Holding

The presumption under s.123 of the Customs Act can be raised when the customs officer has a reasonable belief the goods are smuggled, and the High Court was wrong to reject the admission of additional evidence under s.391 of the CrPC.

Summary

The respondent, a railway passenger, was found wearing a waist‑chain of 820 g that was pure gold coated with mercury to appear silver. A customs officer seized the chain and the respondent was charged under the Gold (Control) Act, 1968 and the Customs Act, 1962. The trial court acquitted him, holding the chain was merely an ornament and that the presumption under s.123 of the Customs Act could not be raised because the officer could not have a reasonable belief it was smuggled gold. The Gujarat High Court affirmed the acquittal and rejected the prosecution’s request to admit additional evidence under s.391 of the CrPC to prove the Mint Master’s report. The Supreme Court allowed the appeal, holding that the officer’s reasonable belief is sufficient to raise the presumption under s.123 and that the High Court erred in refusing the admission of additional evidence despite the six‑year lapse. Consequently, the order of acquittal was set aside and the matter remitted to the High Court for further proceedings.

Issues considered

The applicability of the presumption under s.123 of the Customs Act when the customs officer’s reasonable belief is contested.
Whether an appellate court may examine the officer’s belief regarding the smuggled nature of the seized goods.
The permissibility of admitting additional evidence under s.391 of the CrPC after a lapse of six years.
The characterization of the seized article as ‘primary gold’ versus an ornament for purposes of the Gold (Control) Act.

Legislation cited

Code of Criminal Procedure, 1973s. 391
Customs Act, 1962s. 111, s. 123, s. 135(1)
Gold (Control) Act, 1968s. 85

Subjects

Customs Actpresumption of smuggled goodsreasonable beliefburden of proofEconomic offencesGold (Control) ActAdditional evidenceSection 391 CrPCAppealCommunity interest

Judgment

,
STATE OF GUJARAT A
v.
MOHANLAL JITAMALJl
PORW AL & ANR.

MARCH 26, 1987 B
[M.P. THAKKAR AND S. NATARAJAN, JJ.]

Customs Act, 1962: s. 123 and s. 135(1) read with s. 111-
Presumption that goods seized were smuggled goods-When to be
raised-'Reasonable belief-Connotation of.
c
Code of Criminal Procedure, 1973: s. 391-Additional evidence
to prove a document-Admissibility of-Lapse of six years-Whether
material.

Practice & Procedure D
)

Criminal Trial-Economic offences-Cause of the community-
Courts to give equal treatment.

The respondent accused, a rail passenger, was found by the
Customs Officer wearing a waistchain weighing 820 gms., made of pure E
> y gold and coated with mercury so as to give an appearance of being made
of silver. The goldsmith who was summoned to the railway station to

- test the article on the spot certified that it was made of pure gold. The
article was seized and he was charged for offences under s. 85 of the
Gold (Control) Act, 1968 and s. 135(1) read withs. 111 of the Customs
Act, 1962. The trial court held that what was seized was an 'ornament' F
~. and not 'primary gold' and acquitted the accused respondent of the
charge under s. 85 of the Gold (Control) Act. Disregarding the evidence
~/ of the goldsmith it took the view that the presumption under s. 123 of
the Customs Act could not be raised as the Customs official who had
made the seizure could not have entertained a reasonable belief that the
article in question was made of smuggled gold. It also found fault in G
regard to the proof of report of the Mint Master that the article in
question was made of pure gold of the specified fineness.

The High Court confirmed the acquittal and rejected the request
made by the prosecution for adducing additional evidence under s. 391
of the Code of Criminal Procedure in order to remove the alleged H
formal defect in the proof of the Mint Master.

677
678 SUPREME COURT REPORTS (1987] 2 S.C.R.

A Allowing the appeal by the State, the Court,

HELD: 1.1 The view taken by the High Court that the presump·
lion under s. 123 of the Customs Act that the seized article was smug-
gled gold could not be raised was altogether unreasonable and cannot
be sustained. [681E·Fi
B
1.2 Whether or not the official concerned had seized the article in
the "reasonable belier' that the goods were smuggled goods was not a
question on which the Court could sit in appeal. 1f prima facie there
were grounds to justify the belief the Courts have to accept the officer's
belief regardless of the fact whether the Court of its own might or might
C not have entertained the same belief. Section 123 of the Customs Act
does not admit of any other construction. [682A·C]

Pukhran v. D.R. Kholi, [1962] 3 Supp. S.C.R. 866, applied.
'
1.3. In the instant case, the conduct of respondent No. 1 in coat·
D ing the article of pure gold with mercury to make it appear as if it was of
silver was itself a conduct which could have provided the basis for
entertaining a reasonable belief that the article was a smuggled article.
This was an extremely unusual circumstance which would have aroused
,._
the suspicion of anyone. When the goldsmith was summoned at the y
railway station to test the ,article on the spot, and he expressed the
E opinion that it was made of pure gold, there was no scope for taking any
other view. The acceptance of this evidence would, in view of the provi-
sions of s. 123 of the Customs Act, result in the burden of proof being
shifted on the person from whom the article was seized to establish that
-~.·
-
it was not smuggled gold, which would justify raising the presumption ~
that the article in question was made of smuggled gold. [683C; 681E]
F ).,:
Isardas Dau/at Ram & Ors. v. The Union of India & Ors., (1962]
Suppl. 1 S.C.R. 358, referred to.
~

2. The High Court ·was altogether unjustified in rejecting the
application of the prosecution invoking the powers of the Court under s.
G 391 of the Code of Criminal Procedure for reception of additional evi-
dence. The prayer was rejected by the High Court on the ground that it
did not consider it 'expedient in the interests of justice to open a new
vista of evidence' in view of the fact that the offence had taken place six
years back. The mere fact that six years had elapsed, for which time lag
the prosecution was in no way responsible was no good ground for
H refusing to act in order to promote the ends of justice in an age when
GUJARAT v. M.J. PORWAL [THAKKAR, J.] 679

delays in the Court have become very common. The opinion of the Mint A
Master, which had admittedly been placed on record, though had not
' been formally proved, completely supported the case of the prosecution
that the gold was of the specified purity. To deny the opportunity to
remove the formal defect was to abort a case against an alleged
economic offender. The matter remitted to the High Court. An
B
appropriate direction shall be issued for recording of the evidence to
prove the report of the Mint Master. [683F-H; 684A; E-F)

- ),.-
Ends of justice are not satisfied only when the accused in a crimi-
nal case is acquitted. The Community acting through the State and the
Public Prosecutor is also entitled to justice. The cause of the Commu-
nity deserves equal treatment at th~ hands of the court in the discharge c
of its judicial functions. The entire Community is aggrieved if the
economic offenders who ruin the economy of the State are not brought
to book. [684A-B]

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
D
No. 74 of 1978.

From the Judgment and Order dated 3.11.1976 of the Gujarat
High Court in Criminal Appeal No. 95 of 1975.
.. r Girish Chandra and M.N. Shroff for the Appellant.
E

- Dalveer Bhandari and S.K. Jain for the Respondents.

.,_,,_ The Judgment of the Court was delivered by
'
THAKKAR, J. A passenger travelling by a train, (respondent
F
no. 1 herein) who had adorned his waistline with a waistchain
(kandora) weighing 820 grammes, which according to the prosecution,
was made of pure gold and was coated with mercury so as to give an
appearance of being made of silver was acquitted by the trial court
relying on the evidence of a licensed gold dealer as a defence witness,
who, as per the narration in para. 17 of the judgment of the trial court,
G
stated that:-
• -I,,
" ....... such chains are put on as 'kandora' on the waist of
ladies and gents in Rajasthan. He had sold such kandoras
and seen people putting on such kandoras in Rajasthan
State on their waist. Such chains or kandoras can be pre- H
pared out of pure gold as well as mixed gold. In old times
680 SUPREME COURT REPORTS [1987] 2 S.C.R.

A such kandoras used to be prepared out of pure gold. In
these days such type of kandoras are sold out to us by
people. The~itness further states that the design of mud-
dama! chain was much in vogue in Rajasthan as because of
unsoldered hooks it would fetch full value on sale. By pure
gold he meant gold of more than 99.60 purity or 24 carats
B purity. According to him about 25 years back sharaps of
Rajasthan were not allowed to sell gold of less purity than
99.60 under Mewari State Law ....... ".

The Learned Trial magistrate persuaded himself that the aforesaid
evidence established that it was an ornament and not primary gold.
c The learned Magistrate acted with an impropriety in making himself a
witness for the defence by observing:-

" ..... I have seen the seized gold chain myself in court. It
cannot be called in unfinished state or form. It is an ornament ..... "

D The trial court in these premises held that what was seized was an
'ornament' and not 'primary gold'. The trial court accordingly acquit-
ted the respondent-accused of the charge for an offence under Section
85 of the Gold (Control) Act of 1968. It is a matter of great concern
that the High Court confirmed this finding by overlooking a significant --f .... '
circumstance which stood out a mile. If the chain was bona fide worn
E as an ornament, it would not have been plated with silver. The desire
to show off being the basic purpose of wearing an ornament, one may
subject an ornament of silver to gold plating. But one would not sub-
-
ject an ornament of pure gold to silver plating. It was obvious that it
was a deceitful device to evade the law. Be that as it may, this aspect ~:
need not be probed further in view of the fact that the appeal preferred
F by the State against the order of acquittal in so far as it concerns the ......
/ '
offence under Section 85 of the Gold (Control) Act, 1968 was not
pressed. Suffice it to say that the approach made by the trial court
evinces a permissive and over-indulgent attitude towards the violators
of laws enacted to prevent and punish economic offences.

G The occasion for approaching this Court has been provided by
the view taken by the High Court in regard to the charge for an offence
under Section 135( 1) read with Section 111 of the Customs Act. The
charge against respondent no. 1 was that he was concerned with ac-
quisition, carriage, keeping or concealing with the goods which were
H liable to be confiscated under Section 111 having regard to the fact that
there was a prohibition against the import into India, of goods which
GUJARAT v. M.J. PORWAL [THAKKAR, J.] 681

were found in his possession namely pure gold of the specified fineness A
i.e. 99.60 or 24 carat. It needs to be recalled that Respondent No. 1
had adorned himself with a gold chain which was coated with mercury
in order to give it an appearance that it was made of silver. The trial
court disregarded the evidence of P. W .3, the gold-smith who certified
that the chain was made of pure gold and that the presumption under
Section 123 1 of the Customs Act could not be raised as in the opinion B
of the learned Magistrate, P. W. 1 Mahida, Superintendent of Customs
who had made the seizure could not have "entertained a reasonable
\ belief" that the article in question was made of smuggled gold. The
~ trial court also found faµlt in regard to the proof of report of the Mint
Master that the article in question was made of pure gold of the
specified fineness. c
The High Court confirmed the acquittal on all the three grounds.
The request made by the learned Assistant Public Prosecutor for
adducing additional evidence under Section 391 of the Code of Crimi-
nal Procedure in order to remove the alleged formal defect in the proof
of the Mint Master was rejected. That is why the matter has been D
brought before this Court by way of the present appeal.

P.W. 1, Superintendent of Customs Shri Mahida testified that he
had seized the article in question in the reasonable belief that the same
was an article made of smuggled gold. The acceptance of this evidence
would result in the burden of proof being shifted on the person from E
whom the article was seized to establish that it was not smuggled gold
in view of the statutory provision Section 123 of Customs relating to
burden of proof which would justify raising the presumption that the
article in question was made of smuggled gold. Whether or not the
'), 1. '' 123. Burden of proof in certain cases-( 1) Where any goods to which this section F
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-

(a) in a case where such seizure is made from the possession of any person.-

(i) on the person from whose possession the goods were seized; and
(ii) if any person, other than the person from whose possession the goods were G
seized, claims to be the owner thereof, also, on such other person;
-{ (b) in any other case, on the person, if any who claims to be the owner of the goods
seized.

2. This section shall apply to gold, diamonds, manufacturers of gold or diamonds.
watches and any other class of goods which the Central Government may by notific;1- H
ti on in the Official Gazette specify."
682 SUPREME COURT REPORTS [1987] 2 S.C.R.

A official concerned had seized the article in the "reasonable belief' that
the goods were smuggled goods is not a question on which the Court
can sit in appeal. The law to this effect has been,declared in no ambigu-
ous terms in Pukhran v. D.R. Kholi, AIR 1962 S.C. 1559 = 1962 (3)
Supp. S.C.R. 866. This Court has administered caution to the Courts
not to sit in appeal in regard to this question and has observed that if
B prima facie there ~re ground; to justify the belief the Courts have to
accept the officer's belief regardless of the fact whether the court of its
own might or might not have entertained the same belief. The law
declared by this Court is binding to the High Court and it was not open
to the High Court to do exactly what it was cautioned against by this
Court. Section 123 of the Act does not admit of any other construc-
c tion. Whether or not the officer concerned had entertained reasonable
belief under the circumstances is not a matter which can be placed '
under legal microscope, with an over-indulgent eye which sees np evil ~--
.
anywhere within the range of its eyesight. The circumstances have to
be viewed from the experienced eye of the officer who is well equipped
to interpret the suspicious circumstances and to form a reasonable
D belief in the light of the said circumstances. In the present case the
concerned official had mentioned three circumstances which made him
entertain the reasonable belief that the article was a smuggled one viz:

(1) On the basis of the prior information he was alert and was on ''f "'
the look out, watching the movements of respondent no. 1.
E
(2) The chain which had adorned the waistline of respondent no.
1 was coated with mercury so as to give an appearance of
being made of silver. -i.(
(3) As per the opinion of the goldsmith it was made of pure: gold. \. ,
F /'

If these circumstances did not make the Superintendent of Customs
entertain a reasonable belief that it was a smuggled article, he was not
fit to be an Officer of the Customs Department. The circumstance that
the chain was coated with mercury and given an appearance of having
been made of silver though it was made of pure gold of 99 .60 purity or
G 24 carat, was sufficient even for a layman, not to speak of a Customs
official, to entertain the belief that it was smuggled gold. Would any ~
one who was wearing an article as an ornament, evidently forostentious
purposes, given the article of pure gold the appearance of being made
,of silver? To repeat the observation made earlier one might coat an
article of silver to give an appearance of having been made of gold but
H no one would ordinarily take the trouble and incur the expenditure to
GUJARAT v. M.J. PORWAL [THAKKAR, J.] 683

coat an article of gold in order to give it an appearance of having been A
~· '( made of silver. This was ah extremely unusual circumstance which
' would have aroused the suspicion of anyone. When the goldsmith was
summoned at the Railway Station to test the article on the spot, and he
expressed the opinion that it was made of pure gold, there was no
scope for taking any other view. Even if a layman, let alone a judge,
were to ask himself the question as to whether in these circumstances B
T J. he would have entertained a reasonable belief that the article was a
smuggled article inasmuch as gold of this purity is manufactured only
in foreign countries which have sophisticated equipment and the
- "' .
further fact that an attempt to camouflage the article was made by the
person concerned his commonsense would not have given himself any
other answer. The conduct of respondent no. 1 in coating the article of c
.,. pure gold to make it appear as if it was of silver was itself a conduct
-< which could have provided the basis for entertaining a reasonable
belief it being a relevant piece of evidence as per the law declared by
this Court in Jsardas Dau/at Ram & others v. The Union of India &
others, [1962] Suppl. 1 S.C.R. 358 =A.LR. 1966 SC, 1867. The view
taken by the High Court is altogether unreasonable and accordingly it D
cannot be sustained.

The next question which arises is as regards the request made by
!>
~~ the learned Assistant Public Prosecutor for adducing additional evi·
dence in order to prove letter Ex. 26 received from the Mint Master
certifying that the article in question was made of gold of the_ purity of E
99.60. The request was made in order to invoke the powers of the
Court under Section 391 of the Code of Criminal Procedure, 1973,
, which inter alia provides that in dealing with any appeal under Chapter
'JI- XXIX the appeal court, if it thinks additional evid.ence to be neces·
-) sary, shall record its reasons and may either take such evidence itself
or ask it to be taken by a Magistrate. The High Court rejected the F
prayer on the ground that it did not consider it "expedient in the
interests of justice to open a new vista of evidence" in view of the fact
that the offence had taken place six years back. The mere fact that six
years had elapsed, for which time-lag the prosecution was in no way
responsible, was no good ground for refusing to act in order to pro-
mote the interests of justice in an age when delays in the Court have G
·-( become a part of life and the order of the day. Apart from the fact that
' the alleged lacuna was a technical lacuna in the sense that while the
opinion of the Mint Master had admittedly been placed on record it
had not been formally proved the report completely supported the
case of the prosecution that the gold was of the specified purity. To
deny the opportunity to remove the formal defect was to abort a case H
684 SUPREME COURT REPORTS [1987] 2 S.C.R.

A against an alleged economic offender. Ends of justice are not satisfied -y--
only when the accused in a criminal case is acquitted .. The Community
acting through the State and the Public Prosecutor is also entitled to
justice. The cause of the Community deserves equal treatment at the
hands of the court in the discharge of its judicial functions. The
Community or the State is not a person-non-grata whose cause may be
B
treated with disdain. The entire Community is aggrieved if the
economic offenders who ruin the economy of the State are not brought -\' ~
to books. A murder may be committed in the heat of moment upon
passions being aroused. An economic offence is committed with cool
calculation and deliberate design with an eye on personal profit re-
gardless of the consequence to the Community. A disregard for the
~I
-
c interest of the Community can be manifested only at the cost of forfeit-
ing the trust and faith of the Community in the system to administer
justice in an even handed manner without fear of criticism from the 'r· •
quarters which view white collar crimes with a permissive eye unmind-
ful of the damage done to the National Economy and National
Interest. The High Court was therefore altogether unjustified in
D
rejecting the application made by the learned Assistant Public Pro-
secutor invoking the powers of the Court under Section 391 of the
Code of Criminal Procedure. We are of the opinion that the applica-
tion should have been granted in the facts and circumstances of the
case with the end in view to do full and true justice. The application y ...
made by the learned Assistant Public Prosecutor is therefore granted.
E
The High Court will issue appropriate directions for the recording of
the evidence to prove the report of the Mint Master under Section 391
Cr. P. C. when the matter goes back to High Court and is listed for
directions. The appeal is therefore allowed. The order of acquittal is ' '
~
set aside. The matter is remitted to the High Court for proceeding
further in accordance with law in the light of the abovesaid directions. ';..'
F / '
P.S.S. Appeal allowed.