Delhi District Court
State vs . Ankit Handa on 2 January, 2009
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STATE VS. ANKIT HANDA
FIR NO. 176/08
P.S ECONOMIC OFFENCES WING
U/s 420/120B of IPC & U/s 4, 5, 6 of
Prize Chits & Money Circulation Scheme
(Banning) Act 1978
2/1/09
Present : Ld. APP Sh. Praveen Kumar Samadhia for the State.
: Counsel Sh. Anil Bhargav for the applicant.
: None for the complainants.
1. This is second application for bail preferred by the accused Ankit Handa. First application
of this accused was dismissed by this court prior to filing of the chargesheet, on 28 Nov
2008. Chargesheet was filed on 13/12/08 and cognizance was taken on that very day for
offences U/s 420/120B of IPC & U/s 4, 5, 6 of Prize Chits & Money Circulation Scheme
(Banning) Act 1978.
2. Brief facts of this case are that the accused is stated to be managing director and promoter of
Handa Technology and Marketing Pvt Ltd Co(hereinafter referred to as the accused
company) . The said company launched a scheme called multilevel marketing between
March 2008 to June 2008. The company offered huge commission and assured returns to the
investors. The company induced various public persons to invest amount ranging from Rs.
1500/ to Rs 15,000/ to become the member of the scheme and assured returns of Rs.
57,911/ to about Rs.6/ lakhs after three months in weekly installments. The company also
offered commission of Rs 12,599/ if a member is introduced by any existing member in the
scheme of Rs 1500/. The company further announced high rewards to any member who
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 1 of 13
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attracts more than 10 new members in the scheme. The company did not pay the money to
the investors as per the promise. During investigation the investigating agency examined
180 public persons who stated active role played by the present accused in inducing them to
invest money. The investigating agency found that the accused company was not carrying
on any kind of business nor was manufacturing any product nor the company had any
agreement with any other manufacturer or supplier company to fulfill the promise of
marketing of products by the accused company. Investigating agency claims that the
returns promised by the accused company were unrealistic and practically impossible. The
accused did not get any permission or registration from the Reserve bank of India as was
required under section 45 1A of RBI Act 1934 and therefore the accused company could not
have accepted any investment from general public. The company also claimed to have a
branch office located at London which was nonexistent address which proves the dishonest
intention of the company. The company promised returns as high as Rs 57,911/ after three
months, Rs. 1,71,990/ after one year and, Rs.34,39,800/ after another one year, which was
practically impossible. When the investors demanded their money back the company closed
the office and the accused went underground. It is the claim of investigating agency that
during investigation as many as 13,750 application forms of various public persons for
found to be received in the office of the company. The accused is claimed to have collected
approximately Rs.3/ to Rs3.5/ crores from various public persons. The investigating
agency chargesheeted the accused for the offences under section 420/120B IPC and under
section 3/4/5/6 of The prize chits and money circulation scheme (banning) Act 1978.
Cognizance for these offences has already been taken by this court.
3. On behalf of accused it is argued that there is no cheating involved in this case nor there is
any offence made out under The prize chits Act. It is claimed that the accused company was
dealing in the business of marketing various products which is called a multilevel marketing
and various public persons who successfully marketed the products of the accused
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 2 of 13
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company made good profits and were satisfied. It is only few people who were unable to
sell the products and who joined hands with the competitors of the accused company in
order to ruin the accused company. It is claimed that those persons who were unable to
market the product of the accused company and expressed their inability to the accused
company, the accused company settled their accounts and returned their money. The
accused company is still willing to make payment of Rs 3/ lakhs without prejudice to the
rights and contentions. It is also claimed that investigation is complete, chargesheet has
been filed and there is no possibility of tampering with the evidence which is mostly
documentary in nature and the maximum punishment provided for the offences is up to
seven years therefore the accused being firsttime offender would in any case be entitled to
the provision of Probation of offenders Act and therefore should be enlarged on bail.
Accused claims clean antecedents.
4. It is argued that in the facts of the present case The prize chits Act 1978 does not apply. It is
claimed that prize chits is really a form of lottery and in the present case there being no such
lottery system the offence does not get attracted. The ld counsel for the accused placed
reliance upon the cases of State of West Bengal and others vs Swapan Kumar guha and
others A. I. R. 1982 Supreme Court 949; Kudasu Rajanna vs State of Andhra Pradesh
2005 criminal law journal 190 and the case of Lambert Kruger and others vs NCT of
Delhi 2003 IV AD (criminal) Delhi High Court 719.
5. Section 2 (c) of The prize chits Act 1978 defines 'money circulation scheme' as any scheme,
by whatever name called, for the making of quick or easy money, or for the receipt of any
money valuable thing as the consideration for the promise to pay money, on any event or
contingency relative or applicable to the enrollment of members into the scheme, whether or
not such money or think it is derived from the entrance money of the members of such
scheme or periodical subscriptions. Section 3 of the said that banks prize chicken money
circulation scheme or enrollment as member or to the situation they are in. Section 4
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provides punishment for contravention of provisions of section 3 and the maximum
punishment provided is three years. Section 5 provides punishment for printing or
publishing any ticket or other document for the use in the prize chits and money circulation
scheme. Section 6 of the said that provides that when an offence under this Act has been
committed by a company every person who at the time the offence was committed was in
charge 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.
6. In the present case when the accused company accepted money from various public persons
with the promise to pay more money on the contingency of enrollment of other members
into the scheme, the offence of money circulation gets attracted. It is immaterial that the
scheme has been given a name of multilevel marketing under the garb of marketing
products of the accused company. Mind it that the accused company was not
manufacturing any kind of product. The pamphlet issued by the accused company does not
make it clear as to what product is being marketed. The pamphlet published by the accused
company is most vague in describing the scheme of the company. It appears to have been
prepared only to cover up and to give a different name to the money circulation scheme.
When the accused company did not manufacture any product it is beyond understanding as
to how such high returns were promised. The accused company had no agreement with
any other manufacturer or distributor to market such products. It appears that the money
which was being offered and promised to the public persons was out of the entrance money
of other members who were to be enrolled into the scheme or out of their periodical
subscriptions. These allegations clearly attract the offence of money circulation. The said
offence is punishable under section 4 of the said Act.
7. The judgments relied upon by the counsel for accused are of no help to the accused. In the
case of Sawapan Kumar Guha the facts were that one partnership firm was offering interest
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in the rate of 48 percent per annum to its members on the loan whereas the loan certificate
receipts show the rate of interest to be 12 percent only. It was the case of investigating
agency that the amount in excess of 12 percent so paid by the accused company was from
money circulation scheme. It was in these facts honourable Supreme Court held that the
said Prize Chits Act does not bar any and every kind of activity for making quick or easy
money. It is only those acts for making quick or easy money which were dependent upon
the happening or not happening of any event or contingency relative or applicable to the
enrollment of members into the scheme which gets covered. In the said case however high
the promised rate of interest may be in comparison with the agreed rate but there was no
event or contingency relative or applicable to the enrollment of any members into the
scheme therefore the offence was not attracted. In the present case I have already discussed
above that there was promise made by the accused company to various public persons to
get higher commission dependent upon the eventuality of enrollment of more number of
members. Therefore in the present case the offence of money circulation gets attracted.
8. The second case relied upon by the accused of Kudssu Rajanna vs. State of A.P. is also
distinguishable on the facts since in that case the accused enrolled 1500 members by taking
deposit of Rs 200 per month for a period of 5 and 1/2 years and he issued various receipts
with maturity date. The accused was convicted by the trial court. The conviction was
challenged on the ground that under section 3 The Prize Act a member who was involved or
has participated is made an accused and therefore on the basis of sole public witness in that
case who was also one of the member, conviction could not have been founded since it
would be in the nature of accomplice evidence without proper Corroboration. It is on these
grounds that the conviction was set aside by honourable High Court. Hon High Court did
not lay down that no offence of money circulation is made out. In the case before us trial is
yet to begin and therefore this case is of no help at all.
9. Reliance is further placed upon the case of Lambert Kruger where the accused company
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 5 of 13
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entered into an agreement for contract of sale of gold coins amounting to Rs 49,300 each on
the purchaser making a down payment of Rs 15,000 towards each contract for sale. It was
argued before Hon Delhi High Court that since it was a case of contract for sale of product
and it did not involve any promise to pay money on the event of contingency relative to the
enrollment of members therefore it did not fall within the definition of money circulation. It
was further argued that there was neither draw for reward nor there was any prize of gift in
cash or kind, therefore it was not even prize chit. It was in these circumstances Hon Delhi
High Court held that the terms of the agreement for contract of sale do not fall under the
money circulation scheme as none of the essential ingredients of money circulation scheme
or prize chit were attracted. These facts are different from the present case where high rate
of commission was offered to the investors based upon the contingency of enrollment of
other members into the scheme.
10. It is next argued by learned counsel for the accused that the offences under the prize Act are
bailable since section 4 of the said Act provides a maximum punishment of three years. He
has placed reliance upon the case of Joint commissioner of Customs Pune vs Kulbhushan
Goyal Crl. Misc. number 71789/2005 dated 31st October 2006 delivered by honourable
Supreme Court. In the said case it was argued that section 135 of the Customs Act which
provides imprisonment for a maximum period of three years or fine or both was bailable.
Honourable Supreme Court held that the offences under section 132 and 135 of the Customs
Act are compoundable, noncognizable and summary triable offences with a maximum
punishment of three years therefore bailable. Reliance was further placed upon the case of
Subash Chaudhary vs. Deepak Jayala 2005 (179) ELT 532 (Bombay) where also it was held
that since offence under section 135 (1) (ii) is a non cognizable offence due to non obstante
clause in section 104 and secondly it is triable summarily by Magistrate by virtue of section
138 therefore it is bailable.
11. In the present case before us neither the offence under the prize chit Act are non cognizable
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 6 of 13
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offences nor are triable summaririly therefore these two judgments are distinguishable on
the facts of the case and are of no help to the case of the accused. It may be mentioned here
that Hon Delhi High Court in the case of Om Prakash vs. State (NCT of Delhi) In Bail
application no. 1372/2005 dated 22/62005 delivered by Hon'ble justice B.D. Ahamad, held
that word 'punishable' carries the meaning liable to be punished. Thus where a maximum
punishment is provided for an offence the section has to be construed in a manner that upon
conviction the court has discretion to impose maximum sentence. Section 10 of the Prize Act
makes all offences under the act to be cognizable. In such circumstances section 4 of the
Prize chits and Money circulation scheme (banning) Act which is punishable with maximum
three years sentence has to be nonbailable.
12. Learned counsel for the accused next argued that in case the prosecution argues that the
facts of the present case attracts the offences under the prize chits and money circulation
scheme banning Act, which is a special act, the prosecution cannot prosecute the accused for
the penal offences. It is argued that General law has to give way to special laws. In support
of this contention learned counsel for the accused placed reliance upon the case of Jatinder
Gupta and others vs. union Territory Chandigarh in 1994 (2) CC Cases 562 High Court;
wherein it was held that an accused cannot be tried for the offence of cheating when he was
also booked for offences under section 75 of the Standards of Weight and Measurement Act
1976 for selling cement with lesser quantity in bags. It was held that a general provision has
two yield to a specific provision. Such an observation was given by honourable High Court
on the ground that section 75 of the Act of 1976 operates as a bar for trial under IPC. There
is no such bar under the prize Act that if a person commits offence of cheating under IPC he
cannot be tried for such an offence if an accused is booked for the offences under the prize
chits Act.
13. Reliance is next placed upon the case of JK cotton spinning and weaving Mills Co Ltd vs
State of U. P. AIR 1961 Supreme Court 1170. The facts of the said case are absolutely
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 7 of 13
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distinguishable and are not applicable to the facts of present case. In that case while dealing
with the provisions and rules of U. P. industrial dispute Act honourable Supreme Court
held that where there is a conflict between specific provisions and general provision, specific
provision must prevail over general provisions. It was held that general provisions are
applicable only to such cases where it is not covered by special provisions. The said the
judgment does not anywhere hold that if a person commits offence under IPC as well as
some special Act he cannot be booked so.
14. Reliance is further placed upon the case of Delhi administration vs Ram Singh AIR 1962
Supreme Court 63 wherein honourable Supreme Court held that when a special Act
provides that the particular offence under the said Act can be investigated by special police
officer only and not by any other police officer it has to be implemented. This judgment is of
no help to the accused in any manner.
15. Reliance on further placed upon the case of Dr V. J. A. Flynn vs Mr S. S. Chauhan 1996 JCC
424 where facts were the accused was leaving for Sydney with certain coins which was
suspected to be antiquities and the export of which was prohibited under section 3 of the
Antiquities Act. The accused was prosecuted for offence under section 135 of the Customs
Act in 1962 on a complaint filed. The accused preferred a quashing petition on the ground
that at the most prosecution could have been launched under the antiquities Act and not
under the Customs Act. After examining various provisions of the Customs Act and the
Antiquities Act, Hon'ble Delhi High Court held that the prosecution at the most could have
been for the offence of Antiquities Act and not the Customs Act. It was held that the offence
committed by the accused was one under the Antiquities Act which bans export of such
coins which fall within the definition of antiquity. It was further held that under the
provisions of the Customs Act at the most confiscation of the antiquities could have been
done and not prosecution under the Customs Act. Section 25 of the Antiquities Act also
creates a bar with regard to the prosecution under the Customs Act and therefore it was
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 8 of 13
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held that there could not have been any prosecution under the Customs Act. Again this
judgment also does not lay down that where an act committed by an accused makes it an
offence under the provisions of Indian penal code as also under the provisions of some
special Act, the accused cannot be tried for both the offences. In my considered view, for
example in the present case when the accused committed cheating of public person by
inducing them and also committed the offence of money circulation under the special
provision, both the prosecution can be continued simultaneously.
16. Reliance is further placed upon the case of State of Bihar vs Chander Bhushan Singh 2001 (1)
RCR criminal 137. In the said case the accused persons was caught redhanded while
carrying away railway cement unlawfully for sale. They were being prosecuted for offences
under the Railways property unlawful possession Act 1966. They challanged their
prosecution on the ground that sub inspector of railway protection Force who submitted
chargesheet against the accused was not a police officer within the meaning of section 173 of
the code of criminal procedure and upon his report the magistrate could not have taken
cognizance. The said case again does not help the case of accused at all as it does not lay
down that there cannot be simultaneous prosecution for penal offences and for special Act.
17. Learned counsel for the accused next contended that there was no dishonest inducement
which is required for the offence of cheating as everything was made clear in the pamphlet
before anybody became a member of the multilevel scheme. Perusal of statement of the
victims reveal clear inducement by the accused to some of the investors by the present
accused who was none other than managing director of the accused Co. Dishonest intention
of the accused is clear from the fact that from the fact as discussed above together with the
fact that the accused Co mentioned one branch office at London which was not existing and
when the public persons demanded their money back the office was closed and the accused
ran away. The offence of cheating the does get attracted in the facts of the present case and
a large number of public persons have been cheated.
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 9 of 13
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18. Learned counsel for the accused then placed reliance upon the case of Sushil Ansal vs CBI
1999 (1) JCC Delhi 12; Ashok Dhinngra vs. state 2001 (1) JCC SC 178; Sanjay Chaturvedi vs
State 2006 (3) JCC (NI) 241; Court on its own motion vs State through CBI 2004 (1) JCC 308;
Anil Mahajan vs. Commissioner of Customs 2000 (2) JCC Delhi 302; and Smt Runu Ghosh vs
State 64 (1996) Delhi Law Times 474, in order to claim that the accused should be enlarged
on bail in the present case. I've gone through these judgments. There cannot be any Straight
jacket formula for grant or refusal of bail. Law is well settled that the discretion of bail has
to be exercised on the of facts and circumstances of each case keeping in view the gravity of
offence and all other factors.
19. In the present case the accused cheated a large number of public persons. Although out of
thousands of cheated public persons only around 180 people could be examined by the
investigating agency but the very fact that more than 13,000 applications were recovered
from the office of the accused reveals that a large number of public persons have been
cheated. The cheated persons not only belong to Delhi but the victims may belong to any
place in India and a victim who is residing far away from Delhi would not like to come to
Delhi and incur more expenses when he has already lost money. Such economic offences
are to be treated seriously. Economic offences are ruining the economy of this country and
in my considered view serious view has to be taken to such offences. Although the accused
claims that the accused is ready to make payment of Rs.3/ lakhs without prejudice and the
accused is also stated to be prepared to settle the matter with the persons who have already
been examined by the investigating agency and also he is prepared to settle the accounts of
other persons who may come forward. But in the present case the amount involved is
crores of rupees which has been cheated. It is not a case where accused has already settled
the matter with the victims but the accused is asking bail for settling the matter. In my
considered view in such serious offences where crores of rupees have been cheated by
inducing thousands of innocent public persons, such practice should not be encouraged.
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 10 of 13
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20. In State of Gujarat v. Mohanlal Jitamalji Porwal and another, (AIR 1987 SC 1321).
1987 Cri LJ 1061 in para 5 it was observed by hon'ble supreme court;
"...........The cause of the community deserves better treatment at the hands of the Court in
the discharge of its judicial functions. The Community or the State is not a persona non grata
whose cause may be treated with disdain. The entire community is aggrieved if economic
offenders who ruin the economy of the state are not brought to book. A murder may be
committed in the heat of moment upon passions being aroused. An economic offence is
committed with cool calculation and deliberate design with an eye on personal profit
regardless of the consequence to the Community. A disregard for the interest of the
community can be manifested only at the cost of forfeiting the trust and faith of the
community in the system to administer justice in an even handed manner without fear of
criticism from the quarters which view white collar crimes with a permissive eye unmindful
of the damage; done to the National Economy and National Interest."
21. In Ram Narain Poply v. Central Bureau of Investigation AIR 2003 SUPREME COURT
2748= 2003 AIR SCW 3119, three judge bench comprising of justice M. B. SHAH, B. N.
AGRAWAL AND A. PASAYAT, JJ. It was observed in para 381;
"Funds of the public bodies were utilized as if they were private funds. There was no
legitimacy in the transactions. Huge funds running into hundreds of crores of MUL, a
Government company, were diverted and all the concerned accused persons A1, A3 an A
5 played dubious roles in these illegitimate transactions. Their acts had serious
repercussions on the economic system of the country, and the magnitude of financial impact
involved in the present appeal is only tip of the iceberg. There were several connected cases
and interestingly some of the prosecution witnesses in the present case are stated to be
accused in those cases. That itself explains the thread of selfperseverance running through
their testimony. Therefore, the need to pierce the facadial smoke screen to unravel the truth
Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 11 of 13
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to lift the veil so that the apparent, which is not real can be avoided. The proverbial red
herrings are to be ignored, to find out the guilt of the accused."
(Para 383) "Unfortunately in the last few years, the country has seen an alarming rise in
whitecollar crimes which has affected the fibre of the country's economic structure.
These cases are nothing but private gain at the cost of public, and lead to economic
disaster."
22. In Director of Enforcement v. P. V. Prabhakar Rao AIR 1997 SUPREME COURT 3868=
1997 AIR SCW 3792 three judge bench comprising of justice M. K. MUKHERJEE, S. P.
KURDUKAR AND K. T. THOMAS, JJ. It was observed in para 10,
"The most glaring feature which even the respondent did not repudiate is the magnitude of
the criminal conspiracy hatched, the ingenuity with which the cabal was orchestrated and the meticulousness with which it was implemented and the colossal amount of foreign exchange siphoned off from the country. It is not disputed that whomsoever perpetrated this grave economic offence deserves to be dealt with sternly under law."
23. In AIR 1996 SUPREME COURT 977 "State of H.P. v. Pirthi Chand"= 1996 AIR SCW 422 In para 13 it was observed that an accused involved in an economic offence destabilises the economy and causes grave incursion on the economic planning of the State.
24. In AIR 1988 SUPREME COURT 1106 "V. K. Agarwal v. Vasantraj Bhagwanji Bhatia" it is observed:
"The fact that 20 years have elapsed since the date of the seizure of gold under Customs Act. 1962 and Gold (Control) ACT. 1968 (November 15, 1968) would be no ground for Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 12 of 13 : 13 : not proceeding further with the matter inasmuch as the offence in question was a serious economic offence, which undermines the entire economy of the Nation. The delay occasioned in the working of the judicial system by the ever increasing workload cannot be the ground for justifying the delay. (Para 9)
25. In AIR 1976 SUPREME COURT 1527 "South India Coir Mills Poockakkal, M/s. v. Additional Collector of Customs and Central Excise"in para 12 it is observed;
"In cases of economic offence and specially in relation to the law of Foreign Exchange no leniency in the quantum of punishment is warranted.............."
26. In 2001 CRI. L. J. 4475 "Champakbhai Amirbhai Vasava v. State of Gujarat" It is held that in Serious economic offence of misappropriation of public amount to tune of Rs. 6,00,000/ committed by bank employee cannot be viewed lightly as it would shake confidence of public in scheduled banks. Bail cannot be granted merely on ground of long detention or that there are no chance of his absconding or about tampering with evidence.
27. In the facts and circumstances keeping in view the serious nature of offence the bail application of the accused is dismissed. Copy of this order be given dasti to the investigating officer as well as to the Counsels for the accused and victims.
DIG VINAY SINGH ACMM03(EOW) ROHINI / DELHI / 2/1/2009 Order in State Vs. Ankit Handa / FIR no. 176/08 / PS EOW / dtd.. 2/1/09 pg 13 of 13