Special Leave Petition Civil No 7799 of 1988
From the Judgment and order dated 1651988 of the Delhi High Court in CW No 963 of 1984
R Jagtyani and Miss Kamini Jaiswal for the Petitioners
547 The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is an application under Article 136 of the Constitution for leave to appeal against the judgment and order of the Division Bench of the High Court of Delhi dated 16th May 1988
In order to appreciate the contentions urged before us it is imperative to state a few facts
Ms Gems Impex Corpn
 Bombay petition No 3 herein is a firm engaged in the business of diamonds and precious stones
Ramchand Udhavdas Bharvani petitioner No 2 herein is a partner in the said firm
Indru Ramchand Bharvani petitioner No 1 herein is his son
It is stated that both the father and the son were managing the business of the firm
The Customs officers received a secret information that smuggled diamonds have been kept by the petitioner Nos 1 and 2 in the said premises
After obtaining necessary search warrant the Customs officers searched the business premises on 16th November 1979
It may be mentioned that the day was not very auspicious for the firm as well as for the people of Bombay
On that day a warning had been issued by the Weather office Bombay about a possible sea storm that night
The entire activities came to a half and the public had been advised to rush back to their houses early
On searching the premises of the petitioner No 3 the Customs officers found over 2800 carats of rough diamonds and over 400 carats of cut and polished diamonds in addition to a lot of other items of precious stones pearls gold manufactures etc
The books of accounts of the firm claimed to be written upto date however showed a stock of 1196 carats of cut and polished diamonds and the stock of rough diamonds and other articles was shown as nil
On being asked to produce evidence of legal acquisition import and possession of diamonds the petitioners Nos 1 and 2 showed their inability to produce any such documents
They replied that they had purchased the goods locally through brokers and had already made 50 cash payment
The cash book however revealed no such payment nor were any purchase vouchers produced before the officers
When asked to name the brokers the petitioners Nos 1 and 2 stated that the brokers would not come forward to confirm the deal
The Customs officers also found various documents which had been described in the initial Panchanama as various incriminating documents
In the background of the secret information and the facts and the circumstances aforesaid the Customs officers formed a prima facie belief under section 110 read with section 123 of the  hereinafter called the Act  that the unaccounted diamonds were smuggled 548 goods
They seized various goods including cut and published diamonds and rough diamonds in all valued at Rs544288202 under Section 110 of the Act on the reasonable belief that the goods had been smuggled into India
They also seized Indian currency of Rs140 lakhs and some other incriminating documents found in the premises
The only question agitated before the High Court was regarding cut and polished diamonds and rough diamonds
In view of the climatic conditions the goods and the documents seized were put in two cartons in the presence of witnesses and the cartons were sealed with the Customs  seal and also with the seal provided by petitioners Nos 1 and 2 and the signatures were also put on the label of the cartons
A detailed itemwise inventory of the seized goods and documents was prepared in the Customs House Bombay later on 20th 21st and 22nd of November 1979
The petitioners Nos 1  2 were asked by the Department to attend preparation of the detailed itemwise inventories but they did not attend rather the petitioner No 1 replied that the job could be carried out even in his absence
The petitioners Nos 1 and 2 were examined and their statements recorded under Section 108 of the Act
In his statement recorded on 29th November 1979 Ramchand Udhavdas Bharvani gave names of the 4 dealers
The petitioners also produced certain notes issued by the said dealers showing that some quantity of diamonds had been given by the said dealers to the petitioner No 3 on approval basis
The approval basis was stated to be known in the business circle as Jangad 
Some of these notes bore dates earlier than 16th November 1979 but neither these notes nor any packet of diamonds covered thereby had been found with the firm on the date of search and seizure
The dealers named by the petitioners were questioned under Section 108 of the Act to check the veracity of the notes
They stated that they had issued anti dated and fake notes in order to help the petitioners
The diamonds covered by these Jangad Notes  were not found in possession of the firm on the day and these were not seized
The petitioners gave such explanation for the absence of these diamonds dealers which were not found acceptable by the department
A show cause notice was thereafter issued on 9th May 1980 on various persons including the petitioners
By the showcause notice the petitioners were called upon to explain to the Collector of Customs Preventive Bombay as to why goods mentioned in the notice and the Indian currency of Rs140 lakhs be not confiscated and the penalty should not be imposed under Section 112 of the Act
The petitioners duly filed a reply on 5th March 1981 stating that the goods seized from their custody were Iying with them on approval basis 549 Or Janged basis and belonged to various other dealers
The petitioners sought reliance upon affidavits of 7 other diamond merchants jewellers customers etc which they filed for the first time along with their reply to show cause notice after about 15 months of the seizure
These affidavits however covered the entire quantity of the goods seized
So far as the diamonds are concerned the affidavits of 3 other persons were filed
It was correctly mentioned by the High Court if we may say so that the diamonds were not entered in the books of accounts of the dealers who filed the affidavits when and from whom these were acquired and whether any jangad notes were issued and if so why these were not mentioned in their affidavits
The High Court has characterised these affidavits in the judgment as a bald statement about the ownership of diamonds
The High Court was right
The Collector of Customs by his order dated 17th April 1982 directed release of jewellery but ordered absolute confiscation of various other goods including the diamonds in question and also imposed a penalty of Rs65 lakhs on the petitioners under Section 112 of the Act
A penalty of Rs25 lakhs each was imposed on the firm and petitioner No 1 and a penalty of Rs 15 lakhs was imposed on petitioner No 2
Aggrieved thereby the parties appealed to the Collector of Customs under Section 128 of the Act but the same was dismissed
The Customs Excise  Gold Control Appellate Tribunal by its order dated 17th January 1984 confirmed the order of confiscation in respect of both the diamonds
The Tribunal held that seizure of diamonds was in the reasonable belief that these were smuggled goods and consequently the onus of proof according to Section 123 of the Act was on the petitioners and they had failed to discharge it in respect of the seized diamonds
The Tribunal however ordered the release of Indian currency of Rs140 lakhs and of all the confiscated goods except the diamonds
The penalty on petitioner No 1 was reduced to Rs 10 lakhs and on the petitioner No 2 and the firm it was reduced to Rs 5 lakhs each
The result was that the penalty imposed on the petitioners under Section 112 of the Act was reduced from Rs65 lakhs to Rs20 lakhs
The petitioners challenged the correctness and legality of the Tribunal s order dated 17th January 1986 before the High Court of Delhi under Article 226 of the Constitution
Moreover on an application filed by the petitioners under Section 130 of the Act the Tribunal by its order dated 8th January 1985 referred to Bombay High Court the following two questions 550 1 Whether in the facts and circumstances of the case the Tribunal was justified in holding that the seizing Customs officer had adequate material to form the reasonable belief as contemplated in Section 110 read with Section 123 of the Act that the diamonds found in the business premises of Ms Gems Impex Corpn
were smuggled goods 2
Assuming that Section 123 applied and burden of proof was on the appellants whether the Tribunal should have held that the appellants had discharged this burden by tendering affidavits of persons claiming ownership of the seized diamonds By this Court s order dated 15th July 1987 it was directed that the reference application pending in the Bombay High Court should stand transferred to the Delhi High Court and be heard along with the writ petition
The High Court by the impugned judgment dated 16th May 1988 from which the appeal was sought to this Court disposed of the writ petition as well as answered the questions
Two contentions were raised before the High Court namely 1 there was no material before the Customs officer to form the reasonable belief that seized goods were smuggled goods and hence the seizure itself was bad in law and therefore the provisions of Section 123 of the Act could not be applied and it was for the Customs Department to prove that the diamonds in question were smuggled
The Customs department having failed to prove that the seized diamonds were smuggled the impugned order cannot be sustained
It was secondly argued that by assuming that the onus was upon the petitioners to prove that the seized diamonds were not smuggled they had amply discharged the said burden by tendering affidavits
The first question that had to be considered was whether there was material for forming an opinion as to reasonable belief under Section 110 read with Section 123 of the Act
Section 1101 of the Act which deals with seizure of goods documents and things provides as follows 1 If the proper officer has reason to believe that any goods are liable to confiscation under this Act he may seize such goods 551 Provided that where it is not practicable to seize any such goods the proper officer may serve on the owner of the goods an order that he shall not remove part with or otherwise deal with the goods except with the previous permission of such officer
 Section 123 which deals with onus of proof provides as follows B 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 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 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 so seized
2 This section shall apply to gold diamonds manufactures of gold or diamonds watches and any other class of goods which the Central Government may by notification in the official Gazette specify
 Hence the gist of these two sections is that there must be materials to form a reasonable belief that the goods in question are smuggled
Section 111 deals with confiscation of property
The High Court in our opinion rightly found that there was evidence to presume that the goods in question were smuggled
A large quantity of diamonds was found in the possession of the petitioners
No trustworthy evidence documentary or oral was produced in favour of the petitioners as to its legal acquisitionimportation or possession
The learned Acting Chief Justice Chadha J  Sabharwal J who disposed of the matter by the judgment under appeal found that even a cursory look at the documents was adequate to show that the transac 552 tions were of sale and purchase of diamonds in foreign currencies
While the stock in the books showed a balance of 1196 carats of cut and polished diamonds and nil stock of rough diamonds the stock found in their possession was much more
In those circumstances the High Court came to a conclusion that there was reasonable belief that the diamonds were smuggled and we cannot say that such conclusion was unwarranted
It was contended before the High Court and repeated before us in support of the petitioners that there was no profit element in smuggling the diamonds and hence no presumption should be inferred against the petitioners
There was nothing on record to show that profit element was lacking
Section 123 of the Act itself recognises that diamonds have great potential for smuggling into India and that is why it is mentioned in sub section 2 of Section 123 of the Act
The onus has been placed on the person from whose possession such articles are acquired
In that view of the matter the High Court rightly drew the presumption against the petitioners
However it was contended on their behalf that reasonable belief could not be based on presumptions
Reliance was placed on a Bench decision of the High Court of Delhi in the case of Shanti Lal Mehta vs Union of India  ors
 There it was asserted that the goods in question belonged to Queen Mother of Nepal and that they were duly entered in the account books but the accountant had gone to the Income Tax Department
The Customs officer did not wait for the accountant to arrive to exp lain the entries in the books of account to him and seized the goods which in the search list were described as appearing to be diamonds 
Due to these facts the learned Single Judge held that it was not a case of reasonable belief but only a case of suspicion
In the instant case as per the High Court s order the Customs Deptt
had definite secret information
Despite petitioners  assertion that the books of accounts were written up to date it showed a stock of only 1196 carats of cut and polished diamonds and that of rough diamonds and other articles as nil the diamonds actually found on search were over 2800 carats of rough diamonds and over 400 carats of cut and polished diamonds apart from various other precious stones etc
On being asked to produce evidence of legal acquisition the petitioners expressed their inability
There was good ground accompanied by rational nexus leading to formation of the belief that the goods were smuggled
Furthermore the petitioners stated that they had purchased the goods locally through the brokers and had already made 50 cash payment but the 553 cash book showed no such payment
They also refused to disclose brokers  names saying that the brokers would not come forward to confirm the deal
Besides various incriminating documents were also found
The existence of the material is justiciable but not the sufficiency of the material
In this case there is ample material their existence cannot be disputed
There is certainly a nexus between these materials and the formation of the belief that the goods are liable to confiscation
In the light of the above Section 110 read with Section 123 has been fully complied with
The reasonable belief as to smuggled goods as enjoined in the Act had been explained by this Court in State of Gujarat vs Mohonlal JitamatJi Porwal  Anr  There this Court observed whether or not the officer concerned had seized the article under the reasonable belief that the goods were smuggled goods is not a question on which the Court can sit on appeal
The circumstances under which the officer concerned entertains reasonable belief have to be judged from his experienced eye who is well equipped to interpret the suspicious circumstances and to form a reasonable belief
See also MA Rasheed  Ors
vs State of Kerala  and The Barium Chemicals Ltd Anr
vs The Company Law Board  Ors n must be reiterated that the conclusions arrived at by the fact finding bodies the Tribunal or the statutory authorities on the facts found that cumulative effect or preponderance of evidence cannot be interfered with where the fact finding body or authority has acted reasonably upon the view which can be taken by any reasonable man Courts will be reluctant to interfere in such a situation
Where however the conclusions of the fact finding authority are based on no evidence then the question of law arises and that may be looked into by the Courts but in the instant case the facts are entirely different
See the principles enunciated by this Court in Ms Mehta Parikh  Co vs ClT Bombay  The same view was expressed by this Court in Pukhraj vs DR Kohli 1962 Suppl 3 SCR 866 where while dealing with the provisions of the Customs Act 1878 this Court held that Section 178 of the said Act imposed the onus of proof that the gold was not smuggled on the party if it was seized under the Act
The question whether it was under the reasonable belief or not was a justiciable one
The facts of this case certainly warrant the formation of belief
In any case once it is held that there was material relevant and germane the sufficiency of the material is not open to judicial review
The other contention urged on behalf of the petitioners was that 554 the burden that lay upon the petitioners had been fully discharged to show that the goods were not smuggled
The High Court on an analysis of the facts found that the onus was not duly discharged and held that though the burden on the petitioners was not as high as on the prosecution but there must be preponderance of probabilities
The High Court found that by filing the affidavits in this case the burden had not been discharged
We are in agreement with the High Court
The facts that the affidavits had been filed long afterwards and the names of the parties were not disclosed at the time of search warrant rejection of the affidavits
These were filed after a gap of 15 months and the same were examined minutely
The facts and figures given were checked up and the credibility of the deponents as well as the credence of their version examined
Furthermore the affidavits must be looked on the background that those persons who claim that they had given these diamonds on approval basis made no claim for all these diamonds
Reliance was placed on a decision in the case of Rabindra Kumar Dev vs State of Orissa  This Court while considering this case under the Prevention of Corruption Act and the nature and standard of proof required the accused under Section 105 of the Evidence Act held that the Evidence Act does not contemplate that the accused should prove the case with same strictness and rigour
But in this case the nature of the evidence on which the reliance could not be placed was rightly rejected by the Customs and the High Court held it properly that the petitioners had not discharged the onus to prove that the goods were not smuggled
In this case there was no denial of opportunity the proceedings followed excluded the possibility of denial of opportunity
The proceedings taken were in order and in consonance with natural justice
The High Court was right in answering the first question by saying that the Tribunal was justified in holding that the seizing Customs officer had adequate material to form a reasonable belief as contemplated under Section 110 read with Section 123 of the Act and it rightly held that the appellants had failed to discharge the onus
The High Court answered the second question in the negative
In our opinion the High Court was right
There is however one aspect of the matter which was emphasised before us ie that the conclusions of the fact finding body or statutory authority must be arrived at after giving a fair opportunity to the party to be effected by the order to be passed
As has been reiterated by a Bench decision of the Calcutta High Court in Bal 555 Kissen Kejriwal vs Collector of Customs Calcutta  ors
 AIR 1962 Cal
460 a fair hearing has two justicable elements
The first is that an opportunity of hearing must be given and the second is that the opportunity must be reasonable
Whether a person has a fair hearing can be gone into by the Court and the Court s conscience must be satisfied that an Administrative Tribuanl charged with the duty of deciding a dispute has conformed to the principles of natural justice
In that decision the Calcutta High Court was dealing in respect of a proceeding under the 
Counsel for the appellant sought to urge before us that a fair hearing had not been given
We have set out the facts hereinbefore
The High Court had also examined this aspect and rejected this challenge
In our opinion the High Court was right
In our opinion judged by the aforesaid two aspects a reasonable and fair hearing was afforded to the petitioners
Hence it cannot be accepted that there was legitimate cause of grievance
The High Court was right in disposing of the matter in the manner it did
This application therefore fails and is rejected
RSS Petition Dismissed


Summary:
The appellant was appointed an Assistant Engineer on June 10 1963 in the Punjab State Electricity Board on probation for two years which ended on June 10 1965
On bifurcation of Punjab Electricity Board the service of the appellant was allocated to Haryana State Electricity Board
As a result of a disciplinary proceeding held against him in 1968 a minor penalty of stoppage of one increment without any future effect was imposed on the appellant
After expiry of one year the appellant was however given the increment
By virtue of an order dated March 30 1970 the appellant and respondents 2 to 19 were confirmed as Assistant Engineers class II on satisfactorily completing the probation period of two years
Though the others were confirmed with effect from April 1 1969 the appellant was confirmed with effect from December 1 1969
Consequently the appellant s name was placed last of all the confirmed officers
The appellant challenged the said order by way of a writ petition before the High Court which dismissed the petition
This appeal by special leave is against the judgment of the High Court
G Allowing the appeal  HELD 1
The penalty by way of stoppage of one increment for one year was without any future effect
In other words the appellant s increment for one year was stopped and such stoppage of increment will H 622 have no effect whatsoever on his seniority
Accordingly the Electricity Board acted illegally and most arbitrarily in placing the juniors of the appellant above him in the seniority list andor confirming the appellant in the post with effect from December 1 1969 instead of April 1 1969
The question of seniority has nothing to do with the penalty that was imposed upon the appellant
It is apparent that for the same act of misconduct the appellant has been punished twice that is first by the stoppage of one increment for one year and second by placing him below his juniors in the seniority list
624G H 625A 2
There is no explanation why the confirmation of the appellant was deferred till December 1 1969
The explanation that after some substantive posts had fallen vacant on April 1 1969 the question of confirmation was taken into consideration is not supported by
any material on record inasmuch as there is nothing to show when these posts had fallen vacant
It is difficult to accept that all these posts had fallen vacant on the same day that is on April 1 1969
Though the vacancies had occurred before that day the Board did not care to take up the question of confirmation for reasons best known to it
While there is some necessity for appointing a person in government service on probation for a particular period there may not be any need for confirmation of that officer after the completion of the probationary period
The archaic rule of confirmation still in force gives a scope to the executive authorities to act arbitrarily or malafide giving rise to unnecessary litigations
It is high time that the Government and other authorities should think over the matter and relieve the government servants of becoming victims of arbitrary actions
625H 626B 625C D SB Patwardhan  others vs State of Maharashtra  others   referred to
Setting aside the High Court judgment and the seniority list this Court directed that a fresh seniority list be prepared within six months on the basis of this judgment and maintain the appellant s seniority in the post to which he has been promoted in the meantime 626D