http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: TRIVENI PRASAD RAMKARAN VERMA

       Vs.

RESPONDENT: THE STATE OF MAHARASHTRA

DATE OF JUDGMENT07/09/1976

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. FAZALALI, SYED MURTAZA

CITATION:  1976 AIR 2156            1977 SCR  (1) 519  1977 SCC  (1) 114

ACT:         Gold  Control  Rules, 1963, whether includes  smuggled  gold         within their ambit.

HEADNOTE:         The appellant was found carrying smuggled gold with  foreign         markings, concealed on his person.  He was convicted by  the         Presidency Magistrate under Section 135(b) read with Section         135(ii) of the Customs Act, 1962, and Rule 126H (2)(d)  read         with  Rule. 126 P(2)(iv) of the. Gold Control  Rules,  1965.         The  High Court upheld the convictions.  The appellant  con-         tended that the gold, allegedly recovered from him was smug-         gled gold, and hence not covered by the Gold Control  Rules,         1963.         Dismissing the appeal the Court.         HELD:   The  Gold Control Rules, 1963, seek to  control  and         regulate  dealings  in gold,  and are  applicable  alike  to         smuggled gold as to non-smuggled gold, and the inhibition of         Rule  126  H(2)(d) that no person  other  than   a  licensed         dealer  shall  acquire  gold except in  accordancee  with  a         permit or authorisation granted by the Administrator, is not         confined  in its operation to nonsmuggled gold  but  applies         equally  in relation to smuggled gold.  The object and  pur-         pose of the restrictions imposed by the Gold Control  Rules,         1963, would be  frustrated  by  excluding  from  their         abmit  and  coverage,  smuggled gold.  [523 A-D; 524 B-C]          Aravinda Mohan Sinha v. Prohlad Chand Samenta AIR 1970  Cal         437 over- ruled.

JUDGMENT:          CRIMINAL   APPELLATE JURISDICTION: Criminal Appeal No.  264         of 1971             (Appeal  by  Special Leave from the Judgment  and  Order         dated 19/20th August, 1971 of the Bombay High Court in Cr.A.         No. 650 of 1970 with Crl. Rev. No. 886/70).                  B.R. Agarwala and P.B. Agarwal, for the appellant.                  H.R. Khanna and M.N. Shroff, for the respondent.                  The Judgment of the Court was delivered by            BHAGWATI, J.--The appellant was tried before the   Presi-         dency  Magistrate, 25th Court, Mazgaon, Bombay  for  offence

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

       under  clauses (a) and (b) of section 135 read with  section         135(ii)  of the Customs Act, 1962 and Rule  126H(2)(d)  read         with  Rule 126P(2)(iv) of the Gold Control Rules  1963.  The         prosecution  case  against  the appellant was  that  on  7th         September, 1965 about 3.45 p.m.  Inspector Tilwe, who was at         the material time Senior Grade Inspector of Customs attached         to Gold Circle, Central Excise, Bombay, received information         that two persons would be coming down from a building  known         as Hira Mahal, situated at Kalbadevi Road, and they will  be         carrying  gold in the handle, of a cane basket and  also  in         their shoes 17--1104SC1176         520         Inspector  Tilwe, on receipt of this information,  sent  for         Inspector  Nichani and both of them kept guard outside  Hira         Mahal  building from about 8.00 p.m. Around 8.45  p.m.,  the         appellant accompanied by his material uncle’s son Dwarkapra-         sad, his son Dalip aged 9 years and his servant by the  name         of Mahadev, came out of Hira Mahal building.  The  appellant         was  carrying a basket in his hand and after coming  out  of         the  building, the appellant and his companions got  into  a         Victoria  and proceeded towards Victoria  Terminus  Station.         Inspector Tilwe and Inspector Nichani followed these persons         and when the appellant and his companions got down from  the         Victoria and entered the platform, Inspector Tilwe  accosted         them  and took them to  the office of the Assistant  Station         Master  and  searched them there in the  presence  of  three         panchas.   Two  of the panchas were  selected  by  Inspector         Tilwe  while  the third volunteered to act  as  Pancha.   On         taking  search,  it  was found that the shoes  worn  by  the         appellant  and Dwarkaprasad had specially made cavities  and         four  gold biscuits with foreign markings were found in  the         shoes  of each of these two persons.  The basket carried  by         the appellant also contained 27  gold biscuits with  foreign         markings concealed in the handle which was made of brass and         which had a specially made cavity in it for concealing  gold         biscuits.  While the search was going on, one Ticket Collec-         tor called Tharandas Bhatia arrived on the scene and he also         witnessed  the  search.   Inspector Tilwe  seized  the  gold         biscuits which  were recovered from the appeIIant and  Dwar-         kaprasad,  in the reasonable belief that they were  smuggled         and  hence liable to confiscation under section 111  of  the         Customs Act, 1962.  This search and seizure was recorded  in         a  Panchanama Ex. X, which was witnessed by the  three  pan-         chas.   Inspector Tilwe also seized from the  appellant  two         first  class Railway Tickets for the journey from Bombay  to         Kanpur, one Reservation Card and two Platform Tickets and so         also  were  the basket and the shoes seized under  the  same         Panchanama   Ex.X. Inspector Tilwe then took  the  appellant         and Dwarkaprasad to  the Central Excise Office and  recorded         their statements in the presence of Inspector Nichani  under         section  107 of the Customs Act, 1962. The statement of  the         appellant which is marked Ex. W was written  by Dwarkaprasad         in  Hindi  and was signed by the appellant.   The  appellant         admitted  in  his statement that he  was  carrying  smuggled         gold  concealed in the handle of the basket and  shoes   for         being  handed over to a firm called M/s Pannalal Durgaprasad         at Kanpur and that he had been doing this work for the  last         six  months  ever  since  his business as  a  goldsmith  was         closed  down.  Another statement of the appellant  was  also         subsequently  recorded by Inspector Tilwe on 22nd  November,         1966  at  the shop of the appellant and this  statement  was         written  by one MaganIal, an employee of the  appellant,  in         Gujarati  and was signed by the appellant.  Both the  appel-         lant  and  Dwarkaprasad were thereafter prosecuted  for  of-         fences  under clauses (1) and (b) of section 135  read  with

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

       section   135(ii)  of  the   Customs  Act,  1962,  and  Rule         126H(2)(d)  read with Rule 126P(2)(iv) of the  Gold  Control         Rules,  1963.  Dwarkaprasad pleaded  guilty to   the  charge         and  was convicted and we are not concerned in  this  appeal         with the conviction and sentence recorded against him.   The         appel-         521         lant  denied  the charge and hence he was tried  before  the         leraned  Presidency  Magistrate.  The only evidence  led  on         behalf of  the prosecution against the appellant was that of         Inspector  Tilwe  and Tharandas Bhatia.  None of the panchas         was  examined as a witness to prove the search and  seizure.         The  learned Presidency Magistrate observed that in view  of         the fact that Tharandas Bhatia had not signed the Panchanama         Ex.X  nor  his statement had been recorded by   the  Customs         Authorities or the Railway Police, and his name had also not         been  shown as a witness in the complaint, it would  not  be         desirable  to  rely on his evidence against  the  appellant.         But the learned Presidency Magistrate found the evidence  of         Inspector  Tilwe  satisfactory  and convincing  and  on  the         strength of this evidence, he held the charge proved against         the  appellant and convicted. the appellant of  the  offence         under clause (b) of section 135 read with section 135(ii) of         the  Customs Act, 1962 and Rule 126H(2)(d) read  with   Rule         126P(2)  (iv) of the Gold Control Rules, 1963 and  sentenced         him  to suffer rigorous imprisonment for two months  and  to         pay  a  fine of Rs. 500/- or in default to  suffer  rigorous         imprisonment for two months for each of these two  offences.         Since  there  was  no evidence to show  that  the  appellant         himself  had  smuggled the seized gold into  India,  he  was         acquitted of the charge under clause (a) of section 135 read         with section 135(ii) of the Customs Act, 1962.             The  appellant preferred an appeal against his   convic-         tion   and sentence but the High Court agreed with the  view         taken by the learned Presidency Magistrate and dismissed the         appeal  of   the  appellant. Hence the present  appeal  with         special leave obtained from this Court.         It is true that the conviction of the appellant rests solely         on  the evidence of Inspector Tilwe.  There were three  pan-         chas who witnessed the Panchanama Ex. X regarding search and         seizure of gold from the appellant but unfortunately none of         the three panchas could be examined, as they were not trace-         able  in spite of efforts made by the prosecution.   Two  of         the  panchas undoubtedly remained present in the  course  of         the adjudication proceedings but that was in December  1967.         The trial before the learned Presidency Magistrate commenced         in April 1969 and evidence was given by Inspector Tilwe   in         December  1969  and at that time none of the  three  panchas         could  be traced and brought for the purpose of giving  evi-         dence.  The statement of Inspector Tilwe that "all the three         panchas  are now  not traceable in spite of  great  efforts"         was not challenged in cross-examination and we must,  there-         fore,  proceed on the basis that none of the  three  panchas         was available and if that be so, no adverse inference can be         drawn against the prosecution for not examining any of   the         three  panchas.  Tharandas Bhatia was no doubt examined  but         the  learned Presidency Magistrate preferred not to rely  on         his  evidence and we think, he was right in doing  so.   In-         spector  Nichani could, of course, have been examined  as  a         witness,  since  he was present at the time  of  search  and         seizure, but his non-examination cannot help  the appellant,         since  he was also an Inspector in. the  Customs  Department         like Inspector Tilwe and once Inspector Tilwe gave evidence,         it  would not have added to the weight of  prosecution  evi-         dence by also examin

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

       522         ing  him.  The prosecution case against the appellant  must,         therefore,  in  the ultimate analysis stand or fall  by  the         evidence   of   Inspector  Tilwe.   The  learned  Presidency         Magistrate  as well as the High Court accepted the  evidence         of Inspector Tilwe and we do not see any reason to interfere         with  the  concurrent view taken by both  these  courts   as         regards  the appreciation of his evidence.  It was  not  the         case  of the appellant that he and Dwarkaprasad  along  with         Dalip  and Mahadev did not proceed from Hira Mahal  building         to Victoria Terminus or that they were not taken by  Inspec-         tor Tilwe to the office of the Assistant Station Master  for         purpose of search or that gold was not found as a result  of         the  search,  but his defence was that the seized  gold  was         found  from Dwarkaprasad and not from him and that both  the         basket  and  the shoes belonged to Dwarkaprasad and  he  had         nothing  to  do with the same.  Now, it is difficult to  see         why  Inspector  Tilwe  should have  falsely  implicated  the         appellant  if, in fact, the seized gold was found only  from         the person of Dwarkaprasad and the appellant was  completely         innocent.   It  may also be noticed that the  case  of   the         appellant  was that Mahadev was the servant of  Dwarkaprasad         and it was Dwarkaprasad who was going from Bombay to  Kanpur         along  with his servant Mahadev and the two Railway  Tickets         from  Bombay to Kanpur were meant for Dwarkaprasad.  But  it         is  difficult  to understand why in that event there  should         have  been two first  class Railway Tickets.  Mahadev  could         not  possibly  be travelling by first class along  with  his         master.   The fact that there were two first  class  Railway         Tickets shows that the appellant and Dwarkaprasad were going         to  travel from Bombay to Kanpur.  This is also.  borne  out         from the statement Ex. H given by the appellant to Inspector         Tilwe.  The appellant tried to wriggle out of the  statement         Ex. H by showing that it was taken from him under threat and         was  not  a voluntary statement containing the  true  facts.         But  it is evident from the contents of the statement Ex.  H         that  it is a genuine document.  There  are several  details         in the statement Ex. H which could never have been  dictated         by  Inspector  Tilwe.   There is inherent  evidence  in  the         contents  of the statement Ex. H showing that the  statement         is  true.  It was admitted in the statement Ex. H, that  the         appellant  was  carrying gold from Bombay  to  M/s  Pannalal         Durgaprasad at Kanpur and this statement is clearly support-         ed  by the seizure of two First Class Railway  Tickets  from         Bombay  to  Kanpur.  It is true that  the  reservation  card         seized at the time of search did not show in whose name  the         reservations were made and it would have been better, if the         prosecution had summoned the railway authorities to  produce         the Reservation Chart of the train for the purpose of  show-         ing in whose name the reservations were made.  But even  so,         the  fact  that the reservation card  was  seized  from  the         appellant  shows  that  the appellant  was  travelling  from         Bombay  to  Kanpur.  We do not see any  cogent  reasons  for         taking a different view from that taken concurrently by  the         learned  Presidency Magistrate and the High Court in  regard         to  the evidence of Inspector Tilwe and we think  this  evi-         dence  is sufficient to found the conviction of  the  appel-         lant.             The  appellant,  however, contended that even if  it  be         held  that gold was found from the person of the  appellant,         as alleged by the         523         prosecution,  it was smuggled gold and hence not covered  by         the  Gold Control Rules, 1963 and, in the circumstances,  no         offence  under  Rule 126H(2)(d) read with  Rule  126P(2)(iv)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

       could  be  said to have been committed by the  appellant  in         acquiring such gold.  The argument of the appellant was that         the Gold Control Rules, 1963 apply only in relation to  what         may  be called legal gold or non-smuggled gold and  smuggled         gold is outside their scope and ambit and hence  acquisition         of  smuggled gold would not constitute an offence under  the         Gold  Control Rules, 1963.  This is an argument  of  despair         and cannot be sustained even for a moment.  Rule  126H(2)(d)         provides,  inter alia, that no person other than a  licensed         dealer  shall  buy or otherwise acquire or agree to  buy  or         acquire gold, not being ornaments, except in accordance with         a permit granted by the Administrator or in accordance  with         such  authoriation  as the Administrator may  make  in  this         behalf.   The  word ’gold’ is defined in clause (c)  of  the         Explanation to Rule 126A to mean gold, including its  alloy,         whether  virgin, melted, remelted, wrought or unwrought,  in         any shape  or form, of a purity of not less than nine carats         and include any gold coin (whether legal tender or not), any         ornament and  any  other article of gold".  This  definition         does not restrict the meaning of the word ’gold’ to legal or         non-smuggled gold.  It is wide enough to include any kind of         gold, whether smuggled or  non-smuggled.   The  restrictions         imposed by the Gold Control Rules, 1963 could not have  been         intended  merely  to apply to legal gold.   The  object  and         purpose of the restrictions. would be frustrated by  exclud-         ing  from their ambit and coverage smuggled gold.  The  Gold         Control Rules, 1963 seek to control and regulate dealings in         gold  and  ’gold’  within the meaning of  these  rules  must         include  not only non-smuggled gold but also smuggled  gold,         We  fail to see on what principle of construction can  smug-         gled gold. which is ’gold’ within the meaning of the defini-         tion, be excluded from the operation of these Rules.   There         is  no scope for inferring any such exclusion nor  is  there         anything in the Rules which supports such exclusion.   Take,         for example, Rule 126 B which says that  a dealer shall  not         make or manufacture any article of gold other than ornament.         Can  it  be suggested for a moment that this Rule  does  not         prohibit a dealer from making or manufacturing articles  out         of  smuggled  gold?   Then again, look at Rule  126  C.   It         provides, inter alia, that no dealer shall make, manufacture         or  prepare any ornament having gold of a  purity  exceeding         fourteen carats.  Can a dealer make an ornament of  smuggled         gold having purity exceeding fourteen carats without commit-         ting a breach of this Rule?  Rule 126-1 provides that  every         person  shall make a declaration to the Administrator as  to         the  quantity, description and other prescribed  particulars         of  gold owned by him.  How can a person, who  has  smuggled         gold,  say that he is not bound to make a declaration  under         this  Rule?  The object of requiring a declaration  is  that         the  Government  should know what is the gold  possessed  by         each person, so that dealings in gold can be controlled  and         regulated and this object would be thwarted if smuggled were         not subject to the requirement of declaration.  Then consid-         er  Rule 126 D which says that no person shall make  advance         or grant any loan to any other person on the  hypothecation,         pledge, mortgage or charge of any gold other than  ornament,         unless such gold         524         has  been included in a declaration.  If smuggled gold  were         outside the scope of this rule, it would be open to a person         to  advance moneys on the security of smuggled gold  without         involving any violation of this rule.  That surely could not         have been the intention of the Government in making the Gold         Control Rules, 1963.  We are aware that there is a  decision         of the Calcutta High Court in Aravinda Mohan Sinha v.  Proh-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

       lad  Chand Samenta(1) where a Division Bench has  taken  the         view  that "declaration under Rule 126. P is in  respect  of         legal  gold as opposed to smuggled gold and no  question  of         declaration in respect of smuggled gold can arise under Gold         Control  Rules,  1963," but we do not  think  this  decision         represents  the  correct law on the point.   We are  of  the         view  that the Gold Control Rules 1963 are applicable  alike         to smuggled gold as to non-smuggled gold, and the inhibition         of  Rule  126H(2) (d) that no person other than  a  licensed         dealer shall acquire gold except in accordance with a permit         or  authorisation granted  by the Administrator is not  con-         fined  in  its operation to non-smuggled  gold  but  applies         equally in relation to smuggled gold.  The learned Presiden-         cy  Magistrate and the High Court were, therefore, right  in         convicting  the appellant under Rule 126 H(2)(d)  read  with         Rule 126 P(2) (iv) of the Gold Control Rules, 1963.             Since  the appellant is convicted of the  offence  under         Rule  126P  (2) (iv) of the Gold Control  Rules,  1963,  the         sentence of imprisonment to be imposed on him cannot be less         than .six months and  the High Court was right in  enhancing         the sentence to six months imprisonment.  But so far as  the         sentence  of  fine is concerned, we do not  think  that  the         facts and circumstances of the case justify a heavy fine  of         Rs.  3,000/-  for  each of the two offences  for  which  the         appellant  is convicted.  It appears from the  statement  of         the  appellant Ex. H that he was a carrier of gold  for  M/s         Pannalal  Durgaprasad  of Kanpur and the purchase  price  of         Gold was provided substantially by this Kanpur firm and  the         appellant was merely to receive some commission.  The appel-         lant was a goldsmith who had lost his  business for the last         six months and perhaps economic necessity drove him to carry         on  this nefarious activity.  The sentence  of  imprisonment         which has been imposed on the appellant would be  sufficient         deterrent  to him and many others who indulge in this  anti-         social  activity which is calculated to disrupt the  economy         of  the  country.  We feel that  in the  circumstances,  the         ends  of  justice would be met if the sentence  of  fine  is         reduced  from Rs. 3,000/- to Rs. 500/- for each of the   two         offences.             We  accordingly confirm the conviction of the  appellant         as  also  the sentence of imprisonment imposed  on  him  but         reduce  the sentence of fine from Rs. 3,000/- to  Rs.  500/-         for  each  of the two offences for which  the  appellant  is         convicted  with  a direction that in default of  payment  of         fine, the appellant will suffer rigorous imprisonment for  a         period of two months.  The appeal is allowed to this limited         extent.         M.R.                                 Appeal partly allowed.         (1) A.I.R. 1970 Cal 437         525