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TMI Blog1984 (4) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... ng violative of their fundamental rights under Arts.14 and 19(l)(g) and are seeking suitable directions restraining the respondents from giving effect to any of those provisions. Some of the petitioners [including the petitioner in S.L.P. (Civil) No. 538 of 1973] are challenging the Government of India's Letter of Instructions and the Trade Notices withdrawing the facility of permitting licensed dealers to send ornaments for sale through their travelling salesmen as being violative of the constitutional guarantee under Art. 301 as also their fundamental rights under Arts. 14 and 19(l)(g) of the Constitution. 2. At the outset we would like to observe that the several grounds of challenge will have to be considered in the background of two things: (a) the object with which the Act was enacted and (b) this Courts decision and the observations made by it in Harakchand Ratanchand Banthia's case - 1970 (1) S.C.R. 479 where the Gold (Control) Act and some of its provisions prior to its amendment by Act 26 of 1969 were challenged. The Long Title to the Act shows that it was put on the Statute Book with a view "to provide, in the economic and financial interests of the community, for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to any gold owned, possessed, held or controlled by him, in any capacity other than the capacity of a licensed dealer or refiner and the provisions of sub-section (5) shall not apply to such gold." The requirement of making a declaration under this provision is in respect of any gold owned, possessed, held or controlled by a licensed dealer or refiner otherwise than in his capacity as a licensed dealer or refiner and the exemption granted to a non-dealer in respect of articles and ornaments of gold, total weight whereof does not exceed 2,000 gms. in the case of an individual and 4,000 gms. in the case of a family in the matter of making a declaration under sub-sec. (5) is not applicable. Counsel for the petitioners challenged this provision on two grounds : (a) it is discriminatory under Art. 14 and (b) it imposes unreasonable restriction on licensed dealers and is violative of Art. 19(l)(g). It was pointed out that every licensed dealer is required to furnish, under S. 56, returns in prescribed form as to the quantity, description and other prescribed particulars of gold owned, possessed, held or controlled by him as such dealer and the aforesaid requirement of making a decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, a dealer or a refiner is permitted under the law to have unlimited quantity of primary gold in his possession and therefore, it is easy for a dealer or a refiner to acquire smuggled gold and with a view to preventing detection of such gold, to convert the same into ornaments and to claim such ornaments as his personal property. It is further pointed out that it had been repeatedly observed that licensed dealers in gold, when found in possession of stocks of ornaments in excess of those entered in the prescribed accounts, often took the plea that these represented their personal property and it was further noticed that they kept the ornaments manufactured by them clandestinely at their residences and at other places and when such stocks were detected these were claimed as their personal property; it therefore, became necessary to provide for a declaration of all ornaments and articles owned, possessed, held or controlled by them so that they could not claim any clandestinely manufactured ornaments, when detected, to be their personal property and that is why it has been provided in S. 16(7) that every licensed dealer or refiner should declare all gold articles and ornaments which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion, the challenge to the constitutionality of S.16(7) must fail. 6. The next provision challenged is Section 52 of the Act which provides for licence issued to a firm becoming invalid if there is any change in the partnership of the firm. That section runs thus :- "52. Where any firm has been licensed under this Act to carry on business as a dealer or refiner, such licence shall, notwithstanding anything contained in this Act, become invalid on and from the date on which there is a change in the partnership of such firm, unless such change in the partnership has been approved by the Administrator." Counsel for the petitioners contended that change in partnership is a normal and usual thing that occurs when business is carried on by a firm and such change may arise on account of death or retirement of a partner or re-constitution of the firm but the above provision imposes an unreasonable restriction in so far as it provides that the licence of a firm shall become invalid on and from the date on which there is a change in the partnership of such firm unless the change has been approved by the Administrator. According to Counsel the restriction imposed is excessive a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has been conferred upon the Administrator in the matter of grant or refusal of approval to a change in the partnership of a firm. On the aspect of there being no appeal or other corrective machinery provided against an adverse order of refusing approval that may be passed under this section it may be stated that Counsel for the respondents produced before us copy of a Notification dated 26th August, 1983 issued by the Administrator under Sec. 4(4) of the Act where-under the exercise of the power under Sec. 52 has been delegated to the Deputy Collector of Central Excise with the result that an appeal against his order under Sec. 52 will lie to the Collector of Central Excise under Sec. 80 of the Act. In other words, 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. 8. The next provision that has been challenged is S. 79 read with the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions dealing with Seizure (Sec. 66), Confiscation (Sec. 71), Adjudication (Sec. 78) and Giving of Opportunity (Sec. 79) the policy of the Legislature becomes quite clear that whereas the power to seize can be exercised by any Gold Control Officer if he has "reason to believe" that in respect of any gold any provision of the Act has been or is being or is attempted to be contravened the confiscation of gold can take place only if actual contravention has taken place or is apprehended or is attempted and such confiscation can be adjudged or ordered without limit by a Gold Control Officer not below the rank of a Collector of Central Excise or of Customs and subject to such limits as may be specified in that behalf by such other Gold Control Officer not below the rank of a Superintendent of Central Excise as the Central Government may authorise in that behalf; but the power to grant esxtension of the initial period of six months has been conferred under the second proviso to S. 79 only upon a superior officer, namely, the Collector of Central Excise or of Customs. Further under the second proviso to S. 79 the owner or the person concerned has been given the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned person to the restoration of the goods on the expiry of the period whether initial or extended is affected. Secondly since the Collector's decision or order granting extension of time is appealable under Section 81(2) at the instance of the Administrator, who could be moved by the aggrieved person, and in any case could be challenged by the aggrieved person in an appeal against the order of confiscation every order granting extension must record reasons for it as otherwise the appeal will be ineffective. In other words 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. 11. The next provision challenged is Section 100 of the Act (as amended) read with Rule 3(1) of the Gold Control (Identification of Customers) Rules, 1969, on the ground that the said provision is incapable of compliance in a practical sense and from a commercial point of view and has the effect of ruining the business of the petitioners and since the said Rule 3(1) unreasonably restricts the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold from a customer, a licensed dealer shall, in every case :- (a) obtain on the voucher, the signature and full postal address of the customer, (b) where the licensed dealer's satisfaction as to the identity of the customer is based on the identification made by another person, obtain on the voucher the signature and full postal address of such identifier, and where such identifier is not personally known to him, he shall also note, on the voucher, the particulars of the documents on the strength of which he has been satisfied as to the identity of such identifier, (c) where the licensed dealer's satisfaction as to the identity of the customer is based on any other document, note on the voucher, the date and other particulars of such document. It may be, stated at the outset that Section 100 as it originally stood prior to its amendment in 1969 imposed a statutory obligation upon a dealer to take all reasonable steps to satisfy himself about the identity of the person from whom gold was brought but it did not specify the nature of steps which a dealer was supposed to take for such satisfaction and therefore this Court in Harakchand Ratanchand Banthia's case took the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrespective of whether the customer is personally known to the dealer or not known to him. 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 were informed that a similar contention challenging the said provision [amended Section 100 read with sub-rule (1) of Rule 3] was raised before the Patna High Court in the case of Bihar State Bullion Merchants' Assn. & Ors. v. Union of India & Ors., (AIR 1971 Patna P. 240) and the same was rejected. We approve of that decision. 13. Lastly, the petitioners as licensed dealers seem to have some grievance against the amended prescribed Forms Nos. G.S. 11 and G.S. 12 required to be maintained under Section 55 of the Act read with Rule 11 of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968, Froms which have been brought into force with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requires a dealer to record the weight in terms of pure gold which requirement cannot be satisfied by any dealer unless and until the gold ornaments received from the customers are broken and refined. It was further pointed out that in the old Form No. G.S. 11 column No. 12 was provided to record the loss of weight ('ghat') which would necessarily follow on account of re-making, melting, refining and polishing of new ornaments from old ornaments received by the dealer from his customers but in the amended new Form G.S. 11 there is no such column where this 'ghat' (loss of weight) could be recorded. Similarly, other deficiencies in the amended Form G.S. 12 were pointed out by Counsel for the petitioners. In brief the contention has been that the old Forms were better but the new Forms lack in providing adequate or proper columns with the result that by filling these a true and complete account of gold owned or possessed or held or controlled, etc. by the dealer could not be-reflected. We find some substance in the aforesaid 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced with them, through post parcels, air freight or through any other means of commercial transportation of goods, besides delivering the ornaments to the customers in their own premises. I emphatically say that no direction or notice is issued which may result in any stoppage of Inter-State trade." In view of this statement the contention that the Letter of Instructions or the Trade Notice has the effect of preventing or stopping Inter-State trade has no substance. Realising this position and in view of the aforesaid statement contained in paragraph 12 of the aforesaid counter-affidavit Counsel for the petitioners did not press the challenge to the impugned Letter of Instructions and the Trade Notice. 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. 15. In view of the foregoing discussion all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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