LexSTATE OF GUJARAT versus MANILAL JOITARAM & CO.
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A STATE OF GUJARAT v. MA.NILAL JOITARAM & CO. November 8, 1967 8 [M. HlDAYATULLAH, V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.] Forward Contracts (ReK1tlatio11s) Act, 1952, s.\·, 18 and 20-Non- transferable specific delivery contracts-No actual deliver,Y-Whether prohibited. c D E F G H The members of a Ghee and T·ol Brokers Association, used to enter ieto contracts for the sale and purchase of groundnut oil. Week after week contracts were cancelled by cross-transactions and there was no deliv~ry. Instead of payment of price losses resulting from the cross- transactions y,•ere deposited by the operators in loss with the Association. On the due date also there was no delivery but adjustment of al! con· tracts of sales against all contracts of purchase betwezn the same parties and delivery was of the outstanding balance. Even this delivery y,·as .often avoided by entering into fresh contract at the rate prevailing on the du~ date. as part of the transactions in the next period. The Sessions Judge convict·zd the respondents-the Association's. ·Preside'11t, Secretary and Directors. holding that these were forward contracts prohibited und·zr the Forward Contracts (Regulation) Act and the Association was not f'Zcognised. The High Court set aside the convictions. In appeal. this Court : HELD : Section 18(1) of the Act speaks of true non-transferable specific delivery contracts but the proviso at the same time makes it illegal for an unrecognised assOC'iation to so arrange matters that non- transt:zrable specific delivery contracts will be worked out without actual delivery. Such conduct is prohibited by the proviso and directly punish- able under s. 20(1)(b). An offence under that clause of s. 20(1) and also under cl. (c) of that section read w;th s. 15 was made out. There \Vas no question of considering the matter first under the main part of thz first sub-section and then to put the proviso out of the way because the first sub-s·zction did not apply. The Legislz.ture contemplates that the first sub-section of s. 18 might be complied with in the documents evid.zn- cing the contract but in actuality .the contrc:ct might be differently per- iormed and has, therefore. provided for the identical situatioq· which arose in this case. [182F-H, D] CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 250 of 1964. ' Appeal from the judgment and order dated March 14, 1963 of the Gujarat High Court in Criminal Revision Application No. 124 of 1961. R. Ganapathy Iyer and S. P. Nayar, for the appellant. M. V. Goswami and C. C. Patel, for the respondent. The Judgment of the Court was delivered by Hidayatnllah, J. In this appeal by certificate under Art. 134(1) (c) of the Constitution the State of Gujarat appeals against 178 SUPREME COURT REPORTS (1968] 2 S.C.R. the judgment, March 14, 1963, of the High Court of the State acquitting the respondents of diverse offences under the Forward Contracts (Regulation) Act, 1952. Originally 31 persons were charged before the Judicial Magistrate, Ahmedabad, who acquitted 14 and convicted the rest. The present respondents, who arc 11 in number (accused 1 to 9, II and 12), were convicted under s. 20(1 )(c) of the Act and fined Rs. 51/- ( 15 days' S.l. in default). They were also convicted under s. 21 (b) of the Act but no separate sentence was imposed. Nine of them (accused 1 to 9) were further convicted under s. 21 (c) of the Act and fined Rs. 25/- (one week's S.I. in default). The rem.ainirlg accused were convicted under s. 21 (b). All appealed to the Court of Se.<>Sions Judge. The conviction of accused 1 to 9, 11 and 12 was maintained but conviction under s. 20 ( 1 )(b) was substituted for that under s. 20(1 )(c). The other accused were convicted of all the charges. The High Court was then moved in revision. All the accused were acquitted of all the char~. The State Government now appeals. All respondents are members of the Ghee and Tel Brokers Association Ltd., Ahmedabad. Nine of them ·are Directors and two of these are President and Secretary of the Association. The accused, who are not before us, were brokers and servants of the Association or of the brokers. The prosecution case is this : The Association has an office where the members and brokers used to enter into contracts for the sale and purchase of groundnut oil. These contracts were largely speculative. A large number of con- tracts use
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