Vallabhdas Liladhar & Ors Vs.
Assistant Collector of Customs  INSC 14 (27 January 1964)
27/01/1964 DAS, S.K.
GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA
CITATION: 1965 AIR 481 1965 SCR (3) 854
R 1973 SC 62 (5) RF 1992 SC1831 (32)
Sea Customs Act, 1878 (8 of 1878) ss. 186,
167 (81)--Statements made to Customs authorities--lf admissible in Criminal
trial-Confiscation and penalty imposed--if bars prosecution--Dealing in Gold
proved to be smuggled--If against the law--Indian Evidence Act. 1872 (1 of
1872), ss. 24, 25.
Smuggled gold recovered from the appellants
was confiscated and a penalty imposed on them. Thereafter the appellants were
tried and convicted under s. 167(81) of the Sea' Customs Act. In their
statements made to the customs authorities, the appellants had practically
admitted the prosecution case and these statements were put in evidence.
An appeal to the Sessions Judge and a
revision to the High Court were dismissed. In appeal to this Court:
HELD: (i).Since the statements made to the
customs authorities bore the signature of the appellants which were admitted,
they must be taken to be proved by such admission and no further evidence was
necessary. [858C] (ii) Customs officers are not in the circumstances arising in
this case police officers and statements mad.e to them were not inadmissible
under s. 25 of the Evidence Act.
Section 24 would apply, as customs
authorities are persons in authority; and such statements would be inadmissible
if vitiated by inducement, threat or promise. [858E-F] State of Punjab v.
Barkat Ram,  3 S.C.R. 338, followed.
(iii) Section 186 of the Sea Customs Act, which
is merely an enabling section, is no bar to a prosecution for an offence under
the Act in connection with a matter in which the award of confiscation, penalty
or increased rate of duty has been made. [859F, G] Leo Ray Frey v.
Superintendent of District Jail  S.C.R. 822, referred to.
(iv) Once the gold recovered is proved to be
smuggled whosoever is found to have brought it and dealt with it, thereafter,
knowing it to be smuggled must be held to have had the intention of evading
duty or violating the prohibition or restriction. [860C-D]
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeals Nos. 48 and 80 of 1960.
Appeals by special leave from the judgment
and orders dated December 11, 1959 and March 2, 1960 of the Bombay High Court
Rajkot (Now Gujarat High Court) In criminal Revision Application No. 100 of
855 N.N. Keswani, for the appellants (in both
D.R. Prom and R.N. Sachthey, for the
respondent (in both the appeals).
The Judgment of the Court was delivered by
Wanchoo, J. The two appeals by special leave arise out of the same criminal
trial before a magistrate at Porbunder and will be dealt with together. The
three appellants along with one more person, namely, Keshavlal Nagjibhai were
prosecuted under s. 167 (81) of the Sea Customs Act, No. 8 of 1878,
(hereinafter referred to as the Act). The prosecution case briefly was that
Vallabhdas Liladhar, who is now dead, came in contact with an Arab from whom he
purchased smuggled gold weighing a little more than 84 tolas on December 1,
1956. Before this, Vallabhdas Liladhar had borrowed Rs. 3,600/- from the other
two appellants and Keshavlal about November 28, 1956, in order to make the
purchase. After making the purchase, Vallabhdas Liladhar came to Porbunder to
the house of the other two appellants and Keshavlal and informed them of the
purchase and wanted their help in the disposal of the gold. The other two
appellants namely, Narandas Nagjibhai and Vallabhdas Nagjibhai are brothers.
Keshavlal was also the brother of these two appellants. The prosecution case
further was that Narandas Nagjibhai asked Vallabhdas Nagjibhai to take the gold
to Bantwa and sell it at the rate of Rs. 103/- or so per tola. Vallabhdas
Nagjibhai was also instructed that in case he could not sell the gold at that
rate he should contact Vallabhdas Liladhar and Narandas Nagjibhai at Bantwa bus
stand from where they were to go to Junagadh to dispose of the gold if no
suitable buyer could be found in Bantwa.
Consequently Vallabhdas Nagjibhai proceeded
to Bantwa by bus on December 2, 1956 in the afternoon. In the meantime
information was received by Mehta who was Inspector of Customs about the
smuggling of this gold. He consequently followed the bus in which Vallabhdas
Nagjibhai was travelling and intercepted him at Kutiyana bus stand at about 3
p.m. The Deputy Superintendent of Customs was also with Inspector Mehta and
Vallabhdas Nagjibhai was taken down from the bus at Kutiyana. On search in the
presence of witnesses, five bars of gold weighing about 84 tolas were recovered
from his possession. All these five bars bore marks of foreign origin and were
taken in possession by the customs authorities after preparing a recovery list.
Further investigation was made in the matter and eventually on October 7, 1957,
the Collector of Central Excise Baroda confiscated the gold bars under s. 167
(8) of the Act read with s. 23 of the Foreign Exchange Regulation Act, 1947 and
also imposed a penalty of Rs. 1,000/- each on the three appellants and a
penalty of Rs. 500/- on Keshavlal.
Thereafter a complaint was filed by the
Assistant Collector of Customs under s. 167(81) of the Act before the magistrate
at Porbunder on June 27. 1958.
856 The case of Vallabhdas Liladhar was that
he had not purchased the gold from any Arab but had brought it with him from
Karachi in the year 1946. Vallabhdas Nagjibhai admitted the recovery of gold
from him but said that it belonged to Vallabhdas Liladhar and he was carrying
it at the request of the latter and that he did not know that it was smuggled
gold. Narandas Nagjibhai also, admitted that Vallabhdas Liladhar had come to
their house with the gold but added that it was not smuggled gold and that
Vallabhdas Liladhar had told him that it belonged to him and was for sale.
Keshavlal, the fourth person, who has been
acquitted, said that he did not know anything about the matter and had no
connection with it.
It may be added that the three appellants had
made statements before the customs authorities and those statements were also
put in evidence in support of the prosecution case. In those statements, they
practically admitted the prosecution case that the gold was smuggled gold and
they were trying to dispose it of. The magistrate convicted all the four
persons under s. 167 (81) of the Act and sentenced them to rigorous
imprisonment for six months and a fine of Rs. 500/- He relied on the statements
made by the appellants and Keshavlal before the customs authorities and also on
the evidence produced before him, which was mainly about the recovery of gold.
All the four convicted persons appealed to
the Sessions Judge. The appeal was heard by the Additional Sessions Judge,
Porbunder who acquitted Keshavlal. The appeal of the other three (namely, the
three appellants now before us) was dismissed and their convictions and
sentences Were upheld.
The three appellants then went in revision to
the High Court. The High Court rejected the revisions of Vallabhdas Liladhar
and Vallabhdas Nagjibhai summarily. The revision application of Narandas
Nagjibhai was admitted but was eventually dismissed. The three appellants then
applied for leave to appeal to this Court which was refused. They then prayed
for special leave from this Court, which was granted, and that is how the
matter has come up before us.
Vallabhdas Liladhar, one of the appellants in
Cr. A 48 of 1960, is dead. So far therefore as he is concerned, his appeal
abates. It only remains to consider the appeal of Vallabhdas Nagjibhai
(Cr.A.48) and Narandas Nagjibhai (Cr.A.80). Before however we consider the
points raised before us on behalf of the appellants we may refer to the
circumstances which have been found established by all the courts and on the
basis of which the conviction of the appellants has been upheld. These
circumstances are-- (1) Though the price of gold at the relevant time was over
Rs. 105/- per tola, the appellant were intending to sell these gold bars at a
lower price of about Rs. 103/- per tola.
857 (2) The two appellants were working as
goldsmiths at Porbunder and there was no reason why the gold had to be sent
elsewhere for disposal. As Porbunder is a fairly large town, there was no
reason why the gold could not be sold in the market at Porbunder.
(3) The two appellants displayed undue haste
in the disposal of gold.
(4) The surreptitious manner in which the
gold bars were kept by Vallabhdas Nagjibhai as shown at the time of recovery
shows that the appellants knew that they were dealing with smuggled gold.
(5) The amount of Rs. 3,600/- was advanced to
Vallabhdas Liladhar but the entries in the account book of the appellants were
made in the name of the brother of Vallabhdas Liladhar who is the brother-in-law
of the two appellants.
(6) The markings on the gold made it quite
clear that it was of foreign origin and the two appellants could not be unaware
of this, particularly as they work as goldsmiths.
In addition to the above circumstances, all
the courts relied on the statements made by the two appellants before the
customs authorities and the presumption under s. 178-A of the Act was raised
and on that basis convicted the appellants, though the High Court held that
even without the presumption under s. 178-A the evidence was sufficient to
convict the appellants.
Learned counsel for the appellants has very
properly not challenged the concurrent findings of fact by all the courts. He
has raised four points for our consideration, which are these-- (1) The
statements made to the customs authorities were inadmissible in evidence as
they were not properly proved.
(2) The statement made before the Collector
of Customs were inadmissible in evidence under ss. 24 and 25 of the Indian
(3) As the gold had already been confiscated
and penalty had been imposed under s. 167(8) of the Act, there could be no
further trial in a criminal court in view of s. 186 of the Act.
(4) The ingredients of s. 167(81) are not
satisfied in this case.
858 Re. (1).
So far as the first point is concerned, the
only argument is that the lawyer who signed the statements made before the
customs authorities was not produced to prove them, and therefore the
statements cannot be held to have been properly proved. It is however clear
that the statements were not only signed by the lawyer of the appellants but
also by the appellants. In their statements in court, the appellants admitted
that they had signed the statements, though they said. that they did not know
what the statements contained and they signed it on being asked by their
This part of the statements of the appellants
has not been believed by the courts below and in our opinion rightly. As the
statements bore the signature of the appellants which are admitted, they must
be held to be proved by this admission and it was not further necessary to
examine the lawyer who signed the statements along with the appellants. The
contention on this head must therefore fail.
As to the second point, we are of opinion
that s. 25 of the Indian Evidence Act has no application on the facts of the
present case which are on all fours with the facts in The State of Punjab v.
Barkat Ram(1). In similar circumstances it was held by this Court in that case
that customs officers are not police officers and statements made to them were
not inadmissible under s. 25. Section 24 would however apply, for customs
authorities must be taken to be persons in authority and statements would be
inadmissible in a criminal trial if it is proved that they were caused by
inducement, threat or promise. But the finding of all the courts is that the
statements were not made on account of any inducement threat or promise as
required by s. 24 of the Indian Evidence Act. In the face of this finding,
therefore, it cannot be said that the statements are inadmissible under s. 24
of the Indian Evidence Act.
Next the appellants rely on s. 186 of the
Act. which reads as follows: -- "The award of any confiscation, penalty or
increased rate of duty under this Act by an officer of Customs shall not
prevent the infliction of any punishment to which the person affected thereby
is liable under any other law." It is urged that when s. 186 lays down
that the award of any confiscation, penalty or increased rate of duty under the
Sea Customs Act shall not prevent the infliction of any punishment to which the
person affected thereby is liable under any other law, it necessarily forbids
by implication infliction of any punishment to which (1)  3 S.C.R. 338.
859 the person affected thereby is liable
under the Sea Customs Act itself. In this connection our attention is drawn to
certain observations in Leo Roy Frey v. The Superintendent District Jail(1). It
is true that in that case this Court referred to s. 186 of the Act; but that
case was not directly concerned with the question whether a prosecution under
s. 167(81) of the Act is permissible after the award of confiscation, penalty
or increased rate of duty under s.
167(8) of the Act in view of s. 186. Clause
(81) in s. 167 was introduced by the Amending Act No. 21 of 1955. Before that
there were 80 clauses in the section, and the scheme of those clauses was that
a person could either be dealt with by the award of confiscation, penalty or
increased rate of duty, or by a prosecution before a magistrate. It was in
those circumstances that s. 186 provided that the award of confiscation,
penalty or increased rate of duty would not bar infliction of any other
punishment under any other law.
The intention of the legislature by this
provision in s. 186 was clearly to allow a prosecution under any other law even
though there might be award of confiscation, penalty or increased rate of duty
under the Act. Section 186 was thus meant for permitting prosecutions in
addition to action under the Act in the shape of confiscation, penalty or
increased rate of duty; it was never intended to act as a bar to any
prosecution that might be permissible after the award of confiscation, penalty
or increased rate of duty. It was merely an enabling section and not a barring
section and seems to have been put in the Act ex abundanti cautela. When
however, cl. (81) was introduced in s. 167, it became possible in some cases
where goods had been confiscated;
and penalty inflicted under the Act by the
customs authorities to prosecute persons also under cl. (81) of the Act. That
however would not change the nature of the provision contained in s. 186 which
was an enabling provision and not a barring provision. If the intention was to
bar prosecutions in consequence of the award confiscation, penalty or increased
rate of duty, the words of s. 186 would have been very different. We cannot
therefore read in s. 186 a bar by implication to a prosecution under the Act
simply because s. 186 enables prosecution under any other law. In this view of
the matter, s. 186 is no bar to the prosecution for an offence under the Act in
connection with a matter in which the award of confiscation, penalty or
increased rate of duty has been made.
Next it is contended that the ingredients of
cl. (81) of s. 167 are not satisfied inasmuch as it is not proved that the
intention of the appellants was to defraud the government of any duty payable
on the gold which was the subject matter of the charge in this case or to evade
any prohibition or restriction for the time (1)  S.C.R. 822, 827.
860 being in force. It is true that before
cl. (81) can apply it has to be proved inter alia that the person charged there
under with possession of any dutiable or prohibited or restricted goods or
concerned in carrying, removing, depositing, keeping or concealing such goods,
has the intention of defrauding the government of any duty payable thereon or
of evading any prohibition or restriction thereon for the time being in force.
So it is said that the prosecution has failed to prove by positive evidence
that the intention was to defraud the government of the duty payable on the
gold in this case or to evade the prohibition or restriction on the import
thereon for the time being in force. We have not been able to understand this
argument at all. Once it is proved that the gold is smuggled gold, it follows
that it was brought into the country without payment of duty or in violation of
the prohibition or restriction in force. and whosoever brought it and whosoever
dealt with it thereafter knowing it to be smuggled in the manner provided in
the section must be held to have the intention of evading the payment of duty
or violating the prohibition or restriction. There is no force in this
Lastly it is urged that the substantive
sentence of imprisonment in the case of the two appellants before us may be
reduced to the period already undergone, particularly, as the appellants, have
been on bail since March 1960 and it would not be in the interest of justice to
send them back to jail for a short period after four years when about half the
sentence has already been served out. We however see no reason to interfere
with the sentence in cases of this nature. The appeals therefore fail and are