TMI Blog1970 (10) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... Ordinance from the date of its commencement subject to Section 6 of the General Clauses Act, 1897. 3. Subsequent to the filing of the present application under Article 226 of the Constitution of India, the Supreme Court in the case of Harakchand Ratan-chand Banthia v. Union of India. AIR 1970 SC 1453 considered the question whether the Act is constitutionally valid and held that the provisions contained in Sections 5(2) (b). 27(2) (d), 27(6), 32, 46, 88 and 100 are invalid. It further held that the above provisions in the Act, which are invalid, are not inextricably bound up with the remaining provisions of the Act. Therefore, the provisions of the Act which were declared invalid could not affect the validity of the Act as a whole. 4. Although in the application the provisions as contained in various sections of the Act have been impugned, Mr. Lal Narayan Sinha, learned counsel appearing for the petitioners, restricted his argument only with regard to the question of constitutional validity of Sub-section (7) of Section 16 and Sections 28, 30 and 31 of the Act and Clause (3) of the Gold Control (Identification of Customers) Rules, 1969. hereinafter to be called the Rules , m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the existence of widespread smuggling : 'Smuggling now constitutes not only a loophole for escaping duties but also a threat to the effective fulfilment of the objectives of foreign trade control. The existence of foreign pockets in the country accentuates the danger. The extent of the leakage of revenue that takes place through this process cannot be estimated even roughly, but, we understand, it is not unlikely that it is substantial. Apart from its deleterious effect on legitimate trade, it also entails the outlay of an appreciable amount of public funds on patrol vessels along the sea coasts and permanent works along the land border, and watch and ward staff on a generous scale. It is, therefore, necessary, in our opinion, that stringent measures both legal and administrative should be adopted with a view to minimising the scope of this evil', (p. 320) It is in this context that the test for ascertaining the reasonableness of the restriction of the rights in Article 19 is of great importance. It was further observed as follows: It is necessary to emphasise that the principle which underlies the structure of the rights guaranteed under Article 19 of the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1860 (21 of 1860), co-operative society incorporated under any law with respect to co-operative societies, club, firm or other association of persons which carries on such business; or- (a) buys or accepts gold (for the pur-pose of making ornaments) from, (b) makes, manufactures, prepares, repairs or polishes ornaments for. (c) processes, melts or converts gold (for the purpose of making ornaments) for, (d) sells, supplies or distributes ornaments or other gold (for purpose of making ornaments) to, its members; (iii) a commission agent, broker, del credere agent, auctioneer of other mercantile agent, by whatever name called, who carries on such business on behalf of any principal but does not include the Reserve Bank, the State Bank of India, any subsidiary bank as defined in Clause (k) of Section 2 of the State Bank of India (Subsidiary Bank) Act 1959 (38 of 1959). or any banking company as defined In Clause (c) of Section 5 of the Banking Regulation Act. 1949 (10 of 1949), in so far as such bank sells or transfers or exhibits for sale or transfer, any gold. Explanation-- For the purpose of this Act- (a) Every person who acts, as an agent of a dealer resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or control ot or (iii) buy, accept or otherwise receive or agree to buy. accept or otherwise receive, any primary gold. (2) Save as otherwise provided in this Act, a person may- (a) (i) acquire or agree to acquire the ownership, possession, custody or control of or (ii) buy, accept or otherwise receive, or agree to buy, accept or otherwise receive, any ornament, unless he knows or has reason to believe that such ornament, being required to be included in a declaration, has not been so included. (b) sell, deliver, transfer or otherwise dispose of. or agree to sell, deliver, transfer or otherwise dispose ot any ornament, but shall not do so if the ornament, being required to be included in a declaration has not been so included. (3) Save as otherwise provided in this Act, no person shall- (a) acquire, or agree to acquire, the ownership, possession, custody, or control of, or (b) buy. accept or otherwise, receive, or agree to buy, accept or otherwise receive, any article, except by succession, intestate or testamentary. (4) Save as otherwise provided in this Act, no person shall sell, deliver, transfer or otherwise dispose of, or agree to sell, deliver, tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Save as otherwise provided in this Chapter, every person who owns, or is in possession, custody or control of any article or ornament at the commencement of this Act, or acquires the ownership, possession, custody or control of any article or ornament thereafter, shall make, within thirty days from such commencement or from such acquisition, as the case may be, or within such further period as the Administrator may, on sufficient cause being shown, allow a declaration in the prescribed form as to the quantity, description and other prescribed particulars of any article, or ornament, or both, owned, possessed, held or controlled by him: Provided that no such declaration shall be required to be made where a person who, having owned, possessed, held or controlled any article or ornament before the commencement of this Act, has already made a declaration in relation to that article, or ornament, or both: Provided further that nothing in this sub-section shall be construed as enabling any declaration to be made in respect of any gold for which the period prescribed or allowed under the law for the time being in force before the commencement of this Act had expired, before such com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson shall, within thirty days from the date of such acquisition or within such further period as the Administrator may, on sufficient cause being shown, allow, make a declaration in the prescribed form stating the total quantity, description and other prescribed particulars of- (a) the gold owned, possessed, held or controlled by him immediately after such acquisition, and (b) the person from whom the ownership, possession, custody or control of such gold was acquired. (4) If any person who has made a declaration, whether under Sub-section (1) or under Sub-section (3) or under Part XIIA of the Defence of India Rules. 1962. or under the Gold (Control) Ordinance. 1968 (6 of 1968). as to gold owned, possessed, held or controlled by him. acquires (whether by succession, intestate or testamentary, or otherwise), or parts with, after such declaration, the ownership, possession, custody or control of any quantity of gold, he shall, as often as he acquires or parts with the ownership, possession, custody or control of any quantity of gold, make within thirty days from the date of such acquisition or parting with, or within such further period as the administrator may, on suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or refiner is a company or other body corporate or a firm, the declaration referred to in this sub-section shall also be made by every director of such company or body corporate or, as the case may be. every partner of such firm, in respect of the gold owned, possessed, held or controlled by him in any capacity. (8) Every declaration made under this section shall be made in triplicate, of which one copy shall be authenticated and signed by the Gold Control Officer and thereafter shall be returned to the person making the declaration and the copy so returned shall be retained by such person as evidence of the declaration made by him under this section. (9) Every declaration made under this section shall be kept by the Gold Control Officer in safe custody and the particulars thereof shall be entered in a register to be maintained for this purpose. (10) A person who has made a declaration shall, as often as he acquires or parts with, after such declaration the ownership, possession, custody, or control of any quantity of gold, endorse within thirty days from the date of such acquisition, or parting with, of gold, in such manner as may be prescribed, on the copy of the decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in this Act, no licensed dealer shall buy or otherwise acquire or agree to buy or otherwise acquire or accept or otherwise receive or agree to accept or otherwise receive any article, ornament or primary gold from a person who is not a licensed dealer or refiner: Provided that any such dealer may buy or otherwise acquire or accept or otherwise receive or agree to buy or otherwise acquire or accept or otherwise receive from a person who is not a licensed dealer or refiner- (i) any ornament, unless he knows or has reason to believe that such ornament, being required to be included in a declaration, has not been so included. (ii) any article which, being required to be included in a declaration has been so included, or where such article is not required to be included in a declaration, If the sale, delivery, transfer or disposal of such article has been authorised by the Administrator. (iii) any primary gold, if the person selling, delivering transferring, or otherwise disposing of the same has been authorised so to do by the Administrator: Provided further that where any such dealer has delivered any article, ornament or primary gold to his artisan or a certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (3) Every certified goldsmith shall, before accepting or otherwise receiving any gold, comply with the provisions of Sub-rule (1) and Sub-rule (2) subiect to the modification that instead of obtaining the required signature or making the required note on the voucher, he shall ob-tein such signature and make such note in the register of accounts maintained by him. 8. As provided under Sub-section (7) of Section 16 of the Act, a licensed dealer or refiner has to make a declaration not only in relation to any gold owned, possessed, held or con trolled by him in the capacity of a licensed dealer or refiner but also in any other capacity and the exemptions as provided under Sub-section (5) of Section 16 are not applicable in his case. A licensed dealer or refiner has thus to make a declaration even if he as an individual possesses less than 2000 grammes of gold ornaments. If the licensed dealer is a member of the family he has to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uals other than a refiner or dealer has to make a declaration if the gold ornaments possessed by the family exceed the limit of 4000 grammes and in the declaration the ornaments possessed by the female members of the family are to bo included. In my opinion, the provisions contained in Sub-section (7) of Section 16 of the Act do not impose unreasonable restrictions on the right of a dealer or refiner to possess or to carry on business or trade in gold and are not violative of Article 19(1) (f) and (g) of the Constitution. 10. Regarding the constitutional validity of Section 28 of the Act, Mr. Lal Narayan Sinha raised two contentions. In the first place he submitted that the restrictions contained in Section 28 do not serve any beneficial purpose but seriously impede the business of the dealer and as such they are unreasonable restrictions and are violative of Article 19(1) (g) of the Constitution. Secondly he urged that Section 28 of the Act is violative of Article 14 of the Constitution inasmuch as it confers uncontrolled and arbitrary powers in the Administrator to permit or not to permit a licensed dealer to carry on money-lending or banking business on the security of any ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer is unreasonable inasmuch as the dealer does not himself make, manufacture or prepare an article or ornament of gold but gets it made, manufactured or prepared by an artisan. Therefore, to place an obligation of stamping and certifying the purity of gold on a dealer with-, out placing a similar obligation on an artisan or a certified goldsmith is unreasonable. The above contention of Mr. Sinha does not appear to be sound. An artisan is employed by a licensed dealer on payment of remuneration to make, manufacture, prepare etc.. any article or ornament. He is, therefore, under the direct control of a dealer. As the dealer is the person who ultimately sells articles and ornaments, the responsibility in properly stamping the articles and the ornaments to ensure the purity of gold has been rightly made to rest on him and not on the artisan. Mr. Sinha faintly argued that since a dealer also purchases articles and ornaments from a certified goldsmith the obligation to stamp gold articles and ornaments and certifying the purity of gold in respect thereof is unreasonable. In the first place, on a plain reading of Section 30 of the Act, it appears that the ornaments which are purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the identity of the person from whom any gold was to be bought. All that Section 31 provides is that if a dealer knows or has reason to believe that an ornament being required to be included in the declaration has not been so included he will not buy the same. Section 31. therefore, cannot be declared to be invalid. 13. As the Supreme Court declared the provisions of Section 100 of the Act unconstitutional, a new Section 100 was substituted by the Gold (Control) Amendment Act. 1969. In exercise of the powers conferred by Section 114 read with Sub-section (1) of amended Section 100 of the Act, Gold Control (Identification of Customers) Rules, 1969, was made on the 3rd of July, 1969- As provided under Rule 3 of the said Rules, a licensed dealer has to take one or more of the steps specified therein to satisfy himself as to the identity of his customers. It was contended by Mr. Lal Nara-yan Sinha that the provisions contained in Rules 3(1) (i) and 3(1) (ii) are not adequate to establish the identity of all classes of customers to the satisfaction of a dealer. According to learned counsel, if a villager, who is unknown to a licensed dealer, wants to sell some gold ornaments, it wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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