1979 (10) TMI 95 - HC - Customs

Lawful search upheld based on reasonable belief, burden of proof not met. Petitioners' claims rejected.

MAHADEVI LOHARIWALLA Versus UNION OF INDIA

MAHADEVI LOHARIWALLA Versus UNION OF INDIA - 1988 (38) E.L.T. 585 (Cal.) Issues Involved:1. Legality of the search and seizure.2. Compliance with Section 105 and Section 110 of the Customs Act.3. Jurisdiction and authority of the officers conducting the search.4. Formation of 'reasonable belief' for the search and seizure.5. Application of the Gold Control Act.6. Allegations of mala fide actions by the authorities.7. Non-supply of search order and reasons.8. Burden of proof regarding the origin of seized goods.9. Applicability of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA).Detailed Analysis:1. Legality of the Search and Seizure:The petitioners challenged the legality of the search and seizure conducted by the Customs authorities, alleging that the search was conducted without showing or exhibiting the search order to the owner of the premises, Smt. Mahadevi Lohariwalla. They argued that the search and seizure were malafide and without jurisdiction, as the actions were not covered by the search order issued by Respondent No. 3. The petitioners contended that the search order and the subsequent search and seizure were not based on a reasonable belief that the goods were liable to confiscation under the Customs Act.2. Compliance with Section 105 and Section 110 of the Customs Act:The petitioners argued that the conditions precedent for the assumption of jurisdiction to issue the search order and to seize were not satisfied. They contended that neither Respondent Nos. 3 nor 4 recorded the reasons as contemplated under Section 165 of the Code of Criminal Procedure and sent the same to the Collector of Customs as required by Section 105(2) of the Customs Act. The respondents, however, maintained that the search and seizures were initiated and completed in terms of the search order and on the basis of secret information received.3. Jurisdiction and Authority of the Officers Conducting the Search:The petitioners alleged that Respondent Nos. 3 and 4, not being officers under the Gold Control Act, acted without jurisdiction. They contended that the entire search and seizure were unauthorized and the seized goods were liable to be released from confiscation. The respondents argued that the Customs officers were also Gold Control Officers, and thus, there was no illegality or irregularity in the search and seizure.4. Formation of 'Reasonable Belief' for the Search and Seizure:The petitioners contended that the reasonable belief, which should precede the search and seizure, must be an antecedent belief based upon grounds justifying the entertainment of such belief. They argued that there was no material or basis upon which the officers had reasons to believe that the goods in question were liable to confiscation. The respondents maintained that the search was conducted on the basis of reasonable belief formed from secret information received, and the subsequent recovery of unaccounted valuables established the bona fides of the information and the complicity of the petitioners.5. Application of the Gold Control Act:The petitioners argued that the Gold Control Act did not apply to the seized ornaments as they were acquired and possessed long before the coming into force of the Act. The respondents, however, maintained that the gold and diamonds seized were liable to confiscation under both the Customs Act and the Gold Control Act.6. Allegations of Mala Fide Actions by the Authorities:The petitioners alleged that the search and seizure were conducted with mala fide intentions, as the officers did not supply a copy of the search order despite repeated requests. They claimed that the non-supply of reasons and the search order was an act of mala fide. The respondents denied these allegations, stating that all steps up to the seizure were taken duly and on proper or appropriate opportunities given to the petitioners.7. Non-Supply of Search Order and Reasons:The petitioners argued that the non-supply of the search order and the reasons for the search was a violation of the principles of natural justice and vitiated the entire action. The respondents contended that the search order was duly shown and produced at the time of the search, and the petitioners' signatures were obtained on the body of the same.8. Burden of Proof Regarding the Origin of Seized Goods:The respondents argued that under Section 123 of the Customs Act, the burden of proving that the seized goods were not smuggled lay on the petitioners. They contended that the petitioners failed to discharge this burden despite being given opportunities. The petitioners maintained that the seized goods were acquired through legitimate means and were in their possession long before the enactment of the relevant statutes.9. Applicability of the COFEPOSA Act:The petitioners challenged the incorporation of the COFEPOSA Act in the proceedings but ultimately did not proceed with this challenge. They argued that there was no material before the respondents to initiate proceedings under the COFEPOSA Act for the purported smuggling of goods.Conclusion:The court found that the search and seizure were conducted in accordance with the law and on the basis of reasonable belief formed from secret information received. The petitioners' arguments regarding the non-compliance with statutory requirements, lack of jurisdiction, and allegations of mala fide actions were not upheld. The court held that the petitioners failed to discharge the burden of proving that the seized goods were not smuggled and that the search and seizure were justified. The rule was discharged, and the petitioners' application was dismissed.