{"id":51678,"date":"1969-04-30T00:00:00","date_gmt":"1969-04-29T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/harakchand-ratanchand-banthia-vs-union-of-india-and-ors-on-30-april-1969"},"modified":"2017-10-31T10:07:22","modified_gmt":"2017-10-31T04:37:22","slug":"harakchand-ratanchand-banthia-vs-union-of-india-and-ors-on-30-april-1969","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/harakchand-ratanchand-banthia-vs-union-of-india-and-ors-on-30-april-1969","title":{"rendered":"Harakchand Ratanchand Banthia … vs Union Of India And Ors on 30 April, 1969"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Harakchand Ratanchand Banthia … vs Union Of India And Ors on 30 April, 1969<\/div>\n
Equivalent citations: 1970 AIR 1453, \t\t 1970 SCR (1) 479<\/div>\n
Author: V Ramaswami<\/div>\n
Bench: Hidayatullah, M. (Cj), Shah, J.C., Ramaswami, V., Mitter, G.K., Grover, A.N.<\/div>\n
           PETITIONER:\nHARAKCHAND RATANCHAND BANTHIA AND ORS.\tETC.\n\n\tVs.\n\nRESPONDENT:\nUNION OF INDIA AND ORS.\n\nDATE OF JUDGMENT:\n30\/04\/1969\n\nBENCH:\nRAMASWAMI, V.\nBENCH:\nRAMASWAMI, V.\nHIDAYATULLAH, M. (CJ)\nSHAH, J.C.\nMITTER, G.K.\nGROVER, A.N.\n\nCITATION:\n 1970 AIR 1453\t\t  1970 SCR  (1) 479\n 1969 SCC  (2) 166\n CITATOR INFO :\n RF\t    1972 SC1061\t (22)\n RF\t    1972 SC2301\t (32)\n D\t    1974 SC1489\t (17)\n D\t    1975 SC 446\t (19)\n RF\t    1977 SC1825\t (60)\n RF\t    1978 SC1457\t (69)\n R\t    1984 SC 981\t (8)\n F\t    1984 SC1249\t (2,12)\n E&D\t    1985 SC1013\t (3,5,8)\n RF\t    1988 SC 782\t (55)\n R\t    1990 SC  40\t (9)\n RF\t    1990 SC  85\t (18)\n RF\t    1990 SC2072\t (49)\n\n\nACT:\nGold (Control) Act (45 of 1968), ss. 4(4), 4(5), 5(1),\t(2),\n27,  32, 39, 46, 88 and 100-If violative of Arts. 14 and  19\nof the Constitution -Delegation by Administrator under ss. 4\nand 5(1), not excessive-The phrase 'so far as it appears  to\nhim necessary or expedient', if subjective.\nConstitution of India, 1950, VII Schedule, List 1, Entry 52,\nList  II,  Entry  27  and  List\t III,  Entry  33-Scope\t of-\nManufacture  of qold ornaments if  industry-Whether  control\ndeclared  to  he  expedient in\tpublic\tinterest  Industries\n(Development  and Regulation) Act (65 of 1951) ss. 2(a)\t cnd\n2(d)-Scheduled\tindustry  and 'indistrial  undertaking',  if\nsynonymous--Manufacturers  and semi- manufacturer's  meaning\nof.\nSeverability-Some  sections declared ultra  vires-Tests\t for\ndetermining validity of Act.\n\n\n\nHEADNOTE:\nEven  though  import  of gold into India  had  been  banned,\nconsiderable  quantities  of contraband\t gold  were  finding\ntheir  way  into  the  country\tthrough\t illegal   channels,\naffecting  the national economy and hampering the  country's\neconomic stability and progress.  The Customs Department was\nnot  in a position to effectively combat the smuggling\tover\nthe long borders and coast lines.  Therefore, anti-smuggling\nmeasures  had  to be supplemented by a\tdetailed  system  of\ncontrol\t over internal transactions and the  Gold  (Control)\nAct,  1968, was passed for this purpose.   The\tpetitioners,\nwho  were  goldsmiths, contended that; (1) the Act  was\t Dot\nwithin\tthe legislative competence of  Parliament,  because,\n(a)  Manufacture  of  -old ornaments by\t goldsmiths  is\t not\n'industry'  within the meaning of Entry 52, List I or  Entry\n33,  List III of the VII Schedule to the  Constitution;\t (b)\nEven  if  it  was an 'industry' within the  meaning  of\t the\nLegislative  Entries,  the Control of the industry  was\t not\ndeclared  by  Parliament  to  be  expedient  in\t the  public\ninterest  as required by the Entries; (c) The provisions  of\nthe  industries\t (Development  and  Regulation)\t Act,  1951,\nindicate  that\twhat Parliament intended  to  control  under\nEntry  52  was\tnot the manufacture  of\t gold  ornaments  by\nindividual  goldsmiths\tbut  'industrial  undertakings'\t  as\ncontemplated  by  s.  2(d) of that  Act,  because,  the\t ex.\npression  'scheduled  industry' in s. 2(a)  and\t 'industrial\nundertaking' in s. 2(d) of that Act are synonymous; and\t (2)\nthat the restrictions imposed by ss. 4(4), 4(5), 5(1), 5(2),\n27(2)(d),  27(6), 32, 46, 88 and 100 of the  Gold  (Control)\nAct were unreasonable and not in public interest and so\t are\nviolative of Art. 19(1)(f) and (g) of the Constitution,\t and\nthat s.\t  27  and s. 39 are discriminatory and violative  of\nArt. 14.\nHELD  :\t (1)  (a)  The\tmanufacture  of\t gold  ornaments  by\ngoldsmiths  in India is a process of  systematic  production\nfor trade or manufacture and so falls within the connotation\nof  the\t word  'industry'  in  the  appropriate\t legislative\nEntries.    Therefore,\t in  enacting  the   impugned\tAct,\nParliament  was validly exercising its legislative power  in\nrespect\t of matters covered by Entry 52 of List I and  Entry\n33  of\tList  III.   Entry  27\tof  List  11  dealing\twith\n'Production,  supply and distribution of goods,\t subject  to\nthe provisions\n480\nof Entry 33 of List III', is a general Entry and the general\npower  should  not  be\tinterpreted so\tas  to\tnullify\t the\nparticular  power conferred by Entry 52 of List 1 and  Entry\n33 of List 111.\t There is no reason for imposing on the word\n'industry'  a  restriction that to  constitute\tindustry,  a\nprocess of machinery or mechanical contrivance is essential.\nThe  mere  use\tof skill or art by the goldsmith  is  not  a\ndecisive  factor and will not take the manufacture  or\tgold\nornaments  out\tof  the ambit of  the  relevent\t legislative\nEntries.  The  decisions  in Banerji  v.  Mukherjee,  [1953]\nS.C.R. 302 and National Union of Commercial Employees v.  M.\nR. Meher,<\/a> [1962] Supp. 3 S.C. R. 157 that the word  industry\nin  s.\t2(j) of the Industrial Disputes Act,  1947  involved\ncooperation of employer and employees, did not mean that the\nactivity carried on by self-employed goldsmiths individually\nwithout\t any  participation  by labour and  capital  in\t the\nactivity  would not fall within the word 'industry'  in\t the\nLists  of the Constitution.  The interpretation of the\tword\nin  the\t Industrial Disputes Act was adopted by\t this  Court\nwith reference to the subject-matter of that Act as that Act\nwas passed to ameliorate the service conditions of  workers.\n[491 B-C, E-F, H; 492 A, F-H] ?\n(b)  There  is\tno  scientific\tor  logical  scheme  in\t the\nclassification\tunder the headings of the first schedule  to\nthe Industries (Development and Regulation) Act as shown  by\nthe fact that many items were included under headings  which\nare inappropriate and others are excluded which should\thave\nbeen included.\tTherefore, the first Schedule to that Act is\n-a  mere enumeration and grouping of various items  and\t the\nheadings do not control the scope and meaning of the entries\nunder  them.  Hence, the heading 'Metallurgical\t Industries'\ndoes not control the entry B(2) under it, dealing with semi-\nmanufactures  and  manufactures'.   The\t expression    semi-\nmanufactures'  could  not mean gold in the form\t of  ingots,\nwire,\tstrips\t and  sheets,  nor  would   the\t  expression\n'manufactures'\tmean gold bricks or standard gold  bars\t and\ngold  castings,\t because, then items 1-B(1)  and  (2)  would\nconvey\tthe same meaning, and 1-B(2) would  be\tsuperfluous.\nThe two expressions should be construed in the light of\t the\nBrussels   Tariff  Nomenclature,  and  so   construed,\t the\nmanufacture  of gold ornaments falls within  the  expression\n'semi-manufactures  or manufactures'.  Since under s.  2  of\nthat  Act it is declared that it is expedient in the  public\ninterest  that the Union should take under its\tcontrol\t the\nindustries  specified in the first schedule.  Parliament  is\ncompetent  to legislate in regard to the subject  matter  of\nthe impugned Act. [494 F-G; 495 B-C ,D-F; 496 B-C]\n(c)  There   is\t a  distinction\t made\tbetween\t  'scheduled\nindustries' and 'industrial undertakings', because, separate\nprovisions  are made throughout the Industries\t(Development\nand  Regulation) Act, for their regulation.  Therefore,\t the\ntwo expressions are not synonymous. [496 F-H]\n(2)(a) Sections 5(2)(b), 27(2)(d) 27(6), 32, 46, 88 and\t 100\nare invalid.\n(a)  Sections\t4(4)   and   4(5)   contemplate\t  that\t the\nAdministrator  appointed  under the Act may  authorise\tsuch\nperson as he thinks fit, to also exercise all or any of\t the\npowers\texercisable  by him under the  Act,  except  certain\nspecified powers, and such person may exercise the powers as\nif  they were conferred by the Act.  Such delegation by\t the\nAdministrator  is  necessary, because, the  volume  of\twork\nentrusted  to him is great and it must be' assumed  that  be\nwould\tdelegate  his  authority  only\tto   competent\t and\nresponsible persons.  Therefore, the delegation does not  go\nbeyond permissible constitutional limits. [A-D]\n(b)  Section  5(1)  requires  that  in\tmaking\torders\t for\ncarrying  out the provisions of the Act,  the  Administrator\nshould have regard to the policy\n481\nof the Act.  The orders should be made within the frame-work\nof  the\t Act  and  should  not\tbe  inconsistent  with\t its\nprovisions.  As regards s. 5(2)(a), the section provided the\nsafeguard  that regulation -of the price at which  any\tgold\nmay be bought or sold should be made after consultation with\nthe Reserve Bank of India. The phrase 'so far as it  appears\nto  him\t to be necessary or expedient for carrying  out\t the\nprovisions   of\t the  Act,'  in\t the  sub-Section,  is\t not\nsubjective  and\t does not constitute the  Administrator\t the\nsole judge  as to what is in fact necessary or expedient for\nthe  purposes of the Act. In the context of the\t scheme\t and\nobject\tof the legislation the opinion of the  Administrator\nas  to the necessity or expediency of making the order\tmust\nbe  reached objectively after having regard to the  relevant\nconsideration  and must be reasonably tenable in a court  of\nlaw.  It Must he assumed that the Administrator will not try\nto promote purposes to the object of  the Act. [499 D-H-]\n     (c)  As regards s. 5(2)(b), on a review of ss. 8(6),II(\n1) 3 4(2) and (3    the\t   power   conferred\tup-on\t the\nAdministration under s. 5(2) (b) is legislative in character\nand  extremely\twide.\tBut whereas the\t parallel  power  of\nsubordinate  legislation  of rule-making  conferred  on\t the\nCentral\t Government  under s. 114(1) and (2) is\t subject  to\nparliamentary  scrutiny, the power of regulation granted  to\nthe  Administrator under s. 5(2)(b) suffers  from  excessive\ndelegation  of\tlegislative  power and must be\theld  to  he\nconstitutionally invalid. [501 A-D]\n(d)  Section 27(2) (d) states that the licence issued by the\nAdministrator  may contain such conditions,  limitations  as\nthe  administrator  may think fit to  impose  and  different\ncondition  limitations and restrictions may be\timposed\t for\ndifferent  classes of dealers.\tOn the face of it. the\tsub-\nsection\t  confers  such\t wide  and  vague  power  upon\t the\nAdministrator  that it is difficult to limit its  scope\t and\ntherefore,   the  section  must\t be  struck  down   as\t all\nunreasonable  restriction  on the fundamental right  of\t the\npetitioners to carry on business.\nSection\t 27  (6) (a) states that in the matter of  issue  or\nrenewal\t of licences ,he Administrator shall have regard  to\nthe  number of dealers existing in the region in  which\t the\napplicant intends to carry on business as a dealer.  But the\nword  'region' is nowhere defined in the Act.  Similarly  s.\n27(6)(b)  requires the Administrator to have due  regard  to\nthe anticipated demand as estimated by him for ornaments  in\nthat region but the expression anticipated demand' is  vague\nand incapable of objective assessment. and is bound to\tlead\nto  a  reat  deal  of uncertainty.   In\t the  same  way\t the\nexpression 'suitability of the applicant' in s. 27(6)(e) and\n'public\t interest'  in\ts.  27(6)(g)  do  not  provide\t any\nobjective standard or norm.  Further. the requirement in the\nsection\t imposing the same coiiditio.,is for the renewal  of\nthe licence as for the initial grant is unreasonable, as  it\nrenders\t the  entire future of the business  of\t the  dealer\nuncertain  and subject to the caprice and arbitrary will  of\nthe  administrative authorities.  Therefore.  clauses  (:t).\n(h).  (e) and (g) of s. 27(6) arc constitutionally  invalid.\nSince  these  clauses are inextricably woven up\t with  other\nclauses\t of s. '7(6) the entire s. 17(6) must be held to  be\ninvalid. f501 D-H; 502 A-B]\nIf  s.\t27(6) (d) and s. 27(6) of the Act  arc\tinvalid\t the\nlicensing scheme contemplated by the Act becomes  unworkable\nand it is therefore necessary for Parliament to enact  fresh\nlegislation  imposing appropriate  conditional\trestrictions\nfor the, grant and renewal of licences to dealers or in\t the\nalternative,  the  Central Government may  make\t appropriate\nrules for the same purpose under s. 114. [502 B-E]\n(e)  Sections  32  and 46 of the Act  authorise\t a  licensed\ndealer\tto  keep  any quantity of  standard  gold  bars\t and\nprovides a limit Upon the holding of\n482\nprimary gold depending on the number of artisans he employs.\nBut  a\t-standard gold bar cannot, in many cases  be  handed\nover  to  a certified goldsmith without cutting\t it.   If  a\ndealer\tgives  a  cut  piece  of  standard  gold  bar  to  a\ngoldsmith, the remaining portion is treated as primary\tgold\nin  his hands.\tTherefore, the limits prescribed  under\t the\nsections   'are\t rendered  meaningless\tand  constitute\t  an\nunreasonable restriction on the right of the petitioners  to\ncarry on trade or business and are invalid. [503 C-E]\n(f)  Section 88 extends the scope of the vicarious liability\nof   the   dealer  .and\t makes\thim  responsible   for\t the\ncontravention  of  any provision of the Act or rule  by\t any\nperson\temployed  by him in the course of  such\t employment.\nThe  section  makes  the dealer liable\teven  for  any\tpast\ncontravention\tperpetrated  by\t an  employee  and   extends\nvicarious  liability beyond reasonable limits. it  therefore\nimposes an unreasonable restriction and is unconstitutional.\n[503 H; 504 A-D]\nSection\t 100 imposes a statutory obligation upon  dealer  to\ntake  all  reasonable  steps to satisfy\t himself  about\t the\nidentity  of persons from whom gold is bought. It  does\t not\nspecify\t the  nature  of steps which a\tdealer\tshould\ttake\nforsuch\t satisfaction  and the obligation is  uncertain\t and\nincapable of proper compliance.\t Hence it must also be\theld\nto  be\tunconstitutional on the ground that  it\t imposes  an\nimpossible and unreasonable burden. [504 D-F]\n(h)  Licensed dealers and certified goldsmiths form separate\nclasses\t   and\t the   classification\tis   a\t  reasonable\nclassification,\t because, a licencd dealer is essentially  a\ntrader who does the business of buying and selling ornaments\nwhile  a  certified goldsmith is a craftsman  who  does\t the\nactual\tmanufacture  of\t ornaments and\tdoes  not  trade  in\nornaments.   Considering the policy underlying\tthe  statute\nand  the object intended to be achieved, the  classification\nis  reasonable\tand  has a rational nexus  with\t the  avowed\npolicy\tand  object of the Act, and hence does\tnot  violate\nArt. 14. [504 G-H: 505 C-E]\n(3)  The provisions which are declared invalid do not affect\nthe  validity  of the Act as a whole.  The test\t is  whether\nwhat remains of the statute is so inextricably bound up with\nthe  invalid  part that what  remains  cannot  independently\nsurvive,  or whether on a fair review of the whole maker  it\ncan  be assumed that the legislature would have\t enacted  at\nall  that  which survives without enacting the\tultra  vires\npart.  In the present case.  Act still remains\tsubstantialy\nthe Act as it was passed, that is, an Act for the control of\nthe  production. manufacture, supply, distribution, use\t and\npossession  of gold and gold ornaments and articles of\tgold\neven  without including the sections which are found  to  be\nultra  vires.\tThe provisions held to be  invalid  are\t not\ninextricably bound up with the remaining portions and it  is\ndifficult to hold that Parliament would not have enacted the\nAct excluding the part found to be ultra vires [506 C-E]\n\n\n\nJUDGMENT:\n<\/pre>\n
ORIGINAL JURISDICTION : Writ Petitions Nos. 282, 407 and 408
\nof 1968.\n<\/p>\n
Petition  Under\t Art. 32 of the Constitution  of  India\t for
\nenforcement of the fundamental rights.
\nC.   K.\t Daphtary,  B.\tR.  L.\tIyengar,  R.  N.   Banerjee,
\nRavinder Narain, J. B.\tDadachanji and 0. C. Mathur, for the
\npetitioners (In W.P. No. 407 of 1968).\n<\/p>\n
\t\t\t    483<\/span><\/p>\n
N.   A.\t Palkhivala, R. N. Banerjee, Ravinder Narain and  J.
\nB. Dadachanji and 0. C. Mathur, for the petitioners (in W.P.
\nNo. 408 of 1968).\n<\/p>\n
A.   K. Sen, J. C. Bhatt, R. N. Banerjee, Ravinder Narain,
\nJ.   B.\t  Dadachanji and 0. C. Mathur, for  the\t petitioners
\n(in W.P. No. 282 of 1968).\n<\/p>\n
M.   C. Setalvad, J. M. Mukhi, A. Sreedharan Nambiar and R.   N.
\nSachthey, for the respondents (in all the petitions).
\nThe Judgment of the Court was delivered by
\nRamaswami, J. In these petitions which have been filed under
\nart.  32 of the Constitution a common question is  presented
\nfor  determination, namely, whether the Gold (Control)\tAct,
\n1968 (Act No. 45 of 1968) is constitutionally valid.
\nThe  Gold  (Control) Act, (hereinafter called  the  impugned
\nAct)  was  passed by Parliament and received assent  of\t the
\nPresident  on  September 1, 1968.  The impugned\t Act  be-ins
\nwith  the following preamble, namely, “an Act to provide  in
\nthe  economic and financial interests of the community,\t for
\nthe   control  of  the\tproduction,   manufacture,   supply,
\ndistribution, use and possession of, and business in,  gold,
\nornaments  and\tarticles of gold and for  matters  connected
\ntherewith  or  incidental  thereto.” Section  2\t contains  a
\nnumber of definitions.\tSection 2(b) defines an “article” to
\nmean anything (other than ornament), in a finished form made
\nof, manufactured from or containing, gold, and including (i)
\nany  ,old  coin, (ii) broken pieces of an article,  but\t not
\nIncluding  primary  old.  Clause (d)  defines  a  “certified
\ngoldsmith”  to\tmean a self-employed goldsmith who  holds  a
\nvalid certificates referred to in s. 30.  Clause (h) defines
\na dealer as follows
\n\t      “dealer”\tmeans  any person  who\tcarries\t on,
\n\t      directly or otherwise, the business of making,
\n\t      manufacturing,\t  preparing,\t  repairing,
\n\t      polishing,    buying,    selling,\t   supplying
\n\t      distributing,    melting,\t   processing\t  or
\n\t      converting  gold,\t whether  for  cash  or\t for
\n\t      deferred\t  payment   or\t  for\t commission,
\n\t      remuneration  or\tother  valuable\t  considera-
\n\t      tion,. . . . . .\n<\/p>\n
\t      Clause (i) states
\n\t      “declaration”  means  a declaration  which  is
\n\t      required\tby this Act or was required by\trule
\n\t      126-1 of the Defence of India Rules, 1962,  or
\n\t      the Gold (Control) Ordinance, 1968, to be made
\n\t      with  regard  to\tthe  ownership,\t possession,
\n\t      custody or control of gold;”\n<\/p>\n
\t      484<\/span><\/p>\n
\t      Clause defines ‘gold’ to mean gold,  including
\n\t      its  alloy  (whether  virgin,  melted  or\t re-
\n\t      melted, wrought or unwrought), in any shape or
\n\t      form, of a purity of not less than nine carats
\n\t      and   including  primary\tgold,  article\t and
\n\t      ornament.\n<\/p>\n
\t      Clause (p) reads as follows :\n<\/p>\n
\t      ”\t  ornament”  means a thing,  in\t a  finished
\n\t      form, meant for personal adornment or for\t the
\n\t      adornment\t of  any idol., deity or  any  other
\n\t      object  of  religious  worship,  made  of,  or
\n\t      manufactured  from, gold, whether or  not\t set
\n\t      with  stones or gems (real or artificial),  or
\n\t      with  pearls (real, cultured or imitation)  or
\n\t      with  all or any of them, and includes  parts,
\n\t      pendents or broken pieces of ornament.\n<\/p>\n
\t      Explanation.-For\tthe  purposes of  this\tAct,
\n\t      nothing  made  of\t -old,\twhich  resembles  an
\n\t      ornament,\t shall be deemed to be\tan  ornament
\n\t      unless the thin- (having regard to its purity,
\n\t      size,  weight, description or workmanship)  is
\n\t      such  as is commonly used as ornament  in\t any
\n\t      State or Union territory;”\n<\/p>\n
\t      Clause (r) states :\n<\/p>\n
\t      ”\t primary gold” means gold in any  unfinished
\n\t      or  semi-finished\t form and  includes  ingots,
\n\t      bars, blocks, slabs, billets, shots,  pellets,
\n\t      rods, sheets, foils and wires;”\n<\/p>\n
\t      Clause  (u) defines a “standard gold  bar”  as
\n\t      primary  gold  of such  fineness,\t dimensions,
\n\t      weight  and  description and  containing\tsuch
\n\t      particulars as may be prescribed.\n<\/p>\n
\t      Section  4  deals\t with  the  appointment\t and
\n\t      functions\t  of  the  Administrator  and\tGold
\n\t      Control Officers and reads is follows
\n\t      “(1)   The   Central  Government\t shall,\t  by
\n\t      notification,  appoint  an  Administrator\t for
\n\t      carrying out the purposes of this Act.\n<\/p>\n
\t      (2)   The\t   Central   Government\t  may,\t  by
\n\t      notification,  appoint as many persons  as  it
\n\t      thinks fit to be Gold Control Officers for the
\n\t      purpose of enforcing the provisions of this  Act.
\n\t      (3)   The\t Administrator shall  discharge\t his
\n\t      functions\t subject to the general control\t and
\n\t      directions of the Central Government.\n<\/p>\n
\t      (4)   The\t Administrator\tmay  authorise\tsuch
\n\t      person  as he thinks fit to also exercise\t all
\n\t      or any of the powers exercisable by him  under
\n\t      this  Act\t other than the\t powers\t under\tsub-
\n\t      section  (6) of this section or  under  clause\n<\/p>\n
\t      (a)   of\tsub-section  (1) of  section  80  or
\n\t      under section 81,
\n\t\t\t\t   485<\/span>
\n\t      and  different  persons may be  authorised  to
\n\t      exercise different powers.\n<\/p>\n
\t      (5)   Subject   to  any  general\tor   special
\n\t      direction\t given or condition imposed  by\t the
\n\t      Administrator,  any person authorised  by\t the
\n\t      Administrator  to\t exercise  any\tpowers\t may
\n\t      exercise\tthose powers in the same manner\t and
\n\t      with  the\t same  effect as if  they  had\tbeen
\n\t      conferred on that person directly by this\t Act
\n\t      and not by way of authorisation.\n<\/p>\n
\t      (6)   The Administrator may also–\n<\/p>\n
\t      (a)   perform all or any of the functions\t of,
\n\t      and\n<\/p>\n
\t      (b)   exercise  all  or  any  of\tthe   powers
\n\t      conferred\t by  this Act or any rule  or  order
\n\t      made thereunder on,
\n\t      any officer lower in rank than himself.\n<\/p>\n
\t      (7)   A Gold Control Officer shall, subject to
\n\t      such limitations, restrictions and  conditions
\n\t      as  the  Central Government may think  fit  to
\n\t      impose,  exercise\t such powers  and  discharge
\n\t      such functions as are specified or  conferred,
\n\t      as the case may be, by or under this Act.”\n<\/p>\n
\t      Section  5 confers power on the  Administrator
\n\t      to issue directions and orders.\n<\/p>\n
\t      “(1) The Administrator may, if he thinks\tfit,
\n\t      make   orders,  not  inconsistent\t  with\t the
\n\t      provisions  of this Act, for carrying out\t the
\n\t      provisions of this Act.\n<\/p>\n
\t      (2)   The\t Administrator\tmay, so\t far  as  it
\n\t      appears  to him to be necessary  or  expedient
\n\t      for  carrying out the provisions of this\tAct,
\n\t      by order-\n<\/p>\n
\t      (a)   regulate,  after consultation  with\t the
\n\t      Reserve Bank of India, the price at which\t any
\n\t      gold may be bought or sold, and\n<\/p>\n
\t      (b)   regulate   by  licences,   pen-nits\t  or
\n\t      otherwise,   the\tmanufacture,   distribution,
\n\t      transport, acquisition, possession,  transfer,
\n\t      disposal, use or consumption of gold.”\n<\/p>\n
\t      Chapter III contains a number of\trestrictions
\n\t      relating\tto  the\t manufacture,\tacquisition,
\n\t      possession.  or delivery of -old.\t Section  16
\n\t      provides\tfor declarations as to articles\t and
\n\t      ornaments.   Chapter VII relates\tto  dealers.
\n\t      Section\t27  of\tthis  chapter\tas   regards
\n\t      licensing of dealers may be quoted :\n<\/p>\n
\t      “(1)  Save as otherwise provided in this\tAct,
\n\t      no   person  shall  commence,  or\t carry\t on,
\n\t      business as a dealer
\n\t      486<\/span>
\n\t      unless he holds a valid licence issued in this
\n\t      behalf by the Administrator.\n<\/p>\n
\t      (2)   A licence issued under this section,-\n<\/p>\n
\t      (a)   shall   be\tin  such  form\tas  may\t  be
\n\t      prescribed,\n<\/p>\n
\t      (b)   shall be valid for such period as may be
\n\t      specified therein,\n<\/p>\n
\t      (c)   may be renewed, from time to time, and\n<\/p>\n
\t      (d)   may contain such conditions, limitations
\n\t      and  restrictions\t as  the  Administrator\t may
\n\t      think fit to impose and different\t conditions,
\n\t      limitations  and restrictions may\t be  imposed
\n\t      for different classes of dealers.\n<\/p>\n
\t      (5)   A  person who intends to Commence  after
\n\t      the
\n\t      commencement  of\tthis  Act,  business  as   a
\n\t      dealer,  shall  make an application  (in\tsuch
\n\t      form   and  on  payment  of  such\t fees,\t not
\n\t      exceeding\t one  hundred  rupees,\tas  may\t  be
\n\t      prescribed) for the issue of a licence.\n<\/p>\n
\t      (6)   On\treceipt\t of an application  for\t the
\n\t      issue  or\t renewal  of a\tlicence\t under\tthis
\n\t      section,\tthe Administrator may, after  making
\n\t      such  inquiry,  if  any, as  he  may  consider
\n\t      necessary,  by order in writing, either  issue
\n\t      or   renew   the\tlicence,   or\treject\t the
\n\t      application for the same;\n<\/p>\n
\t      Provided\tthat no licence shall be  issued  or
\n\t      renewed\tunder\tthis  section\tunless\t the
\n\t      Administrator, having regard to the  following
\n\t      matters, is satisfied that the licence  should
\n\t      be issued or renewed, namely :-\n<\/p>\n
\t      (a)   the\t number of dealers existing  in\t the
\n\t      region in which the applicant intends to carry
\n\t      on business as a dealer,\n<\/p>\n
\t      (b)   the anticipated demand, as estimated  by
\n\t      him, for ornaments in that region,\n<\/p>\n
\t      (c)   the turnover of the applicant, if he had
\n\t      been carrying on business as a dealer prior to
\n\t      the cornmencement of Part XIIA of the  Defence
\n\t      of  India Rules, 1962, during the,  two  years
\n\t      immediately preceding such commencement, or in
\n\t      the case of an application for the renewal  of
\n\t      a\t licence,  the date of the  application\t for
\n\t      such renewal,
\n\t\t\t\t   487<\/span>\n<\/p>\n
\t      (d)   the previous experience, if any, of\t the
\n\t      applicant\t  with\t regard\t  to   the   making,
\n\t      manufacturing,\tpreparing,   repairing\t  or
\n\t      polishing of, or dealing in, ornaments,\n<\/p>\n
\t      (e)   the suitability of the applicant,\n<\/p>\n
\t      (f)   the\t suitability of the  Premises  where
\n\t      the applicant intends to carry on business  as
\n\t      a dealer,\n<\/p>\n
\t      (g)   the public interests, and\n<\/p>\n
\t      (h)   such other matters as may be prescribed.
\n\t      Chapter VIII deals with certified\t goldsmiths.
\n\t      Section 39 of this Chapter provides :\n<\/p>\n
\t      (1)   Save as otherwise provided in this\tAct,
\n\t      no   person  shall  commence,  or\t carry\t on,
\n\t      business\t  as   a   goldsmith\tafter\t the
\n\t      cormnencement  of this Act, unless he holds  a
\n\t      valid   certificate  recognising\thim   as   a
\n\t      goldsmith.\n<\/p>\n
\t      (2)   The\t   certificate\t referred   to\t  in\n\t      subsection (1)-\n\t      (a)   shall   be\tin  such  form\tas  may\t  be\n\t      prescribed,\n<\/pre>\n
\t      (b)   shall  be valid -until the death of\t the
\n\t      holder, or the cancellation thereof, whichever
\n\t      is earlier, and\n<\/p>\n
\t      (c)   may contain such conditions, limitations
\n\t      and  restrictions,  as the  Administrator\t may
\n\t      think fit to impose and different\t conditions,
\n\t      limitations  and restrictions may\t be  imposed
\n\t      for different classes of certified goldsmiths.
\n\t      (3)   Every  certificate granted to  a  person
\n\t      under Part XIIA of the Defence of India Rules,
\n\t      1962,  or under the Gold (Control)  Ordinance,
\n\t      1968,  recognizing him as a goldsmith,  shall,
\n\t      if    in\t force\t immediately   before\t the
\n\t      commencement  of this Act, continue to  be  in
\n\t      force  until the death of the holder,  or\t the
\n\t      cancellation, thereof whichever is earlier.
\n\t      (5)   Every  application\tfor the grant  of  a
\n\t      certificate  referred  to in  sub-section\t (1)
\n\t      shall be made in such form, in such manner and
\n\t      on  payment  of such fee,\t not  exceeding\t ten
\n\t      rupees, as may be prescribed.\n<\/p>\n
\t      (8)   A  certified  goldsmith may\t engage\t not
\n\t      more than one hired labourer to assist him  in
\n\t      his work as a gold-\n<\/p>\n
\t      Sup.  CI-69-2
\n\t      488<\/span>
\n\t      Smith but such hired labourer shall not  make,
\n\t      manufacture,  prepare, repair or\tprocess\t any
\n\t      article or ornament.”\n<\/p>\n
\t      Chapter\tX   deals  with\t  cancellation\t and
\n\t      suspension   of  licences\t and   certificates.
\n\t      Chapter  XII contains provisions\trelating  to
\n\t      entry, search, seizure and arrest.  The  other
\n\t      material\tchapters  are Chapter  XIII  dealing
\n\t      with  confiscation and penalties, Chapter\t XIV
\n\t      providing\t  for\tadjudication,\tappeal\t and
\n\t      revision\tand Chapter XV relating to  offences
\n\t      and their trial.\tChapter XVI contains certain
\n\t      miscellaneous provisions.\t Section 100 of this
\n\t      chapter enacts
\n\t      “Every licensed dealer or refiner or certified
\n\t      goldsmith\t shall, before accenting, buying  or
\n\t      otherwise receiving any gold from any  person,
\n\t      take  all reasonable steps to satisfy  himself
\n\t      as  to  the identity of such  person  and\t if,
\n\t      after an inquiry made by an officer authorised
\n\t      in  this\tbehalf by the Administrator,  it  is
\n\t      found  that such person is not either  readily
\n\t      traceable or is a fictitious person, it  shall
\n\t      be presumed, unless such dealer or refiner  or
\n\t      certified\t goldsmith,  as\t the  case  may\t be,
\n\t      establishes  that he had taken all  reasonable
\n\t      steps to satisfy himself as to the identity of
\n\t      such  person,  that  such\t gold  was   bought,
\n\t      acquired,\t  accepted  or\treceived   by\tsuch
\n\t      licensed\t dealer\t or  refiner  or   certified
\n\t      goldsmith,   as\tthe   case   may   be,\t  in
\n\t      contravention of the provisions of this Act.”
\nThe first question to be considered is whether the  impugned
\nAct is within the legislative competence of Parliament under
\nEntry 52 of List I, and Entry 33 of List III of the  Seventh
\nSchedule.   It was argued on behalf of the petitioners\tthat
\nthe legislation fell within the exclusive competence of\t the
\nState  Legislatures under Entry 27 of List II.\tIt was\tsaid
\nthat  the  goldsmiths’\twork  was  a  handicraft   requiring
\napplication  of skill and the art of making  gold  ornaments
\nwas  not an industry within the meaning of Entry 52 of\tList
\nI,  or\tEntry 33 of List III of the Seventh  Schedule.\t The
\nopposite viewpoint was presented by Mr. Setalvad who  argued
\nthat  the Legislative entries must be construed in  a  large
\nand  liberal  sense and that the goldsmith’s  craft  was  an
\nindustry within the meaning of Entry 24 of List II Entry  33
\nof  List  III  and  Entry 52 of List  I\t and  Parliament  is
\ncompetent to legislate in regard to the manufacture of\tgold
\nornaments.  The relevant entries in the Lists of the Seventh
\nSchedule   of  the  Constitution  are  List  1,\t Entry\t 52-
\nIndustries, the control of which by the Union is declared by
\nParliament  by law to be expedient in the  public  interest;
\nList IT, Entry 24 : Industries subject to the provisions  of
\nEntries 7 and 52 of List I; List II, Entry 27 :\t Production,
\nsupply\tand distribution of goods subject to the  provisions
\nof  Entry  33  of List HI.  List III, Entry  3\t3  reads  as
\nfollows:\n<\/p>\n
489<\/span><\/p>\n
\t      “Trade  and commerce in, and  the\t production,
\n\t      supply and distribution of,-\n<\/p><\/blockquote>\n
\t      (a)   the\t products of any industry where\t the
\n\t      control  of  such\t industry by  the  Union  is
\n\t      declared by Parliament by law to be  expedient
\n\t      in the public interest, and imported goods  of
\n\t      the same kind as such products;\n<\/p><\/blockquote>\n
\t      (b)   foodstuffs,\t including  edible  oilseeds
\n\t      and oils;\n<\/p><\/blockquote>\n
\t      (c)   cattle  fodder, including  oilcakes\t and
\n\t      other concentrates;\n<\/p><\/blockquote>\n
\t      (d)   raw cotton, whether ginned or  unginned,
\n\t      and cotton seed; and\n<\/p><\/blockquote>\n
\t      (e)   raw jute.”\n<\/p><\/blockquote>\n
\t      Before  construing these entries it is  useful
\n\t      to  notice some of the well-settled  rules  of
\n\t      interpretation laid down by the Federal  Court
\n\t      and by this Court in the matter of  construing
\n\t      the entries.  The power to legislate is  given
\n\t      to the appropriate legislatures by Art. 246 of
\n\t      the  Constitution.  The entries in  the  three
\n\t      Lists are only legislative heads or fields  of
\n\t      legislation;  they  demarcate  the  area\tover
\n\t      which   the   appropriate\t  legislatures\t can
\n\t      operate.\t It  is\t well-established  that\t the
\n\t      widest  amplitude\t should\t be  given  to\t the
\n\t      language\tof  the entries.  But  some  of\t the
\n\t      entries in the different lists or in the\tsame
\n\t      list may overlap or may appear to be in direct
\n\t      conflict with each other.\t It is then the duty
\n\t      of  this\tCourt to reconcile the\tentries\t and
\n\t      bring about a harmonious construction.  In  In
\n\t      re  The Central Provinces and Berar  Sales  of
\n\t      Motor  Spirit  and  Lubricants  Taxation\tAct,
\n\t      1938(1) Sir Maurice Gwyer pro-
\n\t      ceeded to state :\n<\/p><\/blockquote>\n
\t      “Only  in the Indian Constitution Act can\t the
\n\t      particular  problem arise which is  now  under
\n\t      consideration and an endeavour must be made to
\n\t      solve it, as the Judicial Committee have said,
\n\t      by  having recourse to the context and  scheme
\n\t      of  the  Act, and a  reconciliation  attempted
\n\t      between  two apparently conflicting  jurisdic-
\n\t      tions by reading the two entries together\t and
\n\t      by   interpreting,   and,\t  where\t  necessary,
\n\t      modifying, the language of the one by that  of
\n\t      the  other.  If indeed such  a  reconciliation
\n\t      should prove impossible, then, and only  then,
\n\t      will  the non-obstante clause operate and\t the
\n\t      federal power prevail; for the clause ought to
\n\t      be  regarded as a last resource, a witness  to
\n\t      the imperfections of human expression and\t the
\n\t      fallibility of legal draftsmanship.” (p. 44)
\n\t      (1)   [1939] F. C. R. 18.\n<\/p><\/blockquote>\n
\t      490<\/span><\/p>\n
\t      The  Federal Court in that case held that\t the
\n\t      entry  “taxes  on the sale of  goods  was\t not
\n\t      covered by the entry “duties of excise” and in
\n\t      coming  to that conclusion the  learned  Chief
\n\t      Justice observed :<\/p><\/blockquote>\n
\t      Here are two separate enactments, each in\t one
\n\t      aspect  conferring the power to impose  a\t tax
\n\t      upon  goods;  and it would accord\t with  sound
\n\t      principles  of construction to take  the\tmore
\n\t      general power, that which extends to the whole
\n\t      of  India, as subject to an exception  created
\n\t      by the particular power, that which extends to
\n\t      the Province only.  It is not perhaps strictly
\n\t      accurate\tto speak of the provincial power  as
\n\t      being  exceptedout of the federal\t power,\t for
\n\t      the  two\tare independent of one\tanother\t and
\n\t      exist  side  by  side.   But  the\t  underlying
\n\t      principle\t in the two cases must be the  same,
\n\t      that  a  general\tpower ought  not  to  be  so
\n\t      construed as to make a nullity of a particular
\n\t      power conferred by the same Act and  operating
\n\t      in the, same field, when by reading the former
\n\t      in a more restricted sense effect can be given
\n\t      to  the  latter in its  ordinary\tand  natural
\n\t      meaning.” (pp. 49-50)
\nThe  rule of construction adopted by that decision  for\t the
\npurpose\t of  harmonizing  the  two  apparently\t conflicting
\nentries in the two Lists would equally apply to an  apparent
\nconflict  between two entries in the, same List.   Patanjali
\nSastri,\t J,  (as  he then was) held in State  of  Bombay  v.
\nNarothamadas Jethabai<\/a>(1), that the words “administration  of
\njustice”  and “constitution and organization of all  courts”
\nin  Entry  1  of  List 11 of the  Seventh  Schedule  to\t the
\nGovernment  of India Act, 1935 must be understood in a\tres-
\ntricted\t sense excluding from their scope “jurisdiction\t and
\npowers of courts” specifically dealt with in item 2 of\tList\n<\/p>\n
11.   in  the  words  of  the  learned\tJudge,\tif  such   a
\nconstruction was not given “the wider construction of  entry
\n1 would deprive entry 2 of all its content and reduce it  to
\nuseless lumber.”\n<\/p>\n
The question to be considered is what is the meaning of\t the
\nword  “industry” in Entry 52 of List I, Entry 24 of List  11
\nand  Entry 33 of List 111.  Whatever may be its\t connotation
\nit must bear the same meaning in all these entries which are
\nso  interconnected  that conflicting or\t different  meanings
\ngiven  to  them would snap the connection.  In\tthe  Shorter
\nOxford English Dictionary the word “industry” is defined  as
\n“a  particular\tbranch\tof productive  labour;\ta  trade  or
\nmanufacture.” According to Webster’s Third New International
\nDictionary  (1961  edn.)  the  word  “industry”\t means\t“(a)
\nsystematic labour especially for the creation
\n(1)  [1951] S.C.R. 51.\n<\/p>\n
491<\/span><\/p>\n
of  value;  (b)\t a department or branch\t of  a\tcraft,\tart,
\nbusiness or manufacture, a division of productive and profit
\nmaking labour especially one that employs a large  personnel
\nand  capital  especially in manufacturing; (c)\ta  group  of
\nproductive  or\tprofit making enterprises  or  organisations
\nthat  have a similar technological structure  of  production
\nand that produce or supply technically substitutable  goods,
\nservices or sources of income.” It was said that if the word
\n“industries”  is construed in this wide sense, Entry  27  of
\nList  11  will\tlose all meaning and  content.\t It  is\t not
\npossible  to  accept  this contention for,  Entry  27  is  a
\ngeneral\t  Entry\t and  it  is  a\t well-recognised  canon\t  of
\nconstruction   that  a\tgeneral\t power\tshould\tnot  be\t  so
\ninterpreted  as to nullify a particular power  conferred  by
\nthe  same  instrument.\t In Tika Ramji\tv.  State  of  Uttar
\nPradesh<\/a>(1) the expression “industry” wag defined to mean the
\nprocess of manufacture or production and did not include raw
\nmaterials  used in the industry or the distribution  of\t the
\nproducts  of the industry.  It was contended that  the\tword
\n“industry” was a word of wide import and should be construe:
\nas  including  not  only  the  process\tof  manufacture\t  or
\nproduction  but\t also activites antecedent thereto  such  as
\nacquisition of raw materials and subsequent thereto such  as
\ndisposal  of  the finished products of that  industry.\t But
\nthis  contention was not accepted.  It was contended by\t Mr.
\nDaphtary that if the process of production was to constitute
\n“industry” a process of machinery or mechanical\t contrivance
\nwas  essential.\t But we see no reason why such a  limitation
\nshould\tbe imposed on the meaning of the word “industry”  in
\nthe  legislative  lists.   Similarly it was  argued  by\t Mr.
\nPalkhivala that the manufacture of gold ornaments was not an
\nindustry  because it required application of individual\t art
\nand  craftsmanship  and aesthetic skill.  But  mere  use  of
\nskill or art is not a decisive. factor and will not take the
\nmanufacture  of\t gold  ornaments out of\t the  ambit  of\t the
\nrelevant  legislative entries.\tIt is well settled that\t the
\nentries\t in  the three lists are only legislative  heads  or
\nfields of legislation and they demarcate the area over which
\nthe  appro-priate legislature can operate.  The\t legislative
\nentries\t must be given a large and  liberal  interpretation,
\nthe  reason  being that the allocation of  subjects  to\t the
\nlists is not by way of scientific or logical definition\t but
\nis a mere enumeration of broad and comprehensive categories.
\nIt  is not, however, necessary for the purpose of this\tcase
\nto attempt to define the expression “industry” precisely  or
\nto state exhaustively all its different aspects.  But we are
\nsatisfied  in the present case that the manufacture of\tgold
\nornaments by goldsmiths in India is a “process of systematic
\nproduction”  for trade or manufacture and so  falls  ‘within
\nthe  connotation of the word “industry” in  the\t appropriate
\nlegislative entries-\n<\/p>\n
(1)  [1956] S.C.R. 393.\n<\/p>\n
492<\/span><\/p>\n
It  follows,  therefore, that in enacting the  impugned\t Act
\nParliament  was validly exercising its legislative power  in
\nrespect\t of matters covered by Entry 52 of List I and  Entry
\n33 of List 111.\n<\/p>\n
It  was contended by Mr. Ashoke Sen that the manufacture  of
\n,gold  ornaments  cannot be said to constitute\tan  industry
\nunless there was cooperation of labour and capital and there
\nwas relationship of employer and employee.  It was said that
\nif ornament making activity was largely carried on by  self-
\nemployed   goldsmiths\tindividually  and   there   was\t  no
\nparticipation  by labour and capital in the  said  activity.
\nReference was made to the decision of this Court in  Banerji
\nv.  Mukherjee(1) in which it was pointed out that  the\tword
\n“industry”  in s. 2(j) of the Industrial Disputes Act,\t1947
\nshould\tbe  construed  as  an  activity\t systematically\t  or
\nhabitually  undertaken\tfor production and  distribution  of
\ngoods or for rendering material services to the community at
\nlarge\tand  that  such\t an  activity\tgenerally   involved
\ncooperation of the employer and the employees and its object
\nwas satisfaction of human needs.  The same view was taken in
\nthe National Union of Commercial Employees v. M. R. Meher<\/a>(2)
\nin which it was pointed out that the distinguishing  feature
\nof  an industry was that for production of goods or for\t the
\nrendering of service, cooperation between capital and labour
\nor  between  the employer and his employee must\t be  direct.
\nBut  these decisions are of no avail to the petitioners\t be,
\ncause  they  were concerned with the interpretation  of\t the
\nword  “industry” in s. 2(j) of the Industrial Disputes\tAct,
\n1947 which reads as follows :\n<\/p>\n
\t      “industry\t   means   any\t business,    trade,
\n\t      undertaking,   manufacture   or\tcalling\t  of
\n\t      employers\t and includes any calling,  service,
\n\t      employment,    handicraft\t   or\t  industrial
\n\t      occupation or avocation of workmen-”\n<\/p>\n
In  interpreting  the word “industry” in  that\tsection\t the
\ncourt thought it necessary to Emit the scope of the  section
\nhaving\tregard\tto the -aim, object and scope of  the  whole
\nAct.   The history of the legislation made it manifest\tthat
\nthe  Industrial Disputes Act was introduced as an  important
\nstep  in  achieving  social  justice.\tThe  Act  seeks\t  to
\nameliorate the service conditions of the workers, to provide
\na  machinery for resolving their conflicts and to  encourage
\ntheir  cooperative effort in the service of  the  community.
\nIt  was in this context that the expression  “industry”\t was
\ninterpreted  in Banerjee’s case(1) and Meher’s case(2).\t  It
\nwas  an\t interpretation\t ,adopted  by  this  Court  sacundum
\nsubjectae  materies.   But  what ‘we are  concerned  in\t the
\npresent case is the interpretation of the
\n(1) [1953] S.C.R.302.\n<\/p>\n
(2) [1962] Supp. 3 S.C.R. 157.\n<\/p>\n
493<\/span><\/p>\n
word  “industry” in the legislative lists  which  constitute
\npart  of  the Seventh Schedule of the Constitution.   It  is
\nmanifest  that\tthe,  decisions referred to  above  have  no
\nbearing on the question debated in the present case.
\nIt was argued by Mr. Palkhivala that even on the  assumption
\nthat  making of gold articles and ornaments was an  industry
\nwithin the meaning of the legislative entries the control of
\nthe  said  industry  was not declared by  Parliament  to  be
\nexpedient in the public interest and, therefore,  Parliament
\nwas  not competent to legislate upon the subject  matter  of
\nthe  impugned  Act.   To  appreciate  this  argument  it  is
\nnecessary to notice briefly the provisions of the Industries
\n(Development  and  Regulation) Act, 1951 (Act  65  of  1951)
\nwhich\twas  enacted  by  Parliament  to  provide  for\t the
\ndevelopment and regulation of certain industries.  Under  s.
\n2  of  this Act it is declared that it is expedient  in\t the
\npublic interest that the Union should take under its control
\nthe  industries\t specified in the first\t schedule.   Section
\n3(1) of the 1951 Act defines a “scheduled industry” to\tmean
\n“any  of  the industries specified in the  first  schedule”.
\nThe  relevant  portion of the first schedule  is  reproduced
\nbelow :\n<\/p>\n
\t      “1. METALLURGICAL INDUSTRIES:
\n\t      A. Ferrous
\n\t      (1)   Iron and steel (metal).\n<\/p><\/blockquote>\n
\t      (2)   Ferro-alloys.\n<\/p><\/blockquote>\n
\t      (3)   Iron and steel castings and forgings.
\n\t      (4)   Iron and steel structurals.
\n\t      (5)   Iron and steel pipes.\n<\/p><\/blockquote>\n
\t      (6)   Special steels.\n<\/p><\/blockquote>\n
\t      (7)   Other products of iron and steel.\n<\/p><\/blockquote>\n
\t      B.    Non-ferrous
\n\t      (1)   Precious  metals,  including  gold\t and
\n\t      silver, and their alloys.\n<\/p><\/blockquote>\n
\t      (1A)  Other  non\tferrous\t metals\t and   their
\n\t      alloys,
\n\t      (2) Semi-manufactures and manufactures.”\n<\/p><\/blockquote>\n
The  question  presented for determination  is\twhether\t the
\nmanufacture  of\t gold ornaments falls within item  2  “semi-
\nmanufactures or manufactures” under the sub-heading B  “non-
\nferrous” of the heading “metallurgical industries”.  It\t was
\nargued\tthat  item  2 of sub-heading B\tcannot\tbe  read  in
\nisolation  but\tit must be construed in the context  of\t the
\nheading “metallurgical industries” which was
\n494<\/span>
\nthe  controlling factor in the interpretation of the item  2
\nunder  the sub-heading.\t To put it differently the  argument
\nwas that the heading “metallurgical industries” was the\t key
\nto  the\t interpretation of the\titem  “semi-manufactures  or
\nmanufactures”.\t  It   was   said   that   the\t  expression
\n“metallurgical industries” has a definite technical  meaning
\nnamely an industry engaged in the actual extraction of metal
\nfrom  ores and the processing, manufacturing and  converting
\nthe base metal into various forms, shapes and classes so  as
\nto make them available in a utilisable form for the  purpose
\nof   various  other  industries\t viz.  :  machine   building
\nindustries, electrical industries, ship building industries,
\nrailways etc.  In support of this proposition reference\t was
\nmade  to the affidavits of Dr. G. S. Tendolkar, Head of\t the
\nDepartment  of Metallurgy, Indian Institute  of\t Technology,
\nPowai  and  of\tDr.  V. A. Altekar,  Head  of  the  Chemical
\nTechnology  Department,\t University of Bombay  and  also  to
\ncertain standard text books on metallurgy.  On behalf of the
\nrespondents  reference\twas  made to the  affidavit  of\t Mr.
\nDayal, Industrial Adviser to the Government of India wherein
\nhe  states that in the process of manufacture of gold  orna-
\nments  the goldsmith has to “melt gold (pure  virgin  metal,
\nold  ornaments\tor  scrap); make an alloy  of  the  required
\nspecifications;\t cast  it into desired shapes;\tconvert\t the
\nalloy  into  semis  like  rods,\t strips,  wires\t etc.,\t and
\nfabricate  it  into the required design,  finished  articles
\nincluding ornaments.” These involve metallurgical operations
\nlike   melting,\t  refining,  making  of\t  alloys,   casting,
\nannealing, rolling, forging, pressing, punching,  soldering,
\npressing,  die\tcutting etc., and a goldsmith  therefore  is
\nemployed in the metallurgical industry.\t It is not necessary
\nfor us to express any concluded opinion in this case on\t the
\nquestion whether the manufacture of gold ornaments  involves
\nany metallurgical process.  Even on the assumption that\t the
\npetitioners are right in saying that the manufacture of gold
\nornaments  is not a metallurgical industry in the  technical
\nsense we consider that the heading “metallurgical  industry”
\nin  the schedule does not control the scope and\t meaning  of
\nthe  Entry 1-B(2) “semi-manufactures or manufactures”.\t The
\nheadings  of  the  schedule do not  follow  any\t logical  or
\nscientific  pattern  but are put in merely  as\tdevices\t for
\nconvenient  grouping of the industries.\t For example,  there
\nis no warrant for excluding electricity meters used in homes
\nfrom  item 15(1) or for excluding weighing machines used  at
\nairports  or  railway  stations or ports  from\titem  15(3).
\nThere  are other examples which show that the  heading\tdoes
\nnot control the meaning of the industry.  Thus\t“lubricating
\noils  and  the\tlike” in the item at 2(2)  are\tclearly\t not
\n“fuels”\t which\tis the heading under which they\t are  found.
\nAgain,\tfire fighting equipment and appliances such as\tfire
\nextinguishers used in homes or in offices or in cinema halls
\nor as accessories to motor cars
\n495<\/span>
\nwould  clearly be included in the industry at item  8-B(14).
\nSimilarly matches [item 3 6 (3 ) ] is not controlled by\t the
\nheading\t “timber  products”  nor is there  any\twarrant\t for
\nholding that arms and ammunition, item 37, is controlled  by
\nthe  heading “defence industries”.  As we have already\tsaid
\nthat  there  is\t no  scientific or  logical  scheme  in\t the
\nclassification of first schedule of Act 65 of 1951 but it is
\na  mere enumeration and grouping of various items.   We\t are
\nunable\tto  accept  the argument  of  petitioners  that\t the
\nheading\t metallurgical\tindustries should  be  construed  as
\nhaving\ta  controlling effect on the meaning  of  item\tB(2)
\n“semi-manufactures or manufactures”.
\nWe  proceed  to consider the next question arising  in\tthis
\ncase as to whether the manufacture of ornaments falls within
\nitem  1-B  (2) “semi-manufactures and manufactures”  of\t the
\nfirst  schedule.   It was said that  the  expression  “semi-
\nmanufactures  or manufactures” in regard to gold  means\t the
\nprecious  metal in various stages of preparation before\t its
\nproduction  in\ta  pure state.\tIt was\targued\tthat  “semi-
\nmanufactures”  would mean gold in the form of ingots,  wire,
\nstrips, sheets and “manufactures” would mean gold, bricks or
\nstandard gold bars, cold castings and so on.  We are  unable
\nto accede to this argument.  If the meaning contended for by
\nthe petitioners is correct item 1-B(1) and (2) of the  first
\nschedule  would\t convey the same meaning.   In\tother  words
\nentry  No.  1-B\t (2)  would be\tsuperfluous  and  we  cannot
\nattribute  tautology to Parliament which cannot be  supposed
\nto  have  used\twords  without\tmeaning.   We  are,  on\t the
\ncontrary, of opinion that the expression  “semi-manufactures
\nor  manufactures”  should be construed in the light  of\t the
\nBrussels  Tariff  Nomenclature.\t  Section  XIV\tdeals\twith
\n“precious  metals and articles thereof”.  Sub-Chapter II  of
\nChapter 71 in this section specifically deals with  precious
\nmetal  in unwrought and unworked form and  semi-manufactures
\nthereof\t and  sub-Chapter  III deals  with  manufactures  of
\nprecious  metals.   Headings 71.07 and 71.08  in  this\tsub-
\nChapter\t set out un-wrought or semi-manufactured gold  while
\nheadings 71.12 to 71.14 in Sub-Chapter III set out  finished
\narticles of jewellery, goldsmiths’ wares and other  articles
\nof  precious  metals.\tThe explanatory\t notes\tto  Brussels
\nTariff\tNomenclature shows (Vol, 11, p. 633) that  “precious
\nmetals in unwrought or semi-manufactured from but which have
\nnot reached the stage of articles” are included under  Head-
\ning 71.05 to 71.10. So far as silver is concerned “unwrought
\nand  semi-manufactures”\t are  set out at  p.  641  and\tthey
\ninclude\t forms\tlike  bars, rods,  sections,  wire,  plates,
\nsheets and strips, tubes, pipes, hollow bars, foils,  powder
\netc.  The enumeration of finished articles of gold, that  is
\nto    say,   manufactures of gold is given  at\tp.     640.The
\nenumeration includes articles and ornaments, for
\n496<\/span>
\nexample,  jewellery  and  parts thereof,  small\t objects  of
\npersonal  adornment such as rings, bracelets, necklaces\t and
\narticles  of  personal use such as  cigarette  cases,  snuff
\nboxes,\tpowder boxes, lipstick holders etc. (pp. 641-646  of
\nExplanatory  notes).  In our opinion the  expression  “semi-
\nmanufactures  or manufactures” of the first schedule  should
\nbe   construed\tin  the\t context  and  background   of\t the
\nclassification\tin  the Brussels  Tariff  Nomenclature.\t  It
\nfollows that manufacture of gold ornaments falls within\t the
\nexpression  “semi-manufactures or manufactures” in  item  1-
\nB(2)  of  the first schedule and Parliament  is,  therefore,
\ncompetent  to legislate in regard to the subject  matter  of
\nthe impugned Act.\n<\/p>\n
It was also contended that the provisions of Act 65 of\t1951
\nclearly\t indicate that what Parliament intended\t to  control
\nunder Entry 52 of Union List was not the manufacture of gold
\nornaments but industrial undertakings as contemplated by  s.
\n2(d) of that Act.  It was contended by Mr. Daphtary that the
\nexpression ” scheduled industry” in s. 2 (a) of the Act\t was
\nsynonymous with an industrial undertaking under s. 2 (d) and
\na declaration under  S.\t 2 of the Act would therefore  apply
\nto industries carried on in the factories as defined in\t the
\nAct.   It was argued that the Act was intended to  apply  to
\nindustrial  undertakings carried on in factories and not  to
\nindividual craftsmanship of goldsmiths.\t Section 3(d) of the
\nAct  defines  an  industrial undertaking to  mean  :  ”\t any
\nundertaking pertaining to a scheduled industry carried on in
\none  or more factories by any person or authority  including
\nGovernment”.  Section 2(i) defines a “scheduled industry” as
\nmeaning any of the industries defined in the first schedule.
\nChapter III of the Act provides measures for the  regulation
\nof  scheduled industries.  Chapter III-A relates  to  direct
\nmanagement and control of industrial undertakings in certain
\ncases.\tIn our opinion Act 65 ,of 1951 performs two distinct
\nand  independent functions, namely, (1) a declaration  under
\nS.  2 that it is expedient in the public interest  that\t the
\nUnion should take under its control the industries specified
\nin the first schedule and (2) the setting up of a  machinery
\nfor imposing controls on industrial undertakings.  There  is
\na  distinction\tmade  between  “scheduled  industries”\t and
\n“industrial  undertakings” throughout the Act  and  separate
\nprovision  has\tbeen  made for\tregistration  of  industrial
\nundertakings  for licensing of new  industrial\tundertakings
\nand for the direct management of industrial undertakings  by
\nthe  Central Government in certain cases.   Provisions\thave
\nalso  been  made  for regulation  of  scheduled\t industries,
\nprocedure   for\t  grant\t  of  licences,\t  power\t  to   cause
\ninvestigation to be made etc.  We are, therefore, unable  to
\naccept\tthe contention of Mr. Daphtary that the\t expressions
\n“industrial undertaking” and “scheduled industry” are,\tused
\nsynonymously in the Act or the
\n497<\/span>
\nexpression “scheduled industry” in s. 2 of the Act should be
\nconstrued as a “scheduled industry” carried on in the manner
\nof an “industrial undertaking.”\n<\/p>\n
Having dealt with and negatived the attack upon the validity
\nof the entire Act we shall now proceed to deal with  certain
\nsections  of  the  Act,\t the  validity\tof  which  was\talso
\nquestioned.  It was argued that the restrictions imposed  by
\nsections  4(4),\t 4(5), 5(1), 5 (2), 27 (2) (d), 27  (6),  16
\n(7),  32 read with 46, 88 and 100 were unreasonable and\t not
\nin public interest and so are violative of Art. 19 ( 1 )  (f
\n)  and (g) of the Constitution.\t It was also said  that\t the
\nsections were also violative of Art. 14 of the\tConstitution
\nbecause\t of the conferment of unchannered, uncontrolled\t and
\narbitrary  power in the Administrator and other\t authorities
\nconstituted under the impugned Act.\n<\/p>\n
Before\texamining this argument it is necessary to  set\t out
\nthe circumstances and the social and economic background  in
\nwhich the impugned legislation was passed.  It is stated  in
\nthe  counteraffidavit  that the impugned Act was  passed  in
\norder  to bring about reduction in the quantity of  smuggled
\ngold by rendering smuggling more dangerous and the  disposal
\nof  smuggled  gold in the domestic  market  more  difficult.
\nEven  though  import of gold had  been\tbanned\tconsiderable
\nquantities  of\tcontraband  gold find their  way  into\tthis
\ncountry through illegal channels.  The Customs Department is
\nin itself not in a position to effectively combat  smuggling
\nover  the long borders and the coast lines  and,  therefore,
\nthe  antismuggling  measures have to be\t supplemented  by  a
\ndetailed system of control over internal transactions so  as
\nto make the circulation of smuggled gold more difficult,  if
\nnot  impossible.   The loss of foreign\texchange  caused  by
\nsmuggling of gold was estimated at nearly Rs. 100 crores per
\nyear  in  the post-devaluation period, and  Government\tfelt
\nthat it was very necessary to reduce the internal demand for
\ngold and erect barriers to the circulation of smuggled\tgold
\nwithin the country.  The submission of Mr. Setalvad was that
\nthe reasonableness of the impugned provisions of the Act had
\nto  be\tjudged in the light of the widespread  smuggling  of
\ngold  which, if not checked, was calculated to\tdestroy\t the
\nnational economy and hamper the country’s economic stability
\nand progress.  Reference was made in this connection to\t the
\nreport of the Taxation Enquiry Commission which pointed\t out
\nthat  the  factual position in regard to  the  existence  of
\nwidespread smuggling.\n<\/p>\n
\t      “Smuggling now constitutes not only a loophole
\n\t      for  escaping duties but also a threat to\t the
\n\t      effective\t fulfilment  of\t the  objectives  of
\n\t      foreign  trade  control.\t The  existence\t  of
\n\t      foreign pockets in the country accentuates the
\n\t      danger.\n<\/p><\/blockquote>\n
\t      498<\/span><\/p>\n
\t      The  extent  of the leakage  of  revenue\tthat
\n\t      takes  place  through this process  cannot  be
\n\t      estimated even roughly, but, we understand, it
\n\t      is not unlikely that it is substantial.  Apart
\n\t      from  its\t deleterious  effect  on  legitimate
\n\t      trade,  it  also\tentails\t the  outlay  of  an
\n\t      appreciable  amount of public funds on  patrol
\n\t      vessels  along  the sea coasts  and  permanent
\n\t      works  along  the land border, and  watch\t and
\n\t      ward  staff  on  a  generous  scale.   It\t is,
\n\t      therefore,  necessary,  in our  opinion,\tthat
\n\t      stringent\t   measures    both    legal\t and
\n\t      administrative  should be adopted with a\tview
\n\t      to  minimising  the scope of this\t evil.”\t (p.\n<\/p><\/blockquote>\n
\t      320).\n<\/p><\/blockquote>\n
\t      It  is  in  this context\tthat  the  test\t for
\n\t      ascertaining   the   reasonableness   of\t the
\n\t      restriction  of  the rights in Art. 19  is  of
\n\t      great importance.\t There are several decisions
\n\t      of  this Court in which the relevant  criteria
\n\t      have   been  laid\t down.\t It   is,   however,
\n\t      sufficient  to  refer  to\t a  passage  in\t the
\n\t      judgment of Patanjali Sastri, C.J. in State of
\n\t      Madras v. V. G. Rao<\/a> (1).\n<\/p><\/blockquote>\n
\t      “It  is important in this context to  bear  in
\n\t      mind that the test of reasonableness, wherever
\n\t      prescribed,   should   be\t applied   to\teach
\n\t      individual  statute impugned, and no  abstract
\n\t      standard, or general pattern of reasonableness
\n\t      can be. laid down as applicable to all  cases.
\n\t      The  nature of the right alleged to have\tbeen
\n\t      infringed,  the  underlying  purpose  of\t the
\n\t      restrictions  imposed, the extent and  urgency
\n\t      of the evil sought to be remedied thereby, the
\n\t      disproportion    of   the\t  imposition,\t the
\n\t      prevailing conditions at the time, should\t all
\n\t      enter into the judicial verdict.”\n<\/p><\/blockquote>\n
It  is\tnecessary  to emphasise\t that  the  principle  which
\nunderlies the structure of the rights guaranteed under\tArt.
\n19 of the Constitution is the principle of balancing of\t the
\nneed for individual liberty with the need for social control
\nin  order  that the, freedoms guaranteed to  the  individual
\nsubserve the larger public interests.  It would follow\tthat
\nthe  reasonableness  of the restrictions imposed  under\t the
\nimpugned  Act would have to be judged by the  magnitude,  of
\nthe  evil which it is the purpose of the restraints to\tcurb
\nor eliminate.\n<\/p>\n
Section 4(4) of the Act empowers the Administrator to autho-
\nrise  such person as he thinks fit to also exercise  all  or
\nany  powers  exercised by him under the\t Act  (with  certain
\nexceptions)  and  different  persons may  be  authorised  to
\nexercise  different powers.  Section 4(5) states  that\t“any
\nperson authorised by the Administra-\n<\/p>\n
(1)  [1952] S.C.R.597,607.\n<\/p>\n
499<\/span><\/p>\n
tor to exercise any powers may exercise those powers in\t the
\nsame  manner  and with the same effect as if they  had\tbeen
\nconferred on that person directly by this Act and not by way
\nof  authorisation.” After having heard the argument  of\t Mr.
\nDaphtary  we are not satisfied that the delegation of  power
\nconferred  by s. 4(4) and 4(5) goes beyond  the\t permissible
\nconstitutional\tlimits.\t Delegation by the Administrator  is
\nnecessary  for the volume of work entrusted to him is  great
\nand  he\t cannot be expected to do the bulk  of\tit  himself.
\nAbsence of such power might seriously impair  administrative
\nefficiency.\tSection\t  4(4)\t contemplates\t that\t the
\nAdministrator may authorise such person as he thinks fit  to
\nalso  exercise all or any of the powers exercisable  by\t him
\nunder  the  Act\t other than the\t powers\t specified  in\tthat
\nsection.   It  must be assumed that the\t Administrator\twill
\ndelegate  his authority only to ‘competent  and\t responsible
\npersons\t in pursuance of the power conferred upon him by  s.
\n4(4) of the Act.  It was then said that the provisions of s.
\n5(1)  conferred\t wide  and uncontrolled\t power\twithout\t any
\nguidelines  and\t was capable of being  used  with  arbitrary
\ndiscrimination.\t But s. 5(1) requires that the Administrator
\nshould\thave regard to the policy of the Act in\t making\t his
\norders.\t  His orders should be made within the framework  of
\nthe  Act and should not be inconsistent with the  provisions
\nof  the Act. As regards s. 5 (2) (a) the argument  was\tthat
\nunguided  power was conferred upon the Administrator or\t his
\ndelegate  to  regulate or fix the price at  which  any\tgold
\nwhether\t it be primary gold, article or ornament  should  be
\nsold.\tAs the power to fix the price may also be  exercised
\nnot  only in respect of primary gold but also in respect  of
\narticles  and ornaments the business of the petitioners\t and
\nsimilarly other persons will be adversely affected.  But the
\nsection\t provides the safeguard that the regulation  of\t the
\nprice should be made by the Administrator after consultation
\nwith  the  Reserve Bank of India.  It was  argued  that\t the
\nphrase\t“so  far  as it appears to him to  be  necessary  or
\nexpedient for carrying out the provisions of this Act” was a
\nsubjective formula and action of the Administrator in making
\nthe  orders  under  s.\t5  (2)\t(a)  may  be  arbitrary\t and
\nunreasonable.\tBut  in\t our  opinion  the  formula  is\t not
\nsubjective  and\t does not constitute the  Administrator\t the
\nsole judge as to what is in fact necessary or expedient\t for
\nthe  purposes of the Act.  On the contrary we bold  that  in
\nthe context of the scheme and object of the legislation as a
\nwhole  the  expression cannot be construed in  a  subjective
\nsense  and  the\t opinion  of the  Administrator\t as  to\t the
\nnecessity or expediency of making the order must be  reached
\nobjectively   after   having   regard\tto   the    relevant
\nconsiderations and must be reasonably tenable in a court  of
\nlaw.   It  must\t be  assumed  that  the\t Administrator\twill
\ngenerally  address  himself  to\t the  circumstances  of\t the
\nsituation before him
\n500<\/span>
\nand  not try to promote purposes alien to the object of\t the
\nAct.   As  regards  s.\t5 (2)  (b)  the\t contention  of\t the
\npetitioners  was that substantive provisions have been\tmade
\nin  the\t Act  for  the grant  of  licence  for\tmanufacture,
\nacquisition,  possession  and disposal\tand  consumption  of
\ngold.  Reference was made in this connection to s. 8 (6)  of
\nthe  Act  which\t confers  power\t on  the  Administrator\t  to
\nauthorise any person or class of persons to buy or otherwise
\nacquire,  accept  or  otherwise receive\t or  sell,  deliver,
\ntransfer  or  otherwise\t dispose  of  any  primary  gold  or
\narticle.  Section 1 1 ( 1 ) contains a prohibition in regard
\nto  making, manufacturing etc., preparing or  processing  of
\nany  primary  gold or ornament or article  unless  there  is
\nauthorisation by the Administrator.  Section 29 empowers the
\nAdministrator to authorise a dealer in any exceptional\tcase
\nto make, manufacture or prepare a primary gold or  article.”
\nSection 34(2) prohibits sale, delivery, transfer or disposal
\n(1)  of\t primary gold to any person other  than\t a  licensed
\ndealer\tor  refiner or certified goldsmith and\t(2)  of\t any
\narticle\t to  any  person other than  a\tlicensed  dealer  or
\nrefiner.    But\t s.  34(3)  provides  that   notwithstanding
\nanything contained in sub-s. (2) a licensed dealer may\tsell
\nor  deliver  primary  gold  or\tarticle\t to  any  person  in
\npursuance  of an authorisation made by the Administrator  or
\non  production\tby that person of a permit  granted  by\t the
\nAdministrator in this behalf.  Again, section 114(1) confers
\npower\ton   the  Central  Government  to  make\t  rules\t  by
\nnotification  for  carrying  out the purposes  of  the\tAct.
\nSection 1 14 (2) (d) states :\n<\/p>\n
\t      ” (2) In particular, and without prejudice  to
\n\t      the  foregoing power, such rules\tmay  provide
\n\t      for  all\tor  any of  the\t following
\n\t      matters, namely\n<\/p><\/blockquote>\n
\t      (d)   conditions, limitations and restrictions
\n\t      subject to which-\n<\/p><\/blockquote>\n
\t      (i)   a dealer may sell, deliver, transfer  or
\n\t      otherwise\t  dispose   of\tany  gold   on\t the
\n\t      hypothecation,  pledge, mortgage or charge  of
\n\t      which he had advanced any loan;\n<\/p><\/blockquote>\n
\t      (ii)  a refiner may refine gold;\n<\/p><\/blockquote>\n
\t      (iii) a  licensed\t refiner may  buy,  acquire,
\n\t      accept  or  receive,  gold,  or  melt,  assay,
\n\t      refine, extract or alloy gold or subject it to
\n\t      any other process, or sell, deliver,  transfer
\n\t      or otherwise dispose of any gold;\n<\/p><\/blockquote>\n
\t      501<\/span><\/p>\n
\t      (iv)  a  licensed\t dealer\t may  buy,  acquire,
\n\t      accept  or receive or sell, deliver,  transfer
\n\t      or dispose of gold.”\n<\/p><\/blockquote>\n
It  is manifest upon a review of all -these provisions\tthat
\nthe  power conferred upon the Administrator under s.  5\t (2)\n<\/p>\n
(b)  is\t legislative  in character and\textremely  wide.   A
\nparallel  power of subordinate legislation is  conferred  to
\nthe  Central  Government under s. 114 ( 1 ) and (2)  of\t the
\nAct.   But  s. 114(3) however makes it\tincumbent  upon\t the
\nCentral\t Government to place the rules before each House  of
\nParliament  while  it is in session for a  total  period  of
\nthirty days which may be comprised in one session or in\t two
\nsuccessive  sessions.\tIt  is clear  that  the\t substantive
\nprovisions  of\tthe Act namely ss. 8, 11, 21,  31(3),  34(3)
\nconfer\t powers\t on  the  Administrator\t similar  to   those
\ncontemplated  by  s.  5\t (2)  (b)  of  the  Act.   In  these
\ncircumstances we are of opinion that the power of regulation
\ngranted\t to the Administrator under s. 5 (2) (b) of the\t Act
\nsuffers\t from excessive delegation of legislative power\t and
\nmust be held to be constitutionally invalid.
\nWe now come to s. 27 of the Act which relates to  licensing.
\nof dealers.  It was stated on behalf of the petitioners that
\nthe conditions imposed by sub-s. (6) of s. 27 for the  grant
\nor   renewal   of   licences  are   uncertain,\t vague\t and
\nunintelligible\tand consequently wide and  unfettered  power
\nwas  conferred upon the statutory authorities in the  matter
\nof  grant  or  renewal\tof licence.   In  our  opinion\tthis
\ncontention is well-founded and must be accepted as  correct.
\nSection\t 27(6)\t(a) states that in the matter of  issue,  or
\nrenewal\t of licences the Administrator shall have regard  to
\n“the  number of dealers existing in the region in which\t the
\napplicant  intends to carry on business as a  dealer”.\t But
\nthe word “region” is nowhere defined in the Act.   Similarly
\ns.  27 (6) (b) requires the Administrator to have regard  to
\n“the anticipated demand, as estimated by him, for  ornaments
\nin  that region”.  The expression “anticipated demand” is  a
\nvague\texpression  which  is  not  capable   of   objective
\nassessment  and\t is  bound  to\tlead  to  a  great  deal  of
\nuncertainty.   Similarly the expression “suitability of\t the
\napplicant” in s. 27(6) (e) and “public interest” in s. 27(6)\n<\/p>\n
(g)  do\t not  provide  any objective  standard\tor  norm  or
\nguidance.   For these reasons it must be held  that  clauses\n<\/p>\n
(a),  (d),  (e)\t and (g) of  s.\t 27(6)\timpose\tunreasonable
\nrestrictions  on the fundamental right of the petitioner  to
\ncarry on business and are constitutionally invalid.  It\t was
\nalso  contended that there was no reason why the  conditions
\nfor  renewal  of  licence  should  be  as  rigorous  as\t the
\nconditions for initial grant of licence.  The requirement of
\nstrict\tconditions  for the renewal of licence\trenders\t the
\nentire\tfuture of the business of the dealer  uncertain\t and
\nsubjects it to the caprice and arbitrary will
\n502<\/span>
\nof  the administrative authorities.  There is  justificaiton
\nfor  this argument and the requirement of s. 26 of  the\t Act
\nimposing the same conditions for the renewal of the  licence
\nas for the initial grant appears to be unreasonable.  In our
\nopinion clauses (a), (b), (e) and (g) are inextricably bound
\nup  with  the other clauses of S. 27(6) and form part  of  a
\nsingle\tscheme.\t The result is that clauses (a),  (b),\t(c),\n<\/p>\n
(e) and (g) are not severable and the entire S. 27(6) of the
\nAct must be held invalid.  Section 27(2) (d) of\t  the\t Act
\nstates that a valid licence issued by the Administrator\t may
\ncontain such conditions, limitations and restrictions as the
\nAdministrator\tmay  think  fit\t to  impose  and   different
\nconditions, limitations and restrictions may be imposed\t for
\ndifferent classes of dealers.” On the face of it, this\tsub-
\nsection\t  confers  such\t wide  and  vague  power  upon\t the
\nAdministrator  that it is difficult to limit its scope.\t  In
\nour opinion S. 27 (2) (d) of the Act must be struck down  as
\nan unreasonable restriction on the fundamental right of\t the
\npetitioners  to carry on business.  It appears, however,  to
\nus  that  if  S. 27 (2) (d) and S. 27 (6)  of  the  Act\t are
\ninvalid the licensing scheme contemplated by the rest of  s.
\n27  of\tthe  Act  cannot be  worked  in\t practice.   It\t is,
\ntherefore,   necessary\t for  Parliament  to   enact   fresh
\nlegislation imposing appropriate conditions and restrictions
\nfor  the grant and renewal of licences to dealers.   In\t the
\nalternative  the  Central Government  may  make\t appropriate
\nrules  for the same purpose, in exercise of  its  rulemaking
\npower under s. 114 of the Act.\n<\/p>\n
We  now proceed to deal with ss. 32 and 46 of the Act  which
\nare also challenged.  Section 32 states -:\n<\/p>\n
\t      “Save  as otherwise provided in this  Act,  no
\n\t      licensed\tdealer shall either own or  have  at
\n\t      any time in his possession, custody or control
\n\t      primary gold in any form except in the form
\n\t      of standard gold bars ;\n<\/p><\/blockquote>\n
\t      Provided\tthat  such dealer  may,\t unless\t the
\n\t      Central Government (having regard to the needs
\n\t      of  the trade, volume of business\t and  public
\n\t      interest)\t otherwise directs, own or  keep  in
\n\t      his  possession, custody or control  not\tmore
\n\t      than-\n<\/p><\/blockquote>\n
\t      (a)   four  hundred  grammes, if he  does\t not
\n\t      employ any artisan,\n<\/p><\/blockquote>\n
\t      (b)   five hundred grammes, if he employs\t not
\n\t      more than ten artisans,\n<\/p><\/blockquote>\n
\t      (c)   one thousand grammes, if he employs more
\n\t      than ten but not more than twenty artisans.\n<\/p><\/blockquote>\n
\t      503<\/span><\/p>\n
\t      (d)   two\t thousands  grammes, if\t he  employs
\n\t      more than twenty artisans, of primary gold  in
\n\t      any  form other than in the form\tof  standard
\n\t      gold bars.”\n<\/p><\/blockquote>\n
\t      Section 46 enacts :\n<\/p><\/blockquote>\n
\t      “The  total  quantity of primary gold  in\t the
\n\t      possession,   custody  or\t  control,   whether
\n\t      individually or collectively, of the  artisans
\n\t      employed\tby a licensed dealer shall  not,  at
\n\t      any  time,  exceed  the  limits  specified  in
\n\t      section 32”.:\n<\/p><\/blockquote>\n
Section\t 32 of the Act authorises a licensed dealer to\tkeep
\nany quantity of standard gold bars and provides a limit upon
\nhis  holding  of  primary -old depending on  the  number  of
\nartisans  he employs.  The definition of the term  “standard
\ngold  bar” under s. 2(u) does not contemplate  the  standard
\ngold  bar being cut into pieces.  A standard gold bar  being
\nof  a prescribed weight and purity cannot in many  cases  be
\nhanded\tover  to a certified goldsmith without\tcutting\t the
\nsame.\tIf a dealer, therefore, has to give a cut  piece  of
\nstandard  gold\tbar  to a certain  goldsmith  the  remaining
\nportion of the standard gold bar Will be treated as  primary
\ngold in his hands.  Hence the limits prescribed under s.  32
\nand  46 of the Act are rendered meaningless in view  of\t the
\nstatutory  definition of the term “standard gold bar” as  it
\nstands\tat  present.  We are of opinion that ss. 32  and  46
\nconstitute  an unreasonable restriction on the right of\t the
\npetitioners  to carry on trade or business and must be\theld
\nto be invalid.\n<\/p>\n
Section 88 of the Act has also been challenged.\t Section  88
\nreads thus :\n<\/p>\n
\t      “(1)  A  dealer or refiner who  knows  or\t has
\n\t      reason  to believe that any provision of\tthis
\n\t      Act  or any rule or order made thereunder\t has
\n\t      been, or is being, contravened, by any  person
\n\t      employed\t by  him  in  the  course  of\tsuch
\n\t      employment, shall be deemed to have abetted an
\n\t      offence against this Act.\n<\/p><\/blockquote>\n
\t      (2)  Whoever  abets, or is deemed\t under\tsub-
\n\t      section  (1)  to\thave  abetted,\tan   offence
\n\t      against  this  Act,  shall  be  punished\twith
\n\t      imprisonment  for a term which may  extend  to
\n\t      three years and shall also be liable to fine.”\n<\/p><\/blockquote>\n
This  section extends the scope, of the vicarious  liability
\nof   the   dealer  and\tmakes  him   responsible   for\t the
\ncontravention  of any provision of the Act or rule or  order
\nby  any\t person\t employed  by him  in  the  course  of\tsuch
\nemployment.  The rational basis in law
\n14Sup.Cl\/69-3
\n504<\/span>
\nfor the imposition of vicarious liability is that the person
\nmade responsible may prevent commission of the crime and may
\nhelp  to  bring the actual offender to book.  In  one  sense
\nthe,  dealer  is  punished for the  sins  committed  by\t his
\nemployee.   It\tmay perhaps be said if the dealer  had\tbeen
\nmore  -alert to see that the law was observed the sin  might
\nnot  have been committed.  But the section goes further\t and
\nmakes\tthe  dealer  liable  for  any\tpast   contravention
\nperpetrated by the employee.  It is evident that the  dealer
\ncannot reasonably be made liable for any past misconduct  of
\nhis  employee though the dealer can be made liable  for\t any
\nact done by his employee in the course of the employment and
\nwhom he can reasonably be expected to influence or  control.
\nThe maxim qui facit per alium facit per se is not  generally
\napplicable  in\tcriminal  law.\tBut in s.  88  it  has\tbeen
\nextended  beyond reasonable limits.  We are,  therefore,  of
\nopinion\t that s. 88 imposes an unreasonable  restriction  on
\nthe   fundamental   right   of\tthe   petitioners   and\t  is
\nunconstitutional.\n<\/p>\n
We  shall now proceed to deal with s. 100 of the  Act  which
\nalso has been challenged.  This section imposes a  statutory
\nobligation  upon  a dealer to take all reasonable  steps  to
\nsatisfy himself as to the identity of persons from whom\t any
\ngold is bought.\t The section does not specify the nature  of
\nsteps  which a dealer should take for satisfying himself  as
\nto the identity of the person from whom any gold is  bought.
\nThe statutory obligation imposed by the section is uncertain
\nand  incapable of proper compliance.  It must be  held\tthat
\nthe  section imposes an impossible burden upon\tthe  dealers
\nand constitutes an unreasonable restriction.
\nWe  proceed  to consider next the question arising  in\tthis
\ncase  whether the provisions with regard to licensing of  ID
\ndealers\t and certification of goldsmiths are  discriminatory
\nand violate the guarantee of equal protection under Art.  14
\nof the Constitution.  Reference was made to ss. 27 and 39 of
\nthe impugned Act and it was argued that the provisions\twith
\nregard\tto licensing of dealers were more harsh than in\t the
\ncase of registered goldsmiths.\tBut in our opinion  licensed
\ndealers -and certified goldsmiths form separate. classes and
\nthe classification made by the impugned Act is a  reasonable
\nclassification.\t  A licensed dealer is essentially a  trader
\nwho does the business of buying and selling ornaments  while
\na  certified  goldsmith is a craftsman who does\t the  actual
\nmanufacture of ornaments and does not trade in ornaments.  A
\nlicensed dealer can make or, manufacture ornaments from\t his
\nown  gold but a certified goldsmith can make or\t manufacture
\nnew  ornaments\tfor his customers only from their  gold.   A
\nlicensed  dealer  can sell ornaments to the public  and\t can
\nkeep  ready stock of such ornaments for the purpose of\tsale
\nwhile a certified gold-\n<\/p>\n
505<\/span><\/p>\n
     smith  is not permitted to do the business\t of  selling
\nornaments.   A\tlicensed dealer may have in  his  possession
\nprimary\t gold in the form of standard gold bars without\t any
\nlimit  and melted gold in the form other than  the  standard
\nbars  in  quantities ranging from 400 to 2,000\tgrammes.   A
\ncertified goldsmith cannot have in his possession more\tthan
\n3000 grammes of primary -old.  A licensed    dealer\t can
\nemploy\tas  many persons as he likes as his artisans  but  a
\ncertified  goldsmith  cannot  employ  more  than  one  hired
\nlabourer  to  assist him in his work as goldsmith  and\teven
\nthis  hired  labourer cannot make, manufacture,\t prepare  or
\nprocess\t any  ornament,.   When\t a  law\t is  challenged\t  as
\nviolative of Art. 14 of the Constitution it is necessary  in
\nthe  first  place  to ascertain the  policy  underlying\t the
\nstatute\t and  the  object intended to  be  achieved  by\t it.
\nHaving\tascertained  the policy and object of  the  Act\t the
\nCourt has to apply a dual test in examining its validity (1)
\nwhether\t the  classification is rational and based  upon  an
\nintelligible  differentia  which  distinguishes\t persons  or
\nthings\tthat are grouped together from others that are\tleft
\nout   of   the\t group\tand  (2)  whether   the\t  basis\t  of
\ndifferentiation has any rational nexus or relation with\t its
\navowed\tpolicy\tand object.  In the present  case  both\t the
\ntests  are satisfied and we hold that ss. 27 and 39  of\t the
\nimpugned  Act do not violate the guarantee under Art. 14  of
\nthe  Constitution. The only other point that remains  to  be
\ndecided\t is whether as a result of some of the\tsections  of
\nthe impugned Act being\t struck\t down, what is left  of\t the
\nimpugned  Act  should survive or whether the  whole  of\t the
\nimpugned Act should be declared invalid.  We are of  opinion
\nthat the provisions which are declared invalid cannot affect
\nthe  validity  of  the Act as a whole.\tIn a  case  of\tthis
\ndescription  the, real test is whether what remains  of\t the
\nstatute\t is so inextricably bound up with the  invalid\tpart
\nthat  what remains cannot independently survive or as it  is
\nsometimes  put whether on a fair review of the whole  matter
\nit can be assumed that the legislature would have enacted at
\nall  that which survives without enacting the part  that  is
\nultra  vires.\tThe  matter  is clearly\t put  in  Cooley  on
\nConstitutional Limitations, 8th edn. at p. 360 :\n<\/p>\n
\t      “It  would  be  inconsistent  with  all\tjust
\n\t      principles  of constitutional law\t to  adjudge
\n\t      these   enactments  void\tbecause\t  they\t are
\n\t      associated in the same act, but not  connected
\n\t      with   or\t dependent  on\tothers\t which\t are
\n\t      unconstitutional.\t Where, therefore, a part of
\n\t      a statute is unconstitutional, that fact\tdoes
\n\t      not  authorise  the  courts  to  declare\t the
\n\t      remainder void also, unless all the provisions
\n\t      are  connected in subject-matter depending  on
\n\t      each  other, operating together for  the\tsame
\n\t      purpose, or otherwise so connected together in
\n\t      meaning,\tthat  it  cannot  be  presumed\t the
\n\t      legislature would have passed the one without
\n\t       506<\/span>
\n\t      the    other.\tThe    constitutional\t and
\n\t      unconstitutional\t provisions  may   even\t  be
\n\t      contained\t in  the same section,\tand  yet  be
\n\t      perfectly distinct and separable, so that\t the
\n\t      first  may  stand though the last\t fall.\t The
\n\t      point is not whether they are contained in the
\n\t      same   section;  for  the\t distribution\tinto
\n\t      sections\tis  purely artificial;\tbut  whether
\n\t      they are essentially and inseparably connected
\n\t      in  substance.  If, when the  unconstitutional
\n\t      portion is stricken out, that which remains is
\n\t      complete\tin  itself, and\t capable  ,of  being
\n\t      executed\tin  accordance\twith  the   apparent
\n\t      legislative intent, wholly independent of that
\n\t      which was rejected, it must be sustained.”\n<\/p><\/blockquote>\n
Applying  the  test to the present case we, are\t of  opinion
\nthat the provisions held to be invalid are not\tinextricably
\nbound  up with the remaining provisions of the Act.   It  is
\ndifficult to hold that Parliament would not have enacted the
\nimpugned  Act  at all without including that part  which  is
\nfound\tto   be\t ultra\tvires.\t The   Act   still   remains
\nsubstantially  the Act as it was passed, that is, an Act  to
\nprovide\t for the control, production,  manufacture,  supply,
\ndistribution, use and possession of gold and gold  ornaments
\nand  articles  of  gold.  In the result\t we  hold  that\t the
\nfollowing provisions of the impugned Act are invalid.
\nSections 5(2)(b), 27(2)(d), 27(6), 32, 46, 88 and 1 00.
\nThe  petitioners are, therefore, entitled to a writ  in\t the
\nnature\tof  mandamus  under Art.  32  of  -the\tConstitution
\ncommanding  the\t respondents  not  to  take  any  steps\t  to
\nimplement  any of the invalid provisions of the\t Act.\tWrit
\nPetitions  282,\t 407  and 408 of 1968 are  allowed  to\tthis
\nextent.\t There will be no order with regard to costs in\t any
\nof these petitions.\n<\/p>\n
V.P.S.\t\t\t       Petitions allowed in part.\n507<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Harakchand Ratanchand Banthia … vs Union Of India And Ors on 30 April, 1969 Equivalent citations: 1970 AIR 1453, 1970 SCR (1) 479 Author: V Ramaswami Bench: Hidayatullah, M. (Cj), Shah, J.C., Ramaswami, V., Mitter, G.K., Grover, A.N. PETITIONER: HARAKCHAND RATANCHAND BANTHIA AND ORS. ETC. Vs. RESPONDENT: UNION OF INDIA AND […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-51678","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nHarakchand Ratanchand Banthia ... vs Union Of India And Ors on 30 April, 1969 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/harakchand-ratanchand-banthia-vs-union-of-india-and-ors-on-30-april-1969\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Harakchand Ratanchand Banthia ... vs Union Of India And Ors on 30 April, 1969 - 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