Gujarat High Court
G.S.Thakur vs State Of Gujarat & on 19 September, 2017
Author: A.Y. Kogje
Bench: A.Y. Kogje
R/CR.MA/21674/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR CANCELLATION OF BAIL) NO.
21674 of 2017
With
SPECIAL CRIMINAL APPLICATION NO. 4824 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.Y. KOGJE Sd/-
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1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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G.S.THAKUR....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
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Appearance - Criminal Misc.Application No.21674 of 2017:-
MR DEVANG VYAS, ADVOCATE for the Applicant(s) No. 1
MR P P MAJMUDAR, ADVOCATE for the Respondent(s) No. 2
MR. VIPUL B SUNDESHA, ADVOCATE for the Respondent(s) No. 2
MS NIYATI B KATIRA, ADVOCATE for the Respondent(s) No. 2
MR HK PATEL, APP for the Respondent(s) No. 1
Appearance - Special Criminal Application No.4824 of 2017:-
MS NIYATI B KATIRA, ADVOCATE for the Applicant(s) No. 1
MR P P MAJMUDAR, ADVOCATE for the Applicant(s) No. 1
MR HK PATEL, APP for the Respondent(s) No. 1
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MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 19/09/2017
ORAL JUDGMENT
1. RULE. Learned APP Mr.H.K.Patel waives service of Rule on behalf of respondent No.1-State and learned Advocate Vipul Sundesha waives service of Rule on behalf of respondent No.2.
2. Special Criminal Application No.4824 of 2017 is filed under Article 227 of the Constitution of India, Sections 439(1)(a) and 482 of the Criminal Procedure Code for deletion /modification of conditions of order dated 19.02.2016 passed by the Additional Sessions Judge, City Sessions Court No.22, Ahmedabad in Criminal Misc.Application No.623 of 2016. Criminal Misc.Application No.21674 of 2017 is filed challenging order dated 10.03.2017 passed by Additional Sessions Judge, City Sessions Court No.15, Ahmedabad in Criminal Misc.Application No.3525 of 2016 as well as order dated 19.02.2016 passed by the Additional Sessions Judge, City Sessions Court No.22, Ahmedabad in Criminal Misc.Application No.623 of 2016.
2.1 Special Criminal Application No.4824 of 2017 is
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filed by a private individual (hereinafter to be referred as "the petitioner"), who was enlarged on regular bail by order dated 19.02.2016 in Criminal Misc.Application No.623 of 2016. The petitioner was enlarged on regular bail in connection with the proceedings initiated against the petitioner by DRI authorities. Criminal Misc.Application No.21674 of 2017 is filed by the DRI, Zonal Unit of the Government of India (hereinafter to be referred as "the Department") seeking cancellation of bail granted to the petitioner under the aforementioned order.
2.2 Therefore, essentially, both these petitions are directed against the very same order granting bail and thereafter, respective applications filed by the petitioner as well as the Department, which came to be rejected by the Sessions Court.
2.3 In view of the aforesaid facts, both these matters are taken up for joint hearing with the consent of the learned Advocates for the parties.
3. The facts in brief are that the Department, in connection with offence punishable under Section 135 of the Customs Act, effected arrest on 04.02.2016 and produced the petitioner before the Metropolitan Magistrate on 05.02.2016 with the allegation that the Page 3 of 36 HC-NIC Page 3 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT petitioner was in control and managing day-to-day affairs of one Private Limited Company, viz. PNP Polymers Pvt. Ltd. And PNP Polytex Pvt. Ltd. and it was found that he had submitted under-valued goods invoices to the Customs Department, thereby evading customs duty. The other allegation is that he has imported goods, for which he had submitted over-valued invoices to get the benefit of Anti Dumping Rules. The petitioner thereafter preferred application for regular bail and by order dated 19.02.2016, the petitioner was enlarged on conditional bail.
3.1 The petitioner filed Criminal Misc.Application No.2195 of 2017 before the Sessions Court for modifying /deleting conditions, particularly Condition Nos.2, 3, 6 and 11 and for permanent release of passport and permitting the petitioner to travel out of India as the petitioner is permanent resident of Taiwan and having status of Non-resident of India. This application for modification /deletion was not entertained by the Sessions Court and by order dated 26.05.2017, the same came to be rejected. This order is subject matter of challenge by the petitioner.
3.2 On the other hand, the Department preferred Criminal Misc.Application No.3525 of 2016 praying for cancellation of bail on the ground that the petitioner Page 4 of 36 HC-NIC Page 4 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT has committed breach of condition of bail by not cooperating with the on going investigation. This application was also rejected by order dated 10.03.2017. 3.3 It is the case of the Department that the petitioner had well-planned the entire modus with full knowledge of the fact that the modus adopted by the petitioner amounts to offence and loss of revenue to the Department. Out of his own company, the petitioner presented two different sets of documents before the Customs authorities as well as Banks for import of polyester fabric, the differential amount was not sent through Bank, but was sent through some other mode like "Hawala" channel or other non-banking channel. During investigation, upon questioning, the petitioner did not reveal information like e-mail ID through which the business transactions were being carried and when confronted with the documents of his own company showing manipulation of transaction values submitted to the Customs authority and the Bank, no logical explanations were offered. Despite the objection on the ground that that the investigation is at a crucial stage and that presence of the petitioner would be required continuously as the offence involves complex business transactions at international level involving petitioner owned companies located in Taiwan and Hong Kong, special knowledge of Page 5 of 36 HC-NIC Page 5 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT which is only with the petitioner, the Sessions Court granted regular bail by directing furnishing of guarantee of Rs.4.5 crores to the Customs Department and the condition that the petitioner shall not leave territory of Gujarat State till completion of investigation, deposit passport, cooperate fully with the IO and not leave the territory of India without prior permission of the Sessions Court, even after completion of investigation and marking presence on any day of 1st week of each English calender month for a period of 1 year. The Department has sought for cancellation of bail on the ground that the petitioner had committed breach of condition No.11 by not marking presence in the 1 st week of August. He has committed breach of condition No.4 and has not fully cooperated with the Investigating Officer and though summoned under Section 108 of the Customs Act to remain present on 20.07.2016 along with documents specified in the summons, the petitioner did not supply the necessary information /documents and instead, by letter dated 20.07.2016, denied supplying of the information sought specifically on several grounds. 3.4 The application of the Department came to be rejected by order dated 10.03.2017 mainly on the ground of mis-interpreting provisions of Section 108 of the Act and concluding that the petitioner was not required to Page 6 of 36 HC-NIC Page 6 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT produce documents which would incriminate him as the petitioner is protected under the guarantees of Article 20(3) of the Constitution of India.
4. Learned ASG for the Department submitted that as a matter of fact, the information sought for from the petitioner was categorically mentioned in the summons. Under the conditional order of bail, the petitioner was required to supply documents. The documents were pertaining to the companies situated in Taiwan /Hong Kong and the Department had reasons to believe that such companies of the petitioner are shadow companies, fully owned and in control of the petitioner and these entities were being used to facilitate the petitioner in evading of duty and /or taking advantage of Anti-dumping laws in India.
4.1 It is submitted that when the information was called for, the reply given by the petitioner is that such information is not relevant to the investigation. He took this Court through the reply dated 20.07.2016 to emphasis the attitude of the petitioner towards investigation that too when the petitioner was under
obligation of the Court's order to cooperate fully.
4.2 It is submitted that the Sessions Judge has misinterpreted the judgment of the Apex Court in case of Page 7 of 36 HC-NIC Page 7 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT State of Bombay Vs. Kathi Kalu Oghad, reported in AIR 1961 SC, 1808. It is submitted that in past also, the petitioner had indulged in this kind of activity. It has come on record of investigation that AFCO Asia Ltd. of Taiwan is owned by the petitioner and invoices were issued of manipulated value to an Indian importer, viz.
High Tech Group of companies. During the course of investigation, from the statements of concerned, it has come on record that the petitioner had indulged in creating manipulated documents of huge value for being presented before the Customs authorities. There was gross mis-declaration of value in the documents which were fabricated by the petitioner from AFCO Asia Ltd. in the name of M/s.High Tech Garments Pvt. Ltd., Surat, M/s.High Tech Fablon Pvt. Ltd., Surat, M/s.High Tech Filatex Pvt. Ltd., Surat and M/s.High Tech Texolene Pvt. Ltd., Surat, etc. 4.3 Learned ASG for the Department took this Court through the papers of investigation to submit that the Department is having sufficient documents to establish that AFCO Asia Ltd. is a company with 100% shareholding of the petitioner and his wife. He also drew attention to the statements of the petitioner recorded at various stages of investigation to demonstrate that the petitioner was deliberately and willfully giving Page 8 of 36 HC-NIC Page 8 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT misleading statements to throw the investigation off the track. The Department also had on record various documents in the form of invoices, insurance certificates, parallel set of invoices presented before the Customs authorities and the Bank authorities and when the Department wanted to comprehend the documents and the import taken place, at that stage, the petitioner has denied to supply the documents or cooperate with the investigation.
4.4 Learned ASG for the Department has relied upon judgment of the Andhra Pradesh High Court in case of Dalmia Cement (Bharat) Limited & Anr. Vs. Assistant Director of Enforcement Directorate & Anr. in Writ Petition No.36838 of 2014 and allied matters, decided on 29.02.2016 and submitted that while considering the paramateria provisions of PMLA to Section 108 of the Customs Act, Section 104 of the Customs Act provides for arrest. At that stage, the person arrested is not an accused person, but is arrested in the aid of the proceedings to be undertaken under the provisions of the Customs Act. It is at the stage when the investigation is completed and depending upon the evidence available on record, when the Department files complaint before the concerned Court, it is stated that the person thus arrested would be termed as an accused and it is only the Page 9 of 36 HC-NIC Page 9 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT stage subsequent thereto, the protection of Article 20(3) of the Constitution would come in picture. It is submitted that in the instant case, the investigation is still going on and upon conclusion of the investigation only, the Department would file a complaint as contemplated under Section 200 of the Criminal Procedure Code and therefore, till such time, the petitioner cannot claim protection under Article 20(3) of the Constitution and hence, interpretation given by the Sessions Court, in the facts of this case, to hold that under Section 108 of the Customs Act, the petitioner is not required to supply documents, which in the opinion of the petitioner would be self-incriminating in nature, is erroneous. 4.5 It is submitted that in several judgments discussed by the Andhra Pradesh High Court in the aforementioned judgment, similar view is adopted, including in case of Ramesh Chandra Mehta Vs. The State of West Bengal, reported in AIR 1970, SC, 940.
5. As against this, learned Advocate for the petitioner contended that the petitioner has given Bank Guarantee of Rs.4.5 crores to secure claim of the Department. It is submitted that the petitioner has fully cooperated as per the conditions of bail. It is submitted that the Investigator has called upon the petitioner to furnish such details which are not within Page 10 of 36 HC-NIC Page 10 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT the control of the petitioner. It is submitted that the documents sought to be produced are thoroughly irrelevant for the purpose of investigation. It is submitted that the Investigator has other options if at all the Investigator needs details called for under the summons from the company by issuing summons to the respective persons of that company, viz. AFCO Asis Ltd., which is a separate entity. It is submitted that by calling upon the details of AFCO Asia Ltd., the Investigator merely wants to harass the petitioner by calling for irrelevant documents.
5.1 It is submitted that the Investigator is bound to restrict his investigation only to the transactions which are forming part of investigation. The companies of the petitioner which are situated in Taiwan, are having worldwide business and transaction of the companies having worldwide business will be of no consequence for the transactions which are under scrutiny. It is submitted that the transaction under investigation has nothing to do with AFCO Asia Ltd., details of which are sought under summons. 5.2 It is submitted that considering the fact that the petitioner was arrested by issuing of arrest memo, the grounds of arrest were also provided to the petitioner, the petitioner was produced before the Court Page 11 of 36 HC-NIC Page 11 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT of Magistrate following Section 167 of the Criminal Procedure Code and the petitioner was enlarged on regular bail by invoking Section 439 of the Criminal Procedure Code, all this goes to mean that for all practical purposes, the petitioner was treated as an accused. Even in the pleadings at various stages before the Magistrate Court, the petitioner has been addressed as accused and once the Department has treated the petitioner as an accused the petitioner cannot be called upon to furnish documents or make statements which would be self- incriminating. Such exercise is clearly prohibited and hit by Article 20(3) of the Constitution of India. 5.3 It is further submitted that languages of Section 91 of the Criminal Procedure Code and Section 108 of the Customs Act are identically and they would operate in identically to different sets of circumstances. So, if an accused cannot be compelled under Section 91 of the Criminal Procedure Code to produce evidence against himself, similar analogy should be applied to when the petitioner is treated as an accused and is investigated under Section 108 of the Customs Act.
5.4 It is further submitted that Section 108 itself provides for the consequences in case a person under investigation does not comply with the requirement of Section 108. Therefore, it was for the Department to Page 12 of 36 HC-NIC Page 12 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT initiate proceedings as provided for and cancellation of bail is not the option available with the Department when the petitioner had cooperated with the investigation to the extent permissible under the law.
5.5 It is further submitted that the action of the Department is not bonafide. If the Department was really keen in calling upon the details, it was open for the Department to issue summons or notice to the foreign company calling upon it to supply the details. It is submitted that the action of the Department to file an application for cancellation of bail after almost 6 months from the date of order of bail and that too when the petitioner filed an application for modification of conditions, is indicative of the attitude of the Investigating Officer towards the petitioner. 5.6 It is submitted that the Investigating Officer has travelled beyond the scope of investigation. It is submitted that even as per the international convention, the Customs Mutual Administrative Assistance agreement entered into by India with Hong Kong restricts scope of cooperation to the exchange of information enabling detection of false declaration of value, description or origin of goods providing information of diversion of goods, authentication of documents, maintaining surveillance over suspected goods, persons or amounts of Page 13 of 36 HC-NIC Page 13 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT transaction, etc. This does not include any information regarding under-valuation or over-valuation of goods. 5.7 Learned Advocate for the petitioner relied upon judgment of the Madras High Court in case of A.T.Maideen Vs. The Senior Intelligent Officer, Directorate of Revenue Intelligence, Delhi Zonal Unit, New Delhi, reported in MANUPATRA/TN/0561/2012, to contend that the Department can issue summons upon the petitioner under Section 108 of the Customs Act and to conduct an inquiry, however, without infringement of Article 20(3) of the Constitution of India. Learned Advocate for the petitioner also relied upon judgment of the Allahabad High Court in case of Hindustan Safety Glass Works Ltd. Vs. Assistant Collector, Central, reported in 1985 (21) ELT, 38 All. Learned Advocate for the petitioner next relied upon judgment of the Bombay High Court in case of Grant Investrade Ltd. & Anr. Vs. Union of India & Ors., reported in 2016(9) Tax Management India, 1089, to contend that it is only on investigation being concluded and appropriate steps taken that the authorities can issue show cause notice demanding amounts as custom duty on the licence fee, meaning thereby, as in the instant case, the show cause notice is now issued, the investigation is deemed concluded. The requirement of the petitioner thereafter for the purpose of investigation would not arise and Page 14 of 36 HC-NIC Page 14 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT hence, cancellation of bail application deserves to be rejected.
6. In support of his petition for modification of conditions, learned Advocate for the petitioner submitted that the petitioner is resident of Taiwan. He has furnished Bank Guarantee of Rs.4.5 crores and he haas cooperated with the investigation thereafter. His family is residing in Taiwan and therefore, even for temporary period, conditions restricting his movement in India be cancelled, modified or suspended.
6.1 It is submitted that the petitioner is having, through his companies, properties worth Rs.171.50 crores in various cities in India, like Mumbai, Kolkatta, Surat, Kochi, etc. and therefore, his availability for the purpose of prosecution, if any, is assured.
7. I have heard learned Advocates for the rival parties and have gone through the documents submitted on record by both sides. The main question that is required to be considered is twofold. Firstly, whether pending investigation under the provisions of the Customs Act, the petitioner is considered as an accused and secondly, whether the petitioner, when called upon by the Department under Section 108 of the Customs Act, can claim protection of Article 20(3) of the Constitution of Page 15 of 36 HC-NIC Page 15 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT India?.
8. The Department has challenged the order of the Sessions Court in not accepting their contention that the petitioner has not cooperated with the investigation and has erroneously concluded that when the Court granting bail had imposed condition of full cooperation to the Investigation Agency, did not include that the petitioner was required to produce any documents before the Investigating Officer. The Sessions Court appears to have limited the operation of the condition of bail conservatively. Section 108 of the Customs Act is for the very purpose to aid the investigation and in the aid of investigation, to produce documents. In para-6 of the impugned order, the Sessions Court has observed as under:-
"6. ..... Looking to the condition imposed upon the opponent accused, I fully agree with the learned advocate for the opponent accused that the Court has not imposed any condition on the accused that he shall produce the documents. Looking to the record, the applicant itself has stated in affidavit that the opponent accused was under the fear that if such details are produced by him, then, certain other cases of evasion of duty or havala transactions or black transactions may be initiated against him and his Taiwan based company. Hence, it is clear that the documents which are sought for by the Page 16 of 36 HC-NIC Page 16 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT investigating agency, may be going against the accused."
8.1 The aforesaid finding, in the opinion of this Court is perversity. The nature of details sought for under the summons of Section 108 of the Customs Act issued by the Investigating Officer is on the basis of investigation carried thus far. The investigation, which is under the domain of the Investigating Officer, he was perfectly justified in calling upon the details. As against this, the reply given to the summons is required to be reproduced hereunder:-
"[1] There is no import of Nylon Mono Filament Yarn from AFCO Asia Ltd.
[2] Copies of the bank statement if AFCI Asia Ltd (Company incorporated outside India) are irrelevant to the investigation of Nylon Mono Filament Yarn.
[3] Regarding the constitution of AFCO Asia Ltd., Taiwan, I didn't understood whether you require name of the directors, shareholders, company address in Taiwan or you need certificate of incorporation.
[4] Details of assets and investments in India
- with the best of my knowledge this
information is not relevant to the
investigation."
8.2 Therefore, interpretation now given to word
"fully cooperate with the investigation" stands expanded to the extent that it means to see that the petitioner to Page 17 of 36 HC-NIC Page 17 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT fully cooperate and such cooperation must be voluntary cooperation, thereby leaving it upon the petitioner, who is facing investigation, to decide on his own where he desires to volunteer and where he does not. Such proposition cannot be accepted in the field of investigation.
9. The Apex Court in case of Ramesh Chandra Mehta (Supra) was examining Section 171-A of the Sea Customs Act paramateria to Section 108 and held as under:-
"11. The remaining contention that a person against whom an enquiry is made by the Customs Officer under the Sea Customs Act is a person accused of an offence and on that account he cannot be compelled to be made a witness against himself, and the evidence if any collected by examining him under Section 171A of the Sea Customs Act is inadmissible has also no substance. By Article 20(3) of the Constitution a person who is accused of any offence may not be compelled to be a witness against himself. The guarantee is, it is true, not restricted to statements made in the witness box. This Court in State of Bombay v. Kathi Kalu , observed at p. 249:
'To be a witness' means imparting knowledge in respect of relevant facts by an oral statement or a statement in writing, made or given in Court or otherwise.
'To be a witness' in its ordinary grammatical Page 18 of 36 HC-NIC Page 18 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT sense means giving oral testimony in Court, Case law has gone beyond this strict literal interpretation of the expression which may now bear a wider meaning, namely, bearing testimony in Court or out of Court by a person accused of an offence, orally or in writing."
But in order that the guarantee against testimonial compulsion incorporated in Article 20(3) may be claimed by a person it has to be established that when he made the statement sought to be tendered in evidence against him, lie was a person accused of an offence. Under Section 171A of the Sea Customs Act, a Customs Officer has power in an enquiry in connection with the smuggling of goods to summon any person whose attendance he considers necessary, to give evidence or to produce a document or any other thing, and by Clause (3) the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documents and other things as may be required. The expression "any person" includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling is not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Customs Officer are for the Page 19 of 36 HC-NIC Page 19 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT purpose of holding an inquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of infringing the provision of the Sea Customs Act with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of customs : when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Sea Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate. In Maqboul Hussain v. State of Bombay (1053) 56 Bom. L.R. 13 S.C. : s.c. [1953] S.C.R. 730 the Court held that a person against whom an order for confiscation of goods had been made in proceedings taken by Customs Officer under Section 167 of the Sea Customs Act and was subsequently prosecuted before a Magistrate for offences under the Foreign Exchange Regulation Act, 1947, could not plead the protection of Article 20(3), since he was not "prosecuted" before the Customs authorities, and the order for confiscation was not a "punishment" inflicted by a Court or judicial tribunal within the meaning of Article 20(3) of the Constitution and the prosecution was not barred.
14. 15. In the two earlier cases, M. P. Shanna's case and Raja Narayanlal Bansilal's case, this Court in describing a person accused used the expression "against whom a formal Page 20 of 36 HC-NIC Page 20 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT accusation had been made," and in Kathi Kalu Oghad's case this Court used the expression "the person accused must have stood in the character of an accused person." Counsel for Mehta urged that the earlier authorities were superseded in Kathi Kalu Oghad's case and it was ruled that a statement made by a person standing in the character of a person accused of an offence is inadmissible by virtue of Article 20(3) of the Constitution. But the Court in Kathi Kalu Oghad's case has not set out a different test for determining the stage when a person may be said to be accused of an offence. In Kathi Kalu Oghad's case the Court merely set out the principles in the light of the effect of a formal accusation on a person, viz., that he stands in the character of an accused person at the time when he makes the statement. Normally a person stands in the character of an accused when a First Information Report is lodged against him in respect of an offence before an Officer competent to investigate it, or when a complaint is made relating to the commission of an offence before a Magistrate competent to try or send to another Magistrate for trial the offence; where a Customs Officer arrests a person and informs that person of the grounds of his arrest (which he is bound to do under Article 22(i) of the Constitution) for the purposes of holding an enquiry into the infringement of the provisions of the Sea Customs Act which he has reason to believe has taken place, there is no formal accusation of Page 21 of 36 HC-NIC Page 21 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT an offence. In the case of an offence by infringement of the Sea Customs Act and punishable at the trial before a Magistrate there is an accusation when a complaint is lodged by an officer competent in that behalf before the Magistrate."
10. In case of Veera Ibrahim Vs. The State of Maharashtra, reported in (1976) 2 SCC, 302, phrase "accused of an offence" with reference to Section 108 of the Customs Act was interpreted and it is held as under:-
"6. From an analysis of this clause, it is apparent that in order to claim the benefit of the guarantee against testimonial compulsion embodied in this clause, it must be shown, firstly, that the person who made the statement was "accused of any offence" secondly, that he made this statement under compulsion. The phrase "accused of any offence" has been the subject of several decisions of this Court so that by now it is well settled that only a person against whom a formal accusation relating to the commission of an offence has been levelled which in the normal course may result in his prosecution, would fall within its ambit.
9. The above-quoted observations are a complete answer to the contention of the appellant. In the light of these principles, it is clear that when the statement of the appellant was recorded by the Customs officer under s.108, the appellant was not a person Page 22 of 36 HC-NIC Page 22 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT "accused of any offence" under the Customs Act, 1962. An accusation which would stamp him with the character of such a person was, levelled only when the complaint was filed against him, by the Assistant Collector of Customs complaining of the commission of offences under s. 135(a) and s. 135(b) of the Customs Act."
11. Similarly, in the judgment in case of Poolpandi & Ors. Vs. Superintendent, Central Excise & Ors., reported in (1992) 3 SCC, 259, the Apex Court held as under:-
"6. Clause (3) of Article 20 declares that no person accused of any offence shall be compelled to be a witness against himself. It does not refer to the hypothetical person who may in the future be discovered to have been guilty of some offence. In Ramesh Chandra Mehta case, the appellant was searched at the Calcutta Airport and diamonds and jewelleries of substantial value were found on his person as also currency notes in a suitcase with him, and in pursuance to a statement made by him more pearls and jewellery were recovered from different places. He was charged with offences under the Sea Customs Act. During the trial, reliance was placed on his confessional statements made before the Customs Authorities, which was objected to on the ground that the same were inadmissible in evidence inter alia in view of the provisions of Article 20(3). While rejecting the objection, the Supreme Court held that in order that the guarantee against testimonial compulsion incorporated in Page 23 of 36 HC-NIC Page 23 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT Article 20(3) may be claimed by a person, it has to be established that when he made the statement in question, he was a person accused of an offence. Pointing out to the similar provisions of the Sea Customs Act as in the present Act and referring to the power of a Customs Officer, in an inquiry in connection with the smuggling of goods, to summon any person whose attendance he considers necessary to give evidence or to produce a particular document, the Supreme Court observed thus:
The expression "any person" includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling is not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected or infringing the provisions of the Sea Customs Act with the commission of any office. His primary duty is to prevent smuggling and to recover duties of customs when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Sea Customs Act, he is not accusing the person of any Page 24 of 36 HC-NIC Page 24 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT offence punishable at a trial before a Magistrate."
12. The grounds mentioned for refusal to produce the documents mentioned in reply of the petitioner is very categoric. In reply dated 20.07.2016, grounds given are either that the query raised and the requirement of the document is irrelevant to the investigation or it is simply denial or inability to understand the query. Nowhere the reply suggests that the documents are not to be supplied on the ground that the same would be incriminating. The argument which is made for the petitioner that production of the documents may expose the petitioner to the possible prosecution under some other statute appears to be an afterthought. In any case, the production of "incriminating documents" has to be restricted to the investigation on hand. Moreover, there is nothing on record to indicate that in what manner the documents mentioned in the summons are self- incriminating.
13. The requirement of the judgments in cases of Kathi Kalu Oghad (supra) and State of Gujarat Vs. Shyamlal Mohanlal Choksi, reported in AIR 1965, SC, 1251 is that the accused person not to be compelled to disclose documents which are (i) incriminatory and (ii) based on his personal knowledge, obviously in relation to offence.
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Neither the petitioner has satisfied the two
aforementioned requirements nor the Sessions Court has examined that the documents required to be produced in what manner are incriminatory or how such documents are based on his personal knowledge relating to the offence. To this, it appears that the documents called for production are not based on personal knowledge in relating to the offence nor can such documents be termed as incriminating in nature in relation to the on going investigation.
14. The petitioner has therefore not fully cooperated with the investigation as per the conditions of bail order.
15. On the question of whether in the facts of the case, the petitioner, who is arrested under Section 104 of the Customs Act can be considered as an accused to bring him under the protection of Article 20(3), this Court in the case of Bhavin Impex Pvt. Ltd. Vs. State of Gujarat, reported in 2010 (260) ELT, 526, has held and which is reproduced hereunder in extenso:-
"26. From the decisions referred to hereinabove, the following principles emerge:-
i.The main purpose of the provisions of Sections 9, 13, 18 and 19 of the Central Excise Act is to levy and collect excise Page 26 of 36 HC-NIC Page 26 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT duties and Central Excise Officers have been appointed thereunder for this main purpose. In order that they may carry out their duties in this behalf, powers have been conferred on them to see that duty is not evaded and persons guilty of evasion of duty are brought to book.
ii.Mere conferment of powers of investigation into criminal offences under Section 9 of the Act does not make the Central Excise Officer a police officer. iii.A Customs Officer is not a member of the police force. He is not entrusted with the duty of maintaining law and order. He is entrusted with powers that specifically relate to the collection of customs duty and prevention of smuggling. The power to arrest, the power to detain, the power to search or obtain a search warrant and the power to collect evidence are vested in the Customs Officer for enforcing compliance of the provisions of the Sea Customs Act. The Customs Officer does not exercise, when enquiring into a suspected infringement of the Sea Customs Act, powers of investigation which a police officer may in investigating the commission of an offence. He is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudicating forfeiture and penalty. He has no power to investigate an offence triable by a Magistrate, nor has he the power to submit a report under Page 27 of 36 HC-NIC Page 27 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT Section 173 of the Code of Criminal Procedure. He can only make a complaint in writing before the competent Magistrate. iv.The expression any person includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling goods s not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20 (3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of infringing the provision of the Customs Act with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of customs: when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate.
v.Where a Customs Officer arrests a person and informs that person of the grounds of his arrest (which he is bound to do under Page 28 of 36 HC-NIC Page 28 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT Article 22(1) of the Constitution) for the purposes of holding an enquiry into the infringement of the provisions of the Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. In case of an offence by infringement of the Customs Act and punishable at the trial before a Magistrate there is an accusation when a complaint is lodged by an officer competent in that behalf before the Magistrate.
vi.Arrest and detention are only for the purpose of holding effectively an inquiry under Sections 107 and 108 of the Customs Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalty. At that stage there is no question of the offender against the Customs Act being charged before a Magistrate. Ordinarily, after adjudging penalty and confiscation of goods or without doing so, if the Customs Officer forms an opinion that the offender should be prosecuted, he may prefer a complaint in the manner provided under Section 137 with the sanction of the Collector of Customs and until a complaint is so filed, the person against whom an inquiry is commenced under the Customs Act does not stand in the character of a person accused of an offence under Section 135. vii.The Customs Officer is a revenue officer primarily concerned with the detection of Page 29 of 36 HC-NIC Page 29 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT smuggling and enforcement and levy of proper duties and prevention of entry into India of dutiable goods without payment of duty and of goods of which the entry is prohibited.
viii.A person arrested under Section 104 (1) of the Customs Act would fall within the ambit of the expression suspected of the commission of any non- bailable offence. A person arrested by a Customs Officer under Section 104 would be a person suspected of the commission of such an offence inasmuch as the arrest itself is made when the officer of customs has reason to believe that such person has been guilty of an offence punishable under Section 135 of the Customs Act.
ix.The police is the instrument for the
prevention and detection of crime which
can be said to be the main object of
having the police. The powers of the
customs officers are really not for such purpose and are meant for checking the smuggling of goods and due realization of customs duties and determining the action to be taken in the interest of the revenue of the country by way of confiscation of goods of which no duty has been paid and by imposing penalties and fine.
27. Since the provisions of the Central Excise Act are in pari materia to the above referred provisions of the Customs Act, the said principles would also be squarely applicable to the provisions of the Central Excise Act.Page 30 of 36
HC-NIC Page 30 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT
28. From the language employed in Section 13 of the Central Excise Act, it is apparent that the said provisions confer power on the Central Excise Officer to arrest any person subject to the following: (i) he should have reason to believe that such person is liable to punishment under the Act or the rules made thereunder; (ii) such powers can be exercised by a Central Excise Officer not below the rank of Inspector of Central Excise, and (iii) such arrest has to be made with the prior approval of the Commissioner of Central Excise. Thus the power to arrest is a substantive power conferred on the Central Excise Officer which he can exercise subject to fulfillment of the aforesaid three conditions. There is no other pre-condition for arrest of a person under section 13 of the Act. Thus, the section itself does not say that arrest has to be made only in the manner provided under the Code for arrest in case of non-cognizable cases. When the Legislature in its wisdom has provided three conditions for exercise of powers under section 13 of the Act, if it so intended it would have added a further condition that such arrest has to be made in the manner provided for arrest in case of non-cognizable cases. However, when the Legislature has not thought it fit to introduce such a condition, this Court finds no reason to read such condition in the said provision. From the discussion in the preceding paragraphs, it is apparent that when a Central Excise Officer arrests a person under the provisions of section 13 of the Act, he does so for the Page 31 of 36 HC-NIC Page 31 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT purpose of enforcing the provisions of the Central Excise Act and not for the purpose of detecting the commission of an offence under the Act. The powers of arrest have in fact been vested in the Central Excise Officers only for the purposes of carrying out the purposes of the Act and not for the purpose of prosecuting any accused person of an offence under the Act as that is the duty of the police officer and not the Central Excise Officer.
29. Section 18 of the Act interalia provides that all arrests made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 relating to arrests made under the Code. Section 13 confers a substantive power of arrest on a Central Excise Officer akin to the power conferred on the police under section 41 and 42 of the Code, on a private person under section 43 and on a Magistrate under section 44 of the Code. Whereas in view of the provisions of section 18 of the Act, the procedure for making such arrest is governed by the provisions of the Code viz. the manner of making arrest is provided under section 46 of the Code; the manner for searching of the place entered by the person sought to be arrested is provided under section 47 of the Code; pursuit of offenders into other jurisdictions is laid down under section 48; section 49 provides that the person arrested shall not be subjected to more restraint than is necessary to prevent his escape; section 50 provides for the person arrested to be informed of grounds of arrest Page 32 of 36 HC-NIC Page 32 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT and of right to bail; section 50A imposes an obligation on the person making arrest to inform about the arrest, etc. to a nominated person and section 51 makes provision for search of the arrested persons. Section 52 to 60 of the Code provide for further modalities and procedure in case of arrest of a person. However, the provisions of section 41 to 60 of the Code only lay down the modalities and procedure for arrest of a person and do not detract from the substantive power of arrest conferred by the statute under section 13 of the Act.
30. Examining the issue from another angle, as noted hereinabove the arrest under section 13 of the Act is for investigation/enquiry to fulfill the objects of the Act and not for detection of a crime. If the interpretation canvassed by the learned counsel for the petitioner is accepted, it would render the provisions of section 13 redundant inasmuch as if a person is to be arrested only after registration of a first information report or lodgment of a complaint, the question of arrest by the Central Excise authorities would not arise. Neither would the question of the Magistrate issuing a warrant arise prior to lodging a complaint. Besides, once an FIR is registered or a complaint is lodged, the person against whom an accusation is made would be an accused or a person accused of an offence, whereas section 13 contemplates arrest of a person and not an accused or of a person accused of an offence. It is settled legal Page 33 of 36 HC-NIC Page 33 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT position that while interpreting a statutory provision, a construction which would in effect obliterate it from the statute-book, should be eschewed. If the construction of section 13 as put forth on behalf of the petitioner were to be accepted, the same would render the entire provision redundant, otiose and nugatory, an outcome which the Parliament could surely not have intended."
16. In view of the aforesaid, this Court is of the view that in the facts of the present case, where petitioner is yet to attend the status of an accused arrested for commission of offfence, Article 20(3) of the Constitution cannot be made applicable, which would protect the petitioner from operation of Section 108 of the Customs Act.
17. The power of a Customs Officer to carry out investigation in Chapter 13 of the Customs Act, both Sections 104 and 108 fall in Chapter 13 when person under investigation joins the investigation with the aid of the powers in Chapter 13. Hence, when the petitioner was imposed with a condition to cooperate fully, he would be subjected to investigation under the provisions under Chapter 13 including Section 108. Therefore, when the Department was within its power to investigate, issued summons under Section 108 and it was obligatory upon the petitioner to cooperate. Non-cooperation on the grounds Page 34 of 36 HC-NIC Page 34 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT mentioned amounts to breach of conditions of bail.
18. For the foregoing reasons, Criminal Misc.Application No.21674 of 2017 is allowed. The order dated 10.03.2017 passed by Additional Sessions Judge, City Sessions Court No.15, Ahmedabad in Criminal Misc.Application No.3525 of 2016 is quashed. The case is relegated back to the Additional Sessions Judge, City Sessions Court No.15, Ahmedabad for fresh consideration of the application filed by the Department. However, considering the fact that the petitioner is on bail under order dated 19.02.2016, it may not be necessary for the petitioner to surrender and the application be considered afresh by keeping in mind the observations made in this order. Rule is made absolute to the aforesaid extent.
19. In view of the order passed in Criminal Misc.Application No.21674 of 2017, reliefs prayed for in Special Criminal Application No.4824 of 2017 would not survive at this stage. The petition is disposed of accordingly. Rule is discharged.
20. At this stage, learned Advocate for the petitioner prays for stay of operation of this judgment and order for a period of 8 weeks, which is objected by learned Advocate for the Department. However, considering the issue involved, it would be appropriate Page 35 of 36 HC-NIC Page 35 of 36 Created On Sun Sep 24 17:09:05 IST 2017 R/CR.MA/21674/2017 JUDGMENT to stay operation of this order for a period 4 weeks from today.
Sd/-
(A.Y. KOGJE, J.) SHITOLE Page 36 of 36 HC-NIC Page 36 of 36 Created On Sun Sep 24 17:09:05 IST 2017