Limitation Act 1963 and not Customs Act 1962 will determine the period of limitation for a suit for malicious prosecution.

In the matter of Directorate of Revenue Intelligence & Ors. Vs. Pushpa L. Tolani decided by the Hon’ble Delhi High Court on 27.05.2021

Facts of the case-

The custom authorities seized gold/diamond jewellery worth approx. Rs. 1.27 crores from the Respondent’s possession on 19.11.2002 at the IGI airport. The adjudicating authority confiscated the jewelleries worth Rs. 85.52 Lakhs and permitted her to redeem the remaining at Rs. 3 Lakh upon paying penalty of Rs. 15 Lakhs. Upon trial, the respondent was initially convicted by LD. ACMM but was acquitted later on by Ld. Session Judge on 11.4.2007.
Pursuant to her acquittal, the Respondent on 04.12.2007 issued a notice u/s 155(2) of the Customs Act to D/f No. 1 to 3 (Petitioners herein) and thereafter, filed a suit for malicious prosecution before the Trial Court.

Issue before the Hon’ble Court-

Whether the suit for malicious prosecution would be governed by Limitation Act 1963 or Customs Act 1962.
Contentions of the parties-
The petitioners contended that u/s 155(2) notice has to be given by the initiator of the suit, within one month and the suit has to be filed within three month from the date of accrual of cause of action. Since the Respondent was acquitted on 11.04.2007 and the suit was filed on 11.04.2008, the same is time-barred under the provisions of Custom Act as well as Limitation Act. Respondent on the other hand contended that the limitation period u/s 155(2) of the Act does not apply to suits at all.

Observations of the Court

The Court observed that ‘a reading of Section 155(2) of the Act shows that, broadly there are two views and possible interpretations. The first one being, that no proceedings would lie against the Government or an officer of the Government, for actions taken under the provisions of the Customs Act, except a suit. The second possible view is that it only lays down the limitation period in respect of all proceedings, other than suits.’
From a conjoint reading of Section 155(2) of the Customs Act, 1962, as also the judgments of Madras High Court in Assistant Commissioner of Customs (Prosecution) v. Job Jacob (MANU/TN/7335/2018) and Kerela High Court in C.C. Baby and Ors v. Central Bureau of Investigation, Anticorruption Bureau (ACB) and Ors. (2020 (3) KHC 499), the Hon’ble Court concluded that:
1. The limitation provided under Section 155(2) does not apply to suits
2. The limitation provided under Section 155(2) applies to other proceedings.
3. For the purpose of institution of other proceedings, one month’s previous notice in writing, from the date when the cause of action arises, is required.
4. None of these other proceedings can be filed after the expiration of three months from the accrual of the cause.
Therefore, insofar as a suit for malicious prosecution, i.e., a civil suit, is concerned, the period of limitation of three months, as also the requirement of a notice, under Section 155(2) of the Customs Act, 1962, would not be applicable. The period of limitation for filing such a civil suit would be governed by the provisions of The Limitation Act, 1963.
The Court further noted that a perusal of sec 3 of Limitation Act r/w entry 74 of the Schedule, shows that the period of limitation for filing of a suit for malicious prosecution is one year, from the date when the Plaintiff is acquitted or when the prosecution against the Plaintiff is otherwise terminated.
It was further held since sec 12 (1) provides that the date from which the period of limitation is reckoned, is to excluded while calculating the said period, the limitation would commence only on 12.4.2008 and the suit being filed on 11.4.2008, is therefore well within the limitation prescribed under the Limitation Act, 1963.