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Madras HC issues notice in Kalyan Jewellers’ challenge to BIS Act, 2016

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The Madras High Court has issued notice in a petition challenging the constitutionality of the Bureau of Indian Standards (BIS) Act, 2016.

The Bench of Justices S Manikumar and Subramonium Prasad issued notice in the petition filed by Kalyan Jewellers. Senior Advocate Satish Parasaran made preliminary arguments, briefed by Advocates Preeti Mohan and Pavitra Venkateswaran from J&M Legal.

Notified in October 2017, the BIS Act 2016 aims to improve upon the erstwhile BIS Act of 1986 in ensuring quality standards for precious jewellery and protecting the end consumer.

However, the petitioner has contended that the new Act also imposes disproportionate and arbitrary penalties on jewellers/licence holders alone, while disregarding basic principles of natural justice and criminal procedure.

In particular, Kalyan Jewellers has challenged Sections 18, 27(5), 30, and 34 of the BIS Act, and Rules 34 and 49 of the BIS Rules, 2017.

Section 18 makes licence holders such as Kalyan Jewellers absolutely responsible at all times for goods which carry the standard mark/hallmark. The provision reads,

The license holder shall, at all times, remain responsible for conformance of the goods, articles, processes, systems or services carrying the Standard Mark.

In effect, if the jewellery/good is found to be sub-standard, Kalyan would be held responsible even if due precaution was taken to verify its quality.

Further, if the good is found to be sub-standard, Section 30 of the Act lays down that every member, employee, stake-holder and associate of the Company would be “deemed to be guilty of the offence” and punished irrespective of their involvement, knowledge, consent or neglect.

The penalty for such an offence includes the cancellation of the licence under Rule 49 of the BIS Rules. As pointed out in the petition,

Such a drastic step severely affects the business and reputation of the Licensee, whose functioning depends on the trust of customers, and credibility. All of the painstaking efforts to build these, would be negated and destroyed in a single stroke by an action under the Acts, for reasons not even attributable to the jeweller.

Further compounding the company’s troubles, is Section 27 of the BIS Act. This provision enables Certification Officers to inspect the premises of the company and collect samples to verify its quality. However, as per this provision, the samples collected by the Certification Officers would be treated as confidential.

As pointed out in Kalyan’s petition, the natural implication is that the company is not given an opportunity to be heard. Therefore, the current scheme also involves a denial of natural justice.

On the other hand, the Centre that hallmarks the substandard good (‘Assaying’ or ‘Hallmarking’ Centre) is not penalised as harshly. It is argued that the BIS Act does not have any provisions in place to hold such centres accountable for their lapses.

Rather, the licence holder is left to bear the penalty for the possible errors on the part of such centres. In effect, the petition contends that the BIS Act has failed to target the necessary parties or procedures, to ensure that the process of Standardization is strong and foolproof.

It has, instead, targeted the wrong groups, created an unreasonable regime of liability, in complete departure from the well-settled legal principles for penal liability, and does not address many of the issues faced in the implementation of the legislative framework for standardization of gold jewellery, and precious articles.”

Over and above these concerns, Kalyan Jewellers has also challenged the legislative competence of the Central Government to enact the BIS Act, contending that its scope exceeds the domain allotted in Entry 51 of the Union List.

A representation raising these concerns were sent to the Government in August last year, to no avail. Therefore, Kalyan Jewellers has now approached the High Court with a prayer that the Court declare the BIS Act, 2016 and the BIS Rules, 2017 as unreasonable, arbitrary and against established principles of criminal procedure and natural justice.

The case will be taken up next on Monday.

Courtesy: barandbench.com

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