Dr. M. Shamsudeen v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.BHAVADASAN** # **FRIDAY, THE 23RD DAY OF NOVEMBER 2012/2ND AGRAHAYANA 1934** ## **Bail Appl..No. 8541 of 2012 ()** **-----------------------------(CBCID/EOW-III/CR.NO.246/2011 IN CRIME NO.1028/2012 OF PALA POLICE STATION, KOTTAYAM DISTRICT)** **------------------------------------------** ## **PETITIONER/ACCUSED:** **--------------------------------------** **DR. M.SHAMSUDEEN, S/O. MUHAMMED ABDUL KHADAR,AGED 52 YEARS, RESIDING AT ARAFA, NLRA. 51/A, NEERAZHI LANE, ULLOOR,MEDICAL COLLEGE P.O., THIRUVANANTHAUPRAM.** **BY ADVS.SMT.K.KUSUMAM SMT.N.SHAMNA** ## **RESPONDENTS/COMPLAINANTS:** **----------------------------------------------------** **1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSEUCTOR, HIGH COURT OF KERALA,PIN- 682 031.** ## **2. S.P. OF POLICE,** **CBCID/EOW III, KOZHIKODE-673 001.** ## **3. THE CI OF POLICE,** - **CBCID/EOW III, KOZHIKODE-673 001.** **BY ADDL.DIRECTOR GENERAL OF PROSECUTION SRI.K.I.ABDUL RASHEED** **THIS BAIL APPLICATION HAVING COME UP FOR ADMISSION ON 21-11-2012, ALONG WITH BA. NO.8548/2012 AND CONNECTED CASES, THE COURT ON 23-11-2012 PASSED THE FOLLOWING:** **sts** ## **P. BHAVADASAN, J.** - - - - - - - - - - - - - - - - - - - - - - B.A. Nos. 8541, 8548, 8549, 8550, 8737, 8738 of 2012. - - - - - - - - - - - - - - - - - - - - - - Dated this the 23[rd] day of November, 2012. ## **ORDER** Common issues arise for consideration in these applications, hence they are being disposed of by a common order. 2. In each of the cases in the relevant crimes, the petitioner stands implicated as an accused for having committed offences punishable under Section 420 read with Section 34 I.P.C. and Sections 3 and 4 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. 3. As per the statement filed by the State in B.A. 8541 of 2012, which. according to the learned Additional Director General of Prosecution. may be adopted in all cases, the allegations against the petitioner and other accused are that they have indulged in money circulation scheme, which is prohibited under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, B.A.8541/2012 & con.cases. 2 (hereinafter referred to as the Act). The company adopts a method of prizing its commodities at a very high price and those who are persuaded to buy those products will resort to binary system of enrollment of distributors and under the false pretext of multi level marketing, the RMP company, of which the petitioner is an active participant, is indulging in money circulation scheme. The petitioner is alleged to be on the top of the pyramid and as per the statement, it is learnt that he had conducted several meetings to propagate RMP company's scheme. As per the scheme now envisaged by the Company, it has amassed huge wealth and according to the allegations, several persons who joined the scheme, have lost their money. On the basis of complaints by such persons, crimes have been registered. The company, for the said conduct, is facing prosecution. It is pointed out that a person can join the scheme by buying a product at Rs.4,999/-. He receives in fact Rs.1,000/- in a week when he enrolls two others under him and as the chain expands with B.A.8541/2012 & con.cases. 3 260 members, he will receive Rs.1,30,000/- in a week. The website created by the RMP Company will clearly show, according to the learned Additional DGP, that the scheme followed by the Company is nothing but a money circulation scheme in a disguised form. It is pointed out that the petitioner is actively involved in the scheme and he has amassed lot of money by propagating the scheme and that his claim that the Company is not engaged in money circulation scheme cannot be accepted. Since he was actively involved in the incident, he had to be questioned. 4. Learned counsel for the petitioner pointed out that the accusation that the RMP Company is involved in the money circulation scheme is misconceived. The company indulges in multi level marketing which is permitted under law and the company is carrying on its business strictly in terms of the guidelines issued by the state. Learned counsel pointed out that the scheme now run by the Company does not fall within the definition of money circulation scheme as B.A.8541/2012 & con.cases. 4 contained in Section 2(c) of the Act. A close scrutiny of the scheme adopted by the Company will, according to the learned counsel, show that the receipt or payment of money is not contingent upon enrollment of members in the scheme. On the other hand, the amount received by the persons concerned is based on the sale of the products of the Company. Learned counsel referred to Annexure 11 produced in B.A.8541 of 2012 and pointed out that the Ministry of Industries has brought out guidelines to ensure that those persons who indulge in multi level marketing are not roped in under the guise of carrying on money chain circulation scheme. Clauses 5 and 6(1)(e) therein were referred to and it was pointed out that payment to the distributors is based on the sales and not on the basis of enrollment of members. It was also contended that even if it is assumed that the Company has indulged in money circulation scheme, the petitioner does not fall within the category of promoters and can at best be implicated for B.A.8541/2012 & con.cases. 5 offences under Section 5 and 6 of the Act and if so, the offence committed by him is a bailable offence. The petitioner has only propagated the scheme formulated by the Company and he does not run the Company nor has he any participation in the management of the affairs of the Company. 5. Learned counsel appearing for the petitioner in all these cases pointed out that the petitioner has been in custody for a long period and his custodial interrogation has been completed long ago. Learned counsel pointed out that the moment the petitioner obtains bail in a case, another case is foisted on him, arrested and put behind the bars. There seems to be a vengeance on the part of the investigating agency to see that he is kept behind the bars without any justification. Learned counsel pointed out that in all cases, the allegation as against the petitioner is identical and one fails to understand as to how there has to be separate arrests in each case. Learned counsel also B.A.8541/2012 & con.cases. 6 pointed out that arrest can be resorted to only on certain contingencies. Arrest is an exception, according to the learned counsel, and is not a matter of course. At any rate, learned counsel pointed out that the continued custody of the petitioner is unnecessary. 6. It must be mentioned that elaborate arguments were addressed from both sides regarding the scheme now followed by the RMP Company. Provisions of the Act were referred to and it was sought to be established by the petitioner that a reading of the scheme as a whole will indicate that it does not fall within the definition of Section 2 (c) of the Act. On the other hand, learned Addl.D.G.P. pointed out that even though on the periphery, it appears that the scheme is not dependent upon the enrollment, on a probe into it, it can be seen that it is a money circulation scheme. Though styled as multi level marketing method, an analysis of the scheme, according to the Addl.D.G.P., will show that benefits can be derived only by B.A.8541/2012 & con.cases. 7 enrolling members and that essentially what constitutes a money circulation scheme. 7. While the learned Addl.D.G.P. relied on the decision reported in 2008(3) K.H.C. 115), learned counsel for the petitioner relied on the decision reported in **State of West Bengal v. Swapan Kumar** (AIR 1982 SC 949). 8. This court has to remind itself that the court is dealing with applications for bail and the scope of enquiry is considerably limited. A deep probe into the merits and demerits of the case is not warranted at this point of time. Now this court is concerned only with whether the continued custody of the petitioner is necessary. 9. May be that the petitioner has amassed wealth by his association with the scheme of the RMP Company. In an earlier anticipatory bail application moved by the petitioner, on the basis of the submission of the learned Public Prosecutor that no crime has been registered, the application was disposed of recording the said statement on B.A.8541/2012 & con.cases. 8 19.10.2012. On 24.10.2012 the petitioner was arrested alleging that he is involved in a crime. Thereafter, a series of crimes were registered against him and others and in several cases he was arrested. In nine of such cases, he has been granted bail. 10. A reference to the decisions relied on by both sides is not necessary in the case on hand, because, this court is at present not concerned with the actual consequences of the scheme, but only as to whether the custody of the petitioner should continue. However, it has to be noticed that though it would appear on the periphery that the scheme envisaged by the Company does not as such contemplate enrollment of members, in reality the scheme works only if membership increases. 11. A contention raised by the Addl. D.G.P. has to be taken note of at this point of time. The Addl. D.G.P. pointed out that the products of the Company which has to be bought by the person to get a membership are valued at B.A.8541/2012 & con.cases. 9 a very high price than they are actually worth. May be so. But that by itself is not a ground to bring the scheme within the ambit of the Act. But there is merit in the contention of the learned Addl.D.G.P. that the high pricing of the products by the Company is an incentive or inducement or charm which compels the members to see that more members are enrolled so as to derive more benefit and returns. So it could not be said that the claim that the Company does not enrol members as such may not be fully correct. But as already stated, these are all matters to be considered in detail in a different situation. 12. It is unnecessary to go into the question assuming that the RMP company is engaged in money circulation scheme, taking note of the role said to have been played by the petitioner, whether he would fall under Section 3 or Section 5 of the Act. It was very vehemently contended on behalf of the petitioner that by no stretch of imagination the petitioner can be said to be a promoter or B.A.8541/2012 & con.cases. 10 conductor of the scheme. He only propagated the scheme. On the other hand, learned Addl.D.G.P. referring to the term promoter and conceding that it is not defined under the Act, contended that it has to be given its ordinary meaning and if that be so, the petitioner will fall within its ambit. Any how, this court need not undertake the exercise of determining whether the petitioner's case falls under Sections 3 or 5 of the Act. 13. What now remains to be considered is whether the custody of the petitioner should continue. This court is given to understand that the petitioner has been in custody for a long time. May be that other accused persons are to be arrested and more probe into the case is required. But the role of the petitioner in all the cases registered against him is identical. It may not be out of place here to recollect that in nine cases the petitioner has been granted bail. B.A.8541/2012 & con.cases. 11 14. It may not be insignificant here to refer to Section 4 of the Act which provides for the punishment for the offence under Section 3 of the Act, which reads as follows: “ **4. Penalty for contravening the provisions of section 3** .- Whoever contravenes the provisions of section 3 shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both: Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgment of the court the imprisonment shall not be less than one year and the fine shall not be less than one thousand rupees.” 15. The sentence that could be imposed on a person who is found guilty of the offence necessarily will have a bearing on the question as to whether the petitioner can be granted bail or he should be kept under custody, B.A.8541/2012 & con.cases. 12 apart from the various other factors. As per Section 4 of the Act, the maximum sentence that could be awarded is three years of imprisonment or mulcted with fine or with both. One has to remember that the Act was brought into force on 12.12.1978. Many schemes have come and very many persons have been cheated. But the statute still remains with a meager punishment encouraging persons to indulge in such activities. Any how it is a matter for the legislature to consider. 16. The apprehension expressed by the Addl.D.G.P. that if the petitioner is released on bail, he may abscond and that he may influence the witnesses can be taken care of by imposing adequate conditions. As already stated, his role in all these crimes is identical and therefore there can be no basis for the claim that in each of the cases, his participation needs to be independently considered. 17. Considering the period during which the petitioner has been in custody and his role in the B.A.8541/2012 & con.cases. 13 implementation of the Scheme envisaged by the RMP Company, the fact that his custodial interrogation is over etc., it is felt that the continued custody of the petitioner is unnecessary. These applications are therefore allowed as follows: i) Petitioner shall be released on bail in each of these cases on his executing a bond for a sum of Rs.25,000/- (Rupees Twenty Five Thousand only) with two solvent sureties for the like sum each in each of these cases to the satisfaction of the JFCM concerned or CJM concerned as the case may be. ii) The learned Magistrate may ensure the identity of the sureties and also the veracity of the tax receipts that are sought to be produced at the time of executing the bond. iii) Petitioner shall appear before the Investigating Officer as and when he receives notice from the Investigating Officer concerned. B.A.8541/2012 & con.cases. 14 iv) Petitioner shall surrender his passport if he has not already done so in any other case and in case he does not have a passport, he shall file an affidavit to that effect. v) Petitioner shall not leave the State of Kerala and India without the prior permission of the court before which the bond is executed. vi) Petitioner shall not tamper or attempt to tamper with the evidence or influence or try to influence the witnesses. vii) If any of the condition is violated, bail granted to the petitioner shall stand cancelled, and the Magistrate concerned may take such steps as are available to him in law. P. BHAVADASAN, JUDGE sb.