Delhi District Court
State vs Gulkesh Kumar Jolly on 15 March, 2012
FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 IN THE COURT OF VINOD YADAV: CHIEF METROPOLITAN MAGISTRATE: DELHI FIR No.: 179/1993 PS: Lodhi Colony (Investigated by Crime Branch) U/s 420/406 IPC and 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 State V/s Gulkesh Kumar Jolly Unique ID No.: 02401R0091062009 J U D G M E N T:
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(a) S.No. of the case : 40/2
(b) Name of complainant : Shri Ram Mohan, Sr. Manager (Personnel), Steel Authority of India Limited, Ispat Bhawan, Lodhi Road, New Delhi.
(c) Date of commission of offence : Between the period from
November' 1991 to June' 1993
(d) Name of the accused : Gulkesh Kumar Jolly,
S/o Shri Upjinder Lal,
R/o AG1/2A, Vikaspuri,
New Delhi.
(e) Offence complained of : U/s 420/406 IPC and 3 & 4 of
Prize Chits & Money Circulation
Schemes (Banning) Act, 1978
(f) Plea of accused : Pleaded not guilty
(g) Final arguments heard on : 15.03.2012
(h) Final Order : Acquitted
(i) Date of such order : 15.03.2012
______________________________________________________________ "State V/s Gulkesh Jolly" ("Acquitted") Page 1 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 A. BRIEF FACTS & REASONS FOR SUCH DECISION:
The facts of the case in brief are that on 22.06.1993 a written complaint was sent by one Shri Ram Mohan, Sr. Manager (Personnel) of Steel Authority of India Limited (hereinafter referred to as "SAIL") to Dy. Commissioner of Police (Crime), Delhi Police, against accused Gulkesh Kumar Jolly, annexing with it a complaint, signed by 27 employees of SAIL. In the complaint it was alleged against the accused that he had been working as "Private Secretary" in SAIL and was posted at Ispat Bhawan, Lodhi Road. He was a very active employees' union leader and used to enjoy a great confidence of all the employees. Accused was running several lucrative saving schemes and used to collect money from the members of such schemes every month as per the schemes. One such scheme was "30/31 Months Lucky Draw Scheme", having a subscription of Rs.200/ per month. The accused had assured that every person contributing to the said scheme would get a sum of Rs.6,000/ or more on such draw; if he happened to be the lucky person and his number was drawn and thereafter he would not be contributing to the said scheme. It was further stated in the said complaint that accused assured them that all those members, who did not get lucky draw would get a sum of Rs.6,250/ at the end of 31st month. Believing the accused, said 27 employees also became members of the said scheme and started contributed Rs.200/ per month starting from November' 1991. Accused used to collect "State V/s Gulkesh Jolly" ("Acquitted") Page 2 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 the said amount(s) from the complainants from their office, for taking out lucky draws under the said scheme and used to give the money to the person in whose favour the draw came out. None of the complainants (said 27 employees of SAIL) were the lucky winners of the said scheme. It was further alleged in the complaint that after collecting the contribution for the month of June' 1993 accused informed that the draw for the said month would be held on 06.06.1993 at his residence, i.e MIG Flat bearing No.AGI/2A, Vikaspuri, New Delhi18. On 06.06.1993, when complainants No.1, 2 and 3 went to the said residence of accused, he was not available there and his said residence was found locked. On being enquired from the office, it came to light that accused had been absenting himself from office since long and stated to be on medical leave. Thereafter, on 08.06.1993 accused informed complainant No.1 that no draw would be held henceforth as he had no money to pay.
2. On the aforesaid complaint, an FIR U/s 420/406 IPC and Section 3/4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 (hereinafter referred to as the "Act") was registered and the case was marked to SI Ranvir Singh for investigation. During the course of investigation, SI Ranvir Singh recorded statements of witnesses and collected evidence against the accused.
3. After completion of investigation, accused stood chargesheeted for offences punishable U/s 420/406 IPC and Section 3 and 4 of the Act. "State V/s Gulkesh Jolly" ("Acquitted") Page 3 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012
4. After filing of the charge sheet in the case, accused was supplied the documents in compliance of the provisions of Section 207 Cr.P.C and after hearing arguments on charge, this court vide order dated 02.05.1995 found prima facie case U/s 3 & 4 of the "Act" and Section 420/406 IPC made out against accused. Accordingly, on 01.07.1995, charges U/s 3 & 4 of the "Act" as also 406/420 IPC were framed against the accused, to which he pleaded not guilty and claimed trial.
5. Aggrieved by the aforesaid order on charge, accused filed a Criminal Revision petition before the higher court. The learned Session Court vide its order dated 26.04.2000, passed in Crl. Revision No.11/95, titled as, "G.K Jolly V/s State" was pleased to set aside the charges U/s 420/406 IPC, whereas charges U/s 3 & 4 of the "Act" stood confirmed.
6. In order to bring home the guilt of accused, prosecution examined 24 witnesses, whereafter the PE in the matter was closed and statement of accused U/s 313 Cr.P.C was recorded, wherein he abjured the entire prosecution evidence and submitted that he never conducted alleged chit fund scheme. He, however, did not lead any defence evidence in the matter.
"State V/s Gulkesh Jolly" ("Acquitted") Page 4 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012
7. I have heard arguments advanced at bar by learned APP on behalf of State as also Shri Satya Prakash, Advocate, learned counsel for the accused and perused the entire material on record. Before adverting to adjudication upon the arguments advanced at bar, it would be appropriate to have a brief scrutiny of the evidence recorded in the matter which is as under.
8. PW1, Shri Narain Keshwani in his evidence stated that during the month of November' 1991 he alongwith many other persons became member of "Lucky Dip Committee" run by accused, which was for a period of 30 months on a monthly subscription of Rs.200/. The monthly subscription was paid to the accused regularly by him. He further stated that prior to the said Committee, accused had also successfully run many other committees and investors had received their money back in the said schemes/committees. There were 14 members in all and his claim was for an amount of Rs.53,200/, which was not returned by the accused. He further stated that he signed the complaint alongwith the other members and same has been proved on record as Ex.PW1/A. This witness was thoroughly cross examined by the defence. In his crossexamination, this witness admitted that accused was an active union leader and was Jt. Secretary thereof. He further stated that he had seen the scheme floated by the accused, but he did not handover any scheme to police. He further stated that complaint in question was forwarded by Sr.Manager (Personnel) of SAIL to DCP, Crime as he did not want to involve the company in the chit fund. He, however, admitted that "State V/s Gulkesh Jolly" ("Acquitted") Page 5 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 no forms were filled by the members and no receipts were given to them by the accused. He further admitted that once he got key chain and opener in prize.
9. PW2, Shri Pradeep Shah, one of the complainants and an employee of SAIL at the relevant time, in his evidence stated that accused used to run different saving schemes in the office since 198586 and he was a regular of his scheme. Accused made payment of all the schemes in time and earned their trust and confidence. He further stated that in the month of November' 1991, accused started a new scheme namely "Lucky Draw Scheme" for 30 months @ Rs.200/ per month. He proved the Lucky Draw Card which was handed over to him by the accused as Ex.PW2/A. He further stated that he joined the scheme in question alongwith his sister Ms.Uma Rana and friend Shri Narain Singh and made payment of 19 instalments @ Rs.600/ per month for three shares upto May' 1993, totalling to Rs.11,400/. He further stated that accused did not hold the draw in June' 1993. This witness was also thoroughly crossexamined by the defence. In his defence, this witness admitted that he was the General Secretary and accused was Joint Secretary of the employees Union of SAIL. He further admitted that the card Ex.PW2/A does not bear signatures of anyone and no membership form was ever circulated by the accused. He also could not say as to whether any register reflecting the names of members was being maintained by the "State V/s Gulkesh Jolly" ("Acquitted") Page 6 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 accused or not. He, however, admitted that no commission or any payment was ever taken by the accused. He further stated that as per the scheme the entire payment was to be made to every member after its end, except to the member whose name came in the lucky draw. He, however, admitted that they did not demand any receipt from the accused considering his previous conduct and transactions. He further admitted that he had no other proof of payment made to the accused qua this scheme. This witness denied the suggestion of the defence that he had been rewarded promotion because of his support to the Management.
10. PW3, Shri Rajinder Anand in his evidence stated that during November' 1991 he was working in SAIL and accused was his colleague. During November' 1991, accused started a "Lucky Draw Scheme" for a period of 30 months comprising 300 members and subscription was Rs.200/ per month from each member. He made payment in instalments personally to accused upto May' 1993, totalling to Rs.3,800/. In June' 1993, accused closed the said scheme and did not give any receipt of payments to him. He has proved his signatures on complaint Ex.PW1/A at pt.B. In his cross examination, this witness stated that accused always gave the entire amount to the persons who were lucky winner. He could not tell as to whether any register was being maintained by the accused or not. He, however, stated that there was no membership form given by the accused nor he filled any such form. He, however, admitted that accused was Joint Secretary and union leader.
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11. PW4 ASI Vikram Singh in his evidence stated that on 20.07.1993 on receipt of rukka, he registered the present case FIR (Ex.PW4/A).
12. PW5, Shri R.S Mohan in his evidence stated that accused used to run different saving schemes since the year 198586 and he was a regular member of his scheme(s). He further stated that accused used to make payment of all the scheme(s) in time and thus earned their trust and confidence. In the year November' 1991, accused started a new scheme by the name of "Lucky Draw Scheme" for 30 months @ Rs.200/ per month. The scheme was for 300 members and "lucky draw card" was given to him, but this witness could not produce the same in court on the date of his evidence. He further stated that he had made payment of 20 instalments personally to the accused, total amounting to Rs.4,000/ till 1993, however, thereafter the accused absented himself and was not even available in the office. A complaint was lodged and police recorded his statement. In his cross examination this witness admitted that accused was an Officer Bearer of the Union and there were some differences between the Union and the Management. He further admitted that accused had not given any receipt for the instalments deposited by him.
13. PW6, Smt.Ritu Subnani, who was Section Officer in SAIL at the relevant time, in her evidence stated that accused had started one "Lucky "State V/s Gulkesh Jolly" ("Acquitted") Page 8 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 Draw Scheme" during November' 1991 and she became member of the same. She had made payment in 19 instalments (@ Rs.200/ per month) to the accused personally, total amounting to Rs.3,800/ and thereafter the accused absented himself and refused to refund her payment. A complaint was made to the police and police recorded her statement. In her crossexamination, she admitted that she had no documentary proof with her, regarding payment made by her to the accused. She further admitted that accused was an active Union Member and there were differences between the Management and the Union.
14. PW7, Shri Ram Mohan in his evidence stated that in the year 1993 he was posted as "Senior Manager (Personnel)" in SAIL and on the complaint of its employees against the accused regarding nonpayment of "Lucky Draw Scheme" amount, he made a complaint Ex.PW7/A to the police. In his crossexamination, he stated that since he was Incharge of employees' welfare, therefore, he forwarded the complaint to police. He pleaded ignorance about the fact that whether a written complaint was made by the employees of SAIL to him in this regard. He admitted that he did not initiate any action against the employees of SAIL/ complainants, who participated in Chit Fund Scheme against the Disciplinary Rules of SAIL. "State V/s Gulkesh Jolly" ("Acquitted") Page 9 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012
15. PW8, Shri Roshan Lal Dhoundial in his evidence stated that in the year 1991 he was an employee of SAIL and accused was his colleague. Accused had floated a "Lucky Draw Scheme" for 31 months @ Rs.200/ per month per member and there were about 300 members of the said scheme, including him. He further stated that to popularise the said scheme, accused had distributed pamphlets, copy of same has been proved on record as Ex.PW2/A. He further stated that he had paid monthly instalments @ Rs. 200/ per month to the accused from November' 1991 till June' 1993. He thereafter came to know from other members of the society about non payment of draw amount to the members by the accused. He further stated that when he personally demanded his money from the accused, accused expressed his inability to pay the same on account of his bleak financial condition. Thereafter, all the members lodged a complaint Ex.PW1/A against the accused. In his crossexamination this witness stated that members of the scheme had convened a meeting in which it was decided to lodge a complaint against the accused. He further stated that some of the members had given a written complaint to the Management, but no such complaint was given to the Union or to the police. He further admitted that he became a member of this chit only at the behest and instance of the accused.
16. PW9, Shri Sudershan Kumar, another employee with SAIL has also deposed on the lines of PW8. This witness has also proved the pamphlet "State V/s Gulkesh Jolly" ("Acquitted") Page 10 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He stated that in all he had paid Rs.3,800/ to the accused in "Lucky Draw Scheme". He categorically stated that no receipt used to be issued by the accused in lieu of the payment received by him from the members. He has further proved his signatures on complaint Ex.PW1/A at pt.9A. In his cross examination, this witness admitted that he was one of the office bearers of the Union at that time. He further categorically admitted that he had no documentary proof to show payment of 19 instalments made by him to the accused.
17. PW10, Shri Chandra Prakash Bhatia, employee of SAIL has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid instalments @ Rs.200/ from November' 1991 to June' 1993 to the accused towards the said scheme. He has further proved the complaint made by the members of said scheme against the accused as Ex.PW1/A. In his crossexamination, this witness admitted that he was one of the office bearers of the Union at that time. He further categorically admitted that he had no documentary proof to show payment of instalments made by him to the accused.
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18. PW11, Shri Madan Mohan, another employee with SAIL has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid 20 monthly instalments @ Rs. 200/ per month to the accused from November' 1991. He has further proved his signatures on complaint Ex.PW1/A at pt.11/A. In his crossexamination, this witness admitted that he was one of the office bearers of the Union. He further expressed his ignorance regarding the fact that as to whether any member had lodged any complaint against the accused. He further categorically admitted that he had no documentary proof to show payment of the said instalments made by him to the accused.
19. PW13, Shri P.K Subramaniam, another employee with SAIL has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid monthly instalments @ Rs. 200/ per month to the accused from November' 1991 till June' 1993. He has further proved his signatures on complaint Ex.PW1/A at pt.13/A. In his crossexamination, this witness admitted police had not made any inquiries from him and accused had not issued any receipt against the payment made by him. He further admitted that before signing Ex.PW1/A, he neither made a complaint to the police or the Union and nor to the Management. He also "State V/s Gulkesh Jolly" ("Acquitted") Page 12 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 pleaded ignorance about the fact that as to who drafted Ex.PW1/A. He further stated that no benefit was given by the accused to him.
20. PW14, Smt.Kanta Bisht, who was also an employee of SAIL at the relevant time has also deposed on the lines of PW8 and has further stated that she had paid 30/31 instalments @ Rs.200/ each upto 1993. She has further proved her signatures on complaint Ex.PW1/A. In her cross examination, this witness admitted that present complaint was made through their Union and before her signing the same, atleast 300 members have already signed the same. She further admitted that she had signed the same on the directions of the Union and he pleaded ignorance about the contents contained in Ex.PW1/A. She further admitted that she had no documentary proof to show payment of 19 instalments made by him to the accused. She further admitted that accused was a member of rival group.
21. PW15 Shri Madhukar Gulyani, who was also working with SAIL at the relevant time has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid monthly instalments @ Rs.200/ per month from November' 1991 till May' 1993 to the accused. In his crossexamination, this witness pleaded his ignorance about filing of any written complaint to the Union regarding the "State V/s Gulkesh Jolly" ("Acquitted") Page 13 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 scheme floated by accused. He admitted that Ex.PW1/A did not bear his signatures. He further categorically admitted that he had no documentary proof to show payment of monthly instalments made by him to the accused.
22. PW16, Shri Bhopal Singh and PW17, Shri Tazin Parvesh though were tendered in the witness box, but were not examined by the prosecution.
23. PW18, Dr.Renu Bajaj has not uttered a single word relevant with the facts and circumstances of the present case.
24. PW19, Shri Yashpal Manchanda, who was employed with SAIL at the relevant time has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid Rs.400/ per month to the accused from November' 1991 till June' 1993, as he was holding two number of shares in the said scheme. He has further proved the complaint made by the members of said scheme against the accused as Ex.PW1/A and has identified his signatures at pt.X. He further stated that accused had never issued any receipt in lieu of the monthly payment received by him. In his crossexamination, this witness stated that police never recorded his statement and accused was an active member of the Union. He further admitted that the aggrieved members of the draw had not made any "State V/s Gulkesh Jolly" ("Acquitted") Page 14 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 complaint qua the conduct of accused to SAIL. He further admitted that Ex.PW2/A do not bear his signatures.
25. PW20, Shri Ramesh Kumar Arora, who was also employed with SAIL at the relevant time has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid Rs.400/ per month from November' 1991 to June' 1993 to the accused as he had two shares in the said scheme. This witness has also proved on record one "Bottle Opener" which was gifted by the accused to all the members in the year 1992 as Ex.P1. He has further proved his signatures on complaint Ex.PW1/A at pt.Y. In his crossexamination, this witness admitted that police never recorded his statement.
26. PW21, Smt.Laxmi, who was also employed with SAIL at the relevant time has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid monthly instalments to accused from November' 1991 till May' 1993. He has further proved his signatures on complaint Ex.PW1/A at pt.21A. In his crossexamination, this witness stated that complaint Ex.PW1/A was drafted by the office bearers of the Union and he did not go through the same while signing it. "State V/s Gulkesh Jolly" ("Acquitted") Page 15 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012
27. PW22, Shri Bhupal Singh, who was also employed at SAIL at the relevant time has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he had paid the monthly instalments to the accused from November' 1991 till April/May' 1993, however, he was neither paid the maturity amount nor the lucky draw. He further stated that accused never issued any receipt regarding payment of Rs.200/ by him. He has further proved his signatures on complaint Ex.PW1/A at pt.22A. In his crossexamination, this witness admitted police never recorded his statement.
28. PW23, ACP (Retd.) Ishwar Singh in his evidence stated that on 20.07.1993 he was posted as Incharge, SIT Section, Crime Branch, Delhi. On the said day, on receipt of a complaint from Shri Ram Mohan, Sr.Manager, SAIL, he prepared rukka (Ex.PW23/A) and got the case registered through Ct.Avdesh Kumar from PS Lodhi Colony and the investigation of the present case was marked to SI Ranbir Singh, who arrested the accused and conducted his personal search vide memo Ex.PW23/B. After completion of investigation, chargesheet under appropriate sections was filed in the court. In his crossexamination, this witness admitted that Shri Vijay Karan, former Commissioner of Police, Delhi Police was the "Consultant" in SAIL. He further admitted that he did not make enquiry from 27 persons whose names were there in the said complaint.
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29. PW24, Shri Sanjay Shah in his evidence has also deposed on the lines of PW8. This witness has also proved the pamphlet regarding "Lucky Draw Scheme", circulated by the accused as Ex.PW2/A. He further stated that he was allotted Chit Numbers 136 and 148 in the said Scheme and he made payment @ Rs.200/ per month from November' 1991 to May' 1993. In his crossexamination, this witness stated that accused was the Office bearer of the Union and his brother Shri P.K Shah had contested the election from another group. This witness could not tell as to whether his statement was recorded by the police or not, however, he admitted that Shri Vijay Karan, retired Commissioner of Police, Delhi Police was in their office at the relevant time. He further admitted that he had no receipt with him to show that he made any payment to the accused towards the said scheme. He further admitted that accused neither operated any lottery nor held any draw in office, except making a schedule of draw and inviting the members of the scheme to attend the draw function. He further admitted that he had participated in the departmental enquiry conducted against the accused. He further admitted that he had not filled any form to become a member of the said scheme/lottery.
30. PW25, Shri Raj Kumar in his evidence stated that in the year 1991 he was employed with SAIL and the accused was running a "Committee" in which he was also a member alongwith other persons. The "State V/s Gulkesh Jolly" ("Acquitted") Page 17 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 said Committee was discontinued due to "some reasons" , however, the accused paid back them the maturity amount. He further stated that they used to make payment in instalments and the refund used to come after maturity in the form of lumpsum payment. He further stated that if the draw used to be in between, they used to get whole amount and nothing more was supposed to be given from their side. He further stated that accused had embezzled the amount of around Rs.20,000/ from him in June' 1993. This witness was also thoroughly crossexamined by the learned defence counsel. In his cross examination, this witness stated that accused and Shri P.K Shah were the "Joint Secretary" and "General Secretary" in the Union during the year 1993 and later on they both formed their own group in the Union. He further admitted that the complaint signed by him was drafted by Shri P.K Shah. He further admitted that Shri Vijay Karan, retired Commissioner of Police from Delhi Police was the "Legal Consultant" in their office at the relevant time and he had finalised the said complaint and sent the same to the police. He stated that police neither made any enquiry nor collected any document from him. He further admitted that none of the P.Ws had made any complaint against the accused prior to the dispute between Shri P.K Shah and accused. He further admitted that he had no documentary proof to show that he was the member of the said committee/scheme and had made any payment to the accused.
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31. This is all as far as prosecution evidence in the matter is concerned.
32. Thereafter, the statement of accused U/s 313 Cr.P.C recorded by this court, wherein wherein he abjured the entire prosecution evidence and submitted that he never conducted any chit fund scheme. He further took the defence that he was Joint Secretary of the Employees' Union and was an active member thereof. As such, he had differences with the Management of SAIL on the question of illegal appointments of daily wagers. The Management used to make illegal appointees permanent showing the exigencies of service and he used to object to such appointments. He had a quarrel with Shri P.K Shah, the then Secretary of the Employees' Union and he had been falsely implicated in the present case in connivance with the Management. He, however, did not lead any defence evidence in the matter.
33. The learned APP has very vehemently argued that although there may not be documentary evidence in the matter, yet this court cannot brush aside the testimonies of all the P.Ws who have categorically stated that the accused was engaged in the spurious activity of running a Prize Chit. She further referred to the bail application filed by the accused, dated 16.09.1993, wherein in para 6 he had stated that if he was granted bail in the matter, then he would make sincere efforts to return the money of the prosecution witnesses, as he could not pay the same due to financial constraints. This is "State V/s Gulkesh Jolly" ("Acquitted") Page 19 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 termed as an "admission" on part of the accused of running Prize Chit. It is further argued that PW9, PW14 and PW25 have categorically stated in their evidence that they had not received any payment from the accused. It is further argued that the defence taken by the accused in the matter was neither put to the prosecution witnesses nor the accused led any defence evidence to substantiate the same.
34. Per contra, the learned defence counsel has very vehemently argued that the accused is a "victim of circumstances", as he was an active member of the Employees' Union of SAIL and as such when he had questioned the Management of SAIL on the point of illegal appointments of daily wagers, then the Management of SAIL, in connivance with the members of rival Employees' Union got him falsely implicated in this case. It is next argued that the search and seizure was made in this matter in total violation of Section 7 of the Act and the alleged documents so collected during such illegal searches are inadmissible in evidence. It is further argued that even if case of the prosecution and the testimonies of all the prosecution witnesses are taken on their face value, then at the most it can be said that the accused was engaged in running a conventional chit, wherein the members of that chit were to get the sum paid by them in monthly instalments and no prize etc were being given. It is further argued that the financial arrangement undertaken by the accused was merely in respect of inhouse members of SAIL and there was no motive of making easy and quick money in the process.
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35. Before adverting to the rival arguments in the matter, it would be appropriate to understand the intention of legislature in carving out two different kinds of chits, i.e one defined in Section 2(a) as "Conventional Chit" and other defined in Section 2(e) as "Prize Chit" and the rationale behind keeping the conventional chit out of the purview of the penal provisions of the Act.
36. Provisions of Section 2(a), 2(e) and Section 7 of the Act are re produced hereunder:
2 (a) "Conventional Chit" means a transaction whether called chit, chit fund, kuri or by any other name by or under which a person responsible for the conduct of the chit enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or certain quantity of grain instead) by way of periodical instalments for a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other matter as may be provided for in the chit agreement, be entitled to a prize amount.
Explanation-In this clause "prize amount" shall mean the amount, by whatever name called, arrived at by deducting from out of the total amount paid or payable at each instalment by all the subscribers,
i) the commission charged as service charges as a promoter or a foreman or an agent; and
ii) any sum which a subscriber agrees to forego, from out of the total subscriptions of each instalment, in consideration of the balance being paid to him;
2 (e) "Prize Chit" includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump "State V/s Gulkesh Jolly" ("Acquitted") Page 21 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 sum or in instalmentes by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by whatever name called, and utilises the monies so collected or any part thereof or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:
i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize of gift is under a liability to make any further payment in respect of such scheme or arrangement;
ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole or part of the subscriptions, contributions or other monies collected, with or without any bonus, premium, interest or otherwise advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit.
37. A perusal of the definition of both the chits clearly show that these are different categories with different financial features and different damaging effects. The quintessential aspects of a Prize Chit are that the organizer collects money in lumpsum or instalments, pursuant to a scheme or arrangement and he utilises such moneys as he fancies primarily for his private appetite and for:
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FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012
(i) Awarding periodically or otherwise to a specified number of subscribers, prizes in cash or kind and;
(ii) Refunding to the subscribers the whole or part of money collected on the termination of the scheme or otherwise.
Therefore, one of the major distinguishing feature of both the chits is that in Prize Chit there is a motive to have easy and quick money from a large number of subscribers and the utilisation of the money so collected or any part thereof for the purpose of giving or awarding periodically or otherwise to a specified number of subscriber prizes or gifts in cash or kind. Here, the Statement of Objects & Reasons of enacting the Act reveals that this Act was enacted pursuant to the recommendation of a Study Group, constituted by the Government to examine in depth the provisions of Chapter III B of the Reserve Bank of India Act, 1934 and the directions issued thereunder to NonBanking Companies, in order to assess their adequacy in the context of ensuring the efficacy of monetary and credit policies of the country and affording a degree of protection to the interest of the depositors who place their savings with such companies. The said Study Group had observed that Prize Chit/benefit/saving schemes benefit primarily the promoters and do not serve any social purpose. Such companies have branches in various States. These companies float schemes for collecting money from the public and the modusoperandi of such schemes is generally as described below:
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FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 The Company acts as the foreman or promoter and collects subscription in one lump sum or by monthly instalments spread over a specified period from the subscribers to the schemes. Periodically, the numbers alloted to members holding the tickets or units are put to a draw and the member holding the lucky ticket gets the prize either in cash of in the form of an article of utility, such as a motor car, scooter etc. Once a persons gets the prize, he is very often not required to pay further instalments and his name is deleted from further draws. The schemes usually provide for the return of subscriptions paid by the members with or without an additional sum by way of bonus or premium at the end of the stipulated period in case they do not get any prize. The principal items of income of these companies are interested earned on loans given to the subscribers against the security of the subscriptions paid or on an unsecured basis as also loans to the other parties, service charges and membership fees collected from the subscribers at the time of admission to the membership of the schemes. The major heads of expenditure are prizes given in accordance with the rules and regulations of the schemes, advertisements and publicity expenses and remuneration and other prequisites to the directors.
The financial fallouts of these schemes were also examined by the Study Group to demonstrate how the promoter - companies were gargantuan and were swallowing up huge surpluses from the public who lost interest on their subscriptions, and sometimes, even the principal amounts paid:
.....Even if the company offers some amount by way of bonus or premium to the subscribers at the time of refund of their subscriptions and allowing for reasonable expenditure on publicity, commission to agents, etc., a sizable balance will still be left with the company. This is exclusive of the amounts which the company might be collecting by way of membership fees and service charges from the subscribers and also of the amounts which it might be appropriating in respect of the subscriptions on forfeited tickets on which there will be no future liability for refund to the members at the end of the scheme. It will thus be obvious from the foregoing that such schemes confer monetary benefit only on a few members and on the promoter companies.
There is reference in the Study Group report to the other studies conducted by the Reserve Bank which also demonstrated the many sinister effects upon the community on account of proliferous prize chitsbenefits schemes. (a) the companies had advanced sizeable amounts to the directors or their "State V/s Gulkesh Jolly" ("Acquitted") Page 24 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 relatives or firms in which they were interested as partners, directors or as commission agents and there were practically no repayments of the loans; directors or as commission agents and there were practically no repayments of the loans;
(b) the books of account had not been maintained satisfactorily;
(c) close relatives of the directors had been employed in the companies as members of the staff or as agents on high salaries;
(d) In one case, it was observed that a scheme announced by a company in which collections had been made was withdrawn subsequently without notice to the subscribers and no refunds of the subscriptions already received had been made to the subscribers. Prize moneys had not been paid to all the subscribers who had won the prizes; and
(e) Subscriptions were shown to have been refunded in the books of account of a company but doubts have expressed by the Inspecting Officer about the genuineness of the payments in view of certain attended circumstances. There have also been allegations that some companies had resorted to certain malpractices in drawing the names of prize winners.
...............in the absence of any authoritative judicial pronouncement on the subject, we are not sure whether the activities of companies conducting price chits, etc., are clearly prohibited by the existing legislations. It has been reported that resources of prize chits are used for wasteful spending and hoarding commodities and that these schemes "enable certain persons to convert taxevaded income into accounted money. The persons concerned pay a premium to the promoters in return for the facility." It has also been stated that "there are a number of agents who go about contacting persons who are likely to face the problem of saving their income from the tax authorities. The prize chit pass books issued to them under different names become their passports for traveling from black money territory to the white money areathe easiest and surest way of using ill gotten wealth. Besides, by their misleading names and companies the prize chit companies divert private savings into their personal drains, thus disrupting the national economy.
"State V/s Gulkesh Jolly" ("Acquitted") Page 25 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 From the foregoing discussion, it would be obvious that prize chits or benefit schemes benefit primarily the promoters and do not serve any social purpose. On the contrary, they are prejudicial to the public interest and also adversely affect the efficacy of fiscal and monetary policy. There has also been a public clamour for banning of such schemes; these stems largely from the malpractices indulged in by the promoters and also the possible exploitation of such schemes by unscrupulous elements to their own advantage.
(Reference judgment reported as "AIR 1981 SC Page 504", titled as, "Srinivasa Enterprises & Ors. V/s Union of India Etc.")
38. In the case in hand, from the testimonies of PWs, it is apparent that at the most a scheme was being run by the accused wherein he used to collect Rs.200/ per month from every subscriber and after completion of the tenure of the scheme, he used to pay the money so collected to them without any interest etc. None of the witnesses has stated that he was investing the said money in some profitable venture to make easy and quick money. There is further no evidence that except for the employees of SAIL, some other private persons were also members of such scheme. Except for PW1 Shri Narain Keshwani, no other PW has stated that the accused used to give any prizes at the time of conducting of the business of the scheme. Even PW1 himself brought a chain and opener to show that this was the prize which he had received in one of the monthly meetings of the scheme. The testimonies of all the prosecution witnesses is somewhat similar in nature. Here, the testimonies of PW24 Shri Sanjay and PW25 Shri Raj Kumar need to be mentioned in particular. PW24 categorically admitted in his cross "State V/s Gulkesh Jolly" ("Acquitted") Page 26 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 examination that Shri Vijay Karan, retired Commissioner of Police, Delhi Police was there with the SAIL as "Legal Consultant"; accused was not operating the scheme or draw from the office, most importantly after the end of the draw he was to get a sum of Rs.6,000/ only. Whereas, PW25 has further reiterated that the subscriber used to make payment in instalments and the refund used to come after maturity in the form of lumpsum payment. He categorically admitted that Shri P.K Shah was the General Secretary of the Union at the relevant time and the accused and said Shri P.K Shah had formed their own separate Unions. He further categorically stated that complaint Ex.PW7/A was drafted by Shri P.K Shah and was finalized by Shri Vijay Karan, retired Commissioner of Police. He further admitted that none of the witnesses had ever made a complaint against the accused with the Department.
39. There is no documentary evidence which is legally admissible against the accused in the matter. The only documentary evidence which has been produced on record is Ex.PW2/A and one pamphlet which are type written and have no reference whatsoever to either the accused or any of the PWs. This court fails to understand as to how the said documents could be imputed to the accused. Further, the said documents appear to have been taken into possession during the search of the house of accused by IO, SI Ranvir Singh. Now, let us see whether such seizure is admissible in terms of the provisions of the Act or not. As per Section 7 of the "Act", a mandate has "State V/s Gulkesh Jolly" ("Acquitted") Page 27 of 29 FIR No.179/1993: PS Lodhi Colony (Crime Branch): U/s 420/406 IPC & 3 & 4 of Prize Chits & Money Circulation Schemes (Banning) Act, 1978 DOD: 15.03.2012 been casted upon the investigating agency that a police officer, not below the rank of an Officer Incharge of the Police Station cannot enter into the premises of the accused and further cannot effect any search or seizure. In the case, the alleged search and seizure at the residence of accused was made by SI Ranvir Singh, who was an officer below the rank of a Station House Office. Therefore, the documentary evidence so collected which is even otherwise not of any legal importance can further be not looked into by this court.
40. As regards the argument of learned APP that there was an admission made by the accused in his bail application is concerned; firstly the said document was not put in evidence of any of the witnesses and as such, the accused was deprived of crossexamining the said document. Even otherwise, a perusal of the said bail application reveals that the same was signed by one Advocate, Shri O.P Saxena and not by the accused, as the accused at that time was in judicial custody. The application is further not supported by any affidavit. Therefore, the same is not admissible in evidence.
41. Further, there is nothing on record to suggest that the subscribers filled up any Application Form before joining the scheme of the accused. All the witnesses in their crossexamination have categorically admitted that no document was created with regard to their membership of the scheme and the conducting of businesses thereof by the accused.
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42. As far as the defence taken by the accused in his statement U/s 313 Cr.P.C is concerned, although the accused did not lead any defence evidence in support thereof; yet the defence on the face of it appears to be plausible as PW25 has admitted in the crossexamination that the complaint Ex.PW7/A in the matter was drafted by Shri P.K Shah, who was running a rival Employees' Union and as such false implication of the accused at his instance cannot be ruled out.
43. The material on record clearly suggests that the scheme being run by the accused could at the most be termed as "Conventional Chit", which is excluded from the definition of Prize Chit, as Sections 3 and 4 make running of only Prize Chits to meet with penal consequences. Even otherwise, had the scheme of accused being Prize Chit, then as per the provisions of Section 3 of the Act, the prosecution witnesses should also have been accused being members of the said scheme.
44. In view of the above discussion, this court is of the considered opinion that the prosecution has not been able to prove charges against the accused in the matter. The accused is accordingly acquitted of charges. His B/B stands cancelled, surety stands discharged. Endorsement(s), if any, either on the documents of surety or of accused be cancelled forthwith. Original documents, if any, either of accused or of surety be returned to its rightful owner forthwith. File be consigned to record room after completion of necessary formalities.
Announced & dictated in open court (Vinod Yadav)
on 15.03.2012 Chief Metropolitan Magistrate:
Delhi
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