P L D 2026 Lahore 457 (PLP)

Through the instant constitutional petition under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, the petitioner seeks directions for the recovery of gold jewellery weighing 3.085 kilograms along with US$ 10,000, which were allegedly confiscated by the respondents-department.

2. Briefly stated, the facts necessary for the adjudication of this petition are that on 27.05.2004, the petitioner, namely Abbas Ali son of Noor Elahi, resident of House No.36, New Saud Park, Shahdara, Lahore, holding Passport No.BK-688363, arrived at the Customs counter in the departure lounge of Allama Iqbal International Airport, Lahore, for travel to Bangkok. The officials of the respondents-department, in exercise of powers under Section 139 of the Customs Act, 1969 (hereinafter Act, 1969 ), required the petitioner to declare the contents of his accompanied baggage, particularly whether it contained any contraband goods prohibited under the Import and Export Policy Order, 2003-2004. The petitioner replied in the negative. However, upon suspicion, his baggage was examined in the presence of witnesses, which resulted in the recovery of gold jewellery weighing 3.085 kilograms and foreign currency amounting to US$ 12,000 and 2,429 Thai Baht.

3. As the petitioner failed to produce any documentary evidence regarding lawful possession or export of the recovered items, and no declaration had been made, the same were seized under Section 168(1) of the Act, 1969, after issuance of notice under Section 171 ibid. Moreover, FIR No.19/2004, dated 28.05.2004 was registered against the petitioner for offences under Sections 156(1), 8, 14, 70, 139, 132 and 16 of the Act, 1969. During investigation, it surfaced that the recovered jewellery was allegedly belonged to M/s Atta Sons Gems and Jewellers, who had entrusted the same to the petitioner. Subsequently, the matter was referred for adjudication and the Collector of Customs, Central Excise and Sales Tax (Adjudication), Lahore, vide Order-in-Original dated 12.11.2004, ordered outright confiscation of both the jewellery and the foreign currency.

4. Aggrieved by the said order, the petitioner filed an appeal before the Customs, Sales Tax and Central Excise Tribunal, Lahore (hereinafter Appellate Tribunal ) which vide judgment dated 23.02.2005 observed that the matter had not been properly heard, and remanded the case to the Collector (Adjudication) for fresh decision after providing adequate opportunity of hearing to the parties. In pursuance thereof, the Collector (Adjudication), Lahore, through Order-in-Remand dated 28.06.2005, again ordered outright confiscation of the impugned goods.

5. Dissatisfied with the re-adjudication order, the petitioner again approached the Appellate Tribunal, Bench-I, Lahore, where the matter was heard by a three-member Larger Bench, which vide judgment dated 30.03.2012 directed the respondents-department to release the gold jewellery and return foreign currency equivalent to US$ 10,000 in Pakistani Rupees at the prevailing exchange rate to the petitioner, while the remaining foreign currency was ordered to be confiscated.

6. For implementation of the aforesaid judgment dated 30.03.2012, the petitioner filed W.P. No.13920 of 2014 before this Court, which was dismissed vide order dated 21.03.2019, in view of the order dated 10.11.2016 passed in Customs Reference No.63 of 2012 by a learned Division Bench of this Court, whereby the judgment of the Customs Appellate Tribunal was set aside on the ground that the Bench comprising two Judicial Members was declared illegal, rendering the Tribunal incompetent to hear the matter.

7. Thereafter, the petitioner once again approached the Appellate Tribunal by way of filing an appeal, which was allowed and direction was issued to respondents-department to release the gold jewellery in favour of the petitioner subject to payment of penalty of Rs.100,000/- for violation of SRO No.266(I)/2001 dated 07.05.2001. The Appellate Tribunal further directed the respondents-department to return US$ 10,000 or its equivalent thereof in other foreign currency or an amount in local currency equal to official exchange rate, prevalent on the date of payment.

8. Consequently, the petitioner filed the present petition seeking recovery of the gold jewellery weighing 3.085 kilograms and US$ 10,000 from the respondents-department. During the pendency of the petition, the respondents challenged the aforesaid order of the Appellate Tribunal by filing Customs Reference No.63020 of 2022, which was dismissed by this Court vide order dated 13.03.2025. Being dissatisfied, the respondents-department filed C.P.L.A. No. 1986 of 2025 before the Hon ble Supreme Court of Pakistan, which too was dismissed vide order dated 20.06.2025.

9. Conversely, learned counsel for the respondents- department submitted a report stating that, after registration of the FIR against the petitioner and completion of the proceedings in accordance with the provisions of the Act, 1969, an Order-in-Original was passed on 12.11.2004 whereby the seized goods were outrightly confiscated. Thereafter, the seized gold jewelry was transmitted to the Pakistan Mint vide letter dated 12.05.2005 for the purpose of melting. Upon refining, its net weight was determined to be 2467.300 grams. The refined gold was subsequently converted into Gold Bar No.2959, which was lifted by the State Bank of Pakistan on 29.06.2007. On the said date, in accordance with the London Bullion Market price, the value of the refined gold was assessed at Rs.6,311,068.10, and the said amount was credited to the Government account.

10. It has further been submitted that the petitioner had earlier been informed through notice dated 17.05.2006 issued under Section 169(4) read with Section 201 of the Act, 1969, regarding the proposed auction/disposal of the seized gold, with a stipulation that in absence of any stay order within 10-days, the gold would be disposed of in accordance with law. The respondents further contend that the sale proceeds were determined in accordance with the rate notified by the State Bank of Pakistan through letter dated 30.06.2007. Consequently, approval for refund of the sale proceeds of the gold along with the foreign currency, after deduction of penalty of Rs.100,000/-, was accorded vide order dated 17.07.2025, and a cheque amounting to Rs.5,874,128/- was issued in favour of the petitioner, calculated on the basis of the value of refined gold as determined on 29.06.2007.

11. Arguments heard. Record perused.

12. It is an admitted position that during the pendency of the instant writ petition, the respondents-department accorded approval for refund of the price of the seized gold along with foreign currency, after deduction of a penalty of Rs.100,000/-, vide order dated 17.07.2025, and issued a cheque in the sum of Rs.5,874,128/- in favour of the petitioner. The said amount was calculated on the basis of the value of the refined gold determined on 29.06.2007. It is settled law that this Court, while exercising its constitutional jurisdiction, is competent to examine subsequent developments and actions taken by the respondents-department during the pendency of this writ petition.1

13. The pivotal question requiring determination by this Court is whether the petitioner is entitled to the value of the gold as determined on the date when the State Bank of Pakistan lifted the gold bar and the corresponding amount was credited to the Government Treasury, or whether the petitioner is entitled to the restoration of the refined gold bar itself, or its value assessed at the prevailing rate at the time of delivery, particularly in circumstances where no sale or auction of the gold was conducted by the respondent department, in terms of the provisions of the Act, 1969.

14. Admittedly, C.P.L.A. No.1986 of 2025, filed by the respondents-department before the Honourable Supreme Court of Pakistan against the order dated 13.03.2025 passed by the learned Division Bench of this Court, was dismissed vide order dated 20.06.2025. Consequently, the said order has attained finality and is binding upon the respondents in letter and spirit. Significantly, the respondents-department were not granted any permission by the august Supreme Court to substitute the seized jewellery with its monetary value determined at any date of their own choice. In absence of such permission, the respondents are precluded from unilaterally altering the mode of relief granted to the petitioner by a competent Court of law.

15. The respondents, in their report, have stated that the seized gold jewellery had been transmitted to the Pakistan Mint, where it was melted and its refined weight was determined as 2467.300 grams. It has further been contended that in terms of Section 169(5) of the Act, 1969, the sale proceeds of the refined gold were calculated on the basis of the rate prevailing on 29.06.2007, as notified by the State Bank of Pakistan, and accordingly a sum of Rs.5,874,128/- was sanctioned for refund to the petitioner after deduction of the penalty amount.

16. It is, however, an admitted position that the seized gold jewellery was transmitted to the Pakistan Mint for melting, resulting in reduction of its original weight to 2467.300 grams. Such transformation of the seized property does not extinguish or impair the proprietary rights of the petitioner, which have attained finality up to the Honourable Supreme Court of Pakistan. The record is conspicuously silent regarding any lawful disposal of the refined gold through a legally recognized mode of sale. In the absence of a sale conducted in accordance with law, reliance placed by the respondents on Section 169(5) of the Act, 1969 is wholly misconceived. The said provision becomes applicable only where the seized property has actually been sold and sale proceeds have come into existence. Mere melting of the gold and its subsequent lifting by the State Bank of Pakistan, followed by credit of an amount into the Government treasury on the basis of the London Bullion Market price, cannot be treated as a lawful substitute for the statutory requirement of sale.

17. A conjoint reading of Sections 169(5) and 201 of the Act, 1969 clearly demonstrates that disposal of seized goods is subject to a mandatory procedure sale through recognized modes. Although the respondents claim to have issued a notice dated 17.05.2006 under Section 169(4) read with Section 201 of the Act to petitioner, it is evident from the record that even prior to issuance of the said notice to the petitioner, the seized gold had already been transmitted to the Pakistan Mint for melting vide letter dated 12.05.2005, by the respondent department without lawful authority. No material has been placed on record to demonstrate compliance with the mandatory statutory requirements, nor have the respondents asserted that the refined gold was ever sold through a legally recognized process. Consequently, the invocation of Section 169(5) by the respondents for determining the value of the gold is legally unsustainable.

18. In order to further elucidate the above legal position, reference may also be made to the judgment of the learned Division Bench of the Sindh High Court reported as Muhammad Yousaf v. Collector of Customs (Preventive), Karachi and 3 others (2010 PTD 922), wherein it has been held as under:

8. However, it is not clear either from the record or from the arguments advanced by the learned counsel of both the parties that whether the confiscated gold has been sold or not. In the comments filed by the department it has been asserted that the gold was sent to the Mint Lahore on 9-7-2005 but no finding with regard to the proceedings thereafter taken by the department has been mentioned. If the gold jewelry was sent to the Mint Lahore for melting purposes what happened afterward? We are of the view that if the department has sent the melted gold to the State Bank of Pakistan the petitioner is entitled to return of the same for re-export pending departure. If however the department has disposed of the same then in our view as per the provisions of section 82 of the Act the passenger is entitled to receive from the department the entire sale proceeds after deduction of necessary charges. However, we do not agree with the contention raised by the department that the price of the confiscated gold would be that prevailing on the date of its seizure. In our view the price of the gold would be the price fetched on the date of the actual disposal of the said gold as specifically mentioned in section 82 of the Act. So far as silver is concerned there is no dispute as the department has conceded in its comments that they are ready to return the same to the passenger pending departure.

9. This Constitutional Petition is therefore disposed of in the above terms along with the listed application and the notice issued by the Customs Authorities dated 19-6-2009 under the provisions of section 169(4) of the Customs Act is hereby quashed. However, there shall be no order as to cost. (Underlined for supplying emphasis)

19. In view of above legal principle, it is evident that alteration in the form or condition of seized property while in official custody does not extinguish the proprietary rights of its owner, and the State merely acts as a custodian thereof. The obligation of the respondents-department is to restore the property in its original, so long as it remains traceable. Only where such property has been lawfully disposed of in accordance with the procedure prescribed under the Act, 1969, can the owner s right be satisfied through payment of sale proceeds determined on the basis of the price fetched at the time of lawful disposal.

20. The respondents-department cannot substitute the petitioner s right to specific property with an arbitrary or unilateral determination of value. Consequently, the order dated 17.07.2025, whereby refund of Rs.5,874,128/- was sanctioned by the respondents in respect of the seized gold jewellery and foreign currency, is of no legal consequence, having been issued without lawful authority.

21. The petitioner s entitlement to the seized gold jewellery is also protected under Article 24 of the Constitution of the Islamic Republic of Pakistan, 1973, which guarantees the right to property and prohibits deprivation thereof save in accordance with law. Once the petitioner s entitlement has attained finality up to the Honourable Supreme Court of Pakistan, any action of the respondents resulting in denial of restoration of the property, or its refined form through arbitrary valuation, amounts to deprivation of property in violation of the constitutional safeguards.

22. For the foregoing reasons, the instant constitutional petition is allowed. The respondents-department are directed to release the refined gold bar No.2959 weighing 2467.300 grams to the petitioner after receipt of the penalty amounting to Rs.100,000/- from the petitioner. The respondents are further directed to return US$ 10,000/- to the petitioner, or its equivalent in Pakistani Rupees at the prevailing exchange rate on the date of payment. MWA/A-25/L Petition allowed. 1 Muhammad Shahzad Malik v. Muhammad Suhail and another (2010 SCMR 1825), Ch. Riyasat Ali v. Returning Officer and 2 others (2003 CLC 1730) and Mian Rafat Mehmood and 5 others v. Director General, Lahore Development Authority, Lahore and 3 others (2016 CLC 408).