Superintendent Of Customs (Preventive) v. Taiyab Ali Harun & 2 S

C.A.V JUDGEMNT

1. The present appeal is directed against the judgment and order dated 26.12.1988, passed by the learned Sessions Judge, Valsad at Navsari, in Criminal Appeal No. 19 of 1987, whereby the proceedings against the accused persons have been dropped and the conviction and sentenced imposed upon them vide judgment dated 28.05.1987, rendered by the learned Additional Chief Judicial Magistrate, Valsad, in Criminal Customs Case No. 3 of 1986, has been set aside and the appeal allowed.

2. Briefly stated, the facts of the case are to the following effect:

On 08.03.1985, the Superintendent of Customs, accompanied by other officers, went to Navsari and conducted a search of a shop named Natural Cutlery Stores, situated at Dabgarwad, Navsari, on the basis of prior information. The shop was owned by accused No. 1 - Taiyabali Haroonbhai Memon, who was not present there at the relevant point of time. Accused No. 2 - Vasudev Nathumal Maliramani, who was the Manager of the shop, was present. The search was conducted in the presence of Panch witnesses. A transistor, batteries, cream and cosmetics of foreign origin worth Rs. 520/- were seized as accused No. 2 could not produce any bills or vouchers for the said goods.

On 13.03.1985, the Superintendent of Customs and other officers again raided the above-mentioned shop of accused No. 1, as also his residential premises. From the shop, contraband goods worth Rs. 8,076/- were recovered. The owner of the shop was not present but his brother, who was present, could not produce any bills, vouchers or other documents. The goods were seized by a valid Panchnama. From the residential premises of accused No. 1, certain contraband articles worth Rs. 2,890/- were recovered in the presence of Panch witnesses and Zubeidaben, wife of accused No. 1. As she could not produce any vouchers or documents in respect of the goods, and as the goods were of foreign origin, they were seized. The statement of accused No. 1 was recorded on 19.09.1985, wherein, he admitted the recovery of the goods from his premises and that he had no bills or vouchers in support of his possession of the goods. As per the case of the prosecution, the import of such goods was prohibited, therefore, the goods were liable to confiscation under section 111 of the Customs Act, 1962 (“the Customs Act” for short). The accused persons had, therefore, committed the offence under Section 135 of the Customs Act. The goods were notified goods and their possession was clearly unlawful.

3. The case was adjudicated departmentally and the goods were confiscated. Personal penalty was also levied on accused No. 1. After obtaining necessary sanction, the case was filed on 17.03.1985, before the learned Chief Judicial Magistrate, Valsad. The accused claimed to be tried, therefore, evidence of nine witnesses was recorded. The learned Magistrate held the accused persons guilty and convicted them under Section 135 of the Customs Act. The learned Magistrate sentenced accused No. 1 to undergo six months' rigorous imprisonment and a fine of Rs. 1,000/-, failing which, further rigorous imprisonment of one month was ordered. Accused No. 2 was sentenced to two months' rigorous imprisonment and a fine of Rs. 500/- failing which he was to undergo fifteen days' further rigorous imprisonment. The accused persons preferred an appeal against the judgment of the learned Magistrate before the Sessions Court which has been allowed by the impugned judgment, giving rise to the filing of the presentappeal.

4. Mr. Hriday C. Buch, learned Central Government Standing Counsel for the appellant has submitted that the order of sanction at Ex.39 has been wrongly held to be invalid by the learned Sessions Judge. It is contended that if the said order is perused, it reveals that all the material relevant to the case has been perused and after due application of mind, sanction has been accorded. It is further submitted that it is mainly on this ground that the accused persons have been acquitted even though, as per the settled position of law, the order of sanction shows proper application of mind on each and every aspect of the matter. It is submitted that the learned Sessions Judge has erred in holding that no summons were issued before recording the statements under Section 108 of the Customs Act and that there is nothing on record to prove that the statements were recorded during an inquiry after issuance of summons as prescribed by law. It is submitted that the statements under Section 108 have been discarded only on the above ground which is not borne out from the evidence on record.

5. Learned counsel for the appellant has placed reliance upon several judgments on the point of validity of the sanction for prosecution, the relevant of which shall be discussed hereinafter.

6. On the strength of the above submissions, it is prayed that the impugned judgment and order be quashed and set aside and the appeal allowed.

7. Mr. Mohit Banker, learned advocate for Mr. N.M Kapadia, learned advocate for respondent No. 1 (owner of the shop), has supported the impugned judgment passed by the learned Sessions Judge by submitting that the sanction for prosecution itself is invalid as neither has the material on record been scrutinized and nor does the order of sanction disclose proper application of mind. Besides, it has come in evidence that a draft order of sanction was placed before the sanctioning authority, which further indicates that there was no application of mind and the sanctioning authority has signed a prepared order. Learned counsel for respondent No. 1 has relied upon certain judgments that shall be discussed hereinafter.

8. Mr. L.R Pathan, learned advocate for respondent No. 2, has submitted that not only is the sanction order at Ex.39 invalid, having been passed without proper application of mind, but in addition thereto, there is no material on record to indicate that the seized goods were of foreign make. No name of the company is found on the goods and the customs authorities have not taken any expert opinion to find out whether the goods were actually of foreign make, or not. From the Panchnama itself, it is not sufficient to conclude that the goods were of foreign make, as certain goods described therein bear only the name of the country and not the words, “Made in”. Considering that the market is flooded with fake goods, the prosecution has failed to prove that the goods seized from the shop and house of respondent No. 1 are actually made in a foreign country.

9. It is further submitted that in the present case, it has not been proved beyond reasonable doubt by the prosecution that the goods are prohibited or there has been an evasion of customs duty. In such circumstances, therefore, the provisions of Section 135 of the Customs Act would not come into the picture.

10. It is next submitted that respondent No. 2 is only the Manager of the shop which is owned by respondent No. 1. He is shown to be present in the Panchnama at Ex.16 However, in the other two Panchnamas, only the wife of respondent No. 1 is present and accused No. 1 is not present. The goods purportedly seized under those Panchnamas can, therefore, not be related to respondent No. 2, therefore, the order of the sanctioning authority in granting sanction to prosecute respondent No. 2 for all the goods is erroneous and without application of mind.

11. Learned counsel for respondent No. 2 further submits that the Panch witness of” the Panchnama at Ex.16 does not support the case of the prosecution but has not been declared hostile. The second Panch witness of the said Panchnama has also not supported the case of the prosecution and has been declared hostile. Similarly, the Panch witnesses of the Panchnama at Ex.21 have both not supported the case of the prosecution and have been declared hostile. Insofar as the third Panchnama at Ex.22 is concerned, the second Panch witness of the said Panchnama has also turned hostile. It is submitted that in light of such unreliable evidence, the judgment and order rendered by the Trial Court is just and proper. It is, therefore, prayed that the appeal be dismissed.

12. Mr. H.K Patel, learned Additional Public Prosecutor, has supported the case of the appellant by submitting that the order of sanction at Ex.39, on the face of it, reveals proper application of mind after due scrutiny of the material on record. It is submitted that just because a draft order was prepared and sent for scrutiny of the sanctioning authority, it would not render the sanction invalid. In support of this submission, reliance has been placed upon the following judgments:

(a) Ratilal Govindji Nayak v. State of Gujarat - 2003 (4) GLR 3283

(b) Nareshkumar Kikabhai Tandel v. The State of Gujarat - 1984 (4) GLH 233

13. In the background of the above rival submissions, it would be fruitful to advert to the evidence adduced by the prosecution.

14. pw-1 is Jethalal Somabhai, who was serving as an Inspector in the Customs Department, at the relevant point of time. His deposition is at Ex.15 He has submitted that on 08.03.1985, the then Superintendent of Customs received information to the effect that smuggled goods were being sold in a shop named “Natural Cutlery Stores” in Dabgarwad area of Navsari. The Superintendent of Customs, accompanied by other officers, went to the said shop, identified themselves and conducted a search in the presence of Panch witnesses. Goods of foreign origin worth Rs. 520/- were found from the shop. The goods included telephones, batteries, transistors, bottles of cream and American Georgette cloth. As no bills or vouchers were produced by the Manager, respondent No. 2, who was present in the shop, it was evident that the goods were smuggled. They were, therefore seized This witness further states that the Panchnama at Ex.16 was recorded by him in the presence of Panch witnesses. The statement of accused No. 2 was taken under Section 108 of the Customs Act. Thereafter, the statement of accused No. 1 was recorded on 29.03.1985 under Section 108. Both the above statements were recorded without pressure or threat upon the accused persons. In cross-examination, this witness states that he is aware that there is a difference between goods that are “Made in Japan” and “Made as Japan”. He elaborates that “Made as Japan” goods are similar to goods made in Japan as per his understanding. He further states that he is not aware that goods similar to those of foreign origin are manufactured in Ulhasnagar. However, he admits that duplicate items are manufactured in India. This witness admits that in the present case, no expert opinion has been taken to conclusively prove that the seized goods were, in fact, of foreign origin.

15. PW-2, Bharatkumar Thakordas, is one of the Panch witnesses of the Panchnama at Ex.16 His deposition is at Ex.19 He supports the case of the prosecution to the extent of stating that goods of foreign origin were found from the shop when the premises were searched in his presence. Though he has not fully supported the case of the prosecution, he has not been declared hostile and subjected to cross-examination by the prosecution.

16. PW-3 is Hiralal Dharamdas Parekh, the then Superintendent of Customs. His deposition is at Ex.20 He has deposed along the lines of the case of the prosecution. He describes, in detail, the procedure adopted from the time he received the secret information upto the time when the goods were seized.

In cross-examination, this witness states that he did not possess a search warrant for the raid of the house and shop of accused No. 1. When he went to the house of accused No. 1, the wife of the said accused was present there. However, no woman Panch witness was called.

17. PW-4, Yakub Ismail is one of the Panch witnesses of the Panchnama at Ex.21, regarding the search conducted in the house of accused No. 1. He has been examined at Ex.24 This witness states that he was called as a Panch witness to the house of accused No. 1. He saw the goods present there, but does not know from where they came. This witness was cross-examined but he has flatly denied that the goods seized from the house of respondent No. 1 were of foreign origin. In short, this witness has not supported the case of the prosecution.

18. PW-5 is Siddikbhai Mahamadbhai, the other Panch witness of the Panchnama at ex.21 His deposition is at Ex.25 This witness has also not supported the case of the prosecution at

19. The next witness is PW-6, Bharatkumar Thakordas (who is also PW-2 in respect of the Panchnama at Ex.16). He has been examined as PW-6, in his capacity as the Panch witness of the Panchnama at Ex.22 His deposition is to be found at Ex.26 The Panchnama at Ex.22 is regarding the second raid at the shop of accused No. 1, on 13.03.1985 This witness has not supported the case of the prosecution and has turned hostile.

20. PW-7 Rajrulhak Rasulmiya Malik, is one of the Panch witnesses of the Panchnama at Ex.22 His deposition is at Ex.27 He has not supported the case of the prosecution but has not been declared hostile or subjected to cross-examination by the prosecution.

21. PW-8 is Mohamadsafi Nasir Malek, the Godown Inspector of the Customs Department. His deposition is at Ex.35 This witness has described the procedure undertaken by him while entering the goods seized from the shop and house of accused No. 1, in the Register. He states that one sample of each item of the Muddamal was taken out and sealed separately, on which he has appended his signatures. He describes the goods that have been taken as samples, such as blue silky cloth, brown coloured jersey, torch, calculator, pocket radio, Neno watch, Ricoh automatic watch, etc., all of which are foreign goods.

In cross-examination, this witness admits that it has not been recorded in the Register in what condition the foreign goods were found and in what manner they have been seized.

22. PW-9 is Choithram Basarmal Tharwani, the Superintendent, Legal, of the Customs Department. This witness has signed the papers pertaining to the case for grant of sanction to prosecute the accused persons.

In cross-examination, he states that he does not know on which date the case papers were received by him. He states that a draft order was prepared and sent to the sanctioning authority. However, he does not remember the time period after which the papers were received back from the sanctioning authority.

23. The above is a summary of the oral evidence adduced by the prosecution.

24. Insofar as the documentary evidence is concerned, the Panchnama at Ex.16 has been recorded on 08.03.1985 It pertains to the search and seizure of goods from the premises of “Natural Cutlery Stores”. The Panch witness of this Panchnama, that is, PW-2 has not supported the case of the prosecution, therefore it has not been proved and reliance cannot be placed upon this document. However, PW-2 has stated that goods of foreign origin were found from the shop.

25. The next Panchnama at Ex.21 has been recorded on 13.03.1985 It is regarding the search of the house of accused No. 1, in the presence of his wife Zubaidaben. Both the Panch witnesses of this Panchnama, that is, PW-4 and PW-5, have turned hostile and have not supported the case of the prosecution. This Panchnama, therefore, has not been proved.

26. The third Panchnama at Ex.22 has been recorded on 13.03.1985 and is regarding the second raid conducted in the premises of “Natural Cutlery Stores”. Both the Panch witnesses, that is, PW-6 and PW-7 have not supported the case of the prosecution, therefore, this Panchnama has also not been proved.

27. The order of sanction is at Ex.39 The learned Sessions Judge has found in the impugned judgment and order that there is no reference regarding the material upon which the sanctioning authority has based its satisfaction that a case for sanction is made out. The learned Sessions Judge is further of the view that it is not clear what papers were sent to the sanctioning authority, how many papers were sent and whether they have been received back or not. It is further recorded in the impugned judgment that a draft sanction order had been sent to the sanctioning authority and that there is nothing to indicate that the draft was scrutinized, amended, altered or corrected appropriately by the sanctioning authority. Lastly, the learned Sessions Judge has found that the order of sanction does not disclose that the sanctioning authority has applied its mind to the entire facts of the case, therefore, the said order is not a valid one.

28. On the above grounds, the learned Sessions Judge has rendered the impugned judgment and order, directing that the proceedings against the respondents be dropped and the conviction and sentence imposed upon them by the learned Magistrate be quashed and set aside, for want of legal sanction.

29. The most important question that arises in the present appeal is what constitutes a legal and valid sanction?. The point at issue may be elucidated by referring to certain relevant judicial pronouncements.

30. In Mohd. Iqbal Ahmed v. State of Andhra Pradesh - AIR 1979 SC 677 (cited by learned counsel for respondent No. 1), the Supreme Court has held as below:

“3. …It is incumbent on the prosecution to prove that a valid sanction has been granted by the Sanctioning Authority after it was satisfied that a case for sanction has been made out constituting the offence. This should be done in two ways; either (1) by producing the original sanction which itself contains the facts constituting the offence and the grounds of satisfaction and (2) by adducing evidence aliunde to show that the facts placed before the Sanctioning Authority and the satisfaction arrived at by it. It is well settled that any case instituted without a proper sanction must fail because this being a manifest difficult (sic-defect) in the prosecution, the entire proceedings are rendered void ab initio….”

31. In C.S Krishnamurthy v. State Of Karnataka - (2005) 4 SCC 81 (relied upon by the appellant), the Supreme Court has held:

“The sanction order should speak for itself and in case the facts do not so appear, it should be proved by leading evidence that all the particulars were placed before the sanctioning authority for due application of mind. But, when the sanction order itself is eloquent enough, then in that case only formal evidence has to be produced by the sanctioning authority or by any other evidence that the sanction was accorded by a competent person with due application of mind. In case the sanction speaks for itself then the satisfaction of the sanctioning authority is apparent by reading the order. When the sanction itself is very expressive, then in that case, the argument that particular material was not properly placed before the sanctioning authority for according sanction and the sanctioning authority has not applied its mind becomes unsustainable.

(paras 9 and 7)

32. In Kootha Perumal v. State through Inspector of Police, Vigilance and Anti Corruption - (2011) 1 SCC 491, (cited by learned counsel for the appellant), the Supreme Court has held as below:

“13. We may first consider the issue as to whether sanction was duly obtained prior to the prosecution of the appellant. It is the case of the appellant that the order for sanction of the prosecution produced in this case is signed by the Municipal Commissioner of Pudukottai. According to him, a perusal of the same would show that it suffers from non application of mind. According to the learned counsel, the sanction order must disclose that the sanctioning authority has duly applied its mind and the same must be stated in the sanction order. In support of this submission, learned counsel has relied on a judgment of this Court in Jaswant Singh v. State of Punjab.

14. Undoubtedly, in the aforesaid judgment, Jaswant Singh, this Court observed as follows: (AIR pp. 126-27, para 4)

““4. The sanction under the Act is not intended to be nor is an automatic formality and it is essential that the provisions in regard to sanction should be observed with complete strictness (Basdeo Agarwala v. King Emperor - [(1945) F.C.R 93]. The object of the provision for sanctions is that the authority giving the sanction should be able to consider for itself the evidence before it comes to a conclusion that the prosecution in the circumstances be sanctioned or forbidden. In Gokulchand Dwarkadas Morarka v. R [(1947-48) 75 IA 30] the Judicial Committee of the Privy Council also took a similar view when it observed: [IA pp.37-38]

“…In their Lordships' view, to comply with the provisions of clause 23 it must be proved that the sanction was given in respect of the facts constituting the offence charged. It is plainly desirable that the] facts should be referred to on the face of the sanction, but this is not essential, since clause 23 does not require the sanction to be in any particular form, nor even to be in writing. But if the facts constituting the offence charged are not shown on the face of the sanction, the prosecution must prove by extraneous evidence that those facts were placed before the sanctioning authority. The sanction to prosecute is an important matter; it constitutes a condition precedent to the institution of the prosecution and the Government have an absolute discretion to grant or withhold their sanction.”

It should be clear from the form of the sanction that the sanctioning authority considered the evidence before it and after a consideration of all the circumstances of the case sanctioned the prosecution, and therefore unless the matter can be proved by other evidence, in the sanction itself the facts should be referred to indicate that the sanctioning authority had applied its mind to the facts and circumstances of the case. In Yusofalli Mulla Noorbhoy v. The King (1949) L.R 76 I.A 158 it was held that a valid sanction on separate charges of hoarding and profiteering was essential to give the Court jurisdiction to try the charge. Without such sanction the prosecution would be a nullity and the trial without jurisdiction.””

15. Keeping in view the aforesaid statement of law, it would not be possible to conclude that the sanction order in the present case was not valid. Ex.P-2 with the present appeal is the copy of the sanction order. A perusal of the same would show that the sanctioning authority has adverted to all the necessary facts which have been actually proved by the prosecution in the trial. Upon examination of the material facts, the sanctioning authority has certified that it is the authority competent to remove the appellant from the office. It is specifically stated that the statements of the witnesses have been duly examined. Sanction order also states that the other materials such as copy of the FIR as well as other official documents such as the different mahazars were carefully examined. Upon examination of the statements of the witnesses as also the material on record, the sanctioning authority has duly recorded its satisfaction that the appellant should be prosecuted for the offences, as noticed above. We, therefore, find no merit in the submissions of the learned counsel that the sanctioning order to prosecute the appellant was notlegal.”

33. In State of Maharashtra Through CBI v. MaheshG. Jain - 2013 (7) SCALE 555, (relied upon by learned counsel for the appellant), the Supreme Court has recapitulated the entire legal position by referring to the leading relevant judgments on the point of the validity of an order of sanction and, including Kutha Perumal and Mohd. Iqbal (supra) and has culled out the following principles of law:

“13. From the aforesaid authorities the following principles can be culled out: -

(a) It is incumbent on the prosecution to prove that the valid sanction has been granted by the sanctioning authority after being satisfied that a case for sanction has been made out.

(b) The sanction order may expressly show that the sanctioning authority has perused the material placed before him and, after consideration of the circumstances, has granted sanction for prosecution.

(c) The prosecution may prove by adducing the evidence that the material was placed before the sanctioning authority and his satisfaction was arrived at upon perusal of the material placed before him.

(d) Grant of sanction is only an administrative function and the sanctioning authority is required to prima facie reach the satisfaction that relevant facts would constitute the offence.

(e) The adequacy of material placed before the sanctioning authority cannot be gone into by the Court as it does not sit in appeal over the sanction order.

(f) If the sanctioning authority has perused all the materials placed before him and some of them have not been proved that would not vitiate the order of sanction.

(g) The order of sanction is a pre-requisite as it is intended to provide a safeguard to public servant against frivolous and vexatious litigants, but simultaneously an order of sanction should not be construed in a pedantic manner and there should not be a hyper-technical approach to test its validity.”

34. Further, in paragraph-14 of the above Judgment, the Supreme Court has reproduced the order of sanction that was the subject-matter of scrutiny before it. The case before the Supreme Court was one where the concerned High Court had declined to grant leave to appeal on the ground of the validity of sanction. The Supreme Court, after setting aside the judgment of the High Court and that of the learned Trial Judge pertaining to the validity of the sanction, remitted the matter to the High Court.

35. In Babarali Mamadali Sayed v. State of Gujarat - 1990 (1) GLH 47, a Division Bench of this Court has held as below:

“14. … It is not necessary that for proving the sanction order the sanctioning authority is required to be examined. In the case of State of Rajasthan v. Tarachand, AIR 1973 Supreme Court has in terms held that where the facts constituting the offence appear on the face of the sanction accorded by the Chief Minister, it is not necessary for the prosecution to lead separate evidence to show that the relevant facts were placed before the sanctioning authority.”

36. On the other hand, Mr. Mohit Banker, learned advocate for respondent No. 1, has referred to Gokulchand Dwarkadas Morarka v. The King - AIR 1948 PC 84 wherein it has been held that if the facts constituting the offence charged are not shown on the face of the sanction, the prosecution must prove by extraneous evidence that those facts were placed before sanctioning authority.

37. Learned advocate for respondent No. 1 has also relied upon Jaswant Singh v. State of Punjab - AIR 1958 (SC) 124, wherein it has been held that the object of the provision for sanction is that the authority giving the sanction should be able to consider for itself the evidence, before it comes to a conclusion that the prosecution in the circumstances be sanctioned or forbidden.

38. Both these judgments have been discussed by the Supreme Court in State of Maharashtra Through CBI v. Mahesh G. Jain (supra), wherein, after considering the same, the Supreme Court has culled out the principles of law that have been reproduced hereinabove.

39. In P. Sankaran v. Assistant Collector of Central Excise judgment dated 12.02.2008, in Appeal (Criminal) No. 308 of 2008, cited by learned advocate for respondent No. 1, the Supreme Court has referred to the order of sanction that was in question before it and came to the conclusion that the sanction did not disclose that the sanctioning authority had applied its mind to the documents produced before it. It was further held that the sanctioning authority was not examined as a witness.

40. Reliance has also been placed by learned counsel for respondent No. 1 upon a judgment of the Supreme Court in State of Bihar v. P.P Sharma IAS, - 1992 Supp (1) SCC 222 wherein the Supreme Court has held as below:

“67. It is equally well settled that “before granting sanction the authority or the appropriate Government must have before it the necessary report and the material facts which prima facie establish the commission of offence charged for and that the appropriate Government would apply their mind to those facts”. The order of sanction is only an administrative act and not a quasi-judicial one nor is a lis involved. Therefore, the order of sanction need not contain detailed reasons in support thereof as was contended by Sri. Jain. But the basic facts that constitute the offence must be apparent on the impugned order and the record must bear out the reasons in that regard. The question of giving an opportunity to the public servant at that stage as was contended for the respondents does not arise. Proper application of mind to the existence of prima facie evidence of the commission of the offence is only a precondition to grant or refuse to grant sanction. When the Government accorded sanction, Section 114(e) of the Evidence Act raises presumption that the official acts have been regularly performed. The burden is heavier on the accused to establish the contra to rebut that statutory presumption. Once that is done then it is the duty of the prosecution to produce necessary record to establish that after application of mind and consideration thereof to the subject the grant or refusal to grant sanction was made by the appropriate authority. At any time before the Court takes cognizance of the offence the order of sanction could be made. It is settled law that issuance of the process to the accused to appear before the court is sine qua non of taking cognizance of the offence. The emphasis of Section 197(1) or other similar provisions that “no court shall take cognizance of such offence except with the previous sanction” posits that before taking cognizance of the offence alleged, there must be before the court the ‘prior sanction given by the competent authority. Therefore, at any time before taking cognizance of the offence it is open to the competent authority to grant sanction and the prosecution is entitled to produce the order of sanction. Filing of charge-sheet before the court without sanction per se is not illegal, nor a condition precedent. A perusal of the sanction order clearly indicates that the Government appears to have applied its mind to the facts placed before it and considered them and then granted sanction. No evidence has been placed before us to come to a different conclusion. Accordingly we hold that the High Court committed manifest error of law to quash the charge-sheets on those grounds.”

41. In Customs v. Dina Aruna Gupta - 2011 (274) ELT 323 (Del.), the High Court had found that the sanction was granted by the Commissioner of Customs in a mechanical manner, without application of mind to the material placed before him by the Investigating Officer. That case pertained to the seizure of gold biscuits with foreign markings. In that context, the Delhi High Court has held as below:

“32. Normally, the test applied for testing gold is furnace test but the same was not applied or resorted to in the present case. There is no evidence on record that PW-3 Sh. Ramesh Chand Aggarwal was possessing any proficiency in the matter of testing gold. The certificate/report Ex.PW-1.F does not contain any data. Whereas the certificate must contain actual data and not mere opinion. Further, the gold of foreign origin has to be proved by the authentic manner. Law is well settled that mere making cannot be taken as a proof of the gold for origin of the gold as markings and labels. In such a situation, the statement of the accused under Section 108 of the said Act has no consequences.”

42. The next judgment relied upon by learned counsel for respondent No. 1 is Mansukhlal Vithaldas Chauhan v. State Of Gujarat - (1997) 7 SCC 622, wherein the Supreme Court has held as under:

“18. The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence have been considered by the sanctioning authority. Consideration implies application of mind. The order of sanction must ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that all relevant facts were considered by the sanctioning authority. (See also Jaswant Singh v. State of Punjab and State of Bihar v. P.P Sharma).

19. Since the validity of “sanction” depends on the applicability of mind by the sanctioning authority to the facts of the case as also the material and evidence collected during investigation, it necessarily follows, that the sanctioning authority has to apply its own independent mind for the generation of genuine satisfaction whether prosecution has to be sanctioned or not. The mind of the sanctioning authority should not be under pressure from any quarter nor should any external force be acting upon it to take decision one way or the other. Since the discretion to grant or not to grant sanction vests absolutely in the sanctioning authority, its discretion should be shown to have not been affected by any extraneous consideration. If it is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be bad for the reason that the discretion of the authority “not to sanction” was taken away and it was compelled to act mechanically to sanction the prosecution.”

43. In Hari Prasad Chhapolia v. Union of India2002 (142) ELT 534 (Ori.) (cited on behalf of respondent No. 1), it is held that a mechanical sanction order was accorded by the Collector without due application of mind. It is further held that no evidence has been produced by the prosecution to show that the seized gold biscuits were of foreign origin, therefore, the offences under Section 135(1)(b) of the Customs Act, were notproved.

44. Learned counsel for respondent No. 1 has relied upon a judgment of the High Court of Himachal Pradesh in Bihari Lal Gupta v. The State of H.P, 1984 (2) Crimes 165, wherein the order of sanction for prosecution was passed under the Prevention of Corruption Act. The sanction was found to be bad in law on the ground that the draft order had been prepared by a raw and unintelligent hand. The Court held:

“6. A perusal of this office-order and especially the first five paragraphs thereof would show that the language employed in this order is not only meaningless but also absurd and ridiculous. It only shows that this draft was prepared by some raw and unintelligent hand. The mere fact that the Chief Engineer signed such a draft is sufficient to justify the conclusion that he affixed his signatures on this order without caring to read the language of this office-order much less to apply his mind to the facts stated therein. This sanction order in this circumstances cannot be interpreted to be the order made by the Chief Engineer. Taking the prosecution case as its face value, on that can be said is that the Chief Engineer while passing this order had fully and carefully examined the material before him in regard to the allegations and the circumstances of the case. There is, however nothing, either in this officer order or independent of it, on the record to show as to what exactly was the material placed before the Chief Engineer and on a consideration of which he accorded sanction for the prosecution of the appellant. On the other hand, the language of this order shows that the relevant facts pertaining to this case were not available when this order was prepared and signed. It is obvious that the language of this order Ex. P.W 12.A was copied from the some other sanction order. The relevant facts constituting the offence were required to be stated in the first paragraph and referred to in the second paragraph. There is, however, no mention of such facts in the first paragraph though a reference is made in the second paragraph by using the words “the said acts”. It clearly reflects that the relevant facts were not before the authority which prepared and signed this order.”

On the basis of the above, it was found that the prosecution of the appellant therein was without valid sanction, therefore, the Trial, including the conviction and sentence against him was void ab-initio.

45. Learned counsel for respondent No. 1 has further relied upon a judgment of the High Court of Judicature at Madras in the case of Assistant Collector of Customs v. Tey Teck Seng, 1992 (61) ELT 397 Madras, wherein the order of sanction was set aside on the ground of certain irregularities having been committed before the accord of sanction and as the said order showed non-application of mind by the sanctioning authority.

46. In the background of the above decisions, it would be germane to refer to the order of sanction for prosecution of the respondents in the present case, which is at Ex.39 The said order is reproduced hereinbelow:

“OFFICE OF THE COLLECTOR OF CUSTOMS GUJARAT: AHMEDABAD. No. VIII/17-24/CUS/86 10th March, 1986

SANCTION TO PROSECUTE UNDER section 137(1) of the Customs Act, 1962.

WHEREAS I have perused all the records, facts and materials of the case placed beforeme.

AND WHEREAS the said records, facts and materials, inter alia, disclose that on the basis of intelligence, a batch of Customs Officers from Valsad on 8.3.1985, raided the business premises being run in the name of ‘Natural Cutlery Stores’ situated at Dabgarwad, Navsari in presence of two panchas and the Manager of the store Vasudev Nathumal Maliramani. The search resulted into recovery of Battery Cells, Transistors, Cosmetics and Synthetic Fabrics of foreign origin valued at Rs. 520/-. On demand, the Manager Vasudev Nathumal Maliramani could not produced any valid documents supporting the legal import, acquisition, possession and storage of the goods of foreign origin recovered from the shop as above. The Customs officers, therefore, seized the aforesaid goods of foreign origin valued at Rs. 520/- under a regular panchnama dated 8.3.1985 in the reasonable belief that the said goods are smuggled and liable to confiscation under section 111 of the Customs Act, 1962.

AND WHEREAS the said papers placed before me further reveal that a few days after i.e on 13.3.1985, the Customs Officers of Valsad, on the basis of specific intelligence raided the same business premises M/s. Natural Cutlery Store’ in presence of two panch witnesses and Yakoob Haroon Cutleriwala, the brother of the proprietor, Taiyab Haroon Cutleriwala, The search resulted into. recovery of watches, calculators, transistor radios, video cassettes, cosmetics, perfumes, sarees, etc. all of foreign origin totally valued at Rs. 8,076/-. Yakoob Haroon Cutleriwala, on demand by the Customs Officers, could not produce any valid documents showing the licit importation, acquisition, possession and transport of the said goods. The Customs Officers, therefore, seized all the aforesaid goods of the foreign origin totally valued at Rs. 8,076/- as per panchnama dated 13.3.1985 in the reasonable belief that these are smuggled and liable to confiscation under section 111 of the Customs Act, 1962. Simultaneously, on the same day, residential premises of Taiyab Haroon Cutleriwala situated at Malekwad, Navsari was also raided and searched by the Customs Officers in the presence of two panch witnesses and Smt. Zubedaben, wife of Taiyab Cutleriwala which resulted into recovery of wrist watches, perfumes, sarees etc. of foreign origin totally valued at Rs. 2,890/-. Since, on demand Smt. Zubedaben Taiyab Cutleriwala could not produce any valid documents showing the licit importation, acquisition, possession and transport of the said goods of foreign origin, the same were seized as per panchnama dated 13.2.1985 in the reasonable belief that these goods are smuggled and liable to confiscation under section 111 of the Customs Act, 1962.

AND WHEREAS the case papers placed before me further reveal that Vasudev Nathuram Maliramani, the Manager of M/s. Natural Cutlery Store, Navsari and proprietor thereof Taiyab Haroon Cutleriwala had purchased the goods of foreign origin seized from their shop in piecemeal from persons residing nearby Navsari, who had settled abroad but came on a visit to India; that no valid documents supporting the licit import, acquisition, possession and storage of the said goods could be had from the said persons. Moreover, in connection with seizure dated 13.3.1985, statement of Taiyab Haroon Cutleriwala was recorded under Section 108 of the Customs Act, 1962 on 19.3.1985 wherein he admitted the recovery of the goods of foreign origin from his business as well as residential premises on 13.3.1985 and also admitted that he did not have any documents to support the acquisition, possession and storage of the goods of foreign origin since he had bought the said goods from hawkers at Bombay.

THE aforesaid facts and circumstances reveal that the aforesaid Taiyab Haroon Cutleriwala and Vasudev Nathumal Maliramani acquired possession of or were knowingly concerned in the aforesaid Battery, Cells, Transistor, Radios, Cosmetics and Synthetic Fabrics, etc. of foreign origin valued at Rs. 520/- and Taiyab Haroon Cutleriwala acquired possession or was knowingly concerned with the aforesaid wrist watches, cosmetics, synthetic fabrics, perfumes, sarees, knitted wears transistor radio, etc. of foreign origin totally valued at Rs. 10,966/- either by carrying, keeping, concealing, depositing, harbouring, purchasing, selling, removing, transporting or in any other manner dealing with the same which they knew or had reason to believe are liable to confiscation under section 111 of the Customs Act, 1962 and have, thereby, committed an offence punishable under Section 135 of the Customs Act, 1962.

AND WHEREAS after fully and carefully examining the records and the materials of the case placed before me, I consider that the aforesaid Taiyab Haroon Cutleriwala and Nathumal Maliramani both of Navsari should be prosecuted under Section 135 of the Customs Act, 1962 in a criminal Court of competent jurisdiction for the said offences connected with the seizure of aforesaid goods of foreign origin valued at Rs. 520/-, and Rs. 10,966/- which have been ordered to be confiscated by the Superintendent of Customs (Tch), Valsad vide his Order-in-Original No. 33.Supdt/Cust/1985 dated 26.4.1985 (issued from file No. VIII/10-21/Supdt/85 and by the Asstt. Collector of Customs, Valsad vide his order-in-original No. 30.AC85 dated 24.9.1985 (issued from file NO. VIII/10-22/AC/85) respectively.

AND WHEREAS previous sanction is required under section 137(1) of the Customs Act, 1962 for the Court of competent jurisdiction to take cognizance of the said offence punishable under Section 135 of the Customs Act.

NOW, THEREFORE, I, M.C Kaul, Additional Collector of Customs, Gujarat, Ahmedabad, in exercise of the power conferred on me under section 137(1) read with section 2(b) of the Customs Act, 1962 do hereby accord sanction to prosecute the following 2 persons for the said offence punishable under Section 135 of the Customs Act, 1962 and for taking cognizance of the said offence by the Criminal Court of competent jurisdiction:-

1) Taiyab Haroon Cutleriwala, Natural Cutlery Store, Dabgarwad, Navsari; and

2) Vasudev Nathumal Maliramani, Natural Cutlery Store, Dabgarwad, Navsari.

GIVEN under my hand and seal this 10 day of March, 1986

sd/ M.C Kaul

(M.C KAUL)

Additional Collector

Seal of the Collector of Customs, Gujarat, Ahmedabad”

47. From a perusal of the above order of sanction, it is amply clear that the relevant record, facts and material were placed before the sanctioning authority. The sanctioning authority has meticulously detailed the entire factual matrix of the case, as placed before him in the sanctioning order, and after a careful examination and scrutiny of the record, has arrived at a conclusion that sanction to prosecute the accused is required to be granted. Accordingly, sanction has been granted by the said order. The satisfaction arrived at by the sanctioning authority is evident from the order itself. The sanction order speaks for itself, therefore, there is no requirement of producing any other evidence by the sanctioning authority. Further, there is no dispute regarding the fact that the order of sanction has been passed by a person competent to do so. The said order clearly reveals a proper application of mind, therefore, this Court cannot agree with the observations of the lower appellate Court that “how many papers were sent, what papers were sent and when they were sent and when they were received back are not clear and on what material the satisfaction was recorded by the Additional Collector of Customs is also not clear from the sanction order”. Neither can this Court agree with the submissions advanced by learned counsel for the accused persons regarding the order of sanction being invalid due to non-application of mind. It is amply clear from a perusal of the order of sanction that the relevant record, the factual matrix and other material in the case were placed before the sanctioning authority, and that the said order has been passed after examining thesame.

48. Insofar as the question of a draft order having been sent to the sanctioning authority is concerned, reference may be made to a judgment of this Court in the case of Ratilal Govindji Nayak v. State of Gujarat (supra), wherein it has been held as below:

“40. It happens that sometimes disputesare being raised about non-application of mind by the competent authority sanctioningprosecution. There may be some technical error here or there in drafting the said sanction. Therefore, if a draft has been supplied by a police officer or even by a subordinate officer, then the sanction accorded will not be treated to be illegal unless it is found that there was non-application of mind. Mere acceptance of a draft sanction by the competent authority for according sanction will not be a ground to hold that there was non-application of mind.”

49. In Nareshkumar Kikabhai Tandel v. The State of Gujarat (supra), referred to by learned Additional Public Prosecutor, a Division Bench of this Court has held that:

“5…… Now, therefore, there is no lawwhich requires the Sanctioning Authority to draft the sanction himself. It is for him to decide whether a public servant who is appointed by him and who is liable to be dismissed by him is required to be prosecuted and the sanction is required to be given or not. At that time he had to apply his mind to the facts which are brought to him. It may be by precise concise statement, it may be that all prosecution papers, statements, panchnama, complaintetc. may be placed before him and he may go through the same and if he is satisfied that the sanction is required to be given that sanction order could be drafted by any one in the office, even by a Law Officer kept for that purpose. The Sanctioning Authority thereafter is only required to go through that order, fully satisfy himself that what has been stated is according to what he wanted and if finds it all right he could sign it and that would be perfect legal sanction.”

50. Considering the principles of law enunciated by the Supreme Court and this Court in the above stated judgments, this Court is of the view that the order of sanction for prosecution at Ex.39 is a perfectly legal and valid one having been made after arriving at a satisfaction after scrutiny of the material on record that case for grant of sanction for prosecution of the accused persons is made out. The said order, ex-facie, reveals that the sanctioning authority has perused the material placed before him and only after considering the same, has granted sanction for prosecution.

51. As stated by the Supreme Court in State of Maharashtra Through CBI v. Mahesh G. Jain (supra), the adequacy of the material placed before the sanctioning authority cannot be gone into by the Court as it does not sit in appeal over the sanction order. Moreover, the order of sanction is intended to provide a safeguard to a public servant against frivolous and vexatious litigants, but simultaneously, it should not be construed in a pedantic manner or with a hyper-technical approach to test its validity.

52. Though this Court cannot agree with the reason advanced by the learned Sessions Judge for dropping the proceedings for want of legal sanction, however, this Court is in agreement with the said conclusion of setting aside the sentence imposed upon the accused persons for different reasons.

53. The case of the prosecution is that the shop owned by accused No. 1 was searched on 08.03.1985 and the Panchnama at Ex.16 was drawn. Thereafter, the house of respondent No. 1 was searched on 13.03.1985, and the Panchnama at Ex.21 was drawn. The shop was raided again on 13.03.1985 and the Panchnama at Ex.22 was drawn. As regards the search conducted at the shop of accused No. 1 on 08.03.1985, the Panchnama at Ex.16 was recorded. However, one of the Panch witnesses of the said Panchnama, PW-2, Bharatkumar Thakordas, has not fully supported the case of the prosecution, though he has stated that goods of foreign origin were found from the shop when the premises were searched. There is no mention in his deposition whether the foreign goods allegedly found from the shop bore the markings that they were made in any particular foreign country, or not. Apart from this, the other Panch witnesses of the other Panchnamas have turned hostile and not supported the case of the prosecution. PW-2, Bharatbhai, has also been examined separately as PW-6 in respect of the Panchnama at Ex.22 He has turned hostile insofar as the Panchnama at Ex.22 is concerned. Therefore, the said Panchnamas cannot be relied upon and the seizure of the goods from the shop and house of accused No. 1 becomes highly doubtful.

54. The second aspect is that there is no material on record to substantiate that the goods seized from the shop and house of accused No. 1 were, in fact, of foreign origin. It has come in the cross-examination of PW-1, VJethalal Somabhai, the Customs Inspector, that no expert opinion was taken to conclusively prove that the seized goods were actually of foreign origin. This witness has further stated that he is aware that there is a difference between goods that are “Made in Japan” and “Made as Japan” and that the latter are similar to the goods made in Japan. He further admits that duplicate items of foreign goods are manufactured in India. Moreover, the Panchnama at Ex.36 regarding sending the goods to the godown contains ten categories of goods, as samples. From the said list, item No. 3 has been described as “Hong-Kong made” and item No. 4 bears only the name of the country, ‘Japan’. The other goods have not been described as having been manufactured in any foreign country at all.

55. The above facts and circumstances create a serious doubt regarding the seized goods being of foreign origin. Section 135 of the Customs Act would be applicable only if the goods are liable to be confiscated. Unless the prosecution proves beyond reasonable doubt that the goods are prohibited goods, ‘or an evasion of customs duty has taken place, the provisions of Section 135 would not come into play. In the present case, the prosecution has failed to prove beyond reasonable doubt that the goods are of foreign origin and are liable to be confiscated and that there has been an evasion of customs duty.

56. In short, the prosecution has failed to prove the charges against the accused persons beyond reasonable doubt. Therefore, in the view of this Court, the conclusion (though not the reasons) arrived at by the learned Sessions Judge is just and proper.

57. Last, but not the least, it may be borne in mind that the present is an appeal against acquittal and where there is a possibility of two views being formed on the basis of the evidence on record, the view favourable to the accused ought to be adopted. In the present case, the view taken by the learned Sessions Judge is possible and probable, on the basis of the evidence on record.

58. As a cumulative result of the above discussion and for the aforestated reasons, the appeal fails and is dismissed.