Judgments
Judgments
  1. Home
  2. /
  3. High Court Of Judicature at Allahabad
  4. /
  5. 1972
  6. /
  7. January

Sri Prem Nath Khanna vs The Union Of India (Uoi) And Ors.

High Court Of Judicature at Allahabad|30 October, 1972

JUDGMENT / ORDER

ORDER H.N. Seth, J.
1. On 13th February, 1970, petitioner Prem Nath Khanna submitted an application to the Assistant Collector, Central Excise, Allahabad praying for a Gold dealers licence under the provisions of the Gold (Control) Act 1968. In usual course, the Superintendent of the Central Excise made an enquiry and recommended that the petitioner be granted a Gold dealers licence. However, the Assistant Collector Central Excise, vide his order dated 9th of April, 1970, rejected the application moved by the petitioner. Being aggrieved by the order passed by the Assistant Collector, the petitioner preferred an appeal before the Collector Central Excise who dismissed the same on 5th April, 1971. The petitioner then filed a revision before the Central Government which also was dismissed on 29th November, 1971. He has now approached this Court praying for a writ in the nature of certiorari for quashing the orders passed by the Assistant Collector Central Excise, Collector Central Excise and the Central Government, mentioned above. He also prays that the respondents be commanded to grant him a gold dealers licence.
2. Section 27 of the Gold (Control) Act 1968 as amended by the Gold Control (Amendment) Act 1969, provides that--Save as otherwise provided in the 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-section 6 (a) lays down that no application for 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.
3. Relevant portion of Rule 2 of the Gold Control (Licensing of Dealers) Rules, 1969 reads thus:--
"On receipt of an application for the issue of a licence to commence or carry on business as a dealer, the Administrator shall have regard to the following matters, namely:
(a) ...... ...... ...... ...... ...... ...... ......
(b) the experience of the applicant with regard to the dealing in, or making, manufacturing, preparing, repairing or polishing of ornaments;
(c) ...... ...... ...... ...... ...... ...... ......
(d) ...... ...... ...... ...... ...... ...... ......
(e) ...... ...... ...... ...... ...... ...... ......
(f) the need to increase the number of licensed dealers in the city or town in which the dealer intends to carry on business or where the applicant intends to carry on business in a village, the need to increase the number of licensed dealers in the district within which such village is situated, having regard to-
(i) the number of licensed dealers existing in such city, town or district, as the case may be; and
(ii) the demand for ornaments which is likely to rise in such city, town or district, such demand being estimated on the basis of the turnover of the licensed dealers, existing therein, for a period of three years preceding the year in which such application for the issue of license has been made and such turnover shall be determined on the basis of the accounts and returns submitted under the law for the time being in force in relation to gold."
4. In the schedule attached to his application for licence, the petitioner stated that he wanted to obtain Gold dealer's licence for purchasing and selling gold and silver ornaments. He also filed an affidavit stating that he had been working in Gold ornaments dealing since his childhood. He had the credit of working as a salesman in a firm known as Lala Kashi Nath Seth Shahjahanpur from 1954 to 1956. Later On he worked as sales-man in a Firm M/s. Nanak Chand Ram Sahai Sharraf, Shahjahanpur from 1955-1956. Further he worked as a Sales-man with the Firm M/s. Bhagat Ram Jai Narain at Kanpur from 1956 to 1958. He also worked as Gaddidar and sales-man with M/s. Bhagat Narain Jai Narain Allahabad, from 1958 to 1970. Thus he had long experience of Gold ornaments business.
5. The Assistant Collector Central Excise rejected petitioner's application, by his order dated 9th of April 1970. A copy of order passed by him has been filed as Annexure 3 to the writ petition. In paragraph 5 of the order brief facts of the case have been stated as follows:--
"Shri Prem Nath Khanna applied for a fresh gold dealer's licence through the Superintendent of C. Ex. M. O. R. Allahabad. The application was submitted in the proper form accompanied with a receipted Treasury Challan in evidence of payment of licence fees of Rs. 100/-. The sketch plan of the proposed premises was attached with Superintendent's report of suitability. The Superintendent recommended for issue of licence considering the number of existing gold dealers' licences and turn over for three years. As regards experience of the applicant it was reported that he was working in the farms at three places since 1954 as sales-man. In support of this the applicant has submitted an affidavit and a certificate from the President Allahabad Sarrafa Samiti."
6. However, while making the actual Older, the Assistant Collector Central Excise stated that having carefully considered and processed the application of the party in the light of Rule 2 of the Gold Control (Licensing of Dealers) Rules. 1969 and Section 27 (6) of the Gold Control Act, 1968, there is no justification to increase the number of Gold dealers in the city as the number is already very large. The petitioner merely had an experience of working as Sales-man since the year 1954 and had no experience about making, manufacturing, preparing, repairing or polishing of ornaments. He had not even been a partner in any Firm. In his opinion, such an experience was not the requisite experience which could make him eligible for the grant of dealer's licence. The application filed by the petitioner was accordingly rejected
7. As stated above, according to Rule 2 (b) of Gold Control (Licensing of Dealers) Rules, while considering application for issue of licence to commence or carry on business as a dealer, the Administrator, has to have regard to the experience of the applicant with regard to the dealing in, or making, manufacturing, preparing, repairing or polishing of ornaments. Learned counsel for the petitioner argues that the Assistant Collector was wrong in thinking that unless the applicant had the experience in making, manufacturing, preparing, repairing and polishing of ornaments, he was not qualified 10 obtain a gold dealer's licence and that his experience as a Sales man was of no avail.
8. The expression "dealor" has been defined in Section 2 (h) as meaning 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. A person who carries on any of the activities mentioned in Section 2 (b) of the Act is a dealor who under the provision of Section 27 of the Act would require a licence for carrying on that activity. It is not necessary that a person who is a dealer as he indulges in the activities of selling, supplying and distributing ornaments must also indulge in the activities of manufacturing and repairing of ornaments etc. Rule 2 (b) provides that while dealing with an application for dealer's licence the licensing authority should have regard to applicant's experience in dealing in, or making, manufacturing, preparing, repairing or polishing of ornaments. It does not require that the applicant should have experience in dealing in and making, manufacturing, preparing, repairing and polishing of ornaments. According to this rule, it is not necessary that a person applying for a Gold dealer's licence must have prior experience in all the items mentioned in Rule 2 (b), namely, in dealing, making, manufacturing, preparing, repairing and polishing of ornaments. This provision obviously means that while considering an application for grant of Gold dealers licence regard shall be had to the experience in respect of the activity which he intends to carry on under the licence applied for. If a person applies for a dealers license merely for purposes of carrying on the activity of sale and purchase of ornaments, there is no point in insisting that he should also have experience of making, manufacturing, preparing etc., of ornaments. The type of experience that is to be taken into consideration while dealing with an application for licence, therefore, depends upon the purpose for which the licence is sought to be obtained. Since the petitioner made an application for obtaining gold dealers license for purchase and sale of ornaments, the Assistant Collector was not justified in rejecting the application on the ground that he had no experience of manufacturing etc., of ornaments. A person who has worked as a sales-man with a number of big dealers dealing in ornaments can certainly acquire experience in its purchase and sale.
9. Mr. T. N. Sapru, learned counsel appearing for Union of India, urges that in view of the definition of the word "dealer", contained in Section 2 (b), once a dealer's licence is granted under Section 27 of the Act, the person concerned becomes entitled to indulge in all the activities mentioned therein. Accordingly it would be apt to insist that he should have experience in respect of all those activities. The word "or" used in Rule 2 (b) should therefore be read as "and" and unless a person has experience in all the activities mentioned in the Rule, he should not be granted a gold dealers licence.
10. I am unable to accept this submission. If a person has been granted a dealer's licence merely for the purposes of buying and selling gold and silver ornaments, and even though he becomes a dealer as defined in the Gold Control Act, he does not become entitled to carry on such business for which licence has not been granted to him. It is true that in certain cases, in order to effectuate legislative intention and the purposes for which the enactment is made, the expression 'or' may be read as 'and' and the provisions of the Act or Rule be interpreted accordingly, but in this case I find no justification for not giving normal meaning to the word "or" as used in Rule 2 (b). I am accordingly, of opinion that the Assistant Collector Central Excise was not right in throwing out petitioner's application for grant of Gold Dealer's licence for carrying out the business of purchase and sale of gold ornaments, on the ground that he did not have experience of making, manufacturing, preparing, repairing or polishing of ornaments.
11. Rule 2 (f) requires that while considering the grant of an application for licence, the authority has to take into consideration the need to increase the number of licenced dealers in the city or town in which the dealer intends to carry on business and that such need has to be determined on the basis of the number of licensed dealers existing in such city, town or District and the demand for ornaments which is likely to rise there. It further provides that the demand for ornaments has to be estimated on the basis of the turnover of the licensed dealers, existing therein, for a period of three years preceding the year in Which such application for the issue of licence has been made. The yard-stick for determining the turnover of the dealers is the accounts and returns submitted by them under the law for the time being in force in relation to gold. While stating the brief facts the Assistant Collector mentioned that considering the number of existing gold dealers licences and their turnover for three years, the Superintendent recommended that license be issued to the petitioner. While making the order, he observed that it was not necessary to increase the number of Gold dealers licenses in the city. However, he did not state as to what was the number of the Gold dealers in the city and why he considered that it was not necessary to increase the number of licenses. The order passed by the Assistant Collector does not show that he applied his mind and considered the fact whether there was any likelihood of rise in demand for ornaments estimated on the basis of the turnover of the licensed dealers in the city for last three years. In my opinion, while rejecting petitioners application for licence, the Assistant Collector Central Excise did not consider the matters mentioned in Rule 2 (b) and (f) of the Rules.
12. In appeal, the petitioner asserted that he had the requisite experience of dealing in Gold ornaments as he had worked as Sales-man. His application for licence had been recommended by the Superintendent Central Excise, Allahabad after considering the number of existing licenses and their turnover for the last three years. The Assistant Collector Central Excise did not take this fact into consideration. He alleged that recently one or two new licenses had also been issued by the Allahabad Collectorate and this showed that while dealing with petitioner's application, there had been no proper consideration of the matters mentioned in Rule 2 (f). Order passed by the Collector Central Excise shows that it was also claimed before him that apart from the fact that the petitioner had worked as sales-man with various persons mentioned above, he had experience of dealing in Gold ornaments as while at Kanpur he also dealt in gold ornaments on his own account. Collector Central Excise repelled this plea on the ground that he has failed to produce any evidence by way of Registration Certificate, partnership deed, Sales Tax Department's assessment orders, Income Tax payment etc. about his business at Kanpur, specially when he did not make any mention about it before the Assistant Collector. He however, went on to observe that even on the question whether the petitioner had worked as salesman, he did not produce any evidence to substantiate his claim, and the Assistant Collector, therefore, was right in holding that the condition about experience as per licencing of Dealers Rules, 1969 had not been satisfied in this case.
13. Along with his application for grant of licence, the petitioner submitted an affidavit mentioning about his having worked as a sales-man for various persons. The Superintendent verified these facts and reported that the petitioner had necessary experience in dealing in gold as he had worked as sales-man for three Firms ever since the year 1954. There is no law which requires that the applicant must produce evidence before the licencing authority in support of the facts stated in the application for license. The procedure, adopted in such cases is that after an application for licence is moved, the Assistant Collector Central Excise requires a Superintendent of Central Excise to make an enquiry about correctness of the facts stated therein, other relevant matters and to submit a report. During the course of his enquiry, the superintendent, if he so liked could contact various persons and verify from them whether the statement in the application that the applicant had worked as sales-man for them was correct or not. If the authorities concerned entertained doubt about correctness of the facts mentioned in the application moved by the petitioner or in the report submitted by the Superintendent Central Excise, it was for them to tell the petitioner that they were not inclined to act on the averments made in his application unless he produced some supporting evidence. So long as they did not indicate their desire to seek corroboration of facts mentioned in the application, or in the report of the Superintendent Central Excise, there was absolutely no occasion for the petitioner to produce any supporting evidence from his employers showing that he had been working as sales-man since the year 1954. There is nothing on the record which may indicate that the Collector, at any stage, required the petitioner to produce supporting evidence in respect of his experience in dealing in gold ornaments. The Collector Central Excise, therefore, was not right in holding that the petitioner had no experience as a sales-man, as in support of that allegation he did not produce any evidence from his employers and that petitioners application deserved to be rejected on this ground.
14. As regards the criteria under Rule 2 (f) are concerned, the Collector Central Excise pointed out that at the end of the year 1968 there were 29 dealers. Their number by the end of 1970 was reduced to 20. According to him, the fact that 9 dealers surrendered their licences went to show that the contention that there was increase in business is not correct. He further went on to observe that out of the existing licences, 9 are reported to be getting no business for the last two years. Thus the demand for ornaments which is likely to arise also does not justify any increase in the number of gold licences. A perusal of the order passed by the Collector Central Excise shows that he estimated the demand for ornaments on the basis of the decline in the number of licenced dealers between the years 1968 and 1970. Such decline in the number of existing licences has not been made the basis for estimating the demand of ornaments under Rule 2 (f) which provides that it is to be estimated on the basis of the accounts and returns which have been submitted under the law for the time being in force in relation to gold. Accordingly, the Collector Central Excise was not justified in applying this criterion in estimating the demand for ornaments in the city.
15. Towards the close of his order, the Collector further noticed that the reported turnover of the licenced dealers existing in the city for the last three years, did not justify issue of any further licence as per capita turnover was not substantial particularly as the major part of the turnover Was accounted for by "new ornaments made out of old one." It appears that this observation was made in order to show that in estimating the demand for ornaments the Collector has taken into consideration the factor mentioned in Rule 2 (f) (ii). Order passed by the Collector Central Excise does not indicate that total demand as disclosed by accounts and returns filed by the dealers has gone down in last three years. All that is stated therein is that per capita turnover is not substantial enough so as to justify issue of further licences. It also does not indicate the per capita turnover of each individual dealer during the three years. Mere assertion in the order that per capita turnover of the dealers is not substantial enough does not convey any idea as to what actually the average turnover of licenced dealers was. Same turnover may be considered to be substantial by one person whereas the other may consider it to be unsubstantial. Turnover of an individual dealer depends upon a number of factors. Rule 2 (f) does not ensure that there should be substantial turnover for each of the licenced dealers existing in the city. The Collector was, therefore, not justified in upholding the order re-
fusing to grant licence to the petitioner on this ground.
16. I may mention here that it was brought to the notice of the Collector that he had issued a new licence to another dealer in the same locality where the petitioner wanted to carry on his business. This shows that the case that there was no need to increase the number of licenced dealers is not correct. The Collector rejected this plea on the ground that the fact that one licence had been issued to another person is not relevant. Decision as to grant of licence has to be taken in each case with reference to its own merit.
17. Rule 2 (f) requires consideration of the need to increase the number of licenced dealers in a city or town. It is not disputed that the licence referred to in Collector's order was issued in respect of the business in the city of Allahabad. Not only this it had been issued for purposes of running business in the same locality where the petitioner wanted to run his business. It is stated in the counter affidavit that a dealer's licence had been granted to a person named Shadi Lal Jain who was the holder of a Gold dealers license in the year 1968. As he was evicted from the licenced premises and as he could not arrange another suitable premises for carrying on his business, he did not apply to get his licence renewed for the year 1970-71. The licence issued in 1968 was neither surrendered nor cancelled. After getting suitable premises in Rani Mandi, Allahabad Shri Shadi Lal Jain applied for renewal of his old licence. Since renewal could not be done in accordance with the Rules and orders, a fresh licence was issued to him in 1971. Therefore, in fact, the number of Gold Dealers in Allahabad had not increased because the fresh licence granted to Shri Shadi Lal was in fact the revival of his old incence which was not renewed in the circumstances mentioned above.
18. In the first place, the fact that the licence to Shri Shadi Lal was not continued as he had been evicted from the premises where he was carrying his business did not mean that while considering fresh application for licence the authority should disregard the provisions of Rule 2 (f). A licence could be granted to Shadi Lal Jain only if on a consideration of the need to increase the number of licenced dealers in the city, such a grant was justifiable. If this justification was there for granting licence to Shadi Lal Jain it was equally there while petitioner's application for grant of licence was being considered.
19. It is significant to note that according to paragraph 16 of the counter-affidavit, the authority concerned concedes that considering Shadi Lal to be a licenced dealer in the year 1968, grant of licence to him in the year 1971 did not have the effect of increasing the number of licenced dealers although he was not a holder of a licence during the year 1969-70. When in the year 1968 licences were granted to 29 persons, it meant that having regard to the circumstances prevailing at that time the authorities were of opinion that as many number of licences were required to be issued. Merely because nine persons went out of business subsequently it did not mean that they went out of business as the total demand of gold ornaments decreased thereafter (as is illustrated by Shadi Lal's case). It appears, that while concluding from the fact that a number of Gold dealers have gone out of business the demand for ornament has gone down, the authorities concerned did not keep the aforementioned aspect in mind. They did not try to analyse the reason why a number of licenced dealers had gone out of business. If it be that the number of licenced dealers in the city has gone down for reasons like the one for which Shadi Lal went out of business in the year 1969-70, or because of lack of funds or other like reasons, it cannot lead to an inference that they have gone out of business for lack of demand of ornaments and grant of licence to the petitioner and few others cannot possibly have the effect of increasing the number of licenced dealers having regard to the demand of ornaments. Accordingly, I am of opinion that the Collector Central Excise also has not correctly considered the matters mentioned in Rule 2 (b) and Rule 2 (f), while rejecting the petitioner's application for licence.
20. Revisional order passed by the Central Government also suffers from similar defects. While rejecting the application in revision, the Central Government observed that the evidence produced by the petitioner is not adequate to come to any conclusion regarding the extent of his experience. Although he had enough opportunity of producing supporting evidence, he has failed to do so. As explained earlier, the question of having adequate opportunity to produce supporting evidence did not arise in this case as the authorities concerned never asked the petitioner to produce the same for corroborating his claim about experience, made in his application for licence. On the other hand, the procedure adopted by the respondents in such cases was to get an enquiry conducted through the Superintendent Central Excise, who after making the same gave his report to the Licencing Authority. In this case, the Superintendent verified petitioner's assertion about his having worked as Sales-man since the year 1954. In case the Licencing Authority was not satisfied with the averments made by the applicant or the verifications made by its Enquiring Officer, it should have asked the petitioner to produce evidence in support of his claim. So long as the petitioner was not asked to produce supporting evidence, he could not be blamed for not producing the same and no question of his failing to do so in spite of sufficient opportunity being there arises. Accordingly, the Central Government also was not right in concluding against the petitioner on this ground.
21. The Central Government further observed that having regard to the number of Gold Dealers at Allahabad, and the demand for ornaments likely to arise there, based on the past turnover of the existing dealers, there was no need to increase the number of Gold dealers in Allahabad. No facts have been mentioned as to what the number of licensed dealers was and what was disclosed by their accounts and turnover. It appears that the Central Government has arrived at this finding precisely for the reasons similar to those indicated by the Collector Central Excise. In my opinion for the reasons already mentioned, the order passed by the Central Government also suffers from similar infirmity.
22. I am accordingly of opinion that petitioner's application for licence has been rejected by the respondents without properly taking into consideration the matters referred to in Rule 2 (b) and Rule 2 (f) of the Gold Control (Licensing of Dealers) Rules, 1969.
23. The petition, therefore, succeeds and is allowed with costs. The three impugned orders dated 9th April, 1970, 5th April, 1971 and 29th November, 1971, passed by the Assistant Collector Central Excise, Collector Central Excise and the Union Government, respectively are quashed. The Assistant Collector Central Excise shall consider the application for licence moved by the petitioner afresh and in accordance with law.
Disclaimer: Above Judgment displayed here are taken straight from the court; Vakilsearch has no ownership interest in, reservation over, or other connection to them.
Title

Sri Prem Nath Khanna vs The Union Of India (Uoi) And Ors.

Court

High Court Of Judicature at Allahabad

JudgmentDate
30 October, 1972
Judges
  • H Seth