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Jayantilal Amrathlal v. Union Of India .
Factual and Procedural Background
The case concerns the seizure and proposed confiscation of a large quantity of primary gold discovered during an income-tax search of the appellant’s premises in November 1964. At the time, possession of undeclared primary gold was regulated by Part XII-A of the Defence of India Rules, 1962 (“Gold Control Rules, 1963”). The appellant had earlier filed a declaration on 7 February 1963 for 25 sovereigns and six gold bars but did not declare the gold subsequently found.
Following the seizure, the Assistant Collector of Central Excise issued a show-cause notice on 5 June 1965 proposing confiscation of the gold under Rule 126-M and imposition of penalty under Rule 126-L(16). The appellant challenged the notice before the Gujarat High Court. The High Court upheld the validity of the confiscation proceedings but quashed the penalty proceedings. While the writ petition was pending, the legal landscape changed: Part XII-A was repealed and successively replaced by the Gold (Control) Ordinance, 1968 and then the Gold (Control) Act, 1968, each containing saving clauses for prior actions. The appellant contended that the 1965 notice could not survive these legislative changes.
Legal Issues Presented
- Whether the show-cause notice dated 5 June 1965, issued under the repealed Gold Control Rules, continued to be operative after the enactment of the Gold (Control) Ordinance, 1968 and the Gold (Control) Act, 1968.
- Whether the absence, in the 1968 Act, of provisions requiring a declaration of primary gold rendered prior proceedings based on such declarations inconsistent and hence invalid.
Arguments of the Parties
Appellant's Arguments
- Section 116(2) of the Gold (Control) Act, 1968 does not preserve proceedings based on the earlier declaration scheme because the Act contains no provision requiring declarations of primary gold; therefore, the 1965 notice is inconsistent with and cannot survive the new statute.
- The repeal of Part XII-A and its declaration requirement extinguished liabilities arising from failure to declare primary gold.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| State of Punjab v. Mohar Singh Pratap Singh, AIR 1955 SC 84; (1955) 1 SCR 893 | Section 6 of the General Clauses Act applies to repealed legislation unless a contrary intention appears. | Used to support the proposition that, absent a contrary intention in the Gold (Control) Act, pending proceedings under the repealed Rules continue. |
| T.S. Baliah v. Income Tax Officer, AIR 1969 SC 701; (1969) 3 SCR 65 | Effect of repeal on existing rights and liabilities and application of Section 6, General Clauses Act. | Cited to reinforce that repeal does not, by itself, extinguish liabilities unless the new statute expressly or impliedly does so. |
Court's Reasoning and Analysis
The Supreme Court held that Section 6 of the General Clauses Act, 1897 automatically applies upon repeal unless the later statute evinces a contrary intention. Both the Gold (Control) Ordinance, 1968 and the Gold (Control) Act, 1968 contain explicit saving clauses preserving earlier actions “insofar as not inconsistent” with the new provisions. The Court found no inconsistency between Rule 126-I(10) of the repealed Rules (which authorised the declaration-based control regime) and any provision of the 1968 Act. Consequently, the confiscation proceedings initiated by the 1965 notice remain valid.
The Court emphasised that the correct test is whether the new enactment has taken away rights and liabilities under the repealed law, not whether it has expressly preserved them. Because the 1968 Act does not extinguish liabilities arising from undeclared possession of primary gold discovered earlier, the proceedings continue by virtue of Section 6 of the General Clauses Act and the saving clauses in the subsequent legislation.
Holding and Implications
Appeal Dismissed. The 5 June 1965 show-cause notice for confiscation of the seized gold remains operative.
Implications: The decision reaffirms that, upon repeal of a statute, pending proceedings survive unless the new legislation expressly or impliedly eliminates them. No new substantive precedent was set, but the ruling confirms the continued vitality of Section 6 of the General Clauses Act in the context of successive gold-control legislations.
K.S Hegde, J.— The President of India promulgated a proclamation of emergency on October 26, 1962 in exercise of the powers conferred on him y clause (1) of Article 352 of the Constitution of India. As Parliament was not in session at that time, the President promulgated the Defence of India Ordinance on the same day (Ordinance 4 of 1962). That Ordinance was published in the Gazette of India Extraordinary on that very day. In pursuance of the powers given by the said Ordinance, Defence of India Rules, 1962 were framed (to be hereinafter called the “Rules”). The Ordinance in question was replaced by the Defence of India Act, 1962 (Act I of 1962). That Act came into force on December 12, 1962. The “Rules” framed earlier were continued under that Act.
2. By a notification published in the Gazette of India on January 9, 1963 the “Rules” were amended by incorporating therein Part XII-A. The same is called as “Gold Control Rules, 1963”. Rule 126(1) of those rules required every person not being a dealer to make a declaration within 30 days from the commencement of Part XII-A of the “Rules” or within such period as the Central Government by notification specify, to the administrator in the prescribed form, as to the quantity, description or other particulars of the gold owned by him and sub-rule (11) of that rule lays down that any person in possession or control of gold, not being ornaments shall be presumed, until the contrary is proved, to be the owner thereof. Under Rule 126(1) the declaration in question was required to be made before February 28, 1963. On February 7, 1963, the appellant made a declaration of 25 sovereigns and six gold bars, each of 26.2/3 Tolas in the prescribed form.
3. On November 18, 1964 a squad of Income Tax Officers commenced searching the premises of the appellant. The search continued up to November 21, 1964. On November 20, 1964 the search party discovered huge amount of gold kept buried in one of the rooms of the appellant. The gold bars kept buried weighed 23,329 grams. Alongwith those bars 154 gold sovereigns weighing 1223 grams were also discovered. The quantity of the gold so kept buried was of the value of Rs 2,83,320. The discovered gold was kept in the Safe Deposit Vault of a bank and later on December 17, 1964 the same was seized by the Deputy Superintendent of Central Excise, Ahmedabad. Thereafter the Assistant Collector, Central Excise, Baroda issued a show-cause notice to the appellant on June 5, 1965 requiring the appellant to show-cause to the Collector of Central Excise, Baroda within 10 days of the receipt of that notice as to (1) why the gold under seizure should not be confiscated under Rule 126-M of the Gold Control Rules and (2) why penalty under Section 126-L(16) of the said rules should not be imposed on him.
4. The appellant challenged the validity of that notice before the High Court of Gujarat by means of a writ petition under Article 226 of the Constitution. The High Court upheld the validity of the notice in sofaras it related to the confiscation of the gold seized but ruled that the proceedings relating to the imposition of penalty were invalid in law. After the judgment of the High Court, the Collector of Central Excise by means of his communication dated December 6, 1968 informed the appellant that the previous notice is confined to show cause as to why the gold seized should not be confiscated. On January 10, 1968 when the writ petition of the appellant was pending before the High Court, the President withdrew the proclamation of emergency. Thereafter the Gold (Control) Ordinance of 1968 was issued. That Ordinance repealed Part XII-A of the “Rules”. The provisions therein were replaced by the provisions of the Ordinance. Section 117(1) of the Ordinance dealt with Repeals and Savings. Section 117 provided:
“(1) As from the commencement of this Ordinance, the provisions of Part XII-A of the Defence of India Rules, 1962 shall stand repealed and upon such repeal, Section 6 of the General Clauses Act, 1897 shall apply as if the said Part were a Central Act;
(2) Notwithstanding the repeal made by sub-section (1) but without prejudice to the application of Section 6 of the General Clauses Act, 1897 any notification, order, direction, appointment or declaration made or any notice, licence or certificate issued or permission, authorisation or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under or in pursuance of the provisions of Part XII-A of the Defence of India Rules, 1962 so far as it is not inconsistent with the provisions of this Ordinance be deemed to have been made, issued, granted, adjudged, imposed, ordered, done or taken under the corresponding provisions of this Ordinance.”
5. In view of Section 117 of the Gold (Control) Ordinance, the notice issued on June 5, 1965 initiating proceedings for forfeiting the gold seized must be deemed to have continued. The provisions in the “Rules” relating to forfeiture are not inconsistent with any of the provisions of the Gold (Control) Ordinance, 1968.
6. On August 24, 1968 Parliament passed the Gold (Control) Act, 1968. The same received the assent of the President on September 1, 1968 and came into force on and from that date. By Section 116(1) of that Act, Gold (Control) Ordinance, 1968 was repealed. Section 116(2) provided:
“Notwithstanding such repeal, anything done or any action taken including any notification, order or appointment made, direction given, notice, licence or certificate issued, permission, authorisation or exemption granted, confiscation adjudged, penalty or fine imposed, or forfeiture ordered, whether under the Gold (Control) Ordinance, 1968 or Part XII-A of the Defence of India Rules, 1962 shall insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done, taken, made, given, issued, granted, adjudged, imposed or ordered, as the case may be, under the corresponding provision of this Act, as if this Act had commenced on the 29th day of June 1968.”
7. In view of Section 115(2) of the Gold (Control) Act, 1968, it was urged on behalf of the appellant that the notice issued on June 5, 1965 can no more be operative because under the Gold (Control) Act, 1968, there are no provisions for making a declaration relating to the possession of primary gold. At this stage it may be noticed that under the “Rules” every person who was in possession of primary gold, exceeding the prescribed weight was required to convert the same either into ornaments or sell the same to the licensed dealers within the time prescribed by the “Rules”. Possession of primary gold thereafter exceeding the prescribed limit was an offence. That period had expired long before the Gold (Control) Act, 1968 came into force. Hence the Gold (Control) Act naturally did not make any provision for a declaration of the possession of primary gold. In view of that circumstance it was urged on behalf of the appellant that the provisions in the “Rules” requiring a declaration to be made in respect of the possession of primary gold are inconsistent with the provisions of the Gold (Control) Act and therefore the notice issued under the “Rules” cannot be considered as being continued under the provisions of the Gold (Control) Act, 1968.
8. The above contention is untenable. There are no provisions in the Gold (Control) Act, 1968 which are inconsistent with Rule 126(I)(10) of the “Rules”. That being so, action taken under that rule must be deemed to be continuing in view of Section 6 of the General Clauses Act, 1897. It is true that Gold (Control) Act, 1968 does not purport to incorporate into that Act the provisions of Section 6 of the General Clauses Act. But the provisions therein are not inconsistent with the provisions in Section 6 of the General Clauses Act. Hence the provisions of Section 6 of the General Clauses Act are attracted in view of the repeal of the Gold (Control) Ordinance, 1968. As the Gold (Control) Act does not exhibit a different or contrary intention, proceedings initiated under the repealed law must be held to continue. We must also remember that by Gold (Control) Ordinance, the “Rules” were deemed as an act of Parliament. Hence on the repeal of the “Rules” and the Gold (Control) Ordinance, 1968 the consequences mentioned in Section 6 of the General Clauses Act, follow. For ascertaining whether there is a contrary intention, one has to look to the provisions of the Gold (Control) Act, 1968. In order to see whether the rights and liabilities under the repealed law have been put an end to by the new enactment, the proper approach is not to enquire if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed law but whether it has taken away those rights and liabilities. The absence of a saving clause in a new enactment preserving the rights and liabilities under the repealed law is neither material nor decisive of the question — see State of Punjab v. Mohar Singh AIR 1955 SC 84, (1955) 1 SCR 893, 1955 SCJ 25 and T.S Baliah v. Income Tax Officer, Central Circle VI, Madras AIR 1969 SC 701, (1969) 3 SCR 65, (1969) 1 SCJ 890.
9. For the reasons mentioned above we agree with the High Court that the proceedings commenced by the Collector of Central Excise by means of the notice dated June 5, 1965 must be deemed to be continuing.
10. In the result this appeal fails and the same is dismissed with costs.
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