GIRIDHARLAL KALYANDAS ADVANI Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners Nos. 1 to 3 referred to hereafter as "the petitioners" are certified goldsmiths under Gold (Control) Act, 1968 and carry on their business at 506, Raviwar Peth, Pune. Respondent No. 3, Superintendent of Central Excise, raided the premises of the petitioners on february 23, 1980 and seized ornaments weighing 634. 200 grams under panchanama on the assumption that the petitioners had contravened the provisions of Section 55 of the Gold (Control) Act. The petitioners were served with show-cause notice dated August 16, 1980 and the petitioners filed reply on August 25, 1980. After consideration of the reply, the Additional collector of Central Excise and Customs, Pune, came to the conclusion that the gold under seizure belonged to the customers of the petitioners and is not liable to confiscation. After recording this finding, the Additional Collector observes in his order dated February 22, 1983 that the seized gold ornaments could not be returned to the petitioners as the same are reported to be missing from the office of the Superintendent C. E. (Preventive) of Pune-I Division and the police investigation did not yield any result. The refusal of the Additional Collector to return the ornaments has given rise to the filing of the present petition under Article 226 of the constitution.

(2.) SHRI Joshi, learned counsel appearing on behalf of the petitioners, submitted that the gold ornaments were seized by the Superintendent of Central Excise in exercise of powers conferred under Section 66 (1) of the Gold (Control) Act, 1968. Shri Joshi submitted that as the Additional collector came to the conclusion that the seized gold ornaments were not liable to confiscation, the respondents were duty bound to return the gold ornaments and in case the gold ornaments were not available for return because of the default of the seizing authorities, then the petitioners were entitled to the value of the gold ornaments. The submission is correct and deserves acceptance. It is not permissible for the respondents to decline to return the seized gold ornaments after adjudication or to reimburse the petitioners of the value of the gold ornaments, in case the ornaments were stolen due to the negligence of the respondents. Shri Desai, learned counsel for the respondents submitted that the gold ornaments were seized by the Superintendent of Central Excise in discharge of statutory functions which are referable and based on the delegation of the sovereign powers of the State. The learned counsel urged with reference to the decision of the Supreme Court in Kasturi Lal v. State of U. P. , reported in A. I. R. 1965 SC 1039, that the action for damages for loss caused by tortious act will not lie if the tortious act is committed by a public servant in discharge of statutory functions which are referable to the sovereign powers of the State. In our judgment, the assumption of Shri Desai that the powers of seizure are referable to the sovereign powers of the State is fallacious. The power to seize is under the statutory provision, i. e. Section 66 (1) of the Gold (Control) Act, and it is impossible to suggest that a power to seize is based on the sovereign power of the State. The gold ornaments were seized because the Superintendent of Central Excise felt that the petitioners were holding the ornaments in violation of the statutory provisions of the Gold (Control) Act. There is no inherent power to seize gold ornaments de hors the provisions of the Gold (Control) Act and consequently the power to seize is not referable to the sovereign power of the State. In our judgment, the respondents were duty bound to return the gold ornaments.

(3.) SHRI Desai submitted that as the gold ornaments seized from the petitioners were stolen, there is no compulsion under the Gold (Control) Act, to return the ornaments to the petitioners. The submission is only required to be stated to be rejected. It is not permissible for the respondents to retain the seized ornaments on a fallacious ground that there is no compulsion to return the ornaments. There is compulsion to return the seized articles when the adjudicating authority finds that seizure was on assumption which is not sustainable. In case the seized articles are not available for return, then the respondents are bound to refund the market value of the ornaments and the market value is to be ascertained with reference to the date on which the liability of the respondents arose to return the ornaments. In other words, the market value of the ornaments has to be ascertained as on the date when the Additional Collector passed the order discharging the show-cause notice and was liable to return the ornaments. It is also required to be stated that the return filed on behalf of the respondents does not indicate as to how the gold ornaments were stored, what reasonable precautions were taken to see that the gold ornaments will not be lost during the pendency of adjudication proceedings and when it was realised that the ornaments were lost and what steps were taken to realise the stolen ornaments. The return is entirely silent on this crucial aspect and, therefore, it is not clear as to whether the claim of theft of the gold ornaments is genuine or otherwise. In any event, as the respondents are claiming that the gold ornaments are lost, the respondents are bound to return the market value of the ornaments as prevailing on February 22, 1983, when the Additional Collector passed the order discharging the show-cause notice.