Judgement

Bose J.- The appellants have been convicted under Ss. 7 and 9 of the Essential Supplies Act (No. 24 of 1946) on two counts. The first appellant is a registered joint stock company, the Seksaria Mills Ltd. It was fined Rs. 10,000 on each of the two counts, that is to say, a total fine of Rs. 20,000, and this was upheld in appeal. The second appellant is the Director of the Mills. He was sentenced to two months rigorous imprisonment and to a fine of Rs, 2,00,000 on each count. In appeal the sentence of imprisonment was set aside and the fine reduced to Rs, 10,000 on each count. The third appellant is the General Manager of the Mills. He was sentenced to a fine of Rs. 2,000 on each count. This has been upheld. The fourth appellant is the Sales Manager of the Mills. He was sentenced to four months rigorous imprisonment and a fine of Rs. 1,00,000 on each count. In appeal the sentence of imprisonment was upheld but the fine was reduced to Rs. 10,000 on each count. The substantive sentences are to run concurrently.

2. A Government of India Notification dated 2-2-1946 required every manufacturer to submit "true and accurate information relating to his undertakings" to the Textile commissioner C. S. T. Section at Bombay. In compliance with this Order, the first appellant submitted a return, signed by the third appellant, on 10-3-1947. This return is Ex. A-1. It showed that 13 bales of cloth (20 half bales and 3 full bales) were delivered to Messrs. Dwarkadas Khetan & Company of Bombay during the month of February 1947 on behalf of title quota-holder Shree Kishan & Company. Another return of the same date (Ex. A-2), also relating to the month of February 1947, showed that 6 bales were delivered to the same Dwarkadas Khetan & Company on behalf of another quota-holder Beharilal Bairathi.

3. A note on the back of each printed form states:

"By delivered or delivery is meant physical delivery of cloth in bales or in pieces but not cloth which though paid for is still in the physical possession of the seller."

The offence charged is that this information is not true and accurate. The case for the prosecution is that the bales remained in the physical possession of the first appellant at all material times and were not physically delivered to Messrs. Dwarkadas Khetan & Company.

4. Before us the learned Solicitor-General added that even if there was physical delivery to Dwarkadas Khetan that did not comply with the requirements of the form because the form requires information regarding physical delivery to the quota-holder or his agent and as Dwarkadas Khetan was not the agent of the quota-holder, the statement is inaccurate and misleading.

5. The learned Presidency Magistrate who tried the case; and also the High Court on appeal, hold that the prosecution have established their case and so have convicted and upheld the convictions respsctively.

6. The business procedure of the first appellant is explained by Dwarkadas Khetan. His firm, Dwarkadas Khetan & Company, are the first appellant s sole selling agents. They are del credere agents and guarantee payment to the first appellant of all sales made and, or the other side, guarantee delivery to the purchasers with whom they deal direct. It is necessary at this stage to understand that because of various orders and rules made under the Essential Supplies Act the first appellant could only sell to specified quota-holders and only up to the limits of their quotas. The two quota-holders which concern us are Shree Kishan & Company and Beharilal Bairathi. The first appellant s selling procedure is this. When goods are ready for sale, it sends Dwarkadas Khetan & Company in duplicate a "ready sale note." These notes contain particulars about the bales and the persons to whom they are to be delivered. Upon receipt of this, Dwarkadas & Company contact the quota-holders or their agents.

7. The next step is for the quota-holder to pay Dwarkadas & Company the price of the goods specified in the "rea