Vasantlal Ranchhoddas Patel v. Union Of India

Chainani, C.J:— These three appeals have been heard together as they raise common questions of law and fact. On July 23, 1964, the Assistant Enforcement Officer, Enforcement Directorate, obtained a search warrant from the Chief Presidency Magistrate, Bombay under s. 19 of the Foreign Exchange Regulations Act authorising him to search shop No. 157 situated at Mumbadevi Road, Bombay, and seize incriminating documents, foreign exchange, instruments, account books, correspondence and passport, if any, for the purposes of the enquiry into offences under ss. 4, 5 and 9 of the said Act. In pursuance of this warrant, the Assistant Enforcement Officer, respondent No. 3, accompanied by some other officers of the Enforcement Branch, searched the said premises on the same day. No incriminating documents or other materials were found. One V.R Patel, who is the appellant in appeal No. 2 of 1965, was then present in the shop. He was searched in the presence of panchas and four packets containing diamonds, believed to be foreign cut diamonds, were found on his person. They were, therefore, seized. There was a safe in the shop the key of which was with the proprietor, who was not present then. The safe was therefore, sealed. One of the enforcement officers then telephoned to a Custom Officer about the seizure of the diamonds. Two Custom Officers then went there, but as the panchnama had been already made and as the diamonds had been already taken charge of and also sealed, they did not themselves seize them. They, however, started holding investigation in regard to these diamonds. A summons under s. 108 of the Customs Act was served upon the appellant and his statement was also recorded.

2. On the following day, July 24, 1964, the safe was opened. It was found to contain seven packets of diamonds and currency notes of the value of Rs. 24,055. All these articles were seized by the officers of the Enforcement Directorate. Out of these seven packets, one was claimed by, J.C Mehta, the appellant in appeal No. 3 of 1965 and five were claimed by, J.A Mehta, who is the appellant in appeal No. 5 of 1965. All the packets of diamonds remained in the custody of the Enforcement Directorate till September 4. On that date two Custom Officers took charge of the diamonds from the Enforcement Directorate and seized them under s. 110 of the Customs Act. A receipt for the diamonds taken charge of was passed in favour of the Assistant Director of the Enforcement Directorate. It appears that thereafter in November, 1964, the three appellants as well as the proprietor of the shop Motiwalla were called by the Customs and in the presence of Motiwalla and the appellants in appeals Nos. 2 and 3 of 1965, the Custom Officers removed the seals placed on the packets by the Enforcement Directorate and re-sealed them by putting the seals of the Customs Department.

3. The appellants then applied to the Chief Presidency Magistrate for orders directing the officers of the Enforcement Directorate to return the diamonds to them. It was urged on behalf of the Enforcement Directorate that the diamonds had not been seized in pursuance of the search warrant issued by the Chief Presidency Magistrate, but that they had been seized under s. 151 of the Customs Act, 1962, read with the notification issued by the Central Government on May 23, 1964 and that on September 4, they had been taken charge of by the Customs Authorities. This contention was accepted by the Chief Presidency Magistrate, who held that as the Customs Authorities had taken charge of the diamonds according to law, he could not order their return to the appellants. Thereafter the appellants filed miscellaneous petitions on the Original Side of the High Court against the Union of India, the Deputy Director and another officer of the Enforcement Directorate respondents Nos. 2 and 3, and the Collector of Customs. In these petitions they prayed that the respondents should be directed to forthwith return and/or deliver the diamonds to them. These petitions were summarily dismissed. Against the orders dismissing the petitions the present three appeals have been filed. Under s. 110(2) of the Customs Act, a notice under cl. (a) of s. 124 has to be issued to the owner of the goods or other person concerned within six months of the seizure of the goods. The Collector of Customs is, however, empowered to extend the period of six months on sufficient cause being shown for a period not exceeding six months. In exercise of this power the Collector of Customs extended the period by three months on March 4, 1965. On May 27, 1965, the period was further extended by three months. We have been informed that as required by s. 124 notices to show cause why the goods should not be confiscated or penalty imposed, have since been issued to the appellants. Those proceedings are now pending before the Customs Authorities.

4. [His Lordship after considering a question not material to this report, proceeded.]

5. The next question to be considered is whether the Customs Officers could have seized the diamonds on September 4, 1964, as stated by them. The section under which they could have seized the diamonds is s. 110. Sub-section (1) of this section states that if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods. sub-section (2) of this section reads as follows:

“(2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized”.

6. Before any action can be taken under this section, it is, therefore, necessary that the proper officer should entertain the belief that the goods are liable to confiscation under this Act. The significant word is “belief” and not “suspicion”. In M.G Abrol v. Amichand . 1960 62 Bom. L.R 1043., it was observed at page 1073 that a belief in the existence of a thing requires a more solid foundation than in the case of a mere suspicion and that the belief must be such as any reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. It was also held that belief must be entertained at the time when the goods are seized….

7. The goods were seized by the Officers of the Enforcement Directorate on July 23 and 24, 1964. They were taken charge of by the Customs Authorities on September 4, 1964. Mr. Poonawalla has strenuously argued that the transfer of custody of the goods by the officers of the Enforcement Directorate to the Customs Officers does not constitute seizure within the meaning of s. 110 of the Act. In support of this contention he has relied on the decision of the Supreme Court in Gian Chand v. State of Punjab . [1962] A.I.R S.C 496.. In that case on receiving information that some smugglers were transporting gold from Amritsar into Jullundar, the City Inspector of Police, Jullundur organised a raid-party and raided the house of the appellants. In the course of the search certain bars of gold were found on the person of some of the inmates of the house and in the house itself. Thereafter a complaint was filed under ss. 411 and 414 of the Indian Penal Code. This charge of receiving stolen property preferred against the appellants was, however, not proceeded with. On an application made by the Assistant Collector of Customs, the goods were delivered to the Customs Authorities presumably under the second para, of s. 180 of the Sea Customs Act. Thereafter a notice was issued to the appellants to show cause why the goods should not be confiscated under s. 167(8) of the Sea Customs Act and after considering the explanation of the appellants the Collector passed an order directing the confiscation of the goods. The appellants were also prosecuted for the offence under s. 167(81) of the Act and were convicted. In arriving at his conclusion the trial Magistrate held that s. 178A applied to the case and that the onus of showing that the goods were not smuggled goods was on the appellants. The High Court took the same view. Sub-section (1) of s. 178A provides that 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. The Supreme Court held that a seizure under the Act is one for which the authority to seize is conferred by the Act and that in the context it could be referred to as a seizure under s. 178, which corresponds to s. 110 of the new Customs Act, 1962. The Supreme Court further held that the transfer of the possession of the goods to the Customs Authorities by virtue of the provisions contained in s. 180 of the Sea Customs Act did not constitute a fresh seizure or a seizure within the meaning of s. 178A of the Act so as to shift the burden of proof on the appellants. Under s. 178A the burden of proving that the goods are not smuggled goods can be placed on a person only if the goods are seized from his possession. The burden will not shift if the goods are not seized from his possession. In Gian Chand's case the Customs Authorities had not seized the goods from the possession of the appellants. The Supreme Court held that they could not therefore, be called upon to prove that the goods were not smuggled goods. This decision of the Supreme Court must be read in the context of the facts of that case. It cannot be regarded as an authority for the proposition that if an officer not competent to do so, wrongfully seizes goods, they cannot subsequently be seized by an officer who is lawfully empowered to seize them. In this connection, Mr. Sorabjee has rightly pointed out that s. 110 does not place any limitation as to the person from whose possession or the time and the place at which the goods believed to be liable to confiscation, can be seized. If there is reasonable ground to believe that the goods are liable to confiscation, they can be seized from any person who has custody of them, even if he has obtained such custody unlawfully. We are, therefore, unable to accept Mr. Poonawalla's argument that the taking over of possession of the diamonds by proper customs officers on September 4, 1964, from the officers of the Enforcement Directorate did not constitute seizure within the meaning of s. 110 of the Act.

8. The other point, which has been raised by Mr. Poonawalla, is that assuming that the Customs Officers had seized the goods within the meaning of s. 110 on September 4, 1964, no notice could have been issued to the appellants after March 3, 1965, as the period of six months expired on that date and the Collector of Customs was not competent to extend the period under the proviso to sub-s. (2) of s. 110, as he has done. Section 9 of the General Clauses Act states that in any Central Act it shall be sufficient for the purpose of excluding the first in a series of days or any other period of time, to use the word “from”, and, for the purpose of including the last in a series of days or any other period of time, to use the word “to”. Mr. Poonawalla has argued that this section has no application in the present case, because the words “from” and “to” are not used in sub-s. (2) of s. 110. The principle underlying s. 9 has been applied even in the cases of judicial orders passed by Courts, even though in terms the section is not applicable. See Ramchandra v. Laxman . 1938 40 Bom. L.R 892, S.C [1938] A.I.R Bom. 447., Dharamraj v. Addl. Deputy Commr. . [1957] A.I.R Bom. 154., Puran Chand v. Mohd. Din . [1935] A.I.R Lah. 291., Marakanda Sahu v. Lal Sadananda . [1952] A.I.R Orissa 279. and Liquidator, Union Bank, Mal v. Padamanabha Menon . [1954] II M.L.J 44.. The material words in sub-s. (2) of s. 110 are “within six months of the seizure of the goods.” In such provisions the word “of” has been held to be equivalent to “from”, see Williams v. Burgess . 1840 12 A & E Reports 635.. In that case s. 1 of the relevant statute enacted that warrants of attorney shall be filed “within twenty one days after the execution.” Section 2 enacted that unless they were “filed as aforesaid within the said space of twenty one days from the execution,” they and the judgment thereon shall be void subject to the conditions specified in the section. The warrant of attorney was executed on December 9, 1839, and it was filed, and judgment entered up on December 30. It was held that in computing the period twenty-one days the day of execution must be excluded. Reliance was placed on Ex parte Fallon and wife9 in which the word used was “of” and not “from”. It was observed that “of”, “from” and “after” really meant the same thing and that no distinction could be suggested from the nature of the two provisions. In Stroud's Judicial Dictionary, “Vol. 3, 1953 edn. in Note (5) under the word “of”, it has been observed that “of” is sometimes the equivalent of “after” e.g in the expression “within twenty-one days of the execution.” The principle underlying s. 9 of the General Clauses Act cannot therefore be held to be inapplicable, merely because the word used in sub-s. (2) of s. 110 is “of” and not “from”.

9. The next question to be considered is whether the day on which the goods were seized can be excluded in view of the fact that the period of six months referred to in sub-s. (2) of s. 110 is to be reckoned not from a particular day but from the happening of an event, viz. the seizure of the goods. The relevant words are “within six months of the seizure of the goods” and not “within six months of the day of the seizure of the goods.” The law on this point has been stated by Halsbury to be as follows; (See Halsbury's Laws of England, 3rd edn., Vol. 37, page 95).

“The general rule in cases in which a period is fixed within which a person must act or take the consequences is that the day of the act or event from which the period runs should not be counted against him.

This general rule applies irrespective of whether the limitation of time is imposed by the act of a party or by statute; thus, where a period is fixed within which a criminal prosecution or a civil action may be commenced, the day on which the offence is committed or the cause of action arises is excluded in the computation.”

10. In Goldsmith's Company v. West ‘Metropolitan Railway . [1904] 1 K.B 1., a special Act enacted by Parliament empowered the railway company to take lands compulsorily for the purpose of their undertaking and the powers of the company for this purpose were to cease after the expiration of three years from the passing of the Act. The Act received the Royal assent on August 9, 1899 and on August 9, 1902, the company gave to the plaintiffs a notice to treat for the purchase of lands belonging to them and scheduled in the special Act. It was held that the day of the passing of the Act must be excluded in the computation of three years, and that the notice was served in time. The same view was taken in Marren v. Dawson Bentley & Co. Ltd. . [1961] 2 Q.B 135. In that case Havers, J. referred to the observations made by Wills, J. in Radcliffe v. Bartholomew . [1892] 1 Q.B 161., who after quoting the remarks made by Parke B. in Young v. Higgon . 1840 8 Dowl. 212, 6 M & W. 49.,

“apply the criterion which has been before suggested—reduce the time to one day, and then see what hardship and inconvenience must ensue if the principle I have stated is not to be adopted”

observed “and these remarks are entirely applicable to the present case. The result of reducing the time to one day would be that an offence might be committed a few minutes before midnight, and there would only be those few minutes in which to lay the complaint, which would be to reduce the matter to an absurdity.”

11. These remarks would apply with equal force in the present case. Let us consider what the position would be, if the notice was required to be issued within one day of the seizure of the goods and not within six months thereof. The result may then be that if the goods were seized say five minutes before midnight, the time available for issuing the notice would be only five minutes or less which may be too short for this purpose. To avoid such a result, which may in certain cases make the section nugatory, the day of seizure should be excluded in computing the period of limitation.

12. Mr. Poonawalla has urged that while this may be the position in English Law, in India we are governed by s. 9 of the General Clauses Act and that unless that section applies, the day on which the goods were seized must also be included in computing the period of six months referred to in sub-s. (2) of s. 110. Since, however, the principle underlying s. 9 of the General Clauses Act is the same as that laid down in the above English decisions, it seems to us that even when the period is fixed by reference to an event, the day on which that event takes place should be excluded in computing the prescribed period of limitation.

13. The period of six months in the present case therefore expired on the midnight of March 4, 1965. Before then the period had been extended by three months by the Collector of Customs. The extension of the period was consequently valid.

14. Mr. Poonawalla has also argued that there was no sufficient cause for extending the period under the proviso to sub-s. (2) of s. 110.

15. This was a matter primarily for the Collector of Customs to decide and Mr. Poonawalla has not been able to satisfy us that the Collector of Customs had exercised his discretion wrongly.

16. These are all the points which have been urged in Appeal No. 2 of 1965. For the reasons which I have given the appeal fails and is dismissed.

17. [The rest of the judgment is not material to this report.]

18. Appeal dismissed.