Jasdeep Singh Bains and Ors. v. U.T. Chandigarh - (High Court of Punjab and Haryana) (23 Sep 2003)

No bail for those behind money circulation schemes

MANU/PH/1129/2003

Banking

Ponzi schemes have the benefit of being complex in implementation, but easy in description. Such was one scheme run by ‘Job Work Com. Private Limited’ in Chandigarh in 2002.

Its premise was simple enough: the company would hire ‘business associate A’ who would trump up Rs. 16,500 for enrolment, which would go towards training and registration charges. Every additional ‘business associate B’ enrolled by ‘business associate A’ would earn him or her commission of Rs. 5,500 from the company. So on and so forth.

Why the need for a large number of ‘business associates’ one might wonder, as the court did, when “the company neither rendered any worthwhile service or sold any product”, before it considered the matter of pre-arrest bail in favour of the directors of the company. Denying relief for the prejudice caused to the interest of the general public, it noted that charges for criminal breach of trust and under Section 420 IPC had been established. Without the Petitioners in custody, the full scale and complexities of the scheme would not be unearthed. The court went to caution that “such schemes may result in financial imbalance” and called upon the RBI to “save” the general public from money circulation schemes.

Relevant : State of West Bengal and Ors. v. Swapan Kumar Guha and Ors. MANU/SC/0120/1982 State of Madhya Pradesh v. Mir Basti Ali Khan and Ors. MANU/SC/0188/1971 Section 406 IPC Act

Tags : PYRAMID SCHEME BAIL CUSTODY