Vishal

aba-326-2016@.doc

INTHEHIGHCOURTOFJUDICATUREATBOMBAY
CRIMINALAPPELLATEJURISDICTION

ANTICIPATORYBAILAPPLICATIONNO.326OF2016
WITH
CRIMINALAPPLICATIONNO.360OF2016

SureshThimiris/o.T.K.Thimiri ...Applicant
vs.
TheStateofMaharashtra ...Respondent

WITH
ANTICIPATORYBAILAPPLICATIONNO.327OF2016
WITH
CRIMINALAPPLICATIONNO.361OF2016

MichaelJosephFerreira Applicant
vs.
TheStateofMaharashtra Respondent

WITH
ANTICIPATORYBAILAPPLICATIONNO.328OF2016
WITH
CRIMINALAPPLICATIONNO.362OF2016

ShinivasRaoVanka
s/o.PattabhiRamaRaoVanka Applicant
vs.
TheStateofMaharashtra Respondent

WITH
ANTICIPATORYBAILAPPLICATIONNO.329OF2016
WITH
CRIMINALAPPLICATIONNO.363OF2016

MagaralVeeravalliBalaji
s/o.MagaralVearavalliChellapillai Applicant
vs.
TheStateofMaharashtra Respondent

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WITH
ANTICIPATORYBAILAPPLICATIONNO.330OF2016
WITH
CRIMINALAPPLICATIONNO.364OF2016

MalcholmNozerDesai ...Applicant
vs.
TheStateofMaharashtra ...Respondent

Mr.AmitDesai,SeniorAdvocatea/w.Mr.GopalShenoyforthe
ApplicantsinABA.Nos.326and328of2016.
Mr.AshokMundargi,SeniorAdvocatefortheApplicantinABA.
No.329of2016.
Mr.GirishKulkarni,fortheApplicantinABA.No.330of2016.
(AllthecounselfortheapplicantsareinstructedbyMrs.S.J.
Patila/w.Mr.VikramsinghParmar,Mr.KedarPatil,Mr.Santosh
KoreandMs.TruptiBharadi).
Mr.PradeepGharat,SpecialPPa/w.Mrs.P.P.Shinde,forState.
Mrs.SharmilaKaushik,APPfortheStateinA.B.A.328of2016.
Mr.G.S.Anand,thecomplainant/partyinpersonpresent.

CORAM: MRS.MRIDULABHATKAR,J.
DATE: 6thMAY,2016

P.C.:
. The applications are moved for pre arrest bail as the

applicants/accused are facing charges for the offences punishable

underSections120(B)and420oftheIndianPenalCodeandunder

Sections3,5and6ofPrizeChitsandMoneyCirculationSchemes

(Banning) Act, 1978 and Section 3 of Maharashtra Protection of

InterestofDepositors(InFinancialEstablishmentsAct)inC.R.No.

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316of2013registeredwithOshiwarapolicestation,Mumbai.The

offenceisregisteredattheinstanceofoneGurupreetsinghAnandon

16thAugust,2013.

2. Itisthecaseoftheprosecutionthatintheyear2000one

Vijay Ishwaran and Joseph, the founders of QI Group formed a

companyunderthenameandstyleGoldQuestInternationalPrivate

Limited.Theapplicants/accusedalsojoinedthesaidgroupin2006.

GoldQuestInternationalPrivateLimitedusedtosalegoldplatedcoins.

In the year 2000 the rate of gold was Rs. 5,000/ per 10 gms.,

however, they used to sale the gold plated coins for Rs. 30,000/

thoughthegoldwaslessthan10gms. Thereafter,thepurchaserof

thegoldcoinbecomesamemberofthegroup.Hewasrequiredto

makemorepersonsasthememberofthe GoldQuestInternational

Private Limited. On the basis ofthe number of memberswhich he

brings,hewasplacedtogetthecommission.Sohewassupposedto

bringminimumtwopersonsandthehierarchyhadpyramidstructure.

So one member treatedat the right side and secondmember was

treated on the left side. The volume of the said business after

enrollmentofnewmemberincreaseswhen1000unitsarecreditedto

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theaccountoftheoldmemberwhicharetreatedequivalenttothe

commissionofRs.11,500/.

3. Itisthecaseprosecutionthatintheyear2003afraudwas

detectedandtheoffencewasregisteredatChennaiagainstthesaid

GoldQuestInternationalPrivateLimitedcompany. Sotheownersof

thesaidcompanyrepaideverythingtothememberstowhomthey

havepromisedtopayandtheoffencewascompounded.Hence,the

first information report was quashed. However, the company

continued the illegal activities by forming another company by

differentnamei.e.QuestNetEnterprise(P)Limited.Theystarted

one Pallava Resorts Private Limited and also launched various

products especially the products by name Biodisck, Chi Pendent,

Watches,GoldCoins.TheseproductsweresoldfromminimumRs.

30/toRs.7lacs.Thefalserepresentationwasmadebythecompany

thatthesaidproductBiodiskcuresdiseases.Biodiskistobekeptin

the water and due to molecular effect, the quality of the water is

changedandifthatwaterisconsumed,itwillgivegoodresultand

curesthediseasesincludinglikecancer.

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4. Itisthecaseoftheprosecutionthattheapplicant/accused

SureshThimiriwasappointedasIndianheadandC.E.O.ofQuestNet

Enterprise (P) Limitedandthe applicants/accused MichaelFerreira

andMalcholmDesaihadjoinedthesaidcompanyintheyear2006

andactivelyparticipatedintheexpansionofthiscompany.In2008

the offences were registered at Chennai, Andhra Pradesh and

Karnatakabutthesaidcompanycontinueditsactivitiesofchitfund

and money laundering till 2012. They stopped the business of

QuestNetEnterprise(P)Limitedcompanybutformedanewcompany

by name Q Net. Under this brand of Q Net, three companies i.e.

VanmalaHotels,TravelsandTourismServicesPrivateLtd,Transview

EnterprisesIndiaPrivateLimitedandVihaanDirectSelling(I)Pvt.

Ltd.starteditsbusinesssinceApril,2012.Inthesaidcompany,the

applicant/accusedMalcholmDesaiwasholding20%sharesandthe

applicant/accused Michael Ferreira was holding 80% shares. Other

two applicants /accused Magaral Balaji and Shinivas Vanka were

appointedasDirectorsoftheVihaanDirectSelling(I)Pvt.Ltd.Under

thesaidVihaancompany,theycontinuedtheactivitiesofsellingthe

same products of Biodisk, Gold coins, Chi Pendents etc. They

establishedonePallavaResortsPrivateLimitedandVanmalaHotels,

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Travels and Tourism Services Private Ltd. The applicant/accused

Suresh Thimiri was the C.E.O. since 2010 and became Director of

Transview Enterprises India Private Limited. The holiday packages

wereissuedbythesaidcompany.However,alltheseholidaypackages

were not given but only few were provided. Many persons also

became members could not get a business as promised by the

company. Therefore they felt deception. Thereafter the police

registered offence on 16th August, 2013 against the present

applicants/accused. At that time, it was found that nearly 90000

memberswerecheatedatthehandsofapplicants/accusedandthey

suffered wrongful loss of amount of Rs. 425 Crores and as such

moneylaunderingwasofRs.425Crores.However,tilltodayduring

the investigation, it was found that number of members who are

deceived are around 5 lacs and misappropriation and money

laundering was about more than of Rs. 1000 Crores. Hence, this

complaint.

5. Mr. Amit Desai, Mr. Ashok Mundargi, the learned

SeniorCounselandMr.GirishKulkarni,thelearnedcounselforthe

applicantshavesubmittedthattheapplicants/accusedareinnocent.

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Theyhaveneithercheatedanybodynorcommittedanyoffence.Itis

submittedthatthecomplainantisamotivatedpersonwhohaslodged

a false complaint against the applicants/accused due to business

rivalry. They submitted that the applicants/accused are in the

businessofdirectmarketingwhichislegallypermissibleinallover

theworld.VihaanDirectSelling(I)Pvt.Ltd.companyhastotal50

products and they are categorized sales known for nutrition and

herbalproducts,thetourismholiday,wellnessproductsetc.Mr.Amit

Desai, the learned Senior Counsel, further has submitted that the

applicants/accused neither promoted any investment nor collected

depositsinanyscheme.Theyaresellingproductsandthebuyersget

thecommission.Hedescribedthepolicyofthecompanyasifyousell

more, you earn more. It is not a flybynight operation of money

launderingbuttheapplicants/accusedareinthebusinesswiththe

largenumberofIndividualRepresentativeswhohaveearnedlotof

money.However,theirstatementsarenotrecordedbythepolice.He

submittedthatpoliceareselectiveintheinvestigation.Hereliedon

thetermsandconditionsofthecontract/policywhicheverymember

has to sign with the company after he gets Independent

Representativenumberandthemembership.Hesubmittedthatthe

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companyhasalsorefundpolicyandthepersonswhodidnotreceive

theserviceorarenotsatisfiedwiththeservice,theycanapproachthe

company.Thecompanyhasrefundednearly95100Crores.

6. Insupportofhiscontention,the learnedseniorcounsel

has relied on the judgment of Gold

QuestInternational
Private

Limitedvs.StateofTamilNaduandOthers,(2014)15Supreme

CourtCases,235wherethecompanyhasfiledPetitionforquashing

the first information report and wherein a compromise/settlement

betweenthepartieshastakenplaceandtheSupremeCourtquashed

thefirstinformationreportandallowedtheAppeal.Hefurtherrelied

onthejudgmentof StateofWestBengalandOthresvs.Swapan

KumarGuhaandOthers,1982SupremeCourtCases(Cri)283.So

alsointhecaseof StateofWestBengalandOthersvs.Sanchaita

Investments and Others, 1982 Supreme Court Cases (Cri) 283.

Thejudgmentof SanchaitaInvestments isonSections3and4of

PrizeChitsandMoneyCirculationSchemes(Banning)Act,1978.He

further relied on para 6 of the said ruling. He submitted that the

offenceunderPrizeChitsandMoneyCirculationSchemes(Banning)

Act,1978isbailable.Onthepointofnecessityofarrest,hereliedon

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Siddharam Satlingappa Mhetre vs. State of Maharashtra and

Others,(2011)1SupremeCourtCases694andJogindarsinghvs.

U.PandOthers,1994(4)SCC260.ThelearnedseniorcounselMr.

AmitDesaihassubmittedthatinanycasearrestisnotrequiredand

arrestisnotjustifiedespeciallywhenthepunishmentislessthan7

years.Inordertosubstantiatehissubmissions,hereliedon Arnesh

Kumarvs.StateofBiharandAnother,(2014)8SupremeCourt

Case,273.HealsoreliedonAmwayIndiaEnterprisesvs.Unionof

India,2007SCCOnLineAP494.

7. Thelearnedseniorcounselhassubmittedthatsincethe

case of Joginder Kumar vs. State of U.P. And Others, (1994) 4

SupremeCourtCase,260tothecaseofArneshKumar(supra),the

lawonthepointofarresthaschangedasthepoliceofficermustbe

satisfiedaboutnecessityandjurisdictionofsucharrestonthebasisof

investigation. He submitted that there should not be violation of

humanrights.Hereliedon GurbakshSinghSibbiaandOthersvs.

State of Punjab, (1980) 2 Supreme Court Cases, 565 and

Siddharam Mhetre (supra), wherein the principle of arrest in the

casesofanticipatorybailisexplained.Hefurtherplacedrelianceon

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thecaseofBhadreshBipinbhaiShethvs.StateofGujrat,2015SCC

OnLine771. ItwasthecaseunderSection438ofCodeofCriminal

Procedure wherein the Hon'ble Supreme Court has laid down the

principlesofgrantofanticipatorybail.

8. Mr. Pradeep Gharat, the learned special prosecutor

submittedthatChiPendentandBiodiskweresenttoBhabhaAtomic

ResearchCenterforradioactivitytestwhichwasconductedon20 th

February, 2015 wherein it was reported that no radio activity was

detected. He further submitted that the company was not selling

actually any product but everything is shown on Internet and on

social website. The police have recorded the statements of three

personswhohavestatedthattheseminarswereconductedforthe

personswhowereinterestedingettingdegreeofM.B.A.Theyhave

statedthataspertherepresentationmadebeforethem,theypaidthe

amounts as they were promised Ecourse of M.B.A. which was

affiliatedtosomeSwissUniversity.Theywereinformedthatasand

whenpaymentismade,youwillgetidentityandoneIndependent

Representative (I.R.) number and a link will be provided with a

password so that they could have access to the site. However,

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irrespectiveoftheireffortstheycouldnotgetaccessandcouldnot

completethedegreeandthustheywerecheated.Hesubmittedthat

VanmalaHotels,TravelsandTourismServicesPrivateLtd.andPallava

ResortsPrivateLimitedhavecreatedaWebsiteandtravelpackages.

The commission was not paid on the products though the new

memberswereintroduced.TheregisteredofficeofVanmalaHotels,

TravelsandTourismServicesPrivateLimitedcompanyisacallcenter.

He further submitted that in December, 2014 the Ministry of

Corporate Affairs sealed their office at Chennai and declared Gold

Quest International Private Limited and QuestNet Enterprise (P)

Limitedasthefraudcompanies.Thusmoneyiscollectedonlineand

though the Independent Representative number is given, actual

moneywasnotavailableforwithdrawal.Saidmoneywaslaundered

outside India. The policein theinvestigation have comeacross73

bank accounts of Q NetLimitedandtotallaunderingofRupeesis

around135Crores.

9. Thelearnedspecialprosecutorfurthersubmittedthatin

the year 2014 the complaint was filed against Q Net Limited and

QuestNetEnterprise(P)LimitedcompaniesofQ1Groupastheyhave

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cheatedmanypersons.HesubmittedthatQ1GroupisfromMalaysia

and through the said group these activities are carried out under

differentnameandstyle.Therearemultiplebankaccounts,thereis

mensreatocheatthepeopleandthus,thecompaniesi.e.Transview

EnterprisesIndiaPvt.Ltd.andVanmalaHotels,TravelsandTourism

ServicesPvt.Ltd.andVihaanDirectSelling(I)Pvt.Ltd.cheatedmany

personsandthatiscontinuedtilltoday.Thereismoneytrailwhichis

disclosing money level circulation scheme. In support of his

contentions,hereliedonthefollowingauthorities:

1) State of Gujrat vs. Mohanlal Jitamaljiporwal and

Another,1987AIR1321.
2)NarayananRajagopalanvs.TheStateofMaharashtra,in
Cri.A.B.A.No.1416of2013dated2ndApril,2014.

3)AshokBahirwanivs.TheStateofMaharashtra,inCri.
th
A.B.A.No.1083of2012dated19March,2013.

4)AmwayIndiaEnterprisesvs.UnionofIndia,2007(4)
ALT808.
5) Y.S.JaganMohanReddy vs.C.B.I.,in Cri.AppealNo.
th
730of2013,S.C.dated9May,2013.

6) Kasturchand Ramlal Badjate vs. The State of
Maharashtra,(1981)83BOMLR8.
7) Central Bureau of Investigation vs. Anil Sharma, S.C,
rd
Cri.Appealdated3September,1997.

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8)Sudhirvs.TheStateofMaharashtraandAnother,Cri.
st
AppealNos.12861287of2015dated1October,2015.

9)K.K.Baskaranvs.StateofTamilNaduandOthers,Cri.
th
AppealNo.2341of2011dated4March,2011.

10) Shrinivasa Enterprise and Others vs. Union of India,
(1980)4SCC507.
11)StateofMaharashtravs.SomNathThapa,1996AIR
1744.

10. The learned Special prosecutor submitted that the

economicoffendersruintheeconomyoftheStateandtheeconomic

offencesarecommittedwithcoolanddeliberatemannerregardlessto

theconsequencesonthecommunity.Hereliedonthejudgmentof

Mohanlal Jitamaljiporwal (supra). He further relied on the

judgmentoftheDivisionBenchinthecaseofTransviewEnterprise

IndiaPrivateLimitedvs.TheStateofMaharashtra&Anr. ofthis
th
Courtpassedon 12

February,2014 in CriminalApplicationNo.

844of2014 wheretheapplicantinTransviewEnterprisesIndia(P)

Ltd.hasfiledanapplicationfordefreezingtheaccountswhichwas

refused by this Court. He also placed reliance on Amway India

th
Enterprise vs. Union of India daed 19
July, 2007. (2007 SCC

OnlineA.P.494). Hefurtherreliedonthejudgmentinthecaseof

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KuriachanChackoandOthersvs.StateofKerala,SupremeCourt,
th
inCri.AppealNo.1044of2008passedon10
July,2008. This

matterwasagainsttheorderofdischargeoftheaccusedpersonsfor

theoffencespunishable underSections4and5readwithsections

2(e) and 3 of the Prize Chits and Money Circulation Schemes

(Banning)Act,1978.Hereliedonthejudgmentof GautamKundu

vs.ManojKumar,inCri.AppealNo.1706of2015arisingoutof

SLP(Cri.)No.6701of2015. Inthesaidcase,thetrialCourthas

rejectedbailunderSection439ofCodeofCriminalProcedurewhere

theaccusedwasprosecutedfortheoffencepunishableunderSection

3ofPreventionofMoneyLaunderingAct,2002.Inthesaidcase,the

CourthasreferredSection45ofPrizeChitsandMoneyCirculation

Schemes(Banning)Act,1978andwhichhasoverridingeffectonthe

generalprovisionsoftheCodeofCriminalProcedure.

11. ThecomplainantGurupreetsinghAnandwhowaspresent

intheCourtwantedtoaddresstheCourtandsoinallfairness,the

opportunitywasgiventohim.Hewasheard.Hehasalsofiledthe

intervention application. He stated that QuestNet Enterprise (P)

Limited carried out their business and after the prosecution of

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QuestNetEnterprise(P)Limited,theyintroducedthebusinessplan

under the name and style Q Net Limited. He submitted that the

companygivesrosypictureof'moneybackscheme'tothepublicat

large. However, once a person become a member, he is called as

'Independent Representative' (I.R.) and then he can get the

commission. However, he does not earn money as promised. The

applicants/accusedandtheotherrepresentativesarenotaccessible

andfinallythepersonlosehismoney.Hesubmittedthatthesame

personsarerotatedfromQuestNetEnterprise(P)LimitedtoVanmala

Hotels, Travels and Tourism Services Pvt. Ltd. and Vihaan Direct

Selling(I)Pvt.Ltd.Hesubmittedthatthepaymentswerepromised

andthepartnershipwasasperthebusinessplan.Thecompensation

promisedbytheQNetLimitedwasonweeklybasis.Hesubmitted

thatasGovernmentfoundthatthereisafraudofCroresofrupees,

Government agency started to investigate the matter and through

website qnet.net.com which was blocked by the order of the

Magistrate Court. He submitted that nearly 15000 Independent

Representative of Q Net Limitedwere transferredtoVihaan Direct

Selling(I)Pvt.Ltd.company.Thecomplainantreliedonthebusiness

planofQuestNetEnterprise(P)Limited.SoalsotheFrequentlyAsked

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Questions(FAQ)inthebusinessofVihaanDirectSelling(I)Pvt.Ltd.

company.Soalsothegenealogyreport.Hesubmittedthattheyare

attractingpeoplebygivingfalsepromises.Hence,thereischeating.

12. The learnedcounselfortheapplicants/accusedinreply

submitted that the applicants/accused have fully cooperated the

policeandthedetailsoffinancialtransactionsalsosuppliedtothe

police.Thereisnocaseofmoneylaundering.Onlyfewcroreshave

goneoutofIndia.ThelearnedseniorcounselMr.Desaihassubmitted

that direct marketing is promoted by Government of India and

Government has supported direct marketing i.e. how the

applicants/accusedarecarryingoutthebusinessandalltheactivities

are legal. The applicants/accused who are running company

explainedthefactstothepublicatlargeandthepersonswhobecame

members.Acontractisenteredbetweenthem.Theentirebusinessis

legalsothatpeoplecanearnmoremoneyandquickmoneyanditis

notdependentonenrollmentofmembersbutonthesell.Hereliedon

thejudgmentinthecaseof SanchaitaInvestments (supra) under

PrizeChitsandMoneyCirculationSchemes(Banning)Act,1978.He

submitted that in this scheme, income is on the basis of sale of

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products.Itisnotcompulsoryforanypersontobecomememberand

enrollinit.HesubmittedthatearlieritwasGoldQuestInternational

PrivateLimited andifatallthereissomefaultorillegalityfoundin

the scheme, then the person can change the scheme as per the

requirementofthelawanditcanbecorrectedandthereforeanew

schemecanbeintroduced.Therefore,thereisdifferencebetweenQ

Net Limited and QuestNet Enterprise (P) Limited. There are no

registration charges forbecomingIndependentRepresentativeinQ

Net Limited, which were compulsory in QuestNet Enterprise (P)

Limited.Thecommissiondependsonlyonsaleofgoods.Thereisalso

a refund policy in the working of Q Net Limited. The

applicants/accusedarenotsittingonanybody'smoney.Inthecaseof

QuestNetEnterprise(P)Limited,theMadrasHighCourtinitiatedthe

prosecution against different persons than the applicants/accused.

However, the order passed by the Madras High Court was

subsequentlysetasidebytheHon'bleSupremeCourtastheparties

enteredintoacompromise.AspertherequirementofSection2(c)of

M.P.I.D.Act,itisnecessarytocollectdeposits.Inthepresentcase,no

depositsarecollected.

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13. Before adverting to the facts of the present case, it is

usefultoculloutandreproducetheratiolaiddownbytheHon'ble

SupremeCourtinsomeimportantcases.

14. The question before the Hon'ble Supreme Court in the

caseofAmwayIndia(supra)waswhetherthebusinessactivitybeing

carriedoutbythePetitionercomesunderthePrizeChitsandMoney

Circulation Schemes (Banning) Act, 1978 and the other issue was

about the legality of seizure and search carried out by the

investigatingagencyatvariousplacesofAmway.TheWritPetitions

weredismissedbytheSupremeCourtanditwasheldthattherights

of seizure and search on various places are legal. The Hon'ble

SupremeCourtinthecaseofAmwayIndia(supra)hasdiscussedand

analyzedmoneycirculationschemeandwhereitisheldasunder:

Money circulation scheme means any scheme, by

whatevernamecalled,forthemakingofquickoreasymoney,
or for the receipt of any money or valuable thing as the
consideration for a promise to pay money, or any event or
contingencyrelativeorapplicabletotheenrollmentofmembers
intothescheme,whetherornotsuchmoneyorthingisderived
fromtheentrancemoney ofthemembersofsuchschemeor
periodicalsubscriptions.

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15. In the case of Gautam Kundu (supra), the Bench has

referred the observation of the Supreme Court in the case of Y.S.

JaganMohanReddy(supra)whereinitisobservedasunder:

The economic offences having deep rooted

conspiraciesandinvolvinghugelossofpublicfundsneed
tobeviewedseriouslyandconsideredasgraveoffences
affecting the economy of the country as a whole and
therebyposingseriousthreattothefinancialhealthof
country.

16. In the case of Kuriachan Chacko (supra)saidcasethe

Hon'bleSupremeCourtheldasunder:

The scheme is so grossly unworkable that the

persons who made representations to that effect and
inducedpersonstopartwithmoneydidentertainthe
contumacious intention. They knew fully well that
unworkablefalserepresentationswerebeingmade.The
obviousattempt,itcanbepresumedatthisstage,wasto
inducepersonsbysuchfalseunworkablerepresentations
to part with money. Initially some subscribers can be
keptsatisfiedtoinducethemandotherssimilarlyplaced
tojointhelongqueue.Butinevitablyandinescapably
later subscribersareboundtosuffer unjustlosswhen
theyswallowthefalseandthereforethechargecanbe

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framedunderSection420readwith34ofIndianPenal
Codeatthesaidstage.

17. This scheme is undoubtedly a multilevel marketing

activityandapyramidstructureofsuchschemeispreparedsothat

the members are promised to get money on purchase and sale of

products. The money circulation or multilevel marketing pyramid

structureasdescribedaboveisacognizableoffenceunderPrizeChits

andMoneyCirculationSchemes(Banning)Act,1978.Aletterdated

1stJanuary,2015issuedbytheChiefGeneralManager,R.B.I.isplaced

beforeme,whereinR.B.I.hascautionedthepublicagainstmultilevel

marketingactivitiesasthepeopleduetoattractiveoffersarefalling

preytothesaidschemesandfinallytheysufferlosses.However,the

offenceunderPrizeChitsandMoneyCirculationSchemes(Banning)

Act,1978isbailable.

18. In the case of Shrinivasa Enterprise (supra), the

competency of the legislature to enact the Prize Chits and Money

CirculationSchemes(Banning)Act,1978waschallenged.Inthesaid

case,theHon'bleSupremeCourthasobservedthatasunder:

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In the matters of economics, sociology and other

specialisedsubjects,Courtsnotembarkuponviewsofhalf
litinfallibilityandrejectwhateconomistsorsocialscientists
have, after detailed studies, commanded as the correct
course of action. The final word is with the Court in
constitutionalmattersbutjudgeshesitateto'rushin'where
even specialists 'fear to threat', If experts fall out, Court,
perforce,mustguideitselfandpronounceuponthematter
fromtheconstitutionalangle,sincethefinalverdict,where
constitutionalcontraventionsarecomplainedof,belongsto
thejudicialarm.

19. InthecaseofBhadreshSheth(supra)thechargesforthe

offencespunishableunderSections506(2)and376ofIndianPenal

Codeandthecomplaintwasgivenintheyear2001andafter17years

theSupremeCourttriedthematterforcancellationofanticipatory

bail. The Court referred the principles laid down in the cases of

Gurbaksh Singh Sibbia and Siddharam Satlingappa Mhetre

(supra)andsetasidetheorderofthetrialCourtofcancellationof

anticipatory bail. In sum and substance, while entertaining

anticipatorybailapplication,theCourthastorelyandrefertheratio

laiddowninthecasesofoldgoodlawofGurbakshSinghSibbiaand

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Siddharam Satlingappa Mhetre (supra). The present offence is

fallingunderthecategoryofeconomicoffencesandthereforeithasof

different complexion than the case of Bhadresh Bipinbhai Sheth

(supra).

20. Perused the documents presented by both the sides. I

have gone through the plan which is given by Qnet to every

individualrepresentative(IR).Ihavegonethroughthestatementsof

manywitnesses,whoclaimedthattheyhavebeencheatedunderthe

scheme launched by Qnet. I have also considered the conclusive

report of (Serious Fraud Investigation Agency under the Company

Act)S.F.IO.Primafacie,thereismaterialtoholdthatthebusiness

conductedbyQnetiscoveredunderPCMCActandalsounderDrugs

and Magic Remedies (Objectionable Advertisements) Act, 1954.

However,allthesesectionsarebailable. Consideringthemannerin

whichthebusinessisconducted,Ihavedoubtwhetheroffenceunder

section3oftheMPIDAct,whichisanonbailablesection,canbe

attractedornot?

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21. Apart from these offences for which the

applicants/accusedareprosecuted,cheatingistheonlynonbailable

offenceundersection420oftheIPC.Whilehearingthecaseofthe

prosecutionandthedefence,mymainquerytoboththepartiesand

myselfwaswhetheroffenceofcheatingis primafacie madeoutor

not. In order to attract the offence of cheating, the ingredient of

intentiontocheatshouldbepresentinthemindoftheaccused. If

mens rea is absent, then, even if other person or the complainant

sufferslossesinthebusiness,then,itisnotcheating.Then,itcanbe

simplylabelledasafinancialbusinesstransactionwhichdidnotfetch

positive returns. As per the submissions of the learned Senior

CounselandtheotherlearnedCounselfortheapplicants/accused,it

is true that the company has launched an emarketing business to

make money. As observed by the Supreme Court in the case of

Chacko(supra)toearnmoremoneyisnotanoffence;toearnquick

moneyoreasymoneyisalsonotanoffence.Therefore,ifsuchproject

islaunched,thatitselfcannotbeanoffence.Thereisnocompulsion

orforceoperatedonthepublictobeamemberofthebusinessor

participateinthebusiness.Thus,theoptionwasalwaysopentothe

aggrievedpersonstosaynotothescheme.However,thethingsare

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notasstraightastheyareperceivedonthesurface. Assumingthat

the scheme was launched with a noble object to give benefit to

maximum people to make money quickly and easily by selling

productsofthecompany,however,aftergoingthroughthematerial

placedbeforemeincludingthestatementsofthewitnesses,Iamof

theviewthatinthemidway,theintentionoftheapplicants/accused,

who are the Directors and shareholders of the company, became

dubious. They had knowledge that more members are suffering

financiallossesandtheyarenotsatisfiedwiththeproducts.Theclaim

thatthewellnessproductsi.e.,BiodiskandChiPendentaremedicinal

andspiritualproducts,isafterall,amatteroffaith. However,the

applicants/accused have launched these wellness products with

ulterior motive and with correct judgment of vulnerability of the

people.Theholidaypackageswhichweresoldoroffered,withoutany

choicelefttothebuyers.TheentirebusinesswasInternetbasedand,

therefore,thepersonswhoareresponsiblei.e.,thetopbrassi.e.,the

applicants/accused,werenotapproachabletothepersonswhowere

aggrieved. Thenatureofthebusinesswasknittedintheinterestof

theDirectorsandshareholdersinsucha mannerthatthepersons

whoareatthelowerlevelofthepyramidcannotgetanyaccesstoput

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up their grievances. The manner in which the persons were

contacted,incentivesoffered,theworkshopswereconducted,arebest

examplesofinducement.

22. Respondingtothesubmissionsoftheprosecutionthatthe

IRsoflowerlevelofpyramidaredoingaggressivemarketingandthey

arethreateningandpesteringpeopleforsellingtheproductsandfor

becoming members, Mr.Desai argued that the applicants/accused

cannotbevicariouslyliable. Theyhavestartedtheschemewitha

nobleobjectandtheycannotbeheldresponsibleforsomeoverreach

or aggressive steps or illegality of some IR while marketing the

companyproducts.Itistruethatthedoctrineofvicariousliabilityis

unknowntothecriminallaw.However,apartfromthebehaviourof

suchpressurisingtacticswhichareusedbytheIRsonthelowerlevel

of the pyramid, material is brought before me to show that many

workshopsandsessionsareconductedregularlyatvariousplacesby

the company. Undoubtedly, all these workshops and sessions and

trainingcentresarerunatthebehestoftheapplicants/accusedbythe

Directorsandshareholdersi.e.,theapplicants/accusedandthus,they

have control either directly or remotely, over the dishonest

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inducementandaggressivemarketingwhichisthemodusoperandiof

thiscompany.

23. To protect the fundamental right of every individual to

practice any profession or to carry on any occupation, trade or

businesswhichisguaranteedunderArticle19(g)oftheConstitution

ofIndiaisthedutyoftheCourt.However,itisalwaysqualifiedwith

reasonable restrictions. A particular business fetching profit to

handfulofindividualscannotbecarriedoutatthecostofotherswho

sufferlossesduetodeceitfulinducement.

24. Thestatementsofthewitnessesrevealthatthedishonest

concealmentoftruefactsandtherealbusinessofthecompany.The

persons,whodominateandnavigatethewilloftheothers,havean

advantagewhichtheycanturntotheiraccount.Inthepresentcase,

suchadvantageisgainedundoubtedlybydishonestlyandindeceitful

manner. Thereareinstancesofdishonestconcealmentoffactsi.e.,

genuinenatureoftheproductsandbythepersonsworkingforthe

companyi.e.,I.Rsandwithintentiontoearnwrongfulgaintothem

and the company and wrongful loss to others. The motto of the

company 'sell more, earn more' appears very attractive and

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innocuous.However,thismottoisfullycamouflaged.Thecompany

standsonabasicstatementthatpeoplecanbefooled.Thus,thetrue

mottois'sellmoreearnmore'byfoolingpeople.

25. The submissions of the learned Senior Counsel for the

applicantsaccusedthatsellingtheproductataveryhighpriceisnot

an offence, is true and cannot be controverted in the marketing

business.Itdependsonthemarketingcapacityofanindividualand

sothelevelofhisprofit. However,inthismarketing,theIRs are

directed to give all the names and details of the relatives, phone

numbersoftheiracquaintances,referencesandthereafterthepersons

in the higher level, who are given some positions, contact these

acquaintances and references and the chain is multiplied. The

persons who are gullible, are bound to be prey of such kind of

persuasionwhichiscolouredwithinducement.Infact,itisachain

whereapersonisfooledandthenheistrainedtofoolotherstoearn

money.Forthatpurpose,workshopsareconductedwherestudyand

businessmaterialisprovidedwithajuggleryofwords,promisesand

dreams.Thus,thedeceitandfraudiscamouflagedunderthenameof

emarketingandbusiness.

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26. Mr.Desai,thelearnedSeniorCounselfortheApplicants,

hassubmittedthatthelawundersection438oftheCodeofCriminal

Procedurehasdevelopedandchangedalottilltoday.TheSupreme

Court has taken a veryliberalviewandahumanisticviewon the

pointofarrest. Hereliedon JoginderSinghSibiya and Bhadresh

BipinbhaiSheth(supra) andsubmittedthatinthecasesespecially

wherethepunishmentislessthan7years,theSupremeCourthas

disapproved arrest and, therefore, section 41A of the Code of

CriminalProcedureisenacted.

27. It is true that the Legislature in order to avoid illegal

arrest,rathertocheckthepolicemaniaofarrest,hasenactedsection

41A of the Code of Criminal Procedure and the Supreme Court

respondingtothesaidlegislationinArneshKumar(supra),haslaid

down guidelines directing the police how to give notice and the

person should get opportunity to put up his explanation. In the

present case, the offence is registered in the year 2013. The

applicants/accused were granted interim prearrest bail by the

learnedSessionsJudgeandthus,theapplicants/accusedhavevisited

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thepolicestationonanumberofoccasionsandgaveexplanationto

thepolice,whichtheywantedto.However,thepolicehaveopposed

their applications for prearrest bail in the Sessions Court and the

SessionsCourthasdeniedthesame.Itshowsthatsection41Awasin

fact fully complied with. This shows that the police whatever

explanation and information they received from the

applicants/accusedarenotsatisfied.Imadesearchingqueriestothe

learned Prosecutor in order to clear the doubt as to whether the

policewantedtoarresttheapplicantaccusedonlyoutofvengenace

ortheyhavemadeitaprestigeissue.However,aftergoingthrough

the record, which is placed before the Court and the submissions

madebyboththeparties,Ifoundthatsuchelementisabsent.There

maybemisdirectedoverenthusiasmonthepartoftheprosecutionin

sendingBiodisk andChiPendenttoBARC. However,Iamofthe

viewthattheyneedtoinvestigateproperlyandmoreeffectivelyto

find out the money trail and from where the products are

manufactured, also to check the correct addresses, bank accounts,

networking of the company, etc. Moreover, by this deceitful

inducement,largenumberofpeople,maybeapproximately2.5lakh

people, are trapped in this moneytree planting business and

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everyday,asitisanongoingactivity,morepeopleareacceptingthese

attractivecamouflagedoffers.

28. It has very grave and serious impact on the economic

status and mental health of the people on a large scale. On

considering parameters of section 438 of the Code of Criminal

Procedure,Iamnotinclinedtoprotecttheaccused.Itwon'tbeoutof

placetomentionthatsuchcirculationisrequiredtobestopped.Itis

necessary for the prosecution to take injunctive steps against this

businessactivitywhichisprimafacie,illegal.Thoughbystoppingthis

business, a large group of people may get financially affected,

however,itwillsavelargergroupsofpeoplefrombecomingpreyof

thisactivity.

29. In the result, the Anticipatory Bail Applications are

rejected.CriminalApplicationsforinterventionsstanddisposedof.

30. At this stage, learned Counsel appearing for the

applicants/accusedseekscontinuationofearlierinterimrelieffora

periodof10weeksastheapplicants/accusedintendtochallengethe

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orderbeforethehonourableSupremeCourt.LearnedProsecutorhas

opposed this oral prayer. However, the earlier interim relief is

continuedtill15thJuly,2016.

(MRIDULABHATKAR,J.)

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