JUDGMENT
P.K. Palli, J.
1. On the basis of secret information Respondent No. 2 Collector, Central Excise and Customs, New Delhi organised various raids at the residential premises of one late Shri Chhagan Lal Godawat in the town of Chhoti Sadri. These raids were carried out from 29.7.1965 to 14.8.1965.
2. Chhagan Lal Godawat is said to have died on 8.7.1973. Petitioner No. 1 is his widow and petitioner No. 2 is his son. During the aforesaid raids properties as mentioned in Schedule A annexed with the writ petition were seized. The search was also made at the premises of one Ratan Lal Nalwalia at Chhoti Sadri on 3.6.1965 and some documents are said to have been recovered from there. These documents are of the years 1920, 1921, 1922 and 1931 and late Chhagan Lal Godawat has admitted these documents.
3. On the basis of the search and seizure 240,040.145 kgs. of gold valued at that time at Rs. 12,05,000/- was recovered and in sequence a show cause notice dated 3.2.1966 proposing confiscation and penalty under Rules 126 M and 126 L(16) of Defence of India Rules, 1962 & Gold Control Rules, 1963 (referred to hereinafter as the Rules’) was issued. After the reply had been submitted from the side of chhagan Lal Godawat, the Collector proceeded to dispose of the matter and vide the order Annex. 1 dated 24.9.1966 directed absolute confiscation of the seized gold under Rule 126 M and further imposed a penalty of Rs. 25,00,000/- under Rule 126 L(16) of the aforesaid Rules.
4. Feeling aggrieved with the order of the Collector, an appeal was filed before the Gold Control Administrator, New Delhi and the appeal was dismissed on 6.3.1972 (copy placed as Annex. 2). Against the aforesaid decisions a revision petition was taken before the Government of India which came to be heard and decided by the Special Secretary (Finance) Government of India and an argument was raised there that under Rule 126(8) of the aforesaid Rules keeping in view the precedents of Maharani of Jaipur and Shri Ram Nath Goenka an opportunity should have been provided to redeem the seized gold on payment of nominal fine and that the penalty imposed was wholly illegal and could not have been imposed. The revision petition was dismissed by the Government of India on 3/4.6.1979. A copy of the order has been placed on the record as Annex. 3.
5. Learned Counsel appealing for the petitioner forcefully argued that no opportunity was afforded by the Collector to late Chhagan Lal Godawat and in this view of the matter the entire proceedings held by the Collector stand vitiated. This issue was raised in revision before the Government of India and was brushed aside on the ground that late Chhagan Lal Godawat never asked for any such opportunity and, therefore, there was nothing wrong with the Collector to proceed ahead with the matter. The authorisation in this case was not proper. The gold was not liable for confiscation and that the authority could examine the case for redeeming the seized gold on nominal fine as per the provisions contained in the rules and the penalty imposed was totally illegal and uncalled for.
6. A look at the order of the Collector reveals that Chhagan Lal Godawat did not request for a personal hearing and, therefore, the case was to be decided on the basis of the evidence available on the record.
7. Learned Counsel appearing for the petitioner argues that on the basis of principles of natural justice, it was incumbent upon the authority to have afforded an opportunity of hearing to the person against whom the proceedings were being held and non- granting of opportunity would vitiate the entire proceedings. It is further argued that it was for Chhagan Lal Godawat to avail of the opportunity or not. But the authority dealing with the matter on its part was required to afford a reasonable opportunity before proceeding further with the matter ordering confiscation of the property seized and well as imposing penalty.
8. To further substantiate this plea, learned Counsel has pressed into service the decision delivered in the case of K.I. Shephard and Ors. etc. etc. v. Union of India and Ors. . Their Lordships at page 695 towards the conclusion of paragraph 16 have held as under:
…There is no justification to throw them out of employment and then give them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action. It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose.
Thus, proceeds the learned Counsel that affording an opportunity at the appellate or revisional stage was no substitute for affording an opportunity by the Collector.
9. My attention has also been drawn to the decision rendered in the case of H.L. Trehan and Ors. v. Union of India and Ors. the observations appear like this:
12. It is, however, contended on behalf of CORIL that after the impugned circular was issued, an opportunity of hearing was given to the employees with regard to the alterations made in the conditions of their service by the impugned circular. In our opinion, the post-decisional opportunity of hearing does not subserve the rules of natural justice. The authority who embarks upon a post-decisional hearing will naturally proceed will a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post-decisional opportunity. In this connection, we may refer to a recent decision of this Court in K.L. Shephard v. Union of India, . What happended in that case was that the Hindustan Commercial Bank, the Bank of Cochin Ltd. and Lakshmi Commercial Bank, which were private Banks, were amalgamated with Punjab National Bank, Canara Bank and State Bank of India respectively in terms of separate schemes drawn Under Section 45 of the Banking Regulation Act, 1949. Pursuant to the schemes, certain employees of the first mentioned three Banks were excluded from employment and their services were not taken over by the respective transferee Banks. Such exclusion was made without giving the employees, whose services were terminated, an opportunity of being heard. Ranganath Misra, J. speaking for the Court observed as follows:
We may now point out that the learned single Judge of the Kerala High Court had proposed a post-amalgamation hearing to meet the situation but that has been vacated by the Division Bench. For the reasons we have indicated, there is no justification to think of a post-decisional hearing. On the other hand, the normal rule should apply. It was also contended on behalf of the respondents that the excluded employees could now represent and their cases could be -examined. We do not think that would meet the ends of Justice. They have already been thrown out of employment and having been deprived of livelihood they must be facing serious difficulties. There is no justification to throw them out of employment and then give them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action. It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose.
13. The view that has been taken by this Court in the above observation is that once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose. Thus, even if any hearing was given to the employees of CORIL after the issuance of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution. The High Court, in our opinion was perfectly justified in quashing the impugned circular.
10. To the similar effect are the observation contained in Institute of Chartered Accountants of India v. L.K. Ratna and Ors. and in paragraphs 12, 13, 16 and 17 it is observed:
12….It cannot, therefore, be denied that even though the member has participated in the inquiry before to Disciplinary Committee, there is a rang of consideration by the Council on which he has not been heard. He is clearly entitled to an opportunity of hearing before the Council finds him guilty of misconduct.
13….It is the character and complexion of the proceeding considered in conjunction with the structure of power constituted by the Act which leads us to the conclusion that the member is entitled to a hearing by the Council before it can find him guilty. Upon the approach which has found favour with us, we find no relevance in James Edward Jeffs v. New Zealand Dairy Production and Marketing Board, (1967) 1 AC 551 cited on behalf of the appellant. The Court made observations there of a general nature and indicated the circumstances when evidence could be recorded and submissions of the parties heard by a person other than the decision making authority. Those observations can have no play in a power structure such as the one before us.
16…. There is nothing in Regulation 14 which excludes the operation of the principles of natural justice entitling the member to be heard by the Council when it proceeds to render its finding. The principles of natural justice must be read into the unoccupied interestices of the statute unless there is a clear mandate to the contrary.
17…. It is pointed out that no limitation has been imposed on the scope of the appeal, and that an appellant is entitled to urge before the High Court every ground which was available to him before the Council. Any insufficiency, it is said, can be cured by resort to such appeal. Learned Counsel apparently has in mind the view taken in some cases that an appeal provides an adequate remedy for a defect in procedure during the original proceedings. Some of those cases are mentioned in Sir William Wades erudite and classic work on “Administrative Law”. But as that learned author observes, “in principle there ought to be an observance of natural justice equally at both stages”, and
If natural justice is violated at the first stage, the right of appeal is not so much a true right of appeal as a corrected initial hearing: instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial.
And he makes reference to the observations of Megarry J. In Leary v. National Union of Vehicle Builders (1971) 1 Ch. 34. Treating with another aspect of the point, that learned Judge said:
If one accepts the contention that a defect of natural justice in the trial body can be cured by the presence of natural justice in the appellate body, this has the result of depriving the member of his right of appeal from the expelling body. If the rules and the law combine to give the member the right to fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him. I cannot think that natural justice is satisfied by a process whereby an unfair trial, though not resulting in a valid expulsion, will never the less have the effect of depriving the member of his right of appeal when a valid decision to expel him is subsequently made. Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body.
11. Learned Counsel appearing for the petitioner further brings to my notice Rule 126(1) of Schedule B where a declaration as to possession of gold has to be made in a prescribed from to the Administrator and Rule 126 L deals with the power of entry, search and seizure and Sub-rule (2) deals with the authorisation of the person by the Central Government and Sub-rule (16) in respect of penalty was brought into operation on 23.6.1963 where it is said that any person who in relation to any gold does or omits to do any act which act or omission would render such gold liable to confiscation Under Rule 126 M or abets the doing or omission of which an act shall be liable. The precise argument advanced in this respect by the learned Counsel is that the declaration was to be made under these rules within a period of 30 days from 9.1.1963 and that the penalty clause having been brought latter could not have retrospective operation and thus, the imposition of penalty was wholly illegal.
12. My attention has further been brought to Rule 8(a) which reads as under:
(8)(a) Whenever confiscation of any gold is authorised by this part the officer adjudicating it may give to the owner of the gold an option to pay in lieu of confiscation such fine as the said officer thinks fit;
13. Under this provision the officer adjudicating is given the fullest power to give to the owner of the gold an option to pay in lieu of confiscation such fine as the said officer thinks fit. Learned Counsel therefore, contends that these two important and vital questions i.e. the exercise of option and imposition of penalty having not at all been examined by the Collector and had the petitioner been afforded an opportunity the things could be brought to light and the matter could have been examined in that perspective.
14. Learned Counsel has further argued that these were extraordinary penal provisions and there are no guidelines provided in the Rules and the matter more or less vests in the discretion of the authorities dealing with the matter.
15. When this contention of reasonable opportunity was being stressed I asked the learned Counsel appearing for the respondents Mr. M.D. Purohit that in case I agree with the submissions made by the learned Counsel for the petitioner on this limb of the argument then the matter has to be re-examined by the Collector and the other points raised in the petition need not be dealt with. To this the learned Counsel has half heartedly consented that the matter could be re-examined in case this Court so directs.
16. In my considered opinion., the denial of opportunity by the Collector vitiated the entire proceedings and the opportunity provided by the Gold Control Administrator as well as by the Special Secretary Finance exercising the powers of the Central Government was no substitute. As these provisions are stringent in nature and resulting in penal consequences, in my considered opinion, the matter deserves to be re-examined by the Collector, Central Excise and Customs, New Delhi after affording full opportunity to the petitioners to make out their case, particularly in respect of exercise of option for getting the gold redeemed as well as on the question of imposition of penalty as noticed above in the order.
17. As a sequence the orders passed by the Collector dated 24.9.1966 (Annex. 1), 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 of India 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 preferabily within six months from the date of filing of the appeal.
18. This petition stand disposed of in these terms.