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TMI Blog1967 (1) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... n cards at a fixed price Shops which retail rations are called ration shops. Fair price shops were introduced prior to the introduction of rationing or in areas where statutory rationing had not yet been introduced The rice or wheat, as the case may be which is to be distributed through fair price shops, originally belongs to Government. It is obvious, therefore, that the terms of distribution or the legal incidences of it have necessarily to be governed by the terms of the agreement between the parties, namely Ext. 4/8. The first thing to be noticed is that the agreement is entitled-Agreement for distribution of wheat through Fair Price Shops", and the scheme mentioned in the agreement is for "distribution of wheat to the consumers." The main question to be decided in this case is as to whether under the terms of the agreement, the transaction that took place between the Government and the retailer was a transaction of sale and purchase or a mere agency for distribution From that point of view, the terms of the agreement are all important. In fact, the matter must be decided upon an interpretation of the articles of agreement and not upon any abstract provision of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other directions as may be issued from time to time by the Director or any other officer authorised by the Director in this behalf. 15. If the retailer contravenes the provisions of any of the clauses herein, the Director may without assigning reason suspend supply of wheat to him forthwith and cancel his appointment, if he thinks fit and his decision in that behalf shall be final. 16. Notwithstanding anything hereinbefore contained, the Director shall at any time be at liberty in his uncontrolled discretion and without assigning reason to terminate this agreement on giving one month's notice in writing of his intention to so terminate the agreement and the retailer shall have no claim for losses or damages on that account against the Government and similarly, the retailer shall on like notice be at liberty to terminate the agreement after giving like notice aforesaid. 17 Any stock of wheat left with the retailer after cancellation of his appointment or termination of this agreement shall be dealt with or disposed of according to the direction issued in this behalf by the Director and not otherwise." Before we come to the construction of this agreement, it will be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for having committed criminal breach of trust in respect of 7 maunds 10 seers Government wheat supplied to him for distribution in terms of his agreement. The appellant pleaded not guilty. In the order of reference, it is stated that the accused took the defence that he had not actually removed the wheat from the shop and that the wheat was in the shop all along and there was an alternative defence that for safe custody he had removed the wheat to his own house and that he had not committed criminal breach of trust and had no dishonest intention. This is not strictly accurate. The accused did not call any evidence, although the prosecution examined 11 witnesses. The examination of the accused under Section 342. Cr. P.C., which is set out at page 35 of the Part I of the paper book, is absolutely colourless. It was suggested to him that he took 26 maunds of wheat from Government but out of that 7 maunds 10 seers could not be found with him and that he either sold away the same or removed the same and thereby committed breach of trust against Government. To this, all he said was that he was innocent. From the judgment of the learned Judge of the third Special Court who tried the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 7-6-1960 (Cal), where, a retailer of a fair price shop, bound by an agreement similar to Ext. 4/8, was held to be an agent of the Government for the specific purpose of distribution of the foodgrains at the retail price fixed by the Government. Sen, J. however, thought that in view of certain decisions cited before him, there was reason to think that the decision in Cri. App. No. 308 of 1960. D/- 7-6-1960 (Cal), was wrongly decided In view of the importance of the matter and in view of the decision in the said case mentioned above, the learned Judges of the Court of Appeal decided to refer the case to a Full Bench with particular reference to the following points:-- "(1) Can the holder of a fair price shop bound by an agreement similar to the agreement, Ext. 4/8, be regarded as an agent of the Government in respect of the stock of wheat or rice received by him on deposit of the agreed wholesale price from the Government godown, or does the property in the wheat or rice pass to him? (2) Was the case, Criminal Appeal No. 303 of 1960. D/- 7-6-1960 (Cal), rightly decided?" The first thing upon which we are all agreed is that the points that have been set out are defect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere wanting. At best, there might have been a breach of contract which would give rise to a cause of action in damages. The third point argued before us is that even if there was an agency, there were no terms and conditions in the contract that the goods should be kept at the retail shop at 45/19 Beliaghata Main Road, and therefore, the mere removal from the said shop of any part of the goods indented could not amount to an offence of criminal breach of trust He referred to the fact that in the case of Cri. App. No. 303 of 1960, D/- 7-6-1960 (Cal) (ibid), there was evidence of intention of disposing of part of the goods in what is commonly known as the black market. If there was no term in the contract that the goods should be kept in a particular place then the removal from such place would not constitute either a breach of trust or an attempt to commit breach of trust. 5. The first point raised, namely the construction of the contract is the most important point and I shall proceed now to deal with the same The main provisions of the Articles of agreement, Ext. 4/8 have been set out above It has already been pointed out that the agreement has been entitled as an "Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appointment. 8. The Director may at his uncontrolled discretion and without assigning any reason, terminate the agreement upon giving one month's notice, it may similarly be terminated by the retailer. 9. After cancellation or termination of the agreement, any stock of wheat left can only be dealt with or disposed of according to the direction issued in this behalf of the Director and not otherwise. In favour of the view that it is an agreement for sale: 1. The wheat is obtained by depositing a price of ₹ 14 per maund and sold to consumers at ₹ 15 per maund (annas six per seer). Obviously the difference is the profit to be enjoyed by the retailer, but there is no provision in the agreement for his retention of this sum. It is therefore more consistent with sale than agency. 2. 'Price' has been defined in Section 2(10) of the Sale of Goods Act as meaning-"the money consideration for a sale of goods". If it is agency, why should the 'price' have to be deposited and not merely the 'value' of the goods? 3. The retailer is obviously selling to his customer, because he charges him a price and issue a 'cash memo'. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to do. It follows almost axiomatically from this definition that the ownership or beneficial interest in the property in respect of which criminal breach of trust is alleged to have been committed, must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit. In the case before us, it is not disputed that If the sum of ₹ 23,100 was paid by P.W. 1 to the appellant by way of illegal gratification to induce the latter to make an allotment of cloth in his favour, there can be no question of entrustment in such payment. The payee would then receive the money on his own behalf and not on behalf of or in trust for anybody else. The criminality of an act of this character would consist in illegal receipt of the money and the question of subsequent misappropriation or conversion of the same would not arise at all." It was held that the evidence showed that the money was received by way of illegal gratification and would, therefore, be not the subject-matter of a breach of trust, there being no entrustment of money within the meaning of Section 385 of the Cochin Penal Code. 7. The next case to be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties and there was, in complying with the orders passed by the Controller, no such exercise of volition by the assessees. By the Indian Contract Act, IX of 1872, a proposal or an offer is defined as signification by one person to another of his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence When the person to whom the proposal is made or signified assents thereto, the proposal is said to be accepted The person making the proposal is called the promisor and the person accepting the proposal is called the promisee and every promise or every set of promises, forming the consideration for each other is an agreement. These provisions of the Contract Act are by Section 2(15) of the Sale of Goods Act, incorporated therein There was on the part of the province of Madras no signification to the assessees of their willingness to do or abstain from doing anything, with a view to obtaining the assent of the assessees to such act or abstinence and the Controller did not invite any signification of assent of the assessees to the intimation received by them. He did riot negotiate a sale of sugar: he in exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt-Pasupati Gorai v. Brindaban Khan, ILR (1951) 1 Cal 82. That was a case under the Cotton, Cloth and Yarn Order, 1945. The plaintiff paid for certain textile goods from the defendant, who after having obtained the full value of the goods gave short delivery as well as failed to give delivery of certain goods for which he had received the price. The plaintiff claimed refund of the price for the goods which he had not received The defendant took the defence that he was a mere handling agent of Government, and sold goods to the plaintiff as an agent of Government, and that the plaintiff had no cause of action against him but should pursue his remedies against the Government Das. J. held that the defendant was not an agent on behalf of the Government and he was therefore, personally liable for the claim of the plaintiff. In the opinion of Das. J. the Cotton, Cloth and Yarn Order, 1945, does not affect the mutual relation of manufacturer wholesale dealer and retailer, but merely imposes a restriction as regards the price of the textiles and the persons who are entitled to deal with them in the market and in view of the scheme of things envisaged in that Order it was a misnomer to desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e known as the Bihar Molasses (Control) Ordinance, 1946, and then under the Bihar Molasses (Control) Act, 1947. Under the said provisions the Excise Commissioner was constituted a controller. Without the permission of the Controller no molasses could be moved by rail or river from any place in the province to any other place therein. The Controller had the power to issue directions to owners or occupiers of factories to supply molasses to the provincial Government or to distilleries or to other persons or organisations The Provincial Government (now the State Government) had the power to fix the price of molasses. The proprietors of certain distilleries obtained permits from the Excise Commissioner for lifting molasses from certain factories in North Bihar. According to the permit, the molasses was to be taken to distilleries but a part of the molasses thus obtained on permit was not taken to the distilleries but was sold in the black market, and for that purpose it was alleged that there was a conspiracy entered into by the distilleries with Excise Officers and railway employees, through one Ramjilal Murwari. A criminal ease was started against him inter alia for Criminal breach o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The same view was expressed by a Single Judge of the Andhra High Court in G. Alluraiah v. State of Andhra Pradesh, . The State of Madras passed an order, the Madras Foodgrains (Procurement) Order, 1947. The plaintiff was appointed as a wholesale dealer for sale of rice under the said order. He executed an agreement pursuant to that order. According to that agreement he was to purchase foodgrains from the Government and to sell them to the persons nominated. Rates at which it was to be sold were specified and he could sell only at a specified price in be responsible for the safe custody of the goods and accountable for the difference in price realised by him. In September. 1952. the District Collector, Nellore, allotted to the plaintiff and some others certain quantity of Vishakhapatnam rice to be delivered at Singariakonda railway station after collection of the price etc. The appellants paid for and lifted the rice and discovered that it was boiled rice for which there was no demand in the locality. The plaintiff made representations to the Collector. Nellore, who directed him to return the stocks which was accordingly done. The plaintiffs sued Government stating that they acte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax was payable. In the present case, however, the facts are not exactly similar. The disposal of the goods is restricted to a zone, hut not to any particular person in a zone. In the present day world of controls, a certain degree of control is unavoidable. Simply because the price is controlled and the area within which sale should take place is controlled, it does not follow that there cannot be a sale of goods. Coming now to the terms of the agreement, I confess that it is not at all easy to construe, particularly as we have not the advantage of seeing the scheme which was mooted by Government for opening Fair Price Shops. It is true that the agreement is entitled-"agreement for distribution of wheat ." but that would not be inconsistent with a sale to the retailer. After all, it is amply clear that there was an overall shortage of supply and the available foodstuff was being taken over by Government and then distributed amongst the people through the instrumentality of Fair Price Shops. In these days of scarcity and controls, the mere fact that restrictions are put on sales and purchases is not decisive on the question as to whether the transaction is one of sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g so Normally of course, the goods should have been in the shop and it might be that the case that was put forward from the Bar that it was taken to the house of the accused for safe custody was not true and was a mere ruse on behalf of the accused for eventually diverting the goods to the black market. This however is mere speculation. The agreement contained no terms that the goods taken delivery of from Government should be kepi at any particular place. If that is so, the accused was not bound to keep the goods at the shop at 45/9, Beliaghata Main Road, Calcutta. He may have kept it at his godown or at his residence or somewhere else. It will be remembered that so far as the hooks are concerned, they showed a stock and there is no evidence that the accused ever said that he has no stock anywhere except his shop room or refused to supply any goods to a consumer The mere fact that part of the goods was removed from the Fair Price Shop and later on brought back, does not appear to be a violation of any of the terms of agreement binding the accused as retailer of the Fair Price Shop. If that is so, I cannot see how it can be established that the accused had committed the offence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck so far as the shop was concerned, but the goods were found in front of the shop and there was no evidence of actual disposal of goods by the retailer to parties in contravention of his agreement or any attempt to do so Otherwise however, the cases are the same, because the crucial point, namely whether the retailer was an agent of Government or not and whether under the agreement, the property in the goods passed to him are identical in both cases. 17. Therefore, it must be held that the case was not correctly decided. 18. In my opinion the questions posed should be answered as follows: Question No. 1: No. Question No. 2: Yes. Question No. 3: No 19. It must further be held that it has not been established that the accused appellant committed any breach of trust as defined by Section 405 of the Indian Penal Code and is not guilty of any offence under Section 409 of the said Code. 20. The appeal should therefore succeed and the conviction and sentence of the accused-appellant is set aside and he is acquitted and the bail bond is discharged. Banerjee, J. 21. I agree with my Lord the Chief Justice. I, however, want to add a few words of my own, not because I aspire to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused. The agreement was styled as 'Agreement for distribution of wheat through Fair Price Shop' and that has been marked as Ext. 4/8 in the case. It has been urged before us that on consideration of the articles of the agreement then I was a sale out-right to the accused and hence there was no entrustment. Whereas the prosecution case is that he was entrusted with the goods either in his capacity as a retail dealer or in his capacity as an agent Therefore, the question is substantially in question of interpretation of the agreement. Before I go further into the matter. I would say that it is not necessary for us to determine whether the accused retailer became, at any point of time, the owner of the goods or the owner of the price at which he would sell to the consumers: but all that is necessary for us to decide is whether at the date, when the alleged breach of trust was committed, title passed to the retailer, even if the retailer is not ultimately an agent and even if the retailer may become the ultimate purchaser from the Government, the question is whether at the date of the alleged breach of trust, title passed to the retailer or the retailer was entrusted with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of the decision of the Supreme Court in the case of . Another decision of this Court reported in (1964) 68 Cal WN 998, was referred to. That is a decision of My Lord the Chief Justice. There again the decision of the Supreme Court in New Indian Sugar Mills Ltd., , was followed. Then we have been referred to the decision of the Supreme Court in the aforesaid case reported In that case the Supreme Court held "Transactions of despatch of sugar by the assessee pursuant to the directions of the Controller were not the result of any contract of sale. In calling upon the manufacturing units to supply sugar, the Controller did not act as an agent of the province to purchase goods. He acted in exercise of his statutory authority." It was further held "a contract of sale postulates exercise of volition on the part of the contracting parties and there was in complying with the orders passed by the Controller no such exercise of volition by the assessee" The Government of Madras never intended to purchase sugar but it merely ordered sugar for the purpose of distribution to the consumers and the factory never intended to sell such stocks to the Madras Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract as to whether the Government intended to sell to the retailer and if they intended to sell at what point of time title passed to the retailer. We have also been referred to a decision of the Supreme Court in Civil Appeal No. 164 of 1964, Gordon Woodroffe and Co. (Madras) Ltd v. M.A. Majid and Co., . The question there was whether on the terms of the agreement, there was an outright sale or there was an agency created. The Supreme Court referred to Blackwood Wright 'Principal and Agent' Second Edn.. page 5. "In commercial matters, where the real relationship is that of vendor and purchaser, persons are sometimes called agents when, as a matter of fact, their relations are not those of principal and agent at all, but those of vendor and purchaser. If the person called an 'agent' is entitled to alter the goods, manipulate them, to sell them at any price that he thinks fit after they have been so manipulated, and is still only liable to pay for them at a price fixed beforehand, without any reference to the price at which he sold them, it is impossible to say that the produce of the goods so sold was the money of the consignors, or that the relation of princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was that he would distribute wheat to consumers at a fair price through a fair price shop. Hence the circumstances show that Ghosiram Agarwala was not intended to become the purchaser from the Government on delivery of the goods but Ghosiranl will take delivery of the goods from the Government for the purpose of distributing them to the consumers. The phrase 'distribute to consumers' means in the circumstances of the case to sell to consumers particular quantity at a particular price. Therefore, the circumstances indicate that Ghosiram was not intended to become the full owner of the stock of wheat on delivery but he held the said stock for the purpose of selling to the consumers. These circumstances are in the first part of the agreement. 32. If we refer to the conduct of the parties we would find that after the goods were delivered to him he stored them at the fair price shop and then he removed the goods from the shop at night between 9-30 and 10 p.m. There was no purpose for such removal unless he thought that the removal would be beyond the terms of the contract. The conduct of Gliosiram shows that he knew that he was not to be considered to be the owner of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. This term therefore supposes that the retailer will become the owner of the stock at some particular point of time. Unless the retailer becomes the owner of the goods at some particular point of time he would not have to pay the price for it. The price, as is well known, is payable when title passes. By Term No. (4) price is not directed to be paid but is directed to be deposited, hence I he price directed to be deposited by the retailer will become payable to the Government as soon as the retailer becomes the owner of the goods. Hence we have to determine when does the retailer become the owner of the goods. 34. For that purpose, Term No. (4) does not help us; because Term No. (4) refers merely to the deposit of the price and not payment of the price. Term No. (5) refers to deposit of money for the indented quantity of wheat This again does not dive us any idea as to when the price is payable by the retailer and the price realisable by the Government. It merely refers to deposit of the money which has already been referred to in Term No. (4) as the price. Term No. (6) refers to delivery and the learned advocate for the appellant says that title passes to the reretailer on del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dor who has sold his goods to purchaser does not determine at what time the purchaser would sell. Hence this term is also inconsistent with the case that title passed on delivery of the goods after the deposit of the price, term No. (13) is much worse Term No. (13) shows that the retailer shall offer all facilities to the inspecting staff as well as the staff of any other department of the Government for holding inspection of his stock and books of account. No vendor after title passed to the purchaser can insist on such a term This is completely inconsistent with the case of the accused that title would pass on delivery after deposit of the price. Term No. (14) is equally strong. The retailer shall comply with such other directions as may be issued from time to time by the Director or any other Officer authorised in this behalf. Term No. (14) shows that the Director will have control over the goods even after delivery to the retailer. This should be distinguished from the conditions on which intoxicants, arms and ammunitions are sold. In those cases the Government controls, on authority desired from statutes and the producer does nothing. Term No. (15) provides that in case of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Hence, in my opinion, at the date when the accused removed the goods he had not till then title to the goods. He might have acquired title to the goods subsequently on its transfer to the consumer or he might never have got title to the goods but have title to the price at which he sells. We are not to consider that aspect of the matter. But what we need consider is whether that at the date when the goods were removed, did the accused become the owner of the goods? In my opinion, for the reason stated above, he did not become the owner of the goods on the relevant date though he might have or might not have become an owner subsequently. 35. The next question is whether there was any entrustment of the goods to the retailer at the relevant time or whether the retailer acted as the agent of the Government at the relevant time. I have analysed the agree-merit and found that the substance of the agreement is as follows:- The retailer will place indent for supply of wheat, the Zonal Officer will check up and then sanction a quantity; the retailer thereafter will deposit a sum of money for the indented quantity of wheat at the rate of ₹ 14 per maund. The retailer will then ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether it may be said that al the date when the goods were removed, the retailer acted as the agent of the Government. I may refer to Section 30, Sub-section (2) of the Sale of Goods Act which, supports the argument of the Advocate-General. That section for our relevant purpose reads as follows: "Where a person having agreed to buy goods, obtains, with the consent of the seller, possession of the goods, the delivery or transfer by that person of the goods under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of any Hen or other right of the original seller in respect of the goods or have the effect as if such a Hen or right did not exist." 38. This proposition in Section 30(2), Sale of Goods Act has been considered in Halsbury's Laws of England, Vol. 84, 3rd Edn., page 86, Art. 190 where it has been put in the following manner: "Where a person having agreed to buy goods, obtains, with the consent of the seller, possession of the goods ... the delivery or transfer by that person ... under any sale, pledge or other disposition thereof ... to any person receiving the same in good faith and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the fact that I have come to identical findings sometimes through a slightly different path. I would like to record my reasons briefly for coming to these findings. 43. The facts of this case have already been set out in sufficient details in the judgment of My Lord the Chief Justice. I do not propose to repeat them except in so far as It may be necessary to refer to some of them for making my points. 44. This reference has been made in connection with the trial of an owner of a fair price shop under Section 409 of the Indian Penal Code. The charge was that he had removed certain quantities of wheat from his shop with an intent to commit criminal breach of trust in respect thereof. It is admitted that the wheat in question was brought back to the shop subsequently. It is not, therefore, the case of the prosecution that the offence of criminal breach of trust had been completed. The charge now is merely of an attempt to commit criminal breach of trust. It is not doubted that if the ingredients of an offence of criminal breach of trust can be established, there would be no legal difficulty in finding the accused guilty of the lesser offence of attempting to commit crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that once the retailer or the owner of a fair price shop has paid for the goods at the agreed whole-tale price it it difficult to say that he does not become the full owner of the stock of foodstuff. They were, however, confronted with a Division Bench decision of this Court to which Sen, J. himself had been a party, viz., Cri. App. No. 808 of 1960, D/ 7-6-1960 (Cal), where the owner of a fair price shop bound by a similar agreement had been held to be an agent of Government. They, therefore, made this reference to Full Bench for decision of the case with particular reference to the following points:- (1) Can the holder of a fair price shop bound by an agreement similar to the agreement Exht. 4/8 be regarded as an agent of the Government in respect of the stock of wheat or rice received by him on deposit of the agreed wholesale price from the Government godown, or does the property in the wheat or rice pass to him? (2) Was the case Cri. Appeal No. 303 of 1960 (Cal) rightly decided? 48. For various reasons we were not quite happy about the framing of the questions in this Reference Firstly, we were firmly of the opinion that the answer to the first question must depend on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending on the status of the person who commits it. If it is committed by a carrier, wharfinger or warehouse-keeper, it is an offence dealt with under Section 407 of the Indian Penal Code and is punishable with a particular kind of sentence. If it is criminal breach of trust by a clerk or servant, it is a slightly different offence dealt with separately under Section 408 of the Indian Penal Code. Criminal breach of trust by a public servant or by a bank or by a merchant or by an agent is dealt with in Section 409 and provides for a severe punishment. In the instant case, we are concerned, according to the prosecution, with a case of an attempted criminal breach of trust by an agent. Before we can convict the accused on this charge, we shall, therefore, have to satisfy ourselves that on the facts of the case three elements are satisfied:-firstly, that there was an attempt to commit criminal breach of trust within the meaning of Section 406 of the Indian Penal Code and, secondly, that this attempt was made by a person who was an agent and thirdly, that the offence was attempted to be committed in respect of a property with which the agent was entrusted The important thing to remember ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It may as well be that the appellant did have designs of dishonestly disposing of the wheat. Let us take the case at its worst and assume that the retailer not only removed the goods to his house but sold the goods to consumers who were within the respective zone but did not hold any ration cards. Will that amount to an offence? I have not been given any materials which will warrant a conclusion that even a completed act of that nature would amount to an offence. We cannot say, firstly, that that act is a contravention of any Article of the agreement proved (Exht. 4/8) Not one clause of that agreement is contravened by such an act. Whether any contravention of a clause of the agreement would have amounted to an offence is a matter which I shall consider separately. But the fact remains that such an act would not have amounted to a contravention of any article of that agreement. I can imagine that apart from the agreement that act could have been a contravention of some other Statute and could have made the retailer liable to penalty, but our attention has not been drawn to the provision of any such statute. The prosecution was relying on the agreement alone to support the case ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the trust was to be discharged or in violation of a legal contract which he has made touching the discharge of such trust. (3) The entrustment of property or of dominion over properly must have been made to the accused. 59. Section 409 would mean the addition of one extra element, viz.., that the entrustment with property or with dominion over property referred to above would be to the accused in his capacity as an agent. But if the ingredients of an offence under Section 405 are not satisfied, it is impossible to convict a person under Section 409 of the Indian Penal Code The more vital point therefore, is whether we can say that under the terms of the agreement there was any entrustment of property and whether the appellant tried to dispose of that property in violation of these terms That is why, to my mind, the questions that have been framed in this reference are not sufficient or adequate in disposing of this case. 60. It has been argued that Exht. 4/8 is not an agreement of sale and it has also been argued that even when the retailer after payment of price receives the quantity of wheat from Government godown, property in the wheat does not pass to him. It is contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of delivery of the goods by Government to the retailer have been set out in paragraph 6, Paragraph 5 of the agreement does not say that the retailer shall pay the price because neither the State Bank of India nor the Reserve Bank of India were to deliver the goods. As such it does not use the words "pay the price" but, instead uses the words "deposit the money" because that paragraph is really speaking of depositing the amount of the money with the State Bank of India or the Reserve Bank of India Deposit is indeed, a more appropriate word in that context, I do not see how the use of the word "deposit" in paragraph 4 can nullify or destroy the effect of the use of the word "price" with reference to the consideration that will proceed from the retailer to the Government in respect of the wheat that he was going to take later. 62. Considerable arguments were made about the precise point of time when the property passed. Under the general law, as soon as the specific ascertained goods, viz., the bags of wheat were handed over to the retailer who had already paid the price in advance, property would, in my opinion, pass to the retailer. I find no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy. 64. Why should restrictions over the user of something by a person mean that he has not complete ownership in that property? When a person buys a gun nobody would suggest that he is at liberty to use his gun in any manner as he likes. There are specific regulations even about the manner in which he has to store or keep the gun not to speak of the restrictions regarding the user of the gun. The owner of a gun or its ammunition cannot even sell the gun or ammunition to anybody he likes. He can only dispose of it under the strict control of Government. He can sell it only to a person who has licence from Government to buy that weapon. Can anybody possibly argue that because of these restrictions or limitations on the user of the gun and its ammunition a person does not become the owner of a gun or its ammunition even after he has purchased them from a dealer? 65. It is clear too late in the day to believe or to hold that in these days of social welfare legislation either the law of property or the law of contract can be completely immune from the compulsive norms imposed by the State for purposes of better organisation and better protection of the society. It is impossible for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich, however, the difference in answer can be explained by reference to the peculiar facts of the case and also by the fact that the question sought to be answered was not in relation to the impact of control legislation on the legal nature of the transaction under the ordinary commercial law or the law of contract, but in relation to the impact of the control legislation on the Bihar Sales Tax Act, 1947, where the word 'sale' has been given a specially technical definition. The cases of and , have, if I may say with respect, presented me with a little difficulty. Those decisions in my opinion, have to be explained, if they can be explained at all by the special terms of the agreement that came to be construed by their Lordships of the Andhra High Court. If that is not possible. I would prefer, with great respect, to disagree with their Lordships. I am not dealing with all these eases in details as My Lord the Chief Justice has dealt with them adequately and my own views regarding these decisions will be amply clear from what I have already said. 66. After having set out the various considerations that arise in this matter I can now go straightway to the questions that hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Was the case Cri. Appeal No. 303 of 1960 (Cal) rightly decided? 70. At hearing the questions were refrained as follows:- Was the appellant by virtue of the agreement, dated 8th October. 1966, Ext. 4/8, be regarded as an agent of the Government in respect of the wheat received by him under the said agreement? Question No. 2 Did the property in the stock of wheat received by the appellant under the said agreement pass to him? Question No. 3: Was the case Cri. Appeal No. 3 of 1960 (Cal), rightly decided? 71. The facts of the case are stated below The appellant. Ghasiram Agarwala, was appointed retailer of Fair Price Shop No. 1766 situated at 45/19, Beliaghata Main Road, Calcutta The appointment was made as per agreement, dated 8th October, 1956, by and between the appellant and the Governor of the State of West Bengal. The agreement has been marked as Ext. 4/8. 72. The appellant obtained an indent of 10 bags of wheat weighing 25 mds. from a Government godown on 16th May 1957 in the early part of the night of the 16th May some local people found him removing three bags containing grain from the Fair Price Shop by a push cart Suspecting something wrong they reported the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore the version of P.W. 1 that P.W 11 arrived at the shop at about 12 in the midnight of 16th May, 1957, seems to be correct P.W. 11 was deposing nearly two years after the incident; therefore this discrepanty as to the time of his arrival should be ignored. 74. The following facts can be gathered from the deposition of P.W. 11. P.W. 11 took the seized books into his custody and he also took the three bags of wheat lying in front of the shop and made over the same to the Malkhana of the Enforcement Branch at Chetla. He arrested the appellant then and there. He then applied to the Magistrate for permission to sell the wheat seized by him, and the necessary order was passed by the Police Magistrate, Sealdah. The seized wheat was then sold by P.W. 11 in the presence of the Inspector of the Rationing Department in the shop of the accused. 75. It further transpires from the deposition of P.W. 11 that a case against the appellant was originally filed before the Police Magistrate at Sealdah. P.W. 11 submitted a final report before the Police Magistrate on the ground of insufficient evidence and the appellant was discharged by the Magistrate. Thereafter, under the orders of the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he owner . . But in the instant case the sale of the commodities was restricted and fettered by conditions imposed by the agreement between the owner and the Government. In view of these condition and restriction the correct way of describing the accused would be that he held the commodity, e.g. wheat, in trust for the Government and was only a custodian of the same. He had not the full-fledged right of an owner to dispose of the commodity in any way he liked. In the circumstances, I find no bar to his conviction under Section 409. I.P.C., if all the ingredients of an offence under that section are present in this case." The trial Judge convicted the appellant under Section 409. I.P.C., and sentenced him to rigorous imprisonment for two months and a fine of ₹ 100, in default, imprisonment for a further period of one month. 80. The accused preferred an appeal to the High Court. According to the High Court, the offence of the criminal breach of trust was not completed because the stock was ultimately brought back. As there was no dishonest disposal of the stock of wheat in violation of the legal contract for the distribution of the wheat, the High Court held that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appointment as retailer shall be dealt with or disposed of according to the directions given by the Director and not otherwise it has been urged that this condition indicates that the Government retains control over the wheat; but if the retailer has paid for the wheat at a wholesale price and if he is described as a retailer, it is difficult to accept the proposition that he really be comes an agent of the Government and the Government remains the owner of the goods. . . . Certainly the retailer commits a great wrong if he disposes of or attempts to dispose of the stock of foodgrains received by him in the black market in contravention of the agreement. It appears to us, however, that the offence committed does not come within the definition of criminal breach of trust, because once the retailer has paid for the goods ..it is difficult to say on the terms of the agreement that he does not become the full owner of the stock of foodstuff." 83. On behalf of the State reference was made to a decision of a Division Bench of which one of the referring Judges, namely S.K. Sen, J., happened to be a member in Criminal Appeal No. 303 of 1960. D/- 7-6-1960 (Cal), where a retailer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt times the appellant was the proprietor of the shop in which the wheat obtained from the Government for sale was stocked The charge against the appellant is that he as the retail dealer in wheat of that shop and as an agent of the Government of West Bengal was entrusted with 25 maunds of wheat in ten bags and that having dominion over the same in his capacity as an agent of the Government of West Bengal he committed criminal breach of trust in respect of 7 mds 10 srs of wheat out of the said 25 maunds and there by committed an offence punishable under Section 409, Indian Penal Code. 87. It is to be seen whether the appellant acted as the agent of the Government of West Bengal in the matter of selling as a retailer the 25 maunds of wheat obtained by him from the Government on 15th May, 1957. It will be necessary to examine the relevant clauses of the agreement (Ext 4/81 made on 8th October, 1956 between the Governor of the State of West Bengal and the appellant. 88. The agreement is headed "Agreement for distribution of wheat through fair price shops." In the recitals there is a reference to "the Government scheme for distribution of wheat to consumers through Fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold by the appellant as his wheal and not as wheat belonging to the Government. 92. The next question is whether the appellant can be said to be a person "employed to do any act for another" within the first part of Section 182. Indian Contract Act. The appellant was to sell the wheat at a specified price, namely ₹ 15 per maund, that is six annas per seer to the consumers of the respective zone; on price being offered by the customers, the retailer was bound to supply wheat until the stock with him was completely exhausted: the retailer was required to issue cash memo and maintain daily sales register: and the appellant was required to offer all facilities to the inspecting staff for holding inspection of his stock and books of accounts. All these obligations relate to the sale of wheat. As the sale was to be effected by the appellant on his own behalf and not on behalf of the Government, it cannot be said that because certain obligations were imposed upon the appellant in the matter of sale he was employed to do any act for the Government, The appellant was not employed to do any act for the Government; only certain restrictions were imposed upon him while doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of the sale of wheat supplied by the Government. Then again, if the contract was one of agency there was no need to mention the price as between the Government, and the retailer. As has been pointed out by the Supreme Court in Civil Appeal No. 164 of 1964 (unreported)=(now reported in) if any person is to obtain goods from another on payment of price he cannot be said to be the agent for sale of the latter In that case the plaintiff was made answerable for weight as well as quality: but still the Supreme Court held that the relationship between the plaintiff and defendant was that of buyer and seller and not that of principal and agent In the instant ease the Government is not answerable either for weight or for quality. Therefore, there cannot be any question of holding the appellant as the agent of the Government. 94. The question of agency is intimately connected with the passing of property in the stock of wheat received by the appellant from the Government under the said agreement. Ext. 4/8. This brings us to the second question to be decided by us. If it is found on an examination of the terms of the agreement that the appellant was required to purchase wheat outright f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if an amount equal to the price is to be deposited every time wheat is supplied, the making of such deposit is indistinguishable from the payment of price. Such deposit is entirely different in character from the deposit made by an agent for sale as security for the due performance of the contract including rendering of accounts Therefore the word "deposit" used in Clauses 4 and 5 of the agreement means "pay" So under the contract the retailer is to pay the price in advance. 97. Under Clause 6 the retailer is to take delivery of wheat from the appropriate godown of the Government. There cannot be any doubt that as soon as the retailer will take delivery of the wheat the property in the wheat shall forthwith pass to the retailer. The subsequent clauses, namely, Clauses 7 to 13, no doubt impose certain conditions as to how the wheat purchased from the Government is to be disposed of But these are conditions of resale, it cannot be said that the Government as seller has reserved the right of disposal, until the said conditions are fulfilled. Therefore Section 25(1) of the Indian Sale of Goods Act has no application. As a matter of fact the right of disposal has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase order from the Food Department, and that P.W 8. J.C. Saha, the transport agent produced the letter of authority and release order and took delivery of 25 mds. of wheat from Cossipore godown on 11-5-57. From the evidence it transpires that the appellant paid the price in advance and that the 25 mds. of wheat was delivered to P. W. 8 as the agent of the appellant from the Government godown. It is difficult to say that the property in the wheat supplied did not pass to the appellant. 100. Therefore, both on the terms of the agreement, Ext. 4/8 as well as on the facts revealed by evidence it cannot be said that the appellant received 25 mds. of wheat from the Government as an agent of the Government and that the property in the said wheat did not pass to the appellant. 101. The question may be examined from another angle. If the appellant acted merely as the agent of the Government and if the property in the wheat did not pass to the appellant but remained with the Government, the appellant would have been obliged to make over the sale proceeds to the Government. In any event in the agreement, Ext. 4/8, there would have been provision for accounting between the parties. An agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and the latter must hold it on account of some person or in some way for his benefit." I have found that the appellant himself was the owner of the 25 maunds of wheat delivered to him through his agent P W 8 because the property passed at least on delivery if not on appropriation, the price having been paid in advance He was no doubt required to sell the wheat to the consumers of the particular zone at a fixed price, but it cannot be said that the beneficial interest in the said stock of wheat was in the consumers. No interest was created by Ext. 4/8 in favour of the consumers in the wheat sold to the appellant. A contract of sale is certainly compatible with a distinct collateral contract between the same parties as to the buyer's subsequent disposal of the thing sold Clauses 7 to 13 of Ext. 4/8 are in the nature of a collateral contract regulating the subsequent disposal by the retailer of the wheat supplied. There was really no entrustment of the 25 maunds of wheat by the Government to the appellant. The said wheat was merely delivered to the appellant as purchaser subject to collateral contract as to its subsequent disposal. Therefore, if any part of the wheat supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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