MOHANLAL DEVDANBHAI CHOKSEY Vs. M P MONDKAR

JUDGEMENT

(1.) The firm of Messrs, Mohanlal Devdanbhai Choksey (petitioner No. 1) consisting of three partners, petitioners Nos. 2 to 4, carries on business of sale and purchase of gold and silver bullion. On Jan. 10, 1969 the petitioners delivered to the proper officer under the Customs Act, 1962 (hereinafter referred to as "the Act") an intimation under S. 11J of the Act in respect of their shop at Sheikh Memon Street as being the place where the silver and gold bullion which were the goods notified under S. 11-I of the Act are being kept or stored by them. According to them between 14th and 23rd Jan, 1969 they sold and delivered three consignments of silver bullion to a firm carrying on business at Nasik. On Jan. 23, 1969 they effected sale of 22 bars of silver weighing in the aggregate 666.533 Kgs. valued at Rs. 3,70,356/- to the said firm at Nasik. On the same day they obtained from the Competent Officer a transport voucher under S. 11K for transport of the said goods by road from Bombay to Nasik. In the said transport voucher it was mentioned that the goods would leave the petitioner's shop at Sheikh Memon Street at 6 p. m. on Jan. 23, 1969. Such time was mentioned in the transport voucher according to the petitioners because the Excise Officer declined to sign a transport voucher on that day if the goods were to be transported the next day as intended by the petitioners. On Janu. 23 1969 at about 7.30 p. m. a party of Customs Officers raided the garage and residence of the petitioners Nos. 2, 3 and 4 at building "Triveni", situate at Walkeshwar Road, Bom-hay and seized 22 bars of silver from that garage along with 11 small pieces of silver contained in a gunny bag which was found on the loft. The Customs Officers also seized a Willy's Station Wagon bearing No. MRW-9690 and some old books of account. They also seized from the residence of petitioners Nos, 2, 3 and 4 in building Triveni currency notes of the value of Rs. 54,000/- and 7 gold coins and some cash. On Jan. 24, 1969 from the shap of the petitioners at Sheikh Memon Street beoks of account, documents and other things were taken charge of. On July 22, 1969 the Collector of Central Excise and Customs, Bombay passed an order to the effect that he was satisfied that there were sufficient grounds for extending the period by six months for the issue of notice prescribed under S. 124 of the Act and accordingly, in exercise of the powers conferred by S. 110 (2) of the Act he extended the period for issue of the notice by six months from July 23, 1969. On January 22, 1970 the Assistant Collector, Directorate of Revenue Intelligence, Bombay Unit, issued a show cause notice to the petitioners calling upon them to show cause why the silver bullion which was seized should not be confiscated and they should not be held liable for imposition of the penalty under Chapter XIV of the Act. By the said notice the petitioners were also called upon to show cause why the Willy's Station Wagon bearing No, MRW-9690 and the 'Contex-30' calculating machine that were seized should not 'be confiscated. On Feb. 20, 1970 the petitioners filed a petition under Article 226 of the Constitution on the Original Side of the High Court inter alia to challenge the validity of the order of extension dated July 22, 1969 and the show cause notice dated Jan. 22, 1970. They prayed for a writ of mandamus or other appropriate relief directing the respondents, their officers, servants and agents to return to them forthwith all the goods seized, currency notes of Rs. 72,278/-, 7 gold coins, 'Contex-30' calculating machine, Willy's station wagon bearing No. MRW-9690 and the books of account and other documents seized by them and to withdraw and cancel the order of extension dated July 22, 1969 and the said show cause notice dated Jan. 22, 1970, In this petition the Assistant Collector, Directorate of Revenue Intelligence, Bombay Unit, the Collector of Central Excise, and the Collector, Directorate of Revenue Intelligence, Bombay Unit and the Union of India were made party respondents. The petition was resisted by the respondents and affidavits in reply were filed by the Assistant Collector, Directorate of Revenue Intelligence and the Superintendent of Central Excise and Customs.

(2.) When the petition came up for hearing before the learned trial Judge two contentions were urged on behalf of the petitioners. Firstly it was contended that the order dated July 22, 1969 whereby the period for issue of a show cause notice under Section 124 of the Act was extended, was in breach and violation of the principles of natural justice as the said order was issued by the Officer without giving any opportunity whatsoever to the petitioners. Secondly, it was contended that even the seizure of the goods was unjustified, because, on the facts of the case it was impossible for any officer to entertain any reason to believe that the goods that were seized were liable to confiscation within the terms of Section 110 (1) of the Act so as to justify the seizure. On that ground the validity of the show cause notice dated January 22, 1970 issued under Section 124 of the Act was challenged. The learned Judge following the decision of the Supreme Court in Asst-Collector of Customs and Supdt. Preventive Service Customs, Calcutta v. Charan Das Malhotra, reported in AIR 1972 SC 689, took the view that as the order extending the time for issuing the show cause notice under Section 124 was passed without giving any opportunity to the petitioners of being heard, the said order was liable to be quashed. So far as the validity of the show cause notice dated Jan. 22, 1970 was concerned, he took the view that the attempt on the part of the petitioners to show that the customs authori- ties would have had no reason to believe that the goods in question were liable to confiscation was an ill-advised and ill-founded attempt and he had no hesitation in rejecting the said contention. In view of these findings having regard to the provisions of Section 110 of the Act he issued a writ of mandamus against the respondents directing them to return to the petitioners forthwith the 22 bars of silver, 11 small pieces of silver, Willy's station wagon bearing No. MRW 9690, books of account and other documents seized from the garage and 25 pieces of silver, 'Cootex-30" calculating machine, books of account and other documents seized from the petitioner's shop. By his order he also directed the respondents to withdraw and cancel the order of extension of time dated July 22, 1969. While this petition was pending criminal proceedings were also adopted by the Officers of the Customs Department in the Court of the learned Presidency Magistrate and in view of the pendency of the said proceedings he directed that the property which was directed to be returned should not be returned to the petitioners in compliance with the judgment till two weeks from the date of delivery of the judgment so as to give the respondents an opportunity to apply for an order under S. 516A of the Code of Criminal Procedure to the learned Magistrate before whom the criminal proceedings were pending. It is against this order passed by the learned Judge that these two cross appeals are filed. Appeal No. 81 of 1972 is filed by the petitioners while cross appeal No. 84 of 1972 is filed by the original respondents.

(3.) Mr. Sen the learned counsel on behalf of the petitioners contended that having regard to the provisions of the Act seizure under Section 110 was sine qua non to exercise of the powers of confiscation under Section 124 of the Act. He submitted that a notice under Section 124 of the Act cannot be issued unless there is valid seizure of the goods under Section 110 that such valid seizure is a fetter upon the power of the authorities to issue a show cause notice under Section 124 and that a notice under Section 124 of the Act is a condition precedent to exercise of the power of confiscation of the goods. He submitted that the impugned show cause notice dated Jan. 22, 1970 in so far as it relates to confiscation of the goods must be quashed once the six months' period prescribed in Section 110 expires and no show cause notice is issued within that period and when no valid order of extension of the period of seizure or for issue of the show cause notice is passed by the appropriate authorities. According to his submissions, a show cause notice under Section 124 cannot be given once the period of six months or the extended period mentioned in the proviso has elapsed since the date of the seizure. His submission was that as under the order of the trial Court the goods are ordered to be returned to the 'petitioners, the proceedings initiated pursuant to the notice dated Jan. 22, 1970 under Section 124 of the Act cannot be continued and they should be quashed. On the other hand, Mr. Joshi on behalf of the original respondents contended that Section 110 and Section 124 are entirely independent provisions that Section 110 is contained in Chapter XIII which deals with searches, seizure and arrest He submitted that these provisions constitute the machinery to facilitate proper investigation of a ease and 'anything contained in a provision contained in a section in Chapter XIII cannot affect or impose a fetter upon the powers conferred in the substantive provisions which are contained in Chapter XIV of the Act. Chapter XIV of the Act according to his submission contains substantive provisions for confiscation of goods and conveyances and imposition of penalties. Section 124 is contained in Chapter XIV and it makes the issue of a show cause notice a condition precedent before any order confiscating any goods or imposing any ponalty on any person can be passed under this Chapter. He submitted that the provisions of Section 124 are independent provisions and thereby no limitation as to time is prescribed for the issue of such a show cause notice, nor do they contain any provision to the effect that an order of confiscation cannot be passed or proceedings for such confiscation cannot be instituted unless they are first seized and continued under seizure while proceedings are initiated and continued. He also submitted that for initiation of proceedings under Section 124 no limitation or restriction as regards time is imposed and S. HO contained in Chapter XIII and Section 124 contained in Chapter XIV should be considered in their proper perspective and nothing contained in Section 110 can be regarded or considered as a fetter upon the exercise of powers under Section 124. He urged that the consequences of non-compliance with the principles of nahiral justice while passing an order of extension under Section 110 are provided in the section itself and it would not be permissible to the Court to enlarge the scope of Section 110 beyond what is contained therein;