Bangalore District Court
Ccb F And M Squad vs Mohammed Idress on 23 December, 2024
1 Spl.C.No.463/2015
KABC010233942015
IN THE COURT OF XLVII ADDITIONAL CITY CIVIL &
SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI
CASES, BENGALURU (CCH-48)
DATED THIS THE 23rd DAY OF DECEMBER 2024
PRESENT
Sri Satish J.Bali, B.Com., LL.M.,
XLVII Addl. City Civil and Sessions Judge and Spl. Judge
for CBI Cases, Bengaluru (CCH-48)
SPL.CC.NO.463/2015
COMPLAINANT: State by -Pulakeshinagar Police
Station, Bengaluru.
(By Spl. Public Prosecutor)
Vs.
ACCUSED: 1. Mohamed Idhrees
S/o Ameer Basha,
Aged 30 years,
R/at No.16, 5th Cross,
Arograyamma Layout,
Venkateshapura,
Bengaluru-45.
Office Address:
No. 151/1, 2nd Floor,
2 Spl.C.No.463/2015
Landmark Towers,
Frazer Town,
Bengaluru-05.
2. M/s Fosterfin Capital Management
-Firm, No. 151, 2nd Floor,
Landmark Towers,
Wheelers Road, Frazer Town,
Bengaluru -05.
Represented by its Partner
Sri Venkatachalam Ramachandram
S/o Ramachandram.
3. Sri Venkatachalam Ramachandram
S/o Ramachandram, Partner of
M/s Fosterfin Capital Management-
Firm, No. 151, 2nd Floor, Landmark
Towers, Wheelers Road, Frazer Town,
Bengaluru -05.
A1- By Sri MSM, Advocate,
A2- Firm
A3 - By Sri SR, Advocate,
1.Date of Commission of Offence : During the
period from
8/10/2013 to
24/03/2015
2. Date of Report of Offence : 24/03/2015
3. Arrest of Accused : A1 is in J.C.,
Accused 2 - is firm,
A3 is on bail.
4. Name of the complainant : Bindu.K.
5. Date of recording of Evidence : 20/06/2022
6. Date of closing Evidence : 22/8/2024
3 Spl.C.No.463/2015
7. Offences complained of : Sec.9 of the KPIDFE
Act, 2004 and Sec 419
& 420 of IPC.
8. Opinion of the Judge : As per the final order
(Satish J. Bali)
XLVII Addl. City Civil and Sessions
Judge and Judge for CBI Cases,
Bengaluru (CCH-48)
****
JUDGMENT
This is a charge-sheet filed by the Police Inspector of CCB, Fraud and Misappropriation (F&M) Squad, Bengaluru as against the accused for the offence punishable under Section 420 of IPC and Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (herein afterwards referred as KPIDFE Act for the purpose of brevity.)
2. The brief facts of the case of the prosecution are as under:
4 Spl.C.No.463/2015
Initially the present complaint was filed only against the accused no.1 Mohamed Idhrees and subsequently as per order dated 3/3/2023, the accused no.2 and 3 have been arraigned on the ground that accused no.3 Sri Venkatachalam Ramachandram is also one of the partner of accused no.2 "M/s Fosterfin Capital Management"- Firm.
As per the complaint averments, it is the case of the prosecution that the accused no.1 and 3 posing themselves as partners of accused no.2 "M/s Fosterfin Capital Management" firm offered to accept deposits from the public with assurance to return the same with interest at the rate of 7% per month, and also to return the deposited amount as and when demanded. Accordingly, the complainant by name Smt Bindu K D/O K.V.K.Ayyappan believing the words of accused no.1 and 3, invested a sum of Rs.1,00,000/- under the scheme "Wealth Management Scheme". But, the accused persons as promised have not paid either the interest nor the 5 Spl.C.No.463/2015 principal amount as agreed. Based upon the first information lodged by the complainant, a case came to be registered against the accused by Pulakeshinagar Police in their crime No. 112/2015 dated 24/3/2015 for the offence punishable under Section 420 of IPC and Section 9 of KPIDFE Act.
The Investigating Officer after collecting all relevant documents regarding the statements of the relevant witnesses came to conclusion that the accused have committed the aforesaid offences resulting in filing the charge-sheet against them for the aforesaid offences.
3. On the basis of the above said materials, as there were sufficient materials to proceed against the accused, this court has taken cognizance for the aforesaid offences as against the accused and issued summons to them. In response to the same, the accused persons appeared through their respective counsel and enlarged on bail.
6 Spl.C.No.463/2015
4. The Accusation for the offences punishable under Section 9 of KPIDFE Act and under Section 419 and 420 of IPC were read over to all the accused in the language known to them. The accused having understood the same, denied to plead guilty and claims to be tried.
5. The prosecution in order to prove the guilt of the accused has got examined 4 witnesses as PWs. 1 to 4 and got marked documents at Ex.P1 to Ex.P5 and closed its side.
6. The incriminating circumstances appearing in the evidence of the prosecution were read over to all the accused who have denied the same and not chosen to lead evidence.
7. Heard learned Special Public Prosecutor and also learned counsel for the accused and perused the materials.
8. The learned counsel for the accused no.3 has pressed into service the following citations: 7 Spl.C.No.463/2015
1. AIR 2001 SUPREME COURT 2960 in the case between S.W. Palanitkar and others Vs. State of Bihar and another.
2. 2007 AIR SCW 6332 in the case between Anil Ritolla @ A.K. Ritolia Vs. State of Bihar and another; and
3. 2007 AIR SCW 4816, Veer Prakash Sharma Vs. Anil Kumar Agarwal and another.
4. Judgment in Spl.C.C.124/2016 dated 14/5/2024 on the file of this court.
9. The following points arises for my consideration:
1. Whether the prosecution proves beyond reasonable doubt that the accused no.1 and 3 being the partners of the accused no.2- firm "M/s Fosterfin Capital Management" situated at No.151/1, second floor, Landmark Towers, Wheeler Road, Frazer Town, Bengaluru with an intention to make huge profits illegally persuaded complaint Smt. Bindu.K on the pretext that they will pay attractive rate of interest on her investments and believing the said 8 Spl.C.No.463/2015 words, the complainant had deposited a sum of Rs.1,00,000/- in cash on 10/12/2013 in accused no.2 - firm and in pursuance of the same the Wealth Management Agreement came to be in existence, but accused as assured failed to render the service by payment of interest or by return of deposited amount, and thereby committed an offence punishable under Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004?
2. Whether the prosecution proves beyond reasonable doubt that accused no.1 and 3 intentionally cheated the complainant by representing that they are the partners of "M/s Fosterfin Capital Management" firm - accused no.2 assured to provide an attractive rate of interest on the deposits made by her and thereby the accused have committed an offence punishable under Section 419 of IPC.9 Spl.C.No.463/2015
3. Whether the prosecution proves beyond reasonable that the accused during the aforesaid period, have intentionally cheated dishonestly by inducing the complainant to deposit money in the accused no.2- firm on the assurance to pay the attractive rate of interest and accordingly the complainant deposited a sum of Rs.1,00,000/- in cash on 10/12/2013 and as assured the accused have failed to repay the interest nor deposited amount inspite of execution of Wealth Management Agreement in her favour and thereby accused have cheated the complainant and committed an offence punishable under Section 420 of IPC?
4. What Order ?
10. My answer to the above points are as under:
Point No.1: Partly in the affirmative;
Point No.2: In the Negative;
Point No.3: Partly in the affirmative;10 Spl.C.No.463/2015
Point No.4: As per final order; for the following:
REASONS
11. POINT NO.1: Before appreciating the both oral as well as documentary evidence on record, it is necessary to know the evidence which has been led by the prosecution in order to prove its case.
12. The prosecution has examined the complainant Smt. Bindu .K as PW.1 who has deposed that in the year 2013, one of her colleague introduced her to accused no.1 who has explained about the "M/s Fosterfin Capital Management" and its business and assured that, if she would invest the amount in the said company, he would invest the same in Wealth Management and get 7% returns every month. Believing the said assurance, the complainant paid a sum of Rs.1,00,000/- cash to the accused who in consideration of the same, the accused no.1 paid Rs.7,000/- as interest for the first 11 Spl.C.No.463/2015 month and executed Wealth Management Agreement on 10/12/2013 for having received Rs.1,00,000/-. She further deposed that from the next month, the accused did not responded to her inspite of repeated request to pay the interest and accused neither returned the deposited amount nor interest, and thereby cheated her. She further deposed that as per Ex.P1, she has lodged the First Information against the accused and identified her signature as Ex.P1(a). She also got marked Wealth Management Agreement Ex.P2 and signature found on the same of accused as Ex.P2(a). She further deposed that the accused has also cheated more than 20 members.
13. The prosecution has also examined the colleague of complainant Sri Althaf Khan s/o Imam Khan as PW.2 who has deposed that the accused was running "M/s Fosterfin Capital Management" - accused no.2 - firm at Frazer Town, and in the month of December 2013, he himself and CW.1 went to the said office wherein they met the accused who 12 Spl.C.No.463/2015 has assured to pay interests at the rate of 7% per month, if amount is deposited in the accused no.2 - firm. He further deposed that in the month of December 2013 itself, CW.1 had paid a sum of Rs.1,00,000/- to the accused and in the month of January 2014, the accused was arrested and his office was seized. He further deposed that after his release, the accused assured to pay the amount, but failed, as such complainant has filed the complaint.
14. The prosecution has also examined the then PSI of Pulakeshinagar P.S., Bengaluru as PW.3 who deposed that on 24/3/2015 at about 4.30 pm when he was in police station, complainant Smt. Bindu. K came to the Station and lodged written First Information against the accused which has been registered by him in Crime No. 112/2015 for the offences punishable under Section 420 of IPC and Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishments Act. He identified the complaint as per Ex.P1 and his 13 Spl.C.No.463/2015 signature appearing on the same as per Ex.P1(b). He also got marked FIR as per Ex.P3 and his signature as per Ex.P3(a).
15. PW.3 further deposed that the complainant at the time of lodging the complaint revealed that accused introduced her to make deposit in the accused no.2 - firm with assurance that he would invest the same in share market and pay higher rate of interest and returns, but after deposit, the accused failed to repay the amount and cheated the complainant. He further deposed that as he was transferred, file was handed over to Investigating Officer for further investigation as per the direction of DCP, Crime Branch.
16. The prosecution has also got examined the Investigating Officer Sri Giri K.C. who was the Inspector of Police, CCB (F& M) Unit, Bengaluru from June 2014 to July 2017. He deposed that on 18/5/2015, he received case file for further investigation and on the same day, he made 14 Spl.C.No.463/2015 requisition to City Civil Court Hall No.1 for issuance of body warrant against accused no.1. He further stated that on 11/7/2015, he summoned the complainant and recorded her further statement which reveals that complainant has paid a sum of Rs.1,00,000/- in cash to the accused. He further deposed that he has also recorded the statement of CW.2 to CW.4 and he has collected Registration Certificate, Deed of Partnership of accused no.2 - firm from the District Registrar and also Photostat copy of Wealth Management Agreement dated 10/12/2013 produced by the complainant. He further deposed that after completion of the investigation, having found material against the accused submitted the charge-sheet for the offences punishable under Section 420 of IPC and Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishments Act. He further deposed that as per the Deed of Partnership, accused no.3 and accused no.1 are the partners of the accused 15 Spl.C.No.463/2015 no.2 - firm and got identified the Wealth Management Agreement which is marked as Ex.P2, Registration Certificate of accused no.2 - firm and Deed of Partnership as per Ex.P4 and Ex.P5. He further deposed that accused no.3 has also signed the Deed of Partnership as a partner and identified the accused before the court.
17. In the cross-examination PW.1 has deposed that herself, one Arun, Althaf Khan, Yeshashwini, Syed Illiyaz, Abdul Muzeeb and Aneesh Kumar along with CW.2 were employees of I-GATE Company which is now taken over by CAPGEMINI. It was suggested that Mr. Althaf Khan PW.2 introduced the investment plans to her. The said suggestion is admitted by PW.1. She further deposed that along with CW.2 and others, she went to accused no.2 - firm wherein they met the accused. PW.1 admitted that in her complaint, she has not stated regarding receipt of Rs.7,000/- towards interests and also the date and mode of receipt of said interest. She further 16 Spl.C.No.463/2015 admitted that she has not stated in the complaint about the date of payment of Rs.1,00,000/-. But, she stated that said amount was paid to CW.2 who in turn has paid the said amount to the accused. She admitted that she has not signed Wealth Management Agreement as per Ex.P2 and same is given by CW.2 to her.
18. The learned Special Public Prosecutor in his arguments submitted that the accused no.1 and 3 being the partners of accused no.2 firm have induced complainant to make deposit of Rs.2,00,000/- with assurance to return the same with interest at the rate of 7% every month, but failed which made the complainant to lodge the complaint as per Ex.P1. It is submitted that only suggestions are made to PW.1 to PW.4 and nothing has been elicited from their mouth which will falsifies the case of the prosecution. It is further canvassed that accused no.3 has not produced any documents to show that he was not the partner of 17 Spl.C.No.463/2015 accused no.2 firm and the accused have failed to rebut the presumption, and thereby prayed to convict the accused.
19. To counter the said arguments, the learned counsel for the accused no.1 and 2 submitted that at the time of investment, the accused no.2 - firm was not in existence and as per Ex.P4 Registration Certificate, the accused no.2 firm was registered on 19/12/2003, It is submitted that the said amount was not transferred to the account of accused no.2 - firm as such accused no.1 and 3 are no way concerned to the said transaction and the complainant ought to have made enquiries as to who are the partners and in management of accused no.2 firm before investing the amount. He argued that the principle of 'Caveat-Emptor' is applicable to the case on hand and complainant only at the behest of his friend CW.2 has filed false complaint. Hence, no offence was committed by the accused and accused no. 2 - firm was not in existence at the 18 Spl.C.No.463/2015 time of alleged investment, as such Section 9 of KPIDFE Act is not applicable.
20. In reply, the learned Special Public Prosecutor submitted that, as per Explanation-3 of Section 9 of KPIDFE Act, every person who at the time of offence was committed was in conduct of its business shall be deemed to be guilty of the offence and liable to be punished. He submitted that, the necessary charges were framed against accused persons which is not at all challenged. It is submitted that, in an answer to questions posed under Section 313 of Cr.P.C., the accused have not offered any explanation and thereby prosecution has proved that the accused no.1 and 3 only with an intention to cheat the complainant have floated the accused no.2 - firm and by not returning the deposited amount as assured committed the alleged offences.
21. The learned counsel for the accused no.2 and 3 submitted that when the complainant had 19 Spl.C.No.463/2015 invested the amount the accused no.2 - firm was not in existence and accused no.2 was not at all its partner and he had no dealings with the complainant at that point of time. It is submitted that accused no.1 has forged the signature of accused no.3 on the partnership deed and same was relied upon by the prosecution to rope accused no.3. It is submitted that the accused no.3 has no role to play in the alleged transaction as he was no way concerned to the accused no. 2 - firm and thereby prayed to acquit the accused no 2 and 3.
22. Before appreciating the above said arguments canvassed by both the learned counsels with materials on record. It is necessary to know certain terms as defined under Karnataka Protection of Interest of Depositors in Financial Establishments Act 2004, more particularly the term "Depositor", "Financial Establishment" and also "Deposits" 20 Spl.C.No.463/2015
23. Section 2(2) of Karnataka Protection of Interest of Depositors in Financial Establishments Act defines the term "Deposit" as under:
"(2) "Deposit" includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any financial establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include,-
(i) amount raise by way of sh are capital or by way of debenture, bond or any other instrument covered under the guidelines given and regulations made, by the Security Board of India, established under the Securities and Exchange Board of India Act, 1992 (Central Act 15 of 1992);
(ii) amount contributed as capital by partners of a firm;
(iii) amounts received from a scheduled bank or a co-operative bank or any other banking company as defined in clause (c) of Section 5 of 21 Spl.C.No.463/2015 the Banking Regulation Act, 1949 (Central Act 10 of 1949);
(iv) any amount received from , -
(a) the Industrial Development
Bank of India;
(b) a State Financial Corporation;
(c) any financial institution specified in or under Section 4-A of the Companies Act, 1956 (Central Act 1 of 1956); or
(d) any other institution that may be specified by the Government in this behalf;
(v) amounts received in the ordinary course of business by way of , -
(a) security deposit;
(b) dealership deposit;
(c) earnest money;
(d) advanced against order for goods or services;
(vi) any amount received from an individual or a firm or an association of individuals, registered under any enactment relating to money leading which is for the time being in force in the State; and
(vii) any amount received by way of subscriptions in respect of a chit.22 Spl.C.No.463/2015
Explanation I, - "Chit" has t he meaning as assigned to it in clause (b) of Section 2 of the Chit Funds Act, 1982 (Central Act 40 of 1982);
Explanation II, - Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;."
24. Section 2(3) of Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 defines the term "Depositor" as under:
"(3) "Depositor" means a person who has made deposits with financial establishment."
25. Sub Section 4 of Section 2 of Karnataka Protection of Interest of Depositors in Financial Establishments Act defines the term "Financial Establishment" as under:
"(4) "Financial Establishment" means any person or a group of individuals accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or 23 Spl.C.No.463/2015 controlled by any State Government or the Central Government or a banking company as defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (Central Act 10 of 1949)."
26. Keeping in view the above said terms, let me appreciate both oral as well as documentary evidence on record.
27. PW.1 who is the complainant Smt. Bindu.K w/o Alan in her cross-examination has deposed that she herself (CW.2 and others) went to the office of the accused no.2 - firm wherein they met the accused. She further stated that she had no difficulty to transfer the amount through the account and admitted that she has not stated in the complaint regarding receipt of Rs.7,000/- towards interest and also the date and mode of its receipt. She admitted that in the complaint, she has not stated about the date of payment of Rs.1,00,000/- to the accused. But, when complaint Ex.P1 is carefully 24 Spl.C.No.463/2015 perused, it is quite clear that in the complaint, it is specifically mentioned that complainant - Smt.Bindu.K has paid a sum of Rs.1,00,000/- to the accused no.1 in the month of November 2013 and in consideration of the same, the accused no.1 has executed Wealth Management Agreement as per Ex.P2. She denied a suggestion that accused no.1 does not owe anything to her as she has not paid any amount to him. It has been elicited from the mouth of P W.1 that she has not signed to Ex.P2 Wealth Management Agreement and accused no.1 has not signed to it in her presence. But, it is to be noted that no where in the entire cross-examination of PW.1 and PW.2, it is not disputed that Wealth Management Agreement Ex.P2 bears signature of accused no.1. Hence, even though the complainant has not signed to Wealth Management Agreement, but since no suggestion was made to PW.1 and 2 denying the signature of the accused no.1 appearing on the Wealth Management Agreement Ex.P2, it can 25 Spl.C.No.463/2015 safely come to the conclusion that Ex.P2 bears his signature. Apart from it, PW.2 in his cross- examination specifically stated that in the month of December 2013, he along with CW.3 and CW.1 went to the office of accused no.2 firm and on the said day, CW.1 i.e., complainant brought the cash and paid the same in his presence. He also deposed as to coming into force of Ex.P2 Wealth Management Agreement executed by accused no.1. Nothing worthwhile has been elicited from the mouth of PW.1 and 2 to disbelieve the version of prosecution.
28. When the above said oral evidence of PW.1 and PW.2 is read along with Ex.P2 Wealth Management Agreement, it is quite clear that said agreement was entered into on 10/12/2013. If at all complainant had not paid a sum of Rs.1,00,000/- to the accused no.1, there was no occasion for him to execute Wealth Management Agreement as per Ex.P2. The clause 9 of the said agreement which deals with "Effective Date" makes it very clear that 26 Spl.C.No.463/2015 said agreement shall come into force from 10/12/2013 for the investment of Rs.1,00,000/- and shall remain in force until terminated as per clause
10. When recitals of Ex.P2 Wealth Management Agreement are carefully perused, it is quite clear that complainant who is second party in the agreement described as a "Client" of accused no.2 - firm and it has been specifically described that client i.e., complainant is investor who intended to invest on trading agreed to avail the services of accused no.2 - firm in managing the capital invested by her on such terms and conditions as set out in the agreement. Further, when the scope of the agreement as defined in clause 2 is carefully perused, it is quite clear that accused no.2 -firm is described as having expertise in international market shall render the services of trading on behalf of complainant. Further, when the duties and obligations as contemplated in clause 4 of the said agreement is carefully perused it is quite clear that accused no.2 - firm undertaken that it is a 27 Spl.C.No.463/2015 most expertise in the services such as supervision over the investment made by the complainant and the services provided by the firm shall be as per the industrial standards and as per the requirement of the client. Further, clause 6 of the said agreement makes it very clear that accused no.2 - firm assured to pay interest at the rate of 7% every month on base investment. Therefore, when the terms of the above said agreement are carefully perused, it is quite clear that the accused no.2 - firm undertaken to provide services of supervision of investment made by the complainant and also to pay returns at the rate of 7% every month. In view of not denying the signature of accused no.1 appearing on the said agreement, it is quite clear that in consideration of Rs.1,00,000/- transferred by the complainant, said agreement came to be entered into between the accused no.2 - firm represented by the accused no.1 and the complainant. By investing a sum of Rs.1,00,000/- in the accused no.2 - firm the complainant fits into the 28 Spl.C.No.463/2015 definition of "Depositor" and the firm is a "Financial Establishment" as per the above said definition.
29. PW.3 who has registered FIR against the accused in his cross-examination stated that at the time of lodging the complaint, complainant alone came and she has annexed the Wealth Management Agreement, partnership deed and her bank statement. He denied a suggestion that even though there are no ingredients in the complaint to attract the offence of cheating, a false case has been registered. Nothing worthwhile has been elicited from the mouth of this witness which supports the accused.
30. The Investigating Officer who was examined as PW.4 in his cross-examination stated that even prior to 13/12/2013, the accused no.2 - firm was in existence, but same was not registered and Wealth Management Agreement was in the name of accused no.2 - firm. To a question that accused no.1 was not the partner of the accused 29 Spl.C.No.463/2015 no.2 - firm as on 10/12/2013, PW.4 has deposed that the firm was in existence but it was not registered on the said date. He further deposed that the Wealth Management Agreement was executed on 10/12/2013 and denied a suggestion that even though the accused no.1 has not accepted the deposits, he has filed false charge-sheet. Nothing worthwhile has been elicited from the mouth of this witness also which supports the defence of the accused.
31. The perusal of first information report as per Ex.P3 reveals that on the basis of the first information lodged by the complainant, same came to be registered by the Pulakeshinagar P.S., in their Crime No.112/2015 dated 24/3/2015 for the offence punishable under Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 and Section 420 of IPC. The Registration Certificate Ex.P4 reveals that the accused no.2 - firm was registered on 19/12/2013 with the Registrar of 30 Spl.C.No.463/2015 Companies with the address : No. 151/1, Second Floor, Landmark Towers, Wheelers Road, Frazer Town, Bengaluru. The Deed of Partnership Ex.P5 reveals that on 14/12/2013, a partnership deed came to be entered into between accused no.1 and 3 as a partners of the accused no.2 - firm. Under the said partnership deed, the accused no.1 and 3 invested equal capital to the extent of Rs.25,000/- each and they also decided to share profits in the ratio of 50:50.
32. So far as role of the accused is concerned, the prosecution with the help of Ex.P2 Wealth Management Agreement has proved that the accused no.1 representing accused no.2 - firm has executed Wealth Management Agreement in favour of the complainant in consideration of Rs.1,00,000/- received from the complainant. PW.1, PW.2 and PW.4 have also supported the execution of the above said Wealth Management Agreement by the accused no.1. The accused no.3 is not the signatory 31 Spl.C.No.463/2015 to this Wealth Management Agreement. It is pertinent to note that as per Ex.P5 Deed of Partnership, accused no.2 firm was formed by the accused no.1 and 3 under the said Deed of partnership on 14/12/2013. As per the Registration Certificate Ex.P4, the said firm was registered on 19/12/2013. It is pertinent to note that as per the complaint averments, the complainant had parted with the above said amount with the accused no.1 in the month of October 2013 itself. Ex.P4 and Ex.P5 the Registration Certificate and Deed of Partnership of accused no.2 - firm reveals that it came into existence on 14/12/2013. But, the accused no.1 before coming into existence of accused no.2- firm induced the complainant for investment in the firm. The accused no.3 joined the accused no.2 - firm on 14/12/2013 after the above said transfer of the amount from the complainant to the accused no.1. Therefore, the accused no.3 was neither the partner nor was in management of the accused no.2 - firm 32 Spl.C.No.463/2015 when the complainant had transferred the above said amount to the accused no.1. Though the registration of the accused no.2 - firm is not a sine quo non but the Deed of Partnership Ex.P5 makes it very clear that when complainant transferred the amount to the accused no.1, the accused no.3 was not partner. Therefore, the accused no.3 had no role to play in the above said transaction. Moreover, the accused no.2 firm was not at all in existence when the above said transaction took place. As per the definition of 'Financial Establishment' referred above, if any person accepts deposits under any claim or arrangement or in any other manner, he falls within the said definition. In the case on hand, the accused no.1 has induced the complainant to transfer a sum of Rs.1,00,000/- under the guise of Wealth Management Agreement - Ex.P2 and though he assured to manage the said funds in market and pay interest at the rate of 7% every month neither paid the same nor returned the invested amount to 33 Spl.C.No.463/2015 the complainant. As per the above said definition of 'Financial Establishment', there is no impediment for an individual to accept deposit under any scheme or management or in any other manner from the depositor. Therefore, though the accused no.2 and 3 were not in existence when the above said transaction took place, the accused no.1 by accepting the deposit from the complainant and also by executing the Wealth Management Agreement as per Ex.P2 fallen into the definition of 'Financial Establishment' and by not returning the invested amount or the interest as agreed, has committed the offence punishable under Section 9 of Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004. The prosecution has not been able to establish the role of accused no.2 and 3 in the above said transaction with the complainant. Therefore, this point is answered partly in the affirmative.
34 Spl.C.No.463/2015
33. 1POINT NO.2: The prosecution has alleged that the accused no.1 and 3 by impersonation have cheated the complainant and thereby committed the offence punishable under Section 419 of IPC. But, absolutely there are no documents to prove the factum of impersonation on the part of accused no.1 and 3. Therefore, the prosecution failed to prove that accused are also liable to be punished for the offence of cheating by impersonation. Accordingly, I answer the above point 'Negative'.
34. POINT NO.3: Now it is the duty of this Court to appreciate whether the ingredients of Section 420 of IPC are made out or not with reference to both oral as well as documentary evidence on record.
35. For the sake of convenience, the provision of Section 420 of IPC is extracted below:
"420. Cheating and dishonestly inducing delivery of property,- Whoever cheats and 35 Spl.C.No.463/2015 thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
36. When the above said provision is carefully perused, the essential ingredients which are required to be proved in order to punish the accused for the offence under Section 420 of IPC are as follows:
(i) There shall be an act of cheating by the accused person;
(ii) In furtherance of the said act, a person should be dishonestly induced to;
a) to deliver any property to any person; or
b) to make other or destroy the whole or any part of valuable security or anything which is signed or sealed and which is capable of being converted into a valuable security.36 Spl.C.No.463/2015
37. One more important aspect in relation to offence punishable under section 420 of IPC, there has to be a dishonest intention from the very beginning i.e., from inception which is sine quo non to hold the accused guilty for the commission of the said offence as held by Hon'ble Apex Court in the matter between Joseph Salvaraj Vs. State of Gujarath, AIR 2011 SC 2258.
38. Applying the above said principles of law laid down by Hon'ble Apex Court to the present case on hand, it is to be noted that as per the complaint averments, the complainant had transferred a sum of Rs.1,00,000/- to the complainant in the month of October 2013 on the assurance of accused no.1 to invest the same in the accused no.2 - firm, but the Wealth Management Agreement Ex.P2 came to be executed on 10/12/2013. In order to bring home the guilt of the accused for the offence punishable under Section 420 of IPC, the prosecution has to prove that since from inception the accused no.1 had 37 Spl.C.No.463/2015 intention to defraud. In this case, Ex.P5 the Deed of Partnership reveals that it was entered into between accused no.1 and 3 on 14/12/2013 and accused no.2-firm was registered on 19/12/2013. When complaint averments Ex.P1 and the Wealth Management Agreement Ex.P2 are carefully perused, it is quite clear that before coming into existence of accused no.2 - firm, the accused no.1 induced the complainant to deposit the amount in the accused no.2 - firm as if it was in existence at relevant point of time. Though the accused no.2 firm came into existence on 14/12/2013, the accused no.1 had entered into Wealth Management Agreement with the complainant on behalf of the accused no.2 -firm on10.12.2013 when it was not at all in existence. This itself makes it very clear that accused no.1 had dishonest intention to cheat the complainant from the very inception. The accused no.1 at the time of receiving the amount from the complainant has falsely pretended that accused no.2 - firm was in 38 Spl.C.No.463/2015 existence and believing the said words, the complainant parted with the amount and thereby dishonestly induced the complainant to transfer the said amount on the part of the accused no.1, as such the accused no.1 has cheated the complainant by not returning either the deposited amount or interest amount as agreed under Wealth Management Agreement Ex.P2. The accused no.1 had dishonest intention to cheat the complainant since from the inception and believing his words, the complainant was made to part with the above said sum of Rs.1,00,000/- and by not returning the said amount or interest, the accused no.1 has caused loss to the complainant. Therefore, accused no.1 made the complainant to deliver a sum of Rs.1,00,000/- and by not returning the said amount as agreed or by not paying the interest has cheated the complainant. There is a dishonest intention on the part of the accused no.1 since from inception as he made the complainant to believe the accused no.2 39 Spl.C.No.463/2015
- firm in existence at the time of entering into Wealth Management Agreement though the said firm came into existence on 19/12/2013. The offence of cheating is established thereby when the accused no.1 induced the complainant to deliver a sum of Rs.1,00,000/- and by not returning the said amount as agreed with interest, has dishonestly cheated the complainant. Therefore, the prosecution with the help of oral evidence of PW.1 to PW.4 and Ex.P1 to Ex.P5 established that the accused no.1 has committed the offence punishable under Section 420 of IPC.
39. So far as the role of accused no.2 and 3 is concerned, as discussed in Point No.1, the accused no.2 and 3 were not at all in existence when Wealth Management Agreement was entered into. There is no overtact on the part of accused no.2 & 3. Hence, I answer Point No.3 partly in the affirmative. 40 Spl.C.No.463/2015
40. POINT NO.4 : In view of the above discussion on Point No.1 to 3 supra, I proceed to pass the following :
ORDER Acting under Section 248(2) of Cr.P.C., the accused No.1-
Mohammed Idhrees is hereby convicted for the offences punishable under Section 9 of KPIDFE Act and Section 420 of IPC.
Acting under Section 248(1) of Cr.P.C., Accused No.1 - Mohammed Idhrees is hereby acquitted for the offence punishable under Section 419 of IPC.
Acting under Section 248(1) of Cr.P.C., Accused No.3- Sri Venkatachalam is hereby acquitted for the offence punishable under Section 419, 420 of IPC and Section 9 of KPIDFE Act.
Acting under Section 248(1) of
Cr.P.C., the Accused No.2 - M/s
Fosterfin Capital Management -
Firm, which is represented by
41 Spl.C.No.463/2015
Accused No.1 and 3 is hereby
acquitted for the offences
punishable under Section 419, 420 of IPC, and Section 9 of KPIDFE Act.
The bail bond of accused No.3 and his surety bond shall stand cancelled.
To hear regarding order on sentence of Accused No.1.
****** (Dictated to the Judgment Writer, transcribed by her, Script corrected and then pronounced by me in open court this the 23rd day of December 2024.) (Satish J. Bali) XLVII Addl. City Civil & Sessions Judgeand Special Judge for CBI Cases, Bengalulru.
***** 42 Spl.C.No.463/2015 ORDER REGARDING SENTENCE In the instant case, the accused No.1 Mohammed Idhrees is hereby convicted for the offences punishable under Sec.9 of KPIDFE Act and also under Section 420 of IPC.
The accused No.1 is secured from judicial custody and is present before the Court.
The Learned in-charge Special Public Prosecutor has vehemently argued that the offences against the accused No.1 for the provisions of law have been proved beyond reasonable doubt. It has been submitted that accused No.1 is involved in similar more than 5 cases and has been convicted in Spl CC 124/2016 on the file of this Court for similar offences. By pointing out all the said aspects, it is her submission that the economic offences are to be viewed very seriously and a stringent view is required to be taken into account. It is also been submitted that the intention of enacting KPIDFE Act was with a sole intention to punish snollygoster 43 Spl.C.No.463/2015 persons who are in the habit of cheating and defrauding the general gullible public. Accordingly, she has sought for imposing maximum punishment as provided under the aforesaid provision of law.
The Learned Counsel for the accused No.1 present before the Court and has submitted that accused No.1 is the sole bread earner in his family and his father and mother are suffering from various ailments and they are to be taken care by the present accused no.1 himself. Further he has submitted that the accused No.1 is in custody for a period of more than 4 years and the same may be taken into account. Accordingly, he has submitted that the Court may take into account of the aforesaid aspects and a lenient view can be taken in imposing punishment to the accused.
The Court has also heard the accused No.1 who has also reiterated the submissions made by his counsel and has further submitted that accused no.1 has to take care of his father who is aged about 44 Spl.C.No.463/2015 more than 71 years and his mother who is aged about 67 years and also his father is a chronic diabetic person, who has underwent open heart surgery recently and has sought to take a lenient view.
Heard the parties and the point that requires to be considered is, what would be the appropriate sentence that could be imposed on the accused No.1.
The Hon'ble Apex Court has time and again reiterated that, in matters of awarding sentence, the court should be cautious and has to consider all the relevant factors to arrive at a just conclusion. It is a cardinal principle of law that the nature and gravity of crime is to be appreciated and not the criminal which are germane for consideration to impose suitable punishment. Further, the Hon'ble Apex Court has directed the trial courts to precisely consider the aggravating and mitigating factors at the time of awarding sentence. If the aggravating and 45 Spl.C.No.463/2015 mitigating factors are appreciated, the same can be culled out as follows;
Aggravating Factors:
1. The accused No.1 has induced the gullible general public and had made them to invest money with a dishonest intention though they were aware of the fact that the financial institution was not in existence at the time of receiving the amount.
2. The accused No.1 had not bothered to repay the amount and was fully aware that the amount could not be repaid.
3. The acts of the accused No.1 was deliberate and intentional one, which would amount to breach of trust amongst public at large.
4. If any lenient view is to be taken, the act would further erode the faith and may lead to draw an inference that the economic offences would be dealt liberally.
5. The accused No.1 is already convicted in Spl.
C.C. 124/2016 for the similar offences on the file of this Court and is involved in nearly 10 similar cases wherein a serious allegations of cheating 46 Spl.C.No.463/2015 and defraud is leveled against him. Apart from that he is also facing similar cases pending against him at Tamil Nadu and record indicates that he was arrested in another case pending at Ariyalur, Tamil Nadu, which would point out that he is facing volley of cases of cheating and taking a lenient view would erode public faith and trust. Mitigating Factors:
a. The accused No.1 has to take care of their family members and accused no.1 is the sole bread earner, wherein his father and mother are suffering from various health ailments. b. The accused No.1 is having deep roots in the society.
On considering the aggravating and mitigating factors, it is noticed that the offence which is committed by the accused No.1 could be termed as white collared offence, which bleeds the economy of the nation. Further, the maxim "Nullum crimen sine lege" which means, the principle of legality in the rule of construing criminal statute is to be in favour of citizens and also the approach should be towards the social welfare. The important aspect of 47 Spl.C.No.463/2015 socio-economic offence is to be considered from the point of view of the harm it has caused to the society at large. Even though the gravity of offence cannot be deciphered easily, the same requires to be considered in a manner which would indicate the mode in which its execution was carried out by the accused. The Hon'ble Apex Court has also specifically laid down the dictum that the Court has to consider the cry of the victim at the time of imposing punishment. It is also been held that the society at large is the sufferer due to the commission of white collared offence by the accused persons.
When the aforesaid aspect is applied to the case on hand, it indicates that the accused have induced the witnesses in the above case to part with huge amount of money. It is to be appreciated that the accused have chosen the persons who had got faith and trust in them and had made necessary investments in their Business.48 Spl.C.No.463/2015
The court has to take care of the right of the victim and the accused. Under the circumstances, the court has to consider imposing of maximum punishment as contemplated under Section 9 of KPIDFE Act. The provision of Sec.9 of KPIDFE Act, would indicate that the accused can be imposed with imprisonment for a term not less than 3 years and which may extend to 6 years and with fine which may extend to Rs.1.00 lakh and also he shall be liable to fine to an amount equivalent to an amount of Rs.5.00 lakhs or where such deposits are quantifiable in terms of money the twice the amount involved. The said provision was inserted by amending the Act of 6 of 2021 which came into effect from 19.02.2021. Prior to that, the provision of law did not stipulate for imposing fine by quantifying the twice the amount of aggregate funds. Under the circumstances, the Court is inclined to award imprisonment by imposing suitable fine both under Sec.9 of KPIDFE Act and under Section 420 of IPC.49 Spl.C.No.463/2015
By considering the said aspects, I proceed to pass the following;
ORDER The accused No.1 - Mohammed Idrees, is hereby convicted for the offence punishable under Sec.420 of IPC and he is hereby sentenced to undergo Rigorous Imprisonment for a period of FIVE years and imposed with a fine of Rs.2 lakhs and in default of payment of fine, he shall undergo a Simple Imprisonment for a period of ONE year.
The accused No.1 is also convicted for the offence punishable under Section 9 of KPIDFE Act and he is sentenced to undergo Rigorous Imprisonment for a period of FIVE years and fine of Rs.50,000/- and in default of payment of fine, he shall undergo Simple Imprisonment for a period of SIX months.
The sentences ordered shall run concurrently and accused No.1 shall be entitled for the period of set off as contemplated under Section 428 of 50 Spl.C.No.463/2015 Cr.P.C., for the period of detention he has already undergone, if any as Under Trial Prisoner in the above case.
Acting under Section 357(A) of Cr.P.C., suitable compensation requires to be ordered to the victims out of the fine amount i.e., PW.1 Smt.K. Bindu.
Accordingly, PW.1 Smt. K.Bindu is awarded with a compensation of
Rs.1,50,000/- (Rupees One Lakh Fifty Thousand only), and the remaining amount is ordered to be forfeited to the State.
In the event of deposit of fine amount, the same shall be forfeited after disbursing the compensation.
Office is hereby directed to furnish the free copy of the Judgment to the accused no.1 forthwith.
The bail bond and surety bonds executed by the accused no.1 stands cancelled.
*** 51 Spl.C.No.463/2015 (Dictated directly on computer to the Typist, Script corrected and then pronounced by me in open court this the 23rd day of December 2024.) (SATISH J. BALI) XLVII Addl. City Civil & Sessions Judge and Special Judge for CBI Cases, Bengaluru.
ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION:
PW.1 : Bindu.K. PW.2 : Altaf Khan PW.3 : Narayanaswamy PW.4 : Giri K.C.
LIST OF MATERIAL OBJECTS MARKED THROUGH PROSECUTION:
Ex.P1 Complaint
Ex.P1(a) Signature of the witness
Ex.P1(b) Signature of the witness
Ex.P2 Original Wealth Management Agreement
Ex.P2(a) Signature of the accused
Ex.P3 FIR
Ex.P3(a) Signature of the witness
Ex.P4 True copy of the Registration Certificate of
Fosterfin Capital Management.
Ex.P5 True copy of the Deed of Partnership.
LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE:
52 Spl.C.No.463/2015
NIL.
List of documents marked through Defence Side:
NIL.
(SATISH J. BALI) XLVII Addl. City Civil & Sessions Judge and Special Judge for CBI Cases, Bengalulru.