# 1 he Managt111111I of Indian Gabie Co., Ltd., Calcutta v. Its Workmen AVar J

- **Citation:** [1962] Supp. 3 S.C.R. 613
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** J. L. Kapur, P. B. Gajendragadkar, T. L. Venkatarama Aiyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1-he-managt111111i-of-indian-gabie-co-ltd-calcutta-v-its-workmen-avar-j-2485
- **Pages:** 5

## Headnote

Sea Customs-Goods eeized in reasonable . belief that they
are smuggled-Burden of proof-If on person from whose possession goods are seized-Con8litntionality of statutory provis·ionThe Sea Custom; Act, 1878(8 of 1878),
88 . .167(81), 178AForeign Exchange Regu.lation Act, J.947(7 of 1947), 8. 23A.
The appellant was searched by a Customs Official .and
some bars of gold were found tied round his walst.
Out. of
those bars some were of base metal and the re~t of pure g-old
which bore foreign marks.
Th~ appellant had no permit from
the Reserve Bank of India to import the gold.
He was prosecuted and convicted un.cler :;·. 23i\ of the FQrcign Exchange
Regulation Act ands. 167(81) of the Sea Customs Act.
He
brought an appeal to the Supreme Court by special leave.
Held, thats. l 78A of the Sea Customs Act, 1878, is
constitutiona.1.
The contention that before the presumption under
s. l 78A of the Sea Customs Act could he raised the prosecution
had to prove that the gold was of foreign origin was rejected
and it was held thats. l 78A provides that when the goods are
seized in the reasonable belief that they are smuggled goods
the onus is on the accused to show that they are not smuggled.
Collector of Customs, Madras v. Nat/iella Sampathu~Chetty
\1962) 3 S.C.R. p. 786 followed.
·
1962
1 he Managt111111I of
Indian Gabie Co.,
Ltd., Calcutta
v.
Its Workmen
AVar J,
1962
A1areh 6.
1962
litu:al Krishan
v,
Stale 11/ Punjab
614
SUPRE~f~ COURT REPORTS [1962) SUPP.
CRIMINAL APPELLATE .TURJSJJICTIOX : Criminal
A p1wn 1 No. I '.!6 of l!J5!l.
Appeal by special leave from the judgment
and order dated .June 19, l!J5!1, of the Punjab High
Court in Criminal Revi~ion :No 144 of 195!1. ·
R. L. Kohli'., for the appellant.
G. C. Matlwr and P. D. Jfenon, for tho respondent.
l 9fi2. jfarch 6.
The .Judgment of the Court
was deliverc>d by
KAPl'H, J.-This is ~.n appeal by special leave
against the judgment and order of the High Court
of the Punjab and raises tho constitutionality of
s.l lliA of the Sc:1 Customs Act, 18iS (Act 8 of
1871'), which ha.H bellfi held by this Court to be constitutional in the· Colleclor of Custom.~,
Jfa.dra.~ v.
N at!u:lla Sarnpa.tl:n Chcll.1f ( 1).
At the time of arguments before us ~ further
point was raised that in order that s. J 78A of the
~ea Customs Ac:t may become applicable, the prosecution must. further prove that the goods which
wcrn sought to h" affeckd by the order of the Customs Offirer 1rnre goocls of foreign origin and them
must be evidence in Rupport of the reasonablcne~s of thl' belief of thP Customs Offic·er that the
goods were &mugglcd goods. The question now
8011ght. to he raised was not agitated in any of thn
courts below.
The nppcllant on .February I I, I 958, whm1 he
wa" sitting in a th ire! class compartment of the
Amritsa Kalka train ~tanding on Platform No. ii of
the .Amrsar n~.ilway Rta t.ion, Wall searched hy a
Customs Offidal anci' S(•mc b3rn of gold were fm;nd
tied round his waist.
TheHe gold bars were sPized
and a recovery memo was prepared. Out oftheRe gold
(!) [1%2~ 3. S.C..R. 786,
3 S.C.R.
SUPREME COURT REPORTS
615
bars four were of base metal and the rest were of
pure gold some bearing the stamp of Johmon Mathey
& Co. Ltd., 999-10 tolas and 2-1/4 bars bore marks of
N.M. Rothschild & Sons 10 tolas (990-0). ·No permit
from the the Reserve Bank to import this gold was
produced by the appellant. Under the Foreign
Exchange Regulation Act, 11:147, the importation of
gold witho11t such permit is prohibited and such
contravention is punishable under s.23-A of the
said Act read with s.167 (81) of the Sea Customs
Act.
The app"llant was prosecuted under.s.23A of
the Foreign Exchange Regulation Act and 167( 81)
of the Sea Customs Act and his defence was that he
was not in possession of the gold bars which were
taken from an attache case left by a stranger under
the seat where he (the appellant) was sitting. The Additional District Magistrate held the offence to be
proved and convicted the appellant of the offence
a

## Text

3 s.c.R.
SUPREME COURT REP(_)RTS
613
is oolonrable and not bona fide, s. 25G has no
application
and the respondents, therefore, are
not entitled to any relief under that section. In
the result the appeal is allow0d, the order of the
Tribunal is· set aside and the reference answered
against
the respondents. In the circumstances
the parties will bear their own costs throughout.
Appeal allowed.
KEWAL Kl{ISHAN
v.
STATE OF PUN.JAB
(J. L. KAPUR, P. B. GAJENDRAGADKAR and T. L.
VENKATARAMA AIYAR, JJ.)
Sea Customs-Goods eeized in reasonable . belief that they
are smuggled-Burden of proof-If on person from whose possession goods are seized-Con8litntionality of statutory provis·ionThe Sea Custom; Act, 1878(8 of 1878),
88 . .167(81), 178AForeign Exchange Regu.lation Act, J.947(7 of 1947), 8. 23A.
The appellant was searched by a Customs Official .and
some bars of gold were found tied round his walst.
Out. of
those bars some were of base metal and the re~t of pure g-old
which bore foreign marks.
Th~ appellant had no permit from
the Reserve Bank of India to import the gold.
He was prosecuted and convicted un.cler :;·. 23i\ of the FQrcign Exchange
Regulation Act ands. 167(81) of the Sea Customs Act.
He
brought an appeal to the Supreme Court by special leave.
Held, thats. l 78A of the Sea Customs Act, 1878, is
constitutiona.1.
The contention that before the presumption under
s. l 78A of the Sea Customs Act could he raised the prosecution
had to prove that the gold was of foreign origin was rejected
and it was held thats. l 78A provides that when the goods are
seized in the reasonable belief that they are smuggled goods
the onus is on the accused to show that they are not smuggled.
Collector of Customs, Madras v. Nat/iella Sampathu~Chetty
\1962) 3 S.C.R. p. 786 followed.
·
1962
1 he Managt111111I of
Indian Gabie Co.,
Ltd., Calcutta
v.
Its Workmen
AVar J,
1962
A1areh 6.
1962
litu:al Krishan
v,
Stale 11/ Punjab
614
SUPRE~f~ COURT REPORTS [1962) SUPP.
CRIMINAL APPELLATE .TURJSJJICTIOX : Criminal
A p1wn 1 No. I '.!6 of l!J5!l.
Appeal by special leave from the judgment
and order dated .June 19, l!J5!1, of the Punjab High
Court in Criminal Revi~ion :No 144 of 195!1. ·
R. L. Kohli'., for the appellant.
G. C. Matlwr and P. D. Jfenon, for tho respondent.
l 9fi2. jfarch 6.
The .Judgment of the Court
was deliverc>d by
KAPl'H, J.-This is ~.n appeal by special leave
against the judgment and order of the High Court
of the Punjab and raises tho constitutionality of
s.l lliA of the Sc:1 Customs Act, 18iS (Act 8 of
1871'), which ha.H bellfi held by this Court to be constitutional in the· Colleclor of Custom.~,
Jfa.dra.~ v.
N at!u:lla Sarnpa.tl:n Chcll.1f ( 1).
At the time of arguments before us ~ further
point was raised that in order that s. J 78A of the
~ea Customs Ac:t may become applicable, the prosecution must. further prove that the goods which
wcrn sought to h" affeckd by the order of the Customs Offirer 1rnre goocls of foreign origin and them
must be evidence in Rupport of the reasonablcne~s of thl' belief of thP Customs Offic·er that the
goods were &mugglcd goods. The question now
8011ght. to he raised was not agitated in any of thn
courts below.
The nppcllant on .February I I, I 958, whm1 he
wa" sitting in a th ire! class compartment of the
Amritsa Kalka train ~tanding on Platform No. ii of
the .Amrsar n~.ilway Rta t.ion, Wall searched hy a
Customs Offidal anci' S(•mc b3rn of gold were fm;nd
tied round his waist.
TheHe gold bars were sPized
and a recovery memo was prepared. Out oftheRe gold
(!) [1%2~ 3. S.C..R. 786,
3 S.C.R.
SUPREME COURT REPORTS
615
bars four were of base metal and the rest were of
pure gold some bearing the stamp of Johmon Mathey
& Co. Ltd., 999-10 tolas and 2-1/4 bars bore marks of
N.M. Rothschild & Sons 10 tolas (990-0). ·No permit
from the the Reserve Bank to import this gold was
produced by the appellant. Under the Foreign
Exchange Regulation Act, 11:147, the importation of
gold witho11t such permit is prohibited and such
contravention is punishable under s.23-A of the
said Act read with s.167 (81) of the Sea Customs
Act.
The app"llant was prosecuted under.s.23A of
the Foreign Exchange Regulation Act and 167( 81)
of the Sea Customs Act and his defence was that he
was not in possession of the gold bars which were
taken from an attache case left by a stranger under
the seat where he (the appellant) was sitting. The Additional District Magistrate held the offence to be
proved and convicted the appellant of the offence
and sentenced him to one year's rigorous imprisonment. An appeal to the Sessions Judge 'resulted
in the reduction of the
sentence to· 8 months'
rigorous imprisonment. On revision to the High Court
the sentence was reduced to six months' rigorous
imprisonment. The appellant has come in appeal
by special leave.
The trial court accepted the testimony of the
Customs Officials and held that the defence of the
appellant was false and that gold worth Rs. 14,000/-
was found in his possession. The learned Sessions
Judge in appeal also accepted the testimony of the
Cu;toms Officials and h~ld the defence to be false
and canie to the conclusion that the gold was found
in possession of the appellant. In the High Court
the same plea was taken and was rejected.
For the first time in t.his Court it is contendod
that before the presumption under s.178A can be
made applicable, it must be proved by the prosecution that the goods were of foreign origin, i.e. had beeH
1162
Kewal Eris/tan
v.
Stol• of Punjab
Kapur J.
l~I
Kewol Kri1hcn
••
St•le of Punjei
616 SUPREME COURT REPORTS [1962] SUPP.
i mpoited from abroad and only then does the presumption under s. l i8A arise which relates only to tho
question of Customs duty having been paid. In
other words tho contention comes to this that th~
prosecution must first prove that the goods in dispute in a particular case have been imported from a
foreign country and once that is proved the onus then
will be on the person in whoso possession tho goods
:ire found that he had paid the Customs duty. Apart
from the fact that this question has never been
raised, that is not the effect of s.178A of the Sea
Customs Act which provides:-
" l 78A. (1)
Where any g1;ods to which
this section applies ar<> seized under thiR Act in
the reasonable belief that they are smuggled
goods, th.) burden of proving that they are
not smuggled goods shall be on the person
from
whose
possession
the
goods were
seized.
(2)
This section shall apply to gold, gold
manufactures, diamonds and other precious
ston~s, cigaretters and cosmetics and any
other goods which th" Central Government
may, by notification in the Official Gazette,
sperify in this behalf.
(3) Every notification isgued under sub.
section (2) shall he laid before both Houses
of Parliament as soon as may be after it is
iRBued".
Two Customs officers appeared a.s witnesses, Inspector Satnam Singh and Deputy Superintendent A.N.
Kapur, the former is an Inspector of Land Customs
and the latter a Deputy Superintendent of Customs.
There is nothing to indicate in their cross-examination that the officern did not have a reasonable
belief that the goodH werti smuggled goodR and
tho question that the officers di1! not have reaimna.-
hle belief is not suggested either from the crossll;amina.tion of these witnesses of from the findings
3 S.C.R.
SUPREME COURT REPORTS
617
of the courts below.
Even in his statement of case
it is contended that the mere existence of stamp of
foreign companies on gold does not necessarily
prove that the gold is of foreign origin. It might
be put on spurious gold which may be of Indian
origin. In our opinion .apart from the fact that
this question has not been raised, it is quite clear
that what s. l 78A of the Sea Customs Act provides
is that when the goods are seized in the reasonable
belief that they are smuggled goods then the
burden of proving that they are not smuggled goods
is on the person from whose possession the goods
are seized. The onus is on him to show that the
goods are not smuggled; that is, not of foreign
origin on which duty is not paid. The onus is not
on the prosecution to Ehow that the goods are not
of Indian origin. That appears to be the view
taken in the Collector of OuBtoms, Madras v. Nathella
Sampathu Ohetty (1) where at the learned Judges
observed : - -
"We are therefore of opinion (1) that
section l 78A was constitutionally valid, (2)
that the rule as to the burden of proof enacted
by that section applies to a contravention of
a notification under section 8(1) of the Foreign
Exchanges Regulation Act 1947 by virtue of
its being deemed to be a contravention of a
notification on under section l9 of the Sea
Customs Act, ( 3) that the preliminary requirement of section l 78A that the officer seizing
should entertain "a reasonable belief that the
goods seized were smuggled" was satisfied in
the present case."
. I~ o~r opinion there is no merit in this appeal
and it is d1sm1ssed.
The appellant will surrender
to his bail-bonds.
Appeal dismissed,.
(!) [19G2] 3 S.C.R, 78~.
1962
Kewal Krish1.1n
••
S ta/.1 of Punjab
KapurJ.