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TMI Blog1969 (4) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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." Section 2 contains a number of definitions. Section 2(b) defines an "article" to mean anything (other than ornament), in a finished form made of, manufactured from or containing, gold, and including (i) any ,old coin, (ii) broken pieces of an article, but not Including primary old. Clause (d) defines a "certified goldsmith" to mean a self-employed goldsmith who holds a valid certificates referred to in s. 30. Clause (h) defines a dealer as follows "dealer" means any person who carries on, directly or otherwise, the business of making, manufacturing, preparing, repairing, polishing, buying, selling, supplying distributing, melting, processing or converting gold, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration,..... Clause (i) states "declaration" means a declaration which is required by this Act or was required by rule 126-1 of the Defence of India Rules, 1962, or the Gold (Control) Ordinan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Administrator to exercise any powers may exercise those powers in the same manner and with the same effect as if they had been conferred on that person directly by this Act and not by way of authorisation. (6) The Administrator may also-- (a) perform all or any of the functions of, and (b) exercise all or any of the powers conferred by this Act or any rule or order made thereunder on, any officer lower in rank than himself. (7) A Gold Control Officer shall, subject to such limitations, restrictions and conditions as the Central Government may think fit to impose, exercise such powers and discharge such functions as are specified or conferred, as the case may be, by or under this Act." Section 5 confers power on the Administrator to issue directions and orders. "(1) The Administrator may, if he thinks fit, make orders, not inconsistent with the provisions of this Act, for carrying out the provisions of this Act. (2) The Administrator may, so far as it appears to him to be necessary or expedient for carrying out the provisions of this Act, by order- (a) regulate, after consultation with the Reserve Bank of India, the price at which any gold may be bought or sold, and (b) r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing, preparing, repairing or polishing of, or dealing in, ornaments, (e) the suitability of the applicant, (f) the suitability of the Premises where the applicant intends to carry on business as a dealer, (g) the public interests, and (h) such other matters as may be prescribed. Chapter VIII deals with certified goldsmiths. Section 39 of this Chapter provides : (1) Save as otherwise provided in this Act, no person shall commence, or carry on, business as a goldsmith after the cormnencement of this Act, unless he holds a valid certificate recognising him as a goldsmith. (2) The certificate referred to in subsection (1)- (a) shall be in such form as may be prescribed, (b) shall be valid -until the death of the holder, or the cancellation thereof, whichever is earlier, and (c) may contain such conditions, limitations and restrictions, as the Administrator may think fit to impose and different conditions, limitations and restrictions may be imposed for different classes of certified goldsmiths. (3) Every certificate granted to a person under Part XIIA of the Defence of India Rules, 1962, or under the Gold (Control) Ordinance, 1968, recognizing him as a goldsmith, shall, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The opposite viewpoint was presented by Mr. Setalvad who argued that the Legislative entries must be construed in a large and liberal sense and that the goldsmith's craft was an industry within the meaning of Entry 24 of List II Entry 33 of List III and Entry 52 of List I and Parliament is competent to legislate in regard to the manufacture of gold ornaments. The relevant entries in the Lists of the Seventh Schedule of the Constitution are List 1, Entry 52- Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest; List IT, Entry 24 : Industries subject to the provisions of Entries 7 and 52 of List I; List II, Entry 27 : Production, supply and distribution of goods subject to the provisions of Entry 33 of List HI. List III, Entry 3 3 reads as follows: "Trade and commerce in, and the production, supply and distribution of,- (a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products; (b) foodstuffs, including edible oilseeds and oils; (c) cattle fodder, including oilcakes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing exceptedout of the federal power, for the two are independent of one another and exist side by side. But the underlying principle in the two cases must be the same, that a general power ought not to be so construed as to make a nullity of a particular power conferred by the same Act and operating in the, same field, when by reading the former in a more restricted sense effect can be given to the latter in its ordinary and natural meaning." (pp. 49-50) The rule of construction adopted by that decision for the purpose of harmonizing the two apparently conflicting entries in the two Lists would equally apply to an apparent conflict between two entries in the, same List. Patanjali Sastri, J, (as he then was) held in State of Bombay v. Narothamadas Jethabai((1) [1951] S.C.R. 51), that the words "administration of justice" and "constitution and organization of all courts" in Entry 1 of List 11 of the Seventh Schedule to the Government of India Act, 1935 must be understood in a restricted sense excluding from their scope "jurisdiction and powers of courts" specifically dealt with in item 2 of List 11. in the words of the learned Judge, if such a construction was not given "the wider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry" in the legislative lists. Similarly it was argued by Mr. Palkhivala that the manufacture of gold ornaments was not an industry because it required application of individual art and craftsmanship and aesthetic skill. But mere use of skill or art is not a decisive. factor and will not take the manufacture of gold ornaments out of the ambit of the relevant legislative entries. It is well settled that the entries in the three lists are only legislative heads or fields of legislation and they demarcate the area over which the appro-priate legislature can operate. The legislative entries must be given a large and liberal interpretation, the reason being that the allocation of subjects to the lists is not by way of scientific or logical definition but is a mere enumeration of broad and comprehensive categories. It is not, however, necessary for the purpose of this case to attempt to define the expression "industry" precisely or to state exhaustively all its different aspects. But we are satisfied in the present case that the manufacture of gold ornaments by goldsmiths in India is a "process of systematic production" for trade or manufacture and so falls 'within the connotation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the service of the community. It was in this context that the expression "industry" was interpreted in Banerjee's case(1) and Meher's case(2). It was an interpretation ,adopted by this Court sacundum subjectae materies. But what 'we are concerned in the present case is the interpretation of the word "industry" in the legislative lists which constitute part of the Seventh Schedule of the Constitution. It is manifest that the, decisions referred to above have no bearing on the question debated in the present case. It was argued by Mr. Palkhivala that even on the assumption that making of gold articles and ornaments was an industry within the meaning of the legislative entries the control of the said industry was not declared by Parliament to be expedient in the public interest and, therefore, Parliament was not competent to legislate upon the subject matter of the impugned Act. To appreciate this argument it is necessary to notice briefly the provisions of the Industries (Development and Regulation) Act, 1951 (Act 65 of 1951) which was enacted by Parliament to provide for the development and regulation of certain industries. Under s. 2 of this Act it is declared that it is exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnaments or scrap); make an alloy of the required specifications; cast it into desired shapes; convert the alloy into semis like rods, strips, wires etc., and fabricate it into the required design, finished articles including ornaments." These involve metallurgical operations like melting, refining, making of alloys, casting, annealing, rolling, forging, pressing, punching, soldering, pressing, die cutting etc., and a goldsmith therefore is employed in the metallurgical industry. It is not necessary for us to express any concluded opinion in this case on the question whether the manufacture of gold ornaments involves any metallurgical process. Even on the assumption that the petitioners are right in saying that the manufacture of gold ornaments is not a metallurgical industry in the technical sense we consider that the heading "metallurgical industry" in the schedule does not control the scope and meaning of the Entry 1-B(2) "semi-manufactures or manufactures". The headings of the schedule do not follow any logical or scientific pattern but are put in merely as devices for convenient grouping of the industries. For example, there is no warrant for excluding electricity meters used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rked form and semi-manufactures thereof and sub-Chapter III deals with manufactures of precious metals. Headings 71.07 and 71.08 in this sub- Chapter set out un-wrought or semi-manufactured gold while headings 71.12 to 71.14 in Sub-Chapter III set out finished articles of jewellery, goldsmiths' wares and other articles of precious metals. The explanatory notes to Brussels Tariff Nomenclature shows (Vol, 11, p. 633) that "precious metals in unwrought or semi-manufactured from but which have not reached the stage of articles" are included under Heading 71.05 to 71.10. So far as silver is concerned "unwrought and semi-manufactures" are set out at p. 641 and they include forms like bars, rods, sections, wire, plates, sheets and strips, tubes, pipes, hollow bars, foils, powder etc. The enumeration of finished articles of gold, that is to say, manufactures of gold is given at p. 640.The enumeration includes articles and ornaments, for example, jewellery and parts thereof, small objects of personal adornment such as rings, bracelets, necklaces and articles of personal use such as cigarette cases, snuff boxes, powder boxes, lipstick holders etc. (pp. 641-646 of Explanatory notes). In our o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of licences, power to cause investigation to be made etc. We are, therefore, unable to accept the contention of Mr. Daphtary that the expressions "industrial undertaking" and "scheduled industry" are, used synonymously in the Act or the expression "scheduled industry" in s. 2 of the Act should be construed as a "scheduled industry" carried on in the manner of an "industrial undertaking." Having dealt with and negatived the attack upon the validity of the entire Act we shall now proceed to deal with certain sections of the Act, the validity of which was also questioned. It was argued that the restrictions imposed by sections 4(4), 4(5), 5(1), 5 (2), 27 (2) (d), 27 (6), 16 (7), 32 read with 46, 88 and 100 were unreasonable and not in public interest and so are violative of Art. 19 ( 1 ) (f ) and (g) of the Constitution. It was also said that the sections were also violative of Art. 14 of the Constitution because of the conferment of unchannered, uncontrolled and arbitrary power in the Administrator and other authorities constituted under the impugned Act. Before examining this argument it is necessary to set out the circumstances and the social and economic background in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he test for ascertaining the reasonableness of the restriction of the rights in Art. 19 is of great importance. There are several decisions of this Court in which the relevant criteria have been laid down. It is, however, sufficient to refer to a passage in the judgment of Patanjali Sastri, C.J. in State of Madras v. V. G. Rao ([1952] S.C.R.597,607). "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be. laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict." It is necessary to emphasise that the principle which underlies the structure of the rights guaranteed under Art. 19 of the Constitution is the principle of balancing of the need for individual liberty with the need for social control in order that the, freedoms guaranteed to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adversely affected. But the section provides the safeguard that the regulation of the price should be made by the Administrator after consultation with the Reserve Bank of India. It was argued that the phrase "so far as it appears to him to be necessary or expedient for carrying out the provisions of this Act" was a subjective formula and action of the Administrator in making the orders under s. 5 (2) (a) may be arbitrary and unreasonable. But in our opinion the formula is not subjective and does not constitute the Administrator the sole judge as to what is in fact necessary or expedient for the purposes of the Act. On the contrary we bold that in the context of the scheme and object of the legislation as a whole the expression cannot be construed in a subjective sense and the opinion of the Administrator as to the necessity or expediency of making the order must be reached objectively after having regard to the relevant considerations and must be reasonably tenable in a court of law. It must be assumed that the Administrator will generally address himself to the circumstances of the situation before him and not try to promote purposes alien to the object of the Act. As regards s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd extremely wide. A parallel power of subordinate legislation is conferred to the Central Government under s. 114 ( 1 ) and (2) of the Act. But s. 114(3) however makes it incumbent upon the Central Government to place the rules before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two successive sessions. It is clear that the substantive provisions of the Act namely ss. 8, 11, 21, 31(3), 34(3) confer powers on the Administrator similar to those contemplated by s. 5 (2) (b) of the Act. In these circumstances we are of opinion that the power of regulation granted to the Administrator under s. 5 (2) (b) of the Act suffers from excessive delegation of legislative power and must be held to be constitutionally invalid. We now come to s. 27 of the Act which relates to licensing. of dealers. It was stated on behalf of the petitioners that the conditions imposed by sub-s. (6) of s. 27 for the grant or renewal of licences are uncertain, vague and unintelligible and consequently wide and unfettered power was conferred upon the statutory authorities in the matter of grant or renewal of licence. In our opinion this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the petitioners to carry on business. It appears, however, to us that if S. 27 (2) (d) and S. 27 (6) of the Act are invalid the licensing scheme contemplated by the rest of s. 27 of the Act cannot be worked in practice. It is, therefore, necessary for Parliament to enact fresh legislation imposing appropriate conditions and restrictions for the grant and renewal of licences to dealers. In the alternative the Central Government may make appropriate rules for the same purpose, in exercise of its rulemaking power under s. 114 of the Act. We now proceed to deal with ss. 32 and 46 of the Act which are also challenged. Section 32 states -: "Save as otherwise provided in this Act, no licensed dealer shall either own or have at any time in his possession, custody or control primary gold in any form except in the form of standard gold bars ; Provided that such dealer may, unless the Central Government (having regard to the needs of the trade, volume of business and public interest) otherwise directs, own or keep in his possession, custody or control not more than- (a) four hundred grammes, if he does not employ any artisan, (b) five hundred grammes, if he employs not more than te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponsible may prevent commission of the crime and may help to bring the actual offender to book. In one sense the, dealer is punished for the sins committed by his employee. It may perhaps be said if the dealer had been more -alert to see that the law was observed the sin might not have been committed. But the section goes further and makes the dealer liable for any past contravention perpetrated by the employee. It is evident that the dealer cannot reasonably be made liable for any past misconduct of his employee though the dealer can be made liable for any act done by his employee in the course of the employment and whom he can reasonably be expected to influence or control. The maxim qui facit per alium facit per se is not generally applicable in criminal law. But in s. 88 it has been extended beyond reasonable limits. We are, therefore, of opinion that s. 88 imposes an unreasonable restriction on the fundamental right of the petitioners and is unconstitutional. We shall now proceed to deal with s. 100 of the Act which also has been challenged. This section imposes a statutory obligation upon a dealer to take all reasonable steps to satisfy himself as to the identity of persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving ascertained the policy and object of the Act the Court has to apply a dual test in examining its validity (1) whether the classification is rational and based upon an intelligible differentia which distinguishes persons or things that are grouped together from others that are left out of the group and (2) whether the basis of differentiation has any rational nexus or relation with its avowed policy and object. In the present case both the tests are satisfied and we hold that ss. 27 and 39 of the impugned Act do not violate the guarantee under Art. 14 of the Constitution. The only other point that remains to be decided is whether as a result of some of the sections of the impugned Act being struck down, what is left of the impugned Act should survive or whether the whole of the impugned Act should be declared invalid. We are of opinion that the provisions which are declared invalid cannot affect the validity of the Act as a whole. In a case of this description the, real test is whether what remains of the statute is so inextricably bound up with the invalid part that what remains cannot independently survive or as it is sometimes put whether on a fair review of the whole matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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