Kewal Krishan vs State Of Punjab

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Criminal Appeal No. 126 of 1959

Decision Date: 6 March 1962

Coram: J.L. Kapur, P.B. Gajendragadkar

Kewal Krishan appealed against the State of Punjab before the Supreme Court of India, and the judgment was delivered on 6 March 1962. The case was reported under the citations 1967 AIR 737 and 1962 SCR (3) 613. The Bench comprised Justice J. L. Kapur, Justice P. B. Gajendragadkar, Justice Aiyyar and Justice T. L. Venkatarama. The dispute involved the provisions of the Sea Customs Act, 1878, specifically sections 167(81) and 178A, together with section 23A of the Foreign Exchange Regulation Act, 1947. The factual matrix recorded that a Customs official searched the appellant while he was seated in a third‑class compartment of a train and discovered several bars of gold tied around his waist. Among the seized bars, some were made of base metal while the remainder consisted of pure gold bearing foreign marks, including the stamp of J. Mathey & Co. Ltd. and marks of N. M. Rothschild & Sons. The appellant could not produce a permit from the Reserve Bank of India authorising the import of the gold, an omission that rendered the import illegal under the Foreign Exchange Regulation Act. Consequently, he was prosecuted and convicted under section 167(81) of the Sea Customs Act and sentenced under the corresponding provision of the Foreign Exchange Regulation Act.

The appellant challenged the conviction by obtaining special leave to appeal before this Court. The principal issue raised on appeal concerned the constitutionality of section 178A of the Sea Customs Act. The appellant contended that, before the statutory presumption in section 178A could be invoked, the prosecution was required to establish that the seized goods were of foreign origin and to produce evidence supporting the reasonableness of the Customs officer’s belief that the goods were smuggled. This contention had not been raised before the High Court or the lower courts. The Court noted that in its earlier decision in Collector of Customs, Madras v. Nathella Sampathu Chetty, it had already upheld the constitutionality of section 178A. The Court further observed that the argument requiring the prosecution to prove foreign origin before the presumption could arise was not advanced in any of the subordinate proceedings.

After considering the submissions, the Court held that section 178A of the Sea Customs Act, 1878, was constitutionally valid. It rejected the appellant’s contention that the prosecution must first prove that the gold was of foreign origin. The Court explained that section 178A expressly places the onus on the accused to demonstrate that the seized goods are not smuggled when the seizure is made in reasonable belief that the goods are contraband. Accordingly, the Court affirmed the earlier judgment that the statutory provision was not violative of constitutional principles. The decision thus confirmed the conviction of the appellant under the applicable provisions of the Sea Customs Act and the Foreign Exchange Regulation Act.

In this case the appellant was travelling in a third‑class compartment of the Amritsar–Kalka train that was standing on Platform No. 5 of Amritsar Railway Station when a Customs Officer searched him and discovered several bars of gold tied around his waist. The officer seized the bars and prepared a recovery memorandum. Examination of the seized items showed that four of the bars were made of base metal while the remaining bars were of pure gold; some bore the stamp of Johmon Mathey & Co. Ltd. indicating 999‑10 tolas, and two and a quarter bars bore the mark of N.M. Rothschild & Sons indicating 10 tolas (990‑0). The appellant was unable to produce any permit from the Reserve Bank authorising the import of the gold. Under the Foreign Exchange Regulation Act, 1917 the import of gold without such a permit is prohibited, and a violation of this provision is punishable under section 23‑A of that Act read with section 167(81) of the Sea Customs Act. Consequently the appellant was prosecuted under section 23‑A of the Foreign Exchange Regulation Act and under section 167(81) of the Sea Customs Act. He contended that he was not in actual possession of the gold bars, asserting that the bars had been taken from an attaché case left by an unknown stranger beneath the seat on which he was seated. The Additional District Magistrate, however, found that the offence had been proved, convicted the appellant and sentenced him to one year of rigorous imprisonment. Upon appeal to the Sessions Judge the sentence was reduced to eight months of rigorous imprisonment, and on further revision before the High Court the sentence was reduced again to six months of rigorous imprisonment. The appellant now seeks relief by way of a special leave appeal. Both the trial court and the Sessions Judge accepted the testimony of the Customs officials, held the appellant’s defence to be false and concluded that gold worth Rs. 14,000 was found in his possession; the High Court likewise rejected the same defence. For the first time before this Court it has been contended that before the presumption contained in section 178A of the Sea Customs Act can be invoked, the prosecution must first establish that the goods in question were of foreign origin, that is, that they had been imported, and only after such a proof does the presumption arise, shifting the burden to the person in whose possession the goods were seized to show that customs duty had been paid. It was further argued that this requirement has never been raised before and that it is not the intended effect of section 178A, which provides: “178A. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall 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, cigaretters 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 sub section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued.”

In this case the Court explained that Section 178A of the Sea Customs Act states that when goods are seized because the officer had a reasonable belief that they are smuggled, the obligation to prove that the goods are not smuggled rests upon the person in whose possession the goods were found. The provision continues that the section applies to gold, gold manufactures, diamonds and other precious stones, cigarettes, cosmetics and any other articles that the Central Government may, by a notification in the Official Gazette, specify for this purpose. Furthermore, every notification issued under the second subsection must be laid before both Houses of Parliament as soon as possible after it is issued.

Two Customs officers were called as witnesses: Inspector Satnam Singh, an Inspector of Land Customs, and Deputy Superintendent A N Kapur, a Deputy Superintendent of Customs. The Court observed that the cross‑examination of these officers revealed no indication that either of them lacked a reasonable belief that the seized items were smuggled. Likewise, the findings of the lower courts did not suggest any contrary view. The appellant contended in his statement of case that the mere presence of a foreign company’s stamp on gold does not inevitably demonstrate that the gold originated abroad, because the stamp could be affixed to spurious gold of Indian origin. The Court noted that, aside from the fact that this question had not been raised before, the language of Section 178A is clear: when goods are seized on the basis of a reasonable belief of smuggling, the burden of proof that the goods are not smuggled falls on the person possessing them. The onus therefore lies on that person to demonstrate that the goods are not smuggled, meaning that they are not of foreign origin on which customs duty has not been paid. The prosecution is not required to prove that the goods are of Indian origin.

The Court referenced the earlier decision in Collector of Customs, Madras v. Nathella Sampathu Chetty, noting that the learned judges in that case held that Section 178A was constitutionally valid, that the burden‑of‑proof rule under the section applies to a contravention of a notification made under Section 8(1) of the Foreign Exchanges Regulation Act 1947 by virtue of its being deemed a contravention of a notification under Section 19 of the Sea Customs Act, and that the preliminary requirement that the officer seizing the goods must entertain a reasonable belief that the goods were smuggled was satisfied. After considering all arguments, the Court concluded that there was no merit in the appeal. Accordingly, the appeal was dismissed, the appellant was ordered to surrender to his bail‑bonds, and the appeal was formally set aside. (1) [1962] 3 S.C.R. 786.