M.M. Ismail, J.
1. All these writ petitions raise a common question regarding the validity of Rule 3(ee) of the Gold Control (Licensing of Dealers) Rules, 1969, hereinafter referred to as the Rules, as amended by the Government of India Notification dated 27th December, 1972 published in the Gazette of India, Extraordinary on 27th December, 1972. The validity of this Rule is challenged from different angles as being unconstitutional violating the fundamental rights of the petitioners under Article 19(1)(g) of the Constitution of India, and as conferring an unguided power on the licensing authorities and therefore offending Article 14 of the Constitution of India, and as being outside the rule-making power of the Central Government itself. It was also challenged on yet another ground which has relevancy to the year 1973 only. I shall refer to that also in the course of this judgment.
2. All these petitioners have been licensed as dealers under Section 27 of the Gold Control Act (XLV of 1968) (hereinafter referred to as the Act), for the year 1972. Most of them claim to be dealers in gold even before the Act came into force. Rule 3(a) of the Rules requires that an application for renewal of a licence should be made in the prescribed form at least one month before the expiry of the period of validity thereof. In the present cases, the licences which the petitioners were holding for the year 1972 were to expire on 31st December, 1972 and therefore they should have made their applications for renewal on or before 30th November, 1972. Admittedly the petitioners had made their applications before that date. It is unnecessary for me to refer to the provisions of the Act and the rules as well as the objects sought to be achieved by the Act for the simple reason that they have been elaborately set out in the two judgments of the Supreme Court, namely, Harakchand Ratanchand Banthi's and Ors. etc. v. Union of India and Ors. : 1SCR479 and Badri Prasad v. Collector of Central Excise, Sarvodayanagar, Kanpur and Ors. : AIR1971SC1170 . All that is necessary for the purpose of understanding the point raised in these writ petitions is to refer to Chapter VII of the Act, which deals with dealers and the provisions contained in Section 27 which occurs in that chapter and deals with licensing of dealers. Sub-section (1) of that section states that save as otherwise provided in that Act, no person shall commence, or carry on, business as a dealer unless he holds a valid licence issued in that behalf by the Administrator. Sub-section (2) states that a licence issued under that section shall be in such form as may be prescribed, shall be valid for such period as may be specified therein, may be renewed from time to time, and shall be subject to such conditions and restrictions as may be prescribed, the last of the requirements having been introduced by the Central Act XXVI of 1969 after the judgment of the Supreme Court in the former decision referred to above. Sub-section (3) states that every licence issued before the coming into force of the Act under Part XII-A of the Defence of India Rules, 1962, or under the Gold (Control) Ordinance, 1968, would continue to be valid until the cancellation thereof under the Act. Sub-section (4) enables a person holding a licence at the commencement of the Act to continue to carry on the business and obtain a renewal of the licence. Sub-section (5) enables a person who intends to commence business after the commencement of the Act as a dealer to apply for a licence and obtain one. It is Sub-section (6) of Section 27 which is important. Even at this stage, it is necessary to point out that Sub-section (6) of Section 27 as it stood originally was struck down as unconstitutional by the Supreme Court in the former decision referred to already on the ground that it constituted an imposition of unreasonable restriction on the fundamental right of a citizen to carry on business. Having struck down Section 27(6), the Supreme Court also pointed out that the licensing scheme contemplated by the rest of Section 27 of the Act itself could not be worked in practice and therefore observed:
It is, therefore, necessary for Parliament to enact fresh legislation imposing appropriate conditions and restrictions for the grant and renewal of licences to dealers. In the alternative the Central Government may make appropriate rules for the same purpose in exercise of its rule-making power under Section 114 of the Act.
It is thereafter the Central Government promulgated the Gold (Control) Amendment Ordinance, 1969, (VI of 1969) which came into force an 3rd July, 1969. Section 27(6) of the Act was replaced by a new provision with retrospective effect, from the date of the original Act itself. At the same time, on the very same date, the Gold Control (Licensing of Dealers) Rules, 1969, also were promulgated. Section 27(6)(b) as amended which alone is relevant in connection with the renewal of licences provides as follows:
No application for the renewal of a licence to carry on business as a dealer shall be rejected unless the holder of such licence has been given a reasonable opportunity of presenting his case and unless the Administrator is satisfied that-
(i) the application for such renewal has been made after the expiry of the period specified therefor, or
(ii) any statement made by the applicant at the time of the issue or renewal of the licence was incorrect or false in material particulars, or
(iii) the applicant has contravened any term or condition of the licence or any provision of this Act or any rule or order made thereunder or of any other law far the time being in force in so far as such law prohibits or restricts the bringing into or taking out of India of any goods (including coins, currency, whether Indian or foreign, and foreign exchange) or the dealing in such goods by way of acquisition or otherwise, or
(iv) the applicant does not fulfil the prescribed conditions.
As far as the rules are concerned, Rule 2. of the rules dealt with matters to which regard shall be had before issuing a licence. Rule 3 dealt with matters to be considered for the renewal of a licence and the same is as follows:
3. A dealer shall be qualified for the renewal of the licence held by him if he fulfils the fallowing conditions, namely:
(a) that the application has been made in the prescribed form at least one month before the expiry of the period of validity thereof;
(b) that the prescribed fees for the renewal of the licence have been duly deposited;
(c) that the premises where the applicant is carrying on business as a licensed dealer continues to be suitable and-secure for the carrying on therein of such business;
(d) that no statement made by the applicant at the time of the issue of renewal of the licence was incorrect or false in material particulars;
(e) that no condition of the licence has been contravened by the applicant;
(f) that the applicant has not contravened any provision of the Gold (Control) Act, 1968 or any rule or order made thereunder or of Part XVII-A of the Defence of India Rules, 1962, or of any other law far the time being in force in so far as such law prohibits, restricts or regulates the bringing into or taking out of India of any goads (including coins, currency, whether Indian or foreign and foreign exchange) or the dealing in such goods by way of acquisition or otherwise.
After Clause (e) of the above rule, a new Clause (ee) was introduced by way of amendment an 27th December, 1972 as referred to already and that clause is as follows:
3(ee) that the turnover of the applicant in the twelve months immediately preceding the date of application for renewal of the licence was too low.
Explanation. - For the purposes of this clause, low turnover means a turnover which is on the average, not more than fifty grammes per month except where the applicant satisfies the Administrator that there are sufficient reasons for an average monthly turnover of lower than fifty grammes.
It is the validity of the above rule that is challenged in these writ petitions.
3. As I have painted out already, the petitioners contend that this amended rule cannot apply to an application for renewal for the year 1973, because the amendment came into force only on 27th December, 1972, while all the applications for renewal should have been made and were actually made on or before 30th November, 1972 and to such applications this amendment ought not to have been given effect to. From one point of view, it is unnecessary to decide this question in the present writ petitions for the simple reason that the year 1973 is past, and during that period by virtue of interim orders passed by this Court the petitioners had been granted renewal of licences and they had been functioning as dealers and therefore it may not be really necessary to consider this question now, though I am inclined to agree with the contention of the petitioners. I may also indicate one other reason why this amended rule could not be given effect to in respect of licences for the year 1973. As I have pointed out already, all the applications for renewal should have been made and were actually made by the petitioners on or before 30th November, 1972 and several other applications by other persons also had been made on or before that date. In between 30th November, 1972 and 27th December, 1972 several applications for renewal had been ordered actually without reference, to this amended rule and only because of the fortuitous circumstance or accident of the applications not having been disposed of before 27th December, 1972, this amended rule came to be applied to those applications for renewal which remained undisposed of on 27th December, 1972. This will be a practical ground for holding that the amended Rule 3(ee) should not have been, given effect to the applications for renewal for the year 1973. As I have pointed out already, in view of the peculiar facts of these cases, namely, that the year 1973 is past and for that year the petitioners by virtue of interim orders passed by this Court had been granted renewal of licences and they had been carrying on business, it may not be necessary to decide that question finally for the purpose of these writ petitions.
4. The real question is whether the rule introduced by the amendment is really ultra vires and unconstitutional as offending Articles 14 and 19(1)(g) of the Constitution of India. I may immediately refer to the highly defective language in which the rule itself has been couched. I have extracted the rule in full. The rule itself states that if the turnover of an applicant for renewal in the twelve months immediately preceding the date of application for renewal of the licence was too low, the application for renewal shall be rejected. In the first place, there is absolutely no guide-line to the licencing authorities to decide when a turnover can be said to be too low. Secondly, the turnover which is said to be too low is not to be calculated with reference to a standard or fixed or uniform period, but with reference to variable periods. I have already drawn attention to Rule 3(a) of the rules which provides that an application for renewal should be made at least one month before the expiry of the period of validity thereof. There is absolutely no provision whatever in the rules prescribing the earliest point of time at which the application for renewal can be made. Theoretically speaking, there is nothing to prevent a person applying for renewal of his licence for the year 1973 even in January, 1972, since the rule only requires the minimum period that should elapse between the application for renewal and the expiry of the validity of the current licence. Therefore, depending upon the particular point of time at which an application is made, the rule will have to be applied differently to different individuals, because the twelve months period has to be calculated backwards from the date of the application for renewal. If the rule is in force, certainly it will be open to an applicant to choose the best of twelve months period and file his application for renewal with reference to such a turnover. Certainly that could not have been a satisfactory and fair method of dealing with the right of an individual to carry on his business, which is his fundamental right under Article 19(1)(g) of the Constitution of India.
5. There is absolutely no guide-line whatever for the licensing authorities to determine what is said to be 'too low a turnover'. This is yet another factor which will make the rule work differently to different individuals depending upon the particular officer who deals with the application for the renewal of the licence. The Explanation does not throw any light on what can be said to be 'too low a turnover'. On the other hand, all that the Explanation says is that a turnover which is on the average not mare than 50 grammes per month will be considered to be 'a low turnover'. On the face of it, 'too low a turnover' must be lower than the 'low turnover', that is, 50 grammes on an average per month. The result is, there is no indication whatever in the rules as to what turnover below 50 grammes average per month can be considered to be 'too low a turnover'. Apart from this, the Explanation itself confers an absolutely arbitrary power on the licensing authorities to treat 'a low turnover' as not 'a low turnover' if the applicant satisfies the licensing authority that there are sufficient reasons for an average monthly turnover of lower than 50 grammes. Here again, there is absolutely no guidance whatever in the rules. It may be pointed out in this context that the power to grant a licence and renewal thereof under Section 27 of the Act has been conferred or. Assistant Collectors of Central Excise. The Assistant Collectors of Central Excise functioning in different regions deal with different applications for renewal and they may give effect to this Explanation in different ways. As a matter of fact, the facts of the present cases themselves very strongly illustrate the possibility of caprice and vagary of individual Assistant Collectors of Central Excise playing a vital part in dealing with the applications for renewal filed by different persons. In the affidavits filed in support of many of the writ petitions, the petitioners have given the names of five individuals in whose cases, according to the petitioners, the turnover was nil, and the applications for renewal were granted. Though the counter-affidavit filed on behalf of the respondents had not dealt with the cases of these persons, the files relating to these five individuals have been produced before me by the learned Counsel appearing for the respondents. One of the names actually mentioned by the petitioners in the writ petitions is one K.R. Sundaram Achari of Tiruppathur. With regard to him, his turnover for 1972 was only 15.392 grammes. In his explanation he stated that he was suffering from asthma for the past four years (prior to 13-3-73, the date of his explanation), that he was taking medical treatment for the same and that hence he could not do business during 1972. He also submitted a certain doctor's prescription in support of his contention. The Assistant Collector, Vellore, accepted this explanation and granted renewal of the licence.
6. The second case referred to is one of V.S. Basheer Ahmed of Tiruppathur. His turnover for the year 1972 was nil. In his explanation, he stated that he was suffering from stomach trouble and took medical treatment at C.M.C. Hospital, Vellore and hence he could not do any business during 1972. He also stated that on the date of his explanation in March, 1973, he was all right and that he would do more business. He had further stated at the personal hearing given by the Assistant Collector at Central Excise, Vellore that he was suffering from ulcer for the past seven or eight years (prior to the personal hearing). He produced documents to prove his attendance at C.M.C. Hospital, Vellore. He assured that he would do more business in future. His application for renewal was also granted by the Assistant Collector of Central Excise, Vellore Division, Vellore.
7. The third case mentioned by the petitioners is one relating to M.A. Abdul Malick of Tiruppathur (wrongly mentioned by the petitioners as K.A. Abdul Malick) His turnover for the year 1972 was nil. His explanation was that due to his ill-health and attending to Court cases, he could not do any business during 1972. He also stated that his building owner had filed a case in Court to vacate the dealer's premises and the Court had ordered to vacate the premises in 1972 and that he had shifted the dealer's premises in 1972 and started business only at the end of 1972. The Assistant Collector of Central Excise, Vellore Division, Vellore, accepted this explanation and granted toe application for renewal of the licence.
8. The fourth case mentioned by the petitioners is that of A. Poongavana Achari of Tiruvannamalai. He had transacted business in 1972 to the extent of 295-259 grammes. His explanation was that he had done gold dealer's business for the past 14 years (prior to his explanation), that due to ill-health and family affairs he could not attend the shop and that he would be doing more transactions for the year 1973. He had also stated that his family was depending upon the gold business and therefore he requested for renewal of the licence. His licence was also renewed by the same Assistant Collector of Central Excise, Vellore Division, Vellore.
9. The fifth case mentioned by the petitioners is that of B. Soganraj Jain of Gudiyatham. His transactions for the year 1972 amounted to 523-965 grammes. His explanation for the low turnover for the year 1972 was his ill-health. He produced a medical certificate in support of his statement. At the personnel hearing, he also stated that he had conducted up to 1200 grammes in 1970, 1000 grammes in 1971 and that only in 1972 he was unable to do business due to the fact that he was not doing well. He also was granted the renewal of the licence by the same Assistant Collector of Central Excise, Vellore Division, Vellore.
10. The cases of some of the petitioners whose applications for renewal of licences were rejected can now be contrasted with those of the five individuals mentioned above. The petitioner in W.P. NO. 6392 of 1973 whose turnover was 126 grammes in 1972 had stated before the Assistant Collector of Central Excise, Pondicherry that he was suffering from diabetes and blood pressure and that he had been under treatment during the previous year, that is, 1972. He had also stated that he had to conduct his son's marriage and for that he was having negotiations for about two months and that hampered his business. He further pointed out that from October, 1972 to July, 1973 he had transacted business upto 343 grammes. Notwithstanding this, the Assistant Collector of Central Excise, Pondicherry, stated that the explanation was not convincing and refused the renewal of the licence. So also the petitioner in W.P. No. 6172 of 1973 stated before the Assistant Collector of Central Excise, Vellore, that he was suffering from sugar complaint and that was the reason for his not having sufficient turnover. The petitioners in W.P. No. 6178 of 1973 also stated before the Assistant Collector of Central Excise, Vellore, that he was in the hospital during the last year (prior to his explanation) on account of illness and hence he could not attend to the business. The petitioner in W.P. NO. 156 of 1974 had stated before the Assistant Collector of Pondicherry that due to the ill-health of his wife, he could not attend to the work and that he had to be with her frequently in the Nursing Home at Pudukottai where she was under treatment. He further stated that from November, 1972 till the date of his explanation he had transacted business upto 1453.752 grammes. Notwithstanding this, the Assistant Collector of Central Excise, Pondicherry, stated that the transactions were not upto the margin in 1972 and that the explanation was not convincing. Similar cases can be multiplied.
11. It may also be noted that while the Assistant Collectors of Central Excise had renewed licences in respect of persons whose turnover was nil, they had refused to renew the licences in cases where the applicants had shown much greater turnover. In fact, the petitioner in W.P. NO. 6153 of 1973 had shown a turnover of 301.635 grammes; the petitioner in W.P. No. 6157 of 1973 had shown a turnover 306.459 grammes, the petitioner in W.P. No. 6158 of 1973 had shown a turnover of 359.416 grammes; the petitioner in W.P. No. 6159 of 1973 had shown a turnover of 495.855 grammes and the petitioner in W.P. No. 156 of 1974 had shown a turnover of 304.426 grammes for the year. In all these cases, the applications for renewal had been rejected by the concerned Assistant Collector of Central Excise. Mr. K. Parasaran at one stage wanted to contend that in the cases in which renewal was granted, the grant of renewal might have been erroneous and those cases in which the renewal was refused, the refusal of renewal might be right. I am not concerned here as to which of the orders is right or wrong. I am merely referring to these features only for the purpose of showing the possibility of abuse and arbitrariness in the application of the amended rule in question. These facts themselves clearly and strikingly illustrate the arbitrary exercise of power with reference to the Explanation to Rule 3(ee) extracted already. Actually looked at from the point of view of there being no guidance whatever to determine what exactly is too low a turnover or looked at from the point of view of the licensing authorities exercising their discretion in favour of the applications for renewal holding that their turnover were not low, the rule is capable of arbitrary application and abuse and therefore it offends Article 14 of the Constitution of India and that too with reference to the exercise of fundamental right of the citizens under Article 19(1)(g) of the Constitution of India.
12. As far as the second aspect of the matter is concerned, I asked the learned Counsel for the respondents as to what exactly is the need for imposing a turnover criterion for the purpose of renewing a licence. The learned Counsel referred to the counter-affidavit filed in these writ petitions wherein reliance has been placed on Rule 2(f) as well as the provisions contained in Section 27(6-A) of the Act. In my opinion, neither of these provisions supports the case of the respondents herein. Rule 2(f) of the Rules, dealing with matters to which regard shall be had before issuing a licence, states that the licensing authority shall have regard to the need to increase the number of licensed dealers in the city or town in which the dealer intends to carry on business or where the applicant intends to carry on business in a village, the need to increase the number of licensed dealers in the district within which such village is situated, having regard to:
(i) the number of licensed dealers existing in such city, town or district as the case may be; and
(ii) the demand for ornaments which is likely to arise in such city, town or district, such demand being estimated on the basis of the turnover of the licensed dealers, existing therein, for a period of three years, preceding the year in which such application for the issue of licence has been made and such turnover shall be determined on the basis of the accounts and returns submitted under the law, for the time being in force in relation to gold.
In the first place, this rule will have application only to the grant of licence and will have no application to the renewal of licence. The Supreme Court itself in Harakchand Batanchand Banthia and Ors. etc. v. Union of India and Ors. : 1SCR479 , to which I have already drawn attention, had pointed out that there should be a distinction between the requirements at the stage of the grant of licence for the first time and those at the stage of renewal of a licence. In paragraph 18 of the judgment, the Supreme Court observed:
It was also contended that there was no reason why the conditions for renewal of licence should be as rigorous as the conditions for initial grant of licence. The requirement of strict conditions for the renewal of licence renders the entire future of the business of the dealer uncertain and subjects it to the caprice and arbitrary will of the administrative authorities. There is justification for this argument and the requirement of Section 26 of the Act imposing the same conditions for the renewal of the licence as for the initial grant appears to be unreasonable.
It is in view of the above observations alone, the Central Government when it subsequently framed these rules, made separate provisions for grant of licence and for renewal of licence. Having regard to the above observations of the. Supreme Court as well as the deliberate conduct on the part of the Central Government in making separate provisions for matters dealing with grant of licence and for those dealing with renewal of licence, it is not open to the respondents to rely upon Rule 2(f) in support of their present case.
13. There is yet another reason for holding that the respondents cannot rely upon this rule. The rule, as extracted, clearly shown that the increase in the number of licensed dealers will have to be with reference to a particular city, town or district and it cannot be with reference in any ad hoc or arbitrary turnover, which has no reference whatever to the city, town or district. It may be in one place the demand for gold is much having regard to the status, affluence and the custom of the people living in that area. But in another place, the demand may not be so much. To treat both of them alike, without reference to the peculiar situations prevailing in each locality, will to be deny equality of opportunity provided for in Article 14 of the Constitution of India. That is the reason why Rule 2(f) expressly refers to the city, town or district being taken as a unit and the number of licenses being determined with reference thereto. In these particular cases, the imposition of Rule 3(ee) is a general one and not with reference to the peculiar or particular, situation prevailing in a particular city, town or district, and therefore Rule 3(ee) as introduced, by the amendment, cannot be justified with reference to Rule 2(f) of the Rules.
So far as reliance on Section 27(6-A) of the Act is concerned, here again the respondents cannot derive any support. Section 27(6-A) is as follows:
Where the Central Government, having regard to the quantity of gold produced in India and the supply therein of gold through lawful channels, is of opinion that it is necessary or expedient in the interests of the general public so to do, it may, notwithstanding anything contained in this section, direct the Administrator to restrict or reduce the number of licensed dealers to such extent and in such manner as may be specified by rules made in this behalf:
Provided that no such rules shall come into force until the expiry of the period referred to in Sub-section (3) of Section 114 and if, before the expiry of the said period, both Houses of Parliament agree in making any modification in the rule or both Houses of Parliament agree that the rule should not be made the rule shall come into force only in such modified form or be of no effect, as the case may be.
This provision expressly contemplates the Central Government making special rules with reference to this statutory provision, if it is of opinion that it is necessary or expedient in the interests of the general public, to restrict or reduce the number of licensed dealers, having regard to the quantity of gold produced in India and the supply therein of gold through lawful channels. Here also, the proviso makes it absolutely clear that the rules which are special in character and which have to be made pursuant to Section 27(6-A) are not on a par with those made under Section 114, in view of different provisions having been made as to the time when they will come into force. Section 114(3) imposes an obligation on the Central Government to place the rules framed by it under Section 114 of the table of both the Houses of Parliament, even though the Rules themselves come into force immediately or on the date of notified by the Central Government, and the said Section 114(c) is as follows:
Every rule made by the Central Government under this section shall be laid as soon as may be after it is made, before each Houses of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be, so however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
On the other hand, the proviso to Section 27(6-A) constitutes an exception to this provision, and the rules made under Section 27(6-A) will not come into force until the expiry of the period referred to in Sub-section (3) of Section 114. Admittedly no rules have been made under Section 27(6-A) of the Act. So long as no rules have been made under that provision, the respondents cannot rely upon the statutory provision contained in Section 27(6-A) itself in support of the amended Rule 3(ee). Therefore, I have to decide on the constitutional validity of Rule 3(ee) without reference either Rule 2(f) of the Rules or Section 27(6-A) of the Act. I am making it clear that whatever observations I am making on Rule 3(ee) as to its constitutional validity is without any reference whatever to the power of the Central Government to make rules under Section 27(6-A) of the Act. I am not expressing any opinion as to what will be the efficacy or vires of this rule, if the Central Government makes special rules under Section 27(6-A) of the Act. Against this background, I shall now consider the validity of Rule 3(ee).
14. In my opinion, this Rule 3(ee) imposes an unreasonable restriction on the fundamental right of the petitioners to carry on business as gold-dealers. Various sections of the Gold (Control) Act, 1968 as originally enacted had been struck down by the Supreme Court in the former judgment referred to by me already only on the basis that they interfered with the fundamental rights of the citizens to carry on business as gold-dealers. Consequently, I have now to consider this question only on the basis of the petitioners having a fundamental right to carry on business as dealers in gold. The simple question for consideration, is what is the relevancy of a particular turnover in a particular period and how does it in any way advance the interests of the general public, with reference to which alone a reasonable restriction can be imposed on the fundamental rights of citizens under Article 19(1)(g) of the Constitution of India. The respondents have not placed any materials before the Court to show that such a restriction is necessary in the interests of the general public. In paragraph 6, (Page 5) of the counter-affidavit filed before this Court, it is stated:
The Central Government, on the basis of a survey conducted by them found that there are a substantially large number of dealers who had no transactions or who had very nominal transactions according to their accounts. These dealers continued to get their licences renewed irrespective of the quantum of transaction. The existence of these licencees who were doing nominal transactions prevented genuine traders from entering into the business, as one of the conditions to be taken into account in issuing a fresh licence is the need to increase the number of licensed dealers in the locality concerned. With a view to limiting such licensed dealers who had no transactions or who had very nominal transactions so as to afford an opening for really bona fide persons to apply for and obtain licences, the Central Government in exercise of the powers conferred on them by Section 114 of the Gold Control Act, 1968 issued the amendment under notification F. No. 131/6/72-Gc 11 dated 27th December, 1972 to the Gold Control (Licensing of Dealers) Rules, 1969 introducing a new Sub-rule (ee) to, Rule 3.
I am unable to hold that this statement contained in the counter-affidavit in any way supports the validity of the rule in question. I have already referred to the fact that Rule 2(f) concentrates its attention to the situation prevailing in a particular city, town or district and is not general- It is not the case of the respondents that in any particular area new persons applied for licences and that their applications had to be rejected taking into account the existence of the number of licences including those held by persons like the petitioners. Simply because there is a provision in Rule 2(f) for increasing the number of licences over and above the existing licences, having regard to the particulars mentioned therein, it cannot be contended that in order to enable other persons to apply for licences, the Government wanted to eliminate from the field those persons who had transactions of too low a turnover. Even assuming that such a statement can be valid, it passes one's comprehension as to how it advances the interests of the general public. On the other hand, if there are genuine dealers as well as persons having nominal transactions side by side, the sheer spirit of business competition will drive one out of the field and enable the other to continue the business. Therefore to allow the normal spirit of business competition to play its role among the licences will be a factor in favour of the general public who will be enabled to choose their dealer and not the other way about. Therefore, this limitation, with reference to turnover cannot be said to be a reasonable restriction in the interests of the general public. I repeat again that apart from the contention put forward in paragraph 6 of the counter-affidavit extracted already, the Central Government had not placed any material before the Court as to how the imposition of the new condition advances the interests of the general public or is in the interests of the general public. Therefore I am clearly of the opinion that Rule 3(ee) constitutes an unreasonable restriction on the fundamental rights of the petitioners to carry on their business and hence it cannot be given effect to or enforced against them.
15. In this context, it is relevant to extract the observations made by the Supreme Court in State of Madras v. V.G. Row : 1952CriLJ966 , which the Supreme Court itself referred to and relied on in its judgment in Harakchand Batanchand Banthia and Ors. etc. v. Union of India and Ors. : 1SCR479 , referred to already:
It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
These observations acquire significance by virtue of the fact that the Supreme Court itself applied these observations in determining the constitutional validity of certain provisions of the very same Gold Control Act in the decision referred to already. With reference to the above observations, it cannot be held that the requirement as to a particular turnover provided for in Rule 3(ee) of the Rules passes the test of reasonableness.
16. There is yet another aspect of this identical question. What exactly is the relevancy of the turnover to the licensing provisions themselves? The object of the Gold Control Act, as I have already pointed out had been elaborately set out in the judgment of the Supreme Court to which I have already drawn attention, namely, Harakchand Batanchand Banthia and Ors. etc. v. Union of India and Ors. : 1SCR479 . In paragraph 14 of this judgment, the Supreme Court extracted the case of the Central Government as put forward in the counter-affidavit filed by it as follows:
It is stated in the counter-affidavit that the impugned Act was passed in order to bring about reduction in the quantity of smuggled gold by rendering smuggling more dangerous and the disposal of smuggled gold in the domestic market more difficult. Even though import of gold had been banned considerable quantities of contraband gold find their way into this country through illegal channels. The Customs Department is in itself not in a position to effectively combat smuggling over the long borders and the coast lines and, therefore, the anti-smuggling measures have to be supplemented by a detailed system of control over internal transactions so as to make the circulation of smuggled gold more difficult, if not impossible. The loss of foreign exchange caused by smuggling of gold was estimated at nearly Rs. 100 crores per year in the post-devaluation period, and Government felt that it was very necessary to reduce the internal demand for gold and erect barriers to the circulation of smuggled gold within the country. 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.
The impugned Rule 3(ee) was made under Section 27(6) read with Section 114 of the Act. It passes one's comprehension as to how the prescription of a particular turnover achieves the object of the Act, as set out by the Central Government itself in the counter-affidavit filed before the Supreme Court, and extracted above. From that point of view also, it can be held that the impugned rule is outside the scope of the rule-making power of the Central Government. As I have already pointed out, the rule was made only under Section 27(6) read with Section 114 of the Act. Section 27(6)(b) which I have already extracted as far as the present contest is concerned, merely refers to an applicant not fulfilling the prescribed conditions. Section 114(1) of the Act states that the Central Government may, by notification, make rules for carrying out the purposes of this Act. It is admitted that Rule 3(ee) introduced by the Central Government does not fall within the scope of any of the enumerated matters in Section 114(2) of the Act. Therefore, if at all, it can fall only within Section 114(1) of the Act. If so, it must be with the object of carrying out the purposes of the Act. I have already referred to the purposes of the Act and the rule in question does not carry out the purposes of the Act. From this point of view also, the Rule in question can be said to be ultra vires. As I have already pointed out, I am deciding the validity of Rule 3(ee) independent of the special rules that may be made be the Central Government under Section 27(6-A) of the Act.
17. The prescription of a particular turnover in the past as a condition for eligibility for obtaining a renewal of a licence may have relevancy to and a bearing on the question if the total number of licences to be granted in a defined area or region is restricted or limited and that question, may possibly arise only if and when the Government of India makes special rules in exercise of its powers under Section 27(6-A) of the Act. Since no such rules have been made now, there is no limitation on the number of licences that can be granted or renewed generally, without reference to the peculiar and particular situations of a city, town or district and that is the reason why I have observed that I am deciding this question without reference to the power of the Central Government under Section 27(6-A) of the Act.
18. Under these circumstances, I have no hesitation in holding that Rule 3(ee) of the Rules is ultra vires and unconstitutional and therefore it cannot be enforced against the petitioners. In form, the petitioners have prayed for the issue of a writ of certiorari quashing the orders of the Assistant Collectors of Central Excise concerned declining to grant renewal of licences for the year 1973. Since that year is past, from one point of view that relief has become really infructuous. But the substantial question which was raised in these writ petitions and which is still alive is in relation to the validity of Rule 3(ee) itself which can be enforced against the petitioners for succeeding years and therefore both sides argued on the validity of Rule 3(ee) and invited the Court to pronounce its verdict on the same. Accordingly I have discussed the matter and held that the rule in question is ultra vires, and unconstitutional.
19. Hence, there will be a declaration in these writ petitions that Rule 3(ee) of the Rules, as introduced by the notification of the Central Government dated 27th December, 1972 published in the Gazette of India, Extraordinary, dated 27th December, 1972 is ultra vires and unconstitutional and a direction will issue to the respondents herein not to enforce the said rule against the petitioners. There will be no order as to costs in any of the writ petitions.