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1984 (4) TMI 292 - SC - CustomsConstitutional validity of the Gold (Control) Act, 1968 challenged - Held that - Neither of the contentions has any force. As regards the attack under Art. 14, sufficient material has been placed in the counter-affidavit of Shri K.S. Venkataramani, Deputy Secretary, Ministry of Finance (filed in W.P Nos. 918-953 of 1977) showing how the classification made between the two categories in the context of making a declaration under S. 16 in relation to gold owned, possessed, held or controlled by them is based on intelligible differentia having a nexus to the object of the Act. The submitted material in the counter-affidavit not merely furnishes the intelligible differentia for the classification made but also shows that the classification has a reasonable nexus with the object of the Act and the reasons for denying the exemption limits to licensed dealers or refiners are also valid and referable to the object of the Act. As regards the second ground of challenge it is difficult to appreciate how the provision could be regarded as unnecessary or one which casts an unreasonable burden on the licensed dealer or refiner. In fact the reasons for introducing the provision as indicated above justify its enactment if the objects of the Act are to be achieved. Under S. 16(7) it is provided that the licensed dealer or refiner shall make a declaration in accordance with the provisions of this section which means he has to do so within 30 days of his acquiring the owenership, possession, custody or control of such gold. With such time-limit being provided the burden cast cannot be said to be unreasonable, especially when the provision is found to be necessary to carry out the objectives of the Act. Having regard to the above discussion, the challenge to the constitutionality of S.16(7) must fail. A remedy by way of an appeal to correct any erroneous order that may be passed under Sec. 52 has been provided for. In this view of the matter it is difficult to accept the contention that Section 52 suffers from the vice of excessive delegation of legislative power or for that reason the said provision is unconstitutional. The challenge to that section therefore, has to be rejected. The power to extend the initial period or the extended period must be exercised subject to the observance of the aforesaid two safeguards. In view of the above discussion it is clear that the challenge to Section 79 and the second proviso thereto has to fail. The purpose served by sub-rule (2)(a) of Rule 3 is entirely different from the purpose served by one or more of the steps that are required to be taken by a dealer under sub-rule (1) of Rule 3 and therefore, it cannot be said that because of the provision contained in sub-rule (2)(a) the steps contemplated under sub-rule (1) are unreasonable. The validity of the amended Section 100 read with Rule 3(1) must therefore be upheld. We find some substance in the grievance made by the petitioners and when these aspects of the amended Forms were put to the Counsel for the Respondents, he fairly conceded that either the new Forms will have to be suitably revised or the old Forms could again be revived. We, therefore, direct the Administrator to look into these grievances and remedy the same by taking appropriate action and hope that in the meanwhile no action penal or otherwise would be taken against licensed dealers for failure to maintain accounts in the amended Forms G.S. 11 and G.S. 12. The challenge to S. 27(7)(b) of the Act, in furtherance whereof the facility of effecting peripatetic sales of gold ornaments through travelling salesman in various parts of the country was withdrawn, must also fail. Section 27 (7) (b), which confines a licensed dealer to carry on business as such dealer to the premises specified in his licence, being regulatory in character does not violate any of his rights under the Constitution. W.P. dismissed.
Issues Involved:
1. Constitutional validity of the Gold (Control) Act, 1968 and specific provisions. 2. Challenge to Government of India's Letter of Instructions and Trade Notices. 3. Validity of Section 16(7) of the Act. 4. Validity of Section 52 of the Act. 5. Validity of Section 79 and the second proviso. 6. Validity of Section 100 and Rule 3(1) of the Gold Control (Identification of Customers) Rules, 1969. 7. Grievances against amended Forms G.S. 11 and G.S. 12. 8. Challenge to the withdrawal of the facility for licensed dealers to send ornaments for sale through travelling salesmen. Detailed Analysis: 1. Constitutional Validity of the Gold (Control) Act, 1968 and Specific Provisions: The petitioners, licensed dealers, challenged the constitutional validity of the Gold (Control) Act, 1968, particularly sections 2(p), 16, 27 (as amended), 44, 48, 52, 79, and 100 (as amended), and the associated rules. They argued that these provisions violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The Court noted that the Act was enacted to control gold production, manufacture, supply, distribution, use, and possession to combat smuggling and stabilize the economy. The Court referenced its decision in Harakchand Ratanchand Banthia's case, which upheld the Act's validity while striking down specific provisions. The Court decided to address only the provisions challenged during the hearing. 2. Challenge to Government of India's Letter of Instructions and Trade Notices: Some petitioners challenged the Government of India's Letter of Instructions and Trade Notices that withdrew the facility for licensed dealers to send ornaments for sale through travelling salesmen, claiming it violated Article 301 and their fundamental rights under Articles 14 and 19(1)(g). The Court found that these measures were intended to prevent malpractices and did not stop inter-state trade, as clarified in the counter-affidavit. The challenge was not pressed further by the petitioners. 3. Validity of Section 16(7) of the Act: Section 16(7) requires licensed dealers or refiners to declare gold not held in their capacity as dealers or refiners. Petitioners argued this was discriminatory under Article 14 and imposed unreasonable restrictions under Article 19(1)(g). The Court found the classification between dealers and non-dealers justified, as dealers could easily acquire smuggled gold and claim it as personal property. The requirement to declare gold within 30 days was not considered an unreasonable burden. The challenge to Section 16(7) was rejected. 4. Validity of Section 52 of the Act: Section 52 invalidates a firm's license if there is a change in partnership unless approved by the Administrator. Petitioners argued this was an unreasonable restriction and lacked guidelines for approval. The Court noted that the Gold Control (Licensing of Dealers) Rules, 1969, provided guidelines for issuing and renewing licenses, which also applied to changes in partnership. The Court found that the provision did not confer unfettered discretion and that an appeal mechanism was available. The challenge to Section 52 was rejected. 5. Validity of Section 79 and the Second Proviso: Section 79 requires a notice before confiscating gold and allows for the return of seized gold if no notice is given within six months or an extended period. Petitioners argued the lack of guidelines for extensions and no limit on the extension period made it arbitrary. The Court found implicit guidelines in the Act and emphasized the need for notice and reasons for extensions. The power to grant extensions was not considered arbitrary, and the challenge to Section 79 and the second proviso was rejected. 6. Validity of Section 100 and Rule 3(1) of the Gold Control (Identification of Customers) Rules, 1969: Section 100 requires licensed dealers to verify the identity of customers before accepting gold. Petitioners argued that the steps in Rule 3(1) were impractical and unreasonable. The Court found that the steps were not impossible to comply with and served a different purpose from the requirements in sub-rule (2)(a). The amended Section 100 and Rule 3(1) were upheld. 7. Grievances Against Amended Forms G.S. 11 and G.S. 12: Petitioners argued that the new Forms G.S. 11 and G.S. 12, required for maintaining accounts under Section 55, were inadequate and led to anomalies. The Court found some substance in these grievances and directed the Administrator to address them. No penal action was to be taken against licensed dealers for failing to maintain accounts in the new forms until the issues were resolved. 8. Challenge to the Withdrawal of the Facility for Licensed Dealers to Send Ornaments for Sale Through Travelling Salesmen: The petitioners argued that the withdrawal of this facility violated their rights under Articles 301, 14, and 19(1)(g). The Court found that the withdrawal aimed to prevent malpractices and did not stop inter-state trade, as clarified in the counter-affidavit. The challenge to the withdrawal and Section 27(7)(b), which confines business to licensed premises, was rejected. Conclusion: All writ petitions and the Special Leave Petition were dismissed. No order as to costs was made.
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