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The Salt Cess Act, 1953
Section 3 in The Salt Cess Act, 1953
Section 11 in the Central Excise Act, 1944
Section 40 in the Central Excise Act, 1944
Section 2 in The Salt Cess Act, 1953
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R.K. Katti vs Union Of India (Uoi) And Anr. on 6 February, 2006

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Madras High Court
Shri Vasudeva Bank, Ltd., By Its ... vs The Union Of India (Uoi) By ... on 9 October, 1958
Equivalent citations: (1959) 2 MLJ 165
Author: Ramaswami

JUDGMENT Ramaswami, J.

1. This second appeal is preferred against the decree and judgment: of the learned District Judge of Tiruchirapalli in A.S. No. 156 of 1955, confiming the decree and judgment of the learned Subordinate Judge of Tiruchirapalli, in O.S. No. 252of 1951.

2. One E.A. Rahamatullah, a tobacco merchant, had a warehouse licensed for storage of tobacco. This tobacco consisted of two varieties known as cheroot tobacco and beedi tobacco. Exhibit A-1 is a pattial of tobacco showing the purchase of 51 bags of tobacco. Exhibit A-2 is another pattial dated 20th August, 1946, showing the purchase of 45 bags of tobacco. Rahamatullah kept this tobacco in a warehouse licensed for storage of tobacco.

3. Under Rule 140 of the Central Excises and Salt Rules, the Collector is given power to appoint public warehouses and in like manner license private warehouses for the storage of excisable goods on which duty has not been paid, and Rule 144 says that the goods should not be removed from any warehouse except on payment of duty or where so permitted. Rule 152 says that subject to the limitation imposed by Rule 139, any owner of goods where housed under these rules may at any time within two years from the date on which such goods were first warehoused and with the permission of the proper officer and on such conditions, remove such goods from one warehouse to another. In the case of a private warehouse under Rule 140 the licensee has to furnish a bond with such surety or sufficient security in such amount and under such conditions as the Collector approves, binding himself to pay the duty due on the goods deposited therein, or for the due and safe removal of such goods and for the due observance of the terms, conditions and requirements of the Act.

4. Rahamatullah, who stored the tobacco in his warehouse obtained a license from the Department for storing and he executed a security bond along with one Sundaram Pillai as surety to abide by the Excise Rules and for the payment of the amount due to the Government by way of duty, etc. The tobacco stored in such licensed godowns known as bonded warehouses can be removed only with the permission of the Excise Department on payment of duty payable on the goods. They could also be removed on permission from one bonded warehouse to another.

5. Rahamatullah pledged the cheroot tobacco stored in his bonded warehouse to the plaintiff bank and borrowed Rs. 4,250, Rs. 2,000 on 13th July, 1946 and Rs. 2,250 on 9th September, 1946. This is stated to have been a key-loan.

6. In August, 1947, it was noticed by the Excise Department that certain quantities of cheroot tobacco were missing. The duty payable in respect of such tobacco was 1,007-7-0. Sundaram Pillai who stood surety for Rahamatullah also became apprehensive as he suspected the transaction of Rahamatullah. He therefore applied to the Department to permit the removal of the tabacco from the godown of Rahamatullah to his own godown at Varaganeri, Tiruchirapalli, and Rahamutullah was agreeable to such removal and re-storage.

7. Therefore, on 21st August, 1947, on the application made by Rahamatullah permission was granted and the entire tobacco was removed from the godown of Rahamatullah at 99, Pallivasal, Tanjore Road, Tiruchirapalli, to the godown of Sundaram Pillai at No. 2, Varaganeri Road, Tiruchirapalli. It is this removal on 21st August, 1947, that has given rise to the present controversy.

8. The Department claimed that a sum of Rs. 1,007-7-0 was due as duty in respect of the cheroot variety found missing or removed from the warehouse. The plaintiff bank then wrote to the Department on 25th August, 1947 (Exhibit A-3) stating that Rahamatullah had pledged with the bank on 13th July, 1946, 51 bundles of tobacco and borrowed Rs. 2,000 on the security thereof and again pledged with the bank on 9th September, 1946, 45 bundles of tobacco and borrowed Rs. 2,200 on the security thereof and executed an undertaking to keep the goods under the lock and seal of the plaintiff bank, that the bank had accordingly locked and sealed the godown with the bank's lock, that a sum of Rs. 3,500 was still due and in respect of the same the bank had a first charge next in order to Government charge, if any, and in case of disposal of the said goods under the authority of the Department for any reason, it should be noted that the bank had a first charge and might be informed of any such disposal so as to enable the bank to take such steps as are necessary to safeguard its interests in the pledged goods. This letter was sent four days after the removal of the goods to Sundaram Pillai's godown and it was received by the Assistant Commissioner of Excise on 26th August, 1947. The defendant sent word to the plaintiff bank that a sum of Rs. 1,007-7-0 was due as duty by Rahamatullah to Government. The bank then remitted the said amount into the Government Treasury and wrote to the Department on 6th' September, 1947 (Exhibit A-4). The bank wrote therein that the sum of Rs. 1,007-7-0 having been paid, the tobacco under pledge to the bank should be delivered to the bank. The wording is "We request you to arrange to give us. delivery of the tobacco seized by you. We will keep it under our custody and act up to your instructions." Exhibit A-5 is the letter dated 5th December, 1947, received by the bank's advocate from the Assistant Collector of Central Excise stating that excepting for a small quantity of 534 lbs. the tobacco has been transferred by Rahamatullah to the warehouse of Sundaram Pillai, that Sundaram Pillai is holding the tobacco in his custody pending adjudication of a case registered against Rahamatullah and that the clearance of the tobacco for house consumption would be permitted on the application by the parties concerned in the usual way on the adjudication of the case referred to and on realising all dues due to Government from Rahamatullah and that in case the dues are not realised the stock would be attached by the Department: under Section 11 of the Central Excises and Salt Act, 1944 and will be put in auction. A sum of Rs. 500 was payable by Rahamatullah as penalty and the same was paid. In Exhibit A-6 dated 9th March, 1948, the Department stated that it had no objection for the removal of the tobacco belonging to Rahamatullah, the fine amount of Rs. 500 having been paid. By Exhibit A-7 dated nth March, 1948, the plaintiff requested the Department to hand over the tobacco. In reply to this letter the Superintendent of Central Excise, Tiruchirapalli, wrote to the Deputy Superintendent, Palakarai, Exhibit A-8 to arrange to return the tobacco seized from Rahamatullah back to the owner. The bank once again wrote Exhibit A-9 dated 5th May, 1948, to the Department requesting delivery and stating that if delivery was delayed the bank would be constrained to hold the Government responsible and take legal action for any loss incurred by by the bank and it was specifically mentioned therein that the tobacco was seized from the bank's custody even without the knowledge of the bank. The Department replied by Exhibit A-10 dated 12th July, 1948, that Rahamatullah had not accounted for the quantity of 2,275 lbs. of beedi tobacco non-duty paid, which was in stock in his warehouse and it was believed that he had clandestinely disposed of the same and that the excise duty recoverable on the missing tobacco came to Rs. 1,279-11-0 and as by virtue of section n of Central Excises and Salt Act of 1944 the Government had priority over all other claims, the Assistant Collector had under Section 11 of the said Act attached the stock of Excisable tobacco belonging to Rahamatullah and ordered its sale, and after appropriating the amount due to the Government the surplus, if any, would be held in deposit and that the bank should proceed against its debtor according to law. It was further stated in that letter that Rahamatullah had hypothecated his excisable tobacco lodged in his licensed warehouse without the knowledge or consent of the Department, that the question of the bank holding possession or custody of the tobacco did not arise and the premises did not appear to have been locked with the bank's lock, that any pledge or hypothecation of the tobacco would not confer any right to ownership or possession of the goods in favour of the hypothecate or pledgee as against the Government in view of the provisions of Rules 140, 144, 148, 172, 174 and 178 of the Central Excise Rules, 1944 and that the Government would not accept any liability for loss, if any, incurred by the Bank.

9. In other words, the Department was insisting on the payment of the duty of Rs. 1,279-11-0 payable in respect of the beedi tabacco. The attachment was under Section 11 of the Central Excise Act. The entire proceedings of the Department in the matter of detention of cheroot tobacco belonging Rahamatullah in respect of duty payable on the beedi veriety was under the Central Excise Act, as is evident from the correspondence Exhibit B-3 dated 1st April, 1948, which is a copy of a report made by the Deputy Superintendent of Excise, Palakarai Range, to the Superintendent of Central Excise, Tiruchirapalli, shows the action taken by the Deputy Superintendent, in the matter of recovery of duty on the beedi tabacco. He suggests that the tobacco deposited with Sundaram Pillai have to be attached under Section 11 to compensate the excise duty due to the State on account of the beedi tabacco. Exhibit B-4 is a copy of memo, dated 1st April, 1948, to Rahamatullah calling upon him to produce the warehouse accounts and also to produce the tobacco for inspection and stating that if the memo, is not complied with, the cheroot tobacco will be attached. Exhibit B-6 is a copy of the order of the Assistant Collector of Central Escise attaching the stock of 7,997 lbs. of excisable cheroot tobacco of Rahamatullah under Section 11 of the Act and directing sale of the tobacco in public auction forthwith for recovery of the dues and that the surplus proceeds will be held in deposit pending its final disposal. Exhibit B-7 is a demand notice for Rs. 1,279-11-0 payable by Rahamatullah and this was served on Sundaram Pollai, as Rahamatullah was absconding. Both these Memos. Exhibits B-6 and B-7 contain the reference in the heading "C. No. IV (offence) 85/48". The Department had therefore treated the removal of the beedi tobacco as an offence and the proceedings were all with reference to that offence. Exhibit B-8 dated 6th August, 1948, is the copy of the proceedings of attachment sent to Superintendent, Tiruchirapaili, giving instructions as to the procedure to be adopted in the matter of putting up the tabacco for sale. In pursuance of the directions of the Assistant Collector of Excise, the Superintendent of Central Excise, Tiruchirapalli, issued notification for the sale of the tabacco in public auction on 16th August, 1948, at Palakarai Range Office. The plaintiff bank immediately filed O.S. No. 130 of 1948 for the money due from Rahamatullah and got the tabacco attached before judgment. The Government preferred a claim to the tobacco in I.A. No. 896 of 1948 and the claim was dismissed ; vide Exhibit A-11, copy of the order. The Government did not file a suit to set aside that summary order.

10. After the dismissal of the claim petition the Department did not object to the plaintiff bank proceeding against the attached tabacco and it was sold, some quantity in March, 1949, for Rs. 466-9-0 and the balance in April, 1949, for Rs. 1,198-8-0 to the plaintiff bank who had obtained permission to bid and set off.

11. It is in these circumstances that the suit, out of which the present second appeal arises, was filed and the sum and substance of the bank's claim is that it had advanced Rs. 4,250 to Rahamatullah on the pledge of tobacco, that Rahamatullah is absconding, that the money had to be realised only by sale of the tabacco pledged and that as the Government were improperly detaining the tobacco and refusing to deliver it, the tobacco got deteriorated and therefore fetched only Rs. 1,665-1-0. The plaintiff bank says that the tobacco was in the bank's possession and it was the defendant who broke open the lock and removed the same. Inasmuch as this has been brought about by the wrong and illegal act of the Department, the plaintiff is entitled to recover the entire mortgage amount from the Department by way of damages.

12. Both the Courts below held that the plaintiff bank is not entitled to the damages asked for and dismissed the suit. Hence this second appeal by the defeated bank.

13. In this second appeal I am of the same opinion as the Courts below that the plaintiff bank is not entitled to damages by reason of the protection given to the Central Excise servants under Section 40 of the Central Excises and Salt Act, 1944 and the bar of the suit by limitation under Sub-section (2) of Section 40 aforesaid.

14. The relevant provisions of the Central Excises and Salt Act, 1944, may now be examined. Section 2(d) of the said Act defined "excisable goods" as meaning goods specified in the First Schedule as being subject to a duty of excise and includes salt. It was sought to be argued that once the duty is paid, the goods cease to be excisable. But the unfounded character of this argument is seen from Section 8. That section lays down that from such date as may be specified in this behalf by the Central Government by notification in the Official Gaeette, no person shall except as provided by rules made under this Act have in his possession any goods specified in the Second Schedule in excess of such quantity as may be prescribed for the purposes of this section as the maximum amount of such goods or of any variety of such goods which may be possessed at any time by such a person.

In other words, the qualifying phrase means nothing more than the class of goods set out in the Second Schedule, and they do not cease to be such on payment of duty but remain as such so long as they remain in the possession of the person specified in Section 8. Section 40 of the Act lays down:

(1) No suit shall lie against the Central Government or against any officer of the Government in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Act.

(2) No suit, prosecution or other legal proceeding shall be instituted for anything done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of.

Rule 215 of the Central Excise Rules, states:

The provisions of Sections 168, 189 and 192 of the Sea Customs Act, 1878, shall mutatis mutandis be applicable to any decision or order relating to any duty, fine or penalty leviable in respect of any goods under the Act.

In Central Excise Manual, Appendix II, page 144, the provisions of Sea Customs Act applied to certain procedure in respect of excisable goods are mentioned. Section 192 says that when any fine, penalty or increased rate of duty is leviable the goods in respect of which such fine or rate or penalty is leviable shall not be removed by the owner until such fine, penalty or rate is paid. Then it states that if any person has become liable to any such fine, penalty or rate, in respect of any goods, the Customs-Collector may detain any other goods belonging to such person passing through the customs house until such fine, penalty or rate is paid.

15. The law regarding the vicarious liability of the Government of India for acts done by its servants, in cases of this nature, are clearly set out in S. Ramaswami Iyer's " Law of Torts " (Fifth edition) at pages 622 to 624 as follows:

(iii) The Government is liable for injury to any of its subjects resulting from an act done by itself or by its servants if such act is done under colour of municipal law, as when it purports to be in the exercise of powers conferred by a statute. Actions have been allowed against the Government for illegal levy of customs under the Customs Act, the illegal acquisition of land under the Land Acquisition Act, the improper dismissal of a councillor of a municipality under the District Municipalities Act. In an action for malicious prosecution against Government, the malice of its officer will be imputed to it. (Haribhanji v. Secretary of State (1882) I.L.R. 5 Mad. 273; Secretary of State v. Mask & Co. (1939) F.L.J. 15 : (1940) 2 M.L.J. 140 : L.R. 67 I.A. 222 : I.L.R. (1940) Mad. 599 (P.C.).; Thinvick v. Secretary of State I.L.R. 1939 (1) Cal. 257. ; Rameshwar Singh v. Secretary of State (1907) I.L.R. 34 C. 470; Vijiaraghava v. Secretary of State for India (1884) I.L.R. 7 Mad. 466; Secretary of State for India v. Somayya (1926) 51 M.L.J. 446 : A.I.R. 1926 Mad. 1084 ; Mahajrah Bose v. Governor-General in Council .

(iv) The Government is liable to restore property or money Wrongfully obtained or detained by it or its servants on its behalf. In such cases an action lies against the Government as a petition of right lay against the Crown in England. The Assam High Court allowed a claim against the Union of India for compensation for earth wilfully taken from the plaintiff's land and laid on a railway track. The Wrong Would amount to conversion of moveable property and should have been committed by some one, servant or contractor, on behalf of the Government. Secretary of State for India v. Moment (1912) 24 M.L.J. 459 : L.R. 40 I.A. 48 : I.L.R. 40 Cal. 391 (P.C.); Secretary of State for India v. Hiru Mandal A.I.R. 1935 Cal. 752, Saurashtra v. Thakur A.I.R. 1956 Sau. 65; Kailash Chandra v. Secretary of State (1912) I.L.R. 40 Cal. 452; Washappa v. Secretary of State for India (1915) I.L.R. 40 Bom. 200; India v. Muralidhar A.I.R. 1952 Assam 141.

(v) The Government is not liable for a wrong done by its servants in the course of their official duties unless the wrong was expressly authorised or ratified by it. This principle was enunciated by Wallis,J., as he then was, in a Madras case (Ross v. Secretary of State for India in Council (1913) 24 M.L.J. 429 : I.L.R. 37 Mad. 55.), where a suit for damages against the Government for loss caused to the plaintiff by the wrongful closing of a labour depot by a District Magistrate purporting to act under statutory powers, was dismissed.

Similarly, the Government has been held not liable for an improper arrest. (Maharani of Nabha v. Madras (1944) 1 M.L.J. 399 or seizure of property by a police officer (Babulal y. Province of Orissa , for loss due to a payment of money by a Deputy Collector to a person not entitled to it. (Secretary of State for India v. Ramnath Bhatta (1933) 37 C.W.N. 957, and for negligence in his custody of plaintiff's property resulting in theft (Ram Gulam v. Uttar Pradesh (1950) A.L.J. 46, Shivabhanjun v. Secretary of State for India (1904) I.L.R. 28 Bom. 314; Mohammed v. Uttar Pradesh A.I.R. (1955) U.P. 75. The principle of these cases was stated to be that the act done by a servant of Government was done in the exercise of the authority or discretion vested in him by law or statute and not in pursuance of any implied authority of Government (District Board, Bhagalpur v. Province of Bihar A.I.R. 1954 Pat. 529; Gopal Singh v. Union of India .) It is difficult to accept this reasoning, as vicarious liability does not rest on any principles of implied authority. Much less does it require express authority or ratification by the employer. This requirement is intelligible in the case of a superior servant sought to be held liable for an act of his subordinate but has no meaning in the case of the Government who is the ultimate employer. It is submitted that the rule is that the Government is liable for an illegal act of its servant or agents in the course of performing its work. This of course assumes that the act is illegal and a suit lies against him. Otherwise, there can be no suit against Government as employer.

The view here submitted receives confirmation from a decision of the Calcutta High Court (Maharana Bose v. Governor-General in Council in which Mitter, J., held that the Government could become liable for malicious prosecution of the plaintiff by Railway Officers purporting to act under their powers under the Railway Act.

The Law Commission has recommended changes in the law which would remove some of the restrictions on the liability of Government as employer.

16. The Law Commission of India in its First Report (Liability of the State in Tort, 1956) published by the Government of India, Ministry of Law, after examining the existing law in India and the law in England (for a fuller discussion in regard to the law in England, see Street's Government Liability, Cambridge University Press), America, Australia and France, has set out its conclusions at pages 36 to 43. In Appendix 1 is set out the list of cases in which the State's liability was negatived. Kessoram Poddar & Co. v. Secretary of State for India (1926) I.L.R. 54 Cal. 969; Secretary of State v. A. Cockcraft (1914) I.L.R. 39 Mad. 351; Mata Prasad v. Secretary of State (1929) I.L.R. 5 Luck. 157; Kader Zailany v. Secretary of State (1931) I.L.R. 9 Rang. 375; Ross v. Secretary of State (1913) I.L.R. 37 Mad. 55; (reviews all decisions English and Indian); Nobin Chunder Dey v. Secretary of State for India (1875) I.L.R. 1 Cal. 11; Secretary of State for India in Council v. Sri Gobinda Chaudhuri (1932) 36 C.W.N. 606; Secretary of State v. Ramnath Bhatta (1933) 37 C.W.N. 957 ; Sajida Khaloon v. M.B. Ahmad ; Uday Chand v. Province of Bengal I.L.R. (1947) 2 Cal. 141; Ram Gulam v. U.P. Government ; Mclnerny v. Secretary of State for India I.L.R. (1911) 38 Cal. 797, Durgacharan v. Isamuddin (1946) 51 C.W.N. 534; Etti v. Secretary of State (1939) 1 M.L.J. 784 : I.L.R. (1939) Mad. 438 : A.I.R, 1939 M. 663; Shivabhajan v. Secretary of State for India (1904) I.L.R. 28 Bom. 314. The 11th instance based on Mclnerny v. The Secretary of State for India I.L.R.' (1911) 38 Cal. 797, relates to negligent acts of servants of the Government and the Crown not being liable for negligent or tortuous acts of its officers done in the course of their official duties imposed by statute, except where it could be proved that the impugned act was authorised by the Crown or that it had profited by its performance. In Appendix V is set out the Protection Clauses in Indian Acts giving immunity to the State, which were 72 in number. not 39 of the list is the Central Excises and Salt Act I of 1944, Section 40. The Law Commission in its proposal at page 38 and following has formulated the following principles on which legislation should proceed under the general law viz, the State as employer should be liable for the torts committed by its employees and agents while acting within the scope of their office or employment, and the State as employer should be liable in respect of breach of those duties which a person owes to his employees or agents under the general law by reason of being their employer and that in respect of these the State should be entitled to raise the same defences which a citizen would be. entitled to raise under the general law. Then turning to duties of care imposed by statute, the Law Commission formulates the principles that the State should be liable without proof of negligence for breach of a statutory duty imposed on it or its employees which causes damage and that the State should be liable if in the discharge of statutory duties imposed upon it or its employees, the employees act negligently or maliciously, whether or not discretion is involved in the exercise of such duty.

17. See also, with reference to this Governmental Liability in India, page 95 of T. S. Venkatesa Iyer's " Law of Torts " (English and Indian), and Anand and Sastri's "Law of Torts " (1952), page 350).

18. From the above exposition of Governmental liability, emerges the further question as to what constitutes good faith which would protect Government servants in the discharge of their statutory duties.

19. The meaning of the term "good faith " can be gathered from the following Law Lexicons:

20. Roland Burrows : Words and Phrases Judicially denned.

Good faith requires not, indeed logical infallibility but due care and attention.

"Good faith ", therefore, means absence of knowledge that a preference Was intended.

21. Funk & Wagnalls. (New Standard Dictionary of the English Language (1953).

Good faith 'the observance of, or the intention to observe, honesty and fair dealing ; absence of intention to deceive.

22. Stroud's Judicial Dictionary, 3rd edition (1953).

In good faith " Bankruptcy Act, 1883, would seem to mean innocent of the knowledge, and of the means of knowledge, that there is an adverse bankruptcy.

A thing is to be deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not.

That section is obviously founded on the distinction pointed out in Jones v. Gordon (1877) L.R. 2 App. Cas. 616, by Lord Blackburn, between the case of a person who was ' honestly blundering and careless', and the case of a person who has acted not honestly, that is, not necessarily with the intention to defraud, but not with an honest belief that the transaction was a valid one, and that he was dealing with a good bill.

Sale of Goods Act, 1893: A thing is done " in good faith " when it is in fact done honestly, whether it be done negligently or not.

23. Ballentine : Law Dictionary (U.S.A.) A statutory definition of the term is, an honest intention to abstain from taking any unconscientious advantage of another, even through the forms and technicalities of law, together with an absence of all information or belief of facts which would render the transaction unconscientious.

As applied to the holder of a forged check, to establish good faith there must not only be an absence of knowledge of any invalidity, but an absence of circumstances which would put an ordinarily prudent man upon inquiry.

As an element tending to rebut malice in libel and slander, good faith requires proper consideration for the character and reputation of the person whose character is likely to be injuriously affected by the publication. There must be absence, not only of all improper motives, but of negligence.

Good faith in adverse possession.In the law of adverse possession, whether general or statute the term means free from a design to defraud those who appear to have a better title than the claimant's. His possession must be free from stealth.

Good faith in stock issue.In the valuation of property for which stock in a corporation is issued, " good faith " consists in the belief that a prudent and sensible man would hold in the ordinary conduct of his own business affairs.

The Law Lexicon of British India by P. Ramanatha Iyer (M.L.J.).

" Good Faith " denned. Act XLV of 1860, Section 52; Act IX of 1908, Section 2(7); Act X of 1897, Section 3(20); Bengal Act I of 1899, Section 3(17); Bombay Act I of 1904, Section 3(20). Burma Act I of 1898, Section 2(25) E.B. & A. Act I of 1909, Section 5(21); Madras Act I of 1891, Section 3(11); Punjab ActI of 1898, Section 2(22) ; U.P. Act 1 of 1904, Section 4 (17).

Good Faith.Honesty, absence of fraud, collusion or deceit.

Nothing is said to be done or believed in good faith which is done or believed Without due care and attention. (Penal Code, Section 52).

A thing shall be deemed to be done in " good faith " where it is in fact done honestly, whether it is done negligently or not. Act X of 1897 (General Claues) Section 3(20) ; Eng. Bill of Exchange Act, 1892, Section 90.

Nothing shall be deemed to be done in good faith which is not done with due care and attention. Act IX of 1908. (Limitation) section a (7).

Under the definition of the term in the Limitation Act " nothing shall be deemed to be done in good faith which is not done with due care and attention ". This is a stricter definition than the one adopted in Section 3(20) of the General Clauses Act, 1897, under which "a thing shall be deemed to be done in " good faith " Where it is in fact done honestly ; whether it is done negligently or not". 13 I.C. 260. See also 1 Bom. 296 (Good faith and notice).

The words "good faith'' have no technical legal signification, but are to be taken in their ordinary acceptation, and mean simply, honestly in belief, purpose, or conduct.. Of. Butcher v. Stead (1875) L.R. 7 H.L. 839; In re Avery(1887) L.R. 36 Ch.D. 307 Ex parte Watson L.R. (1888) 21 Q..B.D. 301.

24. Bearing these principles in mind, if we examine the facts of this case, the points which fall for consideration are three in number viz., whether, when the cheroot tobacco had been pledged to the plaintiff bank, the defendant or its servants broke open the lock of the godown; secondly, whether the action of the Government in attaching the cheroot tobacco pledged to the plaintiff bank for the amount due on the beedi tobacco, is illegal and male fide ; and thirdly, whether by reason of any act or omission on the part of the Government servants negativing good faith, after the disposal of the claim petition preferred by the State in favour of the plaintiff bank, the defendant would be liable in damages. In all these points I have come to the same conclusion as both the Courts below and here are my reasons.

25. Point 1 : Both the Courts have found that the defendant or its servants did not break open the godown of Rahamatullah and remove the goods to Sundaram Pillai's godown and that what happened was that on the application of the surety Sundaram Pillai the Excise authorities permitted the transfer of the excisable goods which were slowly purloined from the godown of Rahamatullah, to the well-protected godown of Sundaram Pillai. Point 1 raised by the plaintiff bank rightly failed.

26. Point 2:1 have already reproduced Rule 215 of the Central Excise Rules which states that the provisions of Sections 168, 189 and 192 of the Sea Customs Act has to be applied mutatis mutandis. Therefore, for the words "custom house" we have to substitute the words "bonded warehouse". The cheroot tobacco was in the bonded warehouse of Sundaram Pillai. On the date when the Government attached the cheroot tobacco for the duty payable on the beedi tobacco, the Government was well within its rights to attach the same. The tobacco belonged to Rahamatullah but was in the custody of Sundaram Pillai and the Excise Department attached the tobacco. There is nothing illegal or unlawful in the conduct of the Excise Department. It has power under Section 11 to attach the goods, viz., the cheroot tobacco for duty due on other tobacco for which duty had not been paid by Rahamatullah. Section 11 completely gives power to the Government to take the action it did. Therefore the defendant is not liable either for the resultant deterioration or for the lesser price which the tobacco fetched in the Court sale. Point 2 also fails.

27. Point 3: Both the Courts below have found that first of all the order of the learned Subordinate Judge who disposed of the claim petition did not amount to an adjudication in regard to the Government's right to enforce the realization of the duty on the beedi tobacco by attaching the cheroot tobacco. The learned Subordinate Judge himself in paragraph 7 of his order (Exhibit A-11) states "Whether the pledge will affect the Government's right to claim duty or not is another matter ". Again in paragraph 9 he states: " The next question is whether the petitioner gets any charge by virtue of the attachment effected under Section 11 of the Act....That question does not however arise for consideration in this matter in view of my finding that the respondent bank has got a charge on the goods attached". Secondly, both the Courts below have found that after the dismissal of the claim petition the Department did not object to the plaintiff in any way proceeding against the attached tobacco and that the plaintiff completely failed to show that the Department unnecessarily and improperly withheld the tobacco and that the detention of the goods was the direct cause of the alleged deterioration of the tobacco and its fetching a low price. Therefore, point 3 also rightly failed.

28. The plaintiff has throughout failed to show want of good faith on the part of the Excise Officials. It is not for the Union Government to establish its good faith but it is for the plaintiff bank to establish its want of good faith. On the failure of the plaintiff bank to establish want of good faith on the part of the Union Government, the two consequences follow, viz., that the plaintiff bank is barred from filing this suit under Section 40(1) of the Central Excises and Salt Act, 1944, and that this suit instituted for an act done or ordered to be done, after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of, which has been the case here because the attachment was effected certainly long prior to six months of the date when the suit was instituted, would be barred by limitation under Section 40(2).

29. In the result, this second appeal is dismissed without costs.

30. No leave.