IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.1.2010 CORAM: THE HONOURABLE MS.JUSTICE R.MALA Crl.A.No.987 of 2003 1. Ponnusamy 2. Sundara Gounder @ Sundaram 3. Murugesh @ Jayamurugan 4. Dhanasekaran .. Appellants Vs. State: Inspector of Police, B-6, Peelamedu Police Station, Cr.No.60/2002, Coimbatore. .. Respondent Criminal Appeal against the judgment of conviction and sentence of fine, in C.C.No.45 of 2002 on the file of the First Additional District Judge-cum-Chief Judicial Magistrate's Court, Coimbatore dt.17.2.2003. For appellants : Mr.S.Shanmuga Velayutham, Senior Counsel for Mr.T.Vijayaraghavan For respondent : Mr.I.Paul Noble Devakumar, Govt. Advocate (Crl. Side) JUDGMENT The Criminal Appeal arises out of the judgment of conviction and sentence of fine, in C.C.No.45 of 2002 on the file of the First Additional District-cum-Chief Judicial Magistrate's Court, Coimbatore, whereby the first appellant/A.1, second appellant/A.2, third appellant/A.3 and the fourth appellant/A.5 were convicted for the offence under Section 3 read with Sections 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and each sentenced to pay a fine of Rs.5,000/-, in default, to undergo simple imprisonment for six months. A-4 was acquitted of the charges. 2. The case of the prosecution is as follows: (a) On 13.1.2002 at about 9 p.m., when P.W.1 Loganathan, the resident of Hope College, was at his shop, he received some pamphlets, in which it was printed that on 13.1.2002 at D.A.R. Marriage Hall, Chinniyampalayam, auction is going to take place for sale of house-sites. Accordingly, he went to that place at 9 p.m. on that day. There were five persons and in that auction, they have announced several prizes, in which, the first prize was stated to be Maruthi Car, which was stated to have been given to https://hcservices.ecourts.gov.in/hcservices/ one lady of Kangeyam and they have also announced the second prize to six persons. (b) When P.W.1 came to know that the people gathered at the Marriage Hall, they told P.W.1 that they have remitted the amount for purchase of house-sites on instalment basis, that the draw was being conducted for the first month, that it would be conducted on 13th month and 36th month and the draw winners will be given house- site. They have further told that they have remitted the first instalment amount. (c) Since P.W.1 suspected that the draw scheme is against the Money Circulation Act, he gave Ex.P-2 complaint before B.6 Peelamedu Police Station, stating that A-1 and A-2 conducted the draw and A-3 to A-5 were along with A-1 and A-2. P.W.8 Inspector of Police received Ex.P-2 complaint from P.W.1 and registered a case at about 10.30 p.m. on the same day in Cr.No.60 of 2002 for the offences under Sections 3 and 4 of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. He prepared Ex.P-9 F.I.R. (d) P.W.8 Inspector of Police took up the matter for investigation and went to the place of occurrence at about 11.15 p.m. and prepared Ex.P-3 observation mahazar in the presence of P.W.5 and other witness and drew Ex.P-10 rough sketch. At the mid- night at 12 O'clock, he recovered Ex.P-5 series of 24 cheques, Ex.P-6 series of four receipt books, Ex.P-7 series of agents' forms in 115 numbers and Ex.P-8 series of notices in four numbers, M.O.1 Maruthi Car, etc., under Ex.P-4 seizure mahazar in the presence of the same witnesses. He arrested A-1 to A-5 and released them on that day. He examined the witnesses P.W.1 Loganathan, P.W.2 Raja, P.W.3 Kubendran, P.W.5 Subramaniam and others and recorded their statements. On 15.1.2002, he examined P.W.6 Jeevanandam, P.W.4 Kumar and P.W.7 Rajendran and recorded their statements. (e) P.W.2 Raja and P.W.3 Kubendran, who are the taxi drivers, took the intended purchasers to the flats and also stated that they will bring some people to the Marriage Hall. P.W.4 Kumar is the real estate broker. P.W.5 Subramaniam is the President of Chinniyampalayam Panchayat Union. P.W.5 deposed that the accused were doing real estate business at the house-site at NPS Nagar in Neelambiri. They advertised the same in newspapers as well as by issuing pamphlets that they would conduct a draw on 13.1.2002. (f) P.W.8 Inspector of Police completed his investigation and filed the charge sheet against the accused for the offences under Sections 3 and 4 of the Prize Chits and Money Circulation Scheme (Banning) Act. (g) The trial Court framed charges against the accused and the accused denied the charges. On the side of prosecution, P.Ws.1 to 8 were examined, Exs.P-1 to P-10 were marked and M.O.1 was produced. https://hcservices.ecourts.gov.in/hcservices/ (h) After the questioning of the accused under Section 313 Cr.P.C., on the side of defence, D.W.1 Subbiah was examined to prove that the Maruthi Car alleged to have been parked near the Marriage Hall, has been purchased by him under the hire purchase scheme with one Sundaram Finance at Chennai and the vehicle has been handed over to A-1 for getting fancy number. M.O.1 Maruthi Car has been seized only from the shop of A-1 and not near the Marriage Hall. Exs.D-1 to D-3 were marked on the side of defence. 3. The trial Court, after considering the oral and documentary evidence, came to the conclusion that the prosecution has not proved the presence of A-4 and hence, he was acquitted of the charges and the trial Court convicted A-1 to A-3 and A-5 and sentenced them to pay fine, as indicated above. Challenging the same, the appellants/A-1 to A-3 and A-5 have preferred this Criminal Appeal. 4. Assailing the conviction and sentence of imposition of fine on the appellants, learned Senior Counsel appearing for the appellants would contend that P.W.1's evidence is not trustworthy. He is a business rivalry and he has also been doing real estate business. Since A-1 to A-3 and A-5 were also doing real estate business, because of the business competition, he has given a false complaint, which has not been properly investigated by P.W.8 Inspector of Police, who laid charge sheet against the accused. Hence, P.W.1's evidence cannot be looked into. Learned Senior Counsel further submitted that even though P.W.1 has identified A- 1 and A-2, he has not identified A-3 and A-5. He has not given particulars regarding the draw and the witnesses to the draw. Investigating agency also has not examined any of the persons who participated in the draw. The persons who paid the instalment, have also not been examined. 24 cheques were alleged to have been seized and the persons who issued those cheques have not been examined. There is a defect in the investigation. Moreover, non- examination of the printer of the pamphlets is fatal to the case of the prosecution. The Marriage Hall owner has also not been examined before Court. There is no clinching evidence to robe the appellants for the commission of the offence. The prosecution has not proved its case beyond reasonable doubt. The trial Court has committed error in convicting the appellants for the offence under Section 3 read with Sections 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. He relied on the decision of the Supreme Court reported in AIR 1982 SC 949 (State of W.B. and others Vs. Swapan Kumar Guha and others) and prayed for acquittal of the appellants. 5. Per contra, learned Government Advocate (Criminal Side) submits that the motive alleged by the learned Senior Counsel for the appellants-A-1 to A-3 and A-5, has not been proved. The evidence of P.Ws.1, 2 and 3 is unassailable. Their evidence has clearly proved that the new car without registration was parked in front of the Marriage Hall. Non-examination of the printer of the pamphlets and the owner of the Marriage Hall, is not fatal to the case of the prosecution. The evidence of P.W.3 proved that there https://hcservices.ecourts.gov.in/hcservices/ was a draw. The evidence of P.W.5 proves the distribution of the pamphlets. Hence, the trial Court came to the correct conclusion only after considering the evidence and there is no illegality in the conviction and the imposition of fine by the trial Court. He prayed for dismissal of the appeal. 6. It is the duty of the respondent-prosecution to prove that the conviction of the appellants/A-1 to A-3 and A-5 beyond reasonable doubt. P.W.1, who was the complainant, has been examined. It is true that he has not identified A-3 to A-5. He has identified only A-1 and A-2 who were also doing real estate business, which has been accepted by all the witnesses. 7. It is true that the accused were making lay out at NPS Nagar. The investigation is solely on the basis of Ex.P-8 series (notices/pamhplets). To prove the printed pamphlets, the printer from Sri Velmurugan Computer Offset, Tiruchengode, who printed the pamphlets, has not been examined before the Court. At this juncture, learned Senior Counsel appearing for the appellants would submit that the pamphlets can be printed by any person, because, they do not contain any signature. So, non-examination of the printer is fatal to the case of the prosecution. It is true that as per the Indian Evidence Act, while considering the printed pamphlets, it is the duty of the prosecution to examine the printer to prove that the pamphlets have been printed on the basis of the orders given by the appellants/accused. But, non- examination of the printer is fatal to the case of the prosecution. 8. The next limb of argument advanced by learned Senior Counsel for the appellants is non-examination of the owner of the Marriage Hall. I do not find any force in the said argument advanced by the learned Senior counsel for the appellant, since the appellants-A-1 to A-3 and A-5 also admitted that on that day, they convened a meeting with the agents in the Marriage Hall. In such circumstances, non-examination of the owner of the Marriage Hall, is not fatal to the case of the prosecution. 9. Learned Senior Counsel for the appellants would contend that there was a motive behind P.W.1 for giving such complaint. It is true that no neighbours have been examined before the Court. The President of Chinniyampalayam Panchayat Union has been examined as P.W.5. He has deposed that the accused were doing real estate business. He also deposed about the issuance of pamphlets. It is pertinent to note that there is no evidence before Court to show that the pamphlets have been issued on the instructions given by the appellants. No one has been examined to prove the same. The evidence of prosecution witnesses is that the pamphlets have been distributed along with the newspapers. The newspaper agent has not been examined before Court to show that the pamphlets have been given by the appellants for distributing the same along with the newspapers to the customers. So, non-examination of the distributor is also fatal to the case of the prosecution. https://hcservices.ecourts.gov.in/hcservices/ 10. Learned Senior Counsel for the appellants would further contend that it is alleged that there was recovery of cheques from the place of occurrence, but the persons who issued the cheques were not examined before Court. It is true that 24 cheques were alleged to have been seized. But, no one was examined before Court to show that they have intended to purchase the flats on the basis of the pamphlets and that they will be getting a Car and other prizes like gold coins, Titan watch, etc. 11. At this juncture, it is pertinent to note that except the Car, the other prizes, namely gold coins, Titan watch, etc., have not been seized. Moreover, the investigating agency has not recovered the properties from the person who drew the lucky prizes in the draw, even though P.W.1 has stated that one lady from Kangeyam has drawn the lucky prize of Car, but the car has not been seized from her. The name of the lucky prize winners of the car has not been mentioned by the prosecution. Only the car has been seized from the shop of A-1 and not from the place of occurrence. 12. No photographs have been taken to show that the draw has taken place in the place of occurrence where the car was parked. It is pertinent to note that P.W.1 in his cross examination has stated that the draw has been made with the help of draw-machine. But the draw machine has not been seized by the investigating agency. So, non-seizure of the draw machine and other prizes, like Titan watch, gold coins, etc., and the person who participated in the draw and took the prizes, have not been examined before Court, which are all fatal to the case of the prosecution. 13. Even though P.W.1 has stated that one lady from Kangeyam took the lucky prize of car in the draw, the investigating agency has not examined the said lady. The investigating officer, i.e. the Inspector of Police has been examined as P.W.8 and in his evidence, in cross examination, he has fairly conceded that he has not seized any pamphlets from the public and he has not examined any public who paid the amount for the purchase of flats. He has also not examined any independent witness in the neighbouring area. He has not seized the other prize materials except M.O.1 car. He has gone to the extent of saying that during investigation, he has not investigated as to whom M.O.1 car belongs to. 14. At this juncture, it is appropriate to consider the documentary evidence Ex.D-1 invoice, marked on the side of the defence, through D.W.1 Subbiah. That invoice has been obtained on 9.1.2002. Certificate of Insurance given by Royal Sundaram Alliance Insurance Company Limited, has been marked as Ex.D-2, and it stands in the name of Subbiah of Sulur. He entered into hire purchase agreement with Sundaram Finance Ltd. The statement of accounts/account slip has been marked as Ex.D-3, which clearly proves that the alleged vehicle, namely M.O.1 car which has been seized, belongs to D.W.1 Subbiah. The car neither stands in the name of A-1 or A-2, nor in the name of A-3 or A-5. https://hcservices.ecourts.gov.in/hcservices/ 15. In the above circumstances, P.W.8 investigating officer has not properly investigated the matter. So, the prosecution has failed to prove that the appellants herein have conducted the draw. 16. At this juncture, learned Senior Counsel appearing for the appellants relied upon Sections 2(c) and (e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (Act 43 of 1978) and argued that there is no evidence to show that the draw has been conducted for the making of quick or easy money or for the receipt of any money or valuable thing as the consideration for a promise to pay money. 17. Sections 2(c) and 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, read as follows: "Section 2: Definitions: In this Act, unless the context otherwise requires-- .... .... (c) "money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions; .... .... (e) "prize chit" includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump sum or in instalments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefits, thrift, or any other scheme or arrangement by whatever name called, and utilises the monies so collected or any part thereof or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-- (i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement; https://hcservices.ecourts.gov.in/hcservices/ (ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole or part of the subscriptions, contributions or other monies collected, with or without any bonus, premium, interest or other advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit; " 18. The abovesaid ingredients of Sections 2(c) and (e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, have not been proved by the prosecution. In this connection, learned Senior Counsel appearing for the appellants culled out a portion of the oral evidence of P.W.8, wherein, in cross examination, he has stated as follows: @ //// vdJ tprhuizapy; ,t;tHf;F rk;gtj;jpy; filgpof;fg;gl;l gupRf; FYf;fy; Ryg Kiwapy; gzk; rk;ghjpf;ff; Toa tHpahdJ vd;W bjhpa tutpy;iy/ /////@ The learned Senior Counsel, while referring to the aforesaid version of P.W.8 Inspector of Police, urged that the ingredients of Section 2(c) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 have not been proved by the prosecution. 19. While considering the evidence of P.W.8 Inspector of Police, along with Sections 2(c) and Section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, it is seen that the prosecution has not proved the ingredients of Sections 2(c) and 2(e) beyond reasonable doubt. 20. Learned Senior Counsel also relied on the decision of the Supreme Court reported in AIR 1982 SC 949 (cited supra), wherein, it has been held as follows: "The main object of the Act (Prize Chits and Money Circulation Schemes (Banning) Act (43 of 1978) ) is to ban promotion or conduct of any prize chit or money circulation scheme, by whatever name called, and of the participation by any person in such chit or scheme." "To be money circulation scheme, a scheme must be for the making of quick or easy money on any event or contingency relative or applicable to the enrollment of the members into the scheme. The scheme has necessarily to be judged as a whole, both from the viewpoint of the promoters and also of the members. Various individuals may invest their monies in their business which may yield very high profits. Money individuals also may indulge in speculative business in expectation of high return of their money and may succeed or many not succeed in https://hcservices.ecourts.gov.in/hcservices/ speculative transactions. If such transactions are made openly and not in violation of any law, it can never be said that such investment has been made for making quick or easy money. If a part of the transaction is not above board and is secretive that will not make any difference and the transaction cannot be considered to be a scheme for the making of quick or easy money, though the transaction may offend against revenue laws or any other law. Transactions in black money do not come within the mischief of this Act." "In absence of anything to indicate that the firm in question makes any investment in consultation with depositors, the acts of a firm indulging in high risk investments and also advancing monies to political parties do not go to show that the firm makes quick money. It is no doubt true that the firm pays a larger amount by way of interest than payable on the basis of the rates stipulated in the loan certificate. The clandestine manner of payment of interest in recess of the stipulated rate does not, any way, indicate the existence of any scheme for making quick or easy money. None of the requirements of a money circulation scheme is satisfied in the instant case. As there is no money circulation scheme there can be no scheme as contemplated in the Act in view of the definition of scheme in the Rules. When the materials do not disclose that the firm is promoting or conducting a money circulation scheme, the Act has, therefore, no application to the firm." "The conditions must be satisfied before a person can be held guilty of an offence under S.4 read with S.3 and 2(c) of the Act. In the first place, it must be proved that he is promoting or conducting a scheme for the making of quick or easy money and secondly, the change or opportunity of making quick or easy money must be shown to depend upon an event or contingency relative or applicable to the enrollment of members into that scheme." 21. It is seen from the abovesaid decision of the Supreme Court that the conditions must be satisfied before a person can be held guilty of an offence under Section 4 read with Sections 3 and 2(c) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. In the first place, it must be proved that he is promoting or conducting a scheme for the making of quick or easy money. At this juncture, while considering the evidence of P.W.8 investigating officer, he himself has stated that during his investigation, he has not let in any evidence to show that the scheme has been introduced for getting quick or easy money. 22. Secondly, the change or opportunity of making quick or easy money must be shown to depend upon an event or contingency relative or applicable to the enrollment of members into that scheme. In the present case, none of the members, who are subscribers to the prize chit scheme, have been examined before https://hcservices.ecourts.gov.in/hcservices/ Court, which has also been accepted by the investigating agency. P.W.8 Inspector of Police has not examined any person as to who drew the prizes and the members of the scheme in question. P.W.8 went to the extent of stating that he has not examined any person who issued the cheques and the purpose for which those cheques have been issued. 23. Non-examination of the printer of the pamphlets, subscribers to the scheme in question, the alleged prize winners, the persons who issued the cheques, non-seizure of draw machine and the other materials, namely Titan watch, gold coins, etc., alleged to have been used as prizes and non-examination of the person who owns M.O.1 car, are all fatal to the case of the prosecution case. 24. In the above circumstances, while considering Sections 2 (c) and 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and applying the said decision of the Supreme Court to the facts of the present case, I am of the opinion that the prosecution has not proved the offence against the appellants/A-1 to A-3 and A-5 under Section 3 read with Sections 4 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. 25. The trial Court has committed error in coming to the conclusion only on the basis of the evidence of P.Ws.1 and 2 and Exs.P-1 and P-2, which is erroneous. Hence, the conviction and sentence of fine imposed on the appellants/A.1 to A.3 and A.5 by the trial Court are liable to be set aside. The appellants are exonerated of the charges levelled against them and they are entitled to be given "the benefit of doubt" and they are also entitled for acquittal. 26. In fine, the Criminal Appeal is allowed. The conviction and sentence of fine imposed on the appellants/A.1 to A.3 and A.5 by the trial Court, are set aside. The fine amount, if already paid by the appellants/A.1 to A.3 and A.5, is ordered to be refunded to them. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar cs https://hcservices.ecourts.gov.in/hcservices/ To 1. First Additional District Judge-cum-Chief Judicial Magistrate, Coimbatore.