- (1.) THE applicants are being prosecuted under Sections 20 (e), 21 (a) and 21 (c) of the Forward Contracts (Regulation) Act, 1952 (hereinafter referred to as the Act ). According to the prosecution case, the applicants entered into two transactions of purchase of Tur (Arhar) and one transaction of sale during the period between January, 1967 and March, 1967 and these transactions were forward contract transactions which were prohibited by virtue of notifications Nos. 1384-B, 1384-C and 1384-D all dated 17th July, 1958, issued by the Central Government prohibiting forward contract transactions in regard to Tur and there-by they committed the offences referred to above. After the evidence of the prosecution was over the applicants submitted before the Sub-Divisional Magistrate before whom the case had been pending that the prosecution was uncalled for inasmuch as the three notifications were ultra vires. The Sub-Divisional Magistrate recorded a finding that prima facie there appeared nothing wrong in the notifications. He, however, held that the matter would finally be decided after the defence evidence had also been recorded and the case was taken up for decision. The applicants preferred a revision against that order which was dismissed by the Sessions Judge who also took the view that it was premature to decide the question raised by the applicants at that stage. Thereafter they filed the present application in this Court under Section 551-A read with Section 430 of the Code of Criminal Procedure with a prayer that the proceedings pending in the Court of the Sub-Divisional Magistrate, Gonda, against the applicants may be quashed. While issuing notice on the application on 29th July, 1971, a learned single Judge of this Court felt that in view of the importance of the points involved in the case it was desirable that the application be decided by a Bench of two Judges. It is thus that the case has come up before us.
(2.) IT was urged by learned Counsel for the applicants that the three transactions in respect of which the applicants are being prosecuted were non-transferable specific delivery contracts and they could not be prosecuted in view of Section 18 (1) of the Act which provides that nothing contained in Chapter III or Chapter IV of the Act shall apply to non-transferable specific delivery contracts for sale or purchase of any goods. According to him, the case was not covered by the proviso to Sub-section (1) of Section 18 and consequently there was an absolute bar against prosecution of the applicants under any of the three sections referred to above. According to the prosecution, on the other hand, the provisions of Sub-sections (1) and (2) of Section 17 of the said Act were made applicable even to non-transferable specific delivery contracts for the sale or purchase of Tur in virtue of the three notifications referred to above and consequently even if it is accepted that the three transactions were non-transferable specific delivery contracts, the prosecution was justified. We are not concerned with Sub-section (3) of Section 17 in this case. The relevant sub-sections of Section 17 which have been made applicable to non-transferable specific delivery contracts are Sub-sections (1) and (2) which read: 17. Power to prohibit forward contracts in certain cases- (1) The Central Government may, by notification in the Official Gazette, declare that no person shall, save with the permission of the Central Government, enter into any forward contract for the sale or purchase of any goods or class of goods specified in the notification and to which the provisions of Section 15 have not been made applicable, except to the extent and in the manner, if any, as may be specified in the notification. (2) All forward contracts in contravention of the provisions of Sub-section (1) entered into after the date of publication of the notification thereunder shall be illegal. It would be useful to give a resume of the three notifications referred to above at this very place. Copies of these notifications have been attached to the application. The first one namely S. O. 1284-B dated 17th July, 1958, bears No. 34 (21) : TMP/58-I. This number is to be found towards the end of the notification. By this notification in exercise of the powers conferred oh it by Section 17 read with Section 16 of the Act the Central Government declared that no person shall, save with the permission of the Central Government, enter into any forward contracts for the sale or purchase of any of the goods specified in the Schedule hereto annexed and fixed under Clause (a) of Section 16. A provision was made about the rates also. In the schedule Tur (Arhar) is to be found at serial No. 6, The second notification S. O. 1384-C, dated 17th July, 1968 is to the following effect: Whereas forward contracts for the purchase or sale of the goods specified in the Schedule hereto annexed have been prohibited under the notification of Government of India in the Ministry of Commerce and Industry No 34 (21) TMP/58-I dated the 17th July, 1968; And whereas the Central Government is of the opinion that in the interest of the trade and in the public interest it is expedient to regulate and control non-transferable specific delivery contracts in respect of these goods; Now, therefore, in exercise of the powers conferred toy Subsection (3) of Section 18 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) the Central Government hereby declare the Sub-sections (1) and (2) of Section 17 thereof shall apply to non-transferable specific delivery contracts in respect of the aforesaid goods. SCHEDULE. . . (6)"tur (Arhar ). . . The last one in the series is the notification S. O. 1384-D dated 17th July, 1958. By this notification the Central Government, in exercise of the powers conferred by Sub-section (1) of Section 17 of the Act as applied to non-transferable specific delivery contracts by the earlier notification declared that no person shall, save with the permission of the Central Government, enter into any non-transferable specific delivery contracts for the sale or purchase of any of the goods specified in the schedule hereto annexed. Tur (Arhar) is to be found at serial No. 6 in the schedule of this notification too.
(3.) IT was urged by learned Counsel for the applicants that it was notification S. O. 1384-C namely the second one in the series which made Sub-sections (1) and (2) of Section 17 of the Act applicable to non-transferable specific delivery contracts in respect of Tur. This notification had been issued in the exercise of the powers conferred by Sub-section (3) of Section 18 of the Act which is to the following effect: Notwithstanding anything contained in Sub-section (1), if the Central Government is of opinion that in the interest of the trade or in the public interest it is expedient to regulate and control non-transferable specific delivery contracts in any area, it may, by notification in the Official Gazette, declare that all or any of the provisions of Chapters III and IV shall apply to such class or classes of non-transferable specific delivery contracts in such area and in respect of such goods or class of goods as may be specified in the notification, and may also specify the manner in which and the extent to which all or any of the said provisions shall so apply. According to learned Counsel, even though the class of goods in respect of which the notification had been issued was specified which include Tur, the area in respect of which that notification had been issued had not been specified as contemplated by the said subsections. On this ground it was urged that the notification was invalid. It was pointed out that the notification constituted a subordinate legislation by the Central Government to whom the power to issue a notification had been delegated under Sub-section (3) of Section 18 aforesaid and consequently before a notification issued by the Central Government could be held to be valid it was necessary that it should have been issued in conformity with the requirements of Sub-section (3) of Section 18. Since the area in respect of which the notification had been issued was not specified therein it was a case in which the power had not been exercised by the Central Government in the manner in which it was required to be exercised by the said subsection. In support of the submission that delegated power could be exercised in the manner in which it was required to be exercised and in no other manner, reliance was placed on the principles of interpretation of statutes and also on certain decided cases. In our opinion, it is not necessary to deal with this point in detail inasmuch as the principle is well accepted. The question which really falls for consideration is whether the power has been exercised in the manner in which it was required to be exercised namely whether it can be said that the area in respect of which the notification was issued has been specified therein.;