BIS Enforcement and the Unclear Position of Seized Goods Even After the Liability is Absolved

Introduction

What happens when your goods are seized, but the law leaves you with no way to take them back? The Bureau of Indian Standards (BIS) Act, 2016 establishes BIS as India’s national standards body. It allows the authority to set standards for a wide range of goods, as well as mandatory certification and licenses to enforce such established standards. The BIS Act further grants officers, above the rank of Deputy Superintendent of Police, the power to seize goods that do not conform to these standards without having to obtain a warrant, reinforcing the importance of market integrity and public health.

However, due to the inherent powers granted to police officers by the BIS, a major procedural gap remains. The Act is silent on how the seized goods in particular need to be handled after the proceedings for the offence are completed. In cases where the accused is absolved of liability, either by exoneration or by compounding of the offence, there still remains the question of whether the goods are to be returned to its rightful owner. This lack of clarity can potentially become arbitrary, and therefore has the risk of becoming exploitative to the owners of the goods.

This blog aims to critically analyse the seizure of goods under the BIS Act, the nature and scope of orders passed regarding such offences, and what happens to the goods seized once the accused is absolved of liability due to exoneration or by compounding of the offence. Further, the blog explores future measures that need to be taken to safeguard individuals from being exploited when such seizure occurs.

Proceeding Under the BIS Act

The Bureau of Indian Standards (BIS) Act, 2016 replaces the BIS Act of 1986, and develops a comprehensive framework for the harmonious construction of the activities of standardisation, conformity assessment and quality assurance of goods, articles, processes, and systems.

One of the most important powers granted under this act is the power to seize goods without having to obtain a warrant. Under Section 9(1)(d) of the Act, the Bureau has the power to inspect and seize goods or articles to enforce the provisions of this act. Under Section 28(2) of the BIS Act, if any good or article has been found, that is in violation of the provisions of the BIS act, the certification officer may seize such goods or articles. Under Section 32(3) of the Act, the position becomes clearer as it allows any police officer, not below the rank of deputy superintendent of police or equivalent to such a position, to seize goods that are involved in commitment of the offence without the need to obtain a warrant.

These provisions, entrenched in the BIS Act, 2016 highlight the focus on preventive measures to maintain conformity to BIS standards. Seizure of goods acts as a deterrent, along with allowing investigating officers to collect relevant evidence.

At the same time, the BIS act also deals with the proceedings for the offender, and allows for the compounding of offence by way of penalty under Section 33 of the Act, where the offence is of a first-time nature, and is not an offence punishable by imprisonment only. The general practice under the BIS act remains to be compounding only, since BIS also lays down penalties for highly technical offences, and the companies usually admit liability, pay fines, and promise to ensure compliance.

The Issue

Under the BIS Act, the proceedings for the offender and the goods remains separate, and operate independently. Under Section 32(3) of the Act, the seized goods have to be presented before a magistrate, and under Section 32(4) of the Act, the court may direct any property in relation to the contravention to be forfeited to the Bureau. However, the act does not establish any clear guidelines on the procedure for the seized goods, and whether or not at any point, the goods will be returned to the owner or not.

The procedure of goods remains separated from the procedure for accused persons, and absolving liability of the accused does not automatically transfer the goods back to him. There are various compounding orders given by the Bureau since the most of the offences are technical and first-time offences. The goal remains to be increasing compliance to these standards, and not to fasten liability without cause.

In the case of M/s Trident Ltd, the firm made the mistake of using BIS standard mark on the variety not covered in the scope of the existing license, therefore being in violation of Section 17 of the BIS Act. Since it was a first-time offence, and the firm admitted the mistake, a compounding order under Section 33 of the BIS act was passed. Similar orders were also passed in the case of M/S Rawalwasia Ispat Udyog (P) Ltd, and the case of Shree Sita Ram Appliances Ltd, since all offences were first time offences.

However, the issue lies in the fact that these orders absolve criminal liabilitybut do not lay down any provisions as to the position of the goods. The only relief-oriented remedy appears in the case of Malika v Senior Director and Head, where the petitioner, who was engaged in the jewellery business, was able to recover her goods because the court stated that the offence of being in possession of non-hallmarked jewellery was a highly technical offence, and reverted the goods back to her.However, the court failed to establish any clear guidelines or principles for the disposal of the seized goods, whether to be destroyed, forfeited to the bureau or returned to the owners, and this case is merely considered to be an exception after the petitioner approached the Court. There is no disposal mandated by the Bureau in the present case or any other case, and no standardised procedure for the same.

There are a lot of pending cases in this regard, making the BIS extremely important in the recent times. The case of Ador Welding, in which the compounding order has been challenged, is still pending in the High Court. In this case, the company also seeks to at least be able export their goods, showcasing the fact that the guidelines regarding the procedure of goods is not clear.

This leaves room for exploitation of the owners even after their own liability is resolved, especially if the goods actually meet BIS standards and are only violative due to technical offenses that are curable in nature. The lack of any clarity on the issue can potentially promulgate arbitrary state action.

Conclusion and the Way Forward

The BIS act has become one of the most significant regulations in the recent times. However, the current procedure for the recovery of any good seized under the BIS Act is unclear. Any violation of the BIS, even if technical and minor, does not provide for any remedy for reverting back the goods to the owner, even after the liability is absolved. Without a settled position of law, even goods that have curable defects can become hard to procure, risking unnecessary forfeiture, and potential arbitrary action. Therefore, the author argues for the following comprehensive framework to address this issue, in two parts, that is, categorisation of offences and secondly, incorporation of principles of BNSS.

Primarily, there is a need to categorise the offences under the BIS act, on the basis of whether the offence is technical, and curable, or not. If the offence is merely technical and can be cured, then the goods need to be returned back to the owners and they should be encouraged to cure such defects, like obtaining registration certificates once the proceedings against them are completed, and they are absolved of liability. This will allow them to maintain their financial position without arbitrarily losing out on goods merely because of technicalities. The owners need to be reassured that the law does not allow for arbitrary decisions about how the goods are handled.

Moreover, in various cases like Manjit Singh vs State, the guidelines of search and seizure under the BNSS have been clarified to ensure that goods are returned to their rightful owners, securing the ends of justice. The procedure includes maintaining clear records of the evidence by investigating officers, the maximum amount of time the goods can be kept in custody, and how the proceedings for the goods can operate. Since BIS is a specific act under criminal law itself, the provisions of BNSS and these guidelines can be effectively integrated with the BIS Act. The law needs to specifically address the procedure of when and how the goods are to be returned to the owner.

Thirdly, if these established guidelines are not complied with, strict punitive actions need to be taken against the Bureau itself. In conclusion, in the absence of any settled law principles, anything can potentially happen that is unfair and lacks transparency, and it needs to be made sure that individuals are not exploited in the name of regulatory compliance.

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Authored by Jiya Gulati, a second-year student at NLIU, Bhopal