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PETITIONER: MANICK CHAND PAUL & OTHERS ETC.

       Vs.

RESPONDENT: UNION OF INDIA AND OTHERS

DATE OF JUDGMENT17/04/1984

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. ERADI, V. BALAKRISHNA (J) MADON, D.P.

CITATION:  1984 AIR 1249            1984 SCR  (3) 461  1984 SCC  (3)  65        1984 SCALE  (1)772

ACT:      Gold Control  Act 1968,  Sections 16(7)  52,79,100 read with rule  3(1)  of  the  Gold  Control  (Identification  of Customers) Rules,  1960, whether violative of the provisions of Articles 14,19(1) (g) 301 and 302 of the Constitution.      Gold Control  (Forms, Fees  and Miscellaneous  Matters) Rules, 1968-Forms GS. 11 and GS 12 as amended are unworkable and require  modification Government  of India’s  Letter  of Instructions and  the Trade Notices withdrawing the facility of  sale   by  licensed  traders  through  their  travelling salesmen whether  violative Articles 14, 19(1)(g) and 301 of the Constitution.

HEADNOTE:      In Harak  Chand Ratan Chand Banthia’s case [1970] 1 SCR 479, where  the Gold  (Control) Act,  1969 and  some of  its provisions prior  to the  amendment by  Act 26  of 1969 were challenged, the  Supreme Court  pointed out that 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, that  the Customs Department was not in a position to effectively  combat the  smuggling over  the long borders and coast  lines, that,  therefore, anti-smuggling  measures had to  be supplemented by a detailed system of control over internal transactions  and that the Gold (Control) Act, 1968 was passed  for this  purpose. In  other words,  the several restrictions that  have been  put on  the activities  of the traders doing  business in gold, gold ornaments and articles of  gold,   will  have  to  be  viewed  from  the  aforesaid perspective. The  Court further  held the  enactment  to  be within the   legislative competence of Parliament and out of the several provisions that were challenged only ss.5(2)(b), 27(2)(d), 27(6),  32, 46,  88 and  100 were  invalid.  As  a result of  the aforesaid decisions and the observations made by this  Court therein  the Act of 1968 was suitably amended by Gold  Control (Amendment) Act (26) of 1969. These amended provisions, the  Gold Control  (Identification of Customers) Rules, 1969, the Gold Control (Forms, Fees and Miscellaneous Matters) Rules  1968 are  challenged by the Writ Petitioners

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as  being   violative  of  the  provisions  of  Article  14, 19(1)(g), 301,  and 302  of the  Constitution. Some  of  the petitioners including the petitioners in S.L.P. Civil 538 of 1973 have  also challenged  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,  on  the  same grounds.      Dismissing the petitions, the Court 462 ^      HELD:1:1, Section 16(7) of the Gold (Control) Act, 1968 as amended is constitutionally valid. [269E, 471B]      1:2. The  counter-affidavit of  the Union  of India not merely  furnishes   the  intelligible   classification  made between  the  licensed  dealers  and  non-dealers  and  non- refiners, but  also shows  that  the  classification  has  a reasonable nexus  with the object of the Act and the reasons for denying exemption limits to licensed dealers or refiners are also  valid and  referable to  the object  of  the  Act, namely "to  provide, in the economic and financial interests of  the   community,  for   the   control   of   production, manufacture, supply  distribution, use and possession of and business in,  gold ornaments  and articles  of gold  and for matters connected  therewith or incidental thereto.,’ [469F, 470D-E]      While ordinary  citizens (non-dealers and non-refiners) are not  permitted by  law to have any primary gold in their possession 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. This necessitated a  provision 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 belong  to him  or  which  are  in  his custody, possession  or control, and that is why it has been further provided  that the exemption. limits permissible for general public in relation to the requirement of declaration of articles  and ornaments  should not  be available  to the dealers and refiners. [469G-H, 470B-D]      1:3. the  provision  in  section  16(7)  could  not  be regarded as  unnecessary or  one which casts an unreasonable burden on  the licensed  dealer or  refiner. The reasons for introducing the  provision justify  its enactments,  if  the objects of  the Act  are to  be achieved.  On the  aspect of casting unreasonable  burden on the dealer refiner, firstly, the burden  on the  dealer or  refiner is  the same  as that which has  been cast  on a non-dealer (individual or family) whenever the  latter comes  to own,  possess, hold  or  have under his control articles or ornaments of gold in excess of the exempted  limit; secondly visits of guests and relations (including  married   daughters  and   sisters)  on  festive occasions and  requests proceeding  from them  to the house- keeper to  keep their ornaments in safe custody during their stays with  him, which  are ordinary  incidents in life, are common to  licensed dealers  or refiners and non-dealers and therefore the  requirement of  making  a  declaration  under section 16(7)  does not  cast any  additional burden on him; and thirdly  under section  16(7) it  is provided  that  the

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licensed dealer  or refiner  shall make  a  declaration  "in accordance with  the provisions of this section" which means he has  to do  so  within  30  days  of  his  acquiring  the ownership, possession, custody or control of such gold. With such time  limit being  provided the  burden cast  cannot be said to  be unreasonable,  especially when  the provision is found to  be necessary  to carry  out the  objectives of the Act,                                             [470E-H, 471A-B] 463      2:1. Section  52 of  the Gold  (Control) Act,  1968  as amended  does   not  suffer   from  the  vice  of  excessive delegation of  the power and therefore the said provision is constitutional. [472G-H]      2:2. It  is true  that section  52 does not contain any guide-lines or  principles which would regulate the exercise of the  power of the Administrator in the matter of grant or refusal of  approval to  change in the partnership of a firm but in  the exercise  of the  powers conferred by s.114 read with s.27(6)  of the  Act the  Central Government has framed the ’Gold  Control (Licensing  of Dealers)  Rules 1969’  and Rule 2  enlists matters  to which regard is to be had before issuing a licence and Rule 3 indicates the conditions on the fulfillment of  which a licence could be renewed. It is true that these  Rules, which  deal with licensing of dealers and renewal of their licences, in terms do not cover a case of a change in  the partnership  of a firm and the approval to be accorded thereto  by the Administrator but in a sense a case of a change occurring in the partnership of the firm and the occasion to  apply for  grant of  approval  thereto  by  the Administrator would  be a  case of  seeking renewal  of  the licence by the firm in which a change has occurred either by death  or  retirement  of  a  partner  or  as  a  result  of reconstitution of  the firm  and therefore  to such  a  case these Licensing   Rules,  particularly Rule 3, must and will apply and  these rules,  in so far as they are applicable to the situation, afford the necessary guide-lines on the basis of which  approval to  the change could be given or refused. Obviously, if  the change  in the firm involves introduction of a new partner into the firm these guide-lines under Rules 2 and  3 will  play an  important  part  in  the  matter  of according or  refusing to  accord the  approval but  if  the change nearly  involves alteration  in the  share-capital or profit sharing  basis amongst  the  self-same  partners  who continue  the  firm  the  approval  would  be  a  matter  of formality, in  view of  the Licensing Rules, 1969 which must apply, it  cannot be said that any unfettered or unregulated discretion has  been conferred upon the Administrator in the matter of  grant of  refusal of  approval to a change in the partnership of a firm. [471H, 472A-E]      2:3. On  the aspect  of absence  of  a  provision  from appeal, a  remedy  by  way  of  an  appeal  to  correct  any erroneous order that may be passed under section 52 has been provided for by Notification dated 26 August, 1983 issued by the Administrator  under sec. 4(4) of the Act whereunder the exercise of  the power  under sec.  52 has been delegated to the Deputy  Collector of  the Centre  Excise with the result that an  appeal against his order under s 52 will lie to the Collector of Centre Excise under s.80 of the Act. [472E-G]      3. The power to grant extension under section 79 of the gold (Control)  Act    as  amended is not arbitrary and does not suffer  from lack  of guidelines. Of course two in built safeguards will  have to  be  and  must  be  read  into  the provision. Since  every extension involves civil consequence in that  the owner’s or the concerned person’s right to have

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the seized  gold returned  to him  is adversely  affected by being postponed,  before granting  any extension  he must be given a  notice and  an opportunity  to make  representation against the proposed extension. 474H,475A-B] 464      It is  true that  s.79 does  not expressly  mention the guidelines  on  the  basis  of  which  the  power  to  grant extension of  the initial  period of  six months  is  to  be exercised but  if regard  is had  to the  provisions dealing with  Seizure   (s.66),  Confiscation  (s.71),  Adjudication (s.78) and  Giving of  Opportunity (s.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 Governments may authorise  in  that  behalf;  but  the  power  to  grant extension 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 have the  seized  gold  returned  to  him  where  no  notice proposing confiscation is served upon him within a period of six months  from the  date of  the seizure of the gold which shows that  the Legislature clearly intended that ordinarily the investigation  in connection  with the  seized  gold  is expected to  be over  within six  months; but  only in cases where such  investigation may not be completed owing to some genuine or  bonafide difficulties the Legislature gave under the proviso  power to  the Collector to extend that time. In other words  Collector is  expected to pass extension orders neither mechanically  nor as a matter of routine but only on being satisfied  that facts  or  circumstances  exist  which indicate that  the investigation  could not be completed for bona fide  reasons within  the initial period of six months. Such guidelines  would be  implicit  if  the  extra-ordinary power to  effect seizure  and adjudge confiscation conferred by the  Act is  considered in just apposition with the right conferred upon the owner or the person concerned to have the seized gold  returned to  him normally  at the expiry of the initial period  of six months. Presumably, the ramifications of any  gold smuggling  activity which are usually extensive and complicated  must have led the Legislature not to impose a limit  or ceiling  on the  power to grant extension but if the above  guidelines are to govern every extension that may be granted  then mere absence of a limit or ceiling will not be of any consequence. [473H,474A-G]      Assistant  Collector   of   Customs   v.   Charan   Das Malhotra,[1971] 3 S.C.R. 802; applied.      4:1 Section  100 of the Gold Control Act read with Rule 3(1) of  the  Gold  Control  (Identification  of  Customers) Rules, 1968  is constitutionally valid and does not restrict the licensed  dealers to  carry on  their business including their inter-state trade.[478F-G]      4:2. Section  100 of  the Act  as it  originally  stood prior  to   its  amendment   in  1969  imposed  a  statutory obligation upon  a dealer  to take  all reasonable  steps to

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satisfy himself  about the  identity of the person from whom gold was  bought but  it did not specify the nature of steps which a dealer was supposed to take 465 for such satisfaction and therefore this Court in Harakchand Ratanchand Banthia’s  case took the view that the obligation cast  thereunder  was  uncertain  and  incapable  of  proper compliance and therefore the section was unconstitutional on the ground  that it  imposed an  impossible and unreasonable burden.  In   the  light   of  this   decision,  s.100   was appropriately amended  and the ’Gold Control (Identification of Customers)  Rules, 1969 were framed and particularly Rule 3(1) now  prescribed the  several steps one or more of which have to  be taken  by the licensed dealer to satisfy himself as to  the identity of the Customer from whom he proposes to accept, buy or otherwise receive any gold, 477E-G]      4:3. From  the mere fact that most of the customers who come from  villages as  also from  outside their  own  State prefer to  receive payments in cash in lieu of gold sold and are not  prepared to receive payments by crossed cheques for the reason  that they  do not have any bank account or their apprehension that  the said  cheques may not be encashed, it cannot be  said compliance is either incapable or impossible even from a practical or commercial point of view. Moreover, the provisions  contained in  sub-rule (2)(a)  of Rule  3 is applicable in  all cases  where gold  is accepted  bought or otherwise received by the dealer 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 provisions  contained in  sub-rule 2(a)  the steps contemplated  under  sub-rule  (1)  are  unreasonable. [478A-B,EF]      Bihar State  Bullion Merchants, Assn. & others v. Union of India and others, A.I.R. 1971 Pat. 240; approved.      5. The  amended prescribed  forms Nos.G.S.11 and G.S.12 required to  be maintained  under section  55  of  the  Gold Control Act  read with  Rule 11  of the  Gold control (Forms Fees, and  Miscellaneous Matters)  Rules, 1968  brought into force with effect from 31st October, 1975 do not provide, as conceded by  the Government,  for all  the situations  under which gold  would be  received by  him in  his possession or custody and  keeping the account of their gold in accordance with the  said Forms  would give  rise to  anomalies and the dealer would  not be able to discharge his statutory duty of disclosing a  true and  complete account  of the gold in his possession or custody.[478H, 479G-H]      Therefore, the Court directed the Administrator to look into  these   grievances  and  remedy  the  same  by  taking appropriate action  and hope that in the meanwhile no action penal or  otherwise would  be taken against licensed dealers for failure to maintain accounts in the amended Forms G,S.11 and G.S. 12. [480C-D]      6. Section  27(7)(b) of  the Gold  Control  Act,  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. The  Letter of  Instructions or the trade Notices does not prevent or stop inter State trade but were issued  with a view to prevent the several malpractices that were  indulged in  while availing  of the  facility  of hawking ornaments through travelling salesmen. [481C-F] 466

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JUDGMENT:      ORIGINAL JURISDICTION:  Writ  Petitions  Nos.  918-953, 1159-1186 of 1977,88 of 1973,107,664 & 575 to 618 of 1973.       (Under Article 32 of the Constitution of India)                             WITH           Special Leave Petition (Civil No. 538 of 1973      (From the  Judgment and  Order dated 24th July. 1972 of      the Punjab  and Haryana  High Court  in C.W.No. 1221 of      1972)      A.K.Sen and  G.S. Chatterjee for the Petitioners in WP. 918 and 953/77.      Gobindas, G.S.  Chatterjee and  D.P. Mukherjee  for the Petitioners in W.Ps. Nos. 1159-86 of 1977.      Dr. Y.S.  Chitale, Mrs.  A.K. Verma,  R.N. Banerjee and D.N. Mishra  for the Petitioners in WP. No. 88 of 1973 & WP. No.107/73.      D.N. Mishra for the Petitioners in WPs. 564, 575-618/73 and (Civil) No. 538/73.      Ms. A.  Subhashini for  the Respondents  in  WPs.  918- 953/77, SLP 1159-86 of 1977.      Abdul Khadder,  D. Goburdhan  for the Respondents in WP 88/73      D. Goburdhan for the Respondents.      The Judgment of the Court was delivered by      TULZAPURKAR.  J.   By   these   writ   petitions,   the petitioners who  are licensed  dealers, are  challenging the constitutional validity  of the Gold (Control) Act, 1968 and in particular  the provisions  contained in  ss. 2(p), 16,27 (as amended), 44,48,52,79 and 100 (as amended) 467 and the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968  (as amended  in 1975/1976) and the Gold Control (Identification of Customers) Rules, 1969 as being violative of their  fundamental rights under Arts. 14 and 19(1)(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 though their travelling salesmen as being violative of the constitutional guarantee under Art. 301 as also their fundamental rights  under  Arts.  14  and  19(1)(g)  of  the Constitution.      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  Court’s   decision  and  the observations   made   by   it   in   Harakchand   Ratanchand Banthia’s(1) case  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 control of production, manufacture, Supply distribution, use and possession  of, and  business  in,  gold  ornaments  and articles of  gold and  for matters  connected  therewith  or incidental thereto.")  In  Harakchand  Banthia’s  case  this Court has  further pointed  out that  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

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hampering the  country’s economic  stability  and  progress, that the  Customs  Department  was  not  in  a  position  to effectively combat  the smuggling  over the long borders and coast lines, that, therefore, anti-smuggling measures had to be  supplemented  by  a  detailed  system  of  control  over internal transactions  and that the Gold (Control) Act, 1968 was passed  for this  purpose. In  other words,  the several restrictions that  have been  put on  the activities  of the traders doing  business in gold, gold ornaments and articles of  gold,   will  have  to  be  viewed  from  the  aforesaid perspective.  We  might  also  mention  that  in  Harakchand Banthia’s case  the enactment  (prior to  its  amendment  in 1969) had 468 been challenged  not merely  on the  ground  of  legislative incompetence on  the part  of the  Parliament but several of its provisions  were also  challenged on the ground that the same were in violation of the petitioners fundamental rights under Arts.  14 and  (1)(f)  &  (g).  This  Court  held  the enactment  to   be  within  the  legislative  competence  of Parliament and  out of  the  several  provisions  that  were challenged only  ss. 5(2)(b),  27(2) (d) 27(6), 32,46,88 and 100 were  held to  be invalid.  As a result of the aforesaid decision and  the observations  made by  this Court thererin the Act  of  1968  was  suitably  amended  by  Gold  Control (Amendment) Act  (26) of  1969). It is the provisions of the Act as  amended in  1965 that  are being  challenged by  the petitioners before  us and  we may state that though a large number of provisions have been made the subject of challenge in the  writ petitions,  at the hearing only some provisions were selected against which the challenge was pressed before us and we propose to deal with only those provisions.      The first  provision that  has been  challenged  is  s. 16(7) of the Act which provides:           "Every licensed  dealer or  refiner shall  make  a      declaration in  accordance with  the provisions of this      section in  relation 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-s.(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 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  ground:  (a)  it  is discriminatory under Art. 14 and (b) it imposes unreasonable restriction on  licensed dealers  and is  violative of  Art. 19(1)(g). It  was pointed  out that every licensed dealer is required to  furnish, under  s. 56.  returns in  I described 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 declaration in  respect of  any other gold owned, possessed. held or controlled 469 by him  as non-dealer is an additional requirement and while prescribing such  additional requirement the exemption under s. 16(5)  which is available to non-dealers (individuals and families) has  been denied  to him  and according to counsel the classification  made is  not based  on any  intelligible

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differentia having  any nexus  to the  object sought  to  be achieved by  the Act;  in other words, every licensed dealer in  his   capacity  as   a  non-dealer   is   subjected   to discriminatory  treatment.   Secondly,  counsel  urged  that imposing such  a requirement  on a  licensed dealer  to make declarations on every occasion in respect of any quantity of gold coming in his possession or custody as an individual or a member  of a  family amounts to putting an unnecessary and unreasonable burden  on him and the requirement may at times become impossible  to comply  with; counsel  elaborated  his submission by giving an example that if guests or relations, particularly  married   daughters  and   sisters  visit  the residence of  a gold  dealer for  a short  stay  on  festive occasions and  request him,  as  it  frequently  happens  in normal course  of events,  to keep  their ornaments  in safe custody during  their stay  he has  to oblige  them, but  in terms of  the requirement of s. 16(7) the dealer has to make a declaration  in respect of such gold which has come in his custody or  possession and  to require him to do so on every occasion is  to cast unreasonable burden on him amounting to unreasonable restriction  especially as non-compliance there entails penal  consequences and therefore the provision must be regarded as unreasonable and arbitrary.      In our  view neither  of the contentions has any force. As regards the attack under Art. 14, sufficient material has been placed  before us in the counter affidavit of Shri K.S. Venkataramani, Deputy  Secretary, Ministry of Finance (filed in W.P. Nos. 918-953 of 1977) showing how the classification made between  the two  categories in the context of making a declaration  under   s.  16   in  relation  to  gold  owned, possessed,  held   or  controlled   by  them   is  based  on intelligible differentia having a nexus to the object of the Act. In  para 5 of the counter affidavit it has been pointed out  that  while  ordinary  citizens  (non-dealers  and  non refiners) are  not permitted by law to have any primary gold in their  possession, 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 poin- 470 ted 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 belong to him or which are in his custody, possession or control, and that is why  it has  been further  provided  that  the  exemption limits permissible  for general  public in  relation to  the requirement of  declaration of articles and ornaments should not be  available to the dealers and refiners. The aforesaid materials in  the counter-affidavit not merely furnishes the intelligible differentia  for the  classification  made  but

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also shows  that the  classification has  a reasonable nexus with the  object of  the Act and the reasons for denying the exemption limits  to licensed  dealers or  refiners are also valid and referable to the object of the Act.      As  regards  the  second  ground  of  challenge  it  is difficult to  appreciate how the provision could be regarded as unnecessary  or one which casts an unreasonable burden on the licensed  dealer or  refiner. In  fact the  reasons  for introducing the  provision as  indicated above  justify  its enactment if  the objects  of the Act are to be achieved. On the aspect  of casting  unreasonable burden on the dealer or refiner it  must in  the first  place be  observed that  the burden on  the dealer  or refiner  is the same as that which has  been  cast  on  a  non-dealer  (individual  or  family) whenever the  latter comes  to own,  possess, hold  or  have under his control articles or ornaments of gold in excess of the  exempted   limit.  Visits   of  guests   and  relations (including  married   daughters  and   sisters  on   festive occasions and  requests proceeding  from them  to the house- keeper to  keep their ornaments in safe custody during their stays with  him. which  are ordinary  incidents in life, are common to  licensed dealers  or refiners and non-dealers and there is no reason to suppose that the requirement of making a declaration  under s. 16(7) casts any additional burden on him than on a non-dealer when he has in his possession 471 or custody articles and ornaments in excess of the exemption limit. Moreover,  under s.16(7)  it  is  provided  that  the licensed dealer  or refiner  shall make  a  declaration  "in accordance with  the provisions of this section" which means he has  to do  so  within  30  days  of  his  acquiring  the ownership, possession, custody or control of such gold. With such time  limit being  provided the  burden cast  cannot be said to  be unreasonable,  especially when  the provision is found to  be necessary  to carry  out the  objectives of the Act. Having regard to the above discussion, the challenge to the constitutionality of s. 16(7) must fail.      The next  provision challenged  is sec.  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  dealer or  refiner, such      licence shall,  not with standing 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 reconstitution 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  and what  is more no guide-lines or principles are laid down on the basis of which approval to a change may or may  not be  given by the Administrator; besides there is no appeal  or other corrective machinery provided against an adverse  order   of  the  Administrator  refusing  approval. Counsel therefore, urged that this provision clearly suffers from the  vice of  excessive delegation of legislative power

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and is liable to be declared unconstitutional.      It is  true that  sec. 52  does not  contain any guide- lines or principles which would regulate the exercise of the power of the Administrator in the matter of grant or refusal of approval  to a change in the partnership of a firm but in the exercise of the powers 472 conferred by  sec.114 read  with sec.  27 (6) of the Act the Central Government  has framed  the ’Gold Control (Licensing of Dealers  Rules 1969’  and Rule 2 enlists matters to which regard is  to be  had before  issuing a  licence and  Rule 3 indicates the  conditions on  the  fulfillment  of  which  a licence could be renewed. It is true that these Rules, which deal  with   licensing  of  dealers  and  renewal  of  their licences, in  terms do  not cover  a case of a change in the partnership of  a firm  and  the  approval  to  be  accorded thereto by  the Administrator  but in  a sense  a case  of a change occurring  in the  partnership   of the  firm and the occasion to  apply for  the grant of approval thereto by the Administrator would  be a  case of  seeking renewal  of  the licence by the firm in which a change has occurred either by death  or  retirement  of  a  partner  or  as  a  result  of reconstitution of  the firm  and therefore  to such  a  case these Licensing  Rules, particularly  Rule 3,  must and will apply and  these Rules,  in so far as they are applicable to the situation, afford the necessary guide-lines on the basis of which  approval to  the change could be given or refused. Obviously, if  the change  in the firm involves introduction of a new partner into the firm these guide-lines under Rules 2 and  3 will  play an  important  part  in  the  matter  of according or  refusing to  accord the  approval but  if  the change nearly  involves alteration  in the  share-capital or profit sharing  basis amongst  the  self-same  partners  who continue  the  firm  the  approval  would  be  a  matter  of formality. In  view of  the Licensing Rules, 1969 which must apply it  is difficult  to accept  the contention  that  any unfettered or unregulated discretion 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, 1683 issued by the Administrator  under sec.4(4)  of the Act whereunder 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  s. 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. 473      The next  provision that  has been  challenged is  s.79 read with  the second  proviso thereto.  Section 79 provides that no  order of  confiscation  of  any  gold,  in  respect whereof contravention  of any  provision of  the Act  or any rule or order made thereunder has occurred or is apprehended or attempted,  shall be  made unless  the owner of such gold has been  given a  notice in  writing informing  him of  the grounds on  which it is proposed to confiscate such gold and

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is further  given  a  reasonable  opportunity  of  making  a representation in  writing against the proposed confiscation and if  he so desires, of being heard in the matter; and the second proviso which is material runs thus:           "Provided further  that where  no such  notice  is      given within  a period  of six  months from the date of      the seizure  of the gold, or such further period as the      Collector of  Central Excise  or of  Customs may allow,      such gold  shall be  returned after  the expiry of that      period to  the person  from  whose  possession  it  was      seized."      Counsel for  the petitioners contended that the section does not  provide for any guidelines or principles regarding the conditions  and circumstances  governing  the  grant  of further extension  of the  initial statutory  period of  six months on  the expiry of which, in the absence of extension, the owner  or the  person from whose possession the gold has been seized  is entitled to have the seized gold returned to him; furthermore,  there is  no limit  or ceiling  over  the period a  for which  further extension  may be  granted.  In contrast, counsel  pointed out  that in parallel legislation like the  proviso to  sec. 110(2)  of the  Customs Act, 1962 such limit  or ceiling  is laid  down by  providing that the initial period  of six months may, on sufficient cause being shown, be  extended by the Collector of Customs for a period not exceeding  six months; moreover the words "on sufficient cause being  shown" that occur in the Customs Act are absent here. Counsel,  therefore, urged  that in the absence of any guidelines and  in the  absence of any limit over the period of extension that could be granted, the provision (s.79 read with second  proviso) will have to be regarded as conferring an arbitrary  power and  is unreasonable and hence violative of Arts. 14 and 19(1)(g) of the Constitution.      It is  true that  s. 79  does not expressly mention the guidelines  on  the  basis  of  which  the  power  to  grant extension of  the initial  period of  six months  is  to  be exercised but  if regard  is had  to the  provisions dealing with Seizure (sec. 66) Confiscation (sec. 71), 474 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 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  extension 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 have the seized gold returned to him where  no notice  proposing confiscation  is served upon him within  a period  of six  months from  the date  of  the seizure of the gold which shows that the Legislature clearly intended that  ordinarily the  investigation  in  connection with the  seized gold  is expected  to be  over  within  six months; but only in case where such investigation may not be

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completed owing to some genuine or bonafide difficulties the Legislature gave under the proviso power to the Collector to extend that  time. In  other words the Collector is expected to pass  extension orders  neither  mechanically  nor  as  a matter of  routine but only on being satisfied that facts or circumstances exist  which indicate  that the  investigation could not  be completed  for bona  fide reasons  within  the initial period  of six  months.  Such  guidelines  would  be implicit if  the extraordinary  power to  effect seizure and adjudge confiscation  conferred by  the Act is considered in juxtaposition with the right conferred upon the owner or the person concerned  to have  the seized  gold returned  to him normally at  the expiry  of the initial period of six month. Presumably, the ramifications of any gold smuggling activity which are  usually extensive  and complicated  must have led the Legislature  not to  impose a  limit or  ceiling on  the power to  grant extension but if the above guidelines are to govern every extension that may be granted then mere absence of a limit or ceiling will not be of any consequence.      It is, therefore, not possible to accept the contention that the  power to  grant extension  is arbitrary or suffers from lack of guide- 475 lines. Of  course two inbuilt safeguards will have to be and must be  read into  the  provision.  Since  every  extension involves civil  consequences in  that  the  owner’s  or  the concerned person’s right to have the seized gold returned to him  is   adversely  affected  by  being  postponed,  before granting any  extension he  must be  given a  notice and  an opportunity to  make  representation  against  the  proposed extension. In  Asstt. Collector  of Customs  v.  Charam  Das Malhotra,(1) a case under sec. 110(2) proviso of the Customs Act,  1962   this  Court   has  taken  the  view  that  such opportunity is  necessary, not merely on the ground that the proviso contains  the words  "upon  sufficient  cause  being shown" but  also on  the ground  that the civil right of the concerned 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 sec. 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 s. 79 and the second proviso thereto has to fail.      The next  provision challenged  is s. 100 of the Act as amended)  read   with  Rule   3(1)  of   the  ’Gold  Control (Indentification of  Customs) 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 running  the business  of the  petitioners and  since the said Rule  3(1) unreasonably  restricts  the  right  of  the petitioners to carry on their business including their inter state trade  the same  is violative  of Art.19(1)(g) 301 and 302 of  the Constitution.  Section 100  as  amended  by  the Amending Act  26 of 1969 provides for certain precautions to be taken  by a licensed dealer before acquiring any Gold. It runs thus:           "100(1)  Every   licensed  dealer  or  refiner  or      certified goldsmith,  as the case may be, shall, before

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    accepting, buying  or otherwise receiving any gold from      any person, take such 476      steps as  are specified  by the  Central Government  by      rules made in this behalf, to satisfy himself as to the      identity of  the person from whom such gold is proposed      to be accepted bought or otherwise received by him."      The Gold  Control (Identification  of Customers)  Rules framed by  the Central  Government in exercise of the powers conferred under  sec. 114  read with  sec. 100(1) of the Act provide for  the several steps, one or more of which have to be taken by the licensed dealer to satisfy himself as to the identity of  the customer  from whom  he proposes to accept, buy or  otherwise receive  any gold.  Under Rule 3(1) it has been provided  that except  in cases  where the  customer is personally known  to the  licensed  dealer  or  cases  where transactions are put through by means of crossed cheques the licensed dealer  shall take  one   or more  of the following steps to satisfy himself as to the identity of the customer, namely:-      (1)   Introduction or identification of the customer by           a person  who is  either personally  known to  the           licensed  dealer   or  whose   identity  has  been           established to  the satisfaction  of the  licensed           dealer,      (2)   The production of any document which establishes.           the identity of the customer, such as-           (a)  a valid passport held by the customer,           (b)   a valid identity card issued to the customer                by the postal authorities,           (c)     a  valid   identity  card  issued  by  the                Secretariat   of   Parliament   or   of   any                Legislature in a State or Union Territory;           (d)   a valid identity card issued to the customer                by his  employer if  such employer is a local                authority or  a body  corporate or Government                or  a  corporation  owned  or  controlled  by                Government,           (e)   a motor driving licence held by the customer                as a paid employee;           (f)   an identity  card issued by the Gold Control                Officer. 477      Sub-rule (2)  of Rule  3 which  is also  material  runs thus:-           (2)  Before   accepting,   buying   or   otherwise      receiving any  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  sec. 100  as it originally stood  prior to  its amendment  in 1969 imposed a

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statutory obligation  upon a  dealer to  take all reasonable steps to  satisfy himself  about the  identity of the person from whom  gold was bought 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 the obligation cast  thereunder  was  uncertain  and  incapable  of  proper compliance and therefore the section was unconstitutional on the ground  that it imposed an impossible and unreasonable b under. In  light of  this decision, s. 100 was appropriately amended and  the ’Gold Control (Identification of Customers) Rules, 1969,  were framed  and particularly  Rule  3(1)  now prescribes the several steps one or more of which have to be taken by  the licensed  dealer to  satisfy himself as to the identity of  the customer  from whom  he proposes to accept, buy or otherwise receive any gold.      A two-fold  submission challenging  the amended  s. 100 read with Rule 3(1) was made by counsel for the petitioners. In the first 478 place it was submitted that the steps indicated in Rule 3(1) one or  more of  which are  required  to  be  taken  by  the licensed dealer to satisfy himself about the identity of the customer are  incapable or  impossible of  compliance  in  a practical sense  and from  a commercial  point of  view. The precise argument  was that  most of  the  customers  of  the petitioners come  from villages  as also  from outside their own State  and it becomes extremely difficult for the dealer to demand  from them  production of  either  a  passport  or identity card  specified in  the Rules and further that most of the  customers prefer to receive payments in cash in lieu of gold  sold and  are not  prepared to  receive payments by crossed cheques since many of them do not have bank accounts and even  the dealers equally have the apprehension that the cheques  issued  by  the  customers  may  not  be  encashed. Secondly, it  was urged that since sub-rule (2)(a) of Rule 3 provides for sufficient safeguards regarding the identity of the customers  when the  leader is  required to obtain their signatures on  the vouchers  and the  full  address  of  the customer and  or of  the identifier,  the insistence  upon a dealer to  take steps  as contemplated under sub-rule (1) of Rule 3 would be unreasonable. We are not impressed by either of the  submissions. The  grievances articulated  under  the first submission  do not  at all indicate that compliance of one or  more of  steps indicated  in  Rule  3(1)  is  either incapable or  impossible even from a practical or commercial point of view. Moreover, the provision contained in sub-rule (2)(a) of  Rule 3  is applicable  in all cases where gold is accepted  bought   or  otherwise   received  by  the  dealer 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 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 sec. 100 read with Rule  3(1) must  therefore be  upheld. We were informed that a  similar contention  challenging the  said  provision (amended sec.  100 read  with sub-rule  (1) of  Rule 3)  was raised before  the Patna  High Court  in the  case of  Bihar State Bullion  Merchants’  Asstt. & Ors. v. Union of India & Ors.(1) and  the same  was  rejected.  We  approve  of  that decision      Lastly the petitioners as licensed dealers seem to have

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some grievance  against the  amended prescribed  Forms  Nos. G.S. 11 and 479 G.S. 12  required to  be maintained  under s.  55 of the Act read with  Rule 11  of the  Gold Control  (Forms,  Fees  and Miscellaneous Matters)  Rules, 1968,  Forms which  have been brought into  force with  effect from  31st  October,  1975. Under s.  55 of the Act every licensed dealer is required to keep, in  such form and in such manner as may be prescribed, a true  and complete  account of  the gold owned, possessed, held, controlled,  bought or  otherwise acquired or accepted or otherwise  received or  sold, delivered,  transferred  or otherwise disposed  of  by  him  in  his  capacity  as  such licensed dealer  and Rule  11 provides  that the  account of gold shall  be kept in Forms G.S. 11 and G.S. 12. It appears that prior  to the  amendment of  the Rules on 31st October, 1975 the licensed dealer was required to keep the account of gold in prescribed Forms No. G.S. 10 and G.S. 11 and G.S. 12 but after  the amendment  Form  No.  G.S.10  was  completely deleted while  new amended  Form G.S.  11 and  G.S. 12  were prescribed and  according to the petitioners the deletion of old Form  No. G.S.10  and insertion of the new Forms G.S. 11 and G.S.  12 has  resulted  in  the  licensed  dealer  being prevented from maintaining a true and correct account of the gold owned,  possessed, held,  controlled, etc.  by him. The precise grievance  is that  the new prescribed Forms G.S. 11 and G.S.  12 do  not provide  for all situations under which gold would  be received  by him in his possession or custody and keeping the account of their gold in accordance with the said Forms would give rise to anomalies and the dealer would not be  able to  discharge his satutory duty of disclosing a true and  complete account  of the gold in his possession or custody. For instance, it was pointed out that old Form G.S. 10 contained a comprehensive column No. 2 which required the dealer to indicate "name and address of the person from whom (gold was)  received or to whom (gold was) sold", which Form under the  amended Rules  has been  deleted, while  the  new amended Form  No. G.S.  11 requires  the licensed  dealer to indicate in column No. 3 only two categories of persons from whom gold  is received,  namely, (a)  Seller’s name and full address or  (b) Dealer’s name and Licence No. and that there is no  provision in  the Form to account for the receipts of gold by the licensed dealer from artisans or certified gold- smiths; further.  Form No.  G.S. 11  does  not  provide  for accounting  the   receipts  of  samples  and  old  ornaments intended  to  be  converted  into  new  ornaments  from  the customers. Counsel  further pointed  out that in the amended Form No.  G.S. 11  column 11 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 480 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  an   account  of  remaking,  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 filing these a true and complete account of gold owned or possessed

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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 aspect of the amended Forms were put to the counsel for the Respondents, he fairly conceded that  either the new Forms will have to be suitably revised or  the  old  Forms  could  again  be  revived.  We, therefore, direct  the  Administrator  to  look  into  these grievances and  remedy the same by taking appropriate action and hope that in the mean while no action penal or otherwise would be  taken against  licensed  dealers  for  failure  to maintain accounts in the amended Forms G.S.11 and G.S.12      Some of  the petitioners  have challenged Government of India’s Letter  of Instructions issued to all the Collectors of Central  Excise through out the country directing them to withdraw the  facility till  then afforded  to the  licensed dealers  to  send  ornaments  for  sale  through  travelling salesman and  the Trade  Notice issued  by the Collectors of Central Excise  pursuant thereto  actually  withdrawing  the said facility  with immediate  effect  (specimen  Letter  of Instructions dt.  15th February,  1972 and  Trade Notice dt. 17th March  1972 are  enclosed as  Annexures A  & B  to Writ Petition No.  88/1973) on  the ground that it has the effect of preventing  the licensed  dealers from undertaking inter- State trade  and commerce  which  is  in  violation  of  the constitutional guaranteed under Art. 301 of the Constitution as also their fundamental rights under Arts. 14 and 10(1)(g) of the  Constitution. It  appears that  the said  Letter  of Instructions and  the Trade  Notice have  been issued with a view to  prevent the  several malpractice  that  were  being indulged in  while availing of the said facility (of hawking ornaments through  travelling salesman)  and in the counter- affidavit of  Shri  Kulwant  Ram  Mehta,  Deputy  Secretary, Ministry of  Finance (filed  in W.P.  No. 88  of 1983) these malpractices have  been enlisted. But apart from this aspect of the 481 matter it  has been  clarified in the said counter-affidavit that there  is no  intention to prohibit or stop inter-State trade or  commerce in  gold ornaments  but that  merely  the facility  of   permitting  the   licensed  dealers  to  send ornaments for  sale outside  their licensed premises through their salesman  has been  withdrawn;  in  paragraph  12  the relevant averment in that behalf runs thus:           "I reiterate  that the dealers can send ornaments,      on such  orders having  been placed  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 challange 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.

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    In view  of  the  foregoing  discussion  all  the  writ petitions as  also S.L.P.  No.538 of  1973 are dismissed. In all the  circumstances of the case there will be no order as to costs. S.R.                                    Petitions dismissed. 482