Kerala High Court
Krishna Iyer vs Assistant Collector Of Central Excise on 11 August, 1961
Equivalent citations: 1962CRILJ662
JUDGMENT S. Velu Pillai, J.
1. This is to revise an order of the Sessions Judge, Palghat, by which he confirmed the convictions of the petitioner before us and the sentences imposed on him by the District Magistrate, Palghat, Under Section 167(81) of the Sea Customs. Act,' 1878, and Under Section 23 (i-A) read with Section 8 (1) of the (Foreign Exchange, Regulation Act, 1947. On information received by Pw. 2, the Inspector of Special Customs (Preventive), that the petitioner was carrying smuggled gold, he came to Lakota railway station on the evening of February 6, .1957, with Pw. 3, his sepoy, and another, and watched the, petitioner who was also at that station at the -time. The petitioner then boarded the second class compartment in the Malabar Express, having purchased a ticket of travel to Madras, Pw. 2 having also purchased a second class and a third class tickets of travel to Podanur, Pw, 3. boarded the same second-Class compartment at the direction of Pw. 2. Apparently getting suspicious of the activities of Pw. 2, the petitioner got out of the train and was about to leave the railway station by crossing the railway line on the other side, when he was taken by Pw. 3 to Pw. 2, who seized, under mahazar, Ext. P-2, twenty-six gold bullion from the pouches of his waist belt. The petitioner was then taken to Calicut on the same night, where his confessional statement was taken by Pw. 4, the Inspector of Special Customs (Preventive), Kozhikode.
2. At first, the charge against the petitioner was only Under Section 167 (81) of the Sea Customs Act, and at the last stage, a further charge Under Section 23 (i-A) read with Section 8 (1) of fhe Foreign Exchange Regulation Act, was also iframed. At the material time, before the date of the amending Act 39 of 1957, the provision corresponding to Section 23 (i-A) was Section 23 (1) which provided, that a person who contravenes any of the provisions of that Act, or of any rule, direction, or brder,: made under it, shall be punished. Section 8 (1) of the same Act reads as follows:
The Central Government may, by notification in the Official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed bring or send into India any gold or silver or any currency notes or bank notes or coin whether Indian or foreign.
Under this, Notification No. 12 (11) Fi/48 dated August 25, 1948, was issued which runs as follows:
(1) Restrictions on import of Gold and Silver: In exercise of the powers conferred by Sub-section (1) of Section 8 of the Foreign Exchange Regulation-Act, 1947 (VII of 1947), and in supersession of the notification of the Government of India in the late Finance Department No. 12 (11) Fi/47, dated March 25, 1947, the Central Government is pleased to direct that except with the general or special permission of the Reserve Bank, no .person .shall bring or send into India from any place outside India:
(a) any gold coin, gold bullion, gold sheets or gold ingot, whether refined or not; or ....
The violation1 of this Notification, therefore, is an offence punishable Under Section 23 (1) of the Foreign Exchange Regulation Act and this is the subject-matter of the Additional charge. But that offence is the .bringing or sending into India from any place outside India, any gold coin, gold bullion, gold sheet or gold ingot, etc., and there is no evidence whatever in this case, to establish, that the petitioner "brought. or sent into India" from any place outside India, the gold 'bullion which was seized from him. The conviction of the petitioner Under Section 23 (i-A) read with Section 8(1) of the Foreign Exchange Regulation Act is quite unsustainable; it is quashed, and the sentences imposed on him therefor are set aside, and the fine if paid, will be refunded.
3. Before dealing with the contentions advanced on behalf of the petitioner, against his conviction Under Section 167 (81) of the Sea Customs Act, it is necessary to set out some further provisions in the two statutes. After making provision as above,' in Sees. 23 (1) and 8 (1) of the Foreign Exchange Regulation Act, Section 23-A of that Act, has enacted:
Without prejudice to the provisions of Section 23 or to any other provisions contained in this Act, the restrictions imposed by Sub-sections (1) and (2) of Section 8 ... shall be deemed to have been imposed Under Section 19 of the Sea Customs Act, 1878, and all the provisions of that Act, shall have effect....
The combined effect of Section 19 of the Sea Customs Act, and of Section 23-A of the Foreign Exchange Regulation Act, is to transplant the above Notification, as one under the Sea Customs Act. Chapter XVI of this Act deals with offences and penalties and Section 167, which finds a place in it, defines offences and prescribes penalties or punishments therefor, in a tabular form. Item 81 of that table, is what is referred to in this judgment as Section 167 (81), and the material part of it reads as follows:
If any person knowingly, and with intent ... to evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing harbouring, keeping or concealing or in any manner dealing with any goods ... ... with respect to the importation or exportation of which, any prohibition or restriction is for the time being in force as aforesaid... shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years, or to fine, or to both.
The gist of the offence Under Section 167 (81) of the Sea Customs Act, for which the petitioner has been convicted, is the acquiring possession of, or carrying, or removing, or keeping, or concealing or in any manner dealing with gold, with respect to the importation of which, a restriction is in force, and in entering the conviction, the two courts have relied largely on the statutory presumption Under Section 178-A of the Sea Customs Act, the relevant part of. which may now be quoted:
Section 178-A (1): "Where any goods to white this Section applies are seized under this Act to the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goads shall be on the person from whose possession the goods were seized
2. This Section shall apply to gold... ... and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf.
The first contention of the learned Counsel for the petitioner was, that the existence of a reasonable belief on the part of the seizing officer, that the goods seized are smuggled goods, is a condition precedent for the presumption to operate, and that, this has not been fulfilled. The can be no doubt on the terms of Section 178-A (1), that this is so.
It is equally clear, as held by the Madras High Court in Sampathu Chetty v. Collector of Customs, Madras and by the Bombay High Court in M. G. Barolo v. Amichand Vallam , that ,such belief must exist, either before or at the time of seizure and it is not sufficient, if it is entertained afterwards.
On the following observations by the Supreme Court in Babulal Amthalal Mehtha v. Collector of Customs, Calcutta , that the only prerequisite for the application of the Section is the subjectivity of the Customs Officer in having a reasonable belief that the goods are smuggled it has to be held, that such belief is a matter for the subjective satisfaction of the officer, though perhaps, as the learned Advocate-General has opined out the Court may consider, whether the belief entertained was reasonable or not.
4. The term 'reasonable belief has been defined thus, in Baljentine's Law Dictionary, and Edition, page 1090:
A belief begotten by attendant circumstances fairly creating it and honestly entertained.
Pw. 3 has given cogent evidence of the circumstances under which he seized the gold. He was previously acquainted with the petitioner as a jeweller in Palghat.
As narrated above, on the day in question, on receiving information, he came to Calvados railway-station, and instructed his men to watch the petitioner. At this bidding, Pw. 3 boarded the same compartment in the Malabar Express in which the petitioner took his seat, but the petitioner then came out of the compartment and made his way towards the offside of the platform crossing the rails, which was so unusual. At this stage, as Pw. a swears, he grew "certain", that the petitioner was having some illegal possession and of the petitioner being brought before him, Pw. 2 touched him and found, that something was tied' around his waist. He then took him to the waiting room, where the petitioner disclosed to him that ha was having some gold with him, untied his. dhoti, produced twentysix gold bullion and laid them on the table. Pw. 2 then questioned him. whether he had any pass, or permit, or purchase bill concerning this gold, and the petitioner had none. Pw. 2 was satisfied of the foreign, markings found on the bullion.
It was then, as he stated, that he seized the gold. In cross-examination, however, it was elicited, that when he recovered the gold, he 'suspected' it was smuggled gold. The learned Counsel relied strongly on the word 'suspected' to the exclusion, as we think, of all other passages in his deposition, to contend, that even at that stage, Pw. 2 had nothing more than a bare suspicion as to the character of the gold in his possession. The word has to be interpreted differently. Pw. 2 has stated further in cross-examination, that "what confirmed my (his) suspicions was the act of the accused (petitioner) in getting, out of the compartment and walking across the line." Considering the evidence of Pw. 2 in such detail, we cannot but come to the conclusion, that he entertained the belief at the time of making the seizure, that it was smuggled gold and that such belief was based on reasonable- grounds, Ext. P-2 corroborates his evidence. Though Ext. P-2 opened with the statement, that Pw. 2 and party followed the petitioner to Olvakot railway station on suspicion, it concluded with the statement, which we hold to be an unequivocal' expression of his belief, that the gold which the petitioner carried with him, was smuggled gold. The reference' in the complaint to seizure on suspicion is immaterial, as the complaint was filed by another officer who had no personal knowledge of the circumstances under which the seizure was made by Pw. 2. We have no hesitation in coming to the conclusion, that the condition precedent of 'reasonable belief, that the gold was smuggled gold before the seizure was made, has been fulfilled) There is nothing which stands in the way of the-presumption Under Section 178-A being drawn that the gold seized was smuggled gold.
5. The learned Counsel relied strongly on the cases decided by the Madras and Bombay , High Courts, cited earlier, as to the true import of the terra 'reasonable belief. We are satisfied, that the facts in the two cases are distinguishable. In the Madras case, gold in the possession of a passenger in a railway train was seized from his person, by a head constable, on his alighting at the Madras Central Railway Station for the express purpose of "further investigation" as to the character of the gold and in the Bombay case, the seizure was made from an employee of a jeweler in order to facilitate enquiries."
6. However, the presumption is only, that the gold seized is smuggled gold, and this has not been rebutted. The petitioner had thus acquired possession of gold, or was concerned in carrying, or removing, or keeping, or concealing, or dealing in some manner with gold, with respect to the importation of which, a prohibition or restriction was in force. On these premises, the further contention was, that the petitioner could not ,be convicted Under Section 167(81) as he could not be fixed with an intention, as prescribed, to evade the restriction against importation of gold into India, such evasion having already taken place when it was imported.
The contention, might seem plausible on the expression 'with intent to evade any restriction', but we are satisfied, that it cannot prevail, in the context in which the expression finds a place in the section. The argument of counsel was, that the menses under the section, must have reference to the original import when the evasion took place. But what is made an offence by Section 167 (81) is not merely, the original importation of the goods in violation of the restriction, but also various dealings subsequently, with the goods. If it were not so, an elaborate definition as in Section 167 (81) was not necessary and a simple amendment of Section 167 (8) in the third column, making importation also a criminal offence would have sufficed. Section 167 (81) refers to various acts or dealings with respect to smuggled goods, which would be out of place, if the restricted interpretation of the menses is accepted. In our view, Section 167 (81) is designed to apply, if we may borrow the language of the Supreme Court in Babulal Amthalal Mehtha's case not only to the actual smuggler from whose possession the goods are seized but also to those who came into possession of the goods ...after the same has passed through many hands or agencies. These observations were of course made by the Court, in the context of Section 178-A, but in our opinion, have a bearing on the proper understanding of the scope of the offence Under Section 167 (81).
As pointed out by the learned Advocate-General, .even after goods are imported in evasion or violation of the restriction, they are liable to be seized, wherever and whenever they are found. It cannot therefore be, that the restriction has spent itself, once the importation into India has taken place. We venture to think, that the proper and reasonable view to take is, that the prohibition or restriction is a continuing one and the acts envisaged by Section 167 (81), are those which are committed in violation or evasion of, such continuing prohibition or restriction. So understood, there, can be no doubt, whatever, that the petitioner must be fixed with the intention to evade the prohibition or restriction; knowledge has only to be inferred, from the fact, that the gold seized has to be presumed to be smuggled goods, and from the circumstances which attended the seizure. No direct authority on the interpretation of the mens rea was placed before us.
In somewhat analogous circumstances, a Division Bench of this Court inferred such knowledge and intention in Criminal Revision Petition 8 of. 1958. In Boota Singh Mote Singh v. The State intention and knowledge were inferred mainly from the facts and circumstances1 attending upon the seizure of the contraband article. Of course, these decisions do not help us in disposing of the present contention. Apart from them, on the above discussion, we hold that the requisite mens rea has been established.
7. The learned Counsel for the petitioner has also a contention, that Section 178-A of the Sea Customs Act does not apply to criminal proceedings, but is limited to proceedings in rem against smuggled property, and further, that it is constitutionally bad, as imposing an unreasonable restriction on the petitioner's fundamental right under Article 19 (1) (f) and (g) of the Consiituv tion.
This precise question, however. Is etatei tcr have been raised in several cases, which have already been heard by the Supreme Court and are-awaiting judgment. If, a9 contended, Section 178A is inapplicable or is void, the prosecution can rely; only on Ext, P. 3, the confessional statement, said to have been made by the petitioner before Pw. 4. As to this, the learned Counsel has also a contention, that Pw. 4 who recorded it, though a Customs Officer, is in the same position as a Police Officer, and that it is not voluntary and is hit by "the provisions of Sections 24 and 25 of the Indian. Evidence Act. Though we have heard the learned Counsel on this contention with respect to Ext. P. 3, we did not proceed to hear the Advocate-General in reply, as we are proposing to adjourn-the case for final disposal, after the Supreme Court has pronounced itself on the validity and applicability of Section 178A. We therefore adjourn the case for three weeks. The junior counsel for the petitioner has undertaken to inform us, as soon as the Supreme Court has disposed of the matter now pending before it.
8. ORDER (Dated 11-8-61) : Our order dated February 21, 1961, had decided certain points-which were raised at the time and the case which was adjourned for further hearing, has now been heard in full. The learned Counsel who now appeared for the petitioner, has pressed only two contentions, first that Section 178A of the Sea Customs Act, 1878, is unconstitutional as imposing an unreasonable restriction on the fundamental right under Article 19 (1) (f) and (g) and second, that the confessional statement which was said to have of been made by the petitioner to Pw. 4 a Customs; Officer, is hit by the ban Under Section 25, and in any event, was not voluntary and is therefore irrelevant Under Section 24 of the Evidence Act.
9. On the first contention, a Division 3enpb of the Madras High Court in and a Single Judge of the Bombay High Court in have held, that Section 178A imposes an unreasonable restriction on the fundamental right under Article 19 (1) (f) and (g) and is therefore void. A Division Bench of the Bombay High Court in Pushrod Champalal v. D. R. Kohli 61 Bom L.R 1230 has dissented from this view and has held, that the restriction imposed is reasonable. The judgment of the single Judge had been taken on appeal and in view of the pronouncement in Pukhraj Champalal Jain's case, 61 Bom LR '1230 the issue as to constitutionality was not pressed. Two Division Benches of. the Punjab High Court have held in favour of the constitutionality of Section 178A, in S. Balbir Singh V. Collector of Central Excise and Land Customs and State of Punjab v. Krishna Lai and a single 'Judge of the same court has also held likewise in , In accordance I with the reasoning on 61 Bom LR'230 which was respectfully-adopt and on the preponderance of judicial opinion, we hold, that Section 178A is valid.
It, is therefore unnecessary, to examine the further contention based on Section 24 and Section 25 of the Evidence Act. The conviction of the petitioner under is 167 (81) of the Sea Customs Act is proper and is hereby maintained. His conviction under Section 23 (IA) read with Section 8 (1) of the Foreign Exchange Regulation Act; 1947 has been quashed by our earlier order.
As for the sentence, though' normally, we are not5 for reducing the term of imprisonment award had, the circumstances of this case bear, a close analogy to those in Sreeniyasan v. State of Kerala ILR 1961 Kerala 681 decided by a Division Bench of is Court arid accordingly, we reduce the term of, imprisonment to the period already, undergone 'by the petitioner and maintain the sentence of flee 'including the direction, that in default of I payment of fine, the petitioner shall suffer rigorous imprisonment for two months. The Criminal Revision Petition is disposed of as above.