Holding

The Supreme Court held that the police search was lawful, the phrase “acquired possession” or “keeping” under section 135(1)(b) of the Customs Act includes possession in any capacity, and the Defence of India Rules must be construed broadly, so the circumstantial evidence proved the gold was smuggled and the conviction stands.

Summary

The Anti‑Corruption Bureau raided Natwarlal Damodardas Soni's residence and seized 100 gold biscuits of foreign origin concealed in a jacket; the Customs authorities subsequently took possession. Soni, who was absent at the time, was later convicted under sections 135(a) and (b) of the Customs Act, 1962 and the Defence of India Rules, but the High Court acquitted him, holding that the prosecution failed to prove the gold was smuggled and that the rules applied only to purchase. On appeal, the Supreme Court held that the police had authority to search under the CrPC, that the expression “acquired possession” or “keeping” in section 135(1)(b) is wide enough to cover possession without ownership, and that the Defence of India Rules must be given a broad construction. The Court found ample circumstantial evidence—foreign markings, 24‑carat purity, concealment, high value, and the accused’s flight—to infer the gold was smuggled, thereby satisfying the burden of proof. Consequently, the High Court’s acquittal was set aside and the conviction reinstated with sentencing.

Issues considered

The legality of the police search and seizure under the Code of Criminal Procedure
Whether section 123 of the Customs Act imposed a burden on the accused and, if not, whether circumstantial evidence could establish the gold as smuggled
The interpretation of “acquired possession” or “keeping” under section 135(1)(b) of the Customs Act
The applicability and scope of Rules 126H(2)(d) and 126P(2)(iv) of the Defence of India Rules, 1962

Legislation cited

Code of Criminal Procedures. 103, s. 165
Customs Act, 1962s. 111, s. 123, s. 135(1)(a), s. 135(1)(b)
Defence of India Rules, 1962s. 126H(2)(d), s. 126P(2)(iv)
Foreign Exchange Regulation Act, 1947s. 8(1)
Indian Evidence Act, 1872s. 106, s. 114

Subjects

gold smugglingCustoms Actpossessionburden of proofsearch and seizureDefence of India Rulescircumstantial evidencecriminal procedure

Judgment

340

A STATE OF MAHARASIITRA
v. \\
NATWARLAL DAMODARDAS SONI •
December 4, 1979
B [R. S. SARKARIA AND 0. CHINNAPPA REDDY, JJ.J
•
Code of Crhninal Procedure-Anti Corruption Bureau seized sn1uggled gold
fro1n_ the house of the ac.cuset,l-Poli'ce-lj had no iuri.~diction to take~ ..
cognizance. , ~-; "W-
Customs Act, 1962-S. 135-Scope of-Burden of proof that gold sriced is
c not smuggled gold-On whom rests.

Words and phrases--"Acquired possession'' or "Keepi11g"-Mea.ning cf.
The Anti--Corruption Bureau of the Police raided the house of the 1espon.
dent and recovered gold biscuits with foreign markings stitched in a · jacket
lying int a steel trunk underneath some cloth~. At the time of the ra{d, th~
D respondent was not in the house but his wife and mother were present. At
about the same time the Customs Authorities also raided his house and took
proceedings under the Customs Act, 1962 in respect of the smuggled gold found
in the house. The respondent, who remained absconding, surrendere.C. to the
police a week thereafter. ~
At the trial the· respondent contended ~at the gold was brought jn~G his
house by someone and left there in his absence and that, therefore, he had no
E connection with the gold. The trial court rejected the respondent's defence
and convicted him of the offences.
' I
On appeal, the High Court held that the prosecution had failed to prove~ ~
that the gold found in the house of the respondent was gold on which duty ...._
had been evaded or the import of which was prohibited and that for that reason '
the further question whether the gold was smuggled gold did not ari5e. Tt also
F interpreted rule 126H(2)(d) of the Defence of India Rules 1962 read with
\ rule 126 P(2)(iv) as confined to acquiring ownership and not to the more
acquiring of possession and held that there was no acceptance of gold by the
accused within the meaning of the Rules because not being present in the !iouSe,
he bad no choice of accepting or refusing the gold. •
Jn appeal to this rourt it \Vas contended on behalf of the respondent that
~ (i) the. search of his honse and the seizure of gold by the police was illegal; •
(ii) that section 123 of the Customs Act was .not applicable because the seizure '
was made not by the Customs Authorities but by the police under the Code. of~\
Crintlnal Procedure and therefore the burden of proving the offence lay on thC
police which it did not discharge.

Rejecting the respondent's contention and allowing the appeals,
H HELD : 1. The police had powen; under the Code of Criminal Procedure
to search and seize the gold if they had reason to believe that a cognizable
offence had been committed. Assuming that the search was illegal it Y.:ould
' MAHARASHRTA V· NATWAR LAL DAMODAR DAS (Sarkaria, J.) 341

npt affect either the validity of the seizure and further investigation by the A
CUStoms Authorities or the validity of the trial which followed on the com-
plaint cf the Assistant Collector of Customs. [344 HJ

Radhakislzan v. State of U.P. [1963] Supp. 1 S.C.R. 408; Shyam Lal
) 'I.
Sharma & Anr. v. The State of Madhya Pradesh, A.I.R. 1972 S.C. 886; State
of..Kerala etc. v. Alasserry Mohammed etc. A.I.R. 1978 S.C. 933; W. T. Stone,
Warden, 74-1055 v. Lloyd Charles Powell and Charles L. Wolff Jr. Warden, B
74-1222 v. David L. Rice (1976) USSC Bulletin, Vol. 2, B 4840, referred to.

• 2. :a) The High Court was in error in acquitting the appellant of the
charges under clauses (a) and (b) of section 135(1) of the Customs Act, 1962,
[350 G]

~~.' (b) Even if the prosecution could not invoke the provisions of section 123 c
of.the Customs Act there was sufficient circumstantial evidence to establish that
the gold was smuggled gold. [346 HJ
(c) Jn order to substantiate a charge under clause (b) of section 135(1),
the prosecution has to prove (i) that the accused had acquired possession or
Was in any way concerned in k~eping or concealing the gold bars (ii) that he
knew or had reason to• believe that these gold bars were sfiluggled goods and
thus liable to confiscation under section 111 of the Customs Act. [347 GJ D

(d) Even in cases where section 123(1) of the Customs Act is not attracted
the prosecution can discharge its burden by establishing circun~starices ftom
which a prudent man acting prudently may infer that in all probability the
goods in question were smuggled goods and the accused had the requisite guilty
knowled.r?c in respect thereof. [347 Hl
lssardas Dau/at Ram and Ors. v. The Union of India [1962) 1 Supp. S.C.R.
358; l.abhchand Dhanpat Singh Jain v. State of Maharashtra, A.I.R. 1975 S.C.
182; Balunial Janznadas Batra v. State of Maharashtra, A.I.R. 1975 S.C. 2083.
referred to.
~ Jn the instant case wlule acquitting the. accused the High Court overlooked
• o:;everal tell-tale circumstances appearing in evidence which establL'>h that the
gold was smuggled gold namely (a) the gold biscuits bore foreign markings
which proclaimed their foreign origin; (b) they were of 24 carat purity which
was not available in India at the material time; (c) the gold biscuits were
..~ found concealed stitched in the folds of a jacket specially prepared for this
purpo<e; (d) the gold biscuits were of huge value and (e) after the seizure of
the gold the accused absconded and continued to be a fugitive from justice till
a: week thereafter. All these circumstances show that the. gold had been G
smuggled into the country from a foreign country in contravention of the
Foreign Exchange Regulations Act, 1947. [347 C-EJ
,.,,. .J (e) The fact whether the gold had been imported with or without the
necessary permission of the Reserve Bank of India was within the knowledge
mt the respondent. It was for him toi rebut the inference which arose under
section 114 of the Evidence Act. Once it is established that the respondent
was i!l .::onscious possession or "keeping" of the gold it follows that he had the
mens rea requisite under clauses (a) and (b) of section 135(1) of the Customs
Act. [350 A-BJ ~'- -
..

342 SUPREME COURT REPORTS [1980] 2 S.C.IL

3. (a') The ~press.ion "acquired possession" or "keeping" in section
135{1)(b) is not to be restricted to "possession" or "keeping·• ·acquired. as an
owner or purchaser of the goods. Such a narrow construction ":ould defeat
the object .of the .:Provisions and undermine their efficacy as iu.truments for
suppression of the mischief which the legisJature had in view. [350 D]

(b) The expression ·~acquired possession" is of very wide arnplit~de and
includes acquisition or possession by a person in a capacity otber than as
owner or purchaser. The clause which is 'videly worded brings within its fold
even temporaory control or custody of a carrier, remover, depositor. harbourer,
•
keeper or dealer ot any goodsi which he knows or has reaSon to believe to be
smuggled goods or prohibited goods (liable to confiscation under section 111).
'_fhe expressions 'keeping" and "concealing" in the second phrase of clause (b) ~
also cover the present case. [350 EJ · , · r ~
·C 4. The view of the High Courtihat rule 126H read with 126P of the Defence
of India Rules has no application to this case on the ground that the respondent
did not acquire possession of the gold biscuits for purchase or otherwise within
the mea.nin!_! of the Rules would emasculate the provi:;ions and r'ender them
ineffective. These provisions have to be construed in a manner \Vhich will
Suppress the mischief and advance the object which the legislature had
in view. [351 D-FJ
Balkriilma •Chhagan1a1 v. Star. of West Bengal AIR, 19i5 S.C. 2083,
referred to.
C!UMINAL APPELLATE JURISDICTION : Criminal Appeal No. 231
of 1973 .
.li: Appeal by Special [eave from the Judgment and Order dated
13-10-1972 of the Bombay High Court in Cr!. A. No. 73;71·
0. P. Rana and M. N. Shroff for the Appellant.
Shiv Pujan Singh (Amicus Curiae) for the Respondent.
The Judgment of tne Court was delivered by
SARKARIA, J.-This appeal by special leave is directed against a
judgment dated October 13, 1972, of the High Court of Bombay.
Natwarlal, respondent herein, was prosecuted in the Court of the
Presidency Magistrate 2nd Court, Mazgaon, Bombay, for offences •
(1) under Section 135(a) read with Section 135(i) of the Customs Act,
1962; (2) under Section 135(b) read with Section 135(i) of .the
same Act, and (3) under Rule 126-H(2) (d) .read with Rule 126-
P(2) (iv) of the Defence of India Rules, 1962. The Magistrate con- '-
victed him in respect of these offences and sentenced him to suffer six
months' rigorous imprisonment and to pay a fine of Rs. 1,000/- on
.B each count. The material facts are as follows :
On March 6, 1968, "in consequence of certain information received
by the staff of "the .Anti.Ccnuption Bureau, Bombay, residential pre-
MAHARASHTRA v. NATWAR LAL. DAMODAR DAS (Sarkaria, J.) 343

imises of the accused-respondent at Old Hanuman Lane, Bombay was A
.search~ at about 1 p.m. The respondent himself was not present at
!his house, but his wife. and mother were present in the premises at
.the time of the search. As a result of tho search, the Anti-Corrup-
)
.tion Bureau recovered 100 gold bars, each weighing IO (olas. These
• _gold bars had foreign markings and were in the shape of gold biscuits;
.of 24 carats purity and were found stitched in a cotton jacket, which B
was lying iu a steel trunk underneath some clothes. The prevailing
• .llJJl!ket value of the recovered gold was Rs. 1,85,000. As the search
was being completed and the Panchanama prepared, the Custo!llS
Ji.~ Authorities, also raided the premises. The Anti-Corruption Bureau,
~ . bOIWCVer, first completed its Panchanama and later on a separate
Panchanama was prepared, under which tl1e gold so seized by the Anti-
c
Corruption Bureau was taken possession of by the Customs Authori-
rties. The case of the prosecution further was that the respondent re-
mained absconding after this recovery till March 14, 1968, when he
rnrrendered.
D
The Customs Authorities, also, took proceedings under the Cus-
•oms Act, 1962, and during the course of those proceedings, recorded
the statements of the accused respondent, his wife, and mother.
At the trial, the accused respondent denied. the charge and claimed
J
1
to be tried. He, however, did not dispute the fact that the gold in
·question was found from his premises. Substa_ntial!y, his defence E
was that thi~ gold was brought into his p.remises by one Jayantilal Salla
(P.W. 4) and left there in his absence. The respondent further plea-
ded that he had no connection with this gold. He asserted that if at
V"·-all, anybody was responsible, it was fayantilal Salla, who has beel'.I
examined as prosecution witness in this case.
F
The learned Presidency Magistrate by his judgment dated October
16, 1960, found that the charges had been established ,against the
~. respondent. He rejected the defence story and coovicted the res-
~ pendent as aforesaid.
' Aggrieved, the cespondent preferred an appeal again~t his conviction G
to the High Court. The appeal was heard by a learned Single Judge
•
(Vimadlal, J.), who by his judgment, dated October 13, 1962, allow-
. Jed the appeal, set aside the conviction of the respondent and acquitted
him. Hence this appeal by the State of Maharashtra against that
·llcquittal.
B
• The High Court has heTd "that the prosecution has failed to prove
1tha.t the _gcild 'found in the house of the accused was gold 01~ whic~ duty
' .
344 SUPREME COURT REPORTS [1980] 2 S.C..R.

A had been evaded, or the import of which was prohibited and, in that
view of the matter, the first and second charge~ framed against the
accused must fail, and the furthe.r question as to whether the accused
knew that the gold in question was smuggled gold do.es not really arise".
The High Court refused to consider the decision of this Court in S. t
Banerjee v. S. Agarwal('), which was relied upon by the counscl·for •
.B the State, with the observation:
"Suffice it to say that the observations in the majority
judgment of Wanchoo. J. in the said case would apply only
if it was in the first instance proved by the prosecution that
the gold in question was smuggled gold, which the prosecution
•
c has failed to prove in the present case."
As regards the third charge1 under Rule 126-H(2) (d) .read ,with. Rule
t26-P(2) (iv) of the Defence of India Rules, 1962, the High Court;
-
held that the prosecution had failed to establish "that the accused had
bought or otherwise acquired the gold without being a licensed dealer."·
D In its opinion, the aforesaid Rules must 'be interpreted as being con-
fined to acquiring of ownership and not to.the mea-e acquM"ing of posses-
sion. It further held that there was no "acceptance" of gold by the
accused within the meaning of Rule 126-P(2) of the Defence of India
Rules, 1962, because the accvsed being away from home, had no choice
of accepting or refusing the ·same. l
E
As before the trial court, here ulso, learned counsel appearing for
the respondent, contends that the search and seizure by the police of
the gold from the house of the respondent, was illegal, that the informa-
tion on the basis of which the police conducted the search was not
produced; and that this illegality had vitiated the trial that followed.~
In the alternative, counsel submits, that Section 123 of the Customs Act,.
which places the burden on the accused-person to show that seized
goods are not smuggled gold, was not applicable in the present case,
because the seizure of the gold was notj made byi the Customs Authori-
ties under the Customs Act, 1962, but by the Police under the Code
of Criminal Procedure. This being the case-procee(ls the argument-
G the burden lay heavily on the prosecution to prove every ingredient of
•
the offences wilb. which the accused stood charged. It is maintailled
that the prosecution had miserably failed to produce any evidence ta •
show that the gold in question was smuggled gold. \
Taking the first contention first, it may be observed that the police
H had powers under the Code of Criminal Procedure to search aitd'
seize ~ gold if they had reason to believe that a cognizable offence
---- (!) (1966), 2 S.C.J. 111.

WWW .&:I W- .-,,.- ___.._ - - .....--
MAlIARASHTRA v. NATWAR LAL DAMODAR DAS (Sarkaria, J.) 345

had been committed in respec~ thereof. Assuming arguendo, that the A
search was illegal, then also, it will not affect the validity of the seizure
and fUrther investigation by the Customs Authorities or the validity rJ.
the trial which followed on the complaint of the Assistant Collector of
Customs,
In Radhakrishan v. Stat'e of U.P. {') the appellant was a postman. B
• He and his father were living iu the same house. Certain undelivered
postal articles were recovered from an almirah in the house, the key of
-(~ which was produced by the father. The appellant, Radhakishan was
,.J tried and convicted of an offence under s. 52 of the Post Offices Act,
"lfl for secreting postal articles. One of the contentions raised on behalf
of the appellant was that the search and seizure was illegal inasmuch c
as it was in contravention of the prQVisions of Sections 103 and 165'
of the Code of Criminal Procedure. Mudholkac, J. speakiug for the
Court, repelled this contention, thus :
"So far as the alleged illegality of the, search is concern-
ed, it is sufficient to say that even assuming that th€ search D
was illegal the seizure of the articles is not vitiated. It may
be that where the provisi0ps of ss. 103 and 165, Code of
Criminal Procedure, are contravened the search could be re-
sisted by the person whose premise~ are sough~ to be search-
ed. It may also be that because of the illegality of the search
the Court may be inclined to examine carefully the evidence E
regarding the seizure. But beyond these two consequences
no further consequence ensues."
I
These observations apply aptly to the instant case.
Again, in Shyam Lal Sharma & Anr. v. The State of Madhya F
Pradesh('), Jaganmohan Reddy, J., del;ivering the opinion of the
Bench, held that even if the search is illegal beibg in contravention
with the requirements of Section 165, Criminal Procedure Code 1898
' ,
that provision ceases to have any application to the subsequent steps
in the investigation.
G
In State of Kera/a etc. v. A/asserry Mohammed etc.,(') questio11
J arose, whether the failure on the part of the Food Inspector to com-
ply strictly with the statutory provisions, would vitiate the trial and
conviction of the respondent ? This Court answered this question in
•
(I) [1963] Supp. 1 S.C.R. 408.
(2) A.I.R. 1972 S.C. 886.
R
(3) A.LR. 1978 S.C. 933.
346 SUPRE_ME COURT REPORTS (1980] 2 s.c.R.

A the negative, and referred with appro,val to the decision, dated July 6,
1976, in W.T. Stone, Warden, 74-1055 v. Lloyd Charles Powell and
Charles L. Wolff Jr. Warden, 74-1222 v, David L. Rice('), wherein
the Supreme Court of the United States of America made a clear de-
parture from its previous decision in the application of the exclusionary
rule of evidence. The prosecution in those cases relied upon the evi-
B dence of search and seizure, which were said tq be unconstitutional
and unlawful. Mr. Justice Powell, who delivered the leading majority '
jud~nt, made these pertinent observations :

"Upon examination, we conclude, in light of the nature
and purpose of the Fourth Amenduient exclusionary rule,
.·~
c that this view is unjustified. We hold, therefore, that where
the State hiis prnvided an opportunity for full and fair .litiga-
tion of a Fourth Amendment claim, the Constitution does not
require that a State prisoner be granted federal habeas cor-
pus relief on the ground that evidence obtained in an un-
constitutional search or seizure was introduced at his trial."

In his concurring opinion, Chief Justice Burger highlighted the injustice
that often ;resulted from application of the exclusionary rule. Said
the learned Chief Justice :
"To vindicate the continued existence of this judge-made
E rule, it "is incumbent upon those who seek its retention-and
surely its extension-to demonstrate that it serves its declar-
ed deterrent purpose and to show that the results outweigh the
rule's heavy coots to rational enforcement of the Criminal
Law See. e.g. Killough v. United States, [315 F 2d 241
(1962)]. The burden rightly rests upon those who ask so-
F ciety to ignore trustworthy evidence of guilt, at the expense

..
of settrng obviously guilty criminals free to ply their trade."

What has been said above is more than enough to show that the
first contention raised on behalf o~ the respondent is devoid of merit. •
G As regards the second contention canvassed by Shri Shiv Punjan
Singh, we would say that even if the prosecution cannot invoke the pro-
visions of Section 123. Customs Act, to lighten the burden cast on it, \ ·
the.re is sufficient circumstantial evidence to establish that the gold in
question was smuggled gold. Before dealing with that evidence, it
will_ be useful to notice the relevant provisions relating to the charges •
H against the respondent.

0) (1976) U.S.S.C. Bulletin, Vol. 21 B 4840.

- mfr
MAHARASHTRA v. NATWAR LAL DAMODAR DAS (Sarkaria, /.) 347

First, we take up the charges under Section 135 of the Customs Act, A
1962. The material part of that Section reads as under :
"135.(1) Without prejudice to any action that may be
• taken under this Act, if any person-
( a) is in relation to any goods in any way knowingly
concerned iJ! any fraudulent evasion or attempt at evasion of B
any duty chargeable thereon or of any prohibition for the
time being imposed under this Act or any other law for the
time being in force with respect to such goods, or

(b) acquires possession of or is ini any way concerned in
carrying, removing, depositing, harbouring, keeping, conceal- c
ing, selling or purchasing or in auy other manner dealing
with ariy goods which he knows or has reason to believe are
liable to confiscation under Section 111,
he shall be punish.able,-
(i) in the case of an offence relating to any of the! goods D
to which Section 123 applies and the market price whereof
exceeds one lakb of rupees. with imprisonment for a term
which may extend to seven years and with fine :
1.J
Provided thati in the absence of special and adequate rea-
sons to the contrary to be recorded in the judgment of the E
court, such imprisonment shall not be less than one year;
(ii) in any other case, with imprisonment for a term
which may extend to three years, or with fine, or with both".

Section 111 enumerates the categories of goods which are imported int~
F
India and are liable to confiscation. Broadly speakihg, these catego-
ries relate to goods which are smuggled into India .
•• The requisite guilty knowledge or mens rea undet clauses (a) and
• (b) of Section 135(1) can be established by circumstantial evidence,
also. In order to substantiate the charge under clause (b) against
the respondent, the prosecution had to prove (i) that he had acquired G
.) phossession of or was in any way concerned in keeping or concealing
t e gold bars; (ii) that he knew or had renson to believe that these
gold bar~ were smuggled goods, and thus liable to confiscation under
Section 111 of the Customs Act.
' It is trite law that even in cases where Section 123 (1) of the H
Customs Act is not attracted, the prosecution can discharge its burden
by establishing circumstances frqm which a prudent man, acting pru-
348 SUPREME COURT REPORTS [1980] 2 S.C.R.
Adently, may infer that in all probability the goods in question, were
smuggled goods, and the accused had t)le requisite guilty knowledge
in respect thereof. The leading case is : lssardas Daulat Ram and
Ors. v. The Union of Iudia & Ors.(') In that case, in reaching the
conclusion that the gold had been smuggled, the Collector qf Customs
considered the credibility of the story put forward by the appellant about
B the purchase of the gold and also the conduct of the appellant in
trying to get the gold melted so asi to reduce its fineness by mixing silver •
with it, in an attempt to approximate the resultant product to iicit gold
found in the market. The ratio of this decision was followed by
this Court· in Labhchand Dhanpat Singh Jain v. State of Maharash-
tra(2): The appellant-accused therein was trying to enter the Railway
c compartment at Bombay Sl"ation. Seeing his nervousness, the Rail-
way police questioned him and searched his person and recovered nine
bars of gold with f,Olfeign markings. The accused put forward an
incredible story with regard to the ·possession of the gold. . Tbis Court
held, that in the circumstances of the, case, an inference, could very well
D be drawn that the gold must have been imported after the law passed
in 1948, restricting its entry; that the burden of proving an innocent
· receipt of gold Jay upon the appellant under Sectiqn." 106, Evidence
Act and that the totality of facts proved is enough to raise a presump-
tion under Section 114, Evidence Act that the gold had been illegally
imported into the country, so as to be cov~red by Section 111 ( d) of
E the Customs Act.

. It is to be noted that in Labhchand's case (ibid), Section 123 of
the Customs Act was not applicable, as the seizure of the gold was by
the police and not by the Customs Officer. The Courts in that case
did not use this presumption under SeCtion 123 of the Evidence Act
F against the appellant. They relied upon the circumstantial evidence
to raise the necessary inference" with regard to the character oJl the gold
seized and the possession of the requisite mens rea by the accused. The
ratio of Labhchand's case (ibid) applies a fortiori to the facts of the
case before us. •
G In Balumal Jamnadas Batra v. State of Maharashtra(') a Bench
of this Court to which one of us (Sarkaria J.) was a party, eleven boxes
were seized by .the Police from Room No. 10 at Sheriff Deoji Street, \ . -~·
Bombay. On opening the boxes, goods bearing foreign markings such
as "Made in Germany", were found. A rent receipt in the name of·
the accused in respect of Room No. 10, in the occupation of the accused
H
(1) (1962J 1 Supp. S.C.R. 358.
•
(2) A.l.R. 1975 S.C. 182. -
(3) A.I.R. 1975 S.C. 2083,
MAHARASHTRA v. NATWAR LAL DAMODAR DAS (Siirkaria. J.) 349

was also recovered. It was held by this Court, that eve111 if the goods A
hearing foreign markings, were not seized under the Customs Act,
., and as such Section 123(1) of the Act was not attracted, the afore•
mentioned circumstances, under Section 114 read with Section 106
• of the Evidence Act were sufficient to presume that the accused knew
that the goods had been smuggled or imported in contravention of
B
law.

In the instant case while holding that the respondent was in con-
. ~', scions possession of the gold bars in question, the High Oiurt has
""11' acquitted him only oh the ground that the prosecution had failed to
prove that the gold in question had 00-on imported after 1947 without c
the necessary permission of the Reserve Bank, or without payment of
duty and that the further question as to whether the accused knew that
it was smuggled gold "does not really arise". With this ~easoning the
High Court acquitted the respondent on the fitst two charges under
Section 135 of the Customs Act. The High Court overlooked sevetal
tell-tale circumstances appearing in evidence which unerringly pointed D
to the conclusion that the 1told in question was smuggled gold. These
circumstances are: (a) the gold biscuits in question bore foreign
markings which proclaimed th~ir foreign origin. (b) This gold was
'If of 24 carat purity which was not available in Inditi at the material time.
This circumstance reinforce the inference of its being smuggled gold.
(c) These gold biscuits were found concealed and stitched in the folds
E
of a jacket specially prepared for this purpose. (d) The gold, was in
th~ shape of gold biscuits and was of huge value, which at the then
V - prevailing market rate was Rs. 1,85,000. (e) After the seizure of
this gold the accused absconded and continued to be a fugitive from
justice till March 14, 1962. F

The circumstances catalogued above irresistibly read to the conclu-
sion that the gold in question is smuggled gold, having been recently
• brought into India from a foreign country without payment of duty,
· and further it had been brought into India in CQntravention of the
Notification dated March 25. 1947 issued by the Central Government G
under Section 8(1) of Foreign Exchange Regulation Act, 1947 prohi-
. J biting the import into India gold without the permission
of the Reserve Bank. As already noticed, . this gold was
i'n the shape of bi5cuits of 24 carat purity and bore foreign
markings. The accused respondent-as held by the courts
below-wa's found in conscious 'possession' or 'keeping' of H
this gold of foreign origin about 15 years after its import into
India had been banned. Therefore, it was for the accused respondent

..., _,, ..... dU!2£J!l
350 SUPREME COURT REPORTS [1980] 2 S.C.R.

A
to show that it had been brought into India-with the pennis- l
sion of the Reserve Bank. The existence of this fact viz., whether it
had been imported with or without the necessary permission of the
Reserve Bank, was a matter within the, peculiar knmvledge of the ac-
cused-respondent It was, therefore, 'for the accused to rebut the
•
inference which arose under Section 114, Evidence Act from the sur-
B
rounding circumstances of the cas·~. that it was contraband gold, smug-
gled into India. Once it is held that the accused was in consci~s
possession or "keeping" of this s'muggled gold, it will follow as a neces-
sary corrollary therefrom th~t he had the mens red requisite under ~ _
clauses (a) and (b) of Section 135(1). lt may be remembered that · ¥
(' smuggling, particularly of gold, into India afiects the public economy
and financial stability of the country. The provisions of Sectioni
135 (1) and like statutes which are designed to suppres~ smuggling have
to be construed in accordance with the Mischief Rule fifst enunciated
in Heydons case. Accordingly the words "acquires possession" or
keeping" in clause (b) of Section 135 (1) are not to be restricted to
D "possession" or "keeping" acquired as an owner qr a purchaser of
the goods. Such a narrow construction-which has been erroneously
adopted by the High Court-in' our opinion: would defeat the object of ·
these provisions and undennine their efficacy as instruments for sup-
µression of the mischief which ·the Legislature had in view. Constrn-
E ed in consonance with the scheme of the statute, the purpose of these
provisions and the context, the expression "acquires possession" is of
very wide amplitude and will certainly include the acquisition of posses-
sion by a person in a capacity other than as owner or purchaser. Tiris
expression takes its colour from the succeeding phrase commencing · -~
with the word "or" which is so widely worded that even the temporary
F control or cllstody of a carrier, remover, depooitor, harbqurer, keeger,
or dealer of _any goods which he knows or has reason to believe to be
smuggled goods or prohibited goods (liable to confiscation under Section J,
111) cannot escape the tentacles of clause (b). The expressions
"keeping" and "concealing" in the second phrase of clause (b) iilso •
cover the present case.
G
, From the above discussion, it is clear that the High Court was _in
error in acquitting the appellant of the charges under Section 135(1), \ ·
(a)&(b) of the Customs Act.

ff
-.
This takes us to the charge under Rule 126H(2)(d) read with
Rule 126P(2) (iv) of the Defence of India Rules,1962. These Rules
so far as material for our purp<>se, may be extracted as under :
MAHARASHTRA v. NATWAR LAL DAMODAR DAS (Sarkaria, J.) 351

"126H(2). Save as otherwise provided in this Part,- A
( d) no person other than a dealer licensed under this
, Part shall buy or qtherwise acquire or agree to buy or other-
wise acquire, gold, not being ornament, except,
(i) by succession, intestate or testamentary or
(ii) in accordance with a permit granted by the Board in B
this behalf."
"126P(2). Whoever,~
(ii) has in his possession or under his control any quantity
· of gold in contravention of any provision of this Part;
c
(iv) buys, or otherwise acquires, or accepts gold in contra-
vention of any provision of this ·Part,
shall be punishable with imprisonment for a term of not. less
than six months and not more than two years and also with
fine."
D
The High Court has held that these Rules do not apply because
the accused respondent had not acquired possession o~ these gold bis-
cuits by purchase or otherwise within the meaning of these Rules. Such
a narrow construction of this expression, in our opinion, will emascu-
late these provisions and render them ineffective as a weapon for com- E
bating gold smuggling. As was pointed out by this Court in Balakrisk~a
Chhaganlal v. State of West Benga/( 1 ); Rule !26P(2) (ii) penalises a
person who has in his possession or under his, control any quantity of
gold in contravention of any provision of this: Part, and the Court can-
not cut back on the width of the language used, bearing in mind the
purpose of plenary control the State wanted to impose on gold, and F
exempt smuggled gold from the expression ''any quantity of gold" in,
that sub-.rule. These provisions have, therefore, to be specially cons-
trued in a manner which will suppress the mischief and advance the
• object which the Legislature had in view. The High Court was, in
error in adopting too narrow a construction which tends to stultify the
law. The second charge thus had been fully established against the G
. ) respondent. ·

Mr. Shiv Pujan Singh, for the respondent, submits that this prose-
cution has been brooding over the head of the respondent for morei than
• eleven years and that the arch criminal who was the owner of the gold
H
biscuits in question has escaped making the respondent a scapegoat. It
(!) A. I. R. !975S. C. 2083.
352 SUPREME COURT REPORTS [1980] 2 s.c.R:

A is stressed that the accused is a first offender and he should be released
on probation.
Undoubtedly, this long delay is a factor which should along v.ith
the other circumstances, be taken into account in mitigation of the
'
sentence. Even so, in a case of ·gold smuggling we are loath to
B accord to the accused, found guilty, the beuefit of the Probation of
Offenders Act. Smuggling of gold not only affects public ;revenues and
public economy but often escaped detection.
For the foregoing reasons, we allow this appeal, set aside the acqmt-
tal of the accused, Natwarlal Damodarda$ Soni, and convict him under
C Section l:i5(1)(a)&(b). However, taking into account all the circum-
stances of the case, particularly the fact that these criminal proceed-
ings, like sword of damocles, have been hanging over the head of
the respondent for more than eleven years, we sentence ·him cumula-
tively on these two counts, to six months imprisonment and a fine
of Rs, 2,000, and in default, to suffer four months further lmpriSo'n-
D ment. We further convict him under Rule 126P(2) of the Defence
of India Rules, 1962 and sentence him to six inonths rigorous impri·
sonment. The sentence on all the counts shall ru'n concurrently. The
bail of the accusedcrespondent is cancelled. He must surrender to
serve out the sentence inflicted on him.

E P.B.R. Appeal allowed.

,
•

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MGIPJ.'1-868SCI/79-2,S00-30·7-80.
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