Union of India (UOI) vs Sat Pal Dharam Vir

J.N. Bhat, J.—This Is a first appeal against the decree passed by the Sub Judge Rajouri dated 30-4-1966 whereby he has passed a decree

for Rs. 4,999/- and costs in favour of the Plaintiffs against the Union of India. The facts giving rise to this suit are as under:

The Plaintiff is a firm which carries on business in village Cumbhir Tehsil Rajouri. They had ordered some bales of cloth from Amritsar, which were

lying with M/S Suraj Transport Company. On a 23-6-1960, while the goods were in transit with the transport company, they were seized by the

Land Customs Authorities as it was suspected that these goods were going to be smuggled to Pakistan. A show cause memo was issued to the

Plaintiffs by the Assistant Collector Land Customs Central Revenue Amritsar why action should not be taken u/s 7 of the Land Customs Act read

with Section 167(8) of the Sea Customs Act by confiscation of goods and imposition of penalty. The goods were worth Rupees 4,324/5/3. In

pursuance of the show cause notice on 16-6-1961 the goods were confiscated by the Assistant Collector Land Customs and a penalty of Rs.

500/- was imposed on the Plaintiffs. The Plaintiffs went in appeal and revision even upto the Ministry of Finance and the last order was passed by

the Ministry of Finance against the Plaintiffs on 15-12-1962.

According to the Plaintiffs the goods were illegally and maliciously seized. There was no question of the goods being smuggled to Pakistan. The

Plaintiffs had a bona fide business concern at Cumbhir. The Plaintiffs claim Rupees 4,990/-, claiming refund of Rs. 4,324/5/3 as the price of goods

plus a penalty of Rs. 500/- recovered from them and an expenditure of Rs. 1300/- incurred by the Plaintiffs in defending the action before the

Customs authorities. The Plaintiffs gave up the amount in excess of the amount claimed. The suit was brought against the Union of India. The

defence on behalf of the Defendant was that no such suit lies in a Civil Court. The Civil Court had no jurisdiction. No notice u/s 80 CPC was

given. The Court at Rajouri had no jurisdiction. The Land Customs authorities had every reason to believe that the goods were being smuggled to

Pakistan. The Plaintiffs had committed such acts of smuggling before also for which they had been punished; so on and so forth. A complete

narration of the defence is not necessary. The Sub Judge who heard the suit initially framed the following issues:

Whether this Court has got jurisdiction to try the suit? O.P.P.

Whether notice u/s 80 CPC and Sea Customs Act was necessary? O.P.D.

Whether the suit is not maintainable in the present form? O.P.D.

Whether the civil Court has no jurisdiction to set aside the decision of Customs authorities on merits? O.P.D.

Whether the suit is within time? O.P.P.

The Sub Judge however, found that the Civil Court had no jurisdiction to hear the suit and, therefore, dismissed the suit on 25-6-1964. An appeal

was preferred before this Court against the order of dismissal and a Division Bench of this Court by means of its order dated 26-4-1965 set aside

the order of dismissal and remanded the case to the trial Court for trial of the, remaining issues. The Sub Judge who dismissed the suit was

succeeded by another Sub Judge at Rajouri. The successor Sub-Judge recorded the evidence of the parties and ultimately decreed the suit by

means of his order under appeal dated 30-4-1966.

When this appeal came up for arguments last year, the learned Counsel appearing for the Appellant wanted to add one more ground to his

memo of appeal to the effect that Union of India was not liable for the acts of its officers committed by them in the discharge of statutory functions

which were ultimately based on the delegation of sovereign power of the State to such public servants. Further that the customs authorities were

protected under the Judicial Officers Protection Act for this action of theirs, if it was held to be illegal.

We have heard the learned Counsel for the parties. Only two points have been argued before us. The findings of fact that the goods were seized

by the Land Customs authorities maliciously and without any sufficient cause have not been challenged before us. The learned Counsel for the

Appellant has laid stress on the fact that even if the action of the Customs Officers in seizing these goods was unjustified and tortious, the, Union of

India would not be liable for damages. Secondly, it was argued that the suit was time barred. Mr. Inder Dass, the learned Counsel for the

Respondent however stated that this was not a suit for torts. Therefore, the argument of the learned Counsel for the Appellant that Union of India

was not liable for tortious arts of its officers was not right. We do not accept this argument of Mr. Inder Dass that the present suit is not an action

under torts.

The word tort has been differently defined by different authors. The word 'tort' is of French origin. It is equivalent to the English word 'wrong'. It is

derived from the latin term 'tortam' which means twist and implies twisted or tortious conduct. Different authors like Clerk, Lindsell, Winfield, and

Underhill among the English authors have defined it differently. Ramaswamy Iyer in his book 'Law of Torts' and Anand and Shastri in their books

'Law of Torts' have also defined the word. Without going into or emoting the different definitions of the different authors, but considering all these

definitions, it can safely be said that the essentials of tort are the following:

(i) There must be some act of omission on the part of the Defendant, not being a breach of some duty undertaken by contract:

(ii) The act or omission complained of must not be authorised by law:

(iii) The wrongful act or omission complained of must inflict injury special, private and peculiar to the Plaintiffs.

Applying these tests to the facts of the present case the act complained of does not arise out of any contract; it is not authorised by law as it has

been held to be an act committed by the Land Customs Officers beyond the scope of the law and it has inflicted injury on the Plaintiffs, in the

shape of deprivation of the goods belonging to the Plaintiffs. Therefore, this argument of Mr. Grover does not help him.

Mr. Anil Dev's argument is that the Union of India is not at all liable for the illegal, mala fide and unwarranted actions of the Land Customs

authorities. He has cited some authorities in support of his contention which may be mentioned as AIR 1961 Rai 64, AIR 1961 Madh Pra 316 and

Kasturilal Ralia Ram Jain Vs. State of Uttar Pradesh, . We need not discuss the earlier authorities of Rajasthan and Madhya Pradesh because the

law is very clearly laid down in the Supreme Court authority above mentioned i.e., Kasturilal Ralia Ram Jain Vs. State of Uttar Pradesh, . In that

case some gold was seized by a police party from the Plaintiff. It was kept in the Malkhanna. The Head-Constable in-charge of the Malkhanna ran

away with the gold. The Plaintiff brought a suit for the price of the gold wrongfully seized from him. The Supreme Court held that the manner in

which the gold was seized had been dealt with at the Malkhanna showed a gross negligence on the part of the police officers and that the loss

suffered by the Plaintiff was due to the negligence of police officers of the State. Their Lordships further held that:

that the act of negligence was committed by the police officers while dealing with the property of the Plaintiff which they had seized in exercise of

their statutory powers. The power to arrest a person, to search him, and to seize property found with him, are powers conferred on the specified

officers by statute and in the last analysis, they are powers which can be properly characterised as sovereign powers: and so the act which gave

rise to the present claim for damages had been committed by the employees of the State during the course of its employment but the employment

in question being of the category which can claim the special characteristic of sovereign power....

The suit of the Plaintiff was dismissed. We have given out careful consideration to the argument of the learned Counsel for the Appellant. But we

do not wholly agree with him. We have already stated that the finding of fact that the goods were wrongfully seized from the Plaintiffs has not been

challenged in this appeal. Accepting that finding as correct, we have to come to this irresistible conclusion that the goods having been wrongfully

seized from the Plaintiffs, the Plaintiffs are entitled to the restitution of those goods where- ever or in whosesoever possession they are. The

Supreme Court authority on which reliance is placed by Mr. Anildev Singh is clearly distinguishable and cannot apply to this case. In that case the

gold seized was carried away by the Head constable who had run away with the same to Pakistan. The gold was not in the Malkhanna of the

Government. Here the goods or the money equivalent is in the coffers of the Union of India. It is the property of the Plaintiffs and has been illegally

seized. The price of the goods at Rs. 4324-5-3 is not disputed. If the cloth were not converted into money, on this finding of fact the retention of

the cloth either by the Union of India or by any of its servants would be wrongful and the Plaintiffs would be entitled to get back their goods; the

goods have been converted into money and the sale proceeds are lying with the Union of India. Therefore, the Plaintiffs in our opinion, are clearly

entitled to the refund of this amount which is lying with the Defendant.

We agree with the contention of the learned Counsel for the Appellant that a claim for damages that the Plaintiffs would think themselves entitled to

on account of the wrongful acts of the Land Customs authorities would not lie against the Union of India on the basis of the Supreme Court

authority. But the Plaintiffs would be clearly entitled to the restitution of the property or its money equivalent because that property no more exists.

In this case the Plaintiffs have claimed Rs, 1300/- as expenses incurred by them as well as Rs. 500/- levied as penalty by the Land Customs

authorities. The levy of penalty is a power vested in the Land Customs Officers under the statute and would be deemed to be a statutory power

vested in them. Therefore, that cannot be questioned in that suit and the civil Court will not be competent to grant any relief for the refund of this

money to the Plaintiff. Similarly the Union of India cannot be liable for Rs. 1300/-, alleged to have been incurred by the Plaintiffs in defending the

action against the Land Customs authorities, before the concerned authorities upto the Ministry of finance. To that extent the Supreme Court

authority would give immunity to the Union of India; but it could not give any protection to the Union of India to retain the actual property i.e., the

cloth seized in this case or its money equivalent because it was wrongfully and maliciously seized by the Land Customs authorities. Therefore, in

our opinion the Plaintiffs are entitled to this amount of Rs. 4,324.33 paise. To that extent the decree of the trial Court would be upheld.

Mr. Anil Dev argued that the suit of the Plaintiffs would be covered by Article 2 to Schedule 1 of the Limitation Act. He bases his argument on

Shariful Hasan Vs. Lachmi Narain, . We do not think that authority has any application to this case. Article 2 refers to cases for compensation for

doing or for omitting to do any act alleged to be in pursuance of any enactment in force for the time being in the State. When the case was first

argued before the Sub-Judge, who ultimately dismissed the suit, the learned Counsel for the Defendant relied on Article 14 which is in the following

words:

To set aside any act or order of any officer of Government in his official capacity, not herein otherwise expressly provided for.

The then Sub-Judge held the suit within time. When the appeal was preferred before this Court, which was disposed of on 26-4-1965, the point of

limitation was not at all pressed. Even if we apply Article 14 the suit is within time. The final order passed in this case by the Ministry of Finance

was on 15-12-1962. The suit was brought on 2-11-1963 i. e., within one year of the final order. Therefore, Article 2 not being applicable, even if

we apply Article 14 as pressed for by the learned Counsel for the Appellant at the initial stage, the suit is clearly within time. We therefore, do not

find that the suit is barred by limitation.

Some authorities about the distinction between attempt and preparation were argued at the bar but in view of the fact that the finding of fact as

arrived by the trial Court not having been challenged before us, we need not go into those authorities.

The result is that the decree of the trial Court is upheld to the extent of Rs. 4,324.33 paise. In the circumstances of the case, the parties will bear

their own costs in this appeal.

S.M. Fazl Ali, C.J.

I agree with my learned brother Bhat J. but would like to add a few lines of my own.

To begin with I had a little hesitation in agreeing with the view taken by Bhat J. because of the pronouncement of the Supreme Court in

Kasturilal Ralia Ram Jain Vs. State of Uttar Pradesh, , but on a closer scrutiny of the various aspects of the matter I find myself ultimately in

complete agreement with the view taken by my learned brother. It has rightly been pointed out by my learned brother that the part of the suit that

can be decreed by us would be only that part which relates to the pure and simple recovery of the money equivalent of the goods of the Plaintiff

lying with the Union of India and which had been seized by the Customs authorities without any lawful cause, as held by the trial Court. Apart from

the question of tortious liability the simple point which falls for determination in this case is: Can the Plaintiff ask the Union of India to return a sum

of money which is lying with it and to which the Plaintiff has got title and which is being unlawfully retained by the Union of India? The answer to

such a question must necessarily be in the affirmative.

The claim of the Plaintiff which we are decreeing is not for damages on account of the tortious or the negligent act of the employees of the Union of

India. Nor is a decree being passed in this appeal on the basis of the vicarious liability of the Defendant. In fact we would be fully, justified in

invoking the principle contained in Section 70 of the Contract Act for restituting the benefit which the Union of India has derived by keeping the

money, of the Plaintiff in its custody for some time. It is manifest that if the goods of the Plaintiff were not seized then the Plaintiff would have

earned profits on those goods or even if those goods were sold in. open market, the Plaintiff could have earned interest on the aforesaid amount of

money.

In the Instant case it is not disputed that the goods confiscated by the Customs authority were finally auctioned for a sum of Rs. 4324.53. It is

also not disputed that this amount has ever since the date of the auction been in the coffers of the Union of India. Thus the question arises as to

whether or not the Plaintiffs are entitled to ask for a refund of the money which belonged to the Plaintiffs and was wrongfully seized and which is in

fact lying with the Defendant. In AIR 1928 PC 261 it was clearly held that where a contract is found to have been entered under a mistake of both

the parties the money paid under such mistake can be recovered as money had and received. In this connection their Lordships of the Privy

Council observed as follows:

It follows that In the absence of such proof, the payment made to the Appellant in respect of the 1000 shares was on the interpretation of the facts

most favourable to himself, a payment made under a mistake of fact common to himself and the company, viz., that he was a shareholder for 1,000

shares when in. truth he was not, and money so paid can be recovered as money had and received to the use of the company and this was the

form of the action.

The same principle, in my opinion, applies to the facts of the present case. Here also the Customs authorities unlawfully seized the goods

belonging to the Plaintiffs believing that the same were going to be smuggled. The goods were therefore, put to auction and retained by the Union

of India in its custody under a mistaken impression that the money was the sale proceeds of the goods which were lawfully seized.

On the findings of fact by the trial Court which have not been disputed before us it is manifest that both the parties were under a mistaken

notion. The goods, according to the trial Court, were not at all meant for smuggling and were therefore, wrongfully seized. Similarly the retention of

the money by the Union of India under the belief that the money was the sale proceeds of the smuggled goods was mistaken. On this point also

there can be no doubt that the Plaintiffs would be entitled to the recovery of the bare amount representing the price of the goods lying in the coffers

of the Union of India.

Finally the case in Kasturilal Ralia Ram Jain Vs. State of Uttar Pradesh, is clearly distinguishable from the facts of the present case. In that case

the money was not in the custody of the Union of India but was actually taken away by a head-constable and had been misappropriated by him or,

converted to his own use. Thus the Union of India could be made to pay the money only if it was found to be vicariously liable. Since, however,

the money was taken away due to the negligence of an officer in the exercise of his statutory or sovereign powers, the immunity of the Union of

India was both full and complete.

In the present case the money equivalent of the goods auctioned continues to be in the custody of the Government of India and therefore, there

is no reason why the Union of India should not be asked to pay, back the money which belongs to the Plaintiff and to which the Union of India has

no title.

I, therefore, agree that appeal be dismissed, with the modification indicated by my brother Bhat J., but in the circumstances we leave the

parties to bear their own costs.