JAYANTILAL AMRUTLAL SHODHAN Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition challenges the validity of certain provisions of the Gold Control Rules 1963 On 26th October 1962 simultaneously with the Declaration of Emergency under Article 356 of the Constitution the President promulgated the Defence of India Ordinance 1962 Pursuant to sec. 3 of the Defence of India Ordinance the Central Government made the Defence of India Rules 1962 The Defence of India Ordinance was subsequently repealed by the Defence of India Act 1962 on 12th December 1962 but by virtue of the saving provision the Defence of India Rules were continued in force. The Defence of India Act was passed as its Preamble shows to provide for special measures to ensure the public safety and interest the defence of India and civil defence and for trial of certain offences and for matters connected therewith. Sec. 3 sub-sec. (1) read as follows :-

(2.) Now according to the respondents the petitioner also owned further eight gold bars weighing 23 229 Gms. and one hundred fifty gold sovereigns weighing 1 223 Gms. which were not declared by him and he remained in possession of this quantity of gold (hereinafter referred to as the undeclared gold). This undeclared gold was secreted by the petitioner beneath the earth two and a half feet deep at four points in the strong room of his cellar. It appears that sometime prior to 18th November 1964 the tax authorities received information that some gold was lying secreted in the residential premises of the petitioner and therefore on 18 November 1964 some senior officers of the Income tax Department raided the residential premises of the petitioner and carried on search of the residential premises. On 20th November while the search was in progress the petitioner realising that the officers conducting the search were on the point of discovering the undeclared gold which was lying secreted in the strong room of the cellar came out with the story that his late mother had secreted some valuables in the strong room of the cellar at certain points and offered to point out the spots where according to him the valuables were secreted. When earth was dug out at those spots upto a depth of two and a half feet cement containers were found embedded in the earth and in the cement containers was the undeclared gold of the estimated value of Rs. 2 83 320 The undeclared gold was deposited in a locker in the Safe Deposit Vault of the Bank of India Ltd. in the joint names of the petitioner and one of the Income-tax Officers. Thereafter on 17th December 1964 one R. M. Shelat Deputy Superintendent of Central Excise went to the residence of the petitioner with two Panchas and in the presence of the Panchas he seized the undeclared gold under Rule 126L clause (2). The petitioner thereafter made frantic efforts to purchase Gold Bonds against the undeclared gold as also to subscribe for the National Defence Gold Bonds 1980 by utilising the undeclared gold but his efforts were unsuccessful since the authorities refused to make the undeclared gold available for either of these two purposes. In the meantime a notice dated 5th June 1965 was issued by the Assistant Collector of Central Excise Baroda calling upon the petitioner to show cause why the undeclared gold which was seized as aforesaid and in respect of which an offence as mentioned in para 1 of the notice appeared to have been committed should not be confiscated under Rule 126M and penalty should not be imposed under Rule 126L clause (16). The petitioner filed a statement in reply to the show cause notice on 28th June 1965. The Collector of Central Excise did not proceed with the hearing for some time but ultimately by a letter dated 6th January 1967 he fixed the date of hearing on 20th January 1967 and intimated to the petitioner that he may remain present for the purpose of hearing at the appointed time on that date. The petitioner thereupon filed the present petition challenging the validity of the show cause notice dated 5th June 1965.

(3.) Before we set out the grounds of challenge it would be convenient at this stage to refer to some of the relevant provisions of the Gold control Rules. We have already referred to Rule 126J and Rule 126I clause (1). Rule 126I clause (10) is also material and it runs as under :-