the Court to interpret words of ambiguous meaning in a broad and liberal sense 107 826  CRIMINAL APPELLATE JURISDICTION Criminal Appeal No 61 of 1952
Appeal by special leave granted by the Supreme Court on the 10th September 1951 from the Judgment and Order dated the 5th March 1951 of the High Court of Judicature at Bombay Chagla CJ and Bhagwati J in Criminal Appeal No 394 of 1950 arising out of the Judgment and Order dated the 29th May 1950 of the Court of the Presidency Magistrate Second Court Mazagaon Bombay in Cases Nos
630 P and 635P of 1949
MP Amin R J Kolah with him for appellants Nos 1 2 and 4
As K Muthuswami for appellant No 3 C K Daphtary Solicitor General for India Porus A Mehta with him for the respondent 1953
March 30
The Judgment of the Court was delivered by BOSE J
The appellants have been convicted under sections 7 and 9 of the Essential Supplies Act No XXIV of 1946 on two counts
The first appellant is a registered joint stock company the Seksaria Mills Ltd It was fined Rs 10000 on each of the two counts that is to say a total fine of Rs 20000 and this was upheld in appeal
The second appellant is the Director of the Mills
He was sentenced to two months  rigorous imprisonment and to a fine of Rs 200000 on each count
In appeal the sentence of imprisonment was set aside and the fine reduced to Rs 10000 on each count
The third appellant is the General Manager of the Mills
He was sentenced to a fine of Rs 2000 on each count
This has been upheld
The fourth appellant is the Sales Manager of the Mills
He was sentenced to four months  rigorous imprisonment and a fine of Rs 100000 on
each count
In appeal the sentence of imprisonment was upheld but the fine was reduced to Rs 10000 on each count
The substantive sentences are to run concurrently
827 A Government of India Notification dated 2nd February 1946 required every manufacturer to submit  true and accurate information relating to his undertakings  to the Textile Commissioner CST Section at Bombay
In compliance with this Order the first appellant submitted a return signed by the third appellant on 10th March 1947
This return is Exhibit A 1
It showed that 13 bales of cloth 20 half bales and 3 full bales were delivered to Messrs Dwarkadas Khetan  Company of Bombay during the month of February 1947 on behalf of the quotaholder Shree Kishan  Company
Another return of the same date Exhibit A 2 also relating to the month of February 1947 showed that 6 bales were delivered to the same Dwarkadas Khetan  Company on behalf of another quota holder Beharilal Bajirathi
A note on the back of each printed form states
By delivered or delivery  is meant physical delivery of cloth in bales or in pieces but not cloth which though paid for is still in the I physical possession of the seller
 The offence charged is that this information is not true and accurate
The case for the prosecution is that the bales remained in the physical possession of the first appellant at all material times and were not physically delivered to Messrs Dwarkadas Khetan  Company
Before us the learned Solicitor General added that even if there was physical delivery to Dwarkadas Khetan that did not comply with the requirements of the form because the form requires information regarding physical delivery to the quota holder or his agent and as Dwarkadas Khetan was not the agent of the quota holder the statement is inaccurate and misleading
The learned Presidency Magistrate who tried the case and also the High Court on appeal hold that the prosecution have established their case and so have convicted and upheld the convictions respectively
828 The business procedure of the first appellant is explained by Dwarkadas Khetan
His firm Dwarkadas Khetan  Company are the first appellant s sole selling agents  They are del credere agents and guarantee payment to the first appellant of all sales made and on the other side guarantee delivery to the purchasers with whom they deal direct
It is necessary at this stage to understand that because of various orders and rules made under the Essential Supplies Act the first appellant could only sell to specified quota holders and only up to the limits of their quotas
The two quota holders which concern us are Shree Kishan  Company and Beharilal Bairathi
The first appellant s selling procedure is this
When goods are ready for sale it sends Dwarkadas Khetan  Company in duplicate a  ready sale note 
These notes contain particulars about the bales and the persons to whom they are to be delivered
Upon receipt of this Dwarkadas  Company contact the quota holders or their agents
The next step is for the quota holder to pay Dwarkadas  Company the price of the goods specified in the  ready sale note
Upon receipt of the money one of the two notes is handed over to the quota holder or his agent and he is given a receipt for the money paid
At the same time Dwarkadas  Company send the first appellant an  advice slip  telling it that the money has been received and asking it to prepare a delivery order
The first appellant then debits Dwarkadas  Company with the price and not the purchaser
For payment it looks to Dwarkadas  Company
Upon receipt of this advice slip the first appellant s office prepares the delivery order and delivers the goods to the party concerned
The person receiving the goods then signs the delivery order in token of receipt and the signed order is sent to Dwarkadas  Company who after making the necessary entries in their books return the order to the Mills office
It will be seen that the first appellant has no direct dealing with the purchaser
It acts through Dwarkadas  Company in every case
829 It will now be necessary to trace the history of the two consignments relating to the 13 bales and the 6 bales separately
We will deal with the 13 bales first
The quota holder in respect of the 13 bales was Shree Kishan  Company
This firm was an up country firm and so it was necessary for it to appoint a local agent in Bombay for making payments and receiving delivery
There was some confusion about the agent so appointed at first one Dharsi Moolji was appointed and then P C Vora
The letter informing the first appellant that Dharsi Moolji bad been appointed is not on record but we were told at the Bar that it is not disputed that I the letter is dated 7th February 1947
In any case Dharsi Moolji wrote to the first appellant on 20th February 1947 saying that he had been authorised to take delivery of the January quota on behalf of Messrs Shree Kishan  Company and on 21 st February 1947 he paid Dwarkadas Khetan  Company a sum of Rs 14000 for this quota
A receipt and an entry in Dwarkadas  books evidence the payment
The same day Dwarkadas Khetan wrote to the first appellant telling it that his firm had received payment in advance from Shree Kishan  Company and that the 13 bales should be sent to our godown  Whether the  our  refers to Dwarkadas  godown or to a godown jointly shared between Dwarkadas and the first appellant is not clear
The learned High Court Judges hold that the godown belonged to the first appellant but that in our opinion is not very material for reasons we shall give later
On receipt of this  advice slip  the first appellant prepared what it has called a  ready sale note  on the same
day 21st February 1947 authorising the purchaser to take delivery within a week
Dharsi Moolji was named as the Commission Agent
The man now entered is Prataprai Chunilal that is P C Vora but the original name was Dharsi Moolji
The change was made for reasons which will presently appear
830 In pursuance of all this the first appellant dispatched the 13 bales on 28th February 1947 and sent them to Dharsi Moolji
But in the meanwhile other events had taken place
One P C Vora wrote to the first appellant on 17th February 1947 and said that he had been authorised to take possession of these 13 bales
What had happened in the meanwhile was that the quota holder Shree Kishan  Company had changed its local agent
Accordingly when the goods reached Dharsi Moolji he refused to take delivery
The selling agent Dwarkadas thereupon telephoned the first appellant
He explained that he had actually received the money for the bales from Dharsi Moolji and had not received anything from P C Vora and so could not deliver the goods to the latter and equally could not accept money from P C Vora until the matter had been straightened out with Dharsi Moolji
The first appellant thereupon told Dwarkadas to keep the goods in the Dady Seth godown
On the same day apparently before all this occurred the first appellant credited Dwarkadas Khetan with the money he had received from Dharsi Moolji on account of the 13 bales less Dwarkadas  commission
In other words this adjustment in the accounts was the equivalent of payment for the 13 bales by Dwarkadas Khetan to the first appellant on account of the purchaser Shree Kisban  Company
It will be remembered that Dwarkadas Khetan  Company were the sole selling agents and they alone were responsible to the Mills for orders  which were placed through them
The muddle between Dharsi Moolji and P C Vora was cleared up between 3rd March 1947 and 14th March 1947
On 3rd March 1947 Dwarkadas Khetan returned the Rs 14000 which Dharsi Moolji had paid and on 14th March 1947 accepted the money from P C Vora
The alteration in the ready sale note of 21st February 1947 was presumably made because of these facts
Four days later Dwarkadas Khetan delivered the goods to P C Vora
There was no need to make any alterations in the first 831 appellant s account books because Dwarkadas was responsible for the price whatever happened between him and Dharsi and also because in any event the
goods were sold to Shree Kishan the only query at that time was who was his agent to accept delivery for him
The return with which we are concerned was made on 10th March 1947
It will be seen from the above that the position at that date was as follows 1 the selling agent bad informed the first appellant that he had effected a sale 2 the selling agent had paid the first appellant for the goods 3 specific bales had been set aside and appropriated to the sale and consequently the property in the goods had passed 4 the goods had actually left the Mills  premises and 5 they were in the Dady Seth godown under the control of Dwarkadas Khetan
We say the goods were under the control of Dwarkadas Khetan for three reasons 1 as shown above the property in the goods had passed and so the first appellant no longer had title to them 2 Dwarkadas says that until be received the money for them from P C Vora he would have refused to deliver them 3
being a del credere agent he would have been within his rights a to refuse delivery to anybody till he was paid and b to deliver them despite anything the first appellant might say once he received his money also because Dwarkadas  Mehtaji says If the goods are not accepted by the merchants or their agents the same are sent to us and we keep them in the godown
 Bearing these facts in mind we will now examine the offending document
It is a printed form
The heading is  Manufacturer s Returns showing detail of delivery to quota holders or other8 of civil cloth
 Then there is a note as follows   IMPORTANT This form should be completed in accordance with the instructions printed overleaf giving full details relating to the previous month 832 Under that is the following All stocks pledgedhypothecated by manufacturers with banks or others shall be included in this statement
 The only column in the printed form which could be related to this is column 3 headed  Full name and address of person to whom delivered
 On the back there are the following instructions II
The word I others  in the heading of the form includes artificers who are privileged to purchase cloth under General Permission No TCS 42  1 dated 10th August 1944 and any person to whom deliveries are made under any other General or Special Permission or Order of the Textile Commissioner
The name of artificers or any other persons shall be mentioned in column 3 and against their names number and date of General or Special Permission shall be mentioned in column 2
By delivered  or delivery ismeantphysical delivery of cloth in bales or in pieces but not cloth which though paid for is still in the physical possession of the seller
 The form was filled in as follows  In the column headed 11 Full name and address of quota holder  the name of ShreeKishan  Company is entered
In the column headed Full name and address of person to whom delivered the name of Dwarkadas Khetan  Company is entered
The question wehave to decide is whether these two entries are inaccurate
Dealing first with the learned Solicitor General s argument regarding the construction of the words used in the form we are of opinion that it cannot be accepted
The second clause of the portion marked Important towards the head of the form states that all stocks pledged or hypothecated with banks or others must also be included and Instruction No II on the back directs that the names of any other person must be entered in column 3 and that the number and date of the General or Special Permission must be set out in column 2 Whether this means that goods 833 cannot be pledged without permission or that only goods allotted to quota holders can be pledged we do not know but whatever it means it is clear that the entry in column 3 is not intended to be confined to quota holders or their agents but means what it says namely the person to whom physical delivery of the goods has been made whoever he may be
The only question therefore is whether there was physical delivery to Dwarkadas Khetan
In one sense there can be no doubt about that
The goods left the Mills  premises the property in them had passed and when Dharsi Moolji refused to receive them they were handed over to Dwarkadas Khetan and not taken back to the Mills
Dwarkadas Khetan asked the Mills what he should do with them and in the end he placed them in the Dady Seth godown
In any ordinary understanding of the term it would be clear that the goods had been physically delivered to Dwarkadas Khetan
But the learned High Court Judges do not appear to have concerned themselves with the question of actual physical possession because they say It would not be true to say and the record amply bears it out that this godown belonged to Dwarkadas Khetan
Even if Dwarkadas Khetan had control over the godown the control was exercised on behalf of and as the agent of the Mills
 Therefore the test of the sort of possession which they had in mind was not the control over the goods
But that has always been regarded as one of the tests of physical or de facto possession
Lancelot Hall distinguishing between possession in law and possession in fact says that possession in the popular sense denotes a state of fact of exclusive physical control
See his treatise on Possessory Liens in English Law page 2
See also Pollock and Wright in their Essay on Possession in the Common Law page 119
Drawing the same distinction they say that physical possession may be generally described by stating that 108 834 when a person is in such a relation to a thing that so far as regards the thing he can assume exercise or resume manual control of it at pleasure and so far as regards other persons the thing is under the protection of his personal presence or in or on a house or land occupied by him or in some receptacle belonging to him and under his control
 This would seem exactly to meet the case of Dwarkadas Khetan
Possession is an ambiguous term
The law books divide its concept into two broad categories 1 physical possession or possession in fact and 2 legal possession which need not coincide with possession in fact
The offending form with which we are concerned draws the same broad line
But even on the factual side of the border niceties creep in and so the possession of a servant is called custody rather than possession
But what of an agent  If a man lives abroad over a period of years and leaves his house and furniture in charge of an agent who has the keys of the house and immedi ate access to and physical control over the furniture it would be difficult to say that the agent was not in physical possession
It is true the legal possession would continue to reside in the owner but the actual physical possession would surely be that of the agent
And so with a del credere agent because such a person is the agent of the seller only up to a point
Beyond that he is either a principal or an agent of the buyer
This distinction was discussed by one of us in the Nagpur High Court in Kalyanji Kuwarji vs Tirkaram Sheolal1 and was accepted by the Madras High Court in Kandula Radhakrishna Rao vs The Province of Madras2
But we need not go into all this
Here is an Order which is to affect the business of hundreds of persons many of whom are small petty merchants and traders the sort of meni who would not have lawyers constantly at their elbow and even if they did the more learned their advisers were in the law the more puzzled 1 AIR 1938 Nag
2 835 they would be as to what advice to givefor it is not till one is learned in the law that subtleties of thought and bewilderment arise at the meaning of plain English words which any ordinary man of average intelligence not versed in the law would have no difficulty in understanding
In a penal statute of this kind it is our duty to interpret words of ambiguous meaning in a broad and liberal sense so that they will not become traps for honest unlearned in the law and unwary men
If there is honest and substantial compliance with an array of puzzling directions that should be enough even if on some hypercritical view of the law other ingenious meanings can be devised
In our opinion Dwarkadas Khetan could in the circumstances given above be described without any straining of language as the person to whom the goods were actually delivered
It follows the conviction on this count cannot stand
We would like to add that in any event even if ultra technical notions regarding the concept of possession were to be incorporated into the case it would be wrong to say that there had been anything beyond a technical and unintentional breach of the law
The facts are truly and accurately given according to the popular and natural meaning of the words used nothing was hidden
The goods did reach the quotaholder in the end or rather his proper agent and we cannot see what anyone could stand to gain in an unauthorised way over the very natural mistake which occurred owing to what seems to have been a time lag in the consequences of a change of agency
So even if there was a technical breach of the law it was not one which called for the severe strictures which are to be found in the trial court s judgment and certainly not for the savage sentences which the learned Magistrate imposed
In the High Court also we feel a nominal fine would have met the ends of justice even on the view the learned Judges took of the law
The charge on the second count relating to the 6 bales is a similar one and the facts follow the same pattern
They have been detailed in the High Court s 836 judgment so it is not necessary to do more than outline them here
The quota holder here is Beharilal Bairathi
In this case also Dharsi Moolji paid Dwarkadas Khetan for the goods and the Mills sent the bales to Dharsi Moolji for delivery in the same truck as the 13 bales
Dharsi Moolji refused to accept these bales also so they were deposited in the Dady Seth godown along with the other thirteen
Dwarkadas Khetan  Company has been entered as the person to whom delivery was made
For the reasons given above we hold that this was a true and accurate return
The appeal is allowed
The conviction and sentence in each of the four cases is set aside
The fines if paid will be refunded
Appeal allowed
Agent for appellants Nos 1 2  4 Rajinder Narain
Agent for appellant No 3 Ganpat Rai


Summary:
A Government Notification issued under the Essential Sup plies Act 1946 required every manufacturer to submit true and accurate information relating to his undertakings and a note of the printed form stated that by delivered  or delivery  is mean physical delivery of cloth in bales and pieces but not cloth which though paid for is still in the physical possession of the seller
The appellant Mills were manufacturers of cloth and DK  Co were their sole del credere selling agents who guaranteed payment to the appellant of the price of all sales made and on the other side guaranteed delivery to the purchasers with whom they dealt direct
One DM informed the Mills as the agent of an up country quota holder that he bad been authorised by the latter to take delivery of 13 bales and on this account paid Rs 14000 to DK  Co DK  Co wrote to the Mills that they bad received payment
The Mills dispatched the goods to DM but meanwhile the quota
holder had changed his agent and DM refused to take delivery
The Mills credited the money which had been received from DM to DK godown till the question of delivery was settled
In a return submitted under the Essential Supplies Act 1946 these 13 bales were shown a delivered to D K  Co The appellants were prosecuted and convicted on the ground that physical delivery was not given to DK  Co and the return was not therefore true and accurate Held that as the goods had left the Mill premises the price had been paid and the property in them had passed and as they were in a godown under the control of D K  Co D K  Co were in the circumstances the persons to whom the goods were actually delivered and the conviction was illegal
A del credere agent is an agent of the seller only up to a point
Beyond that he is either a principal or an agent of the buyer