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Case Number
Attorney(S)
  • Mr. Satish Aggarwal, Advocate for Petitioner.
  • Mr. Pradip Jain, Advocate for Respondents.
Judges
  • V.B BANSAL, J.
Acts
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Citation Codes
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Attorney(S)
  • Mr. Satish Aggarwal, Advocate for Petitioner.
  • Mr. Pradip Jain, Advocate for Respondents.
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  • V.B BANSAL, J.
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Smart Summary

Judgment Summary — V.B. Bansal, J.

Factual and Procedural Background

This petition under Section 482 CrPC was filed by the Department of Customs seeking to set aside an order dated 23.2.1994 of the Addl. Chief Metropolitan Magistrate (ACMM), New Delhi, which directed delivery of 450 cardboard boxes of "Close-Up" toothpaste to M/s. Eastern Road Carriers Ltd. The underlying events are as follows:

  • On 18.12.1993 Officers of Customs (Preventive), Delhi, seized smuggled ball-bearings worth Rs. 40,95,600/- concealed under 450 boxes of Close-Up toothpaste from two trucks (Nos. DIG-4706 and DL-1L-A 3252).
  • Drivers and other persons (including Pradip Goel) were examined under Section 108 of the Customs Act. The seizure was made under the reasonable belief that the items were liable to confiscation.
  • The Customs Department applied before the ACMM for permission to dispose of the toothpaste, arguing that the toothpaste was not contraband but only used to conceal smuggled goods and that the toothpaste was perishable.
  • M/s. Eastern Road Carriers Ltd. applied to the ACMM for release of the 450 cartons, asserting transport contracts and the need to deliver to the consignee; the Customs Department responded that the packings were liable to confiscation under Section 119 of the Customs Act and could not be released.
  • The ACMM heard both applications, dismissed the Department's application, allowed Eastern Road Carriers' application, and directed the Assistant Collector (Preventive) to hand over the 450 cartons to Shri Ashok Chakraborty (General Manager and constituted attorney for Eastern Road Carriers) upon execution of an indemnity bond.
  • The Department filed the present petition under Section 482 CrPC seeking to set aside that ACMM order and to be permitted to dispose of the toothpaste in accordance with rules.

Legal Issues Presented

  1. Whether there was any illegality in the ACMM's order permitting the release of 450 cartons of Close-Up toothpaste to the respondent.
  2. Whether the ACMM had jurisdiction under Section 451 of the Code of Criminal Procedure to order release of the toothpaste when those goods had been seized under the Customs Act and were potentially liable to confiscation.
  3. Whether the absence of physical production of the seized property inside the courtroom precluded the ACMM from exercising jurisdiction under Section 451 CrPC.

Arguments of the Parties

Department of Customs (Petitioner) — Learned Counsel's Submissions

  • The cartons of Close-Up toothpaste were used to conceal smuggled goods and were seized under Section 110 of the Customs Act under a reasonable belief that they were liable to confiscation.
  • Only the appropriate authorities under the Customs Act can initiate confiscation proceedings; the criminal court has no jurisdiction to order delivery of such goods to any person.
  • The learned ACMM lacked jurisdiction because the goods had not been produced before the court; therefore the ACMM's order was without jurisdiction and should be set aside.
  • The Department sought permission to dispose of the toothpaste (for example, by public auction) and contended that such disposal would be the proper course rather than handing the goods to the respondent.
  • Relied upon precedents (including P.O. Thomas and Tirlok Singh) to support the contention that the court lacked power to order return/release in analogous circumstances.

Eastern Road Carriers Ltd. (Respondent) — Learned Counsel's Submissions

  • Close-Up toothpaste is a perishable article; delay in release will cause irreparable loss to the respondent, who would otherwise face liability to pay Hindustan Lever Ltd. or to the consignee.
  • Jurisdiction was vested in the ACMM under Section 451 CrPC, and the ACMM properly exercised that jurisdiction in passing the impugned order.
  • The interests of the Department are safeguarded by the conditions imposed in the ACMM order (notably the indemnity bond); if the Department later determines the goods are liable to confiscation, the respondent can pay the amount covered by the bond.
  • The respondent produced documents showing it carried out transport work for Hindustan Lever and had engaged the truck for the consignment in question.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
P.O. Thomas and others v. Union of India (1990 Crl. L.J. 1028) Authority invoked by the petitioner to contest court's power to order return of seized items (passports/air tickets in that case) when challan not filed. The court held this precedent was not of assistance: facts were distinguishable because in P.O. Thomas the challan had not been filed and the court had no jurisdiction, whereas in the instant case a criminal complaint had already been filed and the Department itself sought disposal of the toothpaste.
Tirlok Singh v. The Supdt. of Customs & Another (1979 Chandigarh Law Reporter 1) Relied upon by petitioner regarding release of property (a car) used in transporting smuggled goods and the requirement that appropriate authority take steps within six months. The court found it distinguishable and not helpful: in Tirlok Singh the appropriate authority had to give notice within six months and there was no prayer by Customs for disposal; here the goods are perishable and the Department sought permission to dispose.

Court's Reasoning and Analysis

The court proceeded through a focused analysis of jurisdiction, the nature of the goods and statutory procedure:

  1. Perishability: The court accepted as admitted by parties that Close-Up toothpaste is a perishable commodity with an expiry date and that delay could reduce its value to zero. The Department itself characterised the goods as perishable in its application to the ACMM.
  2. Relevant statutory framework:
    • Section 119 of the Customs Act: goods used for concealing smuggled goods are liable to confiscation.
    • Section 124 of the Customs Act: requires issuance of a show cause notice before confiscation and gives the adjudicating officer power to impose a fine in lieu of confiscation; a notice must be issued within six months of seizure. The six-month period had not expired in this case.
  3. Jurisdiction under Section 451 CrPC: The learned ACMM relied upon Section 451 CrPC in ordering release. The Department argued Section 451 was inapplicable because the property had not been physically produced in court. The court rejected that narrow interpretation, holding that “production” need not be physical within the courtroom; case property (including heavy or bulk items) may be deemed produced by appropriate methods and the ACMM was seized of the criminal complaint.
  4. Evidence and nature of case property: The Department itself relied on the recovery of the cartons as case property to prove smuggling offences, and had filed a criminal complaint; on that basis the ACMM had jurisdiction to consider the application for release under Section 451 CrPC.
  5. Auction argument: The court found the Department's suggestion of an open auction unsatisfactory as a protective measure for the respondent because an open auction would not confer a concession on the respondent and did not adequately protect its interests.
  6. Distinguishing precedent: The court examined cases relied on by the Department (P.O. Thomas and Tirlok Singh) and explained why they were distinguishable on facts—chiefly because in those cases either a challan was not filed or there was no request by Customs for disposal, unlike the present case where the Department had itself sought permission to dispose.
  7. Safeguards imposed: The court considered whether the ACMM's conditions sufficiently protected the Department's interest. It accepted that an indemnity bond (for Rs. 12.00 lakhs, covering the price of the toothpaste) and an undertaking to pay should be required, and further directed retention of one carton by the Department to be produced at trial.

Holding and Implications

Holding: The ACMM's order permitting release of the 450 cartons to Shri Ashok Kumar Chakraborty (on execution of an indemnity bond) was affirmed with modifications. Specifically, the ACMM's order was modified to require (a) the furnishing of an indemnity bond and (b) an undertaking by Shri Ashok Kumar Chakraborty to pay the amount covered by the indemnity bond if the Appropriate Authority ultimately decides the toothpaste is liable to confiscation, and (c) retention of one carton by the Department to be produced at trial. The petition under Section 482 CrPC was disposed of with these modifications.

Implications:

  • Direct effect on the parties: The respondent is permitted delivery of the 450 cartons subject to the indemnity bond and the additional undertaking; the Department retains a single carton for evidentiary purposes and preserves its right to seek confiscation through the appropriate authority, with recourse to the indemnity bond if confiscation is later ordered.
  • Broader precedent: The opinion does not purport to establish a new broad legal principle; it resolves the dispute on the facts and statutory law applied to these facts. No novel precedent beyond the court's factual distinctions and the modifications ordered is articulated in the judgment.

Disposition: Petition disposed of with the stated modification to the ACMM's order.

Show full summary ...

    Department Of Customs v. Eastern Road Carriers

    V.B Bansal, J.— Department of Customs has filed this petition under Section 482 of the Code of Criminal Procedure (for short “the Code”) with a prayer that the order dated 23.2.1994 passed by Shri R.K Sharma, ACMM, New Delhi be set aside and the petitioner be permitted to dispose of the ‘Close Up’ tooth paste in accordance with the prescribed rules.

    2. Before discussing the submissions made by the learned counsel for the parties, it would be necessary to give the brief facts leading to the filing of this petition. On 18.12.1993, Officers of the Customs (Preventive), Delhi recovered and seized smuggled ball-bearings worth Rs. 40,95,600/- from two trucks bearing No. DIG-4706 and DL-1L-A 3252. These were concealed under 450 boxes of Close Up tooth paste. The drivers of the two trucks besides other persons including Pradip Goel were examined under Section 108 of the Customs Act. The seizure of the articles including the Close Up packings was made under the reasonable belief that they were liable to confiscation.

    3. The Department of Customs moved an application before the learned ACMM, New Delhi with a prayer that they may be permitted to dispose of the tooth paste Close-Up. It was, inter-alia, pleaded that the Tooth Paste were not contraband goods but were used only for the concealing of smuggled goods. Further averments made in the application were that the Tooth Paste is a parishable item, which will deteriorate in value and utility by passage of time so the application for permission to dispose of the same.

    4. M/s. Eastern Road Carriers Ltd. moved an application to the Customs Department through their counsel for the rerlease of 450 packings of Close-Up tooth paste to which a reply was sent by the Asstt. Collector, Customs(prev) from the Office of Collector of Customs, Customs House, New Delhi, stating therein that these packings were liable to confisaction under Section 119 of the Customs Act and thus, could not be released at that stage. Further information to the respondent was that the department has already moved the Court of Addl. Chief Metropolitan Magistrate, for permission to dispose of the said tooth paste to safe guard the interests of the department. Accordingly, an application was moved by Eastern Road Carriers Ltd., respondent, before the learned ACMM, New Delhi for release of the cartons of Close-Up tooth paste. It was, inter-alia, pleaded that the applicant was the General Manager of M/s. Eastern Road Carriers Ltd. holding a General Power of Attorney and also authorised to file the application. It was also claimed that M/s. Eastern Road Carriers was a leading road transport company having 40 branches of it all over the country with a fleet of about 14 trucks of its own. It was also claimed that in the course of their normal business, various consignments of different clients are booked for transportation of the cargo to various places and in case of need of more trucks, they, as usual, hired the same through various lorry brokers against settled rates. It has also been pleaded that they were handling the work of transportation of goods of M/s. Hindustan Lever Limited, Calcutta to various places for quite a long time and on 7.12.93 at the instance of M/s. Hindustan Lever Ltd. they as usual, hired truck No. DIG-4706 through Calcutta-Gujrat Roadways at the rate of Rs. 7800/- for which Rs. 6000/- were paid in advance and a copy of loading advice was also annexed with the application. Further averments made in the application were that the truck No. DIG-4706 was sent to the factory of M/s. Hindustan Lever Ltd., Calcutta which was loaded on 7.12.93 and that from a news paper they came to know on 21.12.93 about the interception of truck No. DIG-4706 by Customs Department, Delhi Office and about the seizure of the same. It had been submitted that since they were to ensure the delivery of 450 cartons, to the consignee at their given address, a prayer was made for the release of the same in their favour.

    5. Learned ACMM heard the arguments on both the applications and vide the impugned order, dismissed the application of the department while the application of the respondent was allowed and the Asstt. Collector (Prev) was directed to hand over 450 card board boxes containing Close Up tooth paste to Shri Ashok Chakraborty, General Manager and constituted attorney of M/s. Eastern Road Carriers after he executes an indemnity bond.

    6. I have heard Shri Satish Aggarwal, learned counsel for the petitioner and Shri Pradip Jain, learned counsel for the respondent and have also gone through the record.

    7. Learned counsel for the petitioner has submitted that the cartons of Close-Up tooth paste were used for concealing the smuggled goods and those were seized by the Customs Officer under Section 110 of the Act under reasonable believe that they were liable to confiscation. He has also submitted that once the goods are seized, as referred to above, it is only the appropriate authorities under the Act, who can take proceedings for the confiscation of such goods and that the court has no jurisdiction to pass any order for handing over the same to any one. He has, thus, submitted that learned ACMM has committed illegality in passing the impugned order. He has further submitted that even the goods, subject matter of this petition, have not been produced before the learned ACMM, who was thus, not vested with any jurisdiction. According to him, the order passed by the learned ACMM is without jurisdiction and thus, prayer has been made that the same may be set aside and the department may be permitted to dispose of the same.

    8. Learned counsel for the respondent has, on the other hand, sub p73 milted that the Close-up tooth paste is a perishable article and in case immediate steps are not taken to release the same in favour of the respondent, they would suffer irreparable loss since they would be required to pay huge amount to M/s. Hindustan Lever Ltd. wherefrom, the goods were taken or in any case, to the consignee. He has alo submitted that jurisdiction was vested in the learned ACMM under Sec. 451 of the Code and there has been a proper exercise of jurisdiction by him in passing the impugned order. He has also submitted that the interest of the department has been safe-guarded in the impugned order and in case the department, at any time, holds that the goods were liable to confiscation, the amount can be paid to them by the respondent, for which, the indemnity bond has been required to be furnished. A prayer has, thus, been made that this petition may be dismissed.

    9. It is the admitted case of the parties that Close Up tooth paste is a perishable commodity and thus, requires to be disposed of at the earliest. It is not disputed that there is always the expiry date for such-like items and the value of such articles become zero once the date expires. Even the petitioner-department has claimed it to be a perishable good and it was so stated in the application moved before the learned ACMM for permission to dispose of the same. The short question for consideration is as to whether there has been any illegality in the passing of the impugned order by the learned ACMM. There is no doubt that under Sec. 119 of the Act, any goods used for concealing the smuggled goods are liable to confiscation. Section 124 of the Act requires the issuing of a show cause notice before confiscation of the goods and there is power vested in the officer, adjudicating it to give an option to the concerned person to pay in lieu of confiscation, such fine as the said officer thinks fit. A notice is required for initiating confiscation proceedings within a period of 6 months of the seizure of goods. Admittedly, this period has not expired as yet.

    10. Learned trial court has placed reliance on Sec.451 of the Code to pass the impugned order. Submission of learned counsel for the petitioner has been that this provision was not applicable and thus, was not available to the learned ACMM in passing the order since the property had not been produced before the court. I am afraid, I can not agree with this submission. The production of property before the trial court does not mean that it should be produced physically. Learned counsel for the petitioner has admitted that the department is placing reliance upon the recovery of card board boxes of Close-Up tooth paste and it is a case property also. He has also submitted that department is relying upon this evidence to prove the offences of smuggling. It is only with this view that an application has been moved by the department for permission to dispose of the Close Up tooth paste. The claim of the department, however, has been that the department should be permitted to dispose of the same, may be by public auction, in which the respondent can be permitted to participate so that if they are highest bidder, they may get the delivery of the same and in this way, their interests will also be safe p73 guarded. I am afraid this argument can not be accepted. If there is an open auction, there is no concession to the respondent and every body is competent to participate in such an auction but can be it said that it is for the benefit of both the parties.

    11. Learned counsel for the respondent has placed on record different documents to indicate that they have an agreement for transporting the goods of M/s. Hindustan Lever and for this purpose, they have been utilising their own vehicles as also they have been arranging the trucks belonging to others to transport the goods. The mere fact that the respondent hired the trucks from M/s. Calcutta-Gujrat Roadways for a sum of Rs. 7800/- for a load of 10 tonnes and received a sum of Rs. 10560/- since it was a profit earned by Eastern Road Carriers Ltd., which could not be challenged nor it can be said to be something illegal. It is not necessary and many a times it may not be possible to produce the case property actually in side the court room like vehicles or heavy load machinery which could not be easily shifted. Such type of vehicles and machinery is also deemed to have been produced in court and adopting different methods, such properties are also exhibitted. In the instant case, criminal complaint has already been filed against the accused persons, and thus, the learned ACMM is ceased of the complaint and the Close Up tooth paste being required to be proved having been recovered from the truck and used for concealing the smuggled goods, it can not be said that no jurisdiction was vested in the learned ACMM to pass the impugned order.

    12. Learned counsel for petitioner had placed reliance upon case P.O Thomas and others v. Union of India (1990 Crl. L.J 1028). This case, I am afraid, can not be of any assistance to the petitioner. It was a case of recovery of primary gold from the petitioner, who returned to Kerala from abroad and which was seized by the Customs Authorities under Sec. 110 of the Customs Act and they were arrested and produced before the ACMM. The pass ports and return air tickets of accused persons were also seized by the Customs Authorities to be useful and relevant to proceeding under the Act. Separate applications were filed by the petitioners before the court for the return of the pass-port and return air tickets, which were dismissed by the Magistrate, holding that he had no jurisdiction to return the same. While dealing with this matter, the High Court of Kerala came to the conclusion that the challan had not been filed and thus, the court had no jurisdiction to pass an order for return of pass port and the return-air tickets. In the instant case as already referred to, not only that the complaint has already been filed but the department itself wanted the permission of the court for disposal of the Close Up tooth paste.

    13. The case of the respondent has been that they had taken the delivery of the tooth paste from M/s. Hindustan Lever Ltd., Calcutta and thus, the same was to be delivered to the consignee and they were concerned about its possession and they have established the need for immediate possession of the same so as to p73 avoid its total loss and thus, irreparable loss and injury to the respondent. The delay not only would cause damage to the property, but may result in hardship to the respondent but the interests of the department could be safeguarded by the conditions, as imposed by the learned trial court. It could be different case where there is an offence under a particular special Act not attracting the criminal offence and a person authorised under the Special Act may seize the property for which the remedy would lie before the authority under the Special Act, but in the instant case, jurisdiction of the criminal court could not be ousted after the following of the criminal complaint and especially moving of the application by the petitioner for orders for the disposal of tooth paste. Reliance has been placed by the learned counsel for the petitioner on the judgment in case Tirlok Singh v. The Supdt. of Customs & Another (1979 Chandigarh Law Reporter 1). This judgment, in my view, cannot be of any help to the petitioner and the facts of that case were distinguishable. It was a case regarding the release of a car used for transporting the smuggled goods and it was held that the appropriate authority will take steps for giving of notice within six months which had not expired and there was no prayer by the Customs Department for permission to dispose of the same. However, in the instance case it is the disposal of the tooth paste which is perishable in nature and a prayer has been made even by the Department for permission to dispose of the same test it becomes a total loss.

    14. The most important question, now to be considered is, as to whether the condition imposed by the learned ACMM for the release of the Close-Up tooth paste to the respondent is sufficient to safe guard the interests of the petitioner or not. During arguments, it was suggested by the learned counsel for the petitioner that one carton of Close-up tooth paste could be allowed to be retained by the department so that the same is produced during trial and be exhibited. Learned counsel for the respondent submits that there is no objection to the order being made in this regard. The respondent has been directed to furnish indemnity bond in the sum of Rs. 12.00 lakhs which admittedly covers the price of the tooth paste. It would also be necessary to get the undertaking from the respondent that they would deposit the amount covered by the indemnity bond if ultimately, the Appropriate Authority comes to the conclusion that the tooth paste was liable to confiscation.

    15. In view of my aforesaid discussion, the order of the learned Addl. Chief Metropolitan Magistrate, New Delhi, is modified to the extent that besides giving of indemnity Bond, Shri Ashok Kumar Chakraborty will also give an undertaking before the learned ACMM for the payment of the amount to the Customs Department, if a decision to that effect is taken by the Appropriate Authority and that one carton of Close-Up would be retained by the department to be produced during trial.

    16. The petition stands disposed of with the aforesaid modification.

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    Comments

    Department Of Customs v. Eastern Road Carriers
    (Mar 25, 1994)