Madras High Court
K. Palaniswamy vs State And Others on 16 December, 1991
Equivalent citations: [1992]197ITR455(MAD)
ORDER UNDER S. 132(3)--Money circulation scheme--Bank accounts frozen--Petition for return of amount and allow the accused to operate bank accounts cannot be allowed by invoking s. 451 or s. 482, CrPC. HELD : No petition under s. 451 CrPC had been filed before the Court of Chief Judicial Magistrate before whom the seized amount was stated to have been produced. Further the sum stated to be in the credit of individual accounts of respondents in various banks had not at all been seized by the first respondent and produced before any criminal court and the second respondent had frozen the accounts under s. 132(3). In such situation neither the power under s. 451, CrPC nor the power under s. 482, CrPC is capable of being invoked at this stage by the court. The properties seized in the instant case, namely, currency notes cannot be subject to speedy and natural decay, so that it can be said that if the same is kept in the custody of the court or in a bank, as per the directions of the court, it may become practically useless. Income Tax Act 1961 s.132(3) Criminal Procedure Code 1973 s.451 Criminal Procedure Code 1973 s.482 JUDGMENT Janarthanam, J.
1. One K. Palanisamy calling himself an authorised officer of an entity going by the name Vazhga Vaiagam Enterprises, Salem, filed these two petitions under sections 451 and 482 of the Code of Criminal Procedure (for short, "Crl. P. C.") impleading the State represented by the Inspector of Police, Hasthampatty Police Station (Law and Order), Salem, and the Assistant Director of Income-tax (Investigation), Salem-7, as respondents Nos. 1 and 2, besides certain specified and named individuals numbering 12 as respondents Nos. 3 to 14, praying for the reliefs of :
(1) directing the first respondent to return the amount of Rs. 1,60,61,523 seized from the premises of the aforesaid firm in Crime No. 479 of 1991; and (2) directing the second respondent to allow the respondents Nos. 3 to 14 to operate their respective bank accounts.
2. The fundamental facts giving rise to the filing of these two petitions as culled out from the materials collected during the course of investigation in the aforesaid crime number of Hasthampatty Police Station, Salem, getting revealed by the representations made by the learned Public Prosecutor and Special Public Prosecutor for Income-tax cases may succinctly be stated to better appreciate the grant or otherwise of the reliefs prayed for in both these petitions.
(a) On August 17, 1991, at 1 p.m., one P. Dhanasekaran of Kullampatty, Salem District, lodged information before the first respondent-Inspector of Police, Hasthampatty Police Station, Salem, as to the firm going by the name Vazhga Vaiagam Enterprises situate at No. 3-A, Paramaroor East, Salem-7, indulging in promoting money circulation schemes with an oblique motive of ultimately cheating the gullible public at large, thereby committing offences with impunity under the salient provisions adumbrated in the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (for short, "the 1978 Act"), Indian Penal Code (for short, "the Code") and under the Income-tax Act, 1961 (for short, "the 1961 Act"). In that process, it is said it initiated a survey on August 19, 1991.
(d) Besides, the first respondent, it is said made a search of the premises of the firm, Vazhga Vaiagam Enterprises. The search operation, it is said, commenced at 2.30 p.m. on August 19, 1991, and was completed at 3 a.m. on August 20, 1991. During the said operation, the first respondent was stated to have seized Rs. 1,18,21,935 after duly observing all formalities. The seized amounts, it is said, had been produced before the court of the Chief Judicial Magistrate, Salem, on the same day which in turn was ordered to be deposited in the Criminal Court Deposit account in the State Bank of India. The petitioner, K. Palaniswamy, had been arrested and remanded to custody.
(e) Further investigation revealed interesting details as to the money circulation scheme revelled in by the said firm. The details of some of the schemes may be referred to here to how the gullible public had been lured into the scheme enabling the promoter to mobilise funds in astronomical figures.
(1) If a subscriber deposits a sum of Rs. 225, he will be paid a sum of Rs. 1,000 after three months from the date of such deposit;
(2) If a Subscriber deposits a sum of Rs. 825, he will be paid a sum of Rs. 2,000 after four months from the date of such deposit;
(3) If a subscriber deposits a sum of Rs. 1,000, he will be paid a sum of Rs. 1,600 after one month from the date of such deposit;
(4) If a subscriber deposits a sum of Rs. 75, he will be paid after fifteen days a sum of Rs. 90; and (5) If a subscribe deposits a sum of Rs. 200, he will be paid a sum of Rs. 250 after fifteen days.
(f) Similarly, so many schemes of this nature had been announced varying the quantum of deposit and the period and the period of maturity for mobilisation of cash resources.
(g) These schemes apart, captivating and alluring link schemes had been announced and amounts collected from the unwary public. Under the link scheme, a subscriber has to simply pay a sum of Rs. 52 initially and no further amount is required to be paid. This paltry amount of Rs. 52 gives fabulous dividends to the subscriber as and when the number of subscribers increases. If the number of subscribers reach such a figure equivalent to the figure at by multiplying the serial number of the subscriber by the four multiplier numbers, namely, 4, 16, 64 and 256, that serial number subscriber will be duly paid Rs. 500, Rs. 400, Rs. 1,600 and Rs. 7,500. This can be explained by an illustration.
(h) Let the serial number be 5. Serial Number 5 has to be multiplied by the four multiplier numbers as stated below. So multiplied, the end product will represent the number of the subscribers thus :
(1) 5 x 4 = 20 (2) 5 x 16 = 80 (3) 5 x 64 = 320, and (4) 5 x 256 = 1,280.
If the number of subscribers reach 20, 80, 320 and 1,280, serial number 5 subscriber will have the benefit of getting the dividends respectively of Rs. 500, Rs. 400, Rs. 1,600 and Rs. 7,500 without making any further payment other than the initial payment of Rs. 52. Thus, serial number 5 subscriber is to get Rs. 10,000 (Rs. 500 + Rs. 400 + Rs. 1,600 + Rs. 7,500), by a mere investment of Rs. 52 provided the number of subscribers reach the level of 1,280, irrespective of any tome limit.
(i) Similarly, the other serial number subscribers are also to get such fabulous dividends depending upon the contingency of induction of number of subscribers swelling up to the level required to earn such dividends.
(j) The said enterprise is said to be a registered partnership firm. There are ten partners constituting the firm. The firm, it is said, commenced its activities on January 18, 1991, and, within a short period, that is to say, between January 18, 1991, and August 19, 1991, to was stated to have mobilised Rs. 41,57,91,000 and made disbursements to the subscribers to the tune of Rs. 11,56,88,572 and nothing is known as to what had happened to the balance of the mobilised resources.
(k) There is no account in any bank in the name of the firm. Nor is there any account in any bank in the names of the partners of the said firm. The petitioner is not at all a partner of the firm. He is calling himself the authorised officer of the firm and that is all and nothing more. He is also not transacting any account in his name for and on behalf of the firm. None of the respondents Nos. 3 to 14 is a partner of the firm. But the respondents Nos. 3 to 14 have accounts in various banks in their individual names. All of them put together have, in their respective accounts, a sum of Rs. 1,36,13,656. The second respondent, it is said, had frozen their bank accounts by issuing prohibitory orders. The petitioner and respondents Nos. 3 to 14 are all Central Government employees working in the Telecommunication Department.
(l) The second respondent, it is said, recorded statements from respondents Nos. 3 to 14, who it is had stated that the money in their respective individual bank accounts do not belong to them, but that they belonged to the firm Vazhga Vaiagam Enterprises. Excepting their statements so recorded, there are no tangible materials, in the shape of documents, to vouchsafe what they had stated at this stage. Further probe, it is said, is being made into that aspect of the matter by the Crime Branch CID to whom the case is subsequently transferred.
3. The petitioner filed Criminal Original Petition No. 7988 of 1991 under section 482, Criminal Procedure Code, for quashing the proceedings initiated against the firm Vazhga Vaiagam Enterprises in Crime No. 479 of 1991, Hasthampatti Police Station, on the ground that the averments in the first information report do not at all disclose any offence either under the Code or under the 1978 Act and a learned judge of this court dismissed the same, holding that there are prima facie materials for the alleged commission of the offence under section 4 of the 1978 Act and under section 420 of the Code which are cognisable in nature. It is represented at the Bar that the petitioner had taken steps to file a special leave petition before the apex court.
4. The petitioner did not at all file any petition under section 451, Criminal Procedure Code, before the Court of the Chief Judicial Magistrate, Salem, praying for the return of the cash seized pending trial and the instant petitions been filed straightaway before this court for the reliefs as aforesaid.
5. Learned senior counsel, Mr. S. Chellaswamy, appearing for the petitioner, would submit that the interest of justice requires that the seized money should be returned to the petitioner so as to enable him to honour the commitment of the firm to the subscribers, in the sense of paying them on the respective due dates of maturity of the deposits and if there is any reasonable apprehension in the mind of the court that it is likely that the petitioner will skulk away with the money, he has no objection to the appointment of an Advocate-Commissioner to take charge of the amount to be returned to the firm and he can make the payment to the depositors on the due dates of maturity. He would further submit that the prohibitory orders issued by the second respondent for freezing the bank accounts in the individual names of respondents Nos. 3 to 14 may be lifted and those amounts may also be utilised by the Advocate Commissioner to be appointed for making the payments to the depositors under the various schemes announced by the firm, to which course respondents Nos. 3 to 14 have no objection.
6. The learned Public Prosecutor, Mr. B. Sreeramulu, and the learned Special Public Prosecutor for Income-tax cases, Mr. K. Ramasamy, would however, repel, tooth and nail, such submissions.
7. Even at the outside, I may point out that both the petitions are liable to be dismissed in limine. The reason is rather obvious. Both the petitions are captioned as being filed under section 451 and 482, Criminal Procedure Code, and invoking of power, both under section 451 and as well as under section 482, Criminal Procedure Code, simultaneously by this court is not at all legally permissible. To appreciate this aspect of the matter, those two sections may be extracted hereunder :
"451. Order for custody and disposal of property pending trial in certain cases. - When any property is produced before any criminal court during any inquiry or trial, the court may make such order as it thinks fit for the proper custody of such property pending the conclusion of the inquiry or trial, and, if the property is subject to speedy and natural decay, or if it is otherwise expedient so to do, the court may, after recording such evidence as it thinks necessary, order it to be sold or otherwise disposed of.
Explanation. - For the purposes of this section, 'property' includes -
(a) property of any kind of document which is produced before the court or which is in its custody;
(b) any property regarding which an offence appears to have been committed or which appears to have been used for the commission of any offence."
"482. Saving of inherent powers of High Court. - Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice."
8. The power under section 451, Criminal Procedure Code, is capable of being invoked by any criminal court before which any property is produced during any inquiry or trial. Only such court can make an order providing for interim custody. If such court exercised such power perversely, then it may be permissible to knock at the doors of this court for the exercise of its inherent power under section 482, Criminal Procedure Code, inasmuch as there is no express provision under this Code to undo such wrong in the course of administration of justice. Such is not the position in the instant case.
9. As adverted to, during the course of summation of facts, no petition under section 451, Criminal Procedure Code, had been filed before the Court of the Chief Judicial Magistrate, Salem, before whom the seized amount of Rs. 1,18,21,935 was stated to have been produced. Further, the sum of Rs. 1,36,13,656 stated to be in the credit of the individual accounts of respondents Nos. 3 to 14 in various banks had not at all been seized by the first respondent and produced before any criminal court and what all had been done, in respect of those amounts, as already stated, is that the second respondent had frozen the accounts under section 132(3) of the 1961 Act. In such a situation, neither the power under section 451, Criminal Procedure Code, nor the power under section 482, Criminal Procedure Code, is capable of being invoked at this stage by this court.
10. Top of all, the properties seized in the case, namely, currency notes cannot be subject to speedy and natural decay, so that it can be said that if the same is kept in the custody of the court or in a bank, as per the directions of the court, it may become practically useless. It is also not expedient, in the interests of justice, to return the seized amounts to the petitioner, in the facts and circumstances of the case.
11. As stated earlier, the petition filed for quashing the criminal proceedings initiated against the firm had been dismissed holding that there are prime facie materials for the alleged commission of cognizable offences under section 4 of the 1978 Act under section 420 of the code.
12. Worthy if is to note here that even a subscriber in a money circulation scheme, apart from a promoter, is a particeps criminis and this will be crystal clear by a cursory perusal of the salient provisions adumbrated in section 3 of the 1978 Act, which prescribes :
"No person promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme."
13. The further agonising factor to be taken note of here is that if the alleged offences are proved in the trial, there is a plausibility of the seized amounts being confiscated while passing a final order under section 452, Criminal Procedure Code.
14. For the above reasons, both these petitions, which deserve to be dismissed, are accordingly dismissed.