Hari Prasad Chhapolia vs Union of India (UOI)

P.K. Tripathy, J.—The petitioner challenges the order of conviction for the offences under Sec. 135(b)(i) of the Customs Act, 1962 (in short ''the Act, 1962'') and Section 85 (ii), (iii), (viii) and (ix) of the Gold (Control) Act, 1968 (in short ''the Act, 1968'') for alleged violation of Sections 6, 8(i) and 27 of the Act, 1968. Petitioner was tried in the Court of Additional Chief Judicial Magistrate (Special Court), Cuttack on the basis of the complaint lodged by the Assistant Collector, Central Excise and Customs, Bhubaneswar, registered as 2(c) C.C. No. 214 of, 1985. The trial Court found the petitioner guilty of the aforesaid two offences the therefore sentenced him to undergo R.I. for three years and to pay a fine of Rs. 5,000/- in default to undergo R.I. for a period of one year for the offence u/s 135(b)(I) of the Act, 1962 and R.I. for two years for the offence under Sec. 85 (ii), (iii), (viii), (ix) of the Act, 1968 and to pay a fine of Rs. 2,000/- in default to further undergo R.I. for six months, for the above noted offences under Sec. 85 of the Act, 1968. The sentences were ordered to run concurrently. Appeal preferred against that judgement was heard and dismissed by the 1st Additional Sessions Judge, Cuttack in Criminal Appeal No. 93 of 1990, vide the impugned judgment dated 4-5-1994. The appellate Court concurring with the findings maintained the order of conviction and sentence passed against the petitioner by the trial Court.

Prosecution case is that on 11-11-1984, on conducting a search by the officials of the Central Excise and Customs on the strength of a search warrant, they recovered and seized on such search primary gold, gold ornaments and gold weighing apparatus, besides gold of foreign origin weighing 3170.800 grams valued at Rs. 4,09,971.95 paise besides the containers.

Defence of the accused during the trial was several fold viz :

(i) The premises which was searched i.e., the drawing-cum-bed room in the up stair does not belong to the petitioner but that is the property in possession of one of his sons.

(ii) he was not in possession of the seized articles and it was not recovered from his possession, custody or control.

(iii) " the gold and gold ornaments kept with papers, covers indicating the names of persons were the articles pledged with and belonging to one Satyanarayan Soraf.

(iv) the primary gold and the gold of foreign origin, which was recovered were not at the premises and they were planted by the Searching Officers to build-up a false case against the petitioner and by application of force, his signatures were obtained on some papers.

In course of trial, prosecution examined two witnesses , viz, Mihir Kumar Nayak, Inspector in Central Excise and Customs and a Member of the Raid Party and P.W. 2 - Ganga pani Behera, Superintendent, Central Excise (Preventive), Bhubaneswar. He was also a member of the search party. Prosecution relied on the documents i.e., the authorisation and sanction order, Ext. 1. Prosecution Report. Ext. 2, Carbon copy of seizure list, Ext. 3, statement of witness Basudev Varma, Ext. 4, and statement of accused Ext. 5, and certificate regarding the quality of gold etc.

The defence examined two witnesses, namely, D.W. 1 - Vasudev Verma and D.W. No. 2. Sankirtan Moharana. Petitioner also relied on the documents vide Exts A to D out of which Ext. A is the notice and Exts. B a copy of final decree, Ext. C the R.O.R. and Ext. D registered sale deed.

On assessment of evidence on record the trial court recorded the findings that notwithstanding non-examination of the independent witnesses to the search and seizure the evidence of P.Ws. 1 and 2, who are the official witnesses is sufficient to prove the factum of recovery of the aforesaid seized articles from the possession of the petitioner and in that connection, circumstantially, statement of the accused, Ext. 5 sufficiently corroborates to the evidence of P. Ws 1 and 2. He found the defence plea of the accused regarding the premises being not belong to him and non-testing and non-recovery of the gold from the possession of the accused as not acceptable and in that contest, the trial court found the evidence of D. Ws. 1 and 2 and Exts. B to D deficient to prove the said defence pleas. The trial court also took note of the previous conviction of the petitioner in 2(c) C.C. No. 419 of 1970, on a similar charge of being in possession of 25 numbers of gold biscuits and that conviction of the petitioner being maintained till the High Court.

In the trial Court as well as the appellate Court, various contentions which were raised here were also raised but rejected by the Courts below. Those contentions are:

(1) Petitioner was not the owner and in possession of the house searched and therefore allegations cannot be made against him for anything recovered during, that search; Alternatively, the seized articles have not been proved to be primary gold and gold of foreign origin and, therefore, petitioner cannot be convicted on the allegation of possession of such articles either under the Act, 1962 or under the Act, 1968.

(2) the sanction accorded for prosecution against the petitioner was without due application of mind to the materials available on record and, therefore, it be regarded as absence of a valid sanction;

(3) adverse inference should be drawn against the prosecution for not examining the independent witnesses and the discripancy in the evidence of P. Ws 1 and 2 are sufficient to discard the prosecution case.

As noted above, while convicting the petitioner, the trial court and also the appellate Court have rejected the aforesaid contentions. In course of hearing of this revision, the same points have been reiterated and canvassed by the petitioner for seeking an order of acquittal.

So far as the first point which is canvassed by the petitioner is that the premises searched does not belong to him and, therefore, any article seized there from cannot be attributed to him to attract the penal provisions in the Act, 1962 and Act, 1968. The prosecution evidence is the occular version of P.Ws 1 and 2 to prove the factum of occupation of the searched premises by the petitioner. As against that, the petitioner has filed documents, such as a decree in the partition suit, the record-rights and a sale deed relating to sale of a particular land and has explained that subsequently that land was purchased by the son of the petitioner. As rightly opined by the learned Addl. Chief Judicial Magistrate, when the prosecution evidence and the different exhibited documents proved that petitioner was in possession of that house and that particular room by the time of search and seizure, the aforesaid documents relied upon by the defence do not prove that the house in question was not in his possession. In a case of this nature, it is not the ownership over the premises searched is of much relevance, but the factum of possession of the premises searched is of most relevance. The evidence of P.Ws 1 and 2 is credible enough to concur with the said factual findings of the Courts below.

The next point pressed into service by the petitioner is that the articles seized were not proved to be primary gold, gold ornaments and gold of foreign origin. In that respect, the trial court has recorded the finding that in view of the statement contained in the Panchanama (Ext. 3) and the co-related statement of D.W. No. 1 in Ext. 4 and because of relevancy and acceptability of such statement in accordance with the provision u/s 98(c) read with Section 67 and 70 of the Act, 1968 besides the suggestion at the stage of cross-examination of P.W. No. 1 regarding claim made by one Satyanarayan Saraf claiming the said ornaments in the confiscation proceeding, and the statement of the petitioner, Ext. 5 clearly proves that the articles seized comprises of primary gold, gold ornaments and gold of foreign origin. In that context the relevant finding of the learned Addl. Sessions Judge is that:

"However, it is brought out that this D.W. 1 has weighed and tested the gold and gave his statement to that effect under Ext. 4 and his statement regarding weighment and purity of gold was mentioned in the ''Panchanama'' as per Ext. 3."

(From paragraph 17 of the original judgment at page 14) and "Hence the learned trial court has rightly not believed his statement in the court, but came to a conclusion with the aid of the evidence of P.Ws 1 and 2 and the glaring documentary evidence, Exts. 3 and 4 that he was the person present, witnessed all the seizure of gold ornaments, articles, gold biscuits, primary gold, made weighment and certified them to be gold and that those are more than 9 carat purity. Hence, the learned trial court was right in coming to a conclusion that primary gold, gold ornaments and gold biscuits were seized from the possession of the appellant".

(From paragraph 17 of the Original judgment at pages 16-17)

Learned Counsel for the petitioner argued that the aforesaid findings are not only illogical but also based on surmises and, therefore, per-versal in as much as neither in Ext. 3 nor in Ext. 4 any statement has been made regarding the seized articles to be gold or gold ornaments having 9 carats or more, on that ground alone the prosecution case is bound to fail and the accused is entitled to benefit of doubt and to be acquitted. In that context petitioner has also relied on the ratio in the case of Doki Sriramulu Vs. Assistant Collector of Central Excise and Customs and Another,

In the cited case, this Court held that:

"9. That apart, as to what has been seized from the pelitioner, whether gold, brass or any alloy, that must be established by the prosecution. But a perusal of all the materials on record clearly established that the prosecution has not taken any steps in that regard. To attract the offence u/s 85 of the Gold Control Act, it must be established as to the possession of any primary gold by the accused in contravention of the provisions of the Act or the Rules made thereunder. Necessarily, therefore, it must first be established that what was recovered from the possession of the accused is a gold as defined in Section 3(i) and then the primary gold as defined in Section 3(r) of the Gold Control Act. If there is not established, then the provisions of Section 85 of the Gold Control Act cannot be said to have been attracted, In this view of the matter, the conviction of the petitioner u/s 85 of the Gold Control Act, also cannot be sustained".

On perusal of the oral evidence from the side of the prosecution and the endorsement in the Seizure List. Ext. 3 and the statement of D.W. No. 1, marked Ext. 4 it goes to show that most of the gold ornaments were tested to determine what is the carat contained in each of them. Thus, keeping in view the provision of law in Section 98(c) of the Act, 1968, and the other supporting provision thereof which has been referred to by the Courts below, ''this Court finds that the seized articles, viz., the ornaments etc. are gold bearing more than 9 carats. In that context the primary gold was found to be of 24 carat as noted in Annexure-B of Ext. 3 read with the statement in Ext. 4. That has neither been disputed not controverted by the petitioner in his statement Ext. 5 Under such circumstances, the definition of the term gold and primary gold, as defined in Section 2(j) and 2(r) are quite satisfied.

However, so far as the contentions relating to ''gold of foreign origin'' is concerned, the relevant evidence of P.W. No. 1 read as hereunder :

"3. XXX XXX XXX XXX XXX XXX XXX

Inside the stainless steel box there was one Gold Biscuit with foreign making. . On the gold biscuit, its weight was marked and "Johnson matchary London" was also marked. Below it the figure ''9990'' was also marked. A small piece of gold was previously cut away from the corner of the gold biscuit. Besides it some molten pieces of gold were also found inside the stainless steel box. All these items were primary gold."

P.W. No. 1 has not stated in his examination-in-chief as to how he opined that the said gold biscuit is of foreign origin. The complainant is also silent in that respect, In the cross-examination, P.W. No. 1 in that context stated that:

"The spelling of the ''incription'' (should be ''inscription'') on the seized gold biscuit is ''JONSON METHERY''. I have not ascertained as to whether there is any foreign company under the title "JONSON METHERY''. I do not know whether our office is having a list of foreign companies dealing with gold biscuits. I have not sent the seized gold biscuit to our experts and to the mint to ascertain for '' their opinion that the seized gold biscuits was of foreign origin. Prior to this occasion 1 have never seized any gold biscuit bearing the mark ''JONSON METHERY''".

P.W. No. 2 in his evidence i.e. examination-in-chief merely stated that they recovered one piece of gold biscuit with foreign markings. In his cross-examination he stated that:

"It was written on the gold biscuit, viz. ''JONSON MATHEW LONDON-10 Tolas 9990''. I cannot spell out the word (Jonson Mathew)''. We did not verify and compare the seized biscuit of foreign origin along with other original and genuine gold biscuit bearing the inscription ''JONSON MATHEW LONDON-10-Tola 9990''."

He further states at paragraph-17 of his deposition:

"I did not enquire nor ascertained as to whether there is any foreign company under the title ''JONSON METHERY LONDON'', who are manufacturing primary gold biscuits. The seized gold biscuits were not sent to the Government meant (i.e. should be ''Mint'') or chemist for test and analysis."

In Annexure ''B'' of Ext. 3 so far as the gold biscuit is concerned, the entry has been made in the following manner :

SI. No. Description Quantity Value

1.

Primary gold of foreign origin in the form of Biscuit having marking in one side.

105.000 gms 24 ct

Rs. 20.842.50

In the statement, Ext. 4, D.W. No. 1 has not stated that the seized gold biscuit was of foreign origin. Even in Ext. 5 the petitioner did not make a statement, that the gold biscuit was of foreign origin. It is the admitted position of law that Clause (b) of Sub-section (1) of Section 135 of the Act, 1962 provides for punishment if any person acquires, possesses or in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe that such goods are liable to confiscation u/s 111. In that respect, Section 111 of the Act, 1962 provides for confiscation of improperly imported goods from outside India. In other words if it is not proved that the seized gold is imported from outside, then such gold is not liable for confiscation and therefore, that will not attract the provision u/s 111 and consequently Clause (b) of Sub-section (1) of Section 135 of the Act, 1962. In that score the trial Court''s finding that the gold biscuit was of foreign origin is in the absence of any evidence whatsoever. The evidence led by the prosecution, i.e. the oral evidence of P.Ws 1 and 2, the seizure list (Ext. 3) and statement of D.W. No. 1 and the Ext. 4 do not individually or conjointly prove that the gold biscuit was of foreign origin. Therefore, the finding recorded by the Courts below relating to the offence u/s 135(1)(b) of the Act, 1962 is devoid of merit.

The provision in Section 137 of the Act, 1962 provides that the Court shall not take cognizance of any offence under Sections 132 to 135 of the said Act, except with the previous sanction of the Collector of the Customs. In Doki Sriramulu (Supra), this court has held that:

"It is too well known that the sanction contemplated under the aforesaid provisions is not an empty formality and prosecution must establish that the facts constituting the offence have been considered by the authority before sanctioning prosecution. Further, a sanction which itself exhibits non-application of mind is vitiated in the eye of law".

The facts and evidence noted above goes to show that there was absolutely no evidence whatsoever to prima facie believe that the gold biscuit was of foreign origin or that it was a piece of imported gold. The said gold biscuit is no doubt a piece of primary gold. Section 111 of the Act, 1962 does not provide for confiscation of primary gold. It provides for confiscation of the gold imported from outside the country (India). Therefore the prosecution should have proved that the sanctioning authority had certain evidence before it to conclude that the said gold biscuit was imported gold. In other words it appears that a mechanical sanction order was accorded by the Collector, Customs and Central Excise, Bhubaneswar, without due application of mind to the facts and ingredients of the provision of law. For the reasons indicated above this Court finds that prosecution has not been able to prove that the gold biscuit, which was alleged to be of foreign origin, is imported gold or gold of foreign origin. Prosecution has also failed to prove that such gold is liable for confiscation in accordance with Section 111 of the Act, 1962. The evidence of P.Ws 1 and 2 only shows their ignorance about the said gold biscuit being a foreign origin or imported gold. Hence, in that respect the sanction order u/s 137, is vitiated by non-application of mind by the Collector, Customs and Excise, which granting the sanction for prosecution of the petitioner u/s 135(1)(b) of the Act, 1962. Under such circumstances petitioner''s conviction u/s 135(1)(b) of the Act, 1962 is illegal and not sustainable.

The provision relating to sanction as provided in Sub-section (2) of Section 97 of the Act, 1968 is applicable when an offence against the Act, 1968 is alleged against a Gold Control Officer. According to Section 97, designated authority, i.e. the Collector of the Central Excise or of Customs having jurisdiction over the area in which the offence is committed or by any person authorised by him in writing is competent to file the complaint. In this case, Ext 1 is such authorisation by the Collector authorising the complainant Naba Kishore Bhujabal, the then Assistant Collector, Central Excise and Customs, Bhubaneswar, and accordingly the said Officer filed the complaint. Ext. 1 and the signature of the Collector, Customs and Central Excise, Bhubaneswar has been duly proved in this case. Therefore, simply because the sanction order with respect to provision u/s 137(1) of the Act, 1962 was found to be not in accordance with law, for that reason the Ext. 1 cannot be excluded from reading the term ''authorisation'' given for filing of the complaint in accordance with the provision of Sub-section (1) of Section 97 of the Act, 1968. In other words, the authorisation is found to be in accordance with law for maintaining the complaint against the petitioner for the allegation of the offence under Sec. 85 of the Act, 1968.

Another argument which was advanced by the petitioner while challenging the conviction under Sec. 85 of the Act, 1968 is that the ornaments seized belong to different persons who had pledged the same with one Satyanarayan Soraf and the petitioner has explained that in Ext. 5 It was argued that if Ext. 5 has to be read in evidence, the entire statement should be read together, and if that be done, then the petitioner cannot be found to be in possession of those gold ornaments by entering into the money lending transaction or otherwise. Indeed Ext. 5 is to be read as a whole both relating to the inculpatory and exculapatory statements made therein by the petitioner. In that respect petitioner''s inculpatory statement is found to be corroborated by the other evidence on record. It is to be seen if the petitioner has substantiated by evidence, correctness of the exculpatory statement. In that context Section 98-B read with Section 99 of the Act, 1968 are also the relevant provision of law. The said two provisions are quoted below for a ready reference :

"98-B. Presumption of culpable mental state.

(1) In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the Court shall presume the existence of such mental stale but it shall be open to the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

Explanation - In this section, "culpable mental state" includes intention, motive, knowledge of a fact and belief in, or reason to believe, a fact.

(2) For the purposes of this section, a fact is said to be proved only when the Court believes it to exist beyond reasonable doubi and not merely when its existence is established by a preponderance of probability."

"99. Presumption as to ownership of gold. - Any person who has in his possession, custody or control any primary gold, article or ornaments shall be presumed, unless the contrary is proved, to be the owner thereof."

When the prosecution evidence proves the factum of search of the premises and recovery of gold ornaments and primary gold from the possession of the petitioner as per the Seizure List (Ext. 3) and that fact is supported in the statement vide Annexures 3 and 4 and when the defence plea of the petitioner is that those ornaments belong to one Satyanarayana Saraf left in his (Petitioner''s) possession in good faith, the onus is on the petitioner to prove that aspect by cogent, consistent and acceptable evidence. The oral and documentary evidence adduced by the petitioner has not proved the stand taken by him in the aforesaid manner nor it disproves the prosecution allegation of petitioner possessing the primary gold and the gold ornaments in violation of the provision in the Act, 1968. Petitioner does not come with any explanation for non-examination of said Satyanarayan Saraf, who under the given circumstance, was the post material witness, so far as the defence plea of the petitioner is concerned. Keeping in view the above quoted provision of law this Court first that petitioner has utterly failed to discharge the onus. This Court finds that in that respect the concurrent finding on fact by the Courts below is neither illegal nor erroneous. Therefore, there is nothing to interfere with the order of conviction under Sec. 85 of the Act, 1968.

To sum up the aforesaid findings and the conclusion thereof, it is held that:

(i) Prosecution has proved the factum of search of the premises under occupation of the. petitioner and recovery of gold ornaments and primary gold from his possession as per seizure list. Ext. 3. In that respect assessment of evidence by the trial Court vis-a-vis the defence plea of the petitioner regarding the premises not belonging to him has been done on due scrutiny and proper appreciation of evidence on record and such findings being neither illegal nor erroneous, is not interfered with by this Court in exercise of the revisional power.

(ii) Petitioner being prosecuted for the offence u/s 135(1)(b) of the Act, the evidence on record does not prove that the gold biscuit which was seized from the possession of the petitioner was a piece of imported gold or gold of foreign origin liable to be confiscated u/s 111 of the Act, 1962. In that context, the sanction order of the Collector, Central Excise and Customs was found to be not with due application of mind and therefore, vitiated. The findings recorded by the trial court and concurred by the appellate Court regarding proof of the offence u/s 135(1)(b) of the Act, 1962 is found to be based on surmises about the character of the gold biscuit as the imported gold. Thus, such finding is not sustainable in the eye of law. Accordingly, order of conviction of the petitioner u/s 135(1)(b) of the Act, 1962 is legally not sustainable.

(iii) Though Ext. 1 relating to sanction u/s 137(1) of the Act, 1962 is vitiated due to non-application of mind, but the authorisation contained therein for prosecution of the petitioner under the Gold Control Act is found to be lawful and maintainable and therefore, the complaint filed by the Assistant Collector is found to be on due authorisation in terms of the provision of Sub-section (1) of Section 97 of the Act, 1968.

(iv) The prosecution evidence, both oral and documentary, when proves search and recovery of the gold ornaments and the primary gold from the possession of the petitioner, there is no proper explanation for possession of such quantity of gold by the petitioner in contravention of the provision in Gold Control Act. In that context the defence plea of the accused that such gold belong to one Satyanarayan Saraf and the premises belong to his son Abhin have not been proved. Non-examination of such persons and non-proving of that aspect brings out the situation of not discharging his onus by the petitioner as per the provision in Section 98-B of the Act, 1968. Therefore, there is no reason to interfere with the order of conviction of the petitioner for the offence u/s 85 of the Act, 1968.

In the line of the aforesaid conclusion derived by this Court the conviction and sentence of the petitioner for the offence u/s 135(1)(b) of the Act, 1962 is set aside, where as the conviction and sentence with respect to the offence u/s 85 of the Act, 1968 is maintained. Accordingly, the criminal revision is allowed in part.

Petitioner has been allowed to remain on bail and realisation of the fine has been stayed by this Court during pendency of this revision. In view of the above judgment upholding the conviction and sentence for the offence u/s 85 of the Act, 1968, petitioner is directed to surrender and to serve the sentence and to pay the fine. If the petitioner shall fail to comply with the above direction within a period of one month hence, then the trial court shall proceed in accordance with law in that respect promptly.

Send back the case records to the concerned lower courts immediately.