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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: ANNAM RAMALINGAM ETC. ETC.

DATE OF JUDGMENT21/02/1985

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. MISRA RANGNATH KHALID, V. (J)

CITATION:  1985 AIR 1013            1985 SCR  (2) 951  1985 SCC  (2) 443

ACT:       Gold  Control Act,  1968, section  28,  constitutional validity-Whether  section   28  suffers  from  the  vice  of excessive delegation of legislative power-Doctrine of Parity of Reasoning.

HEADNOTE:       Section  28 of  the Gold  Control Act, 1968 bars money lending business  to be  carried on  in  licensed  premises, either by  the licensed dealer or by any other person unless authorised by the Administrator to do so.       Drawing  analogy from  the reasoning  adopted  by  the Supreme  Court   in  its  decision  reported  in  Harakchand Ratanchand Banthia v. Assistant Collector or Central Excise, Poona, II  Division, [1970]  I SCR 479=AIR 1971 SC 1170, the High Court  of Andhra Pradesh struck down the said provision on the  ground that  it suffers  from the  vice of excessive delegation of  legislative power  in as much, as no criteria or guidelines  have been  provided by reference to which the power conferred on the Administrator to refuse permission or grant permission  should be  exercised and  that the section confers an  arbitrary, uncanalised and unfettered power upon the Administrator  with the  result that the licensed dealer is at  his mercy while seeking permission to carry on money- lending or  banking business on the security of any article, ornament or both in the same premises in which he carried on business as such dealer. Hence the appeal by special leave.       Allowing the appeal, the Court ^       HELD:  1.1 Section  28 of  the Gold  Control Act, 1968 cannot be  struck down on the ground of excessive delegation of legislative power and its validity must be upheld. [957C]       1.3  It is  true that  no express rule prescribing the conditions or  circumstances under  which the permission can be granted  or refused  has been  framed nor  any particular guide-line has  been expressly  indicated in  section 28  by reference to  which the  power conferred upon him thereunder could be  exercised by  the Administrator,  but that  is not decisive of the matter. [954H; 955A] 952       1.3  Section 28  of the Gold Control Act, 1968 is part

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and parcel  of the entire scheme of the Gold Control Act the objective, the  policy and  the scheme  of the  Act together with the  necessity to ensure prevention of circumvention of the other  provisions of the Act afford more than sufficient guidance to  the Administrator  in the  matter of exercising the power  or discretion  conferred on him under section 28. The  several   restrictions  that   have  been  put  on  the activities of  the traders  doing business in gold will have to be  viewed, in the light of the purpose or which the Gold Control Act was passed viz., 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-line that  therefore anti-smuggling measures had to be supplemented by  a detailed  system of control over internal transactions. In fact section 5 (1) of the Act requires that the Administrator  should have  regard  to  the  policy  and purposes of  the Act  in making his orders. Moreover against his order  under that  section a  revision lies  to  Central Government which implies that be will have to make judicious use of  his power or discretion and any improper exercise is liable to  be corrected by a higher authority. Therefore, it cannot be!  said that unfettered or uncanalised or arbitrary power  has  been  conferred  upon  the  Administrator  under section 28. 1955B; E-G]       1.4  further section 28 does not impose any blanket or absolute prohibition  upon a  dealer from carrying on money- lending, banking  or any other business in the same promises in which  he carries  on business  as a  dealer  but  he  is prevented only  from carrying in business as money-lender or banker on  the security  of any  article, ornament  or  both unless authorised by the Administrator. Even the restriction in the  case of  a third person in carrying on business as a money-lender, banker  or any  other  business  in  the  same premises is not absolute in as much as the Administrator can authorise the  third person  to carry of the business in the licensed premises  of the dealer and while implementing such limited restrictions  or granting relief against the same he will be  guided by the policy and purposes of the Act and by the prime  consideration that  circumvention  of  the  other provisions of the Act shall not be permitted. [956A-C]       Bihar  State Bullion  Merchants Association.  Union of India, AIR 1971 Patna 240; Ramanlal Purshottamdas Chokshi v. Union of India & Others 14 Guj. L.R. 1112, approved. ,          Annam Ramalingam, etc. etc. v. Union of India, Writ Petitions Nos.  3956 3873/68  etc.  dated  26.12.69.  Andhra Pradesh, reversed.       1.5  In Harakchand  Banthia’s case  the Supreme  Court found, the  phrases like  ’in the  region’, the  anticipated demand’.  ’suitability’  and  ’public  interest’  as  vague, uncertain and therefore declared the unamended section 21(6) of the  Gold Control  Act as  invalid and the Parliament has carried out suitable amendments thereafter. No such vague or indefinite expressions  or  concepts  are  to  be  found  in section 28 by reference to which 953 the Administrator  is required to exercise his power. In the absence of  A  parity  of  situation  or  circumstances  the doctrine of parity of reasoning cannot be invoked. [957A-C]       Harakchand  Ratanchand Banthia  v. Assistant Collector of Central  Excise Poona  11 Division,  [1970] I SCR 479-AIR 1971 SC 1170, explained and held in applicable.

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JUDGMENT:       CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1264- 67/71 etc.       From the Judgment and Order dated 26.12.69 of the High Court of  Andhra Pradesh  at Hyderabad  in W.P.  Nos.  3956, 3971, 3983,  3899, 4421,  4474, 4537,  4544, 4570,  4825 and 4933/68.       D.K.  Sen, Gopal  Subramonium and  R.N. Poddar for the Appellant.       Ex-parte for the Respondents.       The Judgment of the Court was delivered by       TULZAPURKAR,  J. In these 11 appeals only that part of the judgment of the Andhra Pradesh High Court is assailed by the Union  of India  where the  challenge to the validity of section 28  of the Gold Control Act, 1968 has succeeded. The challenge to the other provisions of the Act at the instance of  persons  engaged  in  gold  trade,  i.e,  manufacturers, shroffs and dealers in gold was rejected by the High Court.       Section 28 of the Act runs thus:                "28. Money lending business not to be carried      on in licensed premises-No licensed dealer shall unless      authorised by the Administrator so to do,-          (a)    carry  on  business  as  a  money-lender  or      banker on  the security of any article, or ornament, or      both,          (b)   permit any  other person  to carry  on money-      lending, banking or any other business,           in the  same  premises  in  which  he  carried  on           business as such dealer."              The  High Court  has struck  down the aforesaid provision only  on the  ground that it suffers from the vice of excessive  delegation of legislative power inasmuch as no criteria or guide-lines have been 954 provided by  reference to  which the  power conferred on the Administrator  to  refuse  permission  or  grant  permission should  be   exercised  and  that  the  section  confers  an arbitrary, uncanalised power upon the Administrator with the result that  the licensed  dealer  is  at  his  mercy  while seeking permission  to carry  on  money-lending  or  banking business on the security of any article, ornament or both in the same  premises in  which he  carried on business as such dealer. The  High Court’s  reasoning in this behalf is to be found in  its judgment  at page  87 of the paper book and it runs thus:                  "The Administrator  as is evident from this      provision, is  given unlimited  authority or  power  to      refuse permission or to grant permission. No rules have      been framed prescribing the conditions or circumstances      under which  the Administrator  could refuse permission      or grant  permission. A  dealer is  at the mercy of the      Administrator and  is help  less against  the arbitrary      exercise of  the power  by the  Administrator  when  he      chooses to  negative the  request.  It  is  clear  that      Section 28  confers an  arbitrary and uncanalised power      without any  criteria for guiding the discretion of the      Administrator. Further,  the section  does not  provide      nor is  any rule  brought to  our notice  which enjoins      upon the  Administrator to give a hearing to dealer who      seeks permission under this Section and give reasons in      case he decides to refuse the permission."       Incidentally  the High  Court also  proceeded to  draw

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analogy from  the reasoning  adopted by  this Court  in  its decision  in   Harakchand  Ratanchand   Banthias  v.   Asst. collector  of   Central  Excise  Poona,  II  Division  while declaring sec.  27(6) of  the Act,  as it stood prior to its amendment  by   the   Amending   Act   No.   26   of   1969, constitutionally invalid on the ground of conferal of a very wide and  vague power  upon the  Administrator to  grant  or renew a license to a dealer.       For  the reasons  which we shall indicate presently it is impossible  to the  reasoning given by the High Court for striking down sec. 28 in the manner done and in our view the analogy drawn  by the  High Court from the reasoning adopted by this Court while dealing with unamended sec. 27(6) of the Act is clearly inapplicable.       It  is true  that  no  express  rule  prescribing  the conditions or  circumstances under  which the permission can be granted or refused (1) [1970] 1 S.C.R. 429=AIR 1971 SC 1170. 955 has been  framed nor  any  particular  guide-line  has  been expressly indicated  in sec.  28 by  reference to  which the power conferred  upon him  thereunder could  be exercised by the Administrator,  but that  is not decisive of the matter. It cannot be disputed that sec. 28 is part and parcel of the entire scheme  of Gold  Control as  envisaged by the Act and the  object   of  the   enactment  and  the  scheme  affords sufficient guidance  to the  Administrator in  the matter of exercising his  discretion  under  that  section.  The  main object in  putting the  Act on the Statute-Book as indicated by its  long title  is "to  provide,  in  the  economic  and financial interests of the community, for the control of the 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 Banthria’s  case (supra) 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  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-line,  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 will  have to be viewed from the aforesaid perspective. It is  also clear  that the  restrictions  which  have  been imposed in sec. 28 are meant to prevent the circumvention of other provisions  of the  Act. Therefore,  in our  view  the objective, the  policy and  the Scheme  of the  Act together with the  necessity to ensure prevention of circumvention of the other  provisions of the Act afford more than sufficient guidance to  the Administrator  in the  matter of exercising the power  of discretion  conferred on him under sec. 28. In fact, sec.  5(1 of  the Act  requires that the Administrator should have  regard to the policy and purposes of the Act in making his  orders. Moreover  against his  order under  that section a  revision lies to Central Government which implies that he  will have  to make  judicious use  of his  power or discretion  and  any  improper  exercise  is  liable  to  be corrected by  a higher authority. If that be so it cannot be said that  unfettered or  uncanalised or arbitrary power has been conferred upon the Administration under sec. 28.

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     Moreover,  regard must  be had to be the nature of the restrictions imposed  by the Section. It does not impose any blanket or 956 absolute prohibition  upon a  dealer from carrying on money- lending, banking  or any other business in the same premises in which  he carries  on business  as a  dealer  but  he  is prevented only  from carrying on business as money-lender or banker on  the security  of any  article, ornament  or  both unless authorised by the administrator. Even the restriction in the  case of  a third person in carrying on business as a money-lender, banker  or any  other  business  in  the  same premises   is not  absolute in  as much as the Administrator can authorise  the third  person to carry on the business in the licensed  premises of  the dealer and while implementing such limited  restrictions or  granting relief  against  the same he will be guided by the policy and purposes of the Act and by  the prime  consideration that  circumvention of  the other provisions  of the  Act shall not be premitted. Having regard to  this position  which obtains  in the case sec. 28 cannot be  struck down on the ground of excessive delegation of legislative power and its validity has to be upheld.       We  may indicate  that the same provision (section 28) was  challenged  before the  Patna High  Court  in  Bihar  State Bullion Merchants’  Association v. Union of lndia(1) and the Gujarat High  Court in  Ramanlal Purshottamamdas  Chokshi v. Union of  India &  Others (2)  and these  High  Courts  have upheld its  validity. We  approve the  view taken  in  those cases       As  regards the  analogy drawn  by the High Court from the reasoning  adopted by this Court in Harakchand Banthia’s case (supra) while declaring unamended sec. 27(6) of the Act invalid we  would like  to point  out that  while conferring power on  the Administrator  in the  matter of  granting  or renewing a  license to  a dealer the unamended sec. 27(6) in several of  its clauses  referred to  certain concepts which Administrator was  required to  take into account, and these concepts were  regarded as  indefinite, uncertain and vague. For instance under clause (a) the Administrator was required to have  regard to  the number  of dealers  existing ’in the region’ in  which the  applicant was  intending to  carry on business as  dealer but  the  word  ’region’  was  no  where defined in  the  Act;  similarly  clause  (b)  required  the Administrator to  have regard to the anticipated demand’, as estimated by  him for  the ornaments  in that region but the expression  ’anticipated   demand’  was   really  vague  and incapable  of   assessment  leading   to  a  great  deal  of uncertainty; similarly the expression (1)AIR 1971 Patna, 240. (2)14 Guj. L.R. 112. 957 ’suitability of  the  applicant’  in  cl.  (e)  and  ’public interest’ in  cl.  (g)  A  did  not  provide  any  objective standard or  norm and because such indefinite, uncertain and vague expressions  or concepts  had been used in some of the clauses under  sec. 27(6)  this Court struck down sec. 27(6) on the  ground that it conferred a very wide and vague power on the  Administrator. It  may be  mentioned that after this provision was  struck down  by  this  Court  Parliament  has carried out  the necessary  amendment in  the Act.  No  such vague or  indefinite expressions or concepts are to be found in sec.  28 by  reference  to  which  the  Administrator  is required to  exercise his power. In the absence of parity of situation  or   circumstances  the  doctrine  of  parity  of

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reasoning cannot be invoked.       In  the result  we set  aside the impugned judgment of the High  Court and  declare sec.  28 of  the Act valid. The appeal succeeds  but since the respondents have not appeared there will be no order as to costs. S.R.                                         Appeal allowed. 958