JAYANTILAL AMRATLAL SHODHAN Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition raises an interesting question of law relating to the construction and effect of sec. 117 of the Gold (Control) Ordinance 1968 and sec. 116 of the Gold (Control) Act 1968 On 29th 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Ordinance the Central Government made the Defence of India Rules 1962 The Defence of India Ordinance was subsequently repealed by the Defence of India Act 1962 on 12th December 1962 but by virtue of the saving provision the Defence of India Rules 1962 were continued in force. On 9 January 1963 the Central Government in exercise of the powers conferred under sec. 3 of the Defence of India Act amended the Defence of India Rules by introducing Part XII-A comprising Rules 126A to 126Z (hereinafter referred to as the Gold Control Rules). Rule 126A clause (a) defined ;Board to mean the Board constituted under Rule 126J and Rule 126J clauses (1) and (2) laid down the constitution and functions of the Board. Rule 126I clause (1) required every person (not being a dealer or refiner required to apply for a licence or licensed under Part XII-A in make a declaration to the Board in the prescribed form as to the quantity description and other prescribed particulars of gold other than ornaments owned by him within thirty days from the commencement of Part XII-A. Part XII-A came into force on 9th January 1963 and therefore the period of thirty days limited by Rule 126I clause (1) for making a declaration under that Rule was due to expire on 8th February 1963 but the Central Government extended the period upto 28th February 1963. The petitioner was admittedly not a dealer or refiner required to apply for a licence or licensed under Part XII-A and he was therefore required under Rule 126I clause (1) to make a declaration to the Board in the prescribed form as to the quantity description and other prescribed particulars of gold owned by him. He accordingly made such a declaration on 7th February 1963 and in that declaration he showed that he owned only six gold bars and twenty-five gold sovereigns.

(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 the cellar of his residential premises. 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 18th 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 1964 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 container 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 Limited 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 paragraph 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 1966. 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 might remain present for the purpose of hearing at the appointed time on that date. The petitioner thereupon filed Special Civil Application No. 58 of 1967 (Jayantilal Shodhan v. Union of India IX G.L.R. 208) in this Court challenging the validity of the show cause notice dated 5th June 1965.

(3.) There were four grounds on which the validity of the show cause notice was challenged on behalf of the petitioner. Of these four grounds the first three were rejected by us but the fourth was upheld and the show cause notice in so far as it called upon the petitioner to show cause why penalty under Rule 126L clause (16) should not be imposed upon him was quashed and set aside. The reason why we held the show cause notice to be invalid in so far as it sought to impose penalty on the petitioner under Rule 126L clause (16) was that Rule 126L clause (16) which provided for imposition of penalty for doing or omitting to do any act which act or omission would render gold liable to confiscation under Rule 126M was introduced in the Gold Control Rules by an amendment made on 24 June 1963 while the omission on the part of the petitioner to declare the undeclared gold within the prescribed period and remaining in possession of it had already rendered the undeclared gold liable to confiscation prior to that date and Rule 126L clause (16) could not be applied retrospectively so as to take in cases where some act or omission rendering gold liable to confiscation was done by a person prior to the coming into force of that clause. The result of this view taken by us was that the show cause notice survived only in so far as it called upon the petitioner to show cause why the undeclared gold should not be confiscated under Rule 126M and the Collector of Central Excise accordingly with a view to bringing the show cause notice into conformity with our decision by his letter dated 6th December 1968 deleted the portion of the show cause notice relating to imposition of penalty under Rule 126L clause (16) and indicated to the petitioner that he proposed to proceed further under the remaining part of the show cause notice. The petitioner thereupon filed the present petition challenging the jurisdiction and power of the Collector of Central Excise to continue the proceeding for confiscation of the undeclared gold under Rule 126M.