TMI Blog1988 (5) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... of the firm, though claimed to be written upto date, showed a stock of 11.96 carats of cut and polished diamonds and the stock of rough diamonds and other articles was shown as nil. When the Officers asked S/Shri Indru Ramchand Bharvani and Ramchand Udhavdas Bharvani to produce evidence of legal acquisition, import and possession of diamonds they showed their inability to produce any documents. They stated that they had purchased the goods locally through brokers and that they had already made 50 per cent of the payment in cash. The Cash Book, however, showed no such payment entries nor were any purchase vouchers produced before the officers. When asked to name the brokers so that the explanation of purchase given by them could be verified, the Petitioners No. 1 and 2 stated that the brokers would not come forward to confirm the deal. The Customs Officers also found various documents which have been described in the initial Panchnama as "various incriminating documents". Considering the totality of the circumstances in the background of the secret information the officers had received, the Customs Officer in-charge of the search party formed the reasonable belief under Section 110 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o M/s. Gems Impex Corporation on approval basis. The approval basis is known in the business circle, according to the learned counsel for the petitioners, as 'Jangad'. Some of these notes bore dates earlier than 16th November 1979 but neither these notes nor any packets of diamonds covered thereby had been found with the firm on the date of search and seizure. The dealers named by the petitioners were also questioned under Section 108 of the Act to check the veracity of the said notes. In the course of their statements it came out that these dealers had prepared anti dated and fake notes in order to help the petitioners. The diamonds covered by these 'jangad notes' were not found in possession of the firm on 16th November 1979 and were not seized. The petitioners tried to explain the absence of these notes by saying that they had further passed on these diamonds to other dealers on jangad basis and as such the said diamonds were in circulation and hence not seized. The jangad notes issued by the four dealers or the jangad notes issued further by the petitioners to other dealers or even copies thereof were also not found. 5. A show cause notice dated 9th May 1980 was served upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learnt about the seizure of diamonds. Dalip Shantilal Jhaveri in the affidavit says that he learnt about the seizure of diamonds on or about 29th November 1979. Both these affidavits are identical in all other respects. The third affidavit of Kirtilal Jeshinglal Jhaveri of M/s. Ashok Gems states that he learnt about the seizure of diamonds on or about 20th November 1979. Kirtilal Jeshinglal Jhaveri is the same dealer whose statement under Section 108 of the Act had been recorded within about two weeks of the seizure as he was one of the dealers named by the petitioners. He had then disowned the diamonds. The other two Shailain Hirachand Jhaveri and Dilip Shantilal Jhaveri were not named by the petitioners when their statements were recorded under Section 108 of the Act. The statement of Kirtilal Jeshinglal Jhaveri under Section 108 of the Act was recorded on 1st December 1979 which was retracted by him for the first time by filing the affidavit through the petitioners with their reply dated 5th March 1981 to the show cause notice. In his affidavit Kirtical Jeshinglal Jhaweri stated that statement made by him on 1st December 1979 was under threat and coercion exercised by the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had adequate material to form the reasonable belief as contemplated in Section 110 read with Section 123 of the Act, that the diamonds found in the business premises of M/s. Gems Impex Corporation were smuggled goods (2) Assuming that Section 123 applied and burden of proof was on the appellants, whether the Tribunal should have held that the appellants had discharged this burden by tendering affidavits of persons claiming ownership of the seized diamonds." 9A. The Supreme Court by order dated 15th July 1987 directed that reference application No.C.S.(SB)28/84-D pending in the Bombay High Court shall stand transferred to this court and be heard alongwith this writ petition. So, this Judgment will dispose of the writ petition and would also answer the aforesaid reference. 10. In support of the petition, the learned counsel for the petitioners has made two submissions: (1) there was no material before the Customs Officer to form the reasonable belief that seized goods were smuggled goods and hence the seizure itself was bad in law and, therefore, the provisions of Section 123 of the Act cannot be applied and it is for the Customs department to prove that the diamonds in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasonable belief was formed in the panchnama although the Customs Officer has indicated in the panchnama the huge stock of unaccounted diamonds and other factors existing at that time, which all led him to form the reasonable belief coupled with definite secret information. It is also not possible to agree with the contention of the learned counsel that there was no material for arriving at the reasonable belief that the goods were smuggled. The conclusions of the Customs Officer as to reasonable belief in the facts and circumstances of the case cannot besaid to be perverse. 13. Learned counsel for the petitioners further contends that there is no profit element in smuggling of diamonds and, therefore, no presumption should be drawn against them. I do not agree. Firstly, there is nothing on record to support the contention that profit element was lacking. Secondly, Section 123 of the Act itself recognises that diamonds have great potential for smuggling Into India and that is why diamonds are one of the few articles specified in sub-section 2 of Section 123 of the Act, the burden of which has been placed on the person from whose possession-such articles are acquired. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners stated that they had purchased the goods locally through brokers and had made 50 per cent of the payment in cash. The cash book, however, showed no such payment. The petitioners when asked to name the brokers did not give the names of the brokers as they stated that the brokers would not come forward to confirm the deal Besides various incriminating documents were at so found of which even superficial examination showed that the transactions of diamonds were in foreign currencies, in view of the overwhelming circumstantial evidence and attending circumstances it is not possible to hold that sufficient material was not available before the Customs Officer to form the reasonable belief under Section 110 read with Section 123 of the Act. The circumstances existing at the time of seizure were adequate to form the reasonable belief in the mind of the Seizing Officer that the diamonds were smuggled. 16. This court is not sitting as a court of appeal and cannot substitute its own finding on the question of reasonable belief. Whether or not the Officer concerned had seized the articles in the "reasonable belief" that the goods were smuggled goods is not a question on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which the Central Government may by notification in the official gazette specify." 18. .Section. 123 of the Act is a departure from the ordinary criminal jurisprudence. In the criminal jurisprudence the onus to prove the guilt of the accused lies on the prosecution. There is no doubt that nature of proceedings under the Act are quasi criminal. In criminal or quasi criminal proceedings the burden of proving everything essential to the establishment of the charge against the accused always rests upon the prosecution as everyone is presumed to be innocent until the contrary is proved. The criminology is never to be presumed subject, however, to statutory exceptions. Section 123 is in the nature of a statutory exception made by the Legislature as regards the presumption of smuggled goods covered therein. The Legislature in its wisdom has placed the burden of proof on the person from whose possession the goods are seized in the reasonable belief of their being smuggled goods, to prove to the contrary. Section 123 in a way incorporates the principles underlying Section 106 of the Evidence Act which provides that when any fact is within the knowledge of any person the burden of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. As regards the proposition about nature and standard of proof required from the petitioners, in my opinion, the test required is that of a prudent man. The burden on the petitioners is not as high as on prosecution in a criminal trial to prove guilt of the accused beyond reasonable doubt. The petitioners can rebut the presumption drawn against them by Section 123 of the Act by bringing on record evidential material before the authorities which should be sufficient for a prudent man to believe their version or making it reasonably probable. However, within that standard also there are degrees of probabilities. The nature of burden on the petitioners is not as onerous as is on prosecution in criminal trial but is of the type which rests upon a party in civil proceedings. The petitioners have to satisfy the standard of a prudent man. While applying the test of a prudent man the court has to consider the total cumulative effect of all the facts and circumstances. Each fact individually by itself may not be sufficient or decisive but when seen alongwith other facts may tend to strengthen the conclusions. It is the combined effect which is conclusive and which has to be leapt In m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Kiritilal J. Jhaveri was also recorded under Section 108 of the Act. He had then decied ownership of diamonds. He retracted his statement after hearty 15 months by handing over his affidavit to the petitioners which they filed alongwith their reply to the show cause. In 15 months no protest is made that statement in December 1979 was the result of duress and coercion. Even now in the affidavit Kirtilal J. Jhaveri does not say whether any documents or jangad slips were issued or not, nor does he file any such document. All the three affidavits are contrary to normal human behaviour. 22. The learned counsel further submits that there is denial of opportunity to the petitioners as the deponents were not called for cross examination. I do not agree. It is not a case where petitioners wanted an opportunity to cross - examine any witness which was refused. The case of the petitioners is also not that these deponents were not permitted to file any documents or place any additional material before the Collector. In my opinion, no useful purpose would have been served even by cross-examination of the deponents by the Customs department. At the most they would have stuck to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affidavits which are described as most important evidence' in the judgment. The necessity of these affidavits had not been considered by the authorities. There was no discussion in the order regarding affidavits. There was no finding that the correctness of these affidavits had not been accepted by the authorities. In this background the Bombay High Court held that "it appears very doubtful as to whether respondent No. 2 could have rejected these affidavits without calling upon the petitioners to produce the deponents for being cross examined or without the correctness of the affidavits being tested in some other manner. Reference was also made to the case of M. Parekh Co. v. Income Tax Commissioner A.I.R. 1956 SC 554 for the proposition that normally speaking, if the officer desires to challenge the correctness of affidavits he should call the deponents for being cross-examined or test the averments by any other means open to him. The use of the word 'normal' in the judgment itself shows that there is no hard and fast rule and every case depends upon its own peculiar facts Eventually each case would turn upon its own facts and circumstances and the conduct of the parties. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners to show that diamonds were kept party-wise but a reference to details given by the petitioners themselves in their reply to show cause and details of the diamonds in panchnama and comparison thereof totally demolishes the argument that diamonds were kept in separate boxes or packets according to different parties. The Tribunal rightly says that it would require a super human with a computer memory to say that as to which piece of diamonds belongs to whom. In order to meet these observations of the Tribunal a novel argument is put forth by learned counsel that as petitioners had thought of buying all these diamonds so there was nothing wrong in mixing the diamonds although in the mind of the owners the diamonds were still on approval basis with the petitioners. This novel argument is not put at any earlier stage, either in reply to show cause or before Collector or even before Tribunal and has to be rejected. In the affidavits are correct then the Petitioners' own earlier version has to be false. This is the background in which the question about correctness of the affidavits is to be seen. 25. From the above facts it is apparent that the petitioners in their attempt to re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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