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MADRAS HIGH COURT
V. RAMASWAMI, V. BHARGAVA AND RAGHUBAR DAYAL, JJ.
Shivanarayan Kabra - Appellant
v.
The State of Madras - Respondent
Criminal Appeal No. 20 of 1964
Decided on: 23-8-1966
FORWARD CONTRACTS REGULATION ACT - FORWARD CONTRACTS - INTERPRETATION - SCOPE OF SECTION 2(C) - CONTRACTS FOR DELIVERY OF GOODS AT FUTURE DATE - INCLUDES SPECULATIVE CONTRACTS - ACT APPLIES TO SPECULATIVE CONTRACTS - SECTION 15 - NOTIFICATION - FORWARD CONTRACTS IN NOTIFIED GOODS - ILLEGAL IF ENTERED INTO OTHERWISE THAN BETWEEN MEMBERS OF RECOGNISED ASSOCIATION - SECTION 21(D) - REPRESENTATION AS MEMBER OF RECOGNISED ASSOCIATION - CANVASSING FOR BUSINESS IN FORWARD CONTRACTS - OFFENCE - SECTION 361(1), CRIMINAL PROCEDURE CODE - INTERPRETATION TO ACCUSED IN LANGUAGE UNDERSTOOD BY HIM - IRREGULARITY - NO PREJUDICE - CURED BY SECTION 537, CRIMINAL PROCEDURE CODE.
Fact of the Case:
Appellant, a proprietor of a firm, advertised that people could invest capital in cotton, oil seeds and other commodities and that J. G. Market reports issued by him could help them in the matter. P. W. 2, a wholesale merchant dealing in cotton seed, groundnut cakes, etc., at Kumbakonam became a subscriber to the reports. P. W. 2 asked the appellant for his business terms. The appellant sent him Ex. P-30 wherein he stated that he undertook export, import, ready and forward business in various commodities in accordance with Pucca Adatia system and according to the usual practice and usage of the various associations concerned. Neither the appellant nor his firm was a member of any recognised association within the meaning of the Act. P. W. 2 placed orders with the appellant and correspondence and statements of accounts were exchanged between the appellant and P. W. 2 who paid a sum of Rs. 12,000 as margin. Subsequent to the demand of P. W. 2 the appellant sent Rs. 1,000 and also a final statement showing loss in the transaction and claiming that a sum of Rs. 398.52 P. was due to the appellant. According to the prosecution case, the appellant induced P. W. 2 to send him Rs. 12,000 between May 1, 1958 and June 15, 1958 for forward contract business in cotton, castor-seeds and groundnut by a fraudulent representation that the appellant conducted such business even though he was not actually entitled to do any such business and thereby cheated P. W. 2.
Finding of the Court:
The court held that the appellant was guilty of cheating under Section 420 of the Indian Penal Code and of offences under Sections 21(d) and (e) of the Forward Contracts (Regulation) Act, 1952. The court found that the appellant had made a false representation to P. W. 2 that he could lawfully carry on forward contract business, and that P. W. 2 would not have parted with the sum of Rs. 12,000 but for the inducement contained in Ex. P-34 and the representation of the appellant that he could lawfully carry on forward contract business. The court also found that the contracts in question were forward contracts within the meaning of the Act, and that the appellant had breached the provisions of Section 15 of the Act by entering into the contracts otherwise than through a member of a recognised association.
Issues: 1. Whether the appellant was guilty of cheating under Section 420 of the Indian Penal Code? 2. Whether the appellant was guilty of offences under Sections 21(d) and (e) of the Forward Contracts (Regulation) Act, 1952? 3. Whether the contracts in question were forward contracts within the meaning of the Act? 4. Whether the appellant had breached the provisions of Section 15 of the Act by entering into the contracts otherwise than through a member of a recognised association? 5. Whether the trial was vitiated by a breach of the requirement of Section 361(1), Criminal Procedure Code? 6. Whether the conviction of the appellant on a single charge was illegal.
Ratio Decidendi: 1. The court held that the appellant was guilty of cheating under Section 420 of the Indian Penal Code because he had made a false representation to P. W. 2 that he could lawfully carry on forward contract business, and that P. W. 2 would not have parted with the sum of Rs. 12,000 but for the inducement contained in Ex. P-34 and the representation of the appellant that he could lawfully carry on forward contract business. 2. The court held that the appellant was guilty of offences under Sections 21(d) and (e) of the Forward Contracts (Regulation) Act, 1952 because he had not been a member of a recognised association, wilfully represented to, or induced, any person to believe that he was a member of a recognised association or that forward contracts can be entered into or made or performed, whether wholly or in part, under this Act through him, or not being a member of a recognised association or his agent authorised as such under the rules or bye-laws of such association, canvassed, advertised or touted in any manner, either for himself or on behalf of any other person, for any business connected with forward contracts in contravention of any of the provisions of this Act. 3. The court held that the contracts in question were forward contracts within the meaning of the Act because they were contracts for the delivery of goods at a future date and which were not ready delivery contracts. 4. The court held that the appellant had breached the provisions of Section 15 of the Act by entering into the contracts otherwise than through a member of a recognised association because the appellant was acting as principal to principal, so far as P. W. 2 was concerned and the contracts are hit by the provisions of S. 15 of the Act. 5. The court held that the trial was not vitiated by a breach of the requirement of Section 361(1), Criminal Procedure Code because even if it is assumed that the appellant did not know English or Tamil the violation of S. 361 (1), Criminal Procedure Code was merely an irregularity and it is not shown in this case that there is any prejudice caused to the appellant on this account. 6. The court held that the conviction of the appellant on a single charge was not illegal because the lower Courts have found that all the six items of cheating were part and parcel of one transaction and the trial of the appellant on a single charge was, therefore, permissible under S. 239, Criminal Procedure Code.
Final Decision: The court dismissed the appeal and affirmed the decision of the High Court.
RAMASWAMI, J. : This appeal is brought, by special leave, from the judgment of the Madras High Court, dated July 16, 1963 in Criminal Revision Case No. 1139 of 1961.
2. The appellant was charged for having committed offences under S. 420, Indian Penal Code and S. 21 (d) and (e) of the Forward Contracts (Regulation) Act, 1952 (Act 74 of 1952), hereinafter called the "Act", with regard to certain transactions between the appellant and P. W. 2, Rajam. The appellant was convicted of all the charges and was sentenced to rigorous imprisonment for one year and a fine of Rs. 1,000 under S. 420, Indian Penal Code and a fine of Rs. 100 under each of Cls. (d) and (e) of S. 21 of the Act by the District Magistrate Kumbakonam. He further directed that a sum of Rs. 1,000 out of the said fine should be paid to P. W. 2. On appeal, the convictions and sentences were affirmed by the Sessions Judge, West Thanjavur. The appellant took the matter in revision to the Madras High Court but the revision application was dismissed.
3. The appellant was the proprietor of a firm in Bombay known as "Jawarmal Gulab Chand". He advertised that people could invest capital in cotton, oil seeds and other commodities and that J. G. Market reports issued by him could help them in the matter. P. W. 2, a wholesale merchant dealing in cotton seed, groundnut cakes, etc., at Kumbakonam became a subscriber to the reports. P. W. 2 asked the appellant for his business terms. The appellant sent him Ex. P-30 wherein he stated that he undertook export, import, ready and forward business in various commodities in accordance with Pucca Adatia system and according to the usual practice and usage of the various associations concerned. Neither the appellant nor his firm was a member of any recognised association within the meaning of the Act. P. W. 2 placed orders with the appellant and correspondence and statements of accounts were exchanged between the appellant and P. W. 2 who paid a sum of Rs. 12,000 as margin. Subsequent to the demand of P. W. 2 the appellant sent Rs. 1,000 and also a final statement showing loss in the transaction and claiming that a sum of Rs. 398.52 P. was due to the appellant. According to the prosecution case, the appellant induced P. W. 2 to send him Rs. 12,000 between May 1, 1958 and June 15, 1958 for forward contract business in cotton, castor-seeds and groundnut by a fraudulent representation that the appellant conducted such business even though he was not actually entitled to do any such business and thereby cheated P. W. 2. The case of the appellant was that he could do business under the Pucca Adatia system with members of recognised associations like the Bombay Oil-seed and Oil Exchange, and the East India Cotton Association, Bombay, though he himself was not a member of either of these associations. The appellant denied that he made any false representation or that he induced P. W. 2 to part with his money. The case of the appellant was rejected by the District Magistrate of Kumbakonam who accepted the prosecution case as true and convicted and sentenced the appellant on all the charges. The decision of the District Magistrate was affirmed by the Sessions Judge, West Thanjavur in appeal.
4. It was argued, in the first place, on behalf of the appellant that on the admitted or proved facts no case of cheating has been made out against the appellant and, therefore, his conviction under S. 420, Indian Penal Code was illegal. We are unable to accept this argument as correct. It has been found that the appellant sent a letter, Ex. P-34 along with a copy of the business terms, Ex. 34 (a) "on which we undertake business of our clients". In this document the appellant has made the representation that he could do business in forward contracts in cotton, grains, seeds, bullion, black pepper, etc., in accordance with the pucca adatia system and "in accordance with the usual practice and usage of the various associations concerned." In Exhibit P-33 t
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