Sudhindra Nath Patra Vs. Union of India (Uoi) - Court Judgment

Excerpt:
- orderparitosh kumar mukherjee, j.1. the instant writ petition was moved challenging, inter alia, the order of revision passed by the central government whereby the revisional authority declined to interfere with the appellate order dated may 21, 1976 which affirmed the original order of imposing penalty dated november 11, 1970 of rs. 10, 000/- upon the writ petitioner under rule 126l(16) of part xiia of the defence of india rules, 1962.2. at the time of admission of the writ petition this court was pleased to issue a rule and granted interim order in terms of prayer (f) of the petition and thereby restrained the respondents from giving any effect to the order dated november 11,1970 passed by the collector of central excise and customs, pending the disposal of the writ petition.3. the case.....

Judgment:
ORDER

Paritosh Kumar Mukherjee, J.

1. The instant writ petition was moved challenging, inter alia, the order of revision passed by the Central Government whereby the revisional authority declined to interfere with the appellate order dated May 21, 1976 which affirmed the original order of imposing penalty dated November 11, 1970 of Rs. 10, 000/- upon the writ petitioner under Rule 126L(16) of Part XIIA of the Defence of India Rules, 1962.

2. At the time of admission of the writ petition this court was pleased to issue a rule and granted interim order in terms of prayer (f) of the petition and thereby restrained the respondents from giving any effect to the order dated November 11,1970 passed by the Collector of Central Excise and Customs, pending the disposal of the writ petition.

3. The case of the petitioner, in short, is as follows:

On or about April 8/9, 1968 a group of Customs Officers of the Divisional Preventive Unit, Krishnagar armed themselves with three search authorisations, all issued under Section 105 of the Customs Act and searched the residence of the petitioner as well as his gold dealing establishment known as 'Akshoy Guinea House' and recovered therefrom and subsequently seized several pieces of gold bars, gold ornaments, obsolete Indian coins, Pak currency notes and Indian currency notes. All the aforesaid Articles, including the currency notes were detained by the aforesaid officers under the provisions of the Customs Act, 1962.

4. Thereafter, an adjudication proceeding was started by the respondent No. 3 and a show cause notice dated August 24, 1968 was issued impleading the petitioner and his wife as parties to the proceeding and charging each one of them individually and separately calling upon them to show cause as to why the aforesaid gold and gold ornaments, the obsolete Indian coins and Pak currency notes should not be confiscated under Section 121 of the Customs Act and why penalties should not be imposed on each of them under Section 112 of the Customs Act.

5. Long thereafter, the respondent No. 3 initiated another adjudication proceeding over the same gold and gold ornaments under the provisions of the Defence of India Rules (Part XIIA) Gold (Control) Rules and issued a show cause notice dated November 14, 1968 in the name of the petitioner only. In the said show cause notice the petitioner was charged with contravention of several provisions of Part XIIA Gold (Control) Rules of the Defence of India Rules, 1962 in respect of the self same gold bars and gold ornaments which were seized and detained under the Customs Act and were subject matter of the earlier Customs Act Adjudication proceeding.

6. In the said show cause notice, there was proposal for confiscation of the seized gold and gold ornaments under Rule 126M of the Defence of India Rules, 1962 and for imposition of penalty on the petitioner under Rule 126L(16) of the Defence of India Rules for contravention of the provisions of the aforesaid Defence of India Rules, 1962 (Part XIIA) Gold (Control) Rules.

7. Thereafter, the petitioner asked from the respondent No. 3 certain relevant information, particulars of the evidence proposed to be relied on against him in the aforesaid two proceedings and copies of certain documents but the respondent No. 3 did not supply the same to the petitioner.

8. In paragraph 8 of the instant writ petition, the petitioner has categorically stated that he has submitted one joint explanation covering charges in both the aforesaid cases stating, inter alia,

(i) that since the seizure not being effected under Rule 126L of the Defence of India Rules, 1962 and, as such, the gold and gold ornaments were not liable to confiscation under the provisions of Rule 126M of the aforesaid Defence of India Rules, 1962 and no penalty could be imposed under Section 126L(16) of the said Defence of India Rules;

(ii) that as the Defence of India Rules, 1962 being a temporary measure, after the repeal of the said Defence of India Rules, 1962 on 29th June 1968, the initiation of the proceedings was not authorised under the law;

(iii) the imposition of penalty, under both the aforesaid provisions being over, the same transactions are barred under the provisions of law.

9. It appears that the respondent No. 3 further by his order dated August 14, 1970 confiscated the gold pieces, ornaments and Pak currency notes under Section 111(d) of the Customs Act. The Indian obsolete coins were however not confiscated by him. Respondent No. 3 also confiscated the Indian currency notes amounting to Rs. 1,11,000/- and Gold leaving Rs. 10,000/- which was claimed by the petitioner's wife Smt. Patra as belonged to her and imposed a penalty of Rs. 2,00,000/- on the petitioner under Section 112 of the Customs Act. Charges against the petitioner's wife were however dropped.

10. An appeal was preferred by the petitioner against the said order before the appellate authority being the Central Board of Excise and Customs, New Delhi and the said appeal was pending at the time of moving the instant writ petition.

11. It is the further case of the petitioner that the respondent No. 3 thereafter by separate Order No. 6/Gold of 1970 purported to be dated August 14,1970 but signed on November 11, 1970 rejecting the petitioner's objection held that the petitioner's contention that the search itself being on the strength of a search order issued under Section 105 of the Customs Act would take the offence out of the scope of Part III of the Defence of India Rules is a misconception. The said authority further held that in such like cases the facts which cannot be ignored are that the officer ordering the search or the officer conducting the same are also duly empowered officers for ordering and conducting the search and effecting the seizure under the Gold (Control) Rules which required at the material time that any officer duly empowered in that behalf could effect seizure of any gold in respect of whereof he had suspicion that provisions of the law have been or were being or were about to be contravened and in doing so it was mandatory for him to record in writing that the seizure had been effected under the relevant provisions of the Defence of India Rules.

12. According to the said authority, as the subject goods have been confiscated in the Customs proceedings, the said authority consequently held that no order regarding the same was necessary and imposed a penalty of Rs. 10,000/- on the petitioner under Rule 126L(16) of the Defence of India Rules, 1962 after giving due notice to the petitioner which had been affirmed in the subsequent appeal and revision, as stated hereinabove.

13. Mr. P.K. Datta, learned Advocate for the petitioner, has submitted in the first place that the said order of imposition of penalty of Rs. 10,000/- upon the petitioner by invoking Rule 126M of the Defence of India Rules, 1962 as passed by the Collector of Central Excise and Customs, the respondent No. 3 which was confirmed by the respondent Nos. 1 and 2 respectively, was bad and not maintainable in the facts and circumstan ces of the case.

14. He submitted in the second place that the Tribunal below erred in law in not giving effect to the provisions of Rules 126M and 126L(16) of the Defence of India Rules, 1962 while passing the respective orders and thereby enlarging the scope of those Rules.

15. The learned counsel further submitted that the Tribunal below failed to consider the fact that the adjudication proceeding could not be initiated in respect of any alleged offence and what was barred under Rule 126M and/or Rule 126L(16) of the Defence of India Rules was initiation of adjudication proceeding in respect of goods not seized under Rule 126L of the Defence of India Rules, 1962.

16. In order to appreciate the arguments, it is necessary for me to set out the provisions of Rules 126M and 126L(16) of the Defence of India Rules, 1962.

'126M. Confiscation of gold seized and adjudicated.

(1) Any gold seized under Rule 126L together with the package covering or receptacle, if any, in which such gold if found shall be liable to confiscation.

(2) Such confiscation may be adjudged -

(a) without limit, by an officer not below the rank of Collector of Customs or Central Excise;

(aa) where the value of gold, together with the package, covering or receptacle, if any, in which it is found, liable to confiscation, does not exceed ten thousand rupees, by an officer not below the rank of Deputy Collector of Customs, or Central Excise ;

(b) where the value of gold together with the package, covering or receptacle, if any, in which it is found, liable to confiscation does not exceed two thousand rupees, by an officer not below the rank of Assistant Collector of Customs or Central Excise.

(3) An appeal shall lie to the Administrator from every adjudication of confiscation under sub-section (2) within a period of three months from the date of the communication of the order of adjudication :

Provided that in the case of an adjudication of confiscation before the commencement of the Defence of India (Ninth Amendment) Rules, 1963, such appeal shall lie within the period of three months aforesaid or within a period of one month from such commencement, whichever period expires later.'

'126L. Power of entry, search, seizure to obtain information and to take samples, - (1) Any person authorised by the Administrator by writing in this behalf may-

(a) enter and search any refinery of which the refiner, or the establishment of a dealer, who is licensed under this part;

(b) seize any gold in respect of which he suspects that any provision of this Part has been, or is being, or is about to be, contravened, along with the package, covering or receptacle, if any, in which such gold is found thereafter take all measures necessary for their safe custody.

(16) Any person who in relation to any gold does or omits to do any act which act or omission would render such gold liable to confiscation under Rule 126M, or abets the doing or omission of such an act shall be liable, in addition to any liability for any punishment under this Part, to a penalty not exceeding five times the value of the gold or one thousand rupees, whichever is more.'

17. Mr. Dutta, learned Advocate, in support of his contention placed reliance on the Division Bench judgment of this Court in the case of Union of India v. Haribhai Vithalji Soni reported in 1979 Cr. L.J. 423.

18. In paragraph 7 of the said judgment, the Division Bench in interpreting the provisions of Section 116(1)(2) the Gold (Control) Order, 1968 had observed as follows :

'Mr. Dutt, learned Advocate appearing in support of this appeal, has assailed the conclusion which was arrived at by our learned brother that the appellants could not have initiated the show cause notice under the provisions of the Gold (Control) Act, 1968. According to Mr. Dutt in view of the provisions of Section 116(1)(2) of the Gold (Control) Act, the appellants could competently initiate a confiscation proceeding under the Gold (Control) Act in the manner as they did so that the conclusion to the contrary of our learned brother is not in accordance with law. The point thus raised by Mr. Dutt has been seriously contested by Mr. Banerjee, learned Advocate appearing on behalf of the respondent. We have carefully considered the contention raised by Mr. Dutt but in our considered opinion it is diffcult to accept such a contention. There is no dispute that when the gold was seized on June 25,1968 for the offence, if any, that was committed by the respondent because of possession or dealing with such gold would be under the provisions of the Gold (Control) Rules, 1963 then in force incorporated in Part XIIA of the Defence of India Rules. Admittedly neither the Ordinance nor the Act had then come into force. Whatever restriction that might have been imposed or contravened must have been under the provisions of the Gold (Control) Rules, 1963. These Rules were repealed by the Gold (Control) Ordinance promulgated on June 29,1968. Section 117 of this ordinance provided as follows:-

(1) As from the commencement of this Ordinance, the provisions of Part XIIA of the Defence of India Rules, 1962 shall stand repealed and upon such repeal Section 6 of the General Clauses Act, 1897 shall apply as if the said Part were a Central Act.

(2) Notwithstanding the repeal made by sub-sec. (1) but without prejudice to the application of S. 6 of the General Clauses Act, 1897, any notification, order, direction, statement or declaration made or any notice, licence or certificate issued or permission, authorisation or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under or in pursuance of the provisions of Part XII-A of the Defence of India Rules, 1962, so far as it is not inconsistent with the provisions of this Ordinance be deemed to have been made, issued, granted, adjudged, imposed, ordered, done or taken under the corresponding provisions of this Ordinance.

On the provisions of Section 117(1) as stated above, the provisions of Section 6 of the General Clauses Act were made applicable. Sub-section (2) merely kept alive notifications, orders, directions, appointments or declarations made or any notice, licence or certificate issued or permission, authorisation or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under the provisions of the repealed Rules. Sub-Section (2), therefore, expressly saved and kept alive actions and things done under the provisions of the Rules repealed by introducing a fiction that actions so taken or things so done shall be deemed to have been done under corresponding provisions of the Ordinance. But this sub-section does not deal with liabilities incurred nor docs it make liabilities so incurred as liabilities incurred under the corresponding provisions of the Ordinance.

Therefore, it is difficult to appreciate how the respondent if had violated any of the provisions of the old Rules can be charged of any liability of violating any of the provisions of the Ordinance or the Act. In this case, it is not necessary for us to go into the question and decide whether and how far the old liability had been kept alive on invocation of Section 6 of the General Clauses Act by sub-section (1) because the appellants themselves never proceeded on that basis. It is not the case that on the date of the Ordinance came into effect the appellants had issued any show cause notice under the provisions of Rule 126M of the Gold (Control) Rules, 1963 on the seizure of the aforesaid gold for violation of any of the provisions of the said Rules which can be said to continue under any corresponding provision of the Ordinance or the Act in terms of Section 117(2) of the Ordinance or Section 116 of the Act. Section 116 of the Act is similar in terms to Section 117 of the Ordinance and the same does not alter the position in any way.'

19. In this writ petition before me, Mr. Dutta further placed reliance on the judgment of the Jammu and Kashmir High Court in the case of Ramesh Chander v. Superintendent, Customs and Anr., reported in 1975 Crl. L.J. 739, wherein the Division Bench of the Jammu and Kashmir High Court in interpreting the provisions of Sections 71, 74 and 116(2) of the Gold (Control) Rules, Rule 126(16) of the Defence of India (Fourth Amendment) Rules (1966), Rule 126M(1-A) of the Defence of India (Fourth Amendment) Rules and the effect of repeal of Defence of India Rules (1962) and Section 6 of the General Clauses Act (1897) observed in paragraph 12 of the said judgment, as follows:

'It will be recalled that the President of India promulgated a proclamation of emergency on October 26, 1962 in exercise of the powers conferred on him by clause (1) of Article 352 of the Constitution of India, The Parliament not being in session at that time the President promulgated on the same day the Defence of India Ordinance (Ordinance No. IV of 1962) which was published in an extraordinary issue of the Gazette of India on that very day. Pursuant to the powers given by the said Ordinance the Defence of India Rules, 1962 (hereinafter called The Rules') were framed. The Ordinance was replaced by Defence of India Act, 1962 (Act No. 1 of 1962), which came into force on December 12, 1962. The 'Rules' framed earlier were continued under the Act. On January 9, 1969 a notification was published in the Gazette of India whereby the rules were amended by incorporating therein Part XII-A which was head as 'Gold Control', Then came the 'Gold (Control) Act, 1965 (No. 18 of 1965) which was enacted by the Parliament on September 22, 1963. This Act was not, however, brought into force by the Central Government under Section 1(3) of the said Act. The Defence of India (Fourth Amendment) Rules of November 1, 1966 amended the Defence of India Rules, 1962 as contained in Chapter XII-A, thereof. On January 10,1968 the President withdrew the proclamation of emergency. Thereafter the Gold (Control) Ordinance was promulgated by the President on June 29, 1968. That Ordinance repealed Part XII-A of the Rules and the provisions therein were replaced by the provisions of the Ordinance.'

20. Thus, according to Mr. Dutt, in terms of the provisions of Section 117 of the Ordinance, Repeal and Savings were dealt with as follows:-

'(1) As from the commencement of this ordinance, the provisions of Part XIIA of the Defence of India Rules, 1962 shall stand repealed and upon such repeal, Section 6 of the General Clauses Act, 1897 shall apply as if the said Part were a Central Act.

(2) Notwithstanding the repeal made by sub-section (1) but without prejudice to the application of Section 6 of the General Clauses Act, 1897 any notification order, direction, appointment or a declaration made or any notice, licence, or certificate issued or permission, authorisation or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under or in pursuance of the provisions of Part XII-A of the Defence of India Rules, 1962 so far as it is not inconsistent with the provisions of this Ordinance be deemed to have been made, issued, granted, adjudged, imposed, ordered, done or taken under the corresponding provisions of this ordinance.'

21. According to Mr. Dutt, such imposition of penalty of Rs. 10,000/- was inconsistent and hence was passed without jurisdiction.

22. Mr. Surathi Mohan Sanyal, learned Advocate for the respondents relied on the affidavit-in-opposition affirmed on behalf of the respondents by the Assistant Collector of Customs, Krishnagar Division on August 13, 1979 and portions of the said affidavit, which are relevant are placed herein below:-

(a) Proceedings under the Customs Act were drawn against the petitioner and his second wife Smt. Tara Patra and two show cause notices were issued on September 24,1988 calling upon them to explain why the gold bars, gold ornaments, obsolete silver coins and currency notes should not be confiscated and why penal action should not be taken against them under the Customs Act.

(b) Another show cause notice under Part XIIA of the Defence of India Rules, 1962 was issued to the petitioner on November 14, 1968 calling upon him to explain why a penalty should not be imposed on him under Rule 126L(16) of the Defence of India Rules, 1962 (Part XIIA Gold Control) and why the aforesaid gold in respect of which an offence appears to have been committed should not be confiscated under Rule 126M of the said Rules.

23. The petitioner, without replying to the show cause notices within the stipulated time, addressed a letter dated March 10, 1969 to the Assistant Collector of Customs (Technical) for Collector of Customs, West Bengal, Calcutta for supply of documents statements, etc. and the same were duly supplied to him by the respondent No. 3 through a letter dated May 12, 1969.

24. Mr. Sanyal has submitted that the Collector of Customs and Central Excise, West Bengal, Calcutta after carefully going through the facts and circumstances of the case and having considered the points mentioned in the reply to the show cause notices and those urged at the time of personal hearing and by an order dated August 14,1970 ordered absolute confiscation of (1) 35 PCS. of gold bars of foreign origin, (ii) Pakistan currency notes worth Rs. 32,513/-, (iii) ornaments made of foreign gold weighing 51 tolas 4 annas 3 raties under Section 111(d) of the Customs Act, 1962 read with Section 120 of the said Act and (iv) Indian Currency Notes worth Rs. 1,10,900/- under Section 121 of the said Act and released (i) balance Indian Currency Notes worth Rs. 10,000/- belonging to Smt. Tara Patra and (ii) obsolete coins numbering 1042 for reasons duly recorded in the said order.

25. In the said order dated August 14, 1970 the petitioner was held to be the 'person concerned' within the meaning of Section 112 of the Customs Act, 1962 and a penalty of Rs. 2,00,000 was imposed on him as he had been deliberately carrying on trade in smuggled gold for several years. In the said order Smt. Tara Patra was discharged of the charges levelled against her in the show cause notice. An appeal against the aforesaid order was preferred by the petitioner before the Central Board of Excise and Customs and the same is under consideration.

26. Being aggrieved by the order (original) No. 6/Gold of 1970 dated August 14, 1970 passed by the Collector of Customs and Central Excise, West Bengal, Calcutta, which was issued under the Defence of India Rules, 1962, the petitioner preferred an appeal before the Administrator, Gold Control, New Delhi on the grounds stated in the said appeal which was heard at Delhi on or about February 20,1976 by the Gold Control Administrator who after carefully considering the various submissions made by the appellant in his appeal as also the points urged at the time of hearing passed an order being order-in-appeal No. 40 of 1976 dated May 31,1976 rejected the appeal.

27. Ultimately, a revision application dated December 12, 1976 was also dismissed by the Secretary, Government of India, Department of Revenue and Banking, New Delhi against which the present writ petition was moved.

28. After considering the pleadings of the parties and in view of the decision of the Division Bench of the Court in Haribhai Vithalji's case (supra), I am of the view that the penalty imposed of Rs. 10,000/- was inconsistent and wholly unjustified and should be set aside.

29. Further, I am of the opinion that in view of the provisions of Section 117 of the Gold (Control) Ordinance, which was promulgated by the President on June 29, 1968 and the respective clauses (1) and (2), the imposition of penalty is undoubtedly inconsistent with the aforesaid provisions and is liable to be set aside.

30. The writ petition is therefore allowed. The imposition of penalty of Rs. 10,000/- is set aside. The Rule is made absolute to the extent indicated above.

31. There will be no order as to costs.