IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF FEBRUARY 2019 BEFORE THE HON'BLE MR. JUSTICE ARAVIND KUMAR CRIMINAL PETITION NO.7711/2017 c/w CRIMINAL PETITION NO.7710/2017 IN CRIMINAL PETITION NO.7711/2017 Between:
Mr. Mohammad Nayeem Lone S/o. Abdul Aziz Lone Aged about 34 years R/o. Wagoob Sopre, Baramulla Jammu & Kashmir – 193201. ... Petitioner (By Sri.Showri H.R., Advocate ) And:
1. State of Karnataka Siddapura Police Station Investigated by Vijayabhaskar Central Crime Branch F and M Squad, Cottonpet Main Road Brigand Square Bangalore – 560 011 Rep by SPP 2. Udayabhaskar Aged about 50 years Inspector of Police CCB, F and M, N T Pete Bangalore – 560 002. ... Respondents (Deleted as per Court order dtd: 05.09.2018 ) (By Sri.S.Rachaiah, HCGP) This Criminal Petition is filed under Section 482 of Cr.P.C praying that this Hon’ble Court may be pleased to quash the entire proceedings against the petitioner (Accused No.1) in C.C.No.2450/2016 for the offence p/u/s 4 and 5 of Price Chit and Money Circulation Scheme (Banning Act) 1978 and Section 420 of IPC pending on the file of I Additional Chief Metropolitan Magistrate at Bangalore ( Annexure A) and etc.
IN CRIMINAL PETITION NO.7710/2017 Between:
Mr. Rameez Ashraf Vaani S/o Mohammed Ashraf Vaani Aged about 43 years, R/o Nupur Jagir, Baramulla, Jammu & Kashmir – 193201. ... Petitioner (By Sri.Showri H.R., Advocate ) And:
1. State of Karnataka Siddapura Police Station Investigated by Vijaya Bhaskar Central Crime Branch F and M Squad, Cottonpet Main Road Brigand Square Bangalore – 560 011 Rep by SPP 2. Udayabhaskar Aged about 50 years Inspector of Police CCB, F and M, N T Pete Bangalore – 560 002. ... Respondents (Deleted as per Court order dtd: 05.09.2018 ) (By Sri. S.Rachaiah, HCGP) This Criminal Petition is filed under Section 482 of Cr.P.C praying that this Hon’ble Court may be pleased to quash the entire proceedings against the petitioner (Accused No.2) in C.C.No.2450/2016 for the offence p/u/s 4 and 5 of Price Chit and Money Circulation Scheme (Banning Act) 1978 and Section 420 of IPC, pending on the file of I Additional Chief Metropolitan Magistrate at Bangalore ( Annexure A) and etc.
These Criminal Petitions coming for Admission this day, the Court made the following:
O R D E R Heard learned counsel appearing for petitioners Sri H.R. Showri and Sri S. Rachaiah, learned HCGP for the State.
2. Petitioners have sought for quashing of the proceedings pending in C.C.No.2450/2016 (arising out of Crime No.217/2011) registered by Siddapura Police Station and investigated by Central Crime Branch (CCB) for the offences punishable under Sections 4 and 5 of Price Chit and Money Circulation Scheme (Banning Act), 1978 (for short ‘Act’) and Section 420 of IPC which proceedings are pending on the file of I Additional Chief Metropolitan Magistrate at Bengaluru.
3. A complaint came to be lodged by respondent No.2 with Siddapura Police Station against petitioners herein and others for the offences punishable under Sections 4 and 5 of the ‘Act’ and Section 420 of IPC alleging that a multilevel marketing scheme is operated in the name and style of TVI Express Holidays Pvt. Ltd., having its office at Hara House, No.1, GAT Street, Hosur Main Road, Wilson Garden, Bengaluru. It was alleged in the complaint that by using internet facilities gullible people were attracted and money was collected indicating that money would be multiplied if people were to invest in the said Company. It was further stipulated in the conditions that if investment is made in the said Company, any person joining the company will have to deposit a sum of Rs.15,500/- as Membership Fees and he or she would have benefit of the said scheme and would be entitled to stay in a 5-star hotel for seven days and a certificate of membership is given to them. It is also stated that assurance was held that amount of Rs.15,500/- would be doubled i.e., for Rs.31,000/-, if such member would ensure attracting 14 persons more as members. Hence, alleging that activity run by the said Company is nothing but is violation of provisions of Sections 4 and 5 of the ‘Act’, a complaint came to be lodged. Based on said complaint, search was conducted in the premises of the Company and some of the accused persons came to be apprehended.
4. It is the grievance of Sri.H.R. Showri, learned counsel for petitioners that other accused persons who had been arraigned on similar set of allegations had approached this Court for quashing of proceedings and this Court on considering their plea, has accepted the same and quashed the proceedings. As such, on the ground of parity, petitioners are entitled to similar relief. He would also submit that even on plain reading of charge sheet material, it does not disclose any offence against petitioners as alleged and as such, he would contend that continuation of proceedings against petitioners is bad in law. On these grounds, he prays for quashing of the proceedings.
5. Per contra, Sri S.Rachaiah, learned High Court Government Pleader appearing for the State would support the case of prosecution.
6. Having heard learned advocates appearing for parties and after bestowing my careful and anxious consideration to the charge material and case papers on hand, first contention raised by learned counsel for petitioners for quashing of the proceedings namely on the ground of parity requires to be considered for the purpose of outright rejection, for the simple reason that accused persons who had approached this Court in Crl. Petition No.4573/2011 dated 24.11.2011 were undoubtedly employees of the company and they had no role whatsoever in either accepting the money or otherwise. In fact, they are said to have acted at the instance or dictates of the petitioners herein who are said to be the Directors of the company. In fact, learned Government Advocate in the said proceedings had also submitted that no incriminating materials were found against those petitioners/ accused Nos.1 and 2. In this background, Co-ordinate Bench had quashed the proceedings against the petitioners therein who were employees of the Company. In so far as Criminal Petition No.4575/2011, which has also been relied upon would disclose that Co-ordinate Bench of this Court had noticed that petitioners therein were Auditors of the firm and they had no role in the alleged act except maintaining accounts of the company. As such, proceedings against them came to be quashed. However, in the instant case, petitioners are said to be the Directors of the Company who were directly responsible for the alleged acts. As such, they cannot claim parity. Hence, first contention stands rejected.
7. In so far as second contention with regard to there being no material to proceed against petitioners is concerned, this Court would not embark upon conducting a mini trial. At this juncture, probable defence petitioners/accused may raise would also not be in the domain of consideration of this Court while entertaining plea for quashing of proceedings. In that view of the matter, second contention cannot be accepted inasmuch as any opinion expressed by this Court on the merits of the case is likely to prejudice the right of petitioners.
8. Sri.H.R. Showri, learned counsel appearing for petitioners to buttress his arguments with regard to Sections 3 and 4 of the ‘Act’ being not attracted, has placed heavy reliance on the judgment of this Court in the case of Naresh Balasubramaniam v. State of Karnataka represented by Cyber Crime Police Station, Bengaluru and Another reported in 2017(2) KCCR 1477, whereunder this Court in the facts obtained therein has observed that it would be a dispute between consumer and direct seller and penal provision is not attracted. As could be seen from said judgment, complainant has alleged that she was introduced to a large international, multi level marketing Company known as Q-Net Limited and had been persuaded by Ramesh to join the same on a commission based network, which she could manage from her residence on the promise of large profits by investing nominal amounts of her money. She was required to purchase certain life-style items through internet transactions, apart from involving two others into the business which would trigger a chain of transactions and that she would receive commission on all such sales so generated and that occurred subsequently. It is in this background, Co-ordinate Bench had held that Sections 3 and 4 of the ‘Act’ had no application. Section 3 of the ‘Act’ reads as under;
“3. Banning of prize chits and money circulation schemes or enrolment as members or participation therein — No person shall promote or conduct any prize chit or money circulation scheme, or enroll as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme.”
9. A plain reading of above provision would disclose that to promote or conduct price chit or money circulation schemes or enrolment as members or participation therein is prohibited. There is no mention in the said provision with regard to material things like goods. If money is sought to be invested by luring, definitely this provision would be attracted and in the instant case, suo motu complaint came to be registered against petitioners which would clearly disclose that probable customers were lured by petitioners to invest a sum of Rs.15,500/- with an assurance of not only doubling their investment but also assured of seven days holiday at a five (5) star hotel. As such, contention of Sri.H.R. Showri, learned counsel for the petitioners, cannot be accepted and it will be thrashed out during the course of trial. In that view of matter, the judgment relied upon by learned counsel for petitioners would in no manner be applicable to the facts on hand.
For the aforesaid reasons, criminal petitions stand dismissed.
In view of the dismissal of the above petitions, I.A. Nos.1/2017 for stay do not survive for consideration.
SD/- JUDGE NBM