- (1.) In 1947 and prior thereto the respondent carried on business as an exporter of fish in the State of Junagadh in the name and style of Ayub Iqbal and Company. In 1947 the Customs authorities of the State of Junagadh seized two motor trucks, a station wagon and other goods belonging to the respondent on the grounds (a) that the respondent had not paid import duties on the said trucks, (b) that they were used for smuggling goods in the State, and (c) that some of the goods w ere smuggled goods. The action was taken under the Junagadh State Sea Customs Act, II of S. Y. 1998 then in vogue in the State. The respondent filed an appeal against this order to the Home Member of the State as provided in the said Act. Pending the appeal, the State of Junagadh merged in the United States of Saurashtra which ultimately was converted into the State of Saurashtra. The State of Saurashtra thereafter merged with the former State of Bombay and on bifurcation of the Bombay State became part of the State of Gujarat. In the meantime the appeal was transferred to the Revenue Tribunal which was constituted by the State of Saurashtra and which was the competent forum to hear such appeals. On February 6, 1952, the Revenue Tribunal set aside the said order of confiscation of the Customs authority and directed the return of the said vehicles to the respondent. On March 13, 1952, the respondent applied for the return of the said vehicles but was informed that they had been disposed of under an order of a Magistrate passed under S. 523 of the Code of Criminal Procedure and that the sale proceeds viz., Rs. 2213/8 - were handed to a creditor of the respondent under an attachment order passed in his favour. On February 5, 1954, the respondent filed the present suit for the return of the said vehicles or in the alternative for their value viz. Rs 31786/8/- on the ground that pursuant to the said order of the Tribunal, which in the absence of any proceedings against it had become final, the State Government was bound to hand over the said vehicles. In its written statement the State Government denied the respondent's claim and took up diverse pleas. It is not necessary to go into the details of these pleas except to say that the State Government did not raise any contention therein that it was not liable for any tortious act committed in respect of the said goods and vehicles by any one of its servants. On these pleadings the trial Court raised various issues. No issue with regard to the absence of liability for the tortious act of any servant of the Government was or could be raised in the aforesaid state of pleadings. The evidence led by the State and in particular of the police officer Trambaklal Naranji showed (a) that the said vehicles were seized in 1947 by the Customs Officer of the State of Junagadh, (b) that somehow they were kept in an open space opposite to the police station at Veraval, (c) that they remained totally uncared for from 1947 to October, 1951 with the result that the greater part of the machinery of the vehicles, tyres and even some wheels were pilfered-away leaving only the skeletons of the vehicles, (d) that no entries were made in any of the registers maintained at the police station to show as to how these vehicles came to be kept in the said open space or whether the customs authority had handed over the said vehicles to the police for safe custody, (e) that in October, 1951, witness Trambaklal who was then in-charge of the police station reported to his superior officers the fact of these vehicles lying in the said open space as uncared and unclaimed vehicles, (f) that on October 3, 1951, directions were given to him to apply to the Magistrate for disposal of the said vehicles as unclaimed property under S. 523, (g) that on October 21, 1951, the police recorded a Panchanama as regards the condition of the said vehicles, and (h) that on October 29, 1951 pursuant to the said directions, the police officer made an application which mentioned the fact that these vehicles were seized by the Port Commissioner in 1947 from Memon Mahomed Haji Hasam of Veraval, the respondent. It is clear that in spite of the police authorities being aware that the said vehicles were seized from the respondent, his name having been mentioned in the said application, on notice was served upon him of the said application which, as aforesaid, was made on the footing that the said vehicles were unclaimed property. The only notice which was issued by the Magistrate was a public notice which was ordered to be pasted at a public place. Clearly, the respondent was right when he said that he was not aware of the said proceedings or the order passed by the Magistrate therein. It appears from the Rojkam of the Magistrate's court that on February 5, 1952, the said vehicles were auctioned in the condition in which they were and only Rs. 2000 and odd were realised from that auction.
(2.) The trial Court found that the customs officer was competent to seize the said vehicles on a suspicion that a custom offence under the said Act had been committed. It held, however, that after the Tribunal had set aside his order and directed the return of the said property to the respondent it was the duty of the State Government to return the said property and on failure to do so the respondent had a cause of action and the suit was maintainable. On these findings, the trial Court passed a decree against the State Government for Rs. 26797/8/-. The State Government thereupon filed an appeal in the High Court of Bombay at Rajkot taking a number of grounds in its memorandum of appeal. In the memorandum of appeal the State Government inter alia raised the following ground : "The learned Civil Judge ought to have decided that the State is not liable for any acts tortious or otherwise of its servants and of the customs or the police authorities." The High Court held that no such plea having been taken in its written statement nor any issue having been raised in the trial Court, the State Government was not entitled to raise the contention for the first time in the appeal. The High Court confirmed the said decree except for a slight reduction in the decretal amount from Rs. 26797/8/- to Rs. 25532/10/-. The High Court found (1) that the said vehicles were sold on February 5, 1952 while the appeal before the Revenue Tribunal was still pending, (2) that the said vehicles were sold at the instance of the police officer under S. 523 on the footing that they were unclaimed property, (3) that such an assumption was wrong as the vehicles were lying with the authorities while the appeal was still pending and when the issue, whether the said vehicles were liable to confiscation, was not finally decided, (4) that the said vehicle could not be sold by auction because they were liable to be returned in the event of the Tribunal holding that the said seizure and confiscation were illegal and directing the vehicles to be returned to the owner. The High Court held (a) that the Junagadh Customs Act which applied to the instant case provided an appeal against an order of seizure and confiscation, (b) that there being a provision for appeal in the said Act there was a statutory duty on the State to see that the property which was seized was kept intact till the appeal was disposed of (c) that there was an implied obligation to see that the said property was not tampered with during the pendency of the appeal in which the order of confiscation was under scrutiny, (d) that the breach of the said obligation gave a cause of action to the respondent, and (e) that the cause of action on which the said suit was grounded was the respondent's right to the return of the said property and that the relief claimed on that cause of action was the return of the said property or in the alternative the value thereof and not damages for any negligence either of the State Government or of any of its servants. It is against this judgment and decree of the High Court that this appeal by special leave is directed.
(3.) It is clear that both the trial Court and the High Court concurrently found that the said vehicles were seized by the customs authority, that between 1947 and October 1951 when they were disposed of they were lying uncared for in an open space, that they were disposed of at the instance of the Police as unclaimed property, that when they were sold most of the valuable parts were missing and lastly that they were sold while the appeal against the order of seizure and confiscation, was still pending. Mr. Dhebar's contention was that since they were seized by a competent officer the seizure was lawful and that the utmost that could be alleged in the circumstances was that one or the other servants of the State Government was guilty of negligence. He contended that the State Government was not liable for any tortious act of any of its servants.;