WP/17123/2007 of M/s.Mussadilal Jewellers,and Exporters Private Limited Vs District Inspector, Legal Metrology, City circle-II, on 29 December 2008

COMMON ORDER:

In these two writ petitions, common questions of law and fact arisesfor consideration, therefore they are being disposed of by this commonorder.

Petitioners are jewellers carrying on the business of gold ornamentsand semi-precious stones and they are registered dealers under theprovisions of Andhra Pradesh Value Added Tax, 2005. The HyderabadInternational Gems and Jewellery Exposition had organized Gems andJewellery Exhibition at Hitex Exhibition Centre at NAC Campus,Madhapur, Hyderabad for the purpose of displaying merchandise andsale thereof. Petitioners have taken up stalls for such purpose.

For the sake of convenience, the facts as stated in W.P.No.17123of 2007 are narrated as under:

The first respondent inspected the petitioner’s stall on 5.8.2007 at1.00 p.m. and seized a gold ornament named as ‘JADA’ worthRs.2,66,695/- under a panchanama dated 5.8.2007. According to therespondents, in the estimate given, 10% of the total weight of theornament was added as wastage i.e. in the gold ornament weighing275.770 grams, 25.570 grams was added as ‘wastage’. The total weightof the gold ornament was shown as 303.340 grams. The price had beenshown by applying 91.6% purity gold at the rate of Rs.825/- per gram andthe cost of the semi precious stones about 83 in number were separatelycharged, which according to the respondents, is a fraudulent practice.

According to the petitioner, the first respondent along with team oflegal metrological department came with a caravan of TV crew andinspected various stalls in the Hitex Exhibition center. The firstrespondent was initially looking for variation in weight between thatmentioned in a tag attached to each of ornaments and the actual weightmeasured by using the weighing scale belonging to a third party. Havingfound absolutely no variation, the respondents in a high-handed mannercharged the petitioner with alleged fraud in the matter of pricing theornament.

On behalf of the respondents, a detailed counter affidavit has beenfiled denying the allegations made by the petitioner stating that a case has been registered against M/s Musaddilal Jewellers and ExportersPrivate Limited, Stall No.E-01, India Gems and Jewellery Exhibition, HitexConvention Centre, Madhapur, Hyderabad, since the seller was in theprocess of selling the gold ornament less than the quantity contracted forand paid for. The Inspector has approached the shopkeeper and askedfor preparation of estimate for the chosen ornament with a view to checkwhether the consumers are getting the correct quantity of commoditywhich they are contracting for and paying for. The details of the estimate prepared by the shopkeeper reads as under:

Gross weight of the ornament along

with Rubies and Emeralds 275.770 g

Wastage added 27.570 g

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Total 303.340 g

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Gold @ Rs.825/- per gram.

The total cost of the ornament with precious stones was Rs.2,66,695/-. Since there was violation of the provisions of the Act, a case has beenregistered Section 39(2) of the Standards of Weights and Measures(Enforcement) Act, 1985 (for short ‘Act’) as the firm was indulging indelivering quantity of commodity less than the quantity being contractedfor. The respondents inspected the premises of the petitioner with aview to implement the provisions of the Act and to check whether theconsumers are getting correct quantity of commodity contracted for andpaid for. In the process the first respondent asked the person-in-charge ofthe business to prepare an estimate of the chosen ornament. Accordingly, an estimate was prepared and given to first respondent. The details of the estimate are as under:

Gross weight of the ornament along with

Rubies and Emeralds 275.770 g

Wastage added 27.570 g

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TOTAL 303.340 g

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Gold @ Rs.825/- per gram.

The total cost of the ornament with precious stones was Rs.2,66,695/-.According to the respondents, by charging the cost of semi preciousstones, in the cost of the gross weight of the gold, and again charging thecost of semi precious stones separately by adding wastage to the weightof the ornament, the consumer was given less than the actual quantity,which is nothing but fraud played on the consumer. In the present case,the short delivery was to the extent of weight of semi precious stones andthe quantum of wastage charged in the estimate. Thus, a case wasregistered under Section 39(2) of the Act and the commodity was seizedas per Section 31 of the said Act as the said firm has delivered quantity ofcommodity less than the quantity contracted for. Therefore, theallegations made by the petitioner are all baseless. There is no malafideintention on the part of the respondents in seizing the material. In the saidexhibition, number of such cases were booked against the businessfirms. A case under Section 39(2) of the Act was booked, against thepetitioner, after conducting a detailed panchanama. The Standards ofWeights and Measures Act, 1976 was enacted to regulate interstate tradeor commerce in weights, measures and other goods, whereas 1985 Actwas enacted to provide for enforcement of Standards of Weights andMeasures established by or under the Standards Act, 1976. As perSection 31 and 39(2) of the Act, the first respondent has registered a caseand seized the commodity for delivering commodity less than the quantitycontracted for and paid for. Against the quantity of 303.34 g. for whichestimate was prepared, actual quantity of the commodity delivered was275.77 g. Further, the jeweller has charged, making charges, for makingthe said ornament. The first respondent is not concerned with the artisticwork in making gold ornament and is only concerned with delivery ofquantity of commodity contracted for and paid for. Therefore, looking from any angle, the petitioner has violated the provisions of the Act and isliable to be proceeded with as per law.

The learned senior counsel Mr.D.Prakash Reddy appearing for oneof the petitioners strenuously contended that absolutely the respondents,under the Act, have no jurisdiction to seize the ornaments or to takecriminal action under the provisions of the Act. The nature of transactionreferred by the respondents does not attract any of the penal provisions ofthe Act or it can be said that the act of the petitioner was contrary to any ofthe provisions of Act either under 1976 Act or Enforcement Act, 1985. There is no allegation that the petitioner has cheated the consumer inrespect of weight of the ornament. Even as per the counter filed by therespondents, petitioners, in the estimate, have shown that the grossweight of the ornament along with Rubies and Emeralds as 275.770 g. byadding wastage of 27.570 g. (total 303.340 g) and the cost of theornament with precious stones was shown as Rs.2,66,695/- bycalculating gold @ Rs.825/- per gram. It is not a pure gold sold inbiscuits form. It was a gold ornament sold along with Rubies andEmeralds studded therein. Therefore, absolutely there was no intention tocheat the purchaser/consumer, particularly by showing the wrongweight. By mentioning all these, an estimate was prepared and wasgiven to the Inspector. Even in the panchanama conducted and in thecounter filed by the respondents, there is no dispute as to this aspect. Therefore, the respondents have no jurisdiction to seize the ornament onthe ground that the gold weight was not properly shown. The provisionsof Section 39 of the Act has no application to the present case.

Mr.S.Ravi, learned counsel appearing for one of the petitioner statedthat what is estimated was in respect of an ornament, but not in respect ofgold biscuit. In this case, an estimate was prepared and was given to theInspector and nothing was hidden nor the consumer was cheated. Theornament weighing 275.770 g. and the wastage of 27.570 g. totaling to 303.340 g. was a part of the contract, which was accepted. The wastageaccepted was also part of contract. Therefore, the provisions ofEnforcement Act, 1985 have no relevance to the facts of the case and therespondents have no authority whatsoever to seize the articles.

On the other hand, the learned counsel appearing for respondentsreiterated the stand taken in the counter and stated that whether there waswastage in the process of making the ornament or not and whether it wasaccepted in the contract or not, since it was shown as 303.340 g., theactual gold was only 275.770 g. therefore it amounts to contravention ofSection 39 read with Section 31 of the Enforcement Act, 1985.

I have given my earnest consideration to the respective submissionsmade by the learned counsel on either side and perused the impugnedpanchanama ad other material made available on record.

The word ‘weight’ or ‘measure’ as defined under Section 2(zd) ofthe Standards of Weights and Measures Act, 1976, reads as under:

“Weight of measure” means a weight or measure specified by orunder this Act and includes a weighing or measuring instrument.

The Standards of Weights and Measures (Enforcement) Act, 1985defines the word ‘weight’ or ‘measure’ as under:

“Standard weight or measure” means a weight, measure ornumber which conforms to the standards established in relationthereto by or under the Standards Act.

Section 31(1) of the Standards of Weights and Measures(Enforcement) Act, 1985 deals with the powers of Inspector to seize anyweight of measure, which reads as under:

“An Inspector may seize and detain any weight or measurein relation to which an offence under this Act is being, or appearsto have been committed or which is intended or likely to be usedin the commission of such offence, and may also seize anddetain any goods sold or delivered, or cause to be sold ordelivered, by such weight or measure, provided that where anygoods seized under this sub-section are subject to speedy ornatural decay, the Inspector may dispose of such goods in such manner as may be prescribed.”

Section 39 of the Act deals with penalty for keeping non-standardweights of measures for use and for other contraventions.

The important question that arises for consideration, in the facts andcircumstances of the case is whether the Inspector has jurisdiction toseize the goods on the ground of keeping non-standard weights and forother contraventions.

The very object of Act 54 of 1985 is to provide for enforcement ofthe standards of weights and measures established by or under theStandards of Weights and Measures Act, 1976, and for matters connectedtherewith or incidental thereto. The definition of ‘weight’ and ‘measure’ means a weight or measure specified by or under this Act and includes aweighing or measuring instrument.

Admittedly, in this case, as noticed above, absolutely there was noconcealment of any part of the transaction. It was indicated that theornament contains gold of 275.770 g. and the loss caused in the processof manufacturing was also included and thus, the weight of gold wasshown as 303.340 (by adding 10% wastage).

In the inspection conducted by the Inspector, Legal Metrology on5.8.2007, it was observed that one ornament named as ‘jada’ goldjewellery studded with semi-precious stones was being sold with a grossweight of 275.770 g. for which the trader has added a manufacturing lossof weight of 27.570 g. i.e. 10% of the actual weight. The total weight saidto be 303.34 g. for which the trader has charged at the rate of Rs.825/- pergram 991.6 purity gold. The contention of the respondents is that in theprocess of selling gold jewellery, the trader has charged the cost of semi-precious stones about 83 number studded in the JADA ornament and thewastage adding in the finished jewellery is a fraudulent practice. Thesemi-precious stones weight is also added in the gross weight as goldweight. Accordingly, the trader issued an estimate bill along with making charges and VAT charges which comes to a total of Rs.2,66,695/-. Thus,the process of adding the weight of semi-precious stones along with thegold and adding the wastage in the gross weight of the ornament andcharging for the total is violative of Section 39(2) of the Act.

As noticed above, Section 39 deals with penalty for keeping non-standard weights or measures for use and for other contraventions. Clause (i) of Sub-section (2) of Section 39 says that whoever in sellingany article or thing by weight, measure or number, delivers or causes tobe delivered to the purchaser any quantity or number of that article orthing less than the quantity or number contracted for and paid for, shall bepunished with fine which may extend to five thousand rupees and for thesecond or subsequent offence, with imprisonment for a term which mayextend to one year and also with fine. Even the respondents were notable to demonstrate as to what exactly the working standard which meansthe set of standard of weight of measure which is made or manufacturedby or on behalf of Government for verification of standard weight ormeasure.

This is not a case where the consumer was delivered the articlewith short of weight than the quantity contracted for and paid for. In thiscase, admittedly even according to the panchanama, the petitioner, in theestimate, had given all the details as to the gross weight and the loss ofmanufacturing weight and the total weight inclusive of wastage. Therefore, it is not proper on the part of the respondents to contend that inthe process of selling gold jewellery, the trader has charged the cost of semi-precious stones studded in the ‘JADA’ ornament, which is afraudulent practice. This is the area where the respondents have nojurisdiction. It is not a case of non-disclosure or fraudulent mentioning ofthe weight of the ornament to be sold than what was sought to bedelivered. In this case, absolutely there is no such bad intention on thepart of the petitioner in delivering gold ornament. If the petitioner has not

disclosed the loss of manufacturing weight and added only the weight ofstudded precious stones to that of the actual net gold available, the mattercould have been altogether different. In this case, practically there was nosuch intention on the part of the petitioner. Petitioner has indicated thegross weight of the gold by adding 10% wastage in the manufacturingprocess. It is only a misconception of the respondents that the net weightalone could have been indicated and charged for the same and not forwastage. The estimate itself indicates the intention of the seller informingthe prospective buyer as to the gross weight of the ornament and thewastage occurred in the manufacturing process of elaborate artisticornament. It is not their case that only after it was studded with 83 numbersemi-precious stones, the weight had come to 303.340 g. This is neitherthe case of petitioner nor it is the case of respondents. A perusal of theoriginal record produced by the respondents would also indicate that thepetitioner had shown the gross weight as 303.340 g. i.e. net weight ofgold 275.770 g. plus wastage in the manufacturing process 27.570 g. andinsofar as this aspect is concerned, there is no dispute. Therefore, I am ofthe opinion that the petitioners have not concealed any thing as to thetransaction of contract. They have clearly indicated every aspect of thecontract. Under those circumstances, it cannot be said that the petitionershave concealed or deceived the prospective buyer by mentioning thedetails. Section 39(2) of the Act contemplates that as and when there is ashort delivery of an article, which is contracted for and paid for, it amountsto an offence and attracts penalty. This is not one such transaction. Though a vague allegation has been made that the process of sellinggold jewellery by the trader taking the semi-precious stones about 83stones studded in the JADA ornament and the wastage added in thefinished jewellery is a fraudulent practice, practically the respondentscould not demonstrate any such fraud being played by the petitioners. The definition ‘weight or measure’ as defined under 1976 Act or 1985 Act and the rules made thereunder does not contemplate such penalty forsuch contingency under Section 39(2) or any other provisions of 1976 Actor 1985 Act. Therefore, I am of the opinion that the respondents haveassumed as if they had jurisdiction to deal with such matters underSection 39(2) of the Act, which is not correct.

For all the above reasons, both the writ petitions are allowed andthe impugned orders are set aside. There shall be no order as to costs.

Date: 29.12.2008DA

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C.V.RAMULU, J

THE HON’BLE SRI JUSTICE C.V.RAMULU

29.12.2008