1967 (5) TMI 68 - SC - Customs

Whether the said vehicles were-seized by the customs -authority that between 1947 and October 1951 when they were disposed off they were lying uncared for in an open space that they were disposed of at the instance of the Police as unclaimed property that when they were sold most of the valuable parts were missing and lastly that they were sold while the appeal against the order of seizure and confiscation was still pending? Held that - The fact that an order for its disposal was passed by a Magistrate would not in an- way interfere with or wipe away the right of the owner to demand the return of the property or the obligation of the Government to return it. The order of disposal in any event was obtained on a false representation that the property was an unclaimed property. Even if the Government cannot be said to be in the position of a bailee it was in any case bound to return the said property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by any act of its agents and servants. In these circumstances it is difficult to apperciate how the contention that the State Government is not liable for any tortious act of its servants can possibly arise. The High Court was right in conferming the decree passed by the trial court on the basis that there was an obligation on the State Government either to return the said vehicles or in the alternative to pay their value. The appeal is dismissed

Issues Involved:
1. Liability of the State Government for the acts of its servants.
2. Duty to preserve seized property pending appeal.
3. Validity of the sale of seized property during the pendency of an appeal.
4. Obligation to return property or pay its value upon setting aside of seizure and confiscation order.

Detailed Analysis:

1. Liability of the State Government for the Acts of its Servants:
The State Government argued that it was not liable for any tortious acts committed by its servants. However, this plea was not raised in the written statement nor was any issue framed on this point in the trial court. Consequently, the High Court held that the State Government could not raise this contention for the first time on appeal. The Supreme Court concurred, emphasizing that the respondent's suit was grounded on the statutory obligation to return the seized property or pay its value, rather than on a claim for damages for negligence.

2. Duty to Preserve Seized Property Pending Appeal:
Both the trial court and the High Court found that the State Government had a statutory duty to take reasonable care of the seized vehicles pending the appeal. The vehicles were seized under the Junagadh State Sea Customs Act, which provided for appeals against seizure and confiscation orders. The courts held that there was an implied obligation to preserve the property intact during the pendency of the appeal. The State Government's failure to do so, allowing the vehicles to be pilfered and sold as unclaimed property, constituted a breach of this duty.

3. Validity of the Sale of Seized Property During the Pendency of an Appeal:
The vehicles were sold by the police as unclaimed property while the appeal against the seizure and confiscation order was still pending. The High Court found this assumption to be incorrect, as the vehicles were in the custody of the authorities and the issue of their confiscation had not been finally decided. The sale was conducted without notifying the respondent, despite the police application mentioning the respondent's name. The Supreme Court agreed that the sale was improper and that the vehicles should have been preserved until the appeal was resolved.

4. Obligation to Return Property or Pay Its Value:
The courts held that once the Revenue Tribunal set aside the order of seizure and confiscation, the State Government was obligated to return the vehicles to the respondent or pay their value if it had disabled itself from returning them. The Supreme Court emphasized that this obligation arose from the statutory duty under the Customs Act and the implied duty to preserve the property pending appeal. The State Government's argument that the vehicles were disposed of under a judicial order was rejected, as the order was obtained on the false premise that the vehicles were unclaimed. The Supreme Court concluded that the respondent had the right to demand the return of the vehicles or their value, affirming the High Court's decree.

Conclusion:
The Supreme Court dismissed the appeal, confirming the High Court's judgment that the State Government was obligated to return the seized vehicles or pay their value due to its failure to preserve the property pending the appeal. The State Government's contention that it was not liable for the tortious acts of its servants was not entertained, as it was not raised in the initial pleadings. The statutory duty to preserve the property and the obligation to return it upon the setting aside of the seizure and confiscation order were central to the respondent's cause of action.

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