GUNWANTLAL GODAWAT v. UNION OF INDIA & Anr.

APPLICATION OF THE LAW TO THE FACTS OF THE CASE: A 6.1 The ORDINANCE itself came to be repealed by the GOLD ACT by the date of the judgment of the Rajasthan High Court. Such repeal gives rise to two questions- What is the effect of (i) the repeal of the Ordinance 6of1968, and (ii) the declaration under Section 116(2) of the GOLD ACT? At the time of the B ,making of the GOLD ACT, Parliament was conscious of the existence of the RULES and their repeal by the ORDINANCE and also the fact that various actions authorised under the provisions of the Part XllA of the RULES were taken or pending. The Parliament is also conscious of the fact that the ORDINANCE while repealing the RULES provided for the application of Section C 6 of the General Clauses Act. Pursuant to the repeal of the ORDINANCE, the Parliament did not choose by the GOLD ACT to disapprove such a declaration made under the ORDINANCE. Therefore, it is more than public interest and constitutional necessity as opined in Krishan Kumar Singh's case to hold that D the RULES stood peremptorily repealed by the ORDINANCE and on such repeal, Section 6 of the General Clauses Act applied. Therefore, the RULES stood peremptorily repealed by the ORDINANCE notwithstanding the fact that the ORDINANCE itself came to be repealed subsequently by the GOLD ACT. The repeal of the Ordinance docs not revive the RULES. [Paras 44, E 45) [396-D-H]

6.2 The adjudgmcnt of confiscation of the appellant's gold is. required to be made only in accordance with the RULES but not the GOLD ACT. The role of the 1st fiction created under Section 116 of GOLD ACT is limited as explained in para 29 of F this judgment.[Para 48][399-B)

6.3 While it is true that the discretion conferred upon the Authority under Rule 128M - (S)(a) is textually unfettered, it docs not lead to the inference :that the discretion is absolute and uniform with reference to the various contraventions of the G RULES. The limitations on the discretion are to be found from the scheme of the RULES. The various RULES in the Part XIIA of the RULES make various stipulations and the contravention of any one of the stipulations can lead to the confiscation of gold. The factors which influence the Authority's exercise of discretion H 376 SUPREME COURT REPORTS [2017] 14 S.C.R. A will necessarily vary from the nature of the offence which is committed. [Paras 49-51](400-B-C]

6.4 The appellant's case does not call for any discretion to be exercised in his favor in the light of the totality of the circumstances. The non-fiJing of the declaration is established to B be an absolutely calculated violation of law. [Para 55) [401-C] E

6.5 The High Court rightly came to the conclusion that the case of the appellant is governed only by the RULES and not by Section 73 of the GOLD ACT. The amount of Rs.11.04 crorcs was the value of the gold as on the date (7 .12.94) when the C appellant was given the option to pay the fine in lieu of confiscation. However, the argument advanced by appellant is that the law applicable to the adjudgment proceedings is GOLD ACT- a submission plainly untenable. A proceeding initiated under the RULES and pending as on the date of the GOLD ACT will still have to be concl;:.ded in accordance with the RULES in view of D Section 116 of the GOLD ACT.[Paras 58-61](402-D; 404-A, C-D] 6.6 While the RULES provide an unrestricted discretion to the "officer adjudging" to determine.the amount of fine, GOLD ACT restricts the discretion by imposing an upper limit on the quantum of fine that could be imposed by declaring that "give to the owner thereof an option to pay in lieu of confiscation such fine, not exceeding the value". There is nothing in the text of Section 73 of the GOLD ACT which requires the value of the gold (for the purpose of determining the fine) should be the value of the gold as on the date of the seizure. But the expression· 'value' is a defined expression under Section 2(v) of the Act. The language of Section 73 is clear that it. applies only to those cases wherein confiscation is one which is authorised "by this Act". Section 73 would have no application to those cases of confiscation which are adjudged under the RULES. It would be applicable only for those cases where the confiscation is authorised by the G GOLD ACT. Section 71 authorises the confiscation of gold in respect of which "any provision of this Act or any rule or order made thereunder has been, or is being, or is attempted to be, contravened". In other words, Section 71 authorises the confiscation of gold if there has been or is or is attempt to contravene the provisions of the GOLD ACT i.e. only such H contravention occur after the commencement of the GOLD ACT F GUNWANTLAL GODAWAT v. UNION OF INDIA 377 but not contravention of law which existed anterior thereto (the A RULES). There is a distinction between acts done pursuant to the authorization of a statute and acts done pursuant to the authorization under a different statute or a statutory instrument but deemed to have been done under the earlier of the abovcmcntioncd two st.atutes. When a statute creates a fiction B requiring certain events. which took place prior to the commencement of such a statute to be deemed to have been ilonc under the statute, such a fiction does not retrospectively authorise doing of such acts. It qnly takes note of the existence of certain state of affairs and cre:rtes putative state of affairs by declaring that such anterior events should be deemed to have C taken place under the statute which came into existence later. Such fictions could only have limited consequences. Prior to the GOLD ACT, seizure and confiscation of gold were authorised by the RULES. Though, by virtue of the fiction created under Section 116, the confiscations adjudged under the RULES are deemed D to be confiscations adjudged under the GOLD ACT, but in view of its Scheme there arc limitations of such fiction. Therefore, neither Section 73 nor the definition under Section 2(v) would be applicable for the confiscations adjudged under the RULES pursuant to a seizure that took place before the commencement of the GOLD ACT. [Paras 63-67] [405-B-D; 406-A-G] E · 6. 7 The High Court rightly held that Section 73 would not come into play at all in the case on hand. Therefore, the fine amount cannot be determined on the basis of the value of the gold. The High Court rightly opined that the market value of the gold as on the date of the exercise of the option ~y the owner of F the gold to pay fine in lieu of the confiscation would be the legally appropriate amount of fine. Because it is a fine in lieu of confiscation. Confiscation would result in the loss of the entire propcrt,y in the confiscated gold resulting in a financial loss of the · value of gold to the owner. Hence, the value of the gold is to be determined with reference to the date on which the owner G exercises the option to pay 'the fine in lieu of the confiscation. [Paras 68, 69][407-A-D] Raja Saliq'ram v. Secretary of State of India in Council 1874 12 Bengal LR 167 - approved. H 378 A B c D E SUPREME COURT REPORTS [2017] 14 S.C.R. The State of West Bengal v. SK. Ghosh AIR 1963 SC 255 : [1963] SCR 111; Biswanath Bhattachatya v. Union of India (2014) 4 SCC 392 : [2014) 1 SCR 885; l.T. Commissioner v. Shah Sadiq & Sons (1987) 3 SCC 516 : [1987) 2 SCR 942; Jayantilal Amrathlal v. Union of India (1972) 4 SCC 174 - referred to. Wicks v. Director of Public Prosecutions 1947 AC 362 (HL); Warren v. Windle 576 (KB); Steavenson v. Oliver 151 ER 1024 - referred to. 102 ER Case Law Reference 11985] 3 SCR 509 c2011) 3 sec 1 (1994) 3 sec 1 [1955) SCR 893 referred to Para 22 distinguished Para 24 referred to Para 27 referred to Para 28 [1963) SCR 111 referred to Para 36 [2014) 1 SCR 885 referred to Para36 1874 12 Bengal LR 167 approved Para 36 [1987) 2 SCR 942 (1972) 4 sec 174 CIVILAPPELLATEJURISDICTION: Civil Appeal Nos. 4711- referred to relied on Para47 Para 42 4712 of2011. From the Judgment and Order dated 29.06.2009 of the High Court F of Judicature for Rajasthan, Jaipur Bench, Jaipur in D. B. Excise & Gold (Control) Reference No. 24of1996 and D. B. Civil Writ Petition No. 6295 of 1996. C. A. Sundaram, Sr. Adv., Puneet Jain, Ms. Christi Jain, Abhishek Gupta, Apoorv Tripathi, Zafar Inayat, Ms. Rohini Musa, Abhinav Gupta, G Ms. Priyal Jain. Harsh Jain, Ms. Yashika Sharma, Ms. Pratibha Jain, Advs. for the Appellant. K. K. Vcnugopal, AG, K. Radhakrishnan, Sr. Adv., Ms. Nisha Bagehi, Ms. Pooja Sharma, B. Krishna Prasad, Advs. for the Respondents. H . GUNWANTLAL GODAWAT v. UNION OF INDIA 379 A The Judgment of the Court was delivered by CHELAMESWAR, J. 1. On 3rd and 41h June, 1965, the residential premises of the appellant's father were searched by the officers of the Government oflndia in exercise of the authority conferred upon them under Rule 126L(2) of the Defence of India Rules, 1962 1 (hereinafter referred to as "the RULES"). They found 240 kilograms B of gold (bars etc.) buried in the house and seized it. Proceedings for confiscation were initiated. Eventually on 24.9.1966, the Collector of Central Excise and Customs passed an order2 confiscating the seized gold in exercise of the power under Rule 26M of the RULES on the ground that the seized gold was held by the appellant in contravention of Rule 126-I. A penalty ofRs.25 lakhs under Rule 126L(l 6) of the RULES C was also imposed. ·

#2. Aggrieved by the same, an appeal was carried by the appellant's father before the Gold Control Administrator which was dismissed on 6.3.1972. The matter was carried further in a revision before the Government of India which was also dismissed on 4.6.1979. The decision D of the Government oflndia was challenged in a writ petition (No.1215/ 79) .before the Rajasthan High Court. By a judgment and order dated ·9.8. I 994, the Rajasthan High Court allowed the writ petition.

#3. It appears from the said judgment that two submissions were made before the High Court, (i) no personal hearing was given by the Collector to the appellant's father before the order of confiscation was E I Rule 126L. Power of entry, search, seizure, to obtain information and to take samples. (2) Any person authorised by the Central Goveniment by writing in this behalf may ( a) enter and search any premises, not being a refinery or establishment referred to in sub-rule (I), vaults, lockers or any other place whether above or below ground: (b) seize any gold in respect of which he suspects that any provision of this Pait has been, or is being, or is about to be contravened, along with the package, covering or receptacle, ifany, in which such gold is found and thereafter take all ,measures necessary for their safe custody. . 2 ""Gold was required to be declared under Rule 126-I ofDefence oflndia Rules, 1962. It was not declared. l accordingly order absolute confiscation of240.040 kgs. of gold, under Rule 126M of said Rules. The iron safe in which gold was secreted is also confiscated under Rule I 26M. I hold that Shri Chhagan Lal Godavat is guilty of contravention of the provisions of the Rule 126-T of the Defence of India Rules, 1962. He is liable to a penalty under Rule 126-L ( 16) of the said Rules. Taking into consideration the gravity of the offence committed by him and in view of the fact that he hoarded a very huge quantity of undeclared gold I impose upon him a personal penalty of Rs.25,00,000/ (Twenty five lacs)." F G H 380 SUPREME COURT REPORTS [2017] 14 S.C.R. A passed though a show cause notice dated 3.2.1966 was issued proposing confiscation and penalty under Section 126M and 126L( 16) of the RULES respectively, and (ii) An opportunity to redeem the seized gala was not given.

#4. The High Court accepted the submissions and remitted the B matter to the Collector (Central Excise and Customs). D c The operative portion of the judgment reads as follows:- "16. As a sequence the orders passed sy the Collector dated 24. 9.1966 (Annex.I}, the order dated 6.3 .1972 passed by the Gold Control Administrator as well as the order dated 3/4.6.1979 passed by the Special Secretary Finance, Government oflndia exercising the power of revision of the Central Government are quashed and the matter is remitted back to the Collector, Central Excise and Customs, New Delhi to examine the matter afresh in the light of the observations made above after affording full opportunity to the petitioners. The parties are directed to appear before the Collector, Central Excise and Customs, New Delhi on 1.9.1994 whereafter the Collector shall proceed with the case afresh and shall dispose of the matter within four months from the date of receipt of the copy of the order as indicated above. The matter has already been considerably delayed for over 30 years and any further delay would amount to denial of justice to the petitioners. It is further ordered that in the event of the appeal being filed by the aggrieved party to the Central Excise and Gold Control Tribunal, the Tribunal shall dispose of the same as expeditiously as possible preferably within six months from the date of filing of the appeal." 5. Pursuant to the remand, by an order dated 9.12.1994, the F Collector once again ordered confiscation of the entire quantity of (240 kilograms) gold approximately valued at Rs. 11. 04 crores with an option to the legal heirs of the appellant's father to redeem the gold by paying a fine of Rs. 2.5 crores. E "(i) l ordarconfiscation of the 240.040 Kgs. of gold (1) Sovereigns of gold 80.776 Kgs. (2) Passas of gold 242 Nos. 75.298.300 Kgs. (3) Pieces of gold bars 5 Nos. 10.975.845 Kgs. (4) Gold bars of 19127 and 1992 9 nos. 72.990 Kgss.) valued at Rs. 12,50,070.41 at the time of seizure (present approximate value Rs. 11.04 crores at the rate ofRs. 4,600per10 gms. as on 07.12.1994) along with Iron Safe used to conceal the gold seized from the house of Late G H GUNWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 381 A Shri Chhaganlal Godawat, under the Rule 126-M of the erstwhile Defence of India Rules, 1962. The impugned gold along with the · Iron Safe will, however, be released and handed over to the legal heirs of Late Shri Chhaganlal Godawat on payment ofredemption fine of Rs. 2.50 crores (Rupees Two crores fifty lacs only) in lieu of confiscation under Rule 126-M (8) (a) of the erstwhile Defence of India Rules, 1962. The option to redeem the same should be exercised within three~months from the date of receipt of this order." The Collector further held that in view of the fact that the person from whom the gold was seized (Chhaganlal Godawat) expired, the levy of penalty contemplated under Rule I 26L( 16) of the RULES is not called C for. B

#6. Aggrieved by the decision of the Collector, the appellant herein carried the matter in appeal to the Tribunal.3 The appeal was heard by a Bench of the Tribunal consisting of two members. There was a difference of opinion between both the members regardingthc quantum D of the redemption fine. In view of the difference of opinion, the matter was referred to the third Member. The outcome of the entire process is · that the Tribunal by its order dated 30th October 1995 finally opined that the redemption fine should be reduced to Rs.12.5 lacs which represented , the value of the gold as on the date of the seizure. Accordingly, the appeal was allowed. E

#7. The Collector sought a reference under Section 82-B 4 of the Gold Control Act, 1968 on two questions oflaw; ;'Appeal N·o.C/144/95-NRB on the file of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi against the Order-in-Original No. 7194 dated 9 .12.1994 passed by the Collector of Central Excise & Customs, Jaipur. 4 Section 82-B of the Gold (Control) Act, 1968 F "Section 82-B. Statement of a case to High Court. (!) The Conector of Central Excise or of Customs or the other party may, within sixty days of the date upon which he is served with notice of an order under sec.SIA, by application in the prescribed fom1, accompanied, court the application is made by the other party, by a fee of two hundred rupees require the Appellate Tribunal to refer to the High Court any question oflaw arising out of such order G and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court: Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days. H 382 A B c SUPREME COURT REPORTS [2017] 14 S.C.R. "l. Whether in the matter of imposition of redemption fine, the provisions of Section 73 of erstwhile5 Gold (Control) Act, 1968 will apply when the gold was neither seized nor confiscated under the Gold (Control) Act, 1968?

#2. Whether the quantum of Redemption fine should be related to market value of Gold on the date of seizure or the market value of gold on the date ofadjudieation by the Commissioner of Customs & Central Excise, Jaipur?"

#8. By an order dated 20.5.1996, the Tribunal referred the matter to the Rajasthan High Court.

#9. In the meanwhile, the Department filed an appeal against that part of the Order of the Collector dated 9.12.1994 which gave an option to the appellant to redeem the gold by paying fine of R.~. 2.5 crores in lieu of confiscation. The said appeal was dismissed on 23.5.1996.

#10. lt appears from the record that the Union of India filed a Writ D Petition being D.B. Civil Writ Petition No. 6295 of 1996 with an interesting prayer as follows:- "It is, therefore, most respectfully prayed that:- (i) By an appropriate writ, order or direction the respondents may be directed not to take any action with respect to getting goods from the Petitioner Department in any manner till the disposal of the reference petition. (ii) Any other order or direction which the Hon'ble Court may consider just and proper in the facts and circumstance of case may also kindly be passed in favour of the petitioner." In fact it is stated at para 9(D) of the writ petition as follows: "D. That the petitioner department has come before the Hon'ble Court with a limited prayer that the goods may not be released to the respondents till the final disposal of the reference petition which has been referred by the learned CEGAT." E F G

#11. It appears that initially there was an interim stay6 in the said writ petition on 20th December 1996. By an order dated 28.5.1997, the 'By the date of the Reference Application, the Gold (Control) Act, 1968 stood repealed by Act No. I 0 of 1990 of the Parliament w.c.f. 6" June 1990. 'The order copy is not available on record H GUNWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 383 interim stay was vacated. The operative portion of the Order reads as A follows:- "8. We, therefore, vacate the stay Order passed on December 20, 1996 staying that operation of the Order dated October 30, 1995 passed by the CEGAT and instead direct that the petitioner shall retain only that much quantity of the seized gold which will B fetch a sum of Rs. 2,50,00,000/-(Rupees Two Crores Fifty Lakhs) @Rs. 4600/- (Rupees Four thousand six hundred) per 10 (ten) gms of gold and release and hand over possession of the rest of the quantity of gold to the respondent No. 1 within one month In case the petitioner succeeds and there is any from today. shortfall in the recovery because of fall in price of gold, the C respondent No. 1 shall make that good and if the petition is dismissed and the order of the CEGAT is maintained the respondent No. 1 shall be entitled to return of the gold permitted to be retained under this Order as per the directions of this Court while finally disposing of the matter or thereafter." D

#12. The Reference came to be answered by the Rajasthan High Court by the order dated 29.6.2009, which is the subject matter of the instant appeal. The relevant portion reads as follows: "19. Undeniably and undisputedly, it is the date of giving option which is relevant for adjudging the fine and not the date of seizure. E The language of sub-rule 8 of Rule 126-M of 'Rules, 1962' categorically envisages that the officer adjudging may give to the owner of the Gold an option to pay in lieu of confiscation such F fine as the said officer thinks fit. According to Wzktionary, a wiki based open content dictionary, the meaning of term in lieu of is 'Instead, in place of, as a substitute for'. This meaning suggests that the redemption fine is the substitute for the . market value of the Gold. ......... ., the market value of the seized Gold has to be taken on that date when the option is given by the officer adjudging it. G

#20. It is revealed from the material on record that the Collector aptly applied the market price of Gold at the rate ofRs.4,600 per H 384 A B c D E F G H SUPREME COURT REPORTS [2017] 14 S.C.R. 10 gms as on December 7, 1994, the date of adjudicating when the option was given by him to the respondent and on this basis, the price of total seized and confiscated Gold 240.040 kgs came to be 11.04 crores and the redemption fine cannot be in any way less than this.

#21. Thus, in the ultimate analysis, it is candidly recorded that the quantity ofredemption fine should be related to the market value of gold on 7.12.1994 i.e. the date ofadjudication when the officer adjudging gave the owner of the Gold an option to pay fine in lieu of confiscation. The amount of fine as adjudged to the tune of Rs.2.5 crores was totally arbitrary and irrational as it was not based on any sound and lawful reasoning.

#23. .. .................. the respondents are entitled to redeem the confiscated Gold only after paying the redemption fine ofRs.11.040 crores.

#24. In view of above, we deem it just and proper to direct the authorized officer to give an option afresh following above clinching observations to the owner of the Gold asking him to pay the redemption fine in lieu of confiscation."

#13. For the sake ofcompletion of the narration of facts, it must be stated that as a consequence, the tribunal (CESTAT) passed an order on 30:4.2010 remitting the matter to the adjudicating Commissioner to determine the appropriate redemption fine and the Commissioner passed an order on 16.7.2010. The relevant portion reads: "4. Under the circumstances, we dispose of the appeal by way of remand to the Adjudicating Commissioner (authorized officer) to determine appropriate redemption fine and allow the order of the gold to redeem the gold on payment of such redemption fine. It goes without saying that while determining the redemption fine, he shall follow the cited order of the Hon 'ble High Court dated 29.62009." (i)An option is given to Shri Gunwant Lal Godawat and legal heir oflate Shri Chhagan Lal Godawat to pay Rs.11.04 crores (Rupees Eleven erores and four lakhs only) in lieu of confiscation of the Gill-TWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 385 gold weighing 240.040J45 kgs under the erstwhile Defence of. A India Rules, 1962 within three months of receipt of this order. (ii) In case Shri Gunwant Lal Godawat and the legal heir oflate Shri Chhagan Lal Godawat does not exercise the option of depositing the amount of Rs.11.04 crores in the stipulated time limit, as given above, Shri Gunwant Lal Godawat and legal heir of B late Shri Chhagan Lal Godawat shall be liable to return to the Department immediately the gold weighing 185.145 kgs which was returned to them on 2. 7 .94 in compliance of directions of the Hon'ble Rajasthan High Court given in the order dated 28.05.97." THE HISTORY OF THE GOLD CONTROL REGIME: C

#14. On 26'h October 1962, the President of India made a ,. proclamation of emergency und~r Article 352 of the Constitution of India. · On 28'h October 1962, the President oflndia promulgated the Defence of India Ordinance ( 4 of 1962) .. It was amended by another ordinance (6of1962). In exercise of the power conferred under Section 3 of the D Ordinance ( 4 of 19()2), RULES came to be made in GSR 1465 dated 5th November 1962. By an amendment to the RULES, Part XIIA came to be introduced by GSR 1525 dated 23"' September, 1963 with the heading 'Gold Control'. ·

#15. PartXIlA of the RULES contained various provisions regarding E acquisition, possession, sale etc. of gold ornaments and articles by two defined classes, under RULES 126-A(c) and (h), i.e. "dealers" and "refiners" and persons other than dealers and refiners .. . 16. Both the Ordinances (4 & 6of1962) C!!me to be repealed by Section 48(2) of the Defence of India Act (51of1962)7 • Section 48(2) of the Act ( 51 of 1962) contained a declaration that notwithstanding the repeal, any Rules made under the repealed ordinance shall be deemed to have been made under the Act 51 of 1962. It contained a further declaration creating a further fiction that Act 51 of 1962 had commenced on 26th October, 1962. · "Section 48. Repeal and saving. - · (1) The Defence oflndia Ordinance, 1962(4of1962), and the Defence of India {Amendment) Ordinance, 1962 (6of1962), are hereby repealed. · 7 Came into force on 15" December.1962 F G H 386 SUPREME COURT REPORTS [2017] 14 S.C.R. A B (2) Notwithstanding such repeal, any rules made, anything done or any action taken under the Defence of India Ordinance, 1962( 4 of 1962) , as amended by the Defence of India (Amendment) Ordinance, 1962 ( 6of1962) shall be deemed to have been made, done or taken under this Act as if this Act had commenced on the 26the October, 1962."

#17. We need not examine the purpose for creating the fiction under sub-section (2) because no submission in this regard is made before us by either of the parties. We only take note of the fact that the RULES must be deemed to have been made under Act 51 of 1962 w.c.f. 26'h C October I 962 though they were in fact made later under Ordinance 4 of

#18. The Defence of India Act itself was a temporary enactment. Section 1(3) of the Act declared as follows:- D "(3). It shall remain in force during the period of operation of the Proclamation of Emergency issued on the 26"' October, 1962, and for a period of six months thereafter." The proclamation of emergency ceased to operate on 10'" January 1968. Therefore, it follows that the Defence oflndia Act ( 5 of 1962) ceased to be in force by 9'h July I 968. E

#19. In the year I 968, an ordinance titled The Gold (Control) Ordinance, 1968 ( 6 of 68) (hereinafter referred to as 'the ORDINANCE') was promulgated on 29'h June, 1968.8 Section 117 of the ORDINANCE repealed the l,{ULES. The RULES would have lapsed on 9"' July 1968 because the Mithority of law for the sustenance of the RULES ceased F on that day with the cessation of the operation of the Defence of India Act (5of1962), but for their repeal by Section 117 of the ORDINANCE. Since the repeal of any rules by another statute and the consequences flowing therefrom are not provided for either in the General Clauses Act 1897 or any other law, it was declared in Section 117 of the ORDINANCE. G H "(I) As from the commencement of this Ordinance, the provisions of Part XII-A of the Defence of India Rules, 1962 shall stand 'Parliament enacted the Gold (Control) Act, 1965 (18 of65), which was never brought into force (for reasons not known nor necessary to be known for the purpose of this case). •Act 45 of 68 came into force on the I" September 1968. GUNWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 387 repealed and upon such repeal, Section 6 of the General A Clauses Act, 1897, shall apply as if the said Part were a ·· Central Act; (2) Notwithstanding the repeal made by sub-section (1) but without prejudice to the application of Section 6 of the General Clauses . Act, 1897, any notification, order, direction, appointment or B declaration made or any notice, licence or certificate issued or permission, authorization or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under or in pursuance of the provisions of Part XII-A of the Defence of India Rules, 1962, so far as it is not inconsistent with the provisions of this C Ordinance be deemed to have been made, issued, granted, adjudged, imposed, ordered, done or taken under the corresponding provisions of this Ordinance." 20. Thereafter Parliament made the Gold Control Act ( 45 ofl 968)9 (hereinafter referred to as the GOLD ACT). The scheme of the D ORDINANCE and the GOLD ACT is more or less the same (the details of which are not necessary for our purpose) and is substantially similar to the scheme of the Part XIIAofthe RULES. Section 116(1) of GOLD · ACT inter alia repealed the ORDINANCE. ' Section 116(2) of the GOLD ACT: "116. Repeal and savings. - (1) The Gold (Control) Act. 1965 ( 18 of 1965), and the Gold (Control) Ordinance. 1968 ( 6. of 1968), are hereby repealed. E (2) Notwithstanding such repeal, anything done or any action taken, including any notification, order or appointment made, F direction given, notice, licence or certificate issued, permission, authorization or exemption granted, confiscation adjudged, penalty or fine imposed, or forfeiture ordered whether under the Gold (Control) Ordinance, 1968 (6 of 1968), or Part XII-A of the Defence of India Rules, 1962, shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done, G taken, made, given, issued, granted, adjudged, imposed or ordered, as the case may be, under the corresponding provision of this Act as if this Act had commenced on the 291 It can be seen from the sub-section (2) extracted above that it creates 2 fictions. The 1 '' fiction provides that various things done or H h day of June, 1968." 388 SUPREME COURT REPORTS [2017] 14 S.C.R. A actions taken under the ORDINANCE or the RULES are deemed to be things done or actions taken under the corresponding provisions of the GOLD ACT. The 2nd fiction is that the GOLD ACT "had commenced _ . as on 29th June 1968". But the GOLD ACT does not contain a provision corresponding to that part of Section 117(1) of the ORDINANCE dealing B with the repeal of the RULES and the consequences of such repeal. EFFECT OF THE REPEAL OF THE RULES BY THE ORDINANCE:

#21. One of the questions that is required to be examined to decide the controversy on hand is whether the RULES stood irrevocably repealed inthe ,absence of a provision in the GOLD ACT similar to Section 117(1) of the ORDINANCE? C

#22. The judgment of this Court in T. Venkata Reddy & Others v. State of Andhra Pradesh 10, would be relevant and helpful to answer the ·above question. Certain posts of part-time Village Officers were abolished by Section 3 of an Ordinance of the then State of Andhra D Pradesh. The Legislature never replaced the ordinance by an enactment. In the litigation that ensued therefrom, one of the questions before this Court was whether those abolished part-time Village Officer posts would revive on the lapse Of the ordinance. A Constitution bench of this Court held that "the effect of Section 3 of the Ordinance was irreversible except by express legislation". E F G H

#23. The resultant legal position is that the efficacy of the provisions of an ordinance would not in any way be diminuted or abrogated unless there is a subsequent countervailing legislation. The rights and obligations created, the liabilities incurred or acquired or suffered under an ordinance would be as enduring as those resulting from a Statute.

#24. But Venkata Reddy is declared not to be good law in view of the law laid down in Krishna Kumar Singh & Another v. State of Bihar & Others, (2017) 3 SCC 1. 11 It was held: 10 (1985) 3 sec 198 11 105.10. The theory of enduring rights which has been laid down in the judgment in Bhupendra Kumar Bose [State of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR 380 : AIR 1962 SC 945] and followed in T. Venkatu Reddy [T. Venkatu Reddy v. State of A.P., (1985) 3 SCC 198: 1985 SCC (L&S) 632] by the Constitution Bench is based on the analogy of a temporary enactment. There is a basic difference between an Ordinance and a temporary enactment. These decisions of the Constitution Bench which have accepted the notion of enduring rights which will survive an Ordinance which has ceased to operate do not lay down the correct position. The judgments are also no longer good law in view of the decision in S.R. Bommai [S.R. Bommai v. Union oflndiu, (1994) 3 sec 1] . . GUNWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 389 "105.12. The question as to whether rights, privileges, obligations A and. liabilities would survive an Ordinance which has ceased to operate must be determined as a matter of construction. The appropriate test to be applied is the test of public interest and constitutional necessity. This would include the issue as to whether the consequences which have taken place under the Ordinance B have assumed an irreversible character. In a suitable case, it would be open to the court to mould the relief." ·

#25. Krishna Kumar Singh dealt with a case where a series of Ordinances were issued by the Governor of Bihar. ·~~ "13. The Ordinances promulgated by the Governor followed a c consistent pattern: None of the Ordinances was laid before the legislature. Each one of the Ordinances lapsed by efflux of time, six weeks after the convening of the session of the Legislative Assembly. When the previous Ordinance ceased to operate, a fresh Ordinance was issued when the Legislative Assembly was not in session. The Legislative Assembly had no occasion to D consider whether any of the Ordinances should be approved or disapproved. No legislation to enact a law along the lines of the Ordinances was moved by the Government in the Legislative Assembly. The last of the Ordinances, like its predecessors, cease to operate as a result of the constitutional limitation contained in E Article 213(2)(a). The subject was entirely governed by successive Ordinances; yet another illustration of what was described by this Court as an Ordinance-Raj barely three years prior to the promulgation of the first in this chain of Ordinances." This Court was examining the issue: · F "69. The issue before the Court is of the consequence of an Ordinance terminating on the expiry of a period of six weeks or, within that period, on a disapproval by the legislature .... Would . the legal effects created by the Ordinance stand obliterated as a matter of law upon the lapsing of an Ordinance or passing of a G resolution of disapproval?" This Court took note of the fact that Venkata Reddy's case and two earlier cases12 which laid down the law based on the theory of 12 Para 76. The "enduring rights" theory which had been applied in English decisions to temporary statutes, was thus brought in while construing the effect H 390 SUPREME COURT REPORTS [2017] 14 S.C.R. A "enduring rights" propounded by English decisions in the cases of temporary statutes 13

#26. This Court in Krishna Kumar Singh opined that "the basis and foundation of the two Constitution Bench decisions cannot be accepted as reflecting the tlue constitutional position" and went on to consider the issue afresh and finally concluded: "92 .... The enduring rights theory attributes a degree of pennanence to the power to promulgate Ordinances in derogation of parliamentary control and supremacy. Any such assumption in regard to the confennent of power would run contrary to the principles which have been laid down in S.R. Bommai [S.R. Bommai v. Union of India, (1994) 3 SCC 1]. The judgment in T. Venkata Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC 198: 1985 SCC (L&S) 632] essentially follows the same logic but goes on to hold that if Parliament intends to reverse matters which have been completed under an Ordinance, it would have to enact a specific law with retrospective effect. This, in our view, reverses the constitutional ordering in regard to the exercise oflegislative power." B c D It must be remembered that the abovementioned discussion of law was in the context of an Ordinance which was never tabled before the Legislature and lapsed by virtue of the efflux of time. E F G

#27. In our opinion, the declaration in Krishna Kumar Singh that Venkata Reddy is no longer good law in view of the judgment in S.R. Bommai may not make any difference to the present case. In the case on hand, the ORDINANCES came to be repealed and replaced by the GOLD ACT with retrospective effect from 291 h June 1968, that is, from the date of promulgation of the ORDINANCE. of an Ordinance which has ceased to operate. Jn the view of the Constitution Bel'Ch: (Bhupendra Kumar case [Stale ofOrissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR 380 : AIR 1962 SC 945] , AIR p. 954, para 21) "21 . ... Therefore, in considering the effect of the expiration ofa temporary statute, it would be unsafe to lay down any inflexible rule. If the right created by the statute is of an enduring character and has vested in the person, that right cannot be taken away because the statute by which it was created has expired. If a penalty had been incurred under the statute and had been imposed upon a person, the imposition of the penalty would survive the expiration of the statute. That appears to be the true legal position in the matter." 13 Wicks v. Director of Public Prosecutions, 1947 AC 362 (HL); Warren v. Windle, I 02 H ER 576 (KB): and Steavenson v. Oliver, 151ER1024 pp. 1026-27 GUNWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 391 THE EFFECT OF THE REPEAL OF THE ORDINANCE BY A THE GOLD ACT:

#28. The General Clauses Act is silent in this regard. On the other hand, Section 3014 of the General Clauses Act deals with a situation of a Central Act being repealed by an Ordinance. It declares (in substance) that the same consequences that would follow the repeal of an earlier B enactment by a_later enactment would also follow in the case ofrepeal of an earlier enactment by a subsequent Ordinance. The implications of Section 30 were considered by this Court in State of Punjab i< Mohar Singh, AIR 1955 SC 84. But the counter position is not provided under the General Clauses Act. In the circumstances, we are only required to look into the provisions of the Act which repeals an Ordinance. In the C ease on hand, the provisions of the GOLD ACT. Though the GOLD ACT expressly repealed the ORDINANCE, it did not make a declaration that the RULES are repealed. But on that account, the peremptory nature of the repeal of the RULES by the ORDINANCE need not be doubted for the following two reasons: (i) The GOLD ACT while making the declaration that the ORDINANCE is repealed provided that various actions taken both.under PART XIIA of the RULES or the ORDINANCE are deemed to be actions taken under the corresponding provisions of the GOLD ACT; and (ii) Unli_ke Krishan Kumar Singh, the ORDINANCE was followed up by a legislative action which did not disapprove the content of the ORDINANCE. D E SCHEME AND PURPOSE OF THE Ill FICTION UNDER F SECTION 116:

#29. The purpose of creating the l" fiction under Section 116, according to us, is to declare that the rights and obligations flowing from the adjudgment of confiscation would be those specified in the GOLD " Section 30. Application of Act to Ordinances.-In this Act the expression Central G Act, wherever it occurs, except in section 5 and the word "Act" in clauses (9), (13), (25), (40), (43), (52) and (54)] ofsection 3 and in section 25 shall be deemed to include an Ordinance made and promulgated by the Govemor General under section 23 of the Indian Councils Act, 1861 (24 and 25 Viet., c.67) or section 72 of the Government of India Act, 1915, (5 and 6 Geo. V. c, 61) or section 42 of the Government oflndiaAct, 1935 (26 Geo. V. c. 2) and an Ordinance promulgated by the President under article 123 of the Constitution. H 392 SUPREME COURT REPORTS [2017] 14 S.C.R. A ACT. The pilrpose of the fiction is not to alter the Jaw applicable to the adjudgment proceedings. One of the examples of the rights flowing from the adjudgment of confiscation of gold is a right of appeal against the adjudgment of confiscation. Both the RULES [Rule 126M(3) and the GOLD ACT (Sections 80 and 81)] provide for appeal. While under the RULES, appeals lay to the 'Administrator' irrespective of the forum which adjudged the confiscation. Under the GOLD ACT, the appellate forum varies depending on the forum which adjudged the confiscation. B

#30. The fiction does not deal with the Jaw applicable to pending proceedings. Such a conclusion is irresistible from the language of C Section 116(2) of the GOLD ACT which says; "the confiscation adjudged .. under . .. Part XIIA of the Defence of' India Rules 1962 ... shall be deemed to have been adjudged ... under the corresponding provisions of this Act." SCHEME OF PART XIIA OF THE RULES: D

#31. The RULES dealt with various matters. We are only concerned with Part XIIA titled "Gold Control" (which was inserted by an Amendment dated 09.01.1963), because the seizure and confiscation of gold which is the subject matter of these appeals arose out of the operation of Part XIIA of the RULES. E

#32. Various Rules in Part XIIA dealt with the regulation of the activity of three classes of persons (i) dealers, (ii) refiners, and (iii) others who own or possess gold. The expressions 'dealer' and 'refiner' are defined expressions under Rule 126-A( c) and (h) respectively. Chapter V of Part XIIA dealt with the regulation of persons other than dealers F and refiners who own gold (hereinafter referred to as PERSONS for the sake of convenience).

#33. Under Rule 126-I, PERSONS were required to make a declaration within a period stipulated therein. The declaration is required to contain. the quantity, description and other prescribed particulars of G gold.( other than ornaments) owned by a PERSON. Sub-rule (3) stipulated that PERSONS shall not acquire any gold other than ornaments except either by succession or in accordance with a permit granted under the RULES. Sub-rule ( 4) mandated that if a. PERSON either acquires or parts with any quantity of gold subsequent to a declaration made by him, such PERSON is required to make a further declaration giving the H particulars thereof. GUNWANTLAL GODAWAT v. UNION OF INDIA [CHELAMESWAR, J.] 393

#34. Rule 126-L(2) provided the authority oflaw (obviously for the A officers entrusted with responsibility of the enforcement of the RULES) to enter and search any premises of PERSONS and seize gold if found therein, if it is suspected that any provision of Part XIIA "has been or is being or is about to be contravened" with respect to the gold found.

#35. Rule 126-M provided for 'confiscation' of the gold seized under B Rule 126-L. Rule provided that a confiscation is required to be 'adjudged'. The expression 'adjudged' is not defined but, having regard to the scheme of the Rules mentioned above, the only possible meaning that can be ascribed to that word is that adjudgment is a proceeding by which the liability for confiscation arising out of the provisions of Part XIIA of the . gold seized is required to be determined. It appears from the scheme, the liability for confiscation of the gold found ih searched premises arises from the fact that "there has been or is being or is about to be" a contravention of any provision· of Part XIIA. In other words, ad judgment is nothing but a process of establishing the facts relevant for arriving at a conclusion that "there has been or is being or is about to be" a D contravention of any one of the Rules contained in Part XIIA. Goes without saying that adjudgment is a quasi judicial proceeding. c·

#36. The expression 'confiscation' is not defined in the RULES. It had roots in the latin word Confiscare-to consign to fiscus i.e. transfer to treasury, as a punishment or in enforcement of law. Though, the expression is generally understood as having implications associated with a crime. However, it is now well settled at least bytwo 15 earlier judgments of this Court that the liability for confiscatfon of property could be purely civil in nature as a consequence of the violation of some prescription of law commonly described as 'forfeiture'. The words 'forfeiture' and 'confiscation' have come to be used interchangeably. E F The General Clauses Act, 1972 does not employ the word 'confiscation'. On the other hand, it employs the word 'forfeiture' in Section 6(d) 16 • Having regard to the long history of the usage of those two expressions, we are of the opinion that 'forfeiture' is an expression which takes within its sweep 'confiscation' also for the purpose oflaw17 • G