Mafatlal Damodardas Parekh vs Union of India and Others

Majumdar, J.—In this petition under Article 226 of the Constitution of India, the petitioner has brought in challenge the order at Annexure

''J'' dated 2/5-7-1977 passed by the first respondent - Union of India in exercise of its powers u/s 131(3) of the Customs Act, 1962. In exercise

of its power aforesaid the Government of India had suo motu initiated review proceedings seeking to review the order in appeal passed by the

appellate Collector of Customs, Bombay on 13-4-1976. The appellate Collector of Customs had set aside the imposition of personal penalty of

Rs. 1,000/- on the petitioner. The first respondent felt that the said order was erroneous and was required to be reviewed. Accordingly, a show

cause notice was issued to the petitioner calling upon him to show cause why the order of the appellate Collector of Customs should not be

annulled. The petitioner showed cause. Ultimately, he impugned order was passed by the first respondent annulling the appellate order of the

appellate Collector of Customs dated 13-4-1976 and restoring the order in original passed by the Assistant Collector of Customs, Bhavnagar,

dated 1-1-1975 imposing personal penalty of Rs. 1,000/- on the petitioner.

In order to appreciate the grievance of the petitioner, a few relevant facts leading to the petition are required to be noted at the outset.

The Inspector of Customs, Bhavnagar, C.I. Cell, while he was in preventive duties in Bhavnagar town on 31-1-1973 afternoon challenged the

petitioner who was standing in his shop. The said officer having having concealed in both the pockets of the Pyjama put on by the petitioner caught

hold of him by holding a tight grip on the said pockets and thus caught hold of material in the pyjama from outside. The said officer took help of

other customs officers in the near vicinity, Panchas were called. The person and premises of the accused were searched. As a result of personal

search of the petitioner, two gold bars bearing foreign mark viz. ""Swiss Bank Corporation"" 10 tolas 999.0 etc. weighing 10 tolas each i.e. 233.328

grms. and one gold strip weighing 37.700 gms. valued at Rs. 6,700/- were found from two pockets of the Pyjama put on by the petitioner. On the

search of the business premises of the petitioner, some documents and Indian currency worth Rs. 3,228/- were found. All these articles were

seized under the proper search list dated 31-1-1973 under a reasonable belief that the gold was of smuggled origin and liable to confiscation.

Ultimately, proceedings were initiated against the petitioner under the provisions of the customs act. In these proceedings, the petitioner did not

object to the confiscation of the seized gold. He, however, objected to the proposed imposition of penalty on him. It appears that the Assistant

Collector of Customs, Bhavnagar amongst others, imposed a personal penalty of Rs. 1,000/- on the petitioner by his order dated 1-1-1975. The

petitioner carried the matter in appeal before the appellate Collector of Customs at Bombay who allowed the appeal on 13-4-1976 and set aside

the order of personal penalty. It is this order of the appellate authority which was sought to be reviewed by the first respondent in exercise of its

powers u/s 131(3) of the Customs Act, 1962.

As noted earlier, having given an opportunity to the petitioner to show cause against the proposed review, the impugned order at Annexure J''

came to be passed by the first respondent.

Mr. P. J. Vyas, learned advocate for the petitioner raised the following two contentions in support of the petition :-

(1) That in criminal prosecution launched against the petitioner for the alleged violation of the provisions of the customs act, the petitioner was

initially convicted by the learned Judicial Magistrate, First Class, Bhavnagar u/s 135 of the customs act and u/s 85 of the Gold Control Act, 1968

and he was ordered to suffer R.I. for six months and to pay a fine of Rs. 1,000/- for the said offences. That the said order of conviction and

sentence was set aside by the learned Sessions Judge, Bhavnagar in Criminal appeal No. 75 of 1975. That the learned Sessions Judge, an

appreciation of the evidence, took the view that the prosecution had failed to prove that the petitioner was found in possession of the gold in

question. He also held that the security was not legal and valid. Mr. Vyas submitted that the aforesaid order of the sessions court was challenged

before this court and this court refused to interfere with the said order and even application for leave to appeal to the Supreme Court was rejected.

It is, therefore, contended that as the competent judicial authority on appreciation of the evidence had taken the view that the petitioner was not in

possession of the gold in question, the first respondent could not have taken a contrary view in the departmental proceedings and hence, the

impugned order at Annexure ''J'' is null and void.

(2) That in any case, the suo motu proceedings were initiated by the first respondent beyond reasonable time and hence also, the impugned order

is liable to be set aside.

Having considered the aforesaid two contentions of the learned advocate for the petitioner, we have reached the conclusion that there is no

substance in either of them for the reasons which we set out hereinblow.

So far as the first contention is concerned, it must be kept in view that the sessions court''s acquittal order is rendered in criminal prosecution

launched against the petitioner for violation of the provisions of Section 135 of the customs act and Section 85 of the Gold Control Act, 1968.

These criminal proceedings were initiated before the learned Magistrate who was competent to try the petitioner criminally for the aforesaid

offences. Even though the petitioner might have been acquitted in these criminal proceedings, so far as adjudication and penalty proceedings are

concerned, they stand entirely on a different footing. The legislature has contemplated that for alleged contravention of the provisions, the

concerned delinquent can be proceeded departmentally by way of adjudication and penalty proceedings and can also be criminally prosecuted.

These are two independent proceedings and one would not impinge on the other. Section 127 of the customs act clearly highlights the legislative

intention in this connection. The said provision reads as under :-

The award of any confiscation or penalty under this act by an officer of customs shall not prevent the infliction of any punishment to which the

person affected thereby is liable under the provisions of Chapter XVI of this act or under any other law.

It is, therefore, not possible to agree with the submission of the learned advocate for the petitioner that as criminal proceedings terminated in

favour of the petitioner, the departmental proceedings by way of adjudication and penalty could not have been pursued further by the concerned

authorities.

Mr. Vyas invited our attention to a decision of the Supreme Court in the case of East India Commercial Co. Ltd. v. Collector of Customs,

Calcutta AIR 1962 S.C. 1898, to support his contention. In our view, the said decision proceeds on its own facts and is not applicable to the

present case. In the case before the Supreme Court, criminal prosecution was launched against the Director of appellate company before the

Supreme Court u/s 5 of the Imports and Exports Act, 1947 on the basis of a information alleged to have been received by the Chief Controller of

Imports that the company was selling goods to various parties contrary to the provisions of the licence issued to the company to import goods.

That there was a condition therein that imported goods were not to be sold. In the prosecution, the Director of the company was discharged by the

first authority. On revision against the order of discharge, the High Court construed Section 5 of the 1947 act and held that the said section

penalised only a contravention of an order made or deemed to have been made under the said act, but did not penalise the contravention of the

conditions of licence issued under the act or issued under a statutory order made under that act. It is thereafter that the Collector of Customs

started proceedings purported to be u/s 167(B) of the Sea Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947

and called upon the company by a notice to show cause within 7 days from the date thereof why the sale proceeds of the said goods should not be

confiscated and why penal action should not be taken against the company. It is this notice which was challenged by way of a writ of prohibition.

The Supreme Court in the aforesaid decision took the view that the show cause notice was without jurisdiction as the High Court earlier in the

criminal proceedings had taken the view that for breach of any of the terms of the licence, no proceedings u/s 5 of the act could be initiated. That

fresh initiation of proceedings for confiscation of the sale proceeds of the very goods amounted to contravention of the order of the High Court,

and made the proposed proceedings null and void. It is difficult to appreciate how the aforesaid decision of the Supreme Court can be pressed in

service by the learned advocate for the petitioner for supporting the first contention. In the criminal proceedings against the petitioner, no provision

of law was interpreted and construed by the competent court against the department. On facts, the criminal court, in the light of the burden of proof

which lay on the prosecution in such cases, found that the prosecution had failed to prove its case against the petitioner and acquitted him. That can

certainly not be pressed in service for scuttling the departmental proceedings or for treating them as barred under any provision of law. As shown

by us earlier, Section 127 of the Act clearly indicates a contrary legislative intention. The first contention, therefore, has to be rejected.

So far as the second contention is concerned, it is true that the order of the appellate Collector was passed on 13-4-1976 while the show

cause notice was issued by the first respondent on 14-3-1977. However, by itself, this delay cannot be said to be so unreasonable as to render the

proceedings pursuant to the show cause notice unauthorised or without jurisdiction. Whether delay in a given case is reasonable or not depends

upon the facts of each case. On the facts of the present case, nothing could be shown to us by Mr. Vyas to indicate that issuance of show cause

notice within one year of the appellate order had in any way prejudiced the petitioner or that the said delay was so grossly unreasonable as to

render the subsequent proceedings unauthorised. It has to be kept in view that criminal proceedings resulted into acquittal of the petitioner for the

first time on 6-9-1976 when the sessions court allowed his appeal. Therefore, the department had come to this court and ultimately leave to appeal

to the Supreme Court was rejected by a Division Bench of this court on 10-1-1977 as seem from the order at Annexure ''G''. Within two months

and four days thereafter, show cause notice was issued by the first respondent. On the peculiar facts of this case, therefore, it cannot be said that

the show cause notice was issued by the first respondent beyond reasonable time. It has also to be kept in view that ultimately, the only order

which has been passed against the petitioner by the first respondent is of restoring personal penalty of Rs. 1,000/- as imposed on him by the

Assistant Collector of Customs on 1-1-1975. On the facts as found by the first respondent, the said order cannot be said to be unjustified or

uncalled for from any angle. Consequently, no case is made out for our interference with the said order. The second contention also, therefore, has

to be rejected.

There were the only contentions raised by Mr. Vyas in support of the petition and as they fail, the inevitable result is that the petition also fails.

Rule is, therefore, discharged. In the facts of the case, there will be no order as to cost. Interim relief granted earlier shall stand vacated.