Case: Triveni Prasad Ramkaran Verma Vs. State of Maharashtra

gold and smuggled gold is outside their scope and ambit and hence acquisition of smuggled gold would not constitute an offence under the Gold Control Rules, 1963. This is an argument of despair and cannot be sustained even for a moment. Rule 126H(2)(d) provides, inter alia, that no person other than a licensed dealer shall buy or otherwise acquire or agree to buy or acquire gold, not being ornaments, except in accordance with a permit granted by the Administrator or in accordance with such authoriation as the Administrator may make in this behalf. The word gold is defined in clause (c) of the Explanation to Rule 126A to mean gold, including its alloy, whether virgin, melted, remelted, wrought or unwrought, in any shape or form, of a purity of not less than nine carats and include any gold coin (whether legal tender or not), any ornament and any other article of gold". This definition does not restrict the meaning of the word gold to legal or non-smuggled gold. It is wide enough to include any kind of gold, whether smuggled or non-smuggled. The restrictions imposed by the Gold Control Rules, 1963 could not have been intended merely to apply to legal gold. The object and purpose of the restrictions. would be frustrated by excluding from their ambit and coverage smuggled gold. The Gold Cont rol Rules, 1963 seek to control and regulate dealings in gold and gold within the meaning of these rules must include not only non-smuggled gold but also smuggled gold, We fail to see on what principle of construction can smuggled gold. which is gold within the meaning of the definition, be excluded from the operation of these Rules. There is no scope for inferring any such exclusion nor is there anything in the Rules which supports such exclusion. Take, for example, Rule 126 B which says that a dealer shall not make or manufacture any article of gold other than ornament. Can it be suggested for a moment that this Rule does not prohibit a dealer from making or manufacturing articles out of smuggled gold? Then again, look at Rule 126 C. It provides, inter alia, that no dealer shall make, manufacture or prepare any ornament having gold of a purity exceeding fourteen carats. Can a dealer make an ornament of smuggled gold having purity exceeding fourteen carats without committing a breach of this Rule? Rule 126-1 provides that every person shall make a declaration to the Administrator as to the quantity, description and other prescribed particulars of gold owned by him. How can a person, who has smuggled gold, say that he is not bound to make a declaration under this Rule? The object of requiring a declaration is that the Government should know what is the gold possessed by each person, so that dealings in gold can be controlled and regulated and this object would be thwarted if smuggled were not subject to the requirement of declaration. Then consider Rule 126 D which says that no person shall make advance or grant any loan to any other person on the hypothecation, pledge, mortgage or charge of any gold other than ornament, unless such gold has been included in a declaration. If smuggled gold were outside the scope of this rule, it would be open to a person to advance moneys on the security of smuggled gold without involving any violation of this rule. That surely could not have been the intention of the Government in making the Gold Control Rules, 1963. We are aware that there is a decision of the Calcutta High Court in Aravinda Mohan Sinha v. Prohlad Chand Samenta (A.I.R. 1970 Cal 437 ) where a Division Bench has taken the view that "declaration under Rule 126. P is in respect of legal gold as opposed to smuggled gold and no question of declaration in respect of smuggled gold can arise under Gold Control Rules, 1963, " but we do not think this decision represents the correct law on the point. We are of the view that the Gold Control Rules 1963 are applicable alike to smuggled gold as to non-smuggled gold, and the inhibition of Rule 126H(2) (d) that no person other than a licensed dealer shall acquire gold except in accordance with a permit or authorisation granted by the Administrator is not confined in its operation to non-smuggled gold but applies equally in relation to smuggled gold. The learned Presidency Magistrate and the High Court were, therefore, right in convicting the appellant under Rule 126 H(2)(d) read with Rule 126 P(2) (iv) of the Gold Control Rules, 1963.Since the appellant is convicted of the offence under Rule 126P (2) (iv) of the Gold Control Rules, 1963, the sentence of imprisonment to be imposed on him cannot be less than six months and the High Court was right in enhancing the sentence to six months imprisonment. But so far as the sentence of fine is concerned, we do not think that the f acts and circumstances of the case justify a heavy fine of Rs. 3, 000/- for each of the two offences for which the appellant is convicted. It appears from the statement of the appellant Ex. H that he was a carrier of gold for M/s Pannalal Durgaprasad of Kanpur and the purchase price of Gold was provided substantially by this Kanpur firm and the appellant was merely to receive some commission. The appellant was a goldsmith who had lost his business for the last six months and perhaps economic necessity drove him to carry on this nefarious activity. The sentence of imprisonment which has been imposed on the appellant would be sufficient deterrent to him and many others who indulge in this anti-social activity which is calculated to disrupt the economy of the country. We feel that in the circumstances, the ends of justice would be met if the sentence of fine is reduced from Rs. 3, 000/- to Rs. 500/- for each of the two offences.3.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We do not see any cogent reasons for taking a different view from that taken concurrently by the learned Presidency Magistrate and the High Court in regard to the evidence of Inspector Tilwe and we think this evidence is sufficient to found the conviction of the appellant.The appellant, however, contended that even if it be held that gold was found from the person of the appellant, as alleged by the prosecution, it was smuggled gold and hence not covered by the Gold Control Rules, 1963 and, in the circumstances, no offence under Rule 126H(2)(d) read with Rule 126P(2)(iv) could be said to have been committed by the appellant in acquiring such gold. The argument of the appellant was that the Gold Control Rules, 1963 apply only in relation to what may be called legal gold or non-smuggled gold and smuggled gold is outside their scope and ambit and hence acquisition of smuggled gold would not constitute an offence under the Gold Control Rules, 1963. This is an argument of despair and cannot be sustained even for a moment. Rule 126H(2)(d) provides, inter alia, that no person other than a licensed dealer shall buy or otherwise acquire or agree to buy or acquire gold, not being ornaments, except in accordance with a permit granted by the Administrator or in accordance with such authoriation as the Administrator may make in this behalf. The word gold is defined in clause (c) of the Explanation to Rule 126A to mean gold, including its alloy, whether virgin, melted, remelted, wrought or unwrought, in any shape or form, of a purity of not less than nine carats and include any gold coin (whether legal tender or not), any ornament and any other article of gold". This definition does not restrict the meaning of the word gold to legal or non-smuggled gold. It is wide enough to include any kind of gold, whether smuggled or non-smuggled. The restrictions imposed by the Gold Control Rules, 1963 could not have been intended merely to apply to legal gold. The object and purpose of the restrictions. would be frustrated by excluding from their ambit and coverage smuggled gold. The Gold Cont rol Rules, 1963 seek to control and regulate dealings in gold and gold within the meaning of these rules must include not only non-smuggled gold but also smuggled gold, We fail to see on what principle of construction can smuggled gold. which is gold within the meaning of the definition, be excluded from the operation of these Rules. There is no scope for inferring any such exclusion nor is there anything in the Rules which supports such exclusion. Take, for example, Rule 126 B which says that a dealer shall not make or manufacture any article of gold other than ornament. Can it be suggested for a moment that this Rule does not prohibit a dealer from making or manufacturing articles out of smuggled gold? Then again, look at Rule 126 C. It provides, inter alia, that no dealer shall make, manufacture or prepare any ornament having gold of a purity exceeding fourteen carats. Can a dealer make an ornament of smuggled gold having purity exceeding fourteen carats without committing a breach of this Rule? Rule 126-1 provides that every person shall make a declaration to the Administrator as to the quantity, description and other prescribed particulars of gold owned by him. How can a person, who has smuggled gold, say that he is not bound to make a declaration under this Rule? The object of requiring a declaration is that the Government should know what is the gold possessed by each person, so that dealings in gold can be controlled and regulated and this object would be thwarted if smuggled were not subject to the requirement of declaration. Then consider Rule 126 D which says that no person shall make advance or grant any loan to any other person on the hypothecation, pledge, mortgage or charge of any gold other than ornament, unless such gold has been included in a declaration. If smuggled gold were outside the scope of this rule, it would be open to a person to advance moneys on the security of smuggled gold without involving any violation of this rule. That surely could not have been the intention of the Government in making the Gold Control Rules, 1963. We are aware that there is a decision of the Calcutta High Court in Aravinda Mohan Sinha v. Prohlad Chand Samenta (A.I.R. 1970 Cal 437 ) where a Division Bench has taken the view that "declaration under Rule 126. P is in respect of legal gold as opposed to smuggled gold and no question of declaration in respect of smuggled gold can arise under Gold Control Rules, 1963, " but we do not think this decision represents the correct law on the point. We are of the view that the Gold Control Rules 1963 are applicable alike to smuggled gold as to non-smuggled gold, and the inhibition of Rule 126H(2) (d) that no person other than a licensed dealer shall acquire gold except in accordance with a permit or authorisation granted by the Administrator is not confined in its operation to non-smuggled gold but applies equally in relation to smuggled gold. The learned Presidency Magistrate and the High Court were, therefore, right in convicting the appellant under Rule 126 H(2)(d) read with Rule 126 P(2) (iv) of the Gold Control Rules, 1963.Since the appellant is convicted of the offence under Rule 126P (2) (iv) of the Gold Control Rules, 1963, the sentence of imprisonment to be imposed on him cannot be less than six months and the High Court was right in enhancing the sentence to six months imprisonment. But so far as the sentence of fine is concerned, we do not think that the f acts and circumstances of the case justify a heavy fine of Rs. 3, 000/- for each of the two offences for which the appellant is convicted. It appears from the statement of the appellant Ex. H that he was a carrier of gold for M/s Pannalal Durgaprasad of Kanpur and the purchase price of Gold was provided substantially by this Kanpur firm and the appellant was merely to receive some commission. The appellant was a goldsmith who had lost his business for the last six months and perhaps economic necessity drove him to carry on this nefarious activity. The sentence of imprisonment which has been imposed on the appellant would be sufficient deterrent to him and many others who indulge in this anti-social activity which is calculated to disrupt the economy of the country. We feel that in the circumstances, the ends of justice would be met if the sentence of fine is reduced from Rs. 3, 000/- to Rs. 500/- for each of the two offences.