TMI Blog2016 (5) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... J. For Appellant: Amit Desai, Senior Advocate and Gopal Shenoy For Respondents: Pradeep Gharat, Special PP and P.P. Shinde P.C.: The applications are moved for pre arrest bail as the applicants/accused are facing charges for the offences punishable under Sections 120(B) and 420 of the Indian Penal Code and under Sections 3, 5 and 6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Section 3 of Maharashtra Protection of Interest of Depositors (In Financial Establishments Act) in C.R. No. 316 of 2013 registered with Oshiwara police station, Mumbai. The offence is registered at the instance of one Gurupreetsingh Anand on 16th August, 2013. 2. It is the case of the prosecution that in the year 2000 one Vijay Ishwaran and Joseph, the founders of QI Group formed a company under the name and style Gold Quest International Private Limited . The applicants/ accused also joined the said group in 2006. Gold Quest International Private Limited used to sale gold plated coins. In the year 2000 the rate of gold was ₹ 5,000/- per 10 gms., however, they used to sale the gold plated coins for ₹ 30,000/- though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tourism Services Private Ltd, Transview Enterprises India Private Limited and Vihaan Direct Selling (I) Pvt. Ltd. started its business since April, 2012. In the said company, the applicant/accused Malcholm Desai was holding 20% shares and the applicant/accused Michael Ferreira was holding 80% shares. Other two applicants /accused Magaral Balaji and Shinivas Vanka were appointed as Directors of the Vihaan Direct Selling (I) Pvt. Ltd. Under the said Vihaan company, they continued the activities of selling the same products of Biodisk, Gold coins, Chi Pendents etc. They established one Pallava Resorts Private Limited and Vanmala Hotels, Travels and Tourism Services Private Ltd. The applicant/accused Suresh Thimiri was the C.E.O. since 2010 and became Director of Transview Enterprises India Private Limited. The holiday packages were issued by the said company. However, all these holiday packages were not given but only few were provided. Many persons also became members could not get a business as promised by the company. Therefore they felt deception. Thereafter the police registered offence on 16th August, 2013 against the present applicants/accused. At that time, it was found that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first information report and wherein a compromise/settlement between the parties has taken place and the Supreme Court quashed the first information report and allowed the Appeal. He further relied on the judgment of State of West Bengal and Othres vs. Swapan Kumar Guha and Others, 1982 Supreme Court Cases (Cri) 283. So also in the case of State of West Bengal and Others vs. Sanchaita Investments and Others, 1982 Supreme Court Cases (Cri) 283. The judgment of Sanchaita Investments is on Sections 3 and 4 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978. He further relied on para 6 of the said ruling. He submitted that the offence under Prize Chits and Money Circulation Schemes (Banning) Act, 1978 is bailable. On the point of necessity of arrest, he relied on Siddharam Satlingappa Mhetre vs. State of Maharashtra and Others, (2011) 1 Supreme Court Cases 694 and Jogindarsingh vs. U.P and Others, 1994(4) SCC 260. The learned senior counsel Mr. Amit Desai has submitted that in any case arrest is not required and arrest is not justified especially when the punishment is less than 7 years. In order to substantiate his submissions, he relied on Arnesh Kumar vs. Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red office of Vanmala Hotels, Travels and Tourism Services Private Limited company is a call center. He further submitted that in December, 2014 the Ministry of Corporate Affairs sealed their office at Chennai and declared Gold Quest International Private Limited and QuestNet Enterprise (P) Limited as the fraud companies. Thus money is collected on-line and though the Independent Representative number is given, actual money was not available for withdrawal. Said money was laundered outside India. The police in the investigation have come across 73 bank accounts of Q Net Limited and total laundering of Rupees is around 135 Crores. 9. The learned special prosecutor further submitted that in the year 2014 the complaint was filed against Q Net Limited and QuestNet Enterprise (P) Limited companies of Q1 Group as they have cheated many persons. He submitted that Q1 Group is from Malaysia and through the said group these activities are carried out under different name and style. There are multiple bank accounts, there is mens rea to cheat the people and thus, the companies i.e. Transview Enterprises India Pvt. Ltd. and Vanmala Hotels, Travels and Tourism Services Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Sections 4 and 5 read with sections 2(e) and 3 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. He relied on the judgment of Gautam Kundu vs. Manoj Kumar, in Cri. Appeal No. 1706 of 2015 arising out of SLP (Cri.) No. 6701 of 2015. In the said case, the trial Court has rejected bail under Section 439 of Code of Criminal Procedure where the accused was prosecuted for the offence punishable under Section 3 of Prevention of Money Laundering Act, 2002. In the said case, the Court has referred Section 45 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and which has overriding effect on the general provisions of the Code of Criminal Procedure. 11. The complainant Gurupreetsingh Anand who was present in the Court wanted to address the Court and so in all fairness, the opportunity was given to him. He was heard. He has also filed the intervention application. He stated that QuestNet Enterprise (P) Limited carried out their business and after the prosecution of QuestNet Enterprise (P) Limited, they introduced the business plan under the name and style Q Net Limited. He submitted that the company gives rosy picture of 'money back scheme& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts. It is not compulsory for any person to become member and enroll in it. He submitted that earlier it was Gold Quest International Private Limited and if at all there is some fault or illegality found in the scheme, then the person can change the scheme as per the requirement of the law and it can be corrected and therefore a new scheme can be introduced. Therefore, there is difference between Q Net Limited and QuestNet Enterprise (P) Limited. There are no registration charges for becoming Independent Representative in Q Net Limited, which were compulsory in QuestNet Enterprise (P) Limited. The commission depends only on sale of goods. There is also a refund policy in the working of Q Net Limited. The applicants/accused are not sitting on anybody's money. In the case of QuestNet Enterprise (P) Limited, the Madras High Court initiated the prosecution against different persons than the applicants/accused. However, the order passed by the Madras High Court was subsequently set aside by the Hon'ble Supreme Court as the parties entered into a compromise. As per the requirement of Section 2(c) of M.P.I.D. Act, it is necessary to collect deposits. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the long queue. But inevitably and inescapably later subscribers are bound to suffer unjust loss when they swallow the false and therefore the charge can be framed under Section 420 read with 34 of Indian Penal Code at the said stage. 17. This scheme is undoubtedly a multilevel marketing activity and a pyramid structure of such scheme is prepared so that the members are promised to get money on purchase and sale of products. The money circulation or multilevel marketing pyramid structure as described above is a cognizable offence under Prize Chits and Money Circulation Schemes (Banning) Act, 1978. A letter dated 1st January, 2015 issued by the Chief General Manager, R.B.I. is placed before me, wherein R.B.I. has cautioned the public against multilevel marketing activities as the people due to attractive offers are falling prey to the said schemes and finally they suffer losses. However, the offence under Prize Chits and Money Circulation Schemes (Banning) Act, 1978 is bailable. 18. In the case of Shrinivasa Enterprise (supra), the competency of the legislature to enact the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 was challenged. In the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from these offences for which the applicants/accused are prosecuted, cheating is the only non-bailable offence under section 420 of the IPC. While hearing the case of the prosecution and the defence, my main query to both the parties and myself was whether offence of cheating is prima facie made out or not. In order to attract the offence of cheating, the ingredient of intention to cheat should be present in the mind of the accused. If mens rea is absent, then, even if other person or the complainant suffers losses in the business, then, it is not cheating. Then, it can be simply labelled as a financial business transaction which did not fetch positive returns. As per the submissions of the learned Senior Counsel and the other learned Counsel for the applicants/accused, it is true that the company has launched an e-marketing business to make money. As observed by the Supreme Court in the case of Chacko (supra) to earn more money is not an offence; to earn quick money or easy money is also not an offence. Therefore, if such project is launched, that itself cannot be an offence. There is no compulsion or force operated on the public to be a member of the business or participate in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egularly at various places by the company. Undoubtedly, all these workshops and sessions and training centres are run at the behest of the applicants/accused by the Directors and shareholders i.e., the applicants/accused and thus, they have control either directly or remotely, over the dishonest inducement and aggressive marketing which is the modus operandi of this company. 23. To protect the fundamental right of every individual to practice any profession or to carry on any occupation, trade or business which is guaranteed under Article 19(g) of the Constitution of India is the duty of the Court. However, it is always qualified with reasonable restrictions. A particular business fetching profit to handful of individuals cannot be carried out at the cost of others who suffer losses due to deceitful inducement. 24. The statements of the witnesses reveal that the dishonest concealment of true facts and the real business of the company. The persons, who dominate and navigate the will of the others, have an advantage which they can turn to their account. In the present case, such advantage is gained undoubtedly by dishonestly and in deceitful manner. There are instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce how to give notice and the person should get opportunity to put up his explanation. In the present case, the offence is registered in the year 2013. The applicants/accused were granted interim pre-arrest bail by the learned Sessions Judge and thus, the applicants/accused have visited the police station on a number of occasions and gave explanation to the police, which they wanted to. However, the police have opposed their applications for pre-arrest bail in the Sessions Court and the Sessions Court has denied the same. It shows that section 41A was in fact fully complied with. This shows that the police whatever explanation and information they received from the applicants/accused are not satisfied. I made searching queries to the learned Prosecutor in order to clear the doubt as to whether the police wanted to arrest the applicant-accused only out of vengenace or they have made it a prestige issue. However, after going through the record, which is placed before the Court and the submissions made by both the parties, I found that such element is absent. There may be misdirected over-enthusiasm on the part of the prosecution in sending Biodisk and Chi Pendent to BARC. However, I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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