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Assistant Controller Of Customs For Prevention And Others v. The New Central Jute Mills Co. Ltd.
Concise Analytical Summary of the Opinion (Amiya Kumar Mookerji, J.)
Factual and Procedural Background
The respondent is an existing company registered under the Companies Act, 1956, with its registered office at 11, Clive Row, Calcutta. On 11 May 1968 the appellant No. 2 (the Assistant Collector of Customs, Preventive Officer) together with several persons searched the respondent's premises pursuant to an authorisation said to have been issued by appellant No. 1 under Section 105 of the Customs Act, 1962. During that search various books, papers and documents belonging to the respondent company were seized.
On 16 May 1968 the respondent filed an application under Article 226 of the Constitution challenging the validity of the authorisation (the opinion refers to the authorisation as dated "11-5-1958" in one place). A Rule Nisi and interim injunction were obtained restraining the appellants from examining the seized documents. The Rule was heard and made absolute by K.L. Roy, J., who quashed the authorisation and all proceedings taken thereunder on the ground that the authorisation form contained blanks (no particulars of goods/documents, no particulars of intended proceedings and the respondent's name was not mentioned) and that the issuing officer had not applied his mind.
The appellants (Assistant Collector of Customs, Preventive Officer and Union of India) appealed against that judgment. The present opinion records submissions by counsel for both sides and disposes of the appeal.
Legal Issues Presented
- Whether the authorisation under Section 105 of the Customs Act, 1962 was valid — in particular whether the officer issuing it had "reasons to believe" and applied his mind to material facts as required by the statute.
- Whether particulars of the goods, documents, the name of the person whose premises were to be searched, or reasons for belief must be specified in the authorisation issued under Section 105.
- Whether the procedure prescribed by Section 165(1) of the Code of Criminal Procedure applies to searches under Section 105(2) of the Customs Act.
- Whether the respondent could rely upon defects in the authorisation in opposition to the appeal without filing a cross-objection.
Arguments of the Parties
Appellants' Arguments (Mr. Kar)
- The learned Judge below was wrong to hold that the Assistant Collector did not apply his mind: the Judge had already found that the Assistant Collector had reasons to believe offences had been committed and that relevant goods/documents were secreted in the premises.
- Section 105 confers a power of general search; it is not practicable to specify in advance the documents or their particulars that might be found or prove relevant in subsequent proceedings.
- It was unnecessary to state the name of the respondent in the authorisation where the search was of premises.
- The issuing customs officer was not required to give reasons for his belief before issuing the authorisation.
- Relied on two Supreme Court decisions: Durga Prasad v. H.R. Gomej (AIR 1966 SC 1209) and Gopi Kisen Agarwal v. R.N. Sen (AIR 1967 SC 1298).
Respondent's Arguments (Mr. Deb)
- The conditions precedent to the exercise of power under Section 105 did not exist: the Assistant Collector's reasons to believe were not based on relevant facts or material and he did not apply his mind.
- The authorisation contained various blanks (including not naming the respondent) and was vague, uncertain, and incapable of being acted upon.
- The affidavit filed by the assistant collector did not disclose the material upon which his belief was based; where belief is challenged, the officer must disclose the underlying materials.
- Contended that the requirements of Section 105(2) were not observed because the report required by Section 165(1) CrPC was not made.
- Relied on Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax ((1972) 3 SCC 234 : AIR 1971 SC 2451) to support the proposition that the Court can examine materials to see if an honest and reasonable person could base reasonable belief upon them.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Durga Prasad v. H.R. Gomej, AIR 1966 SC 1209 | Held that power of search under Section 105 is a power of general search but preliminary statutory conditions must be strictly satisfied — the officer must have reasons to believe that documents/things relevant to proceedings are secreted in the place. | The court relied on this authority to emphasize that even though the search power is broad, the preliminary statutory requirement of "reasons to believe" must be satisfied before issuing an authorisation; used as part of the analysis to determine that the authorisation in the present case did not meet those requirements. |
| Gopi Kisen Agarwal v. R.N. Sen, AIR 1967 SC 1298 | Held that Section 165(1) CrPC's procedure for search is not applicable to Section 105(2) of the Customs Act and that Section 105 does not compel the officer to give reasons in writing or to specify particulars of goods/documents in the authorisation. | The court accepted the principle that Section 165(1) CrPC procedure is not applicable and that recording of reasons in writing is not necessary; but distinguished the present facts because the authorisation and affidavit here failed to disclose the nature of suspected offences or materials forming the belief. |
| Sheo Nath Singh v. Appellate Asst. Commissioner of Income-tax, (1972) 3 SCC 234 : AIR 1971 SC 2451 | Established that when "reasons to believe" are challenged the officer must disclose the materials and the Court can examine those materials to determine whether an honest and reasonable person could base reasonable belief upon them (though the Court does not inquire into the sufficiency of the reasons). | The court applied this principle to hold that although an officer need not state reasons in the authorisation, if the belief is challenged he must disclose the materials forming the belief so the Court can assess whether there is prima facie justification for that belief. |
| Anshuman Lath v. Deputy Supdt. of Central Excise, Calcutta, (1967) 71 Cal WN 814 | Held by this Court that Section 105(1) does not require the Customs Authority to specify the name of the individual whose premises are to be searched if the particulars of the premises are given. | The present court agreed with that view and accepted that omission of the name of the person in the authorisation is not, in itself, fatal if the premises are properly specified. |
| Pukhraj v. D.R. Kohli, AIR 1962 SC 1559 | Observed that in assessing whether a belief was reasonable the Court's role is not to sit in appeal over the officer's decision but to determine whether there are grounds which prima facie justify the reasonable belief. | The court invoked this standard of review to explain the limited scope of judicial scrutiny: the court may consider whether prima facie grounds existed to justify the officer's belief, not re-evaluate the officer's decision itself. |
Court's Reasoning and Analysis
The court proceeded by addressing each contested point in light of the parties' submissions and relevant authorities.
- Name in the authorisation: The court observed that Section 105(1) does not require that the name of the individual be specified. If the particulars of the premises are correctly specified in the authorisation, the statutory requirement is fulfilled. The court cited and agreed with Anshuman Lath to this effect.
- Right to challenge without cross-objection: The court rejected the appellants' objection that the respondent could not challenge the finding without filing a cross-objection, holding that under Order 41, Rule 22 CPC the respondent is entitled to canvass any findings against it to support the judgment that had been passed against the appellant.
- Applicability of Section 165(1) CrPC: The court relied on Gopi Kisen Agarwal to hold that the procedure under Section 165(1) CrPC for searches is not applicable to Section 105(2) of the Customs Act and thus the specific CrPC reporting procedure is not required in relation to Section 105(2).
- Requirements for "reasons to believe": The court carefully reconciled the authorities. It noted that Durga Prasad establishes that while Section 105 confers a general search power, preliminary conditions (a proper "reason to believe" grounded in relevant materials) must be strictly satisfied. Gopi Kisen indicates that the statute does not compel stating reasons or particulars in the authorisation itself. The court concluded that these propositions are complementary: the absence of a formal requirement to record reasons in the authorisation does not relieve the officer of the underlying requirement that his belief be based on relevant materials.
- Duty to disclose material when belief is challenged: Invoking Sheo Nath Singh, the court held that although an officer need not state reasons in the authorisation, if his "reasons to believe" are challenged he must disclose the materials upon which his belief is based so the Court can examine whether an honest and reasonable person could have formed that belief. The court emphasized that "belief" is a mental operation and cannot be fabricated without factual material.
- Standard of judicial scrutiny: Quoting Pukhraj v. D.R. Kohli, the court reiterated that the Court does not sit in appeal over the officer's subjective decision; rather it can consider whether prima facie grounds exist to justify the belief.
- Application to the present facts: The court examined the affidavit of appellant No. 1 and the authorisation. It found that in this case the authorisation and affidavit failed to disclose the nature or particulars of the suspected offences under the Customs Act (the authorisation did not specify the nature of the offences) and did not disclose the material or circumstances upon which the Assistant Collector founded his belief. Consequently, the preliminary statutory conditions required by Section 105 were not fulfilled.
Holding and Implications
Holding: The appeal was dismissed. The court concluded that the impugned authorisation issued by appellant No. 1 and the proceedings taken thereunder could not be sustained.
DISPOSITION: The appeal fails and is dismissed; there will be no order for costs.
Implications: The direct consequence is that the authorisation under Section 105 and the consequent search/seizure proceedings in this case remain quashed. The court's analysis rests on a reading of existing authorities (as set out above) and the application of the principle that an officer's "reasons to believe" must be grounded in relevant materials when challenged. The opinion does not purport to lay down a novel legal principle beyond the application and reconciliation of the cited authorities to the facts before the court.
Amiya Kumar Mookerji, J.:— This appeal is by the Assistant Collector of Customs, Preventive Officer and Union of India against the judgment of K.L Roy, J., dated 26-11-1969, quashing an authorisation under Section 105 of the Customs Act, 1962 (hereinafter referred to as ‘the Act’) and, all proceedings taken thereunder.
2. The respondent is an existing company under the Companies Act, 1956, and has its registered office at 11, Clive Row, Calcutta. M/s. Sahu Jain Ltd., has also its registered office in the said premises. On the 11th of May, 1968, the appellant No. 2 along with several persons searched the said premises in pursuance to an authorisation issued by the appellant No. 1 under Section 105 of the Act. In course of the said search, various books, papers, documents belonging to the respondent company were seized by the appellant No. 2. On 16th of May, 1968, the respondent moved this Court on an application under Article 226 of the Constitution, challenging the validity of the order of authorisation dated 11-5-1958 under which the preventive officer of the Customs department, appellant No. 2, was authorised under Section 105 of the Act to enter into the premises of the respondent to search for, seize and take possession of things, goods and the documents, having reasons to believe by the appellant No. 2 that the goods liable to confiscation under the said Act were secreted in the premises of the respondent. A Rule Nisi and an interim order of injunction restraining the appellants from examining or looking into any of the seized documents were obtained by the respondent. The said Rule was heard and made absolute by K.L Roy, J. The learned Judge found that in view of the averments made in the affidavit affirmed by the appellant No. 1, that, in consequence of the information received, he had reasons to believe that certain offences under the Act and other Acts had been committed by the respondent and certain other companies of the Sahu Jain Group, and that certain goods, documents and things relevant to proceedings for enquiry into the said offences were secreted in the said premises but the learned Judge quashed the authorisation upon the view that appellant No. 1 had not applied his mind in issuing the impugned authorisation under Section 105 of the Act as the spaces requiring the particulars of the goods, documents and things, which would be useful for and/or relevant to any proceedings contemplated under the Act were left entirely blank; no particulars of the intended proceedings were given and even the name of the respondent, which was suspected of the alleged offence, did not appear in the authorisation form. The appellant being aggrieved against the said judgment, preferred this present appeal. It is contended by Mr. Kar, learned Counsel appearing on behalf of the appellant, that the learned Judge of the Court below having found that the Assistant Collector of Customs had reasons to believe that the offence under the Customs and other Acts have been committed by the respondent and that the goods, documents and things relevant to the proceedings were secreted in the premises of the respondent, the learned Judge was wrong in coming to the conclusion that the Assistant Collector of Customs did not apply his mind in issuing the impugned authorisation under Section 105 of the Act, and quashing the same on that ground. Mr. Kar further contended that the power of search granted under Section 105 of the Act was a power of general search. It was not possible for the officer to predict or even know in advance what documents could be found in the search and which of them would be useful or necessary for the proceedings. So, it was not possible to give specification or description of the documents in advance. It was also not necessary to give the name of the respondent in the authorisation because the search was with respect to the premises. It was not incumbent upon the customs officer to give reasons of his belief before issuing an authorisation under Section 105 of the Act In support of his contentions Mr. Kar referred to two decisions of the Supreme Court Durgaprasad v. H.R Gomej, reported in AIR 1966 SC 1209, and Gopi Kisen Agarwal v. R.N Sen, reported in AIR 1967 SC 1298.
3. Mr. Deb, learned Counsel appearing on behalf of the respondent, contended that the conditions precedent to the exercise of the power by the appellant No. 1 issuing an authorisation under Section 105 of the Act did not at all exist. The reasons to believe or information of the appellant No. 1, Mr. Deb argued, were not based on any relevant fact or material in his possession. The appellant No. 1 did not apply his mind to the facts and circumstances before issuing the said authorisation. Mr. Deb pointed out that there were various blanks in the said authorisation and even the name of the respondent did not appear therein. According to Mr. Deb, the said authorisation was vague, uncertain, indefinite, incapable of being acted upon or executed and wholly illegal.
4. Mr. Deb further contended that the averments made in the affidavit of the appellant No. 1 did not disclose any material upon which reasonable beliefs could be based. The said affidavit suffered the same infirmities as that of the authorisation itself. It was incumbent upon the Assistant Collector of Customs to disclose the materials before the Court, upon which he based his belief, if it was challenged. In support of his contentions Mr. Deb referred to a decision of the Supreme Court, Sheo Nath Singh v. Appellate Asst. Commr. of Income-tax, reported in (1972) 3 SCC 234 : AIR 1971 SC 2451 : 82 ITR 147.
5. In the letter of authorisation the name of the respondent was not given but there is nothing in Section 105(1) of the Act which requires the Customs Authority to specify the name of the individual whose premises are to be searched. The power is given under Section 105 of the Act to search the premises and if the particulars of the premises are given in the authorisation, in our view, in such case, the requirements of the section are fulfilled. The same view was taken by this Court in Anshuman Lath v. Deputy Supdt. of Central Excise, Calcutta, reported in (1967) 71 Cal WN 814, and we respectfully agree with that view.
6. Mr. Kar raised an objection that Without filing a cross-objection the respondent could not urge the point that the Assistant Collector of Customs had no reasons to believe, which was decided in favour of the appellant by the learned Judge of the Court below.
7. We do not see any substance in this objection. Under Order 41, Rule 22 of the CPC, the respondent is entitled to canvass the correctness of the findings against it in order to support the judgment that has been passed against the appellant.
8. Mr. Deb lastly contended that the provisions of Section 105(2) of the Act had not been observed as no report required by Section 165(1) of the Cr PC was made in this case.
9. This point has been decided by the Supreme Court in Gopikisen's case, AIR 1967 SC 1298, where it has been held that the procedure prescribed under Section 165(1) of the Cr PC for search is not applicable in Section 105(2) of the Customs Act inasmuch as the two sections are intended to meet totally different situations, recording of reasons in writing by the Assistant Collector is not necessary. So, in view of the above decision of the Supreme Court, this point fails.
10. In Durga Prasad's case, AIR 1966 SC 1209 it has been held by the Supreme Court that power of search granted under Section 105 of the Act is a power of general search but it is essential that before this power is exercised, the preliminary conditions required by the section must be strictly satisfied, that is, the officer concerned must have reasons to believe that the documents and things which in his opinion are relevant for any proceedings under the Act, are secreted in their place. In Gopikisen's case, AIR 1965 SC 1298 the Supreme Court held that Section 105 of the Act did neither compel the officer to give reasons nor the particulars of the goods and of the documents were to be given in the authorisation.
11. In both Durga Prasad's (AIR 1966 SC 1209) and Gopikisen's case, (AIR 1967 SC 1298), in the authorisation suspected commission of offence under Section 11 read with Section 111 of the Act were mentioned. In the instant case, the nature of the suspected offence under the Act has not been mentioned. In paragraph 6(d) of the affidavit in opposition commission of offences under the Customs Act and other acts have been mentioned, but no particulars or nature of the suspected offence are given. The affidavit also does not disclose any material or circumstances upon which the Assistant Collector of Customs has founded his belief.
12. The statutory requirement of reasonable belief, rooted in the information in possession of Custom's Officer, is to safeguard the citizen from vexatious proceedings. ‘Belief’ is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is true that it is not necessary for the Assistant Collector of Customs to state reasons for his belief. But if it is challenged that he had no reasons to believe, in that case, he must disclose the materials upon which his belief was formed, as it has been held by the Supreme Court in Sheonath Singh's case which was referred to by Mr. Deb, ((1972) 3 SCC 234 : AIR 1971 SC 2451), that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court.
13. Mr. Kar remarked that in Sheonath's case, ((1972) 3 SCC 234 : AIR 1971 SC 2451), the Supreme Court made the above observations in a case under Section 34(1-A) of the Income Tax Act, so that decision could not be relied upon in the present case under the Customs Act.
14. We are unable to accept the contention of Mr. Kar. There is no difference in our view, of the principle as laid down by the Supreme Court as the words ‘reasons to believe’ occur both in Section 34(1-A) of the Income Tax Act as well as in Section 105 of the Customs Act.
15. The words ‘when the proper officer has reasons to believe’ in Section 105 of the Act, suggest that the belief must be that of an honest and reasonable person based upon relevant materials and circumstances. In Pukhraj v. D.R Kohli, reported in AIR 1962 SC 1559 at p. 1563, the Supreme Court observed as follows:
“After all, when we are dealing with a question as to whether the belief in the mind of the officer who effected the seizure was reasonable or not, we are not sitting in appeal over the decision of the said officer. All that we can consider is, whether there is ground which prima facie justifies the said reasonable belief.”
16. If the information is such as leads, the Customs Officer to believe; that articles of search are secreted in a place, he may thereby have ‘reasons to believe’ as contemplated under Section 105 of the Act and issue a warrant even if he does not know the name of the person who is in possession of the articles of search. All that the court can consider is, whether there is ground which prima facie justifies the reasonable belief.
17. Considering the averments in the affidavit affirmed by the appellant No. 1 and the statements in the authorisation, we are satisfied that the preliminary conditions required by Section 105 of the Act have not been fulfilled in the instant case and as such the impugned authorisation issued by the appellant No. 1 and proceedings taken thereunder could not be sustained.
18. In the result this appeal fails and it is dismissed but there will be no order for costs.
19. B.C Mitra, J.:— I agree.
20. Appeal dismissed.
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