"REPORTABLE\nIN THE SUPREME COURT OF INDIA\nCIVIL APPELLATE JURISDICTION\nCIVIL APPEAL NOS. 4711­4712 OF 2011\nGunwantlal Godawat \n… Appellant\nVersus\nUnion of India & Another\n… Respondents\nJ U D G M E N T \nChelameswar, J. \n1.\nOn 3rd  and 4th  June, 1965, the residential premises of the\nappellant’s father were searched by the officers of the Government\nof India in exercise of the authority conferred upon them under\nRule   126L(2)   of   the   Defence   of   India   Rules,   19621  (hereinafter\nreferred to as “the RULES”).  They found 240 kilograms of gold (bars\n1 Rule 126L. Power of entry, search, seizure, to obtain information and to take samples.— (2) Any person \nauthorised by the Central Government by writing in this behalf may—\n(a)\nenter and search any premises, not being a refinery or establishment referred to in sub-rule (1),\nvaults, lockers or any other place whether above or below ground;\n(b)\nseize any gold in respect of which he suspects that any provision of this Part has been, or is being,\nor is about to be contravened, along with the package, covering or receptacle, if any, in which such gold is\nfound and thereafter take all measures necessary for their safe custody.\n1\nDigitally signed by\nDEEPAK MANSUKHANI\nDate: 2018.05.25\n10:00:26 IST\nReason:\nSignature Not Verified\n\netc.) buried in the house and seized it.  Proceedings for confiscation\nwere initiated.   Eventually on 24.9.1966, the Collector of Central\nExcise and Customs passed an order2 confiscating the seized gold\nin exercise of the power under Rule 126M of the RULES on the\nground   that   the   seized   gold   was   held   by   the   appellant   in\ncontravention of Rule 126­I.  A penalty of Rs.25 lakhs under Rule\n126L(16) of the RULES was also imposed.\n2.\nAggrieved   by   the   same,   an   appeal   was   carried   by   the\nappellant’s father before the Gold Control Administrator which was\ndismissed on 6.3.1972.  The matter was carried further in a revision\nbefore   the   Government   of   India   which   was   also   dismissed   on\n4.6.1979.  The decision of the Government of India was challenged\nin a writ petition (No.1215/79) before the Rajasthan High Court.\nBy a judgment and order dated 9.8.1994, the Rajasthan High Court\nallowed the writ petition.\n3.\nIt appears from the said judgment that two submissions were\nmade before the High Court, (i) no personal hearing was given by\nthe   Collector   to   the   appellant’s   father   before   the   order   of\n2 ““Gold was required to be declared under Rule 126-I of Defence of India Rules, 1962. It was not declared. I\naccordingly order absolute confiscation of 240.040 kgs. of gold, under Rule 126M of said Rules. The iron safe in\nwhich gold was secreted is also confiscated under Rule 126M.\nI hold that Shri Chhagan Lal Godavat is guilty of contravention of the provisions of the Rule 126-I of the\nDefence of India Rules, 1962. He is liable to a penalty under Rule 126-L (16) of the said Rules. Taking into\nconsideration the gravity of the offence committed by him and in view of the fact that he hoarded a very huge\nquantity of undeclared gold I impose upon him a personal penalty of Rs.25,00,000/- (Twenty five lacs).” \n2\n\nconfiscation   was   passed   though   a   show   cause   notice   dated\n3.2.1966   was   issued   proposing   confiscation   and   penalty   under\nSection 126M and 126L(16) of the RULES respectively, and (ii) An\nopportunity to redeem the seized gold was not given.\n4.\nThe High Court accepted the submissions and remitted the\nmatter to the Collector (Central Excise and Customs).\nThe operative portion of the judgment reads as follows:­\n“16.     As a sequence the orders passed by the Collector dated\n24.9.1966 (Annex.1), the order dated 6.3.1972 passed by the Gold\nControl   Administrator   as   well   as   the   order   dated   3/4.6.1979\npassed   by   the   Special   Secretary   Finance,   Government   of   India\nexercising the power of revision of the Central Government are\nquashed and the matter is remitted back to the Collector, Central\nExcise and Customs, New Delhi to examine the matter afresh in\nthe   light   of   the   observations   made   above   after   affording   full\nopportunity to the petitioners.  The parties are directed to appear\nbefore the Collector, Central Excise and Customs, New Delhi on\n1.9.1994   whereafter   the   Collector   shall   proceed   with   the   case\nafresh and shall dispose of the matter within four months from the\ndate of receipt of the copy of the order as indicated above.   The\nmatter has already been considerably delayed for over 30 years\nand any further delay would amount to denial of justice to the\npetitioners.   It is further ordered that in the event of the appeal\nbeing filed by the aggrieved party to the Central Excise and Gold\nControl   Tribunal,   the   Tribunal   shall   dispose   of   the   same   as\nexpeditiously as possible preferably within six months from the\ndate of filing of the appeal.”\n5.\nPursuant to the remand, by an order dated 9.12.1994, the\nCollector once again ordered confiscation of the entire quantity of\n(240 kilograms) gold approximately valued at Rs. 11.04 crores with\n3\n\nan option to the legal heirs of the appellant’s father to redeem the\ngold by paying a fine of Rs. 2.5 crores.\n“(i) I order confiscation of the 240.040 Kgs. of gold (1) Sovereigns of\ngold 80.776 Kgs. (2) Passas of gold 242 Nos. 75.298.300 Kgs. (3)\nPieces of gold bars 5 Nos. 10.975.845 Kgs. (4) Gold bars of 19127\nand 1992 9 nos. 72.990 Kgss.) valued at Rs. 12,50,070.41 at the\ntime of seizure (present approximate value Rs. 11.04 crores at the\nrate of Rs. 4,600 per 10 gms. as on 07.12.1994) along with Iron\nSafe used to conceal the gold seized from the house of Late Shri\nChhaganlal   Godawat,   under   the   Rule   126­M   of   the   erstwhile\nDefence of India Rules, 1962.   The impugned gold along with the\nIron Safe will, however, be released and handed over to the legal\nheirs of Late Shri Chhaganlal Godawat on payment of redemption\nfine of Rs. 2.50 crores (Rupees Two crores fifty lacs only) in lieu of\nconfiscation under Rule 126­M (8) (a) of the erstwhile Defence of\nIndia   Rules,   1962.   The   option   to   redeem   the   same   should   be\nexercised   within   three   months   from   the   date  of   receipt   of   this\norder.”\nThe Collector further held that in view of the fact that the person\nfrom whom the gold was seized (Chhaganlal Godawat) expired, the\nlevy of penalty contemplated under Rule 126L(16) of the RULES is\nnot called for.\n6.\nAggrieved by the decision of the Collector, the appellant herein\ncarried the matter in appeal to the Tribunal.3  The appeal was heard\nby a Bench of the Tribunal consisting of two members.  There was a\ndifference   of   opinion   between   both   the   members   regarding   the\n3 Appeal No.C/144/95-NRB on the file of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi\nagainst the Order-in-Original No.7/94 dated 9.12.1994 passed by the Collector of Central Excise & Customs, Jaipur.\n4\n\nquantum   of   the   redemption   fine.     In   view   of   the   difference   of\nopinion, the matter was referred to the third Member.  The outcome\nof the entire process is that the Tribunal by its order dated 30th\nOctober 1995 finally opined that the redemption fine should be\nreduced to Rs.12.5 lacs which represented the value of the gold as\non the date of the seizure.   Accordingly, the appeal was allowed.\n7.\nThe Collector sought a reference under Section 82­B4  of the\nGold Control Act, 1968 on two questions of law;\n“1.\nWhether in the matter of imposition of redemption fine, the\nprovisions of Section 73 of erstwhile5 Gold (Control) Act, 1968 will\napply when the gold was neither seized nor confiscated under the\nGold (Control) Act, 1968?\n2.\nWhether the quantum of Redemption fine should be related\nto market value of Gold on the date of seizure or the market value\nof   gold   on   the   date   of   adjudication   by   the   Commissioner   of\nCustoms & Central Excise, Jaipur?”\n8.\nBy an order dated 20.5.1996, the Tribunal referred the matter\nto the Rajasthan High Court.\n4 Section 82-B of the Gold (Control) Act, 1968\n“Section 82-B. Statement of a case to High Court. (1) The Collector of Central Excise or of Customs or the\nother party may, within sixty days of the date upon which he is served with notice of an order under sec.81A, by\napplication in the prescribed form, accompanied, court the application is made by the other party, by a fee of\ntwo hundred rupees require the Appellate Tribunal to refer to the High Court any question of law arising out of\nsuch order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one\nhundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the\nHigh Court:\nProvided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by\nsufficient cause from presenting the application within the period hereinbefore specified, allow it to be\npresented within a further period not exceeding thirty days.\n5 By the date of the Reference Application, the Gold (Control) Act, 1968 stood repealed by Act No.10 of 1990 of \nthe Parliament w.e.f. 6th June 1990.\n5\n\n9.\nIn the meanwhile, the Department filed an appeal against that\npart of the Order of the Collector dated 9.12.1994 which gave an\noption to the appellant to redeem the gold by paying fine of Rs. 2.5\ncrores in lieu of confiscation.   The said appeal was dismissed on\n23.5.1996.\n10.\nIt appears from the record that the Union of India filed a Writ\nPetition being D.B. Civil Writ Petition No. 6295 of 1996 with an\ninteresting prayer as follows:­\n“It is, therefore, most respectfully prayed that:­\n(i)\nBy an appropriate writ, order or direction the respondents\nmay be directed not to take any action with respect to getting\ngoods from the Petitioner Department in any manner till the\ndisposal of the reference petition.\n(ii)\nAny other order or direction which the Hon’ble Court may\nconsider just and proper in the facts and circumstance of\ncase may also kindly be passed in favour of the petitioner.”\nIn fact it is stated at para 9(D) of the writ petition as follows:­\n“D. That the petitioner department has come before the Hon’ble\nCourt with a limited prayer that the goods may not be released to\nthe   respondents   till   the   final   disposal   of   the   reference   petition\nwhich has been referred by the learned CEGAT.”\n11.\nIt appears that initially there was an interim stay6 in the said\nwrit petition on 20th December 1996.  By an order dated 28.5.1997,\n6 The order copy is not available on record\n6\n\nthe interim stay was vacated.   The operative portion of the Order\nreads as follows:­\n“8.   We, therefore, vacate the stay Order passed on December 20,\n1996 staying that operation of the Order dated October 30, 1995\npassed by the CEGAT and instead direct that the petitioner shall\nretain only that much quantity of the seized gold which will fetch a\nsum of Rs. 2,50,00,000/­ (Rupees Two Crores Fifty Lakhs ) @ Rs.\n4600/­ (Rupees Four thousand six hundred) per 10 (ten) gms of\ngold   and   release   and   hand   over   possession   of   the   rest   of   the\nquantity of gold to the respondent No. 1 within one month from\ntoday.   In case the petitioner succeeds and there is any shortfall in\nthe recovery because of fall in price of gold, the respondent No. 1\nshall make that good and if the petition is dismissed and the order\nof the CEGAT is maintained the respondent No. 1 shall be entitled\nto return of the gold permitted to be retained under this Order as\nper the directions of this Court while finally disposing of the matter\nor thereafter.”\n12.\nThe Reference came to be answered by the Rajasthan High\nCourt by the order dated 29.6.2009, which is the subject matter of\nthe instant appeal.  The relevant portion reads as follows:\n“19.\nUndeniably and undisputedly, it is the date of giving option\nwhich is relevant for adjudging the fine and not the date of seizure.\n \nxx\nxxx\nxxx\nxxx\nThe   language   of   sub­rule   8   of   Rule   126­M   of   ‘Rules,   1962’\ncategorically envisages that the officer adjudging may give to the\nowner of the Gold an option to pay in lieu of confiscation such fine\nas the said officer thinks fit.  According to Wiktionary, a wiki based\nopen content dictionary, the meaning of term in lieu of is ‘Instead, in\nplace of , as a substitute for’.   This meaning suggests that the\nredemption fine is the substitute for the market value of the Gold.\n \nxxx\nxxx\nxxx\nxxx\n………., the market value of the seized Gold has to be taken on that\ndate when the option is given by the officer adjudging it.\n20.\nIt is revealed from the material on record that the Collector\naptly applied the market price of Gold at the rate of Rs.4,600 per\n7\n\n10 gms as on December 7, 1994, the date of adjudicating when the\noption was given by him to the respondent and on this basis, the\nprice of total seized and confiscated Gold 240.040 kgs came to be\n11.04 crores and the redemption fine cannot be in any way less\nthan this.\n21.\nThus, in the ultimate analysis, it is candidly recorded that\nthe quantity of redemption fine should be related to the market\nvalue of gold on 7.12.1994 i.e. the date of adjudication when the\nofficer adjudging gave the owner of the Gold an option to pay fine\nin lieu of confiscation.  The amount of fine as adjudged to the tune\nof Rs.2.5 crores was totally arbitrary and irrational as it was not\nbased on any sound and lawful reasoning. \nxxx\nxxx\nxxx\nxxx\n23.\n………………..   the   respondents   are   entitled   to   redeem   the\nconfiscated Gold only after paying the redemption fine of Rs.11.040\ncrores.\n24.\nIn view of above, we deem it just and proper to direct the\nauthorized officer to give an option afresh following above clinching\nobservations   to   the   owner   of   the   Gold   asking   him   to   pay   the\nredemption fine in lieu of confiscation.”\n13.\nFor the sake of completion of the narration of facts, it must be\nstated that as a consequence, the tribunal (CESTAT) passed an\norder   on   30.4.2010   remitting   the   matter   to   the   adjudicating\nCommissioner to determine the appropriate redemption fine and the\nCommissioner passed an order on 16.7.2010.  The relevant portion\nreads:\n“4.\nUnder the circumstances, we dispose of the appeal by way of\nremand to the Adjudicating Commissioner (authorized officer) to\ndetermine appropriate redemption fine and allow the order of the\ngold to redeem the gold on payment of such redemption fine.   It\ngoes without saying that while determining the redemption fine, he\nshall   follow   the   cited   order   of   the   Hon’ble   High   Court   dated\n29.6.2009.”\nxxx\nxxx\nxxx\nxxx\n8\n\n(i)\nAn option is given to Shri Gunwant Lal Godawat and legal\nheir  of late Shri Chhagan Lal Godawat  to pay Rs.11.04 crores\n(Rupees Eleven crores and four lakhs only) in lieu of confiscation of\nthe gold weighing 240.040.145 kgs under the erstwhile Defence of\nIndia Rules, 1962 within three months of receipt of this order.\n(ii)\nIn case Shri Gunwant Lal Godawat and the legal heir of late\nShri   Chhagan   Lal   Godawat   does   not   exercise   the   option   of\ndepositing the amount of Rs.11.04 crores in the stipulated time\nlimit, as given above, Shri Gunwant Lal Godawat and legal heir of\nlate Shri Chhagan Lal Godawat shall be liable to return to the\nDepartment immediately the gold weighing 185.145 kgs which was\nreturned   to   them   on   2.7.94   in  compliance   of   directions   of   the\nHon’ble Rajasthan High Court given in the order dated 28.05.97.”\nTHE HISTORY OF THE GOLD CONTROL REGIME:\n14.\nOn   26th  October   1962,   the   President   of   India   made   a\nproclamation of emergency under Article 352 of the Constitution of\nIndia.   On 28th  October 1962, the President of India promulgated\nthe Defence of India Ordinance (4 of 1962).   It was amended by\nanother ordinance (6 of 1962).  In exercise of the power conferred\nunder Section 3 of the Ordinance (4 of 1962), RULES came to be\nmade in GSR 1465 dated 5th November 1962.  By an amendment to\nthe RULES, Part XIIA came to be introduced by GSR 1525 dated\n23rd September, 1963 with the heading ‘Gold Control’.  \n15.\nPart XIIA of the RULES contained various provisions regarding\nacquisition, possession, sale etc. of gold ornaments and articles by\ntwo defined classes under RULES 126­A(c) and (h), i.e. “dealers”\nand “refiners” and persons other than dealers and refiners.  \n9\n\n16.\nBoth the Ordinances (4 & 6 of 1962) came to be repealed by\nSection 48(2) of the Defence of India Act (51 of 1962)7.   Section\n48(2)   of   the   Act   (51   of   1962)   contained   a   declaration   that\nnotwithstanding the repeal, any Rules made under the repealed\nordinance shall be deemed to have been made under the Act 51 of\n1962.  It contained a further declaration creating a further fiction\nthat Act 51 of 1962 had commenced on 26th October, 1962.\n“Section 48. Repeal and saving. –\n(1)   The Defence of India Ordinance, 1962(4 of 1962) , and the\nDefence of India (Amendment) Ordinance, 1962 (6 of 1962), are\nhereby repealed.\n \n(2)   Notwithstanding such repeal, any rules made, anything done\nor any action taken under the Defence of India Ordinance, 1962(4\nof   1962)   ,   as   amended   by   the   Defence   of   India   (Amendment)\nOrdinance, 1962 (6 of 1962) shall be deemed to have been made,\ndone or taken under this Act as if this Act had commenced on the\n26the October, 1962.”\n \n17.\nWe   need   not   examine   the   purpose   for   creating   the   fiction\nunder sub­section (2) because no submission in this regard is made\nbefore us by either of the parties.  We only take note of the fact that\nthe RULES must be deemed to have been made under Act 51 of\n1962 w.e.f. 26th October 1962 though they were in fact made later\nunder Ordinance 4 of 1962.\n7 Came into force on 15th December 1962\n10\n\n18.\nThe Defence of India Act itself was a temporary enactment.\nSection 1(3) of the Act declared as follows:­\n“(3).   It shall remain in force during the period of operation of the\nProclamation of Emergency issued on the 26th October, 1962, and\nfor a period of six months thereafter.”\nThe proclamation of emergency ceased to operate on 10th January\n1968.  Therefore, it follows that the Defence of India Act (5 of 1962)\nceased to be in force by 9th July 1968.\n19.  In   the   year   1968,   an   ordinance   titled   The   Gold   (Control)\nOrdinance,   1968   (6   of   68)   (hereinafter   referred   to   as   ‘the\nORDINANCE’) was promulgated on 29th June, 1968.8  Section 117 of\nthe  ORDINANCE   repealed   the   RULES.     The   RULES  would   have\nlapsed   on   9th  July   1968   because   the   authority   of   law   for   the\nsustenance of the RULES ceased on that day with the cessation of\nthe operation of the Defence of India Act (5 of 1962), but for their\nrepeal by Section 117 of the ORDINANCE.  Since the repeal of any\nrules by another statute and the consequences flowing therefrom\nare not provided for either in the General Clauses Act 1897 or any\nother law, it was declared in Section 117 of the ORDINANCE.\n“(1) As from the commencement of this Ordinance, the provisions\nof   Part   XII­A   of   the   Defence   of   India   Rules,   1962   shall   stand\n8 Parliament enacted the Gold (Control) Act, 1965 (18 of 65), which was never brought into force (for reasons not\nknown nor necessary to be known for the purpose of this case).\n11\n\nrepealed   and  upon   such   repeal,   Section   6   of   the   General\nClauses   Act,   1897,   shall   apply   as   if   the   said   Part   were   a\nCentral Act;\n(2)     Notwithstanding   the   repeal   made   by   sub­section   (1)   but\nwithout prejudice to the application of Section 6 of the General\nClauses Act, 1897, any notification, order, direction, appointment\nor declaration made or any notice, licence or certificate issued or\npermission, authorization or exemption granted or any confiscation\nadjudged or penalty or fine imposed or any forfeiture ordered or\nany   other   thing   done   or   any   other   action   taken   under   or   in\npursuance of the provisions of Part XII­A of the Defence of India\nRules, 1962, so far as it is not inconsistent with the provisions of\nthis Ordinance be deemed to have been made, issued, granted,\nadjudged,   imposed,   ordered,   done   or   taken   under   the\ncorresponding provisions of this Ordinance.”\n20.\nThereafter Parliament made the Gold Control Act (45 of 1968)9\n(hereinafter  referred   to as   the   GOLD  ACT).     The  scheme  of  the\nORDINANCE and the GOLD ACT is more or less the same (the\ndetails   of   which   are   not   necessary   for   our   purpose)   and   is\nsubstantially similar to the scheme of the Part XIIA of the RULES.\nSection 116(1) of GOLD ACT inter alia repealed the ORDINANCE.\nSection 116(2) of the GOLD ACT:\n“116. Repeal and savings. – (1) The Gold (Control) Act, 1965 (18 of\n1965),  and the  Gold (Control) Ordinance,  1968 (6 of 1968),  are\nhereby repealed.\n(2)\nNotwithstanding   such   repeal,   anything   done   or   any\naction   taken,   including   any   notification,   order   or   appointment\nmade,   direction   given,   notice,   licence   or   certificate   issued,\npermission,   authorization   or   exemption   granted,   confiscation\nadjudged, penalty or fine imposed, or forfeiture ordered whether\nunder the Gold (Control) Ordinance, 1968 (6 of 1968), or Part XII­A\nof the Defence of India Rules, 1962, shall, in so far as it is not\n9 Act 45 of 68 came into force on the 1st September 1968.\n12\n\ninconsistent with the provisions of this Act, be deemed to have\nbeen done, taken, made, given, issued, granted, adjudged, imposed\nor ordered, as the case may be, under the corresponding provision\nof this Act as if this Act had commenced on the 29th day of June,\n1968.”\nIt can  be   seen  from   the   sub­section  (2)  extracted   above   that  it\ncreates 2 fictions.  The 1st fiction provides that various things done\nor actions taken under the ORDINANCE or the RULES are deemed\nto   be   things   done   or   actions   taken   under   the   corresponding\nprovisions of the GOLD ACT.  The 2nd fiction is that the GOLD ACT\n“had commenced as on 29th  June 1968”.  But the GOLD ACT does not\ncontain a provision corresponding to that part of Section 117(1) of\nthe ORDINANCE dealing with the repeal of the  RULES and the\nconsequences of such repeal.\nEFFECT OF THE REPEAL OF THE RULES BY THE ORDINANCE:\n21.\nOne of the questions that is required to be examined to decide\nthe controversy on hand is whether the RULES stood irrevocably\nrepealed in the absence of a provision in the GOLD ACT similar to\nSection 117(1) of the ORDINANCE? \n22.\nThe judgment of this Court in T. Venkata Reddy & Others v.\nState   of   Andhra   Pradesh10,   would   be   relevant   and   helpful   to\n10 (1985) 3 SCC 198\n13\n\nanswer   the   above   question.     Certain   posts   of   part­time   Village\nOfficers were abolished by Section 3 of an Ordinance of the then\nState   of   Andhra   Pradesh.     The   Legislature   never   replaced   the\nordinance by an enactment.  In the litigation that ensued therefrom,\none of the questions before this Court was whether those abolished\npart­time   Village   Officer   posts   would   revive   on   the   lapse   of  the\nordinance.  A Constitution bench of this Court held that “the effect of\nSection 3 of the Ordinance was irreversible except by express legislation”. \n23.\nThe   resultant   legal   position   is   that   the   efficacy   of   the\nprovisions of an ordinance would not in any way be diminuted or\nabrogated unless there is a subsequent countervailing legislation.\nThe   rights   and   obligations   created,   the   liabilities   incurred   or\nacquired or suffered under an ordinance would be as enduring as\nthose resulting from a Statute. \n24.\nBut Venkata Reddy is declared not to be good law in view of\nthe law laid down in Krishna Kumar Singh & Another v. State\nof Bihar & Others, (2017) 3 SCC 1.11  It was held:\n11 105.10. The theory of enduring rights which has been laid down in the judgment in Bhupendra Kumar\nBose [State of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR 380 : AIR 1962 SC 945] and followed in T.\nVenkata Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC 198 : 1985 SCC (L&S) 632] by the Constitution\nBench is based on the analogy of a temporary enactment. There is a basic difference between an Ordinance and a\ntemporary enactment. These decisions of the Constitution Bench which have accepted the notion of enduring rights\nwhich will survive an Ordinance which has ceased to operate do not lay down the correct position. The judgments\nare also no longer good law in view of the decision in S.R. Bommai [S.R. Bommai v. Union of India, (1994) 3 SCC\n1] .\n14\n\n“105.12. \nThe   question   as   to   whether   rights,   privileges,\nobligations and liabilities would survive an Ordinance which has\nceased to operate must be determined as a matter of construction.\nThe appropriate test to be applied is the test of public interest and\nconstitutional   necessity.   This   would   include   the   issue   as   to\nwhether   the   consequences   which   have   taken   place   under   the\nOrdinance have assumed an irreversible character. In a suitable\ncase, it would be open to the court to mould the relief.”\n25.\nKrishna Kumar Singh  dealt with a case where a series of\nOrdinances were issued by the Governor of Bihar.\n“13. The   Ordinances   promulgated   by   the   Governor   followed   a\nconsistent pattern. None of the Ordinances was laid before the\nlegislature. Each one of the Ordinances lapsed by efflux of time, six\nweeks   after   the   convening   of   the   session   of   the   Legislative\nAssembly. When the previous Ordinance ceased to operate, a fresh\nOrdinance was issued when the Legislative Assembly was not in\nsession.   The   Legislative   Assembly   had   no   occasion   to   consider\nwhether any of the Ordinances should be approved or disapproved.\nNo legislation to enact a law along the lines of the Ordinances was\nmoved by the Government in the Legislative Assembly. The last of\nthe Ordinances, like its predecessors, cease to operate as a result\nof the constitutional limitation contained in Article 213(2)(a). The\nsubject   was   entirely   governed   by   successive   Ordinances;   yet\nanother illustration of what was described by this Court as an\nOrdinance­Raj barely three years prior to the promulgation of the\nfirst in this chain of Ordinances.”\nThis Court was examining the issue: \n“69. The   issue   before   the   Court   is   of   the   consequence   of   an\nOrdinance terminating on the expiry of a period of six weeks or,\nwithin that period, on a disapproval by the legislature. … Would\nthe legal effects created by the Ordinance stand obliterated as a\nmatter of law upon the lapsing of an Ordinance or passing of a\nresolution of disapproval?” \nThis Court took note of the fact that  Venkata Reddy’s  case\nand two earlier cases12 which laid down the law based on the theory\n12 Para 76. The “enduring rights” theory which had been applied in English decisions to temporary statutes,\nwas thus brought in while construing the effect of an Ordinance which has ceased to operate. In the view of the\nConstitution Bench: (Bhupendra Kumar case [State of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR 380 :\n15\n\nof “enduring rights” propounded by English decisions in the cases\nof temporary statutes13 \n26.\nThis Court in Krishna Kumar Singh opined that “the basis and\nfoundation of the two Constitution Bench decisions cannot be accepted as\nreflecting the true constitutional position”  and went on to consider the\nissue afresh and finally concluded:\n“92.   …   The   enduring   rights   theory   attributes   a   degree   of\npermanence to the power to promulgate Ordinances in derogation\nof parliamentary control and supremacy. Any such assumption in\nregard   to   the   conferment   of   power   would   run   contrary   to   the\nprinciples   which   have   been   laid   down   in S.R.   Bommai [S.R.\nBommai v. Union of India, (1994) 3 SCC 1] . The judgment in T.\nVenkata Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC\n198 : 1985 SCC (L&S) 632] essentially follows the same logic but\ngoes on to hold that if Parliament intends to reverse matters which\nhave been completed under an Ordinance, it would have to enact a\nspecific law with retrospective effect. This, in our view, reverses the\nconstitutional   ordering   in   regard   to   the   exercise   of   legislative\npower.”\nIt must be remembered that the abovementioned discussion of law\nwas in the context of an Ordinance which was never tabled before\nthe Legislature and lapsed by virtue of the efflux of time.  \n27.\nIn our opinion, the declaration in Krishna Kumar Singh that\nVenkata Reddy is no longer good law in view of the judgment in\nAIR 1962 SC 945] , AIR p. 954, para 21)\n“21. … Therefore, in considering the effect of the expiration of a temporary statute, it would be\nunsafe to lay down any inflexible rule. If the right created by the statute is of an enduring character and\nhas vested in the person, that right cannot be taken away because the statute by which it was created has\nexpired. If a penalty had been incurred under the statute and had been imposed upon a person, the imposition of\nthe penalty would survive the expiration of the statute. That appears to be the true legal position in the matter.”\n13 Wicks v. Director of Public Prosecutions, 1947 AC 362 (HL); Warren v. Windle, 102 ER 576 (KB);\nand Steavenson v. Oliver, 151 ER 1024 pp. 1026-27\n16\n\nS.R. Bommai may not make any difference to the present case. In\nthe   case   on   hand,   the   ORDINANCES   came   to   be   repealed   and\nreplaced by the GOLD ACT with retrospective effect from 29th June\n1968, that is, from the date of promulgation of the ORDINANCE.    \nTHE EFFECT OF THE REPEAL OF THE ORDINANCE BY THE\nGOLD ACT:\n28.\nThe General Clauses Act is silent in this regard.  On the other\nhand, Section 3014 of the General Clauses Act deals with a situation\nof a Central Act being repealed by an Ordinance. It declares (in\nsubstance) that the same consequences that would follow the repeal\nof an earlier enactment by a later enactment would also follow in\nthe   case   of   repeal   of   an   earlier   enactment   by   a   subsequent\nOrdinance.  The implications of Section 30 were considered by this\nCourt in State of Punjab v. Mohar Singh, AIR 1955 SC 84.  But\nthe counter position is not provided under the General Clauses Act.\nIn   the   circumstances,   we   are   only   required   to   look   into   the\nprovisions of the Act which repeals an Ordinance.  In the case on\nhand, the provisions of the GOLD ACT.\n14 Section 30. Application of Act to Ordinances.—In this Act the expression Central Act, wherever it occurs,\nexcept in section 5 and the word “Act” in clauses (9), (13), (25), (40), (43), (52) and (54)] of section 3 and in section\n25 shall be deemed to include an Ordinance made and promulgated by the Governor General under section 23 of the\nIndian Councils Act, 1861 (24 and 25 Vict., c.67) or section 72 of the Government of India Act, 1915, (5 and 6 Geo.\nV. c, 61) or section 42 of the Government of India Act, 1935 (26 Geo. V. c. 2) and an Ordinance promulgated by the\nPresident under article 123 of the Constitution.\n17\n\nThough the GOLD ACT expressly repealed the ORDINANCE, it\ndid not make a declaration that the RULES are repealed.  But on\nthat account, the peremptory nature of the repeal of the RULES by\nthe ORDINANCE need not be doubted for the following two reasons:\n(i)\nThe GOLD ACT while making the declaration that\nthe ORDINANCE is repealed provided that various\nactions taken both under PART XIIA of the RULES\nor the ORDINANCE are deemed to be actions taken\nunder   the   corresponding   provisions   of   the   GOLD\nACT; and\n(ii) \nUnlike  Krishan   Kumar   Singh,  the   ORDINANCE\nwas followed up by a legislative action which did not\ndisapprove the content of the ORDINANCE.  \nSCHEME AND PURPOSE OF THE 1\n \n ST\n   FICTION UNDER SECTION 116:\n29.\nThe   purpose   of   creating   the   1st  fiction   under   Section   116,\naccording to us, is to declare that the rights and obligations flowing\nfrom the adjudgment of confiscation would be those specified in the\nGOLD ACT.     The  purpose  of   the  fiction  is  not  to  alter   the  law\napplicable to the adjudgment proceedings.  One of the examples of\n18\n\nthe rights flowing from the adjudgment of confiscation of gold is a\nright of appeal against the adjudgment of confiscation.   Both the\nRULES [Rule 126M(3) and the GOLD ACT (Sections 80 and 81)]\nprovide  for   appeal.   While   under   the   RULES,   appeals   lay   to  the\n‘Administrator’   irrespective   of   the   forum   which   adjudged   the\nconfiscation.   Under the  GOLD ACT, the  appellate forum varies\ndepending on the forum which adjudged the confiscation.   \n30.\nThe fiction does not deal with the law applicable to pending\nproceedings.   Such a conclusion is irresistible from the language of\nSection 116(2) of the GOLD ACT which says;\n“the confiscation adjudged .. under … Part XIIA of the Defence\nof India Rules 1962 … shall be deemed to have been adjudged …\nunder the corresponding provisions of this Act.”\nSCHEME OF PART XIIA OF THE RULES:\n31.\nThe RULES dealt with various matters.  We are only concerned\nwith   Part   XIIA   titled   “Gold   Control”   (which   was   inserted   by   an\nAmendment   dated   09.01.1963),   because   the   seizure   and\nconfiscation of gold which is the subject matter of these appeals\narose out of the operation of Part XIIA of the RULES.\n32.\nVarious Rules in Part XIIA dealt with the regulation of the\nactivity of three classes of persons (i) dealers, (ii) refiners, and (iii)\n19\n\nothers   who   own   or   possess   gold.     The   expressions   ‘dealer’   and\n‘refiner’   are   defined   expressions   under   Rule   126­A(c)   and   (h)\nrespectively.     Chapter V of Part XIIA dealt with the regulation of\npersons other than dealers and refiners who own gold (hereinafter\nreferred to as PERSONS for the sake of convenience).  \n33.\nUnder   Rule   126­I,   PERSONS   were   required   to   make   a\ndeclaration within a period stipulated therein.   The declaration is\nrequired to contain, the quantity, description and other prescribed\nparticulars of gold (other than ornaments) owned by a PERSON.\nSub­rule (3) stipulated that PERSONS shall not acquire any gold\nother than ornaments except either by succession or in accordance\nwith a permit granted under the RULES.   Sub­rule (4) mandated\nthat if a PERSON either acquires or parts with any quantity of gold\nsubsequent   to   a   declaration   made   by   him,   such   PERSON   is\nrequired   to   make   a   further   declaration   giving   the   particulars\nthereof.\n34.\nRule 126­L(2) provided the authority of law (obviously for the\nofficers   entrusted   with   responsibility   of   the   enforcement   of   the\nRULES) to enter and search any premises of PERSONS and seize\ngold if found therein, if it is suspected that any provision of Part\n20\n\nXIIA “has been or is being or is about to be contravened” with respect to\nthe gold found.\n35.\nRule 126­M provided for ‘confiscation’ of the gold seized under\nRule 126­L.   Rule provided that a confiscation is required to be\n‘adjudged’.   The expression ‘adjudged’ is not defined but, having\nregard   to   the   scheme   of   the   Rules   mentioned   above,   the   only\npossible   meaning   that   can   be   ascribed   to   that   word   is   that\nadjudgment is a proceeding by which the liability for confiscation\narising   out   of   the   provisions   of   Part   XIIA   of   the   gold   seized   is\nrequired to be determined.  It appears from the scheme, the liability\nfor confiscation of the gold found in searched premises arises from\nthe   fact   that   “there   has   been   or   is   being   or   is   about   to   be”   a\ncontravention   of   any   provision   of   Part   XIIA.     In   other   words,\nadjudgment   is   nothing   but   a   process   of   establishing   the   facts\nrelevant for arriving at a conclusion that “there has been or is being\nor is about to be” a contravention of any one of the Rules contained\nin  Part  XIIA.     Goes   without   saying   that   adjudgment   is   a  quasi\njudicial proceeding.\n36.\nThe expression ‘confiscation’ is not defined in the RULES. It\nhad roots in the latin word  Confiscare  – to consign to fiscus i.e.\n21\n\ntransfer to treasury, as a punishment or in enforcement of law.\nThough,   the   expression   is   generally   understood   as   having\nimplications associated with a crime. However, it is now well settled\nat least by two15 earlier judgments of this Court that the liability for\nconfiscation   of   property   could   be   purely   civil   in   nature   as   a\nconsequence of the violation of some prescription of law commonly\ndescribed   as   ‘forfeiture’.   The   words   ‘forfeiture’   and   ‘confiscation’\nhave come to be used interchangeably.   \n  \nThe   General   Clauses   Act,   1972   does   not   employ   the   word\n‘confiscation’.  On the other hand, it employs the word ‘forfeiture’ in\nSection 6(d)16.   Having regard to the long history of the usage of\nthose two expressions, we are of the opinion that ‘forfeiture’ is an\nexpression which takes within its sweep ‘confiscation’ also for the\npurpose of law17.  \n37.\nRule 126­P provided for penalties.  The sub­rules insofar as it\nis relevant for the facts of the present case are Rule 126P(1)(i) and\n(2)(ii)18, the first of which stipulated that any PERSON either fails or\n15 The State of West Bengal Vs. S.K. Ghosh AIR 1963 SC 255\n Biswanath Bhattacharya Vs. Union of India (2014) 4 SCC 392 \n16 Section 6(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against\nany enactment so repealed; or\n17 Raja Saliqram Vs. Secretary of State of India in Council, 1874 12 Bengal LR 167, at page \n182\n18 Rule 126P. Penalties—(1) Whoever,—(i) fails or omits to make any return including a further return as required\nby rule 126F or any declaration including a further declaration as required by rule 126I without any reasonable\ncause, or makes any statement in such return or declaration which is false and which he either knows or believes to\nbe false or does not believe to be true, shall be punishable with imprisonment for a term which may extend to one\n22\n\nomits to make any return required under Rule 126­I without any\nreasonable cause or makes a false statement in the return filed\neither   with   knowledge   or   belief   that   such   statement   is   false   is\npunishable with imprisonment with a term of one year or fine or\nboth.   Sub­rule(2)(ii) stipulates that any person who “has in his\npossession   or   under   his   control   any   quantity   of   gold   in\ncontravention of any provision of this part” shall be punishable with\nimprisonment for a term of not less than six months and not more\nthan two years and also with fine.\n38.\nWe have indicated the content of Rule 126­P(1) only for the\nlimited purpose of understanding the overall scheme of the RULES\nand the consequences (other than confiscation of the gold under\nRule 126M) that can visit PERSONS either owning or possessing\ngold in contravention of the provisions contained in Part XIIA.\n39.\nIt can be seen from the above that possession of undeclared\ngold entails two consequences ­ (i) liability for confiscation of such\ngold, and (ii) liability for prosecution and punishment.   Both the\nconsequences are independent though flowing from the same set of\nfacts.  \nyear or with fine or with both;”.\n Rule 126(2) Whoever,— (ii) has in his possession or under his control any quantity of gold in \ncontravention of any provision of this Part. \n23\n\n40.\nAnother relevant feature of the RULES (for the purpose of the\ncase on hand) is that under Rule 126­M(8)19, the officer adjudging\nconfiscation may give to the “owner of the gold” an option to pay in\nlieu of confiscation such fine (popularly known as redemption fine)\nas the officer thinks fit.\nAPPLICATION OF THE LAW TO THE FACTS OF THE CASE:\n41.\nConfiscation of the gold of the appellant under the order (dated\n24.09.1966)   of   adjudgment   of   confiscation   was   nothing   but   a\n‘forfeiture’ of gold within the meaning of the expression occurring\nunder   Section   6(d)   of   the   General   Clauses   Act.     The   order   of\nforfeiture necessarily extinguished the title of the appellant in the\nconfiscated gold and obliged the appellant to part with the gold.\nCorrespondingly the Union of India acquired title to that gold.  In\nother words, the appellant incurred a liability to part with or forfeit\nthe   gold.     If   the   original   confiscation   order   (dated   24.09.1966)\nremained unchallenged or otherwise and became final, the vesting\nof title in the confiscated gold in the Union of India would have been\nan   accomplished   fact   under   the   RULES.   But   the   appellant\nquestioned   the   legality   of   the   order   of   confiscation   before   the\n19 Rule 126M(8) (a) Whenever confiscation of any gold is authorised by this Part, the officer adjudging it may\ngive to the owner of the gold an option to pay in lieu of confiscation such fine as the said officer thinks fit.\n24\n\n‘appellate’ fora and the proceedings were pending even by the date\nof the repeal of the RULES.    \n42.\nThe   adjudgment   of   confiscation   was   found   to   be   not   in\naccordance with law by the Rajasthan High Court in Writ Petition\nNo.1215/79 dated 9th August 1994.  The High Court had set aside\nthe   adjudgment   order   and   remitted   the   matter   to   the   original\nauthority for fresh adjudgment.   The High Court did not hold the\nseizure of appellant’s gold was illegal.  In other words, the seizure of\nthe gold under the RULES remained undisturbed thereby requiring\nan examination of the question whether the gold is required to be\nconfiscated. As a result, only the adjudgment of confiscation was\nrequired to be conducted afresh.   It is a liability incurred by the\nappellant. Necessarily the question arises as to what is the law in\naccordance with which such adjudgment is to be made.     By the\ndate of the judgment of the High Court, the RULES stood repealed\nby the ORDINANCE which inter alia provided that Section 6 of the\nGeneral Clauses Act applies.  By virtue of the operation of Section 6\nof the General Clauses Act20, the adjudgment of confiscation (legal\n20 “Section 6. Effect of repeal.——Where this Act, or any Central Act or Regulation made after the\ncommencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different\nintention appears, the repeal shall not—\n \n \n (a) revive anything not in force or existing at the time at which the repeal takes effect; or\n \n \n (b) affect the previous operation of any enactment so repealed or anything duly done or suffered\nthereunder; or\n25\n\nproceeding) in respect of the seized gold made under the RULES is\nrequired to be made afresh and appropriate further orders are to be\npassed   in   accordance   with   the   RULES   as   if   the   repealing\nORDINANCE had not been passed21.  \n43.\nThe legal consequences which follow the repeal of the RULES\nare specified in Section 117 of the ORDINANCE.  \n“…upon such repeal, Section 6 of the General Clauses Act, 1897,\nshall apply as if the said Part were a Central Act …”\nConsequently, the RULES would remain unaffected in respect of the\nvarious legal proceedings, referred to in Section 6 (e) of the General\nClauses Act, either pending or concluded and other appropriate\nconsequences specified in the RULES would follow.  \n44.\nBut   that   does   not   solve   the   problem   on   hand.     The\nORDINANCE itself came to be repealed by the GOLD ACT by the\ndate of the judgment of the Rajasthan High Court. \n \n \n (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so\nrepealed; or\n \n \n (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any\nenactment so repealed; or\n \n \n (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation,\nliability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy\nmay be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the\nrepealing Act or Regulation had not been passed.”\n21 I.T. Commissioner Vs. Shah Sadiq & Sons, (1987) 3 SCC 516, page 524 para 15\n26\n\nSuch repeal gives rise to two questions – What is the effect of\n(i)  the repeal of the Ordinance 6 of 1968, and  (ii)  the declaration\nunder Section 116(2) of the GOLD ACT?  \n45.\nAt the time of the making of the GOLD ACT, Parliament was\nconscious of the existence of the RULES and their repeal by the\nORDINANCE   and   also   the   fact   that   various   actions   authorised\nunder the provisions of the Part XIIA of the RULES were taken or\npending.   The Parliament is also conscious of the fact that the\nORDINANCE while repealing the RULES provided for the application\nof Section 6 of the General Clauses Act.  Pursuant to the repeal of\nthe ORDINANCE, the Parliament did not choose by the GOLD ACT\nto   disapprove   such  a  declaration   made   under   the   ORDINANCE.\nTherefore,   in   our   opinion,   it   is   more   than   public   interest   and\nconstitutional   necessity   as   opined   in  Krishan   Kumar   Singh’s\ncase  to hold that the RULES stood peremptorily repealed by the\nORDINANCE and on such repeal, Section 6 of the General Clauses\nAct applied. \nTherefore,   the   RULES   stood   peremptorily   repealed   by   the\nORDINANCE notwithstanding the fact that the ORDINANCE itself\n27\n\ncame to be repealed subsequently by the GOLD ACT. The repeal of\nthe Ordinance does not revive the RULES. \n46.\nNow we shall deal with Question No.(ii) mentioned above i.e.,\nthe effect of Section 116(2), insofar as it is relevant for our purpose,\nthat the confiscation adjudged under Part XII­A of the RULES shall\nbe   deemed   to   have   been   adjudged   under   the   corresponding\nprovision22 of the GOLD ACT.  \n47.\nThe question is no more res integra.  This Court in Jayantilal\nAmrathlal v. Union of India23 specifically dealt with the issue.\nAbout 24.5 kgs. of gold was seized from the Jayantilal on 17th\nDecember   1964.     On   5th  June   1965,   a   show­cause   notice   was\nissued,   calling   upon   Jayantilal   to   explain   why   the   seized   gold\nshould not be confiscated under Rule 126­M of the RULES.   The\nsaid notice was challenged under Article 226 in a writ petition.\nDuring  the   pendency  of   the  said   writ  petition,   the   ORDINANCE\ncame to be issued followed by the GOLD ACT.   It was argued on\nbehalf of Jayantilal  that notice dated 5th  June 1965 could not be\n22 “Section 78. Adjudication. Any confiscation may be adjudged or penalty may be imposed under this Act – (a)\nwithout limit, by a Gold Control Officer not below the rank of a Collector of Central Excise or of Customs;\n(b) subject to such limits as may be specified in this behalf, by such other Gold Control Officer, not below\nthe rank of a Superintendent of Central Excise, as the Central Government may, by notification, authorise in this\nbehalf.”\n23 (1972) 4 SCC 174\n28\n\nenforced because it was a notice issued under the RULES which\nhad been repealed.   The said argument was rejected.\n“Para 7. In view of Section 115(2) of the Gold (Control) Act, 1968, it\nwas urged on behalf of the appellant that the notice issued on\nJune 5, 1965 can no more be operative because under the Gold\n(Control)   Act,   1968,   there   are   no   provisions   for   making   a\ndeclaration relating to the possession of primary gold. At this stage\nit may be noticed that under the “Rules” every person who was in\npossession of primary gold, exceeding the prescribed weight was\nrequired to convert the same either into ornaments or sell the\nsame to the licensed dealers within the time prescribed by the\n“Rules”.   Possession   of   primary   gold   thereafter   exceeding   the\nprescribed   limit   was   an   offence.   That   period   had   expired   long\nbefore the Gold (Control) Act, 1968 came into force. Hence the Gold\n(Control) Act naturally did not make any provision for a declaration\nof the possession of primary gold. In view of that circumstance it\nwas urged on behalf of the appellant that the provisions in the\n“Rules”   requiring   a   declaration   to   be   made   in   respect   of   the\npossession of primary gold are inconsistent with the provisions of\nthe Gold (Control) Act and therefore the notice issued under the\n“Rules”   cannot   be   considered   as   being   continued   under   the\nprovisions of the Gold (Control) Act, 1968.\nPara 8. The above contention is untenable. There are no provisions\nin the Gold (Control) Act, 1968 which are inconsistent with Rule\n126(I)(10) of the “Rules”. That being so, action taken under that\nrule must be deemed to be continuing in view of Section 6 of the\nGeneral Clauses Act, 1897. It is true that Gold (Control) Act, 1968\ndoes not purport to incorporate into that Act the provisions of\nSection 6 of the General Clauses Act. But the provisions therein\nare not inconsistent with the provisions in Section 6 of the General\nClauses   Act.  Hence   the   provisions   of   Section   6  of   the   General\nClauses Act are attracted in view of the repeal of the Gold (Control)\nOrdinance,  1968.  As  the  Gold (Control)  Act  does  not exhibit  a\ndifferent   or   contrary   intention,   proceedings   initiated   under   the\nrepealed law must be held to continue. We must also remember\nthat by Gold (Control) Ordinance, the “Rules” were deemed as an\nact of Parliament. Hence on the repeal of the “Rules” and the Gold\n(Control) Ordinance, 1968 the consequences mentioned in Section\n6   of  the  General  Clauses   Act,   follow.  For   ascertaining   whether\nthere is a contrary intention, one has to look to the provisions of\nthe Gold (Control) Act, 1968. In order to see whether the rights\nand liabilities under the repealed law have been put an end to\nby the new enactment, the proper approach is not to enquire if\nthe new enactment has by its new provisions kept alive the\n29\n\nrights and liabilities under the repealed law but whether it has\ntaken away those rights and liabilities. The absence of a saving\nclause in a new enactment preserving the rights and liabilities\nunder the repealed law is neither material nor decisive of the\nquestion — see State of Punjab v. Mohar Singh [AIR 1955 SC 84 :\n(1955) 1 SCR 893 : 1955 SCJ 25] and T.S. Baliah v. Income Tax\nOfficer, Central Circle VI, Madras [AIR 1969 SC 701 : (1969) 3 SCR\n65 : (1969) 1 SCJ 890 : 72 ITR 787] .”\nTherefore, it was held that the confiscation proceedings initiated\nunder   the   RULES   must   be   concluded   in   accordance   with   the\nRULES without any reference to the provisions of the GOLD ACT.\n48.\nAll the above analysis leads us to the following conclusions:\n(1)\nthe   adjudgment   of   confiscation   of   the   appellant’s\ngold is required to be made only in accordance with\nthe RULES but not the GOLD ACT;\n(2)\nthe role of the 1st fiction created under Section 116\nof GOLD ACT is limited as explained in para 29\n(supra).\n49.\nThe submissions before us revolved around two questions: \n(i) \nWhat   is   the   law   governing   determination   of   the\namount of fine that could be levied and collected\nfrom the appellant in lieu of the confiscation of gold\nseized from him?; \n30\n\n(ii) \nWhether the High Court applied the correct law in\nrecording the conclusion that the appellant is liable\nto pay an amount of Rs.11.04 crores in lieu of the\nconfiscation of the Gold if he so chooses?\nand issues ancillary thereto.\n50.\nIt must be remembered that by order dated 9.12.94, the officer\nadjudging the confiscation of gold of the appellant gave an option to\nthe appellant to pay a fine of Rs.2.5 crores.   While deciding that\nfigure, the officer took note of the fact that the gold was valued at\nRs.12.5 lakhs at the time of its seizure and also took note of the fact\nthat as on 9.12.1994 (the date of adjudgment order), the gold was\nvalued at Rs.11.04 crores.  It must be remembered that Rule 126­\nM(8)(a) did not oblige the officer to determine the amount of fine on\nthe basis of the value of the confiscated gold either with reference to\nthe date of its seizure or on the date of adjudgment of confiscation.\nThe rule (text of it at least) conferred an unfettered discretion on the\nofficer   to   determine   the   amount   of   fine.     But   an   unfettered\ndiscretion and the Rule of Law are contradictions in terms.     The\nHigh Court opined at para 18;\n“… Now, what shall be the quantum of fine, decision thereof has\nbeen left to the adjudging authority and he may adjudge the fine as\nhe thinks fit.   Of course, this decision is required to be exercised\n31\n\njudiciously in accordance with law or rule as the case may be but\nnot arbitrarily.   The words “an option to pay \n \n in lieu of\n \n  \n \n confiscation\nsuch fine” are very significant and the use of the words “in lieu of”\nconnotes that the fine should be equivalent to the thing or Gold\nconfiscated by the authority.”\nWe are in complete agreement with the view of the High Court.\n51.\nWhile   it   is   true   that   the   discretion   conferred   upon   the\nAuthority under Rule 128M – (8)(a) is textually unfettered, it does\nnot lead to the inference that the discretion is absolute and uniform\nwith reference to the various contraventions of the RULES.   The\nlimitations on the discretion are to be found from the scheme of the\nRULES. The various RULES in the Part XIIA of the RULES make\nvarious   stipulations   and   the   contravention   of   any   one   of   the\nstipulations can lead to the confiscation of gold.  The factors which\ninfluence the Authority’s exercise of discretion will necessarily vary\nfrom the nature of the offence which is committed. \nFor   instance,   Rule   126–I   mandates   that   certain   PERSONS\nmake a declaration to the Administrator in the prescribed from. The\nviolation of this would entail a confiscation. \n52.\nBut Rule 126–I(2) stipulates that the declaration is required to\nbe made by PERSONS  other  than owners of the gold in certain\ncases     because   the   owners   are   either   legally   incapacitated   or\n32\n\njudicial   persons   who   are   necessarily   required   to   act   through   a\nhuman agency. Rule 126–I(2)(a) stipulates that the declaration is to\nbe made by the guardian. Similarly with gold belonging to an idol24,\nthe declaration is to be made by the manager. In all these cases, the\ndeclaration is to be made by a third person who is not necessarily\nin possession or the owner of gold. In such circumstances, if the\ndeclaration is not filed, the owner could not be held responsible for\nthe non­declaration.  Therefore, the relevant factor for the exercise\nof the discretion is the culpability of the owner of the gold and\nfactors connected therewith.\n53.\nIn   the   same   vein   Rule   126–I(3)25  enjoins   a   person   from\nacquiring   gold,   subsequent   to   making   a   declaration,   except   in\ncertain situations contemplated therein. Sub Rule 4 and 5 lay down\nthe manner in which a declaration is supposed to be made by those\nwho acquire gold through succession, intestate or testamentary.\nPERSONS not filing a declaration at all and PERSONS not filing a\n24 Rule 126-I-(2)(b) in the case belonging to an idol or a deity, by the manager of such idol or deity, whether known\nas shebait or manager or by any other name\n(c) in the case of gold belonging to a person whose properties under the management of a Court of wards, \nby the manager of such Court\n(d) in the case of gold belonging to a person whose properties are under the management of any \nadministrator or receiver , by such administrator or receiver.\n25 Rule 126– I(3) No person who is either a required to make a declaration or a further declaration under this rule \nor exempted from making such declaration or further declaration under sub-rule (7) thereof, shall, after the \ncommencement of this Part, acquire any gold other than ornament except – \n(A)\nBy succession, intestate, or testamentary, or\n(B)\nIn accordance with a permit granted by the Administrator in this behalf\n33\n\nfurther declaration under sub­Rule (3) cannot be treated on the\nsame footing.   \n54.\nAll this just goes to show that the violations committed by\nPERSONS falling under different category cannot be treated alike.\nIf the rule were to be applied to all these categories of PERSONS\nuniformly it would result in the violation of Article 14. \n55.\nThe   appellant’s   case   does   not   in   our   view   calls   for   any\ndiscretion to be exercised in his favor in the light of the totality of\nthe circumstances.  The non­filing of the declaration is established\nto be an absolutely calculated violation of law.26 \n56.\nAggrieved by the determination of the fine amount of Rs.2.5\ncrores, the appellant carried the matter in appeal under Section 81\n26 The Collector’s order of 24/09/1966 deals with the pleas taken by the Appellant regarding his non-declaration:\n“In his Reply, Shri Chhagan Lal Godavat stated that his letters dated 26.09.1920 and 3.3.1921were written\nby him when he was a minor. He contended that he did not know how to write account books. He was also not fully\naware of his “good” and “bad”. He did not even recollect which connection these letters were got(sic) written from\nhim. He could recollect only that these letters were written to check up the balance sheet by his ‘Munim’ Shri\nRikhab Dass. \nHe further stated that the documents were got written under the influence of ‘Bhang’. The late ‘Munim’\nShri RikhabDass was keeping the gold. It is likely that his mother, Smt. Birju Bai may have told about it. He\nexpressed his ignorance about this gold till the date of seizure. He did not know where the gold was kept. He,\ntherefore, submitted that he cannot be proceeded against on the basis of the letters written by him at a time when he\nwas a minor.\nChhagan Lal Godavat also disclosed that he and his mother had strained relations. She did not disclose the\nfact of buried gold to him fearing that he might dispose it off… “\nThe Superintended after ascertaining the true position of the relationship of Chagganlal found that “The\nmother denied there was any quarrel with her son. The house stand in the name of the ancestral firm of which\nChagganlal is the sole proprietor. The statement of the mother was recorded in the presence of Shri Chhagan Lal\nGodavat was also signed the same”\n34\n\nof the GOLD ACT.  Two members of the appellate tribunal were not\nable to agree upon the quantum of the fine.   While the Member\n(Technical – Brahma Deva) opined that the law applicable is only\nRule 126­M(8)(a) of the RULES and the RULES did not make any\nreference to the value of the gold for the purpose of determining the\nquantum of fine.  He, therefore, opined that the quantum is entirely\nthe discretion of the adjudicating officer.   He, however, chose to\nsubstitute   his   discretion   for   that   of   the   adjudicating   officer   by\nreducing the fine to Rs.25 lakhs from Rs.2.5 crores. Whereas the\nMember (Judicial – Sankararaman) opined27  that the quantum of\nfine   must   be   “in   line   with   Section   73   of   the   Gold   Control   Act”   and,\ntherefore, opined that the fine amount should not exceed Rs.12.5\nlakhs (the value of the gold at the time of seizure).  In view of the\ndisagreement, the matter was referred to the third member of the\ntribunal who agreed with the Member (Technical)’s view.\n27 While agreeing with the approach taken by my learned brother Shri Brahma Deva for reduction of the fine\namount in lieu of confiscation, I am, however, of the view that the quantum thereof should be in line with Section 73\nof Gold Control Act after it was amended whereby redemption fine was not to exceed the value of the gold. The\nterm ‘value’ has also been defined in the Act as the marked price on the date of seizure. Applying the said\nyardstick the fine in lieu of confiscation should not exceed Rs.12.50 lakhs which was the value of the seized\ngoods at the time of seizure. In the circumstances, I feel that the proposed reduction of fine from Rs.2.50 crores as\ndetermined by the Collector in the adjudication order passed de novo to a sum of Rs.25 lakhs is apparently based\nupon the fact that the law has been changed from the Defence of India Rules to Gold Control Act. In view of the\nmatter, the subsequent development of the maximum amount of fine under Section 73 of the Gold Control Act being\nreduced to the value of goods from twice that amount should also be taken into account. In that event the fine\namount in the present case should not exceed Rs.12.5 lakhs. I am of the view accordingly that the fine should be\nreduced to Rs.12.5 lakhs. \n35\n\n57.\nAggrieved   by   the   same,   the   respondent   sought   a   reference\nunder Section 82B of the GOLD ACT to the High Court on two\nprecise questions, which are already noted at para 7 (supra) and, in\nour opinion, the questions were rightly framed.    \n58.\nThe High Court rightly came to the conclusion that the case of\nthe appellant is governed only by the RULES and not by Section 73\nof the GOLD ACT and recorded at paras 20 and 21 of the impugned\njudgment as follows:\n“20.\nIt is revealed from the material on record that the Collector\naptly applied the market price of Gold at the rate of Rs.4,600 per\n10 gms as on December 7, 1994, the date of adjudicating when the\noption was given by him to the respondent and on this basis, the\nprice of total seized and confiscated Gold 240.040 kgs came to be\n11.04 crores and the redemption fine cannot be in any way less\nthan this.\n21.\nThus, in the ultimate analysis, it is candidly recorded that\nthe quantity of redemption fine should be related to the market\nvalue of gold on 7.12.1994 i.e. the date of adjudication when the\nofficer adjudging gave the owner of the Gold an option to pay fine\nin lieu of confiscation.   The amount of fine as adjudged to the tune\nof Rs.2.5 crores was totally arbitrary and irrational as it was not\nbased on any sound and lawful reasoning.”\nThe High Court finally directed – \n“24.\nIn view of the above, we deem it just and proper to direct the\nauthorized officer to give an option afresh following above clinching\nobservations   to   the   owner   of   the   Gold   asking   him   to   pay   the\nredemption fine in lieu of confiscation.”\n36\n\n59.\nPursuant to the order of the High Court dated 29.06.2009,\nanswering   the   reference,   the   tribunal   made   an   order   dated\n30.04.2010 remitting the matter to the Commissioner:\n“4. Under the circumstances, we dispose of the appeal by way of\nremand to the Adjudicating Commissioner (authorized officer) to\ndetermine appropriate redemption fine and allow the order of the\ngold to redeem the gold on payment of such redemption fine.   It\ngoes without saying that while determining the redemption fine, he\nshall   follow   the   cited   order   of   the   Hon’ble   High   Court   dated\n29.6.2009.”\nThereby, the Commissioner passed an order as follows:\n“(i)\nAn option is given to Shri Gunwant Lal Godawat and legal\nheir  of late Shri Chhagan Lal Godawat  to pay Rs.11.04 crores\n(Rupees Eleven crores and four lakhs only) in lieu of confiscation of\nthe gold weighing 240.040.145 kgs under the erstwhile Defence of\nIndia Rules, 1962 within three months of receipt of this order.\n(ii)\nIn case Shri Gunwant Lal Godawat and the legal heir of late\nShri   Chhagan   Lal   Godawat   does   not   exercise   the   option   of\ndepositing the amount of Rs.11.04 crores in the stipulated time\nlimit, as given above, Shri Gunwant Lal Godawat and legal heir of\nlate Shri Chhagan Lal Godawat shall be liable to return to the\nDepartment immediately the gold weighing 185.145 kgs which was\nreturned   to   them   on   2.7.94   in  compliance   of   directions   of   the\nHon’ble Rajasthan High Court given in the order dated 28.05.97.”\nIt must be remembered that the amount of Rs.11.04 crores was the\nvalue of the gold as on the date (7.12.94) when the appellant was\ngiven the option to pay the fine in lieu of confiscation.\n60.\nHowever, it is argued before us by the appellant that: \n“Once the order of confiscation had been set aside and the matter\nremanded back, the issue whether the gold is to be confiscated\nwas required to be adjudicated afresh.   The determination of the\nlaw under the proceedings would continue has to be considered\n37\n\n“on the date of remand by the High Court”…  Thus the pending\nproceedings under Part XII­A of the DoI Rules, will have to be\ndeemed to be continue under the Gold (Control) Act.”28\nIn other words, the argument advanced is that the law applicable to\nthe adjudgment proceedings is GOLD ACT ­ a submission plainly\nuntenable   in   light   of   the   reasons   given   by   us   in  the   preceding\nparagraphs and the decision of this Court in Jayantilal. \n61.\nA proceeding initiated under the RULES and pending as on the\ndate of the GOLD ACT will still have to be concluded in accordance\nwith the RULES in view of Section 116 of the GOLD ACT for the\nreasons already noted at para 29.   \n62.\nOn the basis of the above­mentioned submission, a further\nsubmission was made:\n “The said rule (Ed: Rule 126 M (8)) grants the further discretion to\nimpose a fine that is less than or more than the market value as on\nthe date of seizure or of order of confiscation, as the case may be\n(however,   redemption   at   a   higher   value   would   not   make\ncommercial   sense   since   the   buyer   will   prefer   buying   from   the\nmarket).   Section 73 read with Section 2(v) of the Act mandates\nthat the redemption fine will not exceed the market value of the\ngold seized as on the date of seizure.\nThe   Act   takes   away   the   discretion   available   to   the   officer   to\ndetermine   the   relevant   date   for   valuation   by   mandating   the\nrelevant date to be the date of seizure, which in any case is one of\nthe methods available to the officer for calculating the redemption\nfine   under   rule   126M(8).     Therefore,   the   Act   only   reduces   the\ndiscretion   available   under   Rule   126M(8)   with   respect   to   the\nrelevant date for calculation of the redemption fine.    The officer\n28 Written submissions of the appellant. \n38\n\ncontinues to have the discretion to impose a fine lesser than the\nmarket value as on the date of seizure.   There is therefore no\ninconsistency between the DoI Rules and the Act.”\n63.\nThe substance of the submission is that both the RULES and\nthe GOLD ACT provide for giving an option to the “owner” of the\ngold   adjudged   to   be   confiscated.     While   the   RULES   provide   an\nunrestricted discretion to the “officer adjudging” to determine the\namount of fine, GOLD ACT restricts the discretion by imposing an\nupper   limit   on   the   quantum   of   fine   that   could   be   imposed   by\ndeclaring   that  “give   to   the   owner   thereof   an   option   to   pay   in   lieu   of\nconfiscation   such   fine,   not   exceeding   the   value”.     According   to   the\npetitioner, such value is to be determined with reference to the date\nof the seizure of the gold because of Section 73 of the GOLD ACT\nread with Section 2(v) thereof.\n64.\nAt the outset, we must make it clear that there is nothing in\nthe text of Section 73 of the GOLD ACT which requires the value of\nthe gold (for the purpose of determining the fine) should be the\nvalue of the gold as on the date of the seizure.  But the expression\n‘value’ is a defined expression under Section 2(v) of the Act.\n“Section   73   ­   Power   to   give   option   to   pay   fine   in   lieu   of\nconfiscation­ Whenever any  confiscation is authorized by this\nAct, the officer adjudging it may, subject to such conditions as\nmay be specified in the order adjudging the confiscation, give to\nthe owner thereof an option to pay in lieu of confiscation such\n39\n\nfine, not exceeding the value29 of the thing in respect of which\nconfiscation is authorized, as the said officer thinks fit.”\nSection   2(v).  ‘value’,   in   relation   to   primary   gold,   article   or\nornaments, means,­\n(i) \nwhen the gold is seized under this Act, the market\nprice of such gold as on the date of the seizure thereof,\n(ii)\nwhen the gold is not available for seizure, the market\nprice of such gold as on the date on which the notice referred\nto in section 79 is issued.”\n65.\nThe language of Section 73 is clear that it applies only to those\ncases wherein confiscation is one which is authorised “by this Act”.\nIn our opinion, Section 73 would have no application to those cases\nof confiscation which are adjudged under the RULES.  It would be\napplicable only for those cases where the confiscation is authorised\nby the GOLD ACT.   Section 7130 authorises the confiscation of gold\nin respect of which “any provision of  this Act  or any rule or order made\nthereunder has been, or is being, or is attempted to be, contravened”.   In\nother words, Section 71 authorises the confiscation of gold if there\nhas been or is or is attempt to contravene the provisions of the\nGOLD   ACT   i.e.   only   such   contravention   occur   after   the\ncommencement   of   the   GOLD   ACT   but   not   contravention   of  law\nwhich existed anterior thereto (the RULES). \n29 This rule originally provided for imposition of a fine not exceeding twice the value of the goods. However, the \nword “twice” was omitted by the Gold Control (Amendment) Act, 1971 (21 of 1971), Sec.3. \n30 “Section 71. Confiscation of gold. (1) Any gold in respect of which any provision of this Act or any rule or\norder made thereunder has been, or is being, or is attempted to be, contravened, together with any package,\ncovering or receptacle in which such gold is found, shall be liable to confiscation:”\n40\n\n66.\nThere   is   a   distinction   between   acts   done   pursuant   to   the\nauthorization   of   a   statute   and   acts   done   pursuant   to   the\nauthorization under a different statute or a statutory instrument\nbut   deemed   to   have   been   done   under   the   earlier   of   the\nabovementioned two statutes.  When   a   statute   creates   a   fiction\nrequiring   certain   events   which   took   place   prior   to   the\ncommencement of such a statute to be deemed to have been done\nunder the statute, such a fiction does not retrospectively authorise\ndoing of such acts.   It only takes note of the existence of certain\nstate of affairs and creates putative state of affairs by declaring that\nsuch anterior events should be deemed to have taken place under\nthe statute which came into existence later.   Such fictions could\nonly have limited consequences. \n67.\nPrior to the GOLD ACT, seizure and confiscation of gold were\nauthorised by the RULES.  Though, by virtue of the fiction created\nunder Section 116, the confiscations adjudged under the RULES\nare deemed to be confiscations adjudged under the GOLD ACT, the\nScheme and the limitations of such fiction are already explained\nearlier in para 29.  Therefore, neither Section 73 nor the definition\nunder  Section   2(v),   in   our   opinion,   would   be   applicable   for   the\n41\n\nconfiscations adjudged under the RULES – pursuant to a seizure\nthat took place before the commencement of the GOLD ACT.\n68.\nNo doubt that the option to pay fine in lieu of confiscation is\none   of   the   consequences   flowing   from   the   adjudgment   of\nconfiscation.   Therefore, in view of the fiction under Section 116,\nSection   73   of   the   GOLD   ACT   would   have   been   applicable   if\nconsequence of applying such fiction to the confiscations adjudged\nunder the RULES is not inconsistent with the GOLD ACT.  In view\nof the language of Section 73 – “confiscation authorised by  this Act”\nlimits the operation of Section 73 only to the confiscations adjudged\nunder the GOLD ACT.  Hence, there is an inconsistency.  We are of\nthe opinion that the High Court rightly held that Section 73 would\nnot come into play at all in the case on hand.  Therefore, the fine\namount cannot be determined on the basis of the value of the gold.\n69.\nOn the other hand, as rightly opined by the High Court, the\nmarket value of the gold as on the date of the exercise of the option\nby the owner of the gold to pay fine in lieu of the confiscation would\nbe the legally appropriate amount of fine.   Because it is a fine in\nlieu of confiscation.   Confiscation would result in the loss of the\nentire property in the confiscated gold resulting in a financial loss of\n42\n\nthe value of gold to the owner.  Hence, the value of the gold is to be\ndetermined with reference to the date on which the owner exercises\nthe option to pay the fine in lieu of the confiscation.    \n70.\nOne   of   the   ancillary   submissions   made   on   behalf   of   the\nappellant is that in view of the fact that the order of the Collector\ndated 9.12.94 gave an option to the appellant to redeem the gold by\npaying a fine of Rs.2.5 crores in lieu of confiscation which had\nbecome   final   in   view   of   the   dismissal   of   the   appeal   of   the\ndepartment on 23.5.1996.  Therefore, it was not open to the High\nCourt to hold that the appellant is liable to pay a redemption fine of\nRs.11.04 crores in a reference under Section 82­B of the GOLD\nACT.  The High Court could not sit in appeal on the judgment of the\nTribunal and substitute its opinion regarding the amount of fine to\nbe collected from the appellant in view of the confiscation of his\ngold. \n71.\nThe submission of the appellant is required to be rejected for\nthe simple reason that the determination of the amount of fine\nmade by the tribunal was without any basis.   The conclusion of the\nTribunal that the fine in lieu of confiscation must be equal to the\nvalue of the gold as on the date of its seizure is not based on any\n43\n\nprinciple of law.     The correctness of the said conclusion was the\nsubject matter of the reference before the High Court.   The High\nCourt was completely justified in examining the correctness of the\nlegal basis on which the figure of Rs.12.5 lakhs was arrived at.  For\nthe reasons already recorded by us earlier, the High Court rightly\ncame to the conclusion that the fine in lieu of confiscation must\nrepresent   the   value   of   the   gold   so   confiscated   as   on   the   date\n(9.12.94) the appellant was given an option to pay the fine in lieu of\nconfiscation.   Even according to the said order of the Collector, the\nvalue of the gold as on that date was Rs.11.04 crores.  Therefore,\nthe High Court was right in its direction.\n72.\nWe are only left with one submission made on behalf of the\nUnion of India, i.e., in view of the enormous delay which took place\nin the confiscation proceedings (50+ years), the appellant must be\nmade to pay the interest on the amount of fine of Rs.11.04 crores.\nOtherwise, it would have the effect of permitting the appellant to\nprofit   by   litigation   as   according   to   the   Attorney   General   if   the\nappellant is permitted to take back the entire quantity of 240.040\nkgs.   of   gold   the   current   market   value   would   be   Rs.   72   crores\n(approx.).  We find the submission wholly justified.  We, therefore,\n44\n\ndeem it proper to direct that the appellant would be entitled to\nredeem the gold by paying not only the fine of Rs.11.04 crores but\nalso the interest thereon calculated @ 10% p.a.\n73.\nThe appeals are disposed of as indicated above.\n….....................................J.\n          \n     \n      (J. CHELAMESWAR)\n…….………….....................J.\n      \n     \n     (S. ABDUL NAZEER)\nNew Delhi\nNovember 22, 2017\n45\n"