# HARAKCHAND RATANCHAND BANTHIA AND ORS. ETC v. UNION OF INDIA AND ORS

- **Citation:** [1970] 1 S.C.R. 479
- **Court:** Supreme Court of India
- **Decided:** 1969-04-30
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/harakchand-ratanchand-banthia-and-ors-etc-v-union-of-india-and-ors-4820
- **Pages:** 28

## Headnote

•
•
/
A
HARAKCHAND RATANCHAND BANTHIA AND ORS. ETC.
v.
UNION OF INDIA AND ORS.
April 30, 1969
B
[M. HIDAYATULLAH, C.J., J. C. SHAH,
V.
RAMASWAMI,
c
D
E
F
G
H
G. K. MITTER AND A. N. GROVER, JJ.]
Go/cl (Control) Act (45 of 1968). ss. 4(4), 4(5). 5(l), (2), 27,
32, 39. 46, 88 and 100-/f violative of Arts. 14 and 19 of the Constllution
-Delegation by Administrator under ss. 4 and 5(1). not excessive-The
phr11se 'so far as it appears to him necessary or expedient', if subjective.
Constitution of India, 1950, VII Schedule, List I, Entry 52, List II, Entry
27 (Jlld List III, l~ntry 33--Scope of-Manufacture oj ROid or1U1ments if
industry-Whether control declared to he .rxpedient in public interestIndustries (Development and Regulation) Act (65 of 1951) ss. 2(a) and
2(d)-Scheduled industry £1nd 'industrial undertaking', if sy11ony1nous-
'Ma1111fact11rers and se1ni~1nanufacturer's 1neaning of.
Severability-So111e sections decl11red ultra vires-Tests for determining
validity of Act.
Even. though import of gold into India had been banned, considerable
quaatities of contraband gold \Vere finding their \Vay into the
country
through illegal channels,
affectin.~ the· national economy and hampering
the country's econon1ic stability and progress.
The Customs Department
was not in a position to cffeCtively cvmbat the smuggling over the long
borders and coast lines.
Therefore, anti-smuggling measures had to be
supplemented by a detailed system of control over internal traMactions
and the Gold (Control) Act, 1968, was passed for this purpOse.
The
petitioners, who were· goldsmiths. contended that; ( 1) the Act '\\o'as not
within th>e legislative competence ot ParJiament, because, (a) Manufacture
of gold ornaments by goldsmiths is not 'industry' within the meaning of
Entry 52, List I or Entry 33. List Ill of the VJI Schedule to the Constitution; (b) Even if it was an 'industry' \vithin the meaning of the Legislative Entries, the Control of the Industry was not declared by Parliament
to be expedient in the public interest as required by the Entries; (c) The
provisions of the Industries (Development and Regulation) Act, 1951,
indicate that what Parliament intended to control under Entry 52 was not
the manufacture of gold ornaments by individual goldsmiths but 'industrial
undertakings' as contemplated by s. 2(d) of that Act, because, the ex·
pret>sion 'scheduled industry' in s. 2(a) and 'industrial undertaking' in s.
2(d) of that Act are synonymous; and (2) that the restrictions imposed
bys.. 4(4). 4(5), 5(1), 5(2), 27(2)(d), 27(6), 32, 46, 88 an.cl JOO of
the Gold (Control) Act were unreasonable and not in public interest and
so are violative of Art. 19(1) (f) and, (g) of the Constitution, an.cl that
s. 27 and s. 39 are discriminatory and violative of Art. J 4.
HELD : (1) (a) The manufacture of gold ornaments by goldsmiths in
India is a process of systematic production for trade or manufacture and
so falls \vithin the connotation of the word ·industry'. in the appropriate
legislative Entries.
Therefore, in enacting the impugned Act, Parliament
was validly exercising its legislative pov.1er in respect of matters covered
by Entry 52 of List land Entry 33 of List Ill. Entry 27 of List II dealing
with 'Production, supply and distribution of goods, subject to the provisions
480
SUPREME COUlT llBPOllTS
[ 1970] 1 S.C.R.
of Entry 33 of l...iat ill', is a general Entry and the general power
ahould not be interpreted so as to nullify tho particular power conferred
by F.ntry 52 of List I and Entry 33 of List Ill. There is no rouon for
impooioa on the word 'industry' a restriction that tu comtitute industry, a
process of machinery O£ mechanical contrivanoe is eseenlial.
The mere
uae of •kill or an by the goldsmith is not a decisive factor and will not
t<ak.e the manufacture 01 goJd ornari1enLS out of the ambit of the relevant
leaillative Enlries. The decioions in IJaMrji v. M11kherj~, [1953 J S.C.R.
302 and NationaJ Union of ComTMrr:ial Emp/oyeu v. M. R. Mther,
(

## Text

_Characters 0–39,975 of 74,832. This is a partial read: ask again with offset=39975 for what follows._

•
•
/
A
HARAKCHAND RATANCHAND BANTHIA AND ORS. ETC.
v.
UNION OF INDIA AND ORS.
April 30, 1969
B
[M. HIDAYATULLAH, C.J., J. C. SHAH,
V.
RAMASWAMI,
c
D
E
F
G
H
G. K. MITTER AND A. N. GROVER, JJ.]
Go/cl (Control) Act (45 of 1968). ss. 4(4), 4(5). 5(l), (2), 27,
32, 39. 46, 88 and 100-/f violative of Arts. 14 and 19 of the Constllution
-Delegation by Administrator under ss. 4 and 5(1). not excessive-The
phr11se 'so far as it appears to him necessary or expedient', if subjective.
Constitution of India, 1950, VII Schedule, List I, Entry 52, List II, Entry
27 (Jlld List III, l~ntry 33--Scope of-Manufacture oj ROid or1U1ments if
industry-Whether control declared to he .rxpedient in public interestIndustries (Development and Regulation) Act (65 of 1951) ss. 2(a) and
2(d)-Scheduled industry £1nd 'industrial undertaking', if sy11ony1nous-
'Ma1111fact11rers and se1ni~1nanufacturer's 1neaning of.
Severability-So111e sections decl11red ultra vires-Tests for determining
validity of Act.
Even. though import of gold into India had been banned, considerable
quaatities of contraband gold \Vere finding their \Vay into the
country
through illegal channels,
affectin.~ the· national economy and hampering
the country's econon1ic stability and progress.
The Customs Department
was not in a position to cffeCtively cvmbat the smuggling over the long
borders and coast lines.
Therefore, anti-smuggling measures had to be
supplemented by a detailed system of control over internal traMactions
and the Gold (Control) Act, 1968, was passed for this purpOse.
The
petitioners, who were· goldsmiths. contended that; ( 1) the Act '\\o'as not
within th>e legislative competence ot ParJiament, because, (a) Manufacture
of gold ornaments by goldsmiths is not 'industry' within the meaning of
Entry 52, List I or Entry 33. List Ill of the VJI Schedule to the Constitution; (b) Even if it was an 'industry' \vithin the meaning of the Legislative Entries, the Control of the Industry was not declared by Parliament
to be expedient in the public interest as required by the Entries; (c) The
provisions of the Industries (Development and Regulation) Act, 1951,
indicate that what Parliament intended to control under Entry 52 was not
the manufacture of gold ornaments by individual goldsmiths but 'industrial
undertakings' as contemplated by s. 2(d) of that Act, because, the ex·
pret>sion 'scheduled industry' in s. 2(a) and 'industrial undertaking' in s.
2(d) of that Act are synonymous; and (2) that the restrictions imposed
bys.. 4(4). 4(5), 5(1), 5(2), 27(2)(d), 27(6), 32, 46, 88 an.cl JOO of
the Gold (Control) Act were unreasonable and not in public interest and
so are violative of Art. 19(1) (f) and, (g) of the Constitution, an.cl that
s. 27 and s. 39 are discriminatory and violative of Art. J 4.
HELD : (1) (a) The manufacture of gold ornaments by goldsmiths in
India is a process of systematic production for trade or manufacture and
so falls \vithin the connotation of the word ·industry'. in the appropriate
legislative Entries.
Therefore, in enacting the impugned Act, Parliament
was validly exercising its legislative pov.1er in respect of matters covered
by Entry 52 of List land Entry 33 of List Ill. Entry 27 of List II dealing
with 'Production, supply and distribution of goods, subject to the provisions
480
SUPREME COUlT llBPOllTS
[ 1970] 1 S.C.R.
of Entry 33 of l...iat ill', is a general Entry and the general power
ahould not be interpreted so as to nullify tho particular power conferred
by F.ntry 52 of List I and Entry 33 of List Ill. There is no rouon for
impooioa on the word 'industry' a restriction that tu comtitute industry, a
process of machinery O£ mechanical contrivanoe is eseenlial.
The mere
uae of •kill or an by the goldsmith is not a decisive factor and will not
t<ak.e the manufacture 01 goJd ornari1enLS out of the ambit of the relevant
leaillative Enlries. The decioions in IJaMrji v. M11kherj~, [1953 J S.C.R.
302 and NationaJ Union of ComTMrr:ial Emp/oyeu v. M. R. Mther,
(1962) SUpp. 3 S. C. R. 157 that the word industry in a. 2(j) of the
lnd111trial Disputes Act, 1947 involved cooperation of employer and employeea, did not mean that the activity carried on by self..,mployed &0ldamiths individually without any panicipation by Jabour and capital in the
activity would not fall within the word 'industry' in tho Uats of the Co111titution.
The interpretation of the word in the Industrial Disputes Act
WU adopted by this Court with refere~ to the subject-matter of that Act
as that Act was passed to ameliorate the service conditions of w"'k•rs.
(491 B-C, E-F, H; 492 A, F-H)
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(b) There is no scientific or logical scheme in the claaaification under
the headings of th< first scbedule to the Industries (Development alld
Regulation) Act as shown by the fact that many itema were included
under headings which are inappropriate and others are excluded which
should have bcel\ included. Tberefore. the first Schedule to that Act is a
mere enumeration and groupinR of various items and the headings do not
D
control the scope and meaning of the entries under 1hem.
Hence, the
heading 'Metallurgical Industries' docs not control the entry B(2) under
it. dealing wilh 'semi·manufacturcs and manufactures'.
The
expres.~ion
'aemi-maoufacturcs' could not mean gold in the form of inaots, wire,
atrips and sheets, nor would 1he expression 'manufactures' mean ROid
brickJ or standard gold bars and gold castings, because, then items 1-8( 1)
and (2) would convey the same meaning, and 1-8(2) would he auper11uous.
E
The two exprcs•ions should be construed in the light of the Brussels
Tariff Nomenclature, and so construed, the manufacture of gold ornaments
fall~ within the expression 'stmi-manufacturcs or manufactures'.
Since
under s. 2 of that Act it i! declared that it i! expedient in the public intt'.cst
that the Union should take under its control the industries specified in
the tint s.chedu:e. Parliament jc; competent to legislate in regard to the
•uhject-maller of the impugned Act. [494 F-G; 495 B-C, D-F; 496 B.CJ
(c) There is a distinction made bc1ween 'scheduled indllslries' .and
F
'industrial undertakin~·. because. separalc provision,, are made throughout
the Industries (Development
~nd ReRulation) Act, for their re1n1l3tion.
Therefore. the two expr.,.sion• are not synonymous. [496 F-H)
(2)(a) Section< 5(2l(b). 27(2)(d). 27(6). .32. 46. 88 and 100 are
invalid.
(a) Section..; 4(4) and 4(5) contemplate that 1he Administrator appointed under the Act m>y authorise such persoo as he thinks fit, to also
exercise an or any of the po\Yers exercisable by him under the Act, except
certain specified pOYr'ers, and ... uch person mav excrciSe the poWcrs as if they
were conferred by 1he Act.
Such delegation by the Administrator is
neceuary, because. the volun1e of work entrusted to him ia great and it
must be assumed that he '"·ould dele~te his authority onlv to competent
and respe>nsibte persons.
There(ore. 1hc delegation does not go bevond
'perminible con<;titutionat limits. r A-Dl
(b) Section 5(1) requires that in makin~ orders for carryin~ out the
provisions of the Act. 1hc Administrator "hould have regard to the pohcv
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H. R. BANTH!A v. UNION
481
of the Act. The orders should be made within the frame-work of the Act
and should not be inconsistent with its provisions.
As regards s. 5(2) (a),
the section provided the safeguard that regulation of the price at which any
golu may be bought or sold should be made after consultation with the
ltOierve Bank of India.
The phrase 'so far as it appears to him to be
necessary or expedient for carrying out the provisions of the Act,' in the
sub--;ection. is not subjective and docs not constitute the Administrator
the sole judge as to what is in fact necessary or expedient for the, purposes
of the Act.
In the context of the scheme and object of the legislation
the opinion of th~ Administrator as to the necessity or expediency of
making the order must be reached objectivl..!ly after having regard to the
relevant consideration and mu..,t he reasonably tenable in a court of law.
lt must be assum·~d that the Administrator will not try to promote purpo'c' aiicn to the oh;ect of the Act. [499 D-Hl
(c) As regards s. 5(2)(h), on a review of ss. 8(6), 11(1)
3~(2)
and (3) the power conferred up'1n the Administrator under s. 5(2)(b) is
legislatLve in character and extremely wide.
But \Vhercas the parallel
power of subordinate legislation of rule-making con fer red on the Centrat
Government under s. 114(1) and (2) is subject to parliamentary scrutiny,
the power of regulation granted to the Administrator under s. 5(2) (b)
suffers from excessive delegation of legislative power and must be held to·
he constitution:tlly invalid. f50 l A-Dl
(d) Section 2,7(2) (d) states that the licence issued by the Administrator
may contain such conditions, limitations as the administrator may think
fit to impose and different conditions. limitations and restrictions may be
imposed for different classc~ of dealers.
On the face of it, the sub-section
confers such wide and vague power upon the Administrator that it is
difti;:ult to lin1it its scope and therefore. the section must be struck down
as an unrcasonablL' restriction on the fundan1ental right of the petitioners
to carry on busine"is.
Section 27(6) (a) states that in the n1attcr of issue or
rene\val of
licences the Adn1inistrator shall have regard to the number of
dealers
existing in the region in \\'hich the applicant intends to carry on business
as a dealer.
But the word 'region' is nowhere defined in the Act. Similarly
s. 27(6) (b) requires the A<lmini!;trator to have due regard to the anticipated de1na1ul. a'l estimated hv hin1 for ornaments in that region, but the
expression 'anticipated demand' is vague and incapable of objective assessment, and is bound to lead to a great deal of uncertainty.
In the same
way the expression 'suitability of the applicant' ins. 27(6) (e) and 'public
interest' in s. 27(6)(g) do not provide any objective standard or norm.
Further, the requirement in the section imposing the same conditions for
the renewal of the licence as for the initial grant is unreasonable, as it
renders the entire future of the business of the dealer uncertain and subject
to the caprice and arbitrary ¥.1ill of the administrative. authorities. Therefore.
dames (al. (h), (el and (g) of s. 27(6) are constitutionally invalid.
Since these
clauses are
inextricably
woven
up with
other clauses
of s. 27(6) the entire s. 27(6) must be held to be invalid. [501 D-H;
502 A-B]
Ifs. 27(2) (d) ands. 27(6) of the Act are invalid the licensing scheme
contemplated by the Act becomes unv.rorkablc and it is the~fore neces,,.ary
for Parliament to enact fresh lcuislation imposing: appropriate condition.;;
and restriction<; for the grant and renewal of licences to dealers or in the
alternative. the Central Government mav make appropriate rules for the
same purpose under s. 114. [502 B-E] -
(e) Sections 32 and 46 of the Aet authorise a licensed dealer to keeP'
any quantity of standard gold bars and provides a lbnit upon the holdiiu; of
482
SUPREME COURT REPORTS
[1970] l S.C.R.
prilnary gold depending on the number of artisans he employs.
But a
standard gold bar cannot, in many cases be handed over to a certified
goldsmith. \vithout cutting it.
Jf a dealer gives a cut piece of stdndanJ.
gold bar to a goldsmith, the ren1aining portion is treah~J as primary gold in
his hands. Therefore, the limits prescribed under the sections are rendered
meaningless and constitute an. unreasonable restriction on the right of the
petitioners to carry on trade or business and arc invalid. 1503 C-El
(f) Section 88 extend~ the scope of the vicarious liability of the. dca!er
and makes him responsible for th,_:: contravention of any provision ot the
Act or rule by any person cmpl1Jycd by hin1 in 1he course of such employment. The section n1akcs the dealer liable cv·~n for any past contravention
perpetrated by an employc~ and extends vica'rious liability beyond reC1son..:
able limits.
It therefore imposes an unreasonable restriction and is unconstitutional. /503 H: 504 A-D]
(g) Section 100 in1poses a statutory obligation upon a dealer to take
all reasonable steps to satisfy himself about the iden:ity of person<.; fron1
whon1 gold is bought.
ft does not specify the nature of steps ,,,.·hich a
dealer should take for such .'latisfaction and the obligation is uncert.1in
and incapable of proper compliance.
Hence it must also be held to he
unconstitutional on the ,ground that it imposes an impossible and unre150n-·
abk burden. [504 D-F]
(h) Licensed dealers and certified goldsmiths
form separate clas....,e.;;
and the classification is a
rca~onable cla~silication. iJecause, a
licens..::d
dealer is essentially a trader who does the business c•f buying and selling
ornaments while a certified goldsmith is a craftsman who does the actual
manufacture of ornaments and does not trade in ornaments. Considering
the policy underlying the statute and the ohject intended lo be achieved,
the classification is reasonable and has a rational nexus with the avo\ved
policy and object of the Act. and hence
does
not
violate
Art.
: 4.
(504 G-H; 505 C-E]
(3) The provisions which arc declared invalid do not affect the validitv
of the Act as a whole.
"fhe test is· whether v.1hat remains of the st.Hutc
is so inextricably bound up with the invalid part that \Vhat remain-; cannot
independently survive, or \\'hethcr on a fair reviev.' of the whole rnatl~r
it can be assumed that the legislature would have enacted at all that v..hich
survives without enacting the u[f,"a vires part.
In the present case. rhe .A.~t
still remains substantially the Act as it was passed. that is, an Act f9r th~
control of the production. manufacture, supply,
distrihution, use and
possession of gold and gold ornan1ents and articles of gold even \Vithout
including the section'i which arc found to be ultra i.ires.
The provisions
held to be invalid arc not incxtricahly bound up \vith the remainin.ri: portion'>
and it i'> difficult to hold lhat Parliament v..·ould not have enacted the· ,A.;;t
excluding the part found to l,c ultra vires. f506 C -El
ORIGINAL JURISDIC'TION : Writ Petitions l\os. 282, 407 and
408 of 1968.
Petition Under Art. 32 of the Constitution of India for enforcemtlnt of the fundamental rights.
C. K. Daphtary, B. R. L. lye111<ar, R. N. Banerjee, Ravinder
Narain, J. B. Dadachanji and 0. C. Mathur, for the petitioners
(In W.P. No. 407 o.f 1968).
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H. ll, BANTH!A v. UNION (Ramaswami, J.)
483
N. A. Palkhivala, R. N. Banerjee, Rarinder Narain and J. B.
Dadachanji and 0. C. Mathur, for the petitioners (in W.P. No.
408 of 1968).
A. K. Sen, J. C. Bhatt, R. N. Banerjee, Ravifr,der Narain,
J. B. Dadachanji and 0. C. Mathur, for the petitioners (in W.P.
No. 282 of 1968).
M. C. Setalvad, J. M. Mukhi, A. Sreedharan Nambiar and
R. N. Sachthe,v, for the respondents (in al! the petitions).
The Judgment of the Court was delivered by
Rama~wami, I. In these petitions which have
been Jilcd
under art. 32 of the Constitution a common question is presented
for determination, namely, whether the Gold (Control) Act, 1968
(Act No. 45 of 1968) is constitutionally valid.
The Gold (Control) Act, (hereinafter called the impugned Act)
was passed by Parliament and received assent of the President on
September I, 1968.
The impugned Act begins with the following preamble, namely, "an Act to provide in the economic and
financial interests of the community, for the control of the production, manufacture, supply, distribution, use and possession
of,
•nd business in, gold, ornaments and articles of gold and for
matters connected therewith or incidental thereto."
Section 2
.:<1ntains a number of definitions. . Section
2(b)
defines
an
"::rticle'' to mean anything (other than ornament), in a finished
form. made of, manufactured from or containing. gold. and induding (i) any gold coin, (ii) broken pieces of an article, but not
including primary gold.
Clause (d)
defines n "certified gold-
~mith" to mean a self-employed
goldsmith who holds a valid
certificate, referred to in s. 30. Clause (h) defines a dealer as
follows:
"dealer" means 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. remuner•1tion or other vnluahk consideration .. ..... "
"
Clause (i) states :
"declaratior( means a declaration which is required
by this Act or was required by rule 126-I of the Defence
of India Rules, 1962, or the Gold (Control) Ordinance,
1968, to be made with regard to the ownership, possession. custody or control of gold;"
484
SVPREME COURT REPORTS
[1970] I S.C.R.
Clause (j) define:; 'gold' to mean gold, including its alloy (whether
virgin, melted or re-melted, wrought or unwrought), in any shape
or form, of a purity of not less than nine carats and including
primary gold, article and ornament.
Clause ( p) reads as follows :
"ornament" means a thing, in a
finished
form,
meant for personal adornment or for the
adornment
of any idol, deity or any other object of religious worship, made of, or manufactured from, gold, whether or
not set with stones or gems (real or artificial), or with
pearls (real, cultured or imitation) or with all or any of
them. and includes parts, pendents or broken pieces of
ornament.
Exp/anation.-For the purposes of this Act, nothing
made of gold, which resembles an ornament, shall be
deemed to be an m nament
unles' the thing
(having
regard to its purity, size, weight, description or workmanship) is such as is commonly used as ornament in
any State or Unicm territory;"
Clause (r) states :
"primary gold" means gold in any unfinished or
semi-finished form and includes ingots, bars,
blocks,
slabs, billets, sho!s, pellets, rods, sheets, foils and wires;"
A
B
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D
Clause (u) d~fines a "standard
gold bar" as primary gold
of
E
such fineness, dimensions, weight and description and containing
such particulars as may be prescribed.
Section 4 deals with the appointment and functions of the
Administrator and Gold Control Oflicers and reads as follows:
"(I) The Central Government
shall, by notification, appoint an
Administrator for
carrying out the
purposes of this Act.
(2) The Central Government may. by notification,
appoint as many persons as it thinks lit to be Gold Control Officers for th~ purpose of eniomng the provisions
of this Act.
(3) The Administrator shall discharlle his functions
subject to the general control and directions of the Central Government.
( 4) The Administrator may authorise such person
as he thinks fit to also exercise all or any of the powers
exercisable by him under this Act other than the powers
under sub-section (6) of this section or under clause
(a) of sub-section (I) of section 80 or under section 81,
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H. R. BANTHJA. v. UNION (Rainaswami, J.)
485
and different persons may be authorised to exercise
different powers.
·
(5) Subject to any general or special direction given
or condition imposed by the Administrator, any person
authorised by the Administrator to exercise any powers
may exercise those powers in the same manner and with
the same effect as if they had been conferred on that
person directly by this Act and not by way of authorisation.
(6) The Administrator may also-
(a) perform all or any of the functions of, and
(b) exercise all or any of the powers com.,rred
by this Act or any rule or order made 111lreunder on,
;\~
any officer lower in rank than himself.
~'
(7) A Gold Control Officer shall, subject to such
limitations, restrictions and conditions as the Central
Government may think fit to impose, exercise such
powers and discharge such functions as are specified or
conferred, as the case may be, by or under this Act."
Section 5 confers power on the Administrator to issue directions
and orders.
"(!) The Administrator may, if he thinks fit, make
orders, not inconSistent with the provisions of this Act,
for carrying out the provisions of this Act.
(2) The Administrator may. so far as it appears to
him to be necessary or expedient for carrying out the
provisions of this Act, by order-
( a) regulate, after
consultation with the
Reserve
Bank of India, the price at which any gold may
be bought or sold, and
: b) regulate by licences, permit' or otherwise,
the
manufacture, distribution,
transport,
acquisition, pos11ession, transfer, disposal, use or consumption of gold."
Chapter III contains a number of restrictions relating to .the
manufacture, acquisition, possession. or delivery of gold. Section
16 provides for declarations as to articles and ornaments. Chapter
VII relates to dealers~ Section 2 7 of this chapter as regards
licensing of dealers mty be quoted :
" (I) Save as otherwise provided in this Act, no person shall commence,. or carry on, business as a dealer
SUPREME COURT REPORTS
[1970] 1 S.C.R..
unless he holds a valid licence issued in this behalf by
the Administrator.
(2) A licence issued under this section,-
(a) shall be in such form as may be prescribed,
(b) shall be valid for such period as may be specified
therein,
( c) may be renewed, from time to time, and
(d) may contain such conditions, limitations
and
restrictions as the Administrator may think fit
to impose and different conditions, limitations
and restrictions may be imposed for dilfer"1t
classes of dealers.
(:5) A person who intends to commence, after the
commencement of this Act, business as a dealer, shall
make an application (in such form and on payment of
such foes, not exceeding one hundred rupees, as '!lay be
prescribed) for the issue of a licence.
(6) On receipt of an application for the issue or
renewal oi a licence under this section, the Administrator may, after making such inquiry, if any, as he may
consider necessary, by order in writing, either issue or
renew the licence, or reject the application for the same;
ProviJed that no licence shall be issued or renewed
under this section unless the Administrator, having regard to the following matters, is satisfied that the licence
should be issued or renewed, namely :-
(a) the number of dealers existing in the region in
which the applicant intend~ to carry on businC8s
as a dealer,
(b) the anticipated demand, as
estimated by him,
for ornaments in that region,
(c) the turnover of the applicant, if
he had been
carrying on business as a dealer prior to the commencement of Part XIIA of the
Qefence of
India Rules, 1962, during the two years immediately precedinit such commencement, or
~
the ca~ of an application for the renewal of a
licence, the date of the
application for such
renewal,
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487
(d) the previous experience, if any, of the applicant
with regard to the making, manufacturing, preparing, repairing or polishing of, or dealing in,
ornaments,
(e) the suitability of the applicant,
(f) the suitability of the premises where the appli·
cant intends to carry on business as a dealer,
( g) the public interests, and
(h) such other matters as may be prescribed,
Chapter VIII deals with certified goldsmiths.
Section 39 e>f this
Chapter provides :
( 1) Save as otherwise provided in this Act, no person shall commein.ce, or carry on, business as a gold-.
smith after the commencement of this Act, unless he
holds a valid certificate recognising him as a goldsmith.
(2) The certificate referred to in sub-section (1)-
( a) shall be in such form as may be prescribed,
(b) shall be valid until the death of the holder, or the
cancellation thereof, whichever is earlier, and
( c) may contain such conditions, limitations 'and
restrictions, as the Administrator may think fit
to impose and different conditions, limitations
and restrictions may be imposed for different
dasses of certified goldsmiths.
(3) Every certificate granted to a person under Part
XIIA of the Defence of India Rules, 1962, or under
the Gold (Control) Ordinance, 1968, recognizing him
as a goldsmith, shall, if in force immediately before the
commencement of this Act, continue to be in force until
the death of the holder, or the cancellation, thereof
whichever is earlier.
(5) Every application for the grant of a certificate
referred to in sub-section (1) shall be made in such
form, in such ma'1Qer and on payment of such fee, not
exceeding ten rupees, as may be prescribed.
(8) A certified goldsmith may engage not more than
one hired labourer to assist him in his work as a goldL14 Sup. Cl-69-2
<!SS
SUPREME COURT REPORTS
[1970] 1 s.c.R.
smith but such hired labourer shall not make, manufacture, prepare, repair or process any article or ornament."
Chapter X deals with cancellation and suspension of licences
and certificates.
Chapter XII contains provisions relating
to
entry, search, seizure and arrest.
The other material chapters
are Chapter XIII dealing with confiscation and penalties, Chapter
XN providing for adjudication, appeal and revision and Chapter
XV relating to offences and their trial.
Chapter XVI contains
certain miscellaneous provisions.
Section 100 of this chapter
enacts:
·
"Every licensed dealer or refiner or certified goldsmith shall, before accepting, buying or otherwise receiving any gold from any person, take all reasonable
steps to satisfy himself as to the identity of such person
and if, after an inquiry made by an officer authorised
in this behalf by the Administrator, it is found that such
person is not either readily traceable or is a fictitious
person, it shall be presumed, unless snch dealer or refiner or certified goldsmith, as the case may be, establishes that he had taken all reasonable steps to satisfy
himself as to the identity of such person, that snch gold
was bought, acquired, accepted or received by such
licensed dealer or refiner or certified goldsmith, as the
case may be, in contravention of the provisions of this
Act."
The first question to be considered is whether the impugned
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Act is within the legislative competence of Parliament under
Entry 52 of List I, and Entry 33 of List III of the Seventh Schedule.
It was argued on behalf of the petitioners that the legis-
]fttion fell within the exclusive competence of the 'State Legislatures under Entry 27 of List II. It was said that the goldsmiths'
F
work was a handicraft requiring application of skill and the art
of making gold ornaments was not an industry within the meaning of Entry 52 of List I, or Entry 33 of List ill of the Seventh
Schedule.
The opposite viewpoint was presented by Mr. Setalvad who argued that the Legislative entries must be construed in
a large and liberal sense and that the goldsmith's craft was an
industry within the meaning of Entry 24 of List II, Entry 3 3 of
G
List III and Entry 52 of List I and Parliament is competent to
legislate in regard to the manufacture of gold ornaments.
The
relevant entries in the Lists of the Seventh Schedule of the Constitution are List I, Entry 52-lndustries, the control of which by,
the Union is declared by Parliament by law to be expedient in
the public interest; List II, Entry 24 : Industries subject to the
H
provisions of Entries 7 and 52 of List I; List II, Entry 27 : Production, supply and distribution of goods subject to the provisions of Entry 3 3 of List III.
List ill, Entry 3 3 reads as follows :
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H. ll. BANTHIA v. UNION (Ramaswami, /.)
48&
"Trade and c0mmerce in, and the production, supply and distribution of,-
(a) the products of any industry where the control
of such industry by the Union is declared by
Parliament by law to be expedient in the public
interest, and imported goods of the same ·kind
as such products;
(b) foodstuffs, including edible oilseeds and oils:
( c r cattle fodder, including oilcakes and other concentrates;
(d) raw cotton, whether ginned or unginned, and
cotton seed; and
(e) raw jute."
Before construing these entries it is useful to notice some of
the well-settled rules of interpretation laid down by the Federal
Court and by this Court in the matter of construing the entries.
The power to legililate is given to the appropriate legislatures by
Art. 246 of the Constitution.
The entries in the three Lists are
only legislative heads or fields of legislation; they demarcate the
area over which $e appropriate legislatures can operate.
It is
well-established that the widest amplitude should be given to the
language of the entries.
But some of the entries in the different
lists or in the same list may overlap or may appear to be in direct
conflict with each other. It is then the duty of this Court to reconcile the entries and bring about a harmonious construction.
In In re The Central Provinces and Berar Sales of Motor Spirit
and Lubricants Taxation Act, 1938(1) Sir Maurice Gwyer proceeded to state :
"Only in the Imlian Constitution Act can the
particular problem arise which is now under consideration; and an end~avour must be made to solve it, as the
Judicial Coinrnit!ee have said, by having recourse to the
context and sch'lffie of the Act, and a reconciliation
attempted between two apparently conflicting .iurisdictions by reading the two entries together and by interpreting, and, where necessary, modifying, the language
of the one by that of the other. If indeed such a reconciliation should prove impossible, then, and onlv then.
will the non-obstante clause operate and the "federal
1Jower prevail; for the clause ought to be regarded as
a la8t resource. a witness to the imperfections of human
expression and the fallibility of legal draftsmanship."
(p. 44)
fl) [1939] F. C. Jl. 18.
49C
SUPREME COURT llBPORTS
[1970] I S.C.R.
The Federal Court in that case held that the entry "taxes on the
sale of goods" "'as not covered by the entry "duties of excise"
and in coming to that conclusion the learned Chief Justice
observed:
·'Here are two separate enactments, each in one
aspect conferring the power to
impose a tax upon
goods; and ii would accord with sound principles of
construction to take the more general power, that which
extends to the whole of India, as subject to an exception created by the particular power, that which extends
to the Province only.
It is not perhaps strictly accurate to speak of the provincial power as being excepted
out of the federal power, for the two are independent
of one another and exist side by side.
But the underlying principle in the two cases must be the same, that
a general power oug!Jt not to be so construed as to make
a nuility of a particular power conferred by the same
Act and operating in the same field, when by reading
the former in a more restricted sense effect can be giveP
to the latter in its ordinary and natural meaning." (pp.
49-50)
The rule of constructior. adopted by that decision for the purpose of harmonizing the two apparently conflicting entries in the
two Lists would equally apply to an apparent conflict between
two entries in the san1e List. Patanjali Sastri, J, (as he then was)
held in State af Bomba; v. Narorhamadas Jerhabai(1), that the
words "administration of justice" and "constitution and organization
of all courts" in Entry 1 of List II of the Seventh Schedule to the
Government of India Act, 1935 must be understood in a restricted sense excluding from their scope "jurisdiction and powers
of courts" specifically dealt with in item 2 of List II.
In the
words of the learned Judge, if such a construction was not given
"the wider construction of entry 1 would deprive entry 2 of all
its content and reduce it to useless lumber."
The question to be considered is what is the meaning of the
word "industry" in Entry 52 of List I, Entry 24 of List II and
Entry 33 of List III. Whatever may be its connotation it must
bear the same meaning in all these entries which are so interconnected that confiicting or different meanings given to them
would snap the connection. In the Shorter Qi.ford English Dictionary the word "industry" is defined as "a particular branch of
productive labour; a trade or manufacture." According to Webster's Third New International Dictionary (1961 edn.) the word
"industry" means "(a) systematic Jabour especially for the creation
(!) 11951] S.C.R. 51.
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H. R, BANTH!A v. UNION (Ramaswami, J.)
491
of value; (b) a department or branch of a craft, art, business or
manufacture, a division of productive and profit making labour
especially one that employs a large personnel and capital especially in manufact.iring; ( c) a group of productive or profit making
enterprises or organisations that have a similar
technological
structure of production and that produce or supply technically
substitutable goods, services or sources of income." It was said
thai if the word "industries" is construed in this wide sense, Entry
27 of List II will lose all meaning and content. It is not possible
to accept this contention for, Entry 27 is a general Entry and it is,
a well-recognised canon of construction that a general power
should not be so interpreted as to nullily a particular power conferred by the same instrument. In Tika Ramji v. State of Vttar
Pradesh ( 1 ) the exp1'¢Ssion "industry" was defined to mean the process of manufacture or production and did not include raw materials used in the industry or the distribution of the products of
the industry. It was contended that the word "industry" was a
word of wide import and should be construed as including not
only the process of manufacture or production but also activites
antecedent thereto such as acquisition of raw materials and subsequent thereto such as disposal of the finished products of that
indus_try. But this contention was not accepted. It was contended by Mr. Daphtary that if the process of production was to
constitute "industry" a process of machinery or mechanical contrivance was essenti-1. But we see no reason why such a limitation should be imposed on the meaning of the word "industry"
in the legislative list$. Similarly it was argued by Mr. Palkhivala
that the manufacture of gold ornaments was not an industry because it required application of individual art and craftsmanship
and aesthetic skill. But mere use of skill or art is not a decisive
factor and will not take the manufacture of gold ornaments out
of the ambit of the relevant legislative entries. It is well settled
that the entries in the three lists are only legislative heads or fields
of legi~lation and they demarcate the area over which the appropriate legislature can operate.
The legislative entries must be
given a large and liberal interpretation, the reason being that the
allocation of subjecls to the lists is not by way of scientific or
logical definiiion but is a mere enumerntion of broad and comprehensive categories. It is not, however, necessary for the purpose of this case to attempt to define the expression "industry"
precisely or to state exhaustively all its different aspects. But we
are satisfied in the present case that the manufacture of gold
ornaments by goldsmiths in India is a "process of systematic production" for trade or manufacture and so falls within the connotation of the word "industry" in the appropriate legislative entries.
(I) [1956) S.C.R. 393.
SUPREME COUil! lll!PORTS
[1970] l S.C.R.
It follows, therefore, that in enacting the impugned Act Parliament was validly exercising its legislative power in respect of
matters covered by Entry 52 of List I and Entry 33 of List Ill.
It was contended by Mr. Ashoke Sen that the manufac:ure of
gold ornaments cannot be said to constitute an industry unless
there was cooperation of labour and capital and there WJ> re!Jtionship of employer and employee. It was said that if ornament
making activity was largely carried on by self-employed goldsmiths individually and there was no participation by labour and
capital in the said activity.
Reference was made to the • .k:ision
of this Court in Banerji v. Mukherjee\ 1 J in which it wa> pdnted
out that the word "industry" in s. 2(j J of the Industrial Di>putcs
Act, 1947 should be: construed as an activity systematicJli) or
habitually undertaken for production and distribution of ~oods
or for rendering material services to the community at !Jrge and
that such an activity generally involved cooperation of the employer
and the employees and its object was satisfaction o: human needs.
The same view was taken in the Natio11<1/ Union oi Commcr~ial
Employees v. M. R. Meher( 2 ) in which it was pointed ou: that
the distinguishing feature of an industry was that for produ~tion of
goods or for the rendering of service, cooperation·between capital
and labour or between the employer and his employee must be
direct.
But these decisions arc of no avail 10 the petitioner. because they were concerned with the interpretation of the word
"industry" ins. 2(j) of the Industrial Disputes Act, 1947 which
reads as fclllows :
•
"industry means any business, trade, undertaking.
manufacture or calling of employers and includes any
calling, service, employment, handicraft or industrial
occupation or avocation of workmen:"
In interpreting the word "industry" in that section the court thought
it necessary to limit the scope of the section having regard to the
aim, object and scope of the whole Act. The history of the legislation made it manifest that the Industrial Disputes
Act
was
introduced as an important step in achieving social justice. The
Act seeks to ameliorate 1he service conditions of the worker3, to
provide a machinery for resolving their conflicts and to encourage
their cooperative effort in the service of the community.
It was
in this context that the expression "industry" was interpreted in
Banerjee's case(') and Meher's case('). It was an interpretation
adopted by this Court sacundum subjectae materies.
But what
we are concerned in the present case is the inlerprctation of tlle
(I) [1953] S.C.R. 302.
(2)
:1962)
Supp. 3 S.C.R. 157.
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H. R. BANTHIA v. UNION (Ramaswami, I.)
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A
word "industry" in the legislative lists which constitute part of the
Seventh Schedule of the Constitution. It is manifest that the
decisions referred to above have no bearing on the question deba!ed
in the present case.
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ft was argued by Mr. Palkhivala that even on the assumption
that making of gold articles and ornaments was an industry within
the meaning of the legislative entries the control of the said industry was not declared by Parliament to be expedient in the public
interest and, therefore, Parliament was not competent to legislate
upon the subject matter of the impugned Act. To appreciate this
argument it is necessary to notice briefly the provisions of the
Industries (Development and Regulation) Act, 1951 (Act 65
of 1951) which was enacted by Parliament to provide for the
development and regulation of certain industries. Under. s. 2 of
this Act it is declared that it is expedient in the public interest
that the Union should take under its control the industries specified
in the first schedule.
Section 3(1) of the 1951 Act defines a
"scheduled industry" to mean "any of the industries specified in
the first schedule". The relevant portion of the first schedule is
reproduced below :
"'
"l. METALLURGICAL INDUSTRIES :
A. Ferrous
(1) Iron and steel (metal).
(2) Ferro-alloys.
(3) Iron and steel castings and forgings.
( 4) Iron and steel structurals.
( 5) Iron and steel pipes.
(6) Special steels.
( 7) Other products of iron and steel.
B. Non-ferrous
( 1) Precious metals, including gold and silver, and their
alloys.
( 1 A) Other non ferrous metals and their alloys,
(2) Semi-manufactures and manufactures."
The question presented for determination is whether the manufacture of gold ornaments falls within item 2 "semi-manufactures
or manufactures" under the sub-heading B "non-ferrous" of the
heading "metallur~cal industries".