W. P. (C) Nos. 12775, 13152 of 2006 and Crl. M. C. No. 1377 of 2006. Case: Achamma Chacko and Anr. etc. Vs Govt. of Kerala and Ors. etc.. Kerala CEGAT & CESTAT High Court

Case NumberW. P. (C) Nos. 12775, 13152 of 2006 and Crl. M. C. No. 1377 of 2006
CounselFor Appellant: U. U. Lalith (Sr.), P. Vijaya Bhanu and P. Santhosh (Poduval), Advs. and For Respondents: M. Ajay, Sr. Govt. Pleader and S. Saju, Advocate and Sajeev Kumar K. Gopal and Binoy Vasudevan, Advs. and K. Gopalakrishna Kurup, Advocate and C. C. Thomas, Advocate.
JudgesV. K. Bali, C.J. and P. R. Raman, J.
IssueIndian Penal Code (45 of 1860) - Section 420; Criminal Procedure Code (2 of 1974) - Sections 154, 482
Judgement DateJuly 05, 2006
CourtKerala CEGAT & CESTAT High Court


V. K. Bali, C.J.

1. A partnership firm with the name and style "M/s. LIS, Ernakulam" is said to be conducting the business of making available Government lottery tickets to the public under the Multi Level Marketing principle in partnership. As per its own showing, the partnership has registered three lakhs members in the scheme evolved by it. Though it is not mentioned in sufficient details in the writ petitions or criminal miscellaneous case, but as revealed during the investigation and not disputed during the course of arguments, the managing committee of the trust stated to be P. V. Chacko, Kuriachan Chacko and Joy John met on 11-11-2002 and decided to permit Kurian Chacko to conduct lottery ticket business in the brand name LIS. Kurian Chacko was to conduct the business of his own either as a proprietary concern or as a partnership or as a limited company. Kuriachan Chacko had to make available necessary funds for the trust and its members. In pursuance of the resolution, Kuriachan Chacko along with one Achamma Chacko and Linu Joy who are wives of the trustees of the trust formed a partnership vide Deed dated 12-11-2002. The name of the firm as per the deed is M/s. LIS, Ernakulam and the registered office of the firm is stated to be that of the office of the trust itself. The partnership deed further provides that the main business of the firm shall be arranging online and paper lottery tickets to the public. The firm is seen registered with the Registrar of Firms, Trivandrum on 26-11-2002 with No. 1741/02 and the duration of the firm is stated to be five years. As per the certificate issued by the Registrar of Firms the name of the firm is M/s. LIS with three partners Kuriachan Chacko, Achamma Chacko and Linu Joy. The firm LIS (Regd.) is conducting Prize Chits and Money Circulation Scheme throughout the State of Kerala in the name LIS Deepasthambam Project. The business of these persons is claimed to be genuine, even though styled by the investigating agency as under the bogus name LIS (Regd.), is making advertisement in all leading dailies and through visual medias offering fabulous returns for deposits from the public. The nature of business is that an individual has to deposit Rs. 625/- per unit or multiplies thereof. For each unit a member is given lottery ticket worth Rs. 350/- purchased over 35 weeks at Rs. 10/- per week and subscribes Rs. 275/- to a magazine called 'Trikalam' alleged to be published by LIS Printers and Publishers. Besides the above, they offer Rs. 1052/- to every member holding one unit, the details of which are as follows:

"Amount to be paid to a member per unit: Rs. 1250/-

Less service charge of LIS: Rs. 100/-

Less commission earned by LIS from

purchase of lottery i.e. 28% of Rs. 350/-: Rs. 98/-

Balance to be paid to each member: Rs. 1052/-

The amount of Rs. 625/- is collected as a deposit."

The firm is purchasing lottery tickets, preserving the same, Informing its members the particular ticket numbers and the results thereof and also making arrangements for disbursement of prize amount and irrespective of as to whether a member enrolled by the firm gets any prize on the tickets purchased on his name or not is assured of an amount of Rs. 1250/- in the manner mentioned above.

2. The facts as mentioned above led to registration of an FIR against the members of the firm under various sections of different statutes to be mentioned hereinafter. In asmuchas, the activities Indulged in by the offending partners of the firm is covered under various statutes, with a view to curb it, a ban order naturally resulting into closure of the business of the partnership firm has also been passed.

3. Achamma Chacko, wife of P. V. Chacko, the managing partner of the firm, and P. V. Chacko, the chairman of the same firm, have filed W. P. (C) No. 12775 of 2006 calling in question Ext. P4 dated 10-5-2006 issued by Bernard Dev, A. C. P., Crime Detachment, Kochin City directing the chairman of the firm to stop collection of money in any way from depositors until further direction from the investigating officer, by mentioning that he is collecting money from depositors in violation of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978, hereinafter referred to as 'the Act of 1978', and a case has been registered at Ernakulam Central Police Station which is under investigation. Achamma Chacko and Linu Joy, the partners of the firm, and P. V. Chacko, the trustee thereof, have jointly filed Crl. M. C. No. 1377 of 2006 seeking to quash the FIR Annexure-B in Crime No. 672/2006 of the Central Police Station, Ernakulam and all proceedings pursuant thereto. Linu Joy, wife of Joy John, yet another partner of the same firm, has filed W. P. (C) No. 13152 of 2006 seeking a writ in the nature of mandamus commanding the respondents not to harass her and the firm of the petitioner and also commanding the respondents not to interfere with the peaceful and proper functioning of her firm.

4. By this common order we propose to dispose of these three connected matters as the question of facts and law involved therein are same and as the learned counsel appearing for the parties have also suggested likewise. The facts that need a necessary mention have been extracted from W. P. (C) No. 12775 of 2006 and also Crl. M. C. No. 1377 of 2006. Since the counter affidavits have been filed only in the writ petition the defence projected therein would be referred from the writ petition alone.

5. The first petitioner who claims to be the managing partner of M/s. LIS, Ernakulam is conducting business of making available Government lottery tickets to the public under the Multi Level Marketing principle in partnership. A copy of the partnership deed has been placed on record as Ext. P1. The second petitioner as mentioned above is the Chairman of the same concern. It is the case of the petitioners that the business of the firm is being run smoothly without any complaint from any quarter. While so, on 10-5-2006 police team under the leadership of Inspector General searched the office of the firm and registered a suo motu case against the firm only with the intention to harm the reputation of the firm and harass the petitioners. The suo motu case was registered by the police alleging violation of the Act of 1978 and cheating the public. Petitioners claim that the business conducted by the firm would not come under the provisions of the Act of 1978. This Court on two different occasions while examining the type of business the concern is doing in the matter of one complainant subscriber Kamalasanan and in the matter brought by All Kerala Lottery Subscribers Association, held that the business conducted by the firm of the petitioners would not amount to the Money Circulation Scheme which is prohibited by the Act of 1978 and that the scheme evolved by the firm would not come within the purview of the Act of 1978 and hence there was no violation of the provisions of the said Act. A copy of the judgment of the Division Bench of this Court in W. P. (C) No. 33743 of 2005 dated 30th January, 2006 (Ext. P2) and a copy of the judgment of a single Judge of this Court in Crl. M. C. No. 2912 of 2005 dated 27th October, 2005 (Ext. P3) have been placed on record. It is the case of the petitioners that in view of the two judgments of this Court, Exts. P2 and P3, it is crystal clear that the petitioners have not violated the provisions of the Act of 1978 and therefore the suo motu case registered against them by the police is unfair and with oblique motive to harass the petitioners and to tarnish the reputation of the firm. The Assistant Commissioner of Police, 4th respondent herein, vide letter dated 10-5-2006 has directed the second petitioner to stop the business of the firm until further direction from the investigating officer. The registration of the suo motu case in the context of the judgments Exts. P2 and P3, it is the case of the petitioners, would amount to contempt of this Court.

6. From the resume of the facts and circumstances mentioned above, it would clearly manifest that no details how the business is carried out have been given in the petitions and the relief as mentioned above has been claimed almost exclusively on the judgments Exts. P2 and P3 rendered by the Division Bench and a single Judge respectively of this Court.

7. Before, we might advert to the counter affidavit filed by the respondents in the writ petition it would be relevant at this stage to give bare minimum facts contained in the Criminal Miscellaneous Case filed under Section 482 of the Code of Criminal Procedure and the grounds on which the FIR is sought to be quashed. Crime No. 672/2006 of Central Police Station, Ernakulam has been registered under the instructions of the Inspector General of Police, South Zone, vide letter No. D2/8982/IGP SZ/06 dated 9-5-2006. Along with the letter aforesaid the format of the First Information Statement as also the list of accused had also been furnished together with the direction to register a case against them. In compliance with the instructions contained in the letter dated 9-5-2006 (Annexure A) the Commissioner of Police, Kochi City vide letter No. D1(b) 212/2006/EC dated 10-5-2006 ordered the Station House Officer, Ernakulam Central Police Station to register a case as per the format attached and consequently Crime No. 672/2006 was registered against the petitioners alleging commission of the offence punishable under Sections 3, 4, 5 of the Prize Chits and Money Circulation (Banning) Act, 1978, 45 1(bb), 45 (s) and 58(b) of the Reserve Bank of India Act as well as Section 420 read with Section 34 of the Indian Indian Penal Code (Annexure B). The allegations levelled against the petitioners vide Annexure B are that the accused with intention of making exorbitant profit conducted a firm by name 'LIS' In Palackal Court Building at Ernakulam and without permission from the...

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