Mr. ·c· v. Tht Advocate

reply given by him was in the negative. Thereupon a almirah, wherein washed clothes, and other articles were stored, was searched and therein in an old jacket 475 pieces of diamonds were discovered along with one piece of synthetic stone. A statement signed by him was taken from which we find that his explana tion for the possession was that Rs. 10,000/- worth of received by him from M/s. Ratilal diamonds were Amritlal, of 89 Zaveri Bazar, Bombay, and in Calcutta. He did not were purchased remember the names and address of the parties from whom the local purchases were made, nor did ht· in his possession any documents covering purchase. Inspector escorted the petitioner to the Customs House where the to produce Assistant Collector, Customs, asked him evidence showing that the goods were not smuggled imported on payment of duty. goods hut were legally The Assistant Collector the petitioner then permitted to go and gave him time 'till May 7, 1955, to produce imported on evidence showing that · the goods were payment of customs duty and under a valid import licence. On the same day, i.e., May 4, 1955, a notice was served on the pel'itioner by the Customs authori ties stating the Rummaging Ins believe pector had been illegally India and, taken under ss. therefore, before further action was 167(8) and 167(39) of the Sea Customs Act, the peti tioner should submit by May 7, 1955, any documents which might he goods in question were legally imported into India on payment of proper Customs duty and on production of a valid import trade control licence. It is also stated that if the goods were not imported by the petitioner, but were brought from another party he should submit by the same date any evidence in his possession show ing the purchase of the goods. In answer to this, on the petitioner, Messrs. S. K. Sawdav and behalf of to the Company, a firm of Advocates, Calcutta, wrote Assistant Collector, Customs, on May 7, 1955, reciting the circumstances under which the petitioner came in his possession showing that the goods seized by reasonable grounds there were imported 0 1957 Babula! Amtha/al Mehta v. The Colkctor of Customs, Calcutta Govinda Menon J. S.C.R. SUPREME COURT REPORTS 1113 enclosing two , certificates the Assistant Collector replied the diamonds be in possession of the seized articles alleging that in the circumstances the presumption of an offence having been committed in contravention of s. 86 of the Sea Customs Act attracting a punishment under s. 167(39) of the Sea Customs Act was unwarranted and request ed to be furnished with a statement of the reasons for the seizure as soon as possible. The letter went on to request for ten days' time for . procuring and producing certificates etc., from trade and Calcutta the Bombay trade about the authenticity of the petitioner's business and also how he came to be in possession of the goods. Another letter was written by the same firm of Advo cates on May 9, 1955, the details of which it is unneces to refer. On May 16, 1955, a further letter was containing written further particulars. This also reiterated the request for the supply of specific reasons for the seizure. On May 23, to the Advocates 1955, in question were informing seized on reasonable suspicions the same had been imported into India illegally and as such were liable to seizure under the Sea Customs Act. Further corres pondence followed by a letter dated June 20, 1955, which there was a reply on June 25, 1955, wherein there · was a detailed reference to everything that had taken place till then and especially with regard to the earlier denial of the petitioner about there being any diamonds with him and the discovery of the same later on in a used jacket in a wall almirah. This is a com prehensive proceedings taken by the search officers and finally the Assistant Collector observed the petitioner to submit a written explanation in time or did failed not appear before him when the case was fixed hearing, the case would have to be decided on the basis of the evidence on the record without any further notice. On July 1, 1955, Messrs. S. K. Sawday & Company wrote a further letter on behalf of the petitioner reiterat ing ·their objections and showing why action should not be taken. This was followed by letters dated July 4 and 20, 1955. A personal hearing was. granted on July 21, 1955, followed by a letter from the Advocates letter containing justification for 5-81 S.C. India/59 I •• 1957 ... Ba!ulal Amlhai.l MehltJ The Colkctor of Cwtoms. Calcutlo Goriinda Merwn J. 1114 SUPREME COURT REPORTS [1957] It is unnecessary for the present dated July 22, 1955. to elaborate the contents of these letters or to refer to the statement enclosed from M/ s. Ratilal Amritlal, Bombay . therewith failed that since the petitioner had that the confiscation would be absolute The Collector of Customs thereupon, after consider ing the entire matter placed before him, passed an order dated September 12, 1955, which was despatched on November 5, 1955, containing an elaborate discus sion of the various facts and circumstances and finally concluding discharge the onus under s. 178-A of the Sea Customs Act in respect of the diamonds seized on May 4, 1955, orders had been passed confiscating under ss. 167(8) and 167(39) of the Sea Customs Act of the provisions of ss. 3(2) and 4 of the Imports and Exports (Control) Act, 1947. The reasons given in the above order were that the subsequent statements were contrary to what had been stated in the first instance, that at the time of the raid, an attempt was made to. hide the diamonds in a suspicious manner and lastly that the petitioner was making statements which were in the nature of an afterthought, and not supported by facts. On account of reasons the presumption Collector was of the opinion rebutted. The order under s. 178-A had not been to the Central stated Board of Revenue within three months of the date of the despatch and also contained information as to the court-fee stamps etc., which would have to be affixe_d. Without availing himself of that remedy the petitioner has come up to this Court by way of an application for a writ under Art. 32 of the Constitution. that an appeal against it these and other Though Mr. Chatterjee faintly argued · tpat provisions of Art. 19(1)(f) and (g) and Art. 31 of the Constitution had been violated. he did not seriomlv press those contentions. The main point of the attack s. 178-A was was centered on violative of the principles of equal protection of laws guaranteed under Art. 14 of the Constitution. the contention Before we discuss the validity of s. 178-A, it would be . useful to consider the circumstances which 1957 Babula/ Amlho/a/ Mehla v. Thi Collettor of Ciutams, Cakutl• ~rind11 Mmon J. S.C.R. SUPREME COURT REPORTS 1115 the enactment of that statutory provision and for that · purpose a brief outline of t.1.e relevant sections of the Act would be necessary. Section 19 of the Sea Customs Act, 1878, enables the Central Government by Notification in . the official Gazette to prohibit or restrict importation or exporta tion of goods into or out of India, and s. 20 enumerates the dutiable goods. When any person imports goods into India, the owner of such goods is required, after the delivery of the manifest by the master of the vessel in which they are imported, to make an entry of the goods for home consumption or warehousing by deliver ing to the Customs-collector a bill of entry containing particulars which shall correspond with the particulars given of the same goods in the manifest of the ship (s. 86). This is intended to give an idea to the Custoins collector as · to whether what different or the same as what the master of the vessel has intimated by the delivery of · the manifest. On the delivery of such a bill, if any duty is payable on such goods, the same shall be assessed and it is only after payment of the duty so assessed that the owner may proceed to .clear the same (s. 87). Clearance of goods after the payment of such duty is provided in s. 89 and if everything has been done according to law, the owner can take away the goods. the owner claims C!upter XVI deals with offences and penalties and s. 16/' of the same Chapter contains three columns in a schedule, the first of which mentions the offence, the second, which does not have the force of law, gives the section of the Act to which the offence has reference and the third lays down the penalty which may be \:Vith regard to the third column a distinction imposed. has to be rnade between the penalty to be imposed by the customs authorities and the punishment that can be imposed by a court of law for the infringement of entries certain provisions. Offences mentioned Nos. 26, 72 and 74 to 76 (both inclusive) have. reference to prosecution :md conviction before a Magistrate, whereas most of the others concern penalties imposed the Customs authorities: This distinction will be important when referring to s. 182. We are .. ' : ~ 1116 SUPREME COURT REPORTS [19571 I 1957 Ba!ulal AmlhalaJ Mehta "· The Collector of Customs, Calattta Goouida Menon J. It lays down case concerned with entries Nos. 8 and 39. The penalty of confiscation is provided in the third column of entry No. 8, if any goods, the importation or exportation of which is prohibited or restricted, are imported contrary to such prohibition or restriction. in addition to the confiscation of the goods, the persons concerned shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. This Court has held minimum is the alternative: see Maqbool Hussain v. The State of Bombay( 1 ). Entry No. 39 also provides for a penalty not exceeding Rs. 500 and the confiscation of the goods if they are taken or passed out of any custom.house or wharf without an entry duly made. Smuggled goods when traced and seized come under this category. Though the word is not defined in the Act, it must be understood as having the ordinary dictionary meaning namely carrying of goods clandestinely into a colmtry. 'smuggling' in any part Chapter XVII relates to searches and recovery of smuggled goods, as well as offences, appeals, etc. Section 169 gives power to any customs officer, duly employed in the prevention of smuggling, to search anv person on board of any vessel in (India) or any person who has landed from any vessel, provided that such officer has reason to believe that such person has dutiable or prohibited goods secreted about his person. A safeguard is provided under s. 170 by which any person about to be searched may require the said officer important nearest Magistrate or Customs-collector. The factor the person making search or attempting to do it must have a reason that such person has dutiable or prohibitecl believe goods. These two sections refer to the time at which a person brings dutiable goods into India but the provisiom of the Chapter lay down the procedure to be smuggled without followed where goods have been being detected · at the port or the wharf. Power issue search warrants is given to any Magistrate under s. 172 which is to the following effect : to take him, previous to search, before this case {I) [1953) S. C.R. 730,742. f 1957 Babu/al AmJha/al Mehta v The Collector of Customs, Cai."utta Govinda Menon J. S.C.R. SUPREME COURT REPORTS 1117 on application "Any Magistrate may, a Customs-collector, stating his belief that dutiable or prohibited goods (or any documents relating to such goods) are secreted in any place within the local limits of the jurisdiction of such Magistrate, issue a warrant to search for such goods (or documents). Such warrant shall be executed in the same way the same effect, as a search-warrant issued under the law .relating to Criminal Procedure". shall have The warrant, as will be noticed, may be issued only is a the application of a Customs-collector who responsible senior officer and that is certainly a safe guard against indiscriminate issue of search warrants. Section 178 speaks of the seizure of goods liable to confiscation in any place either upon land or water by officer of customs or any other person duly employed smuggling. The impugned s. 178-A comes next which is quoted below : "178-A(l) : Where any goods to which this section applies are seized under this Act in 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 pre•ention of (2) This section shall apply to gold, gold manu factures, diamonds and other precious stones, cigarettes and cosmetics and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf." in writing of The presumption under s. 178-A is equally applicable to seizure as a result of a search warrant under s. 172 or seizure made under s. 178. How the things seized are to be dealt with can be seen from s. 179, and s. 181 is made, a lays down that when a seizure or arrest statement should be given to the person who is arrested or from whom seized under goods are seized. When an article ss. 172 and 178, except in cases falling under entries Nos. 26, 72 and 74 to 76 of s. 167, the confiscation or penalty or duty may be adjudged by the officer i.e., mentioned articles are to an adjudication 1s the person entitled therein, seized from whom the reasons therefor 1957 Bobola! .ilmlMI• M1Ala v The Coll1ct1r of Cutuns. Cakulta GeuindtJ Menon.]. . ,/ 1118 SUPREME COURT REPORTS [1957] In the present case regarding either confiscation· or penalty or duty. This gives the valuable right of having the adjudication of the claim made by a superior officer, and despite such if the confiscation is still made, under adjudication s. 188 an appeal lies from the subordinate to the Chief the date Customs-authority within three months from of such a decision. the confis cation was made by the Collector of Customs and an appeal lay from him to the Central Board of Revenue. Section 191 enables the Central Government on the application of any person aggrieved by any decision or order passed under this Act by an officer of Customs or Chief Customs-authority and from which no appeal lies, to reverse or modify such decision or order. The the various provisions above made shows outline of that successive remedies are provided to an aggrieved seized and from whom articles have been person confiscated and the Act is a complete Code in itself affording redress and illegal or unjustified orders. relief m case of report problems recommends the amendment of In Vol. II of their The genesis of s. 178-A may now be considered. The Central· Government had appointed a commission known as the Taxation Enquiry Commission which adoption of recommended principles underlying s. 178-A in order to minimize smuggling. report, Chapter VII deals with administrative regard customs and Excise duties. At pp. 320 and 321 Committee the Sea to •. make smuggling a criminal Customs Act, firstly offence and secondly empowering Customs officers recommendation search premises etc. and in the is the one with which we are concerned. It is following terms : "To transfer respect of the onus of proof offences relating to smuggling to the person in whose possession any dutiable, restricted or prohibited goods are found." It s. 178-A has been enacted. Section 178-A applies recommendation there has been no dispute about to diamonds precious stones and implement : . 1957 Babula/ Amlholol Mehta v. The Collector of Customs, Calcutlo Govinda Minon ]. S.C.R. SUPREME COURT REPORTS 1119 is clear the content and It applies not only import of the Customs authorities to the present case. the application of this provision On the facts mentioned above seizure has been under the Act in the reasonable belief they are smuggled goods and, therefore, the burden of proving are not smuggled goods has been cast by this section the goods are on the persons from whose possession seized. No doubt section are very wide. actual smuggler from whose possession the goods are seized but also to those who came into possession of the goods after having purchased the same after the through many hands or agencies. same has passed authorities have a For example, reasonable beilef that certain goods in the possession of an innocent party are smuggled goods and the same is seized under the provisions of this Act, then person from whose possession the goods were seized, however innocent he may be, has · goods are not smuggled articles. This is no doubt a very heavy and onerous duty cast on an innocent possessor who, for aught one knows, may have bona fide paid adequate consideration for the purchase of the articles without knowing that the same has been smuggled. The only pre-requisite for the application of the section is the subjectivity of the Customs-officer in having a reasonable belief the goods are smuggled. if the Customs to prove A careful examination of the contents of the' some what lengthy petition under Art. 32 of the Constitution impugned section offends does not show how Art. 14, and no distinct and separate ground but Mr. Chatterjee unconstitutionality, argues that the burden of proof enunciated therein is opposed to fundamental principles of natural justice as it gives an unrestricted arbitrary and naked powe; to the customs authorities without laying down any standard O( norm to be followed for exercising powers that whereas ~nder ~he. ordinary law the burden of proof in matters like this 1s on the party who sets up a particular case inverted and th~ under the section the section. What that process is urged 1957 Babula! Amthalal Mehta v. The Collector of Customs, Calcutta Govinda Menon J. 1120 SUPREME COURT REPORTS [1957] the shoulders of an it is a heavy burden burden is cast on the possessor of the article to show that it was imported into India with a prope1 bill of entry and after paying the proper custom duty due. As stated already, innocent purchaser who might have come into possession after the article has changed many hands and this, invokes litigants and discrimination between him and other deprives him of guaranteed by Art. 14 of the Constitution. A large number of cases have been cited at the Bar in support of. the. respective contentions of the parties. the equal protection of it is alleged, to be The true nature, scope and effect of Art. 14 of different the Constitution have been explained constitutional Benches of this Coun in a number of cases, namely, Chiranjit Lal Chowdhury v. The Union of India and Others(1 ), The State of Bombay and Another v. F. N. Balsara('), The State of West Bengal v. Anwar Ali Sarkar('), Kathi Raning Rawat v. The State of Saurashtra( 4 ), Lachmandas-Kewalram Ahuja and Another v. The State of Bombay('), Syed Qasim Razvi v. The State of Hyderabad and Others('), Habeeb Mohammad v. The State of Hyderabad(') and V. M. Syed Mohammed and Company v. The State of A11dhra(8 ), but it will not be necessary for us to enter upon a lengthy discussion of the matter or to refer to passages ments, the provisions the principles underlying of the Article have been summarised by a Full Bench of this Court in Bttd!ian Chaudhury and Others v. The State of Bihar(9) in the following terms : "It is now well established forbids class cbssification for the purposes of however, two conditions must be fulfilled, namely (i) classification must be founded on an ferentia which distinguishes persons or that while Art. 14 reasonable legislation, it does not forbid In order, legislation. test of permissible classification that the intelligible dif things to pass (1) [1950] S.C.R. HGg. (2) [•951] S.C.R. GB,, (:l) [19,;·o] S.C.R. "84. (.f) [19;,2] S.C.R. 435. (9) (19'\5) (5) [•952] S.C.R. 710 (6) [1953] S.C.R. 591 () [19;3] S.C.R. 661 (8) (1954] S.C.R. rn7 1 s.c.R. IO-J.5 at P. 1048-1049. S.C.R. SUPREME COURT REPORTS 1121 to be achieved by are grouped together from others left out of the group rational' and (ii) that that differentia must have a relation to the object sought statute in question. The classification may be founded on different bases, namely, geographical or according. to objects or occupations or the like. What is necessary that there must be a nexus between the basis of classification and the object of the Act under considera the decisions of tion. this Court that Art. 14 condemns discrimination not only by a substantive law of procedure." It is also well established by law but also by a The principle thus enunciated has been adopted . 1957 Babula/ Amthalal Mehl a v. The Col/:clor of Customs. Ca/£utta Govinda Menon J. • this Court in · Purshottam Govindji and applied by Halai v. Shri B. M. Desai(1) and in A. Thangal Kunju Musaliar v. M. Venkitachalam Patti and another(2). the petitioner has Mr. N. C. Chatterjee appearing for to several decisions of the Supreme Court referred us of America, such as William N. McFerland v. American .Sugar Refining Co.( 3 ), W. D. Manley v. State of Ceorgia(4) and Tot v. United States(•). It appears the due really process clause of the American Federal Constitution and cannot help the equal protection clause of our Constitution. The contentions urged by Mr. Chatterjee as the unconstitutionality of s. 178-A of the Sea Customs Act, 1878, will, there tested in the light of the principles fore, have in Budhan Chowdhury's laid down by case (supra). the construction of these decisions this Court to be A cursory perusal of s. 178-A will at once disclose the well defined classification of goods based on an intelligible differentia. It applies only to certain goods described in sub-s. (2) which are or can . be easily smuggled. The section applies only those . goods of the specified kind which have been seized under the reasonable belief that . they are the Act and (1) [1955] 2 S. C R. 889, 8g8·899. (2) [1955] 2 S. C R 119~. 12296. (3) (1916) 241 U S 79; 60 L. Ed. 899. (4) (1929) 279 U.S. 1; 73 L. Ed 575. (5) (1943) 319 U.S. 463; 87 L. Ed. 1519. 144 1957 Babu/al .Amlltalal Metlio v. T lu Collector of Customs, Cakutta 1122 SUPREME COURT REPORTS [1957J the section obviously have - a rational It is only those goods which answer smuggled goods. the threefold description that come under the operation of the section. The object of the Act to prevent smuggling. The differentia on the basis of which the the presumption raised goods have been classified and relation t<> the object sought to be achieved by the Act. The presumption only attaches to goods of the description mentioned in the section and it directly object of the Act, namely, the prevention of smuggling, and that being the position clearly within the principle enunciated above, not hit by Art. 14. The impugned section cannot be struck infirmity either of discrimination or down on illegal classification. Confining as to certain classes of goods seized by the customs authorities on they are smuggled goods, the reasonable belief there is only a presumption which can be rebutted. impugned section furthers it does In these circumstances, there can be no doubt whatever that s. 178-A does not offend Art. 14 of the to be Constitmion and dismissed with costs. this petition therefore, 1s, Petition dismissed. 1957 Ma7 IO. MENAKURU DASARATHARAMI REDD! ti. DUDDUKURU SUBBA RAO (S. R. DAS C.J., fAFER IMAM, GAJENDRACADKAR and A. K. SARKAR JJ.) Hindu [Aw-Charitable Endowment-Compromise decree Corutruction-Trust or charge-Intention of the donor-Test. A Hindu father executed a registered deed of trust giviug away his properties to public charities and appointed himself and to a two others as trustees. The litigation moiety share therein started to alienate them. There was in a between compromise decree for .partition bet\\·een the father and the !'011, litigation. A ftei trustees having retired pending the death of both the father and the son a suit was brought under the son which ultimately ended in assertion by his right trustees and two other .son ' ~~