UNION OF INDIA versus ANIL CHANANA & ANOTHER

Citation: [2008] 2 S.C.R. 1 · Decided: 25-01-2008 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 2 S.C.R. 1 
UNION OF INDIA 
A 
v. 
ANIL CHANANA & ANOTHER 
(Civil Appeal No. 683 of 2008) 
JANUARY 25, 2008 
B 
(S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.) 
¥ 
Customs Act, 1962; ss. 77, 108, 111, 1278, 132, 135 & 
137: 
Attempt to smuggle diamond ear rings -
False c 
declaration -
Evasion of payment of customs duty -
Confiscation of goods - Arrest - Prosecution proceedings -
Applications for compounding of offences u/ss. 132 and 
137(1))a) and settlement of case uls.1278 of the Act-Allowed 
by compounding authority imposing fine - Challenge to -
D 
Dismissed by High Court - Correctness of - Held: Incorrect -
Compounding authority duty bound to find out existence of 
~ 
material evidence which suggests disclosure as inaccurate/ 
Misleading/incomplete, particularly when contradiction noticed 
in the stand taken by applicant in the statement recorded and E 
averment made in application for compounding ....:. Under such 
circumstances, application for compounding ought to be 
disallowed by the authorities - Compounding authority bound 
to discharge the statutory duty of making proper enquiry by 
examining with care and caution the material available on 
F 
T 
record- In the instant case contradiction noticed in two versions 
given by accused per se made the application for 
compounding not maintainable. 
Doctrines/Principles: 
Principle of disclosure - ·Discussed in the context of G 
)-
compounding of offences in terms of s. 137 of the Customs 
Act, 1962. 
Words and Phrases: 
1 
H 
2 
SUPREME COURT REPORTS 
[2008] 2 S.C.R. 
A 
'Disclosure in Review Proceeding' and 'Disclosure in 
.B 
c 
D 
E 
F 
G 
H 
cases relating to compounding ·of offences' - Distinction 
between. 
On receipt of an information, officers of ORI, 
intercepted respondent No.1, accused, when he alighted 
from British Airways flight and walking through the Green 
Channel. On search, two sets of diamond ear rings along . 
with US$1900 were recovered from the pocket of his coat. 
He was arrested for having committed offences 
punishable u/ss. 32 and 135 of the Customs Act for failure 
to declare dutiable goods in Customs Declaration Form 
and for having walked through the Green Channel with 
intent to evade payment of duty. He voluntarily deposited 
the customs ~uty. He was granted bail. A ~how cause 
Notice was issued to him by the authorities. Later, 
prosecution proceedings were initiated against him in the 
court of Metropolitan Magistrate. In the meantime, accused 
appli.ed for compounding of the offences u/ss.132 and 
135(1)(a) of the Act and also moved an application for 
settlement of his case u/s.1278 of th~ Customs Act, 1962. 
The Compounding Authority holding that the application 
fell within the scope and eligibility of compounding of 
offences u/r.4 of the Customs (Compounding of Offences) 
Rules, 2005, compounded the offences punishable under 
Sections 132 and 135(1 )(a) and imposed fine of Rs.15 
lakhs. Aggrieved by the decision of the Compounding 
Authority, Union of India challenged the order before the 
Delhi High Court by filing a Writ Petition, which was 
dismissed by the High Court. Hence the present appeal. 
Allowing the appeal, the Court 
HELD: 1. Compounding of offences is based on the 
principle of Disclosure. For purposes of Section 137(3), 
that disclosure has to be in relation to the facts of the case. 
(Para - 13) [11-B] 
2.1 There is a 1ifference between "Disclosure in 
... 
1-
,.. 
~ 
-1 
UNION OF INDIA v. ANIL CHANANA & ANOTHER 
3 
Judicial Review Proceedings" and "Disclosure in cases A 
relating to Compounding of Offences". In the case of 
disclosure in judicial review proceedings, Courts are not 
concerned with factual findings, however, in cases of 
compounding of offences it would be the duty of the 
Compounding Authority to find out existence of material, B 
outside the evidence, which suggests that disclosure is 
inaccurate, misleading or incomplete, particularly, when 
there are contradictions in the stand taken by the 
applicant earlier when statements are recorded under 
Section 108 of the 1962 Act and the averments made in c 
the Application for Compounding of Offences. In 
compounding cases, there is Merit Review vis-a-vis 
Judicial Review. (Para - 13) [11-C-E] 
2.2 In the present case, the accused has stated in 
his Application under Section 137(3) of the Act that he had D 
no intent to smuggle as he had entered into Green 
Channel through oversight whereas earlier in his first bail 
Application he has stat

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