The opinion formed by the Director to search and seize documents is valid and based on reasonable belief. The grounds for the belief need not be disclosed to the petitioner and the scope of judicial review is limited to examining whether there is a ground which prima facie justifies the reasonable belief.

Headnote:
EXCISE - Search and seizure - Opinion formed by Director to search and seize documents - Validity - Reasonable belief - Grounds - Disclosure - Scope of judicial review - Customs Act, 1962 (52 of 1962), Sec. 105 - Central Excise Rules, 1944, R. 201 - Code of Criminal Procedure, 1973 (2 of 1974), Sec. 165(5).
Fact of the Case:

The petitioner, a public limited company engaged in the manufacture and sale of sophisticated electronic instruments and equipments, challenged the searches and seizures conducted by the authorities under the Central Excises and Salt Act, 1944 and the Rules made thereunder, alleging that the searches and seizures were illegal, arbitrary and vexatious. The petitioner also challenged the notice issued by the Director under Section 14 of the Act.
Finding of the Court:

The Court held that the opinion formed by the Director to search and seize documents was valid and based on reasonable belief. The Court further held that the grounds for the belief need not be disclosed to the petitioner and that the scope of judicial review is limited to examining whether there is a ground which prima facie justifies the reasonable belief. The Court also held that the search and seizure of 102 VCRs on the second occasion was illegal and perverse, as there was no compelling or very good reason for making a second search and seizure on a second occasion within a week. The Court further held that the petitioner was entitled to the return of the documents delivered by it on 10th and 15th June, 1983, as there was no search and seizure on those days. The Court also directed the return of 67 account books, 200 protocols or history sheets and 10 Video testing machines to the petitioner on certain conditions.
Issues: 1. Whether the petitioner is entitled for the supply of the opinion formed by the Director to search and seize documents? 2. Whether the opinion formed by the Director to search is valid or not? 3. Whether there has been any excesses in the searches and seizures made by any authorised officers? 4. Whether there was a search and seizure of documents on 10th and 15th June, 1983 as leaded by the petitioner or whether they were voluntarily delivered by the petitioner as pleaded by the respondents? 5. Whether the petitioner is entitled for the return of documents delivered on those days in either event and if so, on what conditions? 6. Whether the petitioner is entitled for return of any of the documents and articles seized even if their search and seizure was valid and if so, on what conditions? 7. Whether the notice dated 16-6-83 (Annexure-A) issued by the Director is valid or not?
Ratio Decidendi: 1. The opinion formed by the Director to search and seize documents is valid and based on reasonable belief. The grounds for the belief need not be disclosed to the petitioner and the scope of judicial review is limited to examining whether there is a ground which prima facie justifies the reasonable belief. 2. The search and seizure of 102 VCRs on the second occasion was illegal and perverse, as there was no compelling or very good reason for making a second search and seizure on a second occasion within a week. 3. The petitioner is entitled to the return of the documents delivered by it on 10th and 15th June, 1983, as there was no search and seizure on those days. 4. The petitioner is entitled to the return of 67 account books, 200 protocols or history sheets and 10 Video testing machines on certain conditions.
Final Decision: The Court quashed the decision of the Director to search M. G. Road godown of the petitioner and directed the return of 102 video Cassette recorders and the documents delivered on 10th and 15th June, 1983. The Court dismissed the writ petition in all other respects. The Court also directed the petitioner to deliver the sealed boxes containing documents to the Director and to furnish bank guarantee for the payment of excise duty and other liabilities in respect of the Video Testing machines. The Court further directed the Director to return 67 account books, 200 protocols or history sheets and 10 Video testing machines to the petitioner on certain conditions.

( 1 ) M/s. British Physical Laboratories India Limited, Petitioner No. 1, is a public limited company incorporated under the Companies Act and has its registered office at Palghat, State of Kerala and has its Head Office at M. G. Road, Bangalore City. Sri M. A. Uppal, who represents petitioner No. 1 as its 'finance Director', is the second petitioner in the case. In the course of my order hereafter, I will refer to petitioner No. 1 who is the principal petitioner as the petitioner in the case.

( 2 ) THE petitioner is principally engaged in the manufacture and sale of sophisticated electronic instruments and equipments at its factories situated at Palghat and Avalahali, Old Madras Road, bangalore Distt. From 1982 the petitioner has started the manufacture of television sets and video cassette recorders (hereinafter referred to as T. Vs and VCRs ). The petitioner has its sales offices at Bangalore, Bombay, Calcutta and Delh.

( 3 ) THE manufacturing places at Palghat, Avalahali and portions of the sales offices situated at kengal Hanumanthaiah Road and M. G. Road, Bangalore are licensed premises under the central Excises and Salt Act, 1944 (Central Act No. 1 of 1944) and the Rules made thereunder (hereinafter referred to as the Act and the Rules) and the petitioner as a manufacturer of excisable articles is eligible to excise duties under the Act.

( 4 ) ON the basis of the material collected by him, the Assistant Director, Directorate of Revenue intelligence Anti-evasion (Central Excise) Wing, Bangalore (hereinafter referred to as the director) on 8-6-1983 reasonably believing that the petitioner was indulging in evasion of excise duty payable under the Act by adopting devious methods decided that a search of the various places detailed in his proceedings should be conducted by the authorised officers. In conformity with that decision, the Director issued authorisations or search warrants to a number of officers simultaneously to search the factories, office premises, residential premises of three senior executives of the petitioners, viz. , Sriyuths Uppal, K. N. Rajasekharan and P. Hariharan. On the basis of search warrants so issued, the authorised officers searched the factories, business premises, sales offices and residential premises of the senior executives on 8-6-1983, 9-6-1983, 14-6-1983 and 17-9-1983 and seized a large number of documents, account books, 102 VCRs and Video testing machines on different dates.

( 5 ) WHILE the search and seizure was in progress, the petitioner moved this Court on 17-6-83, impleading the Director and the Directorate of Revenue Intelligence, Anti-evasion (Central excise) Wing, New Delhi as respondents 1 and 2 respectively challenging the searches and seizures that were in progress and also a notice dated 16-6-83 (Annexure-A) issued by the director under Section 14 of the Act with appropriate interim prayers. On the same day this court issued rule nisi and made an interim order directing the respondents not to undertake any further searches and seizures and stay of further proceedings in pursuance of the notice dated 16-6-83. On 21-6-83, the earlier interim order was modified permitting the Director and his subordinates to identify the remaining documents and account books and their production before this court and in conformity with the same, a large number of documents have been identified and are kept in sealed boxes and were brought to court by the petitioner on the hearing date and they have been permitted to be retained by the petitioner as suggested by the respondents.

( 6 ) BOTH sides have used strong epithets and rhetoric in their pleadings. But, this Court cannot obviously be guided by either of them. With this preface it is necessary to summarise the pleadings of the parties to the extent they are necessary for a proper for a proper disposal of the questions urged before court.

( 7 ) THE petitioner has asserted that in its 20 years of existence it had an unblemished record f

Click Here to Read the rest of this document