2025 (4) TMI 1742 - HC - Customs

Gold smuggling via hawala-funded overseas purchase and clandestine import; s.102 search compliance upheld, regular bail refused.

The dominant issue was whether the accused was entitled to regular bail in a customs gold-smuggling case alleging hawala-funded purchase abroad and ... Seeking grant of Regular bail - offences under Sections 135(1)(a) and 135(1)(b) of the Customs Act, 1962 punishable under Sections 135(1)(a)(i)(A), 135(1)(a)(i)(B), 135(1)(b)(i)(A), 135(1)(b)(i)(B) of the Act - no compliance of Section 102 of the Act - no compliance of Section 50A of Cr.PC since grounds of arrest was not served on the relatives and friends of the accused at the time of her arrest - HELD THAT:- It is very clear that if a person acquires possession or is in any way concerned in carrying, concealing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 or Section 113, as the case may be and the market price of such goods exceeds Rs.One Crore or the evasion or attempted evasion of duty is exceeding Rs.50 lakhs, he shall be punishable with imprisonment for a term which may extend to seven years or with fine - In the case on hand, the allegation against the accused is that the money for purchase of gold was transferred by accused no.3 by Hawala to Dubai and the accused nos.1 & 2 who used to travel to Dubai were purchasing gold at Dubai with the said money sent by accused no.3, and thereafter, accused nos.1 & 2 were submitting declarations in Dubai Customs stating they were travelling to Geneva or Bangkok, and on the other hand, they used to travel to India carrying the gold purcahsed by them, by concealing the same. On 03.03.2025 itself, notice under Section 102 of the Act was served on accused no.1. Though signature of accused no.1 and the independent panch witnesses on the notice under Section 102 of the Act issued to accused no.1 are said to have been affixed on 04.03.2025, learned Counsel for the prosecution has explained the same by stating that search was commenced on the late night of 03.03.2025 and the entire process was completed at the early hours of 04.03.2025 and it is under these circumstances, the signatures of the witnesses are obtained on 04.03.2025. Since the consent of accused no.1 is given by her on 03.03.2025, it is very clear that notice in compliance of Section 102 of the Act was given to her on 03.03.2025 itself and in the said notice which is available on record, it is clearly mentioned that accused no.1 was being informed about her legal right to be searched in the presence of gazetted officer or the Magistrate. Unlike the requirement of Section 50 of NDPS Act, so far as the Customs Act is concerned, Section 102 of the Act specifically provides that the accused shall have a right to be searched either before the gazetted officer of customs or a Magistrate. In the present case, search of the person of accused no.1 was conducted by Neha Kumari who is a gazetted customs officer and she is not the Investigation Officer of the case, and therefore, there are no merit in the contention raised by the learned Senior Counsel for accused no.1 that there is no compliance of the requirement of Section 102 of the Act in the present case, and therefore, the seizure becomes bad. In the case on hand, notice under Section 102 of the Act has been issued to accused no.1 appraising her right to be searched before a gazetted customs officer or Magistrate, and on receipt of the same, she has given her consent to search her person and baggage by a lady gazetted customs officer who was present in the Airport. Therefore, the judgments in Paramananda's case [2014 (3) TMI 54 - SUPREME COURT] and Iqbal Kasam Memon's case [2020 (1) TMI 645 - BOMBAY HIGH COURT], cannot be made applicable to the case on hand. In the case of P.CHIDAMBARAM VS DIRECTORATE OF ENFORCEMENT [2019 (9) TMI 286 - SUPREME COURT], the Hon'ble Supreme Court noted that given the serious nature of economic offences, they require strict scrutiny when granting bail. In the case of SATENDAR KUMAR ANTIL VS CENTRAL BUREAU OF INVESTIGATION & ANOTHER [2022 (8) TMI 152 - SUPREME COURT], the Hon'ble Supreme Court has observed that each case must be assessed on its individual merits, with the determination of bail being guided by the specific gravity and circumstances of the offence rather than a blanket approached tied to the nature of the offence as an economic offence. Therefore, merely for the reason that the alleged offences are compoundable and punishable with imprisonment upto seven years, bail cannot be granted as a thumb rule. Thus, at this stage, the prayer made by the petitioners for grant of bail cannot be entertained - petition dismissed. ISSUES PRESENTED AND CONSIDERED 1) Whether the search and seizure from the first accused suffered from non-compliance with Section 102 of the Customs Act, 1962, so as to undermine the prosecution case at the bail stage. 2) Whether there was non-compliance with Sections 50 and 50A of the Code of Criminal Procedure regarding communication of grounds of arrest to the arrested persons and to their nominated persons, warranting bail. 3) Whether statements recorded under Section 108 of the Customs Act were inadmissible or unusable at the bail stage for want of corroboration, so as to justify release on bail. 4) Whether, applying bail principles for economic offences and the case-specific facts (quantity/value of contraband, modus operandi, ongoing investigation, influence/flight risk), the petitioners were entitled to regular bail, including whether the proviso to Section 480(1) of BNSS, 2023 should benefit the first accused. ISSUE-WISE DETAILED ANALYSIS 1) Compliance with Section 102 of the Customs Act (personal search safeguards) Legal framework: The Court examined Section 102 of the Customs Act, including the right of the person to require being taken to a Gazetted Officer of customs or a Magistrate, the requirement of witnesses, and that a female shall be searched only by a female. Interpretation and reasoning: The Court found that a notice under Section 102 was issued to the first accused on 03.03.2025 itself, informing her of the legal right to be searched in the presence of a Gazetted Officer of customs or a Magistrate. The first accused gave written consent dated 03.03.2025 for personal and baggage search by a lady Gazetted officer present at the airport. Although signatures of panch witnesses on the notice were stated to be on 04.03.2025, the Court accepted the prosecution explanation that the search commenced late night on 03.03.2025 and concluded in the early hours of 04.03.2025. The Court also accepted that the personal search was conducted by a lady Gazetted customs officer who was not the investigating officer, and therefore rejected the contention that the investigating officer conducted the search. The Court distinguished authorities relied upon by the defence as factually and legally inapplicable because, in the present case, the right under Section 102 was expressly communicated and consented to, and the search was by a Gazetted officer in compliance with the female-search requirement. Conclusion: The Court held there was compliance with Section 102 of the Customs Act; the challenge that the seizure was bad on this ground was rejected. 2) Compliance with Sections 50 and 50A of Cr.PC (grounds of arrest and intimation to nominated persons) Legal framework: The Court considered the obligations under Section 50 (informing the arrested person of grounds of arrest and right to bail) and Section 50A (informing a nominated friend/relative of the arrest and place of detention), and treated the requirement-at least prima facie-of communicating grounds of arrest to the nominated person as part of meaningful compliance. Interpretation and reasoning: On examining the arrest memos, the Court found that the grounds of arrest were recorded in detail and signed by both accused on the date of arrest. The arrest memos further recorded that, at each accused's request, a nominated person was informed by phone of the arrest along with 'reasons to believe' and grounds of arrest, and that for the first accused the nominated person acknowledged receipt of a copy of the arrest memo. On this material, the Court concluded that there was compliance with Section 50 and that there was at least prima facie compliance with Section 50A, including communication of grounds to the nominated persons as reflected in the arrest documentation. Conclusion: The Court rejected the contention of non-compliance with Sections 50/50A Cr.PC as a ground for bail. 3) Use of Section 108 Customs Act statements at the bail stage and alleged lack of corroboration Legal framework: The Court addressed the evidentiary contention regarding statements recorded under Section 108 of the Customs Act in the context of a bail application. Interpretation and reasoning: The Court held that at the stage of considering bail, a statement under Section 108 is an admissible piece of evidence. The Court also found that the investigation had yielded material beyond the statements, including seizure of a very large quantity of gold from the first accused and collection of travel particulars and declarations made before Dubai customs. Since investigation was still in progress, the Court declined to treat the prosecution case as lacking corroboration at this stage, and also treated the defence reliance on an acquittal-stage decision as not governing the present bail-stage assessment. Conclusion: The Court rejected the argument that Section 108 statements were unusable for bail due to absence of corroborative material. 4) Entitlement to bail in an alleged high-value economic offence; proviso to Section 480(1) BNSS; risk assessment and ongoing investigation Legal framework: The Court examined the punishment structure under Section 135 of the Customs Act, noting that when market price exceeds one crore rupees (or duty evasion exceeds specified thresholds), imprisonment may extend to seven years with fine. The Court applied the principle that economic offences require a different and stricter approach in bail assessment and must be evaluated on the facts, including seriousness, modus operandi, and risks to investigation and administration of justice. The Court also considered but declined to extend the benefit of the proviso to Section 480 of BNSS, 2023 to the first accused at this stage. Interpretation and reasoning: The Court found substantial prima facie material: recovery of gold bars weighing 14,213.05 grams valued at approximately Rs.12.56 crore from the first accused's person, allegedly concealed with adhesive bandage; and the prosecution narrative of repeated Dubai trips, false declarations at Dubai customs, and an alleged chain involving handing over to another accused. The Court held it could not be said that there was 'absolutely no material' to prosecute. The Court further relied on case-specific indicators affecting bail discretion: the investigation was still under progress; involvement of other persons could not be ruled out; material suggested the first accused was facilitated with escort/protocol and a government vehicle, supporting the prosecution's claim of influence; the second accused was a foreign citizen; the prosecution asserted non-cooperation and an attempt by the second accused to flee; and given these circumstances, chances of absconding could not be completely ruled out. The Court expressly held that merely because the offences were said to be compoundable and punishable up to seven years, bail could not be granted as a thumb rule. On these facts, and considering the gravity of economic offences and the alleged modus operandi, the Court found that the stage was not fit for granting bail, and specifically declined to extend the proviso-based benefit under Section 480 BNSS to the first accused due to the manner of alleged smuggling and the ongoing investigation. Conclusion: The Court held that, considering the gravity and economic-offence dimension, strong prima facie material, ongoing investigation, and influence/flight-risk factors, regular bail was not warranted for either accused; the petitions were dismissed.