Lambert Kroger vs State
2000 Latest Caselaw 243 Del

ORDER

Cyriac Joseph, J.

1. This petition has been filed under Section 439 of the Criminal Procedure Code for grant of bail to the petitioner Lambert Kroger, a German National, who is an accused in Fir No. 219/99 registered at Police Station Chitranjan Park under Section 120B/420/409 of the Indian Penal Code read with Sections 3, 4 and 5 of the Prize chits and Money Circulation Scheme (Banning) Act, 1978. The said FIR was registered on the basis of the complaint of one Shri Lakshmi Chand Gupta. Since the petitioner had already been arrested by the officials of the Enforcement Directorate on 8-7-1999 for of the provisions under FERA 1973 violations and had been in judicial custody, he was arrested in this case on 26-7-1999 through production warrants and was remanded to police custody for three days and thereafter he continued to be in judicial custody.

2. According to the complaint filed by Shri Lakshmi Chand Gupta and the FIR registered on the basis of the said complaint, the complainant is doing business of Motor Workshop. In the first week of May 1999 one of his acquaintances Shri Ravinder Nath Puri informed him that Maple Leaf Trading International Private Limited has floated a scheme appointing general public as business partners. The officers of the company hold meetings in Five Star Hotels every Saturday and Sunday on payment of Rs. 500/- and call the people interested in becoming members. Shri Ravinder Nath Puri was made a member by one Shri Hardeep Singh. The said Shri Hardeep singh called the complainant in Hotel Holiday Inn on 15-5-1999 at 1.30 P.M. where 100-125 persons had gathered. There one Shri Ashok Aggarwal gave a presentation of Maple Leaf Scheme and told that whoever became member of the scheme would have to deposit Rs. 60,000/- through bank draft in favour of the company. The member who appoints four more persons will get Rs.11,800/- worth gold in Phase-I of the scheme. In Phase-II the four members appointed in Phase-I will have to further appoint four members each, upon which the original member (first) will get Rs. 29,500/- worth gold. In Phase-III the sixteen members appointed in Phase-II will have to further appoint four members each, upon which the original Member (first) member will get Rs. 29,500/- worth gold. In Phase-III the sixteen members appointed in Phase-II will have to further appoint four members each, upon which the original (first) member will get Rs. 2,35,000/- worth gold and this process will continue. In the hotel party the said Hardeep Singh informed the complainant that if the complainant was not able to appoint members they would extend full help in appointing members so that the complainant was able to get gold. Shri Hardeep Singh is the spokesperson (Manager) of the company and on the advice of the Directors he induces general public to become a member. During the meetings in the hotel such a rosy picture is presented that every person will have a lot of gold and every person agrees to become member. The complainant also became a member on 18-5-1999 on payment of Rs. 60,000/-by depositing draft in Maple Leaf Trading International Private Limited on the inducement of the said Hardeep Singh and other officials of the company. The complainant was not able to appoint any member and he asked Shri Hardeep Singh and the company to refund his money but they refused to refund his money. It is also stated in the complaint that the company is cheating other people also. The complainant wants his money to be refunded and legal action to be taken against the offenders.

3. Pursuant to the above mentioned FIR investigation has been conducted and charge sheet has been filed in the Court on 20-9-1999. As per the charge sheet the accused persons sent for trial are Lambert Kroger (petitioner herein). Naresh Sharma, Dalip Arora, Ashok Chatterjee and M/s. Maple Leaf Trading International Private Limited through Managing Director. According to the charge sheet Lambert Kroeger, Cliffy Roy and Paul Singh Clare are the Directors of the company, on 8-7-1999 Shri Lambert Kroger has been arrested by officials of Enforcement Directorate for FERA violations. Ashok Aggarwal, Naresh Sharma and Mrs. Nalini Mishra are the Academy Instructors of the company. Ashok Aggarwal has obtained Rs. 31,65,673/- as commission. Naresh Sharma has obtained Rs.24,96,714/- as commission and Mrs. Nalini Mishra has obtained Rs.7,10,884/- as commission. The company succeeded in making 3700 persons as business partners. The company has got accounts in ABN Amro Bank and Bank of America. Shri Naresh Sharma was arrested on 10-7-1999 as there was sufficient evidence against him for inducing the people to part with their money, causing wrongful loss to them and getting wrongful gain in terms of commission. The investigating officer wrote to the banks of the accused persons for stopping the operation of the accounts and for obtaining the statement of accounts. Various complaints were received from the victims who have been cheated by the company and induced by the Academic Instructors and Academic Assistants. The persons who lodged the complaint have been examined under Section 161 of the Criminal Procedure Code. Further records have been obtained from the premises of the company which included the marketing plan, the statement of sources and allocation of funds, the commission paid to Academic Assistants and Academic Instructors and the loss of investors with their addresses. As per the records of the company it is found that the company has received Rs. 26.24 crores from 3700 innocent investors, Rs.13.32 lakhs as share capital and Rs. 60 lakhs on account of conference fee. The company has paid huge commission to the tune of Rs.1.88 crores to Academic Instructors and Academic Assistants. Rs. 58 lakhs have been sent abroad as well. The company had four bank accounts with the ABN AMRO Bank in the names of Maple Leaf Trading (current account), Maple Leaf Gold A/c, Maple Leaf Persons and Places in Need Trust and Maple Leaf Main Gold A/c. There were also three individual accounts of Paul Singh Clare (Director), Cliffy Roy (Director) and Lambert kroeger (Managing Director). The balance amount in Maple Leaf Trading (current account) is Rs. 6,15,17,244/-, in Maple Leaf Gold Account is Rs. 41,89,460/-, in Maple Leaf Persons and Places in Need Trust is Rs.14,73,340/- in Leaf Main Gold account is Rs.2,44,98,474/-, in Paul Singh Clare's account is Rs. 60,104.32, in Cliff Roy's account is Rs.19,966.18 and nil balance in the account of Lambert Kroger. The Maple Leaf Company holds a balance of Rs.3,51,25,780.17 in their fixed deposit account. The balance amount in Bank of America is Rs.3,88,089.72. During the course of investigation and as per examination of witnesses it was found that Lambert Kroger, Cliff Roy, Paul Singh Clare, Naresh Sharma, Mrs. Nalini Mishra, Mrs. Tina Garg, Mrs. Bimaljeet Singh Johar, Prabal Arora, Hardeep Singh, Ashok Chatterjee, Dalip Arora and Rajiv Gupta used to present wrong and rosy pictures during presentations which have held every Saturday and Sunday in different Five Star Hotels, stating that the scheme was approved by the Reserve Bank of India and had sanction of the Government of India and was at per with the law of land. The complainants have categorically mentioned about the above mentioned persons in their complaints. Although there have been some more Academy Instructors and Assistants who got the commission, no complaint has been received against them. As per evidences collected it is found that the company had never invested the deposits collected from the investors to meet the expenses and other heads towards commission etc. Maple Leaf Scheme actually produces no goods of any significance, provides no service, creates no wealth and all it does is to circulate, existing wealth. The entire investments of investors are shared among the originators of the scheme and their cronies in the from of commissions. Therefore, every rupee that an investor gains by such a scheme is a rupee some other investor has lost. Money is made by the company by exponentially expanding enrollments and will continue to operate only if it is able to enroll new replacements of the losers who are cycled out. If the scheme continues in this manner the benefits of this scheme will be confined to only a handful of persons and the rest will be losers. It is further stated in the charge sheet that if each member makes atleast three additional members, the scheme would require one hundred odd crores of people to make it workable, as per promises made by the company. At the end when there are no more people left to induct further, the people inducted at later stages will lose their entire investments. According to the charge sheet there is evidence to prove that Lambert kroger, being the Managing Director of the company, floated the scheme which was not having approval of either Reserve Bank of India or any other agency in India, that he organized the presentation programmes through personal contacts with the connivance of other academy Instructors and Academy Assistants in various five star hotels on every Saturday and Sunday, that every person attending the presentation programmes was charged Rs. 500/- and that Lambert Kroeger along with Academy Instructors used to induce the persons attending the programme stating that they could earn a lot of money within short span of time and that the scheme was approved by Reserve Bank of India and was in accordance with the law of land. During the presentation programme the participants were told that the investments were very safe and members facing difficulty in making more members would be rendered full help and, if anybody wanted to withdraw membership he would be allowed to do so within eight days of becoming member and their deposit would be refunded. It is also stated in the chargesheet that 19 complaints have been seized from the premises of the company in which request was made for refund, but no refund has been made to any of them. The fax messages received by Lambert Kroeger, which have been seized by the officials of Enforcement Directorate, clearly confirmed that the intention of the management was to flee away from India after collecting huge money and become millionaires. It is also stated that Rs. 58 lakhs have already been sent abroad by the Directors and being custodian/trustee of the public money, they misappropriated the public money. It is further stated that as per investigation conducted there have been sufficient evidences against accused Lambert Kroeger, Naresh Sharma, Ashok Chatterjee and Dalip Arora. The other accused persons viz Ashok Aggarwal, Prabal Arora, Mrs. Nalini Mishra, Mrs. Tina Garg, Mrs. Bimaljeet Singh Johar and Hardeep Singh are absconding and are evading their arrest and efforts are continued to apprehend them and after their arrest supplementary charge sheet will be filed. It is further stated that accused Paul Singh Clare and Cliff Roy have run abroad and that Look Out Cards have been opened against them and efforts are afoot for their deportation/extradition through Interpol.

4. According to the petitioner he is the Managing Director of M/s. Maple Leaf Trading International Private Limited which is an Indian Company incorporated in India under the Indian laws. The company sought permission of the Reserve Bank of India for equity participation of 51% in the Indian company which was duly registered by the Reserve Bank of India under the Automatic Route. The company is selling domestically purchased gold through a system of marketing called multilevel marketing. Such marketing plan is in vogue in different products in several European countries including Switzerland, Holland, Germany and Denmark. In this marketing plan every purchaser of gold can also become a business partner entitled to commission and thus become a self employee individual who works as the sales agent for the company selling gold directly to the customers. An individual desirous of becoming the sales agent for selling gold of the company is sponsored by an existing partner called host in a formal presentation to make him understand the nature of the business. Without attending the business training presentation no person can become a business partner. Nor is any person made the business partner on the day of the presentation. After understanding the nature of the business the individual enters into an agreement or contract of sale with the company. No money whatsoever is accepted on the day of presentation and it is only after the individual is satisfied and his queries answered that he chooses of his free volition to become a member and enters into a contract and gives the money by banker's draft or by a cheque. After entering into the agreement and payment of the money the person has an option to withdraw from the scheme within eight days with full refund. Also if no new contract is obtained by him for one year the person would have the option to pay remaining balance money for the purchase of contracted gold price and receive the gold. The agreement contains a declaration by the purchaser that he has understood the plan and then entered into the contract. Chitranjan Park Police Station registered FIR No. 219/99 under Section 420/409 read with Section 120B of the Indian Penal Code on the basis of a complaint filed by one Shri Lakshmi Chand Gupta. On the basis of the said FIR the petitioner was arrested on 26-7-1999. Initially he was remanded to police custody for three days and thereafter he has been in judicial custody. Pursuant to the allegations of cheating, the petitioner company in order to show the bona fides, issued an advertisement to the general public offering to give back the money on the refreezing of the accounts of the company. It is further stated in this petition that the allegations in the FIR against the petitioner are misconceived and untenable in law. According to the petitioner the basic ingredients for constituting the alleged offences are not made out in the complaint or in the FIR. It is stated that the company of the petitioner sells domestically purchased gold through a system of multilevel marketing plan which is fully made aware to the contracting parties. It is only after the contracting parties properly understand the scheme that they choose to enter into the written contract. After the contract is made the contracting party has an option to withdraw within eight days with full refund. Thus there is no scope or question of inducement, much less fraudulent inducement, for the persons entering into the contract for purchase of gold. It is also contended that there is no cheating involved in the activity. It is further contended that the above mentioned complaint is only a ploy to give a criminal colour to a civil dispute, if any. The petitioner points out that even in the complaint and the FIR the complainant has clearly stated that he could not fulfill the contract and, therefore, he was lodging the complaint. According to the petitioner there is no causal connection between the judicial custody and the investigation by the prosecution. It is stated that the petitioner is not likely to hamper or tamper with the investigation and that the release of the petitioner is not likely to prejudice the investigations. According to the petitioner his release will be in the interest of investigation as he will be in a better position to explain the scheme to the respondent and to clarify the doubts, if any. It is stated that the petitioner is keen to establish his innocence and is not likely to flee from justice or to hamper the investigation or to tamper with the evidence. It is also mentioned that the passport of the petitioner is already with the Enforcement Directorate.

5. Even though the learned counsel for the petitioner severely criticised the manner in which 15 charge-sheets have been filed pursuant to the same FIR. I refrain from making any comments in the matter since it is not necessary for disposing of the application for bail.

6. There is serious dispute about the nature of the Multilevel Gold Marketing Programme of the company, M/s. Maple Leaf Trading International (P) Ltd. According to the learned counsel for the petitioner, there is no cheating or fraud involved in the programme. Every transaction is transparent and is conducted only through the bank. The scheme is printed in black and white and it is explained to prospective members during the business training presentation. It is after understanding the terms and conditions that people take membership and join as business partners and sign the written contract. Nobody is compelled or misled. Even after joining the scheme, one has the option to withdraw within eight days with full refund. Most of the 3700 business partners have taken the benefit under the scheme and they have no complaint. Those who have made complaints are a few persons who failed to enroll new members as envisaged in the scheme and as agreed to by them in the written contract. The company has no intention to deny refund of money to those who are entitled and the company has suffi cient assets to satisfy such claims. It was further submitted that if the petitioner is released and the bank accounts are defreezed, the petitioner will be able to refund the entire money to all those who want to withdraw from the scheme. However, the learned counsel for the respondent submitted that a close scrutiny of the marketing scheme would disclose that it is not a workable scheme and that the scheme is bound to collapse at some point of time after enriching the originators and a few early members and causing financial loss to the later entrants as members. It was alleged that the petitioner and the coaccused wanted to make quick money, take it out of the country and then disappear from the scene leaving the investors in loss and despair. Learned counsel for the parties took great pains to explain their respective views about the scheme. But the viability or feasibility or desirability of such a scheme is not the concern of this Court at this stage. However, prima facie, it appears that those who joined the scheme as business partners were not poor, innocent and gullible members of the public. They were driven by a desire to get easy wealth and were lured by the tall claims and promises of the company. They were people who could afford to attend the business meetings at Five Star Hotels and could invest substantial amounts for joining the scheme. Prima facie I am of the view that even an ordinary reasonable person could have understood and anticipated the consequences of the failure of a member to enroll new members and also the consequences of the scheme reaching the stage when there is no scope for further expansion of the business and enrolment of members. However, it is for the trial court to examine and decide whether the alleged actions of the accused constitute the offences mentioned in the chargesheet. Though learned counsel for the petitioner endeavoured to show that the allegations in the charge-sheet do not make out any of the alleged offences. I do not propose to discuss the details since the petitioner will get ample opportunity to raise such questions before the trial court. At this stage I am not inclined to throw out the allegations against the petitioner as totally baseless. Now the only question that arises for consideration is whether the petitioner is entitled to be released on bail even if it is assumed that there are sufficient grounds to try him for the alleged offences.

7. While explaining the power of the Court to grant bail under the provisions of the Criminal Procedure Code 1898, the Supreme Court in The State Vs. Captain Jagjit Singh, held that whenever an application for bail is made to a Court, the first question that it has to decide is whether the offence for which the accused is being prosecuted is bailable or otherwise. If the offence is bailable, bail will be granted without more ado. But if the offence is not bailable, further considerations will arise and the Court will have to decide the question of grant of bail in the light of those further considerations such as nature and seriousness of the offence, the character of the evidence, circumstances which are peculiar to the accused, a reasonable possibility of the presence of the accused not being secured at the trial, a reasonable apprehension of witnesses being tampered with, the larger interest of the public or the State and similar other considerations which arise. The Supreme Court also held that even though the powers of the High Court in the matter of granting bail are very wide, various considerations such as those indicated above have to be taken into account before bail is granted in a nonbailable offence.

8. In Gurcharan Singh & others Vs. State, reported in AIR 1978 Supreme Court 179, the Supreme Court considered the power of the Court under Section 437 of the Code of Criminal Procedure 1974 (the new Code) to grant bail in cases involving non-bailable offence and held that in all non-bailable cases except cases relating to offences punishable with death or imprisonment for life, judicial discretion would always be exercised by the Court in favour of granting bail subject to sub-Section (3) of Section 437 Criminal Procedure Code with regard to imposition of conditions, if necessary. The Supreme Court also held that unless exceptional circumstances were brought to the notice of the Court which might defeat proper investigation and a fair trial, the Court would not decline to grant bail to a person who was not accused of an offence punishable with death or imprisonment for life. The Supreme Court pointed out that Section 439(1) of the new Code confers special powers on the High Court or the Court of Session in respect of bail and that unlike under Section 437(1) there is no ban imposed under Section 439(1) against granting of bail by the High Court or the Court of Session to persons accused of an offence punishable with death or imprisonment for life. However, it was clarified that the High Court or the Court of Session will have to exercise its judicial discretion in considering the question of granting bail under Section 439(1). It was also held that the overriding considerations in granting bail are the nature and gravity of the circumstances in which the offence is committed; the position and the status of the accused with reference to the victim and the witnesses; the likelihood of the accused fleeing from Justice; the likelihood of repeating the offence; the likelihood of jeopardising his own life being faced with a grim prospect of possible conviction in the case; the likelihood of tampering with witnesses; the history of the case as well as of its investigation and other relevant grounds which, in view of so many variable factors, cannot be exhaustively set out. In paragraph 29 of the Judgment in the above case, the Supreme Court has pointed out that the two paramount consideration are the likelihood of the accused fleeing from justice and his tampering with prosecution evidence and that they relate to ensuring a fair trial of the case in a court of justice. According to the Supreme Court, it is essential that due and proper weight should be bestowed on these two factors apart from others. However, the Supreme Court also said that there could not be an inexorable formula in the matter of granting bail and that the facts and circumstance of each case would govern the exercise of judicial discretion in granting or cancelling bail. The Supreme Court referred to the general observations made by the Supreme Court in The State Vs. Captain Jagjit Singh (supra) with regard to the principles that should govern in granting bail in a non-bailable case under the provisions of Criminal Procedure Code 1898 and opined that those observations equally applied to a case under Section 439 of the new Code and that the legal position was not different under the new Code. Thus the principles laid down in The State vs. Captain Jagjit Singh were held to be applicable for grant of bail under Section 439 of the new Code also.

9. In Gudikanti Narasimhulu and others Vs. Public Prosecutor, , V.R. Krishna Iyer, J. observed that "Bail or jail?" _ at the prerial or postconviction stage _ largely hinged on judicial discretion. The learned Judge held that personal liberty was too precious a value of our constitutional system recognised under Article 21 that the crucial power to negate it was a great trust exercisable not casually but judicially, with lively concern for the cost to the individual and the community. It was further held that deprivation of personal freedom must be founded on the most serious considerations relevant to the welfare objectives of society specified in the Constitution. The learned Judge further observed that the object to keep a person in judicial custody pending trial or disposal of an appeal, was often forgotten and quoted Lord Russel who had said the bail was not to be withheld as a punishment and that the requirements as to bail were merely to secure the attendance of the prisoner at trial. According to the learned Judge, the principal rule to guide release on bail should be to secure the presence of the applicant to take judgment and serve sentence in the event of the Court punishing him with imprisonment. After holding that it makes sense to assume that a man on bail has a better chance to prepare and present his case than one remanded in custody the learned Judge observed that if public justice is to be promoted mechanical detention should be demoted.

10. The principles laid down by the Supreme Court in Gurcharan Singh and others Vs. State (supra) were followed by the Supreme Court in Miss Harsh Sawhney Vs. Union Territory in Mohan Singh Vs. Union Territory, Chandigarh, .

11. In Gurbaksh Singh Sibbia etc. Vs. The State of Punjab, the Supreme Court has observed that judges have to decide cases as they come before them, mindful of the need to keep passions and prejudices out of their decisions. The Court has also observed that in which case bail should be granted and in which case it should be refused is a matter of discretion. The Court found it interesting to note that as long back as in 1924 it was held by the High Court of Calcutta in Nagendra Vs. king Emperor, AIR 1924 Calcutta 476, that the object of bail is to secure the attendance of the accused at the trial, that the proper test to be applied in the solution of the question whether bail should be granted or refused is whether it is probable that the party will appear to take his trial and that it is indisputable that bail is not to be withheld as a punishment. The court also referred to the observation of the Allahabad High Court in K.N. Joglekar Vs. Emperor, AIR 1931 Allahabad 504, that Section 498 of the old code which corresponds to Section 439 of the New Code, conferred upon the Sessions Judge or the High Court wide powers to grant bail which were not handicapped by the restrictions in the preceding Section 497 which corresponds to the present Section 437. The Allahabad High Court had also observed that there was no hard and fast rule and no inflexible principle governing the exercise of the discretion conferred by Section 498 and that the only principle which was established was that the discretion should be exercised judiciously. The Supreme Court referred also to the decision of the Allahabad High Court in Emperor Vs. H.L. Hutchinson , wherein it was observed that the principle to be deduced from the various sections in the Cr.P.C. was that grant of bail is the rule and refusal is the exception. It was also observed therein that as a presumably innocent person, the accused person is entitled to freedom and every opportunity to look after his own case and to establish his innocence. It was further observed by the High Court that an accused person who enjoys freedom is in a much better position to look after his case and to properly defend himself than if he were in custody. The Supreme Court apparently approved the above views and observations.

12. I have considered the petitioner's prayer for bail in the light of the facts and circumstances of this case and the legal position emerging from the above mentioned judgments of the Supreme Court and I am of the view, that there is no justification for further detention of the petitioner in prison. The petitioner was arrested in this case on 26.7.1999 and since then he has been in judicial custody. The investigation had been completed and chargesheet was filed in Court on 20.9.1999. The bank accounts of the company and the petitioner have been frozen and there are substantial balance amounts in the frozen accounts. Documents and articles which could form part of the evidence have already been recovered and seized by the respondent. The key witnesses are the complainants themselves. Nothing has been brought to my notice to have a reasonable apprehension that the petitioner will influence the witnesses and tamper with evidence if he is released on bail. The petitioner's passport is with the respondent and ordinarily he cannot leave the country without the passport. Though the possibility of fleeing from trial may be more in the case of a foreign national it cannot be said that an accused cannot be granted bail merely because he is a foreign national. There is no law which authorises or permits discrimination between a foreign national and Indian national in the matter of granting bail. What is permissible is that, considering the facts and circumstances of each case, the Court can impose different conditions to ensure that the accused will be available for facing trial. Learned counsel for the respondent had pointed out that accused Paul Singh Clare and Cliff Roy who also are foreign nationals had run abroad and efforts were afoot for their deportation/extradition through Interpol. The fact that Cliff Roy and Paul Singh Clare have absconded by itself cannot be a ground for detaining the petitioner in prison indefinitely. More than seven months have passed after registering the FIR. The respondent had enough time to take action against the absconding offenders also. It has not been explained how the continued detention of the petitioner will help to book the absconding offenders. Considering the above aspects and the nature of the alleged offences and the entire facts and circumstances of this case I am inclined to direct release of the petitioner on bail subject to certain conditions.

13. Hence it is directed that the petitioner shall be released on bail subject to the following conditions:-

1. The petitioner shall deposit a sum of Rs.1,00,000/- in the Court of the Additional Chief Metropolitan Magistrate, Patiala House Courts, New Delhi, as security;

2. The petitioner shall produce two local sureties in the sum of Rs.1,00,000/- each to the satisfaction of the learned Additional Chief Metropolitan Magistrate.

3. During the period of trial of the case, the petitioner's passport shall remain with the respondent unless otherwise directed by the Trial Court.

4. The petitioner shall not leave the limits of N.C.T. of Delhi without the prior permission of the Trial Court.

5. The petitioner shall report to the Station House Officer, Police Station Chitranjan Park, New Delhi on every Monday at 11.00 A.M.

The petition stands disposed of in the above terms.

14. Let copy of this order be given dasti.