M.M. Kumar JUDGMENT
M.M. Kumar, J.
1. This petition filed under Section 438 of the Code of Criminal Procedure, 1973 (for brevity, 'Cr.P.C.') seeks the relief of prc-arrest bail in case FIR No. 276 dated 27.11.2002 registered under Sections 3 and 4 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (for brevity, 'the Act') at Police Station Sector 26, Chandigarh. According to the allegations made in the First Information Report (for brevity, 'FIR') which is registered on the basis of letter written by the Finance Secretary, Union Territory, Chandigarh that online Job Work Com. Private Limited, S.C.O. No. 34 Sector 26, Madhya Marg, Chandigarh is enrolling members for the purpose of marketing Products/Services/AMC of some foreign concerns and companies. It has been alleged that the activities of the company of which petitioners I to 3 are the Directors violated the provisions of Sections 3 and 4 of the Act. Such lapse being a cognizable offence has resulted into registration of the aforementioned FIR. The detailed FIR is Annexure P-1. Apart from violation of the aforementioned provisions, it has been pointed out that the investigation reveals commission of offences under Sections 406 and 420 of the Indian Penal Code, 1860 (for brevity, 'IPC') as the gullible public is being mislead and deceived. The complainant has alleged that the company is running multi level marketing scheme in which a business associate has to enroll further business associates under him against payment of Rs. 16,500/-per enrolment being product cost, training and registration charges. For each business associate being enrolled, the business associate gets a commission of Rs. 5,500/- from the company and the incentive goes on increasing. The company is neither rendering any worthwhile service or selling any product for the hefty amount of incentive for enrolling new members. The total amount of incentive given in brochure runs into Rs. 15,066/- crore under the home based business plan. The total direct incentive amount is Rs. 212490.13 crore for effecting 2,15,23,359 sales under the said plan. The company is mainly alluring people by offering hefty commission and enrolling members by running some pyramid scheme with some camouflages. However, it is not complying with the provisions of the Act, the case was filed at one stage as untraced on 8.1.2003. The company had filed Criminal Misc. No. 53809-M of 2002 for quashing the aforementioned FIR. However, the same was dismissed on 3.7.2003 by observing that prima facie the allegations made in the FIR show that the scheme floated by the petitioner is money circulation scheme. It is after investigation that the veil is to be lifted. Thereafter, the Inspector General of Police, Union Territory, Chandigarh ordered for reinvestigation of the case. At this stage, it would be appropriate, to make a brief reference of the observations made by this Court while dismissing the petition filed by the petitioners which reads as under:
"The case of the present petitioner comes under the definition of Section 2(c) of the Act i.e. under the heading Money Circulation Scheme.
After going through the contentions of learned Counsels for the parties, I find that it is not a fit case where discretion should be exercised under Section 482, Cr.P.C. to quash the FIR, Annexure P-1 because prima facie, the facts show that the scheme of the petitioner is money circulation scheme. Anyhow, the investigating agency, after investigation, is required to lift the veil. Thus, no case is made out for quashing the FIR."
2. The respondents have filed the reply wherein the stand taken is that the FIR has been registered at the instance of Reserve Bank of India. It has further been asserted that the petitioners are not associating and co-operating with the investigating agency despite the fact that notices in writing under Section 91, Cr.P.C. were sent to the petitioners. Three notices are alleged to have been sent under Section 160 Cr.P.C. All these notices have been collectively appended as Annexure R-2. It has further been claimed that modus operandi unearthed till date, appears to be so complex that without custodial interrogation. It would not be possible to fathom the facts and criminal justice and investigation would be subverted. It has also been asserted that substantial public money is involved and the petitioners have committed offences under Sections 3 and 4 of the Act as also under Sections 406 and 420, IPC. It would be appropriate to refer to the averments made in paragraphs 8A and 9 of the reply filed by the respondents which read as under:
"That public men have given evidence that although they have gave money to the petitioners, yet they have not received the promised amount in return. Thus, the company has involved in making the scheme more attractive to get money from the innocent public and not giving the money back, which reflects the commission of offence under Sections 420 and 406 of the Indian Penal Code.
That the petitioners are not entitled to the concession of anticipatory bail also because they are already interfering with the investigation and are intimidating the witnesses. Approximately 50 witnesses have been approached and the receipts of money have been taken back by the Company under allurement or threat, thus, completely frustrating the process of investigation."
3. The petitioners first approached the learned Additional Sessions Judge, Chandigarh for the grant of pre-arrest bail which has been rejected primarily on the ground that the petitioners who are directors of the company are not appearing before the investigating agency and the possibility of jumping the bail and putting pressure on the prosecution evidence can also be not ruled out. The order dated 19.8.2003 passed by the Additional Sessions Judge, Chandigarh is placed on record as Annexure P.5.
4. Mr. Vinod Sharma, learned Counsel for the petitioners has argued that punishment provided under the Ac t is three years and, therefore, it has not been considered to be a serious offence even if it is assumed that all the allegations in the FIR are correct. The learned Counsel has pointed out that no offence under Section 420, IPC is made out because neither there is any misrepresentation or suppression of material facts with the object of defrauding or cheating the public. According to the learned Counsel, the petitioners are ready to associate themselves with the investigation but on account of fear of torture and police detention, they have avoided to appear before the investigating agency. The learned Counsel has placed reliance on a judgment of the Supreme Court in the case of State of West Bengal and Ors. v. Swapan Kumar Guha and Ors. MANU/SC/0120/1982, to argue that similar nature of FIR was quashed by the Calcutta High Court and the decision was upheld by the Supreme Court. The learned Counsel has also relied upon another judgment of the 108 Supreme Court in the case of the State of Madhya Pradesh v. Mir Basti Ali Khan and Ors. MANU/SC/0188/1971, and submitted that no offence under Section 420, IPC is made out.
5. Mr. Ajai Lamba, learned Counsel for the respondents has vehemently argued that this Court has already given finding that the case of the petitioners is covered by the Act which moans that there is violation of Sections 3 and 4 of the Act by the petitioners. The learned Counsel has also pointed out that general public is being deceived and the petitioners have already started contacting their business associates who have joined the business by becoming member and have demanded back the receipts issued in order to destroy the evidence. The learned Counsel has pointed out that the people are being allured to invest in the pyramid scheme in consideration of promise of job. He has shown me that file maintained by the investigating agency which divulge in such like future instances. Even general public is demanding back the funds invested by them.
6. After hearing the learned Counsel at a considerable length perusing the FIR and the order of the learned Additional Sessions Judge along with the police file. I have reached the conclusion that the petitioners do not deserve the concession of pre-arrest bail because the larger public interest is more dearer to the administration of justice, than the arrest of the petitioners. The gullible public would be saved from the untrue representations alluring them to invest in schemes which allegedly violates Sections 3 and 4 of the Act and Sections 406 and 420, IPC. Moreover, the petitioners have failed to join the investigation despite letters issued by the investigating agency under Sections 91 and 160, Cr.P.C. The larger public interest would be served by unearthing the contour of illegal activities being indulged by the petitioners. Therefore, the more elicitation process i.e. custodial interrogation would be preferable in such like situation.
7. The argument of learned Counsel for the petitioners that the offence is punishable with three years imprisonment has not impressed me because it is one thing to say that a cognizable offence has been committed but it is quite another thing that it has caused prejudice to the interest of the general public. It is the duly performed by the national institutions like Reserve Bank of India to save the general public from any such money circulation scheme which may suck their hard earned savings. Such like schemes may also result into financial imbalance resulting into loss of control over the economy. Moreover, there are allegations showing that case under Sections 406 and 420, IPC is made out. Therefore, the argument is liable to be rejected.
8. The other argument that in Swapan Kumar Guha's case (supra), similar FIR was quashed cannot be accepted for the simple reason that there a company was transacting business in Calcutta when the Act came into force in 1978 and two years period was given to the accused to wind up their business. After recording a finding that the accused-company was not running any more circulation scheme as contemplated by that Act, Their Lordships reached the conclusion that no offence was made out and the FIR was quashed. However, in the present case, the prayer of the petitioners for quashing the FIR has already been repelled by this Court as is evident from the order dated 3.7.2003 Annexure R-1. Therefore, the aforementioned argument has no substance and the same is rejected.
9. For the reasons recorded above, this petition fails and the same is dismissed.
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