Sorry, i don;t know how to edit my post.. So posting updated question again :

[P-189] of EJB3 In Action: "In case of transactions propagated from the client, 
if our method indicates that the transaction should be  rolled back, the 
container
             will not only roll back the whole transaction but will also throw 
a javax.transaction.RollbackException back to the client."
    
   a) I tested this scenario, the container is not throwing 
RollbackException.Moreover nothing of this sort is written in EJB3 specs.       
  
   b) When will contianer rollback the transaction?? Here 2 cases can occur:
     case i) When this method is NOT called from transactional client.. In this 
case the container mark the transaction to be rolledback (at the
             statement where exception occurs)  and will actully rollback 
transaction at method end.
     case ii) When this method is called from transactional client. Suppose a 
BMT started a UserTransaction and called a CMT method,
     In this case this CMT method will join the callers transaction. Now will 
the container simply marks the transaction to be rolledback and 
     the BMT method should check this flag and then only either rollback or 
commit the transaction ??

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