The High Court rejected a petition seeking to quash proceedings filed under the Prevention of Money-Laundering Act, 2002 against directors of a company accused of operating a money circulation scheme and cheating the public.
The petition filed by the accused to quash the criminal proceedings under the PMLA was dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE K.ABRAHAM MATHEW
WEDNESDAY,THE 05TH DAY OF SEPTEMBER 2018 / 14TH BHADRA, 1940
Crl.MC.No. 4589 of 2017
AGAINST SC NO.281/2016 IN F.NO.ECIR/2/KCZO/2014 OF SPECIAL COURT UNDER THE PREVENTION OF MONEY LAUNDERING ACT, 2002, KOZHIKODE
PETITIONER/ACCUSED:
1 M/S BIZARRE GLOBEL MARKETING SYSTEMS LTD 44/3188-A-9, NEAR KALOOR JUMA MASJID, DESABHIMANI ROAD, KALOOR, COCHIN - 682 017.
2 MS. BIZARRE BUSINESS CORPORATION LTD. 44/3188-A-9, NEAR KALOOR JUMA MASJID, DESABHIMANI ROAD, KALOOR, COCHIN - 682 017.
3 MS BIZARRE INTERNATIONAL BUSINESS PVT. LTD. 44/3188-A-9, NEAR KALOOR JUMA MASJID, DESABHIMANI ROAD, KALOOR, COCHIN - 682 017.
4 ABDUL ARSHAD AGED 40, S/O. SYED MUHAMMED, CHAIRMAN CUM MANAGING DIRECTOR OF M/S. BIZARRE MARKETING SYSTEMS PVT. LTD., M/S. BIZARRE GLOBAL MARKETING SYSTEMS LTD., M/S. BIZARRE BUSINESS CORPORATION LTD, AND DIRECTOR OF M/S. BIZARRE INTERNATIONAL BUSINESS LIMITED, REGISTERED OFFICE, D-22, KAUSALYA NAGAR, ELAMAKKARA, DESABHIMANI ROAD, ELAMAKKARA P.O., COCHIN - 682026.
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5 NOUSHAD S. AGED 35, S/O. SAYEED MUHAMMED, DIRECTOR OF M/S BIZARRE BUSINESS CORPORATION LIMITED AND M/S. BIZARRE INTERNATIONAL BUSINESS PVT. LTD, REGISTERED OFFICE KANJIRAKKAPPALI HOUSE, NANADAM KARA, UDAYANAPURAM POST, VAIKOM TALUK, KOTTAYAM DISTRICT.
6 NIJI ARSHAD AGED 36 YEARS, W/O. ABDUL ARASHAD, M/S. BIZARRE BUSINESS CORPORATION LIMITED, REGIONAL OFFICE, D-22, KAUSALYA NAGAR, ELAMAKKARA, DESABHIMANI ROAD, ELAMAKKARA P.O., COCHIN - 682 026.
7 GOPINATHAN K.T. AGED 56 YEARS, S/O. VELAYUDHAN NAIR, CHIEF EXECUTIVE OFFICER, M/S. BIZARRE BUSINESS CORPORATION LIMITED, "NDNDANAM," KALARIKKAL ROAD, KOLAZHY, THRISSUR - 680 010.
AGED 49 YEARS, S/O. KUNHALAN, DIRECTOR OF M/S. BIZARRE BUSINESS CORPORATION LTD, POOVAMTHODI HOUSE, VATTALOOR P.O., MAKKARAPARAMBA VIA, MALAPPURAM DISTRICT - 676 507.
9 GEORGE ALEXANDER
AGED 61 YEARS, S/O. ALEXANDER E.M. DIRECTOR OF M/S. BIZARRE BUSINESS CORPORATION LTD, EDUVANPARA HOUSE, MUNDAMALA P.O., PUSAMATTOM, PATHANAMTHITTA - 689 543.
10 MAYA K.P. AGED 35 YEARS, W/O. PREMLAL, DIRECTOR OF M/S. BIZARRE BUSINESS CORPORATION LTD., KONALLITHARA HOUSE, T.V.PURAM P.O., VAIKOM, KOTTAYAM DISTRICT - 686 606.
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11 KRISHNADAYAL P @ DAYAL MENON AGED 45 YEARS, S/O. BALAKRISHNAN NAIR, DIRECTOR OF M/S. BIZARRE BUSINESS CORPORATION LTD, CHANGARAMKANDATHU, ARIMPUR P.O., THRISSUR - 680 620
12 BEENA GOPINATHAN AGED 49 YEARS, W/O. GOPINATHAN K.T., DIRECTOR OF M/S. BIZARRE BUSINESS CORPORATION LTD., REGISTERED OFFICE NANDANAM, (KODUVARATHODY), KALARIKKAL ROAD, KOLAZHY, THRISSUR -680010.
13 JISHAMOL C. AGED 44 YEARS, W/O. BAIJU B.S., DIRECTOR OF M/S. BIZARRE BUSINESS CORPORATION LTD., KOTTAYI HOUSE, CHARAMANGALAM, MAYITHARA P.O., CHERTHALA, ALLEPPEY DIST.
BY ADVS. SRI. V.M. KRISHNAKUMAR SMT. SURYA BINOY SRI. T. KRISHNANUNNI (SR.)
RESPONDENT/COMPLAINANT: DIRECTORATE OF ENFORCEMENT ASSISTANT DIRECTOR, GOVERNMENT OF INDIA, COCHIN ZONAL OFFICE, KANOOS CASTLE, A.K.SHESHADRI ROAD, MULLASSERY CANAL ROAD(WEST) COCHIN - 682011. BY SMT.C.G.PREETHA, CENTRAL GOVT. COUNSEL
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 05.09.2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
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ORDER
Petitioners 1 to 3 are companies registered under the Companies Act, 1956. They are accused 2 to 4 in S.C. No.281 of 2016 on the file of the Special Court constituted under the Prevention of Money-Laundering Act, 2002. The other petitioners are accused Nos.5 to 14 in the said case. The fourth petitioner is the Chairman and Managing Director of all the companies. The other petitioners are Directors except the seventh petitioner, who is the Chief Executive Officer of the second petitioner company. In this order the parties are referred to as accused.
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the money in supermarkets to be set up by the companies in different parts of the State of Kerala and other southern states of India. In all the companies the fifth accused and his wife, the seventh accused, and his brother, the sixth accused, are Directors. Instead of using the amount in setting up supermarkets, they used the money collected from the public for other purposes. They distributed huge amounts to certain persons whom they called agents or promoters. A small amount was invested in certain supermarkets. The petitioners claimed that they were doing business through franchisee. But the money collected through these franchisee found their way to the accounts of the accused companies. The money was used for purposes other than the purpose for which it was collected from the public. The petitioners have cheated the public and thus committed the offence under Section 420 IPC. The activities of the petitioners attract the offences under Sections 4 to 6 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. They were involved in activities connected with the proceeds of the crime of cheating. A case was registered against them at Sulthan Bathery Police Station under Section 420 IPC and Sections 4 to 6 of the Prize Chits and Money Circulation Schemes (Banning) Act. After the investigation final report has been filed
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before the Chief Judicial Magistrate, Kalpetta. The proceedings in the case before the Special Court are sought to be quashed on the ground that the facts of the case do not attract the offence under the Prevention of Money-Laundering Act, 2002.
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Each shareholder was compelled to purchase a unit of 55 discount vouchers at a price of Rs.5,500/-. The discount voucher entitled him to a discount of 10% to 60% on electronic appliances and other items sold through the supermarkets. The third accused company was incorporated solely to deal with the shares and the fourth accused company solely to deal with the discount vouchers. The promise of the company was that it would purchase lands and set up supermarkets in various assembly constituencies of the southern states. Accordingly, at the initial stage, the company started 12 supermarkets. Two of the super markets were situated on the Company's own lands. But the other supermarkets were doing business in rented buildings. Later, some supermarkets were established through franchisee. The companies purchased 51 plots in the States of Kerala, Karnataka and Tamil Nadu. 45 plots were in Kerala, 5 plots in Karnataka and 1 in Tamil Nadu. These are the statements made by the petitioners in the papers submitted by them and arguments made by the learned Senior counsel. The learned Senior Counsel submits that the facts of the case do not attract Section 420 IPC and according to him since this is the only scheduled offence mentioned in Annexure 32 complaint, it is not maintainable.
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that the privilege cards issued to her would enable her to buy various items at a discounted price from the supermarket to be established at the Sulthan Bathery. But, admittedly, no supermarket was set up at Sulthan Bathery or in the neighbourhood. Similar statements have been given by other witnesses also.
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holders.
In the result, this Crl.M.C. is dismissed.
K.ABRAHAM MATHEW JUDGE
vps 4/9
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APPENDIX
PETITIONER'S/S EXHIBITS:
ANNEXURE I TRUE COPY OF REGISTRATION CERTIFICATE OF 1ST PETITIONER. ANNEXURE II TRUE COPY OF REGISTRATION CERTIFICATE OF 2ND PETITIONER. ANNEXURE III TRUE COPY OF REGISTRATION CERTIFICATE OF 3RD PETITIONER. ANNEXURE IV TRUE COPY OF THE BROCHURE ISSUED BY THE BIZARRE GROUP OF COMPANY. ANNEXURE V TRUE COPY OF THE DISCOUNT COUPON ISSUED TO THE CUSTOMERS ANNEXURE VI TRUE COPY OF THE GOVERNMENT ORDER GO(MS)NO 190/11/INDUSTRIES DATED 12.09.2011. ANNEXURE VII TRUE COPY OF THE GUIDELINES ISSUED ALONG WITH ANNE. VI GOVERNMENT ORDER. ANNEXURE VIII TRUE COPY OF THE LIST OF PLOTS PURCHASED BY THE PETITIONER COMPANIES FOR CONSTRUCTION OF SUPERMARKETS. ANNEXURE IX COPY OF ONE OF THE SALE DEED NO.592/2011/2 DATED 01.02.2011. ANNEXURE X TRUE COPY OF THE IMPORTER-EXPORTER CODE ALLOTMENT LETTER DATED 13.04.2010 IN FAVOUR OF THE 2ND RESPONDENT CORPORATION.
ANNEXURE XI TRUE COPY OF THE REGISTRATION ISSUED IN FAVOUR OF THE 2ND RESPONDENT CORPORATION BY CENTRAL BOARD OF EXCISE AND CUSTOMS DATED 20.02.2010.
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| ANNEXURE XII | TRUE COPY OF THE KVAT REGISTRATION ISSUED IN FAVOUR OF THE 2ND RESPONDENT DATED 17.03.2010. |
|---|---|
| ANNEXURE XIII | TRUE COPY OF THE ISO 9001:2008 CERTIFICATE ISSUED IN FAVOUR OF THE 2ND RESPONDENT. |
| ANNEXURE XIV | TRUE COPY OF TRADEMARK REGISTRATION CERTIFICATE IN THE NAME OF 'BIZARRE' DATED 19.11.2012. |
| ANNEXURE XV | TRUE COPY OF TRADEMARK REGISTRATION CERTIFICATES IN THE NAME 'FRESH AND TASTY' DATED 20.05.2011. |
| ANNEXURE XVI | TRUE COPY OF THE SUGAR DEALER LICENSE DATED 24.01.2011. |
| ANNEXURE XVII | TRUE COPY OF THE FOOD GRAINS DEALERS LICENSE DATED 13.01.2011. |
| ANNEXURE XVIII | TRUE COPY OF A TABULATED STATEMENT OF TAX PAYMENTS UNDERTAKEN BY THE PETITIONER COMPANY GROUP TO THE CENTRAL AND STATE GOVERNMENTS |
| ANNEXURE XIX | TRUE COPY OF THE BANK STATEMENTS OF THE PETITIONERS 1 TO 3 COMPANIES. |
| ANNEXURE XX | TRUE COPY OF LETTER ISSUED BY NIJAS DATED 09.03.2011. |
| ANNEXURE XX(a) | TRUE COPY OF LETTER ISSUED BY NIJAS TO THE PETITIONER COMPANY. |
| ANNEXURE XXI | TRUE COPY OF THE NEWSPAPER REPORT THAT APPEARED IN MALAYALA MANORAMA DATED 14.06.2011. |
| ANNEXURE XXII | TRUE COPY OF THE ORDER OF THE CHIEF JUDICIAL MAGISTRATE COURT KALPETA, DATED 01.10.2012. |
| ANNEXURE XXIII | TRUE COPY OF THE ORDER DATED 06.03.2012 OF PRINCIPAL SECRETARY, INDUSTRIAL DEPARTMENT, GOVERNMENT OF KERALA |
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| ANNEXURE XXIV | TRUE COPY OF APPLICATION FILED BY THE 4TH PETITIONER BEFORE THE KELSA DATED 03.08.2012. |
|---|---|
| ANNEXURE XXV | TRUE COPY OF AWARD PASSED BY KELSA AS REGARDS 101 PERSONS WHO HAD DECIDED TO CONTINUE THEIR ASSOCIATION WITH THE PETITIONER COMPANIES. |
| ANNEXURE XXVI | TRUE COPY OF THE WRIT PETITION, W.P.C. NO.6161/2013 WITHOUT EXHIBITS |
| ANNEXURE XXVII | TRUE COPY OF DRAFT PUBLIC NOTICE APPROVED BY THIS HON'BLE COURT DATED 05.09.2013. |
| ANNEXURE XXVIII | TRUE COPY OF THE NEWS REPORTED IN MATHRUBHUMI DAILY DATED 08.09.2013 |
| ANNEXURE XXIX | TRUE COPY OF THE ORDER DATED 16.01.2014 IN W.P.C. 6161/2013 |
| ANNEXURE XXX | TRUE COPY OF ONE OF THE AWARD OF THE KELSA DATED 12.03.2014. |
| ANNEXURE XXXI | TRUE COPY OF THE WRIT PETITION, W.P.C. NO. 18020/2014 WITHOUT EXHIBITS |
| ANNEXURE XXXII | TRUE COPY OF THE COMPLAINT SC NO. 281/2016 IN F.NO. ECIR/2/KCZO/2014 BEFORE THE SPECIAL COURT UNDER THE PREVENTION OF MONEY LAUNDERING ACT, 2002, KOZHIKODE. |
| ANNEXURE XXXIII | TRUE COPY OF THE ORDER DTD 19.12.2016 OF CHIEF JUDICIAL MAGISTRATE, KOZHIKODE IN CC NO.231 OF 2014 |
| ANNEXURE XXXIV | TRUE COPY OF THE LETTER DTD 25.9.2010 ISSUED BY THE OFFICER ON BEHALF OF THE ARCHAEOLOGICAL SURVEY OF INDIA |
| ANNEXURE XXXV | TRUE COPY OF THE LICENSE AGREEMENT DTD 20.4.2011 ENTERED INTO BY MR.GOPINATHAN NAIR ON BEHALF OF THE 2ND PETITIONER WITH ONE MR.ASHRAF FOR A 1500 sq.ft. BUSINESS AREA |
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RESPONDENT'S/S' EXHIBITS:
ANNEXURE R1(a) THE COMMON JUDGMENT DATED 24.3.2017 IN W.P.(C) NOS.6161/2013, 18037.2013, 18020/2014 & 31622/2014 OF THIS HON'BLE COURT
/TRUE COPY/
VPS PS TO JUDGE
3 issues framed by the court
Whether the facts involving a money circulation scheme attract the offence under Section 4 of the Prevention of Money-Laundering Act, 2002.
Whether the criminal proceedings under the Prevention of Money-Laundering Act, 2002 are liable to be quashed.
Whether the activities of the accused amounts to cheating under Section 420 IPC.
3 provisions across 3 enactments
M/S BIZARRE GLOBEL MARKETING SYSTEMS LTD
MS. BIZARRE BUSINESS CORPORATION LTD.
MS BIZARRE INTERNATIONAL BUSINESS PVT. LTD.
ABDUL ARSHAD
NOUSHAD S.
NIJI ARSHAD
K. ABRAHAM MATHEW
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
