S. Sukumaran, V. Sundararajan and S. Krishnakumar vs State

P.D. Dinakaran, J.—Admittedly, the petitioners are directors of one M/S. Better Gain Financial (P) Ltd. The petitioners seek to quash the

original charge sheet dated 15.6.1998 and the amended charge sheet dated 24.5.1999 framed in the above C.C. No. 4403 of 1998, which was

taken on file, in pursuance of the complaint lodged be individual depositors, as early as on 21.1.1997 and thereafter

Mr. Senthilnathan, learned counsel for the petitioners seeks to quash the above charge sheet on the ground that even though the complaints were

lodged as early as on 21.1.1997, in pursuance of which investigations were made, the business of the company itself was closed immediately

thereafter on 15.3.1997 and thereby, the company was not in existence. Mr. Senthilnathan. Learned counsel for the petitioners, points out that the

Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act. 1997, (hereinafter referred to as the Act) came into force only

from 7.8.1997. on which day. the company was admittedly closed. Hence, it is contended that the complaint lodged earlier to 7.8 1997, which

was entertained by the Addl. Chief Metropolitan Magistrate, ought to have been proceeded by the said Magistrate himself, without transferring the

same to the Special Court, constituted under the Provisions of the said Act. 1997. Therefore, the very transfer of the case from the file of the Addl.

Chief Metropolitan Magistrate to the Special Court on 2.5.1999, when the amended charges were framed and the consequential proceedings

before the Special Court, are without jurisdiction.

Mr. Senthilnathan, inter alia contends that the petitioners being directors of M/s Better Gain Financial (P) Ltd. which is exempted from the

meaning of Financial Establishments, as defined u/s 2(3) of the Act. cannot be charged for the alleged offences punishable under the provisions of

the said Act.

Per contra, Mr. N.R. Elango. learned Government Advocate appearing on behalf of the respondent, brought to my notice the averments in the

amended charge sheet dated 24.5.1999, which read as follows:

In the year 1993 the accused A.12 to A.15 noted in the Final Report, entered into a criminal conspiracy to collect deposits from public and to

cheat them and for this purpose they started Better Gains Financial(P) Ltd., Company and using their status as Directors collected deposits from

public by falsely representing that their sister concerns i.e. 1) Better Gains Finance, 2) Better Gains Finance Corporation, 3) Better Gaias

Investments Corporation, 4) Better Gains Finance & Investment Corporation, 5) Better Gains Finance & Leasing Corporation, 6) Better Gains

Finance & Asset Management Corporation, 7) Better Gains Finance & Asset Management, 8) Better Gains Finance and Investments, 9) Better

Gains Finance and Leasing, 10) Better Gains Finance and Holding and 11) Better Gains Agro Foods Limited were governed by the Reserve Bank

of India Rules and Regulations knowing that they cannot return the Deposit whenever demanded and to achieve their object they announced

attractive benefit of 24% interest and they also have started several other concerns by name i.e. A.1 to A.11 and collected deposits in a calculated

manner by promising that they will return the deposits with interest of 24%.

Placing reliance on the above averments, learned Government Advocate contends that the petitioners are now being tried in the above C.C. No.

4403 of 1998. before the Special Court, not merely in the capacity as directors of M/s. Better Gain Financial (P) Ltd., but for the offence said to

have committed by them, in the capacity of the directors of M/S. Better Gain Financial (P) Ltd., viz. collecting the deposits from the public, by

making false representation, on behalf of the alleged sister concerns of M/s. Better Gain Financial (P) Ltd., referred to above, which are not

registered under the Indian Companies Act and consequently, not exempted within the definition of Section 2(3) of the Act. He further contends

that the respondent has received more than 350 complaints from the respective depositors, with regard to their deposits made with the petitioners.

Therefore, merely because the investigation in question was initiated, in pursuance of the complaints lodged on 21.1.1997, much prior to date of

the commencement of the Act, Viz. 7.8.1997, it cannot be said that such complaints could not be investigated or the charges framed thereon are

without jurisdiction or that the transfer of the case from the files of the learned Addl. Chief Metropolitan Magistrate to the Special Court, by

exercising the powers u/s 6(3) of the Act, is illegal. He further contends that the respondents is competent to entertain as many complaints as they

receive, with regard to the alleged offence said to have been committed by the petitioners, representing that they are the directors of the sister

concerns referred to above, which are, admittedly, not registered under the provisions of the Companies Act. In any event, Mr. Elango, learned

Government Advocate contends that since the trial has already been started and almost 150 prosecution witnesses had been examined, it may not

be proper to quash the said charges, at this stage.

I have bestowed my careful consideration to the submission of both sides.

In this regard, I am obliged to refer Sections 2(3) and 6(3) of the Act, which reads as follows:

Section 2(3):

Financial Establishment'' means an individual, an association of individuals or a firm carrying on the business of receiving deposits under any scheme

or arrangement or in any other manner but does not include a company registered under the Companies Act, 1956 a corporation or a co-operative

society owned or controlled by any State Government or the Central Government, or a banking company as defined u/s 5(c) of the Banking

Regulation Act, 1949 or a non-banking financial company as defined in Clause (f) of Section 45-1 of the Reserve Bank of India Act 1934.

Section 6(3):

Any pending case in any other Court to which the provisions of this Act apply shall stand transferred to the Special Court.

There is no dispute as to the fact that the companies which are registered under the Companies Act, are exempted from the purview of the Act,

as per the definition of the ""financial establishment"", defined u/s 2(3) of the Act. But, as rightly pointed out by Mr. Elango, learned Government

Advocate that the petitioners are charged in the above C.C. No. 4403 of 1998, not merely because they were Directors of M/S. Better Gain

Financial (P) Ltd., but for their alleged offence committed on behalf of the sister concerns, referred to above, which are, admittedly, not registered

under the provisions of the Indian Companies Act. In the light of such averments in the complaint and in the statements obtained u/s 161, Cr.P.C.,

I am of the considered opinion that the said case has been rightly transferred to the Special Court, by exercising the power u/s 6(3) of the Act.

Further, when a series of complaints were lodged against the petitioners by different depositors, in a similar and chain of transactions, the

respondent is under a duty to register the complaints, investigate the same together and proceed against the petitioners in the same crime, in order

to avoid multiply of litigations, to prevent the abuse of process of Court and to meet the ends of justice. Therefore, I am unable to appreciate the

arguments of learned counsel for the petitioner that the Special Court has no jurisdiction and that the petitioners could not be tried in a same case

for different complaints.

That apart, as rightly pointed out by the learned Government Advocate that when the above case has already been taken for trial and more

than 150 prosecution witnesses have been examined, it may not be proper to quash the charge sheet, at this stage, as per the principles laid down

in Amar Chand Agarwalla Vs. Shanti Bose and Another, etc., , wherein it is held as follows:

Where the accused moved the High Court at the time when the trial was almost coming to a close and what remained to be done was the

examination of two prosecution and one Court witnesses and the High Court quashed the charge and the entire proceedings on the grounds that

the complainant suppressed material facts and that the evidence on record did not establish the alleged offence, the Order was liable to be set

aside. The proper course at that stage to be adopted by the High Court was to allow the proceedings to go on and to come to its logical

conclusion, one way or the other, and decline to interfere with those proceedings.

For all these reasons, I do not find any merit in the above petition and therefore, the same is dismissed, however, without prejudice to the right

of the petitioners to work out their appropriate defence in the trial and the learned Special Judge is directed to proceed with the trial and pass

appropriate Orders, on merits, without being prejudiced by the disposal of the above petition. Consequently, Crl.M.P. No. 9290 of 1999 is also

dismissed. No Costs.