IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY NINETH DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE C.V.RAMULU W.P.Nos.17123 & 17139 of 2007 WRIT PETITION NO : 17123 of 2007 Between: M/s.Mussadilal Jewellers,and Exporters Private Limited a company registered under the companies Act, 1956 having its registered office at Hyderabad, rep.by its managing Dirctor Mr.Mohanala Gupta, S/o.Bhagawat Swaroop Gupta, aged about 60 years, Resident of Hyderabad ..... PETITIONER AND 1 District Inspector, Legal Metrology, City circle-II, Resident of 6-1- 103/26, Abhinav nagar colony, Padmaraonagar, Secunderabad 2 Director,Legal Metrology Department PWD Building Gandhinagar, Hyderabad-500080 3 Government of Andhra Pradesh, rep.by its secretary Legal Metrology Department, Secretariat, Hyderabad .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ direction or order especially in the nature of writ of certiorari quashing the panchanama dated 5.8.2007 issued by the Inspector,Legal Metrology weights and Measures, secunderabad declaring that the said action to be beyond the purview of the respondent`s authority under the SOW Act or the Enforcement Act and pass Counsel for the Petitioner:MR.DUVVA.PAVAN KUMAR Counsel for the Respondent No.: THE ADVOCATE GENERAL WRIT PETITION NO : 17139 of 2007 Between: M/s. Totaram Papalas & Sons, a Partnership firm having its Office at 4-1-966, Abids Road, Hyderabad, Rep.by its Partner, Sri Satish Kumar Gupta S/o.Late Sri Papalal, R/o.Hyd. ..... PETITIONER AND 1 Dist Inspector, Legal Metrology, RR-II, R.R Dist. 2 Director, Legal Metrology Department, PWD Building,Gandhinagar,Hyd-500080 3 Govt.Of A.P, Rep.by its Secretary, Legal Metrology Dept, Secretariat, Hyd. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ,direction or order especially in the nature of the writ of Certiorari qashing the panchanama dt.5-8-2007 by the inspector, Legal Metrology,weights and Measures, Sec-Bad declaring that the said action to be beyond the purview of the Respondent's authority under the SOW Act or the Enforcement Act and pass such further or other order(s) Counsel for the Petitioner:MR.S.RAVI Counsel for the Respondent No.: . The Court made the following : THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.Nos.17123 & 17139 of 2007 COMMON ORDER: In these two writ petitions, common questions of law and fact arises for consideration, therefore they are being disposed of by this common order. Petitioners are jewellers carrying on the business of gold ornaments and semi-precious stones and they are registered dealers under the provisions of Andhra Pradesh Value Added Tax, 2005. The Hyderabad International Gems and Jewellery Exposition had organized Gems and Jewellery Exhibition at Hitex Exhibition Centre at NAC Campus, Madhapur, Hyderabad for the purpose of displaying merchandise and sale thereof. Petitioners have taken up stalls for such purpose. For the sake of convenience, the facts as stated in W.P.No.17123 of 2007 are narrated as under: The first respondent inspected the petitioner’s stall on 5.8.2007 at 1.00 p.m. and seized a gold ornament named as ‘JADA’ worth Rs.2,66,695/- under a panchanama dated 5.8.2007. According to the respondents, in the estimate given, 10% of the total weight of the ornament was added as wastage i.e. in the gold ornament weighing 275.770 grams, 25.570 grams was added as ‘wastage’. The total weight of the gold ornament was shown as 303.340 grams. The price had been shown by applying 91.6% purity gold at the rate of Rs.825/- per gram and the cost of the semi precious stones about 83 in number were separately charged, which according to the respondents, is a fraudulent practice. According to the petitioner, the first respondent along with team of legal metrological department came with a caravan of TV crew and inspected various stalls in the Hitex Exhibition center. The first respondent was initially looking for variation in weight between that mentioned in a tag attached to each of ornaments and the actual weight measured by using the weighing scale belonging to a third party. Having found absolutely no variation, the respondents in a high-handed manner charged the petitioner with alleged fraud in the matter of pricing the ornament. On behalf of the respondents, a detailed counter affidavit has been filed denying the allegations made by the petitioner stating that a case has been registered against M/s Musaddilal Jewellers and Exporters Private Limited, Stall No.E-01, India Gems and Jewellery Exhibition, Hitex Convention Centre, Madhapur, Hyderabad, since the seller was in the process of selling the gold ornament less than the quantity contracted for and paid for. The Inspector has approached the shopkeeper and asked for preparation of estimate for the chosen ornament with a view to check whether the consumers are getting the correct quantity of commodity which they are contracting for and paying for. The details of the estimate prepared by the shopkeeper reads as under: Gross weight of the ornament along with Rubies and Emeralds 275.770 g Wastage added 27.570 g -------------- Total 303.340 g -------------- Gold @ Rs.825/- per gram. The total cost of the ornament with precious stones was Rs.2,66,695/-. Since there was violation of the provisions of the Act, a case has been registered Section 39(2) of the Standards of Weights and Measures (Enforcement) Act, 1985 (for short ‘Act’) as the firm was indulging in delivering quantity of commodity less than the quantity being contracted for. The respondents inspected the premises of the petitioner with a view to implement the provisions of the Act and to check whether the consumers are getting correct quantity of commodity contracted for and paid for. In the process the first respondent asked the person-in-charge of the business to prepare an estimate of the chosen ornament. Accordingly, an estimate was prepared and given to first respondent. The details of the estimate are as under: Gross weight of the ornament along with Rubies and Emeralds 275.770 g Wastage added 27.570 g -------------- TOTAL 303.340 g -------------- Gold @ Rs.825/- per gram. The total cost of the ornament with precious stones was Rs.2,66,695/-. According to the respondents, by charging the cost of semi precious stones, in the cost of the gross weight of the gold, and again charging the cost of semi precious stones separately by adding wastage to the weight of the ornament, the consumer was given less than the actual quantity, which is nothing but fraud played on the consumer. In the present case, the short delivery was to the extent of weight of semi precious stones and the quantum of wastage charged in the estimate. Thus, a case was registered under Section 39(2) of the Act and the commodity was seized as per Section 31 of the said Act as the said firm has delivered quantity of commodity less than the quantity contracted for. Therefore, the allegations made by the petitioner are all baseless. There is no malafide intention on the part of the respondents in seizing the material. In the said exhibition, number of such cases were booked against the business firms. A case under Section 39(2) of the Act was booked, against the petitioner, after conducting a detailed panchanama. The Standards of Weights and Measures Act, 1976 was enacted to regulate interstate trade or commerce in weights, measures and other goods, whereas 1985 Act was enacted to provide for enforcement of Standards of Weights and Measures established by or under the Standards Act, 1976. As per Section 31 and 39(2) of the Act, the first respondent has registered a case and seized the commodity for delivering commodity less than the quantity contracted for and paid for. Against the quantity of 303.34 g. for which estimate was prepared, actual quantity of the commodity delivered was 275.77 g. Further, the jeweller has charged, making charges, for making the said ornament. The first respondent is not concerned with the artistic work in making gold ornament and is only concerned with delivery of quantity of commodity contracted for and paid for. Therefore, looking from any angle, the petitioner has violated the provisions of the Act and is liable to be proceeded with as per law. The learned senior counsel Mr.D.Prakash Reddy appearing for one of the petitioners strenuously contended that absolutely the respondents, under the Act, have no jurisdiction to seize the ornaments or to take criminal action under the provisions of the Act. The nature of transaction referred by the respondents does not attract any of the penal provisions of the Act or it can be said that the act of the petitioner was contrary to any of the provisions of Act either under 1976 Act or Enforcement Act, 1985. There is no allegation that the petitioner has cheated the consumer in respect of weight of the ornament. Even as per the counter filed by the respondents, petitioners, in the estimate, have shown that the gross weight of the ornament along with Rubies and Emeralds as 275.770 g. by adding wastage of 27.570 g. (total 303.340 g) and the cost of the ornament with precious stones was shown as Rs.2,66,695/- by calculating gold @ Rs.825/- per gram. It is not a pure gold sold in biscuits form. It was a gold ornament sold along with Rubies and Emeralds studded therein. Therefore, absolutely there was no intention to cheat the purchaser/consumer, particularly by showing the wrong weight. By mentioning all these, an estimate was prepared and was given to the Inspector. Even in the panchanama conducted and in the counter filed by the respondents, there is no dispute as to this aspect. Therefore, the respondents have no jurisdiction to seize the ornament on the ground that the gold weight was not properly shown. The provisions of Section 39 of the Act has no application to the present case. Mr.S.Ravi, learned counsel appearing for one of the petitioner stated that what is estimated was in respect of an ornament, but not in respect of gold biscuit. In this case, an estimate was prepared and was given to the Inspector and nothing was hidden nor the consumer was cheated. The ornament weighing 275.770 g. and the wastage of 27.570 g. totaling to 303.340 g. was a part of the contract, which was accepted. The wastage accepted was also part of contract. Therefore, the provisions of Enforcement Act, 1985 have no relevance to the facts of the case and the respondents have no authority whatsoever to seize the articles. On the other hand, the learned counsel appearing for respondents reiterated the stand taken in the counter and stated that whether there was wastage in the process of making the ornament or not and whether it was accepted in the contract or not, since it was shown as 303.340 g., the actual gold was only 275.770 g. therefore it amounts to contravention of Section 39 read with Section 31 of the Enforcement Act, 1985. I have given my earnest consideration to the respective submissions made by the learned counsel on either side and perused the impugned panchanama ad other material made available on record. The word ‘weight’ or ‘measure’ as defined under Section 2(zd) of the Standards of Weights and Measures Act, 1976, reads as under: “Weight of measure” means a weight or measure specified by or under this Act and includes a weighing or measuring instrument. The Standards of Weights and Measures (Enforcement) Act, 1985 defines the word ‘weight’ or ‘measure’ as under: “Standard weight or measure” means a weight, measure or number which conforms to the standards established in relation thereto by or under the Standards Act. Section 31(1) of the Standards of Weights and Measures (Enforcement) Act, 1985 deals with the powers of Inspector to seize any weight of measure, which reads as under: “An Inspector may seize and detain any weight or measure in relation to which an offence under this Act is being, or appears to have been committed or which is intended or likely to be used in the commission of such offence, and may also seize and detain any goods sold or delivered, or cause to be sold or delivered, by such weight or measure, provided that where any goods seized under this sub-section are subject to speedy or natural decay, the Inspector may dispose of such goods in such manner as may be prescribed.” Section 39 of the Act deals with penalty for keeping non-standard weights of measures for use and for other contraventions. The important question that arises for consideration, in the facts and circumstances of the case is whether the Inspector has jurisdiction to seize the goods on the ground of keeping non-standard weights and for other contraventions. The very object of Act 54 of 1985 is to provide for enforcement of the standards of weights and measures established by or under the Standards of Weights and Measures Act, 1976, and for matters connected therewith or incidental thereto. The definition of ‘weight’ and ‘measure’ means a weight or measure specified by or under this Act and includes a weighing or measuring instrument. Admittedly, in this case, as noticed above, absolutely there was no concealment of any part of the transaction. It was indicated that the ornament contains gold of 275.770 g. and the loss caused in the process of manufacturing was also included and thus, the weight of gold was shown as 303.340 (by adding 10% wastage). In the inspection conducted by the Inspector, Legal Metrology on 5.8.2007, it was observed that one ornament named as ‘jada’ gold jewellery studded with semi-precious stones was being sold with a gross weight of 275.770 g. for which the trader has added a manufacturing loss of weight of 27.570 g. i.e. 10% of the actual weight. The total weight said to be 303.34 g. for which the trader has charged at the rate of Rs.825/- per gram 991.6 purity gold. The contention of the respondents is that in the process of selling gold jewellery, the trader has charged the cost of semi- precious stones about 83 number studded in the JADA ornament and the wastage adding in the finished jewellery is a fraudulent practice. The semi-precious stones weight is also added in the gross weight as gold weight. Accordingly, the trader issued an estimate bill along with making charges and VAT charges which comes to a total of Rs.2,66,695/-. Thus, the process of adding the weight of semi-precious stones along with the gold and adding the wastage in the gross weight of the ornament and charging for the total is violative of Section 39(2) of the Act. As noticed above, Section 39 deals with penalty for keeping non- standard weights or measures for use and for other contraventions. Clause (i) of Sub-section (2) of Section 39 says that whoever in selling any article or thing by weight, measure or number, delivers or causes to be delivered to the purchaser any quantity or number of that article or thing less than the quantity or number contracted for and paid for, shall be punished with fine which may extend to five thousand rupees and for the second or subsequent offence, with imprisonment for a term which may extend to one year and also with fine. Even the respondents were not able to demonstrate as to what exactly the working standard which means the set of standard of weight of measure which is made or manufactured by or on behalf of Government for verification of standard weight or measure. This is not a case where the consumer was delivered the article with short of weight than the quantity contracted for and paid for. In this case, admittedly even according to the panchanama, the petitioner, in the estimate, had given all the details as to the gross weight and the loss of manufacturing weight and the total weight inclusive of wastage. Therefore, it is not proper on the part of the respondents to contend that in the process of selling gold jewellery, the trader has charged the cost of semi-precious stones studded in the ‘JADA’ ornament, which is a fraudulent practice. This is the area where the respondents have no jurisdiction. It is not a case of non-disclosure or fraudulent mentioning of the weight of the ornament to be sold than what was sought to be delivered. In this case, absolutely there is no such bad intention on the part of the petitioner in delivering gold ornament. If the petitioner has not disclosed the loss of manufacturing weight and added only the weight of studded precious stones to that of the actual net gold available, the matter could have been altogether different. In this case, practically there was no such intention on the part of the petitioner. Petitioner has indicated the gross weight of the gold by adding 10% wastage in the manufacturing process. It is only a misconception of the respondents that the net weight alone could have been indicated and charged for the same and not for wastage. The estimate itself indicates the intention of the seller informing the prospective buyer as to the gross weight of the ornament and the wastage occurred in the manufacturing process of elaborate artistic ornament. It is not their case that only after it was studded with 83 number semi-precious stones, the weight had come to 303.340 g. This is neither the case of petitioner nor it is the case of respondents. A perusal of the original record produced by the respondents would also indicate that the petitioner had shown the gross weight as 303.340 g. i.e. net weight of gold 275.770 g. plus wastage in the manufacturing process 27.570 g. and insofar as this aspect is concerned, there is no dispute. Therefore, I am of the opinion that the petitioners have not concealed any thing as to the transaction of contract. They have clearly indicated every aspect of the contract. Under those circumstances, it cannot be said that the petitioners have concealed or deceived the prospective buyer by mentioning the details. Section 39(2) of the Act contemplates that as and when there is a short delivery of an article, which is contracted for and paid for, it amounts to an offence and attracts penalty. This is not one such transaction. Though a vague allegation has been made that the process of selling gold jewellery by the trader taking the semi-precious stones about 83 stones studded in the JADA ornament and the wastage added in the finished jewellery is a fraudulent practice, practically the respondents could not demonstrate any such fraud being played by the petitioners. The definition ‘weight or measure’ as defined under 1976 Act or 1985 Act and the rules made thereunder does not contemplate such penalty for such contingency under Section 39(2) or any other provisions of 1976 Act or 1985 Act. Therefore, I am of the opinion that the respondents have assumed as if they had jurisdiction to deal with such matters under Section 39(2) of the Act, which is not correct. For all the above reasons, both the writ petitions are allowed and the impugned orders are set aside. There shall be no order as to costs. ____________ C.V.RAMULU, J Date: 29.12.2008 DA THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.Nos.17123 & 17139 of 2007 29.12.2008