STATE OF GUJARAT Vs. MANILAL JOITARAM AND CO

JUDGEMENT

(1.) In this appeal by certificate under Art. 134 (1) (c) of d. Constitution the Stab of Gujarat appeals against the Judgment, March 14, 1963, of the High Court of the State acquitting the respondent 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 are 11 in number (accused 1 to 9, 11 and 12) , were convicted under S. 20 (l) (c) of the Act and fined Rs. 51(15 days S. I. 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 0) wee further convicted under S. 21 (c) of the Act and fined Rs. 25 (one week's S. I. default) . The remaining accused were convicted under S. 21 (b) . All appealed to the Court of Sessions Judge. The conviction of accused 1 to 9, 11 and 12 was maintained but convection under S. 20 (1) (b) we. substituted for that under S. 20 (1) (c) . The other accused were convicted of all the charges. The High Court was then moved in revisions All the accused were acquitted of all the charges. The State Government now appeals.

(2.) A11 respondents are member of the Ghee and Tel Brokers Association Ltd., Ahmedabad. Nine of them ore 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 end brokers, used to enter into contacts for the safe and purchase of groundnut oil. These contracts were largely speculative. A large number of contracts used to be entered into but were not performed by actual delivery and payment of price. They were adjusted on a due date after the expiry of a fixed period. This period was generally from the 5th of one calendar month to the 25th of the following month and the latter was the due date. On each Saturday during the period the Association exhibited the prevailing rate and according to that rate cross transactions entered earlier were adjusted and the persons in loss deposited money representing their particular losses with the Association. On the due date all outstanding transactions were finally adjusted by cancelling sales against purchases and delivery used to be ordered in respect of the balance which had to be completed by the end of the month of the due date. During the stated period extensive trading through sales and purchases took place without any delivery. Each member could enter into as many transaction of either kind as he liked provided that each transaction was in multiple of 50 Bengali Maunds. Between March 5 and April 25, 2957 the total transactions put through totalled 4,33,600 Bengali Maunds but the actual delivery on the due date was about 5,500 Bengali Maunds only, that is to say, just over 11/2per cent. The sahre of the several operators in these deliveries was insignificant and the deals were really forward transactions in which there was no intention to take or give deliver. The prosecution, therefore, submitted that theses were forward contracts prohibited under the Act and as the Association was not recognised the offences charged were committed. The High Court having acquitted all the accused the State contends now that the acquittal recorded by the High Court is wrong and proceeds on a misapprehension of the provisions of the Act and of the facts on which charges rested.

(3.) To consider the submissions of the parties the relevant provisions of the Act, which has been passed, among other things, to regulate forward contracts, will have to be seen. Before we do so we may first glance at some definitions leaving out those attributes of the terms defined in which are not interested "Forward contract" under the Act means a contract which is not a ready delivery contract but a contract for future delivery [S. 2 (c) ]. A "ready delivery contract" is one in which there is delivery and payment of price either immediately or within a period which is not to exceed 11 days even by consent of parties or otherwise [S. 2 (i) ]. The expressions "transferable specific delivery contract" and "non-transferable specific delivery contract" are defined with reference to the latter expression which means a specific delivery contract, the rights or liabilities under which are not transferable [S. 2 (f) ] and "specific delivery contract" means a forward delivery contract which provides for actual deli. very of specific qualities or types of goods either immediately or during a period not exceeding 11 days at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyers and sellers are mentioned [S. 2 (m) ].