The Government of Andhra Pradesh and ors. Vs. T.G.L. Groundnut Corporation and anr. - Court Judgment

Excerpt:
criminal - confiscation - sections 100, 103 and 165 of indian penal code, 1860 - confiscation proceedings started - stocks found in excess book stock seized - seizure alleged to be illegal and confiscation proceedings without authority - collector empowered under section 6a to confiscate essential commodity if he thinks expedient so to do - where seizure was illegal collector's approach should be cautious will seized articles - held, confiscation proceedings cannot be said without authority because even assuming search was illegal yet seizure of articles not vitiated. - - 1600 of 1988 assailing the success of the writ petition so far as the 2nd respondent in that appeal is concerned and also assailing some findings in respect of the 1st respondent i. an appeal carried against the confiscation failed before the government in orders passed in g. 4. section 6-a vests authority in the collector, if he thinks it expedient so to do, to direct any essential commodity seized in pursuance of an order made under section 3 to be produced for inspection before him and if he is satisfied that there has been contravention of the order, he may order, inter alia, confiscation of the essential commodity seized. the court in that case was concerned with the maintainability of the claim of damages for negligence and misfeasance of officers of the state in respect of actions which are not inalienable functions of the state like defence of the country, administration of justice, maintenance of law and order and repression of crime. as the case arose out of proceedings under the essential commodities act the court, while observing that the exercise of the power by the collector was obviously mechanical but that nothing turns on that so far as the appeal before the court was concerned, stated that it is inherent that those who are entrusted with responsibility to implement that control orders should act with reasonableness, fairness and to promote the purpose and objective of the act and that the seized goods are liable to be confiscated only if the collector is satisfied about the viloation of the control orders. the high court had reached the conclusion that the warrant issued by the magistrate for search was bad because of non-application of mind by the magistrate and also held that no proper and reasonable opportunity had been given to the person concerned to show that the goods seized were not properly accounted for in their account books. it would be seen that the high court has taken the view that though the warrant was bad yet so far as the seized goods were concerned, the proceedings could go on in respect of those with opportunity made available to show that those were properly accounted for. consequently the failure to comply with these requirements thus affects the prosecution case and therefore vitiates the trial.lingaraja rath, j.1. the appellant in writ appeal no. 1601 of 1988 (reported in 1989 ap lj (cri) 25) was one of the petitioners in writ petition no. 10698 of 1988. the writ petition having been allowed so far as the other petitioner is concerned but having held, so far as the appellant is concerned while setting aside the order of confiscation of seized articles, that the authorities shall proceed to make the enquiry under section 6-a of the essential commodities act afresh in respect of the seized articles and determine regarding the question of confiscation, he has preferred this appeal. the state has preferred writ appeal no. 1600 of 1988 assailing the success of the writ petition so far as the 2nd respondent in that appeal is concerned and also assailing some findings in respect of the 1st respondent i.e., the appellant in writ appeal no. 1601 of 1988. at the hearing stage however mr. ravichander, the learned government pleader frankly conceded, we think rightly, of not seriously pressing the state's appeal. the views taken by the learned single judge that there was no contravention by the 2nd respondent in writ petition no. 1600 of 1988, of the control order and that the seizures effected were illegal as there was no credible information to make the search and the seizure, for the detailed reasons given in support thereof, are un-exceptionable. since we are in full agreement with the judgment, it is not necessary to reiterate the reasons adopted by the learned single judge and we dismiss writ appeal no. 1600 of 1988, for the same reasons. the writ appeal no. 1601/1988 however survives for disposal. 2. the appellant is a manufacturer of edible oils and dealer in edible oil seeds and edible oils at adoni. he was a licensee under the provisions of the andhra pradesh scheduled commodities (licensing and distribution) order, 1982, hereinafter referred to as 'the order. there was a raid of the premises on 31-3-88, which continued till 5-4-1988, and the stocks were seized in respect of which confiscation proceedings were started. the section 6-a proceedings were disposed of on 28-4-1988, with the joint collector passing orders, while confiscating the groundnut oil and kurdi seed oil as those stocks were found in excess of the book stocks and confiscating 50% of the seized stocks where there were shortages. an appeal carried against the confiscation failed before the government in orders passed in g. o. ms. no. 516, ex. a. (cs 21v) department dated : 2-7-1988. similar orders had been also passed in respect of the 2nd petitioner in the writ petition. deciding the writ petition the learned single judge held, so far as the appellant is concerned, the order of confiscation to have not been properly passed and that the exercise of search and seizure to have been also illegally made. but the learned judge negatived the contention raised that the material and information gathered during the course of the illegal search should be disregarded because of the illegality of the search and seizure, for which he permitted, accepting the submission of the learned additional advocate general, a fresh enquiry under section 6-a while setting out the different aspects of the case which where to receive proper attention of the joint collector during the enquiry, and directing to give opportunity to the appellant to participate in the enquiry. 3. urging the appeal the sole submission strenuously advanced by mr. m. suryanarayana murthy, learned senior advocate appearing for the appellant, is that an enquiry under section 6-a, of the act is only possible in respect of seized materials, but that if the seizure is illegal and without jurisdiction, the collector does not get jurisdiction to enter into the enquiry at all for which reason the direction of the learned judge to hold the enquiry afresh, even while holding the seizure to be illegal, is unwarranted in law. the control order, the contravention of which is the basis for confiscation proceedings, provides in clause 18(1)(b) thereof that the licensing authority or the other officers described therein may with such assistance, if any as he thinks fit enter, inspect or break open and search any place or premises, vehicle or vessel, in which he has reason to believe that any contravention of the provisions of the order of the conditions of the licence issued thereunder has been is being or is about to be committed. sub-clauses (c) and (d) authorises the officer to seize books of accounts and documents as also stocks in respect of which contravention has taken place and remove those. since it was found in the judgment under appeal that in fact there were no reasons to believe for the vigilance authorities that any contravention of the order was being committed or was about to be committed, the search and seizure were illegal, and as a logical corollary, the confiscation proceedings should be held as incapable of initiation continuance. 4. section 6-a vests authority in the collector, if he thinks it expedient so to do, to direct any essential commodity seized in pursuance of an order made under section 3 to be produced for inspection before him and if he is satisfied that there has been contravention of the order, he may order, inter alia, confiscation of the essential commodity seized. hence, for the collector to exercise powers under section 6-a, the preconditions are that the essential commodity must have been seized in pursuance of an order made under section 3. all that is necessary for the collector to exercise jurisdiction under section 6-a is a seizure in pursuance of the control order made under section 3 of the act. the jurisdiction of the collector thus ensues upon the seizure made under the provisions of the control order. now when seizure is made, as in the present case, in relation to a control order for contravention of it, can it be said that the seizure has been made not in pursuance of the control order i am afraid not. the proper way to describe the seizure in such a case is that while the search and seizure was carried out in pursuance of the control order yet it was made in contravention of it by not sticking to its requirements. for such reason while the search and seizure may be illegal, as has been found by the learned judge, yet that would not divest the collector of his jurisdiction under section 6-a to determine whether the seized materials are liable to be confiscated because of contravention of provisions of the order which may independently exist and be established irrespective of the fact whether the search and seizure were illegal. the learned single judge rightly placed reliance on the decision in pooranmal v. director of inspection : [1974]93itr505(sc) , which was a constitution bench decision. considering somewhat similar provisions of section 132 of the income-tax act, 1961, the supreme court noted in paragraph 21 of the judgment that the high court was prepared to assume in connection with the cases that the search and seizure was illegal. on the premises the court proceeded to answer the question whether the victims of illegal search were entitled to a writ of prohibition that the income-tax authorities shall not use any information gathered from the documents which had been seized. the court noted that there was no specific article of the constitution prohibiting the admission of evidence obtained in an illegal search and seizure and relying upon the observations in the decision in m. p. sharma v. satish chandra : 1978(2)elt287(sc) of : [1974]93itr505(sc) , held that neither by invoking the spirit of our constitution nor by a strained construction of any of the fundamental rights, the exclusion of evidence obtained on an illegal search can be spelled out. their lordships explained that the law of evidence in india is modelled on the english law of evidence and the courts in both the countries have consistently refused to exclude relevant evidence merely on the ground that it is obtained by illegal search or seizure. in the judgment the decisions in emperor v. allahadad khan ilr (1913) all 358, kuruma v. the queen (1955) ac 197 and herman king v. the queen (1969) ac 304, were cited with approval the facts of the three cases may be briefly noted. in the first case, the superintendent of police and a sub-inspector searched the house of a person suspected of being in illicit possession of excisable articles. the search was successful in yielding such articles. the person was convicted under section 63 of the united provinces excise act, 1910. it was held that the conviction was not rendered invalid by the fact that warrant had not been issued for the search. in the second case, two unauthorised police officers conducted a search of the person concerned and found some ammunition to be in his unlawful possession. it was held that the evidence regarding the finding of the ammunition on the person of kuruma could not be shut out only because it was obtained by unlawful search as, the finding of the ammunition was a relevant piece of evidence in a charge of unlawful possession. in the third case the law laid down in kuruma's case was applied although the jamaican constitution guaranteed the constitutional right against search and seizure, by interpreting the constitutional provision to mean that search and seizure for the purpose of preventing or detecting crime reasonably enforced was not inconsistent with the constitutional guarantee. the facts of the case were that the search of the appellant by a police officer was not justified by the warrant nor was it open to the officer to search the person of the appellant without taking him before a justice of the peace. it was held that the court had a discretion to admit the evidence obtained as a result of the illegal search and the constitutional protection against search of person or property without consent did not take away the discretion of the court. relying upon the precedence, the supreme court held that even assuming that the search and seizure were in contravention of the provisions of section 132 of the income-tax act, still the material seized was liable to be used, subject to law, before the income-tax authorities against the person from whose custody it was seized and, therefore no writ of prohibition could be granted. 5. clause 18(2) of the order makes the provision that the provisions of the code of criminal procedure 1973 regarding search and seizures shall apply to searches and seizures made under clause 18. section 165 cr.p.c. empowers the police officer as described therein to search or cause search to be made if he has reasonable grounds for believing the necessity of the search. 6. in radha kishan v. state of u.p. : (1963)iillj667sc , the court considered the facts of an illegal search and observed that it may be that where the provisions of sections 103 and 165, criminal p.c. are contravened, the search can be resisted by the person whose premises are sought to be searched and it may also be that, because of the illegality of the search, the court may be inclined to examine carefully the evidence regarding the seizure. but beyond these two consequence no further consequences ensue. the court was also of the view that even assuming that the search was illegal, yet the seizure of the articles is not vitiated. 7. similar view was taken in state of maharashtra v. natwarlal : 1980crilj429 , which besides relying upon the decisions in radha kishan v. state of u.p. 1963 cri lj 809 (supra) also derived support from shyam lal v. state of madhya pradesh : 1972crilj638 and state of kerala v. allasserry mohammed : 1978crilj925 . the latter case placed reliance on a decision of the supreme court of the united states of america in w.t. stone, warden, 74-1055 v. lloyd charles powell and charles l. wolff jr. warden, 74-122 v. david l. rice, (1976) 12 usscb 4840. 8. in khandu sonu v. state of maharashtra : 1972crilj593 , the trial of a criminal case was held not to be vitiated because of illegality in the investigation unless the illegality had caused prejudice to the accused. similar view was taken in a. c. sharma v. delhi administration : 1973crilj902 , holding that the legality of a trial by an otherwise competent court is not affected unless miscarriage of justice has been caused. 9. c.i.t. v. nandlal tahiliant : [1988]172itr627(sc) , was yet another decision of the supreme court deciding an appeal from the decision of the allahabad high court in dr. nand lal tahiliani v. commissioner of income-tax : [1988]170itr592(all) . disposing of the special leave petition to appeal against the judgment, the court noticed that since the articles of money seized in an income-tax raid had already been released in the mean time, the leave to appeal application was not to be entertained but that the department could resort to other proceedings which are permissible in law and also take into account any information derived from the inventories prepared in consequence of the search and seizure. 10. in effect hence the apex court was reiterating that informations gathered in an illegal search and seizure are available to be taken into account in any proceeding under the income-tax act. 11. in the judgment under appeal the learned single judge referred to the decision of the supreme court in income-tax officer v. seth brothers : [1969]74itr836(sc) , approving the decision of allahabad high court in income-tax officer, a. ward, agra v. firm madan mohan damma mal, (1968) 70 itr 293, wherein it was held that as there is no direct connection between the assessment of tax and the method by which the document, which is utilised for the purpose of assessment, is found out. 12. reliance was also placed by him on a decision of the kerala high court in new street oil mills v. state of kerala (1978) 111 itr 463 : 1978 tax lr 26, holding that if a search and seizure made under the kerala general sales tax act, 1963 be regarded as illegal, the materials searched and seized could still be looked into and relied upon for the purpose of assessment. 13. another decision from which support was drawn to the same effect was in balwant singh v. r. d. shah, director of inspection, income-tax : air1969delhi91 . 14. while such is the position of law we may also notice the authorities cited on behalf of the appellant. the decision in n. nagendra rao & co. v. state of a.p. : air1994sc2663 , is not an authority on the question at issue. the court in that case was concerned with the maintainability of the claim of damages for negligence and misfeasance of officers of the state in respect of actions which are not inalienable functions of the state like defence of the country, administration of justice, maintenance of law and order and repression of crime. as the case arose out of proceedings under the essential commodities act the court, while observing that the exercise of the power by the collector was obviously mechanical but that nothing turns on that so far as the appeal before the court was concerned, stated that it is inherent that those who are entrusted with responsibility to implement that control orders should act with reasonableness, fairness and to promote the purpose and objective of the act and that the seized goods are liable to be confiscated only if the collector is satisfied about the viloation of the control orders. it was nowhere decided that if the seizure is illegal, the confiscation proceeding is without authority. the decision in commissioner of commercial taxes board of revenue, madras v. r. s. javer : [1968]1scr148 , was pressed into service for the observations made in paragraph 19 thereof. we do not see how anything said in the paragraph is of any help to the appellant. the case arose out of the madras general sales tax act under which certain seizures were made acting under the authority of section 41(4) of the act. the supreme court held section 41(4) as repugnant to the entire scheme of the act and declared it ultra vires. the high court had reached the conclusion that the warrant issued by the magistrate for search was bad because of non-application of mind by the magistrate and also held that no proper and reasonable opportunity had been given to the person concerned to show that the goods seized were not properly accounted for in their account books. the supreme court held that though the finding of the high court regarding the warrant being had was not challenged before it, yet the question whether the persons concerned had not been granted opportunity to show the seized goods to be properly accounted for in their account books did not arise as sub-section (4) of section 41 had fallen in its entirety. it would be seen that the high court has taken the view that though the warrant was bad yet so far as the seized goods were concerned, the proceedings could go on in respect of those with opportunity made available to show that those were properly accounted for. 15. the decision in hindustan aluminium v. controller, aluminium : air1976delhi225 , though supports the appellant's saying that the collector's power to confiscate relates only to seized goods but that the collector would have no jurisdiction to go into the validity of the seizure, and his jurisdiction is only to decide the contravention of the control order. it was held that as the powers of the collector under section 6-a is dependent upon a valid seizure, and the collector has no power to decide the validity of invalidity of the seizure, the confiscation proceedings must be held where the seizure is illegal, as without jurisdiction. with respect we are unable to agree as the decision has not considered the decision in pooran mal v. director of inspection etc. : [1974]93itr505(sc) (supra). as seen earlier, the collector's jurisdiction to decide regarding confiscation is not dependent upon the validity of the seizure but on the fact of the seizure itself, having made in pursuance of the control order. 16. the decision in ramachandra chetty v. ministry of food : air1979ap28 , is a case directly on the point taking a contrary view and for the purpose relied upon the decision in hindustan aluminimum v. controller, aluminimum : air1976delhi225 (supra) and collector, central excise v. lkn jewellers : air1972all231 . in the case clause 11 of the andhra pradesh food grains dealer's licensing order was in question where interpreting the provision the view was taken that unless a reasonable belief exists regarding contravention, there is no power in the officers to make entry into the premises and that subsequent discovery of any material would not justify the entry or seizure. the court coming to such conclusion quashed the whole proceedings relating to entry search and seizure, and the immovable property security furnished by the appellant in the case in pursuance of the interim order of the court was declared as cancelled. in the case the question whether the materials collected or goods seized in pursuance of the illegal search and seizure were liable to be adjudicated for confiscation under section 6-a was not in question and hence did not arise for consideration. the plea itself having not been advanced before the court by the state this case is not an authority for the proposition as is being considered by us in this case. 17. another case worth noticing is a decision of the supreme court on the scope of sections 41, 42, 50 and other allied sections of the narcotic drugs and psychotropic substances act (61 of 1985) in state of punjab v. balbir singh : 1994crilj3702 , regarding search and seizure besides other safeguards provided. sections 41 to 43 of the act provide for' a reason to believe' in the officer as the ground for taking recourse to the provision. the court noted that under section 51 of the act the provisions of the cr.p.c. apply to warrants issued and arrests, searches and seizures made under the act. analysing the provisions, the court observed in paragraph 8 as follows : 'it therefore emerges that non-compliance of these provisions i.e. sections 100 and 165 crl.p.c. would amount to an irregularity and the effect of the same on the main case depends upon the facts and circumstances of each case.' in paragraph 14 the court went on to observe as under : 'therefore, if an arrest or search contemplated under section 41 and 42 is made under a warrant issued by any other magistrate or is made by any officer not empowered or authorised, it would per se be illegal and would affect the prosecution case and consequently vitiate the trial.' it was hence held that the provisions of non-compliance of sections 100 or 165 cr.p.c. would itself be not sufficient to reject the prosecution case. the court then considered the provisions of sections 41 and 42 including the provisions that the arrest or search under the sections could be made by the officer if there is reason to believe from personal knowledge or information about the commission of the offence. keeping such facts into consideration it was decided in paragraph 16 as under : 'the object of n.d.p.s. act is to make stringent provisions for control and regulation of operation relating to those drugs and substances. at the same time, to avoid harm to the innocent persons and to avoid abuse of the provisions by the officers, certain safeguards are provided which in the context have to be observed strictly. therefore, these provisions make it obligatory that such of those officers mentioned therein, on receiving an information, should reduce the same to writing and also record reasons for the belief while carrying out arrest or search as provided under the proviso to section 42(1). to that extent they are mandatory. consequently the failure to comply with these requirements thus affects the prosecution case and therefore vitiates the trial.' obviously the decision was given in the background of stringent provisions of n.d.p.s. act wherein deterrent sentences are contemplated, and that such consideration would not apply to the personal case. the decision in k. l. subhayya v. state of karnataka : 1979crilj651 , was a decision which was also referred to in the decision in state of punjab v. balbir singh : 1994crilj3702 (supra). that was a case under the mysore excise act where considering the fact that the inspector who had searched the car of the accused had not made any record before proceeding to conduct the search, of the grounds on the basis of which he had the reasonable belief that any offence under the act was committed, the court held the search to be without jurisdiction and as a logical corollary to have vitiated the conviction under section 34 of the act. the decision is also not one on the question which has fallen for decision in this case and besides : [1974]93itr505(sc) , and : (1963)iillj667sc , were also not brought to the notice of the court. we would hence hold, on the authorities cited supra, that only because the search and seizure were illegal the collector's jurisdiction to proceed with the confiscation proceedings is not taken away and that he can independently consider as to whether there has been any contravention of the control order, but that since seizure was illegal a more cautious approach is to be adopted by the joint collector in respect of the seizued articles and regarding the genuineness of the department's case. 18. in the result the appeal has no merit and is dismissed, with costs.