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PETITIONER: HARAKCHAND RATANCHAND BANTHIA AND ORS.  ETC.

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.

DATE OF JUDGMENT: 30/04/1969

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. HIDAYATULLAH, M. (CJ) SHAH, J.C. MITTER, G.K. GROVER, A.N.

CITATION:  1970 AIR 1453            1970 SCR  (1) 479  1969 SCC  (2) 166  CITATOR INFO :  RF         1972 SC1061  (22)  RF         1972 SC2301  (32)  D          1974 SC1489  (17)  D          1975 SC 446  (19)  RF         1977 SC1825  (60)  RF         1978 SC1457  (69)  R          1984 SC 981  (8)  F          1984 SC1249  (2,12)  E&D        1985 SC1013  (3,5,8)  RF         1988 SC 782  (55)  R          1990 SC  40  (9)  RF         1990 SC  85  (18)  RF         1990 SC2072  (49)

ACT: Gold (Control) Act (45 of 1968), ss. 4(4), 4(5), 5(1),  (2), 27,  32, 39, 46, 88 and 100-If violative of Arts. 14 and  19 of the Constitution -Delegation by Administrator under ss. 4 and 5(1), not excessive-The phrase ’so far as it appears  to him necessary or expedient’, if subjective. Constitution of India, 1950, VII Schedule, List 1, Entry 52, List  II,  Entry  27  and  List  III,  Entry  33-Scope   of- Manufacture  of qold ornaments if  industry-Whether  control declared  to  he  expedient in  public  interest  Industries (Development  and Regulation) Act (65 of 1951) ss. 2(a)  cnd 2(d)-Scheduled  industry  and ’indistrial  undertaking’,  if synonymous--Manufacturers  and semi- manufacturer’s  meaning of. Severability-Some  sections declared ultra  vires-Tests  for determining validity of Act.

HEADNOTE: Even  though  import  of gold into India  had  been  banned, considerable  quantities  of contraband  gold  were  finding their  way  into  the  country  through  illegal   channels, affecting  the national economy and hampering the  country’s economic stability and progress.  The Customs Department was not  in a position to effectively combat the smuggling  over

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the long borders and coast lines.  Therefore, anti-smuggling measures  had  to be supplemented by a  detailed  system  of control  over internal transactions and the  Gold  (Control) Act,  1968, was passed for this purpose.   The  petitioners, who  were  goldsmiths, contended that; (1) the Act  was  Dot within  the legislative competence of  Parliament,  because, (a)  Manufacture  of  -old ornaments by  goldsmiths  is  not ’industry’  within the meaning of Entry 52, List I or  Entry 33,  List III of the VII Schedule to the  Constitution;  (b) Even  if  it  was an ’industry’ within the  meaning  of  the Legislative  Entries,  the Control of the industry  was  not declared  by  Parliament  to  be  expedient  in  the  public interest  as required by the Entries; (c) The provisions  of the  industries  (Development  and  Regulation)  Act,  1951, indicate  that  what Parliament intended  to  control  under Entry  52  was  not the manufacture  of  gold  ornaments  by individual  goldsmiths  but  ’industrial  undertakings’   as contemplated  by  s.  2(d) of that  Act,  because,  the  ex. pression  ’scheduled  industry’ in s. 2(a)  and  ’industrial undertaking’ in s. 2(d) of that Act are synonymous; and  (2) that the restrictions imposed by ss. 4(4), 4(5), 5(1), 5(2), 27(2)(d),  27(6), 32, 46, 88 and 100 of the  Gold  (Control) Act were unreasonable and not in public interest and so  are violative of Art. 19(1)(f) and (g) of the Constitution,  and that s.   27  and s. 39 are discriminatory and violative  of Art. 14. HELD  :  (1)  (a)  The  manufacture  of  gold  ornaments  by goldsmiths  in India is a process of  systematic  production for trade or manufacture and so falls within the connotation of  the  word  ’industry’  in  the  appropriate  legislative Entries.    Therefore,   in  enacting  the   impugned   Act, Parliament  was validly exercising its legislative power  in respect  of matters covered by Entry 52 of List I and  Entry 33  of  List  III.   Entry  27  of  List  11  dealing   with ’Production,  supply and distribution of goods,  subject  to the provisions 480 of Entry 33 of List III’, is a general Entry and the general power  should  not  be  interpreted so  as  to  nullify  the particular  power conferred by Entry 52 of List 1 and  Entry 33 of List 111.  There is no reason for imposing on the word ’industry’  a  restriction that to  constitute  industry,  a process of machinery or mechanical contrivance is essential. The  mere  use  of skill or art by the goldsmith  is  not  a decisive  factor and will not take the manufacture  or  gold ornaments  out  of  the ambit of  the  relevent  legislative Entries.  The  decisions  in Banerji  v.  Mukherjee,  [1953] S.C.R. 302 and National Union of Commercial Employees v.  M. R. Meher, [1962] Supp. 3 S.C. R. 157 that the word  industry in  s.  2(j) of the Industrial Disputes Act,  1947  involved cooperation of employer and employees, did not mean that the activity carried on by self-employed goldsmiths individually without  any  participation  by labour and  capital  in  the activity  would not fall within the word ’industry’  in  the Lists  of the Constitution.  The interpretation of the  word in  the  Industrial Disputes Act was adopted by  this  Court with reference to the subject-matter of that Act as that Act was passed to ameliorate the service conditions of  workers. [491 B-C, E-F, H; 492 A, F-H] ? (b)  There  is  no  scientific  or  logical  scheme  in  the classification  under the headings of the first schedule  to the Industries (Development and Regulation) Act as shown  by the fact that many items were included under headings  which are inappropriate and others are excluded which should  have been included.  Therefore, the first Schedule to that Act is

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-a  mere enumeration and grouping of various items  and  the headings do not control the scope and meaning of the entries under  them.  Hence, the heading ’Metallurgical  Industries’ does not control the entry B(2) under it, dealing with semi- manufactures  and  manufactures’.   The  expression    semi- manufactures’  could  not mean gold in the form  of  ingots, wire,   strips   and  sheets,  nor  would   the   expression ’manufactures’  mean gold bricks or standard gold  bars  and gold  castings,  because, then items 1-B(1)  and  (2)  would convey  the same meaning, and 1-B(2) would  be  superfluous. The two expressions should be construed in the light of  the Brussels   Tariff  Nomenclature,  and  so   construed,   the manufacture  of gold ornaments falls within  the  expression ’semi-manufactures  or manufactures’.  Since under s.  2  of that  Act it is declared that it is expedient in the  public interest  that the Union should take under its  control  the industries  specified in the first schedule.  Parliament  is competent  to legislate in regard to the subject  matter  of the impugned Act. [494 F-G; 495 B-C ,D-F; 496 B-C] (c)  There   is  a  distinction  made   between   ’scheduled industries’ and ’industrial undertakings’, because, separate provisions  are made throughout the Industries  (Development and  Regulation) Act, for their regulation.  Therefore,  the two expressions are not synonymous. [496 F-H] (2)(a) Sections 5(2)(b), 27(2)(d) 27(6), 32, 46, 88 and  100 are invalid. (a)  Sections   4(4)   and   4(5)   contemplate   that   the Administrator  appointed  under the Act may  authorise  such person as he thinks fit, to also exercise all or any of  the powers  exercisable  by him under the  Act,  except  certain specified powers, and such person may exercise the powers as if  they were conferred by the Act.  Such delegation by  the Administrator  is  necessary, because, the  volume  of  work entrusted  to him is great and it must be’ assumed  that  be would   delegate  his  authority  only  to   competent   and responsible persons.  Therefore, the delegation does not  go beyond permissible constitutional limits. [A-D] (b)  Section  5(1)  requires  that  in  making  orders   for carrying  out the provisions of the Act,  the  Administrator should have regard to the policy 481 of the Act.  The orders should be made within the frame-work of  the  Act  and  should  not  be  inconsistent  with   its provisions.  As regards s. 5(2)(a), the section provided the safeguard  that regulation -of the price at which  any  gold may be bought or sold should be made after consultation with the Reserve Bank of India. The phrase ’so far as it  appears to  him  to be necessary or expedient for carrying  out  the provisions   of  the  Act,’  in  the  sub-Section,  is   not subjective  and  does not constitute the  Administrator  the sole judge  as to what is in fact necessary or expedient for the  purposes of the Act. In the context of the  scheme  and object  of the legislation the opinion of the  Administrator as  to the necessity or expediency of making the order  must be  reached objectively after having regard to the  relevant consideration  and must be reasonably tenable in a court  of law.  It Must he assumed that the Administrator will not try to promote purposes to the object of  the Act. [499 D-H-]      (c)  As regards s. 5(2)(b), on a review of ss. 8(6),II( 1) 3 4(2) and (3    the    power   conferred    up-on    the Administration under s. 5(2) (b) is legislative in character and  extremely  wide.   But whereas the  parallel  power  of subordinate  legislation  of rule-making  conferred  on  the Central  Government  under s. 114(1) and (2) is  subject  to parliamentary  scrutiny, the power of regulation granted  to

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the  Administrator under s. 5(2)(b) suffers  from  excessive delegation  of  legislative  power and must be  held  to  he constitutionally invalid. [501 A-D] (d)  Section 27(2) (d) states that the licence issued by the Administrator  may contain such conditions,  limitations  as the  administrator  may think fit to  impose  and  different condition  limitations and restrictions may be  imposed  for different  classes of dealers.  On the face of it. the  sub- section   confers  such  wide  and  vague  power  upon   the Administrator  that it is difficult to limit its  scope  and therefore,   the  section  must  be  struck  down   as   all unreasonable  restriction  on the fundamental right  of  the petitioners to carry on business. Section  27  (6) (a) states that in the matter of  issue  or renewal  of licences ,he Administrator shall have regard  to the  number of dealers existing in the region in  which  the applicant intends to carry on business as a dealer.  But the word  ’region’ is nowhere defined in the Act.  Similarly  s. 27(6)(b)  requires the Administrator to have due  regard  to the anticipated demand as estimated by him for ornaments  in that region but the expression anticipated demand’ is  vague and incapable of objective assessment. and is bound to  lead to  a  reat  deal  of uncertainty.   In  the  same  way  the expression ’suitability of the applicant’ in s. 27(6)(e) and ’public  interest’  in  s.  27(6)(g)  do  not  provide   any objective standard or norm.  Further. the requirement in the section  imposing the same coiiditio.,is for the renewal  of the licence as for the initial grant is unreasonable, as  it renders  the  entire future of the business  of  the  dealer uncertain  and subject to the caprice and arbitrary will  of the  administrative authorities.  Therefore.  clauses  (:t). (h).  (e) and (g) of s. 27(6) arc constitutionally  invalid. Since  these  clauses are inextricably woven up  with  other clauses  of s. ’7(6) the entire s. 17(6) must be held to  be invalid. f501 D-H; 502 A-B] If  s.  27(6) (d) and s. 27(6) of the Act  arc  invalid  the licensing scheme contemplated by the Act becomes  unworkable and it is therefore necessary for Parliament to enact  fresh legislation  imposing appropriate  conditional  restrictions for the, grant and renewal of licences to dealers or in  the alternative,  the  Central Government may  make  appropriate rules for the same purpose under s. 114. [502 B-E] (e)  Sections  32  and 46 of the Act  authorise  a  licensed dealer  to  keep  any quantity of  standard  gold  bars  and provides a limit Upon the holding of 482 primary gold depending on the number of artisans he employs. But  a  -standard gold bar cannot, in many cases  be  handed over  to  a certified goldsmith without cutting  it.   If  a dealer  gives  a  cut  piece  of  standard  gold  bar  to  a goldsmith, the remaining portion is treated as primary  gold in  his hands.  Therefore, the limits prescribed  under  the sections   ’are  rendered  meaningless  and  constitute   an unreasonable restriction on the right of the petitioners  to carry on trade or business and are invalid. [503 C-E] (f)  Section 88 extends the scope of the vicarious liability of   the   dealer  .and  makes  him  responsible   for   the contravention  of  any provision of the Act or rule  by  any person  employed  by him in the course of  such  employment. The  section  makes  the dealer liable  even  for  any  past contravention   perpetrated  by  an  employee  and   extends vicarious  liability beyond reasonable limits. it  therefore imposes an unreasonable restriction and is unconstitutional. [503 H; 504 A-D] Section  100 imposes a statutory obligation upon  dealer  to

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take  all  reasonable  steps to satisfy  himself  about  the identity  of persons from whom gold is bought. It  does  not specify  the  nature  of steps which a  dealer  should  take forsuch  satisfaction  and the obligation is  uncertain  and incapable of proper compliance.  Hence it must also be  held to  be  unconstitutional on the ground that  it  imposes  an impossible and unreasonable burden. [504 D-F] (h)  Licensed dealers and certified goldsmiths form separate classes    and   the   classification   is   a    reasonable classification,  because, a licencd dealer is essentially  a trader who does the business of buying and selling ornaments while  a  certified goldsmith is a craftsman  who  does  the actual  manufacture  of  ornaments and  does  not  trade  in ornaments.   Considering the policy underlying  the  statute and  the object intended to be achieved, the  classification is  reasonable  and  has a rational nexus  with  the  avowed policy  and  object of the Act, and hence does  not  violate Art. 14. [504 G-H: 505 C-E] (3)  The provisions which are declared invalid do not affect the  validity  of the Act as a whole.  The test  is  whether what remains of the statute is so inextricably bound up with the  invalid  part that what  remains  cannot  independently survive,  or whether on a fair review of the whole maker  it can  be assumed that the legislature would have  enacted  at all  that  which survives without enacting the  ultra  vires part.  In the present case.  Act still remains  substantialy the Act as it was passed, that is, an Act for the control of the  production. manufacture, supply, distribution, use  and possession  of gold and gold ornaments and articles of  gold even  without including the sections which are found  to  be ultra  vires.   The provisions held to be  invalid  are  not inextricably bound up with the remaining portions and it  is difficult to hold that Parliament would not have enacted the Act excluding the part found to be ultra vires [506 C-E]

JUDGMENT: ORIGINAL JURISDICTION : Writ Petitions Nos. 282, 407 and 408 of 1968. Petition  Under  Art. 32 of the Constitution  of  India  for enforcement of the fundamental rights. C.   K.  Daphtary,  B.  R.  L.  Iyengar,  R.  N.   Banerjee, Ravinder Narain, J. B.  Dadachanji and 0. C. Mathur, for the petitioners (In W.P. No. 407 of 1968).                             483 N.   A.  Palkhivala, R. N. Banerjee, Ravinder Narain and  J. B. Dadachanji and 0. C. Mathur, for the petitioners (in W.P. No. 408 of 1968). A.   K. Sen, J. C. Bhatt, R. N. Banerjee, Ravinder Narain, J.   B.   Dadachanji and 0. C. Mathur, for  the  petitioners (in W.P. No. 282 of 1968). M.   C. Setalvad, J. M. Mukhi, A. Sreedharan Nambiar and R.   N. Sachthey, for the respondents (in all the petitions). The Judgment of the Court was delivered by Ramaswami, J. In these petitions which have been filed under art.  32 of the Constitution a common question is  presented for  determination, namely, whether the Gold (Control)  Act, 1968 (Act No. 45 of 1968) is constitutionally valid. The  Gold  (Control) Act, (hereinafter called  the  impugned Act)  was  passed by Parliament and received assent  of  the President  on  September 1, 1968.  The impugned  Act  be-ins with  the following preamble, namely, "an Act to provide  in the  economic and financial interests of the community,  for the   control  of  the  production,   manufacture,   supply,

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distribution, use and possession of, and business in,  gold, ornaments  and  articles of gold and for  matters  connected therewith  or  incidental  thereto." Section  2  contains  a number of definitions.  Section 2(b) defines an "article" to mean anything (other than ornament), in a finished form made of, manufactured from or containing, gold, and including (i) any  ,old  coin, (ii) broken pieces of an article,  but  not Including  primary  old.  Clause (d)  defines  a  "certified goldsmith"  to  mean a self-employed goldsmith who  holds  a valid certificates referred to in s. 30.  Clause (h) defines a dealer as follows               "dealer"  means  any person  who  carries  on,               directly or otherwise, the business of making,               manufacturing,      preparing,      repairing,               polishing,    buying,    selling,    supplying               distributing,    melting,    processing     or               converting  gold,  whether  for  cash  or  for               deferred    payment   or    for    commission,               remuneration  or  other  valuable   considera-               tion,. . . . . .               Clause (i) states               "declaration"  means  a declaration  which  is               required  by this Act or was required by  rule               126-1 of the Defence of India Rules, 1962,  or               the Gold (Control) Ordinance, 1968, to be made               with  regard  to  the  ownership,  possession,               custody or control of gold;"               484               Clause defines ’gold’ to mean gold,  including               its  alloy  (whether  virgin,  melted  or  re-               melted, wrought or unwrought), in any shape or               form, of a purity of not less than nine carats               and   including  primary  gold,  article   and               ornament.               Clause (p) reads as follows :               "   ornament"  means a thing,  in  a  finished               form, meant for personal adornment or for  the               adornment  of  any idol., deity or  any  other               object  of  religious  worship,  made  of,  or               manufactured  from, gold, whether or  not  set               with  stones or gems (real or artificial),  or               with  pearls (real, cultured or imitation)  or               with  all or any of them, and includes  parts,               pendents or broken pieces of ornament.               Explanation.-For  the  purposes of  this  Act,               nothing  made  of  -old,  which  resembles  an               ornament,  shall be deemed to be  an  ornament               unless the thin- (having regard to its purity,               size,  weight, description or workmanship)  is               such  as is commonly used as ornament  in  any               State or Union territory;"               Clause (r) states :               "  primary gold" means gold in any  unfinished               or  semi-finished  form and  includes  ingots,               bars, blocks, slabs, billets, shots,  pellets,               rods, sheets, foils and wires;"               Clause  (u) defines a "standard gold  bar"  as               primary  gold  of such  fineness,  dimensions,               weight  and  description and  containing  such               particulars as may be prescribed.               Section  4  deals  with  the  appointment  and               functions   of  the  Administrator  and   Gold               Control Officers and reads is follows               "(1)   The   Central  Government   shall,   by               notification,  appoint  an  Administrator  for

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             carrying out the purposes of this Act.               (2)   The    Central   Government   may,    by               notification,  appoint as many persons  as  it               thinks fit to be Gold Control Officers for the               purpose of enforcing the provisions of this  Act.               (3)   The  Administrator shall  discharge  his               functions  subject to the general control  and               directions of the Central Government.               (4)   The  Administrator  may  authorise  such               person  as he thinks fit to also exercise  all               or any of the powers exercisable by him  under               this  Act  other than the  powers  under  sub-               section  (6) of this section or  under  clause               (a)   of  sub-section  (1) of  section  80  or               under section 81,                                    485               and  different  persons may be  authorised  to               exercise different powers.               (5)   Subject   to  any  general  or   special               direction  given or condition imposed  by  the               Administrator,  any person authorised  by  the               Administrator  to  exercise  any  powers   may               exercise  those powers in the same manner  and               with  the  same  effect as if  they  had  been               conferred on that person directly by this  Act               and not by way of authorisation.               (6)   The Administrator may also--               (a)   perform all or any of the functions  of,               and               (b)   exercise  all  or  any  of  the   powers               conferred  by  this Act or any rule  or  order               made thereunder on,               any officer lower in rank than himself.               (7)   A Gold Control Officer shall, subject to               such limitations, restrictions and  conditions               as  the  Central Government may think  fit  to               impose,  exercise  such powers  and  discharge               such functions as are specified or  conferred,               as the case may be, by or under this Act."               Section  5 confers power on the  Administrator               to issue directions and orders.               "(1) The Administrator may, if he thinks  fit,               make   orders,  not  inconsistent   with   the               provisions  of this Act, for carrying out  the               provisions of this Act.               (2)   The  Administrator  may, so  far  as  it               appears  to him to be necessary  or  expedient               for  carrying out the provisions of this  Act,               by order-               (a)   regulate,  after consultation  with  the               Reserve Bank of India, the price at which  any               gold may be bought or sold, and               (b)   regulate   by  licences,   pen-nits   or               otherwise,   the  manufacture,   distribution,               transport, acquisition, possession,  transfer,               disposal, use or consumption of gold."               Chapter III contains a number of  restrictions               relating  to  the  manufacture,   acquisition,               possession.  or delivery of -old.  Section  16               provides  for declarations as to articles  and               ornaments.   Chapter VII relates  to  dealers.               Section   27  of  this  chapter   as   regards               licensing of dealers may be quoted :               "(1)  Save as otherwise provided in this  Act,               no   person  shall  commence,  or  carry   on,

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             business as a dealer               486               unless he holds a valid licence issued in this               behalf by the Administrator.               (2)   A licence issued under this section,-               (a)   shall   be  in  such  form  as  may   be               prescribed,               (b)   shall be valid for such period as may be               specified therein,               (c)   may be renewed, from time to time, and               (d)   may contain such conditions, limitations               and  restrictions  as  the  Administrator  may               think fit to impose and different  conditions,               limitations  and restrictions may  be  imposed               for different classes of dealers.               (5)   A  person who intends to Commence  after               the               commencement  of  this  Act,  business  as   a               dealer,  shall  make an application  (in  such               form   and  on  payment  of  such  fees,   not               exceeding  one  hundred  rupees,  as  may   be               prescribed) for the issue of a licence.               (6)   On  receipt  of an application  for  the               issue  or  renewal  of a  licence  under  this               section,  the Administrator may, after  making               such  inquiry,  if  any, as  he  may  consider               necessary,  by order in writing, either  issue               or   renew   the  licence,   or   reject   the               application for the same;               Provided  that no licence shall be  issued  or               renewed   under   this  section   unless   the               Administrator, having regard to the  following               matters, is satisfied that the licence  should               be issued or renewed, namely :-               (a)   the  number of dealers existing  in  the               region in which the applicant intends to carry               on business as a dealer,               (b)   the anticipated demand, as estimated  by               him, for ornaments in that region,               (c)   the turnover of the applicant, if he had               been carrying on business as a dealer prior to               the cornmencement of Part XIIA of the  Defence               of  India Rules, 1962, during the,  two  years               immediately preceding such commencement, or in               the case of an application for the renewal  of               a  licence,  the date of the  application  for               such renewal,                                    487               (d)   the previous experience, if any, of  the               applicant   with   regard   to   the   making,               manufacturing,    preparing,   repairing    or               polishing of, or dealing in, ornaments,               (e)   the suitability of the applicant,               (f)   the  suitability of the  Premises  where               the applicant intends to carry on business  as               a dealer,               (g)   the public interests, and               (h)   such other matters as may be prescribed.               Chapter VIII deals with certified  goldsmiths.               Section 39 of this Chapter provides :               (1)   Save as otherwise provided in this  Act,               no   person  shall  commence,  or  carry   on,               business    as   a   goldsmith    after    the               cormnencement  of this Act, unless he holds  a               valid   certificate  recognising  him   as   a

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             goldsmith.               (2)   The    certificate   referred   to    in               subsection (1)-               (a)   shall   be  in  such  form  as  may   be               prescribed,               (b)   shall  be valid -until the death of  the               holder, or the cancellation thereof, whichever               is earlier, and               (c)   may contain such conditions, limitations               and  restrictions,  as the  Administrator  may               think fit to impose and different  conditions,               limitations  and restrictions may  be  imposed               for different classes of certified goldsmiths.               (3)   Every  certificate granted to  a  person               under Part XIIA of the Defence of India Rules,               1962,  or under the Gold (Control)  Ordinance,               1968,  recognizing him as a goldsmith,  shall,               if    in   force   immediately   before    the               commencement  of this Act, continue to  be  in               force  until the death of the holder,  or  the               cancellation, thereof whichever is earlier.               (5)   Every  application  for the grant  of  a               certificate  referred  to in  sub-section  (1)               shall be made in such form, in such manner and               on  payment  of such fee,  not  exceeding  ten               rupees, as may be prescribed.               (8)   A  certified  goldsmith may  engage  not               more than one hired labourer to assist him  in               his work as a gold-               Sup.  CI-69-2               488               Smith but such hired labourer shall not  make,               manufacture,  prepare, repair or  process  any               article or ornament."               Chapter   X   deals  with   cancellation   and               suspension   of  licences  and   certificates.               Chapter  XII contains provisions  relating  to               entry, search, seizure and arrest.  The  other               material  chapters  are Chapter  XIII  dealing               with  confiscation and penalties, Chapter  XIV               providing   for   adjudication,   appeal   and               revision  and Chapter XV relating to  offences               and their trial.  Chapter XVI contains certain               miscellaneous provisions.  Section 100 of this               chapter enacts               "Every licensed dealer or refiner or certified               goldsmith  shall, before accenting, buying  or               otherwise receiving any gold from any  person,               take  all reasonable steps to satisfy  himself               as  to  the identity of such  person  and  if,               after an inquiry made by an officer authorised               in  this  behalf by the Administrator,  it  is               found  that such person is not either  readily               traceable or is a fictitious person, it  shall               be presumed, unless such dealer or refiner  or               certified  goldsmith,  as  the  case  may  be,               establishes  that he had taken all  reasonable               steps to satisfy himself as to the identity of               such  person,  that  such  gold  was   bought,               acquired,   accepted  or  received   by   such               licensed   dealer  or  refiner  or   certified               goldsmith,   as   the   case   may   be,    in               contravention of the provisions of this Act." The first question to be considered is whether the  impugned Act is within the legislative competence of Parliament under

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Entry 52 of List I, and Entry 33 of List III of the  Seventh Schedule.   It was argued on behalf of the petitioners  that the legislation fell within the exclusive competence of  the State  Legislatures under Entry 27 of List II.  It was  said that  the  goldsmiths’  work  was  a  handicraft   requiring application  of skill and the art of making  gold  ornaments was  not an industry within the meaning of Entry 52 of  List I,  or  Entry 33 of List III of the Seventh  Schedule.   The opposite viewpoint was presented by Mr. Setalvad who  argued that  the Legislative entries must be construed in  a  large and  liberal  sense and that the goldsmith’s  craft  was  an industry within the meaning of Entry 24 of List II Entry  33 of  List  III  and  Entry 52 of List  I  and  Parliament  is competent to legislate in regard to the manufacture of  gold ornaments.  The relevant entries in the Lists of the Seventh Schedule   of  the  Constitution  are  List  1,  Entry   52- Industries, the control of which by the Union is declared by Parliament  by law to be expedient in the  public  interest; List IT, Entry 24 : Industries subject to the provisions  of Entries 7 and 52 of List I; List II, Entry 27 :  Production, supply  and distribution of goods subject to the  provisions of  Entry  33  of List HI.  List III, Entry  3  3  reads  as follows: 489               "Trade  and commerce in, and  the  production,               supply and distribution of,-               (a)   the  products of any industry where  the               control  of  such  industry by  the  Union  is               declared by Parliament by law to be  expedient               in the public interest, and imported goods  of               the same kind as such products;               (b)   foodstuffs,  including  edible  oilseeds               and oils;               (c)   cattle  fodder, including  oilcakes  and               other concentrates;               (d)   raw cotton, whether ginned or  unginned,               and cotton seed; and               (e)   raw jute."               Before  construing these entries it is  useful               to  notice some of the well-settled  rules  of               interpretation laid down by the Federal  Court               and by this Court in the matter of  construing               the entries.  The power to legislate is  given               to the appropriate legislatures by Art. 246 of               the  Constitution.  The entries in  the  three               Lists are only legislative heads or fields  of               legislation;  they  demarcate  the  area  over               which   the   appropriate   legislatures   can               operate.   It  is  well-established  that  the               widest  amplitude  should  be  given  to   the               language  of  the entries.  But  some  of  the               entries in the different lists or in the  same               list may overlap or may appear to be in direct               conflict with each other.  It is then the duty               of  this  Court to reconcile the  entries  and               bring about a harmonious construction.  In  In               re  The Central Provinces and Berar  Sales  of               Motor  Spirit  and  Lubricants  Taxation  Act,               1938(1) Sir Maurice Gwyer pro-               ceeded to state :               "Only  in the Indian Constitution Act can  the               particular  problem arise which is  now  under               consideration and an endeavour must be made to               solve it, as the Judicial Committee have said,               by  having recourse to the context and  scheme

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             of  the  Act, and a  reconciliation  attempted               between  two apparently conflicting  jurisdic-               tions by reading the two entries together  and               by   interpreting,   and,   where   necessary,               modifying, the language of the one by that  of               the  other.  If indeed such  a  reconciliation               should prove impossible, then, and only  then,               will  the non-obstante clause operate and  the               federal power prevail; for the clause ought to               be  regarded as a last resource, a witness  to               the imperfections of human expression and  the               fallibility of legal draftsmanship." (p. 44)               (1)   [1939] F. C. R. 18.               490               The  Federal Court in that case held that  the               entry  "taxes  on the sale of  goods  was  not               covered by the entry "duties of excise" and in               coming  to that conclusion the  learned  Chief               Justice observed :               Here are two separate enactments, each in  one               aspect  conferring the power to impose  a  tax               upon  goods;  and it would accord  with  sound               principles  of construction to take  the  more               general power, that which extends to the whole               of  India, as subject to an exception  created               by the particular power, that which extends to               the Province only.  It is not perhaps strictly               accurate  to speak of the provincial power  as               being  exceptedout of the federal  power,  for               the  two  are independent of one  another  and               exist  side  by  side.   But  the   underlying               principle  in the two cases must be the  same,               that  a  general  power ought  not  to  be  so               construed as to make a nullity of a particular               power conferred by the same Act and  operating               in the, same field, when by reading the former               in a more restricted sense effect can be given               to  the  latter in its  ordinary  and  natural               meaning." (pp. 49-50) The  rule of construction adopted by that decision  for  the purpose  of  harmonizing  the  two  apparently   conflicting entries in the two Lists would equally apply to an  apparent conflict  between two entries in the, same List.   Patanjali Sastri,  J,  (as  he then was) held in State  of  Bombay  v. Narothamadas Jethabai(1), that the words "administration  of justice"  and "constitution and organization of all  courts" in  Entry  1  of  List 11 of the  Seventh  Schedule  to  the Government  of India Act, 1935 must be understood in a  res- tricted  sense excluding from their scope "jurisdiction  and powers of courts" specifically dealt with in item 2 of  List 11.   in  the  words  of  the  learned  Judge,  if  such   a construction was not given "the wider construction of  entry 1 would deprive entry 2 of all its content and reduce it  to useless lumber." The question to be considered is what is the meaning of  the word  "industry" in Entry 52 of List I, Entry 24 of List  11 and  Entry 33 of List 111.  Whatever may be its  connotation it must bear the same meaning in all these entries which are so  interconnected  that conflicting or  different  meanings given  to  them would snap the connection.  In  the  Shorter Oxford English Dictionary the word "industry" is defined  as "a  particular  branch  of productive  labour;  a  trade  or manufacture." According to Webster’s Third New International Dictionary  (1961  edn.)  the  word  "industry"  means  "(a) systematic labour especially for the creation

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(1)  [1951] S.C.R. 51. 491 of  value;  (b)  a department or branch  of  a  craft,  art, business or manufacture, a division of productive and profit making labour especially one that employs a large  personnel and  capital  especially in manufacturing; (c)  a  group  of productive  or  profit making enterprises  or  organisations that  have a similar technological structure  of  production and that produce or supply technically substitutable  goods, services or sources of income." It was said that if the word "industries"  is construed in this wide sense, Entry  27  of List  11  will  lose all meaning and  content.   It  is  not possible  to  accept  this contention for,  Entry  27  is  a general   Entry  and  it  is  a  well-recognised  canon   of construction   that  a  general  power  should  not  be   so interpreted  as to nullify a particular power  conferred  by the  same  instrument.   In Tika Ramji  v.  State  of  Uttar Pradesh(1) the expression "industry" wag defined to mean the process of manufacture or production and did not include raw materials  used in the industry or the distribution  of  the products  of the industry.  It was contended that  the  word "industry" was a word of wide import and should be construe: as  including  not  only  the  process  of  manufacture   or production  but  also activites antecedent thereto  such  as acquisition of raw materials and subsequent thereto such  as disposal  of  the finished products of that  industry.   But this  contention was not accepted.  It was contended by  Mr. Daphtary that if the process of production was to constitute "industry" a process of machinery or mechanical  contrivance was  essential.  But we see no reason why such a  limitation should  be imposed on the meaning of the word "industry"  in the  legislative  lists.   Similarly it was  argued  by  Mr. Palkhivala that the manufacture of gold ornaments was not an industry  because it required application of individual  art and  craftsmanship  and aesthetic skill.  But  mere  use  of skill or art is not a decisive. factor and will not take the manufacture  of  gold  ornaments out of  the  ambit  of  the relevant  legislative entries.  It is well settled that  the entries  in  the three lists are only legislative  heads  or fields of legislation and they demarcate the area over which the  appro-priate legislature can operate.  The  legislative entries  must be given a large and  liberal  interpretation, the  reason  being that the allocation of  subjects  to  the lists is not by way of scientific or logical definition  but is a mere enumeration of broad and comprehensive categories. It  is not, however, necessary for the purpose of this  case to attempt to define the expression "industry" precisely  or to state exhaustively all its different aspects.  But we are satisfied  in the present case that the manufacture of  gold ornaments by goldsmiths in India is a "process of systematic production"  for trade or manufacture and so  falls  ’within the  connotation of the word "industry" in  the  appropriate legislative entries- (1)  [1956] S.C.R. 393. 492 It  follows,  therefore, that in enacting the  impugned  Act Parliament  was validly exercising its legislative power  in respect  of matters covered by Entry 52 of List I and  Entry 33 of List 111. It  was contended by Mr. Ashoke Sen that the manufacture  of ,gold  ornaments  cannot be said to constitute  an  industry unless there was cooperation of labour and capital and there was relationship of employer and employee.  It was said that if ornament making activity was largely carried on by  self- employed   goldsmiths   individually  and   there   was   no

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participation  by labour and capital in the  said  activity. Reference was made to the decision of this Court in  Banerji v.  Mukherjee(1) in which it was pointed out that  the  word "industry"  in s. 2(j) of the Industrial Disputes Act,  1947 should  be  construed  as  an  activity  systematically   or habitually  undertaken  for production and  distribution  of goods or for rendering material services to the community at large   and  that  such  an  activity   generally   involved cooperation of the employer and the employees and its object was satisfaction of human needs.  The same view was taken in the National Union of Commercial Employees v. M. R. Meher(2) in which it was pointed out that the distinguishing  feature of  an industry was that for production of goods or for  the rendering of service, cooperation between capital and labour or  between  the employer and his employee must  be  direct. But  these decisions are of no avail to the petitioners  be, cause  they  were concerned with the interpretation  of  the word  "industry" in s. 2(j) of the Industrial Disputes  Act, 1947 which reads as follows :               "industry    means   any   business,    trade,               undertaking,   manufacture   or   calling   of               employers  and includes any calling,  service,               employment,    handicraft    or     industrial               occupation or avocation of workmen-" In  interpreting  the word "industry" in  that  section  the court thought it necessary to Emit the scope of the  section having  regard  to the -aim, object and scope of  the  whole Act.   The history of the legislation made it manifest  that the  Industrial Disputes Act was introduced as an  important step  in  achieving  social  justice.   The  Act  seeks   to ameliorate the service conditions of the workers, to provide a  machinery for resolving their conflicts and to  encourage their  cooperative effort in the service of  the  community. It  was in this context that the expression  "industry"  was interpreted  in Banerjee’s case(1) and Meher’s case(2).   It was  an  interpretation  ,adopted  by  this  Court  sacundum subjectae  materies.   But  what ’we are  concerned  in  the present case is the interpretation of the (1) [1953] S.C.R.302. (2) [1962] Supp. 3 S.C.R. 157. 493 word  "industry" in the legislative lists  which  constitute part  of  the Seventh Schedule of the Constitution.   It  is manifest  that  the,  decisions referred to  above  have  no bearing on the question debated in the present case. It was argued by Mr. Palkhivala that even on the  assumption that  making of gold articles and ornaments was an  industry within the meaning of the legislative entries the control of the  said  industry  was not declared by  Parliament  to  be expedient in the public interest and, therefore,  Parliament was  not competent to legislate upon the subject  matter  of the  impugned  Act.   To  appreciate  this  argument  it  is necessary to notice briefly the provisions of the Industries (Development  and  Regulation) Act, 1951 (Act  65  of  1951) which   was  enacted  by  Parliament  to  provide  for   the development and regulation of certain industries.  Under  s. 2  of  this Act it is declared that it is expedient  in  the public interest that the Union should take under its control the  industries  specified in the first  schedule.   Section 3(1) of the 1951 Act defines a "scheduled industry" to  mean "any  of  the industries specified in the  first  schedule". The  relevant  portion of the first schedule  is  reproduced below :               "1. METALLURGICAL INDUSTRIES:               A. Ferrous

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             (1)   Iron and steel (metal).               (2)   Ferro-alloys.               (3)   Iron and steel castings and forgings.               (4)   Iron and steel structurals.               (5)   Iron and steel pipes.               (6)   Special steels.               (7)   Other products of iron and steel.               B.    Non-ferrous               (1)   Precious  metals,  including  gold   and               silver, and their alloys.               (1A)  Other  non  ferrous  metals  and   their               alloys,               (2) Semi-manufactures and manufactures." The  question  presented for determination  is  whether  the manufacture  of  gold ornaments falls within item  2  "semi- manufactures or manufactures" under the sub-heading B  "non- ferrous" of the heading "metallurgical industries".  It  was argued  that  item  2 of sub-heading B  cannot  be  read  in isolation  but  it must be construed in the context  of  the heading "metallurgical industries" which was 494 the  controlling factor in the interpretation of the item  2 under  the sub-heading.  To put it differently the  argument was that the heading "metallurgical industries" was the  key to  the  interpretation of the  item  "semi-manufactures  or manufactures".    It   was   said   that   the    expression "metallurgical industries" has a definite technical  meaning namely an industry engaged in the actual extraction of metal from  ores and the processing, manufacturing and  converting the base metal into various forms, shapes and classes so  as to make them available in a utilisable form for the  purpose of   various  other  industries  viz.  :  machine   building industries, electrical industries, ship building industries, railways etc.  In support of this proposition reference  was made  to the affidavits of Dr. G. S. Tendolkar, Head of  the Department  of Metallurgy, Indian Institute  of  Technology, Powai  and  of  Dr.  V. A. Altekar,  Head  of  the  Chemical Technology  Department,  University of Bombay  and  also  to certain standard text books on metallurgy.  On behalf of the respondents  reference  was  made to the  affidavit  of  Mr. Dayal, Industrial Adviser to the Government of India wherein he  states that in the process of manufacture of gold  orna- ments  the goldsmith has to "melt gold (pure  virgin  metal, old  ornaments  or  scrap); make an alloy  of  the  required specifications;  cast  it into desired shapes;  convert  the alloy  into  semis  like  rods,  strips,  wires  etc.,   and fabricate  it  into the required design,  finished  articles including ornaments." These involve metallurgical operations like   melting,   refining,  making  of   alloys,   casting, annealing, rolling, forging, pressing, punching,  soldering, pressing,  die  cutting etc., and a goldsmith  therefore  is employed in the metallurgical industry.  It is not necessary for us to express any concluded opinion in this case on  the question whether the manufacture of gold ornaments  involves any metallurgical process.  Even on the assumption that  the petitioners are right in saying that the manufacture of gold ornaments  is not a metallurgical industry in the  technical sense we consider that the heading "metallurgical  industry" in  the schedule does not control the scope and  meaning  of the  Entry 1-B(2) "semi-manufactures or manufactures".   The headings  of  the  schedule do not  follow  any  logical  or scientific  pattern  but are put in merely  as  devices  for convenient  grouping of the industries.  For example,  there is no warrant for excluding electricity meters used in homes from  item 15(1) or for excluding weighing machines used  at

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airports  or  railway  stations or ports  from  item  15(3). There  are other examples which show that the  heading  does not control the meaning of the industry.  Thus  "lubricating oils  and  the  like" in the item at 2(2)  are  clearly  not "fuels"  which  is the heading under which they  are  found. Again,  fire fighting equipment and appliances such as  fire extinguishers used in homes or in offices or in cinema halls or as accessories to motor cars 495 would  clearly be included in the industry at item  8-B(14). Similarly matches [item 3 6 (3 ) ] is not controlled by  the heading  "timber  products"  nor is there  any  warrant  for holding that arms and ammunition, item 37, is controlled  by the  heading "defence industries".  As we have already  said that  there  is  no  scientific or  logical  scheme  in  the classification of first schedule of Act 65 of 1951 but it is a  mere enumeration and grouping of various items.   We  are unable  to  accept  the argument  of  petitioners  that  the heading  metallurgical  industries should  be  construed  as having  a  controlling effect on the meaning  of  item  B(2) "semi-manufactures or manufactures". We  proceed  to consider the next question arising  in  this case as to whether the manufacture of ornaments falls within item  1-B  (2) "semi-manufactures and manufactures"  of  the first  schedule.   It was said that  the  expression  "semi- manufactures  or manufactures" in regard to gold  means  the precious  metal in various stages of preparation before  its production  in  a  pure state.  It was  argued  that  "semi- manufactures"  would mean gold in the form of ingots,  wire, strips, sheets and "manufactures" would mean gold, bricks or standard gold bars, cold castings and so on.  We are  unable to accede to this argument.  If the meaning contended for by the petitioners is correct item 1-B(1) and (2) of the  first schedule  would  convey the same meaning.   In  other  words entry  No.  1-B  (2)  would be  superfluous  and  we  cannot attribute  tautology to Parliament which cannot be  supposed to  have  used  words  without  meaning.   We  are,  on  the contrary, of opinion that the expression  "semi-manufactures or  manufactures"  should be construed in the light  of  the Brussels  Tariff  Nomenclature.   Section  XIV  deals   with "precious  metals and articles thereof".  Sub-Chapter II  of Chapter 71 in this section specifically deals with  precious metal  in unwrought and unworked form and  semi-manufactures thereof  and  sub-Chapter  III deals  with  manufactures  of precious  metals.   Headings 71.07 and 71.08  in  this  sub- Chapter  set out un-wrought or semi-manufactured gold  while headings 71.12 to 71.14 in Sub-Chapter III set out  finished articles of jewellery, goldsmiths’ wares and other  articles of  precious  metals.   The explanatory  notes  to  Brussels Tariff  Nomenclature shows (Vol, 11, p. 633) that  "precious metals in unwrought or semi-manufactured from but which have not reached the stage of articles" are included under  Head- ing 71.05 to 71.10. So far as silver is concerned "unwrought and  semi-manufactures"  are  set out at  p.  641  and  they include  forms  like  bars, rods,  sections,  wire,  plates, sheets and strips, tubes, pipes, hollow bars, foils,  powder etc.  The enumeration of finished articles of gold, that  is to    say,   manufactures of gold is given  at  p.     640.The enumeration includes articles and ornaments, for 496 example,  jewellery  and  parts thereof,  small  objects  of personal  adornment such as rings, bracelets, necklaces  and articles  of  personal use such as  cigarette  cases,  snuff boxes,  powder boxes, lipstick holders etc. (pp. 641-646  of Explanatory  notes).  In our opinion the  expression  "semi-

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manufactures  or manufactures" of the first schedule  should be   construed  in  the  context  and  background   of   the classification  in  the Brussels  Tariff  Nomenclature.   It follows that manufacture of gold ornaments falls within  the expression  "semi-manufactures or manufactures" in  item  1- B(2)  of  the first schedule and Parliament  is,  therefore, competent  to legislate in regard to the subject  matter  of the impugned Act. It was also contended that the provisions of Act 65 of  1951 clearly  indicate that what Parliament intended  to  control under Entry 52 of Union List was not the manufacture of gold ornaments but industrial undertakings as contemplated by  s. 2(d) of that Act.  It was contended by Mr. Daphtary that the expression " scheduled industry" in s. 2 (a) of the Act  was synonymous with an industrial undertaking under s. 2 (d) and a declaration under  S.  2 of the Act would therefore  apply to industries carried on in the factories as defined in  the Act.   It was argued that the Act was intended to  apply  to industrial  undertakings carried on in factories and not  to individual craftsmanship of goldsmiths.  Section 3(d) of the Act  defines  an  industrial undertaking to  mean  :  "  any undertaking pertaining to a scheduled industry carried on in one  or more factories by any person or authority  including Government".  Section 2(i) defines a "scheduled industry" as meaning any of the industries defined in the first schedule. Chapter III of the Act provides measures for the  regulation of  scheduled industries.  Chapter III-A relates  to  direct management and control of industrial undertakings in certain cases.  In our opinion Act 65 ,of 1951 performs two distinct and  independent functions, namely, (1) a declaration  under S.  2 that it is expedient in the public interest  that  the Union should take under its control the industries specified in the first schedule and (2) the setting up of a  machinery for imposing controls on industrial undertakings.  There  is a  distinction  made  between  "scheduled  industries"   and "industrial  undertakings" throughout the Act  and  separate provision  has  been  made for  registration  of  industrial undertakings  for licensing of new  industrial  undertakings and for the direct management of industrial undertakings  by the  Central Government in certain cases.   Provisions  have also  been  made  for regulation  of  scheduled  industries, procedure   for   grant   of  licences,   power   to   cause investigation to be made etc.  We are, therefore, unable  to accept  the contention of Mr. Daphtary that the  expressions "industrial undertaking" and "scheduled industry" are,  used synonymously in the Act or the 497 expression "scheduled industry" in s. 2 of the Act should be construed as a "scheduled industry" carried on in the manner of an "industrial undertaking." Having dealt with and negatived the attack upon the validity of the entire Act we shall now proceed to deal with  certain sections  of  the  Act,  the  validity  of  which  was  also questioned.  It was argued that the restrictions imposed  by sections  4(4),  4(5), 5(1), 5 (2), 27 (2) (d), 27  (6),  16 (7),  32 read with 46, 88 and 100 were unreasonable and  not in public interest and so are violative of Art. 19 ( 1 )  (f )  and (g) of the Constitution.  It was also said  that  the sections were also violative of Art. 14 of the  Constitution because  of the conferment of unchannered, uncontrolled  and arbitrary  power in the Administrator and other  authorities constituted under the impugned Act. Before  examining this argument it is necessary to  set  out the circumstances and the social and economic background  in which the impugned legislation was passed.  It is stated  in

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the  counteraffidavit  that the impugned Act was  passed  in order  to bring about reduction in the quantity of  smuggled gold by rendering smuggling more dangerous and the  disposal of  smuggled  gold in the domestic  market  more  difficult. Even  though  import of gold had  been  banned  considerable quantities  of  contraband  gold find their  way  into  this country through illegal channels.  The Customs Department is in itself not in a position to effectively combat  smuggling over  the long borders and the coast lines  and,  therefore, the  antismuggling  measures have to be  supplemented  by  a detailed system of control over internal transactions so  as to make the circulation of smuggled gold more difficult,  if not  impossible.   The loss of foreign  exchange  caused  by smuggling of gold was estimated at nearly Rs. 100 crores per year  in  the post-devaluation period, and  Government  felt that it was very necessary to reduce the internal demand for gold and erect barriers to the circulation of smuggled  gold within the country.  The submission of Mr. Setalvad was that the reasonableness of the impugned provisions of the Act had to  be  judged in the light of the widespread  smuggling  of gold  which, if not checked, was calculated to  destroy  the national economy and hamper the country’s economic stability and progress.  Reference was made in this connection to  the report of the Taxation Enquiry Commission which pointed  out that  the  factual position in regard to  the  existence  of widespread smuggling.               "Smuggling now constitutes not only a loophole               for  escaping duties but also a threat to  the               effective  fulfilment  of  the  objectives  of               foreign  trade  control.   The  existence   of               foreign pockets in the country accentuates the               danger.               498               The  extent  of the leakage  of  revenue  that               takes  place  through this process  cannot  be               estimated even roughly, but, we understand, it               is not unlikely that it is substantial.  Apart               from  its  deleterious  effect  on  legitimate               trade,  it  also  entails  the  outlay  of  an               appreciable  amount of public funds on  patrol               vessels  along  the sea coasts  and  permanent               works  along  the land border, and  watch  and               ward  staff  on  a  generous  scale.   It  is,               therefore,  necessary,  in our  opinion,  that               stringent    measures    both    legal     and               administrative  should be adopted with a  view               to  minimising  the scope of this  evil."  (p.               320).               It  is  in  this context  that  the  test  for               ascertaining   the   reasonableness   of   the               restriction  of  the rights in Art. 19  is  of               great importance.  There are several decisions               of  this Court in which the relevant  criteria               have   been  laid  down.   It   is,   however,               sufficient  to  refer  to  a  passage  in  the               judgment of Patanjali Sastri, C.J. in State of               Madras v. V. G. Rao (1).               "It  is important in this context to  bear  in               mind that the test of reasonableness, wherever               prescribed,   should   be  applied   to   each               individual  statute impugned, and no  abstract               standard, or general pattern of reasonableness               can be. laid down as applicable to all  cases.               The  nature of the right alleged to have  been               infringed,  the  underlying  purpose  of   the

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             restrictions  imposed, the extent and  urgency               of the evil sought to be remedied thereby, the               disproportion    of   the   imposition,    the               prevailing conditions at the time, should  all               enter into the judicial verdict." It  is  necessary  to emphasise  that  the  principle  which underlies the structure of the rights guaranteed under  Art. 19 of the Constitution is the principle of balancing of  the need for individual liberty with the need for social control in  order  that the, freedoms guaranteed to  the  individual subserve the larger public interests.  It would follow  that the  reasonableness  of the restrictions imposed  under  the impugned  Act would have to be judged by the  magnitude,  of the  evil which it is the purpose of the restraints to  curb or eliminate. Section 4(4) of the Act empowers the Administrator to autho- rise  such person as he thinks fit to also exercise  all  or any  powers  exercised by him under the  Act  (with  certain exceptions)  and  different  persons may  be  authorised  to exercise  different powers.  Section 4(5) states  that  "any person authorised by the Administra- (1)  [1952] S.C.R.597,607. 499 tor to exercise any powers may exercise those powers in  the same  manner  and with the same effect as if they  had  been conferred on that person directly by this Act and not by way of  authorisation." After having heard the argument  of  Mr. Daphtary  we are not satisfied that the delegation of  power conferred  by s. 4(4) and 4(5) goes beyond  the  permissible constitutional  limits.  Delegation by the Administrator  is necessary  for the volume of work entrusted to him is  great and  he  cannot be expected to do the bulk  of  it  himself. Absence of such power might seriously impair  administrative efficiency.     Section   4(4)   contemplates    that    the Administrator may authorise such person as he thinks fit  to also  exercise all or any of the powers exercisable  by  him under  the  Act  other than the  powers  specified  in  that section.   It  must be assumed that the  Administrator  will delegate  his authority only to ’competent  and  responsible persons  in pursuance of the power conferred upon him by  s. 4(4) of the Act.  It was then said that the provisions of s. 5(1)  conferred  wide  and uncontrolled  power  without  any guidelines  and  was capable of being  used  with  arbitrary discrimination.  But s. 5(1) requires that the Administrator should  have regard to the policy of the Act in  making  his orders.   His orders should be made within the framework  of the  Act and should not be inconsistent with the  provisions of  the Act. As regards s. 5 (2) (a) the argument  was  that unguided  power was conferred upon the Administrator or  his delegate  to  regulate or fix the price at  which  any  gold whether  it be primary gold, article or ornament  should  be sold.   As the power to fix the price may also be  exercised not  only in respect of primary gold but also in respect  of articles  and ornaments the business of the petitioners  and similarly other persons will be adversely affected.  But the section  provides the safeguard that the regulation  of  the price should be made by the Administrator after consultation with  the  Reserve Bank of India.  It was  argued  that  the phrase  "so  far  as it appears to him to  be  necessary  or expedient for carrying out the provisions of this Act" was a subjective formula and action of the Administrator in making the  orders  under  s.  5  (2)  (a)  may  be  arbitrary  and unreasonable.   But  in  our  opinion  the  formula  is  not subjective  and  does not constitute the  Administrator  the sole judge as to what is in fact necessary or expedient  for

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the  purposes of the Act.  On the contrary we bold  that  in the context of the scheme and object of the legislation as a whole  the  expression cannot be construed in  a  subjective sense  and  the  opinion  of the  Administrator  as  to  the necessity or expediency of making the order must be  reached objectively   after   having   regard   to   the    relevant considerations and must be reasonably tenable in a court  of law.   It  must  be  assumed  that  the  Administrator  will generally  address  himself  to  the  circumstances  of  the situation before him 500 and  not try to promote purposes alien to the object of  the Act.   As  regards  s.  5 (2)  (b)  the  contention  of  the petitioners  was that substantive provisions have been  made in  the  Act  for  the grant  of  licence  for  manufacture, acquisition,  possession  and disposal  and  consumption  of gold.  Reference was made in this connection to s. 8 (6)  of the  Act  which  confers  power  on  the  Administrator   to authorise any person or class of persons to buy or otherwise acquire,  accept  or  otherwise receive  or  sell,  deliver, transfer  or  otherwise  dispose  of  any  primary  gold  or article.  Section 1 1 ( 1 ) contains a prohibition in regard to  making, manufacturing etc., preparing or  processing  of any  primary  gold or ornament or article  unless  there  is authorisation by the Administrator.  Section 29 empowers the Administrator to authorise a dealer in any exceptional  case to make, manufacture or prepare a primary gold or  article." Section 34(2) prohibits sale, delivery, transfer or disposal (1)  of  primary gold to any person other  than  a  licensed dealer  or  refiner or certified goldsmith and  (2)  of  any article  to  any  person other than  a  licensed  dealer  or refiner.    But  s.  34(3)  provides  that   notwithstanding anything contained in sub-s. (2) a licensed dealer may  sell or  deliver  primary  gold  or  article  to  any  person  in pursuance  of an authorisation made by the Administrator  or on  production  by that person of a permit  granted  by  the Administrator in this behalf.  Again, section 114(1) confers power   on   the  Central  Government  to  make   rules   by notification  for  carrying  out the purposes  of  the  Act. Section 1 14 (2) (d) states :               " (2) In particular, and without prejudice  to               the  foregoing power, such rules  may  provide               for  all  or  any of  the  following               matters, namely               (d)   conditions, limitations and restrictions               subject to which-               (i)   a dealer may sell, deliver, transfer  or               otherwise   dispose   of  any  gold   on   the               hypothecation,  pledge, mortgage or charge  of               which he had advanced any loan;               (ii)  a refiner may refine gold;               (iii) a  licensed  refiner may  buy,  acquire,               accept  or  receive,  gold,  or  melt,  assay,               refine, extract or alloy gold or subject it to               any other process, or sell, deliver,  transfer               or otherwise dispose of any gold;               501               (iv)  a  licensed  dealer  may  buy,  acquire,               accept  or receive or sell, deliver,  transfer               or dispose of gold." It  is manifest upon a review of all -these provisions  that the  power conferred upon the Administrator under s.  5  (2) (b)  is  legislative  in character and  extremely  wide.   A parallel  power of subordinate legislation is  conferred  to the  Central  Government under s. 114 ( 1 ) and (2)  of  the

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Act.   But  s. 114(3) however makes it  incumbent  upon  the Central  Government to place the rules before each House  of Parliament  while  it is in session for a  total  period  of thirty days which may be comprised in one session or in  two successive  sessions.   It  is clear  that  the  substantive provisions  of  the Act namely ss. 8, 11, 21,  31(3),  34(3) confer   powers  on  the  Administrator  similar  to   those contemplated  by  s.  5  (2)  (b)  of  the  Act.   In  these circumstances we are of opinion that the power of regulation granted  to the Administrator under s. 5 (2) (b) of the  Act suffers  from excessive delegation of legislative power  and must be held to be constitutionally invalid. We now come to s. 27 of the Act which relates to  licensing. of dealers.  It was stated on behalf of the petitioners that the conditions imposed by sub-s. (6) of s. 27 for the  grant or   renewal   of   licences  are   uncertain,   vague   and unintelligible  and consequently wide and  unfettered  power was  conferred upon the statutory authorities in the  matter of  grant  or  renewal  of licence.   In  our  opinion  this contention is well-founded and must be accepted as  correct. Section  27(6)  (a) states that in the matter of  issue,  or renewal  of licences the Administrator shall have regard  to "the  number of dealers existing in the region in which  the applicant  intends to carry on business as a  dealer".   But the word "region" is nowhere defined in the Act.   Similarly s.  27 (6) (b) requires the Administrator to have regard  to "the anticipated demand, as estimated by him, for  ornaments in  that region".  The expression "anticipated demand" is  a vague   expression  which  is  not  capable   of   objective assessment  and  is  bound  to  lead  to  a  great  deal  of uncertainty.   Similarly the expression "suitability of  the applicant" in s. 27(6) (e) and "public interest" in s. 27(6) (g)  do  not  provide  any objective  standard  or  norm  or guidance.   For these reasons it must be held  that  clauses (a),  (d),  (e)  and (g) of  s.  27(6)  impose  unreasonable restrictions  on the fundamental right of the petitioner  to carry on business and are constitutionally invalid.  It  was also  contended that there was no reason why the  conditions for  renewal  of  licence  should  be  as  rigorous  as  the conditions for initial grant of licence.  The requirement of strict  conditions  for the renewal of licence  renders  the entire  future of the business of the dealer  uncertain  and subjects it to the caprice and arbitrary will 502 of  the administrative authorities.  There is  justificaiton for  this argument and the requirement of s. 26 of  the  Act imposing the same conditions for the renewal of the  licence as for the initial grant appears to be unreasonable.  In our opinion clauses (a), (b), (e) and (g) are inextricably bound up  with  the other clauses of S. 27(6) and form part  of  a single  scheme.  The result is that clauses (a),  (b),  (c), (e) and (g) are not severable and the entire S. 27(6) of the Act must be held invalid.  Section 27(2) (d) of   the    Act states that a valid licence issued by the Administrator  may contain such conditions, limitations and restrictions as the Administrator   may  think  fit  to  impose  and   different conditions, limitations and restrictions may be imposed  for different classes of dealers." On the face of it, this  sub- section   confers  such  wide  and  vague  power  upon   the Administrator  that it is difficult to limit its scope.   In our opinion S. 27 (2) (d) of the Act must be struck down  as an unreasonable restriction on the fundamental right of  the petitioners  to carry on business.  It appears, however,  to us  that  if  S. 27 (2) (d) and S. 27 (6)  of  the  Act  are invalid the licensing scheme contemplated by the rest of  s.

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27  of  the  Act  cannot be  worked  in  practice.   It  is, therefore,   necessary   for  Parliament  to   enact   fresh legislation imposing appropriate conditions and restrictions for  the grant and renewal of licences to dealers.   In  the alternative  the  Central Government  may  make  appropriate rules  for the same purpose, in exercise of  its  rulemaking power under s. 114 of the Act. We  now proceed to deal with ss. 32 and 46 of the Act  which are also challenged.  Section 32 states -:               "Save  as otherwise provided in this  Act,  no               licensed  dealer shall either own or  have  at               any time in his possession, custody or control               primary gold in any form except in the form               of standard gold bars ;               Provided  that  such dealer  may,  unless  the               Central Government (having regard to the needs               of  the trade, volume of business  and  public               interest)  otherwise directs, own or  keep  in               his  possession, custody or control  not  more               than-               (a)   four  hundred  grammes, if he  does  not               employ any artisan,               (b)   five hundred grammes, if he employs  not               more than ten artisans,               (c)   one thousand grammes, if he employs more               than ten but not more than twenty artisans.               503               (d)   two  thousands  grammes, if  he  employs               more than twenty artisans, of primary gold  in               any  form other than in the form  of  standard               gold bars."               Section 46 enacts :               "The  total  quantity of primary gold  in  the               possession,   custody  or   control,   whether               individually or collectively, of the  artisans               employed  by a licensed dealer shall  not,  at               any  time,  exceed  the  limits  specified  in               section 32".: Section  32 of the Act authorises a licensed dealer to  keep any quantity of standard gold bars and provides a limit upon his  holding  of  primary -old depending on  the  number  of artisans  he employs.  The definition of the term  "standard gold  bar" under s. 2(u) does not contemplate  the  standard gold  bar being cut into pieces.  A standard gold bar  being of  a prescribed weight and purity cannot in many  cases  be handed  over  to a certified goldsmith without  cutting  the same.   If a dealer, therefore, has to give a cut  piece  of standard  gold  bar  to a certain  goldsmith  the  remaining portion of the standard gold bar Will be treated as  primary gold in his hands.  Hence the limits prescribed under s.  32 and  46 of the Act are rendered meaningless in view  of  the statutory  definition of the term "standard gold bar" as  it stands  at  present.  We are of opinion that ss. 32  and  46 constitute  an unreasonable restriction on the right of  the petitioners  to carry on trade or business and must be  held to be invalid. Section 88 of the Act has also been challenged.  Section  88 reads thus :               "(1)  A  dealer or refiner who  knows  or  has               reason  to believe that any provision of  this               Act  or any rule or order made thereunder  has               been, or is being, contravened, by any  person               employed   by  him  in  the  course  of   such               employment, shall be deemed to have abetted an               offence against this Act.

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             (2)  Whoever  abets, or is deemed  under  sub-               section  (1)  to  have  abetted,  an   offence               against  this  Act,  shall  be  punished  with               imprisonment  for a term which may  extend  to               three years and shall also be liable to fine." This  section extends the scope, of the vicarious  liability of   the   dealer  and  makes  him   responsible   for   the contravention  of any provision of the Act or rule or  order by  any  person  employed  by him  in  the  course  of  such employment.  The rational basis in law 14Sup.Cl/69-3 504 for the imposition of vicarious liability is that the person made responsible may prevent commission of the crime and may help  to  bring the actual offender to book.  In  one  sense the,  dealer  is  punished for the  sins  committed  by  his employee.   It  may perhaps be said if the dealer  had  been more  -alert to see that the law was observed the sin  might not  have been committed.  But the section goes further  and makes   the  dealer  liable  for  any   past   contravention perpetrated by the employee.  It is evident that the  dealer cannot reasonably be made liable for any past misconduct  of his  employee though the dealer can be made liable  for  any act done by his employee in the course of the employment and whom he can reasonably be expected to influence or  control. The maxim qui facit per alium facit per se is not  generally applicable  in  criminal  law.  But in s.  88  it  has  been extended  beyond reasonable limits.  We are,  therefore,  of opinion  that s. 88 imposes an unreasonable  restriction  on the   fundamental   right   of  the   petitioners   and   is unconstitutional. We  shall now proceed to deal with s. 100 of the  Act  which also has been challenged.  This section imposes a  statutory obligation  upon  a dealer to take all reasonable  steps  to satisfy himself as to the identity of persons from whom  any gold is bought.  The section does not specify the nature  of steps  which a dealer should take for satisfying himself  as to the identity of the person from whom any gold is  bought. The statutory obligation imposed by the section is uncertain and  incapable of proper compliance.  It must be  held  that the  section imposes an impossible burden upon  the  dealers and constitutes an unreasonable restriction. We  proceed  to consider next the question arising  in  this case  whether the provisions with regard to licensing of  ID dealers  and certification of goldsmiths are  discriminatory and violate the guarantee of equal protection under Art.  14 of the Constitution.  Reference was made to ss. 27 and 39 of the impugned Act and it was argued that the provisions  with regard  to licensing of dealers were more harsh than in  the case of registered goldsmiths.  But in our opinion  licensed dealers -and certified goldsmiths form separate. classes and the classification made by the impugned Act is a  reasonable classification.   A licensed dealer is essentially a  trader who does the business of buying and selling ornaments  while a  certified  goldsmith is a craftsman who does  the  actual manufacture of ornaments and does not trade in ornaments.  A licensed dealer can make or, manufacture ornaments from  his own  gold but a certified goldsmith can make or  manufacture new  ornaments  for his customers only from their  gold.   A licensed  dealer  can sell ornaments to the public  and  can keep  ready stock of such ornaments for the purpose of  sale while a certified gold- 505      smith  is not permitted to do the business  of  selling ornaments.   A  licensed dealer may have in  his  possession

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primary  gold in the form of standard gold bars without  any limit  and melted gold in the form other than  the  standard bars  in  quantities ranging from 400 to 2,000  grammes.   A certified goldsmith cannot have in his possession more  than 3000 grammes of primary -old.  A licensed    dealer      can employ  as  many persons as he likes as his artisans  but  a certified  goldsmith  cannot  employ  more  than  one  hired labourer  to  assist him in his work as goldsmith  and  even this  hired  labourer cannot make, manufacture,  prepare  or process  any  ornament,.   When  a  law  is  challenged   as violative of Art. 14 of the Constitution it is necessary  in the  first  place  to ascertain the  policy  underlying  the statute  and  the  object intended to  be  achieved  by  it. Having  ascertained  the policy and object of  the  Act  the Court has to apply a dual test in examining its validity (1) whether  the  classification is rational and based  upon  an intelligible  differentia  which  distinguishes  persons  or things  that are grouped together from others that are  left out   of   the   group  and  (2)  whether   the   basis   of differentiation has any rational nexus or relation with  its avowed  policy  and object.  In the present  case  both  the tests  are satisfied and we hold that ss. 27 and 39  of  the impugned  Act do not violate the guarantee under Art. 14  of the  Constitution. The only other point that remains  to  be decided  is whether as a result of some of the  sections  of the impugned Act being   struck  down, what is left  of  the impugned  Act  should survive or whether the  whole  of  the impugned Act should be declared invalid.  We are of  opinion that the provisions which are declared invalid cannot affect the  validity  of  the Act as a whole.  In a  case  of  this description  the, real test is whether what remains  of  the statute  is so inextricably bound up with the  invalid  part that  what remains cannot independently survive or as it  is sometimes  put whether on a fair review of the whole  matter it can be assumed that the legislature would have enacted at all  that which survives without enacting the part  that  is ultra  vires.   The  matter  is clearly  put  in  Cooley  on Constitutional Limitations, 8th edn. at p. 360 :               "It  would  be  inconsistent  with  all   just               principles  of constitutional law  to  adjudge               these   enactments  void  because   they   are               associated in the same act, but not  connected               with   or  dependent  on  others   which   are               unconstitutional.  Where, therefore, a part of               a statute is unconstitutional, that fact  does               not  authorise  the  courts  to  declare   the               remainder void also, unless all the provisions               are  connected in subject-matter depending  on               each  other, operating together for  the  same               purpose, or otherwise so connected together in               meaning,  that  it  cannot  be  presumed   the               legislature would have passed the one without                506               the    other.     The    constitutional    and               unconstitutional   provisions  may   even   be               contained  in  the same section,  and  yet  be               perfectly distinct and separable, so that  the               first  may  stand though the last  fall.   The               point is not whether they are contained in the               same   section;  for  the  distribution   into               sections  is  purely artificial;  but  whether               they are essentially and inseparably connected               in  substance.  If, when the  unconstitutional               portion is stricken out, that which remains is               complete  in  itself, and  capable  ,of  being

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             executed  in  accordance  with  the   apparent               legislative intent, wholly independent of that               which was rejected, it must be sustained." Applying  the  test to the present case we, are  of  opinion that the provisions held to be invalid are not  inextricably bound  up with the remaining provisions of the Act.   It  is difficult to hold that Parliament would not have enacted the impugned  Act  at all without including that part  which  is found   to   be  ultra  vires.   The   Act   still   remains substantially  the Act as it was passed, that is, an Act  to provide  for the control, production,  manufacture,  supply, distribution, use and possession of gold and gold  ornaments and  articles  of  gold.  In the result  we  hold  that  the following provisions of the impugned Act are invalid. Sections 5(2)(b), 27(2)(d), 27(6), 32, 46, 88 and 1 00. The  petitioners are, therefore, entitled to a writ  in  the nature  of  mandamus  under Art.  32  of  -the  Constitution commanding  the  respondents  not  to  take  any  steps   to implement  any of the invalid provisions of the  Act.   Writ Petitions  282,  407  and 408 of 1968 are  allowed  to  this extent.  There will be no order with regard to costs in  any of these petitions. V.P.S.                         Petitions allowed in part. 507