Calcutta High Court
Union Of India (Uoi) And Ors. vs Shambhunath Karmakar And Ors. on 17 July, 1986
Equivalent citations: 1989(22)ECC66, 1987(13)ECR160(CALCUTTA), 1986(26)ELT719(CAL)
JUDGMENT Chittatosh Mookerjee, J.
1. The Union of India and others have preferred this appeal under Clause 15 of the Letters Patent against the judgment dated 20th January, 1986 of Ajit Kumar Sengupta, J. disposing of the writ application filed by Sambhunath Karmakar (since deceased), who was the predecessor-in-interest of the present respondents 1(a) to 1(h). The learned Trial Judge has directed the Union of India and its officers either to return to the writ petitioner equivalent quantity of gold seized on 26th April, 1973 or to pay the market price of such gold as on the date of the order of the Collector, Central Excise, Calcutta dated 6th May, 1985.
2. The present case has a chequerd history and for better appreciation of the points involved, we set out the salient facts of the case. On 26th April 1963 the Gold Control Officers attached to the Central Excise Collectorate, Calcutta had searched the premises of Sambhunath Karmakar and brothers of Ghatal and had recovered : (i) primary gold weighing 252.960 gms of 22 carat purity, (ii) 17H.472 gms. of new ornaments of 22 carat purity and (iii) 38.636 gms of old ornaments of 22 carat purity In the seizure list total value of the said gold was stated to be Rs. 16552.50. Thereafter the Superintendent of Central Excise, Gold Control, Calcutta served a notice upon said Sambhunath Karmakar to show cause why the said seized gold under Rules 126C, 126F, 126G and 126H of the Defence of India (Amendment) Rules, 1963 should not be confiscated. The petitioner, Sambhunath Karmakar had shown cause. On 10th January, 1964 the Collector of Central Excise ordered that the said primary gold, new ornaments and old ornaments of gold be confiscated under the Rule 126M of the Defence of India Rules, 1962 for contravention of Rules 126C, 126F, 126G and 126M of the said Rules. Sambhunath Karmakar, did not, however, prefer any appeal against the said confiscation order to the Administrator, Gold Control, Ministry of Finance (Department of Revenue), New Delhi.
3. The petitioner Sambhunath Karmakar (since deceased) was also prosecuted in the criminal court for having contravened Rules 126F(IXii) and 126P(2)(iv) of the Defence of India (Amendment) Rules 1963 in respect of the gold including gold ornaments seized from him on 26th April, 1963. On 31st July, 1965 the learned Magistrate, Ghatal convicted and sentenced him to undergo imprisonment for one month. Sambhunath Karmakar preferred a criminal revision petition in this court. On 20th January 1966 R.N. Dutt and T.P. Mukherjee, JJ made absolute the Rule obtained by Sambhunath Karmakar, set aside the order of conviction and sentence passed and acquitted him.
4. On April 1, 1966 Sambhunath Karmakar made an application to the Collector, Central Excise, Calcutta annexing a copy of the said High Court order acquitting him. He prayed that the gold seized from him on 26th April, 1963 be returned. On 7th May, 1966 the Collector had rejected the said prayer for return of gold on the ground that there was no provision in law and therefore he was unable to reconsider his order for confiscation. Sambhunath Karmakar thereupon filed a writ application challenging the said order of the learned Collector. According to the Central Excise Authorities after the confiscation order was passed gold seized from Sambhunath Karmakar had been sent to the Mint of the Government of India at Calcutta and the same had been melted. On 5th July 1973 Sambhunath was allowed to withdraw his writ petition with liberty to file a fresh one. Accordingly, he filed a fresh writ petition adding the Mint as a party. On August 11, 1977 Amiya Kumar Mookerjee, J. disposed of Civil Rule No. 2022(W) of 1973 issued upon the said writ petition of Sambhunath Karmakar. In his judgment the learned Judge recorded that the learned advocate appearing on behalf of the Central Excise Authorities did not object to the proposal made on behalf of the petitioner that for ends of justice the petitioner ought to be given liberty to file a supplementary application before the Collector and after giving him opportunity of being heard, the matter should be disposed of Amiya Kumar Mookerjee, J. accordingly granted such liberty to the petitioner to file a fresh representation and the Collector of Customs, Central Excise was directed to reconsider the matter after giving the petitioner an opportunity of being heard. The Collector was directed to state reasons for his order.
5. For the reasons presently indicated, we are not prepared to allow the Union of India to now urge that the said order dated 11th August, 1977 of Amiya Kumar Mookerjee, J. was null and void. The said judgment dated 11th August, 1977 recorded that the learned Advocate for the Union of India had practically conceded that the Collector of Central Excise ought to be commended to entertain and again dispose of the petitioner Sambhunath's application for reconsideration of the confiscation order dated 10th January, 1964. The State did not also prefer any appeal against the said judgment dated 11th August, 1977 of Amiya Kumar Mookerejee, J. Further the Collector of Central Excise not having disposed of the reconsideration application within the stipulated time, Sambhunath had filed a fresh petition being Civil Rule No. 13111(w) of 1984 inter alia with the prayer for directing the respondents to return the gold seized and also for quashing the show cause and adjudication order. On 28th February, 1985 Ajit Kumar Sengputa, 3- passed an order directing the competent Authority to dispose of within five weeks the representation of Sambhunath Karmakar in terms of the order dated 11th August, 1977 made by Amiya Kumar Mookerjee, 3. The present appellants did not also prefer any appeal against the order dated 28th February, 1985. The Collector has now carried out the said order of Amiya Kumar Mookerjee, 3. dated 11th August, 1977 and the order dated 28th February 1985 passed by Ajit Kumar Sengputa, 3. These orders of this court for entertaining and disposing of the reconsideration application of Sambhunath Karmakar are not only binding upon the parties but it is not open to us to collaterally adjudicate the legality or correctness of the orders dated 11th August, 1977 and 28th February, 1985 passed by Amiya Kumar Mookerjee, 3. and Ajit Kumar Sengupta, 3. respectively.
6. The Collector of Central Excise, by his order dated 6th May, 1985, has held that the confiscation order of seized gold passed by the Collector Central Excise, Calcutta on 10th January, 1964 was not sustainable and has accordingly ordered release of confiscated gold. At the present stage the only question for consideration is whether the Collector of Central Excise had acted lawfully by ordering payment to Sambhunath Karmakar (since deceased) of an amount which the department had received credit against the gold from the Mint Authorities. The present appellants did not prefer either an appeal under Section 35B of the Central Excises and Salt Act, 1944 or any writ application challenging the Collector's order dated 6th May, 1985 in effect setting aside the confiscation order dated 10th January, 1964 and directing return of the seized gold to the owner. Therefore, we have not permitted the appellants to urge before us that the Collector had no jurisdiction to reconsider the confiscation order dated 10th January, 1964 or to direct return of the seized gold or the amount received from the Government of India Mint. Accordingly we proceed on the hypothesis that the Collector of Central Excise had jurisdiction to entertain the instant application for reconsideration of the confiscation order and consequent upon recall of the confiscation order to direct the Gold Control Authorities to return the seized gold or value thereof.
7. Primary gold and gold ornaments seized on 26th April, 1963 no longer exist specie and their return to the owner was not possible. The only point is whether the owner should be paid value or price of the said gold and gold ornaments prevailing on the date the Collector of Central Excise set aside the confiscation order and ordered return of the seized gold, i.e. 6th May, 1985 or the owners were entitled to receive value or price of gold prevailing on the date the seized gold and gold ornaments were made over by the Gold Control Authorities to the Government of India Mint.
8. The appellants did not produce either in the trial court or at the time of the hearing of this appeal, the original or copies of the records relating to the disposal of the gold and gold ornaments seized from Sambhunath Karmakar. No papers have been also produced to establish the exact weight of the gold and gold ornaments made over to the Government of India Mint, Calcutta. Mr. Ghosh, learned advocate appearing on behalf of the appellants, has submitted that as early as 10th January, 1964 the Collector of Central Excise passed his order for confiscating the gold and gold ornaments. Although on 20th January, 1966 a Division Bench of this court had made absolute the Rule obtained by Sambhunath Karmakar against his confiscation in criminal court and acquitted him, the order for return of the seized gold and gold ornaments was made as late as 6th May, 1985. According to Mr. Ghosh, in the meantime, under departmental instructions have been placed before us. The appellants, however, have not produced any paper to establish that even these departmental instructions were at all followed in the matter of disposal of the seized gold and gold ornaments. Thus letter MOF(DEA) No. D.5570/BI/52 dated 18.6.51 instructed that inter departmental adjustment of costs of confiscated gold received by the mint should not be carried out until the confiscated gold was really sold or otherwise utilised by the Government. So long as gold was held in the sale custody of the mint the value of such gold should not appear in the regular accounts and a proforma stock account should be maintained for the gold in terms of weight only. In the instant case, as already observed, there was no evidence that the seized gold was really sold or otherwise utilised by the Government. Therefore, the Authorities were bound to maintain stock account for the gold in terms of the weight. By Government of India's Letter MOF (Rev. Div.) F.No. 5(31) Cus. 1/51 dated 10.8.51 the Government conveyed its decision that all confiscated gold irrespective of quantity, form or fineness should be forwarded to the nearest mint for disposal in economical quantities. Small lots of confiscated gold were to be held over until sufficient quantity accumulated for economical dispatch to the mint. We have already noted that there is no paper to indicate that when the seized gold was sent to the mint for disposal. The Central Board of Revenue by Letter F. No. 30/27/62-L.C.I. dated 3rd January, 1963 only reiterated that gold jewellery was not to be sold by public auction but was to be forwarded to the nearest mint for disposal as and when dispatch was possible in economical quantity. In the absence of relevant recordes showing when the gold and gold ornaments seized in the present case were forwarded to the Mint and when the same were disposed of, aforesaid letters have no relevance for deciding the present case. Mr. Ghosh referred to various provisions of the Gold Control Act and Rules which mention to the value of the gold at the time of seizure. Mr. Ghosh also drew our attention to column in the seizure list which mentioned the approximate value of the gold. Value mentioned in the seizure list serve two purposes (1) identification of goods and (2) for quantifying the personal penalty if it is ultimately imposed. Neither the Defence of India Rules nor the Gold Control Act contain any express provision regarding the amount of the price payable to the owner of the seized gold when an order confiscating the seized gold is subsequently set aside. Secondly, the seized gold are not appropriated when they are seized on the suspicion that same are held in contravention of the Gold Control Act or the Rules. Only after confiscation order is passed, seized gold is to be appropriated. In the instant case, there is no evidence when exactly the seized gold was disposed of as claimed by the appellants.
9. We are unable to accept the submission of Mr. Ghosh that the gold was seized in the exercise of sovereign power of the State and therefore, the owner was not entitled to claim damages for disposal of the seized gold. Authority to seize contraband gold including gold ornaments and to order confiscation are derived from the statute and therefore in the instant case the respondents purported to act in exercise of statutory powers. The Collector of Central Excise having himself set aside the confiscation order, cause of action for return of the gold accrued on the date the confiscation order was set aside and the owner became entitled to obtain return of the seized gold in the instant case the appellants do not plead that by reason of the tortuous act of any government servant the seized gold had been disposed of. There is no evidence about the date on which confiscation order was enforced. The seized gold had not been sold to a third party for value. If we accept the claim of the appellants that the seized gold had been forwarded for melting to the Government of India Mint, same really amounted to appropriation by another department of the Government. Secondly, if the gold and gold ornaments were melted, the same resulted only change of form. We agree with the learned trial Judge that the appellant themselves claimed that Government continued to hold melted gold in some form or other and therefore, the Government was bound to return the said gold or the value on the date the Collector of Central Excise set aside the confiscation order.
10. We are not prepared to draw any analogy between the principle of restitution embodied in Section 144 of the Code of Civil Procedure which has no manner of application to cases where confiscation orders by Gold Control Authorities are set aside. At the same time, when confiscation order set aside by the Collector of Central Excise on 6th May 1985 both in equity and law status quo ante prior to the passing of the confiscation order ought to be restored. On the said date the Government's obligation to return the seized gold had accrued. Therefore, the learned trial Judge rightly ordered the appellants to either return to the owner a quantity equivalent to the gold seized or pay the market price of such gold as on the date of passing of the reconsideration order of the Collector, Central Excise, i.e. 6th May, 1985. The learned trial Judge has given elaborate reasons for making the order and we agree with the same.
11. For the foregoing reasons, we dismiss this appeal. There will be no order as to costs. There will be stay of the operation of this order and also the trial court's order dated 20th January, 1986 for a period of two months.