Sri Tanay Das vs The State Of Tripura
2022 Latest Caselaw 474 Tri

                       THE HIGH COURT OF TRIPURA
                             AGARTALA
                            CRL A (J) 53 OF 2018
Sri Tanay Das,
S/o Sri Tapan Das of Lake Chowmuhani,
Agartala, PS-West Agartala,
Dist. West Tripura.
                                                              .... Appellant

                                    --Vs--

The State of Tripura
                                                              ....Respondent

                           BEFORE
              HON'BLE MR. JUSTICE ARINDAM LODH

For the appellant              : Mr. S. Sarkar, Sr. Advocate.
                                 Ms. P. Chakraborty, Advocate.

For the respondent             : Mr. S. Debnath, Addl. P.P.


Date of hearing                : 17.12.2021

Date of delivery of
Judgment & Order               : 02.05.2022

Whether fit for reporting      : Yes

                             Judgment & Order

            This is an appeal filed by the convict-appellant against the

judgment and order of conviction and sentence dated 22.11.2018, passed by

the learned Special Judge, Gomati Judicial District, Udaipur in connection

with Case No. Special 05 (TPID) of 2015 whereby and whereunder the
                                    Page 2




appellant was convicted and sentenced to suffer RI for 4(four) years and also

to pay fine of Rs.50,000/- only with default stipulation for commission of

offence under Section 3 of the Tripura Protection of Interest of Depositors

(Financial Establishment) Act,2000, [here-in-after referred to as ―TPID Act,

2000‖] and further sentenced to suffer R.I for 1(one) year for commission of

offence under Section 406 of the Indian Penal Code.

2.     Brief Facts

:

2.1. R.K. Pur PS Case No. 487/2011, dated 14.11.2011 was

registered by the Officer-in-Charge of R.K.Pur PS under Sections 420 and

406 of the Indian Penal Code against the accused persons, namely, Amar

Dey, Tanay Das, and Dibakar Das based on a written complaint lodged by

one Goutam Dey. In the said complaint, the complainant stated that there was

an office of Rubi Star Marketing Pvt. Ltd./Real Estate in Udaipur. In June,

2010 the State Government started an investigation against various chit fund

organizations by way of bringing allegations of cheating and fraudulent

collection of money from the public and launched a crackdown on the chit

fund companies and sealed the head office of the companies at Agartala. The

process was followed by the closure of branch offices of the companies

across the State. However, the State Government permitted companies to

reopen their offices from 10.08.2010, but, Rubi Star Marketing Ltd. did not Page 3

reopen its offices, nor did make payment of maturity of the customers instead

wound up all its offices. It is alleged that the local Branch-in-charge of

Udaipur, namely, Sri Amar Dey of Chhanban, the Managing Director,

namely, Sri Tanay Das, and the Chief Managing Director of the said

Company, namely, Sri Dibakar Das of Bongaon, 24 Pargana, West Bengal

allured the public and collected money from the public. Moreover, the entire

discourse was the mutual effort of the Branch-in-charge and the Managing

Director, namely, Sri Amar Dey and Sri Tanay Das who, with the agents and

staff of the company, turned up a network to issue false certificates of

investments and thereby cheated the investors. However, the investors tried

to communicate with the Branch-in-charge, i.e. Sri Amar Dey, but, it was

found that he went on underground. Thus, the complainant prayed to get the

return of their deposits and take legal action against the accused persons.

2.2. The case was endorsed to S.I, Surya Kanta Jamatia for

investigation. Subsequently, the case was transferred to the CID and the same

was endorsed to Sri Benulal Kar, Officer of CID to investigate the case.

Taking up the investigation, the investigating officer recorded statements of

the witnesses and seized some documents. Thereafter, the officer submitted

charge-sheet on 30.01.2013 against the accused persons, namely, Dibakar Page 4

Das, Amar Dey, Tanay Das, and Manoranjan Debnath under Sections

406,420 and 109 of the IPC read with Section 3 of the TPID Act, 2000.

2.3. After taking cognizance, the learned Chief Judicial Magistrate,

Udaipur, transferred the matter to the court of learned Judicial Magistrate 1st

Class, Udaipur for trial. The learned Judicial Magistrate 1st Class after perusal

of records, split up the case vide order dated 08.07.2014 in respect of the

accused persons, namely, Amar Dey and Dibakar Das on account of their

absconsion and vide order dated 09.01.2015 committed the case before the

learned Special Judge, Gomati Judicial District, Udaipur being numbered as

Special 05(TPID) of 2015 in respect of the accused persons, namely, Tanay

Das and Manoranjan Debnath for trial in accordance with the law.

2.4. At the commencement of trial, the learned trial Court had

framed charges against the accused person, namely,Tanoy Das under

Sections 406 and 420 of IPC, read with Section 3 of TPID Act, 2000 to

which the accused pleaded not guilty and claimed to be tried. Whereas, the

learned trial court vide order dated 01.04.2015 discharged the other accused

person namely, Manoranjan Debnath due to lack of prima facie evidence.

3. Altogether, 24 (twenty four) nos. of witnesses were examined and

some documents were exhibited[Exbt. MO-1 to Exbt. MO-39/2].

Page 5

4. At the closure of recording evidence, the accused, namely, Tanay

Das, was examined under Section 313 CrPC. The accused had denied all the

allegations and other incriminating materials surfaced against him in course

of trial by the prosecution witnesses, but, refused to adduce any evidence on

his behalf. However, on examination under Section 313 of Cr PC, the

accused stated that he himself was an investor in the said company and went

to the office at Math Chowmuni, Agartala, on one/two occasions to make his

own deposit together with his mother. Thereafter, when the aforesaid

company had stopped making payment, he complained against the company.

The company had also issued a cheque to the accused which was dishonored

by the bank. After that, convict-appellant filed a cheque bounce case vide

Case No. C.R. 56/2011 under N.I. Act and also filed a money suit against the

company in the Court of learned Civil Judge (Senior Division), Court No.1,

Agartala. The learned trial court passed an order for auction of the properties

of the company.

5. Having heard the arguments advanced by the learned counsels

appearing for the parties, the learned trial court after considering the

evidences and materials brought on record convicted and sentenced the

accused as aforestated.

Page 6

6. Feeling aggrieved and dis-satisfied with the impugned judgment

and order of conviction and sentence, the appellant has preferred the instant

appeal before this Court.

7. I have heard Mr. S. Sarkar, learned senior counsel appearing on

behalf of the appellant and Mr. Sumit Debnath, learned Addl. P.P. appearing

for the State-respondent.

8. Mr. Sarkar, learned senior counsel for the appellant at the very

outset, made the following submissions in support of the appeal:-

(i) that, the main object of enactment behind TPID Act, 2000

was to protect the interests of depositors of the financial

establishments and also to regulate the business of the

financial establishments as defined in the Act;

(ii) that there was no evidence at all to demonstrate that the

appellant was the Managing Director of the said company.

No memorandum of association was brought on record to

identify the Managing Director or Directors of the

company. As such, the claim of the prosecution witnesses

that the appellant was the Managing Director of the said

company would have no force in the eye of law;

Page 7

(iii) that, the appellant himself deposited some amount in the

said company, i.e. Rubi Star Marketing Pvt. Ltd. with an

expectation of getting a higher rate of return. Afterwards,

the appellant also lodged a written complaint against the

said company and some of its agents, namely, Dibakar

Das, Kamini Kumar Singha, Kishan Lal Saha, Sunil

Chandra Debnath, Satyaranjan Banik, Ashis Nandi, Nirod

Das, Dhritiman Dey;

(iv) that, on perusal of the depositions of Prosecution

witnesses, it has come forward that the prosecution failed

to prove that there was no repayment or failure of

fulfillment of promise because of a fraudulent act as

required under Section 3 of the TPID Act. It was a normal

business loss and the appellant was not responsible for the

management or conduct of the business affairs. The

prosecution further failed to show that there was criminal

intent on the part of the persons responsible for

management or conduct of the business;

(v) that, there was no evidence which would have suggested

that there was any entrustment of money upon the Page 8

convict-appellant and the prosecution miserably failed to

prove that the said amount of money was misappropriated

by the convict-appellant for his personal gain or that he

did not deposit any sum of money of the depositors to the

said company. Hence, the question of entrustment of

money by the convict-appellant did not arise;

(vi) that, in the absence of proof of entrustment and

misappropriation thereof, offence punishable under

Section 406 of IPC should not be said to be proved, as

mentioned in the cases of, (i) Satishchandra Ratanlal

Shah v. State of Gujarat, (2019) 9 SCC 148 (ii)

VeljiRaghavji Patel v. State of Maharashtra, (1965) 2

SCR 429;

(vii) that, the signature or name of Tanay Das was not

transpired in the documents seized by the I.O., P.W. 24.

The investigating officer [PW-24], in his cross-

examination clearly stated that he could not collect any

evidence to ascertain whether Tanay Das was either the

Director or the Managing Director of the said company.

Page 9

He could not collect any documents to show that Tanay

Das attended any meeting of the Board of Directors;

(viii) that, the appointment letter of Uttam Das (Exbt. M.O.9)

was issued by Dibakar Das. In the appointment letter of

P.W.7 (Exbt. M.O.8), above the seal of Director (issuing

authority), one initial signature was there and beneath the

impression of rubber stamp of the Director the name of

one B.Paul appeared to be written;

(ix) that PWs 3,4,5 and 6 are not relevant so far as the present

appellant is concerned since the said PWs have mainly

deposed against the other accused persons, namely, Amar

Dey and Dibakar Das.

9. On the other hand, Mr. Sumit Debnath, learned Addl. P.P.

strongly bent upon the point that the convict-appellant introduced himself as

the Managing Director of the said company, namely, Rubi Star Marketing

Pvt. Ltd. and he induced the public to deposit money in the said company

with a promise to get a higher rate of interest. Further, the convict-appellant

directly received and collected money from the depositors of Udaipur in the

name of the aforesaid company. Hence, the learned Addl. P.P. prayed before

the Court to dismiss the present appeal.

Page 10

10. I have considered the rival submissions advanced by the learned

counsels appearing for the parties. Before I advert into the merits of the case,

it would be apposite to peruse the evidence and materials on record.

11. What has been transpired from the submissions of learned

counsels appearing on behalf of the parties that both of them emphasized

upon the evidence of PW-1, PW-2, PW-7, PW-10, PW-16 and PW-24. For

convenience, I may first scrutinize the evidence of PWs-1 and 2.

12. PW-1, Lalit Chandra Das in his examination-in-chief deposed

that he was a retired Group-D employee and having heard that the company,

namely, Rubi Star, was giving high rate of interest to the investors, he went

to the office of the said company at Udaipur when he was told by the staff

present in the office that Tanay Das was the officer of that local office.

Accordingly, he met Tanay Das who told that if he could deposit Rs.50,000/-

at a time, the company would give Rs.5000/- per month for next 18 months.

On the following day, PW-1 deposited Rs.53,500/- which he handed over

directly to Tanay Das, but, he got Rs.5000/- for one month only and nothing

more. Against the deposit, one certificate was issued to him from the counter

of the said office where one lady was sitting. He made repeated query with

the local office of the company, but, ultimately received no payment. After

3/4 months, one day, he found said office was closed and was under lock and Page 11

key and never reopened. Thereafter, he never found Tanay Das in the office

area. He identified the accused Tanay Das in the dock. He deposed that

during investigation, his original certificate was seized by the CID officer by

preparing seizure list. He identified the certificate which was issued by Rubi

Star Marketting Private Limited in his favour and was seized by CID. The

said certificate was marked as Exbt. MO-1.

12.1 In his cross-examination, when the attention of PW-1 was drawn

to his previous statement recorded under Section 161 CrPC by the

investigating officer, where he stated that he paid Rs.53,500/- to Tanay Das

was not found. Further, the statement he made in his examination-in-chief

that Tanay Das himself told him that if he could deposit said amount he

would be given Rs.5000/- per month for 18 months was also not found when

his attention was drawn to his previous statement recorded under Section 161

of CrPC. PW-1 admitted the absence of such statement.

12.2 PW-2, Nepal Sarkar deposed that in the year 2010, one day he

visited the office of company, namely, Rubi Star Private Ltd. at Udaipur. On

16.03.2010 he talked with the In-charge, Amar Dey and on the next day he

deposited Rs.2,14,000/- to said Amar Dey. On that day i.e. 17.03.2010 he

also found Tanay Das in that office who told him that he was the Chief

Managing Director of the company and other staff also told the same. Against Page 12

his payment, Amar Dey gave him two certificates of Rs.1,07,000/- each. For

the next two months, he received Rs.20,000/- per month and thereafter the

payment was stopped. PW-2 further deposed that the CID officer examined

him and recorded his statement and seized his two certificates by preparing a

seizure list. He identified said two certificates marked as Exbt.MO-2 series.

PW-2 identified his two signatures on the back of the said two certificates

[Exbt.MO-2/1 series]. PW-2 further deposed that Tanay Das also told him

that if he would deposit money in that company he would be in the safe side.

12.3 Being confronted with cross-examination, his attention was

drawn to his previous statement recorded by I.O. to which he admitted that

there was no such statement that Tanay Das introduced himself as Managing

Director of Rubi Star company and that accused Tanay Das told him that if he

could deposit the money in the company he would be in the safe side.

13. Before I advert the merits of the case, it would be useful to

reproduce the provisions as laid down under Section 3 of the TPID Act,

Sections 406 and 420 of IPC.

14. Section 3 of TPID Act provides as under:-

"Conviction for Fraudulent default-

3. Any Financial Establishment which (i) fraudulently defaults any repayment of deposit on maturity along with any benefit in the form of Page 13

interest, bonus, profit or in any other form as promised; or (ii) fraudulently fails to render service as promoter, partner, director, manager or any other person or conduct of the business or affairs of such Financial Establishment shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to one lakh of rupees and such Financial Establishment also shall be liable for a fine which may extend to one lakh of rupees:

Provided that in the absence of special and adequate reasons recorded in the judgment of the court, the imprisonment shall not be for less than three years and the fine shall not be less than one lakh of rupees .

Explanation :- For the purpose of this section, a Financial Establishment, which-

(1) commits defaults in repayment of such deposit with such benifits in the form of interest, bonus ,profit or in any other form as promised or fails to render any specified service promised against such deposit ; or

(2) fails to render any service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person : or

(3) commits such defaults due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such a manner as it involves inherent risk in recovering the same when needed, shall be deemed to have committed a default fraudulently or Failed to render specific service fraudulently.

15. Section 406 of IPC prescribes the period of punishment for

committing the offence of criminal breach of trust.

Page 14

15.1 Section 405 of IPC deals with the ingredients of a criminal

breach of trust. Section 405 of IPC may be reproduced herein for

convenience:-

―405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust".

15.2 While dealing with the ingredients of Section 405 of IPC, the

Hon'ble Supreme Court in Case No. Crl. Appeal No.238/2019 arising out of

Special Leave Petition [(CRL) No.1434 of 2018] titled as Professor R.K.

Vijayasarathi & Anr. Vrs. Sudha Seetharam & Anr. held thus:-

"A careful reading of Section 405 shows that the ingredients of a criminal breach of trust are as follows:

i) A person should have been entrusted with property, or entrusted with dominion over property;

ii) That person should dishonestly misappropriate or convert to their own use that property, or dishonestly use or dispose of that property or willfully suffer any other person to do so; and

iii) That such misappropriation, conversion, use or disposal should be in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract which the person has made, touching the discharge of such trust.

Page 15

Entrustment is an essential ingredient of the offence. A person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished under Section 406 of the Penal Code."

16. Again, to constitute an offence under Section 420 of IPC,

following ingredients are to be fulfilled as observed by the Hon'ble Supreme

Court in Vijayasarathy (supra):-

―The ingredients to constitute an offence under Section 420 are as follows:

i) A person must commit the offence of cheating under Section 415; and

ii) The person cheated must be dishonestly induced to

(a) deliver property to any person; or

(b) make, alter or destroy valuable security or anything signed or sealed and capable of being converted into valuable security.

Cheating is an essential ingredient for an act to constitute an offence under Section 420.

16.1 Cheating is defined under Section 415 of IPC which reads as

under:-

415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".

Page 16

16.2 In Vijayasarathi (supra), the Hon'ble Supreme Court discussed

the ingredients to constitute an offence of cheating which are as under:-

"i) there should be fraudulent or dishonest inducement of a person by deceiving him;

ii)(a) the person so induced should be intentionally induced to deliver any property to any person or to consent that any person shall retain any property, or

(b) the person so induced should be intentionally induced to do or to omit to do anything which he would not do or omit if he were not so deceived; and

iii) in cases covered by (ii) (b) above, the act or omission should be one which caused or is likely to cause damage or harm to the person induced in body, mind, reputation or property.

A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating."

17. In a recent decision in Crl. Appl. No.463 of 2022 [arising out of

SLP (Crl) No.10951 of 2019] titled as Vijay Kumar Ghai & Ors. Vrs. The

State of West Bengal & Ors.[2022 LiveLaw(SC) 305], a two Judge Bench of

the Hon'ble Supreme Court had discussed regarding the ingredients of

Sections 405 and 420 of IPC, wherein, it was observed that:-

"The essential ingredients of the offence of criminal breach of trust are:-

(1) The accused must be entrusted with the property or with dominion over it, Page 17

(2) The person so entrusted must use that property, or;

(3) The accused must dishonestly use or dispose of that property or wilfully suffer any other person to do so in violation.

(a) of any direction of law prescribing the mode in which such trust is to be discharged, or;

(b) of any legal contract made touching the discharge of such trust."

18. While discussing the essential ingredients of the definition of

cheating as contemplated under Section 415 of IPC, the Hon'ble Supreme

Court in the case of Vijay Kr. Ghai (supra) had observed thus:-

"The essential ingredients of the offense of cheating are:

1. Deception of any person.

2. (a) Fraudulently or dishonestly inducing that person-

(i) to deliver any property to any person; or

(ii) to consent that any person shall retain any property;or

(b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were no so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property."

19. It was further observed in Vijay Kumar Ghai (supra) that - "A

fraudulent or dishonest inducement is an essential ingredient of the offence. A

person who dishonestly induces another person to deliver any property is

liable for the offence of cheating."

Page 18

20. Again, while discussing the essential ingredients as defined

under Section 420 of IPC, the Hon'ble Supreme Court in the case of Vijay Kr.

Ghai (supra) had observed thus:-

"To establish the offence of Cheating in inducing the delivery of property, the following ingredients need to be proved:-

1. The representation made by the person was false

2. The accused had prior knowledge that the representation he made was false.

3. The accused made false representation with dishonest intention in order to deceive the person to whom it was made.

4. The act where the accused induced the person to deliver the property or to perform or to abstain from any act which the person would have not done or had otherwise committed."

21. Another settled principle which is to be kept in mind while

dealing with the disputes raised in the present nature of cases that-- every

breach of contract would not give rise to offence of cheating and only in those

cases of breach of contract would amount to cheating where there was any

deception played at the very inception. If the intention to cheat has developed

later on, the same cannot amount to cheating.

22. In the case of Vijay Kumar Ghai (supra), the Hon'ble Supreme

Court while dealing with this issue placing reliance upon its previous decision

of Hridaya Ranjan Prasad Verma and Ors. Vrs. The State of Bihar & Anr.,

(2000) 4 SCC 168 observed that--―there is no doubt that mere breach of Page 19

contract is not in itself a criminal offence and gives rise to the civil liability of

damages. The distinction between mere breach of contract and cheating,

which is criminal offence, is a fine one. While breach of contract cannot give

rise to a criminal offence, fraudulent or dishonest intention is the basis of the

offence of cheating."

23. Having gone through the complaint, charge-sheet and more

importantly the evidences let in by the prosecution witnesses, it is clear like

crystal that the entire genesis of the disputes emanates from the investments

made by some of the prosecution witnesses as discussed here-in-above with

the company namely Rubi Star Marketing Private Ltd.

24. Section 3 of TPID Act postulates that any essential establishment

which firstly; fraudulently defaults any repayment of deposit of maturity

doing with any benefit in the form of interests, bonus, profits or any other

form as promised; secondly, fraudulently fails to render service as promoter,

partner, director, manager or any other person or an employee responsible for

management or conduct of the business or affairs of such financial

establishment, shall on conviction, be punished with imprisonment for a term

which may extend to 10 years, and with fine etc. as stated here-in-above. So,

from the above, it is evidently clear that any financial establishment or the

persons responsible for the management or conduct of the business or affairs Page 20

of such financial establishment act fraudulently failing to refund the amount

as promised would be punishable as envisaged under Section 3 TPID Act.

Here, the word ―fraudulent‖ used by the maker of this Act carries enough

significance. The TPID Act has not defined the word ―fraudulent‖, however,

we find the definition of ―fraudulently‖ in Section 25 of IPC which reads as

under:-

―25. "Fraudulently"--a person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise.‖

25. So, to attract Section 3 of the TPID Act, one has to act

fraudulently. Bearing in mind the aforesaid legal positions, I shall now

proceed to examine as to whether the appellant has caused any fraudulent act

with the investors and whether the prosecution has been able to meet the

ingredients of Sections 406 and 420 of IPC.

26. From the evidence of PW-1 and PW-2 it appears that they

themselves went to the office of the Rubi Star company at its Udaipur Branch

Office. The statements which was made by PW-1 that he paid Rs.53,500/- to

the appellant and the appellant Tanay Das told him that if he could deposit the

said amount, he would be given Rs. 5000/- per month for 18 months were

found to be his improved versions, which he admitted in his cross-

examination. Similarly, PW-2 admitted that he did not make any such Page 21

statement during his examination under Section 161 CrPC that the appellant

styled himself as the Chief Managing Director of the company who told him

that if he would deposit the money in the company he would be in the safe

side.

27. From the evidence of PW-7, it appears that he stated that his

appointment letter was issued by the Managing Director of the company,

namely Sri Tanay Das. He further stated that the Chief Managing Director of

the office of the company was one namely Dibakar Das residing at Kolkata.

He further deposed--―that whenever any money was deposited at Udaipur

Branch, the same used to be sent to Agartala Branch and they never kept any

deposit in their Udaipur Branch. Exbt.MO-8 is his appointment letter where

he deposed that it was the signature of Tanay Das as Managing Director of the

company.

27.1 During his cross-examination, he admitted that the initial

signature [Exbt.MO-8/1] of Tanay Das where the name is mentioned is not

properly legible due to rubber stamp marking of Director, Rubi Star

Marketing Ltd. It comes to light that the first name of the said person starts

with ―B‖ and the surname starts with ―P‖. On perusal of Exbt.MO-8/1, the

learned trial court observed that the signature appeared to be of one ―B. Pal‖

or so. So, from the observation of the court, it is clear that whether it is the Page 22

signature of Tanay Das or B. Paul has not been proved beyond reasonable

doubt.

27.2 Another significant feature as surfaced from the deposition of

PW-7 is that the money which had been invested by the investors were always

used to be deposited in the branch office at Udaipur and those deposits were

used to be deposited to the Agartala Branch, the head of the company in the

State. What is garnered from the above statements that none of the persons

including the appellant had not used the invested money of the complainant or

other investors for their own benefits. PW-7 was himself an employee of the

Ruby Star Marketing Private Ltd.

28. PW-8 was a Cashier of the said company and his appointment

letter [Exbt. MO-9] was issued by one Dibakar Das of Kolkata as Chief

Managing Director of the said company. He deposed that Tanay Das

introduced himself as Managing Director of the said company. From his

evidence, one important fact comes to fore that neither the appellant had

received any deposits from the customers nor he issued acknowledgment

receipt to the respective customers in respect of payment of installments.

29. PW-9 has stated that having seen the sign board of the company,

he visited the office and talked with some employees. One day, one Amar Page 23

Dey, the Manager of the Branch Office visited the house of PW-9 where PW-

9 was appraised of different schemes of the company. PW-9 had invested

money and against such investment, he received payments for two months

and thereafter no payment was made.

29.1 In his cross-examination, he admitted that in his ejahar or the

statements recorded by I.O. he did not make any such statements that one day

Tanay Das went to his house and explained about different schemes. So, the

statements which he made before the court in his examination-in-chief that

Tanay Das visited his house and explained about different schemes is seemed

to be an improved versions.

30. From the evidence of PW-10, it reveals that he attended a

programme organized by the company where it was appealed by both Dibakar

and Tanay Das that if the money is invested in the said company, then, they

would be given higher rate of interest. PW-10 invested Rs. 2,00,000/- and out

of this Rs.45,000/- was returned by them. However, in his cross-examination

PW-10 admitted that he did not state before the I.O., the above statements he

made in his examination-in-chief which were confirmed by the I.O. i.e. PW-

23 (Surjya Kanta Jamatia).

Page 24

31. PWs-11, 12 and 13 did not depose anything against the present

appellant.

32. PW-14 deposed that he met with Tanay Das who told him to wait

for some period and assured that the invested money would be paid to them.

Since in his cross-examination he admitted that he did not make such

statement before the I.O, the versions of PW-14 also seems to be improved

versions and has no evidentiary value.

33. PW-15 deposed that he invested Rs.1,90,000/- in the said

company in a fixed deposit scheme on the pretext that it would be double on

maturity. He further deposed that he found Tanay Das in the office. However,

in his cross-examination it appears that he did not state the aforesaid facts

before the I.O. during his examination under Section 161 of CrPC.

34. PW-16 deposed that he invested Rs.4,00,000/- step by step in a

scheme and also he met one Tanay Das who was the in-charge of the said

company and the company re-paid Rs.2.5 lakhs as per scheme under which he

invested his money. But, since the said office was found to be closed, he met

with Amar Dey and Tanay Das who assured him that the remaining amount of

money would be returned to him within a short while.

Page 25

35. PW-17 deposed that he visited the Udaipur office of the

company along with one of his previous acquaintances and was introduced

with one Amar Dey, the Branch Manager and Tanay Das, as Managing

Director of the said company. During his cross-examination, he admitted that

he did not make any such statement that he met with Tanay Das, and one

Rakesh Majumder introduced him with Amar Dey and Tanay Das of Udaipur

office. All his statements appeared to be improved versions.

36. From the evidence of PW-18, it transpires that one Ranjit Das

requested him to deposit money with the company saying that the interest rate

would be higher. Thereafter, he attended several meetings in different places

at Udaipur along with said Ranjit Das and Ranjit Das told him that Tanay Das

was the Branch Manager of the company. Thereafter, he invested Rs.8000/-,

but, the company was closed. However, in his cross-examination, he admitted

that he did not state specifically to the I.O. that from Ranjit Das he came to

learn that Tanay Das was the Branch Manager of Udaipur office.

37. PW-19 deposed that he worked as an agent of the said company.

In the first part of 2010, Amar Dey and the appellant went to his house and

introduced themselves as the Branch Managers of the said company and he

was made aware of different schemes of the said company.

Page 26

38. PW-20 deposed that he deposited Rs.20,000/- and one of his co-

villagers, namely, Nikhil Majumder brought him to the said office of the

company and only for one occasion he received Rs.1600/- and thereafter, the

said branch office of Udaipur became closed.

39. PW-21 deposed that he invested Rs.10,700/- with the company

on condition that it would repay Rs.1500/- per month for the next 12 months

and thereafter, he would receive the principal amount of Rs.10,700/-. He

further deposed that he received the repayment for 5/6 months and thereafter,

the payment was stopped. He further deposed that on 28.05.2010 he further

invested Rs. 5000/- in a fixed deposit at the request of the appellant.

40. PW-22 deposed that he was working with the company as a

computer operator at its Agartala Branch office. The appellant Tanay Das was

known to him as one of the successful agent of the said company. He was

declared hostile as he deposed that he did not state to the CID officer that the

appellant was the Managing Director of the said company.

41. Now, this court is concerned with the question whether the

evidences let in by the prosecution witnesses, particularly, the investors at

their face value made out the ingredients of Penal offence as charged against

the accused-appellant or not.

Page 27

42. I have closely scrutinized the evidence and materials on record.

On cumulative discussion of the above evidences of the prosecution

witnesses, it comes to light that the prosecution has failed to prove any scrap

of paper that the appellant was acting as Managing Director of the said

company. None of the witnesses has stated that the appellant has induced

them and defrauded them. There is no evidence that the money received from

the investors was not deposited to the company, rather, it has been proved that

the invested amounts of the depositors were deposited in the company and

due slips were issued under the signature of the authorized employee of the

company. From the evidence of witnesses, who invested money in the said

company, it also comes to light that the company was paying the due amount

to the investors what they were entitled to out of their investments, but,

suddenly repayment was stopped due to closure of the company. There is no

evidence that the appellant obtained cash amount from any of the prosecution

witnesses or received money in cash from the witnesses/investors dishonestly,

and did not deposit such money to the company. There is no evidence that the

money received from the complainant or other investors was not invested in

consonance with the desires of the investors. There is no evidence that the

accused defrauded the money collected from the complainant or any of the

investors for his personal gain without depositing the same to the company. It Page 28

is apparent from the evidence of the witnesses that the appellant had never

fraudulently or dishonestly induced the complainant or any of the investors to

invest knowingfully well that their investments would not be deposited in the

account of the company and it would not be refunded to the investors in

accordance with the terms of the schemes. Furthermore, no allegation is made

directly against the appellant attributing negligence of the appellant with a

criminal intent and the invested money had been used by the appellant himself

for his wrongful gain.

43. As I said earlier, that, one of the important features emanated

from the definition of Section 3 of TPID Act is that any financial

establishment has to commit fraud. From the definition of Section 3 of TPID

Act, it is clear that the said provision will be exercised and enforced in case

any financial establishment fraudulently defaults to make repayment or

fraudulently fails to render service. The evidences being gathered from the

prosecution witnesses, it is apparent that none of the prosecution witnesses

has stated that during the continuation of the company i.e. Rubi Star

Marketing Pvt. Ltd., it defaulted in making repayment or it fraudulently failed

to render service. Even if, it is considered that the appellant had styled himself

as Managing Director, then also, it is the burden upon the prosecution to

establish that he made false representation with dishonest intention in order to Page 29

deceive the investors to whom it was allegedly made. The prosecution

witnesses who made investments with the company have stated that they

visited the office of the company and thereafter, invested their money. If their

statements that Tanay Das styled himself as Managing Director; or somebody

introduced Tanay Das as Managing Director of the company; or that Tanay

Das i.e. the appellant had represented before them as regards various schemes

of the company, even then, the ingredients of section 3 of TPID Act read with

sections 405/406/415 and 420 of IPC would not be attracted since there is no

evidence that the appellant dishonestly has misappropriated the invested

money entrusted to him. More so, there was no entrustment at all upon the

appellant since the money was found to be actually invested with the

company. In such a case, considering the settled law that every breach of

contract would not give rise to offence of cheating or attracts criminal

offence, the nature of complaint/disputes in the present case, in my opinion,

does not disclose any criminal offence at all and much less any offence under

Sections 406/420 of IPC and Section 3 of the TPID Act and the present case

is a case of purely civil dispute between the parties for which remedy lies

before a Civil Court by filing a properly constituted suit.

Page 30

Added to it, prosecution has failed to come up with a case that

the accused-appellant in the affairs of the business of the company was at any

point of time was entrusted with the deposits of the investors.

44. Hon'ble Supreme Court in National Small Industries

Corporation Ltd. Vrs. Harmeet Singh Paintal & Anr.[(2010) 3 SCC 330] at

Para 38, observed that -

―38.But if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was in-charge of the business of the company" or by stating that "he was in- charge of the day-to-day management of the company" or by stating that "he was in-charge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of Section 141 of the Act."

45. From the aforesaid citation of the Hon'ble Apex Court, it is

evident that if the accused is not one of the persons who falls under the

category of "persons who are responsible to the company for the conduct of

the business of the company" then merely by stating that "he was in charge of

the business of the company‖ is not enough. For fastening the criminal

liability, there is no presumption that every Director knows about the Page 31

transaction. Criminal liability can be fastened only on those who, at the time

of the commission of the offence, were in-charge of and were responsible for

the conduct of the business of the company. Vicarious liability on the part of a

person must be pleaded and proved and not inferred.

46. Again, in Vijay Kumar Vrs. State of Rajasthan [(2014) 3 SCC

412], the Apex Court in Para 14 held that:-

"This witness, PW 10 Jaswant Singh was admittedly examined by Investigation Officer during investigation and in that statement he has not stated the facts which he now for the first time stated before the Trial Court. This raises a serious doubt as to the veracity of the said facts [See Khalil Khan vs. State of M.P. (2003) 11 SCC 19]. In other words this witness has made material improvement while deposing in the Court and such evidence cannot be safe to rely upon........."

47. In the instant case, on perusal of the evidences of PWs

1,2,8,,9,10,14,15,16,17,18,19,21 and 22 it is crystal clear that most of the

incriminating statements against the appellant are made for the first time

before the court which raises serious doubt as to the veracity of the statements

they made on facts, and thus, the same ought to be discarded as an

afterthought.

48. In my ultimate analysis, the prosecution has failed to establish

the charges framed against the appellant under Sections 406/420 of IPC and

Section 3 of TPID Act, 2000. Hence, from the entire materials available on Page 32

record, there is nothing as such to prove that there was misappropriation of

money by the present appellant or that the appellant was in-charge or was

responsible for the conduct of the business of the financial establishment and

further that there was any dishonest intention to obtain money from the

investors or he adopted any fraudulent and dishonest means to receive money

from the investors even he is stamped as a ―person‖ or comes within the

purview of the meaning of the words, ―any person‖ as embodied under

Section 3 of the TPID Act. In my opinion, the words, ―any person‖ under

Section 3 of TPID Act must have a live link with his fraudulent and dishonest

acts as defined in the said provisions.

49. To bring home the charge under Section 3 of TPID Act, 2000

and to justify the conviction, the prosecution must establish that the persons

concerned like the appellant herein has been involved and responsible for the

transactions of the business of the company and the conduct of such persons

must have relevance and attracts the ingredients of the definition of

―fraudulently‖ as contemplated under Section 25 of the Indian Penal Code.

50. In the opinion of Court, the legislature by way of incorporating

the words, ―any person" has intended to mean and include those persons

looking after the affairs of the company with the intention to defraud, induced

the investors to invest in the company and diverted the invested money of the Page 33

depositors dishonestly for his/their wrongful gains, and that the appellant had

definite knowledge as regards the financial transactions of the company,

which are missing in this case. The Court should keep in mind, as discussed in

the preceding paragraphs that every breach of contract would not attract

criminal offence, but, it may be a case of civil dispute for which remedy lies

before the Civil Court.

51. In view of above discussions on legal and factual aspects, the

judgment and order of conviction and sentence passed by learned Special

Judge, Gomati Judicial District, Udaipur, in case No. Special 05 (TPID) of

2015 stand set aside and quashed. The appellant, Tanay Das is acquitted of

the charges levelled against him and he is set at liberty. He is discharged from

the bail bond. Surety is also discharged from his liabilities.

The appeal, is accordingly, allowed and disposed of.

Send down the LCRs forthwith.

JUDGE

sanjay