Supreme Court rules repeal of Gold Control Act without saving clause means show cause notice doesn't survive due to contrary intention expressed.

Case Name:

Sushila N. Rungta (D) Thr. Lrs. Vs The Tax Recovery Officer And Ors.

Civil Appeal No. 10824 OF 2018

Key Takeaways:

- Repeal of a law without a saving clause does not automatically mean pending proceedings continue under Section 6 of the General Clauses Act.

- Courts will look at the statement of objects and reasons to determine if a contrary intention was expressed regarding the application of Section 6.

- In this case, the objects and reasons criticized the Gold Control Act as "regressive" and causing "hardship and harassment", indicating an intention to discontinue pending proceedings.

- The court distinguished this from cases where Parliament realized the injustice of limiting claims and therefore intended to save pending proceedings.

Issue:

Whether the repeal of the Gold Control Act, 1968 without a saving clause attracts the provisions of Section 6 of the General Clauses Act, thereby allowing the pending show cause notice to survive.

Facts:

The appellant was issued a show cause notice in 1971 under the Gold Control Act for failing to declare gold in his possession. This notice was challenged but stayed by the Supreme Court in 1973. While the stay was in force, the Gold Control Act was repealed in 1990 through the Gold (Control) Repeal Act, which did not contain a saving clause. The appellant argued that the repeal without a saving clause, coupled with the critical language in the statement of objects and reasons, meant the show cause notice could not survive.

Arguments:

Appellant's Arguments:

The senior counsel argued that Section 6 of the General Clauses Act would not apply because the objects and reasons showed a clear intention to repeal the Act without any saving clause. He relied on the use of the word "regressive" and the statement that the Act caused "hardship and harassment", indicating nothing should survive the repeal.

Revenue's Arguments:

The Revenue's counsel contended that a repeal simpliciter (simple repeal) without a saving clause meant the general rule under Section 6 would apply, allowing pending proceedings to continue as per the State of Punjab vs. Mohar Singh case.

Key Legal Precedents:

- New India Assurance Co. Ltd. vs. C. Padma and Another:

The court noted this parallel case where Parliament realized the injustice of limiting claims based on limitation and therefore intended to save pending proceedings, indicating a different intention than the present case.

- M.S. Shivananda vs. Karnataka State Road Transport Corporation and Others:

This case, following Director of Public Works & Anr. vs. Ho Po Sang & Ors., held that even show cause notices, which are ordinarily not saved under Section 6, can be saved by express provision.

Judgement:

The Supreme Court allowed the appeals, setting aside the High Court's judgment. It held that the repeal simpliciter in this case did not attract Section 6 of the General Clauses Act because a contrary intention was clearly expressed in the statement of objects and reasons of the 1990 repeal Act. The court found the language criticizing the Gold Control Act as "regressive" and causing "hardship and harassment" indicated an intention to discontinue pending proceedings like the show cause notice. Therefore, the court concluded that the 1971 show cause notice no longer survived after the repeal.

FAQs:

Q1: What is the significance of the court's decision?

A1: The decision clarifies that a repeal without a saving clause does not automatically mean pending proceedings continue under Section 6 of the General Clauses Act. Courts will examine the repeal's statement of objects and reasons to determine if a contrary intention was expressed.

Q2: What factors did the court consider in finding a contrary intention?

A2: The court relied heavily on the critical language used in the statement of objects and reasons, such as describing the Gold Control Act as "regressive" and causing "hardship and harassment". This indicated an intention to discontinue pending proceedings like the show cause notice.

Q3: How did the court distinguish this case from others where Section 6 was applied?

A3: The court contrasted this case with instances like New India Assurance Co. Ltd. vs. C. Padma and Another, where Parliament realized the injustice of limiting claims and therefore intended to save pending proceedings. In the present case, the intention was to discontinue proceedings under the criticized Act.

Q4: What was the impact of the court's decision on the parties?

A4: The court's decision meant that the 1971 show cause notice issued to the appellant did not survive after the repeal of the Gold Control Act in 1990. Therefore, the appellant was no longer subject to the proceedings initiated by that notice.

1) In this appeal, an order dated 03.01.1970 was passed by the Collector of Central Excise in which, it was ordered as follows:-

“17. In view of the above-mentioned facts, the party charged is entitled to the benefit of the amnesty granted by the Government. Even though he had initially failed to declare the gold, time was available to him up to 31.5.66 to invest the gold into gold bonds and his intentions would have materialised but for the fact that seizure of gold prevented him from tendering the Gold to the Bank, as it was not in his possession at that time.

18. While intention to invest the gold in gold bonds is conceded failure to declare was, no doubt, there. He was required by law to declare his gold to the Government. Since he did not declare this gold, even though he is given the benefit of the gold bond scheme, he has rendered himself liable to punishment for not declaring his gold, at the appropriate time, as required by law.

19. Considering all the facts and circumstances of the case and weighing the merits of the evidence available on record, I order that the gold shall be released to the party charged for invest in gold bond in pursuance of the application tendered by him to the State Bank of Indore in 1965.

20. I also order that for failure to declare the gold in his possession, which involves contravention of gold control rules, I impose upon him a penalty of Rs.25,000/- (Rupees twenty-five thousands only) under Rule 126-I(16) of the Gold Control Rules, 1962 (Corresponding to Section 74 of the Gold Control Act, 1968)”

2) Against the aforesaid order, an appeal was dismissed on 08.02.1971. Exercising suo motu powers under the Defence of India Rules, a show cause notice dated 01.06.1971 was issued in which it was sought to confiscate the items of gold and enhance penalty that had been imposed. This show cause notice was challenged by the grand-father of the present petitioner in a writ petition that was ultimately dismissed by the Delhi High Court on 29.09.1972. This appeal is an appeal from the aforesaid judgment. This Court, on 09.08.1973, passed the following order:

“Upon hearing the counsel for the parties, while counsel for Respondent No.3 waiving notice of motion, the Court directed stay of all further proceedings in pursuance of the impugned proceedings dated 01.06.1971 pending final disposal of this appeal. The Court allowed C.M.Ps. 3056 and 3058 of 1973”

3) While the stay order of this Court continued, the Gold Control Act itself was repealed.

This was effected by two sections, namely,:

1. Short title.- This Act may be called the Gold (Control) Repeal Act, 1990.

2. Repeal of Act 45 of 1968.- The Gold (Control) Act, 1968 is hereby repealed.

The statement of objects and reasons for this Act is as follows:

“Gold control which regulated the domestic trade and movement of gold within the country was introduced on 9th January, 1963 as part of the Defence of India Rules. Later on, the Gold Control Act, 1968 was enacted with the broad objectives of controlling the production, manufacture, supply, distribution, use and possession of and business in gold, ornaments and articles of gold. The said enactment was meant to supplement other preventive measures to make circulation of smuggled gold difficult and its detection easier by extending the control over gold beyond the stage of import.

2. Over the past 22 years, the results achieved under the Act have not been encouraging and the desired objectives for which the Act was introduced have not been achieved due to various socio-economic and cultural factors in the vast multitude of the country’s population and the lack of administrative machinery. On the other hand, this regressive and purely regulatory Act has given rise to considerable dissatisfaction in the minds of the public as it has caused hardship and harassment to the artisans and small self-employed goldsmiths who have not been able to develop their skills and earn proper living on account of the rigours which this Act imposed upon them.

3. Taking these factors into consideration and the advice of experts who have examined issues related to this Act, it is proposed to repeal the Gold (Control) Act, 1968.

4. The Bill seeks to achieve the said object.”

4) What has been argued by Mr. R. Venkataramani, learned senior counsel appearing on behalf of the appellant, is that considering that the Gold Control Act itself has been repealed without a saving clause, Section 6 of the General Clauses Act would not apply for the reason that the objects and reasons show that the Act was sought to be repealed without any saving clause. He relied strongly upon the objects and reasons using the expression “regressive” and the fact that it has given rise to considerable dissatisfaction in the minds of the public as it has caused hardship and harassment to artisans and small self-employed goldsmiths. Therefore, according to him, the statement of objects and reasons clearly evinces a contrary intention as a result of which, nothing will survive the repeal of this Act. This being so, a show cause notice which has been upheld by the Delhi High Court would not survive.

5) On the other hand, Mr. Rupesh Kumar, learned counsel appearing on behalf of the Revenue, has taken us though the impugned judgment and has argued that once there is a repeal simpliciter, without any savings clause, the whole object of such a repeal was so that the general rule under Section 6 would apply, as a result of which the law laid down in State of Punjab vs. Mohar Singh, [1955] 1 SCR 893, would apply.

6) Having heard learned counsel for both sides, we are of the view that the statement of objects and reasons makes it clear that over 22 years, the results achieved under the Act have not been encouraging and the desired objectives for which the Act has been introduced have failed. Following the advice of experts, who have examined issues related to the Act, the objects and reasons goes on further to state that this Act has proved to be a regressive measure which has caused considerable dissatisfaction in the minds of the public and hardship and harassment to artisans and small self-employed goldsmiths.

7) This being the case, we are of the opinion that the repeal simpliciter, in the present case, does not attract the provisions of Section 6 of the General Clauses Act as a contrary intention is very clearly expressed in the statement of objects and reasons to the 1990 repeal Act. In this behalf, it would be apposite to refer to New India Assurance Co. Ltd. vs. C. Padma and Another, (2003) 7 SCC 713 (para 10)

8) This Court noticed that, in a parallel instance of simpliciter repeal, Parliament realized the grave injustice and injury that had been caused to heirs of LRs of victims of accidents if their petitions were rejected only on the ground of limitation. This being the case, this Court found that a different intention had been expressed and, therefore, Section 6-A of the General Clauses Act would not in that situation apply.

9) We find a similar situation in the present case. In point of fact, on going through the impugned judgment, it is clear that every time an amendment was made to the Defence of India Rules and/or repeal of the said rules had taken place, there was always an inbuilt savings clause. In fact, Section 116 of the Gold (Control) Ordinance No.6 of 1968 also made it clear that it went to the extent, in sub-section 2 thereof, by saving show cause notices which, ordinarily, are not saved even if Section 6 were to apply – See M.S. Shivananda vs. Karnataka State Road Transport Corporation and Others, [1980] 1 SCR 684 following Director of Public Works & Anr. vs. Ho Po Sang & Ors., [1961] 2 All. ER 721.

10) This being the case, we are of the view that the show cause notice dated 01.06.1971, which is the subject matter of this appeal, no longer survives. In this view of the matter, the appeal is disposed of.

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11) Leave granted.

12) The impugned order records that owing to counsel not turning up in time, the reference of questions made under the Wealth Tax Act at that point of time would remain unanswered. Given the fact that the show cause notice and proceedings thereafter have now disappeared as a result of the repeal of the Gold Control Act, we give liberty to both parties to add to or amend or delete the questions in the Wealth Tax Reference within a period of eight weeks from today. Once this is done, the writ petitions will taken up and decided on their merits. Considering these writ petitions are of 2005, we request the High Court to hear the same expeditiously.

13) We, therefore, allow the appeals and set aside the common impugned judgment of the High Court.

(ROHINTON FALI NARIMAN)

(NAVIN SINHA)

New Delhi;

October 30, 2018.