Holding

All the challenged provisions of the Gold Control Act, 1968 (as amended) and the related rules are constitutionally valid and the writ petitions are dismissed.

Summary

The Supreme Court examined writ petitions filed by licensed gold dealers challenging several provisions of the Gold Control Act, 1968 (as amended) and its associated rules on the grounds that they violated Articles 14, 19(1)(g), 301 and 302 of the Constitution. The petitioners argued that sections 16(7), 52, 79 (and its second proviso), 100, the identification‑customer rules, the revised gold‑account forms (G.S.11 and G.S.12), and a government Letter of Instructions restricting travelling salesmen were unconstitutional, amounting to unreasonable discrimination, excessive delegation of power and restraint on inter‑state trade. The Court held that each of these provisions had a rational nexus to the object of the Act—preventing gold smuggling and ensuring proper control of gold transactions—and that the procedural safeguards provided satisfied constitutional requirements. Consequently, the challenges were rejected and the petitions dismissed.

Issues considered

Whether Section 16(7) of the Gold Control Act, 1968 violates Articles 14 and 19(1)(g).
Whether Section 52, which invalidates a dealer's licence on change of partnership without clear guidelines, amounts to excessive delegation of legislative power.
Whether Section 79 and its second proviso, permitting extension of the six‑month confiscation period without a statutory ceiling, are arbitrary and violative of Articles 14 and 19(1)(g).
Whether Section 100 read with Rule 3(1) of the Gold Control (Identification of Customers) Rules, 1969 imposes an unreasonable burden on dealers.
Whether the revised Forms G.S.11 and G.S.12 under the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968 enable dealers to maintain a true account of gold.
Whether Section 27(7)(b) and the Government’s Letter of Instructions/Trade Notice restricting travelling salesmen infringe Article 301 and the right to inter‑state trade.
Whether the overall scheme of the Act and rules is within Parliament’s legislative competence.

Legislation cited

Central Excise Acts. 81(2)
Constitution of Indias. Article 14, s. Article 19(1)(g), s. Article 301, s. Article 302
Customs Act, 1962s. 110(2)
Gold (Control) Act, 1968s. 100, s. 16(7), s. 27(7)(b), s. 52, s. 79
Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968s. Forms G.S.11, s. Forms G.S.12
Gold Control (Identification of Customers) Rules, 1969s. Rule 3(1)
Gold Control (Licensing of Dealers) Rules, 1969

Subjects

Gold Control Actconstitutional validityfundamental rightsArticle 14Article 19(1)(g)Article 301excessive delegationgold smugglinglicensing of dealersinter‑state tradeidentification rulesgold account forms

Judgment

461
•
MANICK CHAND PAUL & OTHERS ETC..

v.
UNION OF INDIA AND OTHERS

Aptil 17, 1984

~\ (V.D .•TULZA¥URKAR, V. BALAl:R!SHNA BRAD! AND D.P. MADON, JJ.]

Gold Control Act 1968, Sections 16(7), 52, 79, JOO read with rule 3(1) Qf the
Go:/d Control (lden~ific.ation of· Customers) Rule1, 1960,. whet he~. violatt~e of the
.
provisions of Articles U,19(1)(/l), 301anl.302 of the Constitution.
. c:
Gold Control (Forms, Fees and Misce/lane1us Mattefs)· Rules, 1968-For11t1·
GS,J J and GS 11 as amended are unworkable anti require modification-,.-Govern··
1nel/t of India's Letter of Instructions ani the Trade Notices withdrawint the-·
faciility of sale by licensed traders throuzh their trflvtlli111 sales1nen whether 1•isla-
tiv~ Articles U, 19(/)(t) and 301 ofrhe &nstituti1n. !
J)
In Harak Chand Rotan ChanJ Bamhia's c.u [1~70] I SCR 479, where tao
Gold (Control) Act, 1969 and some of its provision; prioi to the amendment by·
Act 26 of 1969 were challenged, the Supreme Court poiilted out that even tho,P&h.'
import of Gold into India had been banned, considerable quantities ·Of contra-
b&,nd glod were findinii. their \Vay into the cciuntry through illei!al channels;..
affecting the national economy and hamperin: the country's economic- stability
and progress, th!!:t the Customs .DCpartment was not in ·a position to effectively
combat the sn1ugglinu over the long borders and coast lines, that, therefore,
anti-smugglinu measur~ l'iad to be supplemented by a detailed •ystem of control
over internal transaclions and that the Gold (Contro1) Act, 1968 was passed for
this purpose. In other words, the several restrictions that have be-en put oll the·
activities of the trad!rs doing business in e01d, go Id orname'nts and articles of
gold, will have to be viewed frbm the aforesaid perspective. The Court further
held the enactment to be within _the Jegl.slative compeie_nce of P.1rliamen.f:and
out of the several provisions that were challenged only ss. 5(2)(b), 27(2)(d), 27(6),
32, 46. 8-8 and lOO were invalid. As a result of the aforesaid~decisions and,the
0

obServations made by this Couft therein t he Act of 1968 was suitably amended
by Gold Control (Amendment) Act (i6) of 1969. These amended provisions, the
Gold Control (Identification of Customers) Rules, 1969, th~ Gold Coritrol
(Forms, Fees and Miscellaneous Matters) Rules 1968 are chaJ!enged by the Writ
Petitioners as being: violative of the provisions. of Article 14, 19(r)(g), 301,_ and
302 of the Constitution. Some of the pet_itioners including the petitioners in
S.L.P. Civil 5J8 of 1973 have also challenged the Govern1nent of lndia·s Letter
of Instructions and the Trade Notices withdrawing the facility of permitting
Jicensed dealers to send ~naments for. sale through their travelling salesmen,
on t~e same grouds.

Dismissin&: the petit!ons, the~Court
462 SUPREME COURT REPORTS (1984] 3 $.C.R.

_-\ HELD: 1:1, Section 16(7) of the Gold (Cootrol) Act, 1968 as .amended is
constitutionally valid. [269E, 47IB] '

1:2. The counter·affidavit of the Urilon. of India not merCiy furrilshes the
inteI!igible classification ffiade betw~en the.licensed dealers and non-dealers and
non·rCfiners~ but..also shows th.at the 'ctassitic3.tioil has a reaSonable nexus with
the object of the Act and the reasons for denying e>.emption limil~'tO liceriscd
deJ.Jers or refiners are also valid and r.eferable to the Object of the ~ct, namely
"to provlde, in the economic· arid financial intefests of thC co'nimunity, for the
).
confroJ of production, m·anufacture, supply· distribution, ~se and poss::ssion of' \'
and business in, gold ornaments and articles of goid a·nd for matters connectCd
t~erewith ~r incid~ntal thereto:; [t69F, 4700-E}

~ .\Vhile.ordinary citizens (non··dealers and. non.rCfinCrs) are ·pot premitted-by -
Jaw to have any primary gold in their possession• a deah:r or a, refiner 1s permit·
tej under the law to have unlimited quantity of primary rold in hi..; poss.:ssion
and therefore, it is tasr ·for a dealer or a refinC:r to acquire !rpugg!ed rold and
\\-ith a vi~w to preventing" det~1.:tion of such golJ, to convert .1he same into or.na·
. ' . .
ments and to claint such ornaments as his personal property. This necessitated
a provision for a dcdaration cf all ornaments and articles, owned, possessed.
'D h~ld or controlled by th!m ~o lha,t they_could not _c~aim any clandestinely manu.
factured oranaments, when· detected to be their p!rsonal property and that is
,- \\;hy it has been provid~d in S.t6(7) i1;at e'veiY- liCensed ·dealer or refiner ~hould
declare all g6Td articles arid ornaments which belong to h1m or Which are in his
custody; posssC'sion o.r control, and that is why it has been further.provided
that th~ e.o.:cmption limit-> permissibl~ ·for general public in rel::uion to the
requir~ment of.declaration of articles and ornaments shouid not be available lO
E the dealers and refinerS: [469G-H, 470B-D]

1 :3. 1 hC provi5ion in section 16(7) could not be regarded as unnecessary or "
an
one ·,-\lhich c3.sts unrea!iOnable burden on the licensed dealer or refiner. The
reasons for-introducing thi;: provision justify its enaetmcnts, if the objects of the
. Act are to be achi_ev:J. , -Oath: ~sp!c:t of casting unreasonable burd.:n on the
F dealer refiner, tirStly, the burde~ orl the dealer or refiner i:s the same as that which
haS been Casi on a non-de:il:r (iridividual or family) whenever the l.ttter come:;.'
to own, posses5, h;)ld or have under hi1 cOntrol articles or oriiamenti of sold
in .excess of the exempted limit ; seco~dly visits of guests and relationS (including ·
, ma~ried daught:rs and si~ters) on festive o.:casiofi5 aod requests·proct.·eding frOn1
• them r·o lh~ hou~e-k.e.:p:r to keep their orilam!nts in safe" custody during their
stays \\-i!h him, which are ordinary inciden'ts iri li_fe, arc common to licensed
dealers Or refiners· aiid nCln'-dealers and thi::refi.Jr.! the requirement of rriaking a
declaration uild.:r section _16(7) does not cao;t any additional burden on him;
and. thirdly under section 16(i) it is provided that 'the licensed d:aler or refiner
shall inake a - dec-laratioa- "'in iccordanc: with the provisions of this section"
\vhich means he his to '&J so wi"1hin ·30 days of his acquiring the O\\-n.erShlp,
('9ssession, custody or conlrol of such gold. \Vith such, time limi-t being Pro-
vided the burden casttcannot be, said to be unreasonable.~ especialiy Y.ben the
H provision is found to be nCcessary to carry out the objectives of the Act,
. . [470E-H, 471A·B]
..
tl.C. PAUL v, UN:O~ 463
2:t". Section 52 of the GOid (Coptrol) Act, 1968 -as am.end~d does ·not suffCr
from the vice of excessiVi! delegation of the power and therefore the· said provi·
sion iS constitutional. [472G-HJ
•
2:2. is true that section 52 ~o~s not contairi any guide-line~ or p~inciples
it
which would regul~te the exercise of the ppwer of the Administrator in the
matter of gi-ant or refusal ·or approval to change in lhe Partnership of a firm
but in the exercise of the powers conf~rred by s.114 read·with s.27(6) of the Act
the Central Government has framed the 'Gold Control (Licensing of Dealers)
Rules 1969'_ and Rule 2 enlists· matters ·to Which regard. is tq be had before·
issuing a licence and Rule 3 indicates the conditions on the fulfilinent of which
_a Hcence could bC ref!ewed. It 'is true that the5c RuJes. w.hich deal wi1h Jicens ..
ing of d:!alers and renewal of their licences, in tenns do not cover a case of a
change in the partnership of a firm and the.approval to t-e accorded thereto by
the Adminbtrator but in a sense a case of a change occurrin'g in thC -partnership c:
of· the _fifin and the occasion to app_ly for grant. of approval thi:reto by the
Administ'rator would be a ca1J~ of 5eekin& renewal of the licence by the firm in
which a change has occurred eith'r by death· or re tiremefit of a partner or aS a
result of reconstitution of th~ firm and therefore to such a: case .th-!se licensi~g
Rules, particularly Rule 3, must and will apply and these rules; in so far as they.
are appli.:able to the situation, afford. the n,ecessary guidi.lincs on the basis of
which approval to the change could be given or r~fused .. Obviously, if the D>
charige in ~he .firm involves fntroduction of a· new panner into the firm these
guide-lines under Rules, 2 and 3 will play an important part ia the matter of
ac.:ording or refusing to accord ihe approval but if the change nearly involves.
alteration in lhe share..capit<il or Profit ~harirlg basfa an1~ngst the se!f-same
partners who coatin1,1e the .firm the .ipproval Would be a nlatter of forma!i{y, ·
In view of the Licensing Rule1J, 1969 which must apply, it cannot be said that
--¢ ·any unfeuered or unregulated discretion· has beeO conferred upon the Adminis·
trator in th~ matter of grant of refusal of appro(al to a change in the partaCr.
'ship of a firm. [47JH, 472A-E] ·
,,
2:~. On the aspect of absence -of a prov1s1on from· appe!ll, a remedy by
· wa:Y of an appeal to correct any erroneous order that may· be· pasSed undel'. sec-
tion 52 ·has beeil provided for by Notificafion dated 26August, .. 1983 issued ·.
by tht: Ad1ninistrator under seC. 4 (4) of thC Act whereunder the exercise of the
poWer under sec. 5-2 has been delegated to the Deputy Collector of the Centre
Excist: with the result that.aq ippeal; against his order und.er s.52 will lie to the
. Collector of. Centre Excise under s.80 of t?c ACt. -[472E~G] •

3. The power to grant extension under section 79 of the Gold (Control)
Act as amended is not arbitrary and does not suffer fronl.Jack of guidelines. Of·
course two in built .;afeguards will have to be and must b-= read into the Provi-
sion. Since every extensio_n ·involves civil Consequence in that the owner's or
the ~r::cerned person's right to have the seize_d g0Jd returned to him is adversely
affected by being- postponed. before granting any extensio_n he must be given a
notice and an opportunity to make representatiou aga'in~t the Proposed exten· H
Sloe. 474H,,47SA-lJJ '-

•
.
-464 S~PREME COURT REPORTS (19811] 3 s.c.R.

It is true that s.79 docs not expressly mention the iuidelinc5 on 'the ba,sis of
·which the power to grant ext;psion of die initial period of six Il!Ontbs is to be
exercised buL if regard is had ·to the provh.ions ._dealing with· &:izure (s.66),
Confiscation (s.71), .Adjudication (s.78). and Giving of ('pportunity (s.79) the
Policy of the Legislature becomes ·qi.lite clear that -·- herl!:<1'3 tlo'.. l---Ower to seize'.
can be_ exercised by any Gold Control Officer if ht: Las"'reason to lxlieve" that
in re~pect ot ~any -gold _any provision of the A.ct has been or is beini or is
_ attempted t? 'be contravened the confi~cation._of gold can takC_ pla.cC only if'
: actual contravention bas taken place Or is apprehended or is attempted and such
co;,fisCatiori can b~ adjudged or o?defed withOut limit tiy a Gold cOntiol Officer
not below the rank of a Coll~ctoi Or· Central Excise or of Customs and subject
_-to such.limits- as may __ be specified in that behalf by'such other Gold COntrol
0f!1ccr not beTOw the rank of a Superintendent of Central Excise as the Centrai
GovemmentS·ma~ autliorise in that behalf; but the power _to 8raot extension of
- -- the initial period of six moflths has been conferred under the second proviSo to
's.~9 only upon a superi~r officer, namely tl1;e COlfector of· Ceiitral Excise or of
customs, Further under the second proviso to s.79 tbe owner oi the person con·
'Cemed has been iliven the right to have· the seized gold returned to him where Ilo ·
... ~o-tice _p.roposing Cofi~scation is_ served uPon him within' a period of six months
from"the d'ate ·of th~ seizure of _the gold which shows that the Legisla:ure
clearly intended that ordinarily the investig<ition in corinection with the seized
gold is Cxpected to be· over within six months ; but ·only in caseS where such
investigation may not be complet'ed owing to some gen.uine or bonafide diffi·
' culties the Legislature gave undi:r the proviso power to the Co11ector tO'"e'l!"tend
that time. Iii other word3 Collector is ·expected to pass extension order~ neither
mech.anicaUy nor as a ~atter Of routine but only on being satisfied that fact! or
circumstances Cxist which ind.icate that the investigation could not be completed
for bona fide reasons withln the initial period of six moI}ths. Such guidelines
- would be imP1icit if the extra-ordinary powe; to effect seizure and adjudge confis.
cation conferred by the Act is considered in jllstaposition with· the rig.ht confer· ,
·ted upon the owner or the person cOncerned to have the seized gold.returned to
·him "norniauY at the eX.piry of the initial Period of six months. Presumably, the
ramifications of any gold· smllgg\ing 3.ctivity which are usually' extensive and.
cclmplicated must haVe Jed the. LegisJature ··not to 'impose a Jimit or ceiling on_
the power to· gtant. extension but ,jf the above gllidelines are to gov_ern ·every-·
extension that may be granted then mere absence of a limit or ceiling will not
be or any consequence. [473H, 474A-G] . -

AsSistant Collector of Customs v. Charan Das Malhot'ra, [1971] 3 S.C~R. -802;
aPPtied~ '

4:1 Section JOO of ihe Gold Control Act read with Rule 3(1) of the Gold
Controi (ldentificaliOn of Customers) Rules~ 1968 is constitutiona1Jy v:ilid and'
does not restrict. ihe licensed dealers to ~arry on their business iricludins their
. inter-state trade-, (478FeG]

4':2. Section 100 of thC Act as it originally stood prior to its amendment in
.H ·t969 imposed a statutory obligation Upon a dealer to-take all reasonable steps
to 'sati:c;fy himself about the identity .of the person fro~ :n.hom gold wa! boug.h;t
liut h did not specify the n~tuII cf steps which a dealer ~as supposed to t-ak.o
..
,.
M.C. PAUL v. UNION 4~5

-for such -satisfaction and therefor~ this Court· i~ .1/arakchtind: Ratanchand
...Banthia's case· took the view that the obliiatioa, cast thereunder' was uncertain · ' A.
-2nd incapable of proper_ co:npliance and therefore the section was uncqnstitu~
tional on the ground that it imposed an imposSible and unreasonable burden. In
·the light of this decision, ~.100 was appfopriately ameilded and the •Gold Control
'f ·{ld<.!ntification of Customers) Rules, 1969 were. frarried and p.irticularly Rule 3(1)
n::>w prescribed the Several steps one. or more of which have to be iakCn by the
'11censed dealer to satisfy himself as to the identitY of the Customer from whom
·be proposes to accept, buy or otherw_ise receive any go?d, 477E-G] ·B

) 4:3. From the. mere fact that most of the custon1ers who come from villages
.:as also from outside their own State. prefer to recive payments in.cash_in Jieu of
·~old sold and are- not prepared to receive- payments by crossed cheque!. for the
£Cason that they do not ha Ve a.ny·_ bank account or their apprChen..ion that the
---said cheques may-_ not be enca-stied, it cannot be said complianCe is either incap·
. able or hnpOssiable even frcm-·a practical or commercial point of view. More· :
a
-Over. thi provisions contained in sub-rule_ (2)(a) of Rule 3 i!I apPlicable in all
-cases. v.:hcre gold is accepted bought or otherwi:so received by th: dealer irrespec· -
tive -Qf whether the. customer is personi;Jlly _known to the dealer or not known tc>
:him; The Purpose served b:Y s_ub-rul.! (2)(a) of Rule 3 is entirely diffl;!rept from .
the purpose served by one or more _of the step:s that are 1equired to be taken by
"a dealer under sub-rule (I) of Rule 3· and therefore, it canD.ot be said that be.. .D
---Cause of the provisions contained in sub-rule 2(a) ihe stePs contemplated under
sub.-rulc (If are unreasonable •. [47SA-B, E;Fl

BihCir State Bullion Merchafits,·Assn. &: Others v. Union of India ·an_d Otheu,
A. \.R. 1971 Pat. 240; approved.

S. The amende~ prescribed form3 Nos. G.S.11 and GS. 12 required to be .E
maintained ur..der section 5.$ · of the Gold Control Act read with Rule J l of the
-Oold Gontrol (Forms Fees, and Miscellaneous Matters)Rules, 1968 brought into-.
force v.:lth effect frOm 31st Octob~r. 1975 do not.-provide, as conceded by the
Government, for all tb~ituations under which gold would be received by him in
·his possession or custody and keeping the account of their gOid in .aCcordance
- with ·the said For.ms· Would -give rise to anomalies and the dealer \VOuld not
be'able_ to discharge his st1tutory duty ·of disclosing a true and complete F.
• .=:cunt of the gold in his possession or custody. [478H, 479G-1!]

Th~~ef~re. the Court directed .·the- Adrllillistrator .to look into theSe
.. \1lriev1nces and remedy the same by taking appropriate action and hope that
in the meanwhile no action penal or otherwise would be taken against Iicens·
-cd dealers for f;J.ilure io maintain aecounts in the amended Forms G,S. 11
.and G.S. 12. [480C-D] G

6. Secti0n 27(7J(b) of the Gold Control Act. y,rhich confines· a licensed dealer
to carry on business as such dea!er to the premises specified in his licence. being
regulatorY in Charact!r does not violate any ot his rights under the constitution.
The L~tter of Instructions or the trade Notices does not prive~t or stop inter
. State trade but were issued with a view to prevent the several malpractice:s that H
were indulged iii while availing of the facility or hawking: ornam"ents throuch
t[ave~ling :salesmen. [431C·Fl 1
·'

I
I
·466 SUPREME COURT REPORTS .(1984] 3 S.C.R~

k ·ORIGINAL Jur'1SDICTION: Writ'Petitio~s Nos. 918-953,. 1159-
1186 of 1977, 88 of)973, ,107, 664 & 575 So 618 ~f 1973 •

. (Under Article 32 of the Constitution of India)

·Wmr ,. ;
.B

·Special Leave Petition (Ciyil No. 538 of 1973

(From the Judgment and Order dated ·24th July. 1972 of the
Punjab ancj Haiyana High Conrt'in C.W. No. 1221 of 1972)
c •
. for the ~Petitioners in WP. 918_
A.K. Sen and G.S. ' Chatterjee
and 95~/77 .

. Gobindas, G.S. Chatterjee and D.P. Mukherjee for the
D .
Petitioners
. iri W.Ps. Nos. 1159-86 of 1977.
'
Dr. Y.S. Chitale; Mrs. A.K. Verma, R.N. Banerjee and D.'N•.
Jfishra' for the Petitioners in WP. No. 88 of 1973 ·& WP, No.

E
107 /73.
.
•. D.N. Mishra for the Petitio~~rs in WPs. 564, 575-618/73 and:
(Civil) No. 538/73. ·

.. Ms. A. Subhashini for th(Respondents in WPs. 918-953/77.
SLP 1159-86 of 1977..
F
I ;
Abdul Khadder, D. Goburdhan 1 for the Respon.d~nts in WP.. >-
88/73
.
D. Goburdhan .for the Respondents. ·
'
G

The Judgment of the CoJlrt was delivered by

.. TuLZAPURKAR:· J. 'By these. writ petiticns, the petitioners who-
H a re licensed dealers, are chailenging the constitutional validity of tliec
Gold (Control)·Act, 1968 and in particular the provfaions. contained
in ss. 2(p), 16, 27 (as amended), 44, 48, 52,. 79 and 100 (as amended)
...

M.C. PAUL v. UNION (Tulzapurkar, J.) 467

l and the Gold Control (Forms, Fees and Miscellaneous Matters) A
Rules, 1968 (as amended in 1975/1976) and the Gold Control
. (Identification of Customers) Rules, 1969 as being violative of /
th,. fundamental rights under Arts. 14 and 19(l)(g) and are
seeking suitable directions restraining the respondents from giving:
effect to any of those provisions, Some of the petitioners (inclu-
ding the petitioner in S.L.P. (Civil) No. 538of1973) are challening B
the Government of India's Letter of Instructions and the Trade
Notices withdrawing the facility of permitting licensed dealers to
,end ornaments for sale through their travelling salesmen as being
' Art. 301 as also their
violative of the constitutional guarantee under
fundamental rights under Arts. 14 and 19(1)(g) of the Constitution.
•
c
At the outset we would like to observe that the several grou\lds
of challenge will have to be considered in the background of two
things: (a) the object with which the Act was ~nacted and (b) this
Court's decision and the observations made by it in Harakchand D
Ratanchand Banthia'sl'l case where the Gold (Control) Act and some
of its provisions prior to its amendment by Act 26 of 1969 were
challenged. The Long Title to the Act shows that it was put on
the Statute Book with a view ("to provide, in the economic and
'financial
. . interests of the community, for the control of production,
manufacture, Supply distribution, use and possession bf, and busi- E
ness in, gold ornaments and articles of gold and for matters connected
therewith or incidental thereto.") In Harakchand Banthi~'s case
this Court bas further pointed out that even though import. of Gold
into India had beed banned, considerab1e quantities of contraband
gold were finding their way into the country through illegal chan-
nels, affecting the national economy and hampering the country's
economic stability and progress. tbftt the Customs Department was F
not in a position to effectively combat the smuggling over the Jong
' borders and coast lines, that, therefore, anti-smuggling measures
[had to be supplemented by a detailed system of control over inter-
: nal transactions and that the Gold (Contfol) Act, 1968 was passed ' G
for this purpose. In other words, the several restriciions that have
been put on the activities of the traders doing business in gold, gold
ornaments and articles of gold, will have to be viewed from the
aforesaid perspective. We might also mention that in Harakchand
.' Banthia's case the enactment (prior to its amendment in 1969) had
H
(I) [1970] I SCR. 479
468 SUPREME COURT REPORTS (1984] 3 s.c.R.

A been challenged riot merely on the ground of legislative incompe-
. tence on the part of the Parliament but several of its provisions
,were also challenged on the ground that the same were in violation
of the petitioners fundamental rights under Arts. 14 and 19(1.~") &
(g). This Court held the enactment to be within the legislative ~m-
. petence of Parliament and out of the several provisions that were
IL
. challenged only ss. 5(2)(b), 27(2) (d) 27(6), 32, 46, 88 and 100 were
held to be invalid. As a result of the aforesaid decisionand the
observations made by this Court thercrin the Act of 1968 was suit·
ably amend.ed by Go!<,! Control (Amendment) Act (26) of 1969). It j
. is the provisions of the Act,. as amended in 1965 t.hat are being
c thal!engcd by the petitioners before us and we. may state th~t
• • number of provisions have been made the subject of
though a large
. challenge in the writ petitions, at the hearing only some provisions ~
were selected against which the ch.allcnge was pressed before us an'd
• we propose to deal with only those provisions.

The first provision that has been challenged is s. 16(7) of the
Act which provides : e
"Every licensed dealer ot refiner shall make a decla-
ration in accordance with the provisions of this section in
relation to any gold owned, possessed, held or controlled by
E him, in any capacity other than the capacity of a licensed
dealer or refiner and the provisions of sub-s.(5) shall not
apply to such gold". '

The requirement of making a declaration under this prov1S1on
. is in respect of any gold owned, possessed, held or conttolled by a
licensed dealer or refiner otherwise than in his capacity as a ·~
I licensed dealer or refiner and the examption ·granted to' a non-
dealer in respect of articles and ornaments of gold, total weight
whereof does not exceed 2,000 gms. in the case of au: individual ancl
4,000 gms. in case of a family in the matter of making a declaration
under sub"sec. (5) is. not applicable. Counsel for the petitioners
challenged this. provision on two ground : (a) it is discriminatory
under Art. 14 and (b) it imposcs'.unreasonable restriction on licensed
f dealers and is violative of Art. 19(1 )(g). It was pointed out that
•very licensed dealer is reqµired to furnish, under s. 56, returns in
1 'escribed form as to the quantity, description and other prescribed
'pa.~iculars of gold owned, possessed, held or .controlled by him as
such dealer ~nd the aforesaid requirement of making a declaration
in respect of any other gold owned, possessed. helcl or controlled •
M.C. PAUL v. UNION (Tu/zapurkar, J.) 46?

t 'by him as non-dealer is an additional requirement and while prescri-
bing such additional tequirement the exemption under s. 16(5)
which is available to non-dealers (individuals and families) has been
.denied to him and according to counsel the classification made is
not based on any intelligible differentia having any nexus to the
. -0bject sought to be achieved by th~ Act ; in other words, every
l licensed dealer·in his capacity as a non-dealer is subjected to dis-
B
·Criminatory treatment. Secondly, counsel urged that imposing
£uch a requirement on a licensed dealer to make declarations on
,. evety occasion in respect of any quantity of gold coming in his
possession or custody as an individual or a member of a family
.amounts to putting an unnecessary and unreasonable burden on him c
and the .requirement may at times become impossible to comply
with ; counsel elaborated his submission by giving an example
that if guests or relations, particularly married daughters and
sisters visit the residence of a gold dealer for a short stay on festive
.occasions and request him, as it frequently happens in normal
..course of events, to keep their ornaments in safe custody during
their stay he has to oblige them, but in terms of the requirement of
s. 16(7) the dealer has to make a declaration in respect of such gold·. ·
which has come in his custody or possession and to require him to dp
so on every occasion is to cast unreasonable burden on him amoun- ·
ting to unreasonable restriction especially as. non-compliance there
·entails penal consequences and therefore the provision must .be
regarded as unreasonable and arbitrary.
•
' ln our view neither of the contentions has any force. As re-
gards the attack under Art. 14, sufficient material has been placed
before us in the counter affidavit of Shri K.S. Venkataramani,
Deputy Secretary, Ministry of Finance (filed in W.P. Nos. 918-953
·ef 1977) showing how the classification made between the two cate-
:gories in the context of making a declaration under s. 16 in relation
to gold owned, possessed, held or controlled by them is based on
intelligible differentia having a nexus to the object of the Act. In
G
para 5 of the counter affidavit it has been pointed out that ·while
·ordinary citizens (non-dealers ·and non refiners). are not premitted
·by law to have ony primary gold in their possession, a dealer or a
refiner is permitted under the law to have unlimited quantity of
primary gold in his posse1sion and therefore, it is easy for a dealer
or a tenner to acquire 11muggled gold and with a view to preventin& a
.ctetectioa of such gold, to convert the same into ornaments and t.
.claim Hl'l1l ornaments as bis i>crsonal property. It is further poia·
470 BUP}lEME COURT REPORTS (1984] 3 S.C.R.
t
ted out that it had been ·repeatedly observed that licensed dealers.
A in gold, when found in.possession of stocks of ornaments in excesi.
. of those entered in the prescribed accounts. often took the plea that
these represented their personal property and it was further noti~ed
that they kept the ornaments manufactured by· them clandestinely
at their residences and at other places and when such stocks were
• detected the~e were cla.imed as tfleir personal property ; it therefore
became necessary to provide for a declaration of all ornaments ' ancll ....
articles owned, possessed, held or controlled by them so that they
. could not claim any clandestinely manufactured ornaments, when
• detected, to ·be their personal property and that is why it has been
' provided in s. 16(7) that every licensed dealer or 1efiner shoold
C, dedare all gold articles and ornaments which belong to him or
which are in his custody, possession or conttol, and that is why it
has been further provided that the exemption limits permissible for
general public in relation t_o the requirement of declaration of arti- .J
cles and .ornaments should. not be available to the dealers and
D refiners. The aforesaid materials in the counter.-affidavit not merely
furnishes the intelligible differentia for the classification mad_e lint
also shows thaHhe classification.has a reasonable nexus with the
object of the Act and the reasons for denying the exemption limits.
to_ licensed dealers or r;finers are also valid and referable to the
object of the Act.

As regards the second ground of challenge it is difficult t<>
ap_preciate how the provision could be regarded as unnecessary or
one which casts an unreasonable burden on the licensed dealer or
refiner. In fact the reasons for introducing the provision as indicated
F above justify its enactment if the objects of the Act are to be achie-
ved. On the aspect of castiug unreasonable burden on the dealer
or refiner it must in the first place be observed that the burden oi:i 1
the dealer or refiner is the same as that which bas been cast on a
non-dealer Qlidividual or family) whenever the latter comes to own,·
·-4
·possess, hold or have under his control articles or ornaments of gold 1
G in excess of the exempted limit. Visits of guests and relations
(in~luding 'married daughters and sisters on festive occasions and
requests proceeding from them to the house-keeper to keep their
ornaments in safe custody during their stays with him. which are
ordinary incidents in life, are common to licensed dealers or refiners
H and ilon-dealers and there is no reason to suppose that the require-
ment of making a declaration under s. 16(7) casts any additional
burden on him than on a non-dealer when be has in his possession
M.C. PA.UL v. UNION (Tulzapurkar, J.) 471

-Or 'custody articles and ornaments in excess of the exemption limit. &
Moreover, unders.16(7) it is provided that the licensed dealer or
refiner shall make ·a declaration "in accordance with the provisions
-of this section'' which means he has to do so·within 30 days pf his
acquiring the ownership, possession, custody or control of such gold.
With such time limit being provided the burdeu cast tannot be said
' ·to be unreasonable, especially when the provision is found to be
necessary to carry out the objectives of the Act. Having regard to
B

~he above discussio:1, the challenge to the constitutionality of s.16(7)
must foil.

The next provision challenged is sec. 52 of the Act which
·provides for licence· issued to a firm becoming invalid if there is any
c
•£hange in the partnership of the firm. fhat section runs thus:-

"52. Where any firm has been licensed under this Act
to carry on business as a dealer or refiner, such licence shall,
notwiths•anding anything contained in this Act, become D
invalid on and from the date on which there is a change in
the partnership of such firm, unless such change in the partner-
ship has been approved by the Administrator".

Counsel for the petitioners contended that change in partnership
~ a normal and usual thing that occurs when business is carried on
ty a firm and such change may arise on account of death or retire-
ment of a partner or reconstitution of ,the firm but the above
provision imposes an nnrcasonable restriction in so far as it provides
'that the licence of a firm shall become invalid on and from the date
-0n which there is a change in the partnership of such firm
, unless the
-<:bange has been approved by the Administrator. According to
• .counsel the restriction imposed is excessive and what is more no
;guide-lines or principles arc !"id down on the basis of which approval

f
to a change may or may not be given by the Administrator; besides
·there is no appeal or other corrective machinery provided against
.an!adverse order oftthc Administrator refusing at)proval. Counsel G
·therefore, urged that this provision clearly suffers from the vice of
.excessive delegation of legislative power and is liable to be declared
.unconstitutional.

It is true that sec. 52 does not contain any guide-lines er
J>rinciples which would regulate the exercise of the power of the ~.
Administrator in the matter of grant or refusal of approval to a
<£h ange in the partnership of a Ii.rm but in the exercise of the powers
472 SUPREME COURT REPORTS [1984] 3 S.C.R.

.A conferred by sec.114 read with sec. 27 (6) of the Act the CentraF
Government has framed the 'Gold Control (Licensing of. Dealers)
Rules 1969' and Rule 2 enlists matters to which regard is to be had
before issuing a licence and Rule 3 indicates the conditions on the·
fulfilment ofwhfch a licence could be renewed. It is true that these
B Rules, which deal with licensing of dealers and renewal of their
licences, in terms do not cover a case of a change in the partnership·
of a firm and the approval to be accorded thereto by the Adminis-
trator but in a sense a case of a change occurring in the partnershil"
of the firm and the occasion to apply for the grant of approval there-
to by the Administrator would be a case of seeking renewal of the
Cl licence by the firm in which a change has occurred either by death
or retirement of a partner or as a result of reconstitution of the firm,
and therefore to such a case these Licensing Rulos, particularly Rule
3, must and will apply and these Rules, in so far as they are appli-
. .:able to the situation, afford the necessary guide-lines on the basis.
of which approval to the change could be given or refused. Obviously,
8 · if the change in the firm involves introduction of a new partner into
the firm these guide-lines under Rules 2 and 3 will play an important
part in the matter of according or refusing to accord the approval
but if the change nearly involves alteration in the share· capital or
profit sharing basis amongst the self-same partners who continue the
E firm the approval would be a matter of formality. Inview of tlw
Licensing Rules, 1969 which must apply it is difficult to accept the·
contention 'that any unfetterred or unregl,llatcd discretion has been
.£onferred upon the Administrator in the matter of grant or refusat
<Jf approval ·to a change in the partnership of a firm. On the aspect
of there being no appeal or other corrective machinery provided·
• against an adverse order of refusing approvat"that may be passed
11nder this ~ection it may be stated that Counsel for the respondents.
produced before us copy of a (Notification dated 26th Augus~. 1683 '
issued by the Administrator under sec.4(4) of the Act whereunder
the exercise of the power under sec .52 has been, delegated to the
G • Deputy Collector of Ceqtral Excise with the result that an appeal'
against his order under sec.52 w!ll lie to the Collector of Central
Excise under sec.SO of the Act. In other words, a remedy by way
ef an appeal to correct any erroneous order that may be passed under
11ec.52 has been provided for. In this view of the matter i\is difficult.
to accept the contention that s. 52 suffers from the vice of excessive
B .telegation of legislative power or for that reason the said "provision,
is unconstitut.ional. The challenge to that section therefore, has to-
1tc rejected.
• M.C. PAUL v. UNION (Tulzapurkar, J.) 473

The next provision that has been challenged is s.79 read with
the second proviso thereto. Section 79 provides that no order. of
A.

confiscation of any gold, in respect whereof contravention of any
provision of the Act or any rule or order made thereunder has
occurred or is apprehended or at(empt<;d, shall be made unless the
owner of such gold has been given a notice in writing informing him
of the grounds on which it is proposed to confiscate such gold and is · B;
further given a reasonable opportunity of making a representation in
writing against the proposed confiscation and if he so desires, of
being hc?rd in the maMer; and the second proviso which is material
runs thus:

"Provided further that where'no such notice. is given c
within a period of si.x months from the date of the seizure of
the gold, or such jimher period as the Collector of Central
Excise or of Customs may allow, such gold shall be returned
aft" the expiry-of that period to the person. from whose
possession it was seized.''

Counsel for the petitioners coritended that the section does.not 1
provide for any guidelines or principles regarding the conditions 'and
circumst.\l-nces governing the grant of further extention of the initial
'
statutory period of six months on the expiry of which, in the absence
of extention, the ow.ner or the person from whose possession the E
gold has been seized is entitled to have the seized gold returned to
him; furthermore, there is no limit or ceiling over the period a for
which further extension may be granted. In contrast, counsel pointed
out that in parallel legislation like the proviso to sec. 110(2) of the
Customs Act, 1962 such limit or ceiling is laid down by providing
that the initial period of six months may, on sufficient cause being F
shown, be extended by the Collector of Customs for a period not
exceeding six months; moreover the·words "on stifficient cause being
shown" that occur in the Customs Act are absent here .. Counsel,
therefore, urged that in the absence of any guidelines and in the
absence of any limit over the period of exten~ion that could be
granted, the provision (s.79. read with second proviso) will have to G
be regarded as conferring an arbitrary power and is unreasonable
and hence violative of Arts. 14 and 19(\)(g) of the Constitution.

, It is true that s. 79 does not expressly mention th~ guidelines
on the basis of which the power to grant extension of the initial H
period of six months is to be exercised but if regard is had .to .the'
provisions dealing with Seizure (sec. 66) Confiscation (sec. 71),
A
474 SUPREME CO\JRT REPORTS [1984] 3 s.c.R.

Adjudication (sec. 78) and Giving of Opportunity (sec. 79) the
policy of the Legislature becomes quite clear that whereas the
•
power to seize can be exercised by any Gold Control Officer if
he has "reason to believe" that in respect of any gold any pro-
vision of the Act been or is being or is attempted to be contravened
the confiscation of gold can tike place only if actual contravention
B has taken place or is apprehended or is attempted and such confis·
cation can be adjudged or,ordered without limit by a Gold Control -"1
Officer not below the rank of a Collector of Central Excise or of

c
Customs and subject to such limits as may , be specified in that
· behalf by such other Gold Control Officer not below· the rank of a
Superintendent of Central Excise as the Central Government may
anthodse in that behalf ; but the power to grant extension of the
initial period of six months has beer1 conferred under the second
proviso to s. 79 only upon a superior officer, namely, the Collector
' \
i
''

·of Central Excise or of Cust9ms. Further under the stcond proviso
to s. 79 the owner or the person concerned has beed given the right

,
D · to have the seized gold returned to him where no gotice proposing
confiscation is served upon him wit[1in a period of six months from
the date of the seizure of the gold which shows that the Legislature
clearly intended that ordinarily the investigation in connection with
the seized gold is expectea to be over witliin six months ; but only
in casts where such investigation may not be completed owing to
E some genuine or bonafide difficulties the Legi,slature gave under the
proviso power to the Collector to extend that time, In oth" words
the Collector is expecied to pass extension orders neither mechani-
cally nor as a matter of routine but only on being satisfied that facts
or circumstances exist which indicate that, the investigation could
not be completed for buna fide reasons within the initial period of
F six months. Such guidelines would be implicit. if the extraordinary
power to effect seizure and adjudge confiscation conferred by the
Act ill considered in juxta-pasition with the right conferred upon-
the owner or the person concerned to !Jave the seized gold returned
to him normally at the expiry of the initial period of six months.
Presumably, the ramifications of any gold smuggling activity .which
are usually extensive and complicated must have led the
Legislature not to impose a limit or ceiling on ,the power to grant
extension but if the above guidelines are to govern every extension
that may be granted then mere absence of a limit or ceiling will not
be of any consequence. '
H
It is, therefore, not possible to accept the contention that the
power to grant extension is arbitrary or·suffers from lack of guide-
M.C. PAUL v. UNION (Tulzapurkar, J.) 475

tines. Of course two inbuilt safeguards will have to be and must A·
be read into the provision. Since every extension involves dvil
·consequences in that the owner's or the concerned person's right
to have the seized gold returned to him is adversely affected by
being postponed, bafore granting any extension he must be given a
notice and an opportunity to make representation against the pro-
.posed extension. In Asst/. Collector of Customs v. Chwan Das B
Malhotra,('! a case under sec. 110(2) proviso of the Customs Act,
1962 this Court has taken the view that sue~ opportunity is neces-
sary, not merely on the ground that the proviso contains the words
"upon sufficient cause being shown" but also on the ground that
the civil right of the concerned pers.on to the restoration of the
goods on the expiry of the 1N'riod whether initial or extended is
c
2ffected. Secondly since the Collector's decision or order granting
extension of time is appeal able under sec. 81(2) at the instance of
the Administrator, who could be moved by the aggrieved person,
.and in any case could be challenged by the aggrieved person in an
appeal against the order of confiscation every order granting exten- D
·sion must recor.d reasons for it as otherwise the appeal will be in-
effective. In oti.er words the power to extend the initial period or
the extended period must be exercised subject to the ob>ervance of
1he aforesaid' two safeguards. In view of the above discussion it
1s clear that the challenge to s. 79 and the second proviso thereto
•~ :has to fail. E

The next provision challenged is s. JOO of tqe Act as amen-
ded) read with Rule 3(1) of the 'Gold Control (Indentification of
Customs) Rules 1969' on the ground that the said provision is
focapable of compliance in a practical sense and from a commercial F
... ·point of view and has the effect of running the business of the peti-
1ioner sand since the said Rule 3(1) unreasonably restricts the right
of the petitioners to carry on their business including their inter
state trade the same is violative of Art. 19(l)(g), 301 and 302 of the
' ·Constitution. Section 100 as amended by the Amending Act 26
-0f 1969 provides for certain precautions to be taken by a licensed· G
.dealer before acquiring any Gold. It runs thus : •
'
"JOO(!) Every licensed dealer or refiner or certified
:goldsmith, as the cas.i; may be, shall, before accepting, buying
or otherwise receiving any gold from any person,· take such
R

,(!) .[1971] 3 SCR 802.
476 SUPREME COURT REPORTS [l 984) 3 S.C.R •.
A steps as are specified by the Central Government by rules
made in this behalf, to satisfy himself as to the identity of
the person from whom such gold is proposed to be· accepted
bought or other.wise received by him."

. The Gold Control (Identification of Customers) Rules framed
B
by the Central Government in exercise of the powers conferred. ,
under sec. 114 read with sec. 100(1) of the. Act provide for the
several ·steps, one or more of whi_ch have to be taken by the licen-·
sed dealer to satisfy himself as to the identity of the customer from
Whom he proposes to accept, buy ·or otherwise rec~ive any goid.
c Under Rule 3(1) it has been provided tJpt except in cases where
the customer is personally known to the licensed dealer or cases.
where transactions are put through by means of crossed cheques,
the licensed dealer shall take one or more of the following steps to-
satisfy himself as to the identity of the customer, namely :-

D (!) Introduction or identification of the customer by a
person who is eithe.r personally known to the licensed
dealer or whose id~ntity has been established to the
satisfaction of the licensed dealer,

(2) The production of any document which establishes. ·
the identity of the customer, such as-
E
I (a) a valid passport held by the customer,
I
(b) a valid identity card issued to the customer by the
postal authorities,

F (c) a valid identity card issued by the Secretariat of
Parliament or of any Legislature in a State or
Union Territory_;

(d) a valid identity card issued to the customer by his.
employer if such employer is a local authority or
•G a body corporate or Government or a corpo·
ration owned or controlled by Government,

(e) ·a rooter driving licence held by the customer as a.
paid employee ;

(f) an identity card issued by the Gold ControU
Officer.
M.c, PAUL v. UNION (Tu!zapurkar, J.). 477

Sub-rule (2) of Rule 3 which is also material runs thus:-

' .. (2) Before accepting, buying or otherwise receiving
any gold from a customer, a licensed dealer shall, in every
case:-
.... · (a) obtain on the voucher, the signature and full p;istal add-
ress of the customer,

' (b) where the licensed dealer's satisfaction as to the identity
of the customer is based on the. identification made by
another person, obtain on the voucher the signature and
full postal address of such identifier, and where such
identifier is not personally known to him, he shall also
note, on the voucher, the particulars of the documents
on the strength of which he has been satisfied as to the
identity of such identifier,

(c) where the licensed dealer's satisfaction as to the identity
of the customer is based on any other documen!, note on
the voucher, the· date and other particulars of such docu-
ment.

It may be stated at the outset that sec. 100. as it originally
stood prior to its amendment in 1969 imposed a statutory obligation
upon a dealer to take all reasonable steps to satisfy himself about
the identity of the person from whom gold was bought but it did
not specify the nature of steps which a dealer was supposed to take F
for such satisfaction and therefore this Court in Harakchand
... Ratanchand Banthia's cas.e took the view that the obligation cast
:~, thereunder was uncertain and incapible of proper c0 n.'J?liance and
therefore the section was unconstitutional ·on the ground that it
~ imposed an impossible and unreasonable b urdrn. In light of this
decision, s. JOO was appropriately amended · ard tbe 'Gold Control
(Identification of Customers) Rules, 1969, were framed and particu-
larly Rule 3(1) now prescribes the .several steps one or more of which
have to be taken by the licensed dealer )O satisfy himself as to the
identity of the customer from whom he prop3ses to accept, buy or
· ~-otherwise receive any gold.
Hl
A· two-fold submission challenging t'1: an :n d ed s. 100 read
with Rule 3(1) was made by counsel for the petitioners. In the first
478 SUPREME COURT REPORTS [ l9S4] 3 S.C.R.

A place it was submitted that the steps indicated in Rule 3(!) one or
more of which are required to be takell by the licensed dealer to
satisfy himself about the identity of the customer are incapable or
impossible of compliance in a practical sense and from a commercial
point of view. The precis~ argument was tl\at most of the cust<fmers '
of the petitioners come from villages as also from outside their own
State and it becomes extremely difficult for the dealer to demand
from them production of either a passport or identity card specified ·
in the Rules and further thafmost of the customers prefer to receive
payments in cash in lieu of gold sold an<l are not prepared to receive
payments by crossed cheques since many of them do not have bank
accounts and even the dealers equally haye the apprehension that
the cheques issued by the customers may not be encashed. Secondly,
it was urged that since sub-rule (2)(a) of Rule 3 provides for_ suffi-
cient safeguards regarding the identity of the customers when the
uealer is requir~d to obtain their signatures on the vouchers and the
full address of the customer and or of the ideniifier, the insistence
upon .a dealer to tal::c steps as contemplated under sub-rule (I) of
Rule 3 would b& unreasonable. We are .not impressed by
either of the submi5sions. The grievances articulated under the first
submission do not at all indicate that compliance of one or more.of
steps indicated in Rule 3(1) is either incapable or impossible even
from a practical or co!)'lmercial point of view. Moreover, the pro-
vision contained in sub-rule (Z)(a) of Rule 3 is applicable in all cases
where gold is accepted bought or otherwise received by the dealer
irrespecti'\'e of whether the customer is personally known to the
dealer' or not known to him. The purpose served by sub-rule (2)(a)
of rule 3 is entirely different from the purpose served by one or
more of the steps that nre required to be taken by a dealer under
!fl
sub-rule (!}of Rule 3 and therefore, it cannot be said that because
of~!" provision contained in sub-rule (2)(a) the .steps contemplated
under.sub-rule(!) are unreasonable. The validity of the amended
sec. 100 read with Rule 3(.1) must therefore be upheld. We were
informed that a similar contei!ion challenging· the said provision '!>=
(amended sec. !00 ~ead with sub-rule (I) of Rule 3) was raised be-
fore the Patna High Court in .the case of Bihar Stat< Bullion
Merchants' Assn. & Ors. v. Union of India & Ors.l1J and the same was
rejected. We approve of that decision .

Lastly the petitioners a·s- Jicensed dealers seem to have some
JI grievance against the amended prescribed Forms Nos. G.S. [ l and

(l) A.J.R. 1971 Patna 240
M.C. P.<UL v. U;!ION (Tulzapurkar, J.) 479

G.S. 12 required to be maintained under s. 55 of the Act read with
Rule 11 of the Gold Control (Forms, Fee, .and Miscellaneous
Matters) Rules, 1968,-Forms which have been brought into force
with effect from 31st October, 1975. Under s. 55 of the Act every
licensed dealer is required to keep, in such form and in such manner
as may be prescribed, a true and complete account of the gold
owned, possessed, held, controlled, bought or otherwise acquired or
._r .. accepted or otherwise received or sold, delivered, transferred or
otherwise disposed of by him in his capacity as such licensed dealer
and Rule 11 provides that the account of gold shall be kept in Forms
G.S. IL and G.S. 12. It appears that prior to the amendment of the
Rules on 31st October, 1975 the licensed dealer was required to
keep the account of gold in prescribed Forms No>. G.S. 10, G.S. 11 c
and G.S. 12 but after the amendment Form No. G.S. JO was com-
pletely deleted while new amended Form G.S. 11 and G.S. 12 were
prescribed and according to the pet!tioners the deletion of old Eorm
No. G.S. IO and insertion of the new Forms G.S. 11 and G.S. 12
has resulted in the licenSfd dealer being prevented from maintaining
a true and correct account of the gold owned, possessed, held, con-
trolled, etc. by him. The precise grievance is that the new prescri-
bed Forms G.S. 11 and G.S ..12 do net provide for all situations
under which gold would be received bY. him in his possession or
custody and keeping the account of their gold in accordance with
the said Forms would give rise to anomalies and the dealer would E
not be able to dischage his salutary duty of disclosing a true and
complete account of the gold in his possession or custody. For
instance, it was pointed out that old Form G.S. IO contained a com-
prehensive column No. 2 which required the dealer to indicate
"name and address of the person from whom (gold was) received or
to woom (gold was) sold", which Po.rm under the· amended Rules F
has been dekted, while the new amended Form No. G.S. 11 requires
the licensed dealer to indicate in column No. 3 only two categories
of persons from whom gold is .received, namely, (a) Seller's name
and full address or (b) Dealer's name and Licence No. and that
there is no provision in the Form to account for the receipts of gold G
by the licen~ed dealer from artisans or certified golil-smiths; further.
Form No. G.S. II does riot provide for accoi..uting· the receipts of
samples and old ornaments intended to be converted into new
ornaments from the customers. Counsel further pointed out that in
the amended Form No. G.S. 11 column 11 requii;es a dealer to record
the weight in terms of pure gold which requirement cannot be satisfi- R
ed by any dealer unless and until the gold ornaments received from
the customers are broken and refined. It was further pointed out
480 SUPREME COURT REPORl'S (1984] 3 S.C.R.
.>,..
A I
that in the old Form No.G.S.11 colunm No. 12 was provided to
record the loss of weight ('ghat') which would necessarily follo-.y an
account of re-mo king, melting, refining and polishing of new orna-
ments from old ornaments received by the dealer from bis customers
but in the amended new Form G.S.11 there is no such column where
:'B this 'ghat' (loss of weight) could be recorded. Similarly other defi-
ciencies in the amended Form G.S.12 were pointed out by counsel
for the petitioners. 'In brief the contention has been that the old
Forms were better but the .new Forms lack in providing adequate ~.
or proper columns with the result that by filing these a trne and

-c
complete account of gold owned or possessed or held or controlled,
etc. by the dealer could not be reflected. We find some substance
in the aforesaid grievance made .bY the petitioners and when these
'
aspect of the amended Forms were put to the counsel for the
Respondents, he fairly conceded that either the new Forms will have
to be suitably revised or the old Forms could again be revived. We,
therefore, direct the Administrator to look into these grievances and
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remedy the same by taking appropriate action and hope that in
the mean while no action penal or otherwJse would be taken against
licensed dealers for failure· to maintain accounts in the amended
Forms GS.11 and G.S.12

Some of the petitioners have challenged Government of India's
Letter of Instructions issued to all the Collectors of Central Excise
through out the country directing t)lem to withdraw the facility till
then afforded to the licensed dealers to send ornaments for sale
through travelling salesman and the Trade Notice issued by the
Collectors of Central Excise pursuant thereto actually withdrawing
the s.aid facility with immediate effect (specimen Letter of Instruc-
tions dt. 1 Sth February, 1972 and Trade Notice dt. 17th March 1972
are enclosed as Annexures A & B to Writ Petition No. 88/1973) on
the ground that it has the effect of preventing the licensed dealers
from undertaking inter-State trade and commerce which is in viola-
tion of the constitutional guaranteed under Art. 301 of the Constitu-
tion as also their fundamental rights under Arts. 14 and IO(l)(g) of
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the Constitution. It appears that the said Letter of Instrnctions
...
and the Trade Notice have been issued with a view to prevent the
sev\iral ma! practice that were being indulged in while availing of
the said facility (of llawking ornaments through travelling salesman)
aifd in the counter-affidavit of Shri Kulwant Ram Mehta, . Dep.l!\y
Secretary, M,inisfry of Finance (filed in W.P. No. 88 of 1983) t!l,tse
Dial-practices have been enfated. B~t apart from this aspect ofi)le
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M.C. PAUL v. UNION (Tulzapurkar, J.) 4sr
·matter it has been clarified in the said eounter-affidavit that there· is
no intention to prohibit or siop illter-State trade or co.mmerce in A
gold ornaments but that merely the facility of permitting the licensed
dealers to send ornaments for sale outside their licensed premises
through th~ir · saiesman has been withdrawn_; in paragraph 12 _the
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relevant averment in that behalf runs thus :

, "I reiterate that the dcal~rs can send. ornaments, ·on B
such· o;ders' h·a~ing been placed with them,· through post
parcels, air.freight or through miy other means of commercial
trapspoi4tation of goods, besides deliveri!\g the ;. ornaments to .
· the cuStomers in their own premises. i'emphaiical!y say that.
no (iirection or notice is issued which may resu!t'i:l. any ·
stoppage of inter·State trade." c
Jn view of this statement the contention'that the Letter of
-Instructions or the Trade Notice has. the effect of preventing or
· stopping inter-State trade has no substance. Realising this postilion
and in view of the aforesaid. statement contained in paragraph 12 of
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the aforesaid counter-affidavit counsel for the petitioners did not
press the challange to.the impugned Letter of instructions and the
trade Notice. The cb.allenge to s._27(7) (b) of the Act; in furtherance
whereof the f;cility of effecting peripatetic sales of gold ornaments
through travelling salesman in various parts of the country was with· ·
dra'j\'n, must-also faH. Section 27(7) (b}, wbich confines a licensed E
.. dealer to carry on business as .such dealer to the premises specified
· in his licence, being regulatory in ·character does not violate any of
his rights under the Constitution. · ·
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· • In view of the foregoing discussion all the writ l)etitions. as
also S.I;.P. No. 538 of 1973 are dismissed. In ati the circumstances F
of the case there will be no order as to costs.

S.R. Petitions dismissed•
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