Holding

Adjudication of confiscation initiated under the Defence of India Rules, 1962 must be decided according to those Rules, not the Gold Control Act, 1968, and the redemption fine is to be measured by the market value of the gold on the date the option to pay the fine is exercised.

Summary

In 1965 gold worth 240 kg was seized from the appellant's father's house under the Defence of India Rules, 1962 and confiscation proceedings were initiated. The Rules were later repealed by the Gold Control Ordinance, 1968, which was subsequently repealed by the Gold Control Act, 1968, creating a statutory fiction that actions under the Rules were deemed to be done under the Act. The appellant challenged the amount of the redemption fine, arguing that the fine should be calculated under the Gold Control Act, particularly Section 73, using the value of gold at the time of seizure. The Supreme Court held that pending proceedings initiated under the 1962 Rules must continue to be governed by those Rules, not the Gold Control Act, and that the fine should be based on the market value of the gold on the date the option to pay the fine was exercised. Consequently, the fine was fixed at Rs.11.04 crores plus interest at 10% per annum, and the appeals were dismissed.

Issues considered

The law applicable to adjudication of confiscation pending under the Defence of India Rules, 1962 after the repeal of the Rules and the enactment of the Gold Control Act, 1968.
Whether Section 73 of the Gold Control Act, 1968 applies to determine the redemption fine for gold seized under the Rules.
Whether the valuation of gold for the fine should be based on the date of seizure or the date the option to pay the fine is given.
The effect of the repeal of the Rules by the 1968 Ordinance and its subsequent repeal by the Gold Control Act on pending proceedings.
The scope of discretion conferred on the adjudicating officer under Rule 126M(8)(a).

Legislation cited

Constitution of Indias. Article 352
Defence of India Act, 1962s. 48(2)
Defence of India Rules, 1962s. 126L(16), s. 126M(3), s. 126M(8)(a)
General Clauses Act, 1897s. 30, s. 6
Gold (Control) Act, 1968s. 116(1), s. 116(2), s. 71, s. 73
Gold Control Ordinance, 1968s. 117

Subjects

gold confiscationredemption fineDefence of India RulesGold Control Actstatutory repealsection 116 fictionvaluation of golddiscretion of officerpending proceedingsGeneral Clauses Act

Judgment

[2017] 14 S.C.R. 369

GUNWANTLAL GODAWAT A
v.
UNION OF INDIA & ANOTHER
(Civil Appeal Nos. 4711-4712 of201 l)
NOVEMBER22,2017 B

[J. CHELAMESWAR AND S. ABDUL NAZEER, JJ.]
Defence of India Rules. 1962 - Part XIIA - rr.126-I.126L(2).
l 26M - Confiscation of gold -Law applicable to pending
adjudgment proceedings in respect of such confiscation- In 1965, C
residential premises of appellant:~ father was searched wherein
240kgs gold was found and seized under 1962 Rules-1962 Rules
repealed by the 1968 Ordinance which in turn was repealed by
Gold Control Act of 1968- However. u/s.116(2) of the Act, by way
of fiction, anything done under the 1968 Ordinance or Part XII of
the 1962 Ru!es, was deemed to have been done under the said Act- D
Collector of Central Excise and Customs ordered confiscation of
the entire gold with an option to legal heirs of appellants }ather
(dnce dead) to redeem the gold by paying redemption fine of
Rs.2.5crores- Appellate Tribunal reduced the redemption fine to
Rs.12.5Lacs which was the value of gold at the date of the seizpre E
in terms of the Gold Control Act of 1968- High Court, however.
held that the case of appellant is goyerned only by the 1962 Rules
and not by the Gold Control Act of 1968- Propriety of- Proceedings
pending under Part XIJA of the 1962 Rules, if would be deemed to
continue under the Gold Controi Act of 1968-:,He?d: A proceeding
initiated under the 1962 Rules and.pending as on the date of the F
Gold Control Act of.1968 will have . ., . to be concluded in accordance
with the 1962 Rule.~ in view of s.116 of the Gold Control Act of
1968- The fiction created u/s.116 does not deal with the law
applicable .to pending proceedings - The purpose' of fiction is not
to ·alter the law app/}cab!e._to. the acijudgment proceedings - Thus. a·
the aqjudgment of confiscation of the appellants gold is required
to be made only in accordance ,with the 1962 Rules and not the
Gold Control Act of 1968 ,.-,Constitution.of India - Art.352 - The
Gold (Control)•Ordinance, ;1968":-'S.'117~ Gold Cqntrol Act, 1968 -
Gold( Control) Act, ·1965 .-JJefence of India Act (51 .of1962) c-
H
369
370 SUPREME COURT REPORTS [2017] 14 S.C.R.

A ss.1(3) and 48(2)-Defence of India Ordinance (4of1962)-Defence
of b1dia Ordinance (6 of 1962).
Defence of India Rules, 19112- Rules repealed by 1968
Ordinance- s.117 of the Ordinance providing for the consequences
of such repeal declared that s.6, 1897 Act would apply- Effect of
B such declaration- Held: Rules remained unaffected in respect of
the various legal proceedings referred to in s.6(e) of the 1897 Act,
either pending or concluded and other appropriate consequences
specified in the Rules would follow - The Gold (Control) Ordinance,
1968 - General Clauses Act. 1897 - s.6.
C Interpretation of Statutes - Effect of repeal of an Ordinance
by an enactment - 1962 Rules repealed by the 1968 Gold
Ordinance- Gold Act of 1968 repealed the 1968 Ordinance itself.
but did not make a declaration that the 1962 Rules were repealed -
Issue as to whether the 1962 Rules stood irrevocably repealed-
Held: Efficacy of the provisions of an Ordinance would not in any
D way be diminuted or abrogated unless there is a subsequent
countervailing legislation - 1968 Ordinance was followed up by a
legislative action (Gold Act) which did not disapprove the content
of the Ordinance - Thus. the 1962 Rules stood repealed by
the Ordinance notwithstanding the fact that the Ordinance itself
E came to be repealed subsequently by the Gold Act - Repeal of the
1968 Ordinance does not revive the 1962 Rules - Defence ~f India
Rules, 1962 - The Gold (Control) Ordinance, 1968 - Gold Control
Act,1968 - General Clauses Act, 1897.
Words & Phrases - 'Adjudged', 'Confiscation' - Meaning
F of. in context of Defence of India Rules, 1962 - Discussed.
Defence of India Rules. 1962 - Part XIJA - Scheme of -
Discussed.
Defence of India Rules, 1962 - r.126M(8)(a) - Redemption
fine to he paid in lieu of confiscation of the gold seized under the
G Z962 Rules - Basis for determination of - Plea of appellant that
confiscation fine is to he determined with reference to the value of
gold on the date of the seizure, in terms of s. 73. Gold Control Act r/
w s.2(v) thereof- Held: Rule 126M(8)(a) does not oblige the officer
to determine the amount of fine on the basis of value of the
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 371

confiscated gold either with reference to the date of its seizure or A
on the date of ac1judgment of confiscation- Further, there is nothing
in s. 73 of the Gold Control Act which requires that the value of the
goldfor determining the fine should be the value of gold as on the
date of the seizure- s. 73 applies only to those cases where
confiscation is under the Gold Act - High Court rightly held that B
s. 73 would not apply to the instant case - Amount offine to be paid
in lieu of confiscation of gold would he the 1iiarket .value ofgold on
the date on which the owner exercises the option to pay the fine in
lieu of c011fiscation, as rightly held by High Court to be Rs.11. 04
crores - Further. appellant to pay interest @ 10% p.a. on such fine
to redeem the gold - Gold Control Act (45 of 1968) - ss. 73 and C
2(v).
Defence of India Rules, 1962 - r.126M(8){a) - Redemption
fine to be paid in lieu of confiscation of the seized gold - Discretion
to the Ac{judging Officer - Nature of such discretion - Discussed.
Disposing of the appeals, the Court D

HELD: THE HISTORY OF THE GOLD CONTROL
REGIME:
l.1 On 26th October 1962, the President of India made a
proclamation of emergency under Article 352 of the Constitution E
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). Jn exercise of- the
power conferred under Section 3 of the Ordinance (4 of 1962), .
Defence of India Rules, 1962 (RULES) came to be made. [Para
14)(385-C-D] F
1.2 In the year 1968, an ordinance titled The Gold (Control)
Ordinance, 1968 (6 of 68) (hereinafter referred to as 'the
ORDINANCE') was promulgated on 29th June, 1968. Section
117 of the ORDINANCE repealed the RULES. The RULES
would have lapsed on 9th July 1968 because the authority of law G
for the sustenance of the RULES ceased 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 H
372 '···- SUPREME COURT REPORTS [2017] 14 S.C.R.

A Clauses Act 1897 or any other law, it was declared in Section 117
of the ORDINANCE. Thereafter Parliament made the Gold
Control Act (45 of 1968). The scheme of the ORDINANCE and
the GOLD ACT is more or less the same and is substantially
similar to the scheme of the Part XIIA of the RULES. Section
B 116(1) of GOLD ACT inter alia repealed the ORDINANCE. [Paras
19, 20)(386-E-G; 387-~]
EFFECT OF THE REPEAL OF THE RULES BY THE
ORDINANCE:
2. One of the questions that is required .to be examined to
c decide the controversy on hand is whether the RULES stood
irrevocably repealed in the absence of a provision in the GOLD
ACT similar to Section 117(1) of the ORDINANCE? The legal
position in view of the judgment of this Court in Venkata Reddy's
case is that the efficacy of the provisions of an ordinance would
not in any way be diminuted or abrogated unless there is a
D 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.
But Venkata Reddy is declared not to be good law in view of the
law laid down in Krishna Kumar Singh case. However, the
E discussion of law in Krishna Kumar Singh case was in the context
of an Ordinance which was never tabled before the Legislature
and lapsed by virtue of the efflux of time. 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
F ORDINANCES came to be repealed and replaced by the GOLD
ACT with retrospective effect from 29th June 1968, that is, from
the date of promulgation of the ORDINANCE. [Paras 21, 23, 24,
26· and 27)(388-C, E-.F; 390-E-.F]
Krishna Kumar Singh & Another v. State of Bihar &
G Others (2017) 3 SCC 1 - distinguished.
T Venkata Reddy & Ors. v. State of Andhra Pradesh.
(1985) 3 SCC 198 : (1985] 3 SCR 509 - referred to.
SR Bommai v. VOi (1994) 3 SCC 1 - referred to.
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 373

THE EFFECT OF THE REPEAL OF THE ORDINANCE BY A ·
THE GOLD ACT:
3. The General Clauses Act is silent in this regard. On the
other hand,' Section 30 of the General Clauses Act deals with a
situation of a Central Act being repealed l'.ty an Ordinance. It
declares (in substance) that the same consequences that would B 1
follow the repeal of an earlier enactment by a later enactment
would also follow in the case of repeal of an earlier enactment by
a subsequent Ordinance. But the coun·ter position is not provided
under the General Clauses Act. In the circumstances, the
provisions of the Act which repeals an Ordinance are only
required to be looked into. In the case on hand, though the GOLD C
ACT expressly repealed the ORDINANCE, it did not make a
declaration that the RULES are repealed. But on that account,
the peremptory nature of the repeal of the RULES by the
ORDINANCE need not be doubted for the following two reasons:
(i) The GOLD ACT while making the declaration that the D
ORDINANCE is repealed provided that various actions taken
both under PART XIIA of the RULES oc the ORDINANCE are
deemed to be actions taken under the corresponding provisions
of the GOLD ACT; and (ii) Unlike Krishan Kumar Singh, the
ORDINANCE was followed up by a legislative action which did
not disapprove the content of the ORDINANCE. [Para 28)(391- E
A-E]
State ofPunjab v. Mohar Singh AIR 1955 SC 84 : (1955]
SCR 893 - referred to. ,
SCHEME AND PURPO'SE OF THE lST FICTION UNDER .
SECTION 116: F
4. The purpose of creating the 1st fiction'"under Section
116 is to declare that the rights and obligations flowing from the
adjudgment of confiscation would be those specified in the GOLD
ACT. The purpose of the fiction is not to alter the law applicable
to. the adjudgment proceedings. One of the examples of the rights G
· flowing from the adjudgment of confiscation of gold is a right of
appeal against the adjudgment of confiscation. Both the RUL.ES
[Rule 126M{3) and the GOLD ACT (Sections 80 and 81)) provide
for appeal. While under the RULES, appeals lay to th.e
'Administrator' irrespective of the forum which adjudged the
H
374 SUPREME COURT REPORTS [2017] 14 S.C.R.

A confiscation. Under the GOLD ACT, the appellate forum varies
depending on the forum which adjudged the confiscation. 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. [Paras 29, 30)(391-F; 392-
B A-CJ
SCHEME OF PART XIIA OF THE RULES:
5.1 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. [Para 32)(392-Ej
C 5.2 Ruic 126-M provided for 'confiscation' of the gold seized
under Rule 126-L. Rule provided that a confiscation is required
to be 'adjudged'. The expression 'adjudged' is not defined but,
having regard to the scheme of the Rules mentioned above, the
only possible meaning that can be ascribed to that word is that
adjudgment is a proceeding by which the liability for confiscation
D arising out of the provisions of Part XIIA of the gold seized is
required to be determined. It appears from the scheme, the
liability for confiscation of the gold found in searched premises
arises from the fact that "there has been or is being or is about to
be" a contravention of any provision of Part XIIA. In other words,
E adjudgmcnt is nothing but a process of establishing the facts
relevant for arriving at a conclusion that "there has been or is
bci.ng or is about to be" a contravention of any one of the Rules
contained in Part XIIA. Adjudgment is a quasi judicial
proceeding.[Para 35] [393-B-D]
5.3 The expression 'confiscation' is not defined in the
F RULES. The words 'forfeiture' and 'confiscation' have come to
be used interchangeably. The General Clauses Act, does not
employ the word 'confiscation'. On the other hand, it employs
the word 'forfeiture' in Section 6(d). Having regard to the long
history of the usage of those two expressions, it is clear that
G 'forfeiture' is an expression which takes within its sweep
'confiscation' also for the purpose of law. Ruic 126-P provided
for penalties. Whereas under Ruic 126-M(S), the officer adjudging
confiscation may give to the "owner of the gold" an option to pay
in lieu of confiscation such fine (popularly known as redemption
fine) as the officer thinks fit. [Paras 36, 37 and 40)[393-E, F-G;
H 394-A, E]
GUNWANTLAL GODAWAT v. UNION OF INDIA 375.

APPLICATION OF THE LAW TO THE FACTS OF THE CASE: A
6.1 The ORDINANCE itself came to be repealed by the
GOLD ACT by the date of the judgment of the Rajasthan High
Court. Such repeal gives rise to two questions- What is the effect
of (i) the repeal of the Ordinance 6of1968, and (ii) the declaration
under Section 116(2) of the GOLD ACT? At the time of the B
,making of the GOLD ACT, Parliament was conscious of the
existence of the RULES and their repeal by the ORDINANCE
and also the fact that various actions authorised under the
provisions of the Part XllA of the RULES were taken or pending.
The Parliament is also conscious of the fact that the ORDINANCE
while repealing the RULES provided for the application of Section C
6 of the General Clauses Act. Pursuant to the repeal of the
ORDINANCE, the Parliament did not choose by the GOLD ACT
to disapprove such a declaration made under the ORDINANCE.
Therefore, it is more than public interest and constitutional
necessity as opined in Krishan Kumar Singh's case to hold that D
the RULES stood peremptorily repealed by the ORDINANCE
and on such repeal, Section 6 of the General Clauses Act applied.
Therefore, the RULES stood peremptorily repealed by the
ORDINANCE notwithstanding the fact that the ORDINANCE
itself came to be repealed subsequently by the GOLD ACT. The
repeal of the Ordinance docs not revive the RULES. [Paras 44, E
45) [396-D-H]
6.2 The adjudgmcnt of confiscation of the appellant's gold
is. required to be made only in accordance with the RULES but
not the GOLD ACT. The role of the 1st fiction created under
Section 116 of GOLD ACT is limited as explained in para 29 of F
this judgment.[Para 48][399-B)
6.3 While it is true that the discretion conferred upon the
Authority under Rule 128M - (S)(a) is textually unfettered, it
docs not lead to the inference :that the discretion is absolute and
uniform with reference to the various contraventions of the G
RULES. The limitations on the discretion are to be found from
the scheme of the RULES. The various RULES in the Part XIIA
of the RULES make various stipulations and the contravention
of any one of the stipulations can lead to the confiscation of gold.
The factors which influence the Authority's exercise of discretion
H
376 SUPREME COURT REPORTS [2017] 14 S.C.R.

A will necessarily vary from the nature of the offence which is
committed. [Paras 49-51](400-B-C]
6.4 The appellant's case does not call for any discretion to
be exercised in his favor in the light of the totality of the
circumstances. The non-fiJing of the declaration is established to
B be an absolutely calculated violation of law. [Para 55) [401-C]
6.5 The High Court rightly came to the conclusion that the
case of the appellant is governed only by the RULES and not by
Section 73 of the GOLD ACT. The amount of Rs.11.04 crorcs
was the value of the gold as on the date (7 .12.94) when the
C appellant was given the option to pay the fine in lieu of confiscation.
However, the argument advanced by appellant is that the law
applicable to the adjudgment proceedings is GOLD ACT- a
submission plainly untenable. A proceeding initiated under the
RULES and pending as on the date of the GOLD ACT will still
have to be concl;:.ded in accordance with the RULES in view of
D Section 116 of the GOLD ACT.[Paras 58-61](402-D; 404-A, C-D]
6.6 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
E
the owner thereof an option to pay in lieu of confiscation such
fine, not exceeding the value". There is nothing in the text of
Section 73 of the GOLD ACT which requires the value of the
gold (for the purpose of determining the fine) should be the value
of the gold as on the date of the seizure. But the expression·
'value' is a defined expression under Section 2(v) of the Act. The
F language of Section 73 is clear that it. applies only to those cases
wherein confiscation is one which is authorised "by this Act".
Section 73 would have no application to those cases of confiscation
which are adjudged under the RULES. It would be applicable
only for those cases where the confiscation is authorised by the
G GOLD ACT. Section 71 authorises the confiscation of gold in
respect of which "any provision 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
H contravention occur after the commencement of the GOLD ACT
GUNWANTLAL GODAWAT v. UNION OF INDIA 377

but not contravention of law which existed anterior thereto (the A
RULES). 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
abovcmcntioncd two st.atutes. When a statute creates a fiction B
requiring certain events. which took place prior to the
commencement of such a statute to be deemed to have been
ilonc under the statute, such a fiction does not retrospectively
authorise doing of such acts. It qnly takes note of the existence
of certain state of affairs and cre:rtes putative state of affairs by
declaring that such anterior events should be deemed to have C
taken place under the statute which came into existence later.
Such fictions could only have limited consequences. 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 D
to be confiscations adjudged under the GOLD ACT, but in view
of its Scheme there arc limitations of such fiction. Therefore,
neither Section 73 nor the definition under Section 2(v) would be
applicable for the confiscations adjudged under the RULES-
pursuant to a seizure that took place before the commencement
of the GOLD ACT. [Paras 63-67] [405-B-D; 406-A-G] E
· 6. 7 The High Court rightly held that Section 73 would not
come into play at all in the case on hand. Therefore, the fine
amount cannot be determined on the basis of the value of the
gold. The High Court rightly opined that the market value of the
gold as on the date of the exercise of the option ~y the owner of F
the gold to pay fine in lieu of the confiscation would be the legally
appropriate amount of fine. Because it is a fine in lieu of
confiscation. Confiscation would result in the loss of the entire
propcrt,y in the confiscated gold resulting in a financial loss of the
· value of gold to the owner. Hence, the value of the gold is to be
determined with reference to the date on which the owner G
exercises the option to pay 'the fine in lieu of the confiscation.
[Paras 68, 69][407-A-D]
Raja Saliq'ram v. Secretary of State of India in Council
1874 12 Bengal LR 167 - approved.
H
378 SUPREME COURT REPORTS [2017] 14 S.C.R.

A The State of West Bengal v. SK. Ghosh AIR 1963 SC
255 : [1963] SCR 111; Biswanath Bhattachatya v.
Union of India (2014) 4 SCC 392 : [2014) 1 SCR 885;
l.T. Commissioner v. Shah Sadiq & Sons (1987) 3 SCC
516 : [1987) 2 SCR 942; Jayantilal Amrathlal v. Union
of India (1972) 4 SCC 174 - referred to.
B
Wicks v. Director of Public Prosecutions 1947 AC 362
(HL); Warren v. Windle 102 ER 576
(KB); Steavenson v. Oliver 151 ER 1024 - referred to.
Case Law Reference
c 11985] 3 SCR 509 referred to Para 22
c2011) 3 sec 1 distinguished Para 24
(1994) 3 sec 1 referred to Para 27
[1955) SCR 893 referred to Para 28
D
[1963) SCR 111 referred to Para 36
[2014) 1 SCR 885 referred to Para36
1874 12 Bengal LR 167 approved Para 36
[1987) 2 SCR 942 referred to Para 42
E
(1972) 4 sec 174 relied on Para47
CIVILAPPELLATEJURISDICTION: Civil Appeal Nos. 4711-
4712 of2011.
From the Judgment and Order dated 29.06.2009 of the High Court
F of Judicature for Rajasthan, Jaipur Bench, Jaipur in D. B. Excise &
Gold (Control) Reference No. 24of1996 and D. B. Civil Writ Petition
No. 6295 of 1996.
C. A. Sundaram, Sr. Adv., Puneet Jain, Ms. Christi Jain, Abhishek
Gupta, Apoorv Tripathi, Zafar Inayat, Ms. Rohini Musa, Abhinav Gupta,
G Ms. Priyal Jain. Harsh Jain, Ms. Yashika Sharma, Ms. Pratibha Jain,
Advs. for the Appellant.
K. K. Vcnugopal, AG, K. Radhakrishnan, Sr. Adv., Ms. Nisha
Bagehi, Ms. Pooja Sharma, B. Krishna Prasad, Advs. for the
Respondents.
H
. GUNWANTLAL GODAWAT v. UNION OF INDIA 379

The Judgment of the Court was delivered by A
CHELAMESWAR, J. 1. On 3rd and 4 1h June, 1965, the
residential premises of the appellant's father were searched by the
officers of the Government oflndia in exercise ofthe authority conferred
upon them under Rule 126L(2) of the Defence of India Rules, 1962 1
(hereinafter referred to as "the RULES"). They found 240 kilograms B
of gold (bars etc.) buried in the house and seized it. Proceedings for
confiscation were initiated. Eventually on 24.9.1966, the Collector of
Central Excise and Customs passed an order2 confiscating the seized
gold in exercise of the power under Rule 26M of the RULES on the
ground that the seized gold was held by the appellant in contravention of
Rule 126-I. A penalty ofRs.25 lakhs under Rule 126L(l 6) of the RULES C
was also imposed. ·
2. Aggrieved by the same, an appeal 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 D
of the Government oflndia was challenged in a writ petition (No.1215/
79) .before the Rajasthan High Court. By a judgment and order dated
·9.8. I 994, 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 E
Collector to the appellant's father before the order of confiscation was
I Rule 126L. Power of entry, search, seizure, to obtain information and to take samples.-

(2) Any person authorised by the Central Goveniment by writing in this behalf may-
( a) enter and search any premises, not being a refinery or establishment referred to
in sub-rule (I), vaults, lockers or any other place whether above or below
ground: F
(b) seize any gold in respect of which he suspects that any provision of this Pait
has been, or is being, or is about to be contravened, along with the package,
covering or receptacle, ifany, in which such gold is found and thereafter take all
. ,measures necessary for their safe custody.
2
""Gold was required to be declared under Rule 126-I ofDefence oflndia Rules, 1962.
It was not declared. l accordingly order absolute confiscation of240.040 kgs. of gold,
under Rule 126M of said Rules. The iron safe in which gold was secreted is also G
confiscated under Rule I 26M.
I hold that Shri Chhagan Lal Godavat is guilty of contravention of the
provisions of the Rule 126-T of the Defence of India Rules, 1962. He is liable to a
penalty under Rule 126-L ( 16) of the said Rules. Taking into consideration the gravity
of the offence committed by him and in view of the fact that he hoarded a very huge
quantity of undeclared gold I impose upon him a personal penalty of Rs.25,00,000/-
(Twenty five lacs)." H
380 SUPREME COURT REPORTS [2017] 14 S.C.R.

A 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 gala was not
given.
4. The High Court accepted the submissions and remitted the
B matter to the Collector (Central Excise and Customs).
The operative portion of the judgment reads as follows:-
"16. As a sequence the orders passed sy the Collector dated
24. 9.1966 (Annex.I}, the order dated 6.3 .1972 passed by the Gold
Control Administrator as well as the order dated 3/4.6.1979 passed
c by the Special Secretary Finance, Government oflndia exercising
the power of revision of the Central Government are quashed
and the matter is remitted back to the Collector, Central Excise
and Customs, New Delhi to examine the matter afresh in the light
of the observations made above after affording full opportunity to
the petitioners. The parties are directed to appear before the
D Collector, Central Excise and Customs, New Delhi on 1.9.1994
whereafter the Collector shall proceed with the case afresh and
shall dispose of the matter within four months from the date of
receipt of the copy of the order as indicated above. The matter
has already been considerably delayed for over 30 years and any
E further delay would amount to denial of justice to the petitioners.
It is further ordered that in the event of the appeal being filed by
the aggrieved party to the Central Excise and Gold Control Tribunal,
the Tribunal shall dispose of the same as expeditiously as possible
preferably within six months from the date of filing of the appeal."
5. Pursuant to the remand, by an order dated 9.12.1994, the
F Collector once again ordered confiscation of the entire quantity of (240
kilograms) gold approximately valued at Rs. 11. 04 crores with an option
to the legal heirs of the appellant's father to redeem the gold by paying a
fine of Rs. 2.5 crores.
"(i) l ordarconfiscation of the 240.040 Kgs. of gold (1) Sovereigns
G of gold 80.776 Kgs. (2) Passas of gold 242 Nos. 75.298.300 Kgs.
(3) Pieces of gold bars 5 Nos. 10.975.845 Kgs. (4) Gold bars of
19127 and 1992 9 nos. 72.990 Kgss.) valued at Rs. 12,50,070.41
at the time of seizure (present approximate value Rs. 11.04 crores
at the rate ofRs. 4,600per10 gms. as on 07.12.1994) along with
Iron Safe used to conceal the gold seized from the house of Late
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 381
[CHELAMESWAR, J.]

Shri Chhaganlal Godawat, under the Rule 126-M of the erstwhile A
Defence of India Rules, 1962. The impugned gold along with the
· Iron Safe will, however, be released and handed over to the legal
heirs of Late Shri Chhaganlal Godawat on payment ofredemption
fine of Rs. 2.50 crores (Rupees Two crores fifty lacs only) in lieu
of confiscation under Rule 126-M (8) (a) of the erstwhile Defence
B
of India Rules, 1962. The option to redeem the same should be
exercised within three~months from the date of receipt of this
order."
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 I 26L( 16) of the RULES is not called C
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 regardingthc quantum D
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 30th October 1995 finally opined that
the redemption fine should be reduced to Rs.12.5 lacs which represented ,
the value of the gold as on the date of the seizure. Accordingly, the
appeal was allowed. E
7. The Collector sought a reference under Section 82-B 4 of the
Gold Control Act, 1968 on two questions oflaw;
;'Appeal N·o.C/144/95-NRB on the file of the Customs, Excise and Gold (Control)
Appellate Tribunal, New Delhi against the Order-in-Original No. 7194 dated 9 .12.1994
passed by the Collector of Central Excise & Customs, Jaipur. F
4
Section 82-B of the Gold (Control) Act, 1968
"Section 82-B. Statement of a case to High Court. (!) The Conector of
Central Excise or of Customs or the other party may, within sixty days of the
date upon which he is served with notice of an order under sec.SIA, by
application in the prescribed fom1, 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 oflaw arising out of such order G
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. H
382 SUPREME COURT REPORTS [2017] 14 S.C.R.

A "l. 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
the Gold (Control) Act, 1968?
2. Whether the quantum of Redemption fine should be related to
B market value of Gold on the date of seizure or the market value of
gold on the date ofadjudieation by the Commissioner of Customs
& Central Excise, Jaipur?"
8. By an order dated 20.5.1996, the Tribunal referred the matter
to the Rajasthan High Court.
c 9. In the meanwhile, the Department filed an appeal against that
part of the Order of the Collector dated 9.12.1994 which gave an option
to the appellant to redeem the gold by paying fine of R.~. 2.5 crores in
lieu of confiscation. The said appeal was dismissed on 23.5.1996.
10. lt appears from the record that the Union of India filed a Writ
D Petition being D.B. Civil Writ Petition No. 6295 of 1996 with an interesting
prayer as follows:-
"It is, therefore, most respectfully prayed that:-
(i) By an appropriate writ, order or direction the respondents may
be directed not to take any action with respect to getting goods
E
from the Petitioner Department in any manner till the disposal
of the reference petition.
(ii) Any other order or direction which the Hon'ble Court may
consider just and proper in the facts and circumstance of case
may also kindly be passed in favour of the petitioner."
F
In fact it is stated at para 9(D) of the writ petition as follows:-
"D. That the petitioner department has come before the Hon'ble
Court with a limited prayer that the goods may not be released to
the respondents till the final disposal of the reference petition which
G has been referred by the learned CEGAT."
11. It appears that initially there was an interim stay 6 in the said
writ petition on 20th December 1996. By an order dated 28.5.1997, the
'By the date of the Reference Application, the Gold (Control) Act, 1968 stood repealed
by Act No. I 0 of 1990 of the Parliament w.c.f. 6" June 1990.
H 'The order copy is not available on record
GUNWANTLAL GODAWAT v. UNION OF INDIA 383
[CHELAMESWAR, J.]

interim stay was vacated. The operative portion of the Order reads as A
follows:-
"8. We, therefore, vacate the stay Order passed on December
20, 1996 staying that operation of the Order dated October 30,
1995 passed by the CEGAT and instead direct that the petitioner
shall retain only that much quantity of the seized gold which will B
fetch a sum of Rs. 2,50,00,000/-(Rupees Two Crores Fifty Lakhs)
@Rs. 4600/- (Rupees Four thousand six hundred) per 10 (ten)
gms of gold and release and hand over possession of the rest of
the quantity of gold to the respondent No. 1 within one month
from today. In case the petitioner succeeds and there is any
shortfall in the recovery because of fall in price of gold, the C
respondent No. 1 shall make that good and if the petition is
dismissed and the order ofthe 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." D
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. E
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 F
fine as the said officer thinks fit. According to Wzktionary, 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.
G
xxx xxx xxx xxx
......... ., the market value of the seized Gold has to be taken on
that date when the option is given by the officer adjudging it.
20. It is revealed from the material on record that the Collector
aptly applied the market price of Gold at the rate ofRs.4,600 per H
384 SUPREME COURT REPORTS [2017] 14 S.C.R.

A 10 gms as on December 7, 1994, the date of adjudicating when
the option was given by him to the respondent and on this basis,
the price of total seized and confiscated Gold 240.040 kgs came
to be 11.04 crores and the redemption fine cannot be in any way
less than this.
B 21. Thus, in the ultimate analysis, it is candidly recorded that the
quantity ofredemption fine should be related to the market value
of gold on 7.12.1994 i.e. the date ofadjudication when the officer
adjudging gave the owner of the Gold an option to pay fine in lieu
of confiscation. The amount of fine as adjudged to the tune of
Rs.2.5 crores was totally arbitrary and irrational as it was not
c based on any sound and lawful reasoning.
xxx xxx xxx xxx
23. .. .................. the respondents are entitled to redeem the
confiscated Gold only after paying the redemption fine ofRs.11.040
D crores.
24. In view of 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."
E 13. For the sake ofcompletion of the narration of facts, it must be
stated that as a consequence, the tribunal (CESTAT) passed an order on
30:4.2010 remitting the matter to the adjudicating Commissioner to
determine the appropriate redemption fine and the Commissioner passed
an order on 16.7.2010. The relevant portion reads:
F "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
G
29.62009."
xxx xxx xxx xxx

(i)An option is given to Shri Gunwant Lal Godawat and legal heir
oflate Shri Chhagan Lal Godawat to pay Rs.11.04 crores (Rupees
H Eleven erores and four lakhs only) in lieu of confiscation of the
Gill-TWANTLAL GODAWAT v. UNION OF INDIA 385
[CHELAMESWAR, J.]

gold weighing 240.040J45 kgs under the erstwhile Defence of. A
India Rules, 1962 within three months of receipt of this order.
(ii) In case Shri Gunwant Lal Godawat and the legal heir oflate
Shri Chhagan Lal Godawat does not exercise the option of
depositing the amount of Rs.11.04 crores in the stipulated time
limit, as given above, Shri Gunwant Lal Godawat and legal heir of B
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: C
14. On 26'h October 1962, the President of India made a ,.
proclamation of emergency und~r Article 352 of the Constitution of India. ·
On 28'h October 1962, the President oflndia promulgated the Defence
of India Ordinance (4 of 1962) .. It was amended by another ordinance
(6of1962). In exercise of the power conferred under Section 3 of the D
Ordinance (4 of 19()2), 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 23"' September, 1963 with the heading
'Gold Control'. ·
15. PartXIlA of the RULES contained various provisions regarding E
acquisition, possession, sale etc. of gold ornaments and articles by two
defined classes, under RULES 126-A(c) and (h), i.e. "dealers" and
"refiners" and persons other than dealers and refiners ..
. 16. Both the Ordinances (4 & 6of1962) C!!me to be repealed by
Section 48(2) of the Defence of India Act (51of1962) 7 • Section 48(2) F
of the Act ( 51 of 1962) contained a declaration that notwithstanding the
repeal, any Rules made under the repealed ordinance shall be deemed
to have been made under the Act 51 of 1962. It contained a further
declaration creating a further fiction that Act 51 of 1962 had commenced
on 26th October, 1962. ·
G
"Section 48. Repeal and saving. -
· (1) The Defence oflndia Ordinance, 1962(4of1962), and the
Defence of India {Amendment) Ordinance, 1962 (6of1962), are
hereby repealed. ·
7
Came into force on 15" December.1962
H
386 SUPREME COURT REPORTS [2017] 14 S.C.R.

A (2) Notwithstanding such repeal, any rules made, anything done
or any action taken under the Defence of India Ordinance, 1962(4
of 1962) , as amended by the Defence of India (Amendment)
Ordinance, 1962 (6of1962) shall be deemed to have been made,
done or taken under this Act as if this Act had commenced on the
26the October, 1962."
B
17. We need not examine the purpose for creating the fiction
under sub-section (2) because no submission in this regard is made before
us by either of the parties. We only take note of the fact that the RULES
must be deemed to have been made under Act 51 of 1962 w.c.f. 26'h
C October I 962 though they were in fact made later under Ordinance 4 of
1962.
18. The Defence of India Act itself was a temporary enactment.
Section 1(3) of the Act declared as follows:-
"(3). It shall remain in force during the period of operation of the
D Proclamation of Emergency issued on the 26"' October, 1962,
and for a period of six months thereafter."
The proclamation of emergency ceased to operate on 10'" January
1968. Therefore, it follows that the Defence oflndia Act (5 of 1962)
ceased to be in force by 9'h July I 968.
E 19. In the year I 968, an ordinance titled The Gold (Control)
Ordinance, 1968 (6 of 68) (hereinafter referred to as 'the ORDINANCE')
was promulgated on 29'h June, 1968. 8 Section 117 of the ORDINANCE
repealed the l,{ULES. The RULES would have lapsed on 9"' July 1968
because the Mithority of law for the sustenance of the RULES ceased
F on that day with the cessation of the operation of the Defence of India
Act (5of1962), 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.
G "(I) As from the commencement of this Ordinance, the provisions
of Part XII-A of the Defence of India Rules, 1962 shall stand
'Parliament enacted the Gold (Control) Act, 1965 (18 of65), which was never brought
into force (for reasons not known nor necessary to be known for the purpose of this
case).
•Act 45 of 68 came into force on the I" September 1968.
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 387
[CHELAMESWAR, J.]

repealed and upon such repeal, Section 6 of the General A
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 B
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 provisions of this C
Ordinance be deemed to have been made, issued, granted,
adjudged, imposed, ordered, done or taken under the corresponding
provisions of this Ordinance."
'
20. Thereafter Parliament made the Gold Control Act (45 ofl 968) 9
(hereinafter referred to as the GOLD ACT). The scheme of the D
ORDINANCE and the GOLD ACT is more or less the same (the details
of which are not necessary for our purpose) and is substantially similar
to the scheme of the Part XIIAofthe RULES. Section 116(1) of GOLD
· ACT inter alia repealed the ORDINANCE.
Section 116(2) of the GOLD ACT: E
"116. Repeal and savings. - (1) The Gold (Control) Act. 1965
( 18 of 1965), and the Gold (Control) Ordinance. 1968 (6. of
1968), are hereby repealed.
(2) Notwithstanding such repeal, anything done or any
action taken, including any notification, order or appointment made, F
direction given, notice, licence or certificate issued, permission,
authorization or exemption granted, confiscation adjudged, penalty
or fine imposed, or forfeiture ordered whether under the Gold
(Control) Ordinance, 1968 (6 of 1968), or Part XII-A of the
Defence of India Rules, 1962, shall, in so far as it is not inconsistent
with the provisions of this Act, be deemed to have been done, G
taken, made, given, issued, granted, adjudged, imposed or ordered,
as the case may be, under the corresponding provision of this Act
as if this Act had commenced on the 291h day of June, 1968."
It can be seen from the sub-section (2) extracted above that it
creates 2 fictions. The 1'' fiction provides that various things done or H
388 SUPREME COURT REPORTS [2017] 14 S.C.R.

A actions taken under the ORDINANCE or the RULES are deemed to
be things done or actions taken under the corresponding provisions of
the GOLD ACT. The 2nd fiction is that the GOLD ACT "had commenced
_ . as on 29th June 1968". But the GOLD ACT does not contain a provision
corresponding to that part of Section 117(1) of the ORDINANCE dealing
B with the repeal of the RULES and the consequences of such repeal.
EFFECT OF THE REPEAL OF THE RULES BY THE
ORDINANCE:
21. One of the questions that is required to be examined to decide
the controversy on hand is whether the RULES stood irrevocably repealed
C inthe ,absence of a provision in the GOLD ACT similar to Section 117(1)
of the ORDINANCE?
22. The judgment of this Court in T. Venkata Reddy & Others v.
State of Andhra Pradesh 10, would be 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
D 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
E
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.
F
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:
10
(1985) 3sec 198
11
105.10. The theory of enduring rights which has been laid down in the judgment
G in Bhupendra Kumar Bose [State of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2)
SCR 380 : AIR 1962 SC 945] and followed in T. Venkatu Reddy [T. Venkatu Reddy v. State
of A.P., (1985) 3 SCC 198: 1985 SCC (L&S) 632] by the Constitution Bench is based
on the analogy of a temporary enactment. There is a basic difference between an
Ordinance and a temporary enactment. These decisions of the Constitution Bench
which have accepted the notion of enduring rights which will survive an Ordinance
which has ceased to operate do not lay down the correct position. The judgments are
H also no longer good law in view of the decision in S.R. Bommai [S.R. Bommai v. Union
oflndiu, (1994) 3 sec 1] . .
GUNWANTLAL GODAWAT v. UNION OF INDIA 389
[CHELAMESWAR, J.]

"105.12. The question as to whether rights, privileges, obligations A
and. liabilities would survive an Ordinance which has ceased to
operate must be determined as a matter of construction. The
appropriate test to be applied is the test of public interest and
constitutional necessity. This would include the issue as to whether
the consequences which have taken place under the Ordinance B
have assumed an irreversible character. In a suitable case, it would
be open to the court to mould the relief." ·
25. Krishna Kumar Singh dealt with a case where a series of
Ordinances were issued by the Governor of Bihar. ·~~

"13. The Ordinances promulgated by the Governor followed a c
consistent pattern: None of the Ordinances was laid before the
legislature. Each one of the Ordinances lapsed by efflux of time,
six weeks after the convening of the session of the Legislative
Assembly. When the previous Ordinance ceased to operate, a
fresh Ordinance was issued when the Legislative Assembly was
not in session. The Legislative Assembly had no occasion to D
consider whether any of the Ordinances should be approved or
disapproved. No legislation to enact a law along the lines of the
Ordinances was moved by the Government in the Legislative
Assembly. The last of the Ordinances, like its predecessors, cease
to operate as a result of the constitutional limitation contained in E
Article 213(2)(a). The subject was entirely governed by
successive Ordinances; yet another illustration of what was
described by this Court as an Ordinance-Raj barely three years
prior to the promulgation of the first in this chain of Ordinances."
This Court was examining the issue: · F
"69. The issue before the Court is of the consequence of an
Ordinance terminating on the expiry of a period of six weeks or,
within that period, on a disapproval by the legislature .... Would
. the legal effects created by the Ordinance stand obliterated as a
matter of law upon the lapsing of an Ordinance or passing of a G
resolution of disapproval?"
This Court took note of the fact that Venkata Reddy's case and
two earlier cases 12 which laid down the law based on the theory of
12
Para 76. The "enduring rights" theory which had been applied in English
decisions to temporary statutes, was thus brought in while construing the effect H
390 SUPREME COURT REPORTS [2017] 14 S.C.R.

A "enduring rights" propounded by English decisions in the cases of
temporary statutes 13
26. This Court in Krishna Kumar Singh opined that "the basis
and foundation of the two Constitution Bench decisions cannot be
accepted as reflecting the tlue constitutional position" and went on to
B consider the issue afresh and finally concluded:
"92 .... The enduring rights theory attributes a degree of
pennanence to the power to promulgate Ordinances in derogation
of parliamentary control and supremacy. Any such assumption in
regard to the confennent of power would run contrary to the
principles which have been laid down in S.R. Bommai [S.R.
c Bommai v. Union ofIndia, (1994) 3 SCC 1]. The judgment in T.
Venkata Reddy [T. Venkata Reddy v. State ofA.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
D a specific law with retrospective effect. This, in our view, reverses
the constitutional ordering in regard to the exercise oflegislative
power."
It must be remembered that the abovementioned discussion of
law was in the context of an Ordinance which was never tabled before
E 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 replaced by the
1
F GOLD ACT with retrospective effect from 29 h June 1968, that is, from
the date of promulgation of the ORDINANCE.
of an Ordinance which has ceased to operate. Jn the view of the Constitution
Bel'Ch: (Bhupendra Kumar case [Stale ofOrissa v. Bhupendra Kumar Bose, 1962 Supp
(2) SCR 380 : AIR 1962 SC 945] , AIR p. 954, para 21)
"21 . ... Therefore, in considering the effect of the expiration ofa temporary
statute, it would be unsafe to lay down any inflexible rule. If the right created
G by the statute is of an enduring character and has vested in the person,
that right cannot be taken away because the statute by which it was
created has expired. If a penalty had been incurred under the statute and had
been imposed upon a person, the imposition of the penalty would survive the
expiration of the statute. That appears to be the true legal position in the
matter."
13 Wicks v. Director of Public Prosecutions, 1947 AC 362 (HL); Warren v. Windle, I 02

H ER 576 (KB): and Steavenson v. Oliver, 151ER1024 pp. 1026-27
GUNWANTLAL GODAWAT v. UNION OF INDIA 391
[CHELAMESWAR, J.]

THE EFFECT OF THE REPEAL OF THE ORDINANCE BY A
THE GOLD ACT:
28. The General Clauses Act is silent in this regard. On the other
hand, Section 30 14 of the General Clauses Act deals with a situation of a
Central Act being repealed by an Ordinance. It declares (in substance)
that the same consequences that would follow the repeal of an earlier B
enactment by a_later enactment would also follow in the case ofrepeal
of an earlier enactment by a subsequent Ordinance. The implications of
Section 30 were considered by this Court in State ofPunjab i< Mohar
Singh, AIR 1955 SC 84. But the counter position is not provided under
the General Clauses Act. In the circumstances, we are only required to
look into the provisions of the Act which repeals an Ordinance. In the C
ease on hand, the provisions of the GOLD ACT.
Though the GOLD ACT expressly repealed the ORDINANCE,
it did not make a declaration that the RULES are repealed. But on that
account, the peremptory nature of the repeal of the RULES by the
ORDINANCE need not be doubted for the following two reasons: D
(i) The GOLD ACT while making the declaration that the
ORDINANCE is repealed provided that various actions taken
both.under PART XIIA of the RULES or the ORDINANCE
are deemed to be actions taken under the corresponding
provisions of the GOLD ACT; and E
(ii) Unli_ke Krishan Kumar Singh, the ORDINANCE was
followed up by a legislative action which did not disapprove
the content of the ORDINANCE.
SCHEME AND PURPOSE OF THE Ill FICTION UNDER F
SECTION 116:
29. The purpose of creating the l" fiction under Section 116,
according to us, is to declare that the rights and obligations flowing from
the adjudgment of confiscation would be those specified in the GOLD
" Section 30. Application of Act to Ordinances.-In this Act the expression Central G
Act, wherever it occurs, except in section 5 and the word "Act" in clauses (9), (13),
(25), (40), (43), (52) and (54)] ofsection 3 and in section 25 shall be deemed to include
an Ordinance made and promulgated by the Govemor General under section 23 of the
Indian Councils Act, 1861 (24 and 25 Viet., c.67) or section 72 of the Government of
India Act, 1915, (5 and 6 Geo. V. c, 61) or section 42 of the Government oflndiaAct,
1935 (26 Geo. V. c. 2) and an Ordinance promulgated by the President under article 123
of the Constitution. H
392 SUPREME COURT REPORTS [2017] 14 S.C.R.

A ACT. The pilrpose of the fiction is not to alter the Jaw applicable to the
adjudgment proceedings. One of the examples of the rights flowing
from the adjudgment of confiscation of gold is a right of appeal against
the adjudgment of confiscation. Both the RULES [Rule 126M(3) and
the GOLD ACT (Sections 80 and 81)] provide for appeal. While under
B the RULES, appeals lay to the 'Administrator' irrespective of the forum
which adjudged the confiscation. Under the GOLD ACT, the appellate
forum varies depending on the forum which adjudged the confiscation.
30. The fiction does not deal with the Jaw applicable to pending
proceedings. Such a conclusion is irresistible from the language of
C 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:
D 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.
E 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
F and refiners who own gold (hereinafter referred to as PERSONS for
the sake of convenience).
33. Under Rule 126-I, PERSONS were required to make a
declaration within a period stipulated therein. The declaration is required
to contain. the quantity, description and other prescribed particulars of
G gold.(other than ornaments) owned by a PERSON. Sub-rule (3) stipulated
that PERSONS shall not acquire any gold other than ornaments except
either by succession or in accordance with a permit granted under the
RULES. Sub-rule (4) mandated that if a. PERSON either acquires or
parts with any quantity of gold subsequent to a declaration made by him,
such PERSON is required to make a further declaration giving the
H particulars thereof.
GUNWANTLAL GODAWAT v. UNION OF INDIA 393
[CHELAMESWAR, J.]

34. Rule 126-L(2) provided the authority oflaw (obviously for the A
officers entrusted with responsibility of the enforcement of the RULES)
to enter and search any premises of PERSONS and seize gold if found
therein, if it is suspected that any provision of Part XIIA "has been or is
being or is about to be contravened" with respect to the gold found.
35. Rule 126-M provided for 'confiscation' of the gold seized under B
Rule 126-L. Rule provided that a confiscation is required to be 'adjudged'.
The expression 'adjudged' is not defined but, having regard to the scheme
of the Rules mentioned above, the only possible meaning that can be
ascribed to that word is that adjudgment is a proceeding by which the
liability for confiscation arising out of the provisions of Part XIIA of the c·
. gold seized is required to be determined. It appears from the scheme,
the liability for confiscation of the gold found ih searched premises arises
from the fact that "there has been or is being or is about to be" a
contravention of any provision· of Part XIIA. In other words, adjudgment
is nothing but a process of establishing the facts relevant for arriving at
a conclusion that "there has been or is being or is about to be" a D
contravention of any one of the Rules contained in Part XIIA. Goes
without saying that adjudgment is a quasi judicial proceeding.
36. The expression 'confiscation' is not defined in the RULES. It
had roots in the latin word Confiscare-to consign to fiscus i.e. transfer
to treasury, as a punishment or in enforcement of law. Though, the E
expression is generally understood as having implications associated with
a crime. However, it is now well settled at least bytwo 15 earlier judgments
of this Court that the liability for confiscatfon ofproperty could be 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. F

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 oflaw 17• G
"The State of West Bengal Vs. S.K. Ghosh AIR 1963 SC 255 :
Biswanath Bhattacharya Vs. Union oflndia (2014) 4 SCC 392
16
of
Section 6( d) affect any penalty, forfeiture or punishment incurred in respect any
offence committed against any enactment so repealed; or
17
Raja Saliqram Vs. Secretary of State ofindia in Council, 1874 12 Bengal LR 167,
at page 182 H
394 SUPREME COURT REPORTS [2017] 14 S.C.R.

A 37. Rule 126-P provided for penalties. The sub-rules insofar as it
is relevant" for the facts of the present case arc Rule 126P(l )(i) and
(2)(ii) 18 , the first of which stipulated that any PERSON either fails or
omits to make any return required under Rule 126-1 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
B
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 punishable
with imprisonment for a·term of not less than six months and not more
than two years and also with fine.
c 38. We have indicated the content of Rule 126-P(l) only for the
limited purpose of understanding the overall scheme of the RULES and
the consequences (other than confiscation of the gold under Rule 126M)
that can visit PERSONS either owning or possessing gold in contravention
of the provisions contained in Part XIIA.
D 39. It can be seen from the above that possession of undeclared
gold entails two consequences -(i) liability for confiscation of such gold,
and (ii) liability for prosecution and punishment. Both the consequences
are independent though flowing from the same set of facts.
40. Another relevant feature of the RULES (for the purpose of
the case on hand) is that under Rule 126-M(8) 19, the officer adjudging
E
confiscation may give to the "owner of the gold" an option to pay in lieu
of confiscation such fine (popularly known as redemption fine) as the
officer thinks fit.
APPLICATION OF THE LAW TO THE FACTS OF THE CASE:
41. Confiscation of the gold of the appellant under the order (dated
F
24.09. I966) ofadjudgment of confiscation was nothing but a 'forfeiture'
of gold within the meaning of the expression occmTing under Section
18 Rule I 26P. Penalties-( I) Whoever,-(i) fails or omits to make any retum including

a further return as required by rule 126F or any declaration including a further declaration
as required by rule 1261 without any reasonable cause, or makes any statement in such
G return or declaration which is false and which he either knows·or l!,elieves to be false or
does not believe to be true, shall be punishable with imprisonment for a tem1 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.
10
Rule 126M(8) (a) Whenever confiscation ofany gold is authorised by this Part, the
officer adjudging it may give to the owner of the gold an option to pay in lieu of
H confiscation such fine as the said officer thinks fit.
GUNWANTLAL GODAWAT v. UNION OF lNDIA 395
[CHELAMESWAR, J.)

6( d) of the General Clauses Act. The order of forfeiture necessarily A
extinguished the title of the appellant in the confiscated gold and obliged
the appellant to part with the gold. Correspondingly the Union oflndia
acquired title to that gold. In other words, the appellant incurred a liability
to part with or forfeit the gold. If the original confiscation order (dated
24.09 .1966) remained unchallenged or otherwise and became final, the
B
vesting of title in the confiscated gold in the Union ofJndia would have
been an accomplished fact under the RULES. But the appellant
questioned the legality of the order of confiscation before the' appellate'
fora and the proceedings were pending even by the date of the repeal of
the RULES.
42. The adjudgment of cpnfiscation was found to be not in C
accordance with law by the Rajasthan High Court in Writ Petition
No.1215179 dated 91h August 1994. The High Court had set aside the
adjudgment order and remitted the matter to the original authority for
fresh adjudgment. The High Court did not hold the seizure of appellant's
gold was illegal. In other words, the seizure of the gold under the RULES D
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 E
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 Act20 , the adjudgment of confiscation (legal
211
"Section 6. Effect of repeal.--Where this Act, or any Central Act or Regulation
made after the commencement of this Act, repeals any enactment hitherto made or p
hereafter to be made, then, unless a different intention appears, the repeal shall not-
(a) revive anything not in force or existing at the time at which the repeal takes effect;
or
(b) affect the previous operation of any enactment so repealed or anything duly done
or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under
any enactment so repealed; or G
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence
committed against any enactment so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such·right,
privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any
such investigation, legal proceeding or remedy may be instituted, continued or
enforced, and any such penalty, forfeiture or punishment may be imposed as if the
repealing Act or Regulation had not been passed." H
396 SUPREME COURT REPORTS [2017] 14 S.C.R.

A 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 ifthe repealing ORDINANCE ·
had not been passed21 •
43. The legal consequences which follow the repeal of the RULES
B 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 various legal proceedings, referred to in Section 6 (e) of the General
C Clauses Act, either pending or concluded and other appropriate
consequences specified in the RULES would follow.
44. But that does not solve the problem on hand. The
ORDINANCE itself came to be repealed by the GOLD ACT by the
date of the judgment of the Rajasthan High Court.
D
Such repeal gives rise to two questions - What is the effect of (i)
the repeal of the Ordinance 6 of 1968, and (ii) the declaration under
Section 116(2) of the GOLD ACT?
45. At the time of the making of the GOLD ACT, Parliament was
E conscious of the existence of the RULES and their repeal by the
ORDINANCE and also the fact that various actions authorised under
the provisions of the Part XIIA of the RULES were taken or pending.
The Parliament is also conscious of the fact that the ORDINANCE
while repealing the RULES provided for the application of Section 6 of
the General Clauses Act. Pursuant to the repeal of the ORDINANCE,
F the Parliament did not choose by the GOLD ACT to disapprove such a
declaration made under the ORDINANCE. Therefore, in our opinion, it
is more than public interest and constitutional necessity as opined in
Krishun Kumar Singh 's case to hold that the RULES stood
peremptorily repealed by the ORDINANCE and on such repeal, Section
6 of the General Clauses Act applied.
G
· Therefore, the RULES stood peremptorily repealed by the
ORDINANCE notwithstanding the fact that the ORDINANCE itself
came to be repealed subsequently by the GOLD ACT. The repeal of the
Ordinance does not revive the RULES.
21 LT. Commissioner Vs. Shah Sadiq & Sons, (1987) 3 SCC 516, page 524 para 15
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 397
[CHELAMESWAR, J.] ·

46. Now we shall deal with Question No.(ii) mentioned above A
i.e., the effect of Section 116(2), insofar as it is relevant for our purpose,
that the confiscation adjudged under Part XII-A of the RULES shall be
deemed to have been adjudged under the corresponding provision 22 of
the GOLD ACT.
47. The question is no more res integra. This Court inJayantilal B
Amrathlal v. Union ofIndia 13 specifically dealt with the issue.
About 24.5 kgs. of gold was seized from the Jayantilal on 17th
December 1964. On 5t11 June 1965, a show-cause notice was issued,
calling upon Jayantilal to explain why the seized gold should not be
confiscated under Rule 126-M of the RULES. The said notice was C
challenged under Article 226 in a writ petition. During the pendency of
the said writ petition, the ORDINANCE came to be issued followed by
the GOLD ACT. It was argued on behalf of Jayantilal that notice dated
5'h June 1965 could not be enforced because it was a notice issued
under the RULES which had been repealed. The said argument was
~~d D
"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 E
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 F
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 provisions in the
22 "Section 78. Adjudication. Any confiscation may be adjudged or penalty may be G
imposed under this Act - (a) without limit, by a· Gold Control Officer ·not below the
rank of a Collector of Central Excise or of Customs;
(b) subject to such limits as may be specified in this behalf, by such other Gold Control
Officer, not below the rank of a Superinten~ent of Central Excise, as the Central
Government may, by notification, authorise in this behalf." ·
"(1972) 4 sec 114
398 SUPREME COURT REPORTS (2017] 14 S.C.R.

A "Rules" requiring a declaration to be made in respect of the
possession of primary gold are inconsistent with the provisions of
the Gold (Control) Act and therefore the notice issued under the
"Rules" cannot be considered as being continued under the
provisions of the Gold (Control) Act, 1968.
B Para 8. The above contention is untenable. There are no provisions
in the Gold (Control) Act, 1968 which are inconsistent with Rule
126(1)(10) of the "Rules". That being so, action taken under that
rule must be deemed to be continuing in view of Section 6 of the
General Clauses Act, 1897. It is true that Gold (Control) Act,
1968 does not purport to incorporate into that Act the provisions
c of Section 6 of the General Clauses Act. But the provisions therein
are not inconsistent with the provisions in Section 6 of the General
Clauses Act. Hence the provisions of Section 6 of the General
Clauses Act are attracted in view of the repeal of the Gold (Control)
Ordinance, 1968. As the Gold (Control) Act does not exhibit a
D different or contrary intention, proceedings initiated under the
repealed law must be held to continue. We must also remember
that by Gold (Control) Ordinance, the "Rules" were deemed as
an act of Parliament. Hence on the repeal of the "Rules" and the
Gold (Control) Ordinance, 1968 the consequences mentioned in
Section 6 of the General Clauses Act, follow. For ascertaining
E whether there is a contrary intention, one has to look to the
provisions of the Gold (Control) Act, 1968. In order to see
whether the rights and liabilities under the repealed law
have been put an end to by the new enactment, the proper
approach is not to enquire if the new enactment has by its
F new provisions kept alive the rights and liabilities under
the repealed law but whether it has taken away. those rights
and liabilities. The absence of a saving clause in a new
enactment preserving the rights and liabilities under the
repealed law is neither material nor decisive of the question
- see State ofPunjab v. Mohar Singh [AIR 1955 SC 84: (1955)
G 1 SCR 893 : 1955 SCJ 25] and TS. Baliah v. Income Tax
Officer, Central Circle VI. Madras [AIR 1969 SC 701 : (1969)
3 SCR 65 : (1969) 1 SCJ 890 : 72 ITR 787] ."
Therefore, it was held that the confiscation proceedings initiated
under the RULES must be concluded in accordance with the RULES
H without any reference to the provisions of the GOLD ACT.
GUNWANTLAL GODAWAT v. UNION OF INDIA 399
[CHELAMESWAR, J.]

48. All the above analysis leads us to the following conclusions: A
(1) the adjudgment ofconfiscation 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 l'' fiction created under Section 116 of GOLD ·B
ACT is limited as explained in para 29 (supra). · ,~ ..
49. The submissions before us revolved around two questions:
(i) What is the law governing determjnation of the amount of fine
that could be levied and collected from the appellant in lieu of
,. the confiscation of gold seized from him?; c
(ii) Whether the High Court applied the correct law in recording
the conclusion that the appellant is liable to pay an amount of
Rs.11.04 crores in lieu of the confiscation of the Gold ifhe so
chooses?
and issues ancillary thereto. D

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 ofRs.2.5 crores. While deciding that figure, the
officer took note of the fact that the gold was valued at Rs.12.5 lakhs at
.thetime of its seizure and also took note of the fact that as on 9.12.1994 E
(the date of adjudgment order), the gold was valued at Rs.11.04 crores.
It must be remembered that Rule 126-M(8)(a) did not oblige the officer
to determine the amount of fine on the basis of the value of the collfiscated
gold either with reference to the date of its seizure or on .the date of
adjudgment of confiscation. The rule (text of it at least) conferred an F
unfettered discretion on the officer to determine the amount of fine. But·
an unfettered discretion and the Rule ofLaw·are contradictions in terms.
The High Court opined at para 18;
" ... Now, what shall be the quantum of fine, decision thereof has
been left to the adjudging. authority and he may adjudge the .fine G
as he thinks fit. Of course, this decision is required to be exercised
judiciously in accordance with law or rule as the case may be but
not arbitrarily. The words "an option to pay in lieu of
confiscation such fine'' arc very significant and the use of the

H
400 SUPREME COURT REPORTS [2017] 14 S.C.R.

A words '"in lieu of" connotes that the fine should be equivalent to
the thing or Gold confiscated by the authority."
We are in complete agreement with the view of the High Court.
51. While it is true that the discretion conferred upon the Authority
under Rule 128M-(8)(a) is textually unfettered, it does not lead to the
B inference that the discretion is absolute and uniform with reference to
the various contraventions of the RULES. The limitations on the discretion
are to be found from the scheme of the RULES. The various RULES in
the Part XIIA of the RULES make various stipulations and the
contravention of any one of the stipulations can lead to the confiscation
c ofgold. The factors which influence the Authority's exercise ofdiscretion
will necessarily vary from the nature of the offence which is committed.
For instance, Rule 126-I mandates that certain PERSONS make
a declaration to the Administrator in the prescribed from. The violation
of this would entail a confiscation.
52. But Rule l 26-I(2) stipulates that the declaration is required to
D
be made by PERSONS other than owners of the gold in certain cases
because the owners are either legally incapacitated or judicial persons
who are necessarily required to act through a human agency. Rule 126-
I(2)(a) stipulates that the declaration is to be made by the guardian.
Similarly with gold belonging to an idol24 , the declaration is to be made
E by the manager. In all these cases, 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.
F
53. In the same vein Rule 126-I(3)25 enjoins a person from
24 Rule I 26-I-(2)(b) in the case belonging to an idol or a deity. by the manager of

such idol or deity, whether known as shebait or manager or by any other name
,. (c) in the case of gold belonging to a person whose properties under the management
of a Court of wards, by the manager of such Court
G (d) in the case of gold belonging to a person whose properties are under the
management of any administrator or receiver, by such administrator or receiver.
2·1 Rule 126- 1(3) No person who is either a required to make a declaration or a

further declaration 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
H (B) Jn accordance with a pennit granted by the Administrator in this behalf
GUNWANTLAL GODAWAT v. UNION OF INDIA 401
[CHELAMESWAR, J.]

acquiring gold, subsequent to making a declaration, except in certain A
situati"cins 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 atall and PERSONS not filing a further declaration under
sub-Rule (3) cannot be treated on the same footing.
B
54. All this just goes to show that the violations committed by
PERSONS fatling under different category cannot be treated alike. If
. the rule \Vere to be applied to all these categories of PERSONS uniformly
it would result in the violation ofArticle 14.
55. The appellant's case does not in our view calls for any discretion c
to be exercised in his favor in the light of the totality of the circumstances.
The· non-filing of the declaration is established to be an absolutely
calculated violation oflaw. 26
56. Aggrieved by the determination of the fine amount ofRs.2.5
crores, the appellant carried the matter in appeal under Section 81 of the D
GOLD ACT. Two members of the appellate tribunal were not able to
agree upon the quantum of the fine. While the Member (Technical -
Brahma Deva) opined that the law applicable is only Rule 126-M(S)(i;t)
of the RULES and the RULES did not make any reference to the value

'·' The Collector's order of 24/09/1966 deals with the pleas taken by the Appellant E
regarding his non-declaration: ..
"In his Reply, Shri Chhagan Lal Godavat stated that his letters dated 26.09 .1920 and
3.3 .192 lwere 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 recoliect only that these letters were written to check up the balance sheet by his
'Mimim' Shri Rikhab Dass. F
He further stated that the documents were got written under the influence of 'Bhang'.
The late 'Munim' Shri RikhabDass was keeping the gold. 1t is likely that his mother,
Smt. Birju Bai may have told about it. He expressed his ignorance about this gold till the
date ofseizu!e. He did not know where the gold was kept. He, therefore, submitted thai .., ·
he cannot be proceeded against on the basis of the letters written by liim at a time when
he was a minor.
Chhagan Lal Godavat also disclosed that he and his mother had strained relations. She G
did not disclose the fact of buried gold to him fearing that he might dispose it .off... "
The Superintended after ascertaining the true position of the relationship ofChagganlal
found that "The mother denied there was any quarrel with her son. The house stand in
the nan1e of the ancestral fim1 of which Chagganlal is the sole proprietor. The statement
of the mother was recorded in the presence of Shri Chhagan Lal Godavat was also
signed the same" ·
H

', ·;.
402 SUPREME COURT REPORTS (2017) 14 S.C.R.

A of the gold for the purpose of determining the quantum of fine. He,
therefore, opined that the quantum is entirely the discretion of the
adjudicating officer. He, however, chose co substitute his discretion for
that of the adjudicating officer by reducing the fine to Rs.25 lakhs from
Rs.2 .5 crores. Whereas the Member (Judicial - Sankararaman) opined27
that the quantum of fine must be "in line with Section 73 of the Gold
B
Control Act" and, therefore, opined that the fine amount should not exceed
Rs.12.5 lakhs (the value of the gold at the time of seizure). In view of
the disagreement, the matter was referred to the third member of the
tribunal who agreed with the Member {Technical)'s view.
57. Aggrieved by the same, the respondent sought a reference
c under Section 82B of the GOLD ACT to the High Court on two precise
questions, which are already noted at para 7 (supra) and, in our opinion,
the questions were rightly framed.
58. The High Court rightly came to the conclusion that the case
of the appellant is governed only by the RULES and not by Section 73 of
D the GOLD ACT and recorded at paras 20 and 21 of the impugned
judgment as follows:
"20. It is revealed from the material on record that the Collector
aptly applied the market price of Gold at the rate of Rs.4,600 per
10 gms as on December 7, I 994, the date of adjudicating when
E the option was given by him to the respondent and on this basis,
the price of total seized and confiscated Gold 240.040 kgs came
to be I I .04 crores and the redemption fine cannot be in any way
less than this.
"While agreeing with the approach taken by my learned brother Shri Brahma Deva for
F reduction of the fine amount in lieu ofconfiscation, I am, however, of the view that the
quantum thereof should be in line with Section 73 of Gold Control Act after it was
amended whereby redemption fine was not to exceed the value of the gold. The term
'value' has also been defined in the Act as the marked price. on the date of
seizure. Applying the said yardstick the fine in lieu of confiscation should not
exceed Rs.12.50 lakhs which was the value of the seized goods at the time of
seizure. In the circumstances, I feel that the proposed reduction of fine from Rs.2.50
G crores as determined by the Collector in the adjudication order passed de novo to a sum
ofRs.25 lakhs is apparently based upon the fact that the law has been changed from the
Defence of India Rules to Gold Control Act. In view of the matter, the subsequent
development of the maximum amount of fine under Section 73 of the Gold Control Act
being reduced to the value of goods from twice that amount should also be taken into
account. In that event the fine amount in the present case should not exceed Rs.12.5
lakhs. I am of the view accordingly that the fine should be reduced to Rs.12.5 lakhs.
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 403
[CHELAMESWAR, J.]

21. Thus, in the ultimate analysis, it is candidly recorded that the A
quantity of redemption fine should be related to the market value
of gold on 7.12.1994 i.e. the date of adjudication when the officer
adjudging gave the owner of the Gold an option to pay fine in lieu
of confiscation. The amount of fine as adjudged to the tune of
Rs.2.5 crores was totally arbitrary and irrational as it was not B
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 C
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 D
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 E
"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 late Shri Chhagan Lal Godawat to pay Rs.11.04 crores
(Rupees Eleven crores and four lakhs only) in lieu of confiscation F
of the gold weighing 240.040.145 kgs under the erstwhile Defence
of India Rules, 1962 within three months of receipt of this order.
(ii) In case Shri Gun want Lal Godawat and the legal heir oflate
Shri Chhagan Lal Godawat does not exercise the option of
depositing the amount of Rs.11.04 crores in the stipulated time G
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 <lirections of the
Hon'ble RajasthanHigh Court given in the orderdated28.05.97." H
404 SUPREME COlJRT REPORTS [2017] 14 S.C.R.

A It must be remembered that the amount of Rs.11.04 crores was
the value of the gold as on the date (7.12.94) when the appellant was
given the option to pay the fine in lieu of confiscation.
60. However, it is argued before us by the appellant that: ·
"Once the order of confiscation had been set aside and the matter
B remanded back, the issue whether the gold is to be confiscated
was required to be adjudicated afresh. The detennination of the
law under the proceedings would continue has to be considered
"on the date of remand by the High Court" ... Thus the pending
proceedings under Part XII-A of the Do! Rules, will have to be
c deemed to be continue under the Gold (Control) Act." 28
In other words, the argument advanced is that the law applicable
to the adjudgment proceedings is GOLD ACT - a submissi<m plainly
untenable in light of the reasons given by us in the preceding paragraphs
and the decision of this Court in Jayantilal.
D 61. A proceeding initiated under the RULES and pending as on
the date of the GOLD ACT will still have to be concluded in accordance
with the RULES in view of Section I 16 of the GOLD ACT for the
reasons already noted at para 29.
62. On the basis of the above-mentioned submission, a further
E submission was made:
"The said rule (Ed: Rule 126 M (8)) grants the further discretion
to impose a fine that is less than or more than the market value as
on the date of seizure or of order of confiscation, as the case may
be (however, redemption at a higher value would not make
F commercial sense since the buyer will prefer buying from the
market). Section 73 read with Section 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
G detennine 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
28
Written submissions of the appellant.
H
GUNWANTLAL GODAWAT v. UNION OF INDIA 405
[CHELAMESWAR, J.]

relevant date for calculation of the redemption fine. The officer A
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 Dol Rules and the Act."
63.--'fhe substance of the submission is that both the RULES and
the GOLD ACT provide for giving an option to the "owner" of the gold B
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 to pay in lieu of confiscation such fine, not.
exceeding the value". According to the petitioner, such value is to be
c
determined with reference to the date of the seizure of the gold because
of ~ection 73 of the GOLD ACT read with Section 2(v) thereof.
' \, 64. At the outset, we must make it clear that there is nothing in
the text of Section 73 of the GOLD ACT which requires the value of the
gold {for the purpose of determining the fine) should be the value of the D
gold as on the date of the seizure. But the expression 'value' is a defined
expression under Section 2(v) of the Act.
"Section 73 - Power to give option to pay fine in lieu of
. confiscation- Whenever any confiscation is authorized by this
Act, the officer adjudging it may, subject to such conditions as E
may be specified in the order adjudging the confiscation, give to
the owner thereof an option to pay in lieu of confiscation
such fine, not exceeding the value29 of the thing in respect of
which confiscation is authorized, as the said officer thinks fit."
Section 2(v). 'value', in relation to primary gold, article or F
ornaments, means,-
(i) when the gold is seized under this Act, the market price of
such gold as on the date of the seizure thereof,
(ii) when the gold is not available for seizure, the market price
G
of such gold as on the date on which the notice referred to
in section 79 is issued."

,. This rulc'°riginallyprovided for imposition ofa fine not exceeding twice the value of .• \,to
the goods. However, the word "twice" was omitted by the Gold Control (Amendment)
Act, 1971 (21 ofl971), Sec.3.
H
406 SUPREME COURT REPORTS [2017] 14 S.C.R.

A 65. The language of Section 73 is Clear that it applies only to those
cases wherein confiscation is one which is authorised "by this Act". In
our opinion, Section 73 would have no application to those cases of
confiscation which are adjudged under the RULES. It would be
applicable only fort.hose cases where the confiscation is authorised by
the GOLD ACT. Section 71 30 authorises the confiscation ofgold in respect
B
of which "any provision 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 confiscati_on 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
C ACT but not contravention oflaw which existed anterior thereto (the
RULES).
66. 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
D 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
E should be deemed to have taken place under the statute which came
into existence 1.ater. 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
F 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 GOLD ACT.
G
68. No doubt that the option to pay fine in lieu of confiscation is
one of the consequences flowing from the adjudgment of confiscation.
·10 "Section 71. Confiscation of gold. (l )Any gold in respect of which any provision of

this Act or any rule or order made thereunder has been, or is being, or is attempted
to be, contravened, together with any package, covering or receptacle in which such
H gold is found, shall be liable to confiscation:"
GUNWANTLAL GODAWAT v. UNION OF INDIA 407
[CHELAMESWAR, J.] ,

Therefore, in view of the fiction under Section 116, Section 73 of the A
GOLD ACT would have been applicable if consequence of applying
such fiction to the confiscations adjudged under the RULES is not
inconsistent with the GOLD ACT. In view of the language of Section
73- "confiscation authorised by this Act" limits the operation of Section
73 only to the confiscations adjudged under the GOLD ACT. Hence,
B-
there is an inconsistency. We are of the opinion that the High Court
rightly held that Section 73 would not come into play at all in the case on
hand. Therefore, the fine amount cannot be determined on the basis of
the value of the gold.
69. On the other hand, as rightly opined by the High-Court, the
market value of the gold as on the date of the exercise of the option by
c
· the owner of the gold to pay fine in lieu of the confiscation would be the
legally appropriate amount of fine. Because it is a fine in lieu of
confiscation. Confiscation would result in the loss of the entire property
in the confiscated gold resulting in a financial loss of the value of gold to
the owner. Hence, the value of the gold is to be determined with reference D
to the date on which the owner exercises the option to pay the fine in
lieu of the confiscation.
70. One of the ancillary submissions made on behalfof the appellant
is that in view of the fact that the order of the Collector dated 9.12.94
gave an option to the appellant to redeem the gold by paying a fine of E
Rs.2.5 crores in lieu of confiscation which had become final in view of
the dismissal of the appeal of the department on 23.5.1996. Therefore,
it was not open to the High Court to hold that the appellant is liable to
pay a redemption fine ofRs.11.04 crores in a reference under Section
82-B of the GOLD ACT. The High Court could not sit in appeal on the
judgment of the Tribunal and substitute its opinion regarding the amount F
of fine to be collected from the appellant in view of the confiscation of
his gold.
; 71. The submission of the appellant is required to be rejected for
the simple reason that the determination of the amount of fine made by
the tribunal was without any basis. The conclusion of the Tribunal that G
the fine in lieu of confiscation must be equal to the value of the gold as
on the date of its seizure is not based on any prin"Ciple of law. The
-, correctness of the said conclusion was the subject m.iltter 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 ofRs.12.5 H.
408 SUPREME COURT REPORTS [2017] 14 S.C.R.

A 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 elate (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,
B the value of the gold as on that date was Rs.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 oflndia, 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 ofRs.11.04 crores. Otherwise, it
C would have the effect of permitting the appellant to profit by litigation as
according to the Attorney General if the appellant is permitted to take
back the entire quantity of240.040 kgs. of gold the current market value
would be Rs. 72 crores (approx.). We find the submission wholly justified.
We, therefore, deem it proper to direct that the appellant would be entitled
D to redeem the gold by paying not only the fine of Rs.11.04 crores but
also the interest thereon calculated @ 10% p.a.
73. The appeals are disposed of as indicated above.

Divya Pandey Appeals disposed of.