JUDGMENT

Allsop, J. - This is an application by Meer Singh, who has been sentenced to rigorous imprisonment for a period of three months and to a fine of Rupees 100 under Rule 38(1)(a) read with Rule 34(6)(j), Defence of India Act. The facts found are that one Earn Narain went to the applicant's shop on 17th June 1940 and bought some flour and gram for five annas and three pies ; he presented a currency note for Rs. 10 and asked for change; the applicant refused to accept the note. The learned Judge of the lower appellate Court has believed the evidence of the witnesses for the prosecution. They say that the applicant made some excuses, but eventually said that he would not accept a currency note. One of them has said that the accused stated that currency notes were no longer legal tender and that Government themselves refused to accept them in their treasuries. The trial Court was of the same opinion as the Judge. Both Courts have found that by refusing to take the currency note in the circumstances related the applicant was undermining public confidence in the paper currency of the Government of India. The learned Judge has referred to the fact that at that time there was an indication of financial panic. Learned Counsel has suggested to us, in the first place, that this currency note was not legal tender for a sum of less than one rupee, but I see no reason to differ from the finding on the facts reached by the Courts below and I must observe that the note was not rejected on the ground that it was not legal tender but on the ground that it was of no value Rule 34 of the rules made under the Defence of India Act contains a number of definitions. It defines a "prejudicial act" as an act which is intended or is likely to produce certain results including an act to undermine public confidence in the national credit or in any Government loan or security or in any notes, coins or tokens which are legal tender in India. Rule 38 of the rules made under the Defence of India Act states that no person shall without lawful authority or excuse do any prejudicial act and further that any person who does such an act shall be punishable with imprisonment for a term which may extend to five years and shall also be liable to fine. It seems to me that any person who refuses to accept a currency note upon the ground that it is worth nothing, is certainly doing an act which tends to undermine public confidence in the note and that his action comes within the provisions of Rules 34 and 38.

2. The second argument addressed to us is that Section 34 or at least that part of Rule 34 with which we are dealing is a rule which the Government was not competent to make under the provisions of the Defence of India Act. Section 2 of this Act says in Sub-section (1) that the Central Government may by notification in the Official Gazette make such rules as appear to it to be necessary or expedient for securing the defence of British India, the public safety, the maintenance of public order or the efficient prosecution of war, or for maintaining supplies and services essential to the life of the community. It then goes on to say in Sub-section (2) that the rules may provide, without prejudice to the generality of the powers conferred by Sub-section (1), for certain matters set forth thereafter in detail. Learned Counsel has said that there is no matter in Sub-section (2) which covers a rule for the purpose of maintaining the credit of the Government of India or for safeguarding the confidence of the public in currency notes. Sub-section (2) of Section 2 of the Act clearly says that the provisions of that sub-section are without prejudice to the generality of the powers conferred by Sub-section (1) and it seems to me that there can be no doubt that it is necessary for the public safety and the maintenance of public order and the efficient prosecution of war to maintain the public confidence in the currency of the Government established by law in British India.