Criminal Appeal No 264 of 1971 Appeal by Special Leave from the Judgment and Order dated 1920th August 1971 of the Bombay High Court in CrA No 650 of 1970 with Crl
Rev No 88670
BR Agarwala and PB Agarwal for the appellant
HR Khanna and MN Shroff for the respondent
The Judgment of the Court was delivered by BHAGWATI J
The appellant was tried before the Presi dency Magistrate 25th Court Mazgaon Bombay for offence under clauses a and b of section 135 read with section 135ii of the and Rule 126H2d read with Rule 126P2iv of the Gold Control Rules 1963
The prosecution case against the appellant was that on 7th September 1965 about 345 pm Inspector Tilwe who was at the material time Senior Grade Inspector of Customs attached to Gold Circle Central Excise Bombay received information that two persons would be coming down from a building known as Hira Mahal situated at Kalbadevi Road and they will be carrying gold in the handle of a cane basket and also in their shoes 17 1104SC1176 520 Inspector Tilwe on receipt of this information sent for Inspector Nichani and both of them kept guard outside Hira Mahal building from about 800 pm Around 845 pm the appellant accompanied by his material uncle s son Dwarkapra sad his son Dalip aged 9 years and his servant by the name of Mahadev came out of Hira Mahal building
The appellant was carrying a basket in his hand and after coming out of the building the appellant and his companions got into a Victoria and proceeded towards Victoria Terminus Station
Inspector Tilwe and Inspector Nichani followed these persons and when the appellant and his companions got down from the Victoria and entered the platform Inspector Tilwe accosted them and took them to the office of the Assistant Station Master and searched them there in the presence of three panchas
Two of the panchas were selected by Inspector Tilwe while the third volunteered to act as Pancha
On taking search it was found that the shoes worn by the appellant and Dwarkaprasad had specially made cavities and four gold biscuits with foreign markings were found in the shoes of each of these two persons
The basket carried by the appellant also contained 27 gold biscuits with foreign markings concealed in the handle which was made of brass and which had a specially made cavity in it for concealing gold biscuits
While the search was going on one Ticket Collec tor called Tharandas Bhatia arrived on the scene and he also witnessed the search
Inspector Tilwe seized the gold biscuits which were recovered from the appeIIant and Dwar kaprasad in the reasonable belief that they were smuggled and hence liable to confiscation under section 111 of the 
This search and seizure was recorded in a Panchanama exhibit X which was witnessed by the three pan chas
Inspector Tilwe also seized from the appellant two first class Railway Tickets for the journey from Bombay to Kanpur one Reservation Card and two Platform Tickets and so also were the basket and the shoes seized under the same Panchanama exhibit
X Inspector Tilwe then took the appellant and Dwarkaprasad to the Central Excise Office and recorded their statements in the presence of Inspector Nichani under section 107 of the 
The statement of the appellant which is marked exhibit W was written by Dwarkaprasad in Hindi and was signed by the appellant
The appellant admitted in his statement that he was carrying smuggled gold concealed in the handle of the basket and shoes for being handed over to a firm called Ms Pannalal Durgaprasad at Kanpur and that he had been doing this work for the last six months ever since his business as a goldsmith was closed down
Another statement of the appellant was also subsequently recorded by Inspector Tilwe on 22nd November 1966 at the shop of the appellant and this statement was written by one MaganIal an employee of the appellant in Gujarati and was signed by the appellant
Both the appel lant and Dwarkaprasad were thereafter prosecuted for of fences under clauses 1 and b of section 135 read with section 135ii of the  and Rule 126H2d read with Rule 126P2iv of the Gold Control Rules 1963
Dwarkaprasad pleaded guilty to the charge and was convicted and we are not concerned in this appeal with the conviction and sentence recorded against him
The appel 521 lant denied the charge and hence he was tried before the leraned Presidency Magistrate
The only evidence led on behalf of the prosecution against the appellant was that of Inspector Tilwe and Tharandas Bhatia
None of the panchas was examined as a witness to prove the search and seizure
The learned Presidency Magistrate observed that in view of the fact that Tharandas Bhatia had not signed the Panchanama exhibit
X nor his statement had been recorded by the Customs Authorities or the Railway Police and his name had also not been shown as a witness in the complaint it would not be desirable to rely on his evidence against the appellant
But the learned Presidency Magistrate found the evidence of Inspector Tilwe satisfactory and convincing and on the strength of this evidence he held the charge proved against the appellant and convicted
the appellant of the offence under clause b of section 135 read with section 135ii of the and Rule 126H2d read with Rule 126P2 iv of the Gold Control Rules 1963 and sentenced him to suffer rigorous imprisonment for two months and to pay a fine of Rs 500 or in default to suffer rigorous imprisonment for two months for each of these two offences
Since there was no evidence to show that the appellant himself had smuggled the seized gold into India he was acquitted of the charge under clause a of section 135 read with section 135ii of the 
The appellant preferred an appeal against his convic tion and sentence but the High Court agreed with the view taken by the learned Presidency Magistrate and dismissed the appeal of the appellant
Hence the present appeal with special leave obtained from this Court
It is true that the conviction of the appellant rests solely on the evidence of Inspector Tilwe
There were three pan chas who witnessed the Panchanama exhibit X regarding search and seizure of gold from the appellant but unfortunately none of the three panchas could be examined as they were not trace able in spite of efforts made by the prosecution
Two of the panchas undoubtedly remained present in the course of the adjudication proceedings but that was in December 1967
The trial before the learned Presidency Magistrate commenced in April 1969 and evidence was given by Inspector Tilwe in December 1969 and at that time none of the three panchas could be traced and brought for the purpose of giving evi dence
The statement of Inspector Tilwe that all the three panchas are now not traceable in spite of great efforts was not challenged in cross examination and we must there fore proceed on the basis that none of the three panchas was available and if that be so no adverse inference can be drawn against the prosecution for not examining any of the three panchas
Tharandas Bhatia was no doubt examined but the learned Presidency Magistrate preferred not to rely on his evidence and we think he was right in doing so
In spector Nichani could of course have been examined as a witness since he was present at the time of search and seizure but his non examination cannot help the appellant since he was also an Inspector in
the Customs Department like Inspector Tilwe and once Inspector Tilwe gave evidence it would not have added to the weight of prosecution evi dence by also examin 522 ing him
The prosecution case against the appellant must therefore in the ultimate analysis stand or fall by the evidence of Inspector Tilwe
The learned Presidency Magistrate as well as the High Court accepted the evidence of Inspector Tilwe and we do not see any reason to interfere with the concurrent view taken by both these courts as regards the appreciation of his evidence
It was not the case of the appellant that he and Dwarkaprasad along with Dalip and Mahadev did not proceed from Hira Mahal building to Victoria Terminus or that they were not taken by Inspec tor Tilwe to the office of the Assistant Station Master for purpose of search or that gold was not found as a result of the search but his defence was that the seized gold was found from Dwarkaprasad and not from him and that both the basket and the shoes belonged to Dwarkaprasad and he had nothing to do with the same
Now it is difficult to see why Inspector Tilwe should have falsely implicated the appellant if in fact the seized gold was found only from the person of Dwarkaprasad and the appellant was completely innocent
It may also be noticed that the case of the appellant was that Mahadev was the servant of Dwarkaprasad and it was Dwarkaprasad who was going from Bombay to Kanpur along with his servant Mahadev and the two Railway Tickets from Bombay to Kanpur were meant for Dwarkaprasad
But it is difficult to understand why in that event there should have been two first class Railway Tickets
Mahadev could not possibly be travelling by first class along with his master
The fact that there were two first class Railway Tickets shows that the appellant and Dwarkaprasad were going to travel from Bombay to Kanpur
This is also
borne out from the statement exhibit H given by the appellant to Inspector Tilwe
The appellant tried to wriggle out of the statement exhibit H by showing that it was taken from him under threat and was not a voluntary statement containing the true facts
But it is evident from the contents of the statement exhibit H that it is a genuine document
There are several details in the statement exhibit H which could never have been dictated by Inspector Tilwe
There is inherent evidence in the contents of the statement exhibit H showing that the statement is true
It was admitted in the statement exhibit H that the appellant was carrying gold from Bombay to Ms Pannalal Durgaprasad at Kanpur and this statement is clearly support ed by the seizure of two First Class Railway Tickets from Bombay to Kanpur
It is true that the reservation card seized at the time of search did not show in whose name the reservations were made and it would have been better if the prosecution had summoned the railway authorities to produce the Reservation Chart of the train for the purpose of show ing in whose name the reservations were made
But even so the fact that the reservation card was seized from the appellant shows that the appellant was travelling from Bombay to Kanpur
We do not see any cogent reasons for taking a different view from that taken concurrently by the learned Presidency Magistrate and the High Court in regard to the evidence of Inspector Tilwe and we think this evi dence is sufficient to found the conviction of the appel lant
The appellant however contended that even if it be held that gold was found from the person of the appellant as alleged by the 523 prosecution it was smuggled gold and hence not covered by the Gold Control Rules 1963 and in the circumstances no offence under Rule 126H2d read with Rule 126P2iv could be said to have been committed by the appellant in acquiring such gold
The argument of the appellant was that the Gold Control Rules 1963 apply only in relation to what may be called legal gold or non smuggled gold and smuggled gold is outside their scope and ambit and hence acquisition of smuggled gold would not constitute an offence under the Gold Control Rules 1963
This is an argument of despair and cannot be sustained even for a moment
Rule 126H2d provides inter alia that no person other than a licensed dealer shall buy or otherwise acquire or agree to buy or acquire gold not being ornaments except in accordance with a permit granted by the Administrator or in accordance with such authoriation as the Administrator may make in this behalf
The word gold  is defined in clause c of the Explanation to Rule 126A to mean gold including its alloy whether virgin melted remelted wrought or unwrought in any shape or form of a purity of not less than nine carats and include any gold coin whether legal tender or not any ornament and any other article of gold
This definition does not restrict the meaning of the word gold  to legal or non smuggled gold
It is wide enough to include any kind of gold whether smuggled or non smuggled
The restrictions imposed by the Gold Control Rules 1963 could not have been intended merely to apply to legal gold
The object and purpose of the restrictions
would be frustrated by exclud ing from their ambit and coverage smuggled gold
The Gold Control Rules 1963 seek to control and regulate dealings in gold and gold  within the meaning of these rules must include not only non smuggled gold but also smuggled gold We fail to see on what principle of construction can smug gled gold
which is gold  within the meaning of the defini tion be excluded from the operation of these Rules
There is no scope for inferring any such exclusion nor is there anything in the Rules which supports such exclusion
Take for example Rule 126 B which says that a dealer shall not make or manufacture any article of gold other than ornament
Can it be suggested for a moment that this Rule does not prohibit a dealer from making or manufacturing articles out of smuggled gold Then again look at Rule 126 C
It provides inter alia that no dealer shall make manufacture or prepare any ornament having gold of a purity exceeding fourteen carats
Can a dealer make an ornament of smuggled gold having purity exceeding fourteen carats without commit ting a breach of this Rule Rule 126 1 provides that every person shall make a declaration to the Administrator as to the quantity description and other prescribed particulars of gold owned by him
How can a person who has smuggled gold say that he is not bound to make a declaration under this Rule The object of requiring a declaration is that the Government should know what is the gold possessed by each person so that dealings in gold can be controlled and regulated and this object would be thwarted if smuggled were not subject to the requirement of declaration
Then consid er Rule 126 D which says that no person shall make advance or grant any loan to any other person on the hypothecation pledge mortgage or charge of any gold other than ornament unless such gold 524 has been included in a declaration
If smuggled gold were outside the scope of this rule it would be open to a person to advance moneys on the security of smuggled gold without involving any violation of this rule
That surely could not have been the intention of the Government in making the Gold Control Rules 1963
We are aware that there is a decision of the Calcutta High Court in Aravinda Mohan Sinha vs Proh lad Chand Samenta1 where a Division Bench has taken the view that declaration under Rule 126
P is in respect of legal gold as opposed to smuggled gold and no question of declaration in respect of smuggled gold can arise under Gold Control Rules 1963 but we do not think this decision represents the correct law on the point
We are of the view that the Gold Control Rules 1963 are applicable alike to smuggled gold as to non smuggled gold and the inhibition of Rule 126H2 d that no person other than a licensed dealer shall acquire gold except in accordance with a permit or authorisation granted by the Administrator is not con fined in its operation to non smuggled gold but applies equally in relation to smuggled gold
The learned Presiden cy Magistrate and the High Court were therefore right in convicting the appellant under Rule 126 H2d read with Rule 126 P2 iv of the Gold Control Rules 1963
Since the appellant is convicted of the offence under Rule 126P 2 iv of the Gold Control Rules 1963 the sentence of imprisonment to be imposed on him cannot be less than six months and the High Court was right in enhancing the sentence to six months imprisonment
But so far as the sentence of fine is concerned we do not think that the facts and circumstances of the case justify a heavy fine of Rs 3000 for each of the two offences for which the appellant is convicted
It appears from the statement of the appellant exhibit H that he was a carrier of gold for Ms Pannalal Durgaprasad of Kanpur and the purchase price of Gold was provided substantially by this Kanpur firm and the appellant was merely to receive some commission
The appel lant was a goldsmith who had lost his business for the last six months and perhaps economic necessity drove him to carry on this nefarious activity
The sentence of imprisonment which has been imposed on the appellant would be sufficient deterrent to him and many others who indulge in this anti social activity which is calculated to disrupt the economy of the country
We feel that in the circumstances the ends of justice would be met if the sentence of fine is reduced from Rs 3000 to Rs 500 for each of the two offences
We accordingly confirm the conviction of the appellant as also the sentence of imprisonment imposed on him but reduce the sentence of fine from Rs 3000 to Rs 500 for each of the two offences for which the appellant is convicted with a direction that in default of payment of fine the appellant will suffer rigorous imprisonment for a period of two months
The appeal is allowed to this limited extent
MR Appeal partly allowed


Summary:
The appellant was found carrying smuggled gold with foreign markings concealed on his person
He was convicted by the Presidency Magistrate under Section 135b read with Section 135ii of the  and Rule 126H 2d read with Rule
126 P2iv of the
Gold Control Rules 1965
The High Court upheld the convictions
The appellant con tended that the gold allegedly recovered from him was smug gled gold and hence not covered by the Gold Control Rules 1963
Dismissing the appeal the Court
HELD The Gold Control Rules 1963 seek to control and regulate dealings in gold and are applicable alike to smuggled gold as to non smuggled gold and the inhibition of Rule 126 H2d that no person other than a licensed dealer shall acquire gold except in accordancee with a permit or authorisation granted by the Administrator is not confined in its operation to nonsmuggled gold but applies equally in relation to smuggled gold
The object and pur pose of the restrictions imposed by the Gold Control Rules 1963 would be frustrated by excluding from their abmit and coverage smuggled gold
523 A D 524 B C Aravinda Mohan Sinha vs Prohlad Chand Samenta AIR 1970 Cal 437 over ruled