Madras High Court
M/S.G.S.Poultry Farms vs The State Rep. By Its on 7 August, 2025
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
Crl.A.No.607 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 07.08.2025
CORAM
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
Crl.A.No.607 of 2023
1.M/s.G.S.Poultry Farms,
rep. by S.Suresh Kumar,
Door No.1008, Muthur Road,
New Bus Stand,
Vellakovil,
Kangeyam Taluk,
Tiruppur District.
2. S.Suresh Kumar
3. G.Jeganathan .... Appellants
Vs
The State rep. by its
Inspector of Police,
Economic Offences Wing-II,
Coimbtore,
Crime No.9 of 2012,
Coimbatore District. .... Respondent
Prayer: Criminal Appeal filed under Section 374(2) of the Criminal
Procedure Code, praying to call for the records relating to the conviction
imposed in the judgment dated 16.11.2022 made in C.C.No.37 of 2013 on
the file of the learned Special Judge, Special Court under TNPID Act,
Coimbatore.
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Crl.A.No.607 of 2023
For Appellant : Mr.N.Manohanra
For Respondent : Mr.S.Raja Kumar
Additional Government Pleader
JUDGMENT
This Criminal Appeal has been filed challenging the Judgment dated 16.11.2022 passed in C.C.No.37 of 2013 by the learned Special Judge, Special Court under TNPID Act, Coimbatore, thereby convicting the appellants for the offences punishable under Sections 420, 406 of IPC, Section 5 of TNPID Act and Section 120-B r/w 420 of IPC.
2. The case of the prosecution is that the first accused is a registered partnership firm as M/s.G.S. Poultry Farms, in which the second and third appellants are the Directors. The fourth and fifth accused were employees of the said firm and were actively involved in its day to day affairs. It is alleged that all the accused, with a dishonest intention, had collected huge amounts as deposits from the general public under various schemes, which are as follows :
In Scheme I :- If the depositor deposits, 1 unit amount of Rs.50,000/- they would supply 100 to 200 number of chicks with maintenance charges of Rs.3,000/- per month 2/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 for a period of 24 months besides providing free medical facilities and feed ; yearly bonus of Rs.3,000/- aso would be borne by the firm; the grown up chicks would be taken back by the firm after refunding of principal amount of Rs.50,000/- to the depositors on maturity of the scheme ;
In Scheme II :- If the depositor deposits, 1 unit amount of Rs.1,00,000/- they would rear 250 to 350 number of chicks at A1 firm; they would pay Rs.6,000/- per month for a period of 38 months beside providing yearly bonus of Rs.6,000/- and the deposit amount of Rs.1,00,000/- would be returned to the depositors on maturity of the scheme ;
In Scheme III :- If the depositor deposits, 1 unit amount of Rs.1,50,000/-, they would read 400 to 500 number of chicks at A1 firm; they would pay Rs.9,000/- per month for a period of 36 months besides providing yearly bonus of Rs.9,000/- and the deposit amount of Rs.1,50,000/- would be returned to the depositors on maturity of the scheme ;
In Scheme IV :- If the depositor deposits, 1 unit of Rs.2,00,000/-, they would rear 500 to 650 number of chicks at A1 firm ; they would pay Rs.12,000/- per month for a period of 36 months besides providing yearly bonus of Rs.12,000/- and the deposit amount of Rs.2,00,000/- would be returned to the depositors on maturity of the scheme ; and In Scheme V called VIP Scheme :- If the depositor deposits under VIP Plan, in which the chicks will not be provided to the depositors and the firm itself will look after the chicks and months charges for a period of 36 months would be given by A1 firm and yearly bonus would be paid to the depositors by the firm and the principal deposit amount would be returned to the depositors on maturity of the scheme.
3. The accused 2 and 3 had jointly collected deposits in the 3/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 name of the first accused and executed agreements in favour of the depositors. The fourth and fifth accused had issued receipts in the name of the first accused for the deposits collected from the general public. The accused A2 to A6 conspired together in a calculative manner and collected deposits from the public during the period between 21.03.2012 and 15.08.2012, with the intention to cheat the depositors and misappropriated their funds. The general public were induced by the accused with the false promise of unrealizable returns, which works between 100% to 150% of interest per annum and also assured to return the principal amount at the end of three years. Believing such false representation, several depositors invested their money and the accused collectively collected a total sum of Rs.1,71,18,900/- from 89 depositors. Thereafter, the accused failed to repay the deposit amounts on maturity and misappropriated the same for their personal use, thereby causing wrongful loss to the depositors.
4. Based on the complaint lodged by the victims, the respondent police registered an FIR in Crime No.9 of 2012 for the offences punishable under Sections 120-B, 406, 420 of IPC and Section 5 4/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 of TNPID Act, 1997 After completion of the investigation, a final report was filed and the same has been taken cognizance by the Trial Court.
5. In order to bring home the charges, the prosecution had examined P.Ws. 1 to 93 and marked Exs.P1 to P227. On the side of the Court, Ex.C1 was marked. On the side of the accused, no oral evidence was adduced and Exs.D1 and D2 were marked.
6. On a perusal of the oral and documentary evidence, the Trial Court found the accused Nos.1 to 3 guilty of the offences charged and acquitted the accused 4 and 5 of all the charges. The details of conviction and sentences imposed on A1 to A3 are as follows :
“* A1 G.S.Poultry Farms, A2 Suresh Kumar and A3 Jaganathan are found guilty and sentencing them under Sec.248(2) of Cr.P.C., * A1 G.S.Poulty Farms to pay fine of Rs.18,000/- for each counts (Fine of Rs.18,000 x 89 counts x 3 offences), in total Rs.48,06,000/- under Sec.420, 406 of IPC and Sec. 5 of TNPID Act, A2 and A3 shall pay the said fine amount equally on behalf of A1, namely each Rs.24,03,000/-, in default of payment of fine to undergo further one year rigorous imprisonment for each counts ;
* A2 and A3 to undergo seven years rigorous imprisonment and to pay fine of Rs.18,000/- for each 5/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 counts (Fine of Rs.18,000 x 89 counts x 2 accused), in total Rs.32,04,000/- under Sec.120B r/w 420 of IPC., in default of payment of fine to undergo further one and half years rigorous imprisonment for each counts ;
* A2 and A3 to undergo seven years rigorous imprisonment and to pay fine of Rs.18,000/- for each counts (Fine of Rs.18,000 x 89 counts x 2 accused), in total Rs.32,04,000/- under Sec.420 of IPC, in default of payment of fine to undergo further one and half years rigorous imprisonment for each counts ;
* A2 and A3 to undergo three years rigorous imprisonment and to pay fine of Rs.18,000/- for each counts (Fine of Rs.18,000 x 89 counts x 2 accused), in total Rs.32,04,000/-, under Sec.406 of IPC, in default of payment of fine to undergo further nine months rigorous imprisonment for each counts ;
* A2 and A3 to undergo ten years rigorous imprisonment and to pay fine of Rs.18,000/- for each counts (Fine of Rs.18,000 x 89 counts x 2 accused), in total Rs.32,04,000/- under Sec. 5 of TNPID Act, 1997, in default of payment of fine to undergo further two years rigorous imprisonment for each counts ;
* Total fine amount is Rs.1,76,22,000/- (A2 and A3 each shall pay Rs.88,11,000/-). Out of the said total fine, a sum of Rs.1,72,00,000/- shall be distributed to the victims Pw.1 to Pw.20, Pw.22 to Pw.59, Pw.61 to Pw.84, Lw64 Jayathi, Lw.85 Ponmani, Lw.86 P.Dhandapano, Lw.87 M.Dhandapani and Lw.88 M.Palanisamy (except Pw.21 Thirunavukarasu and Pw60 Sakthivel) as per their respective dues mentioned in the final report proportionately, after appeal time is completed ;
* The sentence shall run concurrently. The imprisonment has already undergone by A2 and A3, if any, shall be set off as per Sec.428 of Cr.P.C.” Aggrieved by the same, the present criminal appeal has been filed.6/22
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7. The learned counsel appearing for the appellants would submit that the appellants are arrayed as A1 to A3. Though the second and third appellants were the Directors of the first accused, they are only named offenders and P.W.29 is the person, who has been the master brain behind the entire crime executed by the first accused in favour of the depositors. But the prosecution failed to even cross-examine him under Section 161(3) of Cr.P.C. Though he was examined as P.W.29, the prosecution failed to take any investigation against him and also failed to recover any materials from him. In fact, the Trial Court, while cross examination of the Investigating Officer, who was examined as P.W.93, posed specific question about non-examination of P.W.29. Therefore, it is vital to the case of the prosecution and the entire conviction cannot be sustained as against the appellants.
8. Even according to the case of the prosecution, the first accused floated various schemes to collect deposits from the general public. On collection of deposits, receipts were issued and agreements were executed between the parties. The said agreements were simply deeds of agreement. If any of the terms and conditions of such agreements were violated by either party, the same would not constitute a 7/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 criminal offence. In fact, as per the terms of the agreement, after the collection of deposits, the depositors were issued receipts and supplied chicks under the respective scheme. The depositors were also instructed to construct sheds for rearing the chicks. Thereafter, the first accused supplied feed and monthly maintenance charges to the depositors. After a certain period, the first accused committed default in the payment of monthly maintenance charge and also failed to supply feed to the chicks. Therefore, part of the contract was performed by the first accused and the remaining part of the agreement was not performed by the first accused.
9. Therefore, at the inception of the agreement, the accused had no intention to cheat the depositors. There was no element of breach of trust. Hence, the offences under Sections 406 and 420 of IPC are not at all attracted as against the appellants. Insofar as the offence under Section 5 of TNPID Act is concerned, while suspending the sentence, the second appellant complied with the condition by deposting the requisite amount, whereas the third appellant failed to do so. Though the first appellant had issued receipts for the deposits collected from the general public, he had also executed agreements with the despositors. Therefore, 8/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 any violation of the terms and conditions of such agreements would not fall within the purview of the TNPID Act, as the same would only give rise to a civil liability for recovery of money. Without considering the same, the Trial Court mechanically convicted the appellants. Hence, the conviction and sentence imposed by the Trial Court cannot be sustained and are liable to be set aside.
10. Per contra, the learned Additional Government Pleader appearing for the respondent submitted that all the accused connived and conspired together with a common intention to cheat the general public and had collected a huge amount of Rs.Rs.1,71,18,900/- from 89 depositors, by floating various schemes. Even at the time of floating such schemes, the appellants had a dishonest intention to cheat the general public, since they had knowledge that the terms and conditions of the agreement could not be performed. Even then, they floated a scheme and received huge deposits from the general public and have cheated them. Though some of the depositors were initially paid the monthly maintenance charge and were supplied chick, several depositors were not even supplied chicks and the appellants failed to construct any sheds as 9/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 per the terms of the agreement. Even the first limb of the contract was not performed by the appellants. Hence, the ingredients of the offences punishable under Sections 406 and 420 of IPC are clearly made out by the appellants. Though, the appellants paid maintenance for some period of time, subsequently, they failed to perform the contract and committed default. Even after expiry of the agreement period, the appellants failed to repay the deposits to the depositors. All the depositors were examined before the Trial Court and the deposits receipts along with the respective agreements were marked in evidence. Therefore, the prosecution has categorically proved the charges against the appellants. Accordingly, the Trial Court rightly convicted and sentenced the appellants and the said conviction and sentence does not warrant any interference of this Court.
11. Heard the learned counsel appearing on either side and perused the materials available on record.
12. There are totally five accused in this case, in which the appellants are arrayed as A1 to A3. The first appellant is the company duly registered under Registrar of Companies, in which the second and third appellants are Directors. The appellants had floated various 10/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 schemes and issued pamphlets inviting deposits from the general public. They also conspired together, induced the general public to invest money under the different schemes introduced by the first appellant. On receipt of the such deposits, the appellants issued fixed deposit receipts and also executed agreements with 89 depositors, thereby collecting a sum of Rs.1,71,18,900/-. It is relevant to extract the terms and conditions of the agreements entered into between the first accused and the respective depositors. There were three types of agreements under various schemes and the general terms and conditions of the agreements are as follows : 11/22
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12. Accordingly, the first appellant constructed sheds for the respective depositors at their places and also supplied chicks as per their respective schemes. Thereafter, the appellants supplied feed and paid monthly maintenance charges as agreed under the terms of the agreement.
Even after a certain period, the appellants failed to supply feed for the chicks and also committed default in the payment of the agreed maintenance charges. Even after expiry of agreement period, that too after maturity of the fixed deposits, the appellants failed to return the maturity amount to the depositors. Subsequently, based on the complaints lodged by several aggrieved depositors, the respondent Police registered an FIR and, after completion of the investigation, filed a final report. The point that arises for consideration is whether the prosecution has proved the charges under Sections 420, 406 and 120-B read with 420 of IPC or not. Though the appellants had issued pamphlets and canvassed the general public to make deposits under various schemes, the appellants performed part of their contract.
13. Admittedly, the appellants had erected shed for the 15/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 depositors to rear the chicks and had also supplied chicks as per the terms and conditions of the respective schemes. They also paid monthly maintenance charges to the depositors. However, after some time, they committed default in making such payments and also failed to return the matured deposit amounts to the depositors. It is relevant to extract the provision under Sections 406 and 420 of IPC.
“The ingredients in order to constitute a criminal breach of trust are (i) entrusting a person with property or with any dominion over property; (ii) that person entrusted : (a) dishonestly misappropriating and converting that property to his own use ; or (b) dishonestly using or disposing of that property or wilfully suffering any other person so to do in violation (i) of any direction of law prescribing the mode in which such trust is to be discharged, (ii) of any legal contract made, touching the discharge of such trust.”
14. Insofar as the offence of cheating is concerned, the ingredients are that there must be a fraudulent or dishonest inducement of a person by deceiving him ; the person so deceived should be induced
(i) to deliver any property to any person, or to consent that any person shall retain any property ; or 16/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023
(ii) the person so deceived should be intentionally induced to do or omit to do anything which he would not do or omit if he were not so deceived In cases falling under clause (ii)(b), such act or omission should be one which causes, or is likely to cause, damage or harm to the person induced in body, mind, reputation or property.
15. Thus, it is clear that mens rea – the intention to defraud or the dishonest intention must be present, and in the case of cheating, such intention must exist right from the very beginning or inception of the transaction. In the case on hand, as stated supra, the appellants entered into contracts with the depositors and performed their part of contract. If at all, the appellants had intention to defraud with dishonest intention to cheat the depositors, they would not have performed part of their contract. The distinction between mere breach of contract and the offence of criminal breach of trust or cheating is indeed a fine one. In case of cheating, the intention of the accused at the time of inducement should be looked into which may be judged by a subsequent conduct, but for this, the subsequent conduct alone cannot be the sole test. Mere 17/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 breach of contract cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right from the beginning of the transaction i.e. the time when the offence is said to have been committed. Therefore, the intention is the gist of the offence. Hence, the prosecution failed to prove the charges under Sections 406 and 420 of IPC.
16. Insofar as the charge under Section 5 of TNPID Act is concerned, admittedly, the appellants had received deposits from the general public and issued deposit receipts to the respective depositors. However, they failed to return the matured deposit amount to the depositors, even after the expiry of the maturity period. All the depositors had categorically deposed that, after making their deposits, they received only maintenance amount that too for some period of time and thereafter, they committed default in payment of maintenance and also failed to supply feed as agreed under the respective schemes. After maturity of the deposits, the appellants failed to return the maturity amounts to the depositors. Therefore, the prosecution had clearly proved the ingredients constituting the offence under Section 5 of the TNPID 18/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 Act. Further, the first appellant is a Company registered under the Registrar of Companies and the second and third respondents are the Directors.
17. P.W.29, though stood as witness to the agreement, which were executed by the first appellant in favour of the depositors, P.W.29, is not a Director of the first accused company and he did not involve in the day to day affairs of the first appellant company. He did not even issue any fixed deposit receipts and there is no material to show that the deposits were deposited into his personal accounts. Therefore, the non-examination of P.W.29 and non-inclusion of P.W.29 as an accused are not fatal to the case of the prosecution. Therefore, the prosecution proved the charges under Section 5 of TNPID Act and the Trial Court rightly convicted the appellants for the offence punishable under Section 5 of the TNPID Act. It is well settled that the offence under Section 5 of TNPID Act does not require proof of mens rea and mere failure to repay the deposits collected from the public is sufficient to attract penal liability under the said provision. However, the Act does not prescribe minimum sentence, the Court has discretion to impose an 19/22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 25/10/2025 03:11:41 pm ) Crl.A.No.607 of 2023 appropriate sentence based on the facts and circumstances of the case. In the present case, the second appellant has complied with the condition by depositing part of the amount while suspending the sentence. However, the third appellant did not comply with the condition. Considering the above facts and circumstances of the case, this Court is inclined to reduce the sentence alone from ten years to five years.
18. In fine, the conviction and sentence imposed by the Trial Court for the offences under Sections 406, 420, 120-B read with 420 of IPC are hereby set aside. However, the conviction and fine amount imposed for the offence under Section 5 of the TNPID Act are hereby confirmed. The sentence of imprisonment imposed by the Trial Court is modified and the sentence against the appellants 2 and 3 is reduced from ten years to five years.
19. In the result, this Criminal Appeal is partly allowed.
07.08.2025
Index : Yes/No
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Crl.A.No.607 of 2023
Neutral citation : Yes/No
Speaking/non-speaking order
Lpp
To
1. The Special Judge,
Special Court under TNPID Act,
Coimbatore.
2. The Inspector of Police,
Economic Offences Wing-II,
Coimbtore.
3. The Public Prosecutor
High Court, Madras.
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Crl.A.No.607 of 2023
G.K.ILANTHIRAIYAN, J.
Lpp
Crl.A.No.607 of 2023
07.08.2025
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