Additional Collector of Customs vs Industrial Gases Ltd.

R.N. Pyne, J.—On November 12, 1973 the Respondent no Kanhaiyalal Garg on his way to London was detained by the Customs Authorities at the Calcutta Airport and certain (sic) cheques, cheques and credit notes found in his possession and custody were seized by the Customs Authorities. Full particulars of the seized articles will appear from the search list which is at p. 16 of the paper book. They are currency note, travellers cheques and cheques of foreign bank. On the next day, i.e. November 13, 1973, the Respondent No. 2 was arrested at the Custom House u/s 104, of the Customs Act. On May 27, 1976, a show-cause notice u/s 124 of the Customs Act, 1962, was issued by the Assistant Collector of Customs for Preventive (Adjudication) on the Respondents calling upon them to show cause why the seized items should not be confiscated under Sections 113 and 119 of the Customs Act, 1962 and penal action should not be taken u/s 114 of that Act. The Respondents by their letters dated July 5 and 7, 1976, showed cause to the said notice. A personal hearing was granted to the Respondents on July 24 and 25, 1976, by the Additional Collector of Customs. In the said adjudication proceedings on August 13, 1976, an order being Order No. 293 was passed by the Additional Collector directing return of the goods to the person from whose possession they were seized. The relevant portion of the said order is as follows:

In this case goods were seized on 12.11.73. It is a fact that show-cause notice could not be issued within the period stipulated in Section 110(2) of the Customs Act, 1962. The seized goods should be returned to the persons from whose possession they were seized. This order is issued without prejudice to any other action that may be taken under this Act or any other law for the time being in force.

It appears that after the said order repeated reminders were made by and/or on behalf of the Respondents to the Customs Authorities for return of the seized goods as directed by the said order dated August 13, 1976. But in spite thereof no answer was given by and/or on behalf of the Customs Authorities to the aforesaid notice or demand nor the said goods were returned to the Respondent No. 2. In the aforesaid circumstances the Respondent moved an application under Article 226 of the Constitution in this Court for appropriate writs directing the Appellants to return the seized goods referred to in the Order No. 293, dated August 13. 1976.

In the affidavit-in opposition filed on behalf of the Customs Authorities it was stated that the seized goods were vital and necessary evidence in the criminal case filed against the Respondent No. 2 and if he was allowed to take away the said seized goods the said criminal case would become infructuous and the said Respondent would escape liabilities.

The said application was heard by Dipak Kumar Sen J. and by a judgment and order dated March 24, 1977, his Lordship made the Rule nisi absolute and directed the Customs Authorities to return the seized articles. Inasmuch as the said criminal proceedings instituted against the Respondents in the Court of the learned Magistrate, Judicial, Alipore, were pending his Lordship directed that the return of the goods to the Respondents would be subject, however, to am order that might be passed by the learned Magistrate. In his judgment his Lordship, however, observed that the Customs Authorities had failed to satisfy the Court that they were then retaining possession of the goods lawfully and to his Lordship it appeared that the Respondents were entitled to the return of the said goods. The relevant portion of the order is extracted hereunder:

It is ordered that the said Rule nisi is hereby made absolute. And it is further ordered that a writ in the nature of mandamus is issued upon the Respondents above named commanding them to return the seized articles referred to in the Order No. 293 dated the thirteenth day of August one thousand nine hundred and seventysix mentioned in the said petition on or before the sixteenth day of April next. And it is further ordered that the Respondents above named shall be at liberty to move the said Court of the Chief Judicial Magistrate for appropriate directions in respect of the aforesaid seized articles if so advised and that this order is made without prejudice to the rights and contentions of the parties. And it is further ordered that the said Petitioners shall be entitled to resist any such application before the said Chief Judicial Magistrate particularly on the ground of delay and latches of the Respondent in this matter. And it is further ordered that the said Rule nisi is disposed of accordingly. And this Court doth not think fit to make any order as to the costs of and incidental to this application and as to those of the said Rule nisi. And it is further ordered that all parties concerned do act on a copy of the minutes of this order signed by an Officer of this Court being produced before them.

It appeals that on May 5, 1977, further order was made by Dipak Kumar Sen J. in the following terms:

It is ordered that the order made herein and dated the twenty fourth day of March one thousand nine hundred and seventy-seven shall not prevent the Chief Judicial Magistrate, Alipori, 24 Parganas, before whom the criminal case pending from making any appropriate order under the Code of Criminal Procedure. And it is further ordered that the prayer for further stay be and the same is hereby refused. And upon the said Petitioners through their said Advocate waiving service of the notice of motion it is further ordered that the service of the notice of motion on the said Petitioner be and same is hereby dispensed with. And it is further ordered that the said Applicants shall supply a plain copy of this order to the parties herein.

On May 6, 1977, the instant appeal was filed by the Appellants against the said two orders dated March 24 and May 5, 1977. The Respondents filed a cross-objection against the said order dated March 24, 1977.

In the instant appeal on the application of the Appellants an order was passed by the Appeal Court on April 24, 1978, the relevant portion whereof is as follows:

On the 13th day of May 1977 we passed an order that status quo as of that date would be maintained till the disposal of this appeal. By that, order we meant inter alia that the seized documents would remain in the custody of the Customs Authorities till the appeal before us was disposed of. The Customs Authorities have made an oral application to us seeking our permission to produce the seized documents before the Chief Judicial Magistrate at Alipore in connexion with a criminal case that was going on before the said Magistrate.

Our order of the 13th day of May 1977 would not prevent the Customs Authorities from producing the seized documents before the Chief Judicial Magistrate for the purpose of being shown to the said Magistrate. The Customs Authorities, however, shall not part with the possession of the documents under any circumstances or make them exhibits in any criminal case. The documents shall not be marked or disfigured in any manner whatsoever.

This order of clarification which we are making today is not to be understood as an indication by this Court that copies or the seized documents can be tendered as prosecution exhibits. The issue will be decided by the trying Magistrate in accordance with law. We are expressing no opinion whatsoever on the merits of the criminal case now said to be pending before the Chief Judicial Magistrate at Alipore on the rival contentions of the parties before the said Magistrate.

A signed copy of the minutes of this order is to be given to each of the parties subject to usual undertaking given by the Advocate on record for the party concerned to have this order to be drawn up, completed and filed.

Counsel for the Appellants has submitted that the Respondent No. 2 is not entitled to the return of the seized articles. According to him, seized articles are no longer goods as defined in Section 2(22) of the Customs Act, 1962 (hereinafter referred to as ''the said Act''). Counsel has further submitted that as the Respondent No. 2 had neither the legal right nor the required permission under Foreign Exchange Regulation Act from the Reserve Bank to hold the cheques and the drafts in foreign currency the same could not be said to be currency or negotiable instruments and therefore, they were not goods as defined in the said section. He has, further, submitted that without the necessary sanction of the Reserve Bank the seized articles could not be acquired or dealt by any one and as the Respondents had no such permission, they ceased to be currency or negotiable instruments. He has, further, submitted that the cheques which were found in possession of the Respondent No. 2 and seized by the Customs Authorities have by lapse of time become stale and ceased to be valid and hence, cannot be said to be of any value. Therefore, according to counsel, the seized articles cannot now be said to be currency and negotiable instruments and as such, they arc no longer ''goods'' as defined in Section 2(22) of the said Act but are mere documents. Counsel has, therefore, submitted that in the instant case Sub-section (2) of Section 110 of the said Act has no application but Sub-section (3) is applicable and this sub-section unlike Sub-section (2) does not direct return of the seized documents after expiry of six months or any other period. Therefore, according to counsel, the Respondents are not entitled to the return of the seized articles.

Counsel for the Appellants has further submitted that as the criminal case against the Respondents is pending, Customs Department has a right to produce the seized articles in the pending criminal case and it should be given an opportunity to do so as was given by the order appealed against and the order of the Appeal Court dated April 24, 1978. Counsel has submitted that the seized articles should be directed to be returned after production thereof before the Court where the criminal case against the Respondents are now pending.

Counsel for the Respondents has submitted that the instant appeal, being one appeal, flied against the two separate orders dated March 24, 1977 and May 5, 1977, is detective and not maintainable. He has, further, submitted that it cannot be said that the seized articles have ceased to be currency or negotiable instruments, or that at present they are merely documents and therefore, Section 110(2) of the said Act has no application. Counsel has, further, submitted that as the show cause notice was not given within six months from the date of seizure as provided in Section 110(2) of the said Act the seized goods are to be returned to the person from whose possession they were seized and after the expiry of the said period that person has become entitled to the return of those goods. Therefore, the ownership of those goods is now in the said person. According to counsel in the instant case, after the expiry of the stipulated period the Respondent No. 2 has become fully entitled to the seized goods and he cannot be compelled to produce the same as evidence against him in any criminal proceeding and any order or direction given in the instant case empowering the authorities to produce those goods in the pending criminal proceedings would amount to ''testimonial compulsion'' and as such, be violative of Article 20(3) of the Constitution of India. In support of his above submissions counsel has referred to the cases of Assistant Collector of Customs Vs. Charan Das Malhotra, , Charandas Malhotra Vs. Assistant Collector of Customs and Superintendent Preventive Service and Others, . Union of India and Others Vs. Khalil Kacherim, , Nandini Satpathy Vs. P.L. Dani and Another, and M.P. Sharma and Others Vs. Satish Chandra, District Magistrate, Delhi and Others, .

The instant appeal having been against two separate orders dated March 24, 1977 and May 5, 1977, appears to us to be defective as submitted on behalf of the Respondents.

We are unable to accept the contention of the Appellant that Section 110(2) has no application in the instant case. In our view, it cannot be said that the seized articles are no longer ''goods'' as defined in Section 2(22) of the said Act but arc mere documents and therefore, section applicable is Section 110(3) of the said Act. As stated earlier the seized articles are currency notes, travellers cheques and cheques of foreign bank. They come within the definition of ''goods'' in Section 2(22) of the Act. It cannot be said that these articles are currency and negotiable instruments only if the holder thereof has the requisite permit of the Reserve Bank to hold the same and therefore, would be goods, but if the holder does not have the required permit they cannot be treated as currency and negotiable instruments but would be merely documents. If the holder of the above articles does not have the requisite permit then his possession would be illegal and be in violation of the relevant statutory provisions, but by no stretch of imagination can it be said that in such cases there would be a change in the nature of the articles? Sub-section 2(22) is an inclusive definition and apart from the things mentioned in items (a) to (d) thereof it also includes in item (e) any other kind of movable property. Further, it has although been the case of the Customs Department that the seized articles are goods as would appear from the search list, show-cause notice, adjudication order dated August 13, 1976. Further, on the footing that the seized articles are goods criminal proceedings u/s 135 of the said Act have been instituted against the Respondents. In the affidavit in-opposition filed in the Court of the first instance seized articles are stated as ''goods''. Therefore, it cannot be said that seized articles are not goods as defined in Section 2(22) of the said Act. In our view, in the instant case as admittedly no show cause notice was served within the stipulated period, i.e. within six months from the date of the seizure of the goods they are liable to be returned to the person from whose possession they were seized i.e. the Respondent No. 2. After the expiry of the said period of six months the right to the return of the goods is vested in the person from whose possession they are seized. The Respondent No. 2 is, therefore, entitled to the return of the seized goods.

We are also unable to accept the other contention of the Appellants that before the return of the goods to the Respondents the Appellants should be given an opportunity to produce the same before the criminal Court where proceedings are now pending against the Respondents. In our view, as the Respondent No. 2 after the requisite time became entitled and has a vested right to the return of the seized goods they should be returned to him forthwith as was ordered by Lire Supreme Court in Charandas Malhotra''s case Supra. No direction as asked for by the Appellants can, in our view, be given to prejudice the aforesaid right of the Respondent No. 2. Since we are not giving any such direction we are not expressing any view as to whether production of the seized goods in the pending criminal case would amount to ''testimonial compulsion'' or be violative of Article 20(3) of the Constitution of India, in this connexion, we may, however, point out that from the facts disclosed in the list of dates which is at pp. 151 to 159 of the paper book and the supplementary list of dates handed up to the Court by the Respondents'' counsel at the lime of hearing of the appeal, it appears that since the date of the seizure of the goods and the institution of the criminal proceedings the Customs Authorities were in possession of the seized goods for a long time without any order of injunction restraining them to produce the same in the criminal proceedings, but in spite thereof no step was taken by them in that behalf. If the Customs Authorities were really interested in pro during or wanted to produce the seized goods in any Court they had ample time to do so. Since we are not making any order or giving any direction regarding production of the seized goods be fore the criminal Court as asked for by the Appellants we are not expressing any view on this aspect of the matter.

In the aforesaid view of the matter the appeal fails and the same is hereby dismissed. There will, however, be no order on the cross-objection. In the facts and circumstances of this case we do not propose to make any order as to costs. The Appellants are hereby directed to return the seized goods mentioned in the search list dated the November 12, 1973, to the Respondents within seven days from to-day.

Ghose, J.

I agree.