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Bombay High CourtIndian Cases

Mogul Line Ltd. vs A.K. Dutt on 5 October 1982

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Bombay High Court
Mogul Line Ltd. vs A.K. Dutt on 5 October, 1982

Lentin, J.

1. The Mogul Line Ltd. (referred to hereafter as “the Company”) who are the 1st appellants before us, are an Undertaking of the Government of India which holds over 80% of the share capital of the Company. The Company carries on business as sea carrier and is the owner inter alia of an ocean-going vessel M. V. Noor Jahan (referred to hereafter as “the vessel”), whereof the 2nd appellant is the Master.

2. On 21st April, 1978, the vessel carrying a large number of passengers arrived from the Gulf Ports and was berthed at the Mole Station BPX where the passengers disembarked the same day. Thereafter the same day in the course of a search of the vessel by the Officers of the Rummaging Department of the Customs, certain contraband was found in 4 bundles wrapped with adhesive tape and concealed in a false ceiling in the Officers’ toilet on the navigation deck. Those 4 bundles contained 10 wrist watches of foreign origin valued at Rs. 1,500/- c.i.f. and 10 gold bars of 10 tolas each valued at Rs. 60,632/- c.i.f. From a different part of the vessel were also found 2 paper bundles and one bundle with adhesive tape near the fire extinguisher on the B-Deck passengers bunk space under ropes in the foredeck. These bundles contained 26 wrist watches valued at Rs. 5,275/- c.i.f. The entire contraband was seized under a panchanama. No one came forward to claim any of those articles. On the same day, i.e. 21st April, 1978, the Master’s voluntary statement was recorded, wherein inter alia he emphasised the precautions taken by him, namely issuing a strong admonition to the Officers and crew from indulging in any illegal activities like smuggling and the penal consequences thereof, and fortifying his admonition by personally conducting a search of the vessel shortly prior to its arrival in Bombay. In his statement the Master also stated that the spot where the 26 wrist watches were found was an open space accessible to the entire crew and passengers and that the Officers’ toilet was used by two Second Officers, 8 Engineering Officers and 2 Pursers and was also accessible to the various stewards and other menial members of the crew who looked after its cleanliness. The following day, the vessel was seized and was released on the execution of a bond of Rs. 1,00,000/- by the Company. On 23rd June, 1978 the Collector of Customs issued a notice on the Company, the Master and 12 members of the crew to show cause why the seized articles and the vessel should not be confiscated and why penal action should not be taken against them. After the show cause notice was replied to on 1st August, 1978 by the Company and the Master, and a personal hearing given on 18th August 1978, the Additional Collector of Customs (Preventive), Bombay (who is the 1st respondent before us) issued his impugned order dated 18th August, 1978 in terms whereof (i) the seized articles were confiscated, (ii) the vessel was confiscated with option to redeem the same on payment of Rs. 80,000/-, and (iii) a personal penalty of Rs. 10,000/- was levied on the Master. Against that order, in so far as the same pertained to confiscation of the vessel and personal penalty on the Master the Appellants filed a writ petition in this Court, which was summarily dismissed by the learned single Judge. Hence the present appeal.

3. On behalf of the appellants, it was urged by their learned Counsel Mr. Andhyarujina that the impugned order in so far as it pertained to confiscation of the vessel and the imposition of personal penalty on the Master, was uncalled for and disclosed total non-application of mind. He emphasised that the Master had done all that he could possibly have done, by not only admonishing the Officers and the crew from desisting in smuggling activities and drawing their attention to the penal consequences thereof, but also personally making a search of the vessel shortly prior to its arrival in Bombay. On the other hand it was urged by Mr. Bulchandani, the learned Counsel appearing on behalf of the respondents, that all this was not enough, as what the Master should have done was to take positive steps to ensure that no contraband was carried in the vessel. Mr. Bulchandani attempted to attribute lack of diligence on the part of the Master on the ground that the search made by the Master must have been perfunctory, else he could not have failed to discover the hidden articles. Relying on Section 115(2) of the Customs Act, 1962, he further urged that the lack of knowledge on the part of the Master was not relevant to the question of confiscation.

4. Section 115 pertains to confiscation of conveyances. As far as is material for the purpose of the present appeal, sub-section (2) relied on by Mr. Bulchandani, provides that any conveyance used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance and that each of them had taken all such precautions against such use as are for the time being specified in the rules.

5. Pausing here for a moment, it was not urged by Mr. Bulchandani and rightly so that the contraband found its way in the vessel with the knowledge or connivance either of the Company or the Master. What however Mr. Bulchandani emphasised was that knowledge and connivance of the Company and Master must be presumed unless they established that the carriage of the contraband was without their knowledge or connivance. The short answer to this contention is that in the facts and circumstances of this case the steps and precautions taken by the Master, as stated in detail hereafter, are sufficient to hold that the carriage of the contraband was without the knowledge or connivance of the Company or the Master.

6. Thus the next question that arises is whether “all such precautions against such use” had been taken as required by sub-section (2). Now according to sub-section (2) itself, the precautions to be taken must be “as are for the time being specified in the rules”. Admittedly no rules have been framed in that behalf. Hence in the absence of any such rules, the precautions to be taken must necessarily depend on the facts and circumstances of each case. In the present case the Master admonished and impressed upon the Officers and crew against indulging in nefarious activities like smuggling and drew their attention to the severe penal consequences thereof. This is not disputed by the department or by Mr. Bulchandani. Thereafter the Master followed up his admonition by personally undertaking a search of the vessel shortly before it touched Bombay. This is also not disputed by the department or by Mr. Bulchandani. For that matter, the search undertaken by the Master has been recorded in the vessel’s log-book. This is also not disputed by the department or by Mr. Bulchandani. It is difficult to see what more the Master could possibly have done. As stated earlier, knowledge or connivance by the Company or the Master was not even sought to be attributed to them even by Mr. Bulchandani and rightly so. Furthermore, as far as humanly possible in this case the Master had taken sufficient precautions in ensuring that no contraband was carried in the vessel. Furthermore, in contrast to the small bundles surreptitiously secreted by some unknown person or persons, the vessel itself is a large one with a tonnage of 14,153 and a carrying capacity of 1,745 passengers and a crew of 200 Seamen and Officers. None of these factors have been considered by the department.

7. It is not possible to accede to Mr. Bulchandani’s suggestion that the search undertaken by the Master must have been perfunctory because (a) some of the contraband was found near the fire extinguisher and the remaining contraband in a false ceiling and (b) if the Rummaging Department could discover the contraband, so could have the Master. To start with, perfunctoriness now attributed to the Master is in the nature of an ipse dixit hurled across the Bar, with nothing to commend it. What also Mr. Bulchandani seems to lose sight of is that it is not that a part of the contraband was just found lying near the fire extinguisher as he suggests. It was discovered under some coils of ropes near the fire extinguisher at a spot accessible to Officers, crew and passengers alike. The false ceiling in the toilet where the remaining contraband was found always remained open and was accessible to not less than 12 Officers including 2 pursers and menial staff looking after its cleanliness. What also Mr. Bulchandani does not take into account is that Officers of the Rummaging Department are experts trained for this type of work, which the Master is not. Further, there is nothing on record to indicate that the contraband was not hidden by somebody after the search was carried out by the Master. And finally, to expect the Master, leaving aside his other duties, to go about tapping an entire large ship in search of false crevices and ceilings as suggested by Mr. Bulchandani, is ludicrous. The fact that he took a search as a reasonable and prudent man would do, is enough. If Mr. Bulchandani’s various suggestions on the duties of the Master in conducting the search are to be accepted at face value, we are afraid that from morning to night, the Master would have nothing else to do except keep on making searches of the vessel to the perils of navigation and the safety of the vessel, its passengers, Officers and crew in an endeavour to find a needle in a haystack.

8. We may clarify, if at all clarification is necessary, that these observations made by us are only in so far as the facts and circumstances of the present case are concerned.

9. Mr. Bulchandani next attempted to justify the imposition of the personal penalty on the Master by reason of his not amending the ship’s manifest after the contraband was seized by the Rummaging Officers. Reliance was placed on Section 30(1) of the Customs Act, 1962 which provides that a person in charge of a conveyance carrying imported goods shall within 24 hours after arrival thereof at a customs station, deliver to the concerned Officer, in the case of a vessel or aircraft, an import manifest in the prescribed form. According to Mr. Bulchandani, on the contraband being seized by the Customs, it was the Master’s duty to have amended the manifest and included therein the seized contraband articles, as they fell within the definition of ‘imported goods’ in Section 2(25) as “any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption”. Mr. Bulchandani also urged that in J. D. Crighton v. S. K. Srivastava, , it was held by a learned single Judge of the Calcutta High Court that mens rea may not be an element in the interpretation of Section 30; the responsibility to submit a correct return or to suffer the consequences of an incorrect return may be a strict liability of the Master; the statute provides one safeguard for the Master, namely if he is an innocent victim of an error in a case where goods have been clandestinely imported in his vessel without his knowledge, he may be permitted, on discovery of such importation, to amend the manifest and thereby escape the penalty; if however he refuses to amend, then the consequences of filing an incorrect manifest must be on him.

10. We do not think these contentions are altogether correct. In our opinion, the reference in Section 30 to imported goods as defined in Section 2(25) must necessarily mean goods which are legitimately brought into India from a place outside India. The words “any goods” in Section 2(25) must mean, not the classification of goods like smuggled, shop-soiled, damaged, decayed and so forth but must mean goods in their different varieties from a pin to an elephant legitimately carried by the vessel. Thus in this case, the Master was under no obligation to amend the manifest by including therein the contraband articles surreptitiously placed on board the vessel by some unknown person or persons. This is brought to the forefront by the Import Manifest (Vessels) Regulations, 1971 framed under the Customs Act. Regulation 3 sets out that every import manifest which shall be delivered in duplicate, must cover all the goods carried in a vessel and shall consist of a general declaration in Form I, a cargo declaration in Form II, the vessel’s stores list in Form III and a list in Form IV of private property in the possession of the Master, Officers and crew. Form I comprises of a general declaration pertaining to the particulars of the vessel, to wit, the name of the owner of vessel, its nationality and tonnage, the Master’s name and nationality, ports of call, and number of crew and passengers. Form II pertains to cargo declaration inter alia to wit, number and nature of packages (e.g. cases, cartons, bags, bales, pieces), their marks and numbers, gross weight, description of the goods, name of the consignee or importer, date of presentation of the bill of entry, name of the Custom House Agents, Cash/Deposit W.R. Number, number of packages on which duty was collected or warehoused and number of packages discharged (to be filled in by the port trust). Form III pertains to the vessel’s stores list comprising of Alcoholic Beverages, Tobacco and Tobacco Products, Mineral Oils, Arms, Ammunitions and Explosives including stores (like Rockets, Distress Signals, Deck Flares, Lifebuoy Lights, etc.), the Vessel’s currency, Dangerous Drugs in stock. Wireless Transmission Apparatus, stores and favour parcels to be unloaded and description of stores. Form IV is the list of private property of the Master, Officers and crew comprising of currency, tobacco, alcoholic liquors, watches, cameras, transistor and jewellery. Thus when Regulation 3 enjoins the inclusion in the manifest of all goods carried in the vessel, the exhortation must be read in the light of what must be declared in Forms I to IV. What Regulation 3 makes manifest is that all the goods carried in the vessel must be reflected in the contents of Forms I to IV. They in turn pertain only to goods legitimately carried in the vessel. Hence “all the goods carried in the vessel” must necessarily pertain to legitimate goods and not other than legitimate. None of the Forms I to IV caters to the inclusion in the manifest of contraband, smuggled or prohibited goods but only those goods legitimately carried in the vessel. We also draw aid from sub-section (3) to Section 30 which provides for the amending or supplementing of the import manifest if the proper officer is satisfied that it is in any way incorrect or incomplete without there being any fraudulent intention. This is yet another indication which discloses that the import manifest can be amended in the case of some accidental slip or omission to include therein goods legitimately carried by the vessel and liable to declaration in terms of Forms I to IV of the Regulations of 1971. Furthermore, the Calcutta decision in Crighton’s case relied on by Mr. Bulchandani comes to the assistance not of the respondents but of the Master in the present case. In that decision there is no reference to the Import Manifest (Vessels) Regulations, 1971, nor could there be for those Regulations of 1971 were not in force when the decision in Crighton’s case was given in 1968. Moreover, what Mr. Bulchandani classifies as findings in that case do not appear to be so but appear to be obiter and have not been applied in arriving at the decision in that case. This is borne out from the following passage at page 265 of the Report which reads as under :-

“16. I need not, however, go to the length of holding that mens rea has no place in interpreting Section 30 read with Sections 111 and 112 of the Act, because I find another infirmity in the order of penalty, on which alone I intend to proceed in this case.”
The learned single Judge of the Calcutta High Court thereafter proceeded to exonerate the Master before him from personal penalty, on the ground that the department was satisfied that the Master was not guilty of fraudulent intention when he failed to include the contraband goods in the manifest submitted by him. In the present case we are satisfied that in failing to amend the manifest there was no fraudulent intention on the part of the Master. Hence applying in this case the same reasoning of the learned Judge in Crighton’s case cited by Mr. Bulchandani, the Master must be exonerated from personal penalty in the facts and circumstances of this case.

11. The reliance placed by Mr. Bulchandani on the other authorities is equally misplaced. In Collector of Customs v. Bhoormull, – , it was held that proceedings for confiscation of contraband or smuggled goods under Section 167(8) of the Sea Customs Act, 1878, are proceedings in rem and therefore such goods can be confiscated without ascertaining who is their real owner or who was actually concerned in their illicit import. That decision can be of no assistance to the respondents, inasmuch as on the same ratio, in the present matter the contraband goods have in fact been confiscated by the department, no person having laid claim to them. In SK. Mohd. Omer v. Collector of Customs – , the observations relied on by Mr. Bulchandani at page 295 are as under :-

“Any restriction on import or export is to an extent a prohibition. The expression ‘any prohibition’ in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947 uses three different expressions ‘prohibiting’, ‘restricting’ or ‘otherwise controlling’, we cannot cut down the amplitude of the word ‘any prohibition’ in Section III(d) of the Act. ‘Any prohibition’ means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From item (i) of Sch I. Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But none-the-less the prohibition continues.”
Mr. Bulchandani relied on these observations in support of his contention that Section 115(2) must be read as a prohibition against bringing certain articles into India namely smuggled goods, which shall be liable to confiscation. We entirely agree with this contention which however does not cater to the fact that in the present matter the smuggled goods were in fact confiscated by the department. For the same reason, the decision in Sewpujanrai I. Ltd. v. Collector of Customs – , relied on by Mr. Bulchandani can also avail the respondents nothing.

12. Mr. Bulchandani next relied on a decision in S. K. Srivastava v. V.K. & Co., , only in so far as it referred to an earlier decision of the Supreme Court in Girdharilal v. Union of India, , where it was held that in the absence of any procedural irregularity, the findings, arrived at by the Customs authorities cannot be disturbed by the High Court under Article 226 of the Constitution. We do not seek to disturb the impugned order on procedural irregularities but on what goes to the root of the matter, in so far as the order touches the confiscation of the vessel and imposes a personal penalty on the Master.

13. In the result, we allow the appeal. We set aside the order of the learned single Judge and the impugned order dated 18th August, 1978 in so far as it pertains to the confiscation of the vessel and the imposition of the personal penalty on the Master. Fine and penalty, if paid, shall be refunded to the Company and the Master respectively. The respondents shall pay to the appellants the costs of the appeal.