C. Govindarajulu Naidu vs The Secretary of State for India in Council

Murray Coutts Trotter, Kt., C.J.—The plaintiff brings this suit against the Secretary of State for India in Council in the following

circumstances;--He made, sales to customers in Salem and Coimbatore of a quantity amounting in all to 100 marcs of gold thread. The gold thread

was despatched to the purchasers from a place called Nellikuppam in South Arcot and in transit it was seized by the Inspector of Customs,

Cuddalore Circle, who alleged that the gold thread had been smuggled into British India and had not paid duty. The case for the plaintiff was that

he had bought it ultimately through a sub-purchaser from Messrs. Parry & Co., who had imported it from France and paid duty upon it. The

Collector of Customs, to whom an appeal lay from the District Officer, or who, rather had to affirm or disaffirm the action of the District Officer,

made an order On the 30th July, 1924 whereby he confiscated the goods and ordered their sale. Thereupon there was an appeal to the Governor

in Council which was made by the plaintiff and was rejected. He now seeks the assistance of the ordinary Courts of the land to get his goods back

or their value, and he has brought this suit which is one of trover against the Secretary of State on the ground that what was done amounted to a

wrongful conversion of his goods, his case of course being that the orders made were illegal inasmuch as in truth and in fact his goods never were

smuggled at all.

It seems to me that there are three difficulties that the plaintiff has not surmounted. In the first place, as he did not ask the Court for leave to

bring his suit on the Original Side of this Court, he is faced with this difficulty that he must show that his cause of action arose wholly in Madras.

The goods never came to Madras except a very small portion by way of exhibit for the purpose of this case, and if any wrong was done it was

done by the seizure and detention of the goods in Salem or Coimbatore or Cuddalore, and the only step in the whole transaction that can be

suggested to have been performed within the Madras jurisdiction is the order of the Collector of Customs confirming the seizure and directing the

goods to be retained at Cuddalore. It seems to me quite impossible to say that that really was an effective dealing with the goods. If the seizure of

the goods was tortious it no doubt made the Collector of Customs a tortfeasor, but that is quite a different proposition from saying that, because

owing to something he did in Madras he was a tort-feasor and had allied himself with tort-feasors, in Cuddalore, that makes the tort in any sense

committed in Madras. That would be enough to dispose of this case, but two other points were raised and I think it right to deal with them.

In the first place, it is said that, apart from any question of the place in which the wrong was committed, this case can be brought within the

meaning of Section 19 of the CPC in its second half which provides a jurisdiction ""if the defendant resides or carries on business or personally

works for gain within the local limits of the jurisdiction"" of the Court in question. It is said here that the Secretary of State for India, which must be

taken to be a paraphrase for the Madras Government, carries on business within the limits of the jurisdiction of this Court, as the headquarters of

the Madras Government is situated in Fort St. George. Similarly I suppose it would have to be contended that at some time or other jurisdiction

would be conferred upon the Subordinate Judge''s Court of the Nilgiris, because during certain parts of the year the headquarters of the Madras

Government is at Ootacamund. In my opinion the words of the section do not cover the case of Government at all. The only doubt I had was with

regard to the word ""resides"" occurring in the section. I was inclined to the view at one time that Government must be said to ""reside"" in the place

where its official headquarters are located, but on consideration I think that the word ""resides"" must be taken to refer to natural persons and not to

legal entities such as limited companies or Governments. With regard to limited companies, they of course will be covered by the words ""carries on

business,"" and it was very strenuously argued that the business of Government being to govern, Government must be deemed, within the meaning

of the section, to carry on business at its headquarters. In my opinion the words that follow in the alternative ""or personally works for gain"" show

that the business intended by the section is a commercial business and not a business of State or Government.

The result will be one that realty works no hardship. There is always a jurisdiction given within the local area where the wrong was done and it

would have been perfectly open to the plaintiff here to sue the Secretary of State either in Salem or in Coimbatore or in Cuddalore--wherever the

goods were in fact taken out of his possession. He has not chosen to do so. He has chosen to bring a suit on the Original Side of this Court without

even taking the trouble to apply for leave on the ground that part of the cause of action arose within its jurisdiction.

Finally the point is taken on behalf of the Secretary of State that this is a matter affecting the revenue and that Section 106(2) of the Government

of India Act covers the matter. On that subject I have nothing to add to what I said in my own considered judgment which is reported in Best and

Co. Ltd. Vs. The Collector of Madras, , where I had to consider all the decisions affecting this matter and came to the conclusion that, however

antiquated the section is and however useless according to present conditions, so long as it was allowed to stand in the statute book it must be

given effect to, and the effect is this, that in matters affecting the revenue the Original Side of this Court and that Side alone is debarred from

interfering in revenue matters. The section came to birth, nearly 100 years ago, when there was a conflict of jurisdiction between the Sudder

Courts and the High Courts. That conflict has utterly vanished and there is no justification whatever for preserving this antiquated fossil on the

statute book; but there it is, and so long as it is there we have to abide by it. I am quite clear that this is a matter affecting the collection of revenue

though it be in the nature of a penalty and that therefore this Court has no jurisdiction to entertain the suit on that ground. For all these reasons I am

of opinion that the plaintiff''s suit is demurrable and must be dismissed with costs.

Beasley, J.

The plaintiff who trades in gold thread sold 100 marcs of gold thread to his constituents in Salem and Coimbatore and sent them to those

constituents by registered post. When they arrived at their respective destinations they were seized under the orders of the Inspector of the

Cuddalore Customs Circle, who also sent a notice to the plaintiff calling upon him to show cause why the goods so seized should not be

confiscated under Sections 12 and 13 of the Land Customs Act. I think it would be well to explain what the procedure is. The local Inspector,

where the goods seized are of the value of Rs. 250 or under, is empowered either to order those goods to be returned to their owner or to

confiscate them if he thinks a good case for confiscation has been made out. Where the goods are of more than the value of Rs. 250 he can order

them to be returned. He has full power to do so if he thinks that they are goods which ought never to have been seized, but he cannot make an

order of confiscation; he has to refer the matter to the Collector of Customs at Madras, who either confirms the seizure by making an order of

confiscation of the goods or orders their return to their owner. From this order of the Collector of Customs in Madras there is an appeal to His

Excellency the Governor in Council. The plaintiff having received a notice calling upon him to show cause why his goods already seized should not

be confiscated duly appeared before the local inspector but notwithstanding his appearance and his contentions the local Inspector referred the

matter to the Collector of Customs, Madras. In view of the procedure 1 have already referred to it is obvious that the action of the local Inspector

in referring the matter to the Collector of Madras indicates that, had the value of the goods been Rs. 250 or under, he himself would have made the

order confiscating them. The Collector of Customs, Madras, made an order confiscating the goods and this order was duly communicated to the

local Inspector who informed the plaintiff of the confiscation of the goods. The plaintiff then preferred an appeal to the Governor in Council who

dismissed his appeal. The plaintiff now claims the return of the goods or their value from the defendant.

Two preliminary objections are taken by the defendant to the jurisdiction of this Court to try the plaintiff''s suit. One is to the territorial

jurisdiction and the other is, by reason of Section 106(2) of the Government of India Act, 1915 the High Courts may not exercise any original

jurisdiction in any matter concerning the revenue or concerning any act done or ordered to be done in the collection thereof according to the usage

and practice of the country or the law for the time being in force; and it is contended that this is a matter concerning the revenue or is an act done

or ordered to be done in the collection of it. With regard to the first objection the point is whether the cause of action arose wholly within the local

limits of this High Court or in part. Clearly if no part of the cause of action arose within the local limits of the High Court the objection founded on

the earlier part of Clause 12 of the amended Letters Patent is well founded and even if part of the cause of action arose within the local limits it is

equally well founded because the leave of the Court to sue here must first have been obtained and no such leave has been obtained. The plaintiff''s

contention here is that the suit is for conversion of his goods and that the act of conversion was the order for the confiscation of his goods made

here in Madras by the Collector of Customs. He could have sued for damages for the wrongful seizure of his goods. In such a case he must have

preferred his suit in the mufassal Court in the place where the goods were seized; or he could have sued for damages both for wrongful seizure and

for conversion, or, as here, sued for conversion only; but in the latter case to allege that the tort was wholly committed in Madras seems to me to

be opposed to obvious facts. The goods were seized outside the local limits of this Court. Without such seizure no order for confiscation could

have been made by the Collector of Customs, Madras. The first essential was this seizure. What was it that was required to make that seizure

effective? The confiscation order of the Collector of Customs, Madras, and even that seizure was not made effective until the order of confiscation

of the goods was received by the local Inspector in the mufassal. The confiscation then became complete in the place where the seizure was

carried out originally and not in Madras. The goods were never at any time in Madras except for a small portion of them which have been brought

here for the purpose of being exhibited in this suit. The plaintiff cannot be heard to say that the seizure was lawful because in his plaint he describes

it as unlawful and the whole basis of his claim must be wrongful seizure. The seizure here cannot be right and the confiscation wrong. Either the

seizure and the order for confiscation were right or both were wrong. For the purpose of upholding the objection on this part of Clause 12 of the

Letters Patent it is only necessary to hold that only a part of the cause of action arose outside the local limits of this High Court. For the reasons I

have already stated I have no difficulty whatever in so holding.

The next contention is that even so he can sue by reason of the latter part of Clause 12 of the Letters Patent, which is:

or if the defendant shall dwell or carry on business or personally work for gain within those limits.

It is contended that the defendant both dwelt and carried on business here at the commencement of the suit and in support of this contention the

plaintiff has cited the decision of a Bench of this Court in Subbaraya Mudali v. The Government and Cunliffe (1863) 1 MHCR 286. In that case it

was held that under Clause 12 of the Letters Patent the Government must be considered as carrying on business at the place where its members

exercise all the functions of Government, that is, in Madras. But even in that case the word ""dwell'' was considered inapplicable to the

Government. On the other hand in Daya Narain Ternary v. The Secretary of State for India ILR (1887) C 256 it was held by a Bench that the

words ""carrying on business or personally work for gain"" are inapplicable to the Secretary of State for India in Council. At page 273 in the course

of this judgment Mitter, J., says:

that the word ''business'' in Clause 12 of the Letters Patent was used in a restricted sense is also indicated by the words ''personally work for gain''

to be found in the same section. The latter words would be unnecessary if the word ''business'' had been intended to be used in an unrestricted

sense.

And with that statement 1 am in entire agreement. In my view the Government cannot be said to be carrying on business within the meaning of

the word in that clause of the Letters Patent. This decision in Daya Narain Tewary v. The Secretary of State for India ILR (1887) C 256 was

followed in Rodricks v. The Secretary of State for India ILR (1913) C 308. We arc not here bound by the decision in Subbaraya Mudali v. The

Government and Cunliffe (1863) 1 MHCR 286 and as I am in agreement with the Calcutta decisions I have no hesitation in following them. Nor

do I think that Government can be said to dwell anywhere. Whereas the words ""carrying on business"" apply to a corporate body and to limited

companies and ""personally work for gain"" to an individual or individuals, the word ""dwell"" can only apply to an individual in a private sense and not

to an entity. A corporation cannot be said to dwell anywhere. it may have an office where it carries on business but it does not dwell there. A

dwelling denotes a place where a person resides, eats and sleeps. In my view therefore this Court has no territorial jurisdiction to try this suit.

The only remaining objection is that this High Court on its Original Side cannot try this case by reason of Section 106(2) of the Government of

India Act.

That sub-section reads as follows:

The High Courts have not and may not exercise any original jurisdiction in any matter concerning the revenue or concerning any act done or

ordered to be done in the collection thereof according to the usage and practice of the country or the law for the time being in force.

It is contended by the defendant that this is a matter concerning the revenue or concerning an act done in the collection thereof; and it is not out

of place in this connection to mention what is done with goods seized and confiscated. They are sold and the proceeds go to the customs. Part of

the revenue of the country is derived from the customs and the collection of the customs is a collection of part of the revenue of the country and I

am prepared to hold that the sale of seized and confiscated goods and the taking by the customs authorities of those proceeds is the collection of

customs and therefore of revenue. It is admitted by Mr. Narasimha Aiyar that penalties in the shape of double or treble duties imposed on

smuggled goods would be revenue. Yet he contends that the money derived from the sale of seized or confiscated goods is not. I cannot myself

see any distinction whatever. I may conjecture that one of the objects of the sale is to recoup the customs for the unpaid duty which, had it been

paid, would have been revenue. But there is another obvious reason for this penalty and it is this : persons who bring dutiable goods into the

country are required to declare their possession of them and to pay the proper duty which is then collected from them and becomes part of the

revenue of the country. That is clearly the collection of revenue. If, however, persons smuggle dutiable goods into the country they prevent the

collection of the duties and so the revenue. The object of the seizure and confiscation is two-fold, to punish the offender and to deter others from

preventing or hindering the collection of revenue; and it seems to me impossible to hold that the seizure and confiscation of smuggled goods is not

an act ordered or done in the collection of revenue, as it is obviously designed to facilitate the collection of customs and therefore the revenue.

The decision in Alcock, Ashdown and Company, Ltd. v. The Chief Revenue Authority of Bombay 45 MLJ 592 (PC) has in my opinion no

application to this case. That case dealt with a mandamus to the Income Tax Officer to make an assessment and was a matter which was merely a

preliminary towards the assessment of the assessee. The acts complained of in this case were not in any sense preliminary but in my view directly

related to the collection of customs. I may add that the question as to whether or not Section 106(2) of the Government of India Act does prohibit

the exercise by this Court of its original jurisdiction in revenuematters has been decided by the learned Chief Justice in Best and Co. Ltd. Vs. The

Collector of Madras, and he there decided that the section was an express prohibition against the exercise of such powers. I need not say more

than that I entirely agree with his judgment and with the reasons he gave therein. I agree with the learned Chief Justice that both the objections are

fatal to the plaintiff''s suit and that it must therefore be dismissed.