Bombay High Court
Suresh Thimiri S/O T. K. Thimiri vs The State Of Maharashtra on 6 May, 2016
Bench: Mridula Bhatkar
Vishal
[email protected]
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
ANTICIPATORY BAIL APPLICATION NO.326 OF 2016
WITH
CRIMINAL APPLICATION NO.360 OF 2016
Suresh Thimiri s/o. T.K. Thimiri ... Applicant
vs.
The State of Maharashtra ... Respondent
WITH
ANTICIPATORY BAIL APPLICATION NO.327 OF 2016
WITH
CRIMINAL APPLICATION NO.361 OF 2016
Michael Joseph Ferreira ... Applicant
vs.
The State of Maharashtra ... Respondent
WITH
ANTICIPATORY BAIL APPLICATION NO.328 OF 2016
WITH
CRIMINAL APPLICATION NO.362 OF 2016
Shinivas Rao Vanka
s/o. Pattabhi Rama Rao Vanka ... Applicant
vs.
The State of Maharashtra ... Respondent
WITH
ANTICIPATORY BAIL APPLICATION NO.329 OF 2016
WITH
CRIMINAL APPLICATION NO.363 OF 2016
Magaral Veeravalli Balaji
s/o. Magaral Vearavalli Chellapillai ... Applicant
vs.
The State of Maharashtra ... Respondent
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WITH
ANTICIPATORY BAIL APPLICATION NO.330 OF 2016
WITH
CRIMINAL APPLICATION NO.364 OF 2016
Malcholm Nozer Desai ... Applicant
vs.
The State of Maharashtra ... Respondent
Mr. Amit Desai, Senior Advocate a/w. Mr. Gopal Shenoy for the
Applicants in ABA. Nos. 326 and 328 of 2016.
Mr. Ashok Mundargi, Senior Advocate for the Applicant in ABA.
No. 329 of 2016.
Mr. Girish Kulkarni, for the Applicant in ABA. No. 330 of 2016.
(All the counsel for the applicants are instructed by Mrs. S.J.
Patil a/w. Mr. Vikramsingh Parmar, Mr. Kedar Patil, Mr. Santosh
Kore and Ms. Trupti Bharadi).
Mr. Pradeep Gharat, Special PP a/w. Mrs. P.P. Shinde, for State.
Mrs. Sharmila Kaushik, APP for the State in A.B.A. 328 of 2016.
Mr. G.S. Anand, the complainant/party-in-person present.
CORAM: MRS.MRIDULA BHATKAR, J.
DATE: 6th MAY, 2016
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.
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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 Rs. 5,000/- per 10 gms.,
however, they used to sale the gold plated coins for Rs. 30,000/-
though the gold was less than 10 gms. Thereafter, the purchaser of
the gold coin becomes a member of the group. He was required to
make more persons as the member of the Gold Quest International
Private Limited. On the basis of the number of members which he
brings, he was placed to get the commission. So he was supposed to
bring minimum two persons and the hierarchy had pyramid structure.
So one member treated at the right side and second member was
treated on the left side. The volume of the said business after
enrollment of new member increases when 1000 units are credited to
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the account of the old member which are treated equivalent to the
commission of Rs. 11,500/-.
3. It is the case prosecution that in the year 2003 a fraud was
detected and the offence was registered at Chennai against the said
Gold Quest International Private Limited company. So the owners of
the said company repaid everything to the members to whom they
have promised to pay and the offence was compounded. Hence, the
first information report was quashed. However, the company
continued the illegal activities by forming another company by
different name i.e. "QuestNet Enterprise (P) Limited". They started
one "Pallava Resorts Private Limited" and also launched various
products especially the products by name Biodisck, Chi Pendent,
Watches, Gold Coins. These products were sold from minimum Rs.
30/- to Rs. 7 lacs. The false representation was made by the company
that the said product Biodisk cures diseases. Biodisk is to be kept in
the water and due to molecular effect, the quality of the water is
changed and if that water is consumed, it will give good result and
cures the diseases including like cancer.
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4. It is the case of the prosecution that the applicant/accused
Suresh Thimiri was appointed as Indian head and C.E.O. of QuestNet
Enterprise (P) Limited and the applicants/accused Michael Ferreira
and Malcholm Desai had joined the said company in the year 2006
and actively participated in the expansion of this company. In 2008
the offences were registered at Chennai, Andhra Pradesh and
Karnataka but the said company continued its activities of chit-fund
and money laundering till 2012. They stopped the business of
QuestNet Enterprise (P) Limited company but formed a new company
by name Q Net. Under this brand of Q Net, three companies i.e.
Vanmala Hotels, Travels and 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,
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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 nearly 90000
members were cheated at the hands of applicants/accused and they
suffered wrongful loss of amount of Rs. 425 Crores and as such
money laundering was of Rs. 425 Crores. However, till today during
the investigation, it was found that number of members who are
deceived are around 5 lacs and misappropriation and money
laundering was about more than of Rs. 1000 Crores. Hence, this
complaint.
5. Mr. Amit Desai, Mr. Ashok Mundargi, the learned
Senior Counsel and Mr. Girish Kulkarni, the learned counsel for the
applicants have submitted that the applicants/accused are innocent.
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They have neither cheated anybody nor committed any offence. It is
submitted that the complainant is a motivated person who has lodged
a false complaint against the applicants/accused due to business
rivalry. They submitted that the applicants/accused are in the
business of direct marketing which is legally permissible in all over
the world. Vihaan Direct Selling (I) Pvt. Ltd. company has total 50
products and they are categorized sales known for nutrition and
herbal products, the tourism holiday, wellness products etc. Mr. Amit
Desai, the learned Senior Counsel, further has submitted that the
applicants/accused neither promoted any investment nor collected
deposits in any scheme. They are selling products and the buyers get
the commission. He described the policy of the company as "if you sell
more, you earn more". It is not a fly-by-night operation of money
laundering but the applicants/accused are in the business with the
large number of Individual Representatives who have earned lot of
money. However, their statements are not recorded by the police. He
submitted that police are selective in the investigation. He relied on
the terms and conditions of the contract/policy which every member
has to sign with the company after he gets Independent
Representative number and the membership. He submitted that the
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company has also refund policy and the persons who did not receive
the service or are not satisfied with the service, they can approach the
company. The company has refunded nearly 95-100 Crores.
6. In support of his contention, the learned senior counsel
has relied on the judgment of Gold
Quest International
Private
Limited vs. State of Tamil Nadu and Others, (2014) 15 Supreme
Court Cases, 235 where the company has filed Petition for quashing
the 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
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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. State of Bihar and Another, (2014) 8 Supreme Court
Case, 273. He also relied on Amway India Enterprises vs. Union of
India, 2007 SCC OnLine AP 494.
7. The learned senior counsel has submitted that since the
case of Joginder Kumar vs. State of U.P. And Others, (1994) 4
Supreme Court Case, 260 to the case of Arnesh Kumar (supra), the
law on the point of arrest has changed as the police officer must be
satisfied about necessity and jurisdiction of such arrest on the basis of
investigation. He submitted that there should not be violation of
human rights. He relied on Gurbaksh Singh Sibbia and Others vs.
State of Punjab, (1980) 2 Supreme Court Cases, 565 and
Siddharam Mhetre (supra), wherein the principle of arrest in the
cases of anticipatory bail is explained. He further placed reliance on
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the case of Bhadresh Bipinbhai Sheth vs. State of Gujrat, 2015 SCC
OnLine 771. It was the case under Section 438 of Code of Criminal
Procedure wherein the Hon'ble Supreme Court has laid down the
principles of grant of anticipatory bail.
8. Mr. Pradeep Gharat, the learned special prosecutor
submitted that Chi Pendent and Biodisk were sent to Bhabha Atomic
Research Center for radio activity test which was conducted on 20 th
February, 2015 wherein it was reported that no radio activity was
detected. He further submitted that the company was not selling
actually any product but everything is shown on Internet and on
social website. The police have recorded the statements of three
persons who have stated that the seminars were conducted for the
persons who were interested in getting degree of M.B.A. They have
stated that as per the representation made before them, they paid the
amounts as they were promised E-course of M.B.A. which was
affiliated to some Swiss University. They were informed that as and
when payment is made, you will get identity and one "Independent
Representative" (I.R.) number and a link will be provided with a
password so that they could have access to the site. However,
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irrespective of their efforts they could not get access and could not
complete the degree and thus they were cheated. He submitted that
Vanmala Hotels, Travels and Tourism Services Private Ltd. and Pallava
Resorts Private Limited have created a Website and travel packages.
The commission was not paid on the products though the new
members were introduced. The registered 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
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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. Ltd. and Vihaan Direct Selling (I) Pvt. Ltd. cheated many
persons and that is continued till today. There is money- trail which is
disclosing money level circulation scheme. In support of his
contentions, he relied on the following authorities:
1) State of Gujrat vs. Mohanlal Jitamaljiporwal and
Another, 1987 AIR 1321.
2) Narayanan Rajagopalan vs. The State of Maharashtra, in
Cri. A.B.A. No. 1416 of 2013 dated 2 nd April, 2014.
3) Ashok Bahirwani vs. The State of Maharashtra, in Cri.
th
A.B.A. No. 1083 of 2012 dated 19 March, 2013.
4) Amway India Enterprises vs. Union of India, 2007 (4)
ALT 808.
5) Y.S. Jagan Mohan Reddy vs. C.B.I., in Cri. Appeal No.
th
730 of 2013, S.C. dated 9 May, 2013.
6) Kasturchand Ramlal Badjate vs. The State of
Maharashtra, (1981) 83 BOMLR 8.
7) Central Bureau of Investigation vs. Anil Sharma, S.C,
rd
Cri. Appeal dated 3 September, 1997.
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8) Sudhir vs. The State of Maharashtra and Another, Cri.
st
Appeal Nos. 1286-1287 of 2015 dated 1 October, 2015.
9) K.K. Baskaran vs. State of Tamil Nadu and Others, Cri.
th
Appeal No. 2341 of 2011 dated 4 March, 2011.
10) Shrinivasa Enterprise and Others vs. Union of India,
(1980) 4 SCC 507.
11) State of Maharashtra vs. Som Nath Thapa, 1996 AIR
1744.
10. The learned Special prosecutor submitted that the
economic offenders ruin the economy of the State and the economic
offences are committed with cool and deliberate manner regardless to
the consequences on the community. He relied on the judgment of
Mohanlal Jitamaljiporwal (supra). He further relied on the
judgment of the Division Bench in the case of Transview Enterprise
India Private Limited vs. The State of Maharashtra & Anr. of this
th
Court passed on 12
February, 2014 in Criminal Application No.
844 of 2014 where the applicant in Transview Enterprises India (P)
Ltd. has filed an application for defreezing the accounts which was
refused by this Court. He also placed reliance on Amway India
th
Enterprise vs. Union of India daed 19
July, 2007. (2007 SCC
Online A.P. 494). He further relied on the judgment in the case of
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Kuriachan Chacko and Others vs. State of Kerala, Supreme Court,
th
in Cri. Appeal No. 1044 of 2008 passed on 10
July, 2008. This
matter was against the order of discharge of the accused persons for
the offences punishable under 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
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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' to the public at
large. However, once a person become a member, he is called as
'Independent Representative' (I.R.) and then he can get the
commission. However, he does not earn money as promised. The
applicants /accused and the other representatives are not accessible
and finally the person lose his money. He submitted that the same
persons are rotated from QuestNet Enterprise (P) Limited to Vanmala
Hotels, Travels and Tourism Services Pvt. Ltd. and Vihaan Direct
Selling (I) Pvt. Ltd. He submitted that the payments were promised
and the partnership was as per the business plan. The compensation
promised by the Q Net Limited was on weekly basis. He submitted
that as Government found that there is a fraud of Crores of rupees,
Government agency started to investigate the matter and through
website qnet.net.com which was blocked by the order of the
Magistrate Court. He submitted that nearly 15000 Independent
Representative of Q Net Limited were transferred to Vihaan Direct
Selling (I) Pvt. Ltd. company. The complainant relied on the business
plan of QuestNet Enterprise (P) Limited. So also the Frequently Asked
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Questions(FAQ) in the business of Vihaan Direct Selling (I) Pvt. Ltd.
company. So also the genealogy report. He submitted that they are
attracting people by giving false promises. Hence, there is cheating.
12. The learned counsel for the applicants/accused in reply
submitted that the applicants/accused have fully cooperated the
police and the details of financial transactions also supplied to the
police. There is no case of money laundering. Only few crores have
gone out of India. The learned senior counsel Mr. Desai has submitted
that direct marketing is promoted by Government of India and
Government has supported direct marketing i.e. how the
applicants/accused are carrying out the business and all the activities
are legal. The applicants/accused who are running company
explained the facts to the public at large and the persons who became
members. A contract is entered between them. The entire business is
legal so that people can earn more money and quick money and it is
not dependent on enrollment of members but on the sell. He relied on
the judgment in the case of Sanchaita Investments (supra) under
Prize Chits and Money Circulation Schemes (Banning) Act, 1978. He
submitted that in this scheme, income is on the basis of sale of
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products. 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 case, no
deposits are collected.
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13. Before adverting to the facts of the present case, it is
useful to cull out and reproduce the ratio laid down by the Hon'ble
Supreme Court in some important cases.
14. The question before the Hon'ble Supreme Court in the
case of Amway India (supra) was whether the business activity being
carried out by the Petitioner comes under the Prize Chits and Money
Circulation Schemes (Banning) Act, 1978 and the other issue was
about the legality of seizure and search carried out by the
investigating agency at various places of Amway. The Writ Petitions
were dismissed by the Supreme Court and it was held that the rights
of seizure and search on various places are legal. The Hon'ble
Supreme Court in the case of Amway India (supra) has discussed and
analyzed money circulation scheme and where it is held as under:
"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, or any event or
contingency relative or applicable to the enrollment 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."
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15. In the case of Gautam Kundu (supra), the Bench has
referred the observation of the Supreme Court in the case of Y.S.
Jagan Mohan Reddy (supra) wherein it is observed as under:
"The economic offences having deep rooted
conspiracies and involving huge loss of public funds need
to be viewed seriously and considered as grave offences
affecting the economy of the country as a whole and
thereby posing serious threat to the financial health of
country."
16. In the case of Kuriachan Chacko (supra) said case the
Hon'ble Supreme Court held as under:
"The scheme is so grossly unworkable that the
persons who made representations to that effect and
induced persons to part with money did entertain the
contumacious intention. They knew fully well that
unworkable false representations were being made. The
obvious attempt, it can be presumed at this stage, was to
induce persons by such false unworkable representations
to part with money. Initially some subscribers can be
kept satisfied to induce them and others similarly placed
to join 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
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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
case, the Hon'ble Supreme Court has observed that as under :
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"In the matters of economics, sociology and other
specialised subjects, Courts not embark upon views of half-
lit infallibility and reject what economists or social scientists
have, after detailed studies, commanded as the correct
course of action. The final word is with the Court in
constitutional matters but judges hesitate to 'rush in' where
even specialists 'fear to threat', If experts fall out, Court,
perforce, must guide itself and pronounce upon the matter
from the constitutional angle, since the final verdict, where
constitutional contraventions are complained of, belongs to
the judicial arm."
19. In the case of Bhadresh Sheth (supra) the charges for the
offences punishable under Sections 506(2) and 376 of Indian Penal
Code and the complaint was given in the year 2001 and after 17 years
the Supreme Court tried the matter for cancellation of anticipatory
bail. The Court referred the principles laid down in the cases of
Gurbaksh Singh Sibbia and Siddharam Satlingappa Mhetre
(supra) and set aside the order of the trial Court of cancellation of
anticipatory bail. In sum and substance, while entertaining
anticipatory bail application, the Court has to rely and refer the ratio
laid down in the cases of old good law of Gurbaksh Singh Sibbia and
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Siddharam Satlingappa Mhetre (supra). The present offence is
falling under the category of economic offences and therefore it has of
different complexion than the case of Bhadresh Bipinbhai Sheth
(supra).
20. Perused the documents presented by both the sides. I
have gone through the plan which is given by Qnet to every
individual representative (IR). I have gone through the statements of
many witnesses, who claimed that they have been cheated under the
scheme launched by Qnet. I have also considered the conclusive
report of (Serious Fraud Investigation Agency under the Company
Act) S.F.IO. Prima facie, there is material to hold that the business
conducted by Qnet is covered under PCMC Act and also under Drugs
and Magic Remedies (Objectionable Advertisements) Act, 1954.
However, all these sections are bailable. Considering the manner in
which the business is conducted, I have doubt whether offence under
section 3 of the MPID Act, which is a non-bailable section, can be
attracted or not?
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21. Apart 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 the business. Thus, the option was always open to the
aggrieved persons to say no to the scheme. However, the things are
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not as straight as they are perceived on the surface. Assuming that
the scheme was launched with a noble object to give benefit to
maximum people to make money quickly and easily by selling
products of the company, however, after going through the material
placed before me including the statements of the witnesses, I am of
the view that in the mid-way, the intention of the applicants/accused,
who are the Directors and shareholders of the company, became
dubious. They had knowledge that more members are suffering
financial losses and they are not satisfied with the products. The claim
that the wellness products i.e., Biodisk and Chi Pendent are medicinal
and spiritual products, is after all, a matter of faith. However, the
applicants/accused have launched these wellness products with
ulterior motive and with correct judgment of vulnerability of the
people. The holiday packages which were sold or offered, without any
choice left to the buyers. The entire business was Internet based and,
therefore, the persons who are responsible i.e., the top brass i.e., the
applicants/accused, were not approachable to the persons who were
aggrieved. The nature of the business was knitted in the interest of
the Directors and shareholders in such a manner that the persons
who are at the lower level of the pyramid cannot get any access to put
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up their grievances. The manner in which the persons were
contacted, incentives offered, the workshops were conducted, are best
examples of inducement.
22. Responding to the submissions of the prosecution that the
IRs of lower level of pyramid are doing aggressive marketing and they
are threatening and pestering people for selling the products and for
becoming members, Mr.Desai argued that the applicants/accused
cannot be vicariously liable. They have started the scheme with a
noble object and they cannot be held responsible for some overreach
or aggressive steps or illegality of some IR while marketing the
company products. It is true that the doctrine of vicarious liability is
unknown to the criminal law. However, apart from the behaviour of
such pressurising tactics which are used by the IRs on the lower level
of the pyramid, material is brought before me to show that many
workshops and sessions are conducted regularly 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
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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 instances of dishonest concealment of facts i.e.,
genuine nature of the products and by the persons working for the
company i.e., I.Rs and with intention to earn wrongful gain to them
and the company and wrongful loss to others. The motto of the
company 'sell more, earn more' appears very attractive and
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innocuous. However, this motto is fully camouflaged. The company
stands on a basic statement that people can be fooled. Thus, the true
motto is 'sell more earn more' by fooling people.
25. The submissions of the learned Senior Counsel for the
applicants-accused that selling the product at a very high price is not
an offence, is true and cannot be controverted in the marketing
business. It depends on the marketing capacity of an individual and
so the level of his profit. However, in this marketing, the IRs are
directed to give all the names and details of the relatives, phone
numbers of their acquaintances, references and thereafter the persons
in the higher level, who are given some positions, contact these
acquaintances and references and the chain is multiplied. The
persons who are gullible, are bound to be prey of such kind of
persuasion which is coloured with inducement. In fact, it is a chain
where a person is fooled and then he is trained to fool others to earn
money. For that purpose, workshops are conducted where study and
business material is provided with a jugglery of words, promises and
dreams. Thus, the deceit and fraud is camouflaged under the name of
e-marketing and business.
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26. Mr.Desai, the learned Senior Counsel for the Applicants,
has submitted that the law under section 438 of the Code of Criminal
Procedure has developed and changed a lot till today. The Supreme
Court has taken a very liberal view and a humanistic view on the
point of arrest. He relied on Joginder Singh Sibiya and Bhadresh
Bipinbhai Sheth (supra) and submitted that in the cases especially
where the punishment is less than 7 years, the Supreme Court has
disapproved arrest and, therefore, section 41A of the Code of
Criminal Procedure is enacted.
27. It is true that the Legislature in order to avoid illegal
arrest, rather to check the police-mania of arrest, has enacted section
41A of the Code of Criminal Procedure and the Supreme Court
responding to the said legislation in Arnesh Kumar (supra), has laid
down guidelines directing the police 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
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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 am of the
view that they need to investigate properly and more effectively to
find out the money trail and from where the products are
manufactured, also to check the correct addresses, bank accounts,
networking of the company, etc. Moreover, by this deceitful
inducement, large number of people, may be approximately 2.5 lakh
people, are trapped in this money-tree planting business and
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everyday, as it is an ongoing activity, more people are accepting these
attractive camouflaged offers.
28. It has very grave and serious impact on the economic
status and mental health of the people on a large scale. On
considering parameters of section 438 of the Code of Criminal
Procedure, I am not inclined to protect the accused. It won't be out of
place to mention that such circulation is required to be stopped. It is
necessary for the prosecution to take injunctive steps against this
business activity which is prima facie, illegal. Though by stopping this
business, a large group of people may get financially affected,
however, it will save larger groups of people from becoming prey of
this activity.
29. In the result, the Anticipatory Bail Applications are
rejected. Criminal Applications for interventions stand disposed of.
30. At this stage, learned Counsel appearing for the
applicants/accused seeks continuation of earlier interim relief for a
period of 10 weeks as the applicants/accused intend to challenge the
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order before the honourable Supreme Court. Learned Prosecutor has
opposed this oral prayer. However, the earlier interim relief is
continued till 15th July, 2016.
(MRIDULA BHATKAR, J.)
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