Third-party gold ornaments cannot be confiscated without proof of owner knowledge or connivance; separate penalty for statutory breach survives.

Gold ornaments proved to belong to third parties could not be confiscated under the proviso to Section 71 of the Gold (Control) Act, 1968 because the Department failed to establish the owners' knowledge or connivance in the act or omission making the goods liable to confiscation, so the confiscation and fine in lieu of confiscation were unsustainable. The appellant's admitted failure to duly account for the ornaments nevertheless established a contravention of Section 6(2), and that separate statutory breach supported the penalty independently, so the penalty was maintained.

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Issues: (i) whether gold ornaments belonging to third parties, though not accounted for by the appellant, were liable to confiscation under the Gold (Control) Act, 1968; (ii) whether the penalty imposed for contravention of Section 6(2) of the Act was sustainable.

Issue (i): whether gold ornaments belonging to third parties, though not accounted for by the appellant, were liable to confiscation under the Gold (Control) Act, 1968.

Analysis: The unaccounted ornaments were proved to belong to persons other than the appellant. The proviso to Section 71 bars confiscation where the property belongs to a third party and the act or omission rendering it liable to confiscation was without the knowledge or connivance of that owner. On the admitted facts, the Department did not establish any knowledge or connivance of the owners, and the statutory protection under the proviso was attracted.

Conclusion: The confiscation of the gold ornaments and the fine in lieu of confiscation were not sustainable.

Issue (ii): whether the penalty imposed for contravention of Section 6(2) of the Act was sustainable.

Analysis: The appellant admitted that the gold ornaments were not duly accounted for, and the evidence on record established the contravention of Section 6(2). That statutory breach remained unaffected by the setting aside of confiscation, and the penalty was independently supportable on the proved violation.

Conclusion: The penalty imposed for contravention of Section 6(2) was sustained.

Final Conclusion: The confiscation and fine were set aside, while the penalty for the established statutory contravention was maintained.

Ratio Decidendi: Gold or ornaments belonging to third parties cannot be confiscated under the proviso to Section 71 unless the adjudicating authority is satisfied that the owner had knowledge or connivance in the act or omission rendering the goods liable to confiscation; a separate penalty may still survive for an admitted contravention of the Act.

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