K.T Desai, J.:— [His Lordship after stating the facts as above, proceeded.] The principal contention urged on behalf of the petitioners is that s. 178A of the Sea Customs Act violates art. 19(1)(f) and (g) of the Constitution of India and that the order complained of, which is based on the presumption raised under s. 178A is invalid, void and of no effect.

2. The aforesaid goods have been confiscated under the provisions of s. 167(8) of the Sea Customs Act. The said section runs as follows:—

Punishment for offences:

“167. The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively:—

Offences Section of this Act to which offence has reference Penalties 8. If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction… 18 & 19. such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees.”

3. Section 19 referred to above runs as follows:—

“19. The Central Government may from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government.”

4. Section 23A of the Foreign Exchange Regulation Act, 1947, referred to in the aforesaid order runs as follows:—

“23A. Application of Sea Customs Act, 1878.—Without prejudice to the provisions of section 23 or to any other provision contained in this Act, the restrictions imposed by sub-sections (1) and (2) of section 8…shall be deemed to have been imposed under section 19 of the Sea Customs Act, 1878 (VIII of 1878) and all the provisions of that Act shall have effect accordingly, except that section 183 thereof shall have effect as if for the word ‘shall’ therein the word ‘may’ were substituted.”

5. Section 8(1) of the said Act runs as under:—

“8. Restrictions on import and export of certain currency and bullion.—(1) The Central Government may, by notification in the Official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed bring or send into the States any gold…”

6. The term “gold” within the meaning of the said Act has been defined by s. 2(f) of the Act to include

“gold in the form of coin, whether legal tender or not, or in the form of bullion or ingot, whether refined or not, and jewellery or articles made or mainly of gold,”

7. In pursuance of the powers given as aforesaid, the Central Government has issued a notification bearing No. 12(11)/F.I/46 dated August 25, 1948, requiring the permission of the Reserve Bank for importing gold. Section 183 of the Sea Customs Act runs as follows:—

“183. Whenever confiscation is authorised by this Act, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit.”

8. The result of the operation of the provisions of s. 23A of the Foreign Exchange Regulation Act, 1947, and the Sea Customs Act is that in respect of an offence under s. 178A of the Sea Customs Act in respect of gold, it is not obligatory upon the officer adjudging confiscation of gold to give to the owner of gold an option to pay fine in lieu of confiscation.

9. section 178 of the Sea Customs Act under which goods which are liable to confiscation may be seized runs as under:—

“178. Any thing liable to confiscation under this Act may be seized in any place in India either upon land or water, or within the Indian customs waters, by any officer of customs or other person duly employed for the prevention of smuggling.”

10. By the provisions of s. 14 of the Sea Customs (Amendment) Act XXI of 1955, s. 178A was added to the Sea Customs Act. That section runs as under:—

“178A. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized.

(2) This section shall apply to gold, gold manufactures, diamonds and other precious stones, cigarettes and cosmetics and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf.

(3) Every notification issued under sub-section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued.”

11. In the statement of Objects and Reasons of Bill No. 48 of 1954 which was ultimately enacted into the aforesaid amending act xxi of 1955, it has been stated inter alia as follows:—

“The object of the Bill is to take certain additional powers which have been found to be necessary for the effective control of smuggling.”

12. The Note to cl. 14 which related to the insertion of the new s. 178A is as follows:—

“Clause 14—At present when action is taken against persons who are in possession of smuggled goods, it is not always easy for customs authorities to prove that the goods are smuggled goods. This clause places the burden of proof in such cases on persons, from whose possession suspected smuggled goods are seized. Such a provision is necessary in order to safeguard the revenues of the State.”

13. The reason and object of the new s. 178A, as shown by these Notes on clauses, appear to be the difficulty experienced by the customs authorities in proving that the goods are smuggled goods and the necessity of safeguarding the revenues of the State.

14. A controversy has arisen as regards the true meaning of s. 178A. I shall first consider what the section means before dealing with the question whether it violates the provisions of art. 19(1)(f) and (g) of the Constitution. It has been contended by Mr. M.P Amin, the learned counsel for the respondents, that goods referred to in that section may be seized on some suspicion, that thereafter enquiries may be made and that if thereafter the customs authorities acquire a reasonable belief that the goods are smuggled, then a presumption arises under the said section that the goods are smuggled goods and the burden of showing that they are not smuggled goods is on the person from whose possession the goods had been seized. It is firstly urged by him that the words “in the reasonable belief” refer to the reasonable belief after seizure. It is next urged that the seizure is a continuous process with the result that if a reasonable belief that the goods are smuggled is at any time acquired whilst the seizure continues, the burden is on the person from whose possession the goods have been seized of proving that they are not smuggled goods. It is lastly urged that a structural alteration may be made in the section and the section should be read as if it ran as under:—

“Where any goods to which this section applies are seized under this Act if there is a reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized.”

15. The meaning sought to be given by Mr. Amin is not borne out upon a plain reading of the section and is contrary to the express language used in the section. Mr. Amin has been at pains to stretch and twist the language of the section with a view to support what has in fact been done in the present case. The section in terms provides that the goods must be seized in the reasonable belief that they are smuggled goods before the burden can be cast on the person from whose possession the goods are seized of proving that they are not smuggled goods. The reasonable belief must exist at the time of the seizure of the goods. The existence of such reasonable belief at the time of the seizure of the goods is a condition precedent to the casting of the burden, under that section, on the person from whose possession the goods are seized of proving that the goods are not smuggled goods. There are various provisions in the Act relating to the seizure of goods. Section 178 lays down that any thing liable to confiscation under the Act may be seized in any place in India either upon land or water or within the Indian customs waters by any officer of Customs or other person duly employed for the prevention of smuggling. Such seizure does not require the existence of any reasonable belief of the goods being smuggled prior to the seizure. Section 180 of the Sea Customs Act provides that when any things liable to confiscation under the Act are seized by any Police Officer on suspicion that they have been stolen, he may carry them to any police station or Court at which a complaint connected with the stealing or receiving of such things has been made, or an enquiry connected with such stealing or receiving is in progress, and there detain such things until the dismissal of such complaint or the conclusion of such enquiry or of any trial thence resulting. That section contemplates the seizure of goods on suspicion that they have been stolen without there being in existence any reasonable belief that the goods are stolen. Section 169 provides that any officer of customs duly employed in the prevention of smuggling may search any person on board of any vessel in any port in India or within the Indian Customs waters or any person who has landed from any vessel provided that such officer “has reason to believe that such person has dutiable or prohibited goods secreted about his person”. Similarly under s. 170A, when any officer of Customs duly employed in the prevention of smuggling has reason to believe that any person on board of any vessel in any port in India or within the Indian customs waters or any person who has landed from any vessel has any dutiable or prohibited goods secreted inside his body, such officer of Customs may detain such person and produce, him without unnecessary delay before the nearest Magistrate. These provisions indicate that when the Legislature considered the existence of a particular belief necessary before action can be taken, it has so laid it down.

16. This section came up for consideration before the Supreme Court in the case of Babulal v. Collector of Customs,1 Mr. Justice Govinda Menon in delivering the judgment of the Supreme Court in that case observes at p. 881 as follows:—

“…The only pre-requisite for the application of the section is the subjectivity of the Customs officer in having a reasonable belief that the goods are smuggled. …The section applies only to those goods of the specified kind which have been seized under the Act in the reasonable belief that they are smuggled goods.”

17. This section, as observed by the Supreme Court in the aforesaid case at pp. 880 and 881, casts “a very heavy and onerous duty on an innocent possessor who for aught one knows, may have bona fide paid adequate consideration for the purchase of the articles without knowing that the same have been smuggled.” The language of the section cannot be tortured in order to give a meaning to the words used which they do not bear. The language of the section requires that not merely the goods should be seized, but that they should be seized in the reasonable belief that they are smuggled goods. It is not enough that the goods are seized. It would not suffice if the goods are seized on suspicion or under the reasonable belief that they are stolen goods.

18. It has been urged by Mr. Amin for the respondents that the reasonable belief referred to in this section is the subjective reasonable belief of the officer seizing the goods. In the Supreme Court judgment referred to above, it has been held by the Supreme Court that the pre-requisite of the application of the section “is the subjectivity of the Customs officer in having a reasonable belief that the goods are smuggled.” The learned Advocate-General for the petitioners states that his task in challenging the validity of s. 178A is made more easy on the footing of the subjective character of the belief referred to in that section. In fairness to him it must be stated that he contended that even if the belief was not the subjective reasonable belief of the customs officer, but had to be objectively shown, the section still offended the provisions of art. 19(1)(f) and (g) of the Constitution and was bad in law.

19. It has been strongly urged on behalf of the respondents, and rightly, that the Court must presume the constitutionality of a provision contained in an enactment and must not declare any provision invalid unless there are compelling reasons to do so. In the case of Chiranjitlal Chowdhuri v. The Union of India,2 it has been stated at p. 879 as follows:—

“…that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. A clear enunciation of this latter doctrine is to be found in Middteton v. Texas Power & L. Co. . 1919 240 U.S 152, 157 in which the relevant passage runs as follows:—

‘[It must be presumed] that a Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience, and that its discriminations are based upon adequate grounds’.”

20. It has been rightly urged on behalf of the respondents that when any powers are conferred upon any officers by any provision of law, the Court must always presume that the officers will act reasonably, honestly and bona fide and not arbitrarily or capriciously. In the case of Dhanraj Mills Ltd. v. Kocher,4 which came up before a Division Bench of this Court consisting of Chief Justice Chagla and Mr. Justice Bhagwati (as he then was), it has been observed by Chief Justice Chagla at p. 396 as follows:—

“…When the law invests an officer with a discretion, the law assumes that the officer will exercise the discretion bona fide and not dishonestly, arbitrarily or capriciously, and if he exercises the discretion dishonestly, arbitrarily or capriciously, he is really going contrary to the law.”

21. In the case of Bapurao Dhondiba v. State of Bombay,5 Chief Justice Chagla has, in connection with the powers conferred upon the Commissioner of Police under s. 37(3) of the Bombay Police Act, 1951, observed at page 422 as follows:—

“…The validity of a statute must be Judged rather on the assumption that those who are called upon to exercise those wide powers will exercise them honestly and bona fide.”

22. Keeping the principles laid down in the aforesaid cases in mind, I have to consider whether the provisions of s. 178A are valid. The constitutionality of this section was challenged before the Supreme Court in the aforesaid case of Babulal v. Collector of Customs, on the ground that it offended against the provisions of art. 14 of the Constitution. In dealing with that contention, the Supreme Court has observed at pages 881 and 882 as follows:—

“A cursory perusal, of s. 178-A will at once disclose the well-defined classification of goods based on an intelligible differentia. It applies only to certain goods described in sub-s. (2) which are or can be easily smuggled. The section applies only to those goods of the specified kind which have been seized under the Act and in the reasonable belief that they are smuggled goods. It is only those goods which answer the threefold description that come under the operation of the section.

The object of the Act is to prevent smuggling. The differentia on the basis of which the goods have been classified and the presumption raised by the section obviously have a rational relation to the object sought to be achieved by the Act. The prescription only attaches to goods of the description mentioned in the section and it directly furthers the object of the Act, namely, the prevention of smuggling, and that being the position the impugned section is clearly within the principle enunciated above, not hit by art. 14.

The impugned section cannot be struck down on the infirmity either of discrimination or illegal classification. Confining as it does to certain classes of goods seized by the customs authorities on the reasonable belief that they are smuggled goods, there is only a presumption which can be rebutted.”

23. In that case the commodity in question consisted of 475 pieces of diamonds and one piece of synthetic stone. It has been observed in that case at page 879 that though Mr. Chatterjee, who appeared for the petitioner in that case, faintly argued that the provisions of art. 19(1)(f) and (g) and art. 31 of the Constitution had been violated, he did not seriously press those contentions and that the main point of the attack was centered on the contention that s. 178A was violative of the principles of equal protection of the laws guaranteed under art. 14 of the Constitution. It was urged by Mr. Amin that the reasonableness of the provisions had been considered by the Supreme Court in that case and that the challenge to the section under art. 19(1)(f) and (g) must fail having regard to the aforesaid judgment. The challenge to a provision under art. 14 of the Constitution is different from a challenge under art. 19(1)(f) and (g) of the Constitution. What is required under art. 14 is that there must be a well-defined classification based on an intelligible differentia and that the differentia on the basis of which the goods have been classified must have a rational relation to the object sought to be achieved by the Act. What is required to be considered in connection with art. 19(1)(f) and (g) is the reasonableness of the restrictions imposed in the interest of the general public on the rights guaranteed under the said art. 19(1)(f) and (g). That decision is no bar to the plea advanced in the present case.

24. It is next urged by Mr. Amin that art. 19 would not apply to any case which falls under art. 31 of the Constitution. He says that the case before me is a case of confiscation of goods based on the presumption raised under s. 178A of the Sea Customs Act, that the case falls under art. 31 and that the section in question is not liable to be challenged under art. 19. He first argued that as art. 31(1) provides that no person shall be deprived of his property save by authority of law and as there was authority of law for the deprivation of the property of the petitioners based on the provisions of s. 178A, the said provisions could not be challenged. This argument does not take into account the interpretation placed upon art. 31(1) by the Supreme Court. In the case of Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd. . [1954] S.C.R 674. where Mr. Amin was counsel for the appellant, Mahajan observes at pages 691 and 692 as follows:—

“…According to the learned Attorney-General, the true content of the fundamental right guaranteed by article 31(1) was that a person could not be deprived of his property except by statutory authority, but once a law was made depriving a person of his property then the article afforded no further protection. Support for this contention was sought to be derived from the reasoning employed in Gopalan's case. There it was held that the freedoms relating to the person of a citizen guaranteed by article 19 assume the existence of a free citizen and can no longer be enjoyed if a citizen is deprived of his liberty by the law of preventive or punitive detention. In like manner it was argued that the freedom relating to property guaranteed by article 19 also vanished as soon as a person was deprived of his property under a law enacted by an appropriate legislature. The learned Attorney-General suggested that the two clauses of article 31 were in the nature of two exceptions to the provisions of article 19(1)(f). The first exception was that the guarantee of freedom given by article 19(1)(f) could be defeated simply by enacting a statute and the second exception was that it could also be defeated by the State acquiring title in the property in exercise of its power of eminent domain within the limited field prescribed by article 31(2) but that if a certain deprivation of property did not fall within the prescribed field of article 31(2) and fell within article 31(1), then for such deprivation no compensation was payable. As regards clause (5) which excepted certain laws from the ambit of article 31(2), it was argued that this clause had been inserted in the article by way of abundant caution.

In my judgment, none of these contentions have any validity. The construction sought to be placed by the learned Attorney-General on the language of article 31 is neither borne out by the phraseology employed in that article nor by the scheme of Part III of the Constitution. It seems to me that our Constitution subject to certain exceptions has guaranteed the fullest protection to private property. It has not only provided that no person can be deprived of property by the executive without legislative sanction but it has further provided that even the legislature cannot deprive a person of his property unless there is a public purpose and then only on payment of compensation.”

25. At page 694 he further observes as follows:—

“…In considering article 31 it is significant to note that it deals with private property of persons residing in the Union of India, while article 19 only deals with citizens defined in article 5 of the Constitution. It is thus obvious that the scope of these two articles cannot be the same as they cover different fields…The true approach to this question is that these two articles really deal with two different subjects and one has no direct relation with the other, namely, article 31 deals with the field of eminent domain and the whole boundary of that field is demarcated by this article. In other words, the State's power to take the property of a person is comprehensively delimited by this article…. Article 31(1) declares the first requisite for the exercise of the power of eminent demain. It guarantees that a person cannot be deprived of property by an executive fiat and that it is only by the exercise of its legislative powers that the State can deprive a person of his property… Clause (5) is the saving clause. It saves from the operation of clause (2) laws made on certain subjects… The saving clause (5) in article 31 has been designed with the express purpose of saving to a certain extent laws made in exercise of the police power of the State which may lead to deprivation of property. It has also saved laws relating to tax. It has thus delimited from the field of eminent domain the field of exercise of police power and the exercise of the power of taxation.”

26. In the case of The State of West Bengal v. Subodh Gopal Bose,7 Chief Justice Patanjali Sastri has in emphatic terms rejected the contention that art. 31(1) deals with police power. At page 602 of that decision he observes as follows:—

“…It would be a startling irony if the fundamental rights of property were, in effect, to be turned by construction into an arbitrary power of the State to deprive a person of his property without compensation in all ways other than acquisition or taking possession of such property. If the Legislature were to have such arbitrary power, why should compensation and public purpose be insisted upon in connection with what are termed two particular forms of deprivation? What could be the rational principle underlying this differentiation? To say that clause (1) defines the ‘police power’ in relation to the rights of property is no satisfactory answer, as the same power could as well have been extended to these two particular kinds of deprivation.”

27. In the face of these judgments it was difficult for Mr. Amin to maintain that the case fell under art. 31(1) of the Constitution. In my view, it is now the law as laid down by the Supreme Court that art. 31(1) deals with matters falling within the field of eminent domain. The provisions of s. 178A of the Sea Customs Act do not fall within that field. Having regard to the aforesaid judgments the argument of Mr. Amin must fail. He, however, urged that if the case fell under any of the other provisions of art. 31, it would still fall outside the ambit of art. 19. In the case of The State of Bombay v. Bhanji Munji,8 it has been held that art. 19(1)(f) read with cl. (5) postulates the existence of property which could be enjoyed and over which rights could be exercised because otherwise the reasonable restrictions contemplated by cl. (5) could not be brought into play. At page 780 of that judgment it has been stated as follows:—

“…If there is no property which can be acquired, held or disposed of, no restriction can be placed on the exercise of the right to acquire, hold and dispose of it, and as clause (5) contemplates the placing of reasonable restrictions on the exercise of those rights it must follow that the article postulates the existence of property over which these rights can be exercised. In our opinion, this was decided in principle in A.K Gopalan v. State Of Madras., where it was held that the freedoms relating to the person of a citizen guaranteed by article 19 assume the existence of a free citizen and can no longer be enjoyed if a citizen is deprived of his liberty by the law of preventive or punitive detention. In the same way, when there is a substantially total deprivation of property which is already held and enjoyed, one must turn to article 31 to see how far that is justified.”

28. In that case the Supreme Court held that the Bombay Land Requisition Act, 1948, provided for compensation by s. 8 and the requisitions were made for a public purpose and, therefore, the provisions of art. 31(2) of the Constitution were complied with. That was a case of the exercise of powers falling within the field of eminent domain. Mr. Amin strongly relied upon the observations of Mahajan in the aforesaid case of Dwarkadas Shrinivas v. The Sholapur Spinning and Weaving Co. Ltd., where the learned Judge has observed as follows (pp. 696-697):—

“…In the result the saving clause (i.e clause 5 of article 31) comprehensively includes within the ambit all the powers of the State in exercise of which it could deprive a person of property without payment of compensation. In other words, all forms of deprivation of property by the State without payment of compensation have been included within the ambit of the exception clause, while other forms of deprivation of property which are outside the ambit of the exception clause are inevitably within the mischief of clause (2) of the article.”

29. Mr. Amin urged that every form of deprivation of property was covered under art. 31 and that as in the present case there was a deprivation of property, art. 19 would not be attracted. Sub-clause (5)(i)(i) of art. 31 provides that nothing in cl. (2) of art. 31 “shall affect the provisions of any law which the State may hereafter make for the purpose of imposing or levying any tax or penalty…” It is urged that the provisions of cl. (5)(b)(i) of art.. 31 are intended to carve something out of the provisions contained in cl. (2) of art. 31 and that what is intended to be saved by the provisions of cl. (5) is something which would otherwise fall within the ambit of the provisions contained in cl. (2) of art. 31. It has been held by the Supreme Court that art. 31(2) covers the field of eminent domain. The exercise of police power by imposing a penalty or the exercise of the power of taxation cannot be regarded as falling within the ambit of the field of eminent domain. In Willis on Constitutional Law of the United States it has been stated under the heading ‘Police Power, Taxation and Eminent Domain distinguished’ at page 716 as follows:

“While the police power, taxation and eminent domain are all forms of social control, and probably include all the forms of social control known to the law, each differs from the others. It is possible to give a definition of each one and to distinguish each from the others, but each has characteristics which resemble characteristics of the others; and there are times when it is very difficult to draw the line between one and the others. The police power is the legal capacity of sovereignty, or one of its governmental agents, to delimit the personal liberty of persons by means which bear a substantial relation to the end to be accomplished for the protection of those social interests which reasonably need protection. Taxation is the legal capacity of sovereignty, or one of its governmental agents, to exact or impose a charge upon persons or their property for the support of government and for the payment for any other public purposes which it may constitutionally carry out Eminent domain is the legal capacity of sovereignty, or one of its governmental agents, to take private property for a public use upon the payment of just compensation.”

30. It is not disputed that the impugned s. 178A of the Sea Customs Act does not fall within the field of eminent domain and art. 31(2) cannot apply thereto.

31. Mr. Amin then urged that if cl. (5)(b)(i) of art. 31 did not carve out anything from cl. (2) of art. 31, then the aforesaid cl. (5)(b)(i) must be treated as an independent provision. He relied upon the decision in the case of Keshavlal Premchand v. Comr. I.T,9 and the observations of Chief Justice Chagla at page 947 where the learned Chief Justice states as follows:—

“…A proviso, which is in fact and in substance a proviso, can only operate to deal with a case which but for it would have fallen within the ambit of the section to which the proviso is a proviso. The section deals with a particular field and the proviso excepts or takes out or carves out from that field a particular portion, and therefore it is perfectly true that before a proviso can have any application, the section itself must apply. It is equally true that the proviso cannot deal with any other field than the field which the section itself deals with. The duty of the Court also must be to give to the proviso as far as possible a meaning so restricted as to bring it within the ambit and purview of the section itself. If a proviso is capable of a wider connotation and is also capable of a narrower connotation, if the narrower connotation brings it within the purview of the section, then the Court must prefer the narrower connotation rather than the wider connotation. But—and this is equally clear—a Legislature may enact a substantive provision in the garb or guise of a proviso, and if the Court is satisfied that the language used in the so-called proviso is incapable of making it applicable to the section, then the Court, if the proviso has a clear meaning, must look upon the proviso as a substantive provision enacted by the Legislature and give effect to it as such.”

32. Treating cl. (5)(b)(i) as a substantive provision, it merely lays down that when the Legislature imposes or levies any tax or penalty, it will not be fettered with the limitations imposed by cl. (2). In my view, cl. (5) merely dispenses with the limitation imposed by cl. (2). It does not lay down that there are no other fetters.

33. It is urged that all provisions of law imposing or levying any tax are outside the provisions of art. 19. It is said that the Sea Customs Act is a taxing enactment and as such it falls outside the ambit and scope of art. 19. In the preamble of the Act, it is stated as follows:—

“WHEREAS it is expedient to consolidate and amend the law relating to the levy of Sea Customs duties; It is enacted as follows: …”

34. It is urged that the provisions relating to the imposition of the penalty of confiscation and other penalties form an integral part of the taxing enactment and are covered by art. 265 of the Constitution and fall outside the provisions of art. 19 of the Constitution. Article 265 provides that no tax shall be levied or collected except by authority of law. Reliance has been placed upon the decision in the case of Guruviah Naidu v. State of Madras.10 It was a case under the Sales Tax Act. At page 168 of that judgment Mr. Justice Rajagopala Ayyangar observes as follows:—

“… The Constitution vests the Union and the States with a power of taxation, which, subject to a few exceptions (vide e.g Art. 276) is plenary in its nature. This imposition of a tax on a trade or on the profits of a trade is undoubtedly a burden and unless the tax was validly imposed, it would be an illegal and an undue interference with the freedom of trade guaranteed by Art. 19(1)(a) and so invalid. That is the ratio underlying the decision of the Supreme Court in Mohammad Yasin v. Town Area Committee, Jalalabad10a and Himmatlal Harilal Mehta v. The State of Madhya Pradesh10b.

If a tax were a restriction which could be legally imposed on a business, the right to carry on which was guaranteed by the Constitution, the validity of the tax cannot be judged by standard applicable to regulations or restrictions imposed on the manner carrying on the business—restrictions which flow more from the nature of the commodity or the repercussions of an unregulated trade on the health, morality or safety of the public. Taxation is the supreme function of the State, the exercise of a power which is necessary for the very existence and maintenance of the State. In the words of Cooley:

‘It is unlimited in its range, acknowledging in its very nature no limits so that security against its abuse is to be found only in the responsibility of the legislation which imposes the tax to the constituency who are to pay.’

35. We are not now concerned with the limitations on this plenary power but will only point out that the test of its being a reasonable restriction on the right to trade is certainly not one of these limitations. The restraints imposed by taxation are wholly beyond the scope of Art. 19(6) and therefore not subject to the tests of a valid legislation under that provision. The saving in Art. 31, sub-cl. 5(b)(i) placing out of the purview of the main article the deprivation of property which taxes entail and which was put in only by way of abundant caution, is a pointer establishing the plenitude of the taxing power.”

36. At page 169 it is further observed as follows:—

“…If licensing was the machinery by which the Sales Tax Act is or can be enforced, this being the usual and well recognised mode in which the enactment could be worked so as to facilitate collection and check evasion, if licensing were a necessary adjunct to a tax system where only certain commodities were taxed at a single point and that point is not the same for all the commodities so taxed, the system of licensing becomes so to speak an integral and inseparable part of the tax measures.

In such a situation the tests which such licensing ought to satisfy are not those set out in Art. 19(6) but would rather be ancillary to an exercise of the taxing power of the State….

The power to levy a tax extends to the enactment of all incidental provisions for ensuring the collection or preventing the evation of the tax…”

37. Placing strong reliance upon these observations it is urged that the levy of a penalty including that of confiscation is incidental to and forms an integral part of the scheme for the due collection of the sea customs duties and the prevention of evasion thereof.

38. As against the aforesaid observations, the learned Advocate General relied upon the observation of Mr. Justice Venkatarama Ayyar (as he then was) made in the case of Ananthakrishnan v. State of Madras,11 as follows (p. 408):—

“There is one other aspect of the matter which may require consideration hereafter. Has the Legislature power to impose tax on the fundamental rights without any limit whatsoever? The law undoubtedly is that the sovereign power of taxation is absolute, that it could be exercised upto any limit, that the determination of that limit is for the legislature and that it knows of no limitations except what are prescribed by the Constitution. The laws fixing taxes cannot be questioned in the Courts on the ground that the tax is heavy & oppressive and this principle has been applied to Stamp Act as well. …But it is open to argument that when the Constitution which confers the power of taxation also confers certain fundamental rights the former should be so exercised as not to destroy the latter. The contention that the power to tax is the power to destroy has been rejected in so far as it seeks to negative any power to tax fundamental rights but it does not follow that it should be rejected in so far as it seeks to impose a limitation upon that power, that it should not be exercised so as to destroy them…. But a right to carry on business is a fundamental right protected by the Constitution and it stands to reason that a tax on such a right should not be such as to destroy it—as for example—a professional tax equal or nearly equal to the income earned in the previous year. It might well be contended that there is in such cases a limitation on the powers of taxation, implicit in the Constitution itself, that it should not be exercised in such a manner as to take away with one hand what has been given by the other. If this is the correct position it will follow that while the levy of income-tax cannot be questioned in Courts the levy of profession tax might be challenged on the ground that it is so unreasonable and excessive as to be prohibitive of the right to carry on trade….”

39. The right to levy customs duties is conferred by Item 83 of List I to the Seventh Schedule of the Constitution of India. It provides for “duties” of customs including export duties”. Item 93 of the said List deals with offences against laws with respect to any of the matters in that List. The constitution of offences and the imposition of penalties in the shape of confiscation, fine etc. fall outside the purview of the power of taxation. They fall within the realm of the police power of the State. It has been provided by art. 366(23) of the Constitution as follows:—

“366. In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say—…

(28) ‘taxation’ includes the imposition of any tax or impost, whether general or local or special, and ‘tax’ shall be construed accordingly.”

40. This also indicates that the levying of penalty is outside the field of taxation.

41. In view of the above, it is not necessary for the purpose of the present case to decide whether the power of taxation can be exercised only in consonance with the fundamental rights guaranteed under art. 19 of the Constitution. The impugned provisions in this case are penal provisions. They fall within the ambit of the police power of the State.

42. It is then urged that all crime is outside art. 19. It is stated, and rightly, that there cannot be any business in crime. In the case of State of Bombay v. Chamarbaugwala,12 the Supreme Court observes in connection with gambling transaction at pages 959 and 960 as follows:—

“…The petitioners contend that even if the prize competitions constitute gambling transactions, they are nevertheless trade or business activities, and that being so, the impugned Act infringes the petitioners' fundamental right under art. 19(1)(g) of the Constitution to carry on their trade or business and that the restrictions imposed by the Act cannot possibly be supported as reasonable restrictions in the interest of the general public permissible under art. 19(6)…. The State of Bombay repudiate these contentions and submits that as prize competitions are opposed to public policy, there can be no ‘trade’ or ‘business’ in promoting a prize competition, and the question of infraction of the petitioners' fundamental right to carry on trade or business guaranteed by art. 19(1)(g) or of the violation of the freedom of trade, commerce or intercourse declared by art. 301 does not arise at all,….

The first branch of the argument on this part of the appeal raises a question of a very far reaching nature. The question posed before us is: Can the promotion of prize competitions, which are opposed to public policy, be characterised as a ‘trade or business’ within the meaning of art. 19(1)(g) or ‘trade, commerce and intercourse’ within Art. 301?…

It will be noted that art. 19(1)(g) in very general terms guarantees to all citizens the right to carry on any occupation, trade or business and cl. (6) of art. 10 protects legislation which may, in the interest of the general public, impose reasonable restrictions on the exercise of the right conferred by art. 19(1)(g). Likewise art. 301 declares that trade, commerce and intercourse throughout the territory of India shall be free, but makes such declaration subject to the other provisions of Part XIII of the Constitution.”

43. The Supreme Court at page 966 quotes the observations of Taylor J. in the case of Mansell v. Beck,13 which run as follows:—

“No simple legislative expedient purporting to transmute trade and commerce into something else will remove it from the ambit of s. 92. But whilst asserting the width of the field in which s. 92 may operate it is necessary to observe that not every transaction which employs the forms of trade and commerce will, as trade and commerce, invoke its protection. The sale of stolen goods, when the transaction is juristically analysed, is no different from the sale of any other goods but can it be doubted that the Parliament of any State may prohibit the sale of stolen goods without infringing s. 92 of the Constitution? The only feature which distinguishes such a transaction from trade and commerce as generally understood is to be found in the subject of the transaction; there is no difference in the means adopted for carrying it out. Yet it may be said that in essence such a transaction constitutes no part of trade and commerce as that expression is generally understood. Numerous examples of other transactions may be given, such as the sale of a forged passport, or the sale of counterfeit money, which provoke the same comment and, although legislation prohibiting such transactions may, possibly, be thought to be legally justifiable pursuant to what has, on occasions, been referred to as a ‘police power’, I prefer to think that the subjects of such transactions are not, on any view, the subjects of trade and commerce as that expression is used in s. 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require, for their consummation, the employment of instruments, whereby inter-State trade and commerce is commonly carried on.” At page 967 Chief Justice Das thereafter proceeds to observe as follows:—

“…The difficulty which faced the judicial authorities interpreting s. 92 of the Australian Constitution cannot arise under our Constitution, for our Constitution did not stop at declaring by art. 19(1)(g) a fundamental right to carry on trade or business or at declaring by art. 301 the freedom of trade, commerce and intercourse, but proceed to make provision by art. 19(6) and arts. 302-305 for imposing in the interest of the general public reasonable restrictions on the exercise of the rights guaranteed and declared by art. 19(1)(g) and art. 301. As one of us said in Kutti Keya v. The State13a the framers of our Constitution, being aware of the problems with which the Australian Government had been confronted by reason of s. 92 sought to solve them by enacting limitations in Part XIII itself on the freedom guaranteed in art. 301—”

44. At page 968 the learned Chief Justice further observes as follows:—

“…In short the argument is that art. 19(1)(g) and art. 301 guarantee and declare the freedom of all activities undertaken and carried on with a view to earning profit and the safeguard is provided in art. 19(6) and arts. 302-305. The proper approach to the task of construction of these provisions of our Constitution, it is urged, is to start with absolute freedom and then to permit the State to cut it down, if necessary, by restrictions which may even extend to total prohibition. On this argument it will follow that criminal activities undertaken and carried on with a view to earning profit will be protected as fundamental rights until they are restricted by law. Thus there will be a guaranteed right to carry on a business of hiring out goondas to commit assault or even murder, of house-breaking, of selling obscene pictures, of trafficking in women and so on until the law curbs or stops such activities. This appears to us to be completely unrealistic and incongruous. We have no doubt that there are certain activities which can under no circumstances be regarded as trade or business or commerce although the usual forms and instruments are employed therein. To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say that they are not within the true meaning of those words. Learned counsel has to concede that there can be, no ‘trade’ or ‘business’ in crime,…”

45. The above case lays down what is trade or business within the meaning of art. 19. The law relating to crimes cannot be static and fresh offences may be constituted by the Legislature and penalties may be imposed therefor. It is urged that for whatever reason, once the carrying on of any activity is made criminal by the Legislature, the legislation is not liable to be challenged under the provisions of art. 19 of the Constitution. Having carefully considered the matter, in my view, such cannot be the meaning to be given to the provisions contained in art. 19 of the Constitution. If such a meaning was to attach to those provisions, then the Legislature has only to seek the expedient of converting any innocent activity into a crime in order to avoid the constitutional guarantees given under art. 19 of the Constitution. The fundamental rights guaranteed under art. 19 cannot depend for their existence upon the non-exercise by the Legislature of the power of converting any activity guaranteed under art. 19 into a crime. A case dealing with this matter came up before the Supreme Court in State Of Madras v. V.G Row Row.14 In that case the provisions impugned were those contained in s. 15(2)(6) of the Indian Criminal Law Amendment Act, 1908, as amended by the Indian Criminal Law Amendment (Madras) Act, 1950. In that case the Court held that s. 15(2)(b) imposed restrictions on the fundamental right to form associations guaranteed by art. 19(7)(c) which were not reasonable within the meaning of art. 19(4) and was, therefore, unconstitutional and void. The Court further held that the fundamental right to form associations or unions guaranteed by art. 19(1)(c) of the Constitution has such a wide and varied scope for its exercise, and its curtailment is fraught with such potential reactions in the religious, political and economic fields, that the vesting of the authority in the executive Government to impose restrictions on such right, without allowing the grounds of such imposition, both in their factual and legal aspects to be duly tested in a judicial inquiry, was a strong element which should be taken into account in judging the reasonableness of restrictions imposed on the fundamental right under art. 19(7)(c). That case clearly negatives the contention that the Legislature has only to dub an activity as a crime in order to remove it outside the ambit of art. 19 of the Constitution.

46. Another case in which the Supreme Court negatived such a contention is that of Ebrahim Vazir Mavat v. The State of Bombay.15 The Supreme Court in that case was dealing with the provisions of s. 7 of the Influx from Pakistan (Control) Act, 1949, and held that those provisions were void under art. 13(1) in so far as the said section conflicted with the fundamental right of a citizen of India under art. 19(1)(c) of the Constitution and that the order of physical removal of the citizen from India was therefore liable to be set aside. At page 938 Gulam Hasan observes as under:—

“Again it will be noticed that section 7 imposes the penalty of removal not only upon a conviction under section 5 but goes further and brings about the same result even where there is a reasonable suspicion entertained by the Central Government that such an offence has been committed. The question whether an offence has been committed is left entirely to the subjective determination of the Government. The inference of a reasonable suspicion rests upon the arbitrary and unrestrained discretion of the Government, and before a citizen is condemned, all that the Government has to do is to issue an order that a reasonable suspicion exists in their mind that an offence under section 5 has been committed…. Even so the penalty imposed upon a citizen by his own Government merely upon a breach of the permit Regulations, however serious it may be and, more, upon a reasonable suspicion only by the executive authority of his having violated the conditions of the permit is utterly disproportionate to the gravity of the offence and is in our opinion indefensible. A law which subjects a citizen to the extreme penalty of a virtual forfeiture of his citizenship upon conviction for a mere breach of the permit Regulations or upon a reasonable suspicion of having committed such a breach can hardly be justified upon the ground that it imposes a reasonable restriction upon the fundamental right to reside and settle in the country in the interest of the public.”

47. In the case of The State of West Bengal v. Subodh Gopal Bose,16 Chief Justice Patanjali Sastri observes at p. 604 as follows:—

“Speaking of police power, as applied to personal liberty, Prof. Willis says (Constitutional Law, p. 728):

There are two main requirements for a proper exercise of the police power—(1) there must be a social interest to be protected which is more important than the social interest in personal liberty, and (2) there must be, as a means for the accomplishment of this end, something which bears a substantial relation thereto.

This statement is equally true of police power as applied to private property. This is recognised and given effect to in clauses (2) to (6) of article 19 which delimit the regulative power of the Legislatures as applied to the freedoms enumerated in clause (1) of that article including the freedom referred to in sub-clause (f).”

48. In view of these decisions it cannot be said that merely because an activity is constituted into a crime by the Legislature, it falls outside the provisions of art. 19. In my view, the contention that art. 19 is not liable to be invoked in the present case is unsound and the impugned provisions will have to steer clear of art. 19 before they can be considered to be valid.

49. The right guaranteed under art. 19(1)(f) to acquire, hold and dispose of property is limited by the provisions contained in art. 19(5). Article 19(5) inter alia provides that nothing in sub-cl. (f) shall affect the operation of any existing law in so far as it imposes or prevents the State from making any law imposing reasonable restrictions on the exercise of any of the rights conferred by the said sub-clause in the interests of the general public. The right guaranteed under art. 19(1)(g) to carry on any occupation, trade or business is limited by the provisions contained in art. 19(6). Article 19(6) provides inter alia that nothing in sub-cl. 19(1)(g) shall affect the operation of airy existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-cl. (g) of art. 19(1).

50. In the case of Bapubhai Ratanchand v. State of Bombay . 1955 57 Bom. L.R 892. Chief Justice Chagla has observed at p. 899 as follows:—

“…Article 19(1)(g) confers a very important right upon every citizen in India and that right is to practice any profession, or to carry on any occupation, trade or business. Undoubtedly the right is to carry on a business freely. Equally it is a right to carry on any business which is permissible in law and also to carry on business anywhere within the territories of the Union of India. But as has been often pointed out, none of the rights to freedom enumerated in art. 19 is an absolute right. That right must be viewed and appreciated in the social context and the constitution makers appreciating the fact that as the country developed and grew more and more social needs would have to be satisfied provided in sub-s. (6) that the State may make law imposing, in the interest of general public, reasonable restrictions on this right. It is true that when a restriction is imposed upon the right of the citizen guaranteed to him under art. 19, it is for the State to justify that restriction. But whether a restriction is reasonable or not must be judged not in abstract but in the context of the times and in the context of social needs and social urges. A restriction which may be unreasonable at a particular juncture of time may be reasonable at a different point of time, and therefore there is no absolute yard stick by which one can test as to whether a restriction is reasonable or not.”

51. In the case of Chintaman Rao v. The State of Madhya Pradesh,18 it was observed by Mr. Justice Mahajan at p. 763 as follows:—

“The phrase ‘reasonable restriction’ connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word ‘reasonable’ implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in art. 19(1)(g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality.”

52. At page 765 of that case it has been held that when the language employed is wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting the right, so long as the possibility of its being applied for purposes not sanctioned by the Constitution could not be ruled out, it must be held to be wholly void.

53. In the case of Romesh Thapper v. The State of Madras . [1950] S.C.R 594. it was held that where a law purports to authorise the imposition of restriction on a fundamental right in language wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting such right, it is not possible to uphold it even so far as it may be applied within the constitutional limits, as it is not severable. It was further held that so long as the possibility of its being applied for purposes not sanctioned by the Constitution could not be ruled out, it must be held to be wholly unconstitutional and void.

54. In the case of Dr. N.B Khare v. The State of Delhi,20 Chief Justice Kania observes at p. 524 as follows:—

“…The law providing reasonable restrictions on the exercise of the right conferred by article 19 may contain substantive provisions as well as procedural provisions. While the reasonableness of the restrictions has to be considered with regard to the exercise of the right, it does not necessarily exclude from the consideration of the Court the question of reasonableness of the procedural part of the law… It seems that the narrow construction sought to be put on the expression, to restrict the Court's power to consider only the substantive law on the point, is not correct,”

55. In the case of Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh,21 Mukherjea observes at p. 811 as follows:—

“… A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable.”

56. I have to consider the matter in the light of the aforesaid principles.

57. It is said that the restrictions imposed by s. 178A are reasonable restrictions in the interest of the general public. It is said that it is in the interest of the general public that sea customs duties should be realised. In order that the payment of the same may not be avoided, it is in the interest of the general public that the non-payment of such duties should be regarded as a crime and punished accordingly and that any commodity which has been imported in contravention of the provisions of the Act should be confiscated and the offender punished. It is said that s. 178A is merely a rule of evidence and raises a presumption in certain cases. That presumption is a rebuttable presumption and cannot be said to be unreasonable having regard to the object with which the section was introduced.

58. On the other hand, it is contended on behalf of the petitioners that s. 178A in the cruise of raising a presumption in effect imposes an unreasonable burden which in most cases is practically impossible to discharge and that in effect it results in the deprivation of a person of his property and of his right to carry on trade or business in that commodity.

59. It is common knowledge that India produces very little gold and that most of the gold available in India is imported gold. A statement has been put in by consent showing the official figures of India's imports and exports of gold from 1851 to 1956. It shows a net import in the country, after deducting exports, of 353 crores and three lakhs worth of gold. Restrictions on the import of gold were for the first time introduced in India by Finance Department (Central Revenues) Notification No. 53, dated September 4, 1939. By that notification the Central Government in the exercise of the powers conferred by s. 19 of the Sea Customs Act prohibited the bringing or taking by sea or land into British India from any place other than Burma or out of British India to any place other than Burma gold coin, gold bullion or gold ingots, whether refined or not, except on the authority of a licence granted in that behalf by the Reserve Bank of India. On March 25, 1947, the Foreign Exchange Regulation Act came into force and under s. 8(1) of the Act a notification was issued on the same day prohibiting import of any gold coin, gold bullion, gold sheets or gold ingot, whether refined or not except with the permission of the Reserve Bank of India. On August 25, 1948, a new notification similar in effect was issued, being notification No. 12(11)-F.I/48 in supersession of the previous notification, dated March 25, 1947. Till April 1, 1946, gold remained duty free. Thereafter duty has been levied on the import of gold bullion, gold plate, gold manufactures and gold coin. There are rules framed by the Central Government regarding grant of awards to officers of the Customs Department for bringing to notice infringement and evasions of the provisions of the Sea Customs Act. The said rules appear at page 22 of the Indian Sea Customs Manual, 5th edn. The said rules provide that a reward may be given to officers of customs below the rank of Assistant Collector of Customs who are instrumental in detecting and bringing to notice infringements or evasions of the provisions of the Sea Customs Act when it is considered it is merited in the case of smuggling or attempted importation of articles contrary to the provisions of ss. 18 or 19 of the Sea Customs Act when goods are confiscated or penalty or fine is imposed not exceeding half of the realised value of the confiscated goods plus half of the penalty or fine realised and shall be so restricted that the balance shall suffice to cover all outstanding Government dues (if any) and incidental charges incurred in consequence of the seizure of the goods.

60. It is alleged that gold is a commodity which is easy to smuggle and that in addition to the gold imported as aforesaid according to official figures, there is a large quantity of gold which has been smuggled into the country. India has a large sea-board and has vast territories adjacent to other countries. It is well-known that the price of gold outside India is much lower than the price of gold in India with the result that there is considerable inducement to persons to smuggle gold into the country. It is said that in this context it is reasonable that the burden of proving that the gold is not smuggled should be cast upon the possessor of gold and that the duty of proving that the gold is smuggled gold should not be cast upon the officers of customs. It is said that the possessor of gold would be in a better position to discharge the burden of proving that the gold is not smuggled. It is further urged that this burden of proof is thrown on the person in possession of gold only in the event of the Customs Officers having seized the gold in the reasonable belief that it is smuggled. It is said that there are provisions by way of appeal and revision contained in ss. 188, 190A and 191 of the Sea Customs Act and that having regard to all the circumstances it must be held that the restrictions which are imposed on the fundamental rights of a citizen under art. 19(1)(f) and (g) are reasonable restrictions in the interest of the general public.

61. Gold has an attraction for human beings since centuries. It is a store of value and it is an article of adornment and investment. It was regarded as an international medium of exchange and is a stabiliser of currencies. It is an article of trade and commerce. It is an article which is capable of being split and there can be a fusion of diverse quantities of gold. It is easily changeable in form, size and shape. The gold available in the market hardly bears any identification mark. It is available in the form of lagdis, ravas, patlas and bars. It is available in the shape of coins. It was at one time a medium of currency. It is practically impossible for any person looking at gold to say whether duty has been paid thereon or not or whether it has been smuggled. The difficulty experienced by the customs officers with the whole machinery of Government at their disposal in proving that the gold has been smuggled is itself made a reason for throwing the burden upon the citizens to establish that the gold has not been smuggled. As stated by the Supreme Court in the case of Babulal v. Collector of Customs,22 at pp. 880 and 881:—

“No doubt the content and import of the section are very wide. It applies not only to the actual smuggler from whose possession the goods are seized but also to those who came into possession of the goods after having purchased the same after the same has passed through many hands or agencies. For example, if the Customs authorities have a reasonable belief that certain goods in the possession of an innocent party are smuggled goods and the same is seized under the provisions of this Act, then the person from whose possession the goods were seized, however innocent he may be, has to prove that the goods are not smuggled articles.

This is no doubt a very heavy and onerous duty cast on an innocent possessor who for aught one knows, may have bona fide paid adequate consideration for the purchase of the articles without knowing that the same has been smuggled. The only pre-requisite for the application of the section is the subjectivity of the Customs officer in having a reasonable belief that the goods are smuggled.”

62. The presumption is not limited in point of the time from the date of the import and is not limited to persons connected in any way with the import of gold. A citizen who may be an innocent possessor of gold, who might have purchased the same in the open market bona fide after paying full value is liable to be called upon to prove that the goods in his possession are not smuggled goods. The goods might have been imported a long time back and might have passed through various hands and the form of gold might have changed since the date of import. Except in the case of persons who might themselves have imported the gold and kept it in the same condition in which it had been imported or persons connected with them, it is virtually impossible for any person to discharge the burden that is cast upon him of proving the negative that the gold is not smuggled gold. Gold as such has no earmark. It may be virtually impossible to identify gold in the possession of a person with the gold mentioned in the Bill of Entry of any importer of gold. A burden is placed upon a citizen who is in possession of gold to trace the title of the gold in his possession to the date of its original import by tracing all dealings in gold subsequent to the import of the gold. Gold has been imported through centuries into this country and it is virtually impossible for a person to establish that any particular quantity of gold in his possession was the gold imported in the country at a particular time without resort to smuggling. The proof required pre-supposes the existence of gold in an identifiable form from the time of its import to the time of its ultimate sale to the person from whose possession the same has been seized, a proposition for which there is no warrant or basis. Gold is not like immoveable property the title of which can be traced. A citizen is asked to establish not what he did, but what might have been done by persons far removed from him, whose names he may not know and with whom he may have no connection. The fundamental right of a citizen to hold, acquire and dispose of gold or to carry on trade or business therein is left for its enforcement to the subjective reasonable belief of an officer of customs. It is a virtual negation of the fundamental right of a citizen guaranteed under art. 19(1)(f) and (g) of the Constitution.

63. On the question of the reasonableness or otherwise of the restrictions imposed by s. 178A, the learned Advocate-General has relied upon three American cases. These cases deal with due process and equality of law. Some of the observations made in those cases are useful in determining what is considered as fair and reasonable in connection with presumption raised by the Legislature. In the case of Bailey v. Alabama,23 the Supreme Court was concerned with the provisions of a law whereby the refusal without just cause to perform the labour called for in a written contract of employment under which the employee had obtained money which were not refunded, or property which was not paid for, was made prima facie evidence of an intent to defraud. At page 199 Justice Hughes in delivering the opinion of the Court observes as follows:—

“It is urged that the time and circumstances of the departure from service may be such as to raise not only an inference, but a strong inference, of fraudulent intent. There was no need to create a statutory presumption, and it was not created, for such a case. …The ‘difficulty,’ which admittedly the amendment was intended to surmount, did not exist where natural inference sufficed. Plainly, the object of the statute was to hit cases which were destitute of such inferences, and to provide that the mere breach of the contract and the mere failure to pay the debt might do duty in their absence…. Unless he were fortunate enough to be able to command evidence of circumstances affirmatively showing good faith, he was Helpless. He stood, stripped by the statute of the presumption of innocence, and exposed to conviction for fraud upon evidence only of breach of contract and failure to pay.”

64. At p. 200, it has been stated as follows:—

“This court has frequently recognised the general power of every Legislature to prescribe the evidence which shall be received, and the effect of that evidence, in the courts of its own government…. In the exercise of this power numerous statutes have been enacted providing that proof of one fact shall be prima facie evidence of the main fact in issue; and where the inference is not purely arbitrary, and there is a rational relation between the two facts, and the accused is not deprived of a proper opportunity to submit all the facts bearing upon the issue, it has been held that such statutes do not violate the requirements of due process of law, or a denial of the equal…”

65. Justice Hughes in that case has quoted with approval the following remarks of Justice Lurton (p. 200):—

“That a legislative presumption of one fact from evidence of another may not constitute a denial of due process of law, or a denial of the equal protection of the law, it is only essential that there shall be some rational connection between the fact proved, and the ultimate fact presumed, and that the inference of one fact from proof of another shall not be so unreasonable as to be a purely arbitrary mandate.”

66. It is further observed at p. 200 as under:—

“…It is apparent that a constitutional prohibition cannot be transgressed indirectly by the creation of a statutory presumption any more than it can be violated by direct enactment. The power to create presumptions is not a means of escape from constitutional restrictions. And the State may not in this way interfere with matters withdrawn from its authority by the Federal Constitution, or subject an accused to conviction for conduct which it is powerless to prescribe.”

67. It is urged that in the present case constitutional provisions have been transgressed by the creation of a statutory presumption.

68. In the case of Manley v. Georgia,24 Justice Butler in delivering the opinion of the Court, observes as follows (p. 578):—

“State legislation declaring that proof of one fact or a group of facts shall constitute prima facie evidence of the main or ultimate fact in issue is valid if there is a rational connection between what is proved and what is to be inferred…. A statute creating a presumption that is arbitrary or that operates to deny a fair opportunity to repeal it violates the due process clause of the 14th Amendment…. Mere legislative fiat may not take the place of fact in the determination of issues involving life, liberty or property. ‘It is not within the province of a legislature to declare an individual guilty or presumptively guilty of a crime’.”

69. It is urged that in the present case the subjective belief of a customs officer is made prima facie evidence of the fact that the goods are smuggled and that there is no rational connection between the two.

70. In the case of Tot v. United States,25 the impugned legislation declared that from the prisoner's prior conviction of a crime of violence and his present possession of a firearm or ammunition, it shall be presumed (1) that the article was received by him in interstate or foreign commerce, and (2) that such receipt occurred subsequent to July 30, 1938, the effective date of the statute. Justice Roberts in delivering the opinion of the Court has observed at p. 1523 as follows:—

“…The defendants assert that it fails to meet them because there is no rational connection between the facts proved and the ultimate fact presumed, that the statute is more than a regulation of the order of proof based upon the relative accessibility of evidence to prosecution and defence, and casts an unfair and practically impossible burden of persuasion upon the defendant.”

71. It is further stated at p. 1525 as follows:—

“…The argument from convenience is admissible only where the inference is a permissible one, where the defendant has more convenient access to the proof, and where requiring him to go forward with proof will not subject him to unfairness or hardship….”

72. Under s. 178A of the Sea Customs Act there is no proof of any fact from which a reasonable inference can be drawn that the gold is smuggled. The burden sought to be east is a well-nigh impossible burden. It subjects citizens to unfairness or hardship. From the subjective reasonable belief of a Customs Officer that gold is smuggled an inference cannot reasonably be drawn that the gold has in fact been smuggled and that an offence in relation thereto has been committed. The object of the legislation in effect is to penalise a citizen for the difficulties experienced by Customs Officers in establishing that the gold seized has been smuggled. The inference sought to be drawn is arbitrary and results in the violation of the fundamental rights guaranteed under art. 19(1)(f) and (g) of the Constitution.

73. It is urged that existence of the power of appeal and revision constitutes a safeguard against the burden being arbitrarily or capriciously thrown on the citizen. Where the belief is subjective, the provision by way of an appeal or revision therefrom does not constitute an effective safeguard. The belief being subjective, those sitting in appeal or revision have only to be satisfied about the existence of such subjective belief without the same being objectively tested. In the case of Nakkuda Ali v. M.F De S. Jayaratne,26 the Judicial Committee of the Privy Council has observed at p. 77 as under:—

“…But if the question whether the condition has been satisfied is to be conclusively decided by the man who wields the power the value of the intended restraint is in effect nothing. No doubt he must not exercise the power in bad faith: but the field in which this kind of question arises is such that the reservation for the case of bad faith is hardly more than a formality.”

74. The learned Advocate-General drew my attention to the decision of this Court in the case of C.B.H Readymoney Ltd. v. State of Bombay,27 and to the remarks of Mr. Justice Tendolkar at p. 807 therein and to the decision of the Privy Council in Nakkuda Ali v. N.F De S. Jayaratne referred to above. He urged that even if the reasonable belief referred to in s. 178A was not subjective but was objective the provisions of s. 178A would be bad. The burden cast upon the citizen in most cases is virtually impossible of being discharged. The fundamental rights of the citizen would be left to the tender mercy of an officer of customs seizing the gold in the reasonable belief that it is smuggled gold. The reasonable belief in this case, whether subjective or objective, falls short of proof and where it falls short of proof a citizen cannot be deprived of his rights by throwing upon him a virtually impossible burden. One can understand a provision where the burden of showing that the gold in question had been purchased in good faith without notice that the same has been smuggled or without reason to believe that the same is smuggled is imposed. But one cannot countenance a burden where he has to establish facts not within his knowledge and which for all practical purposes it might virtually be impossible for him to discharge. It is not possible to sever the case of a person who has actually imported the goods or taken part in the import from that of a person who has purchased the goods in good faith at a fair price from a merchant dealing in gold. The provisions contained in s. 178A must, therefore, be held to be bad in so far as they relate to gold as violating the fundamental rights guaranteed under art. 19(1)(f) and (g) of the Constitution.

75. It was urged before me that s. 178A does not directly deal with the fundamental rights guaranteed under art. 19(1)(f) and (g) and that the provisions of s. 178A must not be held to be bad. My attention was drawn to the decision of the Supreme Court in the case of A.K Gopalan v. State Of Madras.,28 where Chief Justice Kania has observed as follows (pp. 100-101):—

“The Article (Art. 19) has to be read without any pre-conceived notions. So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub-clauses. If there is a legislation directly attempting to control a citizen's freedom of speech or expression or his right to assemble peaceably and without arms etc. the question whether that legislation is saved by the relevant saving clause of article 19 will arise. If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub-clauses is abridged, the question of the application of article 19 does not arise. The true approach is only to consider the directness of the legislation and not what will be the result of the detention otherwise valid, on the mode of the detenue's life,”

76. The presumption in question is raised with a view to inflict the penalty of confiscation. Where the goods are confiscated, the right of a citizen under art. 19(1)(f) and (g) is directly violated. I do not see any substance in this contention.

77. In the petition the petitioners have alleged that s. 178A of the Sea Customs Act violated art. 20(5) of the Constitution. That contention was not pressed before me.

78. In view of the fact that I have held that s. 178A is bad in law in so far as it applies to gold, the order passed by the Additional Collector of Customs must be set aside.

79. Even if s. 178A had been held to be valid, on the facts of the present case the goods in question have not been seized in the reasonable belief that they are smuggled goods and the provisions of s. 178A would not be attracted. Even if the case of the respondents that the seizure took place at the time when the panchnama was made is accepted, the panehnama itself shows that the gold was taken charge of by the Customs Inspector Mr. Kishinchand N. Vazirani and Customs Preventive Officers Messrs B.M Kamat and G.S Shirur and P.M Ranade. The panchnama mentions that the pieces of gold therein mentioned was taken charge of “to facilitate enquiries”. There is no averment anywhere to show that these goods were seized in the reasonable belief that they were smuggled goods. In his affidavit in reply, dated February 19, 1957, respondent No. 1 has stated that the impugned order was passed by him bona fide having formed a reasonable belief under s. 178A that the said goods were smuggled goods. This belief was a belief subsequently acquired after the goods were seized and after enquiries were made. His belief acquired long after the seizure would not attract the operation of s. 178A of the Sea Customs Act. In para. 16 of the said affidavit it is stated that the Assistant Collector of Customs entertained a reasonable belief that the said quantity of gold seized from the petitioners was smuggled gold and that, therefore, before adjudicating the confiscation of the gold seized from the petitioners under s. 167(8) of the Sea Customs Act, he issued a memo, dated August 9, 1956, giving an opportunity to the petitioners to show cause why the said quantity of gold should not be confiscated. The memo, dated August 9, 1956, shows that the Assistant Collector of Customs referred to is Mr. M. Ramchandran. He was not the person who effected the seizure of these goods and the reasonable belief acquired by him is not the belief of the persons who seized the goods. The goods were not seized after he acquired such reasonable belief. In this view of the matter, the impugned order is bad as it is based on the presumption raised under s. 178A of the Sea Customs Act.

80. It is urged in the affidavit in reply that the petition should not be entertained as the petitioners have not exhausted their remedies provided under the Sea Customs Act. No doubt, there are remedies by way of appeal and revision under the Sea Customs Act. The existence of such remedies is no bar where the fundamental rights of a citizen are involved. In the case of United Motors (India) Ltd. v. The State Of Bombay* . 1952 55 Bom. L.R 246., a Division Bench of this Court consisting of Chief Justice Chagla and Mr. Justice Dixit has laid down that the principle that a Court will not issue a prerogative writ when an equally adequate alternative remedy is available would not apply when a party comes to the Court with the allegation that his fundamental rights have been contravened and he wants relief from the High Court under art. 226 of the Constitution. It is well-settled law that the existence of an adequate alternative remedy is no bar where the fundamental rights of a citizen are involved and have been infringed.

81. In para. 5 of the affidavit of respondent No. 1 it has been urged that the impugned order is an administrative order and not a quasi-judicial order. In the case of F.N Roy v. Collector of Customs,30 such a contention has been negatived. In that case the Collector of Customs had passed an order confiscating the goods and imposing a penalty of Rs. 1,000 on the petitioner under s. 167(8) of the Sea Customs Act. Mr. Justice Sarkar in delivering the judgment of the Court observes at page 651 as follows:—

“…Furthermore, the discretion is vested in high Customs officers and there are appeals from their order. The imposition of the fine is really a quasi-judicial act.”

82. That decision has been followed in another case which came up before the Supreme Court, Leo Roy v. Supdt., Dist. Jail . [1958] A.I.R S.C 119.. Chief Justice S.R Das in that observes at page 121 as follows:—

“…That in imposing confiscation and penalties the Collector acts judicially has been held by this Court in its judgment pronounced on May 16, 1957, in F.W Roy v. Collector of Customs, Petn. No. 438 of 1955…”

83. There is a decision to the same effect of a Division Bench of our Court, consisting of Chief Justice Chagla and Tendolkar delivered on October 5, 1956, in S. Venkatesan, Dy. Collector of Customs, Bombay v. Shah Trikamdas Damji . 1956 O.C.J Appeal No. 76 of 1956, Misc. No. 184 of 1956, decided by Chagla C.J and Tendolkar J., on October 5, 1956 Unrep...

84. In that case the impugned order related to the confiscation of certain goods. That order was challenged. In dealing with that order, the learned Chief Justice has observed as follows:—

“The section under which the order is made is section 182 of the Sea Customs Act which talks of adjudication by the Excise Officer and by reason of that section undoubtedly the order passed by the Deputy Collector becomes a quasi-judicial order.”

85. In view of what is stated above, the petitioners are entitled to a writ of certiorari quashing and setting aside the order of confiscation, dated October 27, 1956. The petitioners are also entitled to a writ of mandamus against the respondents directing the return of the gold wrongfully confiscated under the said order by the respondents. I direct the issue of a writ of certiorari in terms of prayer (a) of the petition and also a writ of mandamus directing the respondents to return to the petitioners the gold confiscated under the said order dated October 27, 1956. The respondents to pay to the petitioners the costs of the petition. Having regard to the complicated questions raised in the petition and having regard to the length of time taken in the hearing of the petition, I direct that costs of the petition he taxed on the long cause scale.

86. The respondents appealed.

87. S.V Gupte, with R.L Dalal, for the appellants.

88. R.J Joshi, with S.J Sorabjee, for the respondents.

89. S.M Shah, J.:— This is an appeal filed by the Additional Collector of Customs, Bombay, and the Union of India, against the order passed by K.T Desai, by which the order passed by the Additional Collector of Customs confiscating certain quantity of gold belonging to the respondents was quashed, and a writ of mandamus was issued requiring the Additional Collector to withdraw the order that he had passed.

90. The respondents carry on business in Bombay as dealers in bullion in partnership in the firm name and style of Messers Ambalal Amichand & Co. at 101, Shaikh Memon Street, Bombay. In the petition that they filed in this Court, they stated that they were one of the leading bullion merchants in the city and used to buy and sell gold in a large way in diverse forms. It was alleged that on September 12, 1955, the respondents in the usual course of their business sent about 385 tolas of gold from their stock to the Bombay Bullion Association Refinery for the purpose of melting and assaying. It was further alleged that as the respondents required more gold of the same fineness, they sent a further quantity of 151 tolas of gold from out of their stock with one of their employees named Jitendra Bhagwandas, to have the same melted with the earlier lot in order to have one lot of uniform fineness with one certificate of assaying. The petition went on to allege that as their employee Jitendra was about to hand over the 151 tolas of gold to an employee of the Refinery for being put in the same crucible in which the earlier lot of 385 tolas of gold had been put, he was stopped by one B.M Kamat, an officer in the Customs. Department. It was further alleged that Kamat took charge of the said 151 tolas of gold within the premises of the Refinery and that thereafter Kamat and the said Jitendra went to the respondents' shop with the said 151 tolas of gold. The respondents alleged that Kamat, after going to that shop, checked the stock of gold with their stock as shown in their books of account and other documents and found that there was a shortage of about 24 tolas of gold, which had to be explained by the respondents. The said Kamat, according to the respondents, made the alleged shortage of gold of about 24 tolas an excuse to seize the entire quantity of gold weighing 151 tolas. A panchnama was thereafter made on the same day in connection with the said seizure of gold. According to the respondents, the panchnama recited that the panchas were called by Customs Inspector Mr. Kishinchand N. Vazirani and Customs Preventive Officers Messrs B.M Kamat and G.S Shiroor and P.M Ranade in the Rummaging Division, New Customs House, Bombay, to witness the taking over of the gold bullion from Amichand Vallamji. In the said panchnama the gold was stated to consist of three lots. (1) Three pieces of odd shapes and sizes weighing approximately 64 tolas stated by the respondents to have been purchased from Shantilal Kalidas on Saturday, September 10, 1955; (2) Two pieces of odd shapes and sizes weighing approximately 46 tolas, stated to have been purchased by the respondents from the said Shantilal Kalidas on September 12, 1955; and (3) Two pieces of odd shapes and sizes weighing approximately 41 tolas, stated to be forming part of the quantity purchased by the respondents from Mulchand Jitaji on September 9, 1955. The respondents thereafter quoted a passage from the panchnama showing that all those three lots of gold were taken charge of by the Customs Officers to facilitate inquiries after they were placed in a cloth bag, which was sealed by Amichand with his key as desired by Amichand himself. The respondents further went on to allege in the petition that the said Shantilal Kalidas and Mulchand Jitaji were well-known bullion merchants in the market, doing business for a number of years past and were registered dealers under the Bombay Sales Tax Act. They alleged that the statement of the said Shantilal Kalidas was recorded by the Customs Officer on the very same day, that the books of the said Shantilal Kalidas and the said Mulchand were produced, which showed the purchase of the aforesaid gold by the respondents, and that on September 16, 1955, 41 tolas of gold which had been purchased from Mulchand Jitaji out of the three lots which were seized by the Customs Officers, were released by the Customs Department, the Customs Officers being satisfied that gold was not smuggled. According to the respondents, the Assistant Collector of Customs, Preventive Department, issued a show cause notice on August 9, 1956, against the firm of Ambalal Amichand & Co. to show cause why the balance of the gold should not be confiscated. In the notice it was stated that the said Jitendra was noticed by an Intelligence Officer of the Customs House rushing hurriedly straight to the place where gold was melted in the Bombay Bullion Hennery, without waiting near the counter where gold was weighed before melting. Inasmuch as his behaviour appeared to be suspicious, the notice went on to state, he was followed by the Intelligence Officer inside the Refinery where he was seen taking out some gold pieces in the form of Rawa and handing over the same to one of the servants of the Refinery for placing the same in the furnace. Jitendra was questioned as to why he did not get the gold weighed, to which he replied that the gold pieces which he was handing over were in addition to the gold which had already been handed over to the Refinery for melting. It was further stated in the notice that a casual perusal of the account, books of the shops from where the gold was purchased by Messrs Ambalal Amiehand & Co. showed the acquisition of some quantity of gold in excess by the latter, and that as Messrs Ambalal Amiehand & Co. could not give a satisfactory explanation to the Customs Officers regarding the discrepancy found in the accounts, all the three lots of gold were brought to the Customs House and taken over in the presence of the panch witnesses for taking suitable action under the Sea Customs Act. It was further stated in that notice that two out of the aforesaid lots of gold could not be released for the reasons following:—

“Shri Shantilal Kalidas said in his statement that he had purchased the gold pieces covered by item (1) (weighing about 64 tolas) from one Shri Prabhudas who is neither a Dalal nor a broker in the bullion bazar and whose address is also not known to him. He had further stated that the gold pieces covered by item (2) (weighing about 46 tolas) had been purchased by him from another gentleman Shri Amritlal Kalyanji from Dawa Bazar who is not known in the bullion bazar. His address is also not known to Shri Shantilal Kalidas. He was given sufficient time to produce these men, viz. Messrs Prabhudas and Amritlal Kalyanji before the Customs, but has not produced these men to the Customs.

On suspicion the said gold was detained as there is sufficient reason to believe that the gold was not legally imported. The onus of proof regarding the legal importation of the gold in question lies with the party. In this case the party has failed to discharge this onus.

Further, import of the gold bullion can be legally effected only if authorised by an import permit issued by the Reserve Bank of India. No such permit is forthcoming.

In so far as the legal importation of the said gold has not been established, it is deemed to have been imported into India in contravention of the Reserve Bank of India's Notification No. 12(11) (P.I/48 of 25-8-48). An offence attracting the provisions of section 167(8) of the Sea Customs Act read with section 23A of the Foreign Exchange Regulations Act is thereby disclosed.”

91. It appears that the respondents sent a reply to this notice by their letter dated September 20, 1956, contending that the certificate of fineness in respect of the gold that had been seized, issued by the Indian Government Mint showed that the gold was of indigenous origin, that the said gold was in the form of Rawa, a form in which indigenous refined gold was made, that they had purchased the said gold from the said Shantilal Kalidas, that there was a Dharma Khata Chit of weighment in respect of the said gold and that they were bona fide purchasers of the said gold. By the same letter the respondents further stated that they dealt in gold to the tune of thousands of tolas, that every day they purchased and sold a very large quantity of gold, that they had their own Lagdis bearing their distinctive trade mark, which was popular in the market, and that Lagdis bearing that mark in sizes of quarter tala, half tola, one tola and five tolas were popular in the market and were sold by them. They further contended that before s. 178A of the Sea Customs Act could be made applicable, the goods must be seized in the reasonable belief that they were smuggled goods, that in the present case the goods were not seized under any such belief, and that, therefore, the presumption contemplated by that section would not arise. They denied that any offence had been committed by them or that the goods were liable to confiscation. On October 12, 1956, a personal hearing was given to the respondents by the Additional Collector of Customs and on October 27, 1956, an order was passed by him, confiscating the said gold outright under the provisions of s. 167(8) of the Sea Customs Act read with s. 23A of the Foreign Exchange Regulation Act. The said order inter alia stated as follows:

“On 12-9-1955, Customs Officers in plain clothes on duty in the Zaveri Bazar detained one Shri Bachubhai alias Jitendralal Bhagwandas, an employee of Messrs Ambalal Amichand & Co. with certain gold in his possession and the gold weighing in all about 152 tolas, details as in the margin, was seized under section 178 of the Sea Customs Act pending further enquiries into the legal origin of the gold as there were certain circumstances which made the officers suspicious that the gold was liable to confiscation. Enquiries were then made. Messrs Ambalal Amichand & Co. the owners of the gold, were able, to satisfy this Department of the legal origin of the gold covered by item 3 shown in the margin (weighing about 41 tolas). These two pieces of gold weighing about 41 tolas were therefore returned to Shri Ambalal Amichand on 16-9-1955. In respect of the other gold there was reasonable belief to hold that the same had been smuggled into India and Messrs Ambalal Amichand & Co. were unable to satisfy this Department as to the legal origin of the gold. They were served with a show cause notice on 9-7-1956 giving therein the reasons for the Department's belief that the gold was not legally imported….”

92. The respondents by their petition contended that the said order dated October 27, 1956, was bad, illegal, void and inoperative in law and prayed for the issue of a writ of certiorari or a writ in the nature of certiorari, or a direction, order or other appropriate writ under art. 226 of the Constitution of India against appellant No. 1, the Additional Collector of Customs, calling for the records of the case relating to the said order dated October 27, 1956, and quashing and setting aside the same. They also prayed for the issue of a writ of mandamus or a writ in the nature of mandamus, or a direction, order or other appropriate writ under art. 226 of the Constitution of India against the appellants ordering the appellants to withdraw and set aside the said order dated October 27, 1956, and to return to the respondents the said gold wrongfully confiscated by the appellants. The Collector of Customs filed an affidavit in reply denying the allegations made by the respondents in the petition. In the course of this affidavit, in para. 8 thereof it was inter alia stated:

“I say that the servant of the petitioners, Jitendra Bhagwandas, was observed running hurriedly straight to the place where gold is melted in the Bombay Bullion Refinery at Zaveri Bazar without waiting near the counter where gold is weighed and is taken over by the officials of the refinery before melting. I say that the behaviour of Jitendra Bhagwandas aroused the suspicions of Mr. Kamat, Intelligence Officer of the New Customs House in plain clothes on duty near the Bombay Bullion Refinery… I say that the conduct of the petitioners in attempting to get the gold melted in the refinery without entering the particulars in the refinery's books was suspicious and open to question… I say that Mr. Kamat was justified in suspecting from the manner and behavior of Jitendra and the unusual haste of his actions and the irregularity of the procedure followed by him and other attendant circumstances that the said 151 tolas were not of lawful origin.”

93. In para. 9 of the affidavit in reply it was inter alia stated as follows:

“I say that the shortage of the gold amounting to 24 tolas was an additional factor which further confirmed the suspicion originally entertained by Kamat about the illegal origin of the said gold.”

94. In para. 17 of that affidavit with reference to para. 11 of the petition the Additional Collector of Customs stated as follows:

“I deny that the said gold was not seized under the reasonable belief that the same was smuggled gold as alleged therein. I deny the allegations and submissions made in the said reply and referred to in the said para.”

95. In para. 18 of the affidavit, with reference to paras. 12 and 13 of the petition, it was inter alia stated as follows:

“I say that I entertained a reasonable belief that the petitioners' gold was smuggled gold. I therefore most respectfully submit that it is not competent to this Hon'ble Court to question my belief which was entertained by me in good faith. I say that the reasonable belief referred to in section 178A of the Sea Customs Act relates to a subjective appreciation of the factors relating to the formation of the belief. I therefore submit that this Hon'ble Court cannot question the reasonableness of my said belief.”

96. It was contended on behalf of the respondents before Mr. Justice K.T Desai, who heard this petition, that s. 178A of the Sea Customs Act was ultra vires the Constitution and that, therefore, the order impugned by the petition required to be set aside. It was further contended on merits on behalf of the respondents that even if s. 178A of the Sea Customs Act was not ultra vires as alleged by them, the gold in question was seized by the Customs Officers on their own showing merely on suspicion that it was smuggled gold and not under any reasonable belief that it was smuggled gold. The learned Judge, before whom the hearing went on for several days, came to the conclusion that s. 178A of the Sea Customs Act was ultra vires the Constitution and that, therefore, according to him, the order, which was challenged by the respondents in the petition, deserved to be set aside. The learned Judge further went on to decide the petition on merits on the assumption that s. 178A of the Sea Customs Act was not ultra vires, and he held that inasmuch as on the material on record the Customs Officers seized the gold merely on suspicion which was aroused by reason of the movements of Jitendra and the inability of the respondents to satisfy the Customs Officers from their books of account as to whether the amount of gold which was sent to the refinery for melting was theirs or-not, the order passed by the Additional Collector of Customs was not tenable and that for that reason also it deserved to be set aside. The learned Judge accordingly allowed the petition filed by the respondents, issued the writ of certiorari quashing the order passed by the Additional Collector of Customs, and also issued a writ of mandamus requiring the Additional Collector of Customs as well as the Union of India to withdraw the order that was passed and/or to cancel it. It is against that order of the learned Judge that the Additional Collector of Customs and the Union of India have filed the present appeal.

97. It was contended by Mr. Gupte, the learned counsel for the appellants, that the learned Judge in the Court below was in error in coming to the conclusion on merits that the gold in question was not seized under the reasonable belief, that it was smuggled. In order to sustain this argument Mr. Gupte sought to put a construction upon s. 178A of the Sea Customs Act which, according to him, would lead to the conclusion that the reasonable belief that is required to be entertained with regard to the seizure of any gold is the reasonable belief at the time of the inquiry and not necessarily at the time when the gold is seized. In other words, it was contended that on a reasonable construction of s. 178A of the Sea Customs Act it would be enough for the purpose of throwing the burden of proof that the gold seized was not smuggled gold on the party from whom it was seized that the inquiry officer, after considering the circumstances in which the gold was seized, came to the conclusion that there was a reasonable belief in his mind that the gold that was seized was smuggled. According to the learned counsel, there is no specific reference to any particular time at which the reasonable belief should exist in the section itself and, therefore, looking to the circumstances which generally attend upon the seizure of any smuggled gold or bullion, when it is not possible for the Customs Officer to have a reasonable belief that the gold that is seized is smuggled except after due investigation, it must be held that the Legislature intended the reasonable belief as regards the nature of such gold to exist not at the time when it was seized, but at the time when the inquiry is started by the Customs Officer with a view to decide as to whether the gold which was seized should be confiscated or not and whether the person from whom it was seized should be made liable to any penalty under s. 167(8) of the Sea Customs Act. We are afraid, however, that we cannot accept Mr. Gupte's contention. The language of the section itself, in our opinion, is too simple to admit of any equivocal interpretation. We had an occasion to deal with this question only recently in T.C Seth v. Jal Hormusji Khajotia which arose out of Miscellaneous Petition No. 1 of 1959, and we have expressed our opinion on the basis of the interpretation of ss. 178 and 178A of the Sea Customs Act that the provision of s. 178A would be attracted where it is shown that the Customs Officer seizing the gold had, at the time of actual seizure, either at the place where it was found or in the Customs House where it was seized under a panchnama, a reasonable belief in his own mind that the gold that he was seizing was smuggled gold. The Inquiry Officer thereafter would issue the notice to show cause to the person from whose possession the gold was seized, as to why the gold which was seized should not be confiscated under s. 167(8) of the Sea Customs Act. But he would do that only after considering the material placed before him by the investigating officers in order to enable him to find, as claimed by the investigating officers themselves if at all, that the gold seized by them was seized under a reasonable belief that it was smuggled gold. What the Inquiry Officer, as expressed by us in the judgment in that case, should do is to consider the material placed before him by the investigating officers before issuing the show cause notice itself, so that in case he comes to the conclusion that there was such a reasonable belief in the minds of the seizing officers at the time of the seizure, he could straightaway point out to the persons to whom the notice is addressed that the burden would lie upon them to show that the gold that was seized by the officers was not smuggled. In other words, we are of the opinion that it is at the stage of issuing the show cause notice that the Inquiry Officer has got to decide upon the course that he would adopt, viz., whether; if he is not satisfied that there was such a reasonable belief in the minds of the Customs Officers who seized the gold at the time of the seizure, he would require the Customs Department itself to produce necessary evidence to show that the gold was smuggled, or, in case he is satisfied on the material placed by the Investigating Officers before him that there existed in the minds of seizing officers a reasonable belief that the gold they had seized was smuggled gold at the time of the seizure thereof, call upon the persons to whom the notice is addressed to adduce all the evidence that they would desire for the purpose of showing that the gold was not smuggled gold. As stated above, the words used in s. 378A are too simple to admit of any doubt as to their true construction. The reasonable belief referred to in that section can only refer to the point of time when the gold is seized. If, on the other hand, after further investigation by the Customs Officers, following upon the seizure of gold merely upon suspicion that it was smuggled, the Customs Officers come into possession of more evidence, which would lead to a reasonable belief that the gold was really smuggled gold, that, in our opinion, would not avail the Inquiry Officer for the purpose of acting under s. 178A of the Sea Customs Act. Nor is it contemplated by the section that the reasonable belief should be of the Inquiry Officer, who makes the inquiry into the question as to whether the gold which was seized by the Customs Officers should be confiscated or not.

98. The view, which we have already expressed in T.C Seth v. Jal Hormusji Khajotia, on this question of the interpretation of s. 178A of the Sea Customs Act, seems to be fortified by a recent decision of the Madras High Court in N.S Chetty v. Collector of Customs. In that case, it was contended on behalf of the Customs that the words “reasonable belief” as used in s. 178A of the Sea Customs Act were only descriptive of the smuggled goods seized and that the terms of the section did not prescribe the existence of the reasonable belief as a condition precedent to be satisfied before the burden of proof could be imposed on the person from whom the goods were seized. The learned Judges, however, did not accept that contention and observed as follows (p. 149):

“Such a result could be achieved only if we delete the words from S. 178A(1) ‘in the reasonable belief that they are smuggled goods’ and read the section as ‘where any goods to which this section applies are seized under this Act, the burden of proving they are not smuggled goods shall be on the person from whose possession the goods were seized.’

Such a reading is not permissible to interpret the plain words of the section.”

99. Then on the same page the learned Judges further observed as follows:

“We must uphold the contention of the learned counsel for the petitioners that unless it is established that the gold was seized in the reasonable belief that it was smuggled gold, S. 178A(1) cannot apply. The reasonable belief must be that of the officer who effected the seizure. It is belief and reasonable belief that the section requires, and not for instance mere suspicion which is all that S. 178 requires to justify arrest, or S. 180 requires to justify seizure and detention of goods. The reasonable belief that precede or at least coincide with the seizure; formation of the belief subsequent to the seizure, however well-founded that belief is, will not satisfy the requirements of S. 178A(1).”

100. This is precisely the view that we have taken in T.C Seth v. Jal Hormusji Khajotia. Mr. Gupte, after referring to this decision of the Madras High Court, sought to contend the same way as the learned Advocate General did in that case, but without success. Mr. Gupte also invited our attention to several other sections of the Sea Customs Act for the purpose of showing that the reasonable belief contemplated by s. 178A of the Sea Customs Act could as well be the belief of the Inquiry Officer at the time when he issues the show cause notice to the person from whom the gold is seized. In our opinion, however, it is not necessary to refer to other sections when s. 178A itself is so clear and plain in its language and meaning. As a matter of fact, a perusal of some of the sections of the Act makes it abundantly clear that the Legislature has dearly borne in mind the distinction between ‘a seizure on suspicion’ and ‘a seizure in the reasonable belief.’ For instance, in s. 180 of the Act there is a reference to seizure by a police officer on suspicion of things that have been stolen. The provision of this section itself makes it abundantly clear, that the Legislature did not intend to use the words, or rather expressions, “on suspicion” and “in reasonable belief” interchangeably. They had in their mind a clear distinction between these two expressions, and wherever they thought, in pursuance of their policy in enacting the legislation, that one or the other expression should be used, they have done so. Referring to s. 178K of the Act, it is necessary to remember that it was only on account of the difficulties pointed out by the Customs Officers to the Government that it was almost impossible for them to prove in every case of seizure of bullion or precious stones that the articles seized were smuggled and thereby curb the racket, which according to the Customs Officers prevailed in this country, with regard to smugging of gold and precious stones, that the Government considered that their difficulties might be removed by introducing a new section in the Sea Customs Act. At first, it appears, the section was so worded that entirely arbitrary powers were given to the Customs Officers in regard to seizure of precious metal and precious stones, and the Government had made no secret of the object which it had in view while formulating the policy in regard to the amendment which was sought to be made in the Act. By this section the Government proposed to give absolute authority to Customs Officers to seize precious metal and precious stones, wherever they suspected them to be smuggled, and immediately call upon the persons from whom they were seized to show that they were not smuggled. Realising, however, the danger of the exercise of such an arbitrary power to the common people in the country, Parliament advisedly amended the proposed section by adding the words “in the reasonable belief that they are smuggled goods” after the words “are seized under this Act” in sub-s.’ (7) of s. 178A of the Act. By adding these words Parliament placed a restriction upon the powers of the Customs Officers to the extent that the person from whom any goods falling within the ambit of s. 178A were seized by them could be called upon to prove that they were not smuggled goods only where they were seized in a reasonable belief that they were smuggled goods. The amendment introduced by Parliament in the section, in our opinion, is a salutary one. It is well known that a person accused of an offence cannot be called upon to explain or to prove his innocence. Section 178A, which was proposed by the Government really was opposed to this cardinal principle of criminal law. Such a principle cannot be violated or an enactment contrary to such a principle cannot be made. Obviously, therefore, s. 178A could not be enacted unless there were proper safeguards provided for those who were sought to be held guilty in regard to the import and export of unauthorised goods and articles. It was with this end in view, it appears, that Parliament, though not objecting to the persons from whom certain types of goods were seized, being called upon to show that such goods were not smuggled goods provided by the amendment that the burden of proving that they were not smuggled goods could not lie upon the person from whose possession the goods were seized unless and until they were seized by the Customs Officers in a reasonable belief that they were smuggled goods. The construction, therefore, to be put upon s. 178A of the Act is, in our opinion, plain enough and it is that the Customs Officers should seize the goods covered by s. 178A in a reasonable belief that they are smuggled goods before the burden of proving that they are not smuggled goods could lie on the person from whose possession such goods were seized. This position would be very much clear if it can be contrasted with a case where a Customs Officer seizes any of such goods merely on suspicion that they are smuggled. A suspicion can arise from the peculiar kind of movement on the part of the person who is suspected to be in possession of some smuggled goods. It may arise from the kind of dealing that a person might be having in regard to goods, which the Customs Officer might thereupon suspect to be smuggled. One may conceive of a number of other ways in which a suspicion may arise in the mind of the Customs Officer that any particular person is possessed of smuggled goods. A belief, on the other hand, cannot arise merely in the circumstances in which a suspicion can arise, A belief in the existence of a thing requires a more solid foundation than in the case of a mere suspicion. It may be based upon some definite information acquired from a reliable source that a certain person is in possession of smuggled goods. The belief again, as required by s. 178A of the Sea Customs Act, must be a reasonable one, not a belief of a man who just catches at some slight circumstance which only creates a sort of guess or speculation in his mind that something might exist or might not exist. The belief must be such as any other reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. In regard to s. 178A of the Act the reasonable belief may be based upon some definite information acquired from a reliable source that a certain person is in possession of smuggled goods. The Customs Officer receiving such information again must be confident about the validity and the reliability of the source of information itself. It may arise, for instance, in cases where in the presence of a Customs Officer in disguise some shady dealing in regard to some goods takes place, whereupon he may be able to find sufficient material to entertain a reasonable belief that the dealing, to which he was a witness, was in respect of smuggled goods. The restrictions placed upon the powers of the Customs Officers under s. 178A of the Act cannot be lightly treated. They are serious and it is necessary that the Custom's Officers themselves should realise the importance thereof. They are intended to check the exercise of the powers given to them under s. 178A of the Act arbitrarily and without any foundation at all, to the harassment of the general public. It would be necessary, therefore, that before any person could be called upon to prove that the goods seized from him were not smuggled goods, the Customs Officer making the seizure must proceed upon the foundation of a reasonable belief inspired in him by some definite materials by way of some definite information or otherwise; so that he could be said to seize the goods in the reasonable belief that they were smuggled goods. It will be then for the. Inquiry Officer to enquire and be satisfied as to whether the Customs Officer who had seized the goods was not wrong in his belief that the goods that he had seized were smuggled goods, or, in other words, he had a reasonable belief that the goods were smuggled goods at the time of seizure. In case the Inquiry Officer is satisfied that the goods were seized in such a reasonable belief he would specify the same in the show cause notice which he would thereafter issue to the person from whom the goods were seized and call upon him under s. 178A of the Act to prove that the goods were not smuggled goods.

101. In our opinion, therefore, it is difficult to accept Mr. Gupte's contention that the reasonable belief, which is contemplated by s. 178A of the Sea Customs Act, may either be the belief in the mind of the Inquiry Officer at the stage of the inquiry, or in the mind of the seizing officers themselves even after the seizure took place. In our opinion, there is one and only one construction possible of this section, so far as the point of time at which the reasonable belief should exist, in regard to the seizure of any smuggled goods is concerned, and the construction is that wherever the goods are seized, the officer seizing the goods must at the time of seizure have a reasonable belief in his mind that the goods that he was seizing were smuggled goods. Any subsequent acquisition of such belief would be of no avail. If this amended provision contained in s. 178A of the Sea Customs Act is not found to further the object of the Legislature in enacting the section, it would be open to the Legislature to amend the section. But so far as we are concerned, we must give the natural meaning to the words employed in the section itself and construe it in a manner consistent with the canons of construction of statutes. Accordingly, the contention raised by Mr. Gupte that s. 178A of the Act should be construed in the manner which he suggested cannot be accepted.

102. Mr. Gupte then contended that on merits it could be said that the Customs Officer who seized the gold in question, had a reasonable belief in his mind that it was smuggled gold. We are afraid, however, that Mr. Gupte's arguments on this question were entirely halting. Had it not been for the fact that he was not strong on this aspect of the case on merits, he would not have taken great pains in persuading us to put a construction upon s. 178A of the Act which he wanted us to put. As a matter of fact, the order itself, which is the subject matter of the challenge in this petition, proceeds by saying that, the gold in question was seized on suspicion, pending further inquiries into the legal origin thereof. The words actually used in the order are as follows:—

“On 12-9-1955, Customs Officers in plain clothes on duty in the Zaveri Bazar, detained one Shri Bachubhai alias Jitendra Bhagwandas, an employee of Messrs Ambalal Amiehand & Co. with certain gold in his possession and the gold weighing in all about 152 tolas, details as in the margin, was seized under section 178 of the Sea Customs Act pending further inquiries into the legal origin of the gold as there was certain circumstance which made the officers suspicious that the gold was liable to confiscation.”

103. The order then goes on to say that after recording certain statements of persons, from whom the respondents claimed to have purchased the gold in question, it was found that the respondents were able to satisfy the Department about the legal origin of the gold weighing about 41 tolas, and that, therefore, that quantity of gold was released on September 16, 1955. Besides, in para. 5 of that order it is stated as follows:—

“Under the circumstances I hold that there are valid reasons for believing that the geld has been smuggled into this country.”

104. In relation to this statement in the order, the Additional Collector of Customs in his affidavit in reply has stated as follows in para, 18 thereof:

“I say that I entertained a reasonable belief that the petitioners' gold was smuggled gold.”

105. It is significant to note that nowhere in the affidavit, nor in the order that was passed, has it been stated that the Customs Officer who seized the gold had ever any reasonable belief in his mind at the time of seizure that the gold that he had seized was smuggled gold. On the contrary, there is ample evidence on the record in this case to show that the gold was seized merely on suspicion aroused by the movements within the premises of the refinery of the respondents' employee Jitendra, and by the failure of the respondents to satisfy the Customs Officer with regard to the acquisition of the gold that they had sent to the refinery for melting. It may be noted that what the Customs Officer had found on examination of the books of account of the respondents was only that 24 tolas of gold were unaccounted for. That, however, cannot justify the seizure of the entire quantity of 151 tolas of gold, nor can it legitimately create a reasonable belief in the mind of the Customs Officer that the entire 151 tolas of gold was smuggled gold. As stated by the Additional Collector of Custom's himself in the order, which is the subject matter of challenge in this petition, these were the two circumstances which aroused the suspicion of the Customs Officer with regard to the 151 tolas of gold which he had seized on the ground that it was smuggled gold. In these circumstances, therefore, in our opinion, the learned Judge in the Court below was perfectly right in coming to the conclusion that the Customs Authorities had failed to prove that the gold that was seized by one of their officers was seized in a reasonable belief that it was smuggled gold, and that, therefore, they could not call upon the respondents to show that the gold that was seized by them was not smuggled gold. In other words, the Department could not avail of the provision of s. 178A of the Sea Customs. Act and, therefore, nothing would really turn on the failure of the respondents' to satisfy the Customs Authorities that the gold that was seized by them was not smuggled gold. It was for the Customs Officer who had seized the gold to satisfy the Inquiry Officer that the gold was smuggled as a matter of fact. In view, however, of the fact that the Inquiry Officer made an order under s. 178A of the Sea Customs Act, and in so far as he found that the gold was seized merely on suspicion, but that after investigation and as a result of the inquiry before himself he had a reasonable belief that the gold was smuggled, the Additional Collector of Customs, in our opinion, had no power to make the order that he has passed, confiscating the gold under s. 167(8) of the Act. We agree with the finding of the learned Judge that the Customs had failed to prove that the gold in question was seized under the reasonable belief that it was smuggled gold, and accordingly we concur in the order passed by the learned Judge.

106. It may be noted that although the learned Judge had decided that s. 178A of the Act was ultra vires the Constitution, the point was not really canvassed before us on account of the decision on the same question by a Division Bench of this Court in Pukkraj v. D.B Kohli, which held that's. 178A of the Sea Customs Act was not ultra vires the Constitution at all. The argument in this appeal, therefore, turned on the merits of the order challenged by the respondents in their petition, and it was in the course of the arguments on merits in this appeal that Mr. Gupte, the learned counsel for the appellants, contended, that s. 178A of the Sea Customs Act should be construed differently from the manner in which we had done it in T.C Seth v. Jal Hormusji Khajotia and also the manner in which the Madras High Court had done it in the case referred to above. We may mention that although the point as regards the vires of s. 178A of the Act was not canvassed before us, in view of the decision of the Division Bench of this Court, Mr. Joshi, the learned counsel for the respondents, submitted that if an occasion arose, the right should be reserved to him to agitate the question in a higher Court. Surely, there could not be any objection to our accepting this submission and all that we can say is that Mr. Joshi would be very much welcome to agitate the question in the higher Court, if the occasion arose for him to do so.

107. In the result the appeal is dismissed.

108. With regard to costs, it may be noted that in the trial Court the respondents had impugned the order of the Additional Collector of Customs on two grounds: (1) That the order was bad in law, inasmuch as s. 178A of the Sea Customs Act, on the basis of which the order was made, was ultra vires the Constitution, and (2) that even on the assumption that s. 178A of the Act was intra vires and valid in law, the order of the Additional Collector of Customs was bad, inasmuch as it was not proved that the seizure of the gold in question was effected by the Customs Officer concerned in a reasonable belief that it was smuggled gold. The trial Court accepted both the contentions raised by the respondents in their petition and accordingly made the order for costs in their favour, as on a long cause scale. In the appeal before us the appellants, viz., the Additional Collector of Customs and the Union of India, did not have to challenge the decision of the lower Court on the question as to the vires of s. 178A of the Act, because of the decision of the Division Bench of this Court in their favour.

109. The appeal was confined only to the question on merits, viz., as to whether the Customs Officers who seized the gold did so in a reasonable belief that it was smuggled gold. The result is that whereas the respondents succeeded on both the points in the trial Court, they can be said to have lost on the first of the two points in this Court, by reason of the decision of the Division Bench of this Court, whereas the appellants before us, having lost on both the points in the lower Court, succeeded on the first of the two points before us, because they had not to argue the point as to the vires of s. 178A of the Act, in view of the decision of the Division Bench of this Court. The most equitable order for costs in these circumstances would, in our opinion, be that so far as the costs in the trial Court are concerned, the appellants before us shall pay the costs of the respondents in so far as the second issue on the merits was concerned, but as regards the first question, in reference to the vires of s. 178A of the Act, the respondents shall pay the costs of the appellants. Both these costs will be taxed as on long cause scale. So far as the costs of this appeal are concerned, the appellants have failed on the only issue that they argued before us and, therefore, according to the ordinary rule that the costs should follow the event, they shall pay the costs of the appeal to the respondents. These costs shall likewise be taxed on the ordinary scale.

110. Liberty to the respondents to withdraw the sum of Rs. 500 deposited by the appellants, towards their costs of this appeal.

111. Mr. Joshi on behalf of the respondents agrees that his clients will not call upon the appellants to return the gold, which is the subject-matter of their petition, to them for one month from today.

Solicitor for the appellants: G.M Divekar.

Solicitors for the respondents: Mulla & Mulla & Cragie Blunt & Caroe.

112. Appeal dismissed.