)  "Law of constract "by Chesire and Fi foot,pp./73,74. 94 5 had  the right either to demand the property seized  or  its value,  if,  in  the  meantime  the  State  Government   had precluded  itself from returning the property either by  its own  act  or  that  of its agents  or  servants.   This  was precisely the cause of action on which the respondent’s suit was  grounded.  The fact that an order for its disposal  was passed by a Magistrate would not in an-,, way interfere with or wipe away the right of the owner to demand the return  of the  property or the obligation of the Government to  return it.   The order of disposal in any event was obtained  on  a false representation that the property was an unclaimed pro- perty.   Even if the Government cannot be said to be in  the position of a bailee, it was in any case bound to return the said  property by reason of its statutory obligation  or  to pay  its value if it had disabled itself from  returning  it either  by  its  own act or by any act  of  its  agents  and servants.   In  these  circumstances,  it  is  difficult  to apperciate  how the contention that the State Government  is not liable for any tortious act of its servants can possibly arise.   The decisions in State of Rajasthan v. Mst.   Vidh- yawati(l)  and  Kasturilal Jain v. The State of  U.P.(2)  to which -,Mr.  Dhebar drew our attention have no relevance  in view of the pleadings of the parties and the cause of action on which the respondent’s suit was based. In  our  view, the High Court was right  in  conferming  the decree passed by the trial court on the basis that there was an  obligation on the State Government either to return  the said vehicles or in the alternative to pay their value. The appeal is dismissed with costs. G.C.                                Appeal dismissed. ( 1) [1962] Suppl. 2 S.C.R. 989. (2)  [1965] 1 S.C.R. 375. 946