:152

BATAHARI JENA

STATE OF ORISSA

April 5, 1971

[S. M. S!KRI, C. J., G. K. MITIBK, K. S. HBGDE, A. N. GKOVE!t

AND P. JAGANMOHAN REDDY, JJ.]

Civil Service-Orissa-Age of superannuation raised from 55 to 58 years by Government resolution dated May 21, 1963-liberalised Pension Rules did not have effect that employee should have put in 30 years' rervice before be could be retired at 55-Guidlines ti> Heads of the Departments mentioning inter alia that an officer lacking i'}-tegrity may be retired ut 55-- This did not cast stigma on every officer who was retired at 55-Artic/e 311(2) of Constitution not attracted.

The appellant who was born on January 1,1910 entered the service of the former Indian State of Mayurbhanj in Orissa as an engineer on 1st November 1937. On the merger of that State with the Province of Orissa on January 1, 1949 he became an officer of the said province. The age of superannuation of Government employees in Orissa was then 55 years.

On May 21, 1963 tho Government of Orissa passed a resolution raising the ago of compulsory retirement to 58 years with effect from Decen1ber 1, 1962. The power of Government to retire an employee at the age of 55 years was however retained and so was the right of the employee to voluntarily retire at that age after giving reqU.isite notice. The resolution aforesaid also stated that the above provision will be jn '\ddition to the provisions already contained in the Liberalised Pension Rules ac .. cording to which Government could compulsorily retire an employee who had put in 30 years service, the employee also having a corresponding right to retire after the said period of service. On February 5, 1954 a notification was issued by the Government of Orissa laying down inter alia that in any cae where Government had reasonable cause to believe that employee lacked integrity it would be appropriate to determine upon his retirement. On July 14, 1964 the appellant was asked to retire from Government service with effect from January 1, 1965. His representation for reconsideration was not accbpted. His writ petition in the High Court was rejected. By certificate tho appellant came to this Court contending (i) that in view ot the Liberalised Pension Rules he could not be retired before he had completed 30 years of service, and (ii) that having regard to the crittria laid down by th, e notification dated February 5, 1964 the order. of retirement cast a stigma on him and as such was violative of Arl 311 of the Constitution.

HELD: (1) Before May 21, 1963 an employee of the Government of Orissa would have been due for superannuation When he attained the age of SS years whether he bad or had not put in thirty years qualifying service.

Government bad before the said date an option to ask him to reti!"e if be bad completed 30 years qualifying service even though he had not reached the age of fifty five years; correspondingly the officer had the right to retire if he wanted to do so before he reached the age mentioned if he had 30 years' qualifying service to his credit. The resolution of May 21. 1963 taiscd the age of superannuttion from SS to 58 but nevertheless under paragraph 3 thereof the Government reserved to itself a right to ask any employee to retire when he attained the age of SS years without assignina

BATA~ARI .. ORISSA (Miller, J.)

aoy reason. Correspondinaly the employee was not bound to continue in service beyond the age of filly years unless he wanled it. There was n.o alteration in the rule under which a Government servant could voluntari ly retire or be asked to retire in a case when he had completed thirty years' service. In other words, the ria:ht of Government to require an officer lC\

retire af any time after he had completed 30 years' service was and still remained intact. This right which was not linked with the age of super annuation before May 1963 remained unaffected even after that date. Al! tbou1h the aae of superannualion was raised from 55 to 58 years Govern ment armed itself with the power to require any employee to retire when he attained lhe aae of 55 years without assi1nin1 any reason. The peti tioncr's araument based on the fact that he had not completed 30 years' of service, must therefore, fail. [355H-356E) ·

(ii) Slnce the aae of superannualion fixed was nol unaccounlably early there was no violalion of Art. 311(2). [3580)

Gurdt• Singh Sidh11 v. Stale of P11njab, [1964)

7 S.C.R. 587, 593.

Salish Chandra Anand v. Union of India, [1953) S.C.R .. 665 and Moti Ram Deka etc. v. General Manager. North East Frontier Rly. [1964) 5 S.C.R. 683, discussed.

(iii) Nor was Art. 311 attracted by any aspersion or stigma cast on

lhe appellant by the order daled July 14, 1964. Under paragraph 3 of Jhe D resolution of May 21, 1963 the Government had a ri&ht to require aoy Government servant ta retire at the age of 55 without assigning any rcasor...

The facl thatby notification of 51h February 1964 cerlain guidelines were indicated to the Heads of Departments in_ Considering whether a Govern .. mcnt servant should coninue in service beyond the age of SS years, one of the factors being lack Of integrity, did not imply that any officer who'ie continuance in service was not advised lacked integrity.

On the facts of the case it could not be said that any aspersion was cast -on thC appellant.

[358F-G)

The appeal musl accordingly be dismissed.

OVIL APPELLATE JURISDICTION : Civil Appeal No. 1064 of 1967.

Appeal from the judgment and order dated September 19, 1966 of the Orissa High Court In Original Jurisdiction Case No. 208 of 1964.

S. V. Gupte, and B. P. Maheshwari, for the appellant.

R. Gopalakrishnan and R. N. Sachthey, for the respondent.

The Judgment of the Court was delivered by

Mitter, J.-This is an appeal from a judgment of tbr.

Hih Court of Orissa rejecting a Writ Petition filed by the appellant for quashing the order of tbe Government passed on him on July 14, 1964 informing him that he was to retire from Government service on !st January, 1965 when he would reach the age of 55 years. 23--1 S.C. lndia/71

35.4

SUPRBMB COURT REPORTII [1971] SUPP. s.c.R.

The facts are shortly as follows.

The appellant who was born on January I, 1910 entered the service of the former Indian

State of Mayurbhanj in Orissa as an engineer on !st November

1937. He was in the employment of that State up to December 31, 1948. On the merger of that State with the Province of Orissa on January I, 1949 he became an officer of the said Province.

The age of superannuation of Government employees in Ori8sa was then 55 years. On May 21, 1963 the Government of Orissa passed a resolution the relevant portion whereof ran as follows :- . . "I. The question of raising the age of compulsory retirement of the State Government employees has been under the consideration of Government for some time past. . . .

2. After careful consideration, Government have now decided that the age of compulsory retirement for the State Government employees should be raised from 55 years to 58 years with effect from J.12-1962. . .

3. Notwithstanding anything contained in the pre,. ceding paragraph, the appointing authority may require a Government servant to retire after he attains the age of 55 years on three months' previous notice in writing without assigning any reason. The Government servants also may after attaining the age of 55 years, voluntarily retire by giving three months' notice to the appointing authority. The powers to retjre a Government servant under this provision will normally be exercised to weed out unsuitable employees after they have attained the age of 55 years.

4. This provision will be in addition to the provisions already contained in rule 2 in section I of the Liberalised Pension Rules issued with the Finance Department Resolution. . .according to which :

(a) the Government may require an officer to retire any time after he has completed 30 years qualifying service by giving him a notice in writing at least three months before the date on which be required to retire, and

(b) a Government servant may retire from service any time after completing 30 years qualifying service by giV'ing a notice in writing to the appropriate authority at least three months before the date on which be wishes to retire."

On February 5, 1964 a notification was issued b¥ the Government of Orissa in connection with the above laymg down the

BATAH.Alll v. ORISSA (Mitter, J.)

criteria and procedure to be adopted to ensure uniformity of ope ration of the rule mentioned in paragraph 3 of the above resolution and also equitable treatment in all cases. Speaking broadly, the idea behind the notification was that (l) the service record of an officer was to be scrutinised six months before he was due to attain the age of fifty five years, (2) in any case where Government had reasonable cause to believe that he lacked in integrity it would be appropriate to determine upon his retirement, (3) where an officer's integrity was not in doubt but his physical or mental condition was such as to make him inefficient for further service the same result would follow, and (4) an officer whose performance was considered as below "average" should not be allowed to work after the age of 55.

On July 14, 1964 the appellant was asked to retire from Government service on !st January, 1965. His representation for reconsideration was not accepted. He filed a Writ Petition in the High Court on December 21, 1964. This was rejected by the High Court on September 19, 1966. The appellant has come up by certificate to this Court.

Counsel for the appellant raised only two points in support of the appeal._ His first submission was that as the appellant had not completed 30 years' service on January 1, 1965 he could not be asked to retire on that date: and, secondly, having regard to the criteria laid down by the notification dated February 5, 1964 the order of retirement dated July 14, 1964 cast a stigma on him and as such was violative of the protection given by Art. 111 of the Constitution.

The submission of learned counsel on the first head was based on his construction of the resolution of May 21, 1963. It was urged that as the power of the appointing authority under paragraph 3 of that resolution to retire the appellant after he attained the age of SS years was described as "in addition to the provisions contained in rule 2 in section 1 of the Liberalised Pension Rules" under which Government might require an officer to retire at any time after he had completed 30 years' qualifying

service, the new provision was to be treated as super-added to the Pension Rules and no Government servant could be asked

to retire at the age of 55 unless he had completed 30 years' qualifying service. As there was no dispute that the appellant had not completed 30 years of such service on lstJanuary 1965 It was urged on behalf of the appellant that Government could not resort to pagraph 3 of the said resolution.

In our view the above contention cannot be accepted. Be fore May 21, 1963 an employee of the Government of Orissa would have been due for superannuation when he attained the

SUPREMB COURT REPORTS (1971] SUPP. s.c.R.

age of 55 years whether he had or had not put in thirty years' qualifying service. Government had before the said date an option to ask him to retire if he had completed 30 years qualifying service even though he has not reached the age of fifty five years ; correspondingly the officec had the right to retire if he wanted to do so before he reached the age mentioned if he had 30 years' qualifying serVice to his credit. Fifty five years was the outside limit of age to which an officer was permitted to work before superannuation. The resolution of May 21, 1963 raised the age of superannuation from 55 to 58 but nevertheless under paragraph 3 thereof the Government reserved to itself a right to ask any employee to retire when he attained the age of 55 years without assigning any reason. This was not unilateral. A Government servant was not bound to continue in service beyond the age of fifty five years unless he wanted it. There was no alteration in the rule under which a Government servant could voluntarily retire or be asked to retire in a case where he had completed thirty years' service. In other words, the right of Government to require an officer to retire at any time after he had completed 30 years' service was and still remained intact. This right which was not linked with the age of superannuation before May 1963 remained unaffected even after that date. Although the age of superannuation was raised from 55 to 58 years Government armed itself with the power to requ'ire any employee to retire when he attained the age of 55 years without assigning any reason.

Reliance was placed on certain observations in the decision of this Court in Gurdev Singh Sidhu v. State of Punjab and Anot/rer ('). There this Court struck down article 9.1 of the Pepsu Service Regulations under which the Government sought to retain an absolute right to retire any Government servant after he had completed ten years' qualifying service without giving any reason.

In that case the petitioner who had been appointed as an Assistant Superintendent of Police in the erstwhile Patiala State on February 4, 1942 and confirmed in that rank on the occurrence of a regular vacancy after undergoing practical district training courses, and after promotion to the rank of Superintendent of Police in an officiating capacity in February 1950 in the said State of Pepsu, was asked to show cause by notice dated March 25, 1963 as to why he should not be compulsorily retired. The petitioner complained that the notice issued to him was Invalid on the ground that the article on which it was based was itself ultra vires and inoperative and the only question before this Court was whether the impugned article was shown to be constituti?nally invalid.

Referring to Satish Chandra Anand v. The Unron of India(') and to certain dicta of the majority Judges in Moti Ram

(1) [196417 S, C. R. 587 atS93.

(2) [1963] S. C.R.. 6SS.

BATAHARI v. ORlSSA (Mitter, J.)

Delea etc. v. The General Manager, North East Frontier Railway etc.(') this Court observed by way of explanation that:

". . the majority judgment took the precaution of adding a note of caution that if a rule of compulsory retirement purported to give authority to the Government to terminate the services of a permanent public servant at a very early stage of his career, the question about the validity of such a rule may have to be examined. That is how in accepting the view that a rule of compulsory retirement can be treated as valid and as constituting an exception to the general rule that the termination of the services of a permanent public servant would amount to his removal under Art. 311 (2), this Court added a rider and made it perfectly clear that if the minimum period of servi<;~ which was prescribed by the relevant rules upheld by the ear.lier decisions was 25 years, it could not be unreasonably reduced in that behalf. In other words, the majority judgment indicates that what influenced the decision was the fact that a fairly large number of years had been prescribed by the rule of compulsory retirement as constituting the minimum period of service

~ after which alone the said rule could be invoked."

The Court further observed (see p. 594) that:

"The safeguard which Art. 311 (2) affords to permanent E public servants is no more than this that In case it is intended to dismiss. remove or reduce them in rank, a reasonable opportunity should be given to them of showing cause against the action proposed to be taken in regard to them. A claim for security to tenure does not mean security of tenure for dishonest, corrupt, or ineffieient

public servants. The claim merely insists that before F they are removed, the permanent public servants should be given an opportunity to meet the charge on which they are sought to be removed. Therefore, it seems that only two exceptions can be treated as valid in dealing with the scope and effect of the protection afforded by Art. 311(2). If a permanent public servant is asked to retire G on the ground that he has reached the age of superannuation which has been reasonably fixed, Art. 311 (2) does not apply. because such. retirement is neither dismiss~! nor removal of the public servant. If a permanent pul!c servant is compulsorily retired under the . rules which prescribe the normal age of s_uperannuat10.n and o- H vide for a reasonably Jong penod of quahfied service

(I) [1964]-5 s. c. R. 683.

SUPR.BMB COUR.T RIPOR.TS

[1971] SUPP. S.C.R..

after which alone compulsory retirement can be ordered. that aga.in may not amount to dismissal or removal under Art. 311 (2) mainly because that is the effect of a long series of decisions of this Court. But where while reserving the power to the State to compulsorily retire a permanent public servant, a rule is framed prescribing a proper age of superannuation, and another rule is added giving the power to the State to compulsorily retire a public servant at the end of 10 years of his service, that cannot, we think, be treated as falling outside Art. 311 (2).

The termination of the service of a permanent public servant under such a rule, though called compulsory retirement, is, in substance, removal under Art. 311(2)."

In our v'iew the above observations relied on by counsel do not help the appellant. The above observations show that a rule which. permits a Government to ask an officer to retire after an unreasonably short period of service much before the normal age of superannuation would be hit by Art. 311. They cannot apply when the period of qualifying service mentioned in the rule is not unreasonably short and the normal age of superannuation fixed Is not unaccountably early.

Before May 1963 a Government servant in Orissa had to retire on attaining the age of 55 years whether he had completed 30 years' qualifying service or not. The fact that the age of superannuation was raised from 55 to 58 while Government reserved to itself a right to ask any employee to retire at the age of 55 does not violate Art. 311 (2).

On the second point it is enough to point out that the order of July 14, 1964 did not cast any aspersions or stigma on the appellant which woulil attract Art. 311.

Undr paragraph 3 of the resolution mentioned Government had a right to require any Government servant to retire at the age of 55 without assigning any reason.

The fact that by the notification of 5th February 1964 certain guidelines were indicated to the Heads of Departments in considering whether a Government servant should continue in service beyond the age of 55 years, one of the factors for consideration being lack of integrity, did not imply that . any officer whose continuance in serv'ice was not advised lacked in integrity. On the facts of this case, we cannot say that any evil aspersion was cast on the appellant.

In the result we must hold that there has been no violation of Art. 311 of th~ Constitution and the appeal must be dismissed with costs.

G.C.

Appeal dismissed.

152

BATAHARI JENA

STATE OF ORISSA

P. JAGANMOHAN REDDY, JJ.

Art. 311(2)

[1964)

7 S.C.R. 587

[1964) 5 S.C.R. 683

Art. 311

Art. 111

section 1

article 9

Art. 311

Art. 311

Art. 311(2)

Art. 311

Art. 311

Art. 311

Art. 311(2)

Art. 311

Art. 311

Art. 311

Art. 311


MANHARLAL BHOGO..AL SHAH

STATE OF MAHARASHTRA

April 5, 1971

[S. M. Snrn, c. J., G. K. MITTER, K. s. HEGDE, A. N. GROVER AND

P. JAGANMOHAN REDDY, JJ.]

Sea Customs Act, 1878, s. 167, items 87 and 81, and s. 187 A-If s. 187 A confers arbitrary powers on customs officials-I/ ultra vires A.rt. 14 of Constitution.

The appellant import"! consignments of contraband and prohibited goods. He was prosecuted for an offence under s. 167, item 81, of the Sea Customs Act, 1878, on a complaint by the appropriate authority under s. 187 A, and was convicted.

On the question whether s. 187-A violated Arl 14 of the Constitution on the grounds; (I) that tho Customs authorities had an absolute discretion to proceed either under s. 167(8) in which case there would be only an imposition of a fiscal penalty and confiscation of goods; or to fi!e a complaint in the criminal court under s. 187 A for the offence under s. 167 item 81, in which case there couJd also be a sentence of imprisonment up to two years. and (2) the customs officials have a wide latitude in choosing cases for criminal prosecution,

HELD: (I) The proceedings under the Foreign Exchange Regulation Act, 1947, unlike under tho Sea Customs Act, could be taken in the alternative clnd the punishment could also be imposed in the alternative. Any person guilty of contravention of s. 23(1Xal of that Act could not be made liable for a penalty under s. 23(1) (a) and also to prosecution and imprisonment under s. 23(1Xb). Therefore, s. 23D, which empowers the Director of Enforcement to file complaint instead of imposing a penalty under s. 23(l)(a) only if he was satisfied that in tho circumstances of a case a penalty under s. 23(1Xa) would be inadequate, was necessary to prevent arbitrary exercise of discretion by the Director under that Act. Such a provision however, is not necessary under the Sea Customs Act, becau~. if a prrson is found guilty under s. 167, item 8, and if his case is also covered by item 81, there is no choice in the matter of imposing penalty or punishment. A penalty can be imposed under item 8, and be will also be liable to criminal prosecution under item 81.

[363B-F; 364A-B]

Reyala Corporation (P) Ltd. v. Director of Enforcement, New De/Iii. [19,71] 1 S.C.R. 639, referred to.

(2) It cannot be said that s. 187A confers an unguided power on the customs authorities for not filing a complaint against a person •lthouah he was liable to a criminal prosecution under s. 167. item 81.

While deciding whether a complaint should be instituted for an offence which is covered both bf Utems 8 and 81 of s. 167, a customs offir must take into account the enOrmity and maa:oitude of. the contra ventron, the H evidence which is available, and whether. the evidence is sufficient to take the matter to a criminal court: T1ie officers who are authorised to mate

a complaint under s. 187 A are senior officials holding re<Jponsiblo positions

A and, they have to act in a reasonable and bonafide n1anner. They cannot discrin11nate bet\\een similar cases according to their whim and fancy. Tc power conferred by the section is to be exercised for effectuating the object and purpose of-the Act keeping in view the entire scheme of the Act to ensure th::i1 goods do not escape the levy of duty and that the prohibitions

nd restrktions imposed on importation and exportation are rigidly enforced.

[365C-E, G-H ; 3668-C, D-FJ

B Matajog Dobey v. H. C. Dhari, (1955) 2 S.C.R. 925, 932 and Nirmala Textiles Furnishing Mills Ltd. v. The Second Industrial Tribunal, [1957) S.C.R. 335, followed.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 44 of 1967.

C Appeal from the judgment and order dated January 23, I 967 of the Bombay High Court in Criminal Appeal No. 525 of 1965.

R. Jethmalani, S. B. Jaisinghani and K. Hingorani, for the appellant.

D Jagadish Swarup, Solicitor-Genera/, H. R. Khanna, B. D.

Sharma and S. P. Nayar, for the respondent.

The Judgment of the Court was delivered by

GroTcr, J.-This is an appeal by certificate from a judgment of the Bombay High Court upholding the conviction and sentence of the appellant under s. 167(81) of the Sea Customs Act, 1878, hereinafter called the 'Act' and s. 120-B of the Indian Penal Code read with the aforesaid section and s. 5 of the Import and Export (Control) Act 1947. The main point for determination is whether s. 187-A of the Act is unconstitutional on the ground that it is violative of Art. 14 of the Constitution. The facts to the extent they are necessary may be set out.

The appellant carried on business in the name of M/s. Jaihind Ex-Import Coporation as its sole proprietor. He also carried on business as a partner in another firm run under the name and style of Alram Optics (India) Corporation.

The offices of the two firms were situate at New Charni Road, Bombay. According to the case of the prosecution the appellant with the object of de frauding the Government of customs duty payable on certain goods and with a view to evading prohibition imposed on the import of such gQOds was a party to criminal conspiracy, some of the other parties being M/s. 0. & K. Hcydej!ger and M/s. Winter Optics in West Germany.

The conspiracy was stated to have been entered into for the purpose of acquliing possession of con traband goods such as spectacle frames, welding glasses etc. The import of spectable frames was totally prohibited and the import

MA,, HARLAL v. MAHARASHTRA (Groi•er, J.)

of welding glasses was greatly restricted. It was alleged that in pursuance of the conspiracy the appellant imported three consignments by three different ships ; the first one arrived by s.s. Bialyswck anj the other two came on September 22, 1960 and March 5,

I9SG by two other ships s.s. Fraunfels and s.s. Laurenskerk. Out of the four cases which arrived in the first consignment two cases contained contraband goods. As regards the other two consignments one case in each consignment contained goods the Import

of which was prohibited.

The mod1:1s operandi was highly ingenious and interesting but we need not recapitulate the same.

The defence of the appellant was that it was owing to the mistake of shippers that the cases containing contraband goods arrived. It may be mentioned that no bill of entry was lodged by the appellant regarding the cases which contained contraband goods of the first consignment and the other consignment which were not got cleared.· The learned Presidency Magistrate found the appellant guilty and sentenced him to six months' rigorous Imprisonment and a line of Rs. I 000 for each of the four charges directing the substantive septences to run concurrently.

The appellant filed an appeal to the High Court and the State preferred a petition for revision for enhancement of the sentence.

The High Court dismissed both the appeal and the revision. The High Court further directed that the contraband goods should stand confiscated in favour of the Government of India.

During the pendency of the appeal in this court a petition was filed on behalf of the respondent (Cr. Misc. Petition No. 362/70).

It was prayed therein that a constitutional point as to the vires of s. 187 A read with s. 167 (81) of the Act be allowed to be raised.

Thereupon the Division Bench made an order that the appeal be placed before a la.rger bench. The question .. being one of consti tutional validity of s. 187 A of the Act counsel for the appellant bas addressed arguments before us with our permission on the aforesaid point. It has been contended inter a/ia that the offences of smuggling of goods and in particular the acts with which the appellant has been charged could be dealt with by the customs authorities by proceeding under s. 167(8) of the Act as well as in the alternative or in addition by instituting a prosecution in a criminal court by filing a complaint under s. 187 A read with.

s: 167(81) of the Act. The former can result only in the imposi , tion of a fiscal penalty not exceeding three times the value of the 'goods and confiscation of the goods themselves. The latter can result in a sentence of imprisonment upto two years or fine or both. Thus it has been left to the. unfettered and unguided discretion of the customs authorities to proceed against certain per

ons under s. 167(8) and others under s. 167(81) or under oth the sections. Jn a large number of cases no criminal prosecutions

SUPREllE COURT REPOR11S [1971] SUPP. s.c.R.

were filed at all and proceedings under s. 167(8) alone were taken which resulted in imposition of penalties. This leads to discrimi nation and has actually resulted in discrimination.

We may now refer to s. 187A of the Act. It provides that no court shall take cognizance of any offence relating to smuggling of goods punishable under item 81 of the Schedule to s. 167 except upon complaint in writing made by the Chief Customs Officer or any other officer of customs not lower in rank than an Assistant Collector of Customs. Items 8 and 81 of s. 167 to tbe extent they are material are as follows :-

Ofl'cnces

8. If any goods chc impartation of which is for the time beiq prohibited or restricted by or under Chapter IV of this Act, be imported into or exponcd from India contrary to such prohibition or restrictions; or If any attempt .be made so co import or c11:p0rt iiDY such a:oods; or .............................. ..

81. Ifaay person knowingly, and with intent to defraud the Government of anY duty payable there0n, or to evade any prohibition or rcs'"tiction fo1 the time being in force under or by virtue of this Act wtth respect thereto acquires PoSses!tion or, or is in any way concerned in carryina. removin. depositing, harbourina. keepina or concealing or In Buy manner dealina: with any aoods which have been unlawfUlly removed from a warehouse or which has not been paid or with respect co the importation or e:itportation of which &'1)' prohibition or restriction is for the time beina in force as aforesaid; or .................................... "

section or this Act to Vrhich

offence has

reference

PenaJties

18 & 19 Such aoods shall be liable to confiscation; and any rsoo concerned in any such offence shall b< liable to a penalty not exccedina three times the value of the aoods or not exccedi~ one thousand rupees.•

G<n<ral Such person shall on conviction before a Maaistrate be liable to imprisonment for any term

n.ot exceedi'na two years,, or to8ne, Of' to both.'"

Even though item 8 of s. 167 does not employ the word "knowingly" which is to be found in item 81 international smugglers are bound to be covered by both the itell)s. The argument on behalf of the appellant is based on there being no guideline5 in s. f87 A in the matter of filing a complaint for an offence under item 81.

It is suggested that" if there is a option to the officers mentioned therein to file a complaint or not to file the compfaint then there will be clear infringement of Art. 14. Counsel for tbe appelTa nt

' .

MANHARLAL v. MAHARASHTRA lGrover, J.)

bas gone to the extent of submitting that the power to give sanction or to make a complaint without any guidelines would itself be hit by Art. 14.

Our attention has been invited to Ravala Corporation (P) Ltd. & Ors. v. Director of Enforcement, New De/hi(1), in which one of the points canvassed was that s. 23(1)(b) of the Foreign Exchange Regulation Act 1947 as amended by the Foreign Exchange Regulaliion (Amendment) Act 1957 was violative • of Art. l4 of the Constitution inasmuch as it provided for punishment severer than the punishment or penalty provided for the same acts under s. 23(1)(a) of that Act. It was pointed out in the judgment of this court that two different proceedings could be tllken for contravention of certain proviU>ns of the aforesaid Act. Under s. 23(1)(a) a person was liable to a penalty only and that penalty could not exceed three times the value of foreign exchange in respect of which contravention had taken place or Rs. 5,000 whi'chever was more. That penalty could be imposed by adjudication made by the Director of Enforcement in the manner provided in s. 23(D) of the said Act. The alternative punishment provided by s. 23(1)(b) upon conviction by a court was a sentence of imprisonment for a term which could extend to two years or with fine or with both. The argument that the section laid down no principles for determining when a person concerned should be proceeded against under s. 23(1)(a) and when under s. 23(1) (b) and that It was left to the arbitrary discretion of the Director of Enforcement to decide which proceeding should be taken was repelled by relying on the provisions of s. 23D. Under that section the Director of Enforcement was first to hold an inquiry for the purpose of adjudging whether there had been contravention under s. 23(1)(a) and if he was satisfied that the person had committed a contravention he could imj>ose a penalty prqvided, thereby. According to the proviso, however, if at any stage of the enquiry he was of the opinion that having regard to the circumstances of the case the penalty would not be adequate he was bound to make a complaint in writing to the court instead of imposing any penalty himself.

Counsel for the appellant has laid greltl emphasis on the absence of any such provision in the Act as was to be found in s. 23D of the Foreign Exchange Regulation Act 1947. But it is significant that under the aforesaid enactment the proceedings ' could be taken. in the alternative and the punishment also could be imposed only in the alternatie and any person guilty. of contravention could not be made !table for a penalty provided by s. 23(1)(1) as also imposed a sentence of imprisonment under

(1) [1971] I $. C. R. 639.

.,,

lil

s. 23(l)(b). According to the provision of s. 167, items 8 and 81 of the Act there is no choice in the matter of imposing penalty or punishment. If a person is found guilty a penalty can be imposed under item 8 and he will also be liable to criminal prosecution and conviction if has case is covered by item 81 of that section.

In numerous Acts provisions are found according to which no co.urt can take cogniZl!nce unless either sanction is granted by the competent authority for the prosecution of an accused person or a complaint in writ'ing is made by an officer or authority empowered in that behalf. Nothing is indicated or expressly stated in most of the provisions as to the circumstances in which sanction should be withheld or granted or a complaint should be in stituted or not. One of such provisions came up for examination in Gokulchand Dwarkadas Moraka v. The King (1).

Under clause 23 of the Cotton Qoth and Yarn Control Order 1943 no prosecution for contravention of any of the provisions of th•: Order could be instituted without the preVious sanction of the Provincial Government etc. It was laid down that in order to comply with the provisions of clause 23 it must be proved that the sanction was given in respect of the facts constituting the offence charged.

Counsel for the appellant has relied a great deal on the following observations of their lordships :

"They can refuse sanction on any ground which commends itself to them, for example that on political or economic grounds they regard a prosecution as inexpedient."

It is argued that if the same wide latitude is given to the cutoms

officers mentioned in s. 187 A they can i111port even political or economic considerations for not filing a complaint although a person is liable to criminal prosecution for an offence under s.167(81\. We consider it unnecessary to pronounce, with respect, on the correctness or otherwise of the above observations. We have no doubt that the authorities concerned are expected to take into account the changed conditions obtaining after the enforcement of our Constitution which guarantees fundamental rights including Art. 14. They are bound to examine the facts of a particular case and then decide whether prosecution should be launched or not.

Even if any policy or guidelines have to be found they can certainly be discovered from the object. purpose and scheme of the Act.

The preamble reads: "Whereas it is expedient to consolidate and amend the Jaw relating to the levy of Sea Customs duties it is enacted as follows". Chapter IV deals with prohibitions and restrictions

(I) A. I. R. 1948 P. C. 82.

lllANHARLAL •• MAHARASHTRA (Grover, J.)

on importations and exportation and Chapter V, 'with levy of and exemption from customs duties. Elaborate provisions have been made t<i ensure that goods do not escape the levy of duty and that the prohibitions and restrictions which have been imposed on importation and exportation are rigidly enforced. Chapter XVI provides for offences and penalties and s. 167 therein is an omnibus section which contains 81 items dealing with offences am\ penalties. Chapter XVII contains procedural provisions relating to offences, appeals etc. Section 187A appears in this Chapter.

The procedural provisions must be read in the light of the object and purpose of the Act. While deciding: whether a complaint should be instituted for an offence which is covered both by items 8 and 81 of s. 167 a customs officer must take into account the enormity and magnitude of the contravention and the evidence which is avail able. It is possible that in certain cases the evidence may not be sufficient for taking the matter to a criminal court and in view of the entire facts a complaint may not be lodged for contravention of offence under item 81 but in all cases the customs officers have to act in a reasonable and bona fide manner and they cannot just discriminate between similar cases according to their whim and fancy.· For if that is done it is always open to a person gains! whom complaint has been instituted to challenge their exercise of discretion in appropriate proceedings. We are fortified in the view that we are taking by the following observations in Mat a jog Do bay

v. H. C. Bhari('); where the argument that Section 197 of the Criminal Procedure Code vest¢ an absolutely arbitrary power in the Government to grant or withhold sanction at their sweet will and pleasure was considered :

"If the government gives sanction against one public servant but declines to do so against another, then the government servant against whom sanction is given may possibly complain of discrimination. But the petitioners who are complainants cannot be heard to say so for there is no discrimination as against any complainant. It has to be borne in mind that a discretionary power is not necessarily a discriminatory power and that abuse of power is not to be easily assumed where the discretion is vested in the government and not in a minor official."

The officer who is authorised to make the complaint under s. 187 A of the Act is the Chief Customs Officer or any other officer of customs not lower in rank than the Assistant Collector of Customs authorised by the Chief Customs Officer. These officers cannot be regarded to be minor officials and they hold responsible positions

(I) [19SS] 2 S. C.R. 925,932.

.,..

in the hierarchy of customs authorities. In Niemla Textiles Finishing Mills Ltd. v. The 2nd lndllStrial Tri'bunal(') the validity of the Industrial Disputes Act 1957 including s. 10 was challenged, inter a/ia on the ground that the appropriate government had unregulated and arbitrary power to discriminate between different parties and it was open to it to refer the industrial dispute to a Board for promoting the settlement or a Court of Inquiry or the Industrial Tribunal and that there were no guidelines as to which class of cases were to be referred to one or the other. It was pointed out by this court that the purpose sought to be achieved by the said Act had been well defined in the preamble to it. The provisions sufficiently indicated the purpose and scope of the enactment as also the industrial disputes which might arise between the employers and their workmen which had to be referred for settlement to the various authorities under the Industrial Disputes Act. The achievement of one or other objects in view by such reference to the Board ot Conciliation or Court of Enquiry or Industrial Tribunal must guide and control the exercise of the discretion and there was no question of the government being in a position to discriminate between one party and the other. In our judgment the ratio of this decision appositely applies to the present case. The object and purpose of the Act has already been noticed as also its scheme and the relevant provisions. The power conferred bys. 187A has to be exercised for effectuating the object and purpose of the Act keeping in view the entire scheme. It cannot, therefore, be said that any unguided discretion or power has been conferred of the nature which would come within the inhibition of Art. 14. The principal contention of the learned counsel for the appellant. basi:d on Art. 14 must fail.

On the merits counsel for the appellant has brought to our notice the various facts and circumstances relating to the case. We are satisfied that the High Court rightly upheld the conviction for the offences in question but taking into consideration every aspect of the matter we consider that the sentence of imprisonment already undergone by the appellant together with the fine which has been imposed apart from the order relating to the confiscation of goods will serve the ends of justice.

The appeal is consequently allowed only to the extent that the se!lltence of imprisonment for each offence is reduced to one already undergone.

In all other respects the appeal shall stand dismissed. The bailbonds of the appellant, who was ordered to be released on bail, shall stand discharged.

V.P.S.

Appeal allowed in part.

(1) [19S7] S. C.R. 33S.

MANHARLAL BHOGO..AL SHAH

STATE OF MAHARASHTRA

G. K. MITTER

K. s. HEGDE

A. N. GROVER

P. JAGANMOHAN REDDY, JJ.

Sea Customs Act, 1878

s. 167

s. 187

s. 187

s. 167

Sea Customs Act, 1878

s. 187

s. 187

s. 167(8)

s. 187

s. 167

Sea Customs Act

s. 23(1Xb)

s. 23D

s. 23(l)(a)

s. 23(1Xa)

Customs Act

s. 167

s. 187A

s. 167

s. 167

s. 187

(1955) 2 S.C.R. 925

s. 167(81)

Sea Customs Act, 1878

s. 120

Indian Penal Code

s. 5

s. 187

Art. 14

s. 0

s. 187

s. 167

s. 187

s. 167(8)

s. 187

s. 167(8)

s. 167(81)

s. 167(8)

s. 187A

s. 167

s. 167

s. 167

Art. 14

Art. 14

s. 23(1)(b)

Foreign Exchange Regulation Act 1947

s. 23(1)(a)

s. 23(1)(a)

s. 23(D)

s. 23(1)(b)

s. 23(1)(a)

s. 23(1)

s. 23D

s. 23(1)(a)

s. 23D

Foreign Exchange Regulation Act 1947

s. 23(1)(1)

s. 23(l)(b)

s. 167

clause 23

clause 23

s. 187

s. 167

Section 187A

s. 167

Section 197

s. 187

Industrial Disputes Act 1957

s. 10

Industrial Disputes Act

Art. 14

Art. 14


PERCY RUSTOMJI BASTA

STATE OF MAHARASIITRA

March 16, 1971

[C. A. VAIDIALINGAM AND A. N. RAY, JJ.J

Customs Act, 1962-S. 108-lnquiry under-Statement made to customs officers-Admissibility in evidence-Evidence Act, s. 24-Person against whom inquiry being held not "accused person" within the meaning of s. 24-To be told to speak truth on pain of prosecution does not con.: sritute threat.

'fhe appellant was convicted for offences under the Custorns Act, 1962.

C He challenged the legality of his conviction on the ground that bis statement to the customs authorities made on a summons issued under s. l 08 of the Act and on which the conviction was substantially based was not admissible in evidence in vie\\' of s 24 of the Evidence Act. It was contended that the statement was procured by threat in as much as the officer who recorded the statement warned the appellant that he was bound to state the truth as the officer was conducting a judicial proceeding to which ss. 193 and 228 of the Penal Code applied.

Dismissing the appeal, D

HELD : (i) A statement by a person against whom an inquiry is being held under section 108 is not a statement made by a person accused of an

offenc~. Therefore, the essential ingredient to attract s. 24, namely that the confession must be made by an accused person, is lacking in this case.

[43 DJ

Ramesh Chandra Mehta v. State of West Bengal, [1969] 2 S.C.R. 461 E and lllias v. Collector of Customs, Madras, [1969] 2 S.C.R. 613, relied on.

(ii) A compulsion to speak the truth emanates in this case not from the officers who recorded the statement but from the provisions of the statute itself. What is necessary to constitute a threat under s. 24 of the Evidence Act is that it must emanate from the person in authority. The officers recording the statement were only doing their duty in bringing to the notice of the appellant the provisions of the statute. [44 C-E} F

(iii) To be told that the law required him to. tell the truth and if he did not tell the truth he was liable to be prosecuted under s. 193 Penal Code. for giving false evidence did not constitute a threat under s. 24 of the Evidence Act.

(iv) Even assuming that there was an inducement or threat, the appe11ant had no basis for supposing that by making the statement he would gain any advantage or avoid any evil with reference to the proceedings G in respect of which an inquiry was being conducted by the CUf)toms officers.

Therefore. even on this ground s. 24 of the Evidence Act bas no application. [44 G-H]

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 267 of 1968.

Appeal from the judgment and order dated September 26, 1968 of the Bombay High Court in Criminal Appeal No. 244 of

1967.

SUPREME COURT REPORTS (1971] SUPP. s.c.R.

A A. S. R. Chari, R. Nagaratnam, Janendra Lal and B. R. Agarwal, for the appellant.

H. R. Khanna and B. D. Sharma, for the respondent.

The Judgment of the Court was delivered by

Vaidialingam, J.-This appeal by the first accused, on certificate, is directed against the judgment of the Bombay High Court dated September 26, 1968, in Criminal Appeal No. 244 of !967 confirming his conviction and sentence pased against him by the Presidency Magistrate, Mazgaon, Bombay for offences under s. l 20B I.P.C. read with s. 135 of the Customs Act, 196T(Act 52 of

1962) (hereinafter to be referred as the Act) and also under s. 135 of the Customs Act in respect of the articles claimed to have been recovered from his possession.

The short point that arises for consideration in this appeal is whether s. 24 of the Evidence Act is a bar to the admissibility in evidence of the statement Ex. T given by the appellant to the Customs Officers on a summons issued to him under s. 108 of the Act.

The appellant along with six others was charged under the sections mentioned above and aifter being found guilty was sentenced to undergo one year's rigorous imprisonment and to pay a fine of Rs. 2,000/- for the charges under s. 120B I.P.C. read with s. 135 of the Act. He was also sentenced to undergo one year's rigorous imprisonment and to pay a fine of Rs. 2,000 I - for the charge under s. 135 of the Act. The sentences were directed to run concurrently. In default of p&yment of fine, he was also sentenced to undergo further rigorous imprisonment for the period mentioned in the judgment of the Presidency Magistrate.

The case against the appellant was that he and several other persons entered into a conspiracy during the period from.June, 1963 to the end of December, 1963 to smuggle wrist watches and other luxury goods such &s Nylon Textiles, toilet requisites, plying cards, cigarette lighters, saffron etc. from Dubai to India through Mechanised sailing vessel and land the said imported and smuggled goods surreptitiously a•t any coast near Bombay and then to bring the smuggled goods to Bombay by Motor vehicles.

It was further alleged that in pursuance to the said conspiracy such articles were actually smuggled in the month of December, 1963. The various parts played by the aippellant along with the other accused had been given in the evidence of the prosecution witnesses.

P. W. 19, Inspector in the Rumm&ging Division Town Intelligence in the Bombay Customs, on receipt of information in or about December 21, 1963 about the smuggling of the goods conducted searches in various places and seized several smuggled articles.

PERCY RUSl'OMll BASTA v. MAHARASHTRA (Vaidialingam, J.)

During the pendency of the trial, the third and the fifth accused died and the second accused who. was present for some time later absconded necessitating separation of his trial. Some

other accused could not be traced at all.

Therefore, the trial proceeded against the aippellant and accused Nos. 4, 6, and 7.

It is not necessary to refer to the pleas of accused Nos. 4, 6 and 7 as they have been acquitted of all the charges by the Presidency Magistrate. fhe appellant had filed a, lengthy written statement on October 24, 1966 denying th!!. charges levelled against him.

He had statad that he was not in any manner concerned with any conspiracy. He ailso denied .that any articles had been recovered by the Customs Officers from the houses mentioned by them and stated that in any eventhe had nothing to do with any of those articles. He pleaded that his brother Cama was inimical towards him and thait the latter in connivance with the Customs authorities had foisted this criminal case against him making false allegations . . The appellant alleged that he had left Bombay for Ajmer to pay his respects to the Darga on December 21, 1963 and returned to Bombay on January 2, 1964, when he was apprehended by the Customs authorities and kept in detention, in the first instaince,

till January 7, 1964. During this period of detention he was conti nuously harassed and interrogated by P. Ws. 5 and 19 and forced 10 put his signature on January 7, 1964 to a statement aJfeady got written and prepared by P. W. 5. He was threatened that if he

did ot put his signature on the said statement, his mother and another brother will be prosecuted. He further alleged tha.t it was 1epresented to him that the statement to which he was being asked to put his signature was intended only to be used against the second accused and no part of it was meant to be used aga, inst him. rt may be stated at this stage that the statement recorded trom the appellant by P. Ws. 5 and 19, on Janua.ry 7, 1964 is l:lx.

T. The statement referes to various matters concerning his relation

ship with the other accused as well as his connection with several articles which had been seized and which were the subject of the charges.

We do not think it necessa•ty to refer to Ex. T in any great detail nor to the various seizures of articles made bv the Customs authorities. It is enough to state that the conviction of the ap pellant ha_s been substantially based on the confessional statement Ex. T after finding independent corrobora.tion furnished by other evidence on record in respect of the statements contained in Ex. T.

Objections were taken to the admissibility in evidence of Ex.

T. on. the ground that it is hit by Art. 20(3) and ss. 24 and 25 of the Evidence Act. All these objections were overruled both by the Presidency Magistrate as well as the High Court. The findings of the Presidency Magistrate and accepted by the High Court a.re

SUPRBME COURT REPORTS [1971] SUPP. s.c.R.''

that Ex. T is a voluntary statement and it was a true disclosure made by the appellant. The allegation of the appellant that he was forced to put his signature to Ex. T which had already been prepared by P. Ws. 5 and 19 and that he wa.s induced to put his signature on the representation that it will be used only against

the second accused and not against the appellant, was rejected.

The further findings are that Ex. Twas a voluntary statement made by the appellant and that his plea tha.t he was kept under illegal detention from January 2, 1964 to January 7, 1964 was false. It has also been found that Ex. T is not hit either by Art. 20(3) or by ss. 24 and 25 of the Evidence Act.

The only contention that has been raised before us by Mr.

A. S. R. Chari, learned counsel for the appellant, is, that in view of s. 24 of the Evidence Act, Ex. T, the statement of the appellant recorded by the Customs authorities under the Act, is not admis sable in evidence at the trial for the offences in respect of which the appellant was charged and tried.

His further contention is that as the conviction has been based substantially on the statements contained in Ex. T, the conviction is illegal.

The other contentions based on Art. 20(3) and s. 25 of the Evidence Act which were taken in the High Court have not been taken before us.

In fact those contentions are no. longer available to the appellant in view of the decisions of this Court. According to Mr.

Chari when the statement Ex. T was recorded by the Customs officials, the appellant was in the position of an accused. It is in evidence tha•t P. W. 5, who recorded the statement warned the appellant that he was bound to state the truth as the officer was conducting a judicial proceeding to which the provisions of ss. 193 and 228 I. P. C. apply. This, according to tlie learned counsel, amounts to a threat a.nd as the statement Ex. T ha,, s been procured on the basis of such a threat, it is inadmissible in evidence.

On the other hand, Mr. H. R. Khanna, learned counsel for the State has referred us to the findings recorded by the Presidency Magistrate and a.ccepted by the High Court regarding voluntary nature of Ex. T. The counsel also pointed out that the fact that P. W. 5, who recorded the statement Ex. T from the appellant, informed him that be was bound to speak the truth as it was a.

judicial proceeding to which s. 193 I. P. C. applies, does not amount to any threat in law so as to attract s. 24 of the Evidence Act.

We will now reter to the circumstances under which Ex. T was recorded a.s found by both the Courts. Consequent on information received by the Customs authorities, several raids were conducted from December 21, 1963. The appellant went to the Customs House at about 8 A.M. on January 7, 1964. By about

PERCY RUSTOMJI BASTA v. MAHARASHTRA (Vaidialingam, J.)

8.30 A.M. summons under s. 108 of the Act was served on him.

From 11.30 A.M. onwards to about 8.30 P.M. the process of recor dmg of the statement Ex. T. from the appellant continued cxcep

ting for a short break of about 2! hours for lunch, tea and other requirements. The appellaint was. arrested immediately after his statement Ex. T was completed.

The seizures of the ennre contraband goods were completed by about December 25, 1963.

Though the attention of the appellant was drawn to sub-s. 4 of s. l 08 of the Act, he was not informed or warned that his statement was likely to be used in the event of ainy prosecution against him for the said offence. Undoubtedly Ex. T contained various incriminating facts regarding the complicity of the appellant with the offences alleged against him. The Inspector of Customs, P. W. 5, who recorded the s1atement Ex. T and P. W. 19, have both ad mitted that they questioned the appellant till the statement Ex. T was finally completed at 8.30 P.M. on January 7, 1964. Both of them have also asserted tha.t they had not given any threat or offered any inducement to the appellant before the statement Ex.

T was made. P. W. 5 has deposed that he drew the attention of the appellant to the last pa4"agraph of the summons issued under s. 108 of the Act. In fact in Ex. T the appellant states that he had received summons No. 3 of 1964 dated January 7, 1964 issued to him under s. 108 of the Act. He has further stated that he hoo read the summons and that he had further understood that giving false evidence is an offence punishable under s. 193 of the Indian Penal Code. P. W. 5 has further deposed that he had explained to the appellant the provisions of s. 193 I. P. C. and that the statement wu~ being recorded as if he was in court and that the appellant was bound to speak the truth and that if he made a false statement he would be prosecuted. Based upon these answers of P.

W. 5, Mr. Chari, urged that it is clear that P. W. 5 has administered a threat to the appellant and it was in consequence of such a threat tha.t. the appellant gave the statement Ex. T and thereby has placed himself in a grave jeopardy of action being taken against him under the Act.

Before we refer to s. 24 of the Evidence Act, it is desirable to advert to the relevant provisions of the Customs Act. Sections 107 and 108 are as follows :

"S. 107 Power to examine persons-

Any officer of customs empowered in this behalf by general or special order of the Collector of Customs may. during the course of any enquiry in connection . with the smuggling of any goods,-

(a) require any person to produce or deliver any document or thing relevant to the enquity;

SUPRE)(!I COURT REPORTS (1971] SUPP. s.c.R.

A "(b) examine any person acquainted with the facts

('!

and circumstances of the case.

S. 108. Power to summon persons to give evidence and produce documents-

('!) Any gazetted officer of customs shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making in connection with the smuggling of any goods.

(2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.

(3) All persons so summoned shall be bound to. attend either in person or by an authorised. agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required:

Provided that the exemption under section 132 of the Code of Civil Procedure, 1908, shall be applicable to any requisition for attendance under this section.

(4) Every such enquiry a~ aforesaid shall be deemed to be a judicial proceeding within the me31ning of _section 193 and section 228 of the Indian Penal Code."

Section 122 of the Act deals with C'Onfiscation of goods and levy of penalty. Section 124 deals with the procedure to be adopted before ordering the confiscation of any goods or imposing any penalty on a•ny person. Section 135 deals with prosecution before a criminal court in the circumstances mentioned in els.

(a) and (b) and that prosecution is without prejudice to any action taken under the Act.

This Court had to consider in Romesh Chandra Mehta v.

State of. West Bengal(') whether an officer of customs under the Sea Customs Act, 1878 was a police officer and whether tlie statements made to him were hit by Art. 20(3) of the Constitution and inadmissible in evidence under s. 25 of the Evidence Act A further question also arose whether an officer of customs acting

(0 (1!169) 2 S. C. R. 46J.

PERCY RUSTOMJI BASTA v. MAlfARASHTRA (Vaidialingam, J.)

under the Act is in ainy event a police officer within the meaning of s. 25 of the Evidence Act and hence the confessional statements made to him were inadmissible in evidence. After a considera tion of the scheme of the Sea Customs Act, 1878, this Court held that a Customs Officer does not exercise, when enquiring into a .suspected infringement of the Sea Customs Act, powers of investigation which a police officer may in investigating the commission of an offence and that he is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudi caiting about forfeiture and penalty. Further it was held that the said officer has no power to investigate an offence triable by a Magistrate and that he can only make a complaint in writing before a competent Magistrate and hence s. 25 of the Evidence .Act has no application. It was further held that the steps taken by the Customs Officer are for the purpose of holding an enquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties and that the Customs Officer does not at that stage accuse the person suspected of infringing Ike provisions of the Sea Customs Act with the com- :mission of any offence. Finally, it was held that a person examined under s. l 71A of the Sea Customs Act does not stand in the character of an accused person inasmuch as there is no formal accusation made a•gainst him by any person at that time and hence any statement made by such a person to ai Customs Officer is not hit by Art. 20(3) of the Constitution.

The scheme of the Act was also considered in the said decision an-1 some points of difference between the Act and the Sea Customs Act. 1878 were noted.

But notwithstanding the slight difference in the powers exercised by a• 0Jstoms Officer under the Act, it was held that the Customs Officer under the Act is not a police officer within the meaning of s. 25 of the Evidence Act.

It was emphasised that the proceedings taken by him are for the purpose of holding an enquiry into suspected cases of smuggling and that the Customs Officer is for all purposes ain officer of the Revenue. It was laid down that as the Customs Officer under the Act is not a police officer, the statement made before him by a person, who is arrested or against whom ain enquiry is made, are not covered by s. 25 of the Evidence Act. It was further laid down that until a complaint is filed before a Magistrate, the person against whom an enquiry is commenced under the Customs Act does not stand in the chairacter of a person accused of an offence under s. 135. The discussion on this aspect is wound up by this Court as follows :

" .. ,. ........ The Customs Officer even under the Act of 1962 continues to remain a revenue officer primarily concerned with the detection of smuggling and enforcement and levy of proper duties and prevention of entry

SUPREME COURT REPORTS

[1971] SUPP. S.C.R.

of proper duties and prevention of entry into India of duti-- able goods without payment of duty and of goods of which the entry is prohibited. He does not on thait account become either a police officer, nor does the information conveyed by him, when the person guilty of an infraction of the law is arrested, amount to making of an accusation of an offence against the person so guilty of infraction. Even under the Act of 1962 a formal accusation can only be deemed to be made when a complaint is made before a Magistrate comptttent to try the person guilty of the infraction under ss. 132. 133, 134 and 135 of the Act. Any statement made under ss. 107 and 108 of the Customs Act by a person against whom an enquiry is made by a Customs Officer is not a state ment made by a person accused of a.n offence." From this decision it follows that a Customs Officer conducting an enquiry under ss. !07 or 108 of the Act is not a police ofllcer and the person against whom the inquiry is made is not an accused and the statement ma.de by such a person in that inquiry "is not a statement made by a person accused of an offence''.

The same position has been reiterated in the latter case of Illias v. Collector of Customs, Madras.(') Now coming to s. 24 of the Evidence Act, it runs as follows :

"Section 24 : Confession caused by inducement, threat, or promise, when irrelevant in criminal proceeding: A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise having reference to the charge against the accused person, proceeding from a person in authority and sufficient, in the opinion of the- Court, to give the aocused person grounds which. would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him."

To attract the provisions of this section, the following facts have to be established :

(a.) that the confession has been made by an accused person to a person in authority;

(b) that it must appear to the Court that the confession has been obtained by reason of any inducement. threat or promise procee_ding from a person -in au- thority;

(!) [1969] 2 S. C.R. 613.

PftllCY RUSTOMJI BASTA v. MAHARASHTRA (Vaidialingam, J.)

(c) that the inducement, threat or promise must ha.ve

reference to the charge against the accused person: and

(d) the inducement, threat or promise, must, in the opinion of the Court, be such that the accused in making the confession believed or supposed that by making it he would gain any advantage or avoid any evil of temporal nature in reference to the proceedings against him.

We have already pointed out that when the appellant appeared before the Customs Officers on the morning of January 7,

1964. he was served with. a summons under s. 108 of the Act and that it was after the receipt of the summons, the appellant gave the statement Ex. T. From the decision in Romesh Chandra Mehta v. State of West Bengal('), it is clear that when an inquiry is being conducted under s. 108 of the Act, and a statement is given by a person against whom the inquiry is being held it "is not a statement made by a• person accused of an offence and the person who gives the statement does not siana in the character of an accused person." Therefore the first essential fact to be established, to attract s. 24, referred to a.hove, is lacking in this case, as the appellant was not an "accused person".

We have already stated that it ha.s been found by both the Coorts that the statement Ex. T is a voluntary statement made by the appellant.

Mr. Chari attempted to bring the staitement Ex. T under s. 24 of the Evidence Act because of P. W. 5 having informed the appellant that the statement was. being recorded as if he was a court ~.nd that the appellant was bound to speak the truth and that if any false statement is made, he would be prosecuted. P. W. 5 has also stated that he explained s. 193 I. P. C. to the appella.nt. According to the learned counsel this conduct of P. W. 5 clearly amounts to a threat being administered to the appellant.

It is not in dispute that P. W. 5, who recorded the confession, is a person in authority within the meaning of s. 24 of the Evidence Act. But the question is whether, when P. W. 5 drew the attention of the appella.nt to the fact that the inquiry is a judicial proceeding to which s. 193 I. P. C. applies and that the appellant must speak the truth, it can be considered to be a threat " ...... proceeding from a person in a.uthority" under the section.

We are not inclined to accept the contention of Mr. Chari that in the circumstances mentioned above any threat has proceeded from a person in authority to the appellant, in consequence

(I) (1969] 2 S. C.R. 461.

SUPREMI! COURT REPORTS (1971] SUPP. s.c.R.

of which the st31tement Ex. T was given. Section 108 of the Act gives power to a Customs Officer of a gazetted rank to summon any person to give evidence in any inquiry in connection with the smuggling of any goods.

The inquiry made under this section is by virtue of sub-section (4) deemed to be ii judicial proce eding within the meaning of ss. 193 and 228 of the Indian Pooal Code.

A person summoned under s. 108 of the Act is bound to appea•r and state the truth when giving evidence.

If he does not answer he would render himself liable to be prosecuted under s. 228 I. P. C. If, on the other hand, he answers and gives false evidence, he would be liable to be prosecuted under s. 193 I. P. C. for giving false evidence in a judicial proceeding.

In short a person summoned under s. 108 of the Act is told by the statute itself that under threat of crimina-1 prosecution he is bound to

peak what he knows and state it truthfully.

But it must be noted that a compulsion to speak the truth, even though it may amount to a threat, emanates in this cae not from the officer who recorded the statement, but from the provisions of the statute itself. What is necessary to constitute a thre311 under s. 24 of the Evidence Act is that it must emanate from the person iu authority.

In the cae before us there was no such threat emanating from P. W. 5, who recorded the statement of P. W. 19, who was guiding the proceedings. On the contrary the officers recording the statement were only doing their duty in bringing to the notice of the appellant the provisions of the statute. Even if P. W. 5 had not drawn the attention of the appellant to the fact that the inquiry conducted by him is deemed to be a judicial proceeding, to which s. 193 I. P. C. applies, the appellant was bound to speak the truth when summoned under s. 108 of the Act with the added risk of being prosecuted, if he gave false evidence.

Further, it is to be seen that it is not every threat, inducement or promise even emanating from the person in authority that is hit by s. 24 of the Evidence Act. In order to a.ttract the bar, it bas to be rnch an inducement, threat or promise, which should lead the accused to suppose that "by maKing it he would gain any advantage or a0void any evil of temporal nature in refe rence to the proceedings against him". In the case before us what is it that the appellant has been told ? He has been told that tho law requires him to tell the truth and if be does not tell the truth, he may be prosecuted under s. 193 I. P. C. for giving false evidence. This, we have held, does not constitute a threat under s. 24 of the Evidence Act. The plea of the appellant was that he '\Vas compelled to make the statement under the threat that otherwise his mother and another brother will be prosecuted.

He has further stated that he was induced to make the statement on the belief that it will be used only against the second accused and not against him.

These plea~ of the appellant have been disbelieved by both the

PllRCY RUSTOMJI BASTA v. MAllAllASllTRA (VaidialiBga111, J.)

trial court and the High Court. Therefore, it follows that even assuming that there was an inducement or threat, the appellant had no basis for supposing tha.t by making the statement he would

gain any advantage or avoid any evil with reference to the proceedings in respect of which an inquiry was being conducted by the Customs Officers. Therefore, even on this ground also sec tion 24 of the Evidence Act has no application.

For a.II the above resons we hold that by the mere fact that the Customs Officer P. W. 5, who recorded the statement Ex. T, explained the provisions of S. !93 I. P. C. and informed the appellant that he was bound to tell the truth and that he is liable to be prosecuted if he made a false statement, there was no threa.t

given to the appellant.

We accordingly hold that s. 24 of the Evidence Act has no application and the statement Ex. T was properly aidmitted in evidence in the trial of the appellant. Both the Courts have found that there is also independent evidence lo corroborate the truth of the statements in Ex. T. The question of admissibility of Ex. T in evidence, having been decided against the appellant, no other point has been argued before us.

In the result the appeal fails and is dismissed.

K.B.N.

Appeal dismissed.

PERCY RUSTOMJI BASTA

STATE OF MAHARASIITRA

A. N. RAY, JJ

Customs Act, 1962

S. 108

s. 24

s. 24

Custorns Act, 1962

s 24

ss. 193 and 228

Penal Code

section 108

s. 24

[1969] 2 S.C.R. 461

[1969] 2 S.C.R. 613

s. 24

s. 193

Penal Code

s. 24

s. 24

I.P.C

s. 135

Customs Act

s. 135

Customs Act

s. 24

s. 108

s. 120B

I.P.C

s. 135

s. 135

Art. 20(3)

ss. 24 and 25

Art. 20(3)

ss. 24 and 25

s. 24

Art. 20(3)

s. 25

ss. 193 and 228

s. 193

s. 24

s. 108

s. 4

s. 108

s. 108

s. 193

Indian Penal Code

s. 193

s. 24

Customs Act

Sections 107 and 108

S. 107

S. 108

section 132

Code of Civil Procedure, 1908

section 193

section 228

Indian Penal Code

Section 122

Section 124

Section 135

Sea Customs Act, 1878

Art. 20(3)

s. 25

s. 25

Customs Act

s. 25

Customs Act

Customs Act

Customs Act

Art. 20(3)

Customs Act

Jstoms Officer under the Act

s. 25

s. 25

Customs Act

s. 135

ss. 132

ss. 107 and 108

Customs Act

s. 24

Section 24

[1969] 2 S. C.R. 613

s. 108

s. 108

s. 24

s. 24

s. 193

s. 24

s. 193

(1969] 2 S. C.R. 461

Section 108

ss. 193 and 228

s. 108

s. 228

s. 193

s. 108

s. 24

s. 193

s. 108

s. 24

s. 193

s. 24

s. 24


JONNALA NARASIMHARAO & CO. & ORS. ETC. ETC.

STATE OF ANDHRA PRADESH & ORS.

April 5, 1971

IS. M. SIKRI, C. J., G. K. MITTER, K. S. HEGDE, A. N. GROVER AND

P. JAGANMOHAN REDDY, 1J.]

Andhra Pradesh General Sales Tax Act, 1957 as amended by Act 9 of 1910--Past assessments under invalid law validated-Agents selling jaggery on behalf of principals made liable under s. 11 as amended to pay the

tax collected by them-Agents had no locus standi to challenge levy on the basis of discrimination between principals inter se-Validity of s. 9 of Amending A.ct-Classification between dealers who had collected tax and those who had not collected is reasonable.

The appellan\s carried on the business of Commission Agents in Jag. gery in Andhra Pradesh. They arranged for the sale of jaggery charging a small commission for their service and rendering an account to their Principals in respect of those sales. Every buyer was fully appri•ed of the fact that he was purchasing jaggery of specified agriculturist Principals and not that of the appellants. Till about 1963 under s. 11 of the Andhra Pradesh General Sales Tax Act, 1957, commission agents were required to obtain and were bei~ issued licences and if they conformed to the conditions of those licences} they were not subjected to tax. In 1963 the principal Act was amended by Andhra Pradesh General Sales Tax Amendment Act 16 of 1963. By the new s. 11 introduced by the Amending Act the Agents of resident Principals were made liable for assessment and collection of tax though the liability of the Agent was made co-extensive with that of the principal. The High Court held that in assessing the Agent the turnover of those Principals whose turnover was below the taxable limit of Rs. 10,000 could not be taken into account. As a consequence of this decision the Andhra Pradesh General .Sales Tax 1\.mendment Act 5 of I %8 was enacted and a new s. 11 substitu"tCd for the existing section. This s. 11 was given retrospective effect from 1st August 1963. The object of this amendment was to enable the taxing authorities to assess levy and collect tax or penalty under the Sales Tax Act from the Agent irrespective of the fact that the Principal was not liable to tax. This new section was also struck down by the High Court, on the ground that it was violative of Art. 14 of the Constitution. In view of this judgment which restored the legal position to that prevailing before the Amendment. large sums of money which had been collected as tax from the Agents became refundable. To meet this situation the Andhra Pradesh Legislature enacted the Andhra

Pradesh General Sales Tax Amendment Act 9 of 1970, Section 8 of which validated the assessments already made. Under s. 9 Agents who had not collected the tax from their Principals were exempted from tax.

Under s. II Agents who had collected the tax were made liable to pay the same.

In writ petitions under Art 226 filed by Agents it was contended that s. I 1 as amended and s. 9 of the Amending Act were violative of Art. 14. The High Court held that s. 11 was valid but s. 9 violated Art. 14. In appeal filed against the High Court's judgment by certificate,

HELD: (i) The appeals filed by the agents were not maintainable.

What was sought to be recovered from the appellants was in respect of a tax collected on past dealings and not with respect to the future transactions. Th• tax had alre~_dy been collected, no doubt at first illegally, but

SUPREME COURT REPORTS

[1971] SUPP. S.C R

due to the Amendment Act, that collection had become legal and as dealers the appellants were liable to pay that amount to the State. As there wainothing to show that what was sought to be recovered from the dealer was more tban what he had collected he had not suffered any loss nor any disadvantage which would entitle him to seek a remedy under Art. 226 of the Constitution [373B-C]

(ii) Section 9 had been wrongly struck down by the High Court as invalid.

This section was enacted by the legislature with the object of removing shortcomings in the principal Act which were found wantir1g by jud1cfa.I interpretation.

The interregn_um between the declaration by the High Court of !=CTtain provisions of the Act as being unconstitutional and the attempt of the legislature to remedy the defects and to give retros pectiv: effect thereto created two distinct. categories between the same class of dealers namely those who had coUected the tax whether they were assessed or not and those who had not collected the tax. This classifi.:a tion was certainly reasonable and was related to the object which the Amendment Act sought to achieve.

The dealers who had not collected the tax could not have collected it as the Jaw stood and therefore the legislature thought it just or proper to collect the tax from those who were not liable. E\'en this exemption was given to those who could establish that they had not in fact collected it. the burden of which was upon those who claimed the exemption. [3740-E]

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2116. 2217, 2218, 2126 to 2128 of 1970, 33, 144, 157, 159 to 163 and 164 to 166 of 1971.

E Appeals from the judgments and orders dated the September 5, 1970 of the Andhra Pradesh High Court in Writ Petitions Nos. 2720 of 1970 etc.

S. V. Gupte and G. Narayana Rao for the appellants (in C.A. No. 2116 of 1970).

F M. Natesan and G. Narayana Rao for the appellants (in

C.A. No. 2217 of 1970).

G. Narayana Rao for the appellants (in C. As. Nos. 2218 of 1970, 144, 157, 159 to 163 and 164 to 166 of 1971).

M. C. Setalvad and W. C.

Chopra, for the appellants (in C.As. No. 2126 of 1970).

Polesseti Ramachandra Rao and W. C. Chopra for the appellants Gn C.As. Nos. 2127 and 2128 of 1970).

S. T. Desai and K. Rajendra Chowdhary, for the appellants. (in C.A. No. 33 of 1971).

P. Ram Reddy and P. Parameshwara Rao, for the respon dents (in all the appeals).

' N. & co. 'A. P. iTATE (Jaganmohan Reddy,!.)

Tbe 1 udgment of the Court was delivered by

P. J"ipniiiohm Reddy, J.-this batch of Appeals is by Cer tificate against a common Judgment of the Andhra Pradesh High Court dismissing the Writ Petitions filed by several dehlers in jaggery who challenged the vires and constitutionality of Sections 2, 5, 8 and 9 of the Andhra Pradesh, General Sales Tax Amend-, ment Act 9 of 1970 (hereinafter called the "Amendment Act").

The Appellants are Commission Agents carrying on trade in jaggery.

Agriculturists woo prepare jaggery out of surplus sugarcane which they are unable to sell to the Sugar faotories employ the Appellants as their Commission Agents to seJI. that jaggery.

We w'ill take the fts in Gvil Appeal No. 2116 of 1970 as typical of the common question arising in all these Appeals. The Appellants carry on business of Commission Agent in jaggery in Anakapalli, Visakhapatnam and at various places in West Godavari. In the course of their bus'iness the Appellants arrange for the sale of jaggery charging a small commission for their services and renders an account to the respective principals in respect of these sales. In the pattis issued to the Agriculturists the name of the persons to whom jaggery is sold is specifically mentioned.

The baskets of each principal are separaJtely marked. The stock register also indicates the number of baskets of jaggery held in the name of the Commission Agents. Every buyer is fully apprised of the fact that he is purchasing the jaggery of specified agriculturist principals and not that of the Appellants. This procedure it is said has been in vogue for a long time.

Till about 1963 under Section 11 of Madras General Sales Tax Act as well as under the Andhra Pradesh General Sales Tax Act 1957 (hereinafter called the "Princi'pal Act") Commission Agents were required to obtain and were being issued licences and if they conformed to the conditions of those licences they were not subjected to tax. In 1963 the Principal Act was amended by Andhra Pradesh General Sales Tax Amendment. Act 16 of 1963 wb.icli substituted a new Section 11 for that which was in force till then.

The new Section 11 changed the pre-existing structure of assessment in that, the Agents of Resident Principals were made liable for assessment and collection of Tax through the tiability of the Agent was made co-extensive with that of the Principal. The Sales Tax authorities however were making assessments of the turn-over of the Agents in respect of the purchase and sales of jaggery of several principals notwithstanding the fact that the turnover upto Rs. 10000/- of each was not exigible to tax. These assessments were challenged in a batch of writ petitions in lrri Raju & Ors. v. The Commercial Tax Officer, Tedeplal/igudem & A nr.(') in which the High Court of Andhra Pradesh held that the

(I) Sales Tax Cases-Vol. XX (1967) p, SOI.

24-1 SC lndia/71

SlJPllEME COURT REPORlS [1971] SlJPP.c.; a.

provisions of the Principal Act indicated that the Agent is a dealer in respect of each of the principals, that he is deemed to be as many dealers as there are principals and therefore the total turn-over of the Agent in .respt of the .several principals could not be computed for assessmg him when m fact the turn-over of each of the principals was below the limit i.e. Rs. 10,000/-. As a consequence of this decision the Andhra Pradesh General Sales Tax Amendment Act 5 of 1968 was enacted and a new Section 11 was substituted for the then existing Section.

This Section 11 was given retrospective effect from the !st August 1963.

The object of this Amendment was to enable the Taxing authorities to assess, levy l!nd collect tax or penalty under the Sales Tax Act from the Agent irrespective of the fact that such principal is not liable to pay the tax or penalty in respect of that transaction on account of the turn-over of the principal being less than the minimum turn-over specified in sub-section I of Section 5. The proviso to the new Section 11 however authorised the Tax or penalty assessed or levied on or due from the Agent to be recovered by the Assessing authorities from the principals instead of from the Agents, only if the principal is liable to pay tax or penalty. This new Section was also challenged on various grounds in a batch of writ petitions in

Sri Konatha/a Venkota Ramana & Budha Apparao v. State of Andhra Pradesh & Anr.(').

The High Court held that even after the amendment the liability of the Agent continues to be based on the principal of representation and whether he is a dealer in respect of all the principals or only one principal, his liability is co-extensive with that ot the principal. It also held that while there is' no contlict between Section 5 and Section 11 of the Act, Section 11 which authorises the imposition of a tax independently of the liability of the principal or which takes away or limits the rights of the f gent to reimburse himself or withhold moneys due to the principal only where the principal is liable is discriminatory and is hit by Article 14.

In view of this Judgment, which in fact restored the legal position to that prevailing prior to the Amendment, large sums of money in which assessments bad been made and tax collected became refundable.

To meet this situation the Legislature enacted the Andbra Pradesh General Sales Tax Amendment Act 9 of 1970.

The effect of the Amendments made by Sec. 2, 5, 8 and 9 of the Amendment Act is that a proviso was added to Section 5(1), a new Section 11 was substituted for the old Section 11 with retrospective effect from 1-8-63. The amended Section 11 it may be noticed

(!) Sales Tax C•S••-Vol. 24 (1969) p. 367.

J. N. & co. v. A. P. STATE (Jaganmohan Reddy, J.)

was identical with Section 11 as it stood on 1-8-1963.

The first schedule to the principal Act was also amended by adding jaggery as item 77 which was made taxable at the point of first sale at 5 paise in the Rupee.

It was further provided that as soon as this entry came into force on the date fixed by a Nollfication the proviso to Section 5(A) added by Section 2 of the Amending Act would cease to have effect. Section 8 of the Amending Act purported to validate the assessments already made while Section 9 granted exemption from liability to pay tax in certain cases.

We have already noticed that jaggery was being taxed at the point of the first purchase of its sale between 1-2-60 and 31-7-63 but by reason of the Amendment introduced by Act 16 of 1963 a multiple point tax on sale subject to an exemption of a turn-over of Rs. 10000 /- became Jeviable at 2 paise per Rupee from 1-8-63 which rate was enhanced to 3 paise from 1-4-1966 by Amendment Act 7 of 1966. A single point taxation was however levied on items in Schedule I and 2 of the Act which became chargeable as such under Section 5 (2). We are not concerned with schedule 3 which deals with declared goods but schedule 4 specified the goods which are exempt in terms of Section 8. All other sales which do not fall within the schedules a<e as earlier stated exigible to multiple point tax under Section 5(1) of the Act subject to the minimum of Rs. 10,000/-.

The Appellants had before the High Court of Andhra Pradesh raised several contentions but the principal attack was confined to 3

aspects of the Amendment Act. Firstly that Section 11 read with the new proviso to Section 5 (!) makes an invidious distiqction between . dealers in jaggery on the one hand and dealers in other commodities on the other by perpetuating an unreasonable classification which is based on no intelligible differentia nor can any reasonable nexus be discerned with the object that the Amendment seeks to achieve.

Secondly that Section 9 has to be read as part of Section 2 of the Amendment Act by .which a new proviso is added to Section 5 (!) of the Principal Act and is a part of Section 11 substituted by the Amendment Act. If so read the new proviso to Section 5(1) and the new Section 11 would be violative of Art. 14 inasmuch as the dealers in jaggery similarly situated have been invidiously discriminated by levying tax from those dealers who have collected the tax and the dealers who have not collected the tax. Thirdly that the basis of the amendment is an imposition of a tax not on the transaction of sale or purchase of jaggery but on the collection or non-collection of the tax by the dealers, as such it is also hit by Article 14 of the Constitution.

The High Court rejected all these contentions except the one relating to the validity of Section 9. The State of Andhra Pradesh as well as the Appellants in Civil Appeal No. 33 of 1971 had

3ii

SUPREME COURT REPORTS [1971] SUPP. s.c.Jt.

contended that that provision which granted an exemption from payment of tax to dealers who had not in fact collected the .tax from their principals was valid and did not suffer from the vice of discrimination under Art. 14 because not only was the classification reasonable but that It was based on an intelligible differentia having a nexus with the object of the impugned Act.

We shall however deal with iast mentioned aspect presently but before we do so on the threshold of the argument of the Appellants there is a valid objection to the maintainability of the Writ Petitions filed by the dealers who as Agents of the Principals had collected tax from the purchasers which as a consequence of the two decisions of the High Court referred to earlier was illegal.

After the amendment Act the levy and collection by the dealers became prima facie legal.

In so far as jaggery is concerned .there was also no question of any exemption of the minimum turnover of the principal of Rs. 10,000, so that the hardship which a Commission Agent dealer had to undergo in trying to determine whe ther the tum-over of each of his principals was below Rs. 10,000 before he could collect Sales Tax was na longer there.

After the Amendment by removing the exemption of Rs. 10,000 on sale of jaggery which was given retrospective effect, the dealer agents could not now complain, which complaint had been held by the High Court to be justified, that while the principals were exempted from tax upto Rs. 10,000 the tax is being levied on the agents tum-over irrespective of that exemption. In any case whatever objections the principals may have to the constitutional validity of the provisions introduced by the amending Act under Article 14 the Agent dealers certainly have no locus standi to complain about discrimination between Principals inter-se. That apart the dealers are not expected to and in fact do not pay any money of their own towards the tax which is levied. The tax so levied and paid to the assessing authorities by the dealer agent Is, under the provisions of the Act, not returnable nor can the principal under the provisions of the Act make any claim against such dealer Agents.

Shri Gupte on behalf of the Appellants was unable to tell us that there were among the Appellants any principals who had a direct interest in challenging the validity of the prov'isions on the ground of discrimination. Shri Motilal Setalvad on behalf of the Appellants in Civil Appeals Nos. 2126 to 2128 of 1970 strenuously contended that the Appellants have an Interest and can maintain the Writ Petitions because they were dealers witbin the meaning of Section 2(e) and are persons who are aggrieved because of the assessment made or likely to be made and tax recovered from them. He has further contended that this Canrt has in several cases held that even a notice issued to any person under the provisions of an Impugned Act which is likely to cause prejudice will

J. N. & co. v. A. P. STATB (Jaganmohan Reddy, J.)

entitle him to challenge the Constitufional validity of the Jaw under which the notice is given. If so, where an assessment has been made the assessee has a right to challenge the provisions of the Amendment Act under which the levy and collection of tax baYe been given retrospective validity. Apart from the question that

this argument does not take into account the distinction between an attack under Art. 14 and an attack under Art. 19 it over looks the fact that what is sought to be recovered from the Appell ant is in respect of a tax collected on the past dealings and not with

respect to the future transactions. We had pointed out that tax had already been'collccted no doubt at first illegally, but due to the amendment Act that collection has become legal and as a dealer he

is liable to pay that amount to the State in respect of the Assess ments made. As there is nothing to show that what is sought to be recovered from the dealer is more than what he has collected, he has not suffered any loss nor any disadvantage which would entitle him to seek a remedy under Art. 226 of the Constitution. Shri P.

Ramchandrarao in Civil Appeal No. 2127 of 1970 had nothing new to add to the arguments advanced by the learned Advocates for the Appellants.

On this short ground alone we dismiss all the Appeals except Civil Appeal No. 33 of 1971 but in the circumstances without costs.

Appeal in Civil Appeal No. 33 of 1971:

In this Appeal Shri S. T. Desai contends that the High Court had erroneously struck down Sec. 9 of the Amendment Act. Sec. 9 of the Amendment Act is as follows:

"9(1) Where any sale of jaggery has been effected during the period between the !st August 1963 and the commencement of Section 5 of this Act in so far as it relates to item 77, and the dealer effecting such sale has not collected any amount by way of tax under the principal Act on the ground that no such tax could have been levied or collected in respect of such sale, or any portion of the turnover relating to such sale, and where no such tax could also have been levied or collected if the amendments made in the principal Act by this Act had not been made, then, notwithstanding anything contained in Section 8 or the said amendments, the dealer shall not be liable to pav any tax under the principal Act, as amended by this Act, in respect of such sale or such part of the turnovet relating to such sale.

(2) For the purposes of sub-section (!), the burden of proving that no amount by way of tax was collected under the principal Act in respect of any sale referred to in sub-section (1) or in .respect of any portion of the

SUPREME COURT REPORn (1971] SUPP. s.c.J.·

turnover relating to such sale, shall be on the dealer effecting such sale".

This Section is enacted by the legislature with the object of removing

shortmings in the principal Act which were found wanting by judicial interpretation. The interregnum between the declaration by the High Court of certain provision of the Act as being unconstitutional and the attempt of the legislature to remedy the defects and to give retrospective effect thereto created two distinct categories between the same class of dealers namely those who had . collected the tax whether they were assessed or not and those who had not collected the tax. This classification is certainly reasonable and is related to the object which the Amendment Act seeks to achieve. The dealers who had not collected the tax could not have collected it as the law stood and therefore the legislature did not think it just or proper to collect tax from those who were not liable. Even this exemption as can be seen is given to only those persons who can establish that they have not in fact collected it, the burden of which is upon those who claim the exemption.

It is unnecessary to deal with hypothetical cases.

The mere fact that in many cases it was not collected because the assessment could not be completed cannot be a valid ground nor cain it even now be maide in regard to those assessments which are now pending (a matter upon which we do not pronounce) cannot be valid grounds to declare the classification as arbitrary or unreasonable, which reason seems to have weighed with the High Court. We think not only the classification reasonable but there is an intelligible differentia furnishing a nexus with the object the Amendment Act seeks to achieve.

In this view we set aside the Judgment of the High Court declaring Section 9 as unconstitutional and allow the appeal, but in the circumstances without costs, o.c.

Appeal allowed.

STATE OF ANDHRA PRADESH & ORS

IS. M. SIKRI

G. K. MITTER

K. S. HEGDE

A. N. GROVER

P. JAGANMOHAN REDDY

s. 11

s. 9

s. 11

s. 11

s. 11

s. 11

Art. 14

Section 8

s. 9

Art 226

s. 9

Art. 14

s. 11

s. 9

Art. 14

Art. 226

Section 9

Sections 2, 5, 8 and 9

Section 11

Section 11

Section 11

Section 11

Section 11

Section 5

Section 11

Section 5

Section 11

Section 11

Article 14

Sec. 2, 5, 8 and 9

Section 5(1)

Section 11

Section 11

Section 11

Section 11

Section 5(A)

Section 2

Section 8

Section 9

Schedule I

Section 5

Section 8

Section 5(1)

Section 11

Section 5

Section 9

Section 2

Section 5

Section 11

Section 5(1)

Section 11

Art. 14

Article 14

Section 9

Art. 14

Article 14

Section 2(e)

Art. 14

Art. 19

Art. 226

Sec. 9

Sec. 9

Section 5

Section 8

Section 9