Vineeth Chandran Nair v State of Kerala & Others

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V THURSDAY, THE 17[TH] DAY OF AUGUST 2023 / 26TH SRAVANA, 1945`** ## **`CRL.MC NO. 105 OF 2023`** ## **`CC 147/2022 OF CHIEF JUDL.MAGISTRATE, ERNAKULAM CRIME NO.2935/2017 OF KOTHAMANGALAM POLICE STATION`** ## **`PETITIONER/6TH ACCUSED:`** ``` VINEETHCHANDRANAGED30YEARS,S/O.CHANDRASEKHARAN NAIR,PANAYILKADAVEEDU,EDATHARA,ULIYAZHATHURA, - THIRUVANANTHAPURAM,PIN695587 ``` ``` BYADVS.D.KISHOREMEERAGOPINATHR.MURALEEKRISHNAN (MALAKKARA)ATHULV.VADAKKEDOM ``` ## **`RESPONDENTS/STATE, COMPLAINANT & DE FACTO COMPLAINANTS:`** |`1`|`STATE OF KERALA REPRESENTED BY ITS PUBLIC PROSECUTOR,`| |---|---| ||`HIGH COURT OF KERALA, ERNAKULAM, PIN - 682031`| |`2`|`THE INSPECTOR OF POLICE, KOTHAMANGALAM POLICE STATION,`| ||`ERNAKULAM, PIN - 686691`| |`3`|`AJAY CHANDRAN, AGED 27 YEARS, S/O. CHANDRAN KAPPIL`| ||`HOUSE, ANGADI KARA, KOTHAMANGALAM VILLAGE, ERNAKULAM`| ||`DISTRICT, PIN - 686691`| |`4`|`JOBLE POULOSE, AGED 27 YEARS, S/O. POULOSE,`| ||`KOOTHAMATTATHIL HOUSE, PUTHUPPADI KARA, KOTHAMANGALAM`| ||`VILLAGE, ERNAKULAM DISTRICT, PIN - 686673`| |`5`|`ANANDU RAJ, AGED 26 YEARS, S/O. RAJAN, EENTHAMKUDIYIL`| ||`HOUSE, PUTHUPPADI KARA, KOTHAMANGALAM VILLAGE,`| ||`ERNAKULAM DISTRICT, PIN - 686673`| |`6`|`JUVAN, AGED 27 YEARS, S/O. THOMAS, AVIRAPPATTU HOUSE,`| ||`THADIKKULAM BHAGOM, OONNUKAL KARA, NERIYAMANGALAM`| ||`VILLAGE, ERNAKULAM DISTRICT, PIN - 689647`| Crl.M.C No.105 of 2023 2 - `7 THOMAS J., NEREVEETTIL, AGED 26 YEARS, S/O. NEREVEETTIL JOHNY, NEREVEETTIL, NEAR MARY MATHA PUBLIC SCHOOL, THRIKKAKKARA NORTH VILLAGE, ERNAKULAM, -` - `PIN 682033` - `8 GEORGEKUTTY SEBASTIAN, AGED 26 YEARS, S/O. SEBASTIAN PULIKKAL HOUSE, OONNUKAL KARA, KUTTAMANGALAM VILLAGE, -` - `ERNAKULAM, PIN 689647` - `9 GEORGE P. REJI AGED 26 YEARS, S/O. REJU, PARADUMAKKAL HOUSE, PLAMUDI KARA, KOTTAPPADY VILLAGE, ERNAKULAM, -` - `PIN 686692` - `10 ELDO SABU, AGED 27 YEARS, S/O. SABU, VELLINCHAYIL HOUSE, PANDAPILLI KARA, ARAKKUZHA VILLAGE, ERNAKULAM -` - `DISTRICT, PIN 686672` - `11 PRAVEEN JOSEPH, AGED 29 YEARS, S/O. JOSEPH, PUNNOLIL HOUSE, OONNUKAL KARA, KUTTAMANGALAM VILLAGE, -` - `ERNAKULAM, PIN 689647` ``` 12JISHNUMANOJ,AGED27YEARS,S/O.MANOJ, PUTHANPURAKKALHOUSE,KODIKKULAMKARA,KODIKKULAM - VILLAGE,THODUPUZHAWEST,IDUKKI,PIN685582 13JERINTHOMAS,AGED26YEARS,S/O.THOMAS,POTTOLI HOUSE,KOOVAPPADIKARA,KOOVAPPADIVILLAGE,ERNAKULAM - DISTRICT,PIN683544 14DONTHOMAS,AGED26YEARS,S/O.THOMAS,PARAPPURAM HOUSE,KOOVAPPADIKARA,KOOVAPPADIVILLAGE,ERNAKULAM - DISTRICT,PIN683544 15BASILELIYAS,AGED24YEARS,S/O.ELIYAS,PERUMBANKUDI HOUSE,KOLLIKKADUBHAGOM,ANGADIKARA,KOTHAMANGALAM - VILLAGE,ERNAKULAM,PIN686691 16ASHKARRAHIM,AGED26YEARS,S/O.RAHIM, MANIAMKALAYILHOUSE,KANJARKARA,KUDAYATHURVILLAGE, - THODUPUZHA,IDUKKI-,PIN685590 ``` Crl.M.C No.105 of 2023 3 - `17 ABHIJITH PRASAD, AGED 26 YEARS, S/O. PRASAD VATTATHOTTIYIL HOUSE, ENANALLOOR KARA, ENANALLUR -` - `VILLAGE, ERNAKULAM, PIN 686673` - `18 SUBIN V.S, AGED 26 YEARS, S/O. SUDEVAN, VAZHAKKUZHIYIL HOUSE, ODIYAPARA KARA, VANNAPPURAM VILLAGE, -` - `THODUPUZHA, IDUKKI, PIN 685607` - `19 VINEETH SANTHOSH, AGED 26 YEARS, S/O. SANTHOSH, MEKKALLUR HOUSE, KUDAYATHUR KARA, KUDAYATHUR VILLAGE, -` - `THODUPUZHA, IDUKKI, PIN 685590` - `20 SUDHI, AGED 26 YEARS, S/O. SABU, MALAYIL HOUSE, KODIKKULAM KARA, KODIKKULAM WEST VILLAGE, IDUKKI, -` - `PIN 685582` - `21 RAHUL RAVEENDRAN, AGED 26 YEARS, S/O. RAVEENDRAN, KANAKKUZHIYIL HOUSE, VANNAPPURAM KARA, KALIYAR -` - `VILLAGE, IDUKKI, PIN 685607` - `22 AIVAN ISSAC, AGED 25 YEARS, S/O. ISSAC, METHIPPARAYIL HOUSE, PANDAPPILLI KARA, KALIYAR VILLAGE, IDUKKI, -` - `PIN 685607` - `23 THOMAS AGED 59 YEARS, S/O. MATHEW, AVIRAPPATTU HOUSE, THADIKKULAM BHAGOM, OONNUKAL KARA, NERIYAMANGALAM -` - `VILLAGE, ERNAKULAM DISTRICT, PIN 689647` ``` SRI.TRRANJITH,SR.PUBLICPROSECUTOR ``` ``` THISCRIMINALMISC.CASEHAVINGCOMEUPFORADMISSIONON 17.08.2023,THECOURTONTHESAMEDAYPASSEDTHEFOLLOWING: ``` Crl.M.C No.105 of 2023 4 ## **ORDER** The petitioner herein is the 6[th] accused in C.C.No.147 of 2022 on the files of the Chief Judicial Magistrate Court, Ernakulam. In the aforesaid case, he is facing prosecution for having committed offences punishable under Sections 406, 420 r/w Section 34 IPC and under Sections 3 and 4 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The aforesaid case has arisen from Crime No.2935 of 2017 registered at the Kothamangalam Police Station inter alia under Sections 406 and 420 r/w Section 34 of the IPC based on information furnished by a certain Ajay Chandran. 2. Annexure-III is the final report laid before the jurisdictional Magistrate. The prosecution allegation therein is that the accused Nos.1 and 2 are the Directors of a company run in the name and style as “Team Ocean Events and Training Pvt. Ltd.” Claiming to be the agents/Associates of Q Net, a company having its registered office in Malaysia. Accused Nos.1 and 2 are alleged to have commenced direct selling business in the State of Kerala. It is alleged that the accused Nos. 3 to 6 used to work as representatives and agents of the accused Nos. 1 and 2. The accused are Crl.M.C No.105 of 2023 5 alleged to have persuaded the complainant and others to believe that if they work as independent representatives of the company, they would be in a position to reap good benefits. In terms of the same, on 15.12.2016, the accused is alleged to have convened a meeting at the Kothamangalam Municipal Park, and the 3[rd] accused is stated to have convinced the complainant and others as to the mode of functioning of Q Net company. They were informed that the business of Q Net is centered around the selling of tour packages/educational packages/swiss watches, etc. By assuring them that they could amass vast sums of money, a sum of Rs.46,500/- was allegedly received from each of the victims. It is alleged that accused Nos.3 to 6 had assisted the accused Nos.1 and 2 to carry out the illegal acts. The grievance of the informant and others was that they were made to part with a sum of Rs.8,79,000/- and no benefits, as assured, were granted. 3. Sri. Kishore, the learned counsel appearing for the petitioner, submits that the petitioner is a graduate of CUSAT and he was attracted by the incentives offered by the 1[st] accused, who claimed that their activities are legal and they are associates of Q-Net, a Malaysia based company. According to the learned counsel, the petitioner is nothing but a subscriber Crl.M.C No.105 of 2023 6 of the Direct Marketing business and refers to Annexure-VI customer receipt. It is further submitted by the learned counsel that the 1st accused is an associate company of Vihaan Direct Selling (India) Pvt. Ltd, a direct selling entity, which is registered with the Registrar of Companies, as is evident from Annexure-IV. He would further contend that direct selling has emerged as a global industry, and the petitioner’s only objective was only to be a part of the industry and to gain some experience. According to the learned counsel, the Government of India has come out with Model Guidelines on Direct Selling and has also issued Annexure-X Office Memorandum. In terms of the Office Memorandum issued by the Government of India, the Consumer Affairs Department of the State of Kerala has come out with guidelines on monitoring mechanisms for regulating multi-level marketing/direct selling. It is submitted that in terms of the circular issued by the State of Kerala, Vihaan Direct Selling (India) Pvt. Ltd has submitted a declaration on 12.06.2019, a copy of which is produced as Annexure-XII. It is without adverting to any of the above that the police have concluded the investigation and have submitted the final report on 16/07/2020. According to the learned counsel, for being a subscriber of a Direct Selling Business run after complying with all legal Crl.M.C No.105 of 2023 7 formalities, the petitioner cannot be subject to criminal prosecution. It is further submitted that the State has no case that the petitioner was occupying some official position of either of M/s. Q Net, Vihaan Direct Selling India(P) Ltd. or M/s.Team Ocean Events and Training Pvt. Ltd. Finally, it is submitted by the learned counsel that one Naresh Balasubramanian had approached the Karnataka High Court challenging the initiation of steps taken by the police against QNet and a learned Single Judge of Karnataka High Court by Annexure-XIII judgment had ordered that the activities of Q Net and Vihan, will not constitute offences under Prize Chits and Money Circulation Schemes (Banning) Act, 1978. 4. The contention of the learned counsel is opposed by the learned Public Prosecutor. He would refer to the final report, and it is submitted that the witnesses who have been cited by the prosecution have clearly stated that the petitioner herein has received certain sums of money. It is submitted that though the Government had issued a circular and the company had issued a declaration in terms of the same, no decision has yet been taken by the government. It is further submitted that Annexure-XI was superseded by G.O(P) No.6/2023/CAD dated 28.03.2023. Crl.M.C No.105 of 2023 8 5. I have considered the submissions advanced and have gone through the entire records. 6. At the outset itself, it has to be mentioned that the 1st accused in the aforesaid case is M/s. Team Ocean Events and Training Pvt. Ltd., a company of which accused Nos.2 and 3 are Directors. There is no case for the prosecution that the petitioner is a Director of the Company or that he has any role in the day-to-day running of the business of the direct selling agency. Though the prosecution alleges that the 1st accused is incorporated to promote the activities of Q Net and its subsidiary Company in India, M/s.Vihaan Direct Selling India (P) Ltd., those companies or their officers have not been arrayed as accused in the final report. As far as the petitioner herein is concerned, it is borne out from Annexure-V, he is an independent representative who joined the Direct Selling business as an avocation. In the FIR no role is attributed to him. However, some of the witnesses stated that they had joined the direct selling entities and had transferred some amounts to the petitioner to join the scheme. The specific allegation against the petitioner is that he had taken part in the meeting convened at Kothamangalam and aided the other accused in enrolling some of the witnesses. However, I find that in terms of the advisories issued by Crl.M.C No.105 of 2023 9 the Government, M/s. Vihaan Marketing India Pvt. Ltd. submitted a declaration in the year 2019. The High Court of Karnataka has also held that the activities carried out by Q Net and Vihaan Marketing cannot be termed as prohibited activities under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. In view of the above facts and circumstances, I am of the considered opinion that the arraying of the petitioner, who is merely a subscriber under the scheme of direct selling carried out by the 1st accused, is an abuse of process. 7. The scope of exercise of power under Section 482 of the Code and the categories of cases where the High Court may exercise its power under it relating to cognizable offenses to prevent abuse of process of any court or otherwise to secure the ends of justice were set out in some detail by this Court in **State of Haryana v. Bhajan Lal[1]** . A note of caution was, however, added that the power should be exercised sparingly and that too in the rarest of rare cases. The illustrative categories indicated by the Apex Court has been detailed in paragraph 102 and 103 of the judgment, which reads as under: **102.** In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this > 1 [1992 Supp (1) SCC 335 Crl.M.C No.105 of 2023 10 Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. - (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. - (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. - (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. - (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. - (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. Crl.M.C No.105 of 2023 11 - (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. - (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. **103.** We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice. 8. Having considered the facts of the instant case, in the light of the principles laid down by the Apex Court in **Bhajan Lal** (supra), I am of the view that the uncontroverted allegations made in the FIR and the charge and the evidence collected in support of the same do not disclose the commission of any against the petitioner. In that view of the matter, this Court will be well justified in invoking its powers under section 482 of the Code to quash the criminal proceedings against the petitioner. Crl.M.C No.105 of 2023 12 Resultantly, this petition will stand allowed. Annexure-III final Report in Crime No.2935 of 2017 registered at the Kothamangalam Police Station and all further proceedings in C.C.No.147/2022 on the file of the Chief Judicial Magistrate Court, Ernakulam, insofar as it concerns the petitioner are quashed. Sd/- ## **RAJA VIJAYARAGHAVAN V, JUDGE** IAP Crl.M.C No.105 of 2023 13 ## **`APPENDIX OF CRL.MC 105/2023`** ``` PETITIONER’SANNEXURES: ``` |`Annexure `|`-I`|`CERTIFIED COPY OF THE COMPLAINT DATED`| |---|---|---| |||`17/8/2017 SUBMITTED BY THE RESPONDENTS 3 TO`| |||`23 BEFORE THE SUPERINTENDENT OF POLICE,`| |||`ALUVA`| |`Annexure- `|`II`|`CERTIFIED COPY OF THE FIR IN CRIME`| |||`NO.2935/2017 OF KOTHAMANGALAM POLICE`| |||`STATION`| |`Annexure `|`-III`|`CERTIFIED COPY OF THE FINAL REPORT IN CRIME`| |||`NO.2935/2017 OF KOTHAMANGALAM POLICE`| |||`STATION PENDING AS CC 147/2022 ON THE FILE`| |||`OF CHIEF JUDICIAL MAGISTRATE COURT,`| |||`ERNAKULAM`| |`Annexure `|`-IV`|`TRUE COPY OF THE COMPANY MASTER DATA`| |||`DOWNLOADED FROM THE WEBSITE OF MINISTRY OF`| |||`CORPORATE AFFAIRS WITH RESPECT TO VIHAAN`| |||`DIRECT SELLING (INDIA) PRIVATE LIMITED`| |`Annexure `|`-V`|`TRUE COPY OF THE ENROLMENT CONFORMATION`| |||`RECEIPT DATED 6.11.2015 ISSUED BY Q-NET`| |||`COMPANY TO THE PETITIONER`| |`Annexure `|`-VI`|`TRUE COPY OF THE PURCHASE CONFORMATION`| |||`RECEIPT DATED 6.11.2015 ISSUED BY Q-NET`| |||`COMPANY TO THE PETITIONER`| |`Annexure `|`VII`|`TRUE COPY OF THE CIRCULAR NO.26/2015 DATED`| |||`11.11.2015 ISSUED BY THE COMMISSIONER OF`| |||`COMMERCIAL TAXES, KERALA`| |`Annexure `|`VIII`|`TRUE COPY OF THE CERTIFICATE DATED`| |||`28.4.2017 IN FORM NO.1E ISSUED BY THE`| |||`COMMERCIAL TAX OFFICER TO VIHAAN DIRECT`| Crl.M.C No.105 of 2023 14 ``` SELLING(INDIA)PRIVATELIMITED AnnexureIXTRUECOPYOFTHEGSTREGISTRATION CERTIFICATEDATED12.11.2019WITHRESPECT TOVIHAANDIRECTSELLING(INDIA)PRIVATE LIMITED AnnexureXTRUECOPYOFTHEOFFICEMEMORANDUMDATED 9.9.2016ISSUEDBYTHEMINISTRYOFCONSUMER AFFAIRS,GOVERNMENTOFINDIAALONGWITH ADVISORYTOSTATEGOVERNMENTS/UNION TERRITORIES;MODELFRAMEWORKFORGUIDELINES ONDIRECTSELLING ``` ``` AnnexureXITRUECOPYOFTHEG.O.(P)NO.8/2018(CAD) DATED4.6.2018ISSUEDBYTHESECRETARYTO GOVERNMENT,CONSUMERAFFAIRSDEPARTMENT AnnexureXIITRUECOPYOFTHEDECLARATIONDATED 12.6.2019SUBMITTEDBYVIHAANDIRECT SELLING(INDIA)PVT.LTDBEFORETHE DIRECTOROFCIVILSUPPLIESANDCONSUMER AFFAIRS AnnexureXIIITRUECOPYOFTHEJUDGMENTDATED15.2.2017 INCRIMINALPETITIONNO.9308OF2016OFTHE HONOURABLEHIGHCOURTOFKARNATAKA ```