TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 1317
X X X X Extracts X X X X
X X X X Extracts X X X X
....1972. The matter was carried further in a revision before the Government of India which was also dismissed on 4.6.1979. The decision of the Government of India was challenged in a writ petition (No.1215/79) before the Rajasthan High Court. By a judgment and order dated 9.8.1994, the Rajasthan High Court allowed the writ petition. 3. It appears from the said judgment that two submissions were made before the High Court, (i) no personal hearing was given by the Collector to the appellant's father before the order of confiscation was passed though a show cause notice dated 3.2.1966 was issued proposing confiscation and penalty under Section 126M and 126L(16) of the RULES respectively, and (ii) An opportunity to redeem the seized gold was not given. 4. The High Court accepted the submissions and remitted the matter to the Collector (Central Excise and Customs). The operative portion of the judgment reads as follows:- "16. As a sequence the orders passed by the Collector dated 24.9.1966 (Annex.1), the order dated 6.3.1972 passed by the Gold Control Administrator as well as the order dated 3/4.6.1979 passed by the Special Secretary Finance, Government of India exercising the power ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enalty contemplated under Rule 126L(16) of the RULES is not called for. 6. Aggrieved by the decision of the Collector, the appellant herein carried the matter in appeal to the Tribunal.3 The appeal was heard by a Bench of the Tribunal consisting of two members. There was a difference of opinion between both the members regarding the quantum of the redemption fine. In view of the difference of opinion, the matter was referred to the third Member. The outcome of the entire process is that the Tribunal by its order dated 30th October 1995 finally opined that the redemption fine should be reduced to Rs. 12.5 lacs which represented the value of the gold as on the date of the seizure. Accordingly, the appeal was allowed. 7. The Collector sought a reference under Section 82-B4 of the Gold Control Act, 1968 on two questions of law; "1. Whether in the matter of imposition of redemption fine, the provisions of Section 73 of erstwhile5 Gold (Control) Act, 1968 will apply when the gold was neither seized nor confiscated under the Gold (Control) Act, 1968? 2. Whether the quantum of Redemption fine should be related to market value of Gold on the date of seizure or the market value of gold....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to return of the gold permitted to be retained under this Order as per the directions of this Court while finally disposing of the matter or thereafter." 12. The Reference came to be answered by the Rajasthan High Court by the order dated 29.6.2009, which is the subject matter of the instant appeal. The relevant portion reads as follows: "19. Undeniably and undisputedly, it is the date of giving option which is relevant for adjudging the fine and not the date of seizure. xx xxx xxx xxx The language of sub-rule 8 of Rule 126-M of 'Rules, 1962' categorically envisages that the officer adjudging may give to the owner of the Gold an option to pay in lieu of confiscation such fine as the said officer thinks fit. According to Wiktionary, a wiki based open content dictionary, the meaning of term in lieu of is 'Instead, in place of , as a substitute for'. This meaning suggests that the redemption fine is the substitute for the market value of the Gold. xxx xxx xxx xxx .........., the market value of the seized Gold has to be taken on that date when the option is given by the officer adjudging it. 20. It is revealed from the material on record that the Collector aptly appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... crores in the stipulated time limit, as given above, Shri Gunwant Lal Godawat and legal heir of late Shri Chhagan Lal Godawat shall be liable to return to the Department immediately the gold weighing 185.145 kgs which was returned to them on 2.7.94 in compliance of directions of the Hon'ble Rajasthan High Court given in the order dated 28.05.97." THE HISTORY OF THE GOLD CONTROL REGIME: 14. On 26th October 1962, the President of India made a proclamation of emergency under Article 352 of the Constitution of India. On 28th October 1962, the President of India promulgated the Defence of India Ordinance (4 of 1962). It was amended by another ordinance (6 of 1962). In exercise of the power conferred under Section 3 of the Ordinance (4 of 1962), RULES came to be made in GSR 1465 dated 5th November 1962. By an amendment to the RULES, Part XIIA came to be introduced by GSR 1525 dated 23rd September, 1963 with the heading 'Gold Control'. 15. Part XIIA of the RULES contained various provisions regarding acquisition, possession, sale etc. of gold ornaments and articles by two defined classes under RULES 126-A(c) and (h), i.e. "dealers" and "refiners" and persons other than dealers and ref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r any other law, it was declared in Section 117 of the ORDINANCE. "(1) As from the commencement of this Ordinance, the provisions of Part XII-A of the Defence of India Rules, 1962 shall stand repealed and upon such repeal, Section 6 of the General Clauses Act, 1897, shall apply as if the said Part were a Central Act; (2) Notwithstanding the repeal made by sub-section (1) but without prejudice to the application of Section 6 of the General Clauses Act, 1897, any notification, order, direction, appointment or declaration made or any notice, licence or certificate issued or permission, authorization or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under or in pursuance of the provisions of Part XII-A of the Defence of India Rules, 1962, so far as it is not inconsistent with the provisions of this Ordinance be deemed to have been made, issued, granted, adjudged, imposed, ordered, done or taken under the corresponding provisions of this Ordinance." 20. Thereafter Parliament made the Gold Control Act (45 of 1968)9 (hereinafter referred to as the GOLD ACT). The scheme of the ORDINA....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her those abolished part-time Village Officer posts would revive on the lapse of the ordinance. A Constitution bench of this Court held that "the effect of Section 3 of the Ordinance was irreversible except by express legislation". 23. The resultant legal position is that the efficacy of the provisions of an ordinance would not in any way be diminuted or abrogated unless there is a subsequent countervailing legislation. The rights and obligations created, the liabilities incurred or acquired or suffered under an ordinance would be as enduring as those resulting from a Statute. 24. But Venkata Reddy is declared not to be good law in view of the law laid down in Krishna Kumar Singh & Another v. State of Bihar & Others, (2017) 3 SCC 1.11 It was held: "105.12. The question as to whether rights, privileges, obligations and liabilities would survive an Ordinance which has ceased to operate must be determined as a matter of construction. The appropriate test to be applied is the test of public interest and constitutional necessity. This would include the issue as to whether the consequences which have taken place under the Ordinance have assumed an irreversible character. In a suitabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ta Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC 198 : 1985 SCC (L&S) 632] essentially follows the same logic but goes on to hold that if Parliament intends to reverse matters which have been completed under an Ordinance, it would have to enact a specific law with retrospective effect. This, in our view, reverses the constitutional ordering in regard to the exercise of legislative power." It must be remembered that the abovementioned discussion of law was in the context of an Ordinance which was never tabled before the Legislature and lapsed by virtue of the efflux of time. 27. In our opinion, the declaration in Krishna Kumar Singh that Venkata Reddy is no longer good law in view of the judgment in S.R. Bommai may not make any difference to the present case. In the case on hand, the ORDINANCES came to be repealed and replaced by the GOLD ACT with retrospective effect from 29th June 1968, that is, from the date of promulgation of the ORDINANCE. THE EFFECT OF THE REPEAL OF THE ORDINANCE BY THE GOLD ACT: 28. The General Clauses Act is silent in this regard. On the other hand, Section 3014 of the General Clauses Act deals with a situation of a Central Act being repealed by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Act." SCHEME OF PART XIIA OF THE RULES: 31. The RULES dealt with various matters. We are only concerned with Part XIIA titled "Gold Control" (which was inserted by an Amendment dated 09.01.1963), because the seizure and confiscation of gold which is the subject matter of these appeals arose out of the operation of Part XIIA of the RULES. 32. Various Rules in Part XIIA dealt with the regulation of the activity of three classes of persons (i) dealers, (ii) refiners, and (iii) others who own or possess gold. The expressions 'dealer' and 'refiner' are defined expressions under Rule 126-A(c) and (h) respectively. Chapter V of Part XIIA dealt with the regulation of persons other than dealers and refiners who own gold (hereinafter referred to as PERSONS for the sake of convenience). 33. Under Rule 126-I, PERSONS were required to make a declaration within a period stipulated therein. The declaration is required to contain, the quantity, description and other prescribed particulars of gold (other than ornaments) owned by a PERSON. Sub-rule (3) stipulated that PERSONS shall not acquire any gold other than ornaments except either by succession or in accordance with a permit granted unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of those two expressions, we are of the opinion that 'forfeiture' is an expression which takes within its sweep 'confiscation' also for the purpose of law17. 37. Rule 126-P provided for penalties. The sub-rules insofar as it is relevant for the facts of the present case are Rule 126P(1)(i) and (2)(ii)18, the first of which stipulated that any PERSON either fails or omits to make any return required under Rule 126-I without any reasonable cause or makes a false statement in the return filed either with knowledge or belief that such statement is false is punishable with imprisonment with a term of one year or fine or both. Sub-rule(2)(ii) stipulates that any person who "has in his possession or under his control any quantity of gold in contravention of any provision of this part" shall be punishable with imprisonment for a term of not less than six months and not more than two years and also with fine. 38. We have indicated the content of Rule 126-P(1) only for the limited purpose of understanding the overall scheme of the RULES and the consequences (other than confiscation of the gold under Rule 126M) that can visit PERSONS either owning or possessing gold in contravention of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the High Court, the RULES stood repealed by the ORDINANCE which inter alia provided that Section 6 of the General Clauses Act applies. By virtue of the operation of Section 6 of the General Clauses Act20, the adjudgment of confiscation (legal proceeding) in respect of the seized gold made under the RULES is required to be made afresh and appropriate further orders are to be passed in accordance with the RULES as if the repealing ORDINANCE had not been passed21. 43. The legal consequences which follow the repeal of the RULES are specified in Section 117 of the ORDINANCE. "...upon such repeal, Section 6 of the General Clauses Act, 1897, shall apply as if the said Part were a Central Act ..." Consequently, the RULES would remain unaffected in respect of the various legal proceedings, referred to in Section 6 (e) of the General Clauses Act, either pending or concluded and other appropriate consequences specified in the RULES would follow. 44. But that does not solve the problem on hand. The ORDINANCE itself came to be repealed by the GOLD ACT by the date of the judgment of the Rajasthan High Court. Such repeal gives rise to two questions - What is the effect of (i) the repea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) Act, 1968, there are no provisions for making a declaration relating to the possession of primary gold. At this stage it may be noticed that under the "Rules" every person who was in possession of primary gold, exceeding the prescribed weight was required to convert the same either into ornaments or sell the same to the licensed dealers within the time prescribed by the "Rules". Possession of primary gold thereafter exceeding the prescribed limit was an offence. That period had expired long before the Gold (Control) Act, 1968 came into force. Hence the Gold (Control) Act naturally did not make any provision for a declaration of the possession of primary gold. In view of that circumstance it was urged on behalf of the appellant that the provisions in the "Rules" requiring a declaration to be made in respect of the possession of primary gold are inconsistent with the provisions of the Gold (Control) Act and therefore the notice issued under the "Rules" cannot be considered as being continued under the provisions of the Gold (Control) Act, 1968. Para 8. The above contention is untenable. There are no provisions in the Gold (Control) Act, 1968 which are inconsistent with Rule 126(I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he amount of fine that could be levied and collected from the appellant in lieu of the confiscation of gold seized from him?; (ii) Whether the High Court applied the correct law in recording the conclusion that the appellant is liable to pay an amount of Rs. 11.04 crores in lieu of the confiscation of the Gold if he so chooses? and issues ancillary thereto. 50. It must be remembered that by order dated 9.12.94, the officer adjudging the confiscation of gold of the appellant gave an option to the appellant to pay a fine of Rs. 2.5 crores. While deciding that figure, the officer took note of the fact that the gold was valued at Rs. 12.5 lakhs at the time of its seizure and also took note of the fact that as on 9.12.1994 (the date of adjudgment order), the gold was valued at Rs. 11.04 crores. It must be remembered that Rule 126- M(8)(a) did not oblige the officer to determine the amount of fine on the basis of the value of the confiscated gold either with reference to the date of its seizure or on the date of adjudgment of confiscation. The rule (text of it at least) conferred an unfettered discretion on the officer to determine the amount of fine. But an unfettered discretion and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, except in certain situations contemplated therein. Sub Rule 4 and 5 lay down the manner in which a declaration is supposed to be made by those who acquire gold through succession, intestate or testamentary. PERSONS not filing a declaration at all and PERSONS not filing a further declaration under sub-Rule (3) cannot be treated on the same footing. 54. All this just goes to show that the violations committed by PERSONS falling under different category cannot be treated alike. If the rule were to be applied to all these categories of PERSONS uniformly it would result in the violation of Article 14. 55. The appellant's case does not in our view calls for any discretion to be exercised in his favor in the light of the totality of the circumstances. The non-filing of the declaration is established to be an absolutely calculated violation of law.26 56. Aggrieved by the determination of the fine amount of Rs. 2.5 crores, the appellant carried the matter in appeal under Section 81 of the GOLD ACT. Two members of the appellate tribunal were not able to agree upon the quantum of the fine. While the Member (Technical - Brahma Deva) opined that the law applicable is only Rule 126-M(8)(a)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 29.06.2009, answering the reference, the tribunal made an order dated 30.04.2010 remitting the matter to the Commissioner: "4. Under the circumstances, we dispose of the appeal by way of remand to the Adjudicating Commissioner (authorized officer) to determine appropriate redemption fine and allow the order of the gold to redeem the gold on payment of such redemption fine. It goes without saying that while determining the redemption fine, he shall follow the cited order of the Hon'ble High Court dated 29.6.2009." Thereby, the Commissioner passed an order as follows: "(i) An option is given to Shri Gunwant Lal Godawat and legal heir of late Shri Chhagan Lal Godawat to pay Rs. 11.04 crores (Rupees Eleven crores and four lakhs only) in lieu of confiscation of the gold weighing 240.040.145 kgs under the erstwhile Defence of India Rules, 1962 within three months of receipt of this order. (ii) In case Shri Gunwant Lal Godawat and the legal heir of late Shri Chhagan Lal Godawat does not exercise the option of depositing the amount of Rs. 11.04 crores in the stipulated time limit, as given above, Shri Gunwant Lal Godawat and legal heir of late Shri Chhagan Lal Godawat shall be li....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... continues to have the discretion to impose a fine lesser than the market value as on the date of seizure. There is therefore no inconsistency between the DoI Rules and the Act." 63. The substance of the submission is that both the RULES and the GOLD ACT provide for giving an option to the "owner" of the gold adjudged to be confiscated. While the RULES provide an unrestricted discretion to the "officer adjudging" to determine the amount of fine, GOLD ACT restricts the discretion by imposing an upper limit on the quantum of fine that could be imposed by declaring that "give to the owner thereof an option to pay in lieu of confiscation such fine, not exceeding the value". According to the petitioner, such value is to be determined with reference to the date of the seizure of the gold because of Section 73 of the GOLD ACT read with Section 2(v) thereof. 64. At the outset, we must make it clear that there is nothing in the text of Section 73 of the GOLD ACT which requires the value of the gold (for the purpose of determining the fine) should be the value of the gold as on the date of the seizure. But the expression 'value' is a defined expression under Section 2(v) of the Act. "Sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....limited consequences. 67. Prior to the GOLD ACT, seizure and confiscation of gold were authorised by the RULES. Though, by virtue of the fiction created under Section 116, the confiscations adjudged under the RULES are deemed to be confiscations adjudged under the GOLD ACT, the Scheme and the limitations of such fiction are already explained earlier in para 29. Therefore, neither Section 73 nor the definition under Section 2(v), in our opinion, would be applicable for the confiscations adjudged under the RULES - pursuant to a seizure that took place before the commencement of the GOLD ACT. 68. No doubt that the option to pay fine in lieu of confiscation is one of the consequences flowing from the adjudgment of confiscation. Therefore, in view of the fiction under Section 116, Section 73 of the GOLD ACT would have been applicable if consequence of applying such fiction to the confiscations adjudged under the RULES is not inconsistent with the GOLD ACT. In view of the language of Section 73 - "confiscation authorised by this Act" limits the operation of Section 73 only to the confiscations adjudged under the GOLD ACT. Hence, there is an inconsistency. We are of the opinion that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....according to the said order of the Collector, the value of the gold as on that date was Rs. 11.04 crores. Therefore, the High Court was right in its direction. 72. We are only left with one submission made on behalf of the Union of India, i.e., in view of the enormous delay which took place in the confiscation proceedings (50+ years), the appellant must be made to pay the interest on the amount of fine of Rs. 11.04 crores. Otherwise, it would have the effect of permitting the appellant to profit by litigation as according to the Attorney General if the appellant is permitted to take back the entire quantity of 240.040 kgs. of gold the current market value would be Rs. 72 crores (approx.). We find the submission wholly justified. We, therefore, deem it proper to direct that the appellant would be entitled to redeem the gold by paying not only the fine of Rs. 11.04 crores but also the interest thereon calculated @ 10% p.a. 73. The appeals are disposed of as indicated above. 1 Rule 126L. Power of entry, search, seizure, to obtain information and to take samples.- (2) Any person authorized by the Central Government by writing in this behalf may- (a) enter and search any p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... By the date of the Reference Application, the Gold (Control) Act, 1968 stood repealed by Act No.10 of 1990 of the Parliament w.e.f. 6th June 1990. 6. The order copy is not available on record 7. Came into force on 15th December 1962 8 Parliament enacted the Gold (Control) Act, 1965 (18 of 65), which was never brought into force (for reasons not known nor necessary to be known for the purpose of this case). 9 Act 45 of 68 came into force on the 1st September 1968. 11 105.10. The theory of enduring rights which has been laid down in the judgment in Bhupendra Kumar Bose [State of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR 380 : AIR 1962 SC 945] and followed in T. Venkata Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC 198 : 1985 SCC (L&S) 632] by the Constitution Bench is based on the analogy of a temporary enactment. There is a basic difference between an Ordinance and a temporary enactment. These decisions of the Constitution Bench which have accepted the notion of enduring rights which will survive an Ordinance which has ceased to operate do not lay down the correct position. The judgments are also no longer good law in view of the decision in S.R. Bommai [....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion which is false and which he either knows or believes to be false or does not believe to be true, shall be punishable with imprisonment for a term which may extend to one year or with fine or with both;". Rule 126(2) Whoever,- (ii) has in his possession or under his control any quantity of gold in contravention of any provision of this Part 19 Rule 126M(8) (a) Whenever confiscation of any gold is authorised by this Part, the officer adjudging it may give to the owner of the gold an option to pay in lieu of confiscation such fine as the said officer thinks fit. 20 "Section 6. Effect of repeal.--Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not- (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tters were written to check up the balance sheet by his 'Munim' Shri Rikhab Dass. He further stated that the documents were got written under the influence of 'Bhang'. The late 'Munim' Shri RikhabDass was keeping the gold. It is likely that his mother, Smt. Birju Bai may have told about it. He expressed his ignorance about this gold till the date of seizure. He did not know where the gold was kept. He, therefore, submitted that he cannot be proceeded against on the basis of the letters written by him at a time when he was a minor. Chhagan Lal Godavat also disclosed that he and his mother had strained relations. She did not disclose the fact of buried gold to him fearing that he might dispose it off... " The Superintended after ascertaining the true position of the relationship of Chagganlal found that "The mother denied there was any quarrel with her son. The house stand in the name of the ancestral firm of which Chagganlal is the sole proprietor. The statement of the mother was recorded in the presence of Shri Chhagan Lal Godavat was also signed the same" 27 While agreeing with the approach taken by my learned brother Shri Brahma Deva for reduction of the fine amount in ....