By J K Naidu

IT's been quite a while since I conceptualized this article and the above title, a take from the famous Shakespeare’s play ‘Hamlet’ struck me instantaneously when my fingers hit the key board. As netizens would be aware, “To be or not to be that is the question”, ( while contemplating suicide as compared to a life full of troubles and misery) has made Hamlet sort of immortal in literary circles. For me this title is reflective of the dilemma faced by Magistrates when called upon to decide remanding or bailing a person accused of an offence under Section 135(1)(ii) of the Customs Act, 1962. That is till; the judgment passed by a single bench of the Bombay High Court in the case of Subhash Choudhary V/s Deepak Jyala & others (2004-TIOL-60-HC-MUM-CUS). Before the said judgment, persons accused of having committed offence under Section 135 (1) (ii) were being remanded to judicial custody with the understanding that the said offence constitutes a non bailable offence.

In order to appreciate the issue, it is necessary to advert to Section 135 (1) (ii) of the Act, prior to its amendment vide Section 103 of the Finance Act, 2007. (Even the post amendment position remains the same so far as the said sub-section is concerned)

Section 135- Evasion of duty or prohibition:-

(1) Without prejudice to any action that may be taken under this Act, if any person -

a) is in relation to any goods in any way knowingly concerned in misdeclaration of value or any fraudulent evasion or attempt at evasion of any duty chargeable thereon or if any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods.

b) acquires possession of or is any way concerned in carrying, removing, depositing, harboring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods, which he knows or has reason to believe are liable for confiscation under Section 111 or Section 113 as the case may be.

c) attempts to export any goods which he knows or has reason to believe are liable to confiscation under Section 113.

he shall be punishable:-

(i) in case of an offence relating to any goods to which Section 123 applies and the market price whereof exceeds one lakh of rupees, with imprisonment for a term, which may extend to seven years and with fine.
Provided that ….

(ii) in any other case, with imprisonment for a term, which may extend to three years or with fine or both. (emphasis supplied)

Let us examine the relevant portion of the judgment dated 20.09.2005 passed by a single bench of Bombay High Court in the matter of Subhash Choudhary v/s Deepak Jyala;

“12. After considering the rival submissions, I have no hesitation in accepting the submissions canvassed, on behalf of the Petitioner-Applicant that the offence ”under Section 135 (1) (ii)” is a bailable offence. This is so, because firstly the said offence has been made a non cognizable offence by virtue of the NON-OBSTANTE clause in Section 104(4) of the Act. Secondly, it is ‘triable’ summarily by a Magistrate by virtue of Section 138 of the Act. Moreover, Section 135 (1) (ii) provides for punishment as imprisonment for a term which may extend to three years or with fine or with both. Indeed, it is provided that imprisonment may extend to three years: but the same provision also provides for alternative punishment of fine (only) or imprisonment and fine both. The question is, merely because the punishment of imprisonment provided is for a term, which may extend to three years, i.e three years, does it mean that it will fall in Entry 2 of Part II of First Schedule of the Code and not in Entry 3 thereof. To appreciate this aspect, it may be necessary to advert to the scheme of the code, which has application to the case on hand. On analyzing the Part-I of the First Schedule of the Code, the scheme of the Code is that, non-cognizable offences have been made bailable, except the non-cognizable offences such as under Sections 194, 195, 466, 467, 476, 477 and 493, which provide for punishment of more than three years of imprisonment. The only exception where punishment of imprisonment which may extend to three years and still has been made non bailable is Section 505 of the IPC. But that is an exception. We shall now specifically advert to the non-cognizable offences where punishment provided is imprisonment which may extend to three years or with fine or both as is the case in the present enactment; and in Part I of the First Schedule, those offences have been made bailable. These offences are under Sections 181, 193 (IInd part), 201 (IInd Part) 205, 214 (IInd Part), 225A, 312 (1st Part), 404, 418, 484, 485, 487 and 488 of the Indian Penal Code. In other words, all these offences under the Indian Penal Code, the punishment provided is imprisonment, which may extend to three years or with fine or with both, even then have been made bailable. In that sense, the Scheme of the Code is indicative of the Legislative intention that non-cognizable offences punishable with imprisonment, which may extend to three years, have been treated on par with offences where imprisonment is for “less than three years”, so as to make them bailable. …...”

The judgment also holds that the decision of the Gujarat High Court in the case of N. H. Dave, Inspector of Customs v/s Mohamed Akhtar Hussain Ibrahim Iqbal Kader Ahmed Wagher (Bhitti) & ors. (2003-TIOL-178-HC-AHM-CUS) is not an authority on the proposition that offence under Section 135 (1) (ii) of the Act is a non-bailable offence. The judgment also relies on the para 26 of the Customs Manual, stating that it plainly concedes that the offence under Section 135 (1) (ii) of the Act is non-cognizable and bailable offence.

With due respect, I humbly beg to differ. A plain reading of the judgment of Division Bench of Gujarat High Court in N.H. Dave case (supra) shows that it covers offences punishable under Section 135(1) (i) & (ii) of the Act and holds that they are both non bailable. Similar position has been held by judgment passed by a single bench of the Delhi High Court in the case of Inderjeet Nagpal v/s DRI (2005-TIOL-207-HC-DEL-CUS). It recorded its differences with the single bench decision of Bombay High Court in the case of Subhash Choudhary (supra). The relevant portion of the said order is extracted below;

“ 8.. Learned Senior Counsel, appearing for the petitioner, laid utmost emphasis on his contention that the offence punishable under Section 135(1) (ii) of the Customs Act, 1962 is a bailable one and therefore the petitioner even otherwise deserves to be released. A Single Bench decision of Bombay High Court in Subhash Choudhary v. Deepak Jyala and others in CRL. W.P. 1384/2004 [2004-TIOL-60-HC-MUM-CUS], was referred to in this connection.

9. On the contrary, a decision of this Court in Mohan Lal Thapar v Y. P. Dabara, Inspector, Customs, New Custom House, New Delhi, 2002 (143) ELT 44 (Del.), is cited on behalf of the respondent to contend that an offence punishable under Section 135(1)(ii) of the Customs Act, 1962 is a non-bailable one. It was contended that the present petition for anticipatory bail could not be used as a basis for obtaining a declaration to the effect that the offence in question is a bailable one and if the petitioner really felt that way, the very maintainability of the present petition would be rendered questionable.

10. Table II of the First Schedule to the Criminal Procedure, 1973 incorporates, Classification of Offences Against-other laws. It reads thus :

II- Classification of Offences against other laws

11. The offence under Section 135(1) (ii) of the Customs Act is punishable with imprisonment extending to three years or with fine or both. Learned Senior Counsel for the petitioner sought to maintain that the offence punishable under section 135 (1) (ii) would fall under entry 3 of Table II and borrows support to his contention in this regard from the aforesaid decision of the Bombay High Court in Subhash Choudhary (supra). Having gone through the decision in Subhash Choudhary (supra) it is difficult to subscribe to the view taken therein as the same appear to suffer from inherent contradictions. The offence punishable under Section 135 (1) (ii) providing for punishment extending to three years clearly indicates that the same is punishable with imprisonment for a period upto 3 years. In that view of the matter, the same cannot be pleaded to fall under Third Entry of Table II. In Mohan Lal Thapar (supra), the plea if an offence under Section 135(1)(ii) is a bailable one was examined by this Court and answered in negative. I find no reason to take a different view.” (Emphasis supplied)

The view taken in the said judgment of Bombay High Court is based on three planks, which are examined in the light of the Customs Act, 1962;

(i) that the offence under Section 135 (1) (ii) is non cognizable as per Section 104 (4) of the Act.

By virtue of Section 104 (4) all offences under the Customs Act, 1962 have been made non cognizable, irrespective of whatsoever given in CrPC. It may be noted that the offences covered by serial no. 1 & 2 at part II of Ist schedule to the CrPC are cognizable. By virtue of Section 104 (4) even these are treated as non cognizable. Cognizable offences are those where police authorities can arrest without a warrant. It also indicates that police cannot investigate such cases. Thus the offences attracting punishment of imprisonment upto 7 years and upto 3 years both falls under the category of non cognizable offence.

(ii) that the said offence is triable summarily

There is no doubt that offences under Section 135 (i) (ii) are triable summarily. However, it is subject to arguments as to whether this would have any bearing on the issue of bail.

(iii) that majority of the non cognizable offences mentioned in the Ist Schedule of the CrPC and punishable with imprisonment that may extend upto three years or with fine or both are bailable, indicating legislative intent that even the offences covered by Section 135 (1) (ii) of the Customs Act, 1962, attracting same punishment is bailable under serial no. 3 of the Part-II of the First Schedule to the CrPC.

The third point uses combination of non cognizable offence and bailable offence in part I of First Schedule to CrPC to show that Section 135 (1) (ii) being non cognizable is bailable. As brought out above all offences under the Customs Act, 1962 are non cognizable. Therefore, if the part I of the Schedule I to CrPC is perused with respect to those offences which attract punishment upto three years or with fine or both, it would be seen such offences as mentioned under Section 153A, 153B, 161, 164, 261, 263, 308, 379, 384, 406, 411, 414 are held as non bailable. This would indicate the fallacy of considering offences under Section 135 (1) (ii) as bailable. Infact it is my view the part II of the Schedule I to CrPC should be read independently. The offences under part I of the First Schedule to CrPC are very specific and exhaustive, whereas the part II of the First Schedule to CrPC classify offences against other laws based on the punishment and does not specify the offence. As such to compare both to unearth the legislative intent would be fraught with dangers of generalization.

From the point of view of the Department, it is lucky that the aforementioned decision in the case of Subhash Choudhary (supra) is stayed. However, vide judgment dated 27.08.2007, a division bench of Hon’ble Supreme Court in Avinash Bhosale case has held that the offence under amended Section 135 (1) (ii) is bailable. The relevant portion of the ‘cryptic’ order is given below;

I” On the materials placed on record and the amended Section 135 (1) (ii) of the Customs Act, 1962, it appears to us that apparently the offence, which is alleged to have been committed is a bailable offence and thus the magistrate has rightly granted bail to the appellant. In view of this the order of the High Court is set aside.”

An interesting point to note is that if Avinash Bhosale case had come up in the pre-amended era then the offence of attempting to smuggle into India various high value watches (exceeding Rs. one lakh) among other items would have attracted the provisions of Section 135 (1) (i) as ‘watches’ are covered by the Notification issued under Section 123 of the Customs Act, 1962. Consequently, it would have been categorized as non bailable offence without attracting any controversy.

As far as Bombay High Court is concerned, the order passed in the case of Subhash Choudhary (supra) has become a binding precedent and all subsequent decisions have followed the same. However, Delhi High Court has continued to hold that the offence under Section 135 (1) (ii) is non bailable. With the order of Hon’ble Apex Court in Avinash Bhosale case (supra), the lower Courts have no other option but to treat the said offence as bailable. This has dealt a severe blow to investigative agencies as the unscrupulous smugglers/offenders accused of having committed offence punishable under Section 135 (1) (ii) of the Customs Act, 1962 will not fear arrest and remand. The Hon’ble Supreme Court would be doing a yeomen service to the agencies, if it passes a speaking order as to the bailability or otherwise of the offences under Section 135 (1) (ii) of the Act, when the Appeal filed by revenue in Subhash Choudhary case (supra) comes up on 28.02.2008.

Also the CBEC has to seriously consider and get the punishability of offence under Section 135 (1) (ii) amended to imprisonment extending upto 4 years in the Budget 2008 ( it is an interesting coincidence that the hearing of Subhash Choudhary case is slated for the same day as the Budget) , so as to put an end to the ongoing controversy. Without the fear of ‘arrest’ and ‘cooling ones heel’ behind bars, it will be difficult to curb the nefarious activities of the ‘black collared’ economic fraudsters who would otherwise continue to play havoc with our economy in ways so many, ingenious or otherwise. Until then bail will rule and jails will cool (i.e demographically).

(The author is working with the Department and the views expressed are strictly personal)