IN THE HIGH COURT OF JUDICATURE OF ANDHRAPRADESH AT HYDERABAD THURSDAY, THE TWENTY SECOND DAY OF SEPTEMBER TWO THOUSAND AND ELEVEN PRESENT THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL NO.2580 OF 2004 Between: S.Govindu …..Appellant And The State of A.P., through Inspector of Police, Kurnool II Town, Police Station, Kurnool, rep. by Public Prosecutor, High Court of A.P., Hyderabad. …..Respondent THE COURT MADE THE FOLLOWING: THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL NO.2580 OF 2004 JUDGMENT: The appellant/accused was convicted by the Principal Sessions Judge, Kurnool of the offence under Section 5 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 (for short, the Act) and was sentenced to rigorous imprisonment for one year and fine of Rs.10,000/-. Questioning the same, the accused filed this appeal. 2. There is no dispute in this appeal that the accused started Lucky Gold Scheme in the year 2000 in the name of Sree Guru Raghavendra Lucky Scheme and published pamphlets inviting deposits from the public. As per terms of the scheme, each subscriber has to pay Rs.175/- per month for 26 months and at the end of the scheme period, the subscribers will be given 10 grams of gold and 30 grams of silver. It is also provided under the scheme that there will be lucky dip every month and that the prized subscriber need not pay future instalments. The scheme was for a period of 26 months. P.Ws.1 and 3 to 8 apart from others joined in the scheme started by the accused. Some of them paid complete instalments for 26 months and some of them paid subscription only for part of the scheme period and committed default and were waiting for completion of the scheme to claim refund of their amounts. It is prosecution case that even after completion of the scheme period, the accused did not honour terms of the scheme and did not either pay the proceeds in specie or in cash and that therefore the accused is liable under Section 420 I.P.C. as well as Section 5 of the Act. After trial, the lower court found favour with the accused in respect of offence under Section 420 I.P.C., but found the accused guilty under Section 5 of the Act. 3. In this appeal, it is contended by counsel for the appellant that even though as per terms of the scheme, there should be 250 members, only 127 members joined in the scheme and that some of the members committed default in payment of monthly subscriptions in the middle of the scheme and that rates of gold and silver became high by lapse of time by the end of the scheme and that therefore the accused was not able to honour his commitments as per terms of the scheme. In my opinion, all the said contentions of counsel for the appellant are no valid defences for the offence under Section 5 of the Act. In case the accused could not gather 250 members for the scheme, there was no compulsion for the accused to start the scheme at all. Instead, the accused started the scheme with 127 members only and started making collection of amounts from the members. After starting the scheme and after collection of amounts from the members, it is legal duty of the accused to obey his commitments under the agreement as well as under the law. It is evidence of P.W.1, who is one of the subscribers, that they waited for repayment for a period of one year after completion of the scheme and it is only thereafter they gave report to the police. 4. Saving feature in this case is that as per evidence of P.W.9, who is the Investigating Officer, the accused paid away the amounts to 99 of the subscribers by the date of filing of charge sheet in the lower court. Subsequently also the accused claims that he has settled the matter with other members. But there is no material before this court to show that he settled the matter with all 127 subscribers. Insofar as P.Ws.1 and 3 to 8 are concerned, except with P.W.3, the accused settled the amounts with them and made payments. According to the accused, he could not make payment to P.W.3 because the subscription was made by P.W.3 on behalf of his grand-son and D.W.1 who is son-in-law of P.W.3 and who is father of the beneficiary settled the matter with the accused and received amount from him. The subscribers were forced to settle the matter with the accused satisfying themselves with whatever amount they got from the accused, because the accused did not pay the amounts or gold and silver to them by the agreed date. The said settlement of amounts by the subscribers with the accused subsequent to registration of the case and subsequent to filing of the case in the lower court, would be relevant in determining the sentence to be passed against the accused. The evidence on record established beyond any shadow of doubt that by the end of the scheme floated by the accused, the accused committed default attracting penal liability under Section 5 of the Act. Therefore, the lower court was right in finding the accused guilty under Section 5 of the Act. 5. In the result, the appeal is dismissed, but altering the period of imprisonment from one year to three months. Fine amount is maintained. _____________________________________ JUSTICE SAMUDRALA GOVINDARAJULU 22nd September, 2011 TJMR THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL APPEAL NO.2580 OF 2004 DATE: 22.09.2011