R. R. Rastogi, J. - (1.) THE petitioner, Messrs Sohan Lal, carries on the business of dealing in gold ornaments in the city of Deoria. He holds gold dealer's licence No. 195-Gold/63. For 1975 his application for renewal of the licence was presented in time. He was, however, served with a notice to show cause why his application for renewal should not be rejected in view of the fact that the transactions made by him in 1974 were below the limit prescribed under R.3(ee) of the Gold Control (Licensing of Dealers) Rules, 1969 (hereinafter referred to as 'the Rules'). THE petitioner submitted an explanation which was that he was not able to do his business properly in 1974 on account of drought. That explanation did not find favour with the Assistant Collector, Central Excise, Gorakhpur, respondent No. 2, who was the licensing authority and his application for renewal was rejected by an order dated 22-2-1975. THE petitioner preferred an appeal against that order which as well was dismissed by the Collector, Central Excise, Allahabad, respondent No. 3 by an order dated 28-1-1976. THE petitioner seeks in this writ petition the quashing of these two orders and further challenges the constitutional validity of R.3(ee) of the Rules. THE validity of these Rules has been challenged from different angles, inter alia, as being violative of Arts.19(1)(g) and 14 of the Constitution of India and as conferring an unguided power on the licensing authorities and further as not having been made for carrying out the purposes of the Gold Control Act, 1968 (hereinafter referred to as "the Act").
(2.) ON behalf of the petitioner these very contentions were elaborated and essentially reliance was placed on a decision of the Madras High Court rendered by a single Judge in B. Narasimhalu Chettiar v. Central Government (AIR 1976 Mad 224) wherein Rule 3(ee) of the Rules was held to be ultra vires and violative of Art.19(1)(g) and 14 of the Constitution. On a closer analysis of the relevant provisions of the Act and the Rules as they stand at present, in our opinion, the submissions made on behalf of the petitioner do not have much force. The Act has been enacted to provide, in the economic and financial interest of the community, for the control of production, manufacture, supply, distribution, use of, possession of, and business in, gold ornaments and articles of gold and for matters connected therewith or incidental thereto. In the instant case we are concerned with the case of a dealer which expression has been defined in S.2(h) of the Act to mean :- "Any person who carries on directly or otherwise, the business of making, manufacturing, preparing, repairing polishing, buying, selling, supplying, distributing, melting, processing or converting gold, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration and includes, Persons who deal in gold and gold ornaments have been categorised in this Act under four heads. Refiners, dealers, goldsmiths and artisans. Detailed provisions have been made in regard to all categories. Chap. VI which contains Ss.17 to 26 makes provisions for refiners. Chap. VII which consists of Ss.27 to 38 deals with dealers, Chap. VIII consisting of Sections 39 to 43 with goldsmiths and Chapter IX having Ss.44 to 49 with artisans. Section 29 provides for licensing of dealers. In order to appreciate the points raised in this writ petition it would be necessary to refer to the provisions contained in this Section. Sub-Sec. (1) states that save as otherwise provided in this Act, no person shall commence, or carry on, business as a dealer unless he holds a valid licence issued in this behalf by the Administrator, Sub-Sec. (2) says that a licence issued under this Section shall be in such form as may be prescribed, shall be valid for such period as may be specified therein, may be renewed from time to time; and shall be subject to such conditions and restrictions as may be prescribed. Sub-Sec. (3) states that every licence issued under Part XII-A of the Defence of India Rules, 1962, or under the Gold (Control) Ordinance, 1968 shall continue to be in force until the expiry of the period of its validity or until the cancellation thereof under the Act. Sub-Sec. (4) enables a person holding valid licence at the commencement of the Act to commence or to carry on business as a dealer and to obtain renewal of the licence. Sub-Sec. (5) provides that a person who intends to commence, after the commencement of this Act, business as a dealer, shall make an application for a licence and should obtain one. Then comes Sub-Sec. (6) which is as under :- "(6)(a) No application for the issue of a licence to commence or carry on business as a dealer shall be granted unless the Administrator, having regard to such matters as may be prescribed in this behalf and after making such enquiry in respect of those matters as he may think fit, is satisfied that the licence should be issued. (b) No application for the renewal of a licence to carry on business as a dealer shall be rejected unless the holder of such licence has been given a reasonable opportunity of presenting his case and unless the Administrator is satisfied that :- (i) the application for such renewal has been made after the expiry of the period specified therefor, or (ii) any statement made by the applicant at the time of the issue or renewal of the licence was incorrect or false in material particulars; or (iii) the applicant has contravened any term or condition of the licence or any provisions of this Act or any rule or order made thereunder or of any other law for the time being in force in so far as such law prohibits or restricts the bringing into or taking out of India of any goods (including coins, currency, whether Indian or foreign, and foreign exchange) or the dealing in such goods by way of acquisition or otherwise; or (iv) the applicant does not fulfil the prescribed conditions. (c) Every order granting or rejecting an application for the issue or renewal of a licence shall be made in writing." (It is not necessary to refer to Sub-Secs. (6-A), (7) and (8) of this Section). Section 29 provides what a dealer may manufacture. We have already referred to the definition of a dealer as given in Section 2(h) of the Act and the very same activities are mentioned in this Section. It is, therefore, not necessary to reproduce it here. Section 114 of the Act confers powers on the Central Government to make Rules. Sub-Sec. (1) says that the Central Government may, by notification, make rules for carrying out the purposes of this Act, and Sub-Sec. (2) says that in particular, and without prejudice to the foregoing powers, such rule may provide for all or any of the matters stated in cls. (a) to (k) of this Sub-Sec. Cl.(k) confers power on the Central Government to make Rules for "any other matter which is required to be, or may be prescribed." The expression 'prescribed' has been defined in S.2(q) to mean "Prescribed by Rules made under this Act."
(3.) A re'sume' of the above provisions would go to show that a dealer is under an obligation to obtain a licence under S.27. The licence is to be issued in the form as may be prescribed. It shall be valid for such a period which may be specified therein. It may be renewed from time to time. Lastly it shall be subject to such restrictions and conditions as may be prescribed. As for the renewal of the licence the conditions are provided in Sub-Sec. (6) and sub-cl. (iv) of cl.(b) thereof provides that in case the applicant does not fulfil the prescribed conditions, the application for renewal of licence shall be rejected. A dealer is of course to be given an opportunity of presenting his case and after hearing him the Administrator is to be satisfied on certain points specified in cl.(b). Further, the Central Government has been given powers to make Rules for carrying out the purpose of this Act. Some of the purposes have been specified in Sub- Sec. (2) and cl.(k) thereof which is in the nature of a residuary provision authorises the Central Government to make Rules for any other matter which is required to be or may be prescribed. Now come the Rules. These rules make provisions for the issue of licence to dealers as also the renewal thereof. R.3 lays down "conditions for renewal of a licence." It reads as follows :- "A dealer shall be qualified for the renewal of the licence held by him if he fulfils the following conditions, namely, (a) that the application has been made in the prescribed form at least one month and not made more than 2 months before the expiry of the period of validity thereof; (b) that the prescribed fees for the renewal of the licence have been duly deposited; (c) that the premises where the applicant is carrying on business as a licensed dealer continues to be suitable and secure for the carrying on therein of such business; (d) that no statement made by the applicant at the time of issue or renewal of the licence was incorrect or false in material particulars; (e) that no condition of the licence has been contravened by the applicant; (ee) that the applicant has been a wholesale dealer in standard gold bar, article or ornaments, or the turnover of the applicant with persons, other than licensed dealers, in the twelve months immediately preceding the date of application for renewal of the licence was not too low. Explanation I :- For the purposes of this clause, turnover shall be deemed to be too low if it is on the average, not more than fifty grammes per month except where the applicant satisfies the Administrator that there are sufficient reasons for an average monthly turnover of lower than fifty grammes." Explanation II :- For the purposes of these rules 'turnover' means :- (a) sale of ornaments and articles; (b) remaking of another person's ornaments and articles." (f) that the applicant has not contravened any provision of Gold (Control) Act, 1968, or any rule or order made thereunder or of Part XII-A of the Defence of India Rules, 1962 or of any other law for the time being in force in so far as such law prohibits, restricts or regulates the bringing into or taking out of India of any goods (including coins, currency, whether Indian or foreign and foreign exchange) or the dealing in such goods by way of acquisition or otherwise; (ff) that the applicant has not been detained or ordered to be detained under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974; that the applicant, if he was granted a licence under item (a) of the proviso to Cl.(f) of R.2 has not committed any breach or failure in the performance of any part of the conditions specified in the Bond executed by him; (h) that the authorisation issued to the applicant who has been granted a licence under R.2-A, to open a gold dealer's shop in the international transit lounge or hotel or other place, as the case may be, referred to in R.2-A, has not been withdrawn by the International Airports Authority of India constituted under S.3 of the International Airports Authority Act, 1971 or the management of the hotel or the person in charge of such place, as the case may be; (i) that the turnover of the applicant who has been granted a licence under R.2-A during the preceding twelve months was not less than one lakh rupees.";