TMI Blog1958 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... hich duty has not been paid, and Rule 144 says that the goods should not be removed from any warehouse except on payment of duty or where so permitted. Rule 152 says that subject to the limitation imposed by Rule 139, any owner of goods warehoused under these rules may at any time within two years from the date on which such goods were first warehoused and with the permission of the proper officer and on such conditions, remove such goods from one warehouse to another. In the case of a private warehouse under Rule 140 the licensee has to furnish a bond with such surety or sufficient security in such amount and under such conditions as the Collector approves, binding himself to pay the duty due on the goods deposited therein, or for the due and safe removal of such goods and for the due observance of the terms, conditions and requirements of the Act. 4. Rahamatullah, who stored the tobacco in his warehouse obtained a license from the Department for storing and he executed a security bond along with one Sundaram Pillai as surety to abide by the Excise Rules and for the payment of the amount due to the Government by way of duty, etc. The tobacco stored in such licensed godowns known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to safeguard its interests in the pledged goods. This letter was sent four days after the removal of the goods to Sundaram Pillai's godown and it was received by the Assistant Commissioner of Excise on 26th August, 1947. The defendant sent word to the plaintiff bank that a sum of Rs. 1,007-7-0 was due as duty by Rahamatullah to Government. The bank then remitted the said amount into the Government Treasury and wrote to the Department on 6th September, 1947 (Exhibit A-4). The bank wrote therein that the sum of Rs. 1,007-7-0 having been paid, the tobacco under pledge to the bank should be delivered to the bank. The wording is "We request you to arrange to give us delivery of the tobacco seized by you. We will keep it under our custody and act up to your instructions". Exhibit A-5 is the letter dated 5th December, 1947, received by the bank's advocate from the Assistant Collector of Central Excise stating that excepting for a small quantity of 534 lbs. the tobacco has been transferred by Rahamatullah to the warehouse of Sundaram Pillai, that Sundaram Pillai is holding the tobacco in his custody pending adjudication of a case registered against Rahamatullah and that the clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tody of the tobacco did not arise and the premises did not appear to have been locked with the bank's lock, that any pledge or hypothecation of the tobacco would not confer any right to ownership or possession of the goods in favour of the hypothecatee or pledgee as against the Government in view of the provisions of Rules 140, 144, 148, 172, 174 and 178 of the Central Excise Rules, 1944 and that the Government would not accept any liability for loss, if any, incurred by the Bank. 9. In other words, the Department was insisting on the payment of the duty of Rs. 1,279-11-0 payable in respect of the beedi tobacco. The attachment was under Section 11 of the Central Excise Act. The entire proeedings of the Department in the matter of detention of cheroot tobacco belonging to Rahamatullah in respect of duty payable on the beedi variety was under the Central Excise Act, as is evident from the correspondence Exhibit B-3 dated 1st April, 1948, which is a copy of a report made by the Deputy Superintendent of Excise, Palakarai Range, to the Superintendent of Central Excise, Tiruchirapalli, shows the action taken by the Deputy Superintendent, in the matter of recovery of duty on the beedi t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second appeal arises, was filed and the sum and substance of the bank's claim is that it had advanced Rs. 4,250 to Rahamatullah on the pledge of tobacco, that Rahamatullah is absconding, that the money had to be realised only by sale of the tobacco pledged and that as the Government were improperly detaining the tobacco and refusing to deliver it, the tobacco got deteriorated and therefore fetched only Rs. 1,665-1-0. The plaintiff bank says that the tobacco was in the bank's possession and it was the defendant who broke open the lock and removed the same. Inasmuch as this has been brought about by the wrong and illegal act of the Department, the plaintiff is entitled to recover the entire mortgage amount from the Department by way of damages. 12. Both the Courts below held that the plaintiff bank is not entitled to the damages asked for and dismissed the suit. Hence this second appeal by the defeated bank. 13. In this second appeal I am of the same opinion as the Courts below that the plaintiff bank is not entitled to damages by reason of the protection given to the Central Excise servants under Section 40 of the Central Excises and Salt Act, 1944 and the bar of the suit by li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if any person has become liable to any such fine, penalty or rate, in respect of any goods, the Customs-Collector may detain any other goods belonging to such person passing through the customs house until such fine, penalty or rate is paid. 17. The law regarding the vicarious liability of the Government of India for acts done by its servants, in cases of this nature, are clearly set out in S. Ramaswami Iyer's "Law of Torts" (Fifth edition) at pages 622 to 624 as follows: "(iii) The Government is liable for injury to any of its subjects resulting from an act done by itself or by its servants if such act is done under colour of municipal law, as when it purports to be in the exercise of powers conferred by a statute. Actions have been allowed against the Government for illegal levy of customs under the Customs Act, the illegal acquisition of land under the Land Acquisition Act, the improper dismissal of a councillor of a municipality under the District Municipalities Act. In an action for malicious prosecution against Government, the malice of its officer will be imputed to it. (Haribhanji v. Secretary of State (1882) I.L.R.5 Mad. 273; Secretary of State v. Mask Co. (1939 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h (1950) AIR 46, Shivabhanjun v. Secretary' of State for India (1904) I.L.R. 28 Bom. 314, Mohammed v. Uttar Pradesh A.I.R. (1955) U.P. 75]. The principle of these cases was stated to be that the act done by a servant of Government was done in the exercise of the authority or discretion vested in him by law or statute and not in pursuance of any implied authority of Government (District Board, Bhagalpur v. Province of Bihar A.I.R. 1954 Pat. 529; Gopal Singh v. Union of India A.I.R. 1957 Raj. 17) It is difficult to accept this reasoning, as vicarious liability does not rest on any principles of implied authority. Much less does it require express authority or ratification by the employer. This requirement is intelligible in the case of a superior servant sought to be held liable for an act of his subordinate but has no meaning in the case of the Government who is the ultimate employer. It is submitted that the rule is that the Government is liable for an illegal act of its servant or agents in the course of performing its work. This of course assumes that the act is illegal and a suit lies against him. Otherwise, there can be no suit against Government as employer. The view here su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by its performance. In Appendix V is set out the Protection Clauses in Indian Acts giving immunity to the State, which were 72 in number. No. 39 of the list is the Central Excises and Salt Act (1 of 1944), Section 40. The Law Commission in its proposal at page 38 and following has formulated the following principles on which legislation should proceed under the general law viz., the State as employer should be liable for the torts committed by its employees and agents while acting within the scope of their office or employment, and the State as employer should be liable in respect of breach of those duties which a person owes to his employees or agents under the general law by reason of being their employer and that in respect of these the State should be entitled to raise the same defences which a citizen would be entitled to raise under the general law. Then turning to duties of care imposed by statute, the Law Commission formulates the principles that the State should be liable without proof of negligence for breach of a statutory duty imposed on it or its employees which causes damage and that the State should be liable if in the discharge of statutory duties imposed upon it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere must not only be an absence of knowledge of any invalidity, but an absence of circumstances which would put an ordinarily prudent man upon inquiry. As an element tending to rebut malice in libel and slander, good faith requires proper consideration for the character and reputation of the person whose character is likely to be injuriously affected by the publication. There must be absence, not only of all improper motives, but of negligence. Good faith in adverse possession.-In the law of adverse possession, whether general or statute the term means free from a design to defraud those who appear to have a better title than the claimant's. His possession must be free from stealth. Good faith in stock issue. - In the valuation of property for which stock in a corporation is issued, 'good gaith' consists in the belief that a prudent and sensible man would hold in the ordinary conduct of his own business affairs." 24. The Law Lexicon of British India by P. Ramanatha Iyer (M.L.J.): "Good Faith" defined. Act XLV of 1860, Section 52; Act IX of 1908, Section 2(7); Act X of 1897, Section 3(20); Bengal Act I of 1899, Section 3(17); Bombay Act I of 1904, Section 3(20), Burma Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... break open the godown of Rahamatullah and remove the goods to Sundaram Pillai's godown and that what happened was that on the application of the surety Sundaram Pillai the Excise authorities permitted the transfer of the excisable goods which were slowly purloined from the godown of Rahamatullah, to the well-protected godown of Sundaram Pillai. Point 1 raised by the plaintiff bank rightly failed. 28. Point 2 : I have already reproduced Rule 215 of the Central Excise Rules which states that the provisions of Sections 168, 189 and 192 of the Sea Customs Act has to be applied mutatis mutandis. Therefore, for the words "customs house" we have to substitute the words "bonded warehouse". The cheroot tobacco was in the bonded warehouse of Sundaram Pillai. On the date when the Government attached the cheroot tobacco for the duty payable on the beedi tobacco, the Government was well within its rights to attach the same. The tobacco belonged to Rahamatullah but was in the custody of Sundaram Pillai and the Excise Department attached the tobacco. There is nothing illegal or unlawful in the conduct of the Excise Department. It has power under Section 11 to attach the goods, viz., the cheroo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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