State vs Pannerselvam

K. Natarajan, J.—This Criminal Appeal has been preferred by the State of Tamil Nadu by the Public Prosecutor against the judgment of

acquittal dated 15.10.1991 in C.C. No. III of 19X9. on the file of the Chief Judicial Magistrate Madurai.

The circumstances which gave rise to the filing of this appeal are - The respondent/Accused Pannerselvam taking advantage of the registration

certificate issued by the Assistant Commercial Tax Officer, printed and circulated pamphlet. Ex.P-2, that he has started a shop under the name

Vigneshwara Complex at Krishna Rao Street. Dindigul. announcing household articles and furniture would be available for sale in his shop.

Without giving full particulars he deceptively stated in the pamphlet Ex.P-2 that details would be available if the public approached him in person in

his shop. When members of the public contracted him in person, he showed the household articles and furniture available in his shop and

represented it is sufficient to pay (sic)rd of the price of the article to him and if they come after a period of 25 days, the desired article would be

delivered to them without paying the remaining 2/3rd amount Believing the words of the respondent/accused P.Ws. 1 to 78 and main others paid

l/3rd price of the articles and were waiting for the delivery of the articles by him after the period of 25 days. For the amount paid by P.Ws. 1 to 7X

and others, the respondent/accused did not issue any regular receipt, but issued a lottery ticket-like thing in which denomination of Rs.100/. Rs.50/

etc. were printed The respondent also represented if the members of the public are willing to pay the entire price of the articles they desired to

purchase, it would be delivered to them immediately When the business was picking up in this fashion, an article in a weekly by name ""Tharasu

was published that the respondent had deceived the members of the public in other places by starting shops in the same way as he did in Dindigul

and alter collecting huge amounts from the public representing the 1/3rd price of the articles, had disappeared without delivering them. After

reading the above article, members of the public of Dindigul who paid 1/3 rd of the amount of the articles to the respondent gathered in large

numbers and demanded delivery of the articles or refund of the money paid by them. The respondent did not return the money or the articles

stating if all people come and demand the articles at a time, he cannot deliver the same. P.W.1 Balakrishnan. who had paid Rs.840/- to the

respondent representing l/3rd price of a dinning table and sofa-cum-bed lodged the written complaint Ex. P-l to the Deputy Superintendent of

Police who inspected the shop of the respondent on 6.8.1988. A case in Crime No.211 of 1988 on the file on Dindigul Police Station (West) u/s

420 IPC was registered. PW 80 who was the Inspector of Police. Dindigul at the relevant time took up investigation, went to the shop of the

respondent, examined Balakrishnan. Navarathinam. Akbar. Rangaraj and others and recorded their statements He also prepared an observation

mahazar and arrested the accused on 7.8.1988 at 3.00 P.M. near the Dindigul Kottai Manamm an temple, and recorded the confession of the

accused in the presence of independent witnesses, the admissible portion of which is Ex.P.-5 At 5.15 p.m he recovered M.O.1 series 77 articles

and Rs.205/- from the respondent in the presence of P.W. 79 Arumugham and another Radhakrishnan under cover of mahazar Ex.P.-3. At 10.15

p.m. on the same day from door No.31-B of Krishna Rao first Street. he recovered M.O.2 series in the presence of the same witnesses under

cover of mahazar Ex.P-4. He recorded the statements of some other witnesses and also seized bill books, pamphlets, and R.C. Book. P.W.82.

who succeeded P.W.80 examined the other witnesses, completed the investigation and laid charge sheet against the respondent/accused u/s 3 and

4 of the Prize Chits and Money-Circulation Schemes (Banning)Act, 1978 and also u/s 420 IPC.

The learned Chief Judicial Magistrate, Madurai took up the case on his file as C.C. No. III of 1989. Copies of all relevant documents were

furnished to the accused free of cost. When questioned he pleaded not guilty and claimed to be tried.

P.Ws. l to 82 were examined on the side of the prosecution. Exhibits P-l to P-8 and M.O.1 series 77 articles and M.O.2 series 128 articles

were marked.

On an appreciation of the evidence placed before him. the learned Chief Judicial Magistrate. Madurai concluded that the ingredients of Section

420 IPC and Sections 3 and 4 of the Prize Chits and Money Circulation Schemes (Banning) Act. 1978 are not established by the prosecution

beyond reasonable doubt and therefore, he acquitted the accused of all the charges, the correctness of the said judgment is being challenged in this

appeal by the Stale.

The point for consideration is:-Whether the reasoning of the learned Chief Judicial Magistrate. Madurai that the ingredients of Section 420 IPC

and Sections 3 and 4 of the prize Chits and Money Circulation Scheme (Banning) Act have not been established is incorrect and perverse and the

appeal has to be allowed.

Point:-For appreciating the question involved, it is necessary to analyze the evidence of the witnesses carefully to find out the intention of the

respondent/accused and also the impression gained by the witnesses on his representation, while making enquiries about the business conducted by

the respondent on the basis of Ex.P-2 in the name of Vigneshwara Complex. P.W.1 Balakrishnan. who lodged the complaint Ex. P-l deposed, he

knows the respondent Panneerselvain and he started business under the name Vigneshwara Agency at Krishna Rao Street, Dindigul during August

1988. When contacted in person, he represented, if Rs. 10/- is paid for an article valued Rs.30/-, the article would be delivered to him after 25

days, without any further payment. He believed the representation of the respondent to be true. Accordingly, he paid Rs.840/- being the 1/3rd

value of a dinning table and sofa cum bed as stated by the respondent for which he issued receipts. ''However, the receipts were not regular

receipts usually issued, but were like lottery tickets in which denominations of rupees were printed with the name of the shop. When he went to the

shop on 6.8.1988 he found a crowd and he was told the respondent was distributing money. He found the respondent in the shop and demanded

return of the money from him. The respondent replied, if all the persons come at a time and ask for money he cannot give the same and the articles

for which money has been deposited would be delivered on the due date and asked him to come and take delivery of the articles on that date.

When he insisted for the payment of the money, the respondent refused to pay and by the time, the Deputy Superintendent of Police, Dindigul

came there and he gave the written report Ex.P-1. According to P.W. 1. on the date of the occurrence two or three television sets, one

refrigerator, bicycles, two TVS 50 mopeds. furniture and other articles were available in the shop of the respondent, which will be worth about

rupees fifty or sixty thousand. He was informed that in the godown opposite to the shop, articles had been stored, but the godown was found

sealed. Ex.P-2 is the pamphlet issued by Vigneshwara Complex. It is also his evidence that in the Tharasu magazine dated 6.8.1988 there was a

news item that the respondent started similar shops in various places and deceived people and that the public should be wary about the activities of

the respondent and on reading the same, a large crowd gathered.

P.W.2 Rajasekar deposed, the respondent/accused Pannerselvam was doing business in the name Vigneshwara Complex. On 1.18.1988, he

contacted the respondent in person and expressed his desire to purchase a TVS 50 moped. At that time, the respondent represented to him if he

pays l/3rd of the value of the articles and comes after 25 days, the desired articles would be delivered without any further payment and the

remaining 2/3rd amount need not be paid by him. Believing his representation, he paid Rs.2725/-for purchasing a baby cycle. TVS 50 moped and

other articles. P.W.2 was definite that the amount he had deposited with the respondent represented l/3rd of the value of the articles he intended to

purchase. On 5.8.1988, when he went to the shop of the respondent it was found closed and when enquired with the neighbours ho learnt the

respondent had been arrested and the shop had been sealed. He gave a petition to the Deputy Superintendent of Police and also the xerox copies

of the receipts issued by the respondent.

According to P.W.3 Gunasekaran, he contacted the person sitting in the cash counter in the shop Vigneshwara Complex, earning the pamphlet

Ex.P-2. and made enquiries. His enquiries revealed that others have also deposited money on the representation that if l/3rd value of the articles is

paid, after 25 days, the articles would be delivered by the respondent without collecting the remaining 2/3rd amount. He deposited 1/3rd of the

amount for purchasing two bicycles, a dinning table set, a tape woven cot. iron box and some other small articles, on 28.7.1988, and subsequent

dates. The total amount paid by him was Rs.1176/-for which 25 receipts have been issued by the person in the cash counter.

P.W.4 Sangili deposed that the respondent was doing business under the name Vigneshwara Complex in Dindigul. He represented that if 1/3

rd value of the article is deposited, he would deliver the articles to him without collecting the remaining 2/3rd amount after 25 days. He deposited

Rs.60/- representing l/3rd value of one plastic basket and two chairs, but. the respondent did not deliver either the article or returned the money

and the shop had been closed."" P.Ws.5 to 78 gave similar evidence as that of P.Ws. 1 to 4 that they have also deposited various sums of money,

representing 1/3rd value of the articles and the respondent promised to deliver the articles after 25 days without collecting the remaining 2/3rd

amount but no articles have been delivered or the money was refunded.

P.W.81 Kamatchi, gave evidence that he was working as Deputy Commercial Tax Officer, Madurai at the relevant time and on the application

of the respondent he issued a registration certificate for the concern Vigneshwara Complex to do business at Dindigul. He is definite, the

respondent is the person who gave the application and the certificate issued by him is Ex.P-8.

P.W.79 is the mahazar witness. P.W.80 is the Inspector of Police who did material part of the investigation. P.W.82 is the Inspector who

completed the investigation and laid charge sheet against the respondent.

Learned Public Prosecutor for the appellant State submitted in fairness, the provisions of Section 420 and the ingredients of Prize Chit are not

attracted to the facts of the case. However, the learned Chief Judicial Magistrate, Madurai has grossly erred in reaching the conclusion that the

ingredients of Money Circulation Scheme have not been attracted. The learned Public Prosecutor took me through the evidence of P.Ws. l to 78

and pointed out that all the witnesses have stated, attracted by the pamphlet Ex.P-2, issued by the respondent, they contacted the person

mentioned in the pamphlet at Vigneshwara Complex and at that time they found household articles and furniture in the shop, wherein the

respondent was doing business. The respondent represented to them that if l/3rd value of the articles which each of them decided to purchase is

deposited, after 25 days the desired articles would be delivered to them, without paving the remaining 2/3rd amount. Believing his representation,

all of them enrolled themselves as members of that scheme and deposited with him various sums of money for getting various articles according to

their taste. Pointing out the above, the learned Public Prosecutor submitted, the respondent by such scheme as spoken to by the witnesses

intended to make quick or easy money on the pretext that valuable things would be delivered to them within a short time of 25 days and enrolled

members into the scheme and the ingredients of the Money Circulation Scheme as embodied in Section 3 of the Prize Chits and Money Circulation

Schemes (Banning) Act. 1978 (herein after referred to as ""the Act) are clearly attracted and the lower court has grossly erred in holding to the

contrary and the said conclusion is manifestly wrong.

Learned counsel for the respondent submitted, the learned trial magistrate has given valid reasons for holding the ingredients of the Money

Circulation Scheme are not attracted and there is no reason to disturb the judgment of acquittal recorded by the lower court. It was also pointed

out that normally an order of acquittal would not be disturbed by this court for the mere reason that another view is possible. There cannot be am

dispute about the legal principle submitted by the learned counsel for the respondent. However. it has to be seen whether the conclusion of the

learned trial magistrate that the ingredients of the money circulation scheme are not attracted is a reasonably possible view and no manifest error

has been committed and miscarriage of justice had occurred. Explanation (c) to Section 2 of the Act reads as follows;

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 tiling as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members

into the scheme, whether or not such money or tiling is derived from the entrance money of the members of such scheme or periodical

subscriptions.

A careful analysis of the evidence of P.Ws. l to 78 definitely shows that the respondent is the person who started business under the name

Vigneshwara Complex, storing household articles and furniture and by distributing the pamphlets Ex.P-2. he attracted the members of the public

and when they contacted him in person only, he explained about the money circulation scheme and induced the members of the public to enroll

themselves in the scheme and received money from large number of members of the public creating the belief that it represents 1/3 value of the

articles they intended to get and the said articles would be delivered after a period 25 days and it is no more necessary for the said persons who

enrolled themselves as members to pay the remaining 2/3 amount. Though the pamphlet Ex.P-2 does not promise in writing that if 1/3rd value of

the articles is deposited in the money circulation scheme floated by him and the desired article would be delivered after a period of 25 days without

any further payment, it is important to notice there is a reference in the pamphlet that details would be available if the public contacted him in

person. As pointed out earlier, the evidence of P.Ws. 1 to 78 makes it clear that when they contacted the respondent in person they were told that

if l/3rd value of the articles was deposited the said article would be delivered after a period of 25 days and no further payment need be made by

them and believing the representation each of them deposited various sums of money for getting articles of their choice. The learned Public

Prosecutor submitted, the respondent had carefully and intelligently worded the pamphlet Ex.P-2 to avoid any incriminating evidence against him

and induced the public to contact him in person and when they contacted, he orally explained the business deal and persuaded the public to

become members in the money circulation scheme floated by him and to deposit l/3rd value of the article and made them believe the desired

articles would be delivered to them after 25 days without further payment.

Learned counsel for the respondent argued the respondent was conducting business on instalment basis which is not an offence and relied on

the evidence of some of the prosecution witnesses who have stated that the respondent was selling articles on instalment basis also. At this

juncture, it is important to remember that the case of the respondent is not that he was conducting business on instalment basis. His definite answer

in the 313 statement is, he never opened any shop under the name Vigneshwara Complex at Dindigul or obtained any certificate from the

Commercial Tax Department to conduct business. According to him. no shop was opened by him or he conducted any business. On a careful

consideration of the evidence of P.Ws. l to 78 and P.W.81. I am of the opinion that their evidence is totally true and reliable and nothing has been

elicited in the cross examination to discredit their evidence. In my view, there is absolutely no reason for P.Ws. 1 to 78 to depose against the

respondent who is a stranger to them that when they contacted the respondent in person, he represented, if l/3rd value of the articles they intended

to get is deposited, he would deliver the desired article after a period of 25 days and no further amount need be paid by them and they will

become the owners of the articles without paying the remaining 2/3rd amount.

The learned trial Magistrate, relying on the observations made by the Supreme Court in State of West Bengal and Others Vs. Swapan Kumar

Guha and Others, had concluded that the act of the respondent will not come within the purview of ""Money Circulation Scheme"". In the above

decision, the Supreme Court has held, if the transaction is made openly and not in violation of any law. it can never be said that such investment has

been made for making quick or easy money. In that case, the respondents/accused offered to pay very high rate of interest for the monies that will

be invested with them and ultimately, the rate of interest offered was not paid by the respondents. In those circumstances, such observations have

been made by the Supreme Court of India. Offer to give high rate of interest is not an offence and it will not come within the definition of Money

Circulation Scheme. But. it has to be seen whether the ratio laid down by the Supreme Court of India would fit in to the facts of the present case.

In my opinion, the facts are entirely different. In the case on hand, the respondent/accused whose identity is not in dispute or. in other words, which

has been established beyond all doubts, had collected deposits representing l/3rd value of the articles, which the members of the public desire to

get. with the promise that after 25 days the desired articles would be delivered to the depositors and they need not pay the remaining 2/3rd

amount. The learned Magistrate failed to see that it is not the defence of the respondent that he was conducting business making the above promise

and he was promptly delivering the articles to the depositors after a period of 25 days without collecting the remaining 2/3 value of the articles. His

defence is one of complete denial and according to him. no such business was conducted by him. In other words, he had not conducted any

business or started any shop at Dindigul at all. There is also no evidence on behalf of the respondent that he delivered the promised articles to any

one of the members of the public after a period of 25 days, even though the evidence shows that the respondent was conducting business for more

than three months from the date of Ex. P-l complaint. The observation of the learned trial Magistrate that the respondent by his ability or capacity

could have earned large amount of money to the depositors after a period of 25 days and only if he had not delivered the articles after 25 days

from the date of deposit the provisions of Section 3 of the Act. so far as the Money Circulation Scheme, would be attracted and not otherwise, in

my view is only hypothetical and has no legal basis. The respondent/accused had not explained to any one of the depositors, how he would cam

such large amount of money to deliver the promised articles after a period of 25 days collecting only 1/3 value of the articles and giving a remission

of 2/3 value of the articles. The above conduct of the respondent shows that he intended to make quick or easy money by creating a belief in the

minds of the public that they would be delivered the desired articles promptly after the stipulated period of 25 days, which was not done by him to

any one of the depositors.

It is true that no Register showing the enrollment of members or the money collected from each of them had been seized by the investigating

officer and produced in Court. The above is due to the fact that no Register was maintained by the respondent/accused. The evidence discloses

that without maintaining the account, the respondent was conducting business and he did not even issue regular receipts for the money collected by

him, but, only issued a lottery ticket-like thing with denominations of rupees representing the amount collected by him. which proves that he

enrolled members in the money circulation scheme floated by him and received money from the members of the public which will attract the

ingredients of Section 3 of the Act. It is unfortunate that the learned trial Magistrate has not permitted the prosecution to mark the lottery ticket-like

thing issued by the respondent/accused as receipts for the money deposited by the members of the public, when permission was sought for by the

Assistant Public Prosecutor. Therefore. I am of the opinion that the ratio laid down by the Supreme Court in State of West Bengal and Others Vs.

Swapan Kumar Guha and Others, would not fit in to the facts of the present case and the learned Magistrate committed grave error in holding that

the ratio of the Supreme Court in the above case applies to the case on hand.

The evidence of P.Ws. l to 78 and the Investigating Officer clearly establish that the respondent was conducting business in the name

Vigneshwara Complex at Dindigul and was collecting deposits representing the l/3rd value of the articles not only from P.Ws. l to 78 but from

many others also and he had stored domestic articles and furniture in his shop as well as in the godown which is established from the seizure list.

For the aforestated reasons. I am clearly of the view that the appreciation of evidence by the learned trial Magistrate is manifestly wrong, the

conclusion reached by him is erroneous and is not a reasonably possible view and grave miscarriage of justice had occurred.

In the result, the appeal is allowed and the judgment of acquittal recorded by the learned trial Magistrate so far as Section 3 of the Prize Chits

and Money Circulation Schemes (Banning) Act. 197X. is set aside and the respondent/accused is found guilty for the said offence and is convicted

thereunder. The order of acquittal in respect of Section 420 IPC is not disturbed The maximum punishment prescribed for the offence u/s 3 of the

Act is three years The respondent/accused has to be sentenced for the first time Therefore, he has to be questioned about the sentence to be

imposed on him For questioning the accused about the sentence, post the matter on 22.6.1999 Learned counsel for the respondent/accused shall

produce him in court on that day without fail, and in default, a Non Bailable Warrant shall be issued by the Registry to arrest him and produce in

court.

It is stated by the Government Advocate that the respondent contacted his advocate and as per his instructions, he has appeared in court. The

respondent is questioned about the sentence to be imposed on him for which he replied that he had filed a written memo. It is stated in the written

memo that the occurrence took place in the year 1988 and the judgment of the trial court was delivered on 15.10.1991. The respondent is aged

about 54 years and is having two daughters and two unmarried sons. He has to support his wife and the unmarried sons and he is the only

breadwinner of the family. It is also stated that he lost his properties in the business and all his properties were looted by the public and now. he is

working in a tea-shop at Delhi for the past seven years. He is not aware of the result of the case and only when he came to his native place for

Deepavali he came to know about the judgment of this court and he has appeared before this court.

The learned senior counsel Mr. Gopinath. appearing for the respondent, reiterated the submissions made in the written memo and prayed this

court to take a lenient view in view of the circumstances stated in the memo. After taking due consideration of the submissions made in the written

memo. I am unable to find any merit in the same The respondent has been acquitted and he is at large only. and he was earning his livelihood all

these years as a free man. The sons and the daughters of the respondent are all majors and they are able to support themselves for all the seven

years without the presence of the respondent in his native place and therefore, that max not be a criterion to take a lenient view. From the reasons

given in the judgment, it is clear that the respondent has deliberately cheated the public by attractive incentives and offering to deliver the articles at

l/3rd of the real vales and several members of the public have lost their money If these articles have been looted, it is for him to prefer a complaint

or to file a civil suit against the persons who have committed the act and get appropriate relief. I find no ground to take a lenient view

The respondent-accused is sentenced to undergo rigorous imprisonment for a period of two years and nine months and to pay a fine of Rs

500/-. in default to undergo rigorous imprisonment for a period of one month as the respondent-accused represents that at present he is working in

a tea-shop at Delhi and he is earning only a meager income.

As held in 1992 L.W.(Cri.) 164 (State By Food Inspector, Paramakudi v. Balarkrishnan) following the principles laid down by the Supreme

Court of State of Tamil Nadu Vs. R. Krishnamurthy, the present conviction will date back to the date of the judgment of the trial court and the

respondent-accused shall be given the benefits of the Tamil Nadu Government GOs. giving remission of sentence if he is entitled to.