Special Leave Petition Civil No 1008 of 1986
From the Judgment and Order dated 25111985 of the Madhya Pradesh High Court in Misc
Petition No 551 of 1981
Dr NM Ghatate and SV Deshpande for the Petitioners
Kuldip Singh Additional Solicitor General BB Ahuja and Miss A Subhashini for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is a petition for leave to appeal under Article 136 of the Constitution of India directed against the judgment and order dated 25th November 1985 of the High Court of Madhya Pradesh at Jabalpur
The petitioner herein had challenged by a petition under Article 226 of the Constitution the order dated 26th December 1975 passed by the Collector of Central Excise Nagpur directing confiscation of 565 wrist watches seized from the petitioner s possession on 12th May 1973 under Section 111 of the hereinafter called the Act  and the imposition of penalty of Rs200000 under section 112 of the Act and as well as the order dated 10th August 1979 passed by the Central Board of Excise and Customs dismissing the petitioner s appeal and thereafter the order dated 8th January 1981 passed by the Government of India dismissing the petitioner s revision
It appears that the petitioner along with his father and brothers migrated to India from Pakistan
It is stated that the petitioner started business of cutlery in Indira Market Durg and has got this separate business from other two brothers
The petitioner further asserted that he was not also associated in any business with his cousin Hariram or 800 business of his father
He stated that he lives separately from his brother and father
In or about April 1966 the petitioner purchased a piece of land for Rs6250 from one Yeshwant Ram under the registered sale deed in respect of the plot bearing Khasra No 1167 admeasuring about 182 sq
Similarly his brothers had also purchased plot adjoining the plot of the petitioner
Since 1973 the petitioner stated that he was living in two temporary rooms constructed by his brothers and petitioner s plot was lying vacant
On or about 12th May 1973 Superintendent of Central Excise Raipur issued search warrant under section 105 of the Act authorising one LB Tiwari Inspector Central Excise to search the residential premises of the petitioner
They searched the residential premises at Durg and it was alleged that the house belonged to the petitioner
On 1st April 1974 the petitioner was detained under the hereinafter called COFEPOSA 
On or about 22nd March 1975 the petitioner while in jail received the letter issued by the Collector for the purpose of extension of six months  time for the issuance of show cause notice under section 1102 of the Act under which the period was extended upto 141174
The petitioner alleged that this letter was never received by him
There was another order on or about 5th January 1976 passed by the Collector Central Excise under which it was held that the petitioner had acquired the possession of the wrist watches and these were smuggled goods and imposed a penalty of Rs200000
The High Court noted the facts as below On 1251973 in a search made of the petitioner s bed room at Durg a total of 565 wrist watches of foreign mark valued at Rs87455 were seized from a suit case a secret cavity in a locked steel almirah and behind the almirah concealed in a bundle of waste paper from the petitioner s possession during his presence
A panchnama was prepared at the same time mentioning these facts
The petitioner found himself unable to make any statement at that time on account of which recording of his statement was deferred
However the petitioner went out of station on 1451973
His statement was then recorded on 3051973 as soon as he was available for this purpose
In his statement Annexure R III duly signed by him he admitted these facts and merely denied knowledge of the manner in which the watches came to be in his house
the 801 petitioner was also given a notice to show cause why the period of six months fixed by section 1102 of the should not be extended but no reply was given by him till 10111973 or even thereafter therefore by an order dated 10111973 before expiry of the period of six months  time was extended by the collector of customs for a further period of six months for giving a notice as required by section 124a of the Act
Within proviso to sub section 2 of section 110 a show cause notice specifying the requisite particulars was given to the petitioner on 451974
In reply the petitioner made a general denial
The enquiry was fixed for giving a personal hearing to the petitioner on 31101975 when the petitioner s counsel appeared and sought an adjournment to 201175 which was granted
However on 20111975 the petitioner s counsel stated that the petitioner did not want to avail the opportunity of personal hearing or to even cross examine the witnesses in whose presence the panchnama the time of the seizure of the watches was made
In the above circumstances and on the basis of facts alleged in the show cause notice which the petitioner did not even care to refute by availing the opportunity given to him at the enquiry the Collector of Central Excise passed the order dated 26121975 as aforesaid
This order has been affirmed on appeal by the Board and thereafter in revision by the Government of India
 It was contended before the High Court by the petitioner s counsel that the notice dated 4th May 1974 issued under section 124a of the Act was issued beyond the period of six months of the seizure of goods made on 1251973 and as such the entire proceedings were invalid for this reason
It was also contended that the extension of the period of six months by another period of six months in accordance with the proviso to sub section 2 of section 110 could not be made ex parte without notice to the petitioner
Reliance was placed on the decision of this Court in Asstt
Collector of Customs vs Charan Das Malhotra  The High Court found that this contention had not been urged before the lower authorities
However the High Court noted that the Collector s order dated 26th December 1975 had specifically mentioned that a show cause notice was issued to the petitioner for extension of the period for issue of notice in accordance with section 1102 of the Act by another six months but no reply was 802 given by the petitioner and the Collector therefore extended the period by another six months by his order
This order coupled with the petitioner s failure to even raise this point at an earlier stage was sufficient according to the High Court to indicate that the order extended the period by another six months under the proviso to subsection 2 of section 110 was made after giving an opportunity to the petitioner which he had failed to avail
Sub section 2 of section 110 stipulates as follows Where any goods are seized under sub section 1 and no notice in respect thereof is given under clause a of section 124 within six months of the seizure of the goods the goods shall be returned to the person from whose possession they were seized Provided that the aforesaid period of six months may on sufficient cause being shown be extended by the Collector of Customs for a period not exceeding six months
 Extension of time takes away a valuable right of a party whose goods are proposed to be seized
Such deprivation of the valuable right must be upon notice otherwise it violates the principles of natural justice
In the aforesaid decision of this Court in Asstt
Collector of Customs vs Charandas Malhotra supra this Court affirmed the view of the Calcutta High Court that the power under the proviso was quasi judicial or at any rate one requiring a judicial approach
This Court reiterated that the right to restoration of the seized goods is a civil right which accrues on the expiry of the initial six months and which is defeated on an extension being granted even though such extension is possible within a year from the date of the seizure
Therefore according to this Court an ex parte determination by the collectorwould expose his decision to be one sided and perhaps one based on an incorrect statement of facts
How then can it be said that his determination that a sufficient cause exists is just and fair if he has done it before by one sided picture without any means to check it unless there is an opportunity to the other side to correct or controvert it But in the facts of this case a notice has been given and it has been so found from the records as well as the inference drawn from in absence of pleading which inference drawn by the High Court in the facts of this case was not an improper inference
In our opinion the order was passed not in violation of the principles of natural justice
It must be reiterated whether a notice was given or not within a stipulated time for extension as contenplated under section 1102 is a 803 question of fact
It is also true that the onus that the order was passed without notice was on the person who asserts it to be so and this is a question of fact
There was an assertion to this effect in the collector s order the assertion remained uncontroverted by any specific evidence and also by failure to urge this point
In that view of the matter the inference drawn by the High Court that such notice was given as contemplated under section 1102 in our opinion was not unwarranted
The next contention that was raised before the High Court was that there was no evidence to determine the value of the watches so that the quantum of penalty could not be determined for want of such evidence
It was contended that determination of quantum was arbitrary
It appears however as the High Court noted that the value of the watches was mentioned as one of the particulars in the show cause notice given to the petitioner and this value was not refuted by the petitioner in his reply
The petitioner did not avail himself of the opportunity at any stage to oppose the extention of time or to refute the allegations made in the show cause notice given thereafter
Furthermore these facts must be considered in conjunction with the fact that there was a statement by the petitioner recorded on 30th May 1973
Section 123 of the Act provides as follows 1231 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 804 goods which the Central Government may by notification in the Official Gazette specify Emphasis supplied This provision had been substituted by the Act 36 of 1973 and would be applicable in the instant case
The petitioner failed to discharge the burden of proof of trust on him by the aforesaid section
The next question which was canvassed before the High Court was that the quantification of the penalty was very high
The High Court however noted that the liability was incurred by the petitioner in 1973 and the collector made the order in 1975
Admittedly for about ten years even after the collector s order imposing the penalty the amount of penalty had not been paid by the petitioner
The value of the smuggled goods was Rs87455 even at that time
On that there is no dispute
The penalty permissible is upto five times the value of the goods
The High Court noted that the benefit derived by the petitioner by nonpayment of the amount of Rs200000 at least for ten years is sufficient indication that the penalty could not be treated as arbitrary
That of course by itself in our opinion is not always a safe guide
But in the facts and circumstances of this case the penalty was not heavy and the High Court was right
It is true that this Court in Malhotra s case supra had laid down that the penalty could not be arbitrary and excessive
But in the facts of this case it was not so
As far as the value of the wrist watches is Rs87455 it was not arbitrary because it was not denied even though it was so stated in the show cause notice
In that view of the matter the High Court was right in not entertaining the petition under Article 226 of the Constitution
We decline to interfere in this case under Article 136 of the Constitution
The special leave petition is rejected
NVK Petition dismissed


Summary:
These appeals raised an identical question
Civil Appeals Nos 4291 and 4292 of 1984 were preferred against the judgment of the Madras High Court in Writ Appeals Nos
561 and 562 of 1983
The appellant in these two appeals an employee in the Bank of India which is a Nationalised Bank was dismissed
Aggrieved he preferred an appeal under section 412 of the Tamil Nadu Shops and Establishments Act 1947 the Tamil Nadu Shops Act
A preliminary objection was raised by the Bank to the effect that the Tamil Nadu Shops Act was not applicable to the Bank in view of the exemption contained in Section 41c thereof
The Appellate Authority held that the preliminary objection might be decided along with the appeal
The bank thereupon filed two writ petitions in the High Court one for a direction to the Appellate Authority to dispose of the preliminary objection before disposing of the appeal on merits and the other for a direction to the Appellate Authority not to proceed with the appeal
Both the Writ Petitions were allowed by a Single Judge of the High Court on the ground that the Bank was an establishment under the Central Government and consequently the provisions of the Tamil Nadu Shops Act were not applicable to it in view of the exemption contained in this behalf in section 41c
Against that decision two writ appeals aforementioned were filed which were dismissed by a Division Bench of the High Court by the Judgment under appeal in these two appeals
The same judgment of the High Court had disposed of Writ Petition No 1550 of 1981 also which had arisen out of an application under section 51 of the Tamil Nadu Shops Act made by the employees of the State Bank of India before the Commissioner of Labour for a direction that all the provisions of that Act would apply to them being employed in the State Bank
The State Rank had contended that it was an establishment under the Central 663 Government within the meaning of Section 41c of the Tamil Nadu Shops Act and consequently the provisions of that Act were not applicable to it
The Commissioner of labour had rejected the plea of the State Bank and held that the provisions of the Act were applicable to it
Civil Appeal No 4329 of 1984 was preferred against the said Judgment by the State Bank s Staff Union and Civil Appeal No 4735 of 1984 was preferred by the employees concerned
Civil Appeal No 1120 of 1976 was preferred by Syndicate Bank a Nationalised Bank against the judgment of the Andhra Pradesh High Court Division Bench dismissing the Writ Appeal No 268 of 1975 and upholding the order of a Single Judge dismissing the Writ Petition No 5973 of 1973 filed by the appellant Syndicate Bank
The services of Respondent No 3 in the appeal had been terminated by the appellant Syndicate Bank
An appeal was preferred by the said respondent before the Labour officer under the Andhra Pradesh Shops and Establishment Act 1966 the Andhra Pradesh Shops Act
The Labour officer allowed the appeal which was confirmed in a second appeal by the Labour Court
Aggrieved by these orders the Bank filed the Writ Petition above said
It was urged by the appellant Bank that it being an establishment under the Central Government within the meaning of Section 641b of the Andhra Pradesh Shops Act the provisions of that Act including the provisions of appeal were not applicable to it in view of the exemption contained in this behalf
Civil Appeal No 1042 was preferred by the Syndicate Bank against the judgment of the Andhra Pradesh High Court dismissing the Writ Petition No 86 of 1979
Respondent No 3 in the appeal had been dismissed by the appellant bank
He preferred an appeal which was allowed
The Bank preferred a second appeal before the Labour Court which was dismissed
The Bank filed the aforesaid writ Petition before the High Court and urged that it being an establishment under the Central Government within the meaning of Section 641b of the Andhra Pradesh Shops Act the provisions of that Act were not applicable to it in view of the exemption contained in this behalf
The High Court dismissed the Writ Petition
Civil Appeal No 837 of 1984 was preferred by the Bank of India a nationalised bank against the judgment of the Kerala High Court dismissing the Writ Petition No 1419 of 1978
Respondent No 1 in the appeal had preferred an appeal under section 18 of the Kerala Shops and Commercial Establishments Act 1960 the Kerala shops Act against an order passed by the appellant Bank discharging him from service
A preliminary objection was raised by the Bank with regard to the maintainability of the appeal on the ground that it being an establish 664 ment under the Central Government within the meaning of section 31c of that Act the provisions thereof including section 18 above said were not applicable to it
The objection was overruled by the appellate authority
The Bank filed the original Petition abovementioned in the High Court which dismissed the same
Dismissing the Civil Appeals Nos  4291 and 4292 of 1984 4329 of 1984 and 4735 of 1984 and allowing the Civil Appeal Nos 1120 of 1976 1042 of 1979 and 837 of 1984 the Court  HELD The common question which arose for consideration in all these appeals was as to whether the Nationalised Banks and the State Bank of India were establishments under the Central Government within the meaning of the Acts above said and consequently the provisions of the said Acts were not applicable to these Banks in view of the exemption contained therein in this behalf
670E In view of the definition of the term establishment read with that of commercial establishment contained in the said Acts it was not disputed even by counsel for the banks that a bank is an establishment
Consequently unless exempted the provisions of the said Acts would apply to the State Bank of India and the nationalised banks also
670F G A conspectus of the provisions of the Act No 23 of 1955 and the Act No 5 of 1970 read with the dictionary meaning of the term under leaves no manner of doubt that the State Bank of India and the nationalised banks are clearly establishments under the Central Government677D For the employees of these banks it was urged that these banks were autonomous corporations having distinct juristic entity with a corporate structure of their own and could not as such be treated to be owned by the Central Government
According to counsel the word under used in the expression under the Central Government con noted complete control in the sense of being owned by the Central Government
Disagreeing with that submission it was held that the mere fact that the State Bank of India and the nationalised banks are different entities as corporate bodies for certain purposes cannot by itself be a circumstance from which it may be deduced that they cannot be establishments under the Central Government
677E F 678A 665 If the criteria laid down in Ajay Hasia etc
vs Khalid Mujib Sehravardi  Ors etc
  decided by a Constitution Bench of this Court was applied to the facts of these cases it is obvious that even though the State Bank of India and the nationalised banks may not be owned as such by the Central Government and their employees may not be the employees of the Central Government they certainly will fall within the purview of the expression under the Central Government in view of the existence of deep and pervasive control of the Central Government over these banks
As pointed out by this Court in Biharilal Dobray vs Roshan Lal Dobray   the true test of determination of the question whether a statutory corporation is independent of the Government depends upon the degree of control
679G H682E F In view of these considerations no exception could be taken to the view of the Madras High Court in its judgments which were the subjectmatter of the Civil Appeal Nos 4291 and 4292 of 1984 4375 of 1984 and 4329 of 1984
As regards the judgment of the Kerala High Court and the judgment of the Andhra Pradesh High Court under appeal even if the decisions dealing with Article 12 of the Constitution are not made the foundation for deciding the point in issue the principles enumerated therein particularly with regard to deep and pervasive control are relevant for deciding the point in issue and also it was sufficient to point out that for holding that the State Bank of India and the nationalised banks are establishments under the Central Government which have a corporate structure and have freedom in the matter of day to day administration it is not necessary that these banks should be owned by the Central Government or be under its absolute control in the sense of a department of the Government
As regards the circumstances that even though the Reserve Bank of India is mentioned specifically in the relevant clause containing exemption neither the State Bank of India nor the nationalised banks are so mentioned it is to be pointed out that the Reserve Bank of India was established as shareholders  Bank under Act 2 of 1934
The Kerala Shops Act and the Andhra Pradesh shops Act of the years 1960 and 1966 were modelled almost on the pattern of the Tamil Nadu Shops Act which is of the year 1947
When section 41c of this Act referred to the Reserve Bank of India in 1947 it obviously referred to it as the Shareholders  Bank
The Reserve Bank Transfer to Public ownership Act Act 82 of 1948 came into force on 1st January 1949 and it was thereafter that the shares in the capital of the Reserve Bank came to belong to the Central Government
In this background no undue emphasis could be placed on the circumstances that the State Bank of India or the nationalised banks did 666 not find mention in the provision containing exemption even though the Reserve Bank of India was specially mentioned therein
For the response stated above the aforesaid decisions of the Kerala High Court and the Andhra Pradesh High Court deserved to be set aside683C H On the view the Court had taken that the State Bank of India and the nationalised banks are establishments under the Central Government the Court did not consider the question as to whether these banks were establishment which not being factories within the meaning of the  were in respect of matters deal with in the Tamil Nadu Shops Act governed by a separate law for the time being in force in the State so as to be entitled to claim exemption under clause f of sub section 1 of section 4 of the said Act or of the corresponding provisions in the Kerala Shops Act and the Andhra Pradesh Shops Act
684A B Civil Appeals Nos
4291 and 4292 of 1984 4329 of 1984 and 4735 of 1984 were dismissed
Civil Appeal No 1120 of 1976 was allowed and the judgment of the High Court in Writ Appeal No 268 of 1975 as also the Judgment of the Single judgement the Writ Petition No 5973 of 1973 as well as the orders of the Labour officer in the appeal filed by respondent No 3 and of the Second Appellate Authority m the second appeal filed by the appellant Bank under the provisions of the Andhra Pradesh Shops Act were set aside
Civil Appeal No 1042 of 1979 was allowed and the judgment of the Andhra Pradesh High Court in the Writ Petition No 86 of 1979 as also the orders passed by the first and second appellate authorities in the appeals preferred by respondent No 3 and the bank under the Andhra Pradesh Shops Act were set aside
Civil Appeal No 837 of 1984 was allowed and the judgment of the Kerala High Court in Writ Petition No 1419 of 1978 was set aside
The preliminary objection raised by the bank before the Appellate Authority in the appeal filed by respondent No I under section 18 of the Kerala Shops Act to the effect that the said appeal was not maintainable was upheld with the result that if the said appeal was still pending would be disposed of as not maintainable and in case it had been decided the said decision should be treated as without jurisdiction684C F The various employees whose appeals preferred under the Kerala Shops Act or the Andhra Pradesh Shops Act referred to above had been held to be not maintainable and the orders passed therein had been set aside would be at liberty to take recourse to such other remedies as might be available to them in law
684G 667 Ajay Hasia etc
vs Khalid Mujib Sehravardi  etc
   Heavy Engineering Mazdoor Union vs The State of Bihar  Ors  Hindustan Aeronautics Ltd vs The Workmen and Ors   Graham vs Public Works Commissioner  Regional Provident Fund Commissioner Karnataka vs Workmen represented by the General Secretary Karnataka Provident Fund Employees  Union and Another 1984 II LLJ 503 Western Coalfields Ltd vs Special Area Development Authority Korba and Anr   Rashriva Mill Mazdoor Sangh Nagpur vs The Model Mills Nagpur and Anr   Union of India  Ors
vs N Hargopal and Ors  Thote Bhaskara Rao vs The AP Public Service Commission and Ors Judgment Today and Biharilal Dobray vs Roshan Lal Dobray   referred to