Patna High Court
Bawa Gopal Das Bedi And Sons And Ors. vs Union Of India (Uoi) And Ors. on 2 December, 1981
Equivalent citations: 1982(10)ELT351(PAT), AIR 1982 PATNA 152, 1982 BBCJ 371, (1982) ECR 229, (1982) ELT 351, (1982) BLJ 462, (1982) PAT LJR 238
JUDGMENT Prem Shanker Sahay, J.
1. The petitioners have moved this Court for quashing of the proceedings relating to the search and seizure of their gold ornaments from locker No. 64 of Allahabad Bank, Rajendra Nagar Branch, and for a direction to the respondents to release the aforesaid gold ornaments.
2. Here it will be necessary to state the facts mentioned in the application. Petitioner No. 1, Bawa Gopal Das Bedi and Sons, is a registered partnership firm dealing in the business of gold and petitioners 2 to 4 are its partners The firm is a licensee under the provisions of the Gold (Control) Act, 1968 (hereinafter to be referred as the Act) bearing dealer licence No. 11/63. The firm is also permitted for inter State movement of gold ornaments and sales. A copy of the certificate granted by Assistant Collector, Central Excise, Amritsar, dated 8-3-1973 has been filed and marked as Annexure-1. Under the Gold (Control) Rules (hereinafter to be referred as the Rules) every licensed dealer has to maintain accounts under Rule 11 and the details have to be filled up in form G.S 12. The case of the petitioners, farther, is that some of the petitioners left Amritsar on 3-1-1981 with gold ornaments weighing 4482.750 grams and reached Kanpur and there they sold 79.600 grams to a licensed dealer named Kashi Jewellers and 203.200 grams to another licensed dealer of the same place, namely, Society Jewellers. On 9-1-1981 the petitioners' firm purchased 636.700 grams of gold ornaments from Lakshmi Jewellers, Coimbatore, and, thus, the petitioners' firm was in possession 4836 650 grams of ornaments. Some of the petitioners came to Patna and on 10-1-1981, 1101 grams of gold were sold to Alankar Jewellers and the remaining gold ornaments weighing 3735.650 grams were kept in locker No. 64, which was hired by petitioners No. 3 and 4 and their brother Pradeep on 31-7-1978 (Annexure-3), of Allahabad Bank, Rajendra Nagar Branch, Patna, by petitioner No. 4. The relevant entries were made in form G.S. 12 and copy of the same has been filed and marked Annexure-2. It is, further, stated in the petition that three raids were conducted by the Central Excise Department in the business premises of Messrs. Alankar Jewellers, Muradpur, and also at the residence of the proprietor, Sri Jai Nath Prasad. On 21-1-1981 a brief case belonging to petitioner No. 4 and Pradeep Kumar containing a blank voucher bearing serial No. 231 also bearing the stamp of the Inspector (Gold Control Officer) Central Excise Gold Range, Amritsar, of gold licence No. 11/63 of petitioner No. 1 firm was found and was seized by the Officers. On 27-1-1981 in the business premises of Alanka Jewellers two godrej keys of the lockers of the Bank were recovered and it may be mentioned that they belonged to petitioner Nos. 3 and 4. Jai Nath Prasad gave a statement before the Department and a copy of the same is filed as Annexures-4 and 5. Petitioner No. 1 having lost the key of the locker of Allahabad Bank, filed an application before the Manager of the Bank on 29-1-1981 that the key has been lost and a prayer was made for breaking open the locker and the petitioner was asked to come after ten days so that necessary directions may be taken from the higher authorities in this regard. A similar application was filed by Pradeep Kumar on 28-1-1981 regarding the loss of key of State Bank. On 6-2-1981 petitioner No. 2 went to Allahabad Bank for opening the locker and was told that the Officers of the Central Excise Department had opened the locker and has seized the ornaments kept there weighing 3735.650 grams on 5-2-1981. Petitioner No. 2 thereafter filed an application before respondent No. 2 for the return of the ornaments but it was refused and on the other hand the officers took his statement copy marked Annexure-6. Thereafter, petitioner No. 2 went to Kanpur and on his return sent an application under registered cover, copy of which has been filed and marked Annexure-7, but no reply was received from the authorities concerned and then again a reminder was sent, a copy of which has been filed and marked Annexure-8. It has also been stated that the Blank Voucher No. 231, was lost and for that the petitioners filed an application before the Inspector (Gold Control), Amritsar, and the said voucher was cancelled by the Inspector by his order dated 3-1-1981 (vide Annexure-9). It is stated in the application that in spite of various reminders the authorities were not releasing the gold ornaments which have been illegally seized by them. In paragraph No. 23 of his application some allegation was made against respondents No. 3 and 4 but the learned counsel at the time of hearing sought permission to delate the paragraph and the prayer was allowed.
3. Mr. S.N. Kakker, learned counsel appearing on bahalf of the petitioners, has contended that the search and seizure is an inroad into the fundamental right of the petitioners and the power of seizure has been illegally exercised under Section 66 of the Act without any material and is, therefore, wholly without jurisdiction. He has, therefore, submitted that the search and seizure being illegal, the petitioners are entitled for the return of those ornaments. Learned Senior Standing counsel, appearing on behalf of the Department has submitted that from the facts mentioned in this application no illegality on the part of the Deparment has been shown by the petitioners and the authorities had reasonable belief that the provisions of the Act have been contravened and in that view of the matter, they were fully justified in seizing the ornaments from the locker. He has, further, submitted that the Department was conducting an enquiry into the matter to investigate into the entire case and to issue show cause notice to the petitioners under Section 79 of the Act to adjudicate the matter under Section 78 of the Act. It was, further, urged that the Department had yet to investigate and adjudicate the case against the petitioners and even after adjudication the petitioners have alternative remedy by way of appeal and revision prescribed under the Act and the application was, therefore, premature and the petitioners were, therefore, not entitled to any relief in this writ application. A detailed counter affidavit has also been filed which will be discussed in detail later and it is stated that blank voucher form belonging to the firm of the petitioners was found in the house of Jai Nath Prasad followed by two keys of the lockers, which admittedly belonged to the petitioners ; one of Allahabad Bank and the other of State Bank and the whole matter will be crystalised only after due enquiry.
4. Mr. Kakker has placed reliance on a decision of the Allahabad High Court in the case of L. Kashinath v. The Collector of Central Excise, Allahabad and Ors. (A.I.R. 1972 Allahabad 16) where in a similar circumstance the gold ornaments which were seized by the authorities were ordered to be released. The aforesaid decision has been upheld on appeal preferred by the Department and the case, is reported in the same volume, The Collector, Central Excise, Allahabad and Ors. v. L. Kashinath Jewellers (A.I.R. 1972 Allahabad 231). As regards the preliminary objection of alternative remedy a similar objection was also raised in the Allahabad case which was negatived by their Lordships relying on the cases of C.A. Abraham v. The Income Tax Officer, Kottayam (A.I.R. 1961 Supreme Court 609); Champa Lal v. Commissioner of Income Tax (A.I.R. 1970 Supreme Court 645) ; The Collector of Customs, Bombay v. Shanti Lal (A.I.R. 1966 Supreme Court 197); New Manek Chowk Spinning and Weaving Mills v. Municipal Corporation, Ahmedabad (A.I.R. 1967 Supreme Court 1801) and Zila Parishad, Moradabad v. Kundan Sugar Mills, Amroha (A.I.R. 1968 Supreme Court 98). In the instant case it has been urged on behalf of the petitioners that the authorities have acted beyond their powers and jurisdiction conferred on them under the Act. In other words, if it is found that the seizure itself is without jurisdiction it will be neither proper nor justifiable to ask the petitioners to avail of the alternative remedy and from the views expressed in the decisions mentioned above it is clear that the petitioners are also entitled to relief if they can succeed in their submissions, under Article 226 of the Constitution of India irrespective of the existence of an alternative remedy. The preliminary objection raised on behalf of the respondents, therefore, fails.
5. It will be necessary to examine in detail the facts of Allahabad case to see whether it can be pressed into service on the facts and circumstances of the instant case, in aid of the petitioners. Before going to that I will briefly refer to seme of the provisions of the Act which are relevant for the purpose of this case.
6. The Gold Control Act was enacted in 1968 and the preamble reads as follows :
"An Act to provide in the economic and financial interests of the community for the control of the production, manufacture, supply, distribution, use and possession of and business in, gold, ornaments and articles of gold and for matters connected therewith or incidental thereto."
The object of this Act is to prohibit smuggling of gold into the country from other countries and its circulation so that the country may not be put to any loss of foreign exchange and in that view of the matter, detailed provisions have been made in the Act in order to achieve its object; A dealer carrying on business in gold and ornaments has to obtain a licence under Section 27 and the acquisition of gold by dealer is regulated under Section 31 and no licensed dealer is entitled to buy or otherwise acquire or agree to buy or otherwise acquire or accept or receive any article, ornament or primary gold from a person who is not a licensed dealer or refiner. Under Chapter XI Section 55 every dealer is required to keep, in the form prescribed under the Rules, a true and complete account of the gold owned, possessed, held, controlled bought or otherwise acquired or accepted or otherwise received or sold, delivered, transferred or otherwise disposed of, by him in his capacity as a licensed dealer. Chapter XII of the Act makes provisions for entry, search, seizure and arrest. Any Gold Control Officer may search the business premises of a licensed dealer under Section 58 if he has reason to believe that the provisions of the Act has been or is being, or is about to be contravened. Section 60 prescribes the condition under which the search shall be conducted. Section 65 confers power on the Gold Control Officer to seize gold if he has reason to believe that in respect of the gold the provisions of the Act has been contravened. Section 66 of the Act provides for a power of seizure and Sub-section (1) (a), which is relevant, can be usefully quoted.
"66.(1) If any Gold Control Officer has reason to believe that in respect of any gold any provision of this Act has been, or is being or is attempted to be, contravened, then, he may seize: -
(a) such gold along with the package, covering or receptacle, if any (and the contents thereof), in which the gold is found."
Section 68 gives the power to arrest a person. Chapter XIII provides for confiscation and penalties. Under Section 71 provides for confiscation of gold in respect of which any provisions of the Act is contravened. Chapter XIV deals with adjudication, appeal and revision and confiscation may be adjudged or penalty may be imposed under Section 78. Opportunity has to be given before passing any order under Section 79. Any person aggrieved by the order can prefer an appeal before the higher authorities under Section 80 and there is also a provision for revision. Chapter XV prescribes, the procedure for the offences and their trial. Any person, who contravenes the provisions of the Act, is liable for prosecution under Section 85 and under. Section 87 punishment is provided for an offence for failure to submit returns' or to maintain the accounts under the provisions of the Act and the Rules; framed thereunder. Persons who contravened are tried by Magistrate exercising first class powers under Section 98.
7. After having given the scheme of the Act I will briefly deal with the facts of the Allahabad case on which strong reliance has been placed by Mr. Kakker. The Officers of the Excise Department having learnt from confidential sources searched the business premises of Kashinath Jewellers, Lucknow; who was a licensed dealer, and seized gold ornaments which weighed-22151370 grams. Against that seizure a protest was made but the Department did not release the goods. Thereafter writ was preferred before' the Allahabad High Court. The allegation was that the forms were not maintained as required under Section 55 and at the time of admission a Pleader Commissioner was appointed because the Department agreed to return those gold ornaments which were properly accounted for. After the accounting was done and verified a major portion of the ornaments seized were returned and only 3770.015 grams of golds were not returned and it was retained for the purpose of enquiry under the Act. The learned single Judge, who heard the application, held that the petitioner of that case, on his own admission and showing, had failed to maintain the accounts and thus he had contravened the provisions of Section 55 of the Act. But that, according to his Lordship, did not entitle the authorities to seize the gold ornaments in purported exercise of their power under Section 66 of the Act. If there was a contravention of Section 55 of the Act then a procedure \vas laid down for that and the authorities has to follow that. But, so far the seizure was concerned it was held that the Department had alleged contravention only under Section 55 of the Act and the only charge was that he had failed to maintain the accounts. Thus, only those ornaments and articles of gold could legally be seized which were not accounted for by the petitioner in his books of accounts and, therefore, the Excise Department exceeded their jurisdiction in seizing the entire stock of the petitioner. It was, further, held that the Department had not been able to show as to how they could form a reasonable belief as to which particular ornaments were not accounted for and in absence of any such reasonable belief the authorities were not entitled to seize any ornaments because the Act did not authorise seizure or confiscation of any other articles or ornaments except those in respect of which provisions of the Act are contravened. Concluding his Lordships held as follows :
"In the absence of the existence of the condition precedent, power of seizure exercised by the respondents is without jurisdiction. The respondents have acted in excess of their authority and beyond their jurisdiclion in seizing the ornaments in respect of which no contravention of Section 55 has been alleged or ascertained. The power of seizure is a serious inroad on the fundamental right of property of a citizen. The authorities exercising the power of seizure have to act strictly according to law."
The decision of the learned single Judge was upheld on appeal and the case is reported in the same volume at page 231. There lordships interpreted the word "Reason to believe" occurring in different statutes. Under the Income-tax Act the same phrase has been interpreted in the Calcutta Discount Co. Ltd. v. Income Tax Officer (A.I.R. 1961 Supreme Court 372); S. Narayanappa v. Commissioner of Income Tax, Bangalore (A.I.R. 1967 Supreme Court 523) and Sheo Nath Singh v. Appellate Commissioner of Income Tax (Central) Calcutta (A.I.R. 1971 Supreme Court 2451). Under Section 110 of the Customs Act their Lordships relied on the decision of Assistant Collector of Customs v. Charan Das Malhotra (A.I.R. 1972 Supreme Court 689); Haji Ahmad Haji Esak & Co. v. Commissioner of Income Tax, Bombay City (A.I.R. 1951 Bombay 299) and Deoki Nandan v. M.L. Gupta (23 Sales Tax Cases, Allahabad, 481) under the U.P. Sales Tax Act and Collector of Customs, Madras v. Sampathu Chetty (A.I.R. 1962 Supreme Court 316) under the Sea Customs Act and on a consideration of those decisions it has been held that the condition precedent for application of Section 66 is the reasonable belief that the provisions of the Act have been or are being or are attempted to be contravened. Thereafter the power extends to the seizure of such gold in respect of which contravention has been either made or is about to be made and the section did not permit an indiscriminate seizure with a view to fishing out material to form a belief and justify it by reasons culled therefrom. The belief must be of an honest and reasonable person based upon reasonable grounds. It was not a matter of subjective satisfaction. It was, further, held by their Lordships that when there is a proper seizure in law then only the question of burden of proof arises on the dealer. For non-maintaining accounts as required under Section 55 it was held that the ornaments could not be seized and at best the person could be prosecuted under Section 87 of the Act. While affirming the decision of the learned single Judge their Lordships further held that the power of seizure has to be exercised strictly under an authority of law placing reliance in the cases of Hamdard Dawakhana v. Union of India (A.I.R. 1960 Supreme Court 554) and Wazir Chand v. State of Himachal Pradesh (A.I.R. 1954 Supreme Court 415). These decisions have been quoted with approval in subsequent decisions of the Supreme Court, namely, in the cases of Bishdn Das and Ors. v. State of Punjab and Ors. (A I.R. 1961 Supreme Court 1570) ; Khyerbari Tea Co. Ltd. and Anr. v. State of Assam and Ors. (A.I.R. 1964 Supreme Court 925); Naresh Shridhar Mirajkar and Ors. v. State of Maharashtra and Anr. (A.I.R. 1967 Supreme Court 1) ; The Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi and Anr. (A.I.R. 1968 Supreme Court 1232) and Bennett Coleman and Co. Ltd. and Ors. v. Union of India (A.I.R. 1973 Supreme Court 106).
8. Learned Senior Standing Counsel for the Department has relied on some decisions of the Supreme Court and other High Courts in order to justify the actions of the authorities. The case of Assistant Collector, Customs v. Charan Das Malhotra (A.I.R. 1972 Supreme Court 689), was a case under Section 110 of the Sea Customs Act, where it has been held that no enquiry at the time of seizure is necessary but only the satisfaction of the officers. That satisfaction must be based on some material which is completely lacking in the instant case. Similarly, in the case of Pokhraj v. D.R. Kohli, Collector of Central Excise (A.I.R. 1962 Supreme Court 1559) gold and gold ornaments were .seized from the possession of a passenger of a train who was travelling without ticket. The possession of gold in large quantity gave the officers sufficient material to hold that the action of the aforesaid passenger was not bona fide and he was also travelling without ticket so that his identity may not be disclosed. In that view of the matter, it was held that the officers had sufficient reason to seize the gold ornaments. The facts of that case have absolutely no semblence with the facts of the case under consideration where the gold ornaments were recovered from a locker which was taken on hire by a licensee who was dealing in gold. The other cases, relied upon, are on similar line and need not be considered in detail.
9. On a consideration of the scheme of the Act, and the decisions, referred to above, with special reference to the provisions relating to search and seizure, I am of the opinion that Section 66 of the Act hedges in such powers conferred on the authorities and that has to be exercised strictly in accordance with law. It is also not disputed that petitioner No. 1 is a licensee and has obtained permit for carrying gold ornaments from one State to other. The firm had also dealings with jewellers of Patna and in that connection had to come here and for safe custody of the ornaments two lockers were hired; one of Allahabad Bank and the other of State Bank.
10. Now it has to be seen how far the Authorities were justified in searching the locker No. 64 of Allahabad Bank and in seizing the ornaments which were kept there. In this connection it will be necessary to refer to the counter affidavits filed by the Department. It may be stated here that it has not been stated anywhere in the counter affidavit whether any provisions of the Act have been violated. On a close reading of the affidavit it gives the impression that the matter is being enquired into by the authorities, in order to find out if there has been a violation of the Act. The relevant portion of the counter affidavit may be quoted in this connection :-
"(F) That locker No. 64 relating to Key No. 37 of the Allahabad Bank, Rajendra Nagar Branch, was opened on 5-2-81 in the presence of the Bank officers. As a result of the search, 944 pcs of new gold ornaments weighing 3,729.900 gms., valued at about Rs. 6,15,433/- were recovered and the circumstances of the case, as stated hereinbefore, led the Gold Control Officer to reasonably believe that the provisions of the Act (Gold Control Act) were contravened and hence the new gold ornaments recovered were seized."
Earlier it has been stated as follows :-
"Such an adjudication will include the decision as to whether the seizure (including the fact whether the Seizing Officer had reasonable belief or not) was legal or otherwise."
11. Thus, according to the Department the fact whether there was a reasonable belief or not will be determined only after enquiry. This, in my opinion, is contrary to the provisions of Section 66 of the Act and I may add, that it would amount to putting the cart before the horse and justify a seizure by forming an opinion in the nature of "reasonable belief" after enquiry. Such unfettered powers were also not contemplated by law makers in order to embark upon a roving enquiry, to form an opinion whether any provision of the Act has been violated or not. Search and seizure besides being an inroad on fundamental right of a citizen, adversely affect the reputation of a person, especially of a dealer and is bound to bring disrepute to his business. Seizure of entire stock, as it has been done in the instant case, will virtually paralyse the business. While exercising such powers the authorities should be rather careful and cautious. There should be some materials in order to be, prima facie, satisfied that some of the provisions of the Act have been violated. As I have stated earlier, nothing has been mentioned in the counter affidavit. Even at the time of the argument learned Senior Standing Counsel could not satisfy us on this point and simply stated that the matter was being enquired into for which notices have been given to them and the petitioners were associated with Alankar Jewellers against whom there were confidential informations and in pursuance of that three successive raids were conducted. Needless to say that persons dealing in gold ornaments will always have connection with jewellers and that alone will not be sufficient to form a reasonable belief, in order to seize the ornaments. The seizure of the blank form from the house of the proprietor of Alankar Jewellers and two keys from the shop premises at best may raise a suspicion but that will not be enough to form a reasonable belief as required by Section 66 of the Act. The petitioners, therefore, have made out a case for interference by this Court under writ jurisdiction. It will be, however, open to the authorities to take any other action which may be permissible under the law uninfluenced by the observations made by us which has been made for a limited purpose relating to the powers of search and seizure. The Department will be at liberty to form its own opinion on the materials placed before them in accordance with law. The application is allowed and the respondents are directed to return back the ornaments to the petitioners forthwith. Parties to bear their own cost.