{"id":219484,"date":"2003-04-09T00:00:00","date_gmt":"2003-04-08T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/gold-quest-international-pvt-ltd-vs-the-state-of-tamil-nadu-on-9-april-2003"},"modified":"2016-03-14T02:56:41","modified_gmt":"2016-03-13T21:26:41","slug":"gold-quest-international-pvt-ltd-vs-the-state-of-tamil-nadu-on-9-april-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/gold-quest-international-pvt-ltd-vs-the-state-of-tamil-nadu-on-9-april-2003","title":{"rendered":"Gold Quest International Pvt. Ltd vs The State Of Tamil Nadu on 9 April, 2003"},"content":{"rendered":"
Madras High Court<\/div>\n
Gold Quest International Pvt. Ltd vs The State Of Tamil Nadu on 9 April, 2003<\/div>\n
       \n\n  \n\n  \n\n \n \n IN THE HIGH COURT OF JUDICATURE AT MADRAS\n\nDATED: 09\/04\/2003\n\nCORAM\n\nTHE HONOURABLE MR.JUSTICE V.KANAGARAJ\n\nCRL.O.P. No.2347 of 2003 and CRL.O.P. No. 4617 of 2003\nand\nCrl.M.P.Nos.840, 841 & 1603 of 2003\n\nGold Quest International Pvt. Ltd.,\nrep. by its Director A.Pushpam,\nThe Rain Tree Place, B-Wing,\n9th Floor, #7, MCNichols Road,\nChetpet, Chennai-31.                       ... Petitioner in\n                                               CrlOP.2347\/2003\n\n\n\n\n\nConybio Healthcare (INDIA) Private\nLimited., rep. by its Regional Director,\nNresh K.Thapa,\n137 A Jawaharlal Nehru Salai,\nEekattuthangal,\nChennai-97                                       ...Petitioner  in\n                                              Crl.O.P.4617\/2003\n\n-Vs-\n\n\n1.The State of Tamil Nadu,\n  rep. by its Secretary to\n  Government, Home Department,\n  Fort St. George,\n  Chennai-9.\n\n2.Director General of Police,\n  Crime Branch, Egmore,\n  Chennai.                                      .. Respondents 1&2<\/pre>\n
                                                in both CrlOPs.<\/p>\n
\n\nThe Director General of Police,\nEconomic Offences Wing,\nChennai.                                             ..3rd Respondent in\n                                                       CrlOP.2347\/2003\n\nThe Inspector General of Police,\nEconomic Offences Wing,\nChennai.                                                ..3rd Respondent in\n                                                        CrlOP.4617\/2003\n\n\n<\/pre>\n
                Criminal Original petitions are filed under Section 482 Cr.P.C
\nas stated therein.\n<\/p>\n
For petitioners:  Mrs.Nalini Chidambaram
\n                senior counsel for
\n                Mr.S.silambanan<\/p>\n
For respondents :  Mr.Abudukumar Rajarathinam
\n                Govt.Advocate(Crl.Side)<\/p>\n
:COMMON ORDER<\/p>\n
                The petitioner  in  Crl.O.P.No.2347  of  2003  has  filed  the
\nCriminal  Original  Petition  to  direct  respondents  2 and 3 to withdraw all
\ninstructions issued by them to various law enforcement  agencies  and  to  the
\nPolice  of  various  districts  in  the  State  of  Tamil  Nadu,  whereby  the
\nrespondents  have  asked  these  agencies  to  initiate  action  against   the
\npetitioner  under the Prize Chits and Money Circulation Schemes ( Banning) Act
\n(hereinafter referred to as the Act) and\/or under Section 420 IPC.\n<\/p>\n
                2.  The petitioner in Crl.O.P.No.4617 of 2003  has  filed  the
\nCriminal  Original  Petition  to direct the respondents, their men, agents and
\nsubordinates to restrain from interfering with the business of the  petitioner
\nas  long  as the business is conducted lawfully and without indulging in multi
\nlevel marketing.\n<\/p>\n
                3.  So fa r as the Crl.O.P.No.2347 of 2003 is  concerned,  the
\npetitioner in the affidavit filed in support of the petition would submit that
\nthe  petitioner  company  is  registered  in  January,  20 01 under the Indian
\nCompanies Act and it is a sister concern of  Goldquest  International  Limited
\nbased  at  Hong  Kong;  that  Goldquest  International is a numismatic company
\ndealing with Gold products  and  has  partnered  with  B.H.Mayer’s  Mint  from
\nGermany  to  produce  mint proof premier Numismatic, uncirculated legal tender
\nproducts; that Goldquest International was the largest distributor of  Olympic
\ncommemorative  sets  of  the  Olympic games, which took place in Sydney in the
\nyear 2000; that it has 5,00,000 customers and has operating offices  in  eight
\ncountries;  that  it is one of the world’s largest and most respected fine art
\nand gold coin and jewellery distributors and retailer and works with reputable
\nGovernment and privately owned mints; that as part of its operations in India,
\nthe petitioner has entered into agreements with a number of organizations like
\nthe Shri Kanchi Kamakoti Peetam, the Shivaji Prabhu Charities Trust etc;  that
\nthe  programme is based on Customer Referral System; that the programme offers
\nthe customer, who enrolls with the company on payme nt of a fixed sum, a  gold
\ncoin  of  numismatic  value;  that  if  the customer refers new customers, the
\ncompany pays commission to the said customer; that the petitioner  has  sought
\nthe  approval  of  the  Reserve Bank of India and the Ministry of Commerce and
\nIndustries to import uncirculated coins; that many people  are  benefitted  by
\nthe  company’s  interactive customer referral programme; that the petitioner’s
\nactivities are all strictly legal and transparent.\n<\/p>\n
                4.  The petitioner would further submit that  however,  on  an
\nerroneous  understanding  of  the  scope  of  the  Act,  ten  customers of the
\npetitioner were illegally detained by the Madurai Crime Branch on 24.6.2002 on
\nthe basis of a complaint; that the complainant was not  a  customer  who  felt
\ncheated  by  the  programme of the petitioner; that a member of the public was
\nasked by the police to lodge the complaint and therefore,  the  complaint  was
\nnot  a genuine one and the FIR was belatedly filed with charges under Sections
\n420 and 511 IPC; that later the complaint was disposed of by the  Metropolitan
\nMagistrate,  Madurai  as mistake of fact; that the respondent alleged that the
\nbusiness of the petitioner would  fall  under  the  purview  of  the  Act  and
\nrequested to produce all the records of the petitioner; that on 19.1.2003, the
\nsecond  respondent  had taken into custody all 84 people, officials, employees
\nand distributors of the company; that in the instant case, apart from  getting
\na  gold  coin  of  numismatic  value,  the  customer also gets money by way of
\ncommission  for  enrolling  new  customers  and  in  such  a  situation,   the
\ninvestments  made by the customers cannot be said to have been made for making
\nquick or easy money; that on such averments, the petitioner has  come  forward
\nto  file  the  above  Criminal  Original petition seeking the relief extracted
\nsupra.\n<\/p>\n
                5.  So far as the Crl.O.P.No.4617 of 2003  is  concerned,  the
\npetitioner in the affidavit filed in support of the petition would submit that
\nthe  petitioner  is  a  company  incorporated in India; that Conybio is in the
\nbusiness of importing health care products  mostly  from  Malaysia;  that  the
\npetitioner  has  introduced  30  products in Tamil Nadu; that the products are
\nsold by the petitioner in  India  through  multi  level  marketing;  that  the
\npetitioner  has  registered  several members as distributors and they are paid
\ncommission as an incentive for introducing customers  who  are  interested  in
\nbuying  the  product; that the petitioner offers career to several persons who
\nare suffering due to unemployment, but the law enforcement agencies  in  Tamil
\nNadu  have  taken the view that selling products through multi level marketing
\nviolates the Prize Chits and Money Circulation Schemes  (Banning)  Act,  1978;
\nthat  the  scheme  has been passed by Parliament; that the sale of products by
\nmulti level marketing cannot be construed as a money circulation scheme;  that
\nthe  petitioner apprehends that the respondents will harass the petitioner and
\nits employees by constantly visiting the office of the  petitioner;  that  the
\npromoters of the petitioner are law abiding citizens; that therefore, until it
\nis  clarified  by  the  Court,  the petitioner will not indulge in multi level
\nmarketing of its products in the State of Tamil Nadu.  On such averments,  the
\npetitioner  has  come  forward  to  file  the above Criminal Original Petition
\nseeking the relief extracted supra.\n<\/p>\n
                6.   In  the  reply  affidavit  filed  by   the   the   Deputy
\nCommissioner of Police, Central Crime Branch, Egmore, Chennai in the name of `
\ncounter  affidavit’  in  Crl.O.P.No.2347  of  2003  he  would  submit that the
\npetitioner\/companies distribute or sell their product only on the enrolment of
\ntheir members and  if  they  enroll  more  members,  they  get  commission  or
\nincentives,  which  clearly comes within the definition of Section 2(c) of the
\nAct, 1978; that the petitioners have falsely induced their members by claiming
\nthat they can earn quick and easy money to the tune  of  lakhs  of  rupees  by
\nfurther  inducing  to  enroll more members and therefore, the character of the
\nscheme is not based on  the  product  selling,  but  based  on  enrollment  of
\nmembers; that there is no mala fide intention on the part of the respondent in
\ntaking appropriate action in accordance with law against the petitioners as it
\nsquarely  falls  within  the  meaning  of Section 2(c) of the Act; that if the
\nallegations in  the  FIR  prima  facie  disclose  a  cognizable  offence,  the
\nrespondent  is  duty  bound to take action; that the investigation prima facie
\ndiscloses that the  petitioners\/promoters  companies  are  involved  in  money
\ncirculation  scheme which is banned under the Act and the prayer sought for by
\nthe petitioners is also  vague  and  ambiguous  and  therefore  the  petitions
\ndeserve to be dismissed in limine.\n<\/p>\n
                7.   Mrs.Nalini  Chidambaram, learned senior counsel appearing
\non behalf of the petitioners would submit that the  petitioner  companies  are
\nregistered ones under the Companies Act; that they are conducting the business
\nas that of the Amway; that no action has been taken against Amway and they are
\nopenly doing multi level marketing, but the petitioners are being continuously
\nharassed  by  the  respondents  and they do not come within the purview of the
\nAct; that the Central Minister has also stated that the multi level  marketing
\ndoes  not  come  within the purview of the Act; that the petitioners are doing
\nthe business in accordance with law and have not violated any law; that as and
\nwhen the petitioner’s products  are  sold,  they  are  paying  Commission  and
\ntherefore  would pray to pass an order that the petitioners are doing the same
\nbusiness as that  of  the  Amway  and  hence,  the  affidavits  filed  by  the
\npetitioners may be treated as FIR and action may be taken against Amway.\n<\/p>\n
                8.   The  learned senior counsel would further submit that for
\nthe past five years, no one has made any complaint to the police; that without
\nany reasonable cause and due to  mala  fide  intention,  the  respondents  are
\nattempting  to  interfere  with the petitioners’ business; that no prima facie
\ncases were made out  against  the  petitioners;  that  it  is  seen  from  the
\nmaterials  placed by the learned Government Advocate and according to him, the
\ninitial investigation discloses a prima  facie  case  of  cheating,  which  is
\npunishable under Section 3 of the Act.\n<\/p>\n
                9.   The  learned  senior  counsel  would also submit that the
\npetitioners are not doing a multi level marketing business  and  it  is  doing
\nonly  money circulation scheme and they are giving certificate of gold content
\nand therefore, there was no question of cheating; that the complaints  against
\nthe  petitioners were closed as mistake of fact and hence, she seeks direction<\/p>\n
to the respondents, their  men,  agents  and  subordinates  to  restrain  from
\ninterfering  in  the  business  of  the petitioners as long as the business is
\nconducted lawfully and without indulging in multi level marketing.\n<\/p>\n
                10.    Per   contra,   Mr.Abudukumar   Rajarathinam,   learned
\nGovernment  Advocate  on the criminal side would submit that under Section 154
\nCr.P.  C., where a cognizable offence is made out,  it  is  the  duty  of  the
\npolice  officer  to  register  in  writing  the FIR; that the offences alleged
\nagainst the petitioners are punishable under Section 420 IPC; that Section  10
\nof the Prize Chits and Money Circulation Schemes(Banning) Act, 1978, reads:\n<\/p>\n
“All offences punishable under this Act shall be cognizable”\n<\/p>\n
Once it is found that the offence committed is a cognizable offence, it is the
\nduty  of  the  Police  Officer  to  take  action  against  the  petitioners in
\naccordance with law.  Section 2(c) of the Prize Chits  and  Money  Circulation
\nSchemes(Banning) Act, 1978, reads:\n<\/p>\n
“Money  Circulation Scheme” means any scheme, by whatever name called, for the
\nmaking of quick or easy money, or for the receipt of  any  money  or  valuable
\nthing  as  the  consideration  for  a  promise  to  pay money, on any event or
\ncontingency relative or applicable  to  the  enrolment  of  members  into  the
\nscheme,  whether or not such money or thing is derived from the entrance money
\nof the members of such scheme or periodical subscriptions.\n<\/p>\n
In this case also, the scheme involves enrolment of the members and  hence  it
\ncomes under the Money Circulation Scheme.\n<\/p>\n
                        11.   As  per  Section  3 of the Act, “no person shall
\npromote or conduct any prize chit or money circulation scheme, or enrol  as  a
\nmember  to any such chit or scheme, or participate in it otherwise, or receive
\nor remit any money in pursuance of such chit or scheme.” In these  cases,  the
\nprogramme  is  based  on customer referral system and the programme offers the
\ncustomer, who enrols with the company, on payment of a fixed sum, a gold  coin
\nof numismatic value and if the customer refers new customers, the company pays
\ncommission  to  the  said  customer  and in paragraph 21 of the affidavit, the
\npetitioners admit the same.\n<\/p>\n
                12.  The learned Government Advocate would further submit that
\na similarly placed company also filed writ petitions in W.P.Nos.2908 and  4144
\nof  2003  seeking  almost the same prayer which was dismissed by this Court on
\n13.2.2003.  In that case also, one who had become a member and one member  who
\nhad  bought  a  magnetic  bed,  falsely  induced  the  complainant  that if he
\npurchased a magnetic bed for Rs.5,990\/-, he would in turn become a member  and
\nif  he  in  turn introduced two more members, he would make quick money to the
\ntune of lakhs of rupees and thereby cheated the complainant and hence for  the
\nabovesaid reason, dismissed the writ petition.\n<\/p>\n
                13.   The  learned  Government Advocate would also submit that
\ninvestigation is at the crucial  stage  and  if  and  when  they  receive  the
\ncomplaint against  Amway, they would take action against them.  As there was a
\ntotal ban of the above money circulation  scheme,  the  petitioner  cannot  be
\nallowed to  do the business and the same is punishable under the Act.  In such
\ncircumstances, at the stage of investigation, interference by  this  Court  is
\nnot warranted and would pray to dismiss the above criminal original petitions.\n<\/p>\n
                14.   As  far  as  investigation  is  concerned,  the  learned
\nGovernment Advocate would undertake that he would impart  proper  instructions
\nto  the  respondent  to investigate the same and file a Final Report following
\nall the procedures contemplated under law.  The  learned  Government  Advocate
\nwould  also  submit  that based on the affidavit, if necessary, the respondent
\nwould issue notice to Amway and enquiries would be made.    He  would  further
\nsubmit  that  the  prayer  sought for is totally vague and this Court need not
\nissue any direction to the Director General of  Police  restraining  him  from
\ngiving  instructions  to  his  lower  officers  and  whenever,  the  complaint<\/p>\n
discloses that a cognizable offence is made out, it is the duty of the  police
\nofficer  to  register the complaint under Section 156 Cr.P.C., and take action
\nagainst the petitioners in accordan ce with law.\n<\/p>\n
                15.  In consideration of the facts pleaded, having  regard  to
\nthe materials placed on record and upon hearing the learned senior counsel for
\nthe  petitioner  and  the learned Government Advocate on the Criminal side, it
\ncomes to be known that both the petitioners in Crl.O.P.Nos.2347  and  4617  of
\n2003  have  come  forward  to file the above petitions respectively praying to
\ndirect the respondents 2 and 3 to withdraw their instructions  issued  to  the
\nlaw  enforcing  agencies  and the police in the State to initiate action under
\nthe Act and\/or under Section 42 0 IPC and further to direct  the  respondents,
\ntheir  men,  agents  and  subordinates  to  restrain from interfering with the
\nbusiness of the petitioner as long as the business is conducted  lawfully  and
\nwithout indulging in multi level marketing.\n<\/p>\n
                16.   For  the  sake  of  convenience  and for easy reference,
\nCrl.O.P.No.2347 of 2003 and 4617 of 2003 are hereinafter referred  to  as  the
\nfirst and second petitions and the petitioners therein as the first and second
\npetitioners respectively.\n<\/p>\n
                17.    The  petitioners  are  different  entities,  the  first
\npetitioner being the Gold Quest International Private Limited and  the  second
\npetitioner  being  Conybio  Healthcare  (India) Private Limited, both based at
\nChennai and the respondents are the State of  Tamil  Nadu  and  the  Directors
\nGeneral  of  Police, Crime Branch and Economic Offences Wing and the Inspector
\nGeneral of Police, Economic Offences Wing.  So far as the first petition above
\nis concerned, the petitioner’s contentions are that it is a registered company
\nunder the Indian Companies Act and is a numismatic company dealing  with  gold
\nproducts  and  are considered the largest distributor of Olympic commemorative
\nsets of the Sydney Olympics and  has  5  lakh  customers  and  its  sphere  of
\nactivity  spreads  to  eight  countries  including India and a reputed concern
\nhaving entered into agreements with a number of reputed organisations.\n<\/p>\n
                18.  The  first  petitioner  would  describe  the  operational
\nsphere  of  the  first  petitioner  company  that  if  the customer refers new
\ncustomers, the company  pays  commission;  that  many  are  benefited  by  its
\ninteractive  customer referral programme and its activities are strictly legal
\nand transparent, but on an erroneous understanding, based on a complaint,  not
\nby  a  customer  but  someone  else,  the  FIR  has been belatedly filed under
\nSections 420 and 511 IPC which was later referred as ` mistake of fact’;  that
\nthe  respondent  has  wrongly  concluded  that  the business activities of the
\npetitioner  would  fall  under  the  purview  of  the  Act;  that  the  second
\nrespondent,  on  19.1.2003 took into custody 84 people of officials, employees
\nand distributors of the company; that apart from a  gold  coin  of  numismatic
\nvalue,  the  customer  also  gets  money by way of commission by enrolling new
\ncustomers and in such a situation,  the  investments  made  by  the  customers
\ncannot be said to be for making quick money or easy money.\n<\/p>\n
                19.    Likewise,  in  the  second  petition  above  also,  the
\npetitioner  would  submit  that  Conybio  is  in  the  business  of  importing
\nhealthcare  products mainly from Malaysia and it has introduced 30 products in
\nTamil Nadu and the same is sold by the petitioner in India through multi level
\nmarketing appointing distributors on the basis of  commission,  thus  offering
\ncareer  to  several  persons,  but the enforcement agencies in Tamil Nadu have
\ntaken a view that selling products through multi level marketing violates  the
\nprovisions  of  the  Act;  that  they  are  threatening the petitioner and its
\nemployees and therefore it has become incumbent on the part of  the  Court  to
\nclarify  that  the petitioner will not indulge in multi level marketing of its
\nproducts in the state of Tamil Nadu and would seek for the  reliefs  extracted
\nsupra.\n<\/p>\n
                20.   During  arguments,  the  learned  senior counsel besides
\nbringing out the facts and circumstances as extracted  herebefore  would  also
\ncite  a judgment of the Honourable Supreme Court in support of the case of the
\npetitioners reported in (1982) 1 SCC 561 = AIR 1982 SC 949  (  STATE  OF  WEST
\nBENGAL AND  OTHERS  vs.   SWAPAN KUMAR GUHA AND OTHERS)<\/a> wherein the Honourable
\nApex Court, while considering the scope of the money circulation  scheme,  has
\nheld:\n<\/p>\n
“The  definition  of  the  expression  `money circulation scheme’ contained in
\nSection 2(c) of the Act does not comprehend within its  scope  any  and  every
\nactivity “for  the  making  of  quick  or easy money”.  Two conditions must be
\nsatisfied before a person can be held guilty of an  offence  under  Section  4
\nread with  Sections  3  and  2(c)  of the Act.  In the first place, it must be
\nproved that he is promoting or conducting a scheme for the making of quick  or
\neasy  money  and  secondly,  the chance or opportunity of making quick or easy
\nmoney must be shown to  depend  upon  an  event  or  contingency  relative  or
\napplicable to  the  enrolment  of  members  into that scheme.  In other words,
\nthere has to be a community of interest in the  happening  of  such  event  or
\ncontingency.”\n<\/p>\n
“….   To  be  a money circulation scheme, a scheme must be for the making of
\nquick or easy money on any event or contingency relative or applicable to  the
\nenrolment of  the  members  into the scheme.  The scheme has necessarily to be
\njudged as a whole, both from the viewpoint of the promoters and  also  of  the
\nmembers.”\n<\/p>\n
“….   The  position will not be any different, judged from the point of view
\nof the depositors, even if a part of the transaction is not above-board and is
\nsecretive or clandestine in nature.  Such transaction cannot be considered  to
\nbe  a  scheme  for making of quick or easy money, though it may offend revenue
\nlaws or any other law.  Transactions in black money do  not  come  within  the
\nmischief of the Act….”\n<\/p>\n
“….   Two conditions must be satisfied before a person can be held guilty of
\nan offence under S.4 read with Ss.3 and 2(c) of the Act.  In the first  place,
\nit  must  be proved that he is promoting or conducting a scheme for the making
\nof quick or easy money and secondly, the chance or opportunity of making quick
\nor easy money must be shown to depend upon an event or contingency relative or
\napplicable to the enrolment of members into the scheme.”\n<\/p>\n
                21.  The learned senior counsel for the petitioners would also
\ncite an unreported order of the Bombay High  Court  dated  10.7.2002  made  in
\nCriminal Writ Petition No.800 of 2002 wherein on account of the failure of the
\nrespondents to pay a sum of Rs.2,500\/= in the business transaction, a criminal
\ncase has been filed by the individual making out a case under Sections 406,420
\nr\/w.34  IPC  and  under Sections 3, 4 and 5 of the Act and assessing the facts
\nand circumstances of the case  and  the  manner  in  which  the  business  was
\nconducted  in that case, the learned single Judge of the Bombay High Court has
\narrived at the conclusion to hold that `the terms and  conditions  printed  on
\nthe  receipts  are  binding upon the complainant and thus non-repayment of the
\namount by the company would not amount to commission of offence by any one  of
\nthe respondents.  At the most, it may be said that there is breach of contract
\nfor which  the  remedy  of the petitioner is to go to the civil court….  The
\ncase would also not be covered under the provisions of Prize Chits  and  Money
\nCirculation  Schemes (Banning) Act, 1978 as there is no element of circulation
\nof money for quick or easy money or easy gains to  the  parties  by  the  said
\ntransactions.  There is no wagering or a transaction which is without exchange
\nof consideration.  The method adopted by the company was only a method adopted
\nfor sales promotion as a business strategy for larger sales.  Therefore, in my
\nopinion,  the transaction between the complainant and respondents would not be
\ncovered by the Prize Chits and Money Circulation Schemes ( Banning) Act, 1978.
\nIn my opinion, merely because the respondents failed to repay  the  amount  of
\nRs.2500\/=,  it  does  not  mean  that  the  respondents had intention from the
\nbeginning to cheat complainant or to misappropriate his money.’<\/p>\n
                22.  In the first criminal original petition,  the  petitioner
\nwould seek for a direction to be issued to the respondents 2 and 3 to withdraw
\nall  instructions  issued  by  them  to various law enforcing agencies and the
\npolice of various districts in  the  State  to  initiate  action  against  the
\npetitioner  for cheating and under the provisions of the Prize Chits and Money
\nCirculation Schemes (Banning) Act and the second criminal original petition to
\ndirect the respondents from interfering with the business of the petitioner so
\nlong as the business is conducted lawfully  and  without  indulging  in  multi
\nlevel marketing.\n<\/p>\n
                23.  So far as the prayer in the second petition is concerned,
\nthe  petitioner  would  submit that since the prayer itself is specific to the
\neffect that so long as the business is  conducted  lawfully,  the  respondents
\nneed  not  have  to  interfere  with  and  therefore  praying  to  direct  the
\nrespondents, their men, agents and subordinates to refrain  from  interfering.
\nBut  the  case  of the respondents so far as the prayers of both the petitions
\nare concerned, it is not  the  question  of  causing  interference  while  the
\npetitioners  do  the  business  unlawfully  but  the  very  business  that the
\npetitioners have introduced and are  running  and  the  method  and  means  of
\nrunning  the  business  itself  is illegal and therefore the classification of
\nlawful business or unlawful business itself has no place.\n<\/p>\n
                24.  On the part of the petitioners, the typed set  of  papers
\nsubmitted  would only contain publicity or advertisements captioned ` creating
\nearning opportunities’ or `dreams, vision, business, success’ and in the  name
\nof  `starting your own business’ as `Free India Concepts Opportunity’ terms of
\nhigh hopes and aspirations such as `no investment, only you have  to  purchase
\nany one product, no experience required, everyone can do it, no infrastructure
\nrequired to promote, no risks, work at your own convenience part time and full
\ntime  venture,  sky is the limit, no overheads and inherit y our business’ and
\nfurther  `it  has  unimaginable  income  prospects  that  helps  you  to  earn
\nmillions’,  ` all the effort you need to put in is introducing this concept to
\nyour friends,neighbours and relatives’  and  the  salient  features  of  their
\nconcepts with alluring terms such as `we introduce an innovative concept where
\nyou  have to purchase a product and recommend the products to your friends and
\nrelatives’, `set your own income target.  There are no fixed targets  for  you
\nto achieve.   You have to set your own goals and targets of your income.  Your
\nincome depends on number of new people  sponsored  into  your  network’,  `the
\nunique  income  plan  designed  by the company ensures unlimited income growth
\nwith minimum efforts’, `the unique business plan designed generates  immediate
\nincome  with which all necessities of your life can be fulfilled’, `the unique
\nbusiness plan ensures life long income to all its  network  distributors’  and
\nthat  `this business can be inherited to your spouse, children, dependants and
\nrelatives’ ultimately recommending to purchase anyone product of  your  choice
\nand   setting  guidelines  for  the  agents\/distributors  and  offering  sales
\npromotion incentives.  Thus page by page one could see only alluring  promises
\nof  making  not  only  quick  but  easy  money but also having the hallmark of
\ncanvassing other buyers.\n<\/p>\n
                25.  Nothing is placed on record regarding the  foundation  of
\nthe  petitioner  companies  and  the  aims  and objectives of the companies to
\nachieve and how they are beneficial or serving the ends of the society or  the
\ngeneral  public  and therefore needless to mention that only to cover up cases
\nof such nature, Act 43\/78 has been legislated by the framers of law  revealing
\nthereby  the  legislative intent to cover up cases of such nature with schemes
\nwhich are not based on any ideal relying on one’s effort, hard work or putting
\nin the intelligence etc.  but on luck or chance of making quick or easy  money
\nby lazy or lethargic means of enrolling members into the scheme only to enrich
\nthe  organisers  at  the  cost  of the general public which are glaring in the
\nschemes and there is no wonder the respondents have issued  proper  directions
\nto  their subordinates to be on the alert and to avoid innocent general public
\nfrom falling a prey to  the  ill-motivated  designs  or  alluring  tricks  and
\ntactics adopted by parties like the petitioners by using those who fall a prey
\nearly  being  used as their canvassing agents for enlisting more number of the
\ngeneral public to join the scheme ultimately to enrich themselves at the  cost
\nof  the  innocent  public who are sure to be cheated ultimately and since many
\nsuch instances have proved to be utter failures in the recent times giving way
\nfor the public  to  be  cheated  of  their  hard-earned  life  saving  monies.
\nPrevention is better than cure.  The preventive and punitive measures taken on
\nthe  part  of  the  respondents  cannot,  under any circumstance, be termed as
\neither irregular or illegal or infirm or in violation of  the  norms  of  law.
\nThe  respondents have rightly exercised their jurisdiction conferred by law in
\nregistering such cases  wherein  such  unlawful  activities  are  reported  or
\nbrought to the notice of the respondents thereby promptly registering the case
\neither under the relevant provisions of the IPC such as 420 or under the penal
\nprovisions  of  the  Special Act such as the Prize Chits and Money Circulation
\nSchemes ( Banning) Act, 1978 and thus they have only acted in adherence to the
\nrequirements of law and no such directions or orders as sought for to be  made
\nin the above petitions need be necessary in the circumstances of the case.\n<\/p>\n
                26.   So  far  as  the  judgments  cited  on  the  part of the
\npetitioners are concerned, in the first judgment by the Honourable Apex  Court
\nit  is  clearly  held  that  `in the first place, it must be proved that he is
\npromoting or conducting a scheme for the making of quick  or  easy  money  and
\nsecondly,  the  chance  or  opportunity  of making quick or easy money must be
\nshown to depend upon an event or contingency relative  or  applicable  to  the
\nenrolment  of  members  into  that  scheme’,  which are the ingredients of the
\nrelevant provisions of the Prize Chits and Money Circulation Schemes (Banning)
\nAct, which are laid emphasis by the Honourable Apex Court and  the  Honourable
\nApex  Court would also hold that the `scheme has necessarily to be judged as a
\nwhole both from the viewpoint of the promoters and  also  of  the  members  in
\norder to find out whether it is a scheme for the making of quick or easy money
\nand  any  event  or  contingency  relative  or  applicable to the enrolment of
\nmembers into the scheme’.  Therefore, it is  incumbent  on  the  part  of  the
\nrespondents  to  study  each  and every such scheme floated and exercise their
\njurisdiction and proceed against, provided the transaction is not  above-board
\nand is secretive or clandestine in nature and if the transaction is considered
\nto be a scheme for making quick or easy money.\n<\/p>\n
                27.   So  far  as  the case in hand is concerned, on a overall
\nconsideration of the facts and circumstances of the scheme floated on the part
\nof the petitioners, the respondents in  their  considered  view  have  rightly
\narrived  at the conclusion to hold that they fall under the purview of Section
\n420 IPC and under Section 4 of the Prize Chits and Money  Circulation  Schemes
\n(Banning) Act, 1978 and hence they have given positive instructions to the law
\nenforcing machinery and the police to register the cases wherever such schemes
\nare floated.    Therefore,  the  actions  and  prosecutions  initiated  by the
\nrespondents and their subordinates could  only  be  concluded  as  within  the
\npermissible limits of their powers to register such cases and not in violation
\nof any law or rule or norms.\n<\/p>\n
                28.  From the unreported judgment of the Bombay High Court, it
\ncould  only  be  seen  that  it  is  entirely  on  a different set of facts as
\nextracted supra and in the  facts  and  circumstances  revealed  therein,  the
\nlearned  single Judge of the Bombay High Court has justified the action of the
\nMagistrate in dismissing a complaint filed by the complainant therein and  the
\ncase  in  hand  having different set of facts, the norms or principles evolved
\ntherein cannot be applied to the case in hand.  Moreover, since the element of
\ncanvassing new members has not at all been subjected to  wide  discussion  nor
\nany  conclusion  arrived at in the said case, this Court finds it difficult to
\nadopt the proposition laid down therein.\n<\/p>\n
                29.  Moreover, the cases having been registered, they  are  at
\nthe  investigative  stage  and therefore this Court is of the firm view that a
\nthorough investigation by the respective law enforcing agencies and the police
\nwill be the answer and in the interest of the general  public,  on  a  overall
\nconsideration  of  the  facts  and  circumstances of the case put forth and in
\napplication of the legal principles and the law as well, the  only  conclusion
\nthat  could  be  arrived  at by this Court is to decline to cause interference
\ninto the rights of the respondents in initiating  such  measures  against  the
\npetitioners  not  only  registering cases under Section 420 IPC but also under
\nthe relevant provisions of the  Prize  Chits  and  Money  Circulation  Schemes
\n(Banning) Act, 19 78 and hence the following order:\n<\/p>\n
                In result, both the above criminal original petitions fail and
\nthey are dismissed.\n<\/p>\n
                Consequently,  Crl.M.P.Nos.840,  841 and 1603 of 2003 are also
\ndismissed.\n<\/p>\n
Index:  Yes
\nInternet:  Yes
\nraa\/Rao<\/p>\n
To<\/p>\n
1.The Secretary to
\nGovernment, Home Department,
\nGovernment of Tamil Nadu,
\nFort St.  George,
\nChennai-9.\n<\/p>\n
2.The Director General of Police,
\nCrime Branch, Egmore,
\nChennai.\n<\/p>\n
3.The Director General of Police,
\nEconomic Offences Wing,
\nChennai.\n<\/p>\n
4.The Public Prosecutor,
\nHigh Court, Madras.\n<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"
Madras High Court Gold Quest International Pvt. Ltd vs The State Of Tamil Nadu on 9 April, 2003 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 09\/04\/2003 CORAM THE HONOURABLE MR.JUSTICE V.KANAGARAJ CRL.O.P. No.2347 of 2003 and CRL.O.P. No. 4617 of 2003 and Crl.M.P.Nos.840, 841 & 1603 of 2003 Gold Quest International Pvt. Ltd., […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-219484","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"\nGold Quest International Pvt. 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