K. Sadasivan, J.
1. The complainant in C. C. No. 27 of 1965 on the file of the District Magistrate (Judicial), Alleppey, appeals against the acquittal of the accused who were hauled up before the court for offences under Section 409, Indian Penal Code, and Section 628 of the Indian Companies Act (1 of 1956). Accused No. 1 is the managing director and accused Nos. 2 and 3 the directors of the Cochin Chemicals and Refineries Limited (hereinafter to be referred to as the company), a company incorporated under the Indian Companies Act (7 of 1913) and the Indian Companies Amendment Act (21 of 1936). The case of the complainant is that in the directors' report and balance-sheet and profit and loss account of the company for the year 1962, published by the accused on 7th March, 1963, false particulars were made knowing them to be false or omitted to state material facts knowing them to be material. The specific instance pointed out was that in the balance-sheetthe value of plant and machinery of Rs. 1,51,492 was shown as fixed asset as on 31st March, 1962, while in fact the machinery of the oil refinery section of the Kozhippara mill belonging to the company was already sold by the accused for Rs. 1,65,000 to M/s. Sri Ranga Engineering Works 471 Park Road, Erode. The agreement with the Sri Ranga Engineering Works for the sale of the machinery was entered into by the accused on 1st February, 1963, and an advance of Rs. 10,000 was received. The balance of purchase money was also received later and the sale was effected on 13th February, 1963. The items of machinery were delivered in pursuance of the sale to the purchaser between 16th February, 1963, and 13th March, 1963. The transaction was thus completed ; but in the balance-sheet exhibit P-2, published by them on 2nd September, 1963, the machinery in question was shown as an item of asset belonging to the company and its value was shown as Rs. 1,51,492. They have also omitted to mention material facts in the balance-sheet knowing them to be material. The sale of the machinery for the sum of Rs. 1,65,000 and the receipt of the consideration was wilfully omitted or withheld from the report. The above facts according to the complainant would constitute an offence under Section 628 of the Companies Act and according to him the accused have committed also criminal breach of trust punishable under Section 409 of the Indian Penal Code in that they have dishonestly misappropriated Rs. 1,65,000 received from the purchaser company. The stand taken by the accused was that no false statements have been made by them in the balance-sheet and they are not guilty of any wilful omission also. It is true that they had entered into an agreement with M/s. Sri Ranga Engineering Works and the sale consideration was received and the machinery was also delivered, but the sale could be complete only on getting the approval or concurrence of the Kerala Financial Corporation (hereinafter referred to as the Corporation) with whom the machinery was pledged and so they were obliged to show the value of the machinery as an item of asset in the balance-sheet. The learned Magistrate accepting the plea has acquitted the accused.
2. The position was thrashed out in all minuteness and I am satisfied that the order of acquittal entered by the learned Magistrate is correct and does not call for interference by this court. The most important point to be considered in respect of the transaction, is whether the alleged sale was complete or it was only in the stage of an executory contract. Exhibit D-4 is the assignment deed executed by the company in favour of the Corporation Under the terms and conditions set forth in exhibit D-4 it is patent that the right, title and interest of the company in the machinery and plant were transferred to the Corporation and the transfer was absolute. The Corporation was made the absolute owner of the property subject to the right of thecompany to redeem it on discharge of their liability. The company had also given the written undertaking to the Corporation that without their written consent the company would not remove the plant and machinery from its site referred to in the agreement. On a plain reading of exhibit D-4 it is clear that the company cannot transfer the property in the machinery and the plant, without the concurrence of the Corporation. In view of the clear position it is difficult to treat the transaction as a completed sale. The company on the date of the sale was in possession of the plant and machinery not in its own right but only on behalf of the Corporation. The case of the accused is that they had no intention to transfer the property in the machinery and the plant to the vendee until the sanction was obtained from the Corporation. Under Section 19 of the Indian Sale of Goods Act, where there is a contract for sale of the specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. The intention of the parties as expressed in the contract or inferred from their contract and other circumstances of the case has to be considered. In the present case it was the intention of the parties to convey the property in the plant and machinery only on getting the concurrence of the Corporation. The buyer was also fully alive to this fact as is evident from the two letters exhibit D-15 and exhibit D-16 addressed by him to the company after the date of the alleged sale. In exhibit D-15 the purchaser would state as follows:
' We have received the entire machinery as per our agreement. Please obtain the sanction from the Finance Corporation at your earliest and pass on to us the documents and title of the plants and machinery to complete the sale.'
3. The letter is dated 19th March, 1963. Exhibit D-16 is only a reminder and that is dated 17th March, 1964. It is noteworthy that in exhibit D-15 the purchaser refers to the transaction as an agreement only, and that the title deeds had to be supplied to him to complete the transaction. So, on the date of exhibit D-15 the transaction had not progressed from the stage of agreement. The genuineness of these letters was questioned by the complainant but the 2nd accused has given evidence to the effect that exhibits D-15 and D-16 are received from the purchaser company. D.W. 2 is the auditor of the company and he swears that he had occasion to come across these letters in the course of his audit. The letters in the circumstances can be taken as genuine and properly proved. It was up to the complainant to have summoned the author of exhibits D-15 and D-16 and exposed the fraud as he thought it to be, before the court, and as a matter of fact, the author of the said letters was included as a witness in the schedule but the complainant refrained from citing him before court. The permissionof the Corporation was obtained only in 1965 as is seen from exhibit D-29. Before that the position was that the machinery and plant was in the legal possession of the Corporation, and the company was incapable of transferring possession to the purchaser and complete the sale. Sub-section (3) of Section 36 of the Indian Sale of Goods Act is important in this connection. The sub-section says :
' Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf.'
4. Here the third person is the Corporation and until the Corporation acknowledged to the buyer that they held the property on his behalf, the sale could not have been treated as completed. It was in these circumstances that the amount received from Sri Ranga Engineering Works was shown in the balance-sheet as a suspense item (under the caption, sundry creditors) and the value of the machinery, viz., Rs. 1,51,492, as an item of fixed asset Nothing else could be expected of the directors of the company under such circumstances. The agreement of sale entered into with the Sri Ranga Engineering Works has also been referred to in the balance-sheet. In the directors' report (page 1 of exhibit P-2) they have stated:
'The company has agreed to dispose of the oil refinery section of the Kozhippara mill and it is now awaiting sanction of the Kerala Financial Corporation.'
5. Thus it is impossible to find the accused guilty of any material omission also. The learned counsel for the appellant stated that after having delivered the article and after the receipt of the sale consideration, there is no point in saying that the sale was not complete. In the case of sale of movable property the transaction is complete the moment the sale consideration is received and goods are delivered. Nothing else remains to be done for the completion of the sale. I fail to see any force in this contention We are here confronted with the proposed sale of the machinery subject to the approval of the person who is in legal possession. Only after that person's approval is obtained, the transaction could be said to be complete The fact that the machinery in question was in the legal possession of the Corporation cannot be denied in view of the express terms and conditions contained in exhibit D-4 and what the company had was only custody and not possession. It is that custody that was transferred by them to the buyer. What the buyer wanted is, transfer of legal possession, and it was for that, that exhibits D-15 and D-16, letters, were addressed to the seller. The complainant himself was in the know of all these things. He is not a mere shareholder of the company. It was he who negotiated the sale in question and he was promised a commission for the work done by him. But theremuneration paid fell short of his expectation and he was disgruntled on that account. There are indications in the evidence that he had even threatened the directors with prosecution in case he was not given something more by way of remuneration. This can be seen from exhibits D-5 to D-14 correspondence. The complaint itself was launched only about 11/2 years of the publication of the balance-sheet. All these would reflect very much against the bona fides of the complaint.
6. The charge under Section 409 was not pressed at the final stage of the trial and that under Section 628 of the Companies Act alone was pressed. In order to sustain an action under Section 628, the prosecution must show that false statements were made in the balance-sheet knowing them to be false and with a dishonest intention. The learned counsel for the appellant relying on a division bench ruling of the Calcutta High Court in Superintendent and Legal Remembrancer, Bengal v. A. B. Guha,  6 Comp. Cas. 464, 470argued that in a statutory offence like this 'mens rea' is not a necessary ingredient to fasten guilt upon the accused. The learned judge held in that case that the expression 'wilfully' does embody the idea of a criminal mentality and that it meant only the spontaneous action of a person who is a free agent. The learned judge observed :
'In my opinion also the expression ' wilfully ' used in the Companies Acts, both in this country and in the United Kingdom, means nothing more nor less than the spontaneous action of a person who is a free agent. The word ' wilfully ' has been dealt with in certain well-known decisions to which I need not refer exactly but such seems to be the considered opinion with regard to its exact significance. It is, of course, a term that must be interpreted according to the facts of each case. It has been described as not being a term of art, but a legal expression to be fitted to the circumstances being considered by the court.'
7. This decision had subsequently come up for consideration before another Division Bench of the same High Court in Pulin Chandra Daw v. Emperor,  18 Comp. Cas. 121, 125, 126and their Lordships have practically dissented from the above view. Before the learned judges it was argued on behalf of the Crown that ' all that section (Section 282) of the Companies Act required was that there must be a statement in a balance-sheet, that it must be known to be false, that it must be made wilfully in the sense that it must be intended to be made, and it must relate to some material particular. Given these elements, Mr. Deb proceeded to contend, it was altogether irrelevant whether the person responsible for making the statement had any criminal intention at all or intended to deceive or succeed in deceiving anybody ', and it was in support of this contention that Superintendent and Legal Remembrancer, Bengal v. A. B. Guha was relied on. The learned judges, after referring to Superintendent and Legal Remembrancer, Bengal v. A. B. Guha , observed :
'In this state of the facts, the question we have to ask ourselves is, can it be said that the statement contained in the balance-sheet was false and known to be false? In our opinion, on the special facts of the case, the answer must be in the negative. It is not necessary to decide finally one way or the other the contention of Mr. Deb that questions of mens rea are altogether immaterial to a charge under Section 282 of the Indian Companies Act. We might however refer to the recent decision of the Privy Council in the case of Srinivas Matt Bariolly v. King Emperor, (1947) 51 C.W.N. 900where their Lordship's quoted with approval the proposition laid down in an earlier case, which is to the effect that ' unless a statute by itself or by necessary implication rules out mens rea as a constituent part of a crime, a person should not be found guilty of an offence against the criminal law unless he has got a guilty mind '. Be that as it may, it appears to us that the language used by Section 282 itself does import an element of mens rea when it speaks of the relevant statement being known to be false. '
8. In In re C. Natesan,  19 Comp. Cas. 159, 171following this decision, Justice Govinda Menon of the Madras High Court held :
' It seems to me that these dicta are applicable to the actions of the petitioners herein. The accused in this case are men of position and responsibility and some of them are, I am given to understand, members of the Bar enjoying fairly good practice. One cannot attribute any wilful negligence or dishonesty to men in such positions if they depend upon and trust the permanent officials and the managing director of the company so far as the working of the company is concerned. The prosecution has not been able to show any mala fides or want of good faith on the part of any of these accused. All that might be laid at their door is perhaps the blame--if that could be called a blame at all--that they placed trust upon the permanent servants of the company. It seems to me that they are not guilty of any false statement of any material particular wilfully made and knowing the same to be false.'
9. The position is now well established by the decision of the Supreme Court in Nathulal v. State of M.P., A.I.R. 1966 S.C. 43wherein their Lordships have observed :
'Mens rea is an essential ingredient of a criminal offence. A statute may exclude the element of mens rea ; it is, however, a sound rule of construction which is adopted in England and also accepted in India, to construe a provision which creates an offence in conformity with the common law rather than against it, except where the statute expressly or by necessaryimplication excludes mens rea. Of the question whether the element of guilty mind is excluded from the ingredients of an offence the mere fact that the object of the statute is to promote welfare activities or to eradicate a grave social evil is not by itself decisive. Only where it is absolutely clear that implementation of the object of the statute would otherwise be defeated that mens rea may, by necessary implication, be excluded from a statute. The nature of the mens rea that would be implied in a statute creating an offence depends on the object of the Act and the provisions thereof.'
10. The learned judges would observe that even if the legislation in question is one to eradicate the social evil, the foundation of penal responsibility attaching itself to the crime cannot change and the fundamental principle of criminal jurisprudence is that without mens rea or the guilty mind being proved against the accused, he cannot be visited with a punishment. So also in the present case, the burden was on the complainant to show that the alleged statement in the balance-sheet was made with the dishonest intention of making a wrongful gain or to deceive the public. No such element has evidently been proved in the case. In the circumstances, the accused have rightly been acquitted. The order of acquittal is confirmed and the appeal is dismissed.