Cr.P.C. cannot lie in view of the decision of this Court in Criminal vs RajamanickamT, orders of High Court of Jabalpur between Dr.(Mrs.f

THE HON'BLE SRI JUSTICE E.V.VENUGOPAL CRIMINAL REVISION CASE Nos.851 853 and 854 OF 2024 COMMON ORDER : All these criminal revision cases are filed by the petitioner, who is accused No.9 in CC No.651 of 2015 and accused No. 13 in CC Nos.468 of 2076 CC No.551 of 2015, ail on the hle of the learned Chief Metropolitan Magistrate at Hyderabad, under Sections 438 and 442 ot BNSS aggrieved by the common order dated 19.04.2024 passed by the trial Court in Cr1.M.P.Nos.826, a32 and 833 of 2023 in the calendar cases refcrred above, wherein his prayer under Section 239 Cr.P.C. seeking his clischarge from the offences under Sections 420, 12O(B) of IPC and Sections 2(C), 3,4, 5 and 6 of Prize Chis and Money Circulation Schemes (Banning) Act, 1978, was rejected

2. ln ail these criminal revision cases, this Court heard Sri R.Umamaheshwar Rao, learned counsel for the petitioners and Sri Palle Nageshwar Rao, learned Public Prosecutor for the respondents.

3. Since the parties in all these three criminal revision cases are one and the same and the facts and thg points to be adjudicated are interrelated, this Court disposes of all these criminal revision_ cases through this common order. ( 2

4. Before going into the facts of the case, the particulars of the three cases, registered against the petitioners herein, as described in the charge-sheets, are tabulated hereunder for brevit5z and easy understanding : Crl.RC No. =- a51 12024 as3l2024 854 I 2024 I Filed against orders in Crl-M-P.No a33 /2023 CC No.65l of 2015 on the hle of tnal Court a32 12023 in CC No.648 of 20 16 on the file of trial Court a'2612023 in CC No.5l I of 201 5 on the filc of the tnal Court Crime No. / Nos la /2OO9 129 /20tO 232 I 20 t4 161 t2014 3O2 /2014 Case registered in PS De-facto complainant l Nacharam Gojireddy Koti Redd.v Chikkadpally Mankena Srinivasa Rcddv RC Puram Jangaon I-Town Khammam Subedari Matam Venkata S_vam Sundar Md.Sadrq A1i Gollapudi Rama Rao A.An u rag Crime No. 161/2014 was clubbed with Crime No.3O2l201,+ t23l2O't4 CCS, DD, Hvderabad t3o 12014 Panjagutta I Matam Venkata Syam Sundar The allegations levelled against the petitioner and other accused persons, succinctly, are that the accused entered into an agreement to do an illegal business of money circulation under the guise of direct selling ol the goods of accused No. I company with a malafide intention to cheat the general gullible public of India and in execution of such conspiracy, they have promoted money circulation scheme by way of joining or enrolling the members in the form of distributors called as ABOs but the said act is nothing but enrollment of new members into the scheme so as to enrich A1 company alone. In this process, some of a 3 the accused have extended their co-operation in aggressively propagating the scheme by conducting seminars and meetings so as to attract the gullible public to become members of the money circulation scheme with the intention of becoming rich quickly and easily within a short span of time without any effort. In this process, the accused were successful in iuring the public by false representations that anybody can make easy money and become rich in a short time and induced the public to join as members on enrollment under the guise of marketing the goods directly to the public and thereby they have committed offences with which, they were charge-sheeted. (a) More precisely, the modus operandi of the accused in this process is that accused No.1/Amway India Enterprises Pvt. Ltd., is a company registered under the Companies Act and its scheme is 6-4-3 means the first person has to sponsor 6 persons and these 6 persons have to sponsor 4 persons each totaling to 24 persons and in turn these 24 persons have to sponsor/enroll 3 persons each totaling to 72 persons. These 1O3 persons are ca,lled as one leg for income calculation purpose and this chain keeps on going unchecked. The persons should be enrolled by an already enrolled member so as to maintain chain. The initial entrance fee of Rs.4,4O0/- was waived off and subsequently, the new entrants have to purchase products worth Rs.4,4O0/- or otherwise the membership will expire. After payment of some amount, an identit5r ..'.., 4 card and some products will be delivered by the company at the time of joining in the name of business kit. Joining a member into the scheme is treated as sale of product. The new person, who joined in the scheme is called Amway Business Owner ADA or ABO or down liner. The person who joins a new member in the scheme under him is called up- line member. Commissions are given not only on the event of person efforts their direct enrollment/ sponsoring but also on the contingency to sponsoring of new members by their down-line members. (b) The allegation against the petitioner in all these cases is that he is the employee ol A 1 company and was responsible for day to day business affairs of the company besides responsible for spreading multi-level marketing schemes designed by the company. Further, he was the head of information technolory and was responsible for preparation of website of the company and publishing and advertising the company business and receiving on-line orders from ABOs.

5. The investigating officer concerned upon conducting investigation basing on the above allegations laid charge-sheets and the same were assigned calendar case numbers by the trial Court by taking cognizance against the accused for the offences with which they were charge- sheeted. I I I I r ) 5

6. Challenging his array as accused in the above calendar cases, the petitioner filed the above referred applications seeking his discharge from the above cases before the trial Court mainly contending that he is innocent, falsely and in a casual manner he was implicated in the cases; neither the charge-sheets nor the statements of witnesses recorded during investigation disclose any facts to attribute the petitioner that he committed the offences; no attributions can be made against the petitioner only for his attending the employment of creating a website or promoting the multi-level marketing on behalf of his employer; no employee can be prosecuted by virtue of allegations levelled against his employer as laid down by Hon'ble Apex Court in catena oI decisions.

7. The learned public prosecutor, representing the respondent/ State vehemently opposed the said discharge applications mainly contending that the accused have criminally conspired to conduct a banned and illegal business under the guise of direct selling resulting in wrongful gain to themselves and wrongful loss to the public; the High Court, as per orders in WP Nos-20470 of 2006 and 20471 of 2006 has categorically held that the business activities carried out by the accused in the present cases clearly attract the provisions of Prize Chits and Money Scheme (Banning) Act, 1978 and that the petitioner was \-- -- 6 instrumental in creating the website for the purpose of canvassing the business and attracting the innocent public.

8. The trial Court dismissed the said applications holding that there are grounds ancl material to frame charges against the accused and hence, the petitioners cannot be discharged from the respective cases.

9. Aggrieved by the said dismissal orders, the present criminal revision cases are hled by the petitioner mainly contending that except stating that the petitioner is the employee of A 1 company and instrumental in creating website to canvass, publicize and attract the public no grave allegations are made against the petitioner and he being an employee of A1 company cannot be vicariously made liable for the acts of the company and his prosecution in his individual capacity only on the ground that his employer was made an accused, unless he is the alter ego of the company, cannot stand for legal scrutiny as held by the Hon'ble Supreme Court in Sunil Barthi Mlttal Vs. CBII. There is nothing on record to show that the petitioner acted as an alter-ego of Al company. The orders of the trial Court are made without properly appreciating the material placed before it and submissions made on behalf of the petitioner. The contents of the charge-sheet do not make out any offence against the petitioner. The scope of petitioner by virtue ' (zDfs) a scc oog / 1 of his employment as Vice President (Information Technologr) is very limited in providing information related support to the company and he has nothing to do with the business model of A1 company and even according to the prosecution case, the petitioner did not participate in the business of Al nor he interacted with any of the persons dealing with the business of A1 or he is a party to any of the documents relied upon by the prosecution or he is the recipient of crime proceeds from any of the customers of A1 company. No witness has referred the name of the petitioner. The trial Court without specihcally mentioning the material which would lead the trial Court to frame charge against the petitioner in the subject crimes, has erroneously held that there is prima-facie material against the petitioner. The charge-sheets of the prosecution are filled with vague and omnibus a-llegations. There is no element of deception to be attributed to the petitioner. The trial Court failed to take into consideration the findings of the High Court of Kerala in the case between Anshu Budhraja and another vs. State of Kerala (Crl.MC No.2510 of 2OlB, dated 07.O2.2O221, wherein it has categorically held that activities of Amway are legal and are distinct from the activities sought to be prohibited under the Act. The trial Court further erred in ignoring the settled proposition of law that the Court cannot blindly accept the assumption made by tJle prosecution in its investigation and that when two views are possible upon sifting and weighing of the evidence and the evidence produced before the Court gives rise to some suspicion and not grave suspicion, the accused has a to be discharged.

10. Learned counsel for the petitioner, in support of the grounds urged through these criminal revision cases, relied upon the decisions rendered in Sunil Bharti Mittal Vs. Central Bureau of Investigation2, Sanjay Kumar Rai Vs. State of Uttar Pradesh and another3 and Amway India Eaterprises and another Vs.Union of India and others (SLP (Civil) No.13414 of 2OO7 of Hon'ble Supreme Court (from the judgment and order dated 19.O7.2OO7 in WP No.2O47O of 2OO6 of High Court of APl. The main cn-rx of the decisions relied upon by the learned counsel for the petitioner, referred above, is that the company is oniy liable for the actions of its employees if the company's controlling group had criminal intent and that the principle of alter ego can only be applied to make a company liable for the actions of a person or group of people who control the company. Basing on the above decisions learned counsel for the petitioner also contended that while considering the discharge applications the trial Court cannot act as a mere post oflice and it has to sift through the evidence in order to find out whether there are sufficient grounds to try the suspect and consider the broad probabiiities, totat effect of evidence and documents produced and basic information appearing in the case. It is further contended that the High '?(2015)4 Supreme court cases 609 t 12022115 supreme Court Cases 720 9 Court is imbued with inherent jurisdiction to prevent abuse of process of law or to secure the ends of justice having regard to the facts and circumstances of the individual cases and when the contents of the complaint or the other purported material on record is a brazen attempt to persecute an innocent person, it becomes imperative upon the Court to prevent abuse of process of law. Stating thus, learned counsel for the petitioner prayed to allow these criminal revision cases by setting aside the impugned orders of the trial Court.

11. Per contra, learned public prosecutor, by filing counter affidavit, vehementiy opposed the present criminal revision cases mainly contending that the petitioner being the head of technolory of A1 company played a pivotal role in the business of tlle company by way of publishing its products all over India and by taking on-line orders through its website including delivery of products through its agents at ABOs level starts from silver to founder's crown ambassador, who were engaged by A1 company to promote its products among the general and I innocent people. The accused including the petitioner have involved in several cases with same modes operandi in promoting illegal money circulation scheme under the guise of sale of goods by enrolment of members in chain system with the intent of getting rich quickly. With the main object to establish, develop a direct selling business to sell their products without involvement of middleman/distributors/ d5:alers 10 etc., the Government of India, upon the request made by A1 company, on 26.08-1994, permitted A1 to do direct selling business in India but A1 company with a dishonest intention colluded with other accused and started its business of multi-level-marketing scheme through its Amway Business Owners (ABO), its top employees and other companies including the petitioner, which model scheme is prohibited in India.

12. A1 company paid commission/incentives to the extent of 49.7o/o to its chain members. It has collected crores of rupees by cheating lakhs of consumers/ subscribers through the other accused including the petitioner by making false promise of getting quick money by putting mental torture in the name of seminars. A I company by entering into agreements with abroad companies, illegally sent crores of rupees in violation of provisions of FEMA, 1999 and the guidelines of RBI. The High Court for the composite State of Andhra Pradesh vide its orders dated 19.07.2OO7 in WP Nos.2O47O and 2047 I of 2006, filed by A 1 company, held that the business activities carried out by A I company squarely attract the definition of Money Circulation Scheme as provided under Section 2(c) of the Prize Chits & Money Circulation Scheme (Banning) Act, 1978 and the same flnding was also confirmed by the Hon'ble Apex Court in SLP No.13414 of 2OL7 dated 14.08.2007 while denying the prayer of A1 company to interfere with the above said findings of High Court. The accused including the petitioner lave 11 violated the orders of the State Government in GOMs.No. 178 dated

19.09.2008 restraining/advertising in newspapers arld electronic media propagating the scheme, luring the gullible public to join their company as members and continuing issuance of advertisements.

13. The Hon'ble Apex Court as well as the erstwhile High Court for the composite State of Andhra Pradesh have categorically held that though there is no loss or misappropriation of funds, mere informing a scheme, which covered under the Money Circulation Scheme (Banning) Act, l97B and enrolling members as subscribers itself is usurp offence leading to mathematical impossibility that amounts to cheating. The audit balance sheets of company for the period from 1999-200O to 2Ol2-L3 revealed that it has been remitting dividend, royalty from their holding companies/ultimate holdings, amounts paid towards import of goods and other services etc., to their holding & associate companies to an extent of Rs.2227 .28 crores against its. share capital of Rs.2 1.39 crores during the period from 1999 to 2013. The investigation done so far revealed the complicity of the accused including the petitioner and that itself is sufficient to frame charge against them for their criminal conspiracy to cheat the public and violation of provisions of money circulation scheme. The petitioner being the IT head of Al compaly, pretty well knows the objectives, nature of work and the way of \_ business carried out by it and his role is inseparable when it -is I L2 commonly read with other material accused on account of their fraudulent activities and their cheaLing the public by luring them to the rosy picture cut and in grabbing the hard-earned money of the innocent public. In that view of the matter, not only the company but also its administrators and other people prepared material and scheme for the cause of execution of the plan hatched are also liable to be prosecuted. The petitioner knowing well all these aspects, indulged in designing and preparation of fraud. Roving enquiry by the Court, while adjudicating the discharge petitions, cannot be expected. Once the charge sheet is flled with sufficient material, the trial Court has to give opportunit5r for the prosecution to produce evidence during trial and the accused will have fair opportunit5r to prove his innocence during trial by cross- examining the witnesses and also to produce evidence in support of his defence. The petitioner not only accused in these cases but also in SC No.803 of 2023, on the file of ttre learned Metropolitan Sessions Judge, Hyderabad at Nampally (Special Court), which is a case registered by the ED under the provisions of PMLA/FEMA, is an accused. Keeping all these aspects in mind, the tria-l Court, upon carefully analyzing the material available on record, has rightly dismissed the discharge petitions filed by the petitioner and hence, the said well-considered Iindings cannot be interfered with under the present revisions. 7 13

14. The learned public prosecutor filed Form 32 stating that upon working as Alternate Director in A1 company, the petitioner resigned from the same with effect from 17.O7.2014 i.e. after registration of FIRs, as stated in the table supra (paragraph No.4 of this order), and hence, the petitioner's association with accused No.1 in such capacity during the period of commission of offence is established and in that view of the matter, he cannot plead ignorance with regard to the crime perpetrated by A1 company. Further, the petitioner was a-lso one of the directors of A1 company and responsible lor its day to day functioning. Learned public prosecutor further contended that against an order made in interlocutory application, the revision under section 397 of Cr.P.C. cannot lie in view of the decision of this Court in Criminal Revision Case (SR) No.3198 of 2022.

15. While submitting the above, the learned public prosecutor relied upon the decisions rendered in Adalat Prasad Vs. Rooplal Jindal and I othersa, Sheo Nandan Paswan Vs. State of Bihar and otherss, State of Bihar Vs. PP Sharma and another6, Sethurarnan Vs. RajamanickamT, orders of High Court of Jabalpur between Dr.(Mrs.f Neena V.Patel Vs. State of Madhya Pradesh and others (Criminal Revision No.219 of 2ol211 and Kuriachan Chacko and others [s. " (u ooa) z scc:sa 'etn t98z sc 8zz ' atR 199t sc tz60 'zoos1r1 aro 1crt.1szt 14 State of Kerala8 and prayed to dismiss the present criminal revision cases as quashing the criminal proceedings does not meet the ends of justice since there is prima-facie material collected against the accused including the petitioner during the course of investigation and hence, the same requires full-fledged trial to know the complicity or otherwise of the accused including the petitioner.

16. This Court heard the rival contentions advanced on either side and perused the material available on record. The point to be adjudicated in these three criminal revision cases is whether there is any prima-facie material existing against the petitioner either for discharging him or directing the trial Court to proceed with framing of charges against the accused including the petitioner in all the three calendar cases.

17. So far as the petitioner's association with accused No.I company during the period concerning to the present crimes is concerned, no doubt he worked :rs an IT head and in execution of his post, as such, he took responsibility of publicizing the advertisements with regard to the features, nature, benefits and money returns given by A1 company to its subscribers. The main question herein is to what extent his acts contributed in perpetrating the crime of luring the gullible public in joining as subscribers by paying subscription amount and losing thei_r 8 Supreme Coun Cases (2008) 8 SCC 15 amounts in that process and in A1 companies proceeding with multi- level marketing will be the key for coming to a conclusion with regard to his complicity or otherwise.

18. Section 3 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (Act No.43 of i978) says circulation of banned prize chit and money circulation schemes or enrolment as members or participation therein in the said schemes are prohibited. Further, no person shall promote or conduct any prrze chit or money circulation scheme, or enroll as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme. Section 6 says that when an offence has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. However, it is made clear that the person who proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence cannot be prosecuted under this Act.

19. Copy of Form 32 hled by the prosecution proves that the petitioner worked as Alternate Director in A 1 company and subsequently he resigned from the same with effect from 17.07.2014 16 that this itself is sufficient to establish the petitioner's association with accused No. 1. The allegations leveled against the petitioner are that he being one of the directors of A1 company and worked as head of technolory is responsible for its day to day functioning and played a pivotal role in the business of the company by way of publishing its products all over India and by taking on-line orders through its website including deiivery of products among the general and innocent people. It is also alleged in the charge-sheet that the accused including the petitioner involved in various cases with same modes operandi in promoting illegal money circulation scheme under the guise of sale of goods by enrolment of members in chain system with the intent of getting rich quickly. The High Court for the composite State of Andhra Pradesh vide its orders dated 19.07.2OO7 in WP Nos.2047O ar..d 2047 I of 2006 held that the business activities carried out by Al company comes under the definition of Money Circulation Scheme as provided under Section 2(c) of the Prize Chits & Money Circulation Scheme (Banning) Act, 1978. The said finding was confirmed by the Hon'ble Apex Court in SLP No. 13414 of 2017 dated 14.08.2007. It is also the allegations against the petitioner that the accused including the petitioner by violating the orders of the State Government in GOMs.No. 178 dated 19.09.2008 and continued in promoting the Al companies business in giving advertisements in newspapers and electronic media and lured the gullible public. It is also alleged againsr r 1,7 the petitioner that having known well ttre fraud played by A1 company, the petitioner indulged in designing and preparation of fraud.

20. Proposition of law is very clear that review of a judgment is a serious step and reluctant resort to it is proper only where a glaring omission or patent mistake or like grave error has crept in earlier by judicial faliibility. The scope of interference and exercise ofjurisdiction under Section 397 Cr.P.C., is extremely limited and it should be exercised very sparingly and only where the decision under challenge is grossly erroneous, or there is non-compliance of the provisions of law, or the finding recorded by the trial Court is based on no evidence, or material evidence is ignored or judicial discretion is exercised arbitrarily or perversely by framing the charge. When the impugned orders are perused, there is nothing on record to set aside the same since this Court sees no apparent error warranting interference under the revisional powers.

21. When the above facts and circumstances are evaluated, this Court is of the considered opinion that there is prima-facie material placed by the prosecution in the form of charge-sheet arrd the same requires full-fledged trial to decide the complicity or otherwise of the accused and without letting the accused to face trial, he cannot be declared as innocent and it is premature to come to a conclusion with regard to the genuineness or otherwise of the prosecution case. t I I 18 Keeping in view .the above facts in mind, the trial Court has rightly rejected the prayer of the petitioner for his discharge and the said findings, in my considered view, do not warrant interference of this Court. Further, there is no force in the grounds urged by the petitioner through these revisions to set aside the impugned orders. In that view of the matter, this Court is not inclined interfere with the well considered f-rndings of the trial Court. Accordingly, the present criminal revision cases are dismissed.

22. In the result, 851 of 2024, 853 of 2024 and 854 of 2024 are dismissed.

23. As a sequel, the interlocutory applications, if any pending, shall also stand dismissed. //TRUE COPY/i D Sd/. M. RAMANA KRISHNA EPUTY REGISTRAR i\l'u-. SECTION OFFICER To,

1. The Chief Metropolitan Magistrate at Hyderabad 2. The Station House Officer, C.l.D. Police Station, Hyderabad 3. Two CCs to the Public Prosecutor, High Court for the State of Telangana at Hyderabad [OUT]

4. One CC to Sri E Umamaheswar Rao, Advocate [OPUC] 5. Two CD Copies ADK/nsk w HIGH COURT DATED:2010212025 / COMMON ORDER CRLRC.No.851,853 AND 854 of 2024 a 1H E 9I^q o( (f. t- I { I (.) t 1 B ilAfl 2025 { .Sl.TCH 6g DISMISSING ALL THE CRLRCS