SHIVNARAYAN KABRA versus THE STATE OF MADRAS

Citation: [1967] 1 S.C.R. 138 · Decided: 23-08-1966 · Supreme Court of India · Bench: RAGHUBAR DAYAL · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

SIOVNARAYAN KABRA 
v. 
THE STATE OF MADRAS 
August 23, 1966 
[V. RAMASWAMl, V. BHARGAVA AND RAGHUBAR DAYAL, JJ.j 
Jndkus Penal CO<k. 1860, s. 4U>-Forward Controct (R•gulatlon) 
Act, 19S2 (74 of 19S2), ss. 2(c), IS, 21-Pucca adatia nor a mtmber of 
any twociation recognised under t/,. Act-,--Representing that ~ would 
carry out business tlirough such associations--Constituent partln1 with 
money to him /or such trall3<1Cfion --OO•nc• of chea1in11 whtther commJI• 
ttd-S. IS of tht Act of 19S2 whethtr contrmf<!n.td. 
The appellant who held out as a pucca adada made a public adver-
tisement inviting people to enter into forward transactions throush him. 
He further said IQ his advertisement that he undertook forward businea 
in acc:onlance with pucca adatia system and according to the urual prac-
tico and usage of the various associations concerned. 
One of his con-
atitueots made a complaint against him on the allegation tlrat by his 
false representation that he 
was entitled to lawfully conduct 
forward 
buliness he had induced tbo complainant to part with money. The appd-
lant was not a member of any of the recognised associations whose mem-
bers were entitled to carry on forward business. The prosccutiOn of 
the appcllant was under a. 420 of the Indian Penal Code and 1. 21 of 
0the Forward Contracts (ReJU(ation) Ac~ 19S2 (74 of 19S2). In his 
defence the appellaat said that he carried out the transactions in question 
through members of the recognised associations as an agent of the com-
plainant. The trial coun convicted hint and the conviction was upheld 
. by the Session.s Judj!C and the High Conrt. whereupon with special leave 
an appeal was filed IQ this Court. 
. 
HELD : (i) From the evidenee it was clear ·that the 
complainant 
would oot ha~ parted with his money but for the inducement contained 
in the appellant's advertisement and his falae 
representation 
that he 
could lawfully carry on forward contract business. The offence under 
s. 420 I.P.C. was therefore proved. [141 C-D) 
It was not necessary that a false pretence should be made in express 
......is fur s. 420 I.P.C. to be applicable. 
It may be inferred from all 
tho circumstances including the conduct of the person charged. [141 B-C) 
(ii) The speculative contracts entered into by the appellant with the 
c:omplainant fell widlin the dcllnilion of 'forward contracts' within the 
meaning of the Forward Contracts ·(Regulation) A~ 1962. 
H 
l1ICb 
oontncla """' not included within the definition of "forward contract' 
in 1. 2(c) of the Act the very object of the Act which was passed in 
onler to put a stop ID 
undmirable forms of speculation in forward 
tradinJ and to correct the abuses of certain forms of forward tnding in 
the wide iotercst.tt of the community and io 
particuJar of the consumers. 
wonk! be defeated. [144 F-H] 
llqlor(1 et=, (1584) 3 W. Rep. ~6 and Bengal Immunity CompllJly 
Liil. v. Stale of BUiar and others. [19SS] 2 S.C.R. 603. referred to. 
(iii) There was no evidence on record to show that the appellant 
pllClld tho ocder for the notified goods with a member of a teCognioed 
!JI 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
SlilVNARAYAN v. MADRAS (Ramaswami, J.) 
139 
usooiatiM. 
But even. on lhe assumption that the appellant placed an 
order for the notified goods through a member of a reeognised associa-
tion th°"e was a breach of the provisions Of the Act. The appellant 
was doing forward contract business as a pucca adatia. 
It is well estab'-
lished that the pucca adatla has no authority to pledge the credit of the 
upcountry constituent to the Bombay merchant and there ia no privily of 
contract .between the upcountry constituent and the Bombay merchant. 
The pucca adatia is entitled to substitute his own goods towards the con-
tract made for the principal and buy the principal's goods in his personal 
· account. 
In other words the pucca adatia is acting as a principal 
as 
regards his constituent and not as a disinterested middleman to bring 
the two principals together. 
The appellant was acting as principal to 
princip:li so far as the complainant was concerned and the contracts were 
hit by s. 15 of the 1952 Act. [145 B-F] 
Bhagwandas Narotamdas v. Kanil Deojl, I.L.R. 30 Born. 205 and 
Bluzgwandas Paras ram v. Burjorjo Ruttonji Bomanji, 45 I.A. 29, referred 
ta. 
(iv) The appellant was represented at the trial by eminent counsel and 
there was no 11rcjudice caused to him by the fact that the trial was con-
ducted 

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