ITC Limited vs State of Karnataka & Anr.

1.4 Observance of due process of law and the principles of natural justice being intertwined, is a legal necessity to ensure that the action of the authorities does not result in manifest arbitrariness or abuse and misuse of power by those empowered to conduct inspection, search, and/or seizure – When the law prescribes a particular procedure to be followed while taking action, the same must be strictly adhered to. [Para 20.1]

1.5 The 2009 Act itself contemplates action against officials violating its provisions u/ss.42 and 43 – Compliance with statutory procedures, including recording “reasons to believe” before initiating search or seizure, is incumbent upon officials; non-compliance renders the action futile and results in arbitrary excise of authority. [Para 23]

1.6 Nothing on record to show that the search was so imminent as to justify dispensing with a warrant – On the same day as the inspection, search, and seizure, a notice u/s.48, 2009 Act was issued, specifying a compounding fee for contraventions of ss.29, 36(1), and 36(2) of the Act, and rr.18(2) and 27, 2011 Rules, and directing the appellant to respond within 15 days, failing which further legal action would follow – Single Judge of the High Court correctly set aside these notices, but the Division Bench erroneously reversed the order – Therefore, the notices/orders issued by the respondents, as well as the judgment of the Division Bench are quashed – Order of the Single Judge, restored. [Para 23] Code of Criminal Procedure, 1973 – ss.165, 100: Held: s.165 deals with circumstances and pre-requisites for searches without warrant – As a general rule, every search must be preceded by a warrant and reasons to believe must be recorded – s.165 applies where, due to exigent circumstances, it is not possible to obtain a search warrant – In such cases, the officer may, after recording his reasons in writing and specifying, as far as possible, the thing for which the search is to be made, conduct or cause a search of the place – s.165(4) provides that the general provisions relating to searches contained in s.100 also apply to searches u/s.165 – Therefore, even u/s.165, the existence of reasons to believe that an imminent search is necessary, must be recorded, with as much detail as possible – The mandate of s.100(4) must also be satisfied even in searches u/s.165. [Para 17] Legal Metrology Act, 2009 – s.15 – Code of Criminal Procedure, 1973 – s.93 – “search”, “inspection”; “seizure”; “detention”: Held: 1.1 s.15, 2009 Act and s.93, CrPC speak about search and inspection – Both provisions treat “search” and “inspection” as distinct actions – Inspection refers to the verification of the books, records, or documents at the premises of a person, which is generally permissible under the respective law upon compliance with the prerequisites of authorization, recording of reasons to believe, and permission from the competent authority under law – It is made to verify compliance with the statute. [Para 19]

1.2 A search, on the other hand, has a wider connotation – It implies the power to look in any place for any materials, goods, books, or documents believed to be secreted or concealed, which may evidence a violation and may be liable to seizure or confiscation – Further, to conduct either a search or an inspection, not only is a warrant ordinarily necessary, but there must also be reasons to believe that such a search is required. [Para 19]

1.3 Seizure refers to the act of taking the material object into custody for the purpose of investigation or enquiry – Detention refers to a situation where the owner, though retaining possession of the goods, is restrained from using them. [Para 19.1]

1.4 There is also a subtle difference where a search followed by seizure is effected under a special enactment, which contemplates a sequence of mandatory steps – Such proceedings are initiated not merely to charge a person with a violation but also to prevent further violations, as in the present case. [Para 19.1] Legal Metrology Act, 2009 – s.15(4) – Code of Criminal Procedure, 1973 – s.165:

Held: Reference in s.15(4), 2009 Act to the provisions of the CrPC cannot be read to mean that s.165, CrPC can be invoked only if an offence has already been registered – s.165 itself, under subsection (4), makes other provisions of the Code applicable, leaving no room for ambiguity – Moreover, s.165 speaks of searches during an investigation; It comes into operation once an investigation commences. [Para 18]

Legal Metrology Act, 2009 – s.15(4) – Code of Criminal Procedure, 1973 – s.100(4), (5) – Applicability: Held: ss.100(4) and 100(5), CrPC are applicable to the present case – Thus, the presence of two respectable independent witnesses from the locality was mandatory – Such witnesses may also be drawn from a different locality, provided they meet the requirements of independence and respectability –However, in the present case, the driver of the Assistant Controller being a party to the inspection acted as a witness in violation of law – Although the respondents claimed that no one from the locality was forthcoming, there is nothing on record to indicate who was approached, when such request was made, whether a written request was given, and what further action was taken – The seizure mahazar also fails to support the respondents’ case, as it records none of the claims now relied upon in their defence – It is settled law that where the initial proceedings are vitiated, all subsequent proceedings are unsustainable – Any act in violation of law cannot be brushed aside on the ground that no prejudice was caused; every violation of law is deemed to cause some prejudice. [Para 21] Legal Metrology (Packaged Commodities) Rules, 2011 – Respondents submitted that r.24, 2011 Rules mandates specific declarations on wholesale packages – The seized items, corrugated fibreboard containers (CFCs) containing pre-packed notebooks fall within the definition of “wholesale packages” u/r.2(l), 2011 Rules and hence, mandatory declarations were required to be directly printed on the package and not merely affixed through labels, as done by the appellant: Held: Nothing on record to suggest that the goods in the container differed from the particulars on the label, either in form, quality, or weight – The seizure mahazar only noted that the packages lacked clear and conspicuous declarations as required u/r.24(a), which mandates that declarations on wholesale packages be printed and not affixed by way of a label – It is not disputed by the respondents that disclosures were made; their contention is merely that they were affixed as labels rather than printed – Appellant contended that the goods were stored in CFCs for transportation and that a label declaring the particulars required under law was duly affixed – The alleged violation was therefore, at best, technical. [Para 22] Code of Criminal Procedure , 1973 – Applicability to special enactments:

Held: Unless the provisions of the CrPC are explicitly excluded, the same shall apply to special enactments as well – Various special enactments, such as the Legal Metrology Act, 2009, Income Tax Act, 1961, Customs Act, 1962, Central Excise Act, 1944, Finance Act, 1994, Goods and Service Tax Act, 2017, Narcotic Drugs and Psychotropic Substances Act, 1985, as well as several repealed indirect Tax Laws of different States, contain provisions relating to search and seizure – The said list is illustrative and not exhaustive, as there are many other enactments with similar provisions – In all such enactments, the object of search and seizure is, more often than not, to collect evidence relating to an ongoing investigation of an offence or violation, and in some cases, to prevent a violation – In all these enactments, the procedure prescribed under the CrPC, insofar as it is applicable to search and seizure, is to be followed. [Para 19.5]

Words and Phrases – Legal Metrology Act, 2009 – ss.2(n); 15 – “premises”; “intended to take place”; “place of inspection” – Scope, examined – Code of Criminal Procedure , 1973 – Chapter VII-Part A-D – ss.93, 100 (4), (5). [Paras 13-15.2]