TMI Blog2015 (8) TMI 1521X X X X Extracts X X X X X X X X Extracts X X X X ..... the Legislature wanted to bring into the net of TNPID both Non-Banking Financial Companies and incorporated Companies which are into the business of receiving deposits within the purview of TNPID Act. It is not necessary that an incorporated Company should be a Non-Banking Financial Company for being in the business of receiving deposits. - Though it is clear to me that the definition of the word Financial Establishment' in TNPID Act does not admit into its fold all Companies irrespective of their nature of business, and only Companies which are into the business of receiving deposits, yet I would also like to address this issue from the perspective of the Philosophy of Penal Law. In Democratic Republican form of Governments, the entire edifice of Penal Law is built upon the Rousseauean Philosophy that man is naturally good and anything that is not natural has corrupted us from this natural State. When Rousseau propounded this theory, as usual cynics ridiculed it as merely a romantic hypothesis. He has been proved right by later commentators. Definitions in Penal Law are not intended for semantic debates by trained legal minds, but it is intended for the lay and the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. It is indeed a sheer coincidence that, though Helios and Viswapriya have no relationship with each other, yet, they share a common Cr.No.5, but of course registered in different years. It is the specific case of the prosecution that, Helios and Viswapriya had collected deposits from public and on maturity, they failed to repay them, pursuant to which, on the complaint lodged by depositors, the aforesaid cases were registered against them for the offence under the TNPID Act along with IPC offences. At the outset, it is contended on behalf of Helios and Viswapriya that, the Deputy Superintendent of Police, Economic Offences Wing has no authority to conduct investigation under the TNPID Act and therefore, the very FIR deserves to be quashed. In support of this plea, the learned counsel for the accused submitted that, the power of Economic Offences Wing to conduct investigation for an offence under TNPID Act came for consideration before a learned single Judge of this Court in P.S.Chellamuthu v. The State [MANU/TN/1492/2008] Crl.O.P.Nos.21711 and 35339 of 2007 and this Court by order dated 04.12.2008, upheld the power of the Deputy Superintendent of Police, Economic Offences Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court is that, where a single Judge is inclined to take a view different from the one that has been taken by a single Judge of the same Court or of the Division Bench of the same Court, then he should not embark upon an enquiry as a single Judge, but should refer the matter to a Division Bench or should seek for constitution of a larger Bench to examine the question. [a] In D.K.Trivedi and sons others v. State of Gujarat [cited supra], the Hon'ble Supreme Court has held as follows: In our opinion, the course adopted by the High Court was not correct. If the High Court thought that the point raised by the Appellants was the same as was pending in this Court, it ought to have stayed the hearing of the writ petition until this Court disposed of the other matters. [b] In Central Coal fields vs. H.M.P. [cited supra], the Supreme Court has held as follows: 2. It is open to the petitioners to apply in the High Courts in the writ petitions pending there, for an interim order in similar terms as has been made by Hon'ble Mr.Justice J.S.Verma and Hon'ble Mr.Justice G.N.Ray in W.P.(C) NO.787 of 1992 on April 30, 1993. Apart from making the necessary interim order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is quashed and the matter is remanded, the result would be that the appeal which had been disposed of by the said order of the appellate authority would be restored and it can be said to be pending before the appellate authority after the quashing of the order of the appellate authority. The same cannot be said with regard to an order staying the operation of the order of the appellate authority because in spite of the said order, the order of the appellate authority continues to exist in law and so long as it exists, it cannot be said that that appeal which has been disposed of by the said order has not been disposed of and is still pending. We are, therefore, of the opinion that the passing of the interim order dated February 21, 1991 by the Delhi High Court staying the operation of the order of the appellate authority dated January 7, 1991 does not have the effect of reviving the appeal which had been dismissed by the appellate authority by its order dated January 7,1991 and it cannot be said that after February 21, 1991, the said appeal stood revived and was pending before the appellate authority. 8. The learned counsel for the accused submitted that, the Calcutta High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ennai, in its order dated 29.9.99, in Company Application Nos.479 and 480 of 1999, filed by M/s Anubhav Plantations Ltd., Chennai, has ordered that a Special Wing comprising of persons, possessing skill and capable of acting with a sense of urgency, headed by an officer not below the rank of a Police Commissioner must be constituted without further delay to deal with the cases against non-banking financial companies and unincorporated financial institutions which have collected money from public as deposits and thereafter defaulted in repayment to them after maturity. It was also ordered that able and experienced senior officers with integrity, recently retired from Banks and financial institutions and also able senior professionals with integrity can be associated with such a specialised Wing as advisors or consultants. The High Court, has further ordered to employ competent persons, audit, valuation, stock exchanges, securities market, etc., for legal assistance in dealing with such cases. 2. The Government after careful examination of the matter in consultation with the Director General of Police, Chennai and the Additional Director General of Police (Economic Offences Wing) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the ancient usages of the country, should be established throughout the territories subject to the Government of Fort St.George, and that the powers and authorities of the several classes of persons to be entrusted with the performance of police duties should be defined; The Right Honorable the Governor in Council has been pleased to enact the following rules. II. Regulation XXXV, 1802, and Section XII, Regulation IV, 1808 are hereby rescinded. III. The present establishments of Police Darogahs and Tanahdars shall from the first day of November 1816, be abolished, and the duties heretofore discharged by those persons shall be performed by persons of the descriptions herein-after mentioned. 1. Heads of villages as described in Section III, Regulation IV, 1816 aided by Curnums or Village Registers, and Tallyars and other Village Watchers. 2. Tahsildars, or Native Collectors of districts, by whatever name designated, with the assistance of Peshkars, Gomashtas, and establishments of Peons. 3. Zemindars. 4. Ameens of Police. 5. Cutwals and their Peons 6. Magistrates of Zillas and their Assistants. IV. Heads of villages shall be ex-officio Heads of the Pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces; to preserve the peace; to apprehend disorderly and suspicious characters; to detect and bring offenders to justice; to collect and communicate intelligence affecting the public peace; and promptly to obey and execute all orders and warrants lawfully issued to him. 15. Discussion about these provisions will be taken up while dealing with similar provisions of the 1861 Act, about which we will come to, a little later. The 1859 Act was a self contained Code, and it conferred the following powers on the Police: Sections XXII - Police Officer may arrest without warrant; XXIII - Persons arrested without warrant to be taken to Station House until brought before Magistrate or bailed; XXIV - Releasing on bail; XXV - Superior Officer of Police may take recognizance for appearance of prosecutor or witness; XXVI - Condition of recognizance; XXVII - Remands; XXVIII - Entering drinking shops, gaming houses etc. without a warrant; XXIX - Inspection of weights and measures; XXX - Police Officer not to receive complaints of petty offences; XXXI - Police Officers may lay information before Magistrate; XXXII - All warrants and summons to be executed by the members of the Police Force; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ette of India, may extend the whole or any part of this Act to any presidency, province or place, and the whole or such portion of this Act as shall be specified in such order shall thereupon take effect in such presidency, province or place. By Notification No.728 dated 31.10.1895 (Gazette of India, 1895, Part I p.876), Section 15, 15A, 16, 30, 30A, 31 and 32 of the Indian Police Act, 1861 was extended to the whole of Madras Presidency. Notification No.728 reads as follows: The 31st October, 1895. No.728.-- In exercise of the power conferred by section 46, sub-section (1), of Act V of 1861 (an Act for the Regulation of Police), as amended by subsequent enactments, the Governor General in Council is pleased to extend sections 15, 15A, 16, 30, 30A, 31, and 32 of the said Act as amended to the whole of the Madras Presidency. That is how Superintendents of Police in the Districts frequently pass orders under Section 30 of the Police Act, 1861 regulating assemblies and processions. Section 15A of the Indian Police Act, 1861 was amended by the Police (Madras Amendment) Act, 1948 (Madras Act No.XIII of 1948) and Sections 30, 31 and 34 of the Indian Police Act, 1861 were am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d whereas by Act XXV of 1861 a Code of Procedure is provided for the Courts of Criminal Judicature not established by Royal Charter, and the said Code likewise came into operation on the 1st day of January 1862 in the Presidencies of Bengal, Madras, and Bombay, and was at the same time, or has since been, or hereafter may be extended to other parts of British India; and whereas it is expedient to repeal, in the manner hereinafter provided, certain Regulations and Acts relating to Criminal Law and Procedure; It is enacted as follows: I. The several Regulations and Acts set forth in the Schedule hereunto annexed, so far as they provide for the punishment of offences, shall be held to have been and are hereby repealed from the 1st day of January 1862 in the Presidencies of Bengal, Madras, and Bombay, and in the other parts of British India, in which such Regulations and Acts or any of them were in force on the said 1st day of January 1862, except in so far as they repeal the whole or any part of any other Regulation or Act, and except as to any offence committed before the said 1st day of January, 1862. II. ..... III. ..... IV. In the investigation and trial of offences co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to Tamil Nadu. 22. The discussion will be incomplete without a reference to the Madras City Police Act, 1888 [Act II of 1888]. This Act created a position called Commissioner of Police for the city of Madras and vested the control of the Police force in Madras city on the Commissioner of Police. Section 16 of the Madras City Police Act, provides for employment of Police Officers appointed under the Tamil Nadu District Police Act, 1859 in the city of Madras. All Police men working under the Commissioner of Police are required to perform the duties adumbrated in Section 21 of the 1859 Act in addition to the duties under the Madras City Police Act, 1888. The Madras City Police Act, 1888 was re-christened as the Chennai City Police Act, 1888. As and when the Government creates new cities in Tamil Nadu, an Act is passed by the State Assembly to create the position of Commissioner of Police for the newly formed City and the provisions of the Chennai City Police Act, 1888 is made applicable. For example, by the Chennai City Police (Extension to the City of Madurai and to the City of Coimbatore) Act 1987 (Tamil Nadu Act 32 of 1987) the provisions of Madras City Police Act 1888 was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituting Economic Offences Wing should also meet the same fate. The Hon'ble First Bench of this Court quashed those two Government Orders as they were found to be violative of Article 14 of the Constitution of India, inasmuch as the Hon'ble Bench felt that, without a law prescribing what Land Grabbing Office is, creation of a special wing for land grabbing offences, would amount to arbitrary exercise of power. In this case, TNPID Act clearly defines the offence and for investigating the offence, if a Special Police Wing is created, it cannot be violative of Article 14 of the Constitution of India. Therefore, the judgment of the Hon'ble First Bench was rendered in the facts and circumstances of that case and for the aforesaid reason, the principles in that judgment in my humble opinion, cannot be applied into this case. 26. The argument that Economic Offences Wing can investigate only partnership firms and unincorporated companies is an argument in vain. The definition of the word 'person' in the 1859 Police Act, Indian Penal Code, 1860 and the General Clauses Act, 1897, is an answer to this argument. If any person, be it natural or juristic, commits an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code of Criminal Procedure, 1973 to take up the investigation and register FIR under Section 154 of the Code. Hence, this contention is rejected. 29. The next contention by the learned counsel is that, the accused are companies incorporated under the Companies Act, 1956 and therefore, only the provisions of Section 74 of the Companies Act, 2013 can be made applicable to them and not the provisions of the TNPID Act. 30. There is no force in this argument in the light of Section 14 of TNPID Act, which states as follows: 14. Act to override other laws.-- Save as otherwise provided in this Act, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any custom or usage or any instrument having effect by virtue of any such law. 31. Mr.Nithyaesh, learned counsel placed heavy reliance upon the non obstante clause used in Section 74(1)(a) of the Companies Act to drive home the point that, if a Company defaults in repaying the depositors, only the provisions of Section 74 can be invoked and not the TNPID Act. Section 74(1)(a) permits a Company to prepare a Scheme for repayment and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yanan, learned Amicus Curiae took a stand that TNPID Act would apply to any Company that refuses to pay back its depositor. This argument was strongly refuted by Mr.Ramakrishnan, learned Amicus Curiae and the learned counsel for the accused. The learned Advocate General and Mr.Sankar Narayanan brought to the notice of this Court the changes that were effected to the TNPID Act by the 2003 amendments. They contended that, when the Act was originally passed in 1997, it clearly excluded a Company registered under the Companies Act, 1956 and also a Non-Banking Financial Company as defined in Section (f) of Section 45-I of Reserve Bank of India Act, 1934, but whereas, by the 2003 amendment, a Company registered under the Companies Act, 1956 has been included and the specific exclusion of Non- Banking Financial Companies in the 1997 Act has been left out by the 2003 amendment. Therefore, it is their contention that, if the legislature had wanted to exclude incorporated Companies from the purview of the TNPID Act, they would have excluded it specifically and would have included Nonbanking Financial Companies specifically. It is true that when TNPID Act was passed in 1997, it specifically e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Negotiable Instruments Act. Sri P.Ramanatha Aiyar's Advanced Law Lexicon 3rd Edition says: The is the word used before nouns, with a specifying or particularizing effect opposed to the indefinite or generalising force of a or an . The article the directs what particular things or things we are to take or assume as spoken of. It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. Article 'THE' before word 'agreement' would refer to that agreement which is implicit in the sale occasioning the export. And the agreement spoken of must be the agreement with foreign buyer. Consolidated Coffee Ltd. v. Coffee Board Bangalore, AIR 1980 SC 1468. [Constitution of India, Art.286 (2); Central Sales Tax Act (74 of 1956), S.5(3)] 36. It may be profitable to extract the following self explanatory passage from the Constitution Bench judgment of the Supreme Court in Gujarat University v. Shri Krishna [AIR 1963 SC 703]: When the Legislature intended to provide English as the sole medium of instruction, definite article 'the' was used while in other cases indefinite article 'a' was used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for various reasons. The deposits so received from the public is a loan simpliciter repayable with statutory interest. In fact, while receiving deposits under the Deposit Rules framed under the Companies Act, the receiving Company cannot pay fancy interest. They have to pay only the interest fixed by the Reserve Bank of India and nothing more. Whereas, TNPID Act was enacted because, fancy interest was being offered by Companies which were into the business of receiving deposits to lure innocent public. To say that an ordinary manufacturing unit which receives deposits under the Companies Act exclusively for augmenting its resources for the purpose of running its manufacturing unit and which fails to repay a depositor can be prosecuted under the TNPID Act, will not only mean enlarging the scope of the definition of the word Financial Establishment under the TNPID Act, but would also be against the objective for which the Act was passed. 39. On behalf of the State, it was pointed out that if the Memorandum of Association of a Company permits the receipt of deposits, then that Company should be deemed to be a Financial Establishment within the meaning of the TNPID Act. Company La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-Banking Financial Company is not a body in abstract. It has been defined in Section 45-I(f) of the Reserve Bank of India Act, 1934 which is as follows: 45-I(f) non-banking financial company mean-- (i) a financial institution which is a Company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. 42. In Section 45-I(f), the expression which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner is somewhat similar to the definition of the word Financial Establishment in TNPID Act. One difference is, the word principal is not there before the word business in Section 2(3) of TNPID Act. From an analysis of these two Sections, it is clear that, the Legislature wanted to bring into the net of TNPID both Non-Banking Financial Companies and incorporated Companies which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t carry the appearance of satisfying Thomas Aquinas' definition of law as an 'order of reason for the common good by one who has the care of the community, and promulgated. 45. In England, where there is no Republican form of Government, the purpose of criminal law is heavily diced against the State as noticed in the dissenting judgment of Shah, J., in State of Gujarat v. Shyamlal [AIR 1965 SC 1251]: The prevailing ideas on the subject of criminal law had been somewhat affected by the English law; and the departures from the rules of the English law which the Committee recommended were founded on this ground, that many of the prominent parts of the English law were based on political considerations, the object of those familiar rules of criminal law being not to bring the criminal to justice, but to protect the people from a tyrannical Government. (emphasis supplied) 46. The faith in the goodness of ordinary human being is so profound that Viscount Sankey wrote the famous words in Woolmington vs. Director of Public Prosecutions [1935 All ER 1] that, the prisoner is presumed to be innocent unless proved otherwise. In Sheldrake vs. Director of Public Prosecut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the TNPID Act for default in paying its depositor. They can be prosecuted under the Companies Act. It would never have been the intention of the Legislature to give unbridled power to the police to destroy legitimate business in this Country and reduce our countrymen to penury. 50. Coming to the case of Helios, it is contended by the learned counsel for the accused that their main business activity is into Information Technology and that they are not into the business of receiving deposits. During the arguments in the open Court, the website of Helios and Matheson was opened, in which they have represented to the public that they are into Banking and Financial services. Their Directors' Report for 2012-2013 filed with the Registrar of Companies also states: while the business focus continues to be on Banking and financial services and insurance, healthcare and technology verticals, the company has taken the initiative to launch services in new horizontals such as big data and analytics, cloud services and mobile technology solutions. [emphasis supplied] Thus, prima facie the website and the Directors' Report of Helios belies their contention that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no sameness in the complaints of new depositors, then it would lead to a very disastrous situation, whereby thousands of FIRs will stand registered and each time when the arrested accused is released on bail in one FIR, he can be re-arrested and kept in jail for the whole of his life time as a remanded prisoner. A common sense approach should be adopted and a pragmatic interpretation of the law should be made. A similar situation arose before this Court in V.Ettiappan and others v. Superintendent of Police, Chengalput and another [2002 MLJ Crl 162], wherein 600 people were cheated by a person and this Court directed that, there can be one FIR and the complaints of other persons should be treated as statement under Section 161(3) Cr.P.C. I am inclined to adopt this procedure in this case and it is not open to the police to keep registering fresh FIRs by obtaining complaint from each depositor and arrest the accused, for that would be a patent abuse of police power. Of course, the trial Court can frame distinct charge vis-a-vis each depositor. The Deputy Superintendent of Police in his signed written submission has contended as follows: The complaint in Crime no.5 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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