# [1962] Supp. 1 S.C.R. 364

- **Citation:** [1962] Supp. 1 S.C.R. 364
- **Court:** Supreme Court of India
- **Decided:** 1960-01-20
- **Case number:** CRIMINAL APPELLATE JUR1snrnT10N: Criminal I Appeal No. 194 of 1960
- **Bench:** P. B. Gajendraoadkar, A. K. Sarkar, K. N. WANr:aoo, K. C. DAs GUPTA, N. Rajaoopala Ayyanoar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1962-supp-1-s-c-r-364-2427
- **Pages:** 11

## Headnote

Smuggled Gooda-Good• Seiu.d by lht polic.-Iklirtry
of goods to c.,.tom• autharilies-Proaecution far of!<nc. unckr
Sea Cusl071111 Act-Onus of proof-Goods, if .eized under the
Act-"Seized", meaning of-8ea Custom.a Act, 1878 (8 of
1878), "· 167 (81), 178, 178A, 180.
On receipt of information thal some smugglers were
transporiing gold from Amrilsar inio Jullundur, 1he police
made a raid of the house of the first appellanl in Jullundur
and in 1he course of 1he search cerlain bars of gold were found
on the person of some of the inmates of the house and in the
house itself. The gold found was seized by the police and
the appellants were proseculed on a charge of receiving
stolen property. The case however was not proceeded with
and, in the meantime, the customs authorities contacted the
police and on the order of the Magistrate on an application
under s. 180 of the Sea Customs Act, 1878, made by
them the gold bars w.re delivered to them.
Proceedings
were taken by the Collector of Customs for coufiscalion
of the gold under s.
167 \8) of the Act, and the appellants
were prosecuted for an offence under s. 167 (81)
of the .\ct on the ground that the gold was smuggled and
that the appellants did the acts spcciJied in that section
knowing that the gold was of that character. The Magistrate
took the view that •· l 78A of the Act was applicable to the
case so that the burden of proving that lhe gold was not smug·
gled could be laid on 1he appellants. The question was
whelhcr the possession obiained by the customs authorities
under s. 180 of the Act was such that the goods could be
treated as that seized under the Act within the meaning of
s. l 78A of the Act.
H.ld, that the taking posaession of the good• by the
customs authorities when they were delivered to them under
s. 180 of the Sea Customs Act, 1878, did not amount to a
seizure under the Act within the meaning of s. 1 78A of the
Act.
A seizure unc1er the authority of law involved a dcpri·
vation of po•scssio11 and when the police seized the goods
the appellants lost possession which vested in the police so
(1) s.c.R. SUPREME COURT REPORTS
365
that when the possession was transferred to the cmtoms
authorities by virtue of the provisions in s. JS(} there was no
fresh seizure under the Act. Accordingly, s. 178!\ wa' not
appllicable to the case.
The tcnn "seized" in s. l 78A means "taken possession
of contrary to the ·wishes of the owner of property".
CRIMINAL APPELLATE JUR1snrnT10N: Criminal
I
Appeal No. 194 of 1960.
Appeal by special leave from the Judgment
and Order dated January 20, 1960, of the Punjab
High Court in Criminal Revision No. 1485 of
1959.
Porus A. Mehta, J. B. Daclachanji, 0. O. Jfathur
and Ravinder Narain, for the appellants.
H. R. Khanna and P. D. Menon, for the res·
pondent.
1961. November 13. The Judgment of the
Court was delivered by
AYYANGAR,J.-Thethree appellants were con·
victed by the First Class Magistrate of Jullundur of
an offence under s. 167 (81) of the Sea Customs Act
for "having acquired possession of smuggled gold
and for carrying,. keeping and concealing the said
gold with intent to defraud the Government knowing that the gold had been smuggled into India
from a foreign country and that no duty had been
paid thereon,'' and were sentenced to terms of
imprisonment. · Appeals were filed by the accused
to the Sessions Judge, Jullundur but the convictions were upheld though tho sentence was reduced·
in the case of the third appellant. A ·revision
~tition · preferred therefrom to the High Court of
Punjab was dismissed and thereafter the appellants
obtained leave from this Court under Art. 136 of
the Constitution and filed the appeal which is now
before us.
A few faca are. aeceaaary to be llC&ted to
ap.preoiate.the p"int ~d
for decillioo. ··The City
Inspector of Police, Jullundur is atated to hAT•
1961
Gi11n Olua11J
,
v.
Th, Sia" of Punjab
1911
Gian Chand
v.
TM Store of /'ufijob
.4 JJOntor J.
366 SUPREME CX>URT REPORTS [1962] SUPP.
,_
received information that s

## Text

116.
Nottmbn 13.
••
364 8VP.kEME COURT REPORTS [1962] SUPP.
GIAN CHAND AND OTHERS
t'.
THE STATE OF PUNJAB.
(P. B. GAJENDRAOADKAR, A. K. SARKAR,
K. N. WANr:aoo, K. C. DAs GUPTA and
N. RAJAOOPALA AYYANOAR, JJ.)
Smuggled Gooda-Good• Seiu.d by lht polic.-Iklirtry
of goods to c.,.tom• autharilies-Proaecution far of!<nc. unckr
Sea Cusl071111 Act-Onus of proof-Goods, if .eized under the
Act-"Seized", meaning of-8ea Custom.a Act, 1878 (8 of
1878), "· 167 (81), 178, 178A, 180.
On receipt of information thal some smugglers were
transporiing gold from Amrilsar inio Jullundur, 1he police
made a raid of the house of the first appellanl in Jullundur
and in 1he course of 1he search cerlain bars of gold were found
on the person of some of the inmates of the house and in the
house itself. The gold found was seized by the police and
the appellants were proseculed on a charge of receiving
stolen property. The case however was not proceeded with
and, in the meantime, the customs authorities contacted the
police and on the order of the Magistrate on an application
under s. 180 of the Sea Customs Act, 1878, made by
them the gold bars w.re delivered to them.
Proceedings
were taken by the Collector of Customs for coufiscalion
of the gold under s.
167 \8) of the Act, and the appellants
were prosecuted for an offence under s. 167 (81)
of the .\ct on the ground that the gold was smuggled and
that the appellants did the acts spcciJied in that section
knowing that the gold was of that character. The Magistrate
took the view that •· l 78A of the Act was applicable to the
case so that the burden of proving that lhe gold was not smug·
gled could be laid on 1he appellants. The question was
whelhcr the possession obiained by the customs authorities
under s. 180 of the Act was such that the goods could be
treated as that seized under the Act within the meaning of
s. l 78A of the Act.
H.ld, that the taking posaession of the good• by the
customs authorities when they were delivered to them under
s. 180 of the Sea Customs Act, 1878, did not amount to a
seizure under the Act within the meaning of s. 1 78A of the
Act.
A seizure unc1er the authority of law involved a dcpri·
vation of po•scssio11 and when the police seized the goods
the appellants lost possession which vested in the police so
(1) s.c.R. SUPREME COURT REPORTS
365
that when the possession was transferred to the cmtoms
authorities by virtue of the provisions in s. JS(} there was no
fresh seizure under the Act. Accordingly, s. 178!\ wa' not
appllicable to the case.
The tcnn "seized" in s. l 78A means "taken possession
of contrary to the ·wishes of the owner of property".
CRIMINAL APPELLATE JUR1snrnT10N: Criminal
I
Appeal No. 194 of 1960.
Appeal by special leave from the Judgment
and Order dated January 20, 1960, of the Punjab
High Court in Criminal Revision No. 1485 of
1959.
Porus A. Mehta, J. B. Daclachanji, 0. O. Jfathur
and Ravinder Narain, for the appellants.
H. R. Khanna and P. D. Menon, for the res·
pondent.
1961. November 13. The Judgment of the
Court was delivered by
AYYANGAR,J.-Thethree appellants were con·
victed by the First Class Magistrate of Jullundur of
an offence under s. 167 (81) of the Sea Customs Act
for "having acquired possession of smuggled gold
and for carrying,. keeping and concealing the said
gold with intent to defraud the Government knowing that the gold had been smuggled into India
from a foreign country and that no duty had been
paid thereon,'' and were sentenced to terms of
imprisonment. · Appeals were filed by the accused
to the Sessions Judge, Jullundur but the convictions were upheld though tho sentence was reduced·
in the case of the third appellant. A ·revision
~tition · preferred therefrom to the High Court of
Punjab was dismissed and thereafter the appellants
obtained leave from this Court under Art. 136 of
the Constitution and filed the appeal which is now
before us.
A few faca are. aeceaaary to be llC&ted to
ap.preoiate.the p"int ~d
for decillioo. ··The City
Inspector of Police, Jullundur is atated to hAT•
1961
Gi11n Olua11J
,
v.
Th, Sia" of Punjab
1911
Gian Chand
v.
TM Store of /'ufijob
.4 JJOntor J.
366 SUPREME CX>URT REPORTS [1962] SUPP.
,_
received information that some smu~lers were on
the point of transporting gold from Amritsar into
Jullundur and at about mid-night on July 16, 1958
further information that some of these had actually
oome ~.nd were present in the house of Gian Chandthe first appellant. A raid-party was accordingly
organi•ed ~nd the house of the fast appellant was
cordoned a.nd raided at about 3 A. M. on the ea.riv
morning of July 17, 1958. In the course of the
search certain ha.rs of gold were found on the person of some of the inmates of the house and in
the hon~e itself, as a.lso a large amount of cash.
Thereafter the first appellant, his wife-the third
appellant-and her brother-the second appellant--
were arrested, the gold found was seized and a.
complaint filed eha.rging the three accused of offences under ss. 411and414 of the Indian Penal Code.
This charge of receiving stolen property preferred
ag.dnst the three appellants was, however. not proceederl with and the Police Inspector ma.de a report
to the Court on J anua.ry 7, 1959, that no case had
been made out aga.instthem, and the case was thereupon dropped. Meanwhile, the Assistant Collector
of Customs contacted the City Police at Jullundur
and made an application to the Court of the Fir st
Class Magistrate,
Ju llundur for the delivery of
these gold-bars to the Customs authorities obvi0usly
under s. 180 of the Sea. Customs Ar.t to the terms
of which we shall refer later, and they ~ere delivered to the Customs 1mthorities on Ja.nua.ry 7,
1939, this being the date on which the ease against
the appellants under ss. 411 and 414 of the Indian
Penni Code was dismissed.
Verv soon thereafter a notice was iSBued to
the appellants to show cause why the gold in the
poB11Cssion of the Customs authorities should not
be confiscated under s. 167 (8) of the Sea Customs
Act, and after considering_ the explanations of the
appellants the Collector passed an order directing
the confiscation of the gold. That order bas
(1) S.C.R. SUPREME COURT REPORTS
367
become final and this appeal is not concernrd with
the correctness of the order of confiscation of the
gold under s. 167 (8).
During t.he proceedings before the Customs
authorities for confiiscation, sanction was accorded
to prosecute the appellants for an offence under
s. 167 (81) which runs in these tefllls :
"167. The offences mentioned in the
first column of the following schedule shall
be punishable to the extent mentioned in the
third column of the same with reference to
such offences respectively :-
Offences
Section of
this Act to
which off·
ence has
reference.
If any
person
General
knowingly,
and
with
intent to defraud the
Government of any duty
payable thereon, or to
evade any prohibition or
restriction for the time
being in force under or
by virtue of this Act with
respect thereto acquires
possession of,
or is in
any way concerned
in
carrying, removing, depositing, harbouring, keeping or concealing or in
any manner dealing with
any goods
which
h~I"e ·.,
been unlawfully remove.dlft
frorr. a ware-house
or··
whiph are chargeable with
a duty which has not
been paid or with respect
Penalties
such person
shall on conviction before
a Magistrate
he liable to
imprisonment
for any term
not exceeding
two years, or
to fine, or to
both.
1981
Jian Chand
v.
The Stale of l'wii•b
AJ,....C"' J.
IHI
GU.. O..nd
••
Tht Stolt of l'ot!iab
A.'!)'GlllOF J.
368 SUPREME COURT REPORTS (1962] SUPP.
to the importation or
exportation of which any
prohibition or re11triction
is for the time being in
foroe as aforesaid; or
U any person is in
relation to any gqods in
any way knowingly concerned in any fra.udulent
evasion or attempt at
evasion of any
duty
chargeable thereon or of
&ny such prohibition or
restriction as
aforesaid
or of any provision of
this Act applicable to
those goods,"
and it is the correctness of tho conviction in the
prosecution that followed which is the eubjectma tter of the appeal now before us.
It will be Peen from the terms of e. 167 (81)
that there are two distinct matters which have to
be established before a person could be held guilty
of the offenoe there set out: ( l) that the goods in
this case (gold) were smuggled, i.e., imported into
the country either without p!!yment of duty or in
contrnvention of any restriction or prohibition
imposed as regards the entry of those goods, and
(2) that the accused knowing that the goods were
of that character did the acts specified in the latter
pa.rt of tho provision. It is clear that in the absence of any valid statutory provision in that behalf the onus of establishing the two ingredients
necessary to bring l>ome th_e offence to an accused
is on the prosecution .•
\,,jIn regard to thP. first of the above matters
the position stands thus: With a view to oonllE't've
the foreign exchange reBOUrees of this country, in
line with provisions framed for a like object by
(1) S.C.R. SUPREME COURT REPORTS
369
several other Governments, the Foreign Exchange
Regulation Act, 1947, was enacted which came into
force on March 25, 1947. Section 8(1) of the Act
enacted:
"8. (1) The Central Government may,
by notification in the Official Gazette, order
that, subject to such exemptions, if any, as
may be contained in the notification, no person shall, except with the general or special
permission of the Reserve Bank and on payment of the fee, if any, prescribed bring or
send into India. any gold or silver or any
currency notes or bank notes or coin whether
Indian or foreign.
Explanation.-The bringing or sending
into any port or place in India of any such
article as aforesaid intended to be taken out
of India without being removed from the
ship of conveyance in which it is being carried
shall nonetheless be deemed to be a bringing,
or as the case may be sending, into India of
that artiC'le for the purposes of this section."
On the same day on which the Act came into force
a notification was issued under this section reading:
"( l) Restrictions on import of gold and
silver.-
In excercise of the powers . conferred by
sub-s. 1 of s. 8 of the Foreign Exchange
Regulation Act, 1947 (Act 7 of 1947) and in
supersession of the noti1kation of the Government of India in the late Finance Department No.
12 (11) FI/47, dated the 25th
March,
1947, the Central Government is
pleaaed to direct that except with the general
or special permission of the Reserve Bank
no person shall bring or send into India from
any place outside India-
(a) any gold coin, gold bullion, gold
sheets or gold ingot whether refined or not; ,,
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
'. . ............... .
1961
Gian Chand
v.
The Steir. of Punjab
A))'flll,.,;'ar J.
l~l
Gian CAo:nd
v.
Thi 5141• of Punjd
A;yct11_(U J,
370 SUPREME COURT REPORTS [1962] SUPP.
Virtually therefore a ban
waR imposed on the
import of gold into the country. This prohibition
naturally resulted in the rise of the internal price of
gold compared to its external price, i.e., its price
in the international markets and this gave a great
incentive to smuggling in the commodity. As a
rosnlt Parliament enacted a provision (R. 178 A of
the ~ca. Customs Act) reading:
"I 78 A. (I) Whero any goods to which
this section applies are seized under this Act
in the reasonable belief that they a.re smug·
gled goods, the burden of proving that they
aro not smuggled goods shall he ou the perlon from whose possession the goods· were
seized .
. . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"
............................................................
shifting the onus of proof in respect of particular
commodities seized under thA Act in stated circumstances that the goods wero not smuggled, on the
person from whose possession they were ta.ken. Subsection (2) set out the commodities to which the
section applied and gold was specified a1 one such.
The details of tho circumstances in which this pro.
vision found its place in the statute book as well
as its construction have been dealt with in Collector
nf Oustmris, Madras v. Nathellti .'fompathu Chetty(')
and need not here be repeated. Suffice it to say
that if the terms of the section were satisfied tho
gold seized in the prosont case would bo presumed
to be smuggled and tho burden of proving that
they are not, would be on the person from whom
they were seized.
Without much of a discuS8ion or a consideration of tho several provisions tho learned First
Class Magistrate held that s. 178 A of the Sea Cua.
toms Act was applicable to the case and that accord·
ingly the onus was properly on the accwmd. Before
considering his reasoning it is necesRary to refer
to a few other provisions of the Sea Customs Act
(I) [1962] 9 S. C.R. 186.
1
(1) S.C.R.
SUPREME COURT REPORTS
371
which have a. bearing on the point now under
discussion. Section 178 of the Act which empowers
Customs Officers to effect a seizure of goods suspected by them to be smuggled, enacts:
"178. Any thing liable to confiscation
under this Act may be seized in any place in
India either upon land or water, or within the
Indian customs waters by any officer of Customs or other person duly employed for the
prevention of smuggling.''
Section 180 under the provisions of which the gold
seized by the police as a result of their search on
July 17, 1958, came into the possession of the
Customs authorities, runs in these terms :
"180. When any things liable to oonfisoa.tion under this Act a.re seized by any
Police-officer on suspicion that they have
been stolen, he may oa.rry them to any policestation or Court at which a complaint connected with the stealing or receiving of such
things has been made, or an enquiry connected with such stealing or receiving is in progress, and there detain such things until the
dismissal of such complaint or the conclusion
of such enquiry or of any trial thence resulting.
In every such case the Police-officer
seizing the things shall send written notice of
their seizure and detention to the nearest
custom-house; and immediately after the
dismissal of the complaint or the conclusion
of the enq11iry or trial, he shall cause such
things to be conveyed to, and deposited at,
the nearest custom-house, to be there proceeded against according to law."
The question tha.t now a.rises is whether the posses·
sion obtained by the Customs department by goods
being "conveyed to and deposited a.t the nearest
Custom-house" within the last words of the second
1961
Gian Cl1a11d
v.
Tk Stat1 of P1mj11b
Gian GIUJnd
v.
Tht State of Pun}a6
A)J'nngar J.
372 SUPREME COURT REPORTS [1962) SUPP.
paragraph of s. 180 are goods which have been
seized under tJie Act within t.he opening word8 of
A. 178A. In the first place, it would be seen that
these three sections which have to be read together
draw a distinction between seizure under the Act
and a seizure under proYisions of other laws.
A
seizure under tlie Act is one for whith the authority to
seize is conferred by the Act. and in the contex it
could be referred to as a seizure under s. l 78. The
seizure from the owner of the property under
s. 180 is not a seizure under the Act but by a police
officer effecting the seizure under other provisions
of the law, for instance the Criminal Procedure
Code. And that is made clear by appropriate language in the first paragrapli of R. 180. Learned
Counsel for t.ho respondent-Sta tc has urged that
"the conveyance and deposit" in the office of the
Customs authority und~r the second paragraph of
s. 180 also involves a seizure under the Act and for
this purpose relied on the meaning of the word
'seize' given in Ballantyne's Law Dictiona1y where
it is equated to "taking a thing into possession".
This howc\·or might be the meaning in p:irticular
context8 when used in thn nensc of the cognate
Latin expression "Seized" while in tho context in
which it is t1scd in the Aet in s. l 78A it means
'take possession of contrary to the wishes of the
owner of the property'. No <loubt, in cases where
a delivery is effected by an owner of tho goods in
pursuancn of a demand under legal right, whether
oral or backed by a warrant, it would certainly be
a case of seizure but the idea that it iR the unilateral act of the pers<>n 8<'iZing i8 the very ns.~ence
of the concept.
There is another matter to which reference
should ho made which, in our opinion, conclusively
establishes that the deli\·cry of the goo<lR t.o the
Customs authorities uncler thn lattM part of s. 180
is not seizure under the Act within the meaning of
8 . 178A. The last part of1mb-s. (I) ofK. 17i;A lays
i
(l) s.c.B..
SUPHEME COURT REPORTS
373
the burden of proving that the goods are not smuggled on "the person from whose possession the goods
are taken". Asauredly when the goods are delivered
to the Customs authorities hy the Magistrate they
are not taken from the possession of the persons
accused in criminal case so as to throw the burden
of proof on them and it would lead to an absurdity
to hold that the section contemplated "proof to the
contrary" by the Magistrate under whose orders the
dellvery was effected. For the purpose of deciding
the point arising in this case we do not think it
necessary to enter into the philosophy or refinements
of the law as to the nature of possessionWhen
the goods were seized by the police they ceased to
be in the possession of tho accused and passed into
the possession of the police and when they were
with the Magistrate it is unnecessary to consider
whether the Magistrate had possession or merely
custody of the goods. 'rhe suggestion that the goods
continued to be, at that stage, in the possession of
the accused does not embody a correct appreciation
of the law as regards possession. A 'seizure' under
the authority of law does not involve a deprivation
of possession and not merely of custody and so when
the police officer seized the goods, the accused lost
possession which vested in the police. When that
possession is transferred, by virtue of the provisions
contained ins. 180 to the Customs authorities, there
is no fresh seizure under the Sea Customs Act. It
would, therefore, fol!ow t.hat, having regard to the
circumstances in which the gold came into the
possession of the Customs authorities, the terms of
s. I 78A which requires a seizure under the Act were
not satisfied and consequently that provision can·
not be availed of to throw the burden of proving
that t.he gold was not smuggled, on the accused.
Through the leamed Magistrate held that
s. l 78A applied to the case, he also entered into an
elaborate discussion of the positive evidence in the
case, so that it is not quite clear whether he would
1961
Gian Ohand
v.
The Stale of P1111job
Ayyan~ar J.
J:iGJ
Gian Chand
V.
1iit Stale of l'wzjab
374
SUPREME OOURT REPORTS [1962] SUPP.
have reached the same conclusion, viz., that the
gold was smuggled, even without referent'0 to the
rule as to onus enacted by that section.
When the matter was before the learned
Sessions Judge he first held tb.at s. I 78A of the
Customs Act did apply to the case before him but
proceeded also to deal with the case on an alterna·
tive footing that the provisions of s. l78A were not
applicable to the case and set out the cir<'umstanccs
which led him to that conclusion. The learned
Single Judge who heard the revision in the High
Court, however, dealt with t.he case solely on the
footing that s. l 78A was applicable. The constitutional validity of that sec:tion was challenged before
the High Court and figured prominently in the
growids of appeal to this Court but this point has
been decided against the appellants by this Court
and is therefore no longer a live issue. If, as we
have pointed out earlier, the delivery to the Customs authorities under s. 180 is not a seizure
under the Act within s. l 78A it would follow that
the judgment of the High Court cannot be upheld
for it has proceeded on the sole basis of the provisioDB of that section being attracted. We have
already pointed out that the learned Sessions Judge
had upheld the conviction of the appellants by an
independent finding
that the prosecution had
positively established that the goods were smuggled
and that the accused had knowingly done the acts
referred to in s. 167(81) with which they were
charged. This part of the case of the prosecution
bas not been considered by the learned Judge in
the High Court and this would have to be done
before the revision petition of the appellants could
properly be disposed of. The appeal is accordingly
allowed and the order of the High Court set aside.
The case will be remitted to the High Court for the
revision petition of the appellants being di8poscd of
in the light of this jndirment and in accordance with
law.
.Appeal allowed. Case remittecL