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Thakurdas Mundra and ors. Vs. Emperor - Court Judgment

LegalCrystal Citation
Subject Criminal
CourtKolkata
Decided On
Reported inAIR1930Cal637
AppellantThakurdas Mundra and ors.
RespondentEmperor
Excerpt:
- .....were prosecuted. the accused are all modis or members of a limited company called the bengal jute association limited which carried on business at the address mentioned, and the sole question in the case is whether or not the transactions which were entered into or arranged by members of the association were wagering transactions or were in truth, as they purported to be in form transactions for the purchase and sale of jute for future delivery. this question is one of fact and it is for the prosecution to show that in these transactions the intention of the parties was in no circumstances either to take or give delivery. if it be shown that the intention of both parties to each contract was merely that according as the prices of jute should rise or fall payment of differences.....
Judgment:

Rankin, C.J.

1. In this casa the Chief Presidency Magistrate has found 25 men guilty of an offence under Section 44, Calcutta Police Act (Bengal Act 4, 1866), that is, of the offence of keeping a certain house, room or place, to wit 2/1 Royal Exchange Place, as a common gaming house. It appears that the police raided the premises 2/1 Royal Exchange Place on 27th February 1929, and out of a large number of persons then and there arrested, the present accused were prosecuted. The accused are all modis or members of a limited company called the Bengal Jute Association Limited which carried on business at the address mentioned, and the sole question in the case is whether or not the transactions which were entered into or arranged by members of the association were wagering transactions or were in truth, as they purported to be in form transactions for the purchase and sale of jute for future delivery. This question is one of fact and it is for the prosecution to show that in these transactions the intention of the parties was in no circumstances either to take or give delivery. If it be shown that the intention of both parties to each contract was merely that according as the prices of jute should rise or fall payment of differences should be made, then it is proved that the true intention of the parties was to gamble and not to deal in jute, The Court has to arrive at the true intention of the parties upon a consideration of all the facts. I know of no special rules of proof or presumption which affect this question. If however it be first found that the transactions entered into at this place were transactions by way of wager or gaming, then no doubt the books and contract forms which were kept upon the premises must be regarded as instruments of gaming and, in the circumstances of this case, the accused have no defence to a charge under Section 44.

2. It appears that the Bengal Jute Association Limited was registered under the Companies Act in October 1928. The case of the accused is that this association was incorporated for the purpose of dealings in 'futures,' that is to say, dealings in jute for delivery in certain specified months of the year namely, September, December and March and that in February 1929, when the business was brought to an end by the police raid, only one delivery month, namely December 1928, had elapsed and the dealings then taking place Were dealings for delivery in March. It appears from the evidence that these dealings were of two classes according as they were made by and between modis who were members of the association, that is between modi and modi, or were made by the agency of modis between third parties or beparis. A printed form was kept for each class of contract. The form for use between modi and modi is a very short one and purports merely to record a sale subject to the bye laws of the Bengal Jute Association. The contract form for the latter class of contract is more elaborate and has all the appearance in many of its clauses of a real sale of jute. It provides that the sellers between the 1st and 20th of the delivery month shall tender a delivery instruction form and that the buyers within three days thereafter are to send shipping instructions. It contains however, certain remarkable terms, in particular the terms providing for the periodical payment of margin namely that a party shall pay to1 or receive from the other the difference between the contract rate and the market rate on Saturday as quoted by the association. It provides that interest on all margin will be calculated at the rate of 6 per cent per annum from the date of payment on the due date of the contract, but that any failure to pay margin is to entitle the other party to terminate the contract and to claim difference on the basis of the rate prevailing on the date of default. The contract also provides that no contractual privity is established with the persons with whom a corresponding contract is entered into; that is to say that while the modi acts in form as a broker ha is in reality alone responsible to his principal for the performance of the contract.

3. The contention of the accused is that the provision for payment of margins was intended to minimize the chance of loss by reason of failure on the part of the buyer or seller to make payment or to give delivery as the case may be. It is further contended that although the accused or the persons with whom they dealt were not possessed of any stock of jute, or godowns for the storage thereof, delivery could be and was intended to be effected by means of delivery orders which enabled the holder to obtain delivery from jute balers or other persons who were possessed of stocks of jute. They further contend that several deliveries had in fact been made in this manner; that owing to the cornering of jute by a certain dealer many transactions had to be settled in December by the payment of differences; but that there is no proof, or no sufficient proof, that the transactions which were for delivery in March would not have been completed in some cases at least by delivery.

4. The Chief Presidency Magistrate is in my judgment right in saying that the only question in the case is as to the real nature of the business done. On this question it is quite true that the defence have done nothing to prove the genuineness of such business. They have not produced their books or customers to speak to any particular transactions and give evidence of their genuine character. They are entitled however to say that it is for the prosecution to prove the offence. In the first place it is clear, both, from the contract itself and from the evidence, that the business was to be done according to certain clearing house procedure : the delivery order for example, by Clause 23 of the contract between modi and bepari was to be obtained by the modi from the clearing house. Now the association kept a delivery book as under this system it would have to do. In spite of evidence which shows that a very large volume of business - the exact amount is of small importance - was being transacted by members of the association, the records of the association disclose, as the Magistrate has conclusively shown in his judgment, that delivery orders for 250 bale3 from each of three jute balers represent the only cases in which there can have been any question of delivery. In no single one of these cases was delivery ever given in fact. It appears that two orders were paid for by the secretary of the association. They were sold and then resold to the sellers who got them back with a substantial profit in a few days. One of the balers from whom a delivery order was obtained is shown to have been in liquidation and to have had no godowns for months, and there is no evidence of money having been paid for this delivery order. There is no evidence of any delivery order having been taken or given in connexion with any transaction conducted at this place. The conclusion of the Magistrate is that these, delivery orders are not genuine but were a mere 'blind,' the possession of them being intended to conceal the fact that delivery was not intended at all.

5. Upon a careful consideration of the evidence I am of opinion that the Magistrate was right in thinking that the case against the accused was proved and in my judgment the rule must be discharged.


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