1953 (3) TMI 39 - SC - Indian Laws

Summary

Issues Involved:

1. Conviction under Sections 7 and 9 of the Essential Supplies Act.
2. Accuracy of the information provided in the returns submitted to the Textile Commissioner.
3. Interpretation of "physical delivery" in the context of the Essential Supplies Act.

Detailed Analysis:

1. Conviction under Sections 7 and 9 of the Essential Supplies Act:

The appellants were convicted under Sections 7 and 9 of the Essential Supplies Act (No. XXIV of 1946) on two counts. The first appellant, a registered joint stock company, was fined Rs. 10,000 on each count, totaling Rs. 20,000. The second appellant, the Director of the Mills, was initially sentenced to two months' rigorous imprisonment and fined Rs. 2,00,000 on each count, but on appeal, the imprisonment was set aside, and the fine was reduced to Rs. 10,000 on each count. The third appellant, the General Manager, was fined Rs. 2,000 on each count, which was upheld. The fourth appellant, the Sales Manager, was sentenced to four months' rigorous imprisonment and fined Rs. 1,00,000 on each count, but on appeal, the fine was reduced to Rs. 10,000 on each count while the imprisonment was upheld. The substantive sentences were to run concurrently.

2. Accuracy of the Information Provided in the Returns:

The case revolved around a Government of India Notification dated 2nd February 1946, requiring every manufacturer to submit "true and accurate information relating to his undertakings" to the Textile Commissioner. The first appellant submitted a return on 10th March 1947, showing that 13 bales of cloth were delivered to Messrs. Dwarkadas Khetan & Company on behalf of the quota-holder Shree Kishan & Company, and another return showed that 6 bales were delivered to the same company on behalf of another quota-holder, Beharilal Bajirathi. The prosecution argued that this information was inaccurate as the bales remained in the physical possession of the first appellant and were not delivered to Dwarkadas Khetan & Company.

3. Interpretation of "Physical Delivery":

The main legal issue was the interpretation of "physical delivery" as required by the form. The prosecution and the lower courts held that the goods were not physically delivered to the quota-holders or their agents. However, the Supreme Court examined the business procedure of the first appellant and the role of Dwarkadas Khetan & Company, who acted as del credere agents, guaranteeing payment and delivery. The Court found that the goods were physically delivered to Dwarkadas Khetan & Company, who had control over the goods, even though the actual delivery to the quota-holders was delayed due to a change in the local agent.

The Court noted that the goods left the Mills' premises, the property in them had passed, and they were under the control of Dwarkadas Khetan, satisfying the requirement of "physical delivery" as per the popular and natural meaning of the term. The Court emphasized that in a penal statute, words of ambiguous meaning should be interpreted in a broad and liberal sense to avoid trapping honest and unlearned individuals.

Conclusion:

The Supreme Court concluded that the returns submitted by the first appellant were true and accurate. The conviction and sentences in each of the four cases were set aside, and the fines, if paid, were ordered to be refunded. The appeal was allowed.