TMI Blog2017 (11) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of this Act or any rule or order made thereunder has been, or is being, or is attempted to be, contravened”. In other words, Section 71 authorises the confiscation of gold if there has been or is or is attempt to contravene the provisions of the GOLD ACT i.e. only such contravention occur after the commencement of the GOLD ACT but not contravention of law which existed anterior thereto - There is a distinction between acts done pursuant to the authorization of a statute and acts done pursuant to the authorization under a different statute or a statutory instrument but deemed to have been done under the earlier of the abovementioned two statutes. When a statute creates a fiction requiring certain events which took place prior to the commencement of such a statute to be deemed to have been done under the statute, such a fiction does not retrospectively authorise doing of such acts. It only takes note of the existence of certain state of affairs and creates putative state of affairs by declaring that such anterior events should be deemed to have taken place under the statute which came into existence later. Such fictions could only have limited consequences. One of the anci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was carried by the appellant s father before the Gold Control Administrator which was dismissed on 6.3.1972. 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 wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Collector further held that in view of the fact that the person from whom the gold was seized (Chhaganlal Godawat) expired, the levy of penalty 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 30 th October 1995 finally opined that the redemption fine should be reduced to ₹ 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-B 4 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 erstwhile 5 Gold (Control) Act, 1968 will apply when the gold was neither seized nor confiscated under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll in the recovery because of fall in price of gold, the respondent No. 1 shall make that good and if the petition is dismissed and the order of the CEGAT is maintained the respondent No. 1 shall be entitled 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 xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on that day with the cessation of the operation of the Defence of India Act (5 of 1962), but for their repeal by Section 117 of the ORDINANCE. Since the repeal of any rules by another statute and the consequences flowing therefrom are not provided for either in the General Clauses Act 1897 or 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 provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant and helpful to answer the above question. Certain posts of part-time Village Officers were abolished by Section 3 of an Ordinance of the then State of Andhra Pradesh. The Legislature never replaced the ordinance by an enactment. In the litigation that ensued therefrom, one of the questions before this Court was whether 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 Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng rights theory attributes a degree of permanence to the power to promulgate Ordinances in derogation of parliamentary control and supremacy. Any such assumption in regard to the conferment of power would run contrary to the principles which have been laid down in S.R. Bommai [S.R. Bommai v. Union of India, (1994) 3 SCC 1] . The judgment in T. Venkata 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 rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udged the confiscation. 30. The fiction does not deal with the law applicable to pending proceedings. Such a conclusion is irresistible from the language of Section 116(2) of the GOLD ACT which says; the confiscation adjudged .. under Part XIIA of the Defence of India Rules 1962 shall be deemed to have been adjudged under the corresponding provisions of this 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, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purely civil in nature as a consequence of the violation of some prescription of law commonly described as forfeiture . The words forfeiture and confiscation have come to be used interchangeably. The General Clauses Act, 1972 does not employ the word confiscation . On the other hand, it employs the word forfeiture in Section 6(d) 16 . Having regard to the long history of the usage 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 law 17 . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the gold under the RULES remained undisturbed thereby requiring an examination of the question whether the gold is required to be confiscated. As a result, only the adjudgment of confiscation was required to be conducted afresh. It is a liability incurred by the appellant. Necessarily the question arises as to what is the law in accordance with which such adjudgment is to be made. By the date of the judgment 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 Act 20 , 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 passed 21 . 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 vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be issued followed by the GOLD ACT. It was argued on behalf of Jayantilal that notice dated 5th June 1965 could not be enforced because it was a notice issued under the RULES which had been repealed. The said argument was rejected. Para 7. In view of Section 115(2) of the Gold (Control) Act, 1968, it was urged on behalf of the appellant that the notice issued on June 5, 1965 can no more be operative because under the Gold (Control) 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 provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GOLD ACT. 48. All the above analysis leads us to the following conclusions: (1) the adjudgment of confiscation of the appellant s gold is required to be made only in accordance with the RULES but not the GOLD ACT; (2) the role of the 1st fiction created under Section 116 of GOLD ACT is limited as explained in para 29 (supra). 49. The submissions before us revolved around two questions: (i) What is the law governing determination of the 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 ₹ 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 ₹ 2.5 crores. While deciding that figure, the officer took note of the fact that the gold was valued at ₹ 12.5 lakhs at the time of its seizure and also took note of the fact that as on 9.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases, the declaration is to be made by a third person who is not necessarily in possession or the owner of gold. In such circumstances, if the declaration is not filed, the owner could not be held responsible for the non-declaration. Therefore, the relevant factor for the exercise of the discretion is the culpability of the owner of the gold and factors connected therewith. 53. In the same vein Rule 126 I(3) 25 enjoins a person from acquiring gold, subsequent to making a declaration, 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 fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld an option to pay fine in lieu of confiscation. The amount of fine as adjudged to the tune of ₹ 2.5 crores was totally arbitrary and irrational as it was not based on any sound and lawful reasoning. The High Court finally directed 24. In view of the above, we deem it just and proper to direct the authorized officer to give an option afresh following above clinching observations to the owner of the Gold asking him to pay the redemption fine in lieu of confiscation. 59. Pursuant to the order of the High Court dated 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(v) of the Act mandates that the redemption fine will not exceed the market value of the gold seized as on the date of seizure. The Act takes away the discretion available to the officer to determine the relevant date for valuation by mandating the relevant date to be the date of seizure, which in any case is one of the methods available to the officer for calculating the redemption fine under rule 126M(8). Therefore, the Act only reduces the discretion available under Rule 126M(8) with respect to the relevant date for calculation of the redemption fine. The officer 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a statutory instrument but deemed to have been done under the earlier of the abovementioned two statutes. When a statute creates a fiction requiring certain events which took place prior to the commencement of such a statute to be deemed to have been done under the statute, such a fiction does not retrospectively authorise doing of such acts. It only takes note of the existence of certain state of affairs and creates putative state of affairs by declaring that such anterior events should be deemed to have taken place under the statute which came into existence later. Such fictions could only have 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 GOL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the value of the gold as on the date of its seizure is not based on any principle of law. The correctness of the said conclusion was the subject matter of the reference before the High Court. The High Court was completely justified in examining the correctness of the legal basis on which the figure of ₹ 12.5 lakhs was arrived at. For the reasons already recorded by us earlier, the High Court rightly came to the conclusion that the fine in lieu of confiscation must represent the value of the gold so confiscated as on the date (9.12.94) the appellant was given an option to pay the fine in lieu of confiscation. Even according to the said order of the Collector, the value of the gold as on that date was ₹ 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 ₹ 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , accompanied, court the application is made by the other party, by a fee of two hundred rupees require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court: Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days. 5 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 2) and an Ordinance promulgated by the President under article 123 of the Constitution 15 The State of West Bengal Vs. S.K. Ghosh AIR 1963 SC 255 Biswanath Bhattacharya Vs. Union of India (2014) 4 SCC 392 16 Section 6(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or 17 Raja Saliqram Vs. Secretary of State of India in Council, 1874 12 Bengal LR 167, at page 182 18 Rule 126P. Penalties-(1) Whoever,-(i) fails or omits to make any return including a further return as required by rule 126F or any declaration including a further declaration as required by rule 126I without any reasonable cause, or makes any statement in such return or declaration 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaration under this rule or exempted from making such declaration or further declaration under sub-rule (7) thereof, shall, after the commencement of this Part, acquire any gold other than ornament except (A) By succession, intestate, or testamentary, or (B) In accordance with a permit granted by the Administrator in this behalf 26 The Collector s order of 24/09/1966 deals with the pleas taken by the Appellant regarding his non-declaration: In his Reply, Shri Chhagan Lal Godavat stated that his letters dated 26.09.1920 and 3.3.1921were written by him when he was a minor. He contended that he did not know how to write account books. He was also not fully aware of his good and bad . He did not even recollect which connection these letters were got(sic) written from him. He could recollect only that these letters 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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