TMI Blog1964 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... to Marmagoa some time in September 1958 On December 4 1958 the customs authorities visited the said bungalow for making a search thereof pursuant to a search warrant obtained by them under section 172 of the Sea Customs Act VIII of 1878. As the petitioner was absent his munim one Soonderji Nagardas informed the customs authorities that he did not have in his possession all the keys of the bungalow. On the authorities threatening to break open the lock of the bungalow one Chunilal Umedchand undertook to produce the keys as early as possible. Nothing else happened on that day except that the officers sealed the doors of the said bungalow and posted custom guards thereat. By his letter dated December 6 1958 the Assistant Collector of Customs Rajkot informed the petitioner at Marmagoa to appear before him at Surendranagar on December 14 1958 with the keys of the said bungalow as also of the cup-boards safest. therein failing which he was informed that the authorities would break open the bungalow as also the safes cup-boards etc. placed therein. On December 17 1958 the bungalow was searched by the customs authorities and in the purported exercise of their powers enter alia seized two g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 8(1) of the Foreign Exchange Regulation Act 1947 read with sec. 19 of the Sea Customs Act and section 23A of the Foreign Exchange Regulation Act 1947 By the said notice the petitioner was called upon to show cause why personal penalty should not be imposed upon him under section 167(8) of the Sea Customs Act and why the aforesaid gold and ornaments should not be confiscated. An annexure enclosed with the show cause notice stated that the said ingots and the ornaments had been kept inside a safe in a box and further that the two bars of gold seized on the occasion of the search bore foreign markings on them namely 10 9999 The annexure further stated that gold with such foreign markings was not sold in the open market and therefore the two ingots constituted smuggled gold. On May 21 1959 the petitioner filed his reply to the said show cause notice wherein he maintained that the two ingots of gold were not of foreign origin that he had purchased those two pieces of gold in the open market more than thirteen years ago and that their seizure was based merely on suspicion and was therefore not justified in law. On August 31 1959 the first respondent held an enquiry at Porbandar where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery for investigation and conduct of an enquiry in respect of offences committed there under and the remedies against the orders passed there under. He contended that that being so the petitioner ought to have exhausted his remedies given to him under the Act before filing this petition and that that not having been done the petition should be dismissed. It is however well settled that where a petitioner challenges the jurisdiction of the adjudicating authority or the validity of the enquiry itself or the impugned order on the ground that there is an ex facie error there under he need not wait until he has exhausted the alternative remedy and therefore can file a petition to set aside the impugned order without having recourse to such alternative remedy. In the present petition the petitioner has challenged amongst other things the validity of the order on the ground that sec. 178A of the Act was wrongly applied by the adjudicating authority without the condition precedent therefore having been satisfied as also the validity of the seizure of the ingots in question on the ground that the seizure was made without the seizing authority having bad a reasonable belief at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when a petition was filed for enforcing such a right. The Supreme Court was not concerned with a contention of the type we have nor with a petition of the type we have before us and the decision relied upon by the learned Assistant Government Pleader therefore cannot assist the respondents for the order in question before us is challenged not on the ground only that it is an erroneous order but on the ground that the basis on which the adjudicating authority invoked the presumption under section 178A and threw the burden upon the petitioner of proving that the two ingots in question were not smuggled gold was lacking namely a reasonable belief on the part of the seizing authority that the two ingots were smuggled gold and on the further ground that the enquiry before the first respondent was a quasi-judicial enquiry and yet the adjudicating authority had not followed the principles of natural justice. The preliminary objection raised by the learned Assistant Government Pleader must therefore be rejected. ( 4. ) The principal contentions raised by the learned Advocate General appearing for the petitioner were that the seizure of the two ingots of gold was on a mere suspicion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint effect of sec. 23A of the Foreign Exchange Regulation Act and section 19 of the Sea Customs Act is that notwithstanding the proceedings that may be taken under the Sea Customs Act against a person for the contravention of the provisions of that Act such a person would be liable to be proceeded against and punished on the same facts as if his act amounts to a contravention of any of the provisions of the Foreign Exchange Regulation Act. If a person therefore clandestinely brings or in popular parlance smuggles gold into India without the permission of the Reserve Bank of India from a place outside India he is liable to be proceeded against under sec. 167(8) of the Sea Customs Act and notwithstanding that he may be punished under the Sea Customs Act he would also be liable to be prosecuted for the same act for contravention of the provisions inter alia of sec 8 of the Foreign Exchange Regulation Act punishable under section 23 thereof. Section 19 of the Sea Customs Act empowers the Central Government by a notification in the Official Gazette to prohibit or restrict importation or exportation of goods of any specified description and sec. 167(8) provides that if any goods the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Legislature decided to throw the burden of proving that the goods were not smuggled goods on the person from whose possession the goods are found. But realizing that it was doing away with one of the most important rules of criminal jurisprudence it laid down a safeguard by requiring that such burden can only be thrown on the person against whom the enquiry is made provided that the officer seizing the goods under section 178 had at the time of the seizure a reasonable belief in other words a belief based on reasonable grounds that the goods seized were smuggled goods. Thus under section 172 a search warrant can be obtained only on the basis of a belief that certain prohibited goods are secreted at a particular place and under section 178 if the goods are seized as a result of a search made under the authority of such search warrant and if they are seized under a reasonable belief that they were smuggled goods in that event only the burden can be cast upon the person concerned to establish that the goods in question were not smuggled goods. In Collector of Customs v. Sampathu Chetty A.I.R. 1962 S. C. 316 where the constitutional validity of section 178 was challenged the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not. How would the adjudicating authority proceed to do that unless the seizing officer either by his own evidence or other materials placed before the adjudicating authority proves to its satisfaction that there were grounds for him to reasonably believe that the goods were smuggled goods that is to say that the goods were imported into the country and imported at the time and place when they were restricted or prohibited from being imported. If the adjudicating authority is not satisfied that the goods were seized upon a reasonable belief sec. 178A cannot be invoked and in that event it would be the customs authorities who would have to prove that the goods were smuggled goods and sec. 178A it that event would have no application. If therefore section 178A is wrongly applied and the presumption there under is raised without the condition precedent there under having been satisfied the entire enquiry and the order passed therein would be vitiated. The question as to when sec. 178A can be invoked was further explained by the Supreme Court in Pukhraj v. D. R. Kohli Collector of Central Excise Madhya Pradesh and Vidarbha and another A. I. R. 1962 S C. 1559 where the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef that the goods were smuggled then the presumption arises that the goods were smuggled goods and the burden of showing that they were not smuggled goods would be on the person from whose possession the goods had been seized. The learned trial Judge negatived the construction sought to be placed on behalf of the Department and upon the same construction being urged before the appellate Court the learned Judges trying the appeal held that the belief as required by sec. 178A must be a reasonable one not a belief of a man who just catches at some slight circumstance which creates only a sort of guess or speculation in his mind that something might exist or might not exist. The belief must be such as any other reasonable man in the circumstances of the case would entertain about the existence or nonexistence of a thing. They further observed that the restriction placed upon the power of the customs officers under sec. 178A cannot be lightly treated as they are intended to check the exercise of powers given to them under section 178 arbitrarily and without any foundation at all to the harassment of the general public. It would be necessary therefore that before any person could be call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noticed that the show cause notice itself stated that it was on a mere suspicion that the bungalow Manju Villa was searched by the customs Staff on December 17 1958 This is admitted even in the affidavit of the first respondent. Neither the show cause notice nor the order of the first respondent states that anything happened after the search was made which could lead the seizing officer to entertain a reasonable belief that the goods recovered from the bungalow namely the two ingots and ornaments were smuggled goods. When the bed room was searched a sandle box was found containing currency notes of ₹ 3000/and gold ornaments of the weight of about 20 tolas. From the safe in the cellar were found silver utensils and from the right band drawer currency notes again of ₹ 2500/were found and the left drawer contained a jewellery box in which were the two ingots bearing marks 10 9999 together with certain ornaments. The fact that the petitioner visited this bungalow in August September 1958 coupled with the fact that currency notes of ₹ 3000/and ornaments were found from a sandle box in the bed room would seem to indicate that the petitioner was in the habit of keepin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing and could not possibly have given cause for a reasonable belief that the two ingots were smuggled goods. Being valuable articles it would be quite natural that they would be kept in the safe and along with other valuable articles such as ornaments. That the bungalow had a cellar and the safe was kept in that cellar is also not an unusual circumstance first because cellars in hot places in this part of the country are not uncommon and secondly because the cellar was not a secret place where the safe was surreptitiously kept. The panchnama indicates that there was a ladder by which the panchas and the officers could reach the cellar. These facts therefore could not have been the facts upon which the seizing officer could have arrived at the necessary reasonable belief. Besides there is nothing in the impugned order which would indicate as to what were the grounds for such reasonable belief on the part of the seizing officer that the two ingots were smuggled gold and on which the presumption under section 178A could be invoked by the enquiry officer or on which the enquiry officer could say that be was satisfied that the goods were seized on December 17 1958 on the basis of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer of the safe. But that again would not mean that he seized these valuables because he had a reasonable belief relating to them. It is obvious that he could not have seized the currency notes that were lying in a sandle box in the bedroom nor the ornaments therein kept for the ornaments found in that sandle box were admittedly old ornaments. Similarly the utensils also could not be seized and so also the currency notes found in the right hand drawer of the safe. The mere fact therefore that these valuables were not seized cannot possibly lead to a conclusion that in respect of the articles that were seized the seizing officer had come to a reasonable belief that those were smuggled articles. It is therefore difficult to accept the contention of the learned Assistant Government Pleader that because the officer had discriminated between certain valuables from the rest of the valuable articles that that meant that he had held a reasonable belief relating to those articles. As pointed out earlier on a construction of section 178A it is for the enquiry officer first to ascertain and come to a conclusion that the goods seized by the officer were seized on the footing of a reasonable be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made behind the back of the petitioner. No evidence was produced before the enquiry officer of persons from whom these enquiries were made or of persons who made the enquiries and the petitioner obviously was not given any opportunity of testing the truth of the information arrived at as a result of these enquiries either by means of cross-examination or by giving an opportunity to him to lead evidence to controvert the information derived from such enquiries. In his affidavit in reply the first respondent states that the information derived as a result of these enquiries was of a general nature. It would seem that by the expression general nature the first respondent meant that the markings on the two ingots were foreign markings that such markings were noticed only on imported gold bars of ten tolas and that gold bars having such markings were not available for sale in the open market. These three conclusions obviously were arrived at by him from the enquiries made by him or at his instance and upon which he placed reliance for his ultimate conclusion. If he wanted to rely upon these enquiries it was incumbent upon him to give an opportunity to the petitioner to test the truth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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