TMI Blog1962 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... nformed the Customs Department. On interrogation by the Customs Officers, Ghevarchand produced a manuscript letter written in the letter-head paper of 'Jain Jewellers', Bangalore, dated 8th October, 1957, and addressed to M/s. Amichand Nagindas, Jewellers, Madras. The letter was in the following terms : "We have to-day sent along with Mr. Ghevarchand two pieces of gold, weight 305.56 approximately, which kindly take delivery and pay him the agreed price. Solicit the further order. Thanking you,......" on 9th October, 1957, Amichand Nagindas was contacted by an Inspector of Customs, and Chunilal, the managing partner of that firm, gave a written statement, wherein he stated as follows : "I state I have not placed any order with M/s. Jain Jewellery; the gold in question cannot be either for me or to my firm. I have no communication from that party, namely, Jain Jewellers, Bangalore." 3.The petitioner himself arrived in Madras on 9th October, 1957, and gave a statement to the Customs Authorities. He stated that the gold was despatched from Bangalore in pursuance of an oral contract between him and M/s. Amichand Nagindas entered into through the medium of the trunk phone, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same for both places, the Bangalore parties are not in a position to sell the same gold at a profit to Madras parties; unless there is old stock and there is considerable upward fluctuation in prices. He solemnly denies any connection with the gold under detention by the Custom House ............ or having entered into any discussions over trunk telephone with M/s. Jain Jewellers of Bangalore in respect of sale or purchase of gold." 4.As a result of the enquiry, the Collector found that the actual quantity of gold seized on 8th October, 1957, from Ghevarchand was of the weight of 305.56 tolas consisting of four pieces of gold; one block weighing 205.34 tolas, another block of 97.69 tolas and two small pieces weighing 2.53 tolas. The books of account with the petitioner examined by the Customs Authorities disclosed his stock position of gold as follows: (1) balance of stock of gold acquired from Bombay merchants—80 tolas approximately and (2) purchases from M/s. Hindustan Jewellery Mart— 235 tolas approximately. The case of the petitioner at the enquiry was that M/s. Amichand Nagindas placed orders of 300 tolas of gold at Rs. 104.50 per tola, that he agreed to fulfil that order a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the petitioner submits that the Collector was wrong in invoking section 178-A of the Sea Customs Act, as it cannot be said that there was any reasonable belief that the gold was smuggled gold at the time of the seizure. Section 178-A reads : "Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized." The existence of reasonable belief is an essential conditions for the section to operate, and, surely, 'reasonable belief' indicates a state of mind possessed of facts on which the belief is founded, and not a chimerical mind filled with suspicion. 6.When was the gold seized in this case, is the question. On 8th October, 1957, Ghevarchand was deprived of the custody of the gold. The police officers took it in the first instance and handed it over to the Customs Department. The Customs Inspector contacted M/s. Amichand Nagindas on 9th October, 1957, and got a statement from one of its partners. The petitioner himself gave a written statement on that date. Therein, he stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the dismissal of the complaint or the conclusion of the enquiry or trial, he shall cause such things to be conveyed to, and deposited at, the nearest Custom House, to be there proceeded against according to law." The gold was confiscated by the Customs Authorities under section 167(8) of the Sea Customs Act, and, in addition, a prosecution was launched against the owner of gold under section 167(81) of the Sea Customs Act. The question that arose for consideration was whether the presumption under section 178-A of the Sea Customs Act was available for the prosecution to sustain a conviction of the person charged with the offence. The Supreme Court held that the presumption was not available, because the essential prerequisite of the applicability of section 178-A was that there should be a seizure under the Sea Customs Act. Rajagopala Ayyangar, J., delivering the judgment, observed that the handing over of the gold to the Customs Authorities under section 180 of the Sea Customs Act was not a seizure under that Act. At page 156, the following observation occurs : "The question that now arises is whether the possession obtained by the Customs Department by goods being conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the statements of Chunilal of M/s. Amichand Nagindas recorded behind his back have been relied on by the Collector as evidence against him and the order is therefore vitiated by breach of natural justice. That the petitioner was aware of the stand taken by Amichand Nagindas cannot be, and is not, disputed. In the show-cause notice itself, the authorities referred to the statement of Chunilal to the effect that he did not place any order with M/s. Jain Jewellers at Bangalore. Further, the petitioner applied for a copy of the statement of Chunilal given in December, 1957, and a copy was furnished to him. The importance which the Department attached to the statement of Chunilal was not kept in secret, and, indeed, the petitioner took care to say on every occasion that Chunilal's conduct was not above board, though it was explicable as the conduct of self-preservation. The petitioner did say repeatedly with a good deal of force and logic that he should not be treated as a suspect, merely because it is convenient to Chunilal to deny the attempted transaction which broke down by the unexpected interference of the Customs Authorities. It cannot therefore be said that the reception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owerless to quash decisions emanating from a mind foreclosed to reason. A stubborn unbelieving frame of mind is certainly not cast in a judicial mould. 12.I have now to consider the question whether there are grounds for a certiorari in this case. The following facts emerge on a close analysis of the materials on record. The petitioner was a partner of the firm called Hindustan Jewellery Mart from 29th December, 1949. He left the firm and started his own business, Jain Jewellers - on 2nd July, 1957. This business consisted of dealing in bullion. His capital for the new business is stated to be Rs. 20,000/- borrowed from one Fulchand Pratapjee at 7.5% interest. He purchased gold in September, 1957, from Chandulal Kushaldas, Bombay and Hindustan Jewellery Mart, Bangalore, at prices ranging between Rs. 106/- and Rs. 107/- per tola. He had no dealing with Amichand Nagindas prior to the transaction said to have been put through on trunk phone on 6th October, 1957. As the time when he received the order on 6th October, 1957, he had certainly not enough gold in his hands to effect the supply. On 7th October 1957, he purchased gold weighing about 235 tolas from Hindustan Jewellery Mart, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter states : "If the rate of 100 touch gold is 106.25, the 99 touch gold will be 105.19 i.e. less by Rs. 1.06." It is true that gold despatched by the petitioner through Ghevarchand was only 99 touch. But, still, it is obvious that the market rate of gold on 6th October, 1957, was much higher than Rs. 104.50 per tola, for which he is supposed to have agreed to supply Amichand Nagindas. The explanation of the petitioner for this queer conduct can best be set out in his own words, as contained in his answer to the show-cause notice : "On the date of the said transcation, the price of acid gold at Bangalore, was Rs. 104/- and therefore we made a bargain with M/s. Amichand Nagindas for sale at Rs. 104-8-0 per tola. However, as we could not obtain the entire quantity from the market, we had to give delivery from our old stock purchased at higher price to the extent of about 70 tolas only. In a fluctuating market, the merchants of specially reputed firms would not mind the loss or profit and would stick up to their business obligations. Accordingly, in order to maintain our high reputation and integrity, we wanted to supply the goods as per contract, although it entailed the l ..... 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