Bhanabhai Khalpabhai Vs. Collector of Customs [1994] INSC 164 (8 March 1994)

Singh N.P. (J) Singh N.P. (J) Reddy, K. Jayachandra (J)

CITATION: 1994 SCC Supl. (2) 143 JT 1994 (2) 591 1994 SCALE (2)238

ACT:

HEAD NOTE:

The Judgment of the Court was delivered by N.P. SINGH, J.- The appellant was convicted by the Magistrate for an offence under Section 135(1)(a) of the Customs Act (hereinafter referred to as the 'Act') and was sentenced to undergo rigorous imprisonment for two years and to pay a fine of Rs 5000, in default of payment thereof, to undergo rigorous imprisonment for further period of six months. The appeal preferred on behalf of the appellant, before the Sessions Judge, was transferred to the High Court, to be heard along with the appeal filed on behalf of the State, against the order of acquittal, passed by the Magistrate against other co-accused persons. The High Court, by the impugned judgment, dismissed the appeal of the appellant.

2. It is the case of the prosecution that on January 30, 1969, the patrolling officials found a truck coming from the side of Moti Daman and proceeding towards Mohangam Railway Crossing, without the headlights being on in a suspicious manner. On inquiry, it was found that the said truck had unloaded some contraband articles at some Wadi. Police and the officials of the Customs Department, found out that goods had been unloaded at the Wadi of the appellant at Iklora. A search was carried out in the said Wadi, and on digging the ground near a well 101 silver ingots, weighing 3274.98 kgs., worth about Rs 18,08,850, were recovered. The said silver ingots were neither covered under any transport voucher nor any of the requirements contemplated under Chapter IV-B of the Act, were found to have been complied with. The Customs officials had reasonable belief that the said silver ingots had been stored at the Wadi of the appellant, for the purpose of illegal export and as such liable for confiscation. Further investigation disclosed that the said silver ingots had been brought by two motor trucks bearing Nos. M.H.T. 2304 and M.R.T. 275 1. So far the truck No. M.H.T. 2304 was concerned, which was spotted out first moving in a suspicious manner, was carrying contraband silver ingots 20 in number. Several persons including the drivers and owners of the trucks were made accused in connection with the said recovery. The original accused 2 Shankarbhai Haribhai, brother-in-law of the appellant, was at the time of seizure, present at the Wadi and was guarding the said place. Later he absconded and could not be made available for trial.

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3. By. Notification No. C.S.R. 37, dated January 3, 1969, issued by the Government of India, Ministry of Finance, in exercise of the powers conferred by the Act 'Silver Bullion and Coins' had been declared as 'specified goods'. By Notification No. C.S.R. 38, dated January 3, 1969, issued in exercise of powers conferred by the said Act, the area of 50 kilometres in width from the coast of India, falling within the territories of the States of Gujarat, Maharashtra, Mysore and Union Territory of Goa, Daman and Diu, had been declared as 'the specified area'. There is no dispute that the Wadi of the appellant was within 50 kilometres from the coast of India as such within the 'specified area', and before the seizure were made on January 30, 1969, the silver ingots had been notified as 'specified goods'.

4. After the recovery aforesaid, the statement of the appellant had been recorded, in accordance with Section 108 of the Act. During course of the statement, the appellant admitted that the Wadi belonged to him and 101 silver bars had been buried near a well in the said Wadi. He stated:

"Customs personnel came at night at my Iklora Wadi and they took away 101 silver bars which were buried near the well......

He again repeated the same thing later in his statement by saying:

"On date January 30/31, 1969 the Customs officials digged the land near the well in the Wadi of my Iklora and found 101 silver bars......" He, however, stated that he did not know how the silver bars came there. In the case of Veera Ibrahim v. State of Maharashtra' it was examined, as to whether the statement of the accused in that case recorded by the Customs Officer under Section 108 of the Act before any complaint or first information had been lodged against him, can be used against such accused when he was charged for having committed an offence under Section 135(1)(a) of the Act. It was said that mere facts that at the relevant time the person was arrested on suspicion of having committed an offence under Section 124 of the Bombay Police Act and a panchnama had been prepared seizing the goods, were immaterial when neither the case was registered nor the FIR was recorded by the police. It was pointed out that when the Customs Officer recorded the statement of the appellant, in that case he was not formally accused of any offence and as such the statement recorded by the Inspector of Customs was not hit by Article 20(3) of the Constitution. In that connection, reference was made to the judgment of this Court in the case of R. C Mehta v. State of W. B. 2 As such the statement made by the appellant under Section 108 of the Act, can be used against him. The appellant stated in clear and unambiguous words (i) that the Wadi belonged to him by saying twice "my Iklora Wadi" (ii) Customs personnel came at night and took away "101 silver bars, which were buried near the well". At the time of trial, the appellant took a stand that the Wadi did not belong to him, it belonged to his wife and as during the recovery of the silver ingots, he was not present at the Wadi, no inference of guilt against him could be drawn.

5. On behalf of the appellant, nothing has been brought to our notice to reject his statement under Section 108 of the Act, saying that the said statement was not voluntary or made under coercion. On behalf of the prosecution, witnesses have been examined to prove as to how after digging the ground near 1 (1976) 2 SCC 302: AIR 1976 SC 1167 2 (1969) 2 SCR 461 : AIR 1970 SC 940 147 the well, 101 silver ingots were recovered. Witnesses have also stated that the Wadi, from where recovery was made, belonged to the appellant. The statement of the appellant made under Section 108 of the Act along with the evidence of the witnesses, who have been examined to prove the recovery from the Wadi aforesaid, establish that Wadi belonged to the appellant and 101 silver ingots had been concealed under the ground, which were recovered after digging the ground.

6. Now the only question which is to be examined, is as to whether on basis of the recovery, the appellant can be held to be guilty for an offence under Section 135(1)(a) of the Act? On behalf of the appellant, a stand was taken before this Court that even if the prosecution case regarding recovery aforesaid is accepted, the ingredients of Section 135(1)(a) have not been fulfilled, so as to hold that the appellant committed an offence under that section. The relevant part of Section 135(1)(a) is as follows:

"135. Evasion of duty or prohibitions.- (1) Without prejudice to any action that may be taken under this Act, if any person- (a) is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods; or

7. According to appellant, the prosecution has not established that the silver ingots had been kept buried in connection with any fraudulent evasion or attempt at evasion of any duty chargeable thereon.

In the case of Asst. Collector of Customs v. Babu Miya Sheikh Imam3 it was pointed out that Section 135(1)(a) has to be read in three parts: (SCC pp. 450, 451, para 4) "1. If any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon, he shall be punishable with imprisonment for a term which may extend to three years or with fine or both.

2. If any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any prohibition for the time being imposed under the Customs Act, 1962 with respect to such goods, he shall be punishable with imprisonment for a term which may extend to three years or with fine or both.

3. If any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any prohibition for the time being imposed under any other law for the time being in force with respect of such goods, he shall be punishable with imprisonment for a term which may extend to three years or with fine or both."

8. As such if any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any prohibition for the time being imposed under the said Act with respect to such goods, even then he shall be punishable with imprisonment as prescribed under the said section. In other words, the person must be concerned in any fraudulent evasion or 3 (1983) 3 SCC 447 : AIR 1983 SC 974 148 attempt at evasion of any prohibition imposed under the Act.

In the instant case, the 'silver bullion' had been declared as specified goods and the inland area of 50 kilometres in width from the coast of India including the area in which the Wadi of the appellant was situated had been declared as 'specified area' under the provisions of the Act. Sub- section (1) of Section II J, which had come in force, w.e.f. January 3, 1969, required every person who owns, possesses, or has control, on the specified date, over any specified goods, the market price of which exceeds fifteen thousand rupees, to deliver to the proper officer, an intimation containing the particulars of the place where such goods had been kept or had been stored within the specified area.

Sub-section (2) of Section 11-J enjoins that every person who acquires, within the specified area, after the specified date, any specified goods, the value whereof exceeds fifteen thousand rupees, to deliver to the proper officer an intimation containing the particulars of the place where such goods were proposed to be kept or stored "before making such acquisition". In other words sub-section (2) prescribes a bar on acquiring any specified goods within the specified area unless before making such acquisition, he delivers to the proper officer an intimation containing the particulars of the place where such goods are proposed to be kept or stored, after such acquisition. Per se this will amount to be prohibition in acquiring specified goods within the specified area, the value whereof exceeds fifteen thousand rupees unless the conditions for such acquisition are fulfilled with. There is no dispute in the present case that the appellant, never before making acquisition, delivered to the proper officer any intimation in respect of acquisition, of those silver ingots and the place where such silver ingots were proposed to be kept or stored after the acquisition. In this background, there should not be any difficulty in holding that the appellant was concerned in fraudulent evasion or attempt at evasion of the aforesaid prohibition under subsection (2) of Section 11-J in relation to specified goods.

9. In the facts and circumstances of the case, it can also be held that the appellant was concerned with the specified goods in connection with 'fraudulent evasion or attempt at evasion' of duty chargeable on the specified goods. It is well known, that it is very difficult for the prosecution, to prove every link, in respect of the commission of the offence under the Act by direct evidence. The whole process of smuggling, for evading payment of custom duty consists of different links. The links aid and abate each other, sometimes through a remote control. That is why, Parliament has introduced Section 138-A in the Act. Section 138-A says:

"138-A. Presumption of culpable mental state.- (1) In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

(2)For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability." This section had come in force before the trial commenced.

The provision relates only to burden and nature of proof at the trial, as such it was applicable in the present case.

In view of the aforesaid section, a presumption has to be 149 drawn, in respect of existence of the alleged mental state.

An option has been given to the accused to prove by way of defence the fact, that he did not have any such mental state with respect to the act charged which is an offence. It can be said that the provision aforesaid is an exception to the general criminal jurisprudence that onus never shifts on the accused and he has only to raise a doubt in the mind of the court, in respect of the correctness of the prosecution version. It is different from Sections 106 and 114 of the Evidence Act. In view of Section 138-A, once a presumption is raised about a culpable mental state on the part of the accused, that he had stored the silver ingots, to export them outside the country evading payment of custom duties, the accused has to prove as a defence that no such mental state with respect to the act charged, did exist. No material has been produced on behalf of the appellant to discharge this burden. He has not explained as to why 3274.98 kgs. of silver ingots, worth rupees more than 18 lakhs had been concealed underground near a well in his Wadi without any intimation being given to the proper officer concerned, before acquisition of those silver ingots, as required by sub-section (2) of Section 11-J.

10. This Court in the case of State of Maharashtra v. Natwarlal Damodardas Soni4 in which the trial had been completed before the introduction of Section 138-A in the Act, examined as to what is the nature of proof required for establishing a charge for an offence under Section 135(1).

It was said that the requisite guilty knowledge or mens rea under clause (a) or (b) of Section 135(1), can be established by circumstantial evidence as well. Even without applying Section 138-A of the Act, it was held that the burden of proving an innocent receipt of gold lay upon the appellant under Section 106 of the Evidence Act. The totality of facts proved, was enough to raise a presumption under Section 114 of the Evidence Act, that the gold had been illegally imported into the country. It was further said that provisions of Section 135(1) had been designed to suppress smuggling, as such it has to be construed in accordance with the Mischief Rule first enunciated in Heydon case5.

11. According to us, the prosecution has established that the appellant was concerned in an attempt at evasion of duty under the provisions of the Act, as such committed the offence under first part of Section 135(1)(a) of the Act.

He was also concerned in evasion of the prohibition imposed by sub-section (2) of Section 11 J of the Act, by not having delivered to the proper officer, an intimation containing the particulars of the place, where the silver ingots, in such a huge quantity were to be kept and stored, as such he committed the offence even under the second part of Section 135(1)(a) of the Act. The very fact that 3274.98 kgs. of silver ingots worth more than rupees 18 lakhs had been kept buried near the well in the garden, leads to irresistible conclusion that the said silver ingots had not been kept or stored in normal course of business.

12. As such there is no merit in this appeal and it is accordingly dismissed. The trial court shall take all necessary steps to take the appellant in custody to serve out the remaining period of sentence.

4 (1980) 4 SCC 669 5 (1584)3CoRep7a:76ER637 150

ORDER

1. This appeal by special leave is against the judgment of the Kerala High Court dated November 25, 1980 by which CRP No. 2034/80-E filed by the appellant was dismissed by the High Court. The short question involved for decision is the meaning and scope of Section 4-A of the Kerala Land Reforms Act, 1964 inserted therein by the Amending Act 35 of 1969.

2. The predecessor in-interest of respondents effected a mortgage with possession of the disputed land on March 13, 1919 in favour of the predecessor in-interest of the appellant. The mortgagee remained in possession except for the period between January 29, 1940 to June 17, 1942 during which the lessee of the mortgagee was in possession. The mortgagee's cultivating possession of the disputed land was, therefore, disrupted between January 29, 1940 and June 17, 1942. The mortgagee, the appellants herein, claim the right as a deemed tenant by virtue of Section 4-A of the Act, material part of which reads as under :

"4-A. Certain mortgagees and lessees of mortgagees to be deemed tenants.- (1) Notwithstanding anything to the contrary contained in any law or in any contract, custom or usage, or in any judgment, decree or order of court, a mortgagee with possession of land, other than land principally planted with rubber, coffee, tea or cardamom, or the lessee of a mortgagee of such land shall be deemed to be tenant if- (a) the mortgagee or lessee was holding the land comprised in the mortgage for a continuous period of not less than fifty years immediately preceding the commencement of the Kerala Land Reforms (Amendment) Act, 1969; or (b) the mortgagee or lessee has constructed a building for his own residence in the land comprised in the mortgage and he was occupying such building for such purpose for a continuous period of not less than twenty years immediately preceding such commencement:

Provided that a mortgagee or lessee falling under this clause shall not be deemed to be a tenant if he, or, where he is a member of a 151 family, such family was holding any other land exceeding two acres in extent on the date of publication of the Kerala Land Reforms (Amendment) Bill, 1968, in the Gazette; or (c) the land comprised in the mortgage was waste land at the time of mortgage or land to which the Madras Preservation of Private Forests Act, 1949, would have applied if that Act has been in force at the time of mortgage, and (i) the mortgagee or lessee was holding such land for a continuous period of not less than thirty years immediately preceding the commencement of the Kerala Land Reforms (Amendment) Act, 1969, and (ii) the mortgagee or lessee has effected substantial improvements on such land before such commencement.

Explanation I.- For the purposes of this sub-section, in computing the period of continuous possession or occupation by a lessee, the period during which the mortgagee was in possession or occupation, as the case may be, shall also be taken into account.

Explanation II.- In computing the period of fifty years referred to in clause (a) or the period of thirty years referred to in clause (c), the period during which the predecessor-in-interest or predecessors-in-interest of the mortgagee or lessee was or were holding the property shall also be taken into account.

(emphasis supplied)

3. The High Court has taken the view that the appellant- mortgagees were not in possession for a continuous period of not less than fifty years immediately preceding the commencement of the Kerala Land Reforms (Amendment) Act, 1969 which came into force on January 1, 1970 and, therefore, the right of a deemed tenant claimed under clause (a) of sub-section (1) of Section 4-A was not available to the appellants. This view has been taken on the ground that there was disruption in the continuous cultivating possession of the mortgagee for the period between January 29, 1940 to June 17, 1942 when the disputed land was under cultivation of the lessee.

4. The learned counsel for the appellants contended that the period between January 29, 1940 and June 17, 1942 during which the lessee was in cultivating possession of the disputed land must be treated as a part of the mortgagee- appellants' continuous possession and if that be done, the appellants satisfy the requirement of holding the land comprised in the mortgage for a continuous period of not less than fifty years immediately preceding the commencement of the Amendment Act of 1969. The High Court rejected this contention following the view taken consistently by the Kerala High Court in several earlier decisions wherein the possession of the lessee of the mortgagee was not treated as the mortgagee's possession for this purpose. The question is whether the view taken by the High Court calls for any interference.

5. As we read clause (a) of sub-section (1) of Section 4- A, we do not find any reason to differ from the view taken by the High Court. The object of the provision is very clear. This provision was made for the purpose of recognising the tenancy rights of the person in actual cultivating possession of the land for a continuous period of not less than fifty years immediately preceding the date of 152 commencement of the Amendment Act, the idea being to confer that right on the actual tiller of the land. For this purpose no distinction has been made in the provision between the mortgagee with possession of the land who was himself cultivating the same or the lessee of such a mortgagee in cultivating possession for the specified period. If the contentions of the learned counsel for the appellants were to be accepted it may lead to incongruous results in certain situations. In a case where the mortgage has been subsisting for more than fifty years during which the lessee of the mortgagee has been in cultivating possession for a continuous period of not less than fifty years, the right of the lessee to be treated as the deemed tenant would be defeated if the lessee's cultivating possession is to ensure to the benefit of the mortgagee from whom the lessee holds possession under the lease.

Obviously, this would frustrate the object of such an enactment. The scheme of sub-section (1) of Section 4-A indicates that throughout it is either the mortgagee or lessee for whom the provision is made, depending on who between them satisfies the prescribed condition.

Explanation 1 further negatives the contention that lessee's possession can be treated as the mortgagee's possession while computing the period of continuous possession of the mortgagee.

6. We do not find anything in clause (a) or in the remaining part of subsection (1) of Section 4-A to support the submission of the learned counsel for the appellants.

Moreover, the Kerala High Court has consistently taken this view ever since the provision was enacted and obviously the people have so far arranged their affairs on that basis.

This is an additional reason for not disturbing the view taken by the High Court which even otherwise commends to us as the correct view.

7. Consequently, the appeal is dismissed. No costs.

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