SCR.A/1038/2007 1/33 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CRIMINAL APPLICATION No. 1038 of 2007 WITH SPECIAL CRIMINAL APPLICATION No. 1041 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE M.S.SHAH HONOURABLE MR.JUSTICE K.A.PUJ ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= RAJNISHKUMAR TULI PROPRIETOR & 1 - Petitioners Versus STATE OF GUJARAT & 1 - Respondents ========================================= Appearance : MR SV RAJU WITH MR CHETAN K PANDYA for Petitioners. MR SUNIT SHAH, PUBLIC PROSECUTOR for Respondent No. 1. MR HARIN P RAVAL, ASSISTANT SOLICITOR GENERAL for Respondent No. 2. ========================================= SCR.A/1038/2007 2/33 JUDGMENT CORAM : HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE K.A.PUJ Date : 31/07/2007 COMMON ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. Since common issues of facts and law are involved in both these petitions and since both the petitions are heard together, the same are being disposed of by this common judgment and order. 2. Special Criminal Application No. 1038 of 2007 is filed by Rajnishkumar Tuli, proprietor of M/s. Sumit Wool Processors and Special Criminal Application No. 1041 of 2007 is filed by Ruchit Tuli, proprietor of M/s. R. S. Enterprises praying for quashing and setting aside Criminal Case Nos. 2 & 1 of 2007 respectively pending before the learned Additional Chief Metropolitan Magistrate's Court at Ahmedabad (for short 'Metropolitan Magistrate'). Both the petitioners have also prayed for issuance of writ of mandamus and/or certiorari and/or any other writ, order or direction quashing and setting aside the orders dated 23.04.2007 and 14.05.2007 passed by the learned Metropolitan Magistrate in Criminal Case Nos. 2 & 1 of 2007. In pursuance of an amendment granted by this Court on 01.06.2007, the petitioners have also made SCR.A/1038/2007 3/33 JUDGMENT additional prayer for issuance of writ of mandamus and/or writ of prohibition and/or any other appropriate writ, order or direction declaring Section 108 of the Customs Act, 1962 ultra vires to Article 14 of the Constitution of India to the extent that it requires person residing far away to attend to a summons to give evidence or to produce documents, issued under Section 108 of the Customs Act, 1962. 3. It is the case of the petitioners that they had done business with M/s. Krishna Trading Company, M/s. Nirmal Polyester Pvt. Ltd., M/s. Meenu Exim Pvt. Ltd. and M/s. Pradeep Kumar Nirmal Kumar on High Seas sale basis. The petitioners had received full payment of all the goods sold on High Seas sale basis. It is also their case that once the goods are sold to the Indian buyer, it is the duty of the buyer to comply with the custom provisions and to pay the custom duty and/or to fulfill the terms and conditions under which the goods are being imported. The petitioners had nothing to do once the goods are sold on High Seas. It is also their case that the respondent No. 2 had initiated inquiry against M/s. Krishna Trading, M/s. Nirmal Polyester Pvt. Ltd., M/s. Meenu Exim Private Ltd. and M/s. Pradeep Kumar Nirmal Kumar inter alia alleging that they have diversed the duty free Polyester Yarn imported against advance licenses. The petitioners were called for recording evidence by issuing summons under SCR.A/1038/2007 4/33 JUDGMENT Section 108 of the Customs Act, 1962 in connection with inquiry initiated by the respondent No. 2. The petitioners gave reply to the respondent No. 2 that because of high blood pressure and high sugar, the petitioners were unable to travel to Ahmedabad. However, they have shown their willingness to appear before the authority at Ludhiana DIR office. The petitioners also made available all the documents and accounts to the respondent authority and they have also shown their willingness to provide other documents that may be called for. 4. Despite these facts, The respondent No. 2 filed Criminal Case Nos. 2 & 1 of 2007 against the petitioners before the learned Metropolitan Magistrate at Ahmedabad under Sections 174 & 175 of the Indian Penal Code, 1860 read with Section 108 of the Customs Act, 1962 on 22.12.2006. The learned Metropolitan Magistrate has issued summons in respect of offences punishable under Sections 174 & 175 of the IPC making it returnable on 25.01.2007. The respondent No. 2 preferred an application Exh. 6 to issue arrest warrant against the petitioners and the same was issued by the learned Metropolitan Magistrate on 23.04.2007. The petitioners' advocate who was appearing before the learned Metropolitan Magistrate preferred an application Exh.7 to stay the arrest warrant. However, the said application was SCR.A/1038/2007 5/33 JUDGMENT rejected by the learned Metropolitan Magistrate on 14.05.2007. 5. Being aggrieved and dissatisfied by filing of Criminal Case Nos. 2 & 1 of 2007 and issuance of process by the learned Metropolitan Magistrate under Section 202 of Cr.P.C. in relation to offences punishable under Sections 174 & 175 of the IPC and the orders passed by the learned Metropolitan Magistrate below Exh. 6 & 7 on 23.04.2007 and 14.05.2007, the petitioners have preferred these petitions under Articles 14, 21, 226 & 227 of the Constitution of India and under Section 482 of the Code of Criminal Procedure, inter alia praying to quash and set aside Criminal Case Nos. 2 & 1 of 2007 and challenging the orders passed therein. 6. Mr. S. V. Raju, learned advocate appearing with Mr. Chetan K. Pandya for the petitioners has submitted that even if the allegations mentioned in the Criminal Cases are accepted to be true in their entirety, without admitting the same to be true, then also prima facie no offence, much less an offence punishable under Sections 174 & 175 of IPC is made out against the petitioners. On plain reading of the criminal case Nos. 2 & 1 of 2007, it is manifest that none of the ingredients of Sections 174 & 175 of the IPC are satisfied and therefore, no prima facie case is made out against the petitioners. The learned Metropolitan Magistrate has not followed the SCR.A/1038/2007 6/33 JUDGMENT mandatory requirement of Section 202 of the Criminal Procedure Code when the accused is residing at a place beyond the area in which he exercises his jurisdiction. It is mandatory requirement under Section 202 to postpone the issue of process against the accused where the accused is residing at a place beyond the area in which he exercises his jurisdiction and in such a case, the Magistrate has either to inquire into the case himself or direct an investigation to be made by a police officer. Neither of these things has been done by the learned Metropolitan Magistrate and straightway process was issued against the petitioners despite the fact that the petitioners were residing at a place beyond the area in which he exercises his jurisdiction. He has further submitted that both the criminal cases were filed by the respondent No.2 with malafide intention and they were maliciously instituted with an ulterior motive for twisting arm and threatening the petitioners with arrest and harassment. 7. Mr. Raju further submitted that Section 108 of the Customs Act, 1962 violates fundamental rights of the petitioners as the Gazetted Officer of Customs has uncontrolled power to summon any person either to give evidence or to produce documents even when such person is not residing in his local jurisdiction. Section 108 of the Customs Act violates the constitutional protection under Article 20 (3) of the SCR.A/1038/2007 7/33 JUDGMENT Constitution of India and it is contrary to the law laid down by the Hon'ble Supreme Court in the case of Nandini Satpathy V/s. P. L. Dani reported in (1978) 2 SCC 424. Section 108 of the Customs Act, treats unequals as equals and, therefore, equal treatment to unequals violates Article 14 of the Constitution of India as the persons residing or doing business beyond his jurisdiction are treated with those who are residing and/or doing business within the local jurisdiction of the Gazetted Officer of Customs. Under the Customs Act, there is no provision to reimburse the expenses of the person who is called to give evidence and/or to produce documents whereas the Gazetted Officer of Customs Act can get reimbursement of his expenses for travelling beyond his jurisdiction by way of travelling allowances and daily allowances over and above his salary. Though Code of Criminal Procedure 1973 under Section 160 (1) empowers any Police Officer making an investigation, by order in writing to require the attendance before himself of any person being within the limits of his own or any adjoining station and under Sub-section (2) the police officer can provide reasonable expenses for attending under sub-section (1) at any place other than his residence, no such provision is found under Section 108 of the Customs Act and, therefore, it violates fundamental rights of the petitioners. He has further submitted that even the summons issued to the petitioners to SCR.A/1038/2007 8/33 JUDGMENT give evidence and/or to produce documents did not say that the inquiry initiated against the High Seas Sale purchase is for smuggling of goods. On the contrary, the petitioners registered all the goods with import department as the petitioners sold the goods in High Seas sale. The petitioners have nothing to do with the diversion of imported Polyester Yarn as the petitioners had sold goods on High Seas sale. Once the goods are sold on High Seas Sale, the petitioners had nothing to do with those goods. It is the duty of the High Seas Sale purchaser to observe the terms and conditions of the advance license and/or to make the payment of the Custom duties as the buyer becomes real importer. He has further submitted that there was no intention on the part of the petitioners to disobey the summonses or to avoid the summonses issued by the respondent No. 2. However, because of the circumstances beyond their control, the petitioners could not travel to Ahmedabad and made available all the documents to the respondent No. 2 and had shown their willingness to appear before the DRI Office at Ludhiana and to give evidence. The petitioners are apprehending that the respondent No. 2 shall harass the petitioners and shall compel them to sign the statements that may be prepared by them against the will and wishes of the petitioners. 8. Mr. Raju has further submitted that the offence under SCR.A/1038/2007 9/33 JUDGMENT Sections 174 & 175 of the IPC is a bailable one, since the same is punishable with imprisonment for a maximum period of one month. The learned Metropolitan Magistrate has issued an arrest warrant without a preceding bailable warrant though the offence alleged is bailable. It is not in accordance with the scheme of the Criminal Procedure Code and hence, illegal. Mr. Raju has, therefore, submitted that while exercising the power conferred under Section 87 of the Code of Criminal Procedure and issuing a warrant, in a case of bailable offence, the Magistrate shall always issue at the first instance a bailable warrant. If the person does not appear before the Court even after execution of bailable warrant, only then the Magistrate may issue a non-bailable warrant. He has further submitted that the power under Section 71 of the Code of Criminal Procedure may be exercised by the Magistrate as well as by the Police Officers concerned and thereby indicating that the execution of the non-bailable warrant by arresting the concerned persons is not necessary. Mr. Raju has, therefore, submitted that both the criminal cases filed by the petitioners as well as the orders passed therein are required to be quashed and set aside and it is also to be held by this Court that the provisions contained in Section 108 of the Customs Act are ultravires Article 14 of the Constitution of India. SCR.A/1038/2007 10/33 JUDGMENT 9. Mr. Raju, in support of his submission that provisions contained in Section 108 are cumbersome and cause tremendous hardships to the persons against whom such notices are issued, has relied on the decision of the Punjab & Haryana High Court in the case of Tar Balbir Singh V/s. Union of India and another, 1992 (3) RECENT CRIMINAL REPORTS 210 wherein after observing that a citizen would only be put to harassment if he is being summoned to far off places, just to meet the whims of the officers of the DRI, the Court directed that the petitioner in that case shall be examined at Jalandhar on a date to be fixed by the Investigating Officer, by giving an advance notice of 15 days. 10.As far as issue of non-bailable warrant is concerned, Mr. Raju has relied on the decision of this Court in the case of Dipak Navnitlal Parikh and others V/s. The State of Gujarat and Another, 1995 (1) G.L.H. (U.J.) 25 wherein the Court held that upon a joint reading of the provisions contained under Section 204 and Section 87 of the Code, it becomes abundantly clear that in any case in which the Court is empowered under the Code to issue a summons for the appearance of any person, the warrant may be issued by the Court instead of a summons, if the Court sees reason to believe that such a person has absconded or will not obey the SCR.A/1038/2007 11/33 JUDGMENT summons. 11.Mr. Raju has further relied on the decision of the Delhi High Court in the case of G. Sagar Suri V/s. State and another, 2004 CRI. L. J. 212 wherein it is held that bare perusal of relevant sanctions shows that to cause appearance through warrant of arrest it is mandatory for the Court to record reasons in writing and it is only in following two eventualities that such a step is resorted to. Firstly, the Court should see reasons to believe that the said person has absconded or will not obey the summons. Secondly, if such a person has failed to appear despite due service of summons upon him. Thus there is no scope of doubt as to the nature of process to be issued in a summons case. It was mandatory for the Metropolitan Magistrate to issue at the first instance process of summons for the attendance of the petitioner. In case he had failed to appear despite due service of summons upon him, the Magistrate could have resorted to coercive process of warrants of arrest and that too after recording the reasons in writing. 12.Based on the aforesaid judgments, Mr. Raju has submitted that though pursuant to the summons issued, the petitioners' advocate did appear and only on one occasion, he could not remain present, non-bailable warrant was issued and that too without recording any valid reasons. He has, therefore, SCR.A/1038/2007 12/33 JUDGMENT submitted that the orders passed by the learned Metropolitan Magistrate in the form of issuance of non-bailable warrant deserve to be quashed and set aside and since there is no prima facie case against the petitioners, both the criminal cases are also required to be quashed and set aside. 13.Mr. Sunit Shah, learned Public Prosecutor appears for State of Gujarat whereas Mr. Harin P. Raval, learned Assistant Solicitor General appears for respondent No. 2 – Deputy Director in the office of Directorate of Revenue Intelligence, Ahmedabad. An affidavit-in-reply is filed by Mr. S. R. Prasad, Additional Director on behalf of respondent No. 2 and along with the said reply, several documents are placed on record. A rejoinder to this reply is also filed by the petitioners. Mr. Raval has made detailed submissions opposing the admission of the petitions and Mr. Shah has adopted the arguments made by Mr. Raval. 14.Mr. Raval has raised certain preliminary objections as regards the maintainability of the petitions. He has submitted that the petitions were filed in May 2007 styled as Special Criminal Applications invoking the jurisdiction of this Court under Articles 226 & 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure. Thereafter on 01.06.2007, the petitioners have sought to introduce the prayer clause by virtue of para 14 (aa) praying SCR.A/1038/2007 13/33 JUDGMENT for issuance of a writ of mandamus or any other writ, order or direction declaring Section 108 of the Customs Act, 1962 ultravires Article 14 of the Constitution of India to the extent that it requires person residing far away to attend to a summons to give evidence or to produce documents issued under Section 108 of the Customs Act, 1962. In this regard, he has submitted that essentially, there is a presumption in favour of the constitutionality of an enactment unless it is found that the provision enacted results in palpably arbitrary consequences. Unless it is so shown and demonstrated, the Courts refrain from declaring the law invalid as legislated by the Legislature. In support of this submission, he relied on the decision of the Hon'ble Supreme Court in the case of R. K. Garg V/s. Union of India, 1981 (4) SCC 675 wherein the Hon'ble Supreme Court has observed that the Court must adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse of any of its provisions come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. SCR.A/1038/2007 14/33 JUDGMENT 15.Mr. Raval has further relied on the decision of the Hon'ble Supreme Court in the case of Bhavesh D. Parish V/s. Union of India and another, 2000 (5) SCC 471 wherein it is held that it is necessary that while dealing with economic legislation, the Court, while not jettisoning its jurisdiction to curb arbitrary action or unconstitutional legislation, would interfere only in those few cases where the view reflected in the legislation is not possible to be taken at all. In view of this settled legal position, Mr. Raval has submitted that Section 108 of the Customs Act does not suffer from any legal or constitutional infirmity much less it can be branded as violative of Article 14 of the Constitution of India. He has, therefore, submitted that the relief as prayed for by the petitioners to declare Section 108 of the Customs Act as violative of Article 14 of the Constitution of India is devoid of any merits. 16.Mr. Raval has further submitted that a bare perusal of the statutory provisions will show that there is no discriminatory treatment by the Section which is impugned in the present petitions. There is no special procedure enacted for a person summoned under the said provision. It relates to persons who have information about offences under the Act. It is not primarily concerned with the persons guilty of offence or it may happen that they may also be summoned. The offences SCR.A/1038/2007 15/33 JUDGMENT under the Customs Act are committed secretly often by persons of doubtful respectability and it will not be always easy to find out a violator of law who would always keep behind and be part of organized activity leading to breach/contravention of the provisions of the Act. The offences under the Customs Act are such that interest of the society requires that they should be trapped and brought to book. The dubious ways of which a person committing violation of the provisions of the said Act at his business are not easy of detection. The provision of the kind contained in Section 108 is not restricted to the present enactment. Section 11 (3) of the Industrial Disputes Act contains an almost identical provision. Section 33 (3) of the Insurance Act confers powers of full examination on oath of any Manager, Managing Director or other officers of insurance in relation to their business. Sections 240, 477 and 498 of the Companies Act contain similar provisions. Section 454 (6) and (7) of the Banking Companies Act goes further and provides for record of evidence with due formality and which could be used against the deponent in any civil or criminal proceedings. Article 14 of the Constitution of India specifies for every one the same rules of evidence and modes of proceedings, in other words, the same rule must exist for all in similar circumstances. It is well settled principle that several laws must have universal application for all persons SCR.A/1038/2007 16/33 JUDGMENT who are not, by nature, attainment or circumstances, in the same position. There is no hostile discrimination while dealing with the persons who are in possession of information or material which is sought to be questioned under Section 108 and all such persons are treated alike. The discrimination suggested by the petitioners by reason of an alleged protection under a different law i.e. Criminal Procedure Code is unsustainable. The Customs Act, 1962 as per its preamble is an Act to consolidate and amend the law relating to customs. The statement of objects and reasons of the Customs Act stated that the Sea Customs Act, 1878 was a law which lays down basic law relating to customs enacted more than 80 years prior to the present enactment and which was amended from time to time. The last of the important amendments were made in the Sea Customs Act in the year 1955. However, general and comprehensive revision of the Act was not undertaken. The statement of reasons and objectives states that several provisions of the Act had become obsolete and difficulties had also been experienced in the implementation of certain other provisions. There was no separate law relating to Air Customs and the administration of Air Customs was governed by certain rules made in the Indian Aircraft Act, 1911. Mr. Raval has further submitted that only with a view to have the consolidated provisions relating to Sea Customs, Land Customs and Air Customs into SCR.A/1038/2007 17/33 JUDGMENT one comprehensive access, the Act was enacted by the Parliament. A perusal of Section 108 provides that a Gazetted Officer of a Customs is duly empowered by the Central Government in that behalf to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under this Act. Sub- section (2) thereof provides that the summons to produce documents or other things may be for production of certain specified documents or things or for production of all documents or thing of a certain description in possession or under his control. Sub-section (3) thereof provides that all persons so summoned shall be bound to attend either in person or by an authorized agent as such officer may direct and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements or produce such documents and other things as may be required. Sub-section (4) provides that every such inquiry made under Section 108 shall be deemed to be a judicial proceeding within the meaning of Section 193 & 228 of the Indian Penal Code. 17.Mr. Raval further submitted that the Hon'ble Supreme Court in the case of K. I. Pavunny V/s. Assistant Collector, Central Excise Collectorate, reported in 1997 (3) SCC SCR.A/1038/2007 18/33 JUDGMENT 721, held that the object of recording statement is to collect information in relation to the contravention of the provisions of the Act despite there being provisions for further action of confiscation of contraband as well as imposition of penalty under the Act. Mr. Raval has, therefore, submitted that in determining the question of reasonableness, the Court must find some economic, political or other essential interest to be secured