W.A. No. 1408 of 2016.

: 2 :

order on the question of 'interim custody' of the vehicle seized under the Act ? Has the law has been correctly laid down in Abdul Nazer Vs. State of Kerala [2014 (2) KLT 1073] with reference to Section 53B of the Act ? Whether the verdict passed by the learned single Judge in the instant case, declining the relief sought for and declaring that Section 53B of the Act and Rule 4 of the Rules cater to two different situations and that there is no conflict in this regard requires any interference? These are the main questions to be considered and answered by this Court in this appeal preferred by the writ petitioner/appellant, who lost the battle in the first instance.

2. The factual sequence revealed from the proceedings is that, the jeep bearing registration No. KL13 G 2940 owned and driven by the petitioner/appellant was seized on 14.08.2015 by the second respondent, for the alleged transportation of 21 litres of Indian Made Foreign Liquor ('IMFL' in short) meant for sale only in Puducherry State and thus involving commission of an offence punishable under Section 58 of the Act. It was alleged that the appellant/writ petitioner, who was owner of the vehicle, himself was driving the jeep at the relevant time. A crime was registered against him as Crime No. 71 of 2015 of the Excise Range Office, Iratty and the proceedings

3

W.A. No. 1408 of 2016.

: 3 :

are going on.

3. While so, an application was submitted by the appellant on 19.02.2016 before the first respondent, for granting interim custody of the vehicle. After considering the said application, the first respondent passed Ext. P2 order, granting interim custody of the jeep bearing No. KL 13 G 2940, subject to the conditions stipulated therein. Apart from the conditions for proving ownership over the vehicle and for causing endorsement to be made in the Registration Certificate of the vehicle (that such interim custody was being granted during pendency of the Abkari case registered involving the said vehicle) and for execution of a 'Bond' on a stamp paper worth Rs.100/- in terms of the requirements under clause (a) to (f) of condition No.4, it was stipulated as the prime requirement that a sum of Rs.1,00,000/- had to be deposited in the District Treasury Savings Bank Account, Kannur towards the market value of the vehicle fixed by the Excise Mechanical Engineer. This was sought to be challenged by filing a writ petition before this Court, mainly contending that interim custody of the vehicle was liable to be released on execution of a 'Simple Bond' for the cash equivalent with reference to market value of the vehicle in terms of Section 53B of the Act, and that

4

W.A. No. 1408 of 2016.

: 4 :

Ext.P2 order was bad in law to the said extent.

4. A counter affidavit was filed from the part of the first respondent opposing the relief sought for and asserting that Ext. P2 order was strictly in conformity with Rule 4 (2) (a) of the 'Confiscation Rules'. It was also pointed out that, Section 53B of the Act was having no relevance, once an order was passed by the competent officer granting interim custody of the vehicle. Reliance was sought to be placed by the writ petitioner on the verdict passed by a learned single Judge of this Court reported in 2014 (2) KLT 1073 (cited supra) to the effect that execution of 'Bond' was enough to grant interim custody of the vehicle and nothing else. This was sought to be rebutted by the learned Government Pleader stating that the above decision was rendered unfortunately without referring to the law declared by a Division Bench of this Court in Karthikeyan Vs. Deputy Commissioner of Excise, Ernakulam and another [2011

(1) KHC 138 = 2011 (1) KLT 334], pursuant to the reference made by another learned Judge doubting the correctness of the verdict passed in Dr. Ommen Mathew & others Vs. Excise Commissioner, Thiruvananthapuram & others [2010 (2) KHC 617], whereby the vehicle was ordered to be released without

5

W.A. No. 1408 of 2016.

: 5 :

insisting for cash deposit. The version of the appellant is that, the verdict passed by the Division Bench reported in 2011 (1) KLT 334

(cited supra) was never with reference to the scope of Section 53B of the Act and hence the appeal.

5. Indisputably, the offence as alleged in the instant case, if proved, is of a very serious nature. Stringent provisions are made in the Statute, which is a self-contained code, to punish the guilt, which is more with intent to deter anybody from pursuing such/similar activities any further. Apart from the punishment to be imposed, the vehicle and the goods seized are liable to be confiscated in terms of Section 67B of the Act. However, considering the merit of each case, it is possible to have interim custody of the vehicle released. The power of 'confiscation' conferred under Section 67B of the Act is absolute, by virtue of the 'non-obstante clause' therein. If the authorised officer is satisfied that an offence under the Act has been committed in respect of or by means of that property (which includes the vehicle as well) and the property is liable for confiscation, it is open for such authorised officer to order confiscation of the property/vehicle and the contents, whether or not prosecution is instituted for commission of the offence. The said order is subject to

6

W.A. No. 1408 of 2016.

: 6 :

scrutiny of the Appellate authority under Section 67E of the Act and that of the Revisional authority under Section 67F of the Act. If the authorised officer passes an order under Section 67B that the property is not liable to be confiscated under the Act, it is to be returned to the person from whom the vehicle was seized, in the manner as prescribed under Section 67D of the Act. Granting of 'interim custody' of the vehicle has to be considered in the said circumstances; especially in view of the serious nature of the offence and the consequences to be resulted, if the requirements are satisfied.

6. In exercise of the powers of the Government under Section 29 (1) and 29 (2) (q) of the Abkari Act, the Kerala Abkari (Disposal of Confiscated Articles) Rules, 1996 were formulated and notified by the State Government, which came into effect from 11.03.1996 - the date of publication. It is true that Rule 4 (2) of the Confiscation Rules deals with the granting of interim custody of the carts/vessels/other conveyances, which are liable to be confiscated under the Act to its owner. But to understand the scope of the said Rule, it is necessary to go through the full text of Rule 4, which hence is extracted below.

"4. Carts, vessels or other conveyances.-

7

W.A. No. 1408 of 2016.

: 7 :

"(1) (a) When an authorized officer adjudging a confiscation of cart, vessel or other conveyance under Section 67E or 67F of the Act offers the owner of such property the option of paying in lieu of confiscation, a fine equivalent to the market value of the cart, vessel or other conveyance as fixed by the Mechanical Engineer of the Excise Department or any Mechanical Engineer of and above the rank of an Assistant Executive Engineer of the Public Works Department of the State, and if the owner of such property agrees to accept such option, he shall be required to pay forthwith such sum as may already have been spent towards the safe custody and upkeep of such property, and to deposit such further sum as may appear likely to be required for such purposes until the payment of the fine.

(b) A period of fifteen days shall be allowed for the payment of such fine, if the fine is paid within such period, the property shall at once be, released to the owner together with such part of the sum so deposited as may remain unspent on such purposes, and if the fine is not paid within the said period of 15 days, the order of confiscation shall remain in full effect in the same way as if no option of the payment of a fine had been offered.

(c) There shall be no appeal against adjudication of an optional fine.

(d) An appeal may be preferred against the amount of

8

W.A. No. 1408 of 2016.

: 8 :

such fine provided that the fine has already been paid.

(2)(a) The cart, vessel or other conveyance liable to be confiscated under the Act may be released temporarily by the authorized officer to its owner on depositing an amount equivalent to the market value of the cart, vessel or other conveyance, fixed by the Mechanical Engineer of the Excise Department or any Mechanical Engineer of and above the rank of an Assistant Executive Engineer of the Public Works Department of the State in the Treasury Savings Account in favour of the Commissioner of Excise.

(b) The cart, vessel or other conveyance so released (temporarily) shall be produced before the Authorized Officer when final order of confiscation is passed by the Competent Authority and communicated to the owner of such property by Registered Post."

7. Obviously, the object of formulation of the Confiscation Rules itself reveals that they were brought about for the disposal of the

confiscated articles. Rule 4 (1) (a) of the Confiscation Rules enables the owner of the vehicle to get back the vehicle from the authorized officer on accepting the offer, if any, made by the said officer, to grant such custody, subject to payment of fine equivalent to the market value of the vehicle, in lieu of confiscation, along with the expenses incurred for arranging safe custody and upkeep of the

9

W.A. No. 1408 of 2016.

: 9 :

vehicle/property, till the fine is satisfied. By virtue of Sub rule 2 (a) of Rule 4, interim custody of such vehicles liable to be confiscated can be released to its owner, on depositing an amount equivalent to the market value of the vehicle as fixed by the Mechanical Engineer of the Excise Department or such other persons as prescribed. The vehicle so released temporarily is to be produced before the authorized officer when the final order of confiscation is passed and communicated to the owner, by the competent authority.

8. After considering the Expert Committee Report as to the changes to be made in the Abkari Act and to control manufacture/sale of illicit liquor/toddy in the State, the Government brought about some amendments vide Act 3 of 2010; one among which was insertion of a new Section as 'Section 53B', for providing jurisdiction to Courts for the temporary release of vehicles or other conveyances involved in any offence, seized/detained under the Act, on execution of sufficient Bond towards security. The said provision reads as follows :

"53B. Jurisdiction of COURTS on articles seized-- Whenever any vehicle or other conveyance used for committing any offence is seized or detained under this Act, and if any court finds that it shall be released temporarily, it

10

W.A. No. 1408 of 2016.

: 10 :

shall do so with direction to execute sufficient bond by way of cash security equivalent to the market value of such vehicle or conveyance, to be fixed by the Mechanical Engineer of the Excise Department or any Mechanical Engineer of or above the rank of an Assistant Executive Engineer of the State Public Works Department, for production of such vehicle or conveyance on demand before the court or authorised officer and such order shall not prevent the authorised officer from taking or continuing action under Section 67B of this Act."

9. As mentioned above, the very purpose of constitution of the 'Expert Committee' was to study and report on the changes required to be made in the Abkari Act; to solve the various problems faced by the Excise Department and to control manufacture/sale of illicit liquor/toddy in the State, vide G.O. (MS) No.234/07/TD dated 26.11.2007. It was after considering the report of the said Committee, that the amendment was brought about, also incorporating Section 53B of the Act. A copy of the report of the Committee was also called for, which was made available by the learned Government Pleader and same has been perused. We have also gone through the purpose and object of the amendment. It was never with reference to any hardships or inconvenience to the owners

11

W.A. No. 1408 of 2016.

: 11 :

of the vehicles/carts/vessels/other conveyances, which were seized by the concerned statutory authority under the Abkari Act in connection with the commission of Abkari offence which involves confiscation proceedings as well, under Section 67B of the Act. The nature of offence is quite serious and so is the position with regard to the consequences as well. Despite the opportunity given to the appellant, nothing was brought to the notice of this Court to show that the intention of the Legislature was to water down the rigor of the provisions and proceedings, by causing interim custody of the vehicle, which otherwise is liable to be confiscated under Section 67B, merely on the execution of 'Bond', instead of cash security to be provided to obtain interim custody as provided in terms of Rule 4(2) of the Confiscation Rules.

10. We find that such a proposition mooted from the part of the petitioner in Crl. M.C. 2619 of 2014 came to be accepted by a learned Judge of this Court, while intercepting the order passed by the learned Magistrate, to release the interim custody of the vehicle, subject to payment of cash security of Rs.2.1 lakhs, in exercise of the jurisdiction under Section 482 of the Cr.P.C. vested with this Court.

11. In the aforesaid case, an Abkari offence came to be

12

W.A. No. 1408 of 2016.

: 12 :

registered against the petitioner/owner of the car, which was seized after registering the abkari crime. It was contended that the petitioner therein was not made an accused and that he was having absolutely no knowledge as to the transaction, who was eligible to have protection under Sub section (2) of Section 67C of the Act. The petitioner had filed an application for interim custody of the vehicle before the concerned Magistrate's Court under Section 457 of Cr.P.C., where an order was passed granting interim custody; subject to furnishing cash security of Rs.2.10 lakhs. This was challenged by filing a petition under Section 482 of the Cr.P.C. before this Court, also contending that the petitioner was ready to furnish security by way of property, instead of cash deposit. The order passed by the learned Magistrate was set aside, placing reliance on Section 53B of the Abkari Act and the interim custody of the vehicle was ordered to be released, directing the petitioner to execute a 'Bond' for Rs.2.10 lakhs with two solvent sureties for the like sum each, to the satisfaction of the Judicial First Class Magistrate, besides a direction to furnish property security, as specified therein. It has been observed by the learned Judge of this Court in paragraphs 11 and 12 of the verdict reported in 2014 (2) KLT 1073 (cited supra) that, if the

13

W.A. No. 1408 of 2016.

: 13 :

intention of the Legislature was to direct the party to furnish 'cash security', instead of executing a Bond, that would have been specifically mentioned in that Section. Instead of this, while directing the party to execute a 'Bond' for the amount equivalent to market value of the vehicle for releasing the vehicle, the intention of the Legislature appeared to be to avoid difficulty caused to the owners by imposing stringent conditions of cash security. It was further held in paragraph 12 that the provisions of law have to be interpreted for the benefit of the parties in favour of whom such benefit was intended by the Legislature and that a 'purposive interpretation' has to be made in that regard.

12. There is no difference of opinion that the Statute has to be read as it is and if any ambiguity is there in understanding the same, the Rule of purposive interpretation has to be adopted. But, there is absolutely no discussion in the said judgment as to the purpose of enactment and how the same could be interpreted as if the enactment was made to avoid the difficulty caused to the owners of the vehicles. When the offences under the Act are quite serious and when the Committee constituted, on whose report the amendment by way of Act 3 of 2010 (also incorporating Section 53B of the Act) was

14

W.A. No. 1408 of 2016.

: 14 :

introduced to solve the various problems faced by the Excise Department and further to control the manufacture and sale of illicit toddy in the State, what difficulty to the owners of the vehicles was pointed out by the Committee, if any, was never sought to be probed into. We are of the view that there is misconception of law, particularly, as to the scope of the amendment, which requires to be clarified in proper terms.

13. There cannot be any dispute that if a vehicle is involved in an Abkari offence, it is liable to be confiscated in terms of Section 67B of the Abkari Act. There is a duty cast upon all officers in charge of the Police station under Section 53 of the Act, to take charge of and keep in safe custody, pending the orders of a Magistrate or an Abkari Inspector, all articles seized under the Abkari Act, and to comply with such other requirements as mentioned therein. Since the vehicle is liable to be confiscated, what shall be the further course of action pursuant to the confiscation and what could be the interim measure, if any, during pendency of such proceedings, is dealt with under Rule 4 of the Confiscation Rules, which has already been extracted above.

14. Sub rule (1) of Rule 4 deals with the situation after passing an order of confiscation, whereas Sub rule (2) of Rule 4 mainly deals

15

W.A. No. 1408 of 2016.

: 15 :

with the stages during pendency of the confiscation proceedings. Sub rule 1(a) of Rule 4, refers to a situation where the authorised officer adjudging confiscation of the vehicle offers the owner of such property, the option of paying a fine equivalent to the market value of the vehicle (as fixed by the concerned Engineer) in lieu of confiscation. If such offer of option is accepted by the owner of the property, and the cash equivalent is deposited along with such other amounts spent towards safe custody and upkeep of the property till payment of fine is effected, he shall be given the custody of the vehicle. By virtue of sub Rule 1 (b) of Rule 4, the owner of the property is to be given 15 days' time to satisfy the fine with the aforesaid expenses and if it is paid within the said period, the vehicle is to be released to him. If the fine is not paid within 15 days, the order of confiscation shall remain with full effect, as if no option for payment of fine had been offered. The scope of the provision is further evident from Sub rule 1 (c) of Rule 4 that there shall be no appeal against adjudication of an optional fine; though an appeal may be preferred against the amount of such fine; provided that the fine has already been paid as stipulated under sub Rule 1 (d) of Rule 4.

15. Under sub Rule 2 (a) of Rule 4, the power is conferred upon

16

W.A. No. 1408 of 2016.

: 16 :

the 'Authorised officer', to release interim custody of the vehicle to the owner, pending confiscation proceedings, on depositing an amount equivalent to the market value of the vehicle (as fixed by the Engineer concerned), further stipulating under sub Rule 2 (b) of Rule 4 that the vehicle so released shall be produced before the Authorised officer, when final order of confiscation is passed by the competent authority and communicated to the owner by registered post.

16. Validity of the Confiscation Rules was upheld by this Court in Aji Kumar Vs. Assistant Excise Commissioner [1999 (1) KLT

132] and Prasad Vs. Sub Inspector of Police [2000 (2) KLT 790 (DB)]. Whether interim custody of the vehicle which is liable to be confiscated under Section 67B of the Act could be released to the owner during pendency of the proceedings, without insisting for 'cash security' had come up for consideration before a Division Bench of this Court in 2011 (1) KLT 334 (cited supra). It was pursuant to an order of reference passed by a learned Judge of this Court doubting the correctness and the course pursued by another learned Judge in granting interim custody of the vehicle without insisting for cash deposit as held in 2010 (2) KHC 617 (cited supra). The case considered by the learned single Judge was in respect of the seizure

17

W.A. No. 1408 of 2016.

: 17 :

of the vehicle bearing No. KL2C 6384, in which some Ayurvedic preparations were made transported, on the strength of valid licence obtained to the first petitioner to prepare those Ayurvedic medicines. It was alleged by the prosecution that there was violation of Rule 10

(1) (c) (i) of the Kerala Spirituous Preparations (Control) Rules 1969; that samples were taken and sent for examination and it was alleged that, if the percentage of ethyl alcohol exceeded the permitted limit, the petitioners were liable to be prosecuted under the Abkari Act and on that event, the vehicle was also liable to be confiscated. The contention of the petitioner before the learned single Judge was that; to attract confiscation proceedings under Section 67B of the Act [read with Section 65 of the Act], the articles seized from the vehicle should either be liquor or intoxicating drugs. As observed by the learned single Judge in paragraph 2 of the said verdict, the articles seized from the concerned vehicle [KL 2C 6384] were Ayurvedic preparations. Whether the Ayurvedic preparation contained ethyle alcohol, beyond the permissible extent of percentage, attracting the offence under the Abkari Act, was held as a matter to be considered by the Deputy Excise Commissioner. It was with reference to the power of the Deputy Excise Commissioner [to grant interim custody of

18

W.A. No. 1408 of 2016.

: 18 :

the vehicle on conditions, till such decision is taken], that a direction was given to have the interim custody released on sufficient conditions, however, without insisting for cash deposit.

17. Pursuant to the reference made by another learned single Judge doubting the correctness and course of proceedings in 2010

(2) KHC 617 (cited supra), the matter was considered elaborately by the Division Bench. The Bench observed, in paragraph 6 of the verdict in 2011 (1) KLT 334 (cited supra), that when the confiscation Rules contained clear statutory provisions as to the manner in which, and the conditions subject to which, a vehicle could be provisionally released pending confiscation proceedings, it was not open for any statutory authority acting under the Abkari laws to issue any order for release, except in conformity with that condition. Since the statutory provision including subordinate legislation binds the repository of power under that Statute, it was held that there was no way for any 'Abkari officer' to act except in terms of the directions given therein. The Bench further observed in paragraph 7 of the verdict that, under exceptional circumstances, the discretionary power vested with this Court under Article 226 of the Constitution of India could be invoked to render justice, however, without in any manner impairing the effect

19

W.A. No. 1408 of 2016.

: 19 :

of the statutory law governing the field. The Bench held that the direction given by the learned single Judge in Dr. Ommen Mathew's

case (cited supra) to grant interim custody of the vehicle without insisting or making any 'cash deposit' is not a recognition of the power or authority of the officer to do so under the statutory provisions. The Bench categorically made clear that the above decision is to be taken exclusively with reference to the facts of that case and it has not laid down any principle of law, which could be followed by any subordinate authority, or for that matter, by the Writ Court, as a precedent. It was further observed that the verdict passed by the Apex Court in State of Kerala Vs. Jabbar [2009 (2) KLT 709] also would not come to the rescue of the petitioner, as the ratio of the decision in the said case had nothing to do with the nature of conditions, that may be imposed by the statutory authority while ordering temporary release of the vehicle involved in an Abkari offence. The Bench observed that the Apex Court in the said case was not laying down any law; that a statutory authority could release the vehicle on conditions other than those made under the Statute. It was accordingly, that the reference was answered and the writ petition was dismissed. We fully concur with the view expressed by

20

W.A. No. 1408 of 2016.

: 20 :

the learned Judges in the said case.

18. It is true that no reference is made by the Bench in 2011

(1) KLT 334 (cited supra), to section 53B of the Act, which was introduced as per the Amendment Act 3 of 2010. But, on reading the said provision (Section 53 B) and Rule 4(2) of the Confiscation Rules, this Court is of the view that absolutely no conflict is there as to the course of action to be pursued in relation to granting of interim custody of the vehicle, pending confiscation proceedings. As rightly held by the learned single Judge in the writ petition [W.P.(C) No. 17099 of 2016] and as obvious from Section 53B of the Act, it deals with the jurisdiction of 'Court' to release the article/vehicle seized, whereas Rule 4(2) of the Confiscation Rules deals with the power of the 'Abkari officer' to deal with the same. This Court finds considerable force in the submissions made by the learned senior Government Pleader that Section 53B was introduced in the Act as there was no provision conferring power on the Court to deal with the situation under similar circumstances, as conferred upon the statutory authority by way of Rule 4(2) of the Confiscation Rules. The words used under Section 53B are quite relevant, that such order to release the interim custody is subject to execution of "sufficient bond" by way

21

W.A. No. 1408 of 2016.

: 21 :

of CASH SECURITY equivalent to the market value of the vehicle/conveyance. The term 'Bond' as per general sense, is a deed by which one person binds himself to pay a sum to another person. In the instant case, the term 'Bond' used in Section 53B of the Act is qualified by the following words "by way of cash security" with further stipulation that it shall be equivalent to the market value of the vehicle/conveyance. When the word 'Bond' stands qualified by the words by way of cash security, there cannot be any other Bond than 'cash security' and such Bond would contain such other conditions as well, to make it a 'sufficient bond' as used in Section 53B of the Act. The importance of the qualifying words "by way of cash security" was unfortunately omitted to be considered by the learned single Judge while rendering the decision reported in 2014 (1) KLT 1073 (cited supra). Similarly, by virtue of the very nature of the Statute, intending to prevent manufacture and sale of illicit liquor/toddy in the State, necessitating amendment to appropriate terms based on the report of the Expert Committee constituted by the Government, by incorporating such amendment as per Act 3 of 2010, it could never be considered as an Act of the Government "to avoid difficulty caused to the owners" on imposing stringent conditions of cash security, for

22

W.A. No. 1408 of 2016.

: 22 :

allowing temporary custody of the vehicle, where the learned Judge [who passed the verdict in 2014 (1) KLT 1073 (cited supra)] has gone wrong. We cannot but say that the intention of the Legislature was omitted to be noted correctly while ascertaining the scope of the provision (Section 53B of the Kerala Abkari Act) as per the verdict in

2014 (1) KLT 1073 (cited supra), which requires to be intercepted.

19. In the above circumstances, we declare that Section 53B of the Act was never introduced [as per the Amendment Act 3 of 2010] by the Government 'to avoid difficulty caused to the owners of the vehicles/conveyances' and to substitute the 'cash security' equivalent to market value of the vehicle, by a simple bond. We find that the law declared by the Division Bench in the decision reported in 2011 (1) KLT 334 (cited supra) with reference to the Rule 4(2) of the Confiscation Rules governs the field with equal force even after the amendment of the Statute by introducing Section 53B of the Act. While Rule 4 (1) of the 'Confiscation Rules' deals with the power of the Abkari officers to grant interim custody of the vehicle [if the owner of the vehicle gives the option to have the custody of the vehicle even after the confiscation proceedings], Rule 4(2) deals with granting of interim custody of such

23

W.A. No. 1408 of 2016.

: 23 :

vehicle during pendency of the confiscation proceedings under Section 67B. Unlike this, Section 53B of the Act deals with the power of 'Court', which normally lies with the concerned Magistrate as made clear by the learned Judge in the judgment under challenge. This however does not bar the way of jurisdiction of the Writ Court under Article 226 of the Constitution, to deal with the situation on exceptional circumstances, more so since such powers under the Constitution of India cannot be curtailed by a Statute. With the above observations, we overrule the dictum laid down in the decision reported in 2014 (2) KLT 1073 (cited supra) and hold that the verdict passed by the learned single Judge in W.P. (C) No. 17099 of 2016 does not warrant any interference. The Writ Appeal stands dismissed accordingly.

Sd/-

P. R. RAMACHANDRA MENON,

JUDGE

sd/-

ANIL K. NARENDRAN,

JUDGE

kmd /True copy/ P.A. to Judge

24