Madras High Court
Bharatharaj .. Revision vs The State Represented By on 21 April, 2015
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 21.04.2015 CORAM THE HONOURABLE MR.JUSTICE S.NAGAMUTHU Crl.R.C.(MD)NO.447 of 2013 and M.P.No.1 of 2013 Bharatharaj .. Revision Petitioner Vs. 1.The State represented by The Inspector of Police, District Crime Branch Theni District. .. Respondent 2.R.S.Muthiah S/o.Suriliandi Gounder, Kamayagoundanpatti Uthammapalayam Taluk Theni District .. Respondent/ De-facto Complainant Prayer: Criminal Revision Petition filed under Section 397 r/w 401 Cr.P.C., against the order dated 18.01.2013 passed in Cr.M.P.No.304 of 2012 in C.C.No.4 of 2009 on the file of the Special Court for TNPID Cases, Madurai. !For Petitioner :: Mr.D.Malaichamy ^For Respondent :: Mr.K.Chellapandian Addl. Advocate General assisted by Mr.P.Kannithevan Govt. Advocate (Crl.side) :ORDER
The petitioner is the 8th accused in C.C.No.4 of 2009 on the file of the Special Judge under the Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, (in short 'TANPID Act'). Totally there are as many as 11 accused in the case. It is reported that the accused Nos.3,5 and 6 have already been discharged. The remaining are now facing the prosecution. These accused are stated to have committed offences punishable under Sections 406, 420 read with Section 34 IPC and Section 5 of the TANPID Act. Seeking for discharge, the petitioner filed Cr.M.P.No.304 of 2012 before the lower Court. By order dated 18.01.2013, the trial Court dismissed the said petition. As against the same, the petitioner is before this Court with this revision.
2. I have heard the learned counsel for the petitioner and Mr.K.Chellapandian, learned Additional Advocate General, for the State and I have also perused the records carefully.
3. The case of the prosecution in brief is as follows:
The first accused Sri Seetharam Investments is admittedly a Financial Establishment as defined in the TANPID Act. It is an unregistered Firm, of which, all the other accused are partners. The 2nd accused Mr.R.Jakkaiappan was the Managing Partner of the said Establishment. Admittedly, the petitioner was also a partner of the said Establishment.
3.1. According to the further case of the prosecution, from 13 persons, the partners of the said Establishment, collected a total sum of Rs.25,80,000/- on various dates and issued appropriate receipts for the same.
The said amount was collected by way of deposit with a promise to return the same with interest. But later on, the Establishment as well as its partners, namely, the other accused had defaulted in repaying the deposit amount with interest as promised. The total amount so defaulted works out to Rs.47,91,550/-. Despite several demands made by the depositors, who are the witnesses in the present case, the accused had failed to pay the said amount. This act of the accused, according to the prosecution, amounts to offences under Sections 406 and 420 read with 34 IPC and Section 5 of the TANPID Act.
4. But in this revision, it is contended that the petitioner was never in-charge of the day to-day affairs of the Establishment and therefore, he cannot be prosecuted for offence under Section 5 of the TANPID Act. It is further contended that to make out the offences under Sections 406 and 420 read with Section 34 IPC, absolutely, there are no materials. In respect of the receipts issued on behalf of the Establishment, for the receipt of the deposits from three witnesses by name, Anand, Ponnuram and Ragu, the learned counsel for the petitioner would submit that it is true that the petitioner collected deposits on behalf of the Establishment and also issued the receipts. It is the further contention that the said act of the accused by itself would not go to indicate that he was in-charge of the day-to-day affairs of the Establishment as required under Section 5 of the TANPID Act. Thus, according to the learned counsel, the lower Court was in error in dismissing the petition.
5. But the learned Additional Advocate General appearing for the State would submit that there are enormous materials available against the accused to frame charges under the penal provisions. So far as the offence under Section 5 of the TANPID Act said to have been committed by the petitioner is concerned, the learned Additional Advocate General would submit that the very fact that the petitioner had collected deposits from some of the depositors and issued receipts by signing on behalf of the Establishment would go a long way to show that he was responsible for the affairs of the Establishment. Thus, under Section 5 of the TANPID Act, as of now, there are materials to frame charges. He would further submit that so far as the offences under Sections 406 and 420 IPC are concerned, there are allegations made by the witnesses that the deposits were received by playing deception and since the amount was not later on returned, these offences were also made out.
6. I have considered the above submissions.
7. During the course of the argument, the learned counsel relied on the order passed by this Court in Crl.R.C.No.79 of 2013 dated 05.03.2013, wherein, this Court had discharged the accused Nos.3,5 and 6, who are all only partners of the first accused/Establishment. I have gone through the said order of this Court. The learned Judge has dealt with the overt acts attributed to those three accused. The learned Judge found that there was nothing on record to show that they had anything to do with the management of the affairs of the Financial Establishment, namely, the first accused. It was only on that factual findings, for want of any material against them, this Court allowed the revision case in Crl.R.C.(MD) No.79 of 2013 and discharged the accused Nos.3,5 and 6.
8. So far as the petitioner herein is concerned, according to the learned Additional Advocate General, there are materials to indicate that he was responsible for the management of the affairs of the first accused Financial Establishment. In this regard, admittedly, there are three witnesses, who have spoken to the fact that the deposits were canvassed and collected by the petitioner. They have also stated that for collection of the said deposits, the fixed deposit receipts were signed on behalf of the first accused only by the petitioner herein. Of course, it is true that the 2nd accused, the Managing Partner has also signed. When it was pointed out to the learned counsel for the petitioner as to why the accused herein signed the receipts, the learned counsel submitted that the said fact by itself would not go to indicate that he was in the management of the affairs of the Financial Establishment. This argument does not persuade me at all. If the petitioner is a sleeping partner, who had nothing to do with the affairs of the Financial Establishment, then, as it has been held by this Court in respect of the other accused, so far as the petitioner is also concerned, it can be safely held that he has got nothing to do with the affairs of the first accused. But, here in this case, the first accused had canvassed and collected deposits from the depositors. This would go to show that he was responsible for the management of the affairs of the Financial Establishment. Not only that, he has issued the fixed deposit receipts for having collected the deposits from depositors. If really, he had nothing to do with the management of the affairs of the Establishment, there would have been no occasion at all for him to issue these receipts. Therefore, from the very fact that the petitioner collected deposits and issued fixed deposit receipts to the depositors thereby promising to repay the amount with fabulous interest, it would go to make out a prima facie case that he has committed the offence under Section 5 of the TANPID Act.
9. The learned counsel for the petitioner would make a comparison between Section 141 of the Negotiable Instruments Act and Section 5 of the TANPID Act to say that so far as the TANPID Act is concerned, a partner of the Establishment can be punished, if only he had active participation in the affairs of the Management. But, in my considered view, Section 141 of the Negotiable Instruments Act and Section 5 of the TANPID Act, by the very language used in these provisions, would make that they operate in different directions and they are not in pari materia.
10. Let us have a look into Section 141(1) of the Negotiable Instruments Act and Section 5 of the TANPID Act, which read as follows:
?141.Offences by companies ? (1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was incharge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly; (emphasis supplied) Provided that nothing contained in his sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this chapter.]
11. Section 5 of the TANPID Act:
?5.Default in repayment of deposits and interests honouring the commitment ? Notwithstanding anything contained in Chapter II, where any Financial Establishment defaults the return of the deposit or defaults the payment of interest on the deposit [or fails to return in any kind, or fails to render service for which the deposit has been made], every person responsible for the management of the affairs of the Financial Establishment shall be punished with imprisonment for a term which may extend to ten years and with fine which may extend to one lakh of rupees and such Financial Establishment is also liable for fine which may extend to one lakh of rupees.? (emphasis supplied)
12. A reading of Section 141(1) of the Negotiable Instruments Act would go to show that in the event, the company has committed offence, the person, who was in-charge of and was responsible to the Company for the conduct of the business of the company, as well as the company, are liable for punishment.
13. If we look into Section 5 of the TANPID Act, it shows that every person responsible for the management of the affairs of the Establishment is liable for punishment. The difference is that the person as mentioned in Section 5 of the TANPID Act need not be in-charge of the company and responsible for the conduct of the business of the company, as it is required in Section 141 of the Negotiable Instruments Act.
14. Nextly, under Section 5 of the TANPID Act, it is enough if a person is responsible for the management of the affairs of the Establishment, whereas under Section 141 of the Negotiable Instruments Act, a person should be responsible to the company for the conduct of the business of the company. Thus, Section 5 of the TANPID Act, it is enough if the person concerned is responsible for the management of the affairs of the Financial Establishment and he need not be responsible for the conduct of the business of the company. In other words, a person may be responsible for the management of the company without involving himself in the business of the company. Similarly, a person may be responsible for the business of the company without involving in the management of the company. Likewise, a person may be responsible for the management as well as the business of the company. Under Section 5 of the TANPID Act, the first and third categories of persons are liable for punishment whereas, under Section 141 of the Negotiable Instruments Act, the second and third categories of persons as detailed above are liable for punishment under Section 138 of the Negotiable Instruments Act. Thus, these two provisions do not stand in the same footing.
15. The TANPID Act was brought into force by the State, after having noticed the mushroom growth of Financial Establishments not covered by the Reserve Bank of India, 1934 and that many of those Establishments had defaulted to return the deposits and maturity to the public running to crores of rupees and thereby public resentment, which creates law and order problem in the State. Since this Act serves a larger public interest, more particularly, the avoidance of law and order problem in the State, the State Legislative has used a different language from that of the conventional language, which are used in the enactments like Negotiable Instruments Act, (Vide Section 141 of the Act). Therefore, it can be safely concluded that for prosecuting a person for an offence under Section 5 of the TANPID Act, it is enough, if it is proved that he was responsible for the management of the affairs of the Financial Establishment, which had defaulted to pay the amount to the depositors.
16. Applying the said yardstick to the facts of the present case, if we look into the statement of the witnesses, it is crystal clear that the petitioner had issued the receipts after having collected the deposit amount from various depositors, which would surely go to show that he was also responsible for the management of the affairs of the Establishment. Thus, there are grounds to proceed against the petitioner under Section 5 of the TANPID Act and so he is not entitled for discharge.
17. In this revision, though I have referred to the statements of some of the witnesses, it cannot be concluded that the accused is responsible for the collection of the deposits only from those three persons. I have referred to the statements of these three witnesses alone only to show that he was responsible for the Management of the affairs of the Establishment. If once, it is established that he was in any manner responsible for the management of the affairs of the Establishment, then, he is liable for prosecution under 13 counts, i.e. in respect of each deposit, which the establishment had collected and failed to repay.
18. So far as the offence under Sections 406 and 420 IPC are concerned, it is a matter of appreciation of evidence to find whether the intention of the petitioner was to fulfil the promise or to swindle the deposits. Going by the materials available on record, at this stage, it cannot be held that the accused had not played any deception, when he collected the deposits from the depositors.
19. In view of all the above, I do not find any merit at all in this revision. Accordingly, the criminal revision petition is dismissed. However, I make it clear that the observations, which I have made herein above on facts, except the observations regarding the legal position, are only for the purposes of this revision case and therefore, the same shall not influence the trial Court. But the legal propositions, which I have stated above, shall have binding on the trial Court. Consequently connected Miscellaneous Petition is closed.
21.04.2015 Index :Yes Internet:Yes RR To
1.The Special Court for TNPID Cases, Madurai.
2.The Additional Public Prosecutor, Madurai Bench of Madras High Court, Madurai.
S.NAGAMUTHU, J.
RR Crl.R.C.(MD)NO.447 of 2015 and M.P.No.1 of 2015 21.04.2015