Basi Reddy, J.:— This is a petition under Article 226 of the Constitution by one Devichand for the issue of a writ of certiorari to quash the order of the Collector of Central Excise, Hyderabad in C. No. VIII/10/11/63, dated 29-7-1963, imposing on him a penalty of Rupees 50,000/- under S. 112(a) of the Customs Act, 1962 (hereinafter called “the Act”) for having abetted the smuggling into Indian customs waters of a large quantity of spices of the value of Rs. 2.7 lakhs in a launch from Ceylon and the subsequent landing of the goods at an unfrequented sea-shore near Eathamukkala in Ongole taluk, Guntur District. In respect of the same transaction, penalties ranging from Rs. 25,000/- to Rs. 7,00,000/- were imposed on five other persons including one Md. Salab Sahib, who has filed the companion writ petition No. 1248 of 1963.
2. We should like to say at once that the petitioner has chosen to bypass section 128 of the Act, under which an aggrieved person has a right of appeal to the Central Board of Revenue and Sec. 131, where under a revision lies to the Central Government, and has invoked the special jurisdiction of this Court under Article 226 of the Constitution without exhausting those statutory remedies. Such being the case, we would have had no hesitation in dismissing this writ petition on that ground alone, but for the fact that the adjudication by the Collector of Central Excise is vitiated by a flagrant disregard, albeit in absolute good faith, of the essential requirements of natural justice, as embodied in S. 124 of the Act natural justice, which in essence is only “fair play in action”, is something which is basic to our legal system, and the importance or upholding it far outweighs the significance of an)7 particular case. Natural justice, is the name given to certain fundamental rules which are considered so necessary to the proper exercise of power that they are projected from the judicial to the administrative sphere. This is because experience has shown that there is much truth in the aphorism of Lord Acton that “power tends to corrupt, and absolute power corrupts absolutely.” In view of the order we propose to make in this case, it would suffice if we set out the allegations against the petitioner and his confederates in broad outline and indicate the manner mi which the inquiry against the petitioner was conducted by the Collector.
3. On 27-4-1963, on receipt of information that a gang of smugglers were arranging to land at the sea-shore near Eathamukkala, spices from a launch anchored in the sea, the Deputy Superintendent of Central Excise. Ongole, made arrangements for petrolling and guarding all the roads leading to Eathamukkala. At about 11 p.m on 27-4-1963, while the Deputy Superintendent, accompanied by his local staff and police party, was proceeding in a jeep towards the sea-shore, a car which was later ascertained to belong to one K. Ramalinga Reddy of Ongole, crossed them and proceeded towards Ongole. After the party had travelled a few yards on the cross-road to Eathamukkala, they met another car bearing No. BYJ 3663 coming from the direction of Eathamukkala. As this car was reported to be carrying some of the smugglers, the Deputy Superintendent stopped the car and found that four persons by names Dayalchand Choudary, Prem Sagar Manchauda, Nagarathnam alias Vadivelu and Md. Saleh Sahib were inside the car. The car was searched but nothing incriminating was found. The occupants were interrogated and searching questions were put to them. After giving evasive answers in the beginning. Dayalchand Choudary ultimately admitted that he and Prem Sagar Manchanda were associated with the smugglers as purchasers and promised to assist the customs authorities in seizing the goods.
4. At Ongole, the officers detailed for watching suspected cars, found a car bearing registration No. MSV 2792 parked in front of a hotel on the night of 27-4-1963. The car appears to have been identified as one belonging to the smugglers and the persons who had come by that car and were sleeping in the hotel, appear to have been identified as the associates of the smugglers. One officer was left at the spot to watch the suspects and the rest of the party proceeded to Eathamukkala sea-shore. On 28-4-1963, the car MSV 2792 was found at about 8-30 a.m to be moving towards Madras and then taking a diversion to Eathamukkala seashore. The Cental excise staff were following the car. The suspects who were in the car finding that they were being shadowed, tried to turn back in an open space before reaching Eathamukkala but their attempt to escape was foiled the car was stopped by the excise staff. Besides the driver, there were two persons inside the car and they were Devichand, the petitioner in this writ petition and one Mangilal. On being questioned as to where they were going, the occupants stated that they were on their way to Vijayawada, but due to the mistake of the driver, they were on a wrong track.
5. The central excise officers then took the car and the occupants to Ongole and there the petitioner was interrogated and his statement was recorded. Therein he said ‘inter alia’ that he had left Madras on the night of 26-4-1963 on a trip to Vijayawada, had met Mangilal accidentally at Nellore on the morning of the 27th and had agreed to go with him in the car to Vijayawada and that on the 28th, the car had been intercepted by the excise staff near Eathamukkala. He protested his innocence. Mangilal said that he was in a hurry to go to Madras as he had to take an injured man by name Balwant for treatment. So Mangilal was allowed to go, on his promising to come back to give a statement after two days. He returned accordingly and gave a statement on 2-5-1963 in which he stated that he had left Madras in the taxi MSY 2792 on the evening of 26-4-1963, had picked up Devichand at Nellore on the morning of 27-4-1963, had halted at Singarayakonda for some time having picked up the injured Bal-want, a servant of Prem Sagar, on the way, and after reaching Ongole at 8 p.m, had halted there for the night as the driver was sick. He further stated that the next day, the driver took him and Devichand to Eathamukkala road by mistake although they had wanted to go to Vijayawada and the car was stopped by the customs officials on Eathamukkala road. This story was similar to the one told by Devichand, the petitioner herein, on 28-1-1963.
6. In the early hours of 29-4-1963, through the assistance of Dayalchand Choudary who was apparently running with the here and hunting with the hounds, some of the members of the excise staff proceeded in a catamaran to the launch which anchored in the sea and after hoodwinking the persons in charge of the launch, brought to the shore by the catamaran 162 bags of which 1.42 bags contained cloves and 20 bags contained nutmegs. Thereafter an attempt was made to seize the launch, but the launch managed to escape, having scented trouble.
7. Subsequently the events of the day resulting in the seizure of 162 bags of spices, were recorded in a panchnama. The bags so seized were then transported to Ongole and deposited with the Deputy Superintendent for safe custody pending further action.
8. Then, on 30-4-1963, Nagarathnam alias Vadivelu was interrogated and his statement was recorded. It would appear that in that statement he admitted having arranged for importing the cloves and nutmegs from Ceylon in a launch, with full knowledge that such smuggling was in contravention of the law. Likewise, Md. Saleh Sahib was questioned on 30-4-1963 and his statement was recorded. While admitting that he had agreed to accompany Nagarathnam, he stated that he had nothing to do with the smuggling operations and protested that he had accompanied Nagaratnam on a proposed pleasure-trip to Hyderabad. Similarly a statement was also recorded from Dayalchand Choudury on 30-1-1963. In I he colure of that statement, he admitted his association with Nagarahiam in arranging for the smuggling of spices from Ceylon but asserted that was only with the idea of passing on the information to the Customs authorities and earning a reward. Prem Sagar Manchanda also gave a Statement on 30-4-1963 in which, he admitted having moved with the smuggling party but only with a view to passing on the information to the Customs Authorities.
9. It would appear that Ramalinga Reddy was questioned on 19-5-1963 and a statement was recorded from him also, in which he denied his complicity in the smuggling operations and tried to explain away a telegram which had been received by him from one Vadivelu Nadar on 26-4-1963 saying that the latter would be meeting him on the next day, by stating that the telegram had been sent to him as he was an influential person in Eathamukkala area. He further stated that he was away from Ongole for about ten days during the period when the goods were smuggled and landed.
10. On the basis of the above material, action was taken against the smugglers by the Collector of Central Excise, Hyderabad, who is the Collector of Customs for the area. So far as the petitioner was concerned, on 22-5-1963 a show-cause notice was issued in the following terms:
Central Excise Collectorate, Hyderabad. C. No. VIII/10/11/63 dated 22nd May 1963. Show Cause Notice.
Shri Devichand, son of Theraji,
No. 9, Narayanamudali Street, Madras-1.
Whereas there is reason to believe that you have contravened S. 112(a) of the Customs Act, 1962, in that you have abetted the bringing into Indian Customs waters for the purpose of being imported 142 bags of cloves and 20 bags of nut-megs of foreign origin in a launch which were actually imported at the shore of Pallepalem, hamlet of Eathamukkala, Ongole Taluk, Guntur District on the night of 28/29-4-1963 contrary to Section 3 of the Imports and Exports Control Act, 1947 read with S. 111(d) of the Customs Act, 1962.
Whereas you are liable to a penalty under Section 112 of the Customs Act, 1962,
(2) You are therefore called upon to show cause to the Collector of Customs and Central Excise, Hyderabad within 5 days of receipt of this notice why a penalty should not be imposed on you.
(3) All evidence documentary or otherwise in your possession should be produced in support of your explanation within the period specified above.
(4) You should also indicate in the written explanation whether you desire to be heard in person before the case is adjudicated.
(5) If no cause is shown against the action proposed to be taken within 5 days or receipt of this notice or if you do not appear before the adjudicating office when the case is posted for hearing, the case will be decided ex parte.
Sd/- R.C Mehra,
22-5-1963.
11. On 25-5-1963, the petitioner sent a reply to the Collector denying the allegations contained in the show cause notice and further expressing his inability to give an effective answer to the show-cause notice as he had not been furnished with copies of the evidence upon which the show-cause notice was based, he also requested the Collector to furnish him with copies of the evidence and desired to be heard in person before the adjudication was made. On 3-6-1963, the petitioner received a communication from the Collector intimating to him that his request for a personal hearing had been granted and that he should appear before the Collector on 6-6-1963 without fail. To that, the petitioner sent a reply on 5-6-1963 requesting for an adjournment of the enquiry till the 15th June as he was unwell. Again, he reiterated his request for copies of the material upon which action was sought to be taken against him and complained that the show-cause notice did not disclose any grounds upon which a penalty was sought to be imposed. He added:
“A personal hearing in the absence of such material being provided to me, will not afford me a reasonable opportunity of being heard in the matter.
I therefore request you that copies of the material referred to above may be furnished to me and a personal hearing be given to me after such material has been furnished to me.”
12. To this, the Collector sent a telegram followed by a letter on 7-6-1963 declining to adjourn the case for ten days but fixing the date of hearing as 10-6-1963. The personal hearing was conducted on 10-6-1963 at which the petitioner represented that he was not connected with the smuggling operations in any way. When he was examined by the Collector in detail about his knowledge of the persons and events in this case and also about his movements in his trip to Ongole, the petitioner admitted that Mangilal was his employee on a monthly pay of Rs. 50/- but he did not suspect or question Mangilal as to how the latter could afford to engage a taxi for a purposeless journey to Vijayawada. On being asked about the address of his relative at Vijayawada, whom he intended to visit in his trip, the petitioner stated that he did not know the name of the street in which his relative resided or did business.
13. Thereafter, by a common order dated 29-7-1963, the Collector found Nagaratnam and Dayalchand Choudary guilty of having been directly involved in the act of smuggling the goods into India while the petitioner, Md. Saleh Sahib, K. Ramalinga Reddy and Mangilal held guilty of having abetted the said smuggling. They had all thereby contravened the provisions of S. 112 of the Act either as principals or as abettors. Consequently, penalties in varying sums were levied on all of them. In reaching the above conclusion, the Collector relied amongst other things, on the panchnama for the seizure of the goods which was prepared on 29-4-1963 and on the statements of Nagaratnam, Dayal Chand Choudary, Prem Sagar Mauchanda, Mangilal and Ramalinga Reddy, besides the statement of the petitioner himself, and he used one or more of those statements to disprove the petitioner's case of an innocuous journey from Madras to Ongole and to establish the petitioner's complicity as an abettor of the illegal act of smuggling. In paragraph 8 of his order, the Collector observed:
“From the above statements it is clear that Sarvashri Chinnathumbi Nagaratnam alias Vadivelu and Dayalchand Choudary and others had arranged to import illicitly contraband goods from Ceylon by a launch and in pursuance of this arrangement, Nagaratnam alias Vadivelu and some others had visited Eathainukkala-Pallepalem coast in car BYJ 3663 in order to bring about a landing of contraband goods and in pursuance of this arrangement Nagaratnam alias Vadivelu had visited the launch on the night of 27-4-1963 when the launch was within Indian Customs waters and stand-by arrangements had been made for a safe landing. It is also evident that in all these activities his associates, namely, Dayalchand Choudary, Mohd. Saleh, Mangilal, Devichand and Sri Ramalinga Reddy of Ongole were all actively playing their own part in successfully evading the Customs Law and bringing about a landing at an unauthorised place and without payment of Customs Duty and infringement of the Imports and Exports Control Act, 1947”.
14. The Collector then went on to sum up the part played by each of the conspirators in that nefarious act. As regards the petitioner Devichand, this is how the Collector summed up the case against him:
“As already discussed in regard to Mangilal, Shri Devichand pre-planned to accompany Mangilal in his journey from Madras and met him at a hotel in Nellore on the journey. In fact a car was engaged by Mangilal to take Devichand with him. Their subsequent movements and halts right on the heels of the smugglers' party, association with Balwant belonging to the smugglers' party and final trip towards the sea-shore to which the smugglers' party proceeded on the previous night and did not return, abundantly prove their connection with the smuggling under way and their knowledge of the whole affair. Besides this, his denial about Balwant whom Mangilal is reported to have picked when he was moving with Devichand clearly shows how he is trying to avoid all evidence of his activities. The offence of abetment of smuggling is thus proved in his case also.”
15. It is in tills view that the Collector imposed a penalty of Rs. 50,000/- on the petitioner.
16. The order of the Collector was challenged in this writ petition on the following grounds: (1) that the requirements of S. 124 or the Act had not been complied with inasmuch as the bald show-cause notice given to the petitioner merely mentioned the offence alleged to have been committed but did not list the grounds on which the penalty was proposed to be levied; (2) that the procedure adopted is opposed to the fundamental principles of natural justice in that the petitioner's repeated requests for copies of the statements of the persons on the basis of which, action was taken against the petitioner were not complied with, and he was not made aware of the material which was sought to be used against him; (3) that the order is on the face of it illegal inasmuch as the value of the goods has not been found; the penalty under S. 112 cannot exceed five times the value of the goods and without a finding as to the value, no penalty can be imposed; and (4) that assuming all the facts found against the petitioner are true, he cannot be said to be an abettor within the meaning of S. 112 of the Act.
17. We do not propose to express any opinion on the first, third and fourth grounds because those are grounds which should be agitated in appeal or revision. It is well-settled that the determination of disputed questions of fact or law, and the consideration of the reliability or sufficiency of evidence, are matters which are outside the purview of a proceeding under Article 226 of the Constitution and the High Court will not arrogate to itself a function which belongs elsewhere.
18. As regards the second ground, however, we are satisfied that there is much force in it. We have noticed already that in spite of repeated requests, the petitioner was not supplied with copies of statements taken from persons alleged to have been involved along with him in the act of smuggling either as principals or as abettors. Those statements were not made available to the petitioner before the personal inquiry or during the enquiry. The petitioner says that he had asked for the statements at the time of the inquiry. The Collector denies it. We see no reason to distrust the word of the Collector. Even so, whether a demand was made or not, it was incumbent on the Collector to have made those statements available to the petitioner so as to enable him to defend himself effectively. All the more so, when the Collector himself intended to rely upon those statements in proof of the act of smuggling by a gang of persons of whom the petitioner was stated to be one. Even the statement of Mangilal, who was in the company of the petitioner in the car MSV 2792 at the time it was intercepted by the excise staff in the vicinity of Eathamuwkala, was not supplied to the petitioner. Nor was a copy of the ‘panchnama’ given to him. At the personal inquiry, the petitioner was questioned about his movements and he said he was on his way to Vijayawada on a private visit and denied that he had any part or lot in the smuggling.
19. It is evident that the form of abetment alleged against the petitioner was abetment by conspiracy, as contemplated by S. 107 of the Indian Penal Code. That section so far as is material, provides:
“A person abets the doing of a thing who:
Secondly:— Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy and in order to me doing of that thing. That being the nature of the accusation against the petitioner, and as under the law one conspirator would be liable for the acts of a co-conspirator, it was necessary for him to know what the other-conspirators had said or done. He had a right to know if the statements made by his co-conspirators contained any incriminating matter which could be used against him so that he could meet it, equally, if there was anything in those statements which was helpful to him, he was entitled to use that material in his favour. Since admittedly not a single statement was made available to the petitioner, it cannot be said he had been given a reasonable opportunity of being heard in his defence, as envisaged by clause (c) of section 124 of the Act. Section 124 reads thus:
“No order confiscating any goods or imposing any penalty on any person shall be made under this chapter unless the owner of the goods or such person—
(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter;
Provided that the notice referred to in clause (a) and the representation referred in clause (b) may at the request of the person concerned, be oral.”
20. We have no hesitation in holding in the circumstances of this case, that the petitioner has not been given a reasonable opportunity of being heard and at the personal inquiry, he must have been under a severe handicap because he did not know what the evidence against him was. But yet, the Collector in this order adjudging the guilt of the petitioner and imposing a heavy penalty on him relied on those very statements, copies of which had been denied to the petitioner. A decision so readied cannot have any validity.
21. In this connection, reference may usefully be made to a judgment of the Judicial Committee of the Privy Council in the case of Kanda v. Government of the Federation of Malaya, 1962 AC 322 in which Lord Denning gave a lucid exposition of the concept of natural justice, in considering a provision in the Constitution of the Federation of Malaya which laid down that no member of the police service shall be dismissed or reduced in rank “without being given a reasonable opportunity of being heard”. The facts of that case were that one Kanda, who was an inspector of police in the Royal Federation of Malaya Police, was dismissed by the Commissioner of Police on the ground that he had been guilty of an offence against discipline. Inspector Kanda brought an action in the High Court challenging the dismissal. The trial Judge Rigby in declared that the dismissal was void and had no effect. The Government appealed. The Court of Appeal, by a majority, allowed the appeal and field that inspector Kanda was validly dismissed. He appealed to the Privy Council. One of the questions which the appeal raised was whether the proceedings which resulted in Kanda's dismissal were conducted in accordance with the principles of natural justice. The stand taken by inspector Kanda was that his dismissal was invalid because he was not given a reasonable opportunity of being heard, in accordance with the provisions of Article 135(2) of the Constitution in that the report of the board of inquiry, which was prejudicial to him was before the adjucating officer but unknown to Kanda, who never had any knowledge of the contents of the report and with which he had no chance to deal.
22. Considering this point of the alleged denial of a reasonable opportunity of being heard, Lord Denning observed as follows:
“The governing article of the Constitution on this point is article 135(2)……………. ‘No member of such a service as aforesaid (the police service is one of these) shall be dismissed or reduced in rank without being given a reasonable opportunity of being heard.’
Several complaints were made by inspector Kanda of a failure to comply with this article but none of them survived for argument before their Lordships except one complaint which related to the report of the board of inquiry….
The report of the board of inquiry contained a severe condemnation of inspector Kanda. It was sent ta the adjudicating officer before he sat to inquire into the charge. He read it and had full knowledge of its contents. But inspector Kanda never had it. He never had an opportunity of dealing with it. Indeed, he never got it until the fourth day of the hearing of this action………………………….
The report was then made available to inspector Kanda and his advisers. It dealt in detail with the evidence of each witness heard by the board, and expressed views as to the credibility of each witness, and the weight to be attached to his statement. It referred to the inquiries made by the board itself apart from the evidence given by witnesses. In the result it presented, as Rigby J. said, a most damning indictment against inspector Kanda as an unscrupulous scoundrel, who had suborned witnesses both police and civilian, to commit perjury………… The question is whether the hearing by the adjudicating officer was vitiated by his being furnished with that report without inspector Kanda being given any opportunity of correcting or contradicting it. Much of the argument before their Lordships and, indeed, before the Courts in Malaya proceeded on the footing that this depended on this further question: Was there a ‘real likelihood of bias’, that is, ‘an operative prejudice, whether conscious or unconscious,’ on the part of the adjudicating officer against inspector Kanda? The well-known line of cases was cited from Reg v. Rand, (1866) 1 QB 230 to Reg v. Camborne Justice; Ex parte, Pearce, (1955) 1 QB 41. Adopting this test, much effort was devoted to showing that the adjudicating officer was not biased against inspector Kanda………………… The trial Judge Rigby J., was not persuaded by these arguments he held that there was a very real likelihood of bias. Bui all the members of the Court of Appeal thought otherwise. The held that there was no real likelihood of bias. So inspector Kanda failed on that way of looking at the case.
In the opinion of their Lordships, however, the proper approach is somewhat different. The rule against bias is one thing. The light to be heard is another. Those two rules are the essential characteristics of what is often called natural justice. They are the twin pillars supporting it. The Romans put them in the two maxims: Nemo judex in causa sua: and Audit alteram partem. They have recently been put in the two words, Impartiality and Fairness. But they are separate concepts and are governed by separate considerations. In the present case inspector Kanda complained of a breach of the second. He said that his constitutional right had been infringed. He had been dismissed without being given a reasonable opportunity of being heard.
If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him: and then he must be given a fair opportunity to correct or contradict them. This appears in all the cases from the celebrated judgment of Lord Loreburn L.C in Board of Education v. Rice, (1911) AC 179 at p. 182 down to the decision of their Lordships' Board in Ceylon University v. Fernando, (1960) 1 WLR 223. It follows, of course, that the Judge or whoever has to adjudicate, must not hear evidence or receive representations from one side behind the back of the other. The Court will not inquire whether the evidence or representations did work to his prejudice. Sufficient that they might do so. The Court will not go into the likelihood of prejudice. The risk of it is enough. No one who has lost a case will believe he has been fairly treated if the other side has had access to the Judge without his knowing…………
Applying these principles, their Lordships are of opinion that inspector Kanda was not in this case given a reasonable opportunity of being heard…………. The mistake of the police authorities was no doubt made entirely in good faith. It was quite proper to let the adjudicating officer have the statements of the witnesses. The Regulations show that it is necessary for him to have them. He will then read those out in the presence of the accused. But their Lordships do not think it was correct to let him have the report of the board of inquiry unless the accused also had it so as to be able to correct or contradict the statements in it to his prejudice.”
23. Applying the above principles to the present case, since admittedly copies of statements made by the alleged accomplices of the petitioner were not made available to him, whereas the adjudicating officer made use of those statements to hold the petitioner guilty of abetment of the illegal act of smuggling, and since the petitioner had no opportunity to correct or contradict anything in those statements which was to his prejudice, it must be held that the adjudicatory process adopted by the Collector resulted in a failure to afford the petitioner “a reasonable opportunity of being heard” in answer to the charge, within the meaning of section 124(c) of the Act. This amounted to such a denial of natural justice as to entitle this Court to set aside those proceedings.
24. In the result, this writ petition is allowed and the impugned order of the Collector, in so far as it relates to the petitioner, is quashed. This, however, does not preclude the authorities from taking fresh action against the petitioner in the light of this judgment. We may also mention that the learned Government Pleader, appearing for the Collector, has stated before us that the show-cause notice issued to the petitioner, was defective in that it did not give sufficient particulars of the wrongful act alleged against him so as to enable him to make an effective representation against the action proposed to be taken. In all the circumstances of the case, we make no order as to costs.
DI/MVJ/D.V.C
25. Petition allowed.
Comments