BADRI PRASAD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) - The petitioner in Writ Petition No. 24 of 1970, a citizen of India, who has been carrying on business inter alia of money lending against pledge of gold ornaments, challenges the vires of the Gold Control Act. 1969 read with the rules made thereunder and in particular Sections 6, 8 and 16 (1) of the Act.

(2.) The facts on which the petition is based are as follows The petitioner has fairly extensive business of money lending in Etawah in U. P In pursuit of his business he advances moneys to a large number of persons who pledge ornaments made of gold or containing gold and ether precious stones, or silver. It includes a seasonal business of agriculturists taking loans from him in the sowing season and repaying the same with interest by redeeming the pledged ornaments. According to the petition such loans are not always redeemed quickly and there are instances of ornaments lying with him under pledge for 10 to 15 years. He also owns along with other members of his family substantial quantities of gold ornaments. As he has a strong room for keeping these valuables his friends and relations also are in the habit of keeping their gold ornaments and articles with him for safe custody. The purity of the gold content of the ornaments varies from 10-18 carats to 22-24 carats. The content of the gold is difficult to estimate in some cases where they are pieces containing more than one metal and set with stones. In all such cases a rough and ready estimate of their value is made whenever possible by the indigenous method of determining the purity on a touchstone and loans are advanced to the extent of 50 to 75 per cent of the value of the pledged goods. Over the last 8 to 10 years the petitioner claims to have come into possession of such pledged ornaments and articles which have not been redeemed since their first pledge weighing approximately 42,989 grams. On an average he entertains about 25 transactions of pledge or redemption in a day and the total number of ornaments and articles pledged with him over a year varies from 15,000 to 20,000 pieces. His entire belongings of gold including those of the members of his family are kept in a strong room alone with the pledged goods.

(3.) The petitioner's grievance is based on a raid which took place at his place of business on March 26,1969 by the Inspectors of Excise under the authority of the Collector of Central Excise. The raid was. completed on 9th April, 1969 and a large number of ornaments and articles of gold were seized from his premises. According to the petition the condition precedent to the exercise of such power i. e., that the officer concerned should have a reasonable belief that the provisions of the Act have been violated was nonexistent and in any event the Act did not permit Inspectors of Customs or Central Excise to carry out the search or seizure. The validity of the search and seizure is also challenged on the ground that inasmuch as the time to furnish declaration under Section 18 of the Act had been extended since the commencement of the Act from time to time up to the 30th April, 1969 the search which took place on March 26, 1969 was unjustified.