The Public Prosecutor, Madras, appeals against the acquittal of the two respondents of an offence under S. 5 (1) (b) of the Madras Prevention of Adulteration Act for having contravened the provisions of R. 27 of the rules framed under S. 20 (2) (f) of the same Act. The first respondent is the Secretary of the Co-operative Milk Society, Bapatla and the second respondent, a salesman in that Society. The learned Public Prosecutor did not press the case as regards the first respondent and his acquittal has therefore to be confirmed. As regards the second respondent, the case is that on the 19th October 1946, he sold milk containing 12 per cent of water to P.W 1, the Sanitary Inspector and passed a receipt Ex P-2. What happened was that when the second respondent was delivering a quantity of milk to one M. Venkatasubbayya, the proprietor of Maruthi Vilas Coffee Hotel, Bapatla, P.W 1 came there, took out a quantity and paid the cost of it to the second respondent. This milk, when analysed by the Government Analyst was found to contain 12 per cent of water and on the strength of the Analyst's certificate, both the respondents were prosecuted. The Stationary Sub-Magistrate of Bapatla held that there was no sale of milk as contemplated by the Madras Prevention of Adulteration Act and therefore acquitted both the respondents.
The reason on which the lower court found the respondents not guilty was that the Milk Society was a composite body consisting of a number of members of which the proprietor of the Maruthi Vilas Coffee Hotel was one and when the Society was delivering milk to one of its members, it was not a sale as contemplated by the Act but the transaction was one by which an undivided joint owner of the entire assets of the Society was being given his share of the milk and as such, in law, it could only be a distribution of the article among the members which would not amount to a sale. For this contention the learned Sub Magistrate relied upon a decision of this court in Public Prosecutor v. Srinivasa Rao 1938 M.W.N 317.
The lower court has not correctly appreciated the above decision. Lakshmana Rao, J. did not in fact lay down that in the case of a society registered under the Madras Co-operative Societies Act, there cannot be, in law, a sale at all but only a distribution of the articles among the members. The learned Judge definitely states that it is unnecessary to consider that question as on the facts themselves, the order of acquittal was right. The learned Judge was only stating in so many words the reason on which the lower appellate court in that case rested its decision of acquittal. It cannot be said that the decision aforesaid is authority for the position that in all Co-operative Societies registered under the Madras Co-operative Societies Act, there can be no transaction of sale of an article, but only a distribution of the articles amongst the various members.
S. 20 of the Madras Co-operative Societies Act. Act VI of 1932 enacts that the registration of a Society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purpose for which it was constituted. This makes it clear that as a body corporate it has got a separate existence apart from its individual members and when an article belonging to this body corporate is transferred to one of its individual members for a consideration, it cannot be said that it does not amount to a sale under S. 4 of the Sale of Goods Act.
Mr. Y.G Krishnamurthy appearing for the second respondent relies upon the decision in Graff v. Evans 1882 8 Q.B 373 and Humphrey v. Tudgay 1915 I.K.B 119 for his argument that in circumstances like the present there is no sale at all. In the first of these cases it was held by the English Courts that the distribution of liquor for price to a member of a club by the manager cannot be considered to be a sale within the meaning of S. 3 of the Licensing Act of 1872, which enacted that no person shall sell or expose for sale by retail any intoxicating liquor without being duly licensed to sell the same. I am unable to see the analogy between the supply of liquor by the management of a club to its members and the sale of certain articles by a Co-operative Society registered under the Madras Co-operative Societies Act to one of its members. The reports do not show what kind of constitution the clubs had and whether they were societies registered under any Act like the Co-operative Societies Act. Field, J. in Graff v. Evans observes as follows:
“It is not disputed that the club was a bona fide club. The club property by the rules was vested in certain trustees, no doubt for the purpose as was suggested in argument, of enabling them to sue or take other legal proceedings both of a civil and criminal nature with respect to injuries to the possession of the goods belonging to the club. No doubt other special properties in the goods of the club are created and given to officers of the club other than the trustees. Thus the treasurer has a special property in the funds of the club, and the manager has a special property in the liquors, and may part with them without the permission of the trustees. He acts for the committee, who are his masters as are also in a sense all members of the club. The goods would, I presume, be bought by the Committee and paid for by cheque out of the funds of the club.”
Further on the learned Judge observes:
“The legislature have come to the conclusion that it is unadvisable that intoxicating liquors should be sold anywhere without a licence. The enactment is limited to ‘sales’ of intoxicating liquors, and only seems aimed at sales by the retail traders, because the wholesale trader is not touched. The question here is, Did Graff, the manager, who supplied the liquors to Foster effect a ‘sale’ by retail? I think not. I think Foster was an owner of the property together with all the other members of the club. Any member was entitled to obtain the goods on payment of the price.”
This decision has been followed in Humphrey v. Tudgey. Can it be said that these cases apply ad idem to a Co-operative Society registered under Act VI of 1932? I think not. The ownership of the milk in the present case is in the corporate body and not in the group of members as in the case of a club. There is no joint ownership. S. 20 is very general and imparts a corporate character to the society which can own property and transact business, quite irrespective of its members. There is no resemblance between such a society and an ordinary club. As in the case of the clubs above referred to the society does not create any rights in the properties in favour of a member or members. I am therefore of opinion that the transaction of the delivery of milk to Venkatasubbayya for price during which time P.W 1 purchased a quantity is a sale within the meaning of the Act.
The further question has been raised by Mr. Krishnamurthy that the transaction whereby the Sanitary Inspector got a quantity of milk was in any event not a sale. In Public Prosecutor v. Narayan Singh 1944 M.W.N 559 Kuppuswami Iyer, J. has held that when a sanitary inspector purchased milk from the accused, tested it and found that it was adulterated, the transaction amounted to a purchase and therefore the accused was guilty under R. 29 (b) of the rules and S. 5 (1) (b) read with R. 27 of the Madras Prevention of Adulteration Act. Moreover, in this case, Ex P-2 the receipt, contains an admission by the second accused that he was selling buffalo milk to the Maruthi Vilas Coffee Hotel and the transaction by which P.W 1 got the sample is also admitted to be a sale. Apart from the admission contained in Ex P-2 when M. Venkatasubbayya exchanged money consideration for the milk, he was acting as a purchaser and the society, a separate legal entity was performing a contract of sale in delivering milk. Therefore it may even be unnecessary to decide whether the transaction with P.W 1 was a sale at all, even though I am convinced that it is also a sale. In these circumstances I cannot uphold the order of acquittal which is therefore set aside and the second respondent is convicted under section 5 (1) (b) of the Madras Prevention of Adulteration Act and sentenced to pay a fine of Rs. 5 or in default to undergo simple imprisonment for a period of one week