1. This is an appeal by the Provincial Government against the acquittal of the two accused in C.C. No. 10 of 1944 on appeal by the Additional Sessions Judge of East Godavari. The appeal raises the question of the proper construction of Section 6, Sub-section (2), Clause (b)(ii) of the Hoarding and Profiteering Ordinance. The first and second accused were respectively the proprietor of and the salesman employed in a shop known as the City Emporium in Coconada. The charge against them was that they had sold a hat for Rs. 7 which had been sold by the producer for Rs. 5-4-0 or even less and so had added more than 20 per cent. to the cost price in contravention of the provisions of Section 6 of the Hoarding and Profiteering Prevention Ordinance. The Howrah Hat Manufacturing Company of Delhi had agreed to supply the City Emporium with 6 Ajanta Hats, the hat in question in this case is one of these 6, for Rs. 63 per dozen F.O.R. Coconada. It transpired, however, that the hats could not be sent by goods train and, consequently, the Howrah Hat Manufacturing Company proposed that if the City Emporium was willing to have the goods sent by passenger train they would send them in that way, deducting the cost of freight by goods train and leaving the City Emporium to pay the passenger freight. The Emporium accepted this proposal and in consequence they paid the Howrah Hat Manufacturing Company at the rate of Rs. 63 less Rs. 3-4-0 for one dozen hats and themselves paid the M. and S. M. Railway Rs. 11-8-0 for the passenger freight in respect of the hats. The contention of the accused was and is that the first accused was entitled for the purpose of calculating whether the price at which he had sold the article was within the 20 per cent. addition to the price at which the producer sold the article, to add to the price at which the producer sold the article the expenses incurred by him such as freight, forwarding charges and so forth. The learned Additional District Magistrate did not accept this contention. He held, therefore, that the price for which the hats were sold constituted an addition of more than 20 per cent. to the price at which the article had been sold by the producer. He consequently convicted the accused and sentenced the first accused to pay a fine of Rs. 700 and the second accused to pay a fine of Rs. 500. The Additional Sessions Judge took the other view and, holding that the first accused was entitled to charge for the hat 20 per cent. in excess of the cost to him of the hat, which in his view would include the cost of freight and other expenses such as forwarding charges and bank collection charges, found that there had been no contravention of the provisions of Section 6 and accordingly acquitted the accused.
2. For the purposes of this case it is conceded that the relevant provision of Section 6 of the Hoarding and Profiteering Prevention Ordinance is Section 6, Sub-section (2), Clause (b)(ii) by which it is provided that a consideration is unreasonable--if, when the sale is by a dealer, it exceeds the amount represented by the addition allowed by the normal trade practice in force on the 31st day of August, 1939, to
the price at which the producer sold the article in the case of an article which is not imported
subject to the proviso that if the addition allowed by normal trade practice exceeds 20 per cent. the dealer must report the fact to the Controller General and take his orders. In effect in this case, as there is no proof of any normal trade practice the question is whether the price at which the hat was sold exceeded the price at which the producer sold the article by more than 20 per cent. The learned Additional Sessions Judge, it seems to me, has not kept his mind on the plain words of Section 6(2)(b), Sub-clause (ii) of the Ordinance but has been inclined to treat the case as if the governing factor was not the price at which the producer sold the article but the cost of the article to the dealer. In the present case there is no dispute that the producer was paid only at the rate of Rs. 59-12-0 for twelve hats and, that being so the sale of the hats at Rs. 7 each added more than 20 per cent, to the price at which the producer sold the articles. The producer was not paid the cost of the carriage of the hats by passenger train and it is quite impossible to say--as the learned Additional Sessions Judge in fact does-that the price at which the producer sold the article may be something more than the price actually paid to the producer. According to the calculations of the learned Additional Sessions Judge Rs. 76-10-0 must have been the price to the dealer per dozen, but it was not price at which the producer sold the articles for, as already pointed out, all that was paid to the producer for a dozen articles was Rs. 63 less Rs. 3-4-o which was deducted in respect of the freight that was to have been charged for the carriage of the articles by goods train. It follows, therefore, that on a proper construction of Section 6 the price for which the hat was sold Rs. 7 constituted an addition of more than 20 per cent, to the price at which the producer sold the hat. That being so, the conviction of the accused by the Additional District Magistrate was right.
3. The appeal is allowed and the accused are convicted of the offences with which they were charged. With regard to the appropriate penalty, I think that in the circumstances of the case it will be sufficient if I impose on the first accused a fine of Rs. 250 with two months rigorous imprisonment in default of payment. With regard to the second accused, as he was a mere salesman and the first accused is before the Court and has been punished, a lighter penalty will suffice. He is sentenced to pay a fine of Rs. 10 and, in default of payment, to undergo two weeks. rigorous imprisonment.