# [1971] 3 S.C.R. 802

- **Citation:** [1971] 3 S.C.R. 802
- **Court:** Supreme Court of India
- **Decided:** 1971-02-19
- **Bench:** J. M. Shelat, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1971-3-s-c-r-802-5422
- **Pages:** 13

## Headnote

Customs Act (52 of 1962), s. 110 (I) and (2) and proviso-Power of
extension of period,"· quasi judici<l-'Su/ficient cause being shown'-Scope
oJ.
Under s. 110(1) of the Customs Act. 1962. if a proper officer has
'reason to believe' that any goods are liable to confiscation under the Act,
he may seize such goods. Section 124 provides that no order confiscating
any goods shall be made unless the owner of the goods is given notice in
writing informing him of the grounds on which it is proposed to confiscate
the goods. Under s. 110(2) where any goods are seized under sub-s. (1)
and no notice in respect thereof is given under s. 124 within six months
of the seizure, the goods shall be returned to the person from whose possession they were seized; provided, the period . of six months ·may 'on
•ufficient cause beipg shown' be extended by the Collector of Customs for
a period not exceeding six months.
On March 19, 1963 goods were seized from the respondent and, on
September 19, 1963 an extension for a period of four months was applied
!or by the customs authorities and was granted by the Collector on the
ground that certain inquiries yet remained to be made ·by them.
On
February 20, 1964, that is, one month after the extended period had
expired, the Collector passed an order granting further extension for two
months. Both the extension orders were passed without giving any oppor-
. 1unity to the respondent. The respondent challenged the second extension
and the High Court held that the orders of extension we're bad as the
Collector had to ·decide the application for extension judicially. In appeal
:to this Court.
HELD : The power of extension under the proviso was quasi-judicial,
·Or at any rate, one requiring a judicial .approach, and therefore, an oppor1unity of being heard ought to have been given to the respondent before
ordering extension. [811 B-C]
(a) The policy of the Legislature is, that in view of the extraordinary
power of seizure the inquiry should ordinarily be completed within six
months but in exceptional cases, the legislature entrusted to a superior
officer ihe power of extension on sufficient' cause being shown. The Collector is not expected to pass extension orders mechanically or as a matter
of routine but only on being satisfied that there exist facts which. in~icatc
that investigation could not be. completed for bona fide reason~ within the
time of 6 months laid down 1n s. 110(2). [808 C-E; F-GJ
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(b) Whereas s. 110(1) uses the expression re!'son to believe for enabling
a custom~ officer to seize t~e goods, the provt"? to .sub-s. (2) uses the
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expression sufficient er.use being sho'!'n. Sub-Section (I). does not c;ontemplate an inquiry at the stage of seizure, the ?nly reqmrement bemg the
satisfaction of the concern~ officer that th~e are relevant i;easons. to
hclieve that the goods are hable to confiscahon by reason of illegal 1m-
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ASST. COLLECTOR CUSTOMS V, C, D. MALHOTRA (She/at,/.) 803
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portation. The words sufficient cause being shown mean that the Collector
must determine on materials placed before him that they warrant extension of time.
Furthel', the civil right to have the seized goods restored
which accrues on the expiry of the initial six months is defeated on extension being granted.
Therefore, when the statute requires the determination of a sufficient cause on facts produced before the Collector it should
be held to be a quasi judicial function or at least a function requiring
judicial approach; and there is no distinction between extension orders
passed before and those passed after the expiry of the initial or the extended
period. [808 H; 809 A, C-D; 811 C-D)
( c) When an order is n1ade in bona fide exercise of power and within
the provisions" of the Act which confer such power, the order- is immune
from interference by a court of law and therefore, the adequacy orthe
cause shown may not be a ground for interference, but the Collector has
to hold an inquiry on fa

## Text

so~
ASSTT. COLLECTOR OF CUSTOMS
..
CHARAN DAS MALHOTRA
February 19, 1971
[J. M. SHELAT AND C. A. VAIDIALINGAM, JJ.J
Customs Act (52 of 1962), s. 110 (I) and (2) and proviso-Power of
extension of period,"· quasi judici<l-'Su/ficient cause being shown'-Scope
oJ.
Under s. 110(1) of the Customs Act. 1962. if a proper officer has
'reason to believe' that any goods are liable to confiscation under the Act,
he may seize such goods. Section 124 provides that no order confiscating
any goods shall be made unless the owner of the goods is given notice in
writing informing him of the grounds on which it is proposed to confiscate
the goods. Under s. 110(2) where any goods are seized under sub-s. (1)
and no notice in respect thereof is given under s. 124 within six months
of the seizure, the goods shall be returned to the person from whose possession they were seized; provided, the period . of six months ·may 'on
•ufficient cause beipg shown' be extended by the Collector of Customs for
a period not exceeding six months.
On March 19, 1963 goods were seized from the respondent and, on
September 19, 1963 an extension for a period of four months was applied
!or by the customs authorities and was granted by the Collector on the
ground that certain inquiries yet remained to be made ·by them.
On
February 20, 1964, that is, one month after the extended period had
expired, the Collector passed an order granting further extension for two
months. Both the extension orders were passed without giving any oppor-
. 1unity to the respondent. The respondent challenged the second extension
and the High Court held that the orders of extension we're bad as the
Collector had to ·decide the application for extension judicially. In appeal
:to this Court.
HELD : The power of extension under the proviso was quasi-judicial,
·Or at any rate, one requiring a judicial .approach, and therefore, an oppor1unity of being heard ought to have been given to the respondent before
ordering extension. [811 B-C]
(a) The policy of the Legislature is, that in view of the extraordinary
power of seizure the inquiry should ordinarily be completed within six
months but in exceptional cases, the legislature entrusted to a superior
officer ihe power of extension on sufficient' cause being shown. The Collector is not expected to pass extension orders mechanically or as a matter
of routine but only on being satisfied that there exist facts which. in~icatc
that investigation could not be. completed for bona fide reason~ within the
time of 6 months laid down 1n s. 110(2). [808 C-E; F-GJ
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(b) Whereas s. 110(1) uses the expression re!'son to believe for enabling
a custom~ officer to seize t~e goods, the provt"? to .sub-s. (2) uses the
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expression sufficient er.use being sho'!'n. Sub-Section (I). does not c;ontemplate an inquiry at the stage of seizure, the ?nly reqmrement bemg the
satisfaction of the concern~ officer that th~e are relevant i;easons. to
hclieve that the goods are hable to confiscahon by reason of illegal 1m-
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ASST. COLLECTOR CUSTOMS V, C, D. MALHOTRA (She/at,/.) 803
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portation. The words sufficient cause being shown mean that the Collector
must determine on materials placed before him that they warrant extension of time.
Furthel', the civil right to have the seized goods restored
which accrues on the expiry of the initial six months is defeated on extension being granted.
Therefore, when the statute requires the determination of a sufficient cause on facts produced before the Collector it should
be held to be a quasi judicial function or at least a function requiring
judicial approach; and there is no distinction between extension orders
passed before and those passed after the expiry of the initial or the extended
period. [808 H; 809 A, C-D; 811 C-D)
( c) When an order is n1ade in bona fide exercise of power and within
the provisions" of the Act which confer such power, the order- is immune
from interference by a court of law and therefore, the adequacy orthe
cause shown may not be a ground for interference, but the Collector has
to hold an inquiry on facts, that is, on material placed before him,· and
consider the pros and cons of the question. [809 D-E; 811 El
( d) By holding such inquiry there is no danger of disclosure of facts
which would be detrimental to the investigation.
The only disclosure
would be about the fact that investigation at some place or places and
about certain matters was still incomplete and pending.
As between the
right of the person from whom the goods were seized and the supposed
danger to the investigation, the matter is not so weighted that it should be
held that the Legislature could not possibly have contemplated a judicial
approach by the Collector when he orders of extension of time. [813 G-H;
814 B-D]
Kraipak v. Union of India, [1970) 1 S.C.R. 457, followed.
Lakhanpal's case, A.I.R. 1967 S.C. 1507 and ·De Verteuil v. Knaggs,
[1918] A.C; 557, referred to
Sheikh Mohcmmed Sayeed v. Asst,t. Collector of Customs, A.l.R. 1970
Caj. '134, GaneshmuJ Channilal Gandhi v. Collector of Central Excise,
A,1.R. 1968 Mys. 89 and Mis. Prakash Cotton Mi/ls Pvt. Ltd. v. Asstt.
Collector of Central Excise, Bombay, M.P. No. 127/1963 di. 31-8-1970,
overruled,
, CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1056 of
1967.
' Appeal from the judgment and decree da~d May 12, 1967 of
the'Calcutta High Court in Appeal from OrigiJ1,lll Order No. 21S
of 1966.
R. H. Dhebar and S. P. Nayar, for the appellants.
• S. T. Desai and P. C. Bhartari, for the respondent.
The Judgment of the Court was delivered 'by
Shelat, J.
This appeal, under a
certificate,
raises two
questions.
The first is as to the nature of the power of the
Collector of Customs under the proviso to the second sub-section
o.f s. 110 of the Customs Act, 52 of 1962, and the s,econd is as to
whether the Collector under that proviso can extend the period
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[1971 )3 S.C.R.
for giving notice under s. 124(a) of the Act either after the initial
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period of six months or the extended period has already expired.
In 1963, the respondent carried on business as a dealer in
watches in the name and style of Wallton Watch Company in
Calcutta. In 1955, he also used to have another business premises where he carried on the same business in the name of
Walcon Watch Company.
That business was wound up in that
year and he had the stock-in-trade of that business transferred to
I.is business carried on in the. name of Wallton Watch Company.
On March 19, 1963, the Rummaging staff under the appellant raided the respondent's business premises and seized 218
watches, all of foreign ·make, 87 of these watches, ho'(l'ever.
were released on the respondent then and there producing
vouchers relating to them.
Later on, 21 more watches were
released on September 18, 1963 and February 27, 1964 on more
vouchers having been produced. The case of the Customs authorities, however, was that he was not able to produce documentary evidence in respect of the rest of the watches, and therefore.
their release was not possible.
On March 6, 1964, the appellant served on the respondent a
notice under s. 124(a) to show cause why the rest of the said
watches should not be confiscated and personal penalty should
not be imposed upon him.
Watches imported without licence or
-0n which proper import duty has not been paid are undoubtedly
liable to confiscation under s. lll(d).
Sec. 110, which finds its place in Ch. XIII dealing with
searches, seizure and arrest, provides for seizure, inter alia, of
goods.
Under sub-s. (1), if a proper officer has "reason to
believe" that any goods are liable to confiscation under the Act.
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he may seize such goods.
Sub-s. (2) reads as follows :
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" ( 2) Where any goods are seized under sub-section
( 1) and no notice in respect thereof is given under
clause (a) of section 124 within six months of the
seizure of the goods, the goods shall be returned to the
person from whose possession they were seized :
Provided that the aforesaid period of six months
may, on sufficient cause being shown, be extended by
the Collector of Customs for a period not exceeding
six months."
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Sec. 124 provides that no order confiscating any goods or imposing any penalty on any pers?n ~hall be m_ade. uril~. the. owner
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of the goods or such person 1s given a notice m wntlng mforming him of the grounds on which it is pr~posed to confiscate the
goods or to impose a penalty.
The section does not lay down
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ASST. COLLECTOR CUSTOMS v. c. D. MALHOTRA (She/at, J.) 805
any period within which the notice required by it has to be given.
The period laid down in s. 110 ( 2) affects only the seizure of the
goods and not the validity of the notice.
Since the watches in question were seized on March 19, 1963,
the initial period of six months provided under the second subsection of s. 110 expired on September 19, 1963 and the respondent became entitled to the return of the said watches as no show
cause notice had tilL then been issued to him.
But the appellant's
case was that an extension for a further period of four months was
applied for and was granted ·by the Collector on September 19,
1963 under his power under the said proviso on the ground that
certain inquiries at Bombay and Delhi yet remained to be made.
The extended period of four months expired on January 19, 1964
and a further extension of two months was applied for on January
3, 1964.
But the Collector passed his order granting further
extension on February 20, 1964, that is to say, about a month
after the first extended period had expired.
Admittedly, both 'the extension orders were passed ex parte
and without any opportunity of being heard having been given to
the respondent.
The respondent, therefore, got no chance to
resist either of the two applications for extension and to show
that no sufficient cause had been shown, and that therefore, no
order of extension was justified or should be granted, and the
watches shol!ld, as provided by s. 110(2), be restored to him.
He also got no opportunity to plead before the Collector that the
right to have the watches restored to him having already accrued
to him on January 19, 1964, it could not be defeated by an order
of extension passed after the first extended period had already
lapsed.
Aggrieved by the two orders of extension passed in the manner
aforesaid, the respondent moved the High Court of Calcutta under
Art. 226 of the Constitution, contending that the proviso to
s. 110(2) envisaged only one extension, and that therefore, the
second extension was invalid.
The learned Single Judge, who
heard the writ petition, rejected this contention holding that the
proviso empowered the Collector to grant as many extensions as
the completion of the inquiry and the issuance of the notice under.
s. 124(a) required but in no case exceeding six months at a time.
The second contention urged by the respondent was
that the
period of the first extension having expired on January 19, 1964
and no further extension having been granted by that date, he
became entitled to restoration of the said. watches and the second
order extending the period by two months more granted a month
after the expiry of the first extended period would be of no avail
to the Customs authorities.
This contention too was rejected lln
806
SUPREME COURT REPORTS
[1971] 3 S.C.R.
the ground that where there is a prescribed time for doing a thing
but ai:J. express power is given to an authority to extend that time,
such power can be exercised even after the prescribed time has
expired unless there is an express provision prohibiting to do so.
There was no such provision.
The learned Single Judge
also
held that there was no need to give to the respondent any notice
of the applications for extension, the only requirement being that
a sufficient cause had to be shown t<) the satisfaction of the Collector.
The .learned Judge also rejected a third contention by
the respondent that in the absence of any information with the
Customs officers as regards the watches save that they were of
foreign manufacture, they could not have entertained any reasonable belief that their importation was contrary to or in violation of aqy statutory provision.
This contention was rejected on
the strength of the supplemental affidavits of the Customs officers
ord\lred by the learned Judge.
The result· was that the learned
Judge dismissed the writ petition negativing, inter a/ia, the respondent's plea as to the restoration of the seized watches.
On an ·appeal by the respondent, a Division Bench of that
High Court took a contrary view.
It held that the watches having been seized on Marc!"! 19, 1963, the period of six months
expired on September 18, 1963, that if a notice under s. 124(a)
was not given by that time, s. 110(2) imposed a statutory obligation on the customs to return the goods to the person from whom
they were seized.
The Division Bench observed that even assuming that the first extension which was granted ex parte and without any opportunity to the respondent of being heard were to be
valid, the period of four months granted then havi'lg !!Xpired on
January 19, 1964 and no order for further extension having
admittedly been made, it was obligatory on the Customs to return
the watches to the respondent.
There being such a statutory
obligation under s. 110(2), there was a corresponding statutory
right in the respondent to have them restored to him.
The Division Bench was of the view that such a right having accrued to
the respondent, it coulcl not be defeated by an order passed one
month after the lapse of the first extended period.
It also held
that the words "sufficient cause being shown" used in the proviso
meant that the Collector had to decide an application for extension judicially, the reason being that the Collector could not fairly
and justly determine that a sufficient cause was shown without
hearing the pros and cons of the question, and therefore, he had
no jurisdiction to grant extension witho1;1t giving t? the resp?~d~nt
an opportunity of being heard.
In this connectmn the D1v1s!on
Bench observed :
"As Jon~ as the period of issuing notice has not
expired, it ~iight be· one thing.
But quite a different
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set of circumstances arise when the period has e. :xpired
and the right to the return of the goods is vested;ln the
person from whose possession the goods are seized. If
you are to take away the right you can only do that for
a sufficient cause.
How can the
officer concerned
decide as to whether a sufficient cause has been shown,
so as, to divest a vested right, unless
he hears the
parties affected.
Even after the supplementary affidavits were filed in this case, it is
extremely doubtful
whether a sufficient cause has been shown."
,\ccording to the Division Bench, even if the Collector's functioll'
under the proviso were to be treated as an administrative function, his authority being to determine the question affecting the
rights of the citizen, there was an implied duty to act judicially.
On this reasoning, the Division Bench held that in any event the
,second order of extension was bad.
It also found that the· show
cause notice issued under s. 124(a) was vague, gave no opportunity to the respondent to explain the allegations contained therein, and therefore, was bad, with the result that the appellant would
be required to give a fresh notice.
For the reasons above stated,
t6e Division Bench reversed the judgment of the Single Judge·
and allowed the writ petition.
The correctness of this judgment
is the subject matter of this appeal.
We may at this stage mention that cotms.el for appellant fornmlated the following two contentions only :
(I) that the liability to return the
goods
seized
under s. 110 (1 ) on the expiry of the time prescribed
under sub-s. (2) is not absolute as it is subject to the
period being extended for a period not exceeding six
months, that is to say, within the over all period of one
year; that therefore, there is no question of any right
beinl,l vested in the respondent on the expiry of the first
six months or the extended. period or such right being
divested until one year from the date of seizure has
expired: and
( 2) that, t~e proviso to s. 110 ( 2) does not co~tem
plate any ilOhce to the respondent as the
cons1de~a
tions which would weigh with the Collector or which.
would be relevant for granting extension would be of
such a nature that they could not be disclosed. such
disclosure being against public interest; th~t only !WO
requirements are envisaged for the extension of Hme
and they are ( i) that a sufficient cause is shown. and
(ii) that the extension is within one year.
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SUPREME COURT REPORTS
[1971] 3 S.C.R.
As already stated, sub-s. (1 i of s. 110 authorises seizure. the
.only requirement being a reasonable belief on the part of the con-
<:erned officer at the time of seizure.
The . power of seizure
founded on a mere reasonable belief being obviously an extra-
.ordinary power, the second sub-section envisages i;ompletion of
the enquiry within a period of six months from
the date of
seizure.
But it provides that if such an enquiry is not completed
within that period and a notice under s. 124 (a)
is, therefore,
· not given, the person from whom the goods are seized become:
-·entitled to their restoration.
However, on the supposition that in
some cases such an investigation may not be c_ompleted owing to
some difficulties, the legislature gave under the proviso power to
the Collector, an officer superior in rank and also an appellate
.authority under s. 128, to extend the time on 'two conditions.
namely, (1) it does not exceed one year, and (2) on sufficient
cause being shown.
The policy of the legislature,
therefore,
clearly was that in view of the extraordinary power of seizure,
the enquiry should ordinarily be completed within six months but
since it might not be possible to do so in some cases, it gave power
of extension to the Co'.!ector.
The legislature was thus careful
to entrust the power of extension to a superior officer who also
has the power to hear inquiries under the Act involving penal
consequences and also appeals.
Cases where extension would
have to be asked for and granted are thus envisaged as exceptions
to the general rule of six months laid down in sub-s. (2). The
second limitation to the power is that such extension can be
granted only on sufficient cause being shown, a phrase often used
in provisions for condonation of delay, such as s. 5 of the T_;;nitation Act, 1908.
There can be no doubt that the proviso to the second sub·
section of s. 110 contemplates some sort of inquiry.
The Collector, obviously, is expected not to pass _extension orders mechani·
cally or as a matter of routine, but only on being satisfied that
·there exist facts which indicate that the investigation could not
be completed for bona fide reasons within the time laid down in
s. 110(2), and that therefore, extension of that period has become necessary.
He cannot, therefore, extend the time unless he
is satisfied on facts placed before him that there is
a sufficient
cause necessitating extension.
The burden of proof in such an
·inquiry is clearly on the Customs officer applying for extension and
not on the person from whom the goods are seized.
The question, therefore, is as to the nature of such a function
and power entrusted to and conferred on the Collector by the
·proviso.
It will be noticed that whereas sub-s. ( 1) of s. 110 uses
·the expression "reason to. believe" for enabling a Customs Officer
'to seiz1! goods, the proviso to sub-section (2) uses the expresA
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sion
'su.'ficient cause being shown" It would seem that
su?-s. ( 1) does not contemplate an· inquiry at the _stage of
seizure, the only requirement being the satisfaction of the concerned officer that there are reasons to believe that the goods are
liable to confiscation by reason of their illegal importation. Even
so, such satisfaction, as laid down in Narayanappa v. Commissioner of Income Tax, Bangalore('), is not absolutely subjective
inasmuch as the reasons for his belief have to be relevant and not
extraneous. It is clear that the legislature was not prepared to
use the same language while giving p_ower to the Collector to
extend time and deliberately used the expression "sufficient cause
being shown".
The point is why should the legislature have
used such· a different expression while enacting the proviso if its
intention was to confer power whic1i would depend on a more
subjective satisfaction as to the cause for extension.
The words
"sufficient cause being shown" must mean that the Collector must
determine on materials placed before him that they warrant extension of time.
Where an order is made in bona fide exercise of
power and within the provisions of the Act which confers such
power, the order undoubtedly is immune from interference by a
court of Jaw, and therefore, the adequacy of the cause shown may
not be a ground for such interference.
But there can be no doubt
at the same time that the inquiry to be held by the Collector has
to be on facts, i.e., matertals placed before him.
There is therefore no question in such cases of the subjective satisfaction of the
Collector, for, what he is asked to do by the proviso is to determine that the cause shown before him warrants an extension of
time.
In l,,akhampal's case("), this Court noticed a similar difference of language used in rr. 30(1 )(b) and 30-A(9) of the
Defence of India Rules, 1962 which dealt with two different types
of powers.
Though it was a case dealing with preventive detention, what is important is that the decision primarily depended on
the difference in language used in the two rules and the difference
it made in the character of the two powers.
A similar expression, though not exactly the same, also came to be construed by
the House of Lords in De Verteuil v. Knaggs & Anr..(8), a case
often referred to wh;le determining the nature of power. The
question which arose there was whether under s. 203 of the Trinidad Immigration Ordinance, No. 161, the government could pass
an order transferring indentured labour from one employer to
another without notice to the concerned employer against whom
complaints as to treatment of the labourers were made. The
section provided that if at any time "it appears to the governor on
(I) 63 I.T.R. 219.
(2) A.I.R. 1967 S.C. I 507.
(3) [191F[ A.C'. 557 ..
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SUPREME COURT REPORTS
[1971]3 S.C.R.
sufficient ground shown to his ,satisfaction, that all or any of the
immigrants indentured on any· plantation should be removed
therefrom. it shall be lawful for him to transfer the indentures of
such immigrants to any other employer.''
Construing this provision, Loid Parmoor observed at p. 560 of the report :
"The Ordinance does not prescribe any special form
of procedure, but there is an obvious implication that
some form of inquiry must be made, such as will enable
the Governor fairly to determine whether a sufficient
ground has been shown to his satisfaction for the removal
of indentured immigrants ... What is the procedure which
in such a case the law will imply when the Legislature
is silent '!
The acting Governor was not called upon to
give a decision on an appeal between parties, and it is not
suggested that he holds the position of a judge or that
the appellant is entitled to insist on the forms used in
ordinary judicial procedure ..... On the other hand, the
acting Governor could not properly carry through the
duty entrusted to him without making some inquiry
whether sufficient grounds had been shown to his
satisfaction that immigrants indentured on the La
Glaria estate of the appellant should be removed. Their
Lordships are of opinion that in making such an
inquiry there is, apart from special circumstances, a
duty of giving to any person against whom the complaint is made a fair opportunity to make any relevant
statement which he may desire to bring forward and a
fair opportunity to correct or controvert any relevant
statement brought forward to his prejudice."
In Kraipak v. Union of India(1) the power of a selection board
to prepare a selection list from amongst the public servants for
appointment in the senior and junior scales was held to be quasijudicial although the board had no power of appointment itself.
In doing so, this Court ·observed that the dividing line between
judicial and administrative functions was
thin
and gradually
evaporating', .and that the functions performed by those doing
judicial function and administrative function, where the rights ot
citizens are affected to their pre.judice. had ·the same object,
namely, to do justice and deciding the question fairly and justly.
ln the former case, there would be express rules of procedure, but
the object of those rules is only to em1ble or facilitate to decide
fairly and justly.
The Court also pointed out that in recent years
the concept of quasi-judicial power has been undergoing a radical
change and noted with approval the decision in Regina v. Criminal Injuries Compensation Board Ex parta Lain(")' where it was
(I) [1970) 1 S.C.R. 457.
(2) [1967] 2 Q.B. 864.
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ASST. COLLECTOR CUSTOMS v. c. D. MALHOTRA (She/at, J.) 81 J
held that certiorari would be available not only where the impugn·
ed order infringes immediately enforceable rights but also where
it is a step as a result of which legally enforceable rights may be
affected. If the power of preparing a selection list without the
power to appoint, as in Kraipak's case(!), and power to transfer
indentured labour from one to another employer, as in De Vertcuil
v. Knaggs('), are held, in the context of their respective provisions, to be quasi-judicial powers, there is no reason why, when
the statute requires the determination of a sufficient cause on
facts produced before the Collector should be held not to be a
quasi judicial function or at least a function requiring judicial
approach.
But it may be said that in both thgse cases there was a civil
right involved and the power, therefore, had to be held to be q11a.1ijudicial.
But in the present case also, the right to restoration of
the seized goods is a civil right which accrues on the expiry of the
initial six months and which is defeated on an extension being
granted, even though such extension is possible within a year
from the date of the seizure.
Since the Collector has on facts to
decide on the existence of a sufficient cause, although his decision
as to sufficiency of materials before him may be within his exclusive jurisdiction, it is nonetheless difficult to comprehend how he
can come to his determination unless, as the Division Bench of
the High Court has said, he has before him the pros and cons of
the question.
An ex parte determination by the Collector would
expose his decision to be one-sided and perhaps one based on an
incorrect statement of facts.
How then can it be said that his
determination that a sufficient cause exists is just and fair if he
has before him a one-sided p:~tJre without any means to check it
unless there is an opportunity to the other side to correct or controvert it.
The difference in the language used in the first subsection and the proviso to sub-s. (2) lends support to the contention that the power in one case may be subjective, and therefore,
not calling for an enquiry, and the power in the other is one, the
exercise of which necessitates an enquiry into materials placed
before the Collector for his determination.
In our view, these
considerations lead to the conclusion that the power under the proviso is not to be exercised without an opportunity of being heard
given to the person from whom the goods are seized.
In a recent decision in Sheikh Mohammed Sayeed v. Assistant
Collector of Customs(') a contrary view has, however, been taken
by a single Judge of the )ligh Court of Calcutta.
The extension
order there was passed before the expiry of the initial six month~'
period.
But the contention raised was that an opportunity to be
heard should have been given to the petitioner.
The learned
--(t) [1970] I S.C.R 457.
12) [19181 A.C. 557.
0) A.1.R.1970Ca1.134.
812
SUPREME COURT REPORTS
[1971] 3 S.C.R.
Judge distinguished the decision of the Division Bench under this
appeal (reported in A.LR. 1968 Cal. 28) on the ground that the
qu~tion involved in tha~ dec!sion was whether an opportunity of
bemg heard had to be given m respect only of an extension when
the right to restoration of the goods .in question has already
accrued to the party from whom they were seized, and therefore.
the decision did not apply to the case before him when such a
right had not vested in the petitioner.
With respect to the learned
Judge, the distinction was not correct, firstly, because the first
order of extension was only assumed to be correct as the Division
Be~ch concentrated its attention on the second order of extension
which also involved the question of the right to restoration of the
goods having already vested; and secondly, because the Division
Bench set aside the extension order on the ground :hat the power
of extension was quasi-judicial or at any rate one which required
a judicial approach.
The latter ground applied to both the
orders, and therefore. if" the second order of extension was bad.
the first was for the same reason necessarily bad.
The order of
extension in both the cilses would deprive the person from whom
the goods are seized of the right to have the goods restored to him
on the expiry of six months from the date of seizure.
As for his
decision on the nature of the power, the learned Judge relied on
decisions in Collector of Customs v.
N. Sampathu Chetty(').
Babula/ Amt halal v. Collector of Customs('), Pukhraj v. Kohli(")
and Nathmal Jala11 v. Additional Collector of Customs(') which
were all cases where the exercise of power depended on reasonable
belief or reasons to believe. But he held that the power under
the proviso to s. 110(2) should be construed on the same principles laid down in those decisions.
This is made clear at page 141
of the report where he observed :-
"In my view the same principles are attracted in
construing the phrase 'on sufficient cause being shown'
..... With regard to the nature and sufficiency of the ,
cause, it is the satisfaction of the Collector of Customs
that provides the ground and justification for an order
extending the time to complete the inquiry ..... If the
order' of extension is made before expiry of the inic '
tial period of six months, or before expiry of the extended period, it cannot in my view be challenged on
the ground that notice to show cause, or opportunity
of.. being heard. was not given to the party."
In our view, equating the power, the exercise of wkich depends
on a mere reasonable belief, with the power, the exercise of
.which depends on 'sufficient cause being shown' envisaging at
fl) A.I.R. 1962 S.C. 316.
(2) A.I.R. 19H S.C. 877.
(3) A.J.R. 1~62 S.C. 1559.
(4) 70C.W.N. 349.
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ASST. COLLECTOR CUSTOMS v. c. D. MALHOTRA (Shelat, J.) 813
•
least some sort of inquiry on facts placed before the authority
and determination by him on those facts, is not warranted.
Therefore, a conclusion based on such a premise creates difficulty in sustaiining it.
Further, the distinction between an order
extending before and after the expiry of the i:nitial or the extendc
ed period does not make any difference as was sought to be
made by the learned Judge when one inquires into the character
o.[ the power of extension.
Both would raise precisely the same
question, whether the power is purely administrative requiring
no opportunity of be.ing heard or judicial or quasi-judicial, as in
both the cases the right to the goods being restored would be
involved.
We cannot also agr_ee with the learned Judge that
there is no indication in the Act 'ftJ suggest that the Collector is
required to act judicially, firstly, because the proviso requires
. determination on facts and not on mere suspicion and a sufficient
cause being made out by the applicant-officer, and secondly, because a civil right of a citizen to the restoration of the goods on
expiry of the period, whether initial or extended, is affected.
The other decisioo,. which takes a contrary view, is of the
High Court of Mysore in Ganeshmul Channilal Gandhi v. Collector of Central Excise('). The grounds on which the learned
Judges there took that view were (i) that the power was administrative, and (2) that if notice were to be necessary, the authority which applies for extension would have to make a disclosure about the investigati~n, which disclosure would be detrimental to the investigation itself.
For the reasons already given
we cannot agree with the first ground.
As for the second ground.
we do not see any reason for the apprehension.
So far as the:
initial period of six months is concerned, there is no question of
disolosure of the investigation.
The legislature itself contemplated that ordinarily such an investigation would be completed
within that period. The question of disclosure would arise only
in cases where for bona fide reasons something yet remains to be
done.
The only disclosure in such cnses would be about the
fact that investigation at some place or places, or about certain
matters is still incomplete and pending.
No one suggests that
the inquiry to be held by the Collector would be similar to the
one held in a court of law or that the officer applying for exte.nsion would be compelled to disclose the names of his informants
or such other matters which would be detrimental to the investigation.
Even in more se'rious matters. such as applications for
remand in criminal cases, opportunity to be heard has to be given
\fo one has yet suggested that such an opportunity is detrimental
to the investigation. The unreported judgment of the High Court
(I) A.l.R. 19(8 Myrnrc
F9·.
d14
SUPREME C'OL'RT REPORTS
[197J) 3 S.C'.R.
.of Bombay in M/ s. Prakash Collon Mi//.1· Pl'I. Ltd. v. Assis1a111
Collector of Cemrar Excise, Bombay( 1 )
does not throw a,ny
further light as it is mostly based on the reasoning of the Mysore
High Court.
We are not satisfied that as between the right of
the person from whom the goods are seized and the supposed
danger lo the investigation the matter is so weighted down that'
we would be compelled 10 hold that the legislature could not pos-
'ibly have contemplated a judicial approach by the Collector
when he orders extension of time, the effect of which would be
the deprivation of, or in any event, postponement of the right
to restoration.
In our view, the first question must be answered
in favour of_ the respondent, and therefore, the -Division Bei.nch
was right in holding that the power under the proviso was quasijudicial, or at any rate, one requirin_g a judicial approach. Consequently, an opportunity of being heard ou,ght to have been
given to the respondent before orders for extension were made.
The High Court, consequently, was justified in ordering restoration of the watches in question to the respondent.
In this view it is not necessary for us to decide the second
question raised by coumel for th~ respondent.
We are also not
dealing with the question as to whether the notice under s. 124(a)
was vague, and therefore, void as decided by the Division Bench.
That part of the decision of the High Court was not challenged
before us, and therefore, we are not called upon to give our decision on that part of the case.
In the result, the judgment of the Division Bench has to be
upheld.
The appeal will stand dismissed with costs.
V.P.S.
Appeal dismissed.
(t) M.P. No. 127 of 1963 dt. Augu't 31, t970
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