- (1.) THIS is a writ petition under Article 226 of the Constitution by Kripal Das against the order of the Collector of Central Execise and Land Customs, New Delhi, dated the 14th September, 1959, under Sec. 167 (8) of the Sea Customs Act, 1878, read with Sec. 19 thereof and Sec. 23a and 23b of the Foreign Exchange Regulation Act, 1947, by which he directed absolute confiscation of certain gold and Indian and Pakistan currency seized from the house of the petitioner and further imposed a personal penalty of Rs. 10,000/- under Sec. 167 (8) of the Sea Customs Act. THIS order was affirmed on appeal by the Central Board of Revenue on the 17th January, 1961, and in revision from the last-mentioned order by the Government of India, Ministry of Finance Department of Revenue, New Delhi dated the 4th February, 1963.
(2.) THE material facts leading up to this application may shortly be stated as follows. On having received information that the petitioner had unlawfully imported a large quantity of gold from Pakistan through certain Muslims of border villages and was disposing of the same in bits at Barmer and in Jaipur and that he had also some undisposed of smuggled gold in his residential house, the customs staff at Barmer obtained a search warrant from the Sub-Divisional Magistrate Barmer for conducting a search of the petitioner's residential premises. As a result thereof, the following articles were recovered: - (1) Indian currency amounting to Rs. 43, 496/ -. (2) Pakistan currency amounting to Rs. 599/12. (3) 49 soverigns of gold weighing 33 tolas and 3 mashas. (4) Two pieces of gold bearing the stamp of National Bank of India Mogatta and Goldsmith Bullion Brokers, London, weighing 45 tolas and 7-1/2 mashas, and (5) Two pieces of gold without any mark weighing 40 tolas. It seems that the house of Motilal, a cousin of the petitioner at Barmer was also searched on the 9th August, 1957, during the course of which two bars of gold with some Pakistan currency were recovered, and further, the houses of two other persons namely Narsingh Das and Kishanchand and the shop of yet another person Nemichand were also searched as they were suspected to be the associates of the petitioner in his smuggling activities. It is said that certain documentary evidence was forthcoming from the house of Narsingh Das from which it was revealed that upto the date of the search of his house, he had disposed of allegedly smuggled gold of the value of Rs. 1,11,372/6/- which had been sent to him by the petitioner from time to time. It is alleged that during the course of the departmental investigation, the Deputy Superintendent Customs, Barmer, recorded the statement of Nar Singh Das and also of Kripal Das petitioner. Kripaldass' case was that out of the Indian currency of Rs. 43,496/- seized from his house, a sum of Rs. 20,000/- belonged to one Seth Meharchand son of Lakhmi Chand who had deposited the same with him for safe custody and the remaining amount belonged to him personally and had been accounted for in his books. As for the Pakistan currency seized from his house, his version was that it had been brought by his son Deepchand and his brother-in-law Prabhu Lal who had recently come from Pakistan with their families. As respects the 49 gold sovereigns and two pieces of gold bearing the stamp of the National Bank of India, Mogatta and Goldsmith Bullion brokers London, his case was that these did not belong to him but to one Leelchand who had kept a box containing all these goods with him for safe custody. As for the remaining two pieces of gold weighing 40 tolas recovered from his house, he stated that he had brought them with him from Pakistan at the time of his migration to India in 1947. He further stated that these pieces were got melted by him from certain ornaments of his while he was in Pakistan. THE petitioner denied that he was at all engaged in smuggling gold from Pakistan or selling such gold over in this country or that he had associated himself with the aforesaid Narsingh Das or any other person in this connection. It further appears that during the course of this investigation, the petitioner examined Lilaram, Deochand, Shermal and Paras Ram during the period extending from the 5th September to the 12th September, 1957. As a result of this investigation, the Superintendent Land Customs, Barmer, issued a show-cause notice on the 29th April, 1958, calling upon the petitioner to explain as to why penal action may not be taken against him for an offence under Sec. 6 of the Land Customs Act, 1924, and Sec. 19 of the Sea Customs Act, 1878, read with Sec. 23a of the Foreign Exchange Regulation Act, 1947, which offences were alleged to have been prima facie committed by him and to further explain why the said goods be not confiscated under Sec. 7 of the Land Customs Act, and Sec. 167 (8) of the Sea Customs Act. It is remarkable that in this very notice in paragraph 3 thereof it was pointed out to the petitioner that he should produce all evidence, documentary or otherwise, in his possession in support of his defence within a period often days from the receipt of the notice failing which the case would be decided ex parte. The petitioner was further warned that he should also state whether he desired to be heard in person or through his legal representative in his defence. The explanation was required to be submitted to the Assistant Collector, Central Excise Ajmer. Thereupon the petitioner submitted his explanation to the said Assistant Collector at Ajmer on the 8th May, 1958. It is sufficient to say for the present purpose that the petitioner stoutly denied his complicity in the offences which were levelled against him. In the last paragraph of his explanation, he particularly made a prayer as follows: - "in the end, I claim a personal hearing through ray counsel before final order is passed and I also request if any evidence is adduced by the Department I my be allowed to rebut. " Thereafter a personal hearing was admittedly granted to the petitioner by the Assistant Collector, Central Excise and Land Customs, Ajmer, on the 12th July. 1958, and presumably the said officer submitted his report to the Collector of Central Excise and Land Customs, New Delhi, who was the competent adjudicating authority in this case according to sec. 182 of the Sea Customs Act. Thereafter the Collector seems to have gone into the whole material placed before him and passed what is obviously a speaking order on the 14th September, 1959, which has been hotly assailed before us. The petitioner, as already stated, went in appeal from the Collector's order to the Central Board of Revenue and thereafter in revision to the Ministry of Finance in the Government of India but without any success. It is in these circumstances that the petitioner preferred his present writ application in this Court on the 1st July, 1963. This petition has been opposed on behalf of the respondents including the Government of India. The orders of the authorities below have been assailed before us on three principal grounds: (1) the order passed by the Collector was and is a quasi judicial order. , and that being so, the procedure adopted by him in disposing of the case against the petitioner finally without granting a hearing to him was grossly violative of the principles of natural justice; (2) the order of the Collector was also bad because it was passed without any inquiry after the show-cause notice had been given to the petitioner. Even such evidence as had been recorded in support of the case of the department had not been recorded in the presence of the petitioner nor was he afforded an opportunity of cross-examining those witnesses: (3) the Indian currency found at the house of the petitioner could not have been confiscated under sec. 167 (8) of the Sea Customs Act in any case, and, (4) no penalty could have been imposed on him under the aforesaid section as there was no proof that he was a person concerned in the importation and exportation of prohibited or restricted goods within the meaning of Chapter 4 of the Act. The first question which thus emerges for consideration is whether a proceeding like this before the Collector is of a judicial or a quasi-judicial nature. For, we have no doubt that even if it is not a judicial proceeding as such but is one of a quasi-judicial character, then an inquiry into this kind of matter must conform to certain basic principles of natural justice. In their reply, the respondents contend that the matter before the Collector was of a purely administrative nature, and, therefore, the inquiry by the Collector was not required to be conducted in accordance with the principles of natural justice but was entirely in the discretion of the authority competent to decide the case. Fortunately for the petitioner, this matter is no longer at large and seems to us to be concluded by certain decisions of the highest Court in the country to which we propose briefly to refer. The earliest case on the point is Maqbool Hussain vs. State of Bombay (1 ). This was a case under Sec. 167 (8) of the Sea Customs Act, 1878 wherein certain gold of which the appellant was found in possession at the time of his landing on an airport in this country was ordered to be confiscated. Thereafter a complaint was filed in the Court of a Magistrate at Bombay charging him with having committed an offence under Sec. 8 of the Foreign Exchange Regulation Act No. ' 7 of 1947 read with a notification of the Government of India dated the 25th August, 1948. In these circumstances the appellant contended that his prosecution in the court of the Magistrate was a breach of the fundamental right guaranteed to him under Art. 20 (2) of the Constitution. It was held that the Sea Customs authorities were not a judicial tribunal, and, therefore, when the customs authorities confiscated the gold brought by the petitioner in India in contravention of the notification of the Government of India, it could not be predicated of such proceedings that they amounted to a prosecution of the person under the criminal law of the country nor did the order of confiscation constitute a punishment inflicted on that person by a court or a judicial tribunal. Learned counsel for the State placed strong reliance on this decision in support of his submission that the Collector of Customs in the case before us was neither a court nor a tribunal, and, therefore, the proceeding before him was purely administrative and did not call for a judicial approach. The next case to which reference may be made in this connection is Amba Lal vs. Union of India (2 ). Referring to the case cited above, it was re-affirmed that a customs officer was not a judicial tribunal, and, therefore, the proceeding before him was not a prosecution but it was clearly laid down that it was undeniable that the relevant provisions of the Sea Customs Act and the Land Customs Act in so far as they permitted the confiscation of goods and the infliction of a penalty were penal in character. It was further observed that: "the appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been committed by a person under the said Acts summon and examine witnesses, decide whether an offence is committed make an order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned. " and that being so it was held that though the provisions of the Code of Criminal Procedure or the Evidence Act may not be held to be applicable except in so far as they are statutorily made so applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. The next case on this topic is Indo-China Steam Navigation Co. Ltd. vs. Jasjit Singh (3) which, in our opinion, clinches the whole matter. Referring to the earlier decision of this Court in AIR 1953 Supreme Court 325, Maqbool Hussain vs. State of Bombay (Supra), it was explained that while dealing with the legal position of the customs authorities for the purposes of Art. 20 (2) of the Constitution, it was correct that the Court had in the last mentioned case observed that the Customs Officers were not a court or a judicial tribunal, who were required to act judicially on legal evidence tendered on oath and they were not authorised to administer oath to any witness and that the appeal lay before the Central Board of Revenue and that the power of revision was given to the Central Government which were not judicial authorities, but the last mentioned observation was, it was pointed out, purely in the nature of an obiter dictum because the status of the Central Board of Revenue or the Central Government did not fall to be considered in that case. But all the same, the judgment goes on to hold that it was no longer open to doubt that the customs officers would have to act in a judicial manner and reference was made in support of this conclusion to an earlier decision of the Supreme Court in Leo Roy Erey vs. Superintendent, District Jail, Amritsar (4) in which it was held that in imposing confiscation and penalty under sec. 167 (8) of the Sea Customs Act, the Collector of Customs acts judicially, and to yet another decision in Thomas Dana vs. State of Punjab (5) which took the same view. We may as well invite reference to yet another decision of the Supreme Court in Sewpujanrai Indrasanrai Ltd. vs. Collector of Gustoms (6) wherein it was plainly held that the imposition of a fine under sec. 167 (8) of the Sea Customs Act was really a quasi judicial act and that in imposing confiscation and penalties under that Act, the Collector acts judicially. In this state of the law, we have no manner of hesitation in coming to the conclusion that a proceeding before a Collector of Customs involving an order of confiscation or penalty under the Sea Customs Act is a quasi-judicial matter and that the other view that it is a mere administrative act is no longer tenable. This being the settled character of a proceeding under sec. 167 (8) of the Sea Customs Act, the next question that falls for determination in this case is whether the Collector in adopting the procedure that he did failed to fulfil certain essential requirements of natural justice. It is urged that the Collector has failed to do so in two important respects. The first is that being himself the competent authority to adjudicate on the guilt of the petitioner and the punishment of confiscation and penalty to which he had been sentenced, it was incumbent upon him to have granted a personal hearing to the petitioner before he passed his final order, and it is contended that the procedure followed by him according to which a personal hearing was granted to the petitioner before the Assistant Collector of Customs and Excise who had no competence to decide the case and the matter was then decided by the Collector himself by whom no hearing had at all been granted to the petitioner, was grossly violative of a fundamental principle of natural justice. This ground, in our opinion, has very considerable force. Indeed it is directly governed by a bench decision of our own Court in Leela vs. State of Raj. (7) to which one of us was a party and with which we are in respectful agreement, if we may say so. That was also a case of a quasi-judicial character under the Rajasthan City Municipal Appeals (Regulation) Act, 1950 (Act No. 3 of 1950) in which the hearing had been granted to the aggrieved party by a Deputy Minister who was not competent to decide the case and the same was then decided by the Minister of Local Self Government Department but without any hearing having been granted by him to the said party. In these circumstances it was held, after a fairly elaborate discussion of the legal position, that a procedure, according to which the hearing in a judicial or quasi-judicial matter is relegated to one authority while the power of final disposal is vested in another and the latter authority decides the case adversely to the concerned party without affording him any opportunity of hearing, cannot be countenanced as correct and the decision must be struck down as being substantially violative of a basic rule of natural justice. It was further pointed out that the mere fact that such a practice was current in the hearing of such matters at the relevant time or that the same was in accordance with some standing orders passed by the Minister concerned, could not be accepted as a sound ground for the condonation of such an illegal procedure and the principle was firmly laid down that for a proper disposal of a quasi-judicial matter, the authority which hears a matter must be the one which is capable of deciding it, or, in other words, that the authority which decides it must have heard it and that if that was not so, the hearing would be reduced to an empty formality or more or less a farce. This decision is fully binding on us and, therefore, we hold that the procedure followed by the Collector of Customs in deciding the case against the petitioner before him was utterly contrary to one of the most elementary principles of natural justice and that being so we can see no escape from the conclusion that it must be struck down as illegal. This brings us to a consideration of the other infirmity upon which the order of the Collector has been assailed before us and that is that it had been passed by the Collector without any proper inquiry having been held into the case. Our attention has, in this connection, been invited by learned counsel for the State to the departmental investigation made by the Deputy Superintendent of Central Excise and Customs in this case. We should like to point out here that this preceded the show-cause notice which was given to the petitioner on the 29th April, 1958, and, therefore, it would, in our opinion, be putting the cart before the horse if we accept this as a proper inquiry into the matter for such inquiry must have in the normal course of things followed the show-cause notice. That admittedly was not done. Indeed it is plainly admitted before us on behalf of the respondents that no evidence whatsoever was recorded in this case after the show-cause notice was given. The statements of certain witnesses which were recorded earlier were recorded during the course of a preliminary investigation and such investigation which, as a rule, has to be ex-parte, cannot be accepted as a proper or lawful substitute for an inquiry in the presence of the delinquent party. It has also been brought to our notice in this connection that two witnesses who appear to have been examined in support of the case for the department were Bastimal and Narsingh Das, and neither of these witnesses was, it is admitted before us, examined in the presence of the petitioner nor was any opportunity given to him to cross-examine them. We should also like to point out that the evidence of these witnesses was material and has been relied on by the Collector in arriving at the conclusion that he came to. We would refer to the following extract from paragraph 17 of his order: "shri Narsingh Das in his statement dated 9. 8. 1957 clearly admitted that he was getting smuggled gold from Shri Kripal Das of Banner and after disposing of the same, handed over its sale-proceeds to Shri Kripaldas. Moreover, Shri Bastimal, from whose possession 90 tolas of gold was seized in another case. . . . . . . . . . . . . . . stated that he had brought the smuggled gold from Sri Kripaldas for delivery to Shri Narsingh Das. This shows that Shri Kripaldas was dealing in smuggled gold on large scale and, was the pivot of the smugglers' gang. " In these circumstances, it is futile for the respondents to contend that the statements of either the one or the other of these two witnesses was not taken into consideration in arriving at the guilt of the accused. We should take the opportunity of pointing out at this place that apart from the rule of natural justice to which we have drawn attention above, there is another equally well-settled rule and that is that if the guilt of the aggrieved party depends on oral evidence, then he must be allowed the chance of the cross-examination of such evidence when adduced against him and he must further be given an opportunity of rebutting such evidence by his own counter evidence if he chooses to do the same. This requirement of the rule of natural justice also seems to have been clearly violated in the present case and unmistakably affects the validity of the Collector's order. This disposes of the second contention set out above.
(3.) HAVING regard to the findings to which we have come on the aforesaid points, we do not feel called upon to deal with the other points raised by learned counsel for the petitioners which relate to the merits of the case. All that we need say is that it will be open to the petitioner to raise them before the departmental authorities in case it becomes necessary for him to do so. We should also like to make it clear that our judgment in this case shall not be construed as standing in the way of a further and a proper inquiry into the matter on the merits in case the department may think fit to do so. For the reasons mentioned above, we allow this application, and quash the order of the Collector dated the 14th September, 1959, and the orders of the higher authorities on the departmental side affirming the same. The petitioner will have his costs from respondent No. 1, the Government of India. .;