Attorney General v Angelo Sebastian Pereira
SC Appeal No. 119/2024; SC/Spl LA No. 32/2020; Court of Appeal No. 810/99 (F); DC Colombo No. 3371/SPL
Supreme Court of Sri Lanka — Judgment delivered on 18 September 2026
Introduction
The Supreme Court has delivered an important judgment concerning the application of Sri Lanka’s customs and exchange-control laws to a passenger who arrived at the Bandaranaike International Airport as a transit passenger and was found carrying a substantial quantity of gold concealed in his baggage.
In Attorney General v Angelo Sebastian Pereira, the Supreme Court considered whether the Customs Ordinance and the Exchange Control Act — as it was then operative — could apply to a passenger who had not passed through immigration, did not intend to enter Sri Lanka, and intended to continue his journey to another country.
The case also raised a separate but equally important question: whether a person seeking the return of goods seized and forfeited by Customs must first establish that he is the “owner” of those goods.
The Supreme Court, comprising Padman Surasena CJ, Mahinda Samayawardhena J and Arjuna Obeyesekere J, allowed the appeal of the Attorney General, set aside the judgment of the Court of Appeal and affirmed the judgment of the District Court.
The judgment is significant for at least four reasons.
First, the Court held that the statutory concept of importation could extend to goods carried by a transit passenger, notwithstanding the passenger’s intention to take the goods out of Sri Lanka.
Second, the Court rejected the proposition that Customs jurisdiction over an arriving passenger depends upon the passenger first clearing immigration.
Third, the Court decided that goods unlawfully imported in circumstances falling within section 43 of the Customs Ordinance are forfeited by operation of law.
Fourth, the Court decided that a person seeking to recover forfeited goods must establish ownership and cannot rely merely upon physical possession.
The case therefore provides an important illustration of the manner in which the Court distinguishes the statutory scheme of customs law operating independently of the ordinary commercial understanding of the expression “transit”.
The facts
The plaintiff, Angelo Sebastian Pereira, was an Indian national who had been living in Dubai for more than twenty years and was engaged in import and export activities.
On 15 July 1991, he travelled from Dubai to Madras via Katunayake. His flight arrived at Katunayake at approximately 10.30 a.m. after a delay. He was a transit passenger and, according to the evidence, transit passengers ordinarily proceeded to the Transit Lounge without undergoing immigration clearance.
Pereira was carrying a black briefcase. At the entrance to the Transit Lounge, he was stopped by an Assistant Superintendent of Customs and taken to the Customs office.
Upon examination of the briefcase, Customs officers discovered a false bottom containing 50 slabs of gold weighing approximately 5,850 grams.
Pereira had no permit issued by the Central Bank authorising the importation of the gold.
The subsequent proceedings produced an important dispute concerning “ownership”. In his initial statement, Pereira stated that the gold had been given to him by a person named Mohammed in Dubai and that he was carrying it to Madras as a courier, for which he expected to receive Rs. 50,000 in Indian currency.
He subsequently changed his position and claimed that the gold was his own property and that he had purchased it in Dubai.
The District Court did not accept this later claim of ownership. The Supreme Court likewise concluded that Pereira had failed to establish ownership of the gold, under property law, which would, with all due respect to the Court’s argument, be immaterial and be an inappropriate law in the case of gold possessed by a passenger, and where there is no conflicting counter-claim offered by a third party for ownership for the same goods.
The case eventually reached the Supreme Court after the Court of Appeal had found in favour of Pereira.
The two principal questions before the Supreme Court
The Supreme Court identified two central questions.
The first was whether Pereira had “imported” the gold into Sri Lanka in contravention of the applicable provisions of the Exchange Control Act, the Imports and Exports (Control) Act and the Customs Ordinance, thereby rendering the goods liable to forfeiture.
The second was whether Pereira was in fact the “owner” of the gold and therefore entitled to maintain proceedings seeking its recovery.
These questions were closely connected, but they involved different legal principles.
The first concerned the operation of the statutory regime governing the importation and forfeiture of gold.
The second concerned the right of an individual to claim goods seized or forfeited by Customs.
Ownership and the right to claim seized goods
One of the most important aspects of the judgment concerns the requirement that a claimant establish “ownership”.
Sections 154 and 155 of the Customs Ordinance contain the statutory mechanism by which a claim may be made in respect of goods seized by Customs. Section 155, in particular, requires a claim to be entered in the name of the owner and requires the claimant to make the necessary declaration concerning his ownership of the goods.
The Supreme Court referred to Attorney General v Sathasivam [1969] 69 NLR 110 in considering the requirement that a claimant establish his ownership before a claim to the goods can properly be maintained.
The Court found that Pereira had not satisfactorily established that he was the owner of the gold.
His initial statement that he was merely carrying the gold as a courier was inconsistent with his subsequent assertion that he had purchased the gold himself. Court considered that there was also no satisfactory evidence establishing the alleged purchase in Dubai, including adequate evidence concerning the seller, payment or the circumstances of the transaction.
An Arabic receipt relied upon by Pereira emerged only during cross-examination and was not accepted as sufficient evidence establishing ownership.
The Court was also not persuaded that Customs officers had induced Pereira to make his original statement that he was carrying the gold on behalf of another person.
The significance of this aspect of the judgment extends beyond the particular facts.
A person found in possession of goods cannot necessarily convert that possession into a legally enforceable claim against the State under Section 154 and 155 of the Customs Ordinance. Where the Customs Ordinance requires the claimant to be the owner, ownership is a threshold question. This legal argument on the issue of legal ownership under the meaning of the said sections does not prevent Customs prosecuting passengers, who have gold in their possession at the time of apprehension, for suspected violation of customs ordinance and import and export control law.
Section 110 of the Evidence Ordinance
The Court of Appeal had relied upon section 110 of the Evidence Ordinance, apparently treating possession as sufficient to raise a presumption of ownership.
The Supreme Court rejected an unrestricted application of that principle.
The Court considered the authorities concerning section 110 and emphasized that the presumption arising from possession does not operate mechanically in circumstances where the possession itself is prima facie wrongful or unlawful under a law other than property law.
In the present case, the possession concerned a large quantity of restricted gold which had been brought into Sri Lanka without the required permission.
Accordingly, the Supreme Court held that Pereira could not rely simply upon his physical possession of the gold to establish “ownership”.
This is an important distinction the Court makes. Possession and ownership are not necessarily synonymous, particularly where the possession itself arises in circumstances indicating an unlawful importation.
What does it mean to “import” goods?
The principal substantive issue concerned the meaning of “import”.
Pereira’s argument was straightforward.
He had not intended to enter Sri Lanka. He was merely travelling through Sri Lanka to India. He had not cleared immigration. He had not entered the country in the ordinary sense. Transit passengers were not ordinarily required to make the same customs declarations or pay import duty as passengers entering Sri Lanka.
Therefore, he argued, the gold had not been “imported” into Sri Lanka.
The Supreme Court rejected this argument.
A critical provision was section 21(2) of the Exchange Control Act applicable at the time of the incident.
Section 21(1) prohibited the importation of gold without the requisite permission of the Central Bank.
Section 21(2) contained a deeming provision under which bringing or sending gold into a port or other place in Sri Lanka was deemed to constitute importation, notwithstanding an intention that the gold might subsequently be taken out of Sri Lanka.
The statutory deeming provision was therefore decisive.
The Court held that the statutory scheme did not distinguish between goods intended to remain in Sri Lanka and goods intended merely to pass through Sri Lanka.
Nor did it distinguish between Sri Lankan citizens and foreign nationals.
The ordinary commercial meaning of “transit” therefore could not displace the specific statutory deeming provision governing gold.
The importance of the statutory deeming provision
This part of the judgment illustrates a fundamental principle of statutory interpretation.
Where Parliament has expressly deemed a particular act or circumstance to constitute an “import”, the Court must give effect to that statutory fiction.
The question is not simply whether the goods were intended for consumption or sale in Sri Lanka.
The relevant question is whether the statutory conditions for importation had been satisfied.
The Supreme Court therefore rejected the argument that the gold could not have been imported merely because Pereira intended to take it onward to India.
The Court also considered section 22 of the Imports and Exports (Control) Act, which defined “import” in terms broad enough to encompass bringing goods into Sri Lanka by sea or air.
The Court did not accept that importation necessarily required an intention that the goods be consumed, sold or otherwise used within Sri Lanka.
The judgment also considered foreign authorities concerning goods in transit, including the English decision in R v Smith (Donald). The Court distinguished the foreign authorities relied upon by Pereira because they arose under different statutory provisions and did not contain the same statutory deeming provision applicable to gold under Sri Lankan law.
Transit passengers and Customs jurisdiction
The argument based on transit status was also advanced from a different direction.
Pereira contended that Customs did not have jurisdiction over him because he had not passed through immigration.
The Supreme Court rejected that contention.
The Court examined section 107A(1) of the Customs Ordinance, which empowers Customs officers to search an arriving passenger and his baggage where the statutory conditions are satisfied.
The Court’s interpretation was that the relevant event for the exercise of Customs powers is the arrival of the aircraft and passenger in Sri Lanka.
It is not necessary for the passenger first to clear immigration.
The Court therefore drew a distinction between two different concepts:
arrival in Sri Lanka for Customs purposes, and
completion of immigration formalities for immigration purposes.
They are not necessarily the same event.
The aircraft had landed at Katunayake and Pereira was physically present within the airport. His status as a transit passenger did not place him outside the statutory reach of the Customs Ordinance.
The Supreme Court therefore held that the Customs Ordinance applied to passengers and goods carried by them from the moment the aircraft arrived in Sri Lanka.
This conclusion is particularly significant because it prevents Customs jurisdiction from depending upon the administrative sequence in which an arriving passenger is processed.
The Customs circulars
The Court also considered two Customs circulars relevant to the treatment of passengers.
A circular dated 1 July 1991 dealt with restrictions concerning Sri Lankan passengers returning from employment abroad. It also made clear that gold brought by foreign passport holders, whether declared or not, was liable to forfeiture under the Customs Ordinance read with the Exchange Control Act unless covered by the necessary permit.
A second circular dated 17 July 1991 — two days after Pereira’s arrest — instructed that transit passengers and their baggage should not ordinarily be subjected to Customs checks, while also requiring Customs officers to maintain vigilance regarding attempts to smuggle gold.
Pereira relied upon these administrative instructions in support of his argument concerning Customs jurisdiction.
The Supreme Court did not accept that an administrative circular could restrict a statutory power conferred by Parliament.
The Court’s reasoning is important in principle.
Administrative instructions may regulate the manner in which Customs officers exercise their functions, but they cannot ordinarily remove or extinguish a statutory power conferred by the Customs Ordinance.
Thus, even if a particular Customs circular contemplated a different administrative practice concerning transit passengers, it could not override the statutory power to search an arriving passenger or the statutory consequences attaching to prohibited or restricted goods.
Attorney General v Kumarasinghe
A major issue in the case was the earlier decision of Attorney General v Kumarasinghe [(1995) 2 Sri LR 1].
Kumarasinghe also concerned a transit passenger at Katunayake carrying gold.
In that case, the passenger was a Sri Lankan national returning from Singapore and was carrying 40 pieces of gold. He was intercepted in the transit area and intended to take the gold onward to Male.
The Court of Appeal in Pereira attempted to distinguish Kumarasinghe on the basis that Kumarasinghe was a Sri Lankan national and resident, whereas Pereira was an Indian national who was not resident in Sri Lanka.
The Supreme Court accepted that there was a distinction in relation to the particular penal provision under which Kumarasinghe had been prosecuted.
Section 51(1) of the Exchange Control Act applied to a person in or resident in Sri Lanka. Consequently, the Supreme Court accepted that Pereira could not simply be treated identically to Kumarasinghe for the purpose of that particular criminal provision.
But the Court held that this did not answer the separate question of whether the gold had been imported into Sri Lanka for the purposes of the statutory regime.
Section 21(2), which deemed the bringing of gold into Sri Lanka to constitute importation, did not distinguish between a Sri Lankan passenger and a foreign passenger.
The distinction therefore could not be used to exclude Pereira from the operation of the statutory importation and forfeiture provisions.
This is an important analytical point in the judgment.
The Court did not hold that every statutory provision applicable to a Sri Lankan resident must necessarily apply in precisely the same manner to a foreign transit passenger.
Rather, it examined the particular statutory provision in question.
Where the provision itself makes no distinction based upon nationality or residence, the Court was unwilling to introduce such a distinction by interpretation.
Forfeiture by operation of law
Perhaps the most significant aspect of the judgment for Customs practitioners is the Court’s discussion of forfeiture.
Section 43 of the Customs Ordinance provides for the forfeiture of goods unlawfully imported in circumstances falling within the statutory restrictions.
The Court relied upon earlier authorities, including Palasamy Nadar v Lanktree [(1949) 51 NLR 520] and A.H. Kothari v K.P.W. Fernando [1972] 74 NLR 463.
These authorities establish an important proposition concerning the legal sequence of events.
Where goods fall within the statutory provision that they “shall be forfeited”, the forfeiture occurs by operation of law.
In Palasamy Nadar, Gratiaen J explained that where the statutory event giving rise to forfeiture occurs, the owner is automatically divested of his interest in the goods.
Similarly, in Kothari, the Court recognized that goods unlawfully imported contrary to section 43 become forfeited by operation of law and become State property at the moment of unlawful importation, even though Customs officers may not yet have become aware of the importation.
The power to seize the goods therefore follows the forfeiture.
This produces an important conceptual sequence:
unlawful importation → forfeiture by operation of law → seizure/detention by Customs.
It is therefore not necessarily correct to conceive of the legal process as:
seizure → subsequent discretionary forfeiture.
Where section 43 applies, the forfeiture is a statutory consequence of the unlawful importation itself.
The judgment’s discussion of this principle is particularly relevant to Customs litigation because it affects the way a challenge to forfeiture should be formulated.
The distinction between seizure and forfeiture
The distinction deserves emphasis.
A Customs officer discovering unlawfully imported goods may seize them. But the legal foundation for the State’s title may already have arisen by operation of the statutory forfeiture provision.
Consequently, the fact that Customs officers had not physically discovered the goods at the precise moment of importation does not mean that the goods had not already become forfeited.
The judgment therefore reinforces the statutory nature of forfeiture.
This is particularly important when considering the relationship between the Customs Ordinance and proceedings seeking the return or release of seized goods.
A claimant cannot necessarily argue that the State acquired no interest in the goods merely because Customs did not immediately seize them.
Where the statutory conditions for forfeiture have been satisfied, the forfeiture may precede the physical seizure.
The Court’s ultimate conclusion
Having considered the evidence and the statutory provisions, the Supreme Court concluded that Pereira had failed to establish ownership of the gold.
The Court further held that the gold had been brought into Sri Lanka in circumstances constituting importation under the applicable statutory regime.
The fact that Pereira was a transit passenger, had not cleared immigration and intended to take the gold onward to India did not prevent the operation of the statutory provisions.
The gold was therefore liable to forfeiture.
The Supreme Court allowed the Attorney General’s appeal, set aside the judgment of the Court of Appeal and affirmed the judgment of the District Court.
Costs were fixed at Rs. 1 million.
Significance for Customs litigation
The judgment contains several propositions of practical importance.
1. Transit status is not, by itself, a defence to Customs jurisdiction
A passenger cannot necessarily rely upon the fact that he is travelling onward to another country to place himself outside the Customs Ordinance.
Where the statute applies to an arriving passenger and the relevant goods are subject to a statutory prohibition or restriction, the passenger’s ultimate destination may not determine the application of Customs law.
2. Immigration clearance is not the determining event for Customs jurisdiction
The judgment rejects the proposition that a passenger becomes subject to Customs powers only after completing immigration formalities.
For the purposes considered by the Court, physical arrival of the aircraft and passenger in Sri Lanka was sufficient to engage the relevant Customs provisions.
3. The statutory definition of importation must be considered carefully
The ordinary meaning of “transit” cannot be applied in isolation where Parliament has enacted a specific deeming provision.
In cases concerning restricted goods, practitioners should therefore begin with the precise statutory language applicable to the goods rather than relying upon the commercial or ordinary meaning of “transit”.
4. Ownership must be established independently
A person claiming goods seized by Customs in the District Court must establish the legal basis of his claim.
Where ownership is disputed, section 110 of the Evidence Ordinance cannot automatically be invoked merely because the claimant was physically carrying the goods.
The circumstances in which possession was obtained, and whether the possession itself was lawful, are relevant.
5. Forfeiture may precede seizure
The judgment reinforces the principle that statutory forfeiture may occur by operation of law upon the unlawful importation of the goods.
Physical seizure by Customs is not necessarily the event which creates the State’s title.
6. Administrative circulars cannot override the parent statute
Customs circulars and administrative instructions may regulate administrative practice, but they cannot ordinarily restrict a statutory power in a manner inconsistent with the Customs Ordinance.
A qualification concerning the present law
The judgment must, however, be read in its proper historical statutory context.
The incident occurred in 1991, and the Supreme Court’s principal discussion of the importation of gold was based upon the provisions of the Exchange Control Act then applicable, together with the Customs Ordinance and the Imports and Exports (Control) Act.
The Exchange Control Act has subsequently been repealed and replaced by the Foreign Exchange Act No. 12 of 2017.
Accordingly, the judgment should not be read as establishing, without further examination, that every aspect of the law governing the importation of gold by a transit passenger in 2026 is identical to the law applicable in 1991.
Its continuing importance lies principally in the Court’s interpretation of the statutory concepts involved, particularly the relationship between statutory importation, Customs jurisdiction, ownership, and forfeiture by operation of law.
Any present-day Customs dispute involving gold or other restricted goods should therefore be analysed against the legislation currently in force.
Conclusion
Attorney General v Angelo Sebastian Pereira is an important Supreme Court authority on the reach of Sri Lankan Customs law in relation to transit passengers.
Its central lesson is that the legal consequences of bringing restricted goods into Sri Lanka cannot necessarily be avoided by characterising the passenger as being merely “in transit”.
The Supreme Court’s reasoning rests upon three connected propositions.
First, the relevant statutory provisions then in force may deem the bringing of particular goods into Sri Lanka to constitute importation even where the goods are intended to leave the country again.
Second, Customs jurisdiction over an arriving passenger does not necessarily depend upon the passenger having completed immigration clearance.
Third, where the statutory conditions for forfeiture are satisfied, forfeiture may arise by operation of law upon the unlawful importation itself.
At the same time, the case demonstrates that the Court has considered the question of who is entitled to challenge the State’s title to the goods as a separate question. A claimant must establish the necessary proprietary interest and cannot necessarily rely upon possession alone.
