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PETITIONER:
STATE OF MAHARASHTRA
Vs.
RESPONDENT:
NATWARLAL DAMODARDAS SONI
DATE OF JUDGMENT04/12/1979
BENCH:
SARKARIA, RANJIT SINGH
BENCH:
SARKARIA, RANJIT SINGH
REDDY, O. CHINNAPPA (J)
CITATION:
1980 AIR 593 1980 SCR (2) 340
CITATOR INFO :
R 1985 SC 989 (15)
ACT:
Code of Civil Procedure-Anti Corruption Bureau seized
smuggled gold from the house of the accused-police-If had no
jurisdiction to take cognizance.
Customs Act, 1962-5. 135-Scope of-Burden of proof that
gold seized is no smuggled gold-on whom rests.
Words and phrases-"Acquired possession" or "Keeping"-
Meaning of.
HEADNOTE:
The Anti-Corruption Bureau of the Police raided the
house of the respondent and recovered gold biscuits with
foreign markings stitched in a jacket lying in a steel trunk
underneath some clothes.
At the time of the raid, the
respondent was not in the house but his wife and mother were
present.
At about the same time the Customs Authorities also
raided his house and took proceedings under the Customs Act,
1962 in respect of the smuggled gold found in the house.
The
respondent, who remained absconding. surrendered to the
police a week thereafter.
At the trial the respondent contended that the gold was
brought into his house by someone and left there ill his
absence and that, therefore, he rad no connection with the
gold. The trial court rejected the respondent’s defence and
convicted him of the offences.
On appeal, the High Court held that the prosecution had
failed to prove that the gold found in the house of the
respondent was gold on which duty had been evaded or the
import of which was prohibited and that for that reason the
further question whether the gold was smuggled gold did not
arise. It also interpreted rule 126H(2)(d) of the Defence of
India Rules 1962 read with Rule 126 P(2) (iv) as confined to
acquiring ownership and not to the more, acquiring of
possession and held that there was no acceptance of gold by
the accused within the meaning of the Rules because not
being present in the house, he had no choice of accepting or
refusing the gold.
In appeal to this court it was contended on behalf of
the respondent that (i) the search of his house and the
seizure of gold by the police was illegal; (ii) that section
123 of the Customs Act was not applicable because the
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seizure was made not by the Customs Authorities but by the
police under the Code- of Criminal Procedure and therefore
the burden of proving the offence lay on the Police which it
did not discharge.
Rejecting the respondent’s contention and allowing the
appeals,
^
HELD: 1. The police had powers under the Code of
Criminal procedure to search and seize the gold if they had
reason to believe that a cognizable offence had been
committed. Assuming that the search was illegal it would
341
not affect either the validity of the seizure and further
investigation by the Customs Authorities or the validity of
the trial which followed on the complaint of the Assistant
Collector of Customs. [344 H]
Radhakishan v. State of U.P. [1963] Supp. 1 S.C.R. 408;
Shyam Lal Sharma & Anr v. The State of Madhya Pradesh,
A.I.R. 1972 S.C. 886; State of Kerala etc. v. Alassery
Mohammed etc. A.I.R. 1978 S.C. 933; W.T. Stone, Warden 74-
1055 v. Lloyd Charles Powell and Charles L. Wolff Jr.
Warden, 74-1222 v. David L. Rice (1976) USSC Bulletin, Vol.
2, B 4840, referred to.
2.(a) The High Court was in error in acquitting the
appellant of the charges under clauses (a) and (b) of
section 135(1) of the Customs Act, 1962. [350 G]
(b) Even if the prosecution could not invoke the
provisions of section 123 of the Customs Act there was
sufficient circumstantial evidence to establish that the
gold was smuggled gold. [346 H]
(c) In order to substantiate a charge under clause (b)
of section 135(1), the prosecution has to prove (i) that the
accused had acquired possession or was in any way concerned
in keeping or concealing the gold bars (ii) that he knew or
had reason to believe that these gold bars were smuggled
goods and thus liable to confiscation under section 111 of
the Customs Act. [347 G]
(d) Even in cases where section 123(1) of the Customs
Act is not attracted the prosecution can discharge its
burden by establishing circumstances from which a prudent
man acting prudently may infer that in all probability the
goods in question were smuggled goods and the accused had
the requisite guilty knowledge in respect thereof. [347 H]
Issardas Daulat Ram and Ors. v. The Union of India
[1962] 1 Supp. S.C.R. 358; Labhchand Dhanpat Singh Jain v.
State of Maharashtra, A.I.R. 1975 S.C. 182; Balumal Jamnadas
Batra v. State of Maharashtra, A.I.R. 1975 S.C. 2083,
referred to.
In the instant case while acquitting the accused the
High Court overlooked several tell-tale circumstances
appearing in evidence which establish that the gold was
smuggled gold namely (a) the gold biscuits bore foreign
markings which proclaimed their foreign origin; (b) they
were of 24 carat purity which was not available in India at
the material time; (c) the gold biscuits were found
concealed stitched in the folds of a jacket specially
prepared for this purpose; (d) the gold biscuits were of
huge value and (e) after the seizure of the gold the accused
absconded and continued to be a fugitive from justice till a
week thereafter. All these circumstances show that the gold
had been smuggled into the country from a foreign country in
contravention of the Foreign Exchange Regulations Act, 1947.
[347 C-E]
(e) The fact whether the gold had been imported with or
without the necessary permission of the Reserve Bank
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India was within the knowledge of the respondent. It was for
him to rebut the inference which arose under section 111 of
the Evidence Act. Once it is established that the respondent
was in conscious possession or "keeping" of the gold it
follows that he had the mens rea requisite under clauses (a)
and (b) of section 135(1) of the Customs Act.
[350 A-B]
342
3. (a) The expression "acquired possession" or
"keeping" in section 135(1) (b) is not to be restricted to
"possession" or keeping acquired as an owner or purchaser of
the goods. Such a narrow construction would defeat the
object of the provisions and undermine their efficacy as
instruments for suppression of the mischief which the
legislature had in view. [350 D]
(b) The expression "acquired possession" is of very
wide amplitude and includes acquisition or possession by a
person in a capacity other than as owner or purchaser. The
clause which is widely worded brings within its fold even
temporary control or custody of a carrier, remover,
depositor, harbourer, keeper or dealer of any goods which he
knows or has reason to believe to be smuggled goods or
prohibited goods (liable to confiscation under section 111).
The expression ’keeping" and "concealing" in the second
phrase of clause (b) also cover the present case.
4. The view of the High Court that rule 126H read with
126P of the Defence of India Rules has no application to
this case on the ground that the respondent did not acquire
possession of the gold biscuits for purchase or otherwise
within the meaning of the Rules would emasculate the
provisions and render them ineffective. These provisions
have to be construed in a manner which will suppress the
mischief and advance the object which the legislature had in
view. [350 E]
Balkrishan Chhaganlal v. State of West Bengal AIR,
1975 S.C. 2083, referred to.
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
231 of 1973.
Appeal by Special Leave from the Judgment and order
dated 13-10-1972 of the Bombay High Court in Crl. A. No.
73/71.
O. P. Rana and M. N. Shroff for the Appellant.
Shiv Pujan Singh (Amicus Curiae) for the Respondent.
The Judgment of the Court was delivered by
SARKARIA, J.-This appeal by special leave is directed
against a judgment dated October 13, 1972, of the High Court
of Bombay.
Natwarlal, respondent herein, was prosecuted in the
Court of the . Presidency Magistrate 2nd Court, Mazgaon,
Bombay, for offences (1) under Section 135(a) read with
Section 135(i) of the Customs Act, 1962, (2) under Section
135(b) read with Section 135(i) of the same Act, and (3)
under Rule 126-H(2) (d) read with Rule 126 P(2) (iv) of the
Defence of India Rules, 1962. The Magistrate convicted him
in respect of these offences and sentenced him to suffer six
months’ rigorous imprisonment and to pay a fine of Rs.
1,000/- on each count. The material facts are as follows .
On March 6, 1968, in consequence of certain information
received by the staff of the Anti-Corruption Bureau, Bombay,
residential pre-
343
mises of the accused-respondent at old Hanuman Lane,
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was searched at about 1 p.m. The respondent himself was not
present at his house, but his wife and mother were present
in the premises at the time of the search. As a result of
the search, the Anti-Corruption Bureau recovered 100 gold
bars, each weighing 10 tolas. These gold bars had foreign
markings and were in the shape of gold biscuits of 24 carats
purity and were found stitched in a cotton jacket, which was
Lying in a steel trunk underneath some clothes. The
prevailing market value of the recovered gold was Rs.
1,85,000. As the search was being completed and the
Panchanama prepared, the Customs Authorities, also raided
the premises. The Anti-Corruption Bureau, however, first
completed its Panchanama and later on a separate Panchanama
was prepared, under which the gold so seized by the Anti
Corruption Bureau was taken possession of by the Customs
Authorities. The case of the prosecution further was that
the respondent remained absconding after this recovery till
March 14, 1968, when he surrendered.
The Customs Authorities, also, took proceedings under
the Customs Act, 1962, and during the course of those
proceedings, recorded the statements of the accused
respondent, his wife, and mother.
At the trial, the accused respondent denied the charge
and claimed lo be tried. He, however, did not dispute the
fact that the gold in question was found from his premises.
Substantially, his defence was that this gold was brought
into his premises by one Jayantilal Salla (P.W. 4) and left
there in his absence. The respondent further pleaded that he
had no connection with this gold. He asserted that if at all
anybody was responsible, it was Jayantilal Salla, who has
been examined as prosecution witness in this case.
The learned Presidency Magistrate by his judgment dated
October 16, 1960, found that the charges had been
established against the respondent. He rejected the defence
story and convicted the respondent as aforesaid.
Aggrieved, the respondent preferred an appeal against
his conviction to the High Court. The appeal was heard by a
learned Single Judge (Vimadlal, J.), who by his judgment,
dated October 13, 1962, allowed the appeal, set aside the
conviction of the respondent and acquitted him. Hence this
appeal by the State of Maharashtra against that acquittal.
The High Court has held "that the prosecution has
failed to prove that the gold found in the house of the
accused was gold on which duty
344
had been evaded, or the import of which was prohibited and,
in that view of the matter, the first and second charges!
framed against the accused must fail, and the further
question as to whether the accused knew that the gold in
question was smuggled gold does not really arise". The High
Court refused to consider the decision of this Court in S.
Banerjee v. S. Agarwal, which was relied upon by the counsel
for the State, with the observation :
"Suffice it to say that the observations in the
majority judgment of Wanchoo. J. in the said case would
apply only if it was in the first instance proved by
the prosecution that the gold in question was smuggled
gold which the prosecution has failed to prove in the
present case."
As regards the third charge under Rule 125-11(2) (d) read
with Rule 126-P(2) (iv) of the Defence of India Rules, 1962,
the High Court held that the prosecution had failed to
establish "that the accused had bought or otherwise acquired
the gold without being a licensed dealer." In its opinion,
the aforesaid Rules must be interpreted as being confined tohttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10
acquiring of ownership and not to the mere acquiring of
possession. It further held that there was no "acceptance"
of gold by the accused within the meaning of Rule 126-P(2)
of the Defence of India Rules, 1962, because the accused
being away from home, had no choice of accepting or refusing
the same.
As before the trial court, here also, learned counsel
appearing for the respondent, contends that the search and
seizure by the police of the gold from the house of the
respondent, was illegal, that the information on the basis
of which the police conducted the search was not produced;
and that this illegality had vitiated the trial that
followed. In the alternative, counsel submits that Section
123 of the Customs Act, which places the burden on the
accused-person to show that seized goods are not smuggled
gold, was not applicable in the present case, because the
seizure of the gold was not made by, the Customs Authorities
under the Customs Act, 1962, but by the Police under the
Code of Criminal Procedure. This being the case-proceeds the
argument the burden lay heavily on the prosecution to prove
every ingredient of the offences with which the accused
stood charged. It is maintained that the prosecution had
miserably failed to produce any evidence to show that the
gold in question was smuggled gold.
Taking the first contention first, it may be observed
that the police had powers under the Code of Criminal
Procedure to search and seize this gold if they had reason
to believe that a cognizable offence
345
had been committed in respect thereof. Assuming arguendo,
that the search was illegal, then also, it will not affect
the validity of the seizure and further investigation by the
Customs Authorities or the validity of the trial which
followed on the complaint of the Assistant Collector of
Customs
In Radhakrishan v. State of U.P. the appellant was a
postman. He and his father were living in the same house.
Certain undelivered postal articles were recovered from an
almirah in the house, the key of which was produced by the
father. The appellant, Radhakishan was tried and convicted
of an offence under s. 52 of the Post offices Act, for
secreting postal articles. One of the contentions raised on
behalf of the appellant was that the search and seizure was
illegal inasmuch, as it was in contravention of the
provisions of Sections 103 and 105 of the Code of Criminal
Procedure. Mudholkar, J. speaking for the Court, repelled
this contention, thus:
"So far as the alleged illegality of the search is
concern ed, it is sufficient to say that even assuming
that the search was illegal the seizure of the articles
is not vitiated. It may be that where the provisions of
ss. 103 and 165, Code of Criminal Procedure, are
contravened the search could be resisted by the person
whose premises are sought to be searched. It may also
be that because of the illegality of the search the
Court may be inclined to examine carefully the evidence
regarding the seizure. But beyond these two
consequences no further consequence ensues."
These observations apply aptly to the instant case.
Again, in Shyam Lal Sharma & Anr. v. The State of
Madhya Pradesh, Jaganmohan Reddy, J., delivering the opinion
of the Bench, held that even if the search is illegal being
in contravention with the requirements of Section 165,
Criminal Procedure Code, 1898, that provision ceases to have
any application to the subsequent steps in thehttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10
investigation.
In State of Kerala etc. v. Alasserry Mohammed etc.,
question arose, whether the failure on the part of the Food
Inspector to comply strictly with the statutory provisions,
would vitiate the trial and conviction of the respondent ?
This Court answered this question in
346
the negative, and referred with approval to the decision,
dated July 6, 1976, in W.T. Stone, Warden, 74-1055 v. Lloyd
Charles Powell and Charles L. Wolff Jr. Warden, 74-1222 v.
David L. Rice, wherein the Supreme Court of the United
States of America made a clear departure from its previous
decision in the application of the exclusionary rule of
evidence. The prosecution in those cases relied upon the
evidence of search and seizure, which were said to be
unconstitutional and unlawful. Mr. Justice Powell, who
delivered the leading majority judgment, made these
pertinent observations:
"Upon examination, we conclude, in light of tile
nature and purpose of the Fourth Amendment exclusionary
rule, that this view is unjustified. We hold,
therefore, that where the State has provided an
opportunity for full and fair litigation of a Fourth
Amendment claim, the Constitution does not require that
a State prisoner be granted federal habeas corpus
relief on the ground that evidence obtained in an
unconstitutional search or seizure was introduced at
his trial."
In his concurring opinion, Chief Justice Burger highlighted
the injustice that often resulted from application of the
exclusionary rule. Said the learned Chief Justice:
"To vindicate the continued existence of this
judge-made rule, it is incumbent upon those who seek
its retention-and surely its extension-to demonstrate
that it serves its declared deterrent purpose and to
show that the results outweigh the rule’s heavy costs
to rational enforcement of the Criminal Law See. e.g.
Killough v. United States, [315 F 2d 241 (1962)]. The
burden rightly rests upon those who ask society to
ignore trustworthy evidence of guilt, at the expense of
setting obviously guilty criminals free to ply their
trade."
What has been said above is more than enough to show
that the first contention raised on behalf of, the
respondent is devoid of merit.
As regards the second contention canvassed by Shri Shiv
Pujan Singh, we would say that even if the prosecution
cannot invoke the provisions of Section 123. Customs Act, to
lighten the burden cast on it, there is sufficient
circumstantial evidence to establish that the gold in
question was smuggled gold. Before dealing with that
evidence, it will be useful to notice the relevant
provisions relating to the charges against the respondent.
347
First, we take up the charges under Section 135 of the
Customs Act, A 1962. The material part of that Section reads
as under:
"135.(t) 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
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(b) acquires possession of or is in any way
concerned in carrying. removing, depositing,
harbouring, keeping, concealing, selling or purchasing
or in any other manner dealing with any goods which he
knows or has reason to believe are liable to
confiscation under Section 111,
he shall be punishable,-
(i) in the case of an offence relating to any of
the goods to which Section 123 applies and the market
price whereof exceeds one lakh of rupees, with
imprisonment for a term which may extend to seven years
and with fine .
Provided that in the absence of special and
adequate reasons to the contrary to be recorded in the
judgment of the court, such imprisonment shall not be
less than one year;
(ii) in any other case, with imprisonment for a
term which may extend to three years, or with fine, or
with both".
Section 111 enumerates the categories of goods which are
imported into India and are liable to confiscation. Broadly
speaking, these categories relate to goods which are
smuggled into India.
The requisite guilty knowledge or mens rea under
clauses (a) and (b) of Section 135(1) can be established by
circumstantial evidence, also. In order to substantiate the
charge under clause (b) against the respondent, the
prosecution had to prove (i) that he had acquired possession
of or was in any way concerned in keeping or concealing the
gold bars; (ii) that he knew or had reason to believe that
these gold bars were smuggled goods, and thus liable to
confiscation under Section 1 t l of the Customs Act.
It is trite law that even in cases where Section 123(1)
of the Customs Act is not attracted, the prosecution can
discharge its burden by establishing circumstances from
which a prudent man, acting pru-
348
dently, may infer that in all probability the goods in
question were smuggled goods, and the accused had the
requisite guilty knowledge in respect thereof. The leading
case is: Issardas Daulat Ram and ors. v. The Union of India
& ors. In that case, in reaching the conclusion that the
gold had been smuggled, the Collector of Customs considered
the credibility of the story put forward by the appellant
about the purchase of the gold and also the conduct of the
appellant in trying to get the gold melted so as to reduce
its fineness by mixing silver with it, in an attempt to
approximate the resultant product to licit gold found in the
market. The ratio of this decision was followed by this
Court in Labhchand Dhanpat Singh Jain v. State of
Maharashtra: The appellant-accused therein was trying to
enter the Railway compartment at Bombay Station. Seeing his
nervousness, the Rail way police questioned him and searched
his person and recovered nine bars of gold with foreign
markings. The accused put forward an incredible story with
regard to the possession of the gold. This Court held, that
in the circumstances of the case, an inference could very
well be drawn that the gold must have been imported after
the law passed in 1948, restricting its entry; that the
burden of proving an innocent receipt of gold lay upon the
appellant under Section- 106, Evidence Act and that the
totality of facts proved is enough to raise a presumption
under Section 114, Evidence Act that the gold had been
illegally imported into the country, so as to be covered by
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It is to be noted that in Labhchand’s case (ibid).
Section 123 of the Customs Act was not applicable, as the
seizure of the gold was by the police and not by the Customs
officer. The Courts in that case did not use this
presumption under Section 123 of the Evidence Act against
the appellant. They relied upon the circumstantial evidence
to raise the necessary inference with regard to the
character of the gold seized and the possession of the
requisite mens rea by the accused. The ratio of Labhchand’s
case (ibid) applies a fortiori to the facts of the case
before us.
In Balumal Jamnadas Batra v. State of Maharasthra a
Bench of this Court to which one of us (Sarkaria J.) was a
party, eleven boxes were seized by the Police from Room No.
10 at Sheriff Deoji Street, Bombay. On opening the boxes,
goods bearing foreign markings such as "Made in Germany",
were found. A rent receipt in the name of the accused in
respect of Room No. 10, in the occupation of the accused
349
was also recovered. It was held by this Court, that even if
the goods A bearing foreign markings, were not seized under
the Customs Act, and as such Section 123(1) of the Act was
not attracted, the aforementioned circumstances, under
Section 114 read with Section 106 of the Evidence Act were
sufficient to presume that the accused knew that the goods
had been smuggled or imported in contravention of law.
In the instant case while holding that the respondent
was in conscious possession of the gold bars in question,
the High Court has acquitted him only on the ground that the
prosecution had failed to prove that the gold in question
had been imported after 1947 without the necessary
permission of the Reserve Bank, or without payment of duty
and that the further question as to whether the accused knew
that it was smuggled gold "does not really arise". With this
reasoning the High Court acquitted the respondent on the
first two charges under Section 135 of the Customs Act. The
High Court overlooked several tell-tale circumstances
appearing in evidence which unerringly pointed to the
conclusion that the gold if question was smuggled gold.
These circumstances are. (a) the gold biscuits in question
bore foreign markings which proclaimed their foreign origin.
(b) This gold was of 24 carat purity which was not available
in India at the material time. This circumstance reinforce
the inference of its being smuggled gold. (c) These gold
biscuits were found concealed and stitched in the folds of a
jacket specially prepared for this purpose. (d) The gold,
was in the shape of gold biscuits and was of huge value,
which at the then prevailing market rate was Rs. 1,85,000.
(e) After the seizure of this gold the accused absconded and
continued to be a fugitive from justice till March 14, 1962.
The circumstances catalogued above irresistibly read to
the conclusion that the gold in question is smuggled gold,
having been recently brought into India from a foreign
country without payment of duty, and further it had been
brought into India in contravention of the Notification
dated March 25, 1947 issued by the Central Government under
Section 8(1) of Foreign Exchange Regulation Act, 1947
prohibiting the import into India gold without the
permission of the Reserve Bank. As already noticed, this
gold was in the shape of biscuits of 24 carat purity and
bore foreign markings. The accused respondent-as held by the
courts below-was found in conscious ’possession’ or
’keeping’ of this gold of foreign origin about 15 years
after its import into India had been banned Therefore, it
was for the accused respondenthttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10
350
to show that it had been brought into India-with the
permission of the Reserve Bank. The existence of this fact
viz., whether it had been imported with or without the
necessary permission of the Reserve Bank, was matter within
the peculiar knowledge of the accused-respondent. It was,
therefore, for the accused to rebut the inference which
arose under Section 114, Evidence] Act from the surrounding
circumstances of the case, that it was contraband gold,
smuggled into India. Once it is held that the accused was in
conscious possession or "keeping" of this smuggled gold, it
will follow as a necessary corollary therefrom that he had
the mens rea requisite under clauses (a) and (b) of Section
135(1). It may be remembered that smuggling, particularly
of gold, into India affects the public economy and financial
stability of the country. The provisions of Section 135 (1)
and like statutes which are designed to suppress smuggling
have to be construed in accordance with the Mischief Rule
first enunciated in Heydons case. Accordingly the words
"acquires possession" or keeping" in clause (b) of Section
135(l) are not to be restricted to "possession" or "keeping"
acquired as an owner or a purchaser of the goods. Such a
narrow construction-which has been erroneously adopted by
the High Court-in our opinion, would defeat the object of
these provisions and undermine their efficacy as instruments
for suppression of the mischief which the Legislature had in
view. Construed in consonance with the scheme of the
statute, the purpose of these provisions and the context,
the expression "acquires possession" is of very wide
amplitude and will certainly include the acquisition of
possession by a person in a capacity other than as owner or
purchaser. This expression takes its colour from the
succeeding phrase commencing with the word "or" which is so
widely worded that even the temporary control or custody of
a carrier, remover, depositor, harbourer, keeper, or dealer
of any goods which he knows or has reason to believe to be
smuggled goods or prohibited goods (liable to confiscation
under Section 111) cannot escape the tentacles of clause
(b). The expressions "keeping" and "concealing" in the
second phrase of clause (b) also cover the present case.
From the above discussion, it is clear that the High
Court was in error in acquitting the appellant of the
charges under Section 135(1), (a) & (b) of the Customs Act.
This takes us to the charge under Rule 126H(2) (d) read
with Rule 126P(2)(iv) of the Defence of India Rules, 1962.
These Rules so far as material for our purpose, may be
extracted as under:
351
"126H(2). Save as otherwise provided in this Part,-
(d) no person other than a dealer licensed under
this Part shall buy or otherwise acquire or agree to
buy or otherwise acquire, gold, not being ornament,
except,
(i) by succession, intestate or testamentary or .
(ii) in accordance with a permit granted by the
Board in this behalf."
"126P(2) . Whoever,-
(ii) has in his possession or under his control
any quantity of gold in Contravention of any
provision of this Part;
(iv) buys, or otherwise acquires, or accepts gold
in contravention of any provision of this
Part,
shall be punishable with imprisonment for a term of not
less than six months and not more than two years andhttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10
also with fine."
The High Court has held that these Rules do not apply
because the accused respondent had not acquired possession
of these gold biscuits by purchase or otherwise within the
meaning of these Rules. Such a narrow construction of this
expression, in our opinion, will emasculate these provisions
and render them ineffective as a weapon for combating gold
smuggling. As was pointed out by this Court in Balakrishna
Chhaganlal v. State of West Bengal; Rule 126P(2) (ii)
penalises a person who has in his possession or under his
control any quantity of gold in contravention of any
provision of this! Part, and the Court can not cut back on
the width of the language used, bearing in mind the purpose
of plenary control the State wanted to impose on gold, and
exempt smuggled gold from the expression any quantity of
gold" in that sub-rule. These provisions have, therefore, to
be specially cons trued in a manner which will suppress the
mischief and advance the object which the Legislature had in
view. The High Court was, in error in adopting too narrow a
construction which tends to stultify the law. The second
charge thus had been fully established against the
respondent.
Mr. Shiv Pujan Singh, for the respondent, submits that
this prosecution has been brooding over the head of the
respondent for morel than eleven years and that the arch
criminal who was the owner of the gold biscuits in question
has escaped making the respondent a scapegoat It
352
is stressed that the accused is a first offender and he
should be released on probation.
Undoubtedly, this long delay is a factor which should
along with the other circumstances, be taken into account in
mitigation of the sentence. Even so, in a case of gold
smuggling we are loath to accord to the accused, found
guilty, the benefit of the Probation of Offenders Act.
Smuggling of gold not only affects public, revenues and
public economy but often escaped detection.
For the foregoing reasons, we allow this appeal, set
aside the acquittal of the accused, Natwarlal Damodardas
Soni, and convict him under Section 135(1) (a)&(b) .
However, taking into account all the circumstances of the
case, particularly the fact that these criminal proceedings,
like sword of damocles, have been hanging over the head of
the respondent for more than eleven years, we sentence him
cumulatively on these two counts, to six months imprisonment
and a fine of Rs. 2,000, and in default, to suffer four
months further Imprisonment. We further convict him under
Rule 126P(2) of the Defence of India Rules, 1962 and
sentence him to six months rigorous imprisonment. The
sentence on all the counts shall run concurrently. The bail
of the accused-respondent is cancelled. He must surrender to
serve out the sentence inflicted on him.
P.B.R Appeal allowed.
353
PETITIONER:
STATE OF MAHARASHTRA
Vs.
RESPONDENT:
NATWARLAL DAMODARDAS SONI
DATE OF JUDGMENT04/12/1979
BENCH:
SARKARIA, RANJIT SINGH
BENCH:
SARKARIA, RANJIT SINGH
REDDY, O. CHINNAPPA (J)
CITATION:
1980 AIR 593 1980 SCR (2) 340
CITATOR INFO :
R 1985 SC 989 (15)
ACT:
Code of Civil Procedure-Anti Corruption Bureau seized
smuggled gold from the house of the accused-police-If had no
jurisdiction to take cognizance.
Customs Act, 1962-5. 135-Scope of-Burden of proof that
gold seized is no smuggled gold-on whom rests.
Words and phrases-"Acquired possession" or "Keeping"-
Meaning of.
HEADNOTE:
The Anti-Corruption Bureau of the Police raided the
house of the respondent and recovered gold biscuits with
foreign markings stitched in a jacket lying in a steel trunk
underneath some clothes.
At the time of the raid, the
respondent was not in the house but his wife and mother were
present.
At about the same time the Customs Authorities also
raided his house and took proceedings under the Customs Act,
1962 in respect of the smuggled gold found in the house.
The
respondent, who remained absconding. surrendered to the
police a week thereafter.
At the trial the respondent contended that the gold was
brought into his house by someone and left there ill his
absence and that, therefore, he rad no connection with the
gold. The trial court rejected the respondent’s defence and
convicted him of the offences.
On appeal, the High Court held that the prosecution had
failed to prove that the gold found in the house of the
respondent was gold on which duty had been evaded or the
import of which was prohibited and that for that reason the
further question whether the gold was smuggled gold did not
arise. It also interpreted rule 126H(2)(d) of the Defence of
India Rules 1962 read with Rule 126 P(2) (iv) as confined to
acquiring ownership and not to the more, acquiring of
possession and held that there was no acceptance of gold by
the accused within the meaning of the Rules because not
being present in the house, he had no choice of accepting or
refusing the gold.
In appeal to this court it was contended on behalf of
the respondent that (i) the search of his house and the
seizure of gold by the police was illegal; (ii) that section
123 of the Customs Act was not applicable because the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10
seizure was made not by the Customs Authorities but by the
police under the Code- of Criminal Procedure and therefore
the burden of proving the offence lay on the Police which it
did not discharge.
Rejecting the respondent’s contention and allowing the
appeals,
^
HELD: 1. The police had powers under the Code of
Criminal procedure to search and seize the gold if they had
reason to believe that a cognizable offence had been
committed. Assuming that the search was illegal it would
341
not affect either the validity of the seizure and further
investigation by the Customs Authorities or the validity of
the trial which followed on the complaint of the Assistant
Collector of Customs. [344 H]
Radhakishan v. State of U.P. [1963] Supp. 1 S.C.R. 408;
Shyam Lal Sharma & Anr v. The State of Madhya Pradesh,
A.I.R. 1972 S.C. 886; State of Kerala etc. v. Alassery
Mohammed etc. A.I.R. 1978 S.C. 933; W.T. Stone, Warden 74-
1055 v. Lloyd Charles Powell and Charles L. Wolff Jr.
Warden, 74-1222 v. David L. Rice (1976) USSC Bulletin, Vol.
2, B 4840, referred to.
2.(a) The High Court was in error in acquitting the
appellant of the charges under clauses (a) and (b) of
section 135(1) of the Customs Act, 1962. [350 G]
(b) Even if the prosecution could not invoke the
provisions of section 123 of the Customs Act there was
sufficient circumstantial evidence to establish that the
gold was smuggled gold. [346 H]
(c) In order to substantiate a charge under clause (b)
of section 135(1), the prosecution has to prove (i) that the
accused had acquired possession or was in any way concerned
in keeping or concealing the gold bars (ii) that he knew or
had reason to believe that these gold bars were smuggled
goods and thus liable to confiscation under section 111 of
the Customs Act. [347 G]
(d) Even in cases where section 123(1) of the Customs
Act is not attracted the prosecution can discharge its
burden by establishing circumstances from which a prudent
man acting prudently may infer that in all probability the
goods in question were smuggled goods and the accused had
the requisite guilty knowledge in respect thereof. [347 H]
Issardas Daulat Ram and Ors. v. The Union of India
[1962] 1 Supp. S.C.R. 358; Labhchand Dhanpat Singh Jain v.
State of Maharashtra, A.I.R. 1975 S.C. 182; Balumal Jamnadas
Batra v. State of Maharashtra, A.I.R. 1975 S.C. 2083,
referred to.
In the instant case while acquitting the accused the
High Court overlooked several tell-tale circumstances
appearing in evidence which establish that the gold was
smuggled gold namely (a) the gold biscuits bore foreign
markings which proclaimed their foreign origin; (b) they
were of 24 carat purity which was not available in India at
the material time; (c) the gold biscuits were found
concealed stitched in the folds of a jacket specially
prepared for this purpose; (d) the gold biscuits were of
huge value and (e) after the seizure of the gold the accused
absconded and continued to be a fugitive from justice till a
week thereafter. All these circumstances show that the gold
had been smuggled into the country from a foreign country in
contravention of the Foreign Exchange Regulations Act, 1947.
[347 C-E]
(e) The fact whether the gold had been imported with or
without the necessary permission of the Reserve Bank
ofhttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10
India was within the knowledge of the respondent. It was for
him to rebut the inference which arose under section 111 of
the Evidence Act. Once it is established that the respondent
was in conscious possession or "keeping" of the gold it
follows that he had the mens rea requisite under clauses (a)
and (b) of section 135(1) of the Customs Act.
[350 A-B]
342
3. (a) The expression "acquired possession" or
"keeping" in section 135(1) (b) is not to be restricted to
"possession" or keeping acquired as an owner or purchaser of
the goods. Such a narrow construction would defeat the
object of the provisions and undermine their efficacy as
instruments for suppression of the mischief which the
legislature had in view. [350 D]
(b) The expression "acquired possession" is of very
wide amplitude and includes acquisition or possession by a
person in a capacity other than as owner or purchaser. The
clause which is widely worded brings within its fold even
temporary control or custody of a carrier, remover,
depositor, harbourer, keeper or dealer of any goods which he
knows or has reason to believe to be smuggled goods or
prohibited goods (liable to confiscation under section 111).
The expression ’keeping" and "concealing" in the second
phrase of clause (b) also cover the present case.
4. The view of the High Court that rule 126H read with
126P of the Defence of India Rules has no application to
this case on the ground that the respondent did not acquire
possession of the gold biscuits for purchase or otherwise
within the meaning of the Rules would emasculate the
provisions and render them ineffective. These provisions
have to be construed in a manner which will suppress the
mischief and advance the object which the legislature had in
view. [350 E]
Balkrishan Chhaganlal v. State of West Bengal AIR,
1975 S.C. 2083, referred to.
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
231 of 1973.
Appeal by Special Leave from the Judgment and order
dated 13-10-1972 of the Bombay High Court in Crl. A. No.
73/71.
O. P. Rana and M. N. Shroff for the Appellant.
Shiv Pujan Singh (Amicus Curiae) for the Respondent.
The Judgment of the Court was delivered by
SARKARIA, J.-This appeal by special leave is directed
against a judgment dated October 13, 1972, of the High Court
of Bombay.
Natwarlal, respondent herein, was prosecuted in the
Court of the . Presidency Magistrate 2nd Court, Mazgaon,
Bombay, for offences (1) under Section 135(a) read with
Section 135(i) of the Customs Act, 1962, (2) under Section
135(b) read with Section 135(i) of the same Act, and (3)
under Rule 126-H(2) (d) read with Rule 126 P(2) (iv) of the
Defence of India Rules, 1962. The Magistrate convicted him
in respect of these offences and sentenced him to suffer six
months’ rigorous imprisonment and to pay a fine of Rs.
1,000/- on each count. The material facts are as follows .
On March 6, 1968, in consequence of certain information
received by the staff of the Anti-Corruption Bureau, Bombay,
residential pre-
343
mises of the accused-respondent at old Hanuman Lane,
Bombayhttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10
was searched at about 1 p.m. The respondent himself was not
present at his house, but his wife and mother were present
in the premises at the time of the search. As a result of
the search, the Anti-Corruption Bureau recovered 100 gold
bars, each weighing 10 tolas. These gold bars had foreign
markings and were in the shape of gold biscuits of 24 carats
purity and were found stitched in a cotton jacket, which was
Lying in a steel trunk underneath some clothes. The
prevailing market value of the recovered gold was Rs.
1,85,000. As the search was being completed and the
Panchanama prepared, the Customs Authorities, also raided
the premises. The Anti-Corruption Bureau, however, first
completed its Panchanama and later on a separate Panchanama
was prepared, under which the gold so seized by the Anti
Corruption Bureau was taken possession of by the Customs
Authorities. The case of the prosecution further was that
the respondent remained absconding after this recovery till
March 14, 1968, when he surrendered.
The Customs Authorities, also, took proceedings under
the Customs Act, 1962, and during the course of those
proceedings, recorded the statements of the accused
respondent, his wife, and mother.
At the trial, the accused respondent denied the charge
and claimed lo be tried. He, however, did not dispute the
fact that the gold in question was found from his premises.
Substantially, his defence was that this gold was brought
into his premises by one Jayantilal Salla (P.W. 4) and left
there in his absence. The respondent further pleaded that he
had no connection with this gold. He asserted that if at all
anybody was responsible, it was Jayantilal Salla, who has
been examined as prosecution witness in this case.
The learned Presidency Magistrate by his judgment dated
October 16, 1960, found that the charges had been
established against the respondent. He rejected the defence
story and convicted the respondent as aforesaid.
Aggrieved, the respondent preferred an appeal against
his conviction to the High Court. The appeal was heard by a
learned Single Judge (Vimadlal, J.), who by his judgment,
dated October 13, 1962, allowed the appeal, set aside the
conviction of the respondent and acquitted him. Hence this
appeal by the State of Maharashtra against that acquittal.
The High Court has held "that the prosecution has
failed to prove that the gold found in the house of the
accused was gold on which duty
344
had been evaded, or the import of which was prohibited and,
in that view of the matter, the first and second charges!
framed against the accused must fail, and the further
question as to whether the accused knew that the gold in
question was smuggled gold does not really arise". The High
Court refused to consider the decision of this Court in S.
Banerjee v. S. Agarwal, which was relied upon by the counsel
for the State, with the observation :
"Suffice it to say that the observations in the
majority judgment of Wanchoo. J. in the said case would
apply only if it was in the first instance proved by
the prosecution that the gold in question was smuggled
gold which the prosecution has failed to prove in the
present case."
As regards the third charge under Rule 125-11(2) (d) read
with Rule 126-P(2) (iv) of the Defence of India Rules, 1962,
the High Court held that the prosecution had failed to
establish "that the accused had bought or otherwise acquired
the gold without being a licensed dealer." In its opinion,
the aforesaid Rules must be interpreted as being confined tohttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10
acquiring of ownership and not to the mere acquiring of
possession. It further held that there was no "acceptance"
of gold by the accused within the meaning of Rule 126-P(2)
of the Defence of India Rules, 1962, because the accused
being away from home, had no choice of accepting or refusing
the same.
As before the trial court, here also, learned counsel
appearing for the respondent, contends that the search and
seizure by the police of the gold from the house of the
respondent, was illegal, that the information on the basis
of which the police conducted the search was not produced;
and that this illegality had vitiated the trial that
followed. In the alternative, counsel submits that Section
123 of the Customs Act, which places the burden on the
accused-person to show that seized goods are not smuggled
gold, was not applicable in the present case, because the
seizure of the gold was not made by, the Customs Authorities
under the Customs Act, 1962, but by the Police under the
Code of Criminal Procedure. This being the case-proceeds the
argument the burden lay heavily on the prosecution to prove
every ingredient of the offences with which the accused
stood charged. It is maintained that the prosecution had
miserably failed to produce any evidence to show that the
gold in question was smuggled gold.
Taking the first contention first, it may be observed
that the police had powers under the Code of Criminal
Procedure to search and seize this gold if they had reason
to believe that a cognizable offence
345
had been committed in respect thereof. Assuming arguendo,
that the search was illegal, then also, it will not affect
the validity of the seizure and further investigation by the
Customs Authorities or the validity of the trial which
followed on the complaint of the Assistant Collector of
Customs
In Radhakrishan v. State of U.P. the appellant was a
postman. He and his father were living in the same house.
Certain undelivered postal articles were recovered from an
almirah in the house, the key of which was produced by the
father. The appellant, Radhakishan was tried and convicted
of an offence under s. 52 of the Post offices Act, for
secreting postal articles. One of the contentions raised on
behalf of the appellant was that the search and seizure was
illegal inasmuch, as it was in contravention of the
provisions of Sections 103 and 105 of the Code of Criminal
Procedure. Mudholkar, J. speaking for the Court, repelled
this contention, thus:
"So far as the alleged illegality of the search is
concern ed, it is sufficient to say that even assuming
that the search was illegal the seizure of the articles
is not vitiated. It may be that where the provisions of
ss. 103 and 165, Code of Criminal Procedure, are
contravened the search could be resisted by the person
whose premises are sought to be searched. It may also
be that because of the illegality of the search the
Court may be inclined to examine carefully the evidence
regarding the seizure. But beyond these two
consequences no further consequence ensues."
These observations apply aptly to the instant case.
Again, in Shyam Lal Sharma & Anr. v. The State of
Madhya Pradesh, Jaganmohan Reddy, J., delivering the opinion
of the Bench, held that even if the search is illegal being
in contravention with the requirements of Section 165,
Criminal Procedure Code, 1898, that provision ceases to have
any application to the subsequent steps in thehttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10
investigation.
In State of Kerala etc. v. Alasserry Mohammed etc.,
question arose, whether the failure on the part of the Food
Inspector to comply strictly with the statutory provisions,
would vitiate the trial and conviction of the respondent ?
This Court answered this question in
346
the negative, and referred with approval to the decision,
dated July 6, 1976, in W.T. Stone, Warden, 74-1055 v. Lloyd
Charles Powell and Charles L. Wolff Jr. Warden, 74-1222 v.
David L. Rice, wherein the Supreme Court of the United
States of America made a clear departure from its previous
decision in the application of the exclusionary rule of
evidence. The prosecution in those cases relied upon the
evidence of search and seizure, which were said to be
unconstitutional and unlawful. Mr. Justice Powell, who
delivered the leading majority judgment, made these
pertinent observations:
"Upon examination, we conclude, in light of tile
nature and purpose of the Fourth Amendment exclusionary
rule, that this view is unjustified. We hold,
therefore, that where the State has provided an
opportunity for full and fair litigation of a Fourth
Amendment claim, the Constitution does not require that
a State prisoner be granted federal habeas corpus
relief on the ground that evidence obtained in an
unconstitutional search or seizure was introduced at
his trial."
In his concurring opinion, Chief Justice Burger highlighted
the injustice that often resulted from application of the
exclusionary rule. Said the learned Chief Justice:
"To vindicate the continued existence of this
judge-made rule, it is incumbent upon those who seek
its retention-and surely its extension-to demonstrate
that it serves its declared deterrent purpose and to
show that the results outweigh the rule’s heavy costs
to rational enforcement of the Criminal Law See. e.g.
Killough v. United States, [315 F 2d 241 (1962)]. The
burden rightly rests upon those who ask society to
ignore trustworthy evidence of guilt, at the expense of
setting obviously guilty criminals free to ply their
trade."
What has been said above is more than enough to show
that the first contention raised on behalf of, the
respondent is devoid of merit.
As regards the second contention canvassed by Shri Shiv
Pujan Singh, we would say that even if the prosecution
cannot invoke the provisions of Section 123. Customs Act, to
lighten the burden cast on it, there is sufficient
circumstantial evidence to establish that the gold in
question was smuggled gold. Before dealing with that
evidence, it will be useful to notice the relevant
provisions relating to the charges against the respondent.
347
First, we take up the charges under Section 135 of the
Customs Act, A 1962. The material part of that Section reads
as under:
"135.(t) 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, orhttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10
(b) acquires possession of or is in any way
concerned in carrying. removing, depositing,
harbouring, keeping, concealing, selling or purchasing
or in any other manner dealing with any goods which he
knows or has reason to believe are liable to
confiscation under Section 111,
he shall be punishable,-
(i) in the case of an offence relating to any of
the goods to which Section 123 applies and the market
price whereof exceeds one lakh of rupees, with
imprisonment for a term which may extend to seven years
and with fine .
Provided that in the absence of special and
adequate reasons to the contrary to be recorded in the
judgment of the court, such imprisonment shall not be
less than one year;
(ii) in any other case, with imprisonment for a
term which may extend to three years, or with fine, or
with both".
Section 111 enumerates the categories of goods which are
imported into India and are liable to confiscation. Broadly
speaking, these categories relate to goods which are
smuggled into India.
The requisite guilty knowledge or mens rea under
clauses (a) and (b) of Section 135(1) can be established by
circumstantial evidence, also. In order to substantiate the
charge under clause (b) against the respondent, the
prosecution had to prove (i) that he had acquired possession
of or was in any way concerned in keeping or concealing the
gold bars; (ii) that he knew or had reason to believe that
these gold bars were smuggled goods, and thus liable to
confiscation under Section 1 t l of the Customs Act.
It is trite law that even in cases where Section 123(1)
of the Customs Act is not attracted, the prosecution can
discharge its burden by establishing circumstances from
which a prudent man, acting pru-
348
dently, may infer that in all probability the goods in
question were smuggled goods, and the accused had the
requisite guilty knowledge in respect thereof. The leading
case is: Issardas Daulat Ram and ors. v. The Union of India
& ors. In that case, in reaching the conclusion that the
gold had been smuggled, the Collector of Customs considered
the credibility of the story put forward by the appellant
about the purchase of the gold and also the conduct of the
appellant in trying to get the gold melted so as to reduce
its fineness by mixing silver with it, in an attempt to
approximate the resultant product to licit gold found in the
market. The ratio of this decision was followed by this
Court in Labhchand Dhanpat Singh Jain v. State of
Maharashtra: The appellant-accused therein was trying to
enter the Railway compartment at Bombay Station. Seeing his
nervousness, the Rail way police questioned him and searched
his person and recovered nine bars of gold with foreign
markings. The accused put forward an incredible story with
regard to the possession of the gold. This Court held, that
in the circumstances of the case, an inference could very
well be drawn that the gold must have been imported after
the law passed in 1948, restricting its entry; that the
burden of proving an innocent receipt of gold lay upon the
appellant under Section- 106, Evidence Act and that the
totality of facts proved is enough to raise a presumption
under Section 114, Evidence Act that the gold had been
illegally imported into the country, so as to be covered by
Section 111(d) of the Customs Act.http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10
It is to be noted that in Labhchand’s case (ibid).
Section 123 of the Customs Act was not applicable, as the
seizure of the gold was by the police and not by the Customs
officer. The Courts in that case did not use this
presumption under Section 123 of the Evidence Act against
the appellant. They relied upon the circumstantial evidence
to raise the necessary inference with regard to the
character of the gold seized and the possession of the
requisite mens rea by the accused. The ratio of Labhchand’s
case (ibid) applies a fortiori to the facts of the case
before us.
In Balumal Jamnadas Batra v. State of Maharasthra a
Bench of this Court to which one of us (Sarkaria J.) was a
party, eleven boxes were seized by the Police from Room No.
10 at Sheriff Deoji Street, Bombay. On opening the boxes,
goods bearing foreign markings such as "Made in Germany",
were found. A rent receipt in the name of the accused in
respect of Room No. 10, in the occupation of the accused
349
was also recovered. It was held by this Court, that even if
the goods A bearing foreign markings, were not seized under
the Customs Act, and as such Section 123(1) of the Act was
not attracted, the aforementioned circumstances, under
Section 114 read with Section 106 of the Evidence Act were
sufficient to presume that the accused knew that the goods
had been smuggled or imported in contravention of law.
In the instant case while holding that the respondent
was in conscious possession of the gold bars in question,
the High Court has acquitted him only on the ground that the
prosecution had failed to prove that the gold in question
had been imported after 1947 without the necessary
permission of the Reserve Bank, or without payment of duty
and that the further question as to whether the accused knew
that it was smuggled gold "does not really arise". With this
reasoning the High Court acquitted the respondent on the
first two charges under Section 135 of the Customs Act. The
High Court overlooked several tell-tale circumstances
appearing in evidence which unerringly pointed to the
conclusion that the gold if question was smuggled gold.
These circumstances are. (a) the gold biscuits in question
bore foreign markings which proclaimed their foreign origin.
(b) This gold was of 24 carat purity which was not available
in India at the material time. This circumstance reinforce
the inference of its being smuggled gold. (c) These gold
biscuits were found concealed and stitched in the folds of a
jacket specially prepared for this purpose. (d) The gold,
was in the shape of gold biscuits and was of huge value,
which at the then prevailing market rate was Rs. 1,85,000.
(e) After the seizure of this gold the accused absconded and
continued to be a fugitive from justice till March 14, 1962.
The circumstances catalogued above irresistibly read to
the conclusion that the gold in question is smuggled gold,
having been recently brought into India from a foreign
country without payment of duty, and further it had been
brought into India in contravention of the Notification
dated March 25, 1947 issued by the Central Government under
Section 8(1) of Foreign Exchange Regulation Act, 1947
prohibiting the import into India gold without the
permission of the Reserve Bank. As already noticed, this
gold was in the shape of biscuits of 24 carat purity and
bore foreign markings. The accused respondent-as held by the
courts below-was found in conscious ’possession’ or
’keeping’ of this gold of foreign origin about 15 years
after its import into India had been banned Therefore, it
was for the accused respondenthttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10
350
to show that it had been brought into India-with the
permission of the Reserve Bank. The existence of this fact
viz., whether it had been imported with or without the
necessary permission of the Reserve Bank, was matter within
the peculiar knowledge of the accused-respondent. It was,
therefore, for the accused to rebut the inference which
arose under Section 114, Evidence] Act from the surrounding
circumstances of the case, that it was contraband gold,
smuggled into India. Once it is held that the accused was in
conscious possession or "keeping" of this smuggled gold, it
will follow as a necessary corollary therefrom that he had
the mens rea requisite under clauses (a) and (b) of Section
135(1). It may be remembered that smuggling, particularly
of gold, into India affects the public economy and financial
stability of the country. The provisions of Section 135 (1)
and like statutes which are designed to suppress smuggling
have to be construed in accordance with the Mischief Rule
first enunciated in Heydons case. Accordingly the words
"acquires possession" or keeping" in clause (b) of Section
135(l) are not to be restricted to "possession" or "keeping"
acquired as an owner or a purchaser of the goods. Such a
narrow construction-which has been erroneously adopted by
the High Court-in our opinion, would defeat the object of
these provisions and undermine their efficacy as instruments
for suppression of the mischief which the Legislature had in
view. Construed in consonance with the scheme of the
statute, the purpose of these provisions and the context,
the expression "acquires possession" is of very wide
amplitude and will certainly include the acquisition of
possession by a person in a capacity other than as owner or
purchaser. This expression takes its colour from the
succeeding phrase commencing with the word "or" which is so
widely worded that even the temporary control or custody of
a carrier, remover, depositor, harbourer, keeper, or dealer
of any goods which he knows or has reason to believe to be
smuggled goods or prohibited goods (liable to confiscation
under Section 111) cannot escape the tentacles of clause
(b). The expressions "keeping" and "concealing" in the
second phrase of clause (b) also cover the present case.
From the above discussion, it is clear that the High
Court was in error in acquitting the appellant of the
charges under Section 135(1), (a) & (b) of the Customs Act.
This takes us to the charge under Rule 126H(2) (d) read
with Rule 126P(2)(iv) of the Defence of India Rules, 1962.
These Rules so far as material for our purpose, may be
extracted as under:
351
"126H(2). Save as otherwise provided in this Part,-
(d) no person other than a dealer licensed under
this Part shall buy or otherwise acquire or agree to
buy or otherwise acquire, gold, not being ornament,
except,
(i) by succession, intestate or testamentary or .
(ii) in accordance with a permit granted by the
Board in this behalf."
"126P(2) . Whoever,-
(ii) has in his possession or under his control
any quantity of gold in Contravention of any
provision of this Part;
(iv) buys, or otherwise acquires, or accepts gold
in contravention of any provision of this
Part,
shall be punishable with imprisonment for a term of not
less than six months and not more than two years andhttp://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10
also with fine."
The High Court has held that these Rules do not apply
because the accused respondent had not acquired possession
of these gold biscuits by purchase or otherwise within the
meaning of these Rules. Such a narrow construction of this
expression, in our opinion, will emasculate these provisions
and render them ineffective as a weapon for combating gold
smuggling. As was pointed out by this Court in Balakrishna
Chhaganlal v. State of West Bengal; Rule 126P(2) (ii)
penalises a person who has in his possession or under his
control any quantity of gold in contravention of any
provision of this! Part, and the Court can not cut back on
the width of the language used, bearing in mind the purpose
of plenary control the State wanted to impose on gold, and
exempt smuggled gold from the expression any quantity of
gold" in that sub-rule. These provisions have, therefore, to
be specially cons trued in a manner which will suppress the
mischief and advance the object which the Legislature had in
view. The High Court was, in error in adopting too narrow a
construction which tends to stultify the law. The second
charge thus had been fully established against the
respondent.
Mr. Shiv Pujan Singh, for the respondent, submits that
this prosecution has been brooding over the head of the
respondent for morel than eleven years and that the arch
criminal who was the owner of the gold biscuits in question
has escaped making the respondent a scapegoat It
352
is stressed that the accused is a first offender and he
should be released on probation.
Undoubtedly, this long delay is a factor which should
along with the other circumstances, be taken into account in
mitigation of the sentence. Even so, in a case of gold
smuggling we are loath to accord to the accused, found
guilty, the benefit of the Probation of Offenders Act.
Smuggling of gold not only affects public, revenues and
public economy but often escaped detection.
For the foregoing reasons, we allow this appeal, set
aside the acquittal of the accused, Natwarlal Damodardas
Soni, and convict him under Section 135(1) (a)&(b) .
However, taking into account all the circumstances of the
case, particularly the fact that these criminal proceedings,
like sword of damocles, have been hanging over the head of
the respondent for more than eleven years, we sentence him
cumulatively on these two counts, to six months imprisonment
and a fine of Rs. 2,000, and in default, to suffer four
months further Imprisonment. We further convict him under
Rule 126P(2) of the Defence of India Rules, 1962 and
sentence him to six months rigorous imprisonment. The
sentence on all the counts shall run concurrently. The bail
of the accused-respondent is cancelled. He must surrender to
serve out the sentence inflicted on him.
P.B.R Appeal allowed.
353
