# Jowohar Z I B""""" v. UniM of India - **Citation:** [1962] 3 S.C.R. 786 - **Court:** Supreme Court of India - **Decided:** 1962 - **Case number:** Civil Appeals Nos. 408 to 410 of 1960 - **Bench:** B.P. Sinha, A. K. Sarkar, M. Hidayatulla.H, N. Rajagopala Ayyanga.R, J. R. lllUDilOLKAR - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jowohar-z-i-b-v-unim-of-india-2477 - **Pages:** 57 ## Headnote Smuggl•d Gooda-Re&trictiona on imporration of goldS•izurt of gold on muonable bPlz°p/ that it UllU amuggl•~BarclM of proof that it uaa not amuggled °" peraon in ~ Conatitutional va/iJlity of enaclmeRt-Rfer..,.ce of statute in a atconcl statute without incorporatiorr-Effut of modification. of the firat •tatutP.-1'oreign Exchange Regulation Act, 1947 (7 of 1947), sa. 2(/), 8(1), 23A-See Cuatoma Act, 1878 (8 of 1878), u. 19, 167(8), 178A, 182-Conalitutio,.of Ind4a, Arta. 1', 19(1), (/) and (g). Un1er the powers conferred bys. 8( I) of the Foreign Exchange Re~'\llation Act, 1947, the Central Government issued a notification on August. 25, 1948, placing a ban on the imp1>rtation of gold except with the permission of the Reserve Bank. Section 23A of the Act, which was introduced by an amendment in 1952, provided that " .. the restrictions imposed by s. 8( I) .. shall be deemed to have been imposed under s. 19 of the Sea Customs Act, 1878, and all the provi1ions of the Act shall have effect accordi~gly .. " Section 19 of the Sea Custom• Act, 1878, enabled the Central Government, by notification, to prohibit or restrict the bringing goods of any specified description into .-- ' 3 s.c.R. SUPREME OOURT REPORTS 78i India and, by reason of other provisions of that Act, goods imported in contravention of the notification issued under s. 19 were liable to confiscation. In 1955, the Sea Customs Act, 1878, was amended by the introduction of s. l 78A in that Act, which provided, inter alia· that "where goods were seized under that Act in the reasonable belief that they were smuggled goods, the burden of proving that they were not smuggled goods shall be on the person from whose posse!Sion the goods were seized;" On June 26, 1956, N, an employee of the respondent, on alighting at the Central Station in Madras from Bombay was intercepted by a Police Head Constable and, on a search of his clothing, four blocks of gold weighing about a thousand tolas were found in his possession. The officers of the customs department interrogated him and, finding that he was unable to produce any record for the purchase of the gold, seized from him the blocks of gold. N admitted that he brought the gold.for the respondent and enquiries were made to verify the story narrated by him as to the source from which he obtained the gold. Theroafter the Collector of Customs being prima facie of the view that the gold seized had been smuggled, issued notice to the respondent to show cause why the said gold should not be confiscated. The respondent offered his explanation but the Collector held that the respondent had not discharged the onus of proving that the gold was not smuggled, an onus which had been cast on him by s. l 78A of the Sea Customs Act, 1878, and directed the confiscation of the gold under s. 167 (8) of that Act. The respondent challenged the legality of the action taken by the Collector of Customs on the grounds, inter alia, ( 1) that s. l 78A of the Sea Cu.toms Act, 1878, was constitutionally invalid as it was an unreasonable restraint on the citizen's rights to hold property or to do business guaranteed by Art. 19(l)(f) and (g) of the Constitution of India and was not saved by els. (5) and (6) respectively of Art. 19; (2) that s.178A of the Sea Customs Act which was enacted in 1955 could not be invoked in adjudicating a contravention of a notification under the Foreign Exchange Regulation Act inasmuch as s. 23A of the latter Act when enacted in 1952 in effect incorporated into that Act all the relevant provisions of the Sea Customs Act as they stood in 1952 with the result that any subsequent amendments to the Sea Customs Act could not affect s. 23A; and (3) that the rule as to the burden of proof under s. I 78A was not attracted to the present case because the Customs Officer who effected the seizure did not, at the moment of seizure, entertain a reasonable belief that the goods seized were smuggled. The Collector of Customs besides maintaining the leg ## Text _Characters 0–39,907 of 114,110. This is a partial read: ask again with offset=39907 for what follows._ 1981 Jowohar Z..I B""""" v. UniM of India 1961 8t1l1f'lt011 2S. i86 SL"PREME COURT REPORTS [I !162] accep~ tho appellant's argument that tho letter was intended to make a substantial variation in the contract by making the deposit. of security a. condition precedent instead of a. condition subsequent. . In the result the appeal fails and is dismissed ll 01th costs. 4. Appeal dismused. THE COLLECTOR OF CUSTOMS, MADRAS t'. NATHELLA SAMPATHU CHETTY AND ANOTHER (And connected cases) (B.P. SINHA, c. J., A. K. SARKAR, M. HIDAYATULLA.H, N. RAJAGOPALA AYYANGA.R and J. R. lllUDilOLKAR, JJ.) Smuggl•d Gooda-Re&trictiona on imporration of goldS•izurt of gold on muonable bPlz°p/ that it UllU amuggl•~BarclM of proof that it uaa not amuggled °" peraon in ~ Conatitutional va/iJlity of enaclmeRt-Rfer..,.ce of statute in a atconcl statute without incorporatiorr-Effut of modification. of the firat •tatutP.-1'oreign Exchange Regulation Act, 1947 (7 of 1947), sa. 2(/), 8(1), 23A-See Cuatoma Act, 1878 (8 of 1878), u. 19, 167(8), 178A, 182-Conalitutio,.of Ind4a, Arta. 1', 19(1), (/) and (g). Un1er the powers conferred bys. 8( I) of the Foreign Exchange Re~'\llation Act, 1947, the Central Government issued a notification on August. 25, 1948, placing a ban on the imp1>rtation of gold except with the permission of the Reserve Bank. Section 23A of the Act, which was introduced by an amendment in 1952, provided that " .. the restrictions imposed by s. 8( I) .. shall be deemed to have been imposed under s. 19 of the Sea Customs Act, 1878, and all the provi1ions of the Act shall have effect accordi~gly .. " Section 19 of the Sea Custom• Act, 1878, enabled the Central Government, by notification, to prohibit or restrict the bringing goods of any specified description into .-- ' 3 s.c.R. SUPREME OOURT REPORTS 78i India and, by reason of other provisions of that Act, goods imported in contravention of the notification issued under s. 19 were liable to confiscation. In 1955, the Sea Customs Act, 1878, was amended by the introduction of s. l 78A in that Act, which provided, inter alia· that "where goods were seized under that Act in the reasonable belief that they were smuggled goods, the burden of proving that they were not smuggled goods shall be on the person from whose posse!Sion the goods were seized;" On June 26, 1956, N, an employee of the respondent, on alighting at the Central Station in Madras from Bombay was intercepted by a Police Head Constable and, on a search of his clothing, four blocks of gold weighing about a thousand tolas were found in his possession. The officers of the customs department interrogated him and, finding that he was unable to produce any record for the purchase of the gold, seized from him the blocks of gold. N admitted that he brought the gold.for the respondent and enquiries were made to verify the story narrated by him as to the source from which he obtained the gold. Theroafter the Collector of Customs being prima facie of the view that the gold seized had been smuggled, issued notice to the respondent to show cause why the said gold should not be confiscated. The respondent offered his explanation but the Collector held that the respondent had not discharged the onus of proving that the gold was not smuggled, an onus which had been cast on him by s. l 78A of the Sea Customs Act, 1878, and directed the confiscation of the gold under s. 167 (8) of that Act. The respondent challenged the legality of the action taken by the Collector of Customs on the grounds, inter alia, ( 1) that s. l 78A of the Sea Cu.toms Act, 1878, was constitutionally invalid as it was an unreasonable restraint on the citizen's rights to hold property or to do business guaranteed by Art. 19(l)(f) and (g) of the Constitution of India and was not saved by els. (5) and (6) respectively of Art. 19; (2) that s.178A of the Sea Customs Act which was enacted in 1955 could not be invoked in adjudicating a contravention of a notification under the Foreign Exchange Regulation Act inasmuch as s. 23A of the latter Act when enacted in 1952 in effect incorporated into that Act all the relevant provisions of the Sea Customs Act as they stood in 1952 with the result that any subsequent amendments to the Sea Customs Act could not affect s. 23A; and (3) that the rule as to the burden of proof under s. I 78A was not attracted to the present case because the Customs Officer who effected the seizure did not, at the moment of seizure, entertain a reasonable belief that the goods seized were smuggled. The Collector of Customs besides maintaining the legality of the order of confiscation, contended that the question raised in the case as to the constitutional 19/JI Thi Coll1ctor of Curtoms, M a4ra1 v. Nath11/• Sampat"" ChttlJ 1961 T/i, Colltt101 of Cwtom.s, M atbu v . • V.iJwUa Sampatlm Chttty 788 SUPREME COURT REPORTS [1962] validity of s. I i8A of the Sea Customs Act was concluded by the drcision in Babu/al Amthalal Mehla v. The Collulor of Custom&, Calcu!ta[l957J S.C.R. 1110. Ileld: (I) that Babula! Amthalal Mehta v. The Collutor of Cu•iomJJ, Calcu~, [19571 S. C.R. 1110, was a decision as to the \'alidit:1 of s. I i8A of the Customs Act, 1878, with reference to Art. 14 of the Con!litution of India onlv and that the C]'JCstio·1 whether the said section \vas obnoxious to the rights h"'aranteed by Art. 19(l)(f) and (g) was not considered by that judrment. (2) t 01at the object of s. 178A was the prevention and eradktion of smuggling, intu alio, of gold which was widely preva~ent 1 and in vie\ll of the fact that \vithout a La\\' in that form and with that amplitude smuggling might not be possible of heing efl'<:ctivcly checked, the restrictions imposed by that s<".ction bein~ in the interests of the general public could not be held to be violati\'e of the rights guaranteed by Art. 19(l)(f) and (l:l, thcugh it might operate somewhat harshly on a small section of the public. Accorclingly, s. I 7BA does not contravene Art. l~'(l)(f) and (g). Stale of M!Jdra• '" V. G. Row, 119521 S.C.R. 597, Manohar r.ol v. State _of Punjab, rl9611 2 S.C.R. 343 and Ram Dhan DaJ• '" Stat• of Punjab, 119621 I S.C.R. 852, relieji, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and l'. L. Vohra, for the rcspon· dents in C. Ae. Nos. 408 and 409 of 60and appe· llant in C. A. No. 410 of 1960. R. S. Narwla, for the appellant in Cr. A. No. 38 of 59. C. K. Daphtary, Solicif,()1'.General of India, N. S. llindr!l and D. Gupta, for the respondent in Cr. A. No. :18 of 1950. 'J'. M. Sen, for Intervener No. I in Cr. A. No. 38 of 59. K. N. Kuu:rmi, for inter>ener No. 2 in Cr. A. No. 38 of 59. I'.. S. Narula ancl R. L. Kohli, for the appellant in Cr. A. No. 126 of 1959. C. K. Daphtary, Solicitor-General, of India, H.J. Umrigar ancl D. Gupta, for the respondPT1t in Cr. A. No. 126 of 1959. N. C. Cliatlerji, S. K. Kapur and Gcinpnt m C. A. No. 5n of 1960. 8. VenkatakriRhnmt, for thA petitioner in Pctn. Xo. 118 of 1958. C. K. Daphtmy, Solicit-0r-Ue11eral of India, II. J. Um.riuar a,1d R. JI. Dhelxtr, for the respondents in Petn. Ne·. llE: of 1958. J 961. Sept-0mber 25. The Judgment of the Court was delivered by AYYAtm.u:, J.-The Sea Customs Act, 1878 (Act 8 of 1878) (referred to hereinafter as the Act), ~ -. - ~ s.c.R. SuPREME COURT REPORTS 191 was amended bys. 14 of Act 21 of 1955 by the introduction of s. l 78A reading : "178A. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they arc smuggled goods, the burden of proving that they a.re not smuggled goods shull be on the person from whose possession the goods were seized. (2) This section shall apply to gold, gold manufactures, diamonds and other precious stones, cigarattes and cosmetics and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf. (3) Every notification issued under Subsection (2) shall be laid before both Houses of Parliament as soon as may be after it is issued." It is the constitutional validity of this section that is the common point which arises in these several cases which have beiin heard together. We have heard on the merits only Civil Appeals 408 to 410 of 1960 and the other cases were posted before us in order that Counsel appearing for the parties in them, might have an opportunity to be heard upon the common question mentioned earlier. We shall, therefore, refer only to the facts of Civil Appeals 408 to 410 of 1960 in dealing with these petitions. Civil Appeals 480 to 410 : These appeals come before us on a certificate granted by the High Court of Madr1ts undPr Arts.132(1) and 133(l)(c} of the Constitution and are directed against the judgment and order of thf' High Court in two Writ Petitions filed before it by Nathella Sampathu Chetty-the sole proprietor of a business in gold and silver, bullion, jewellery etc. carried on in the name of Natholla Sampathu 1961 The Collector oj Customs, MadraB v. Nathella Sampathu A;vyangar ] . 1961 T/,, c.u,,,., •f Customs> Madras v. Jf.uitl/a Sam;alhu Ch.117 Ayyongar J. + 792 SUPREME COURT REPORTS [19621 Chetty & Sons (ref..rrcd to hereafter as the respondent). The facts giving rise to tlwse appeals arc briefly as follows : On the morning of Juno 26, 1956, one Nandgopal-an <'mploycc of tho respondent-alighted at the Ce1;tral ~talion in Madras from the Bombay Express. Xandgopal was interc"pted and questioned by a Head Constable of the State Police Scr\'ice attached to the Prohibition Intdligencc Department. Nandgopal admitted that he was in possession of gold which he was bringing for his firm-the respond!·nt-from Bombay. The Head Constable immcdiatdy contaewd the officerd of the Prevouti \·e Section of the Customs Department who were on duty at tho Central station who interrogated Nandgopal and wized from him four blocks of gold weighing in a.II about 1,00(1 tolas. Enquiries were madl' to verify -ihe story narrated by Nandgopal as to the source from which he obtained the gold and thereafter the Collector of Customs being prima f11cie of the view that the gold seized had been ~muggled, issued notice to the respondent to show cause why the said gold should not bo confiscated. The respondent offered his expla.na.tion but the Collector held that the rt'Spondent had not discharged the onus of proving that the gold was not smuggled-an onus which had been cast on him by H. l 78A of the Sea. Customs Act and directed the confiscation of the gold. The respondent thereupon filed a petition (Writ Petition 3S-! of 1957) under Art. 2:26 of the Constitution before the High Court of Madras for tho isaue of a writ, of certi-Orari or other appropriate writ for quashing the order of th~ Collector of Customs on va.riou~ grounds to which we shall advert later, including the constit11tional validity of s. I iSA. While this writ petition was pending, the respondent filed another petition (Writ Petition 660 of 1958) for a writ of ma11dam11s directing tho Collector to return the gold seized and confiscated by him. • .. - .. -.-; l 3 S.C.R. St.11.>REM:fll COUR'l' REPORTS 79.3 The two writ petitions were heard together and by an order dated September 11, 1958, the learned Judges of the High Court held, allowing Writ Petition 384of1957, that s. 178A of the Sea Customs Act was void under Art. 13 of the Constitution. They further held that even ifs. 178A were valid, the condition precedent for invoking the rule as to the burden of proof prescribed by the section had not been complied with, in that the customs officer who effected the seizure which preceded the adjudication did not enterhin "a reasonable belief that the gold was smuggled", with the result that the order of confiscation was invalid. Besides, the learned J11dges were also of the view that s. l 78A of the Sea Customs Act could not be invoked in adjudicating a contravention of a notification under the Foreign Exchange Regulation Act which imposed restrictions on the import of gold. Though on these conclusions the order of the Collector confiscating the gold was set aside, the learned Judges held that the respondent was not entitled to an order for the return of the gold, but only to a direction to the Collector to he~r and determine the question about the gold seized being smuggled gold without reference to the rule as to onus of proof enacted bys. 178A. The appellant, the Collector of Customs, Madras, obtained leave from the High Court under Arta. 132 and 133 of the Constitution to appeal to this Court against the orders in wirt Petition No. 384of1957 and No. 660 ofl958 (Civil Appeals 408 and 409) and a similar order was passed in an application for a certificate by the respondent who felt aggrieved by the refusal of the Court in Writ Petition No. 660 of 1958 to direct an immediate return of the gold seized (Civil Appeal 410). The three appeals have been consolidated as they arise out of the same tnmsaction. We shall first take up for consideration Civil Appeals 408 and 409 of 1960 filed by the Collector -0f Customs, because unless those appeals fail there would be no need to decide the relief to which the 1Hl The fJGl!tctor c,f Customs, Madras v. }/atlulla SampatJ>u Chetty Ayyan~c;r J. TT-.. Co/Int•• •f Cuato.l'flS Madraf .. N.U..lla Samp.i/.., C/wtty .1'f.Yl"I"' J. SUPRE?IIB CoURT REPORTs (1062 j respondent would bo entitled in Civil Appeal 410 of 1960. In order to appreciat-0 the contentions raised, it 1rnuld he n•,ccss1iry to set out t.ho statutory provisi1ms which form the background of tho impugned pro\'ision -s. I i8A of the Sea Customs Act. The Furoign Exchang<' Hegulation Act, 1947 (Act 7 of UJ.17), waR brouf!ht into force on March 25, 1947, by a notification issued by tlrn Central Government under s. 1(3) of that Act. Tho preamble to the Act recites: "It is expedient in the economic and financial int-OrPsts of Inrlia to provide for tho regulation of ...... the import and export of currency and bu Ilion." Section 8 of this Ad refers to the import of goldthe eommodity with which these appeals n.re concerned. It enacts: "8(1). The Central Govcrnm<>nt may, by notification in the official Gazette, order that, 6ubjeet to such exemptions, if any, as may be c-ontained in the notification, no person shall, except with the general or special permission of the Rescn•c Bank and on payment of tho foe, if any, prescribed bring or send into India any gold or silver or any currenc.v notes or bank notes or coin whether Indian or foreign. • Explanation.-The bringing or S<.'nding into any port or place in India of any such _._...., article as aforesaid intended to ho taken out of India without being removed from the ship of conveyance in which it i~ being carrild shall nonethelcsH be deemed to be a bringing, or as the case may be sending, into India. of that article for the purposes of this section." Oold io defined ins. 2(f) of this Act thus: I"'.' .... " 'gold' includes gold in the form of coin, whether legal tender or not, or in tho form of bullion or ingot, whether refined or not and .. I ). -. - 3S.C.R. SUPREME COURT REPORTS 795 jewellery or articles made wholly or mainly of gold." These provisions have to be read in conjunction with the provisions of the Sea Customs Act which form, as it were, integrated provisions in relation to the import and export of, among other commodities, gold, and s. 23A of the Foreign Exchange Regnlation Act which was introduced by an amendment of 1952 effects this co-ordination. This section reads: "23A. Without prejudice to the provisions of section 23 or to any other provision contained in this Act the restrictions imposed by sub-sections (1) and (2) of section 8, subsection ( 1) of section 12 and clause (a) of sub-section ( 1) of section 13 shall be deemed to have been imposed under section 19 of the Sea Customs Act, 1878, and all the provisions of that Act shall have effect, aceordingly, exeept that section 183 thereof shall have effect as if for the word 'shall' therein the word 'mav' were substituted." " Turning now to the Sea Customs Act. s. 167(8) enacts: "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:- Section of this Act to Offences which offPenalties ence has re8. If any goods, the importation of which is for the time being prohi- ~ited or reBtricted ' ' . .. ference. 18 & 19 Such goods shall be liable to confiscation; anq 1961 The Collwor of. Cuuciin.S, Mtuftas v. N athel/a Su.ipatlw; · Chetty Ayyan:ar J. 1gu Tiu c.lim••f Out....,, Mdr., v. .,V¢1Atll'l Sa•;at4u ... _,,...,., ], 796 SUPREME COURT REPORTS [1962] by or under Chapter IV of this Act, be imported into or exported from India oontrary t-0 such prohibition or restriction; or if any attempt be made so to import or export any euch goode; or if any such goods be found in any package produced to any officer of Customs as containing no such goods; or if any eur.h goods or any dutiable goods, be found either before or after landing or shipment to have been concealed in any manner on board of any vessel within tho limits of any port in India; or if any goods, the exportation of which is prohibited or restricted as aforca&id, be brought to any wharf in order to be put on board of any "l"essel for exportation contrary to such prohibiiion or restriotiffil. any person concerned in any such offence sba II be liable to a penalty not exceeding three times the value of tho goods, or not exceeding one thousand rupees. 3 S.C.R. SUPREME COURT REPORTS Section 19 referred to here reads : "19. The Central Government may from time to time, by notification in the Offidial Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government." The other provisions which have a bearing upon the points arising for discussion with reference to the validity of the impugned s. l 78A of the Sea Customs Act are : "s. l 78. 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." "s. 181. When anything is seized, or any person is arrested, under this Act, the officer or other person making such seizure or arrest shall, on demand of the person in charge of the thing so seized, or of the person so arrested, give him a statement in writing of the reason for .such seizure or arrest." . "s. 182 .. In every case, except the cases mentioned in section 167, Nos. 26, 72 and 74 to 76, both inclusive, in which, under this Act, anything is liable to confiscation or to increased rates of duty; or any person is liable to penalty, such confiscation, increased rate of duty or penalty may be adjudged- ( a) without limit, by a Deputy Commissioner or Deputy Collector of Customs, or a Customs-co!lector; (b) up to confiscation of goods not exceeding two hundred and fifty rupees in value, and imposition of penalty or incre~~ecj ltll Tht c.r1ec1o, •f CustomM, MWa• v. Nathe/la S•,Yatlm Chetty AY.J"ntsr J 11111 71r Collrct" •! Cust1ms, M airaJ v. ,Yatlu/"2 SMC/NUJiu c1u11,, A.v@gat' J· 798 and • SUPREME COURT REPORTS [1962] duty, ~ot exceeding one hundred rupees, by an Assistant Commissioner or Assistant Collector of Customs; (c) up to confiscation of goods not exceeding fifty rupees in value, and imposition of penalty or increased duty not exceeding ten rupees, by such other subordinate officers of customs 8:8 the ~ief Customs-authority m'ly, from time to time, empower in that br·half in virtue of their office: Provided that the Chief Custom&- authority may, in tho case of any officer performing the duties of a Customs-collector, limit his powers to those indicated in clause (b) or in clause (c) of this section, and may confer on any offic~r, by name or in virtue of his offi<~e. the powers indicated in clauses (a), (b) or (c) of this section." "s. 183. Whenever confiscation is authorized by this Act, the officer adjudging it shall gi vc the ow nor of the goods an option to pay in lieu of confiscation such fine aa the oflicer thinks fit." Immediately the Foreign Exchange Regulation Act came into forctl in March, 1947, a notification was issued on 'March 25, 1947, under s. 8(1) placing a ban on the importation of gold except with tho permisFion of the Reserve Bank. This notification was superseded and replaced by a fresh ono dated Aug•ist 25, l!l~S. also issued under tho powers conferred by sub-s. (1) of s. 8 of the Foreign Exch1inge Regulation Act and this_ is the notificat~on which c1Jntinues in force up to this date and which is relev;int to the proceedings against the respondent. The notification ran: "(l) Restrictions on import of gold and silver.- In exercise of tho vowel"!! conferred b;r , ' , - 3S.C.R. SUPREME COURT REPORTS 799 sub-s. 1 of s. 8 of the Foreign Exchange Regulation Act, 1947 (Act 7 of 1947) and in supersession of the notification of the Government of India in the late Finance Department No. 12(11) FI/47, dated the 25th March 1947, the Central Government is pleased to direct that except with the general or special permis- ' Sion 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; or (b} any silver bullion ............ " It would be noticed that on the law as it stood upto 1952 before s. 23A was inserted in the Foreign Exchange Regulation Act, the importation of gold in contravention of the notification of August 1948issued under s. 8(1) of the Foreign Exchange Regulation Act would have been an importation contrary to s. 19 of the Sea Customs Act, with the result that any person concerned in the act of importation would have been liable to the penalties specified in the third column of s. 167(8) and the imported gold would have been liable to confiscation under the opening words of that column. The gold being "a thing" liable to confiscation could have been seized by any officer of the Customs under s. 178 of the Sea Customs Act with an obligation on the officer effecting the seizure to give to, the person from whom the gold was seized a "statement in writing of the reason for such seizure" (s. 181 ). Thereafter the officers specified in s. 182 would have adjudged the confiscation of these goods subject to the option mentioned in s. 183 with the modification to this provision enacted by s. 23A of the Foreign Exchange Regulation Act. It would further be manifest that at that date before the gold seized was liable to be de~lt with under t4e t4ird oolumn of s. 167(8) b;y 1961 The Col1-:tor of CU6toms, Madraa v. Naihel/a Sampathu Chet(Y Ayyangar J. 1901 Tlll c.l/ftt11 qf Glat...,, Mair., v. N.u..Ila s.,.,.uw Glut~ ,j-'-"'"'"' J. 800 SUPREME COURT REPORTS [1962) a.n officer adjudicating on the matt<>r under s. 182, the burden of proving that the gold was smuggled la.v upon the department and unless the adjudging officer who was acting quasi-judicially was reasonably satisfied on that point, the confiscation or the imposition of tho penalty could not have been ordered. The effect of thn imposition of the severe restrictions on tho import of gold into this country by the notifications under the Foreign Exchange Regulation Act with a view to defend and conserve the economy of the country in conjunction with the circumqtn.nc~ that the internal production of gold was very little, resulted in a great disparity between tho prine of gold in India and outside India i.e., in tho internntional markets. This naturally gave a great incentive to smuggling which bnsides depriving the Stiite of its revenue, also posed a grave thl'cat t-0 ne.tion:il economy. It is only necessary to add that gold wq,s not tho only commodity which gavo rise to this problem. But as thc>o appeals are concerned with gold, wo are confining our examination to that article. Taking these matters into account the Taxation Enquiry Commission, which submitted its report to the Government of India in 1954, rncommendcd a tightening of the law in order effectively to prevent smuggling. After dealing with the administrative problems in regard to the levy and enforcement of Customs duties in Ch. VII of the report the Committee recommended inter alia the amendment of the Sea Customs Act so as- "( I) to mako smuggling a criminal offence, and (2) to transfer the onus of proof in respect of offences relating to smuggling to the person in whoso possoesion any dutia hie, restricted or prohibit{)d goods are found." In pursuance of these recommendations the Sea Customs Aot was amended by ~ct 2l of 1955 and • • . - . " 3 S.C.R. SUPREME COURT REPORTS 801 among others s. l 78A whose terms we have set out, was introduced into it. As the question of the constitutionality of s. l 78A has been the subject of elaborate consideration in a few decided cases to which reference was made during the arguments, we consider that it would be convenient if we deal with them before setting out and discussing the precise grounds on which the challenge to the validity of the provision was rested before us. Very soon after s. l 78A was enacted its constitutional validity was challenged by an original petition filed in this Court (Petition 98 of 1956)- Babulal Amthalal Mehta v. The Collector of Customs, Calcutta ('). The goods involved in the case were diamonds. Four hundred and seventy-five diamond pieces which had heen seized from the petitioner, were directed to be confiscated holding them to be smuggled, by the application of the burden of proof laid down in s. l 78A. The validity of the confiscation was challenged before this Court on the ground thats. l 78A was unconstitutional as being violative of Art.14 of the Constitution and the contention was rejected. It has been urged by the learned Solicitor. General, for the appellant, that the points regarding the constitutional validity of s. l 78A raised in the present appeal are concluded in his favour by this judgment. We shall, therefore, have to examine the exact scope of this decision in detail which we shall do later, but for the present it is sufficient to state that the case dealt mainly with an objection based on a violation of Art. 14 of the Constitution which the following extract from the headnote would indica.te: "Section l 78A of the Sea Customs Act which places the burden of proving that any of the goods mentioned in the section and reasonably believed to be smuggled are not really so on the person from whose possession pl [1957] s.c.R. 1110, 1961 Tiu C l/«for of Gust tJm , .f ru!raJ v. Natlul/a Sampathu Clutty 4vyaazar ]. 19GI 7"' Colltttor of Cau uiins, M adr a; v, NaJ/i,/la SampGtiw Ax)'angar J. 802 SUPREME COURT REPORTS ·[1962] thoy are seized, is not discriminative in charac·ter and does not \"iolate equal proU>ction of law guaranteed by Art.14 of the Constitution''. The validity of the s!'ction was next attack1·d before the Hid1 Court of Bombay in a Writ Peti1 ion filed under Art. 226 of the Constitution on the ground that it violatc:cl Art. 19( lXf) and(!.() of the Constitution: ,1[, G. Abrolv. Amichand('). The article involved in that case was gold which had been seized from tho petitioner and directed to be confisra.ted by an adjudicating officer under s. 18~ of the Sea Customs Act. The case came up for hC'aring before K. T. Desai, J., and the lcarnl'd Judge held tlmt s. l 78A was 11ncon,tit11tional aH being an 1111r,•aRouable restriction 011 the citizens' right t.o hold property and to trade; and also that enu assurnilli! the' provi~ion to be constitutionally valid, thr rcquirem<'nts of the section had not bcC'n compliC'd with in the case before him inasmuch as the seizing oflic<·r had not,· at the moment of seizure, "reasonable belirf that the gold seized was smuggled". The next clecision in ordl'r of date is that of the Bench of the Madras High Court dated )farch 11, 19:>7, which is now under appc,al· before us in Civil Appeals 408 to 410 of I !)60. The reasoning of the ll·a1·nccl ,JuJgPR uf the Madras High Court is on the same lines aH that of JCT. Desai; J., in the judgment jnst now r<'frrred. Subseqnentlythe N:Lgpur Bench of the Bombay High Court ha.cl to crlllsi - . , -a s.c.R. SUPREME COURT REPORTS 803 the narrative it is only necessary to add that an appeal was preferred by the Customs authorities from the decision of K. T. Desiti, J. The appeal however was dismissed on the (,lround that even if s. l 78A were valid as held by th~t Court previously, its terms were not attracted to the particular. case, because of the non-fulfilment of an essential condition requisite for the application of the section [See 11f. G. Abrol v. Arnichand (1)]. \Ve shall now proceed to deal with the points urged by learned Counsel for the respondent in support of his ploa that the impugned provision viola.tea the fundamental right to hold property under Art. 19 ( 1 )(f) and the l'ight to carry on trade or business under Art. 19( l)(g) and was not saved by els. (5) & (6) respectively of Art. 19. Before we do so, however, it is necessary to advert to the points upon which learned Judges have, in the judgment under appeal, allowed the petition of the respondent, because in deciding these appeals we have necessarily to pronounce upon them also. Besides holding s. l 78A of the Sea Customs Act which was called in aid by the Collector of Customs to direct tho confiscation of the gold seized to be unconstitutional and therefore void under Art. 13, the learned Judges also upheld two further contentions urged on behalf of the respondent in support of their petition : (I) that s. l 78A was not attr&cted to the determination of a question raised in relation to the confiscation of an article imported in contravention of a notification under s. 8( I) of the Foreign Exchange Regulation Act, (2) that s. 178.A required as a pre-condition of its applicability, that the goods which were the subject of adjudication must have been seized "in the reasonable belief that they are smuggled goods" and that in the instant case the Customs Officer effecting the seizure did not or could not entertain such a belief. We consider it would be convenient if we deal with these two points after e:x:amining the constitutional validity of s. l 78A. (I) (1960) 62 Born. L.R. 1043. 1961 Tiu Collector of Customa, Madras v. N ath1lla Sampatku Chett)I A,lYantar J. 1961 Tilt Collect"' of C11Jtotn1, Madra.r v. JVatluUa Sampathu Chtt!J ~··J. S04 SUPRE?lrE COURT REP<'.>RTS (196.2] Before embarking on this enquiry it is necessary to deal with the argument of the learned Solicitor-General that every point (1.bout the consti· tutional validit.y of s. l 78A is concluded in his favour by the judgment of this Court in Babu/al Amtlialal Jifehta v. The Collector of Customs, Calcutta('). \Vo have ·already extracted tho head-note of tho rnport in the Supreme Court Reports which would appear to indicate that this Court considered only the impact of Art. 14 of the Constitution on the provision. Nevertheless, there are somo passages in thiA judgmt•nt, which would be immediately referred to on which reliance was placed by the learned SolicitorGcneral in support of his contention that this judgml·nt is an authority for tho position not merely thats. l78A docs not violate Art. 14 but that it impliedly, if not expreesly decides that the restriction imposed by it on the right to hold property or to engage in the business of dealing in gold was a. reasonable restriction within Art. 19(5) & (6) of tho Constitution. Wo will quote these passages in order to examine whether this contention is made out. That judgment after setting out a summary of the provisions of the Sea Customs Act relating to seizure, the adjudiction of confiscation, tho imposi · tion of penalties, appeals from tho orders of tho Customs authorities to the higher revenue authori· ties and tbs terms of s. 178, proceeds: "No doubt the content and import of the Rection are very wide. It applies not only to the aotno.l smuggler from whose possession the goods arc seized but also to thoso who came into possession of the goods after having purchased the same after the same has passed through many hands or agencies. For example, if the Customs authorities have a reasonable belief that certain goods in the possession of an innocent party aro smuggled goods and the same is seized under the provisions of this Act, then the person from whose posse8llion (ll [1957) S. C.R. 1110. • •• .,,.... .. .r • 3 $.C.R. StJPREl\IB COURT REPORTS 805 the goods were seized, however innocent be may be, has to prove that the goods are not smuggled articles. This is no dou~t a very heavy and onerous duty cast on an mnocent possessor who, for aught one knows, may have bona fide paid adequate consideration for the purchase of the articles without knowing that the same has been smuggled. The only pre-requisite for the application of the section is the subjectivity of the Customsofficer in having a reasonable belief that the goods are smuggled." This passage is followed by an examination of the matters with reference to Art. 14 expressing the opinion that the petition did not show in what manner there had been a violation of that Article, and the judgment continues: "But Mr. Chatterjee argues that tho burden of proof enunciated therein is opposed to fundamental principles of natural justice, as it gives an unrestricted arbitrary and naked power to the customs authorities without laying down any standard or norm to be followed for exercising powers under the section ........ . It is a heavy burden to be laid upon the shoulders of an innocent purchaser who might have come into possession after the article has changed many hands and this, it is alleged, invokes discrimination between him and other litigants and deprives him of the equal protection of the law guaranteed by Art. 14 of the Constitution. A large number of cases have been cited at the B11r in support of the respective contentions of the parties." This is followed by a citation from the decisions of this Court in which the scope and content of Art. 14 were discussed and in particular a passage in the judgment in Budhan Chaudhury v. The State of Bihar(') where the principle that Art. 14 r1955J 1 s.c.R. 1045, 1048-1049. 1961 The Collector of Customs, Madros v. Nathella Sampallw Chetty AY.Y""gar J. 19~1 TJ., Cliltc"1r of Customs, Mad!as v. NoJht/lrl-Samf14tlu< a,,,tl -1-J. 806 SUPREME COURT REPORTS (1962j does not forbid classification on a reasonable and ration-LI basis is ext.meted. The judgment proceeds: "A cursory perusal of s. l 78A will at once