Jammu & Kashmir High Court
Phagu Mal Rattan Chand And Anr. vs Union Of India (Uoi) And Ors. on 21 May, 1988
Equivalent citations: 1990(25)ECC81
ORDER
1. This writ petition arises out of the proceedings allegedly taken by the respondents against the petitioners under the provisions of the Gold Control Act. 1968 (hereinafter called the Act). The petitioners have challenged the order of seizure of the Gold Ornaments weighing 244.750 grams order to be confiscated and imposition of a penalty of Rs.2,000 as stood modified by the order of respondent No. 1 by partly allowing the revision of the petitioners by order dated May 16, 1981 and in lieu of confiscation releasing the ornaments on payment of a fine of Rs.7,500.
2. It is stated in the petition that petitioner No. 1 is a partnership concern and a licensed dealer in terms of the Act; whereas petitioner No. 2 is one of the partners of the said firm. On November 3, 1973, the Central Excise Intelligence and Preventive Officers headed by an Inspector visited the business premises of the petitioners situate in Jain Bazar, Jammu. On physical verification of stocks, the said officers seized sixty pieces of gold ornaments weighing 244.750 grams (in Gross), in excess of the recorded balance on the alleged violation of the provisions of the Act. It is further stated that on February 12, 1974, a show cause notice was issued to the petitioners by Assistant Collector Customs and Central Excise, Srinagar, Respondent No. 3, alleging that the petitioners had been guilty of violating the provisions of Sections 8, 33, 36 and 55 of the Act. They were, therefore, called upon also to show cause as to why the ornaments seized be not confiscated under Section 71 of the Act and the penalty in terms of Section 74 be not imposed. The petitioners replied the said notice attacking the seizure as well as the allegations made against the petitioners in the said notice of show cause and denied that they have committed any violation of the sections shown therein.
3. The Assistant Collector, Customs and Central Excise, Srinagar respondent No. 3 by his order dated April 30, 1974 directed the confiscation of the ornaments seized and imposed a penalty of Rs.1,000 upon the petitioners in terms of Section 74 of the Act on the strength of the alleged statements of the owners of the ornaments recorded behind the back of the petitioners. On appeal against the said order to respondent No. 2 by the petitioners, the same was accepted by order dated December 23, 1975, who directed that the proceedings leading to the passing of the final order be conducted de novo. On receipt of the file, respondent No. 3 by notice dated March 22, 1976 purported to level a further allegation against the petitioners alleging violation of the provisions of the Identification of Customers Rule, 1969 besides the provisions of the Act. The said notice was also contested by the petitioners alleging that the show cause notice issued amounts to fresh charge and is beyond the scope of the directions issued by the Collector while remanding the case for de novo enquiry.
4. It is further alleged that respondent No. 3 by his order dated September 29, 1976 in gross violation of the directions of the respondent No. 2 arbitrarily and unilaterally passed the order confiscating the ornaments and enhanced the penalty to Rs.5,000. Against the said order, again an appeal was preferred by the petitioners to respondent No. 2, who by his order dated April 7, 1977 upheld the order passed by respondent No. 3 and rejected the appeal. Being aggrieved against that, the petitioners preferred a revision as provided under the Act to the Central Government. Respondent No. 1, which by its order dated May 16, 1981 disposed of the revision upholding the orders passed by respondents 2 & 3 and directing that the seized gold ornaments be released on payment of fine of Rs.7,500 to be paid by the petitioners and reduced the penalty to Rs.2,000. It is further alleged that because there was a great pressure for the return of the ornaments by the customers they paid under protest in the fine of Rs.7,500 and got the ornaments released and filed this writ petition challenging the order passed in revision as well as those passed by respondents 2 & 3 on various grounds including the vires of the Act.
5. After the admission of the writ petition, the respondents have filed their counter and resisted the writ petition alleging that the action taken against the petitioners was in accordance with law. The seizure of the ornaments was by the authorised Inspector of the Central Excise & Customs, who is a Gold control officer by virtue of Notification No. 3115 dated 1.9.1968 (Gold Control). It is further submitted that the Act is validly extended to the State J & K, which is not ultra vires the Constitution, on fundamental or statutory right of the petitioners has been violated so as to grant them any relief in the writ petition. In their rejoinder affidavit, petitioners reiterated their stand and alleged that the issue of corrigendum and the show cause notice was mala fide, illegal, without jurisdiction and arbitrary in nature. It is further alleged that the petitioners were denied a fair opportunity for making their defence, the findings as to the nature of the ornaments being new on the observation of the Assistant Collector are purely imaginary and unilateral.
6. Heard the rival arguments at length. Learned Counsel for the respondents was directed on hearing the arguments to produce the record for the perusal of the court, which has also been produced.
7. Learned Counsel for the petitioner Mr. T.S.Thakur in his tripartite attack on the order impugned in the writ petition, firstly submitted that the provision of the Act in its application to the State of J & K be struck down being ultra vires the provisions of the constitution. The parliament has no legislative competence in view of the provisions of the Article 370 to legislate on the subject Secondly, the very seizure of the ornaments has been attacked on the plea that the Inspectors, who visited the business premises of the petitioners were not the Gold Control Officers within the meaning of the Act and were not authorised as such for seizure. In the absence of such an authority the entire proceedings based on such a seizure are vitiated by error of law and jurisdiction and thirdly that the entire proceedings taken by respondent No. 3 in gross violation of the directions of the respondent No. 2 and no opportunity was given to the petitioners to cross-examine the customers, whose statements were recorded behind the back of the petitioners. Nor the inspection of the seized articles, by which respondent No. 3 has come to the conclusion that the ornaments were new was ever made in presence of the petitioners. The ornaments were never examined by any expert to arrive at a conclusion adversely drawn against the petitioners. All the allegations so made before the respondent are not met under the impugned orders, thus the orders are liable to be set aside, and quashed in the present writ petition.
8. In his reply arguments by Mr. J.P.Singh, learned Additional Central Government Standing Counsel, it has been pointed out that the validity of the Act cannot be challenged in view of the authoritative pronouncement of their Lordships of the Apex Court Harchand Ratanchand Banthia v. Union of India. It is pointed out that the Act is enacted by parliament in accordance with the power conferred on it under Schedule 7 list I entry 52, List 3 entry 33 of the Constitution of India, which also extends to the State of J & K. Meeting the second arguments, it has been pointed out that the Officers, who seized the ornaments from the premises of the petitioners were duly authorised as Gold Control officers by virtue of Notification issued under the Act on 1.9.1968 and, therefore, the seizure cannot be either unauthorised or illegal so as to affect the further proceedings under law. Meeting the last and third argument of the learned Counsel for the petitioners Mr.J.P.Singh tried to emphasis by referring to the order passed by respondent No. 3 Assistant Collector that in fact despite giving several opportunities to the petitioners to appear and adduce the evidence in their defence, they have failed to avail the said opportunity and thus no grievance can be made of condemnation behind the back of the petitioners.
9. I will now deal with the arguments in seriatim advanced as noted hereinabove. Taking first the attack on the vires of the Act, it shall have to be seen in the light of the provisions contained in the constitution. Nothing substantial was pointed out except the provisions of Article 370 to show that the Act is ultra vires the provisions of the constitution. I find force in the arguments of the learned Counsel for the respondents, when he places reliance on (Supra). How the Article 370 debars the parliament to legislate on the matters in the Union List and the concurrent list is to be pointed out before an enactment is held ultra vires on the said ground. On this proposition looking to the fact that the Act in question falls in Entry 52 Schedule 7 list I and List 3 Entry 32, the validity of which has been upheld by their lordships of the Apex Court in the above noted decision, i.e. (Supra), I do not find that any case is made out to hold the Act as ultra vires the provisions of the Constitution. The first limb of the argument, therefore, fails.
10. Secondly it has been strenuously argued that the search and seizure by Inspectors of Customs & Central Excise, who visited the business premises of the petitioners was without jurisdiction as they were not the Gold Control Officers within the meaning of Section 4 of the Act. The notification relied on by learned Counsel for the respondents has never seen the light of the day. It was neither placed before the court nor forms part of the record produced by the respondents. Even otherwise it has been pointed out that by mere authorisation for inspection, an inspector does not become a Gold Control Officer within the meaning of Section 4 of the Act. In order to appreciate this argument in the Book Commentary on the Gold (Control) Act. Notification No. 3115, relied on by the respondents issued on September 1, 1968 and published in the Gazette of India Extraordinary, Part II, Section 3(ii), dated 1.9.1968 at page 93, which runs as follows:
S.O. No. 3115.--In exercise of the powers conferred by Sub-section (2) of Section 4 of the Gold (Control) Act, 1968, (45 of 1968), the Central Government hereby appoints all officers of the Central Excise of and above the rank of Sub-Inspectors and all officers of Customs of and above the rank of preventive Officers as Gold Control Officers for the purpose of enforcing the provisions of the said Act.
With the above said Notification in hand it is to be scrutinised in the light of the provisions of Section 4 of the Act. Sub-section (2) of Section 4 empowers the Central Government to appoint as many persons as it thinks fit to be Gold Control Officers for the purpose of enforcing the provisions of the Act. In order to exercise the powers of Gold Control Officer, it is essential that basically there should be an appointment by the Central Government under the above noted provisions and the officer concerned must hold that office for the purpose of enforcing the provisions of the Act. In the instant case it is no doubt true that by the said Notification the Inspectors above the rank of Sub-Inspectors of the Central Excise and all officers of the Customs above the rank of preventive Officers have been so appointed and Gold Control Officers for the purpose of enforcing the provision of the said Act. Their powers cannot be isolated for the purpose of enforcing the provisions of the Act as the words of Sub-section (2) of Section 4 denotes that the Central Government may appoint as many persons as it thinks fit to be Gold Control Officers for the purpose of enforcing the provision of the Act. On a careful consideration of the provision of the Act in the light of the admitted position that the officers who visited the business premises of the petitioners were holding the ranks of Central Excise Intelligence and Preventive Officer, they were undoubtedly above the rank of Sub-Inspectors and therefore, the seizure made under Section 68 of the Act cannot be said to be by an unauthorised Officer or illegal in any manner. I am, therefore, of the opinion that the second attack made by learned Counsel for the petitioners on the seizure of the ornaments though attractive but is devoid of any substance.
11. Adverting to the last and third limb of the arguments, which pertains to the serious attacks on the impugned orders on the violation of the principles of natural justice is to be scrutinised from the record. There is no dispute, about the fact that the appeal preferred by the petitioners to the Collector-Respondent No. 2 against the first order passed on April 30, 1974 by respondent No. 3 imposed the penalty of Rs.1,000 only and the confiscation of the ornaments, which was accepted by the Collector by his order dated December 23,1975 and the case was remanded back to the Assistant Collector Respondent No. 3 for conducting the de novo trial. Pursuant to the receipt of the file, respondent No. 3 by his notice dated March 22, 1976 added certain more charges, which were not available to him at the time when the initial notice was issued. Because the notice itself indicates and styled as Corrigendum to the notice issued earlier on February 12, 1974 by adding paragraph 6 adding the charge of contravention of Identification of Customers Rules, 1969. The earlier notice shows the contravention of Sections 8, 33, 36 & 55 of the Act. See. 8 places restrictions regarding acquisition, possession and disposal of gold, Section 33 places a bar on the dealer not to keep on any business premises the gold which is not a part of the stock-in-trade, Section 38 provides for prohibition regarding possession of gold not included in any return and Section 55 pertains to the Accounts and Returns. It is undoubtedly true that in the Corrigendum one more violation has been added that of the contravention of Identification of Customers Rules, 1969. It is a departure from the notice issued earlier. The Collector never directed for addition of any more grounds except the one based on the notice initially issued for which he directed for de novo action. I therefore, find force in the arguments advanced by learned Counsel for the petitioners with that objection that the learned Assistant Collector Respondent No. 3 exceeded the notice initially issued, for which he was not authorised by the Collector.
12. The order impugned passed by the learned Assistant Collector-Re Collector-Respondent No. 3 after the remand dated September 29, 1976 by maintaining the order of confiscation and enhancing the penalty of Rs.5,000 as against Rs. 1,000 imposed in the earlier order is attacked on the variety of reasons. On a close scrutiny of the record produced by the learned Counsel for the respondents, it transpires that the statements of the customers recorded by the Assistant-Collector prior to the order of remand remained as they are and no opportunity appears to have been given to the petitioners to cross-examine those witnesses nor their statements were recorded in presence of the petitioners. The condition of the file shows that no regular proceedings were kept on record so as to find out what steps were taken by the Assistant Collector for conducting the de novo trial in terms of the remand order. It will not be proper for me in the writ petition nor it is the jurisdiction of this Court to re-appreciate the evidence, but the fact remains that if the quasi judicial authority acts beyond jurisdiction in drawing its own conclusion without any basis, such conclusions become arbitrary and assumptive.
The learned Assistant Collector while dealing with the statements of the witnesses-the customers to whom the seized articles belong have based merely on assumptions, conjectures and surmises and beyond the course of common human conduct. In proceedings of such a nature where the penal consequences accrued and a party is held liable for penalty, the procedural lapses come to the rescue of the party concerned and the benefit goes to him and not to the department. It was an imperative duty of the learned Collector to allow the petitioners to cross-examine those witnesses, so that the right of the petitioners to defend themselves would not have been violated.
13. As regards the visual examination of the seized gold ornaments by the Assistant Collector himself, it is pointed out that the same is neither done in presence of the petitioners nor any examination of the articles was made after notice to the petitioners by any expert. In doing the visual examination and finding them to be new ornaments and criticising the statements of the witnesses to whom the articles belong makes the learned Assistant Collector to be the Judge of his own cause, who is a prosecutor himself and amounts to condemnation of the petitioners behind their back violating the principles of natural justice. All this shows that the action taken by respondent No. 3 is arbitrary, assumptive and vindictive in nature. If the violation of the provisions of the Act alleged against the petitioners is not found proved according to the standard prescribed for the criminal cases, it is the prosecution, who has to suffer and not the petitioners. Merely harping on the fact of right of hearing does not fulfill the gaps of the prosecution for conduct of the trial without giving opportunity to the petitioners of making their defence and getting the opportunity of cross-examining the witnesses or to remain present at the time of the visual examination of the seized articles as to their age. In the absence of any such procedure the rule of audi alteram partem stands violated and all such proceedings as to the confiscation of ornaments and imposition of penalty are vitiated by error of law and jurisdiction liable to be quashed in the writ jurisdiction by the High Court.
14. The learned Collector in appeal while upholding the order passed by respondent No. 3 in his order dated April 7, 1977 has not taken into account all the grounds so raised before him and the Central Government too while confirming the order in revision by its order dated May 16, 1981 appears to have ignored the procedural lapses pointed out hereinabove making the orders impugned as illegal and without jurisdiction. It is now well settled law that if the principles of natural judicial have been violated even by quasi-judicial authority, the orders so passed are liable to be interfered with in writ jurisdiction. I, therefore, find considerable force in the last and third argument advanced by learned Counsel for the petitioners and the petition deserves to be allowed on that grounds alone and the petitioners are entitled to get back the amount of Rs.7,500 paid towards the confiscation of the ornaments of Rs.2,000 paid towards the penalty imposed under the order impugned passed by respondent No.
1.
15. In the result the petition succeeds, which is hereby allowed. The orders passed by respondent No. 1 on May 16, 1981 and those passed by Collector-Respondent No. 2 on April 17, 1977 and Respondent No. 3 on September 29, 1976 are hereby qushed. Respondents are directed to refund the amount of Rs.9,500 deposited by the petitioners in compliances of the order passed by the Central Government on May 16, 1981. Parties under the circumstances are left to bear their own costs. It also disposes of C.M.P. No. 734 of 1981. The record be given back to Mr. J.P. Singh, Counsel for the respondents.