AP High Court's judgement in full against speakasiaonline

IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH

HON'BLE SRI JUSTICE RAJA ELANGO

 

CRL.M.P.Nos.6459 and 7016 of 2011

and

CRIMINAL PETITION No.5626 of 2011

 

SPEAKASIA ONLINE PTE.LTD.,OFFICE AT SINGAPORE, REP.BY AU.REP

VS

THE STATE OF A.P., THROUGH CID, HYDERABAD & ANOTHER, REP PP.

ORDER:

          This Criminal Petition is filed by the petitioner company namely Speakasia Online Pvt. Ltd. represented by its Authorised Representative Mr. Charan Kumar, under Section 482 Cr.P.C., seeking to quash the proceedings in F.I.R.No.30 of 2011 on the file of the Station House Officer, C.B.C.I.D., Hyderabad, registered on the basis of the complaint given by the 2^nd respondent.

The petitioner company was arrayed as an accused in F.I.R.No.30 of 2011 for the offences under Sections 420 of I.P.C. and 4, 5 and 6 r/w 2(c) and 3 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (for short “the Act”).

The contents in the complaint are as follows:

i)        The business of the company is told as Online survey. The joining fee of the company is Rs.11,000/-. One must get enrolled into the scheme to join others into the scheme for commissions. Huge income is promised by the company within a short span of time. The scheme of the company is Binary scheme. Binary scheme means one person has to enrol two persons and again these two persons have to enrol two persons each and again these four persons have to enrol two persons each and this chain continues endlessly. As the network and chain of members get extended, the upline members will get more commissions.

ii)       It is promised by the company that the commission is paid not only on the personal efforts of joining members into its scheme but also on the efforts of joining new members into the scheme.

iii)      The promoters of the scheme very well knew that it is certain that the scheme was impracticable and unworkable making tall promises and for the benefit of very few who have joined the scheme at the initial stage. If each person keep on enrolling two persons, at the 15^th or 18^th  level all the Indian population and at the 24^th level all the World population will become the members of the company and there would be no member left to join/enrol into the scheme of new members by the already existing members. This will result in heavy loss of money of the enrolled members. The scheme will collapse under its own weight.

iv)      Because of misrepresentation and deceptive words, nearly 19 lakh people have joined into the scheme of the petitioner company all over India and the company got quick and easy money of Rs.5000 crore by cheating and looting all these 19 lakh people.

This Court on 13.07.2011 passed the following order:

“There shall be interim stay of arrest of Officials/Employees belonging to the petitioner company, but investigation can go on.”

Respondent Nos.1 and 2 filed petitions in Crl.P.M.P.Nos.6459 of 2011 and 7016 of 2011 respectively, with a prayer to vacate the interim stay granted by this Court on 13.7.2011.

The main contentions raised by Sri Vedula Venkata Ramana, Senior Counsel, appearing for the petitioner company are as follows:

1)   1)     First Information Report can be registered only for commission of an offence. The First Information Report should state the manner in which the offence committed. In the absence of any commission of offence, there cannot be any registration of First Information Report.

2)   2)     The entire complaint does not disclose any offence as stated in the First Information Report.

3)   3)     The complainant lodged the complaint in expectation of loss of money to the public, even prior to commission of any offence. The complaint does not disclose about the manner in which the subscribers are cheated and also the modus operandi of the petitioner company.

4)   4)     The allegations made in the complaint do not attract an offence under Section 420 of IPC.

5)   5)     Section 511 of IPC is also not registered in the First Information Report.

Hence, the prosecution cannot claim that an attempt was made to commit the offence.

The learned Senior Counsel, to substantiate his contentions, relied on a decision in “State of West Bangal and others Vs. Sanchaita Investments and others”[1][1]. In the said judgment, the learned Senior Counsel has drawn the attention of this Court regarding his first contention that there cannot be any First Information Report, when cognizable offence is not committed. He further submitted that in the said case, the Apex Court held that to attract an offence under the provisions of the Money Circulation Scheme, the following ingredients should be there:

A.      A.      there must be a scheme;

B.      B.      there must be members of the scheme;

C.       C.       the scheme must be for the making of quick or easy money on any event or contingency relative or applicable to the enrolment of members into the scheme or there must be a scheme for the receipt of any money or valuable thing as the consideration for a promise to pay money on any event or contingency relative or applicable to the enrolment of members into the scheme;

D.     D.     the event of contingency relative or applicable to the enrolment of members into the scheme will however not be in any way affected by the fact whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscription.

The learned Senior Counsel also relied on a decision in “Indian Oil Corpn. Vs. NEPC India Ltd. and others”[2][2] wherein the principles of exercise of jurisdiction under Section 482 of Cr.P.C. are reiterated by the Apex Court on the basis of its earlier judgment.

The learned Senior Counsel further relied on a decision in “Abhayanand Mishra Vs. State of Bihar”[3][3] to substantiate his arguments with regard to preparation and an attempt to commit an offence.

In contra, the learned Public Prosecutor has submitted that the First Information Report discloses cognizable offences and in view of the order passed by this Court on 13.07.2011, the Investigating Agency proceeded with the investigation. He stated the following facts before this Court for consideration:

                i.                               i.            During the course of investigation on 25.06.2011 two franchises of Vijayawada by names (1) Devireddy Srinivasa Reddy and (2) Lanka Venkata Ayyappa Swamy were arrested as A.2 and A.3 and documents were seized pertaining to the bank accounts, agreements, cell phones and laptop from their possession and sent them for judicial custody. According to the confession of the statements of A.2 and A.3 that on attracting the advertisements of the petitioner company, with a view to earn more money in easy way by attending online simple surveys and also to enrol panellists, they joined as franchises to the petitioner company in Andhra Pradesh by depositing Rs.3 lakh each. The modus operandi of the company is if a person got registered in petitioner company, he should pay an amount of Rs.6,000/- for six months and Rs.11,000/- per annum. Further, the person required to furnish subscription code, personal details including bank account details. When he becomes panellist, once he completes the surveys, he will get Rs.500/- for each survey. The subscription is valid for 12 months. The method of survey is that the petitioner company will put a questionnaire to the subscriber about a product and its performance.

              ii.                             ii.            The I.O. visited the Registrar of Companies and caused enquiries about the registration of the alleged companies namely (1) Seamless Outsourcing LLP, Mumbai, (2) Kritanz Management & Allied Services, Mumbai, and (3) Tulasiyat Tek Pvt. Ltd., Mumbai and also addressed a letter to the Registrar of Companies for furnishing of certain information on registration of above firms.

            iii.                          iii.            On 08.08.2011 the I.O. received the information from the Assistant Registrar of Companies, Andhra Pradesh, Hyderabad in which he stated that no company in the name of “Speak Asia Online Pvt. Ltd.” is found to be registered in the Ministry of Corporate Affairs Registry.

             iv.                            iv.            The I.O. got served notices U/s 91 & 160 Cr.P.C. to (1) Manoj Kumar, CEO, (2) K. Charan Kumar, Regional Manager, and (3) Harender Kour, Global CEO of petitioner company through their advocate Sri S.S.R. Murthy to attend before him on or before 25^th July 2011. Manoj Kumar, CEO and Harendar Kour, Global CEO have not attended so far before the I.O.

The first contention raised by the learned Senior Counsel is that First Information Report can be registered only for commission of an offence. It is true that First Information Report is to be registered on commission of an offence, more particularly, for a cognizable offence. Once a cognizable offence is committed, First Information Report can be registered. But at the same time, some of the provisions in the law enable the Investigating Agency to register First Information Report for mere preparation alone, for example, Sections 120-B, 399 of IPC and 7(1)(a) of the Criminal Law Amendment Act. Further, whether an offence committed or not always depends upon the ingredients mentioned in the provision of law.

Some provisions in the penal laws made the preparation also as an offence. When the provision deals the preparation as an offence, the preparation itself is commission of offence.

In the present case, the offences alleged are under Sections 420 of I.P.C. and 4, 5 and 6  r/w  2(c) and 3 of the Act.

For the sake of convenience, Sections 2(c) and 3 of the Act are reproduced hereunder:

“2(c) of the Act: “money circulation scheme” means any scheme by whatever name called, for the making of quick or easy money; or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions.

Section 3 of the Act -  Banning of prize chits and money circulation scheme or enrolment as members or participation therein:- No person shall promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme.”

          The said provisions, on a mere reading, indicate that there is no need of any loss or misappropriation of funds to attract an offence. Mere informing a scheme, which covered under the money circulation scheme and enrolling members as subscribers, itself is an offence. It is not necessary to further elaborate on the same, since the Sections are unambiguous and clearly indicate the acts which attract an offence.

          The view of this Court is fortified by the decision rendered by the Apex Court in Kuriachan Chacko and others Vs. State of Kerala[4][4].

          As far as the offence under Section 420 of IPC is concerned, this Court is of the view that the said case is registered along with other provisions of the Act. Further, the investigation will disclose whether an offence is committed under Section 420 of IPC.  Wrong mentioning of any provision in the First Information Report itself is not a ground to quash the First Information Report and to stay the investigation.

The facts and circumstances in the 1^st cited case (supra) are totally different from the facts and circumstances of the case on hand. It is also observed in the said judgment, whether an offence is disclosed or not must necessarily depend on the facts and circumstances of each particular case and in considering whether an offence, into which investigation is made or to be made, is disclosed or not, the Court has mainly to take into consideration the complaint or the F.I.R. and the Court may in appropriate cases take into consideration the relevant facts and circumstances of the case. On a consideration of all the relevant materials, the Court has to come to the conclusion whether an offence is disclosed or not.

Further, in the said case, the firm namely Sanchaita Investments offered fabulous interest at 48% per annum to its members and later reduced it to 36% per annum. Such high rate of interest was being paid, even though the loan certificates receipts show that the interest was liable to be paid at 12% p.a. The Apex Court felt that the said facts do not disclose any offence under the provisions of the Act. It is true, in the said facts and circumstances of the case, the essential ingredients of Section 2(c) of the Act are totally missing. The Apex Court also elaborately discussed the said fact and opined that acceptance of money and periodical interest paid by a company do not come within the purview of Section 3 of the Act. But, the facts in the present case are totally different and the invitation made by the petitioner company in the name of “surveys” discloses an offence under the provisions of the said Act.

The learned Senior Counsel further contended that the complainant failed to inform as to how he gathered the material. The same need not be proved, at this stage.

Since there was no stay of investigation, the investigation so far conducted by the Investigating Agency discloses that 21 witnesses were examined and two persons were arrested.  The investigation further reveals that 24 lakh members were enlisted, more particularly, 30000 persons were enrolled in the State of Andhra Pradesh, the money transacted is Rs.2276 crore, Rs.467.17 crore was transferred to Singapore, and so many other incriminating materials are collected.

This Court is not inclined to go into all those things, because the question before this Court is whether the investigation to be proceeded or not and hence, it is not necessary to record the manner in which the investigation proceeded in this case which will cause prejudice to either parties.

In view of the foregoing discussion, this Court is not inclined to quash the First Information Report No.30 of 2011 on the file of the Station House Officer, C.B.C.I.D., Hyderabad, and the interim stay granted by this Court on 13.07.2011 is liable to be vacated.

        Accordingly, CRL.M.P.Nos.6459 and 7016 of 2011 are allowed and the interim stay granted by this Court in Crl.P.M.P.No.5698 of 2011 on 13.07.2011 is hereby vacated and the Criminal Petition is also dismissed. Miscellaneous petitions, if any, filed shall stand closed.

                    __________________                                      

RAJA ELANGO, J

30^th August, 2011

cbs

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[1][1] (1982)1 S.C.C. 561

[2][2] (2006) 6 S.C.C. 737

[3][3] AIR 1961 SC 1698

[4][4] (2008) X S.C.C. Page No.708