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CRM-M-39703-2018 (O&M)
Reserved on: 09th 0ctober, 2018
Decided on:30th October, 2018
versus
RAMENDRA JAIN, J.
Criminal Procedure, the petitioner has assailed the legality and validity of
charge-sheet against him and further order dated 11.1.2017 (Annexure P-3),
conducting joint trial in case FIR no.280 dated 02.12.2002, registered under
(Banning), Act, 1978 ( in short “PCMCS Act”) coupled with Section 420
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Act, 1956.
for registration of a case against petitioner, alleging that the business being
the year 2002 under sections 3 and 4 of the PCMCS Act. Subsequently,
vide letter dated 01.02.2003, addressed to Chief Secretaries of all the States
and Union Territories, Reserve Bank of India informed that its officials
have no power to opine that the business run by M/s Amway company was
not a prize chit or money circulation and that no legal proceedings may be
Investigating Officer, after around seven years, filed a status report before
conscious of the fact that, by now any action against M/s Amway
Company in alleged offence under PCMCS Act, has become time barred, on
the petitioner, wherein he was, for the first time, arraigned as accused by
deliberately adding offence under section 420 IPC, without assigning any
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revive the time barred action against the petitioner under PCMCS Act.
clubbed supplementary challans for conducting joint trial. Vide order dated
Act and section 420 IPC were framed against the petitioner.
trial court, the petitioner preferred revision, which too was dismissed vide
the learned trial court erred in taking cognizance and framing charges
against the petitioner under sections 3 and 4 of the PCMCS Act, losing
sight of the fact that under provisions of Sections 468 and 469, Code of
and ignoring the status report filed before this court in the year 2009 that no
offence is made out against the petitioner under the aforesaid sections of the
witnesses, for the first time, were recorded under section 161, Code of
420 IPC, i.e., intention to deceive is completely missing. That apart, M/s
Amway company was not arraigned as accused in the FIR. It was registered
against the petitioner only, who was former Director of the company.
absence of the company, not being made as accused. Consequently, FIR and
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revisional court has rightly affirmed order dated 07.01.2017 of the trial
court, framing charges under sections 3, 4 of the PCMCS Act, and Section
420 IPC against the petitioner, on the basis of material available on the
record holding that he, being the Director of the Company, at the relevant
time and responsible for the conduct of its business, which amounted to
money circulation scheme for the distributors as also the company, was
this court finds the instant petition merits acceptance for the reasons to
follow:-
minutely scan the contents of FIR No.280 dated 2.12.2002 (Annexure P-5),
registered against the petitioner alone. The prosecution did not bother to
arraign M/s Amway company as accused for the reasons best known to it.
There are no specific allegations against the Director of the Company. The
12. Faced with this situation, the question that arises for
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the two Judges. The same was resolved in Aneeta Hada versus Godfather
Travels and Tours Private Limited and three other connected petitions
proceedings initiated against the appellants as well as the company. For the
observations:-
that when the company can be prosecuted, then only the persons
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13. Further, His Lordship Hon'ble the Chief Justice of the Apex
hand, relying upon the dictum laid down by three-Judge Bench of the Apex
Court in Aneeta Hada's case (supra) in the case of Sharad Kumar Sanghi
versus Sangita Rane 2015(2) RCR (Criminal) 120 has made the following
mind. The Penal Code does not contain any provision for
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with an offence under section 138 of the Negotiable Instruments Act, 1881,
the Court explaining the duty of a Magistrate, while issuing process and his
to make up his mind for issuing process. If this were not the
tremendous. Even section 204 of the Code starts with the words
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After stating so, the Court analysed Section 141 of the Act and after
section 141 that at the time the offence was committed, the
“10 XX XX XX XX
would reflect, the allegations are against the company, but the
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“ 12 XX XX XX XX
such an order could not have been passed. We have said so for
considered opinion that the High Court should have been well
appellant and that having not been done, the order is sensitively
vulnerable and accordingly we set aside the same and quash the
appellant.”
could be fastened upon the petitioner. Therefore, the FIR and the
offence under section 420 IPC can be added after 10 years, especially when
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and 4 of the Act, had expired in the year 2005, i.e., after lapse of three years
learned counsel for the petitioner, a time barred criminal action cannot be
Chandigarh, lodging FIR No.280 of 2002 under sections 3 and 4 of the Act
against the petitioner, a former Managing Director and CEO of M/s Amway
so on. The police carried on investigating the matter for around 5 years.
out all available evidednce. After that the investigation had been carried
out, but no evidence came to light against M/s Amway India Enterprises.
registration of FIR, police filed a final report (Annexure P-9) under section
173 (2) Cr.P.C against the petitioner, who was Director of the said
Company at the relevant time, under sections 3 and 4 of the Act, coupled
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action, initially lodged under sections 3 and 4 of the Act, deliberately added
Section 420 IPC to launch prosecution against the petitioner on the basis of
Singh, Varun Sharma, Baljit Singh, Smt. Sudesh Kaur, Rajan Khera,
Ramesh Dubey, Narinder Kumar, Smt. Inderjeet Kaur, and Vikrant Sihotra
recorded under section 161 Code of Criminal Procedure. They made almost
similar statements to the effect that they joined the company in the year
2002. They had to pay Rs.1800/- as joining fee and Rs.2600/- for the
products of the company, they would get incentives on the points value
gained. Besides this, they would also earn more profits by getting joined
more and more members in the company. Thus, they were induced by the
company. Though they sold products assigned to them as kits, but could not
get any benefit, inasmuch as the their products were costly. At the time of
joining the company, ID numbers were issued to them, but the same were
refund their amount of Rs.1800/-, they used to hush up the matter on one
pretext or the other. Therefore, the company had committed a fraud with
offence under sections 3 and 4 of the PCMCS Act is three years from the
date of registration of the FIR under sections 468 and 469, Code of Criminal
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read as under:-
period of limitation.
for a term exceeding one year but not exceeding three years.
with the more severe punishment or, as the case may be, the
commence,- --------
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earlier.
(2) In computing the said period, the day from which such
manifest that both the learned courts below did not appreciate that once the
limitation starts, qua a particular offence, the same could not have been tried
Act could have been filed beyond the period of limitation. Even the
prosecution did not file any application for condonation of delay, explaining
plausible reason for not filing the challan against the petitioner within the
22. The learned counsel appearing for the Union territory has not
been able to dispel the contention raised by the learned counsel for the
prosecution under the garb of adding Section 420 IPC in the supplementary
challans submitted before the trial court. Therefore, the impugned order
passed by the trial court framing charge-sheet against the petitioner after a
mind, is cryptic in nature. This court finds support from the judgment
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Cases 34, wherein their Lordships of the Apex Court have held as under:-
23. Now coming to section 420 IPC, which was added in the
alleged offences of the PCMCS Act only on the basis of the statements of
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the above said persons, who had made almost similar statements (cut and
it clearly reveals that no case is made out under section 420 IPC, inasmuch
as the basic ingredient of the offence of alleged cheating, i.e., the element
missing in the instant case. The so-called witnesses, referred to above, did
them at the time of joining the company, providing them kits of sale
making them aware of refund of the amount within 90 days from their
not sold out by such indolent /passive members, who are quite reluctant in
not making any endeavour to join new members under them, that too finding
fault with the products being costly by investing a paltry sum of Rs.4400/-
in the company, therefore, did not make out a case against the petitioner
under section 420 IPC. In fact, this business, on the face of it, is a smart
one, of such distributors who are, in reality, keen to gain extra monetary
the market, enabling them to earn points assigned to each product and
transparent that seminars are organised by the company under the able
flourishing their business and with their able assistance, they earn extra-
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24. Only on the basis of few of the alleged witnesses, who were
idle and indolent, having in mind to earn easy money, without doing hard
work in their life, lowered down the reputation of the company, stating that
the amount of Rs.1800/- as subscription fee was not refunded to them. The
for the refund of money. It is not a money circulation scheme. Rather, the
stated that despite demand, money was not paid to them by the company.
No material has been brought on the record on the basis of which, it could
be determined that there was any allurement on the part of the company to
considered opinion of this court, this court does not find any deception or
25 It is not the case of the prosecution that kits of the sale products
the scheme to return kits of products to the company within 90 days of their
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made out in any manner. Moreso, no specific allegations have been levelled
against the petitioner, who was a Director of the Company at the relevant
time, for cheating any of the distributors. The alleged allegations with
26. The contention of the learned counsel for the Union Territory
that it was a money circulation scheme and there was allurement on the part
of the company by organising seminars with the sole motive to attract more
customers for joining more and more members earning huge profits and not
to make them millionaires in a night, does not find force and the same, being
and is accepted qua the petitioner only. Accordingly, FIR No.280 dated
(Annexure P-2) and dated 11.01.2017 (Annexure P-3) passed by the courts
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