Indian Kanoon - Search engine for Indian Law

13. Before I advert the merits of the case, it would be useful to reproduce the provisions as laid down under Section 3 of the TPID Act, Sections 406 and 420 of IPC.

14. Section 3 of TPID Act provides as under:-

"Conviction for Fraudulent default-

3. Any Financial Establishment which (i) fraudulently defaults any repayment of deposit on maturity along with any benefit in the form of Page 13 interest, bonus, profit or in any other form as promised; or (ii) fraudulently fails to render service as promoter, partner, director, manager or any other person or conduct of the business or affairs of such Financial Establishment shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to one lakh of rupees and such Financial Establishment also shall be liable for a fine which may extend to one lakh of rupees:

Provided that in the absence of special and adequate reasons recorded in the judgment of the court, the imprisonment shall not be for less than three years and the fine shall not be less than one lakh of rupees .

Explanation :- For the purpose of this section, a Financial Establishment, which-

(1) commits defaults in repayment of such deposit with such benifits in the form of interest, bonus ,profit or in any other form as promised or fails to render any specified service promised against such deposit ; or (2) fails to render any service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person : or (3) commits such defaults due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such a manner as it involves inherent risk in recovering the same when needed, shall be deemed to have committed a default fraudulently or Failed to render specific service fraudulently.

23. Having gone through the complaint, charge-sheet and more importantly the evidences let in by the prosecution witnesses, it is clear like crystal that the entire genesis of the disputes emanates from the investments made by some of the prosecution witnesses as discussed here-in-above with the company namely Rubi Star Marketing Private Ltd.

24. Section 3 of TPID Act postulates that any essential establishment which firstly; fraudulently defaults any repayment of deposit of maturity doing with any benefit in the form of interests, bonus, profits or any other form as promised; secondly, fraudulently fails to render service as promoter, partner, director, manager or any other person or an employee responsible for management or conduct of the business or affairs of such financial establishment, shall on conviction, be punished with imprisonment for a term which may extend to 10 years, and with fine etc. as stated here-in-above. So, from the above, it is evidently clear that any financial establishment or the persons responsible for the management or conduct of the business or affairs Page 20 of such financial establishment act fraudulently failing to refund the amount as promised would be punishable as envisaged under Section 3 TPID Act. Here, the word ―fraudulent‖ used by the maker of this Act carries enough significance. The TPID Act has not defined the word ―fraudulent‖, however, we find the definition of ―fraudulently‖ in Section 25 of IPC which reads as under:-

43. As I said earlier, that, one of the important features emanated from the definition of Section 3 of TPID Act is that any financial establishment has to commit fraud. From the definition of Section 3 of TPID Act, it is clear that the said provision will be exercised and enforced in case any financial establishment fraudulently defaults to make repayment or fraudulently fails to render service. The evidences being gathered from the prosecution witnesses, it is apparent that none of the prosecution witnesses has stated that during the continuation of the company i.e. Rubi Star Marketing Pvt. Ltd., it defaulted in making repayment or it fraudulently failed to render service. Even if, it is considered that the appellant had styled himself as Managing Director, then also, it is the burden upon the prosecution to establish that he made false representation with dishonest intention in order to Page 29 deceive the investors to whom it was allegedly made. The prosecution witnesses who made investments with the company have stated that they visited the office of the company and thereafter, invested their money. If their statements that Tanay Das styled himself as Managing Director; or somebody introduced Tanay Das as Managing Director of the company; or that Tanay Das i.e. the appellant had represented before them as regards various schemes of the company, even then, the ingredients of section 3 of TPID Act read with sections 405/406/415 and 420 of IPC would not be attracted since there is no evidence that the appellant dishonestly has misappropriated the invested money entrusted to him. More so, there was no entrustment at all upon the appellant since the money was found to be actually invested with the company. In such a case, considering the settled law that every breach of contract would not give rise to offence of cheating or attracts criminal offence, the nature of complaint/disputes in the present case, in my opinion, does not disclose any criminal offence at all and much less any offence under Sections 406/420 of IPC and Section 3 of the TPID Act and the present case is a case of purely civil dispute between the parties for which remedy lies before a Civil Court by filing a properly constituted suit.