1. These are connected appeals preferred by the learned Public Prosecutor against the order of acquittal of the learned Sub-Divisional Magistrate, Tuticorin, in S. C. Nos. 439, 485, 487, 526 and 531 of 1951.
2. The facts are: The respondents before us live at Tuticorin on the foreshore of the sea. Every day the fishermen go out in boats or canoes and bring in the catches. These catches are stacked on the foreshore by the persons to whom they belonged and these owners stand by the side of these catches. They employ these present respondents for auctioning these catches. The respondents cry out the upset price, invite bidders and when the price offeredexceeds the reserve price the sales are knocked down in the names of the highest bidders and those bidders pay the prices to the owners and take over from them the catches. If the reserved prices are not reached the owners take the fish to the market. These respondents are paid for the duties performed by them at the rate of quarter to one anna per rupee. On these facts, the respective contentions are advanced, viz., that these respondents are commission agents coming within the meaning of 'dealers' and liable to sales-tax and that they are only brokers or criers at the auctions and do not therefore come within the meaning of 'dealers' liable to pay sales-tax.
3. In this case and in similar cases there is no dispute that the Deputy Commercial tax Officer, Tuticorin, levied sales tax and the Commercial Tax Officer, Tirunelveli East, confirmed them. Thereupon, appeals were preferred before the Sales Tax Appellate Tribunal, Madras, and it was held that these respondents and persons similarly situated were not liable to be assessed to sales tax. The Government has not preferred any revisions from these orders.
Tribunal Appeals Nos. 276, 277, 278 etc., dated 23-7-1952 and appeal No. 275 of 1952 dated 29-10-1952.
4. These respondents were prosecuted before the Sub-Divisional Magistrate, Tuticorin, on the foot that they failed to pay the sales tax assessed on them for the year. 1946-47 in spite of the B notices served on them, and thereby committed an offence punishable under Section 15 (b), Madras General Sales-tax Act.
5. The learned Sub-Divisional Magistrate came to the conclusion that these respondents are not liable to be assessed and that therefore they have not committed an offence under Section 15 (b), Madras General Sales-tax Act, and acquitted them. Hence these appeals by the State.
6. The short point for determination in these appeals is whether these respondents are commission agents coming within the category of dealers or whether they are mere brokers or criers at auctions and not liable to be assessed to sales-tax.
7. It is fortunate for us that the terms 'broker' and 'commission agent' in so far as they relate to the Madras General Sales-tax Ac have been authoritatively denned by a Full Bench of the Madras High Court in -- 'Radhakrishna Rao v. Province of Madras' : AIR1952Mad718 which considered and dissented from the earlier Bench decision (Satyanarayana Rao and Viswanatha Sastri JJ,) in--'Provincial 'Govt. of Madras v. Veerabhadrappa' : AIR1950Mad521 and which in its turn had dissented from 'Narasingamutu Chettiar in re', AIR 1946 Mad 116 (C) and -- 'Province of Madras v. K. Sivalakshminarayana', AIR 1949 Mad 843 (D) & approved -- 'Public Prosecutor v. Narasimha Reddi', AIR 1948 Mad 702 (1) (E) and the conclusions arrived at by the Full Bench were as follows: --
'A broker is an agent employed to make a bargain for another and receives a commission on the transaction which is usually called brokerage. He has usually neither the custody nor the possession of the goods. It is the broker's duty to establish privity of contract between the principal and the third party. The broker cannot sell in his own name nor canhe sue on the contract. A commission agent, on the other hand to whom goods are entrusted by sellers with full authority to transfer property and title in the goods to buyers who obtain delivery from the commission agents themselves without even being aware of the identity of the seller principals, is not like a broker. He has, almost invariably, custody or possession of the goods, actually or constructively. He often sells in his own name and in certain circumstances can sue the buyer himself. A commission agent is not bound to keep separate accounts at his bankers, for he is not a fiduciary agent and the monies he receives are his own and by the custom of the trade he is only liable as debtor to his employer for the amounts received. In spite of the parties supposing their relationships to be that of principal and agent, in point of law, it may be different.
In the Madras General Sales-tax Act 'dealer' is defined as any person who carries on the business of buying or selling goods. 'Sales' is defined as a transfer of the property in goods by one person to another in the course of trade or business for consideration.
In the case of a commission agent the accepted merchantile practice is that he has control over or possession of the goods & he has the authority from the Owner of the goods to pass the property in and title to the goods. If this is so, when a commission agent sells goods belonging to his principal with his authority and consent without disclosing to the buyer the name of the owner, there is certainly a transfer of property in the goods from the commission agent to the buyer. A business which consists in such transactions can properly be described as a business of selling goods. A similar position would arise even in the case of a commission agent buying for an undisclosed principal. A commission agent doing this kind of business would fall within the definition of 'dealer' in the Sales-tax Act. Neither the definition of 'dealer' nor of 'Sale' contemplates as a necessary condition, that the goods sold should belong to the person selling or buying.'
In addition, it has been pointed out by Bala-krishna Ayyar J. in -- 're, Papanna Rowther' : AIR1954Mad96 (F) that in the General Sales-tax Act the word 'dealer' is denned as meaning 'any person who carries on business of buying or selling' & that it would be noticed that the word used is 'or' & not 'and' & that a person will be a dealer within the meaning of the Act who keeps on selling goods even though he does not buy any.
8. Therefore applying these principles, let us see whether these respondents are brokers or commission agents. In this case the facts established show that it is the boatmen who bring the catches to the shore and that it is these owners who stand by the side of the catches and that these respondents had nothing more to do than to cry out the prices and that if the sales are knocked down as being over and above the reserve price the purchasers take the flsh direct from the boatmen and the respondents get only a commission of quarter to one anna in the rupee for crying out and concluding the auction and that at no stage these respondents handle the goods and have no authority to transfer the property in the goods to the purchasers and do nothing more than bringing the purchasers and sellers together. There can be no doubt that such persons who do nothing, more than crying out the bids at the auction and who have no custody or possession over the property auctioned & have no authority to pass-the property in the goods to the purchasers can only be brokers.
9. These activities of these respondents fall only within the scope of the duties of a broker as laid down in the Full Bench decision cited above and which is only in consonance with the trend of English decisions also on the subject which though not binding on us may be legitimately looked into as persuasive and helpful.-- 'State of Bombay v. Raja Kulkarni' : AIR1951Bom105 'B. LadUram v. Ganesh Commercial Co' : AIR1951Cal78 , 'Governor General in Council v. Municipal Court, Madura' , 'Basdevanandgir v. Shanta Anand' AIR 1942 All 302 (J), -- 'Vimala Bai v. Emperor', AIR 1945 Nag 8 (K).
'Brokers are those that contrive, make and conclude bargains and contracts between merchants and tradesman in matters of money and merchandise, for which they have a fee or reward',
-- '(Jacob, cited by Best C. J. Gibbons v. Rule', (1827) 4 Bing. 306 (L). This definition is derived from the act against brokers, 1604 1 Jac 1 C. 21 cited Friperer, See also the Bank of England Act, 1697 Will 3. C. 20, Section 60 where the definition is those who 'make or drive' bargains. A broker is not put into possession of the property to be sold as a factor is: -- 'Baring v. Come', (1818) 2 B & Ald 137 (M). -- 'See Lake v. Simmons', (1927) A. C. 487 (N) and -- 'Stevens v. Biller', (1883) 25Ch. D. 31 (O) and also -- 'Milford v. Hughes', (1846) 16 M & W. 174 (P).
'There is no doubt a broker cannot sue; he has no authority to sell in his own name, or to receive the money, and has nothing to do with the goods'.
This is so laid down in Story on Agency, Sections 28-34, 109: 'To use the brief but expressive language of an eminent Judge, a broker is one who makes a bargain for another, and receives a commission for so doing. Properly speaking a broker is a mere negotiator between the other parties, and he never acts in his own name, but in the names of those who employ him. When he is employed to buy or sell goods, he is not entrusted with the custody or possession of them and he is not authorised to buy or to sell them in his own name (Section 28). So, a broker has ordinarily no authority 'Virtute Officii', to receive payment for property sold by him (Section 109)'. -- 'Fairlie v. Fenton', (1870) 5 Ex. 169 (Q) per Cleasby B. at page 172.
10. The conclusion of the learned Sub Divisional Magistrate in all these cases is correct &hence; these appeals are dismissed.