State of Bombay (Now Gujarat) Vs.
Memon Mahomed Haji Hasam  INSC 150 (5 May 1967)
05/05/1967 SHELAT, J.M.
CITATION: 1967 AIR 1885 1967 SCR (3) 938
Junggarh Sea Customs Act II of S. Y. 1998-Seizure
under said Act of some vehicles belonging to respondent-After being kept for
some years outside a police station vehicles sold by order obtained under s.
523 Cr. P. C. as unclaimed property-Revenue Tribunal in appeal ordering return
of vehicles to respondent-Suit by respondent to recover value of
vehicles-Liability of State.
Two trucks and a station wagon belonging to
the respondent were seized by the customs authorities of the State of Junagarh
under the provisions of the Junagarh State Sea Customs Act of S.Y. 1998. The
Junagrah State was merged into the United States of Saurashtra and after
further changes became part of the present Gujarat State. The respondent's
appeal against the aforesaid seizure of his goods succeeded before the Revenue
Tribunal which ordered the return of the said vehicles to the respondent. When
however he applied for the return of the vehicles he was informed that they had
been disposed of under an order of a Magistrate under s. 523 of the Code of
Criminal Procedure, and that the sale proceeds had been paid to a creditor of
the 'respondent under an attachment order. The respondent thereupon filed a
suit for the recovery of the value of the vehicles.
It appeared in the evidence that the vehicles
were kept for several in an. open place outside the police station at Veraval
so that most of their parts were pilfered away and only the skeletons of the
vehicles were left. Finally on the report of the officer incharge of the
aforesaid police station they were sold it an auction as unclaimed property
after obtaining the order of a Magistrate. The trial court on the above evidence
decreed the respondent's suit and the High Court upheld the decree though
partly reducing the amount. The State appealed to this Court It wits contended
on behalf of the appellant that the sale was under a judicial order and
therefore there was no liability to pay; at the most one or the other officers
of the Government could be held guilty of negligence. It was further contended
on behalf of the State that it could not be treated as a bailee because a
bailment could arise only under a contract.
HELD : (i) The State Government no doubt
seized the said vehicles pursuant to the power tinder the Customs Act. But the
power to seize and confiscate was dependent upon a customs offence having been
committed or a suspicion that such offence had been committed. The order of the
Customs Officer was not final as it was subject to appeal and if the authority
found that there was no good ground for the exercise of that power the property
Could no longer be retained and had under the Act to be returned to the owner.
Thus there was a clear obligation to return the vehicle to the owner if the
appeal went his favour. [944E] There was also an implied legal obligation to
preserve tile property intact and to take reasonable care of it so is to enable
it to be returned 93 9 in the same condition in which it was seized. The
position of the State Government until the order became final was therefore
that of a bailee. There can be bailment and the 'relationship of a bailor and
bailee in respect of specific property without there being an enforceable
contract. Nor is consent indispensable for such a relationship to arise.
Even a finder of goods of another becomes a
bailee in certain circumstances. 1.944A-D; F-H] The High Court was right in
confirming the decree passed by the trial court on the basis that there was an
obligation on the State Government either to return the said vehicles or in the
alternative to pay their value. [945 E] State of Rajasthan v. Mst. Vidhyawati,
 Supp. 2 S.C.R. 989 and Kasturilal Jain v. State of U.P.  1 S.C.R.
375, held inapplicable.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 215 of 1961.
Appeal by special leave from the judgment and
decree dated January 22, 1958 of the Bombay High Court at Rajkot in Civil First
Appeal No. 93 of 1956.
R. H. Dhebar, for the appellant.
H. K. Puri and Bishamber Lal, for the
respondents Nos. 47.
The Judgment of the Court was delivered by
Shelat, J. 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 lqbal
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 were 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 tbis 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 I'), 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
over to a creditor of the respondent under an attachment order passed in his
favour. On February 5, 1954, the respondent filed 940 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 'Lind 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 vehicle
s 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 Junagadli, (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
incharge 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, no
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 9 41 5, 1952, the said vehicles were auctioned in the condition in
which they were and only Rs. 2,000 and odd were realised from that auction.
The trial court found that the customs
officer was competent to seize the said vehicles on a suspicion that a custom
offence tinder 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 grounds :
"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 vehicles 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 hold (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 942 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.
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 off
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
Fe ,contended that the State Government was
not liable for any tortious act of any of its servants.
Before we proceed to consider this contention
it is necessary to examine some of the provisions of the said Act which both
the parties conceded was the relevant law applicable to the present ,case.
Section 150 lays down various offences under the Act and the respective
penalties therefor. Clause (8) of s. 150 provides thatif any goods, the
importation or exportation of which is for the time being prohibited or
restricted by or under Chapter IV of this Act, be imported into or exported
from the Junagadli 'State contrary to such prohibition or restriction, or if
any attempt is made so to import or export any such goods, or if any such goods
are found in any package produced to any officer of Customs as containing no
such goods etc., such goods shall be liable to confiscation and any person
concerned in any such offence shall be liable to a penalty as set out therein.
Section 160 provides that a thing liable to confiscation under this Act may be
seized in 'any place by an officer of Customs or other person duly employed for
the prevention of smuggling. Section 163 provides that when a thing is seized
the officer making such seizure shall on demand of the person in charge of the
goods so seized give him a statement in writing of the reasons for such
seizure. Section 166 provides for adjudication of confiscation and penalties.
Section 172 providas for an appeal from a subordinate Customs officer to the
-Chief Customs authority and S. 175 provides a revision by the Ruler of the
Junagadh State. The power of revision under S.
175 includes the power to reverse or modify
the decision or, order in the exercise of His Highness's extraordinary
943 It would appear from these provisions
that the seizure of the said vehicles was carried out with jurisdiction and
-the order of confiscation was also made, apart from the question as to its
merits, by a competent officer with jurisdiction.
It is also possible to contend that as the
said vehicles were sold pursuant to a judicial order no liability can be attached
on the State Government for their disposal by public auction. But between their
seizure and the auction there was a duty implicit from the provisions of the
Act to take reasonable care of the property seized. This is so because .the
order of confiscation was not final and was subject to an appeal and a revision
before the Home Member and later on before the Revenue Tribunal after Junagadh
merged in the State of Saurashtra in 1948-49. The appellant-State was aware
that the order of seizure and confiscation was not final being subject to an
appeal and was liable to be set aside either in appeal or in revision.
It was also aware that if the said order was
set aside, the property would have to be returned to the owner thereof in the
same state in which it was seized except as to normal depreciation. In spite of
this clear position, while the appeal was still pending before the Revenue
Tribunal and without waiting for its disposal, it allowed its police
authorities to have it disposed of as unclaimed property.
The State Government was fully aware,
firstly, by reason of the pendency of the appeal and secondly because the
application under s. 523 expressly mentioned -the person from whom the said
vehicles were seized, that the vehicles were and could not be said to be
unclaimed property. In the circumstances, the State Government was during the
pendency of the appeal under a statutory duty to take reasonable care of the
said vehicles which on the said appeal being decided against it were liable to
be returned to their owner.
The contention that the order of disposal was
a judicial order or that the respondent could have filed a revision application
against that order and have it set aside would be beside the point. There being
a statutory obligation under the Act to return the property once the order of
seizure and confiscation was held to be wrong, the respondent could rely on
that obligation and claim the return of the said vehicles. On behalf of the
respondent, the contention urged was that though the seizure might be lawful
and under the authority of the Statute, the State Government was from the time
that the said goods were seized until the decision of the appeal, in a position
of a bailee and was, therefore, bound to take reasonable care of the said vehicles.
That no such reasonable care was taken and the vehicles remained totally
uncared for is not in dispute.
Mr. Dhebar's reply was that there was no
bailment nor can such bailment be inferred as s. 148 of the Contract Act
requires that a bailment can arise only under a contract between the parties.
That contention is not sustainable.
Bailment is dealt with by the Contract Act
only 944 in cases where it arises from a contract but it is not correct to say
that there cannot be a bailment without an enforceable contract. As stated in
"Possession in the Common Law" by Pollock and Wright, p. 163,
"Upon the whole, it is conceived that in general any person is to be
considered as a bailee who otherwise than as a servant either receives possession
of a thing from another or consents to receive or hold possession of a thing
for another upon an understanding with the other person either to keep and
return or deliver to him the specific thing or to (convey and) apply the
specific thing according to the directions antecedent or future of the other
'Bailment is a relationship sui generis and
unless it is sought to increase or diminish the burdens imposed upon the bailee
by the very fact of the bailment, it is not necessary to incorporate it into
the law of contract and to prove a consideration"(1).
There can, therefore, be bailment and the
relationship of a bailee in respect of specific property without there being an
enforceable contract. Nor is consent indispensable for such a relationship to
arise. A finder of goods of another has been held to be a bailee in certain
On the facts of the present case, the State
Government no doubt seized the said vehicles pursuant to the power under the
Customs Act. But the power to seize and confiscate was dependent upon a customs
offence having been committed or a suspicion that such offence had been
committed. The order of the Customs Officer was not final as it was subject to
an appeal and if the appellate authority found that there was no good ground
for the exercise of that power, 'the property could no longer be retained and
had under the Act to be returned to the owner. That being the position and the
property being liable to be returned there was not only a statutory obligation
to return but until the order of confiscation became final an implied
obligation to preserve the property intact and for that purpose to take such
care of it as a reasonable person in like circumstances is expected to take.
Just as a finder of property has to return it when its owner is found and
demands it, so the State Government was bound to return the said vehicles once
it was found that the seizure and confiscation were not sustainable. There
being thus a legal obligation to preserve the property intact and also the
obligation to take reasonable care of it so as to enable the Government to
return it in the same condition in which it was seized, the position of the
State Government until the order became final would be that of a bailee. If
that is the correct position once the Revenue Tribunal set aside the order of
the Customs Officer and the Government became liable to return the goods the
owner (1) "Law of constract "by Chesire and Fi foot,pp./73,74.
94 5 had the right either to demand the
property seized or its value, if, in the meantime the State Government had
precluded itself from returning the property either by its own act or that of
its agents or servants. This was precisely the cause of action on which the
respondent's suit was grounded. The fact that an order for its disposal was
passed by a Magistrate would not in an-,, way interfere with or wipe away the
right of the owner to demand the return of the property or the obligation of
the Government to return it. The order of disposal in any event was obtained on
a false representation that the property was an unclaimed property. Even if the
Government cannot be said to be in the position of a bailee, it was in any case
bound to return the said property by reason of its statutory obligation or to
pay its value if it had disabled itself from returning it either by its own act
or by any act of its agents and servants. In these circumstances, it is
difficult to apperciate how the contention that the State Government is not
liable for any tortious act of its servants can possibly arise. The decisions
in State of Rajasthan v. Mst. Vidhyawati(l) and Kasturilal Jain v. The State of
U.P.(2) to which -,Mr. Dhebar drew our attention have no relevance in view of
the pleadings of the parties and the cause of action on which the respondent's
suit was based.
In our view, the High Court was right in
conferming the decree passed by the trial court on the basis that there was an
obligation on the State Government either to return the said vehicles or in the
alternative to pay their value.
The appeal is dismissed with costs.
G.C. Appeal dismissed.
( 1)  Suppl. 2 S.C.R. 989.
(2)  1 S.C.R. 375.