Judgment

SHAH, J. : By order dated February 12, 1957, this court remanded the proceeding in this appeal to the High Court of Bombay with a direction that proper steps be taken for recording a finding on the question whether the sanction for the prosecution of the appellants was accorded by the Central Government under Indian Ordinance No. III of 1946 or under the Bhor State Ordinance, i.e., the Ordinance which was in force in the Bhor State. Pursuant to this direction, the Special Judicial Magistrate First Class (A. C. Branch), Poona recorded a finding that sanction had been given by the Central Govt., under the Indian Ordinance No. III of 1946 and also under the Bhor State Ordinance of 1946, but primarily the sanction was given under the Ordinance in force in the Bhor State. The Additional Sessions Judge, Poona to whom the record was submitted for his opinion recorded a finding that the sanction was granted under the Ordinance which was in force in the State of Bhor. The High Court at Bombay did not record any express finding on this question.

2. To appreciate the pleas raised in this appeal, certain material facts may be briefly set out.

3. Bhor was one of the Indian States in the Deccan area. The Rajasaheb of Bhor promulgated Act I of 1942, being "The Government of Bhor State Act, 1942" with a view to introduce certain constitutional reforms in the State of Bhor. By S. 25 of the Act, a Council to be constituted under the Act was subject to the provisions of the Act, given authority to make, repeal or alter the laws for the whole or any part of the Bhor State and for the subjects of the Rajasaheb wherever they may be. But by S. 26, from the competency of the Council to legislate, certain matters set out in sub-s. 1 were excluded, and by S. 30, jurisdiction was conferred on the Rajasaheb to legislate in respect of the matters so excluded. By S. 31, power was conferred on the Rajasaheb, if he was satisfied that an emergency existed which rendered it necessary to take immediate action in matters other than those falling under S. 26, to frame any measure or regulation for that purpose. Such measure or regulation on receiving the assent of the Rajasaheb was to have the force of law for six months from the date of its promulgation in the official Gazette. By the proviso, the Rajasaheb was competent to extend the period of the operation of the measure or regulation for three months. By S. 6, inherent authority executive, legislative, and judicial, of the Rajasaheb, notwithstanding anything contained in the Constitution Act was affirmed, and it was expressly enacted that nothing contained in the Constitution Act or any other Act shall be deemed to have affected the right and prerogative of the Rajasaheb to make laws, issue proclamations, orders and ordinances.

4. The Laxmi Textile Mills Ltd., a limited liability company had its registered office in Bhor State and the two appellants were its Managing Directors. On January 12, 1946, the Government of India promulgated in exercise of the powers conferred by S. 72 of the Government of India Act, 1935, as set out in the IXth Schedule Ordinance No. III of 1946 called the High Denomination Bank Notes (Demonetisation) Ordinance, 1946. By S. 3 of that Ordinance, after January 12, 1946, all high denomination bank notes, notwithstanding anything contained in S. 26 of the Reserve Bank of India Act, 1934 ceased to be legal tender in payment or on account at any place in British India. By S. 4, transfer to the possession of another person of any high denomination bank note was prohibited. Provision was made by S. 6 for exchange of high denomination bank notes held by persons other than banks or Government Treasuries, and by Cl. 9 of S. 6, high denomination bank notes exceeding in value rupees ten lakhs held by any person were exchangeable only with the Reserve Bank at Bombay, Calcutta and Madras. By Cl. 2 of S. 6, every owner of the high denomination bank notes desiring to tender them for exchange wa