UNION OF INDIA Vs. A.Y. YEMANI

JUDGEMENT

(1.) THIS second appeal at the instance of the defendants is admitted on the following questions of law formulated in the memorandum of second appeal.

(2.) THE suit is for the value of 50 bags (2305.20 Kgs.) of I.A.C. Gujarathi Pathi Biri tobacco illegally seized by the 3rd defendant from the plaintiff with interest at 12% from 31 -7 -1961 to 31 -10 -1966. The suit was filed on 5 -11 -1966. The plaintiff was a licencee for dealing in Biri tobacco having warehouse licence No. 29/1960 of Shertallai. The Preventive and Intelligence Inspector of the Central Excise Department, Alleppey checked the stock account of the plaintiff's warehouse between 29th and 31st of July, 1961 and seized 50 bags of Biri tobacco from the warehouse for the alleged contravention of clauses (c) and (d) of Rule 151 of the Central Excise Rules, 1944. The second defendant, the Assistant Collector of Central Excise, Trivandrum Division, passed an order Under Section 33 of the Central Excises and Salt Act, 1944 confiscating the 50 bags of tobacco. The plaintiff was, however, allowed to redeem the seized tobacco on payment of a redemption fine of Rs. 1,000/ - and a penalty of Rs. 250/ -. The plaintiff challenged the order of confiscation in O.P. No. 2566 of 1962 before this Court. A Division Bench of this Court by Ext. P1 judgment dated 22 -11 -1963 quashed the order of confiscation on the ground that it was in violation of the principles of natural justice leaving the Department free to take further action in accordance with law. There were no further proceedings Under Section 33 of the Act. The Excise Range Officer on 28 -10 -1964 ordered the release of the tobacco to the plaintiff directing him to take delivery of the same within ten days from the date of the order. There was a further order Ext. P8 by the 3rd defendant, Superintendent of Central Excise, Alleppey on 9 -11 -1965 directing the plaintiff to take delivery of the 50 bags of tobacco seized from him within ten days from the receipt of the order, failing which, he was informed, he will have no legal claim for the goods or its equivalent in value. He was later informed by Ext. P9 letter dated 7 -5 -1966 issued by the 3rd defendant that the articles seized will be destroyed. It is the plaintiff's case that he did not take delivery of the goods in pursuance to the notices issued to him for the reason that the goods seized were rendered unfit for use and had become unfit for sale. It is the case of the Department that the goods were auctioned, but there was no purchaser and had to be destroyed. The suit was filed on 8 -11 -1966 for the value of the goods illegally seized, or its equivalent in value with damages calculated at 12% interest from the date of seizure till the date of the suit.

(3.) APART from question Nos. 1 to 3 referred to above, the learned counsel for the appellants has submitted that the suit is not maintainable as it amounts to a suit for damages for a tortious act against the Central Government and its employees who were discharging a statutory function under the provisions of the Central Excises and Salt Act, 1944. The learned counsel points out that Rule 200 of the Central Excise Rules empowers the officers concerned to seize and remove the goods or articles in respect of which duty should have been levied for contravention of the provisions of the Act or the Rules. If the articles or goods warehoused had been removed or replaced, the owner of the goods warehoused is liable to be proceeded against under Rule 151 and the goods seized are also liable to confiscation. Section 33 of the Act empowers the Collector of Central Excise or the Assistant Collector, as the case may be, to take proceedings by way of adjudication for the purpose of confiscation of the goods seized and for the imposition of penalty on the owner of the goods. For the reason of these various powers conferred by the officers of the Central Excise Department, counsel for the appellants submits that the seizure of goods and its retention for the purpose of adjudication by the defendants were in exercise of a sovereign function delegated to them by virtue of the provisions contained in the Statute and the rules made thereunder, and no suit for damages for a tortious act will lie against the Government or its employees. Counsel places reliance on the decision of the Supreme Court in 'Kasturi Lal v. State of U.P. (AIR 1965 S.C. 1039) wherein it is stated thus at page 1046 : -