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J. Mohanlal and ors. Vs. the Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtKarnataka High Court
Decided On
Case NumberWrit Petn. Nos. 1043, 1970 and 1971 of 1973
Judge
Reported inAIR1975Kant114; 1975(1)KarLJ229
ActsGold (Control) Act, 1968 - Sections 16, 16(4), 16(5), 16(10), 52, 53, 109 and 139; Constitution of India - Articles 14 and 19(1); State Bank of India (Subsidiary Bank) Act, 1959 - Sections 2; Banking Regulation Act, 1949 - Sections 5; Bombay Prohibition Act, 1949; Delhi Laws Act, 1912
AppellantJ. Mohanlal and ors.
RespondentThe Union of India (Uoi) and ors.
Appellant AdvocateR.U. Goulay and ;R. Nagaraj, Advs.
Respondent AdvocateU.L. Narayana Rao, Sr. Central Govt. Standing Counsel
Excerpt:
.....was holding the land as a tenant prior to and as on 1.3.1974. - a subsidiary bank of the state bank of india, and banking companies as defined under clause (c) of section 5 of the banking regulation act, 1949. it is well known that the institutions referred to above are subject to statutory and administrative control and supervision of the reserve bank of india and the union government and in the course of their business which has to be carried on in accordance with the regulations, rules and orders that are issued from time to time from the reserve bank of india and the union government, they are expected to maintain their accounts in a particular manner. it is well settled that whenever the validity of any statutory provision is challenged on the ground that it is violative of..........(4) is to be read with sub-section (10) and it is enough for a pawn broker to approach the gold control officer with the full and detailed statements of his holding at the end of every month. as such it cannot be said that there is any unreasonable restriction on his holding property or pursuing his business in terms of article 19(1)(f) or (g) of the constitution.'3. the question for consideration in this case is whether the impugned notification dated 18-5-1970 issued by the government of india exempting certain banks referred to therein from the operation of section 16, is void either on the ground that it is violative of article 14 of the constitution or on the ground that there has been excessive delegation of legislative power to the government of india under section 109 of.....
Judgment:
ORDER

1. The petitioners in these petitions are carrying on business as Pawn Brokers. They have filed these petitions requesting the Court to issue a writ in the nature of mandamus to the respondents directing them not to enforce Section 16 of the Gold (Control) Act, 1968 (hereinafter referred to as the Act) against them in so far as the said section requires the making of declarations by the petitioners regarding the quantity of gold received by them in the course of their business. The relevant part of Section 16 of the Act reads as follows:

'16. DECLARATIONS AS TO ARTICLES OR ORNAMENTS: (1) Save as otherwise provided in this Chapter, every person who owns or is in possession, custody or control of, any articles or ornaments at the commencement of this Act, or acquires the ownership, possession, custody or control of any articles or ornament thereafter, shall make, within thirty days from such commencement or from such acquisition, as the case may be, OB within such further period as the Administrator may, on sufficient cause being shown, allow, a declaration in the prescribed form as to the quantity, description and other prescribed particulars of any articles or ornament, or both, owned, possessed, held or controlled by him : ............'

After the Act came into force the Government of India, being of opinion that it was necessary and expedient in the public interest so to do, in exercise of its powers under Section 109 of the Act, issued a notification dated 18-5-1970 exempting the State Bank of India, a subsidiary Bank as defined in Clause (k) of Section 2 of the State Bank of India (Subsidiary Bank Act, 1959) and a banking company as defined in Clause (c) of Section 5 of the Banking Regulation Act, 1949, from the operation of the provisions of Section 16 of the Act in so far as the said section related to the making of declarations by such banks in relation to any article or any ornament which was in their possession, custody or control as security for any money lent or advanced by them. Because the Government of India did not simultaneously exempt the Pawn Brokers also from the operation of Section 16 of the Act, the petitioners have filed these petitions for the issue of a writ in the nature of mandamus calling upon the Government of India to treat them in the same way in which the banks referred to above, were treated by it. The petitions are contested by the Union Government.

2. The validity of the Act has been upheld by the Supreme Court in Harakchand Ratanchand Banthia v. Union of India, : [1970]1SCR479 . In Badri Prasad v. Collector, Central Excise, : AIR1971SC1170 , the Supreme Court observed that the provisions of Section 16 of the Act were not violative of Article 19(1)(f) and (g) of the Constitution of India. The petitioners before the Supreme Court in the above case were Pawn Brokers. Their contention was negatived by the Supreme Court as follows:--

'Section 16 as is seen is all-embracing and makes it obligatory or every person unless he is exempted under Sub-section (5) thereof to make a declaration of all the gold articles and ornaments in his possession, custody or control. In order that there may not be any uncertainty in the matter of making declarations in certain cases, the Legislature has indicated the persons on whom the burden lay. The requirement of making a declaration as often as a pawn broker acquires ownership, possession, custody or control of gold under Sub-section (4) is to be read with Sub-section (10) and it is enough for a pawn broker to approach the Gold Control Officer with the full and detailed statements of his holding at the end of every month. As such it cannot be said that there is any unreasonable restriction on his holding property or pursuing his business in terms of Article 19(1)(f) or (g) of the Constitution.'

3. The question for consideration in this case is whether the impugned notification dated 18-5-1970 issued by the Government of India exempting certain banks referred to therein from the operation of Section 16, is void either on the ground that it is violative of Article 14 of the Constitution or on the ground that there has been excessive delegation of legislative power to the Government of India under Section 109 of the Act. Section 109 of the Act reads as follows:

'109. POWER TO EXEMPT--Where, on the recommendation of the Administrator or otherwise, the Central Government is of opinion that, it is necessary or expedient in the public interest so to do, it may, by order and subject to such conditions, if any, as it may specify in the order exempt any dealer or any refiner or any other person from the operation of all or any of the provisions of this Act and may, as often as may be, revoke or modify such order.'

The institutions which are exempted under the impugned notification, as already mentioned, are the State Bank of India; a subsidiary bank of the State Bank of India, and banking companies as defined under Clause (c) of Section 5 of the Banking Regulation Act, 1949. It is well known that the institutions referred to above are subject to statutory and administrative control and supervision of the Reserve Bank of India and the Union Government and in the course of their business which has to be carried on in accordance with the regulations, rules and orders that are issued from time to time from the Reserve Bank of India and the Union Government, they are expected to maintain their accounts in a particular manner. Their accounts are subject to internal audit and statutory audit. There is also provision for periodical inspection by the Reserve Bank of India and participation of the representatives of the Reserve Bank of India in the administrative decisions to be taken by these banks on vital matters. It is, therefore, clear that they form a class by themselves and they are distinguishable from the pawn brokers. The fact that the pawn brokers are also subject to certain control under the State enactment is not sufficient to hold that the amount of control to which they are subject is the same as in the case of the banking institutions referred to in the impugned notification. The object with which the Act was passed is dealt with by the Supreme Court in Harakchand's case. The Supreme Court observed as follows in that connection :--

'The submission of Mr. Setalvad was that the reasonableness of the impugned provisions of the Act had to be judged in the light of the widespread smuggling of gold which, if not checked, was calculated to destroy the national economy and hamper the country's economic stability and progress. Reference was made in this connection to the report of the Taxation Enquiry Commission which pointed out that the factual position in regard to the existence of widespread smuggling: 'Smuggling now constitutes not only a loophole for escaping duties but also a threat to the effective fulfilment of the objectives of foreign trade control. The existence of foreign pockets in the country accentuates the danger. The extent of the leakage of revenue that takes place through this process cannot be estimated even roughly, but, we understand, it is not unlikely that it is substantial. Apart from its deleterious effect on legitimate trade, it also entails the outlay of an appreciable amount of public funds on patrol vessels along the land border, and watch and ward staff on a generous scale. It is, therefore, necessary, in our opinion, that stringent measures both legal and administrative should be adopted with a view to minimising the scope of this evil.'

It is, therefore, clear from the above passage that the object of the Act was to keep track of gold and ornaments made of gold so that the undesirable effects pointed out by the Supreme Court in the above case could be minimised. It is well settled that whenever the validity of any statutory provision is challenged on the ground that it is violative of Article 14, it is necessary in the first instance to ascertain the policy underlying the statute and the object intended to be achieved by it. Having ascertained the policy and object of the Act, the court has to apply a dual test in examining its validity, (1) whether the classification is related and based upon an intelligible differentia which distinguishes person or things which are grouped together from those that are left out of the group and (2) whether such classification serves the purpose and object of the enactment. As mentioned earlier, there is an intelligible differentia between the institutions which are exempted and the pawn brokers and that it is also clear that the object of the Act is achieved by making a classification between the pawn brokers on the one hand and the banking institutions referred to above on the other. The object of the Act is not defeated in according a special treatment to the banking institutions. The administration of the provisions of the Act would also be easier as there would be no duplication of the returns to be filed by the banking institutions. I do not think that in the instant case there has been violation of Article 14 of the Constitution by not extending the benefit of exemption to pawn brokers also.

4. The next contention relates to the question whether there has been excessive delegation of legislative power, under Section 109 of the Act by which the Central Government is authorised to exempt any dealer or any refiner or any other person from the operation of all or any of the provisions of the Act. The validity of a similar provision appearing in the Bombay Prohibition Act (25 of 1949) was upheld by the Supreme Court in State of Bombay v. F. N. Balsara, (AIR 1951 SC 318). Under Section 139(c) of that Act the Government of Bombay was given the power to exempt any person or institutions or class of persons from the observance of Bombay Prohibition Act. The said provision was struck down by the High Court of Bombay on the ground that there was excessive delegation of legislative power. In the appeal before the Supreme Court the judgment of the High Court of Bombay was reversed. While doing so the Supreme Court observed as follows :--

'This Court had to consider quite recently the question as to how far 'delegated legislation' is permissible and a reference to its final conclusion will show that delegation of the character with these sections involve cannot on any view be held to be invalid. (See Special Reference No. 1 of 1951 in Re the Delhi Laws Act, 1912 etc). A legislature while legislating cannot foresee and provide for all future contingencies, and Section 52 does no more than enable the duly authorised officer to meet contingencies and deal with various situations as they arise. The same considerations will apply to Sections 53 and 139(c). The matter however need not be pursued further, as it has already been dealt, with elaborately in the case referred to.'

5. In view of the observation of the Supreme Court made regarding the validity of Section 139(c) of the Bombay Prohibition Act which contained a provision similar to Section 109 of the Act, I am of the view that Section 109 of the Act does not suffer from the vice of excessive delegation of legislative power.

6. No other contention is urged.

7. These petitions, therefore, fail and they are dismissed. No costs.

8. The petitioners are given a month's time to file the necessary returns before the concerned authority.

9. Petitions dismissed.


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