THE AMALGAMA'MlD TEA ESTATE CO. LTD. ETC.

A v.

STATE OF KERALA

April 2, 1974 [A. N. RAIY, C.J., P. JAGANMOllAN REDDY, s. N. DWJVEDI,

P. K. GOSWAMI AND R. S. SARICARIA, 1J, J

Constit11tion of India. A.rt. 14-Classificati"n test if inflexible and doctrlnairi.

Kera/a Agric11/t11ral Income Tax Act, 1950-lf imposition of graduated .ta.T betwttll don1t.stic and foreign companies violates Art. 14.

The petitioners, two foreign companies, had been assessed to agricultural income tax under the Kerala Agricultural Income-tax Act, 1950 , M amended by the Amendment Act of 1970. n1e Act has fixed a graJ\1ated scaJe on 3Ji:ri:ulhtral income tax to a minimum of 65% on domestic companies anJ a flat rate: of 75% of. the total incorne on foreign companies. The petitioner.1 contended that this discrimination between a domestic company and a foreign company was violative of Art. 14 of the Constitution because the classification was not bsed on any intelligible differentia and the differentia. if any, had no rational relation to the purpose sought to be achieved by the taxing statute .and that it treats as unequal, companies which are equally circumstanced.

Dismissing the petitions,

HELD : (I) The impugned provisions of the Amending Act, 1970 were not violative of Art. 14.

The impuJ!; ned legislation, in order to get tht: green light from Art 141 should satisfy the classification test evolved by this Court namely

(I) the classification should be passed on an intelligible differenlia and (2) the differentia should bear a rational relation to the purpOse of the legislation.

[822 F]

(2) The classification test is, however. not inflexible and doctFinuire.

Jt gives do.1e regard to the complex necessities and intricate -problems of government.

As revenue is the first necessity of the State and as taxes arc l'aised for various purposes and bv an adiustment of diverse elements, the Court grants the State greater choice of classification in the field of taxation than in other spheres.

[822 G]

Kl1andi1:e Sham Bhat \'. Auricu/tura/ /11conie-tax Officer, 1\.l.R. 1963 S.C. 591 and Kasargod Ravi Ver1na Rajall v. Union of /11dia [19691 3 S.C.R. 827, referred to.

(3) On a challenge to a statute on the ground of Art. 14 the court would raise a presumtion in_ favour of its constitutionality. Consequently one who challenged the salute h!ars th: burden of eitab'.ishing that the statu~. is clearly' violative of Art. 14. [823 BJ

Cl1ara11jl1 Lal v. Union of India, [1950] S.C.R. 869 at p. 879 per Fazal Ali J. and State of West Bengal v. Anwar Ali Sarkar, [1952] S.C.R. 284 at p. 303. referred to. ( 4) It is not possible to hold on the meagre facts pre!iented before the court that domestic companies and foreign companies carrying on agriclllture in the S'tate of Kerala are equaly circumstanced. [823 0]

D. P. Jo.lii v. State of 1'1Cldlir11 l}lwrat, [1955], 1 S.C.R .. 1215, at p. 1228, Hu11x. Muller of Nurenburg v. Super1111e11dent Pre.ndencJ. Jail, Calcutla, [1955] 1 S.C.R. 1284, K. T. Moopil Nair v. State of Kerala t1961] 3 S.C, R. 77 and

late of Kerala, v. Haji K. K11tty Nalw, A.l.R. 1959 S.C. 378, referred to.

ORIGINAL JURISDICTION: Writ Petitions Nos. 2 and 9 of 1971.

Under Article 32 of the Constitution for the enforcement of fundamental rights.

AMAL. TEA ESTATE\', KER.ALA (Dwivtdi, /.) 821

A G. B. Pai, 0. C. Mathur, D. N. Misra, J. B. DaJaclw11ji and Rmirider Narain, for the petitioners

L. N. Misra, Solicitor General of India and A. G. P11dissary, for the respondent.

The Judgment of the Court was delivered by

B Dw1vE01, J.-Thc two petitioners have been assessed to Agricultural Income-tax by the State of Kerala under the Agricultural Incometa• Act, 1950 (hereinafter called the Act) as amended by the Agricultural Income-tax (Amendment) Act, 1970. The assessment is made at the rate of 75 per cent of their total income. They challenge the assessment on the ground that s. 2(hh) and (kk) and clauses (2) . and \3) of Pan I to the Schedule of the Kcrala Agricultural Jncome- C tax (Amendment) Act, 1970 are violative of Art. 14 o{ the Constitution.

it will facilitate appreciation of the facts and the constitutional qu .... stlon in this case if the taxing provisions are noticed at this stage.

The Agricultural Income-tax Act was passed in 1950. In the beginning, the Act was known as the Travancorc-Cochin Agricultural Income-tax Act.

Later as a result of the State'-; reorganisation, the Act was renamed simply as Agricultural Income-tax Act, 1950.

According to the preamble, the Act was made to provide for levy of tax on agricultural income in the State o[ Kerala. Tilt the Amending Act of l 970, all companies were liable to pay tax according to their total income.

The tax is chargeable under s. 3.

Sub-section. (l) thereof provided that the agricultural incon1c at the rate or rates specified in the schedule to the Act shall be charged oa the total agricultural income ofthe previous year of every person. It was a grnduated rate.

Section 2(h) of the Amending Act of 1970 has redefined a 'Company' as "a domestic company or a foreign company." Section 2(hh) defines a 'domestic company' as "'a company fonncd and registered under the Companies Act, 1956 ... and includes a company 'formed and registered under any law relating to companies formerly in force in any part of India." lt is necessary that the registered office of the Company should be in India.

Section 2(kk) defines a 'foreign company' as 'a foreign company within the meaning of s.591 of the CC\mpanics Act, 1956 .... and includes any foreign association whether incorporated o_r not which the Government, may. by general or special order, declare to be a foreign company for the purposes of this Act."

Clause (2) of Part I of the Schedule to the Amending Act, 1970, provides for the rate of taxation chargeable fron1 a 'do1nestic co1npany.' It is this :

A. Where the total agricultural_ incon1c docs not exceed

Rs. 25,000-45 per cent of the total agricultural income

B. Where the total agricultural income exceeds. Rs. 25,000

but docs nol exceed Rs. 1 lakh-50 per cent of the total

g:ricultural inco1nc

C. Where the total agricultural income exceeds Rs. l lakh but does not exceed Rs. 3 lakhs-55 per cent of the total agricultural income

D. Where the total agricultural income exceeds Rs. 3 lakhs but does not exceed Rs. 10 lakhs.-60 per cent of the total agricultural income E. Where the total agricultural income exceeds Rs. 10

lakhs.-65 per cent of the total agricultural income.

The provisos to vai-ious alphabetical clauses have been omitted here from as they are not material. Clause ( 3) of Part I of the Schedule provides for the rate of tax chargeable from a foreign company. The rate fixed is 75 per cent of the total agricultriral income.

It is obvious from the review of the aforesaid provisions that while C in the case of domestic companies a graduated scale is fixed, in the ca..e of foreign companies a flat rate is fixed. Secondly, while the maximum rate of tax in the case of a domestic company is 65 per cent of the total income, it is 75 per cent in case of all foreign companies.

The petitioners' contention is that this discrimination between a domestic company and a foreign company is violative of Art. 14 of D the Constitution.

The classification for the purposes of taxation is not based on any intelligible differentia; and the differentia, if any, has no rational relation to the pwpose ought to be achieved by the taXing statute. Reliance is placed on Wheeling Steel Corporation v. C. Emory G/ander, P) where the U.S.A. Supreme Court has said: "After a State has chosen to domesticate foreign corporations, they arc entitled to equal protection with the State's own corporate progeny, at least to E the extent that their property is entitled to an equally favourable ad valorem tax basis."

It may be pointed out that the Indian Income-tax Act also makes a distinction between a domestic company and a foreign company.

But that circumstance per se would not help the State of Kera!a. The impugned legislation, in order to get the green light from Art. 14, F should satisfy the classification test evolved by this Court in a catena of cases. According to that test ( 1) the class.ification should be based on an inte!iligible differentia and (2) the differentia should bear a rational relation to the purpose of the legislation.

The classification test is, however, not inflexible and doctrinaire.

It gives due regard to the complex necessities and intericatc problem• G of government. Thus, as revenue is the first necessity of the State and as taxes are raised for various purposes and by an adjustment of diverse elements, the Court grants the State greater choice of classification in the field of taxation, than in other spheres. Accorging to Subba Rao J.,, "(T) he courts in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature in the matter of classification, so long as it adheres to the fundamental H principles underlying the said doctrine.

The power of the Legislature

(I) 93 Law. Edn. 1544.

AMAL. TEA ESTATE v. KERALA Wwivedi, !.) 823

to classify is of wide range and flexibility so that it can adjust its system of taxation in all proper and reasonable ways." [Khandige Sham Bhat v.Agricu/t11ral /iicome-tax Officer, Kasargod('); Ravi Verma Rajah v.

Union of India(').]

Again, on a challenge to a statute on the ground of Art. 14, the Court would generally raise a presumption in favour of its constitutionality.

Consequently, one who challenges the statute.bears the burden of establishing that the statute is clearly. violative of Art. 14. "(T)l1e presumption is always i11 favour of the constitutionality of an enact,-

ment and the burden is upon him who attacks it to show that there is a clear transgression of the constitutional principle." [See Charanjit Lal v.Union of India(').] .

The reason why a statute is presumed to be constitutional is that the Legislature is the best judge of the local condition and circumstances and special needs of various classes of persons. "(T) he Legislature is the best judge of the needs of particular classe.s and to estimate the degree of evil so as to adjust its legislation according to the exigency found to exist." (Charanjit Lal (supra) at page 933 per Das J.)

Speaking in the same vein, Patanjali Sastri, C.J. observed: "(The Legislatures) alone know the local conditions and circumstances which demanded the enactment of such a law, and it must be remembered that "legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts." [See State of West Btngql v. Anwar Ali Sarkar(').]

The contention of the petitioners would have to be examined in the light of the foregoing considerations.

The only relevant statement of fact in the petitions is that the petitioners are Joint Stock Companies with limited liability and have been incorporated in the United Kingdom.

One of them has its registered office in Scotland, and the other in England.

Both of them carry onbusiness also in this coun(fy, and particularly in the State ¢ Kerala.

In Kerala their main business is oneof cultivation and marketing of plantation crops such as tea. It is also alleged that the impugned statute seeks to treat as unequal companies which are equally circumstanced.

No other facts are disclosed in the petitions. No comparison is made between the domestic companies and foreign companies carrying on agriculture in Kerala in regard to their financial standing. Magni tude of their business inside a.nd outside the country, the fertility of the land owned by them and the quality of the plantation crops raised by them. It is not possible to hold on the meagre facts presented before us that domestic companies and foreign companies carrying on agriculture in the State of Kerala are equally circumstanced.

(1) A.T.R. 1963 S.C. 591.

(2) (1969! S. C. R 827 ()) (1950] S. C'. R. 869 at p, 879 per Fazal AH .T.

(4) [19521 S. C.R. 284 at p, 303

There is no denying the fact that for various reasons a domestic A company may be 1rr.ated differently from a foreign company in the field of taxation.

According to Art. 48 of the Constitution, it is a fundamental obligation of the State to make "'endeavour to organise agriculture and animal husbandry on modem and scientific lines and to take .steps for preservation and improving the breeds ... of cows and calves and other milch and draught cattle." So it may b~ safely presumed that the State of Kerala shOuld be striving to improve agriculture and B

anim~I husbandry within 11s boundaries. It may also be presumed that in so doing it mu!)t be 1nvesttng considerable money and skill. The State is, therefore, entitled to raise revenue by taxation for investment in agriculture and animal husbandry.

So it could reasonably demand 75 per cent of total income as tax from a foreign company.

It could demand the same amount of tax from a domestic company also.

But the rate of tax on them is lesser.

But the tax relief given to them is c 11ot proved to be arbitrary or unreasonable.

It may be that the domestic companies own land which is less fertile or produce inferior quality of plantation crops while the foreign companies own 1no.re fertile land and produce superior quality of plantation crops.

In that case. the domest'c companies would not be able to withstand the compctitic!l1 or

the foreign con1punics rind would not survive. 1hc State might have chosen to give the domstic con1panies protection against the foreign D companies.

And there seems to be yet another good reason for this.

The entire income earned by a domestic company fron1 business insid~

as well as outsido India will remain in India.

But a good part of the income earned by the petitioners inside India would be drained out of India to the United Kingdom in the shape of dividends, etc.

Under the Foreign Exchange Regulation Act, l 94 7. it is open to a forcig;1 company to transmit money out of India with the permission of the E.

Reserve Bank of India.

It is thus evident that a greater part of the income and skill of the domestic companies is likely to be utilised in improving agriculture within the State.

It will not be so in the case of forcig11 co1npanics.

On these considerations it cannot be said that the cla>Sification ot c.ompanics into domestic and foreign con1panies has no rational rcJation to the purpose of the impugned provisions.

Our view receives strong support from the Court's opinion in D. P.

Joshi v. State of Madhya Bilarat(I). That case related to the question of admission of students in a Medical College in the Sta!e of Madhya Bharat.

According to a direction of the State of Madhya Bharat, all students admitted to the College were required to pay a prescribed fee.

But students who were not btJna fide residence of Madhya Bharat were also requ; rcd to pay capitation fe.o of Rs. 1500/-.

A student who was not a hona fide resident of Madhya Bharat challenged the capitation fee as being violative of Art. J4_ The majority of the Court overruled the contention.

Speaking for the Court, Vcnkatarama Ayyar J. said :

'The object of the classification underlying the impugned rule was cleerly to help to some extent students who residents of Madhya Bharat in the prosecution of their studies,

(t) lt955] t S. C.R. 1215 ot P. t228.

' '

AMAL. TEA ESTATE v. KERALA <Dwivedi, J,) 825

and it cannot be disputed that it is quite a legitimate and laudable objective for a State to encourage education within Us borders.

Education is a State subject, and one of the directive principles declared in Pan IV of the Constitution 1s that the State should make effective provision for education within the limits of its economy ..•• The State has to contribute for the unkeep and the running of its educational institutions.

We are in this petition concerned with a Medioal College, and it is well-known that it requires considerable finance to maintain such as institution. If the State has to spend money on it, is it unreasonable that it should SO> order the educational system that the advantage of it would to some extent at least enure for the benefit of the State? A concession given to the "residents of the State in the matter of fee is obviously calculated to serve that end, as presuma- 2bly some of them might, after passing out of the College, settle down as doctors and serve, the needs of the locality.

The classification is thus based on a ground which has a rea sonable relation to the subject matter of the legislation, and is in consequence not open to attack. It has been held in the State of Punjab v. Ajaib Singh and others(') that a classification might validly be made on a geographical basis. Such a classification would be eminently just and reasonable, where it relates to education which is the concern primarily of the State.

The contention, therefore, that the rule imposing capitation tee 1s in contravention of article 14 must be rejected."

Wheeling Steel Corporation (supra) cannot, in our view, assist the petitioners.

Firstly, the foreign corporation there was a corporation incorporated and registered in a State within the U.S.A.

Here the petitioner companies are incorporated not in any part of India but in the United Kingdom.

Secondly, while there the taxing State has chosen ''to adopt" the petitioning foreign corporation. here there is. no evidence to show that the petitioners were permitted to carry on business in the State of Kerala by the choice of that State.

In all probability they had set up their business in that State before India became a Sovereign Republic.

Thirdly, there the taxing State was trying to tax the property of a foreign corporation admitted in the State.

Here the State of Kcrala is not taxing the property, but the income, of the petitioners from their agricultural property.

In Haus Mu!/er of Nurenbug v. Su, perintendent, Presidency Jail, Calcutta('). this Court upheld the classification of foreigners into those who are British subjects and those who arc not British subjects for the purpose of preventive detention.

The Court said there : "(I )t is casih understandable that the reasons of State may make it desirable tO. classify foreigners into different groups."

K. T. llfoopi/ Nair v. State of Kera/a(') and State .of Kera/a v. l/aji K. Kully Naha(') deal with taxing statutes. In the first cos~.

{l J [1953] S.C.R. 254.

(JI [1961] J S.C.R. 77. (2)

[1955! I S.C.R. 11~4.

(4) A.l.R. 1969 S.C. JW.

the State oj Kerala had imposed a uniform tax levy on land.

The A taxing pr, ovisions were struck down as violative of Art. 14 because according to the Court there was no classification of persons .for the purpose of taxation. In the other case, a uniform building tax was imposed on buildings according to their floor area. The taxing provisions were struck down as being discriminatory for total lack of any classification of persons or buildings. The impugned Act of 1970 does not suffer from this vice.

So these cases also do not help the B pctitiOncrs.

We are of opinion that the impugned provisions of the Amending Act of 1970 are not violative of Art. 14.

The petitions arc accordingly disn1isscd with costs. One set.

P.B.R.

Petitions disn1issed.

STATE OF KERALA

April 2, 1974

P. JAGANMOllAN REDDY

P. K. GOSWAMI

Income Tax Act, 1950

Art. 14

Art. 14

Art. 14

Art 141

Art. 14

Art. 14

Kerala

[1955] 1 S.C.R. 1284

Article 32

G. B. Pai

C. Mathur

D. N. Misra

J. B. DaJaclw11ji

Rmirider Narain

L. N. Misra

A. G. P11dissary

B Dw1vE01

s. 2(hh)

Art. 14

Income-tax Act

Income-tax Act

Tilt the Amending Act

s. 3

Section 2(h)

Section 2(hh)

Companies Act, 1956

India

Section 2(kk)

Art. 14

U.S.A. Supreme Court

Income-tax Act

State of Kera!a

Art. 14

Subba Rao

Art. 14

Art. 14

Charanjit Lal

Das

Patanjali Sastri

United Kingdom

Scotland

England

Art. 48

State of Kerala

Reserve Bank of India

State of Madhya Bharat

Vcnkatarama Ayyar

article 14

Wheeling Steel Corporation

U.S.A.

State of Kcrala

Art. 14

Art. 14


KESHO RAM

DE'LHI ADMlNISTRATION April 3, 1974.

[M. H. BEG AND R. S. SARKARIA, JJ.J

Dl'lhi }.fu11icipa: Corporation Act 1957-Ss. 154, 155 & 161 read wit/: Secs. 353/332 3330/ l.P.C.-Whet/ler seizure and detention of animal u/s 161 posJible 1ritlzout 11otice 11/s. 154 for recoW.'ryaf mHk tax-If notice Optional.

The appellant was convicted u/s 353/332/333 of the Indian Penal Code a.nd was sentenced accordingly.

The prosecution case was th:it tlte appellant obstructed 3 inspectors and a peon of the Delhi Municipal Corporation, when they went to seize the appell'ants' buffalo in the discharge of their duty to realise the milk tax from him and struck one of the officers on the nose with the result that it bled and was found fractured.

The main contention of the appeUant was that the attempt to realise the arrears of milk. tax and recovery charges was illegal because no demand notice under Sec. 154 of the Act was served on the appellant, and therefore, he hitd the right of private defence.

The

0 prsecution relied on Sec. 99 Indian Penal Code which provideii that there is no right of priVate defence against an act of a public servant. done in .!?ood faith under colour of his office, though that act may not be strictly justifiable bv law. Further according to the prosecution, Sec. 161 of the Act empowered the Inspector of the Corpo'ration. to, seize and n10 ... e the appetla.nt's buffalo for non-payment of tax and the sect.Ion gave them an over-riding power to resort to seize and detention of the artimaJ. Therefore, according to the prosecution, the appellant .was guilty of the offences charged.

Dismissing the appeal,

HELD: (1) AithouJ?h the interpretation placed by the High Court that seizure and detention of a vehicle or an animal is possible under sec. 161 at an\.1ime after the tax. ha~ become due' when read in the light of other provisions of the Act. it has to be remembered that section 161 would become the repository :'.>f a rather drastic power of .actinp; without previous notice to seizeany animal or vehicle at anv time after 'the tax bcame due. and thereby, of seriously iniurin~ c\'en innocent individuals who mav have every intention and the capacity to par the demanded tax, but may 'have 'defaulted only by some oversight and may be unable to produce the required money on the spot.

It is well settled that out of two possible internationals, the one which confines the content of such oower of seizure to reasonable limits and fair modes of operation should be preferred. [831 DJ

Therefore. although Sec. 161 of the Act can be used 'at any time', agaipst a defaulter, yet a defaulter in view of secs. 154 and 155 of the Act would be a person who refuses to pay within a period specified in Sec, 155 of the Act after a notice of demand u/s. 154 of the Act. Although the demand of notice is optional, yet, but the option has to be exercised if it is intended to invoke the powers contained in sec. 161. [8,31 F]

(ii) The Inspectors were acting honsetly in exercise of the powen~ delegated to them, but they had erred in the exercise of their PoWers. They, however, cannot be presumed to know that a notiee under sec. 154 must precede any attemot of seizure.

Therefore. there waS no legal defect which. vitiated their action<;. Sec. 99, therefore. did confer a protection upon the employees of the Corporation who acted in good faith under_ the colour of their office. But 11ince

they acted in an improper manner in demanding immediate payment, the sentences imoosed upon the appellant were oxcessive. The sentences, therefore, were reduced to the period already undergone by the appellant but the convictions were upheld. The fine imposed upon the appellant \'{as also set aside ..

[832 A-CJ

I '

CRIMINAL APPELLATE JuR1so1cno:-i: Criminal Appeal No. 199 of [ l) 10.

Appeal by Special leave from the judgment and order dated the l 2ch November, 1969 of the Delhi High Court at New Delhi in Criminal Apeal No. 103 of 1968.

Harba11s Singh. for the appellant.

(Jovi11d Das, for the respondent.

Ihe Judgment of the Court. was delivered by

BEG, J.-The High Court or Delhi had confirmcdtho conviction .. of the appellant under Section 353/332/333 of the Indian Penal

Cod~, nnd a sent.nce of one year's regorous imprisonment on each , count, and also to be fine of Rs. 400/-, and, in default of payment . of fine, to four months further rigorous imprisonment under section . 333 Indian Penal Code.

The appellant has come to this Court by grant of special leave.

It was alleged that the appellant had, on 17-3-1967, at 4,30 p.m., in Rameshwar Nagar, obstructed Sarvshri Rattan Singh, Maharaj Singh , and Raghbir Singh, Section Inspectors, and Dunger, a Peon of the Delhi Municipal. Corporation, when they went to seize a buffalo belong • . ing tO the appellant in the discharge or their duty to realise the milk

tax from him, and struck Rattan Singh on the nose with the result that it bled and was also fractured.

Tho Main contention on behalf of tc appellant is that the attempt to realize Rs. 153.75 as arrears of milk tax together with Rs. 10/- as recovery charges was illegal, because compliance with the provisions . of the Dolhi Municipal Corporation Act, 1957 (hereinafter referred to as "the Act'), for the payment an:I recovery of taxes, and, in parti- . cular \vith the requirements for.a notice o[ <lcn1and contained in Section

154 of the Act, was wanting so that he ha:I a right to private defrncc.

An at1cmpt was also made to argue that the Inspectors who went to realise the milk tax by seizing the buffalo were not duly empowered by the Commissioner to do so.

An order of the Commissioner dated 22-7-1959 under Section 491 of the Act. delegating the Commissioner"s . pow ors to Inspectors of the .corporation, set that question at rest. We do not think it could be areue.d .that Soction 491 requires the conferment of the Coinmissioners pO'Ncrs upon every Inspector by name.

It is enough if there is a general order, as there is in this case, indicating tbo class of ofticcrs to whom the Commissioner had delegated his , powers under any section.

We arc supported in thio; view by the case . of Ka11war Sing/1 l's. Delhi Adniinistrlltiou. ( 1 )

We find that it has not been contended anywhere that the Inspectors Jid not act under the colour of their oftice.

The appellant did not plead, in defence. that the officers concerned were not known to him a• ln, pectors of the Corporation authorised to collect tax or that they could not sho\V any authority for perfonning their duties.

Hence.

0) [t965] (I) SCR r. 7 "' t I.

KESUO RAM v. DELHI ADMN. (Beg, J.) 829

!he prosecution has relied upon Section 99 of the I.P.C. which lays down:

"There is no right of private defence against an act which does not reasonably cause the apprehension of death or of grievous hurt, if done, or altempted to be done, by a public servant acting in good faith under colour of his office. though that act may not be strictly justifiable by law".

On facts found, it has to be assumed that the appdlant haJ objected to the taking of his buffalo, and, as this was of no avail, he had given a blow to Rattan Singh on the nose which bled and wa5 alio traclUred a• a result. It is true that, if the act against which a right of private defence is pleaded is not done in good faith the protection o'f Section 9P "I.P.C. will not extend to it. It bas, therefore, to be determined whether there was any such non-compliance with the provisions relating to the realisation ot the tax, in attempting to take away ti)e buffalo of the appellant, as to amount to want of good , faith.

The High Court had acceptd the submission on behalf of the prosecution that Section 161 of the Act empowered the Inspectors of"''

the Corporation to seize and remove the appellant's buffalo for nonpayment of the tax as it gave an over-riding power to resort to this

method of enforcing payment "at any time after the tax has become due." Section 161 of the Act lay> down :

"161(1) If the tax on any vehicle or animal is not paid, then, instead of proceeding against the defa.uiter by distress am! sale of his other movable property as hereinbefore provided, the Commissioner may, at any time after the tax has become due, seize and detain the vehicle or animal or both and, if the owner or other p,.son enti:lcd thereto does not within seven days .in respect of a vehicle and two days in respect of an animal from the date of such seizure and detention, claim the same and pay the tax due together with the charges incurred in connection with th~

seizure and detention, the Commissioner may cause the same to be sold and apply the proceeds of the sale or such part thereof as is required in discharge of the sum due and. tho charges incurred as al'oresaid.

(2) The surplus, if any, remaining after t_he application of the sale-proceeds under sub-section( 1) shall be disposed of in the manner laid down in sub-sections (6) and (?) of Section 158 ..

Section 152 provides Iha.\ a tax levied under the Act becomes payable "on such dates, in such number of instalments and in such manner as may he determined by bye-hws ma1e in this bchalr'.

A tax on an animal must be deemed to have become due wi!h()Ut t!1<· need to present a bill because Section 153 reads as follows :

"153(1) When anv tax has become due, the Commissioner shall cause to be presented to the person liable for the payment thereof, a bill for the amount due :

. Provided that no such bill shall be necessary in the case cl:- .

(a) . a tax on vehicles and animals;

(b) a theatre-tax; and

(c) a tax on advertisements.

(2) Every such bill shall specify the particulars of the tax and the period for which the charge is made".

Nevertheless, Section 154 reads as follows :

"154(1) If the amount of the tax for which. a bill has" been presented under Section 153, is not paid within fiftem days from the presentation thereof, or if the tax on vehicles and animals or the theatre-tax or the tax on advertisements is not paid after it has become due, the Commissioner may cause to be served upon the person liable for the payment of the same a notice of .demand in the form set forth in the seventh Schedule.

(2) For every notice of demand which the Commissioner causes to be served on any person under this Section, a fee of such amount not exceeding five rupees as may be deter- D mined by bye-laws made in this behalf, shall be payable by the said person and shall be included in the cost of recovery"_.

Then comes Section 155, which runs as follows :

"155(1) If the person liable for the payment of any tax docs not, within thirty days of the service of the notice of demand under Section 154, pay the sum due and if no appeal E is preferred against such tax, he shall be deemed _to b in default. ·

(2) When the person.liable for the payment of any tax is deemed to be in default under-sub-section ( 1), such sum not exceeding twenty per cent. of the amount of the tax as may be determined by the Commissioner may be recovered from him by way of penalty, in addition to the amount of the tax and the notice-fee payable under sub-section (2) of section 154.

(3) The amount due as penalty under subsection (2) shall be rccoverabl! as an arrear of tax under this Act."

The argument of the learned Counsel for the appellant, based upon the provisions of Section 154 and Section 155 of the Act, is that, unless Section 154 is complied with, so that a notice of -demand is served upon a person from whom tax has become due, be cannot file an appeal. It was emphasised that he will "be deemed to be in default" only if the demand is not satisfied within 30 days and _ no appeal is filed against it. It was urged that Section 155 thus, indirectly, provides the meaning of the word "defaulter" as used in Section 161 of the Act. Furthermore, it is contended that, unless a person is a defaulter within the meaning of Section 155 of the Act, no proceeding can be taken against him under Section 161 of the Act.

The High

;·--~

.• , ·;

' ,.. .

USHO RAM .v. DELHI ADMN. (Beg, /.) 831

Court had met this argument by holding that this interpretation would make it unnecessary to have inserted the words in Section 161 "at . any time after the tax has become due".

It held that these words are to be given their literal meaning .and due effect.

On behalf of the appellant, support was sought from the provisions of Section 156, Section 157, and Section 159 of the Act to contend that rcoveries by sale and distress have to be preceded by notices of demand. It was pointed out that, even in the caa of recovery of tax from a person likely to leave Delhi soon, Section 159 required a notice of demand, for immediate payment.

Hence, it was urged that the procedure laid down for seizure of vehicles and animals in Section 161 of the Act is an alternative only to the procedures of. recovery by distress and sale but does not dispense with the notice required under Section 154 of the Act or else it would become much too. drastic an elternative which could be used arbitrarily.

We, think that, although the interpretation placed by the High Court upon the proVisions of Section 161, read in the light of otfter provisions of the Act, is 'possible interpretation, it bas to be remembered that Section 161 would become the repository of rather drastic power, of acting without previous notice, to seize any animal or vehicle at any time after the tax has become due, and, thereby, of seriously injuring even innocent individuals who may have every intention and the capacity to pa'y the demanded tax, but may have defaulted only by some oversight and may be unable to produce the required money on the spot. It is well settled that, out of two possible interpretations, the one which confines the content of such power of seiiure to reasonable limits and fair modes of operation should be preferred lest the validity of the provision itself becomes questionable, The provisions of the Act, set out above, are capable, we think, of being reasonably so interpreted as to confine the ambit of power contained in Section 161 of the Act to situations in which the person from whom the tax is to be realized can be deemed to be a defaulter. In other words, although Section 161 can be used "at any time" when the person against whom it is to be used is shown to be a "defaulter". yet a defaulter, in view of. the provisions of Sections 154 and 155 of the Act, would be a person who refuses !O pay within the period specified JD Section 155 of the Act after a noti~ of demand under Section 154

of the Act. No doubt the demand by notice for a tax on an animar is optional. But, the option has to be exercised if it is intended to invoke the powers contained in Section 161.

G '!'e, however,. d~ not think that, in .view o: the provisions of Sec!Ion 99. I.P.C, .rt IS enough to hold that there had been no notice of demand in the instant case.

The action of the Inspectors did not become vitiated by bad faith simply for that reason. They were acting honestl.Y _in the xerise of the powers delegated to them by the Comm1ss1oner.

Their attempt to recover the tax due by seizure of the animal, was not entirely outside the law, All trat could be said H was that they had erred, even if sadly, in the exercise of their powers,

'The Inspectors could not he fairly presumed to know that a notice under Section 154 of the Act must precede any attempt to seize the IO-L84Sup.C.L/75

buffalo as the law has been anything but clear on a subject on which A there has been no previpus decision of this Court.

The view of the Delhi High Court supported the view that no legal defect at all vitiated the actions of the Inspectors.

As already stated, there was no plea that the Inspectors did not act in a bona fide manner or that they were aware of the defect in the procedure adopted.

All that the appellant told them was that he did not have ready money to pay up instantly.

He did not refuse to pay. In these circumstances, we think that Section B 99 did confer a protection upon the employees of the Corporation who acted in good faith under the colour of their office.

But, in as much as they had actrd in an improper manner in demanding immediate payment and tried to seize the animal prematurely under a misconception about the mode of exercise of their powers under Section 161 of the Act, the sentences imposed upon the appellant are excessive.

We think that the ends of justice wm be served by maintaining the convictions but reducing the sentences to the period already undergone by the appellant.

Consequently, we set aside the fine imposed upon the appellant and reduce the sentences passed upon him to the period already undergone.

With this modification, this appeal is hcrel>y dismissed.

s.c.

Appeal dismissed.

RAM

DE'LHI ADMlNISTRATION

April 3, 1974

M. H. BEG

R. S. SARKARIA, JJ

Corporation Act 1957

Ss. 154, 155 & 161

s 161

s. 154

s 353

Indian Penal Code

Delhi Municipal Corporation

Sec. 154

Sec. 99

Indian Penal Code

Sec. 161

sec. 161

section 161

Sec. 161

s. 154

sec. 161

sec. 154

Sec. 99

Harba11s Singh

Jovi11d Das

BEG

Section 353

Indian Penal Code

Rattan Singh

Maharaj Singh

Raghbir Singh

Dunger

Dolhi Municipal Corporation Act, 1957

Section

154

Section 491

Section 99

I.P.C

Section 9P

I.P.C

Section 161

Section 161

Section 158

Section 152

Section 153

Section 154

Section 153

Section 155

Section 154

section 154

Section 154

Section 155

Section 154

Section 155

Section 161

Section 155

Section 161

Section 161

Section 156

Section 157

Section 159

Delhi

Section 159

Section 161

Section 154

Section 161

Section 161

Section 161

Section 161

Sections 154 and 155

Section 155

Section 154

Section 161

I.P.C

Section 154

Delhi High Court

Section 161


COLLECTOR OF CUSTOMS, MADRAS AND ORS

D .. BHOORMUL

April 3, 1974

[M. H. BEG AND R. S. SARKARIA, JJ; J

Sea C11sto1ns Act, 1878, Sec. 167(8_)--Irnports 11nd &pons Control Act, 1947-Sec. 3(2)-Confiscation of gi:>ods--Goods acquired jrom illegally i1nported stocks-Burden of ptoo/, how discharged by tlie DepartmtlJl-lndian Evidence Act, Sec. 106---Conflicting and incredible-account by alleged owner

of facts (regarding iniportation and owner.ship) within Iii& per.tonal knowledge- How far co11duc1 of 1lie alleged owner determinatiie of legal inferenct regard ing smuggled nature of goods.

The preventive officers of the Customs Deptt. recovered from the shop of one Baboothmull ten packa8es containing imported goods, such as fountain peos.

hair clippers, razor sets, etc. worth about Rs. 12,00Q/.. They were lying packed as if they had been. frshly delivered or were ready for despatch to a further destination. The respondent disclaimed not only the ownership but all knowledse about the contents of the packages. He could not give a satisfactory aocount as to how those packages came into h\.s shop. His first explanation was that some next door unknown broker had left the packages outside his shop.

He then :; lated I.hat they were owned bv one Bhoormul. The said Bhoormul despite repeated requests by the Deptt, did not furnish any inforn1atton regarding the source of the alleged uisition of the goods.

He never appeared penonally nor gave address or sufficient particulars of the brokers who bad aold the goods to him. Despite two show-cause notices, Bhoormul refused to disclose any further information. He did not furnish any evidence of his ownership or even juridical posses5ion of the goods. The Collector of Customs on consideration of the fact that the goods were. admittedly foreign goods incredible explanations by the resPondent concluded that the goods were acquired from the illegally acquired stocks and ordered the confiscation of the goc)ds u/s 167(8) of the Sea Customs Act. On a writ petition filed by the respondent. the single Judge of the Madras High Court rejected the writ petition but the Letters Patent Appeal was allowed by the Division Bench of the High Court. The Division.

Bench held that the Customs Dcptt. had not discharged its burden or proof that the goods were smuggled goods.

Allowing the appeal,

HELD : (I) The propriety and legality of the Collector's order is to be Judged in the light of the principles regarding the burden of proof, Legal proof is not necessarily pcrlect proof; often it is nothing more than a prudent man'1 estimL.te as to the nrobabilities of the case. Since it is cxteedingly difficult for the prosecution to prove the facts Which are especially within the knowledge of the accused, it is not obliged to prove them as a part of its priaiary burdo.

On the principle underlyings. 106 of the Evidence Act, the burden to establ1sh. the facts within special knowledge of a person lies on him and if be fails to establish the facts within special knowledge of a penon lies on him anJ if .he fails to establish or explain those facts, an adveFe inference of facts may anse against him. which coupl~ with the presumotie. vidence aduced . by the prosecution or the Department. would rebut the inittal prcsm, ption of innocence in favour of that person. and in the result wouJd prove him guilty. The first oart-of the e11trv in the third column of clause 8 of s. 167 of the Sea Custoo Act regardin" the penalty of confiscation of the goods casts less ri'°rou-; burden on the prosecution a-; the order operates in rem and is enforced against the goods only [842 D; 841 D; EF]

(II) Although no direct evidence of the illicit importation of g<?<JdS ~s adduced by the Department the fact that the goods were of foreign ong1n couoled with the inference arlsin~ from the dubiou; conduct of Babhoothmull and Bhoormal could reasonably lead to the conclusion drawn by the Collector that the goods were smuggled a:oods.

Jssardas Daulat Ram and ors. v. The Union of India and ors., [1962] Supp.

1. S.C.R. 355 and M/S. Kanungo and Co. v. Collector of Custo1111 (Ca/cuua) A.LR. 1972 S.C. 2136, relied upon.

Amba Lal v. Union of India, [1961] 1, S.C.R. 933, and S/uzmbhu Nath Mehra

v. State of Ajmer, [l!IS6] S.C.R. 1'9, distinguished .

Bletch v. Archer 11774] Cowp. 63 at p.65 and R. Madhub Chander, 11874] 21, W.R. Cr. 13 at 19. .

CIVIL APPEi.LATE JURISDICTION: Civil Appeal No. 1142 of 1973.

Appeal by special leave from the judgment and order dated the 12th March, 1973 of the Madras High Court at Madras in Writ Appeal No. 357 of 1969.

G. L. Sanghi and .s. P. Nayar, for the appellants.

K. S. Ramamurthy and B. R. Agarwala, for the respondent.

The Judgment of the Court was delivered by :

SARKARIA, J.

This appeal by special leave arises out of the following facts :

On receiving information that some packages containing smuggled goods had been left by a person .in the premises of M/s. Sha Rupaji D Rikhabdas at 98, Narayana Mudali Lane, Madras-I and that these packages were about to be despatched to Bangalore for disposal, a posse of Preventive Officers of the Customs House went to the said shop on June 4, 1962. They found ten packai:es in that shop.

Baboothmull of M/s. Sha Rupaji Rikhabdas was present there.

The officers questioned Baboothmull about those packages. Baboothmull replied that he was not the owner of those packages and that somebody E next to his shop had left them outside the premises and since that person had not returned for a considerable time, he got them removed into the shop.

Baboothmull was unable to throw any light with regard to the owner or the contents of the packages.

After getting a consent letter from Baboothmull, the officers opened the packages which contained these articles of the total value of F Rs. 12,255/-.

J. ParkerF9untain Pens (19 made in Canada)

~. Master hair clippers made in Germany

3. OMer Hair Clippers made in Germany

4. Venus pencils made in England

S. K. SS Out thread razors made in Germany

6. Nylon buttons made in Japan

7. Gillette Razor Blades n1ade in England

8. 7 O'clock Razor sets made in Englarid

28 Doz.

5 Doz.

3!· Doz.

760 Doz.

68 Doz.

47 Gross.

1,000 Pcs.

12 Doz.

Rs. 3,360 00

Rs. 600 00

Rs. 400·00

Rs. 2,250 00 G

Rs. 4,080 00

Rs. 705 00

Rs. 120 00

Rs. 730 00

H Rs. l 2,255 00

\,_ -

The Officers seized these goods under a mahazarnama.

On June 9, 1962, a letter was addressed by the said Baboothmull to the Collector, Customs, informing that on that date, the owner of the packages, one Mr. D. Bhoormull turned up to claim the goods; that his other partner was absent at the time iif the seizure of the aoods who knew about this affair and that he had spbsequently learnt from this partner that those goods belonged to D .. Bhoormull who left instructions for their storage in the shop.

Subsequently the name of this partner was given as Indermul.

The Custom Officers attempted to find out and contact this Indermu1 but without success.

Eight days after the seizure, a letter dated June 12, 1962, was received by the Collector of Customs from one D. Bhoormull (Poona wala, temporarily at 98, Narayana Mudali Lane, Madras-1), claiming ownersl1ip of the goods.

In this letter it was stated that he had pur chased these goods on June 3, 1962 in the local market at Madras through brokers; that he was packing the same till late in the evening, and since he was forced to leave for Bangalore on the call of a friend immediately, he instructed one of the staff of Sha Rupaji Rikhabdas to keep the goods in their shop until his return. This letter of Bhoormull did not contain the names or the particulars of the brokers from whom the goods were allegedly purchased; nor did it refer to any bill, voucher or other document to support the allegati0n of their having been purchased locally in the normal course .of business.

On receipt of this letter, the Collector made an attempt to contact Bhoormull for furtber investigation.

Bhoormull, however, could not be contacted as he had gone away to Poona which was said to be his normal place of activity.

Another le; ter, dated June 25, 1962, was received by the Collector from Bhoormull urging for release of his goods at an early date ..

On July 3, 1962, a letter was received by the Collector from M/s.

Gagrat & Co., Solicitors, Bombay on behalf of Bhoormull, requesting for disclosure of the grounds for the seizure of the goods, and for supply of the copies of the M ahazarnama and other relevant documents relating to the seizure. It was reiterated that the goods had been bona fide purchased by Bhoormull in the course of business, and as such, were

not liable to seizure or confiscation.

This was followed., by, another letter dated September 14, 1962 from M/s. Gagrat & Co./addressed to the Assistant Collector of Customs wherein the request for supply of the necessary information, was reiterated.

The importation of goods shown as items 1, 4 and 7 had been J?rDhibited since December 1957 and of those at items 2, 3, 5, 6.and 8 smc~ March .1.960, save under a licence issued by the Import Trade Control Authonl!es under s. 19 of the Sea Customs Act read withs. 3(1)of the Imports and F!xports Control Act, 194 7.

The A<sistant Collector of Customs on October 26, 1962 issued a notic.e_ to Boormull through. his solicitors, M/s. Gagrat & Co., Bombay

equmn~ him .to prod1;1ce eVIdence of bona fide acquisition of the p:oods m que<llon fa1lm2 , which to show cause within a week as to why those goods valued at Rs. 12;255/- be not confiscated under s. 167(8) of tbe Sea Customs Act read with s. 3 ( 2) Imports and Exports Control Act,

1947. It was added tl)at in case no reply was received within the specified period the case. would be decided ex-parte on the basis of the facts already on record without further reference to him.

In reply, a letter, dated December 13, 1962, was written by the Solicitors in which, it was inter alia stated that on Jun~ 4, 1962, at Madras, the goods, being items 2 and 4 to 8, were purchased by their client from Broker Ram Lal for a total price of Rs. 10,675 /-, and those shown as items 1 and 3, from Broker Shanthi Lal for a sum of Rs. 4872/-, and that these brokers had not issued any bills or receipts regarding those goods.

Any further particulars or addresses of the brokers were not disclosed.

On March 27, 1963, a revised show-cause notice was sent under registered cover by the Collector of Customs to Bhoormull through bis solicitors requiring him to produce within a week the purchase receipts, bills, vouchers, Customs auction-receipts, Central excise auction receipts, licences or any other documents in his po<session and to furnish the names of the brokers in the market, their addresses etc. from whom the goods were purchased by him, failing which to show cause against confiscation of the goods.

The information called for was not supplied, nor did Bhoormull appear personally before the Collector at any stage. However, on his behalf the Solicitors wrote to the Collector, a letter, dated April 30,

1963, contending that the burden of proving that the seized goods had been illegally. imported into India lay on the Customs Department and the non-production of the documents or non-furnishing of the information asked for by the Collectorcould not justify an inference of illicit importation of the goods.

It was added that such goods bad been imported as late as 1959/1960 as personal baggages and had in fact been sold by the Customs Department at Madras and elsewhere and as such were being freely bought and sold in the market.

A date. was fixed by the Collector for personal hearing of Bhoormull.

But he did not personally appear.

However, on August l, 1963, Shri J. R. Gagrat, of Mis Gagrat & Co. appeared before the Collector with a representative of Bhoormtill, and contended-that unless the Department had any other indication, it would not be necessary for Bhoormull to establish ownership of the goods; that there were no purchase vouchers; nor was he in a position to produce the broker who was supposed to have left the goods near the shop of Baboothmull.

While conceding that the burden of proving the goods to be smuggled goods, was on the Department, the Collector held that such G burden prima facie stood discharged as the circumstances of this case irresistibly led to the conclusion that the goods had been illicitly imported.

The main circumstances, taken into account by the Collcetor, in raising such an inference, may be arranged as under-:

(i) The import of such goods has been totally prohibited since 1957 except in the case of hair clippers and Venus H Pencils, which were allowed on a highly restricted quotabasis till October 1959 /March 1960, Policy period, when their import too was banned;"

• B

CUSTOMS COLLECTOR v. I>. BHOORMl'I. (Sarkaria, /.) 837

(Ii) The highly suspicious circumstances of the seizure and the dubious conduct Cif the parties in relation thereto : {a) This large number of goods, all of foreign origin, worth over Rs .12,000/-, were found fully packed and ready for despatch. (b) Baboothmull from whose possession they were seized gave confticting and evasive explanations in regard thereto.

At the time of seizure on June 4, 1962, he disda!Dled all la)OIVledge about the ownership and content~ of those packages_, and said they were left outside the shop by a broker whom he could not identify.

Some days later, he 'appeared in the arena (garb?) of an anonymous (ficticous ?) person, one Bhoormull".

(c) It was eight days after the seizure that one Bhoormull by a letter claimed ownership of the goods, and Baboothmull, also confirmed this: "This llhoormull the alleged owner of the goods has never been seen.

Even at the personal hearing a representative from !tim came ... All the correspondence was exchanged with the firm of Solicitors, namely M/s. Gagrat & Co. of Bombay".

( d) Despite repeated requisitions made and two showcause notices given by the Collector, no bill, voucher or other documentary evidence, whatever, regarding purchase of the goods in the recognised markets of the country was produced. At first, even the names of the seller were not disclosed. Later on M/s. Gagrat & Co. cited two brokers whose addresses were not furnished.

In view of the above circumstances the Collector held that there "was no room for doubt that the goods were acquired from illegally imported stocks". He, therefore, ordered their confiscation under s. 167 ( 8) of the Sea Customs Act.

Against this order dated October 24, 1963, Bhoormull carried an appeal under s. 131 of the Customs Act 1962 to the Central Board of Revenue which dismissed the same on September 7, 1964. Aggrievoo,

Bhoormull preferred a Revision Petition to the Central Government.

It was dismissed by the Secretary to the Government by an order, dated September 7, 1965.

Bhoormull then moved the High Court at Madras by a writ petition under Art. 226 of the Constitution impugning the aforesaid orders of the Collector, the Board and the Central Government, contending that the confiscation was illegal because the Customs Department on which the onus of proving the unlawful importation of the goods lay, had failed to adduce any evidence whatever, to discharge that onus. The learned single. Judge who tried the petition repelled this contention, holding that the circumstances on .record established "every probability of the goods having been illicitly imported into India," and dismissed the petition.

Against the ordr of the learned Single Judge Bhoormull filed an appeal under Clause (15) of the Letters Patent to the Division Bench of the High Court which held that the onus on the Department to prove that the goods had been smuggled, could not-in this case did notsbift to Bhoormull and that the later's failure to appear personally or

SUPREME COURT REPORTS (1974] 3 S.C.ll.

prove before the Collector how he had come by those goods, did not A justify an inference of their illicit importation, because a mere suspicion cannot be a substitute for proof. On the above reasoning, the Bench allowed the appeal and quashed the .Collector's order for confiscation of the goods. Hence this appeal with special leave, by the Department.

Before dealing with the contentions canvassed, we would refer briefly to the relevant statutory provisions.

Section 167(8) of the Sea Customs Act provides for offences punishable to the extent mentioned in the 3rd column of the Schedule appended to that section.

Clause (8) of that Schedule provides that if any goods the importation or exportation of whiCh is for the time being prohibited or restricted by order under Ch. IV of this Act be imported into or exported from India conllacy to such prohibition or C restriction, then (i) such goods '.'shall be liable to confiscation, and

(ii) any person concerned in any such offence shall be liable to a penalty not exceeding three times of the value of the goods, or not exceeding 1000 /- rupees."

Section 171-A specifically empowers the Customs Officers employ' ed in the prevention of smuggling to summon any person whose attendance be considers necessary either to give evidence or to produce a D document or thing in an enquiry in connection with the smuggling of any goods and such person shall be bound to state the truth and produce that document or thing and would be liable to prosecution if he made a false statement.

A reading of s. 167 ( 8) and the related provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem E and the penalty of confiscation under the first part of the entiy in column ( 3) of clause ( 8) of the Schedule, is enforced against the goods irrespective of whether the offender is known or 'unknown. But, imposition ohhe other kind of penalty, under the second part of the entry in column 3, is one in personam; such a penalty can beievied only on the "person concerned" in any offence described in column I oftheC~.

Goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without assertaining who is their real owner or who was actually concerned in their illicit import.

Section 168 empowers an officer of the Customs or anti-smuggling staff to seize any thing liable to confiscation.

Section 178 (A) provides for burden of proof. It says :

" ( 1) Where any goods to which the section applies are seized under this Act in the reasonable belief that they arc smuggled goods, the burden of proving that they are not smuggl!'<I goods shall be on the person from whose possession the goods were seized; ( 2) This section shall apply to gold, gold manufactures, diamonds and other precious stones, cigarettes and cosmetics and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf;

(3) Every notification issued under sub-section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued."

Large scale smuggling of gold or other goods into India may pose a threat to the economic and fiscal interests and policies of the State.

Such illicit trade is often carried on by organized international smugglers in the secrecy of the under-world. The more it is organized, the less are the chances of its detection, and greater the difficulty of proving the offences relating thereto. Laws have therefore been enacted in most countries, which mark a partial or wholesale departure in matters relating to smuggling, from the general principle of penal law, viz., that it is for the State or its Department to prove the offence against the accused or the defendant. Thus in England, s. 290(2) of the Customs and Excise Act, 1952 provides that where in any proceeding relating to ustoms or Excise any question arises as to the place from which any goods have been brought or as to whether or not any duty has been paid er any goods have been lawfully imported etc., then the burden of proof shall lie upon the other party to the proceeding.

In India, Parliament inserted s. 178-A by the Amending Act 10 of 1957, but it did not, in its wisdom, go as far ass. 290(2) of the English Act. Section 178-A in terms applies to "gold, gold manufacture, diamands and other precious stones, cigarettes and cosmetics". With regard to thes.- specified goods if seized under this Act in the reasonable belief tha< they are smuggled goods, the burden of proof that they are not such goods shall be on the person from whose possession, they are seized. But with regard to any other goods, the rule in sub-section (I) of Section 178-A would not 11pply unless the Central Government had specifically applied the same by notification in the Official Gazette.

It is common ground that at the material time, no such notification applying the section to the categories of the goods in question had been issued. In respect of such goods the provisions of the Evidence Act and the Code of Criminal Procedure, do not, in terms, govern the onus of proof in proceeding under s. 167(8) of the Act. In conducting these penal proceedings, therefore, the Collector of Customs is to be

uied by the basic canons of criminal jurisprudence and natural 1usttce.

:-Yith the above prefactory remarks, we now advert to the conten!Ions. canvassed before us.

Mr. Sanghi, learned Counsel for the appellants, has advanced these arguments:

_(a) B.ho?rmu!l had no locus standi to invoke the extraordmary 1unsd1ct1on of the High Court under Article 226 of. the Constitution because there was not even prima facie

ev!denc~ to. show that at the time of seizure, he was in ownership or 1und1cal possession of the goods;

(bl, !he on_s of proving the goods to be smuggled cods that mitially l~~ o~ the epartment, stood sufficient]: discharged .by the mev1tble inference arising out of the totality of the Clfcumstances m this case, which were appraised by

the Collector m the Ifght of the conduct of Baboothmull and Bhoormull, who gave conflicting and incredible explanations as to how they had come by these goods; (c) The source from which and the circumstances in which Bhoormull or Baboothmull acquired these goods, were facts especially within their knowledge and on the principle underlying s. 106, Evidence Act, these facts had to be proved by them.

They deliberately failed to disclose those facts or to give the necessary particulars of the persons from whom the goods were allegedly purchased, although such. information was repeatedly requisitioned from Bhoormull by the Collector, and they were duty bound under s. 171-A disclose it. This contumacious conduct of Baboothmull and Bhoormull strongly pointed towards the conclusion that the goods were smuggled stocks, and in that sense, the inference arising from the circumstances had shifted the onus on the Bhooormull to prove to the contrary. (In this connection, reliance has been placed upon lssardas Dau/at Ram and ors. v. The Union of India and ors.(I) and M/s. Kanungo and Co. v. Collector of Customs (Calcutta)('); (d) The Order of the Collector did not sufF•r from any apparent error or defect of jurisdiction. ft,. order was. based on an appraisement of the circumstantial evid.ence before him and was consistent with the rules of natural justice. He had given the fullest opportunity to the Respondent to put forth bis case and had issued two show-cause notices .to him through his Solicitors.

The Division Bench of the High Court exercising jurisdiction under Art. 226 was not competent to go .into the question of the adequacy of that evidence, and act as if it was a court of appeal.

' B

Mr. Ramamurthi, learned Counsel for the Respondent, contends in reply, that all proceedings were conducted by -the Collector on the ~, assumption that Bhoormull was the claiment or the supposed owner of the goods; that at no st , ge, before the High Court an objection was taken that he had no locus standi to maintain the writ petition, because F he had no interest in the confiscated goods and consequently, this objection should not be entertained for the first time in this Court. Learned Corinsel further submits that proceedings of confiscation being penal in nature, the burden was on the Department to show by cogent and convincing evidence that the goods had been illicitly imported into India and that no part of this burden could be sliifted to the person claiming the goods. It is emphasised that in the present case, no evi- G dence whatever was produced by the Department to show that the goods in question were smuggled goods. The Collector's order-proceeds the argument-calling upon Bhoormull to prove that he bad purchased / these goods in the normal course of business was contrary .to the law laid down by this Court in Amba Lal v. Union of lndia( 8 ). Reference has also been made to several decisions of the High Courts, but most of H

(I) [1962] Supp, 1, SCR 355.

(2) AIR 1972 SC 2136.

(3) [1961) J, S.C.R. 933.

them turn on their own facts and do )lot elucidate the principle beyond what was laid down in Amba Lal's case (supra)

It cannot be disputed that in proceeding for imposing penalties under Clause (8) of S.167 to which s. 178-A does not apply, the burden of proving that the goods are smuggled goods, is on the Depart ment. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus. cast by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. Orie of them is that the prosecution or the Department is nQ! required to prove its case with mathematical precision to a demonStrable degree; for, in all human affairs. absolute certainty is a myth, and-as Prof. Brett felicitously puts it-"all exactness is a fake". El Dorado of absolute proof being un attainable, the law accepts for it, probability as a working substi tute in this worka-day world. The law does not require the prosecution to prpve the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis,. believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's. estimate as to the probabilities of the case.

The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered-to use the words of Lord Mansfield in Bmch v. Archer(') "according to the proof which it was in the power of one side to prove, and in the power of the other to have contra dieted". Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which . are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as parts of its primary burden.

Smuggling is clandestine conveying of goods to avoid legal duties.

Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process.

Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlyings~ 106, Evidence Act, the burden to establish those facts is cast on the person concerned; and if he 'fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in 'Law of Evidence', (12th Edn. Article 320, page 291), the "presumption of innocence is, no doubt,. presumptio juris; but every day's practice shows that it may be successfully encountered by . the presumption of guilt arising from the recent (unexplained) possession of stolen property", though the latter is only a presumption of fact.

Thus the burden on the proseeution or the Department may be con siderably lightened even by such presumption of fact arising in their

(I) (1774) I, Cowp. 63 at p. 65.

favour.

However, this does not mean that the special or peculiar A knowledge of the person proceeded against will relieve the prosecu' tion or tho Department altogether of the burden of producing" some evidence in respect of that fact in issue.

It wii! only alleviate that burden to ischarge which very slight evidence may suffice.

Another point to be noted is that the incidence, extent and nature <Jf the burden of proof for proceedings for confiscation under the first part of the entry in the 3rd column of Clause (8) of s. 167, may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the m.atter.

It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is

nforced against the goods and the second kind of penalty is .one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the Department furnishes prima facie proof of the _goods being smuggled stocks. In the case of the latter penalty, the Department has to prove further that the person proceeded against was concerned

in the smuggling.

The propriety and legality of the Collector's impugned order had lo be judged in the light of the above principles.

It is not correct to say that this is a case of no evidence. While it is true that no direct evidence of the illicit importation of the goods was adduced by the Department, it had made available to the Collector several circumstances of a determinative character which coupled with the inference arising from the dubious conduct of Baboothmull. and Bhoormull, could reasonably lead to the conclusion drawn by the Collector, that they were smuggled goods. These circumstances have been set out by us earlier in this judgment. We may rccapitulat; only the most salient among them.

The importation of such goods into India had been banned several years, earlier, i.e. of some of them in 1957 and of others in 1960. These goods, without exception, were aJI of foreign origin. They were of large value of over Rs. 12,000/-. They were all lying packed: as if they had been freshly delivered, or were ready for despatch to a further destination. They were not lying exhibited for sale in the show cases of the shop. Baboothmull from whose apparent custody or physical possession, they were seized disclaimed not only their ownership but also all knowledge about the contents of the packages. He could not give a satisfactory account as to how those packages came into his shop. At first. he said that some nextdoor unknown broker had left them outside his shop.

Some days later, he came out with another version viz., that one Bhoormull had left them there.

Eight days after, one mysterious person who gave out his name as Bhoormull,

laid claim to these goods. Despite repeated . requisitions, Bhoormull did not furnish any information regarding the source of the alleged acquisition of the goods. He never appeared personally before tho <Collector. He remained behind the scenes. He did not give addresses

or sufficient particulars of the brokers who had allegedly sold the \ gocids to him on the 3rd June. Whatever cryptic information was given by him, was also conflicting. Despite two show-cause notices, Bhoormull intransigently refused to disclose .any further information. Apart from making a bare claim, he did not furnish evidence of his ownership or even juridical possession of the goods. The totality of these circumstances reinforced' by the inferences arising from the co.nduct of Baboothmull and Bhoormull could reasonabiy and judicially lead one t<> concludo that these goods had been illicitly imported into Madras, a sea port.

Even if the Division Bench of the High Court felt that this circum-

' stantial evidence was not adequate enough to establish the smuggled character of the gooos, beyond doubt, then also, in our opinion, that was not a good ground to justify interference, with the CoJlector's order in the exercise of the writ jurisdiction under Art. 226 of the Constitution. The function of weighing the evidence or considering its sufficiency was the business of the Collector or the appellate autho- rity which was the final tribunal of fact. "For weighing evidence and drawing inferences from it'', said Birch J. in R. Madhub Chander(') "there can be no canon. Each case presents its own peculiarities and in each common sense and shrewdness must be brought to bear upon

.e facts elicited." It follows from this observation that so Jong as the Collector's appreciation of the circumstantial evidence before him was not illegal, perverse or devoid of common sense, or contrary to rules of natural justice there would be no warrant for disturbing his finding under Art. 226. The collector's order was not of this kind.

In the view that the initial onus of proof on the Department can be sufficiently discharged by circumstantial evidence, we are supported by the decision of this Court in lssardas Dau/at Ram'.s case (supra).

There, on September 14, 1954, that is, long before tlic insertion of s. 178-A in the Act, a quantity of gold to a refinery in Bombay was sent for the purpose of melting. The Cu.stoms authorities seized this gold when it was being melted. The gold was found to be of foreign origin and had been imported into In, dia in contravention of the Foreign Exchange Regulations Act, 1947. The Collector of Customs confiscated it under s. 167(8) of the Act. The legality of confiscation was challenged by a petition under art. 2.26 of the Constitution before the High Court, on the ground that there was no evidence before the Collector to show that the gold had been imported into India after restrictions had been imposed in March 1947 on its importation. The High Court rejected this contention and dismissed the petition. The same argument was advanced before this Court in appeal by special leave. This Court also negatived this contention. While conceding that there was no direct evidence that the gold had been smuggled after March 1947, it was held that a finding to that effect could be reached by referring to "the conduct of the appellant fo connection with

(a) the credibility of the story about the purchase of this gold from three parties, (b) the price at which the gold was stated to have been

(!) (!874) 21, W.R. Cr. 13, at 19.

purh.ased. whic~ was less than the market price and ( c) the hurry exh1b1ted m trymg to get the gold melted at the refinery with a small !J!t of silver added' so as reduce the fineness of the gold and thus ppro x1mate the resultant product to licit gold found in the market."

The rule in /ssardas Daulat Ram's case was reiterated \\ith amplification in M/o. Kanungo ..,< Co.'r case (supra). 111erein, the appellant was a firm carrying on business as dealer, importer and repairer of watches. On a search of the firm's premises on October 17, 1959 the Customs authorities seized 390 watches out of which 250 were confiscated on the ground that they had been illicitly imported into India.

The firm's petition under Article 226 of the Constitution was allowed by a learned single Judge of the High Court and the order of confiscation was quashed on the ground that the customs authorities had failed to prove illicit importatfon of the watches. On appeal by the Department, the Division Bench of the High Court reversed the decision of the single Judge with these observations:

"The watches were seized from the possession of the respondent No. 1 (appellant) who had not obtained a licence or a cnstoms clearance permit for importation of the same.

They were of foreign make andi must have been imported across the customs frontier. The explanations offered by the Respondent No. 1 regarding its coming into possession of the same between 1956 and 1957 were found, upon enquiries by the customs authorities, to be false, t)te result of these enquiries were communicated to the Respondent No. 1 who was thereafter heard by the adjudicating officer. Yet no attempt was made by the respondent No. I to substantiate its claim regarding lawful importation of the watches. . . . . . . . The cnstoms authorities came to the conclnsion that the said 280 watches were illegally imported and thereupon made an order for confiscation of the same. It is not for this Court, in exercise of its jurisdiction under Art. 226 of the Constitution to revise, set aside or quash this order, in the facts of this case."

Jn appeal on certificate, it was contended before this Court that there was no evidence that these watches bad not been illicitly imported into India and that the impugned order wrongfully placed the burden on the appellants. Sikri C.J., speaking for the Court, repelled this contention thus :

"There is also no force in the second point because we do not read the impugned order as having wrongly placed the burden on the appellant. What the impugned order does is that it refers to the eYidence on the record which militates against the version of the appellant and then states that the appellant had not been able to meet the inferences arising therefrom.. . In our OP.inion, the High Court was riht in holding that the burden of proof had shifted on to the appellant after the Customs Authorities had informed the appellant of the results of the enquiries and investigations.

This also disposes of the first point. As we have said; the burden was on the Customs Authorities which they discharged by falsifying in many particulars the story put forwara by the appellam .............. It cannot be disputed that a false denial could be relied on by the Customs Authorities for the purpose of coming to the conclusion that the goods ha!l been illegally imported."

In the case before us, the circumstancial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector.

There was no violation of the rules of natural justice. The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoormull. He was simply giving him a fair opportunity of rebutting the first and te foremost presumption that aro"' out of the tell-tale circumstances in which the goods were found, regarding their being smuggled goods, by disclosing facts within his special knowledge.

Amba Lal's case (supra) strongly relied upon by Mr. Ramamurthi, is clearly distinguishable on facts. There, Amba Lal was originally a resident of Pakistan. He migrated into India on the partition of the Indian Sub-continent before March 1948 when the customs barrier between India and Pakistan was raised for the first time. The Department did not lead any evidence, circumstantial or direct, that the goods seized from Amba Lai had been illicitly imported. Amba Lal gave plausible explanation. that he had brought thoe goods along with him in 1947, when there were nb restrictions on their importation.

The Department however, tried to take advantage of certain alleged discrepancies in the statements of Amba Lal which were recorded in English. Amba Lal did l}Ot know English. He was not 'supplied with copies of those .statements, nor allowed to inspect them; This Court. therefore, held that the Department was not entitled to rely on those discrepancies.

Quoting from Shambhu Nath Mehra v. !tate of Ajmer,(') the Court said thats. 106. Evidence Act "cannot be used to undermine the well established rule of law that, save in a very exceptional class of cases, the burden is on the prosecution and never sifts." It was added :

"If s. 106 of the Evidence Act is applied. then, by analogy, the fundamental principles of criminal jurisdrudence must equally be invoked",

If we may say so with great respect, it is not proper to read into the above observations more than what the context and the peculiar facts of that case demanded. While it is true that iit criminal trials to which. the Evidence Act, in terms. applies. this section is not intended to reheve the prosecution of the initial burden which lies on it to prove

(1) [1956] S.C.R. 199.

e positive facts of its own case, it can be said by way of generalisa- ;::, tton that the effect of the material facts being exclusively or especially within the knowledge of the accused, is tbat it may proportionately with the gravity or the relative triviality of the issues at stake, in some special type of cases, lighten the burden of proof resting on the prosecution. For instance, once it is shown that the accused was travelling without a ticket, a prima facie case against him is proved. If he once had such a ticket and lost it, it will be for him to prove this fact within his special knowledge. Similarly, if 3 person is proved to be in recent possession of stolen goods, the prosecution will be deemed to have established the charge that he. was either the thief or had received those stolen goods knowing them to be stolen. If his possession was innocent and lacked the requisite incriminating knowledge, then it will be for him to explain or establish those facts within his peculiar knowledge, failing which the prosecution will be entitled to take advantage of the presumption of fact arising against him, in discharging its liurden of proof.

. These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under s. 167(8) of the Act. The broad effect of the application of the basic principle underlying s. I 06 Evidence Act to cases under s. 167(8) of the Act, is that the Department would be deemed to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved.

Amba Lal's case was a case of no evidence. The only circumstantial evidence viz., the conduct of Amba Lal in making conflicting statements, could not be taken into account because he was never given an opportunity to explain the alleged discrepancies. The status of Amba Lal viz. that he was an immigrant from Pakistan and had come to India in 194 7 before the customs barrier was raised bringing along with him the goods in question, had greatly strengthened the initial presumption of innocence in his favour. Amba Lal's case thus stands on its own facts.

The present case is in line with the decisions jn I ssardas Daulatram

v. Vnion of Jndia'and Mis. Kanungo & Co. v. Collector of Customs (supra). ··

For all the foregoing reasons, we are of the opinion that the learned Judges of the High Court were in error in reversing the judgment of the learned: single Judge and in quashing the order of the Collector of Customs. We, therefore, allow this appeal, set .aside the

jtlllt under appeal and dismiss the writ petition. In view of the law point involved, we would leave the parties to bear their own costs.

S.B.W.

Appeal allowed.

COLLECTOR OF CUSTOMS, MADRAS AND ORS

M. H. BEG

R. S. SARKARIA, JJ

Sec. 167(8_)

Control Act, 1947

Sec. 3(2)

DepartmtlJl-lndian Evidence Act

Sec. 106

Bhoormul

s 167(8)

Customs Act

Madras High Court

clause 8

s. 167

Babhoothmull

Bhoormal

G. L. Sanghi

P. Nayar

K. S. Ramamurthy

B. R. Agarwala

SARKARIA

Bangalore

June 4, 1962

Baboothmull

D. Bhoormull

Madras

Sha Rupaji Rikhabdas

Bhoormull

Bhoormull

Poona

June 25, 1962

July 3, 1962

September 14, 1962

Gagrat & Co./addressed

s. 19

Customs Act

October 26, 1962

Boormull

s. 167(8)

Sea Customs Act

s. 3

Imports and Exports Control Act

December 13, 1962

Jun~ 4, 1962

Ram Lal

Shanthi Lal

March 27, 1963

April 30,

1963

India

August l, 1963

J. R. Gagrat

Mis Gagrat & Co.

Bhoormtill

M/s. Gagrat & Co. of Bombay

Gagrat & Co.

s. 167

Customs Act

October 24, 1963

Bhoormull

s. 131

Customs Act 1962

Central Board of Revenue

Aggrievoo

Central Government

September 7, 1965

High Court at Madras

Art. 226

SUPREME COURT REPORTS (1974] 3 S.C.ll

Section 167(8)

Customs Act

Section 171

s. 167

Section 168

Section 178

Parliament

England

s. 290(2)

Customs and Excise Act, 1952

s. 178

Section 178

Section 178

Code of Criminal Procedure

s. 167(8)

Sanghi

Article 226

s. 106

s. 171

Bhooormull

Art. 226

Ramamurthi

AIR 1972 SC 2136

Amba Lal

s. 178

Brett

Mansfield

Article 320

s. 167

Art. 226

Birch

R. Madhub Chander

Art. 226

September 14, 1954

s. 178

Bombay

Foreign Exchange Regulations Act, 1947

s. 167(8)

art. 2

/ssardas Daulat Ram

October 17, 1959

Article 226

Art. 226

Sikri

Pakistan

Amba Lai

s. 106

s. 167(8)

s. 167(8)


RAJENDRA KUMAR CHATURVEDI

THE STATE OF MAHARASHTRA

April 4, 1974

IM. H. BEG AND R. S. SARKARIN, JJ .]

Practice-:-Criminal P1'octdllre-Dismissal of appeal b)' High Court sumr.1a. U_v-D11f)• tn Rh•e a rtucned onler.

lbc Soeciat JudJe, after a very thorough. and careful assessment of the whole evidence in the cue. had come to the conclusion that the prosecution case apimt the appelluit was established beyond reasonable doubt and convicted him under sections 1208 as well as 161 read with s. 34 l.P.C. and also under se:tions S(l)(d) and 5(2) of the Prevention of Corruption Act, 1947. The

High Court dismisaed the ppellant's appeal summarily without giving any reasons.

DismissinR the apeal to this Court,

HELD : ( t) It is necessary for the High Courts, even when they dismiss criminal -3Rpeals summarily on facts found, to record the reason'i briefly.

It is often difficult in a criminal case to say whether any material error was committed by the trial court in arriving at its findings of fact without atleast some e; xamination and consideration of the main features of the evidencewhich only a reasoned order would disclose. [85 I E-G]

(2) An examination of the evidence by this Court, because of such summary dismissal, hover, sho\VS that the findings of the trial court must be up-held. it must be deemed that the High Court had affirmed the findings of the trial .

Cort when it dismissed the appeal summarily, and therefore, there is no reason to depart from the general rule that this Court will .not interfere with concurrent findings of fact except under very exceptional circumstances. [851 D-El

B. c. Go.swanii V • . Del/ii Administration, followed.

CRIMINAL APPEi.LATE JurusmcnoN : Criminal Appeal No. 200 of 1970. Appeal by special leave from the judgment and order dated the 13th October, 1970 of the Bombay High Court at Bombay in Crimi- F nal Appeal No. 1112 of 1970.

S. N. Misra and M. V. Goswami, for the appellant.

M. C. Bhandare and S. P. Nayer, for the respondent.

The Judgment of the Court was delivered by

BEG, J.-J"he Special Judge of Greater Bombay tried the appealiant, a Su6 lnsP"ctor in the Railway Production Force, togethr with three other members of the Force, serving under him, on charges for , offences punishable under Section 120B and 161 Indian Penal Code and Sections 5(1) (d) and 5(2) of the Prevention of Corruption Act.

It was alleged that the appellant1 and tlle Rakshaks serving under him at Bhusaval Central Railway Station had conspired to extort mol)ey from Shivaji Ogale, P.W.2, a merchant owning property and goods estimated by him at Rs. 1,50,000/-, ?nd paying Income, tax and Salestx. The .appellant is alleged to hve stopped Shivaji from removing ' his goods from the goods yard ori the ground thai the .truck brought L84Sup.Cl/74 ,

8~8 SUPREMil COURT REPORTS

[1974] 3 S.C.R.

b~ im was parked at tl\e wrong place. Tl!e ap!J!!llant, with the Jielp A ot his Rakshaks/ was said to ha.ve threatened Kalandar Khan, P. W. 3, the driver oi the truck, and to ha1c actually handcuffed him and tied him With a rope and taken him to the appellant's office at some distance from the goods ~'Ord. Shivaji was himself said to be present at the scene at that time which wan about 4 p.m. on 17-1-1968. The appellant and his co-accus:d, Hari Rachu, were alleged to have demanded Rs. 20:J/- as bribe for releasing the truck driver without B whom the truck could not be driven away. The vexed Shivaji. is said to have fallen at the feet of the appellant and to have begged him to release his driver. The appellant then reduced his demanu to Rs. 100/-.

Shivaji is said to have sent his son Sarjearao, P.W. 4, to his shop to

get Rs. !OWwhich were hroug.t in Rs. 101notes within half an hour and handed over to the extortionists. The appellant is said to hav~ released the driver and allowed the truck to go away after this C payment had been actually made.

The Special Judge had eamined the whole evidence in great detail. He observed about Shivaji, P.W. 2:

"It saw his demeanour when he was in the witness box and it ne-1er appeared to me that he was gifted with krtile D imagination or that the present prosecution was the product of a deliberate conspiracy between him, Vishwanath, Vasant and Rambabu Kate as alleged by the Learned Advocates for the accused. Had they really intended to do so, their natural conduct would have b:en to approach railway police them selves or local police or ACB. Police Bhusaval but neither Shivaji nor Vasant did so and they preferred to write out E a complaint in the complaint Book at Ex. 10 regarding the incident which took place on the 17th as it really occurred'"

The complaint mentioned above was lodged at about 8 a.m. on 18-1-1 %8 after an imposition of Rs. 7. JO as wharfage charges as all the goods could not be removed on 17-1-1968 presumably .because of the interruption caused by the action of the appellant and his associates. Shivaji had also stated that he had related "everything" to the Chief Goods' Clerk of Bhusaval, P.W. 8, about 6 p.m. on 17-1-1968.

The Goods' Clerk deposed that Shivaji came to his office at that time and \old him :

"xx thre was all darkn"ss in the State.. bribe was demanded from bim; hand-i:u!i's were being pu('on, we and our lllboun:rs were being harassed. After having told me this G he went awy. As my duty hours were over I made no further enquiry and Shivaji went away"

The Goods' Clerk had taken down •he complaint of Shivnji next morning after fixing the wharfage charges. Apparently, Shivaji, P.W. 2: an old man cf seventv, was very agitated by what had taken place. fhe Goods' Clerk stated that Shivaji was in an exasperated state of mind 11 when he came to him on the evening of 17-1-1968.

Under cross cxainination. the witness stated that he.must have told the police during the investigation that Shivaji had said. that bribes were. bein& taken.

' (

11[

R. K. CHATURVEDI v. ~AHARASHTRA (Beg,!.) 849,

This statement in Court was made on 14-8-1970, more than 2t years

after the occurrence. Therefore, the mere fact that, in his e:Millinationin:chief, he did not state . that Shivaji had actually mentioned the passing of money on the evening of 16-1-1968 does not seem to be material. Sbivaji's complaint next morning contained a!l the detailed allegations. The accused could not give any. reason why this witness should dep!1SC at all falsely against him. His testimony corroborates Shivaji's version.

Furthermore, there is corroboration of the statement of Shivaji from die statements of not only his son Sarjerao, P.W. 4, who brought money from the shop, bis nephew, Visbwanath, P.W. 5, who had gone to the scene of occurrence as there was delay in the arrival of goods, and, Vasant; P.W. 6, who bad given out Rs. 100/- to bis brother Sarjerao, p, w. 4, at Shivaji's shop, 'but also from the statement of Abdul Jabar, P.W. 10, who was an Assistan.t Sub Inspector of the Railway .Protecti9n Force and a colleague of the appellant. Abdul la bar's evidence, characterised by the Trial Court as "independent", disclosed that Kalandar Khan was actually arrested by the appellant a fact denied and left unexplained .by the appellant.

Another piece of corroborative evidence offered by the prosecution was the "pucca" entry of a disbursement of Rs. 1001as bribe and Rs. 7.10 as wharfage shown on 17-1-1968 in the cash book of Shlvaji. But, as this account boolt was not produced at the time of the enquiry held by the Inspector .Hanotia of the Railway Protection Force

iBto tile allegations and the entry was admitted to have been made on 19-1-1968 although the disbursement is shown on 17-1-1968 it cannot b relied upon.

There is force in the conl.enlion that. it app, ars to have been made to support the prosecution case.

The wharfage charge of Rs. 7-10 was not even fixed on 17-1-1968. However, as the entry was admitted by the prosecution to have been actually made on 18-1-1968, it can be ignored as a piece of corroborative evidence. The mere f&ct that it must have been made on 18-1-1968 to support the version of Shivaji and is admitied to have been SO\ made does not take away the value of the evidence of Shivaji which impresse~ the Trial Court and whic11 was corroborated by other pieces of unimpeachable evidence.

CCmsK!crale sess is laid on the fact that Shivaji bad pointed out, at a test 1entification parade, the aci; used No. 2, Hari Rachu, as the perso11 to whom the money was paid, but, t the trial, he stated that it was paid to the appellant accused No. 1 who handed it over to aecused No. 2. A 1ong period of time had elapsed between the occurretice and depositions at the trial by witnesses. Their memory could very wll have become blurred as to who actually got the money first if the money was passed by one accused person to another as it seems

lo baye n. 'I:heie could be an honest lapse of memory about. the :"xact sequence, The infirmity is not so serious as to be attribut-d . to nothing except mendaciousness.

The Special Judge, after a very through and carelul assessment of the whole evidence in the case, "had come to the conclusion that the

SUPREME COURT REPORTS [1974] 3 s.C.R •.

prosecution case against the appellani was establisiied beyond reason~

able doubt. He had convicted the appellant under Section 120B as well as Section 161 read with Section 34 I.P.C. and also under Section 5(l)(d) and Sec. 5(2) of Prevention of Corruption Act and sentenced him to two years rigorous imprisonment and to pay a fine of Rs. 300/-, and, in default of payment of fine, to undergo further rigorous imprisonment for two months, on each one of the three counts, but the substantiYe sentences were made concurrent.

The appellant as well asthe other convicts had appealed to the High .Court of Bombay.

The appellant's appeal had been dismissed summarily. The appeal of the three convicted co-accused was admitted, but it was finally dismissed, except as regards one of the accused who was held to be merely present and to have carried out the orders of the appellant before us in writing up a document alid then destroying it. The reasons given in the judgment of the Bombay High Court, on that appeal, reponed as Hari Rachu Kanadi v. The State of Maharashtra('), are relied upon as arguments before us for accepting the prosecution case.

We may here mention a fact which the Bombay High Court took into account in confirming the convictions of two of the ce>-accused in this case. It has been relied upon by the learned Counsel for the State before_ us. It is that, under the provisions of the Railway Pr0tection Force, the members of that Force are not Police Officers at all in the ordinary sense, and that the appellant had apparently exceeded his powers of ar.rest.

The powers of.arrest without a warrant under Section 12, vested in Superior Officers of the Force, are laid down in the following terms :

"Power to arrest without warrant.

(12). Any superior officer or member of the Force may, without an order from a Magistrate and without a warrant, arrest-

( a) any person who has been concerned in an offence relating to railway property punishable with . imprisonment F for a term exceeding six months, or against whom a reasonable suspicion exists of his having been .so concerned, or

(b) any person found taking . precautions to. conceal his presence within railway limits under circumstances which afford reason to believe. that he is taking such precautions with a View to committing theft of. or damage to, railway G property"

It has not been shown to us what justifiable ground the appellant had to arrest or cause the arrest of Kalandar Khan. This indicates that th~ r::ason for the arrest could be an attempt to extort a bribe as alleged by the prosecution. The appellant had, no doubt, denied the arrest.

This denial was clearly false in view of the statements of witnessc5 H

(1) 1973 Bombay Law Reporter (Vol. 71) p. 891.

f .

' '

R. K. CHATURVEDI v. MAHARASHTRA (Beg, !.) as 1

A who included Abdul Jabar, P.W.10, a fellow member of the protection Force to which the appellant belonged.

The established fact of this arrest of Kalaodar together with the false denial of it by the appellant indicate the dishonesty of the appellant's stand. It also corroborates the prosecution version.

It is true that the statement of Kalandar Khan, P.W.3, the driver B of the truck, contradict~ the prosecution case, as given out by Shivaji and his son, so far as the actual arrest of Kalandar Khan is concerned.

But, even Kalandar Khan had deposed that the appellant had threatened him. He then went on to state that there was a quarrel as a consequence of it and nothing more. lie was declared hostile by the prosecution. He was cross-examined about the statements made by him during investigation showing that he was arrested and that he C actually saw the handing over of money as a bribe for his release. He denied making such statements to the police. As there is no reason whatsoever shown why the Investigating Officer should be prejudiced against the appellant and falsely record statements, the Trial Court was right in holding that Kalandar Khan was a thoroughly unreliable

., wi.ness.

The rcsu1t is that we see no reason to depart in this case from the general rule laid down by this Court in numerous cases, such as B. C. Goswami v. Delhi Administration, that this Court will not interfere with concurrent findings of fact except under very exceptional circumstances. The High Court must be deemed to have aflirmeil the findings of fact of the Special Judge when it dismissed the appellant's appeal summarily even if it did not give its reasons. It is because of such a dismissal by it that we have examined the evidence in the case ourselves. We may here observe .th.at, although we uphold the fit\dings of the Trial Court which would be deemed to be affirmed by the High Court, we consider it very n-..-cessary for High ourts to at least record their reasons briefly even when they dismiss criminal appeal summarily on facts found. It is often difficult in criminal cases to say whether any material error was committed by the Tritil Court ill arriving at its. findings of fact without at least some examina\ion and consideration of the main features of the evidence which only a: reasoned order could disclose. It was mainly because reasons for summary dismissal of the appellant's appeal were not given by the High Court that the appellant seems to have. obtained Special Leave to appeal to this Court.

We hereby dismiss thi~ appeal and co.nfirm the convictions and sentences passed against the appellant who is on bail. He shall surrender forthwith and serve out the remaining period of his concurrent sentences. .

V.P.S.

Appeal dim1/ssed.

RAJENDRA KUMAR CHATURVEDI

THE STATE OF MAHARASHTRA

April 4, 1974

IM. H. BEG

sections 1208

s. 34

Prevention of Corruption Act, 1947

13th October, 1970

Bombay High Court at Bombay

S. N. Misra

M. V. Goswami

M. C. Bhandare

S. P. Nayer

BEG

Section 120B and 161

Indian Penal Code

Sections 5(1)

Prevention of Corruption Act

Shivaji Ogale

Shivaji

Kalandar Khan

Hari Rachu

Sarjearao

Shivaji

Vishwanath

Vasant

Rambabu Kate

18-1-1 %

Bhusaval

Shivnji

Sbivaji

Sarjerao

Visbwanath

Abdul Jabar

Abdul la bar

Kalandar Khan

Shlvaji

.Hanotia

Hari Rachu

Section 120B

Section 161

Section 34

I.P.C

Section 5(l)(d)

Sec. 5(2)

Prevention of Corruption Act

High .Court of Bombay

Bombay High Court

Section 12

Kalaodar