: 1 : STATE VS. ANKIT HANDA FIR NO. 17[SECTION]/08 P.S ECONOMIC OFFENCES WING U/[SECTION] of [ACT] & U/[SECTION], [SECTION], [SECTION] of [ACT] 2/1/09 Present : Ld. APP Sh. [ENTITY] for the State. : Counsel Sh. [ENTITY] for the applicant. : None for the complainants. 1. This is second application for bail preferred by the accused [ENTITY]. First application of this accused was dismissed by this court prior to filing of the chargesheet, on 28 Nov 2008. Chargesheet was filed on 13/12/08 and cognizance was taken on that very day for offences U/[SECTION] of [ACT] & U/[SECTION], [SECTION], [SECTION] of [ACT]. 2. Brief facts of this case are that the accused is stated to be managing director and promoter of Handa Technology and Marketing Pvt Ltd Co(hereinafter referred to as the accused company) . The said company launched a scheme called multilevel marketing between March 2008 to June 2008. The company offered huge commission and assured returns to the investors. The company induced various public persons to invest amount ranging from Rs. 1[SECTION]00/ to Rs 1[SECTION],000/ to become the member of the scheme and assured returns of Rs. [SECTION]7,911/ to about Rs.[SECTION]/ lakhs after three months in weekly installments. The company also offered commission of Rs 12,[SECTION]99/ if a member is introduced by any existing member in the scheme of Rs 1[SECTION]00/. The company further announced high rewards to any member who Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 1 of 13 : 2 : attracts more than 10 new members in the scheme. The company did not pay the money to the investors as per the promise. During investigation the investigating agency examined 180 public persons who stated active role played by the present accused in inducing them to invest money. The investigating agency found that the accused company was not carrying on any kind of business nor was manufacturing any product nor the company had any agreement with any other manufacturer or supplier company to fulfill the promise of marketing of products by the accused company. Investigating agency claims that the returns promised by the accused company were unrealistic and practically impossible. The accused did not get any permission or registration from the Reserve bank of India as was required under [SECTION] of [ACT] and therefore the accused company could not have accepted any investment from general public. The company also claimed to have a branch office located at London which was nonexistent address which proves the dishonest intention of the company. The company promised returns as high as Rs [SECTION]7,911/ after three months, Rs. 1,71,990/ after one year and, Rs.34,39,800/ after another one year, which was practically impossible. When the investors demanded their money back the company closed the office and the accused went underground. It is the claim of investigating agency that during investigation as many as 13,7[SECTION]0 application forms of various public persons for found to be received in the office of the company. The accused is claimed to have collected approximately Rs.3/ to Rs3.[SECTION]/ crores from various public persons. The investigating agency chargesheeted the accused for the offences under [SECTION] [ACT] and under [SECTION] of The [ACT]. Cognizance for these offences has already been taken by this court. 3. On behalf of accused it is argued that there is no cheating involved in this case nor there is any offence made out under The [ACT]. It is claimed that the accused company was dealing in the business of marketing various products which is called a multilevel marketing and various public persons who successfully marketed the products of the accused Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 2 of 13 : 3 : company made good profits and were satisfied. It is only few people who were unable to sell the products and who joined hands with the competitors of the accused company in order to ruin the accused company. It is claimed that those persons who were unable to market the product of the accused company and expressed their inability to the accused company, the accused company settled their accounts and returned their money. The accused company is still willing to make payment of Rs 3/ lakhs without prejudice to the rights and contentions. It is also claimed that investigation is complete, chargesheet has been filed and there is no possibility of tampering with the evidence which is mostly documentary in nature and the maximum punishment provided for the offences is up to seven years therefore the accused being firsttime offender would in any case be entitled to the provision of [ACT] and therefore should be enlarged on bail. Accused claims clean antecedents. 4. It is argued that in the facts of the present case The [ACT] does not apply. It is claimed that prize chits is really a form of lottery and in the present case there being no such lottery system the offence does not get attracted. The ld counsel for the accused placed reliance upon the cases of [PRECEDENT]; Kudasu Rajanna vs State of Andhra Pradesh 200[SECTION] criminal law journal 190 and the case of [ENTITY] and others vs NCT of Delhi 2003 IV AD (criminal) Delhi High Court 719. [SECTION]. [SECTION] of The [ACT] defines 'money circulation scheme' as any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money valuable thing as the consideration for the promise to pay money, on any event or contingency relative or applicable to the enrollment of members into the scheme, whether or not such money or think it is derived from the entrance money of the members of such scheme or periodical subscriptions. [SECTION] of the said that banks prize chicken money circulation scheme or enrollment as member or to the situation they are in. [SECTION] Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 3 of 13 : 4 : provides punishment for contravention of provisions of [SECTION] and the maximum punishment provided is three years. [SECTION] provides punishment for printing or publishing any ticket or other document for the use in the prize chits and money circulation scheme. [SECTION] of the said that provides that when an offence under this Act has been committed by a company every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. [SECTION]. In the present case when the accused company accepted money from various public persons with the promise to pay more money on the contingency of enrollment of other members into the scheme, the offence of money circulation gets attracted. It is immaterial that the scheme has been given a name of multilevel marketing under the garb of marketing products of the accused company. Mind it that the accused company was not manufacturing any kind of product. The pamphlet issued by the accused company does not make it clear as to what product is being marketed. The pamphlet published by the accused company is most vague in describing the scheme of the company. It appears to have been prepared only to cover up and to give a different name to the money circulation scheme. When the accused company did not manufacture any product it is beyond understanding as to how such high returns were promised. The accused company had no agreement with any other manufacturer or distributor to market such products. It appears that the money which was being offered and promised to the public persons was out of the entrance money of other members who were to be enrolled into the scheme or out of their periodical subscriptions. These allegations clearly attract the offence of money circulation. The said offence is punishable under [SECTION] of the said Act. 7. The judgments relied upon by the counsel for accused are of no help to the accused. In the case of [ENTITY] the facts were that one partnership firm was offering interest Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 4 of 13 : [SECTION] : in the rate of 48 percent per annum to its members on the loan whereas the loan certificate receipts show the rate of interest to be 12 percent only. It was the case of investigating agency that the amount in excess of 12 percent so paid by the accused company was from money circulation scheme. It was in these facts honourable Supreme Court held that the said [ACT] does not bar any and every kind of activity for making quick or easy money. It is only those acts for making quick or easy money which were dependent upon the happening or not happening of any event or contingency relative or applicable to the enrollment of members into the scheme which gets covered. In the said case however high the promised rate of interest may be in comparison with the agreed rate but there was no event or contingency relative or applicable to the enrollment of any members into the scheme therefore the offence was not attracted. In the present case I have already discussed above that there was promise made by the accused company to various public persons to get higher commission dependent upon the eventuality of enrollment of more number of members. Therefore in the present case the offence of money circulation gets attracted. 8. The second case relied upon by the accused of [PRECEDENT] is also distinguishable on the facts since in that case the accused enrolled 1[SECTION]00 members by taking deposit of Rs 200 per month for a period of [SECTION] and 1/2 years and he issued various receipts with maturity date. The accused was convicted by the trial court. The conviction was challenged on the ground that under [SECTION] The [ACT] a member who was involved or has participated is made an accused and therefore on the basis of sole public witness in that case who was also one of the member, conviction could not have been founded since it would be in the nature of accomplice evidence without proper Corroboration. It is on these grounds that the conviction was set aside by honourable High Court. Hon High Court did not lay down that no offence of money circulation is made out. In the case before us trial is yet to begin and therefore this case is of no help at all. 9. Reliance is further placed upon the case of [ENTITY] where the accused company Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg [SECTION] of 13 : [SECTION] : entered into an agreement for contract of sale of gold coins amounting to R[SECTION]9,300 each on the purchaser making a down payment of Rs 1[SECTION],000 towards each contract for sale. It was argued before Hon Delhi High Court that since it was a case of contract for sale of product and it did not involve any promise to pay money on the event of contingency relative to the enrollment of members therefore it did not fall within the definition of money circulation. It was further argued that there was neither draw for reward nor there was any prize of gift in cash or kind, therefore it was not even prize chit. It was in these circumstances Hon Delhi High Court held that the terms of the agreement for contract of sale do not fall under the money circulation scheme as none of the essential ingredients of money circulation scheme or prize chit were attracted. These facts are different from the present case where high rate of commission was offered to the investors based upon the contingency of enrollment of other members into the scheme. 10. It is next argued by learned counsel for the accused that the offences under the [ACT] are bailable since [SECTION] of the said Act provides a maximum punishment of three years. He has placed reliance upon the case of [PRECEDENT]. Misc. number 71789/200[SECTION] dated 31st October 200[SECTION] delivered by honourable Supreme Court. In the said case it was argued that [SECTION] of the [ACT] which provides imprisonment for a maximum period of three years or fine or both was bailable. Honourable Supreme Court held that the offences under [SECTION] and [SECTION] of the [ACT] are compoundable, noncognizable and summary triable offences with a maximum punishment of three years therefore bailable. Reliance was further placed upon the case of Subash Chaudhary vs. Deepak Jayala 200[SECTION] (179) ELT [SECTION]32 (Bombay) where also it was held that since offence under [SECTION] is a non cognizable offence due to non obstante clause in [SECTION] and secondly it is triable summarily by Magistrate by virtue of [SECTION] therefore it is bailable. 11. In the present case before us neither the offence under the [ACT] are non cognizable Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg [SECTION] of 13 : 7 : offences nor are triable summaririly therefore these two judgments are distinguishable on the facts of the case and are of no help to the case of the accused. It may be mentioned here that Hon Delhi High Court in the case of [PRECEDENT] In Bail application no. 1372/200[SECTION] dated 22/[SECTION]200[SECTION] delivered by Hon'ble justice [ENTITY], held that word 'punishable' carries the meaning liable to be punished. Thus where a maximum punishment is provided for an offence the section has to be construed in a manner that upon conviction the court has discretion to impose maximum sentence. [SECTION] of the [ACT] makes all offences under the act to be cognizable. In such circumstances [SECTION] of the [ACT] which is punishable with maximum three years sentence has to be nonbailable. 12. Learned counsel for the accused next argued that in case the prosecution argues that the facts of the present case attracts the offences under the prize chits and money circulation scheme banning Act, which is a special act, the prosecution cannot prosecute the accused for the penal offences. It is argued that General law has to give way to special laws. In support of this contention learned counsel for the accused placed reliance upon the case of Jatinder Gupta and others vs. union Territory Chandigarh in 1994 (2) CC Cases [SECTION][SECTION]2 High Court; wherein it was held that an accused cannot be tried for the offence of cheating when he was also booked for offences under [SECTION] of the Standards of Weight and Measurement Act 197[SECTION] for selling cement with lesser quantity in bags. It was held that a general provision has two yield to a specific provision. Such an observation was given by honourable High Court on the ground that [SECTION] of the Act of 197[SECTION] operates as a bar for trial under [ACT]. There is no such bar under the [ACT] that if a person commits offence of cheating under [ACT] he cannot be tried for such an offence if an accused is booked for the offences under the [ACT]. 13. Reliance is next placed upon the case of JK cotton spinning and weaving Mills Co Ltd vs State of U. P. AIR 19[SECTION]1 Supreme Court 1170. The facts of the said case are absolutely Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 7 of 13 : 8 : distinguishable and are not applicable to the facts of present case. In that case while dealing with the provisions and rules of [ACT] honourable Supreme Court held that where there is a conflict between specific provisions and general provision, specific provision must prevail over general provisions. It was held that general provisions are applicable only to such cases where it is not covered by special provisions. The said the judgment does not anywhere hold that if a person commits offence under [ACT] as well as some special Act he cannot be booked so. 14. Reliance is further placed upon the case of Delhi administration vs Ram Singh AIR 19[SECTION]2 Supreme Court [SECTION]3 wherein honourable Supreme Court held that when a special Act provides that the particular offence under the said Act can be investigated by special police officer only and not by any other police officer it has to be implemented. This judgment is of no help to the accused in any manner. 1[SECTION]. Reliance on further placed upon the case of Dr V. J. A. Flynn vs Mr S. S. Chauhan 199[SECTION] JCC 424 where facts were the accused was leaving for Sydney with certain coins which was suspected to be antiquities and the export of which was prohibited under [SECTION] of the [ACT]. The accused was prosecuted for offence under [SECTION] of the [ACT] in 19[SECTION]2 on a complaint filed. The accused preferred a quashing petition on the ground that at the most prosecution could have been launched under the [ACT] and not under the [ACT]. After examining various provisions of the [ACT] and the [ACT], Hon'ble Delhi High Court held that the prosecution at the most could have been for the offence of [ACT] and not the [ACT]. It was held that the offence committed by the accused was one under the [ACT] which bans export of such coins which fall within the definition of antiquity. It was further held that under the provisions of the [ACT] at the most confiscation of the antiquities could have been done and not prosecution under the [ACT]. [SECTION] of the [ACT] also creates a bar with regard to the prosecution under the [ACT] and therefore it was Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 8 of 13 : 9 : held that there could not have been any prosecution under the [ACT]. Again this judgment also does not lay down that where an act committed by an accused makes it an offence under the provisions of [ACT] as also under the provisions of some special Act, the accused cannot be tried for both the offences. In my considered view, for example in the present case when the accused committed cheating of public person by inducing them and also committed the offence of money circulation under the special provision, both the prosecution can be continued simultaneously. 1[SECTION]. Reliance is further placed upon the case of [PRECEDENT]. In the said case the accused persons was caught redhanded while carrying away railway cement unlawfully for sale. They were being prosecuted for offences under the Railways property unlawful possession Act 19[SECTION][SECTION]. They challanged their prosecution on the ground that sub inspector of railway protection Force who submitted chargesheet against the accused was not a police officer within the meaning of [SECTION] of the code of criminal procedure and upon his report the magistrate could not have taken cognizance. The said case again does not help the case of accused at all as it does not lay down that there cannot be simultaneous prosecution for penal offences and for special Act. 17. Learned counsel for the accused next contended that there was no dishonest inducement which is required for the offence of cheating as everything was made clear in the pamphlet before anybody became a member of the multilevel scheme. Perusal of statement of the victims reveal clear inducement by the accused to some of the investors by the present accused who was none other than managing director of the accused Co. Dishonest intention of the accused is clear from the fact that from the fact as discussed above together with the fact that the accused Co mentioned one branch office at London which was not existing and when the public persons demanded their money back the office was closed and the accused ran away. The offence of cheating the does get attracted in the facts of the present case and a large number of public persons have been cheated. Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 9 of 13 : 10 : 18. Learned counsel for the accused then placed reliance upon the case of [PRECEDENT]; [PRECEDENT]; Sanjay Chaturvedi vs State 200[SECTION] (3) JCC (NI) 241; Court on its own motion vs State through [PRECEDENT]; [PRECEDENT]; and Smt Runu Ghosh vs State [SECTION]4 (199[SECTION]) Delhi Law Time[SECTION]74, in order to claim that the accused should be enlarged on bail in the present case. I've gone through these judgments. There cannot be any Straight jacket formula for grant or refusal of bail. Law is well settled that the discretion of bail has to be exercised on the of facts and circumstances of each case keeping in view the gravity of offence and all other factors. 19. In the present case the accused cheated a large number of public persons. Although out of thousands of cheated public persons only around 180 people could be examined by the investigating agency but the very fact that more than 13,000 applications were recovered from the office of the accused reveals that a large number of public persons have been cheated. The cheated persons not only belong to Delhi but the victims may belong to any place in India and a victim who is residing far away from Delhi would not like to come to Delhi and incur more expenses when he has already lost money. Such economic offences are to be treated seriously. Economic offences are ruining the economy of this country and in my considered view serious view has to be taken to such offences. Although the accused claims that the accused is ready to make payment of Rs.3/ lakhs without prejudice and the accused is also stated to be prepared to settle the matter with the persons who have already been examined by the investigating agency and also he is prepared to settle the accounts of other persons who may come forward. But in the present case the amount involved is crores of rupees which has been cheated. It is not a case where accused has already settled the matter with the victims but the accused is asking bail for settling the matter. In my considered view in such serious offences where crores of rupees have been cheated by inducing thousands of innocent public persons, such practice should not be encouraged. Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 10 of 13 : 11 : 20. In State of Gujarat v. Mohanlal Jitamalji Porwal and another, (AIR 1987 SC 1321). 1987 Cri LJ 10[SECTION]1 in para [SECTION] it was observed by hon'ble supreme court; " The cause of the community deserves better treatment at the hands of the Court in the discharge of its judicial functions. The Community or the State is not a persona non grata whose cause may be treated with disdain. The entire community is aggrieved if economic offenders who ruin the economy of the state are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage; done to the National Economy and National Interest." 21. In [PRECEDENT], three judge bench comprising of justice [ENTITY], B. N. AGRAWAL AND [ENTITY], JJ. It was observed in para 381; "Funds of the public bodies were utilized as if they were private funds. There was no legitimacy in the transactions. Huge funds running into hundreds of crores of MUL, a Government company, were diverted and all the concerned accused persons A1, A3 an A [SECTION] played dubious roles in these illegitimate transactions. Their acts had serious repercussions on the economic system of the country, and the magnitude of financial impact involved in the present appeal is only tip of the iceberg. There were several connected cases and interestingly some of the prosecution witnesses in the present case are stated to be accused in those cases. That itself explains the thread of selfperseverance running through their testimony. Therefore, the need to pierce the facadial smoke screen to unravel the truth Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 11 of 13 : 12 : to lift the veil so that the apparent, which is not real can be avoided. The proverbial red herrings are to be ignored, to find out the guilt of the accused." (Para 383) "Unfortunately in the last few years, the country has seen an alarming rise in whitecollar crimes which has affected the fibre of the country's economic structure. These cases are nothing but private gain at the cost of public, and lead to economic disaster." 22. In Director of Enforcement v. P. V. Prabhakar Rao AIR 1997 SUPREME COURT 38[SECTION]8= 1997 AIR SCW 3792 three judge bench comprising of justice [ENTITY], [ENTITY] AND [ENTITY], JJ. It was observed in para 10, "The most glaring feature which even the respondent did not repudiate is the magnitude of
the criminal conspiracy hatched, the ingenuity with which the cabal was orchestrated and the meticulousness with which it was implemented and the colossal amount of foreign exchange siphoned off from the country. It is not disputed that whomsoever perpetrated this grave economic offence deserves to be dealt with sternly under law."
23. In AIR 199[SECTION] SUPREME COURT 977 "State of H.P. v. Pirthi Chand"= 199[SECTION] AIR SCW 422 In para 13 it was observed that an accused involved in an economic offence destabilises the economy and causes grave incursion on the economic planning of the State.
24. In AIR 1988 SUPREME COURT 110[SECTION] "V. K. Agarwal v. Vasantraj Bhagwanji Bhatia" it is observed:
"The fact that 20 years have elapsed since the date of the seizure of gold under [ACT]. 19[SECTION]2 and Gold (Control) ACT. 19[SECTION]8 (November 1[SECTION], 19[SECTION]8) would be no ground for Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 12 of 13 not proceeding further with the matter inasmuch as the offence in question was a serious economic offence, which undermines the entire economy of the Nation. The delay occasioned in the working of the judicial system by the ever increasing workload cannot be the ground for justifying the delay. (Para 9)
2[SECTION]. In AIR 197[SECTION] SUPREME COURT 1[SECTION]27 "South India Coir Mills Poockakkal, M/s. v. Additional Collector of Customs and Central Excise"in para 12 it is observed;
"In cases of economic offence and specially in relation to the law of Foreign Exchange no leniency in the quantum of punishment is warranted "
2[SECTION]. In 2001 CRI. L. J. 447[SECTION] "Champakbhai Amirbhai Vasava v. State of Gujarat" It is held that in Serious economic offence of misappropriation of public amount to tune of Rs. [SECTION],00,000/ committed by bank employee cannot be viewed lightly as it would shake confidence of public in scheduled banks. Bail cannot be granted merely on ground of long detention or that there are no chance of his absconding or about tampering with evidence.
27. In the facts and circumstances keeping in view the serious nature of offence the bail application of the accused is dismissed. Copy of this order be given dasti to the investigating officer as well as to the Counsels for the accused and victims.
[ENTITY] / DELHI / 2/1/2009 Order in State Vs. [ENTITY] / FIR no. 17[SECTION]/08 / PS EOW / dtd 2/1/09 pg 13 of 13