Judgment

C.K. Thakker, J. —

1.Leave granted.

2.The present appeals have been instituted by the appellants against the Judgment and Order dated 19th July, 2007 passed by the High Court of Kerala in Criminal Revision Petition No. 4126 of 2006 and companion matters. By the impugned Order, the High Court dismissed revision petitions filed by the appellants herein as also by the State of Kerala.

3.To understand the issue raised in the present appeals, few relevant facts may be stated :

4.The appellants are partners of M/s LIS, Ernakulam, a partnership firm engaged in the business of sale of lotteries and magazines after collecting advance money. They floated a scheme known as “LIS Deepasthambham Scheme”. The scheme was simple in its conception. A person has to pay Rs.625/- and purchase one unit of lotteries from the promoters. The promoters will make use of Rs.350/- to purchase 35 lottery tickets of the Kerala State Government each of Rs.10/- for the unit holder for the next 35 weeks. If the unit holder wins any prize up to Rs.5,000/- in the 35 draws, the promoters shall collect the amount and pay the same to the unit holder. If the unit holder wins any prize above Rs.5,000/-, the ticket shall be handed over to the unit holder for collection of the amount. The balance of Rs.275/- (Rs.625 - Rs.350) will be used to make the unit holder a subscriber of a magazine by name ‘Thrikalam’ for one year. The said magazine would reproduce relevant and important materials from other magazines. It would also furnish necessary information about the lottery tickets which have won prizes.

5.The unit holder will be returned (paid) not only Rs.625/- which he had initially invested, but twice his investment i.e. Rs.1,250/- (less Rs.100/- as service charges for the promoters and legal deduction for tax, etc.) on an early date. As per the scheme, on sale of three tickets of Rs.10/- each, the Government would pay commission of 28% of which the promoters would share 25% with the unit holders. Likewise, the publisher of the magazine would give commission of 30% to the promoters and promoters would share 25% with the unit holders. All these amounts are available to the unit-holders. Under the scheme, in Order of strict seniority, the senior most unit holder would be paid Rs.1,250/- as soon as the requisite amounts are available as commission with the promoters. The promoters, in addition to 28% commission for the lottery tickets, and 30% commission for the magazines, would also get commission for the prizes won by the tickets sold through them from the Government. Those amounts also would be entirely made available for payment to unit holders. If a unit holder is paid Rs.1,250/- before the expiry of 35 weeks, no lottery tickets will be purchased on his behalf thereafter. It is because he had already been paid the requisite amount. On the same reasoning, if the amount of Rs.1,250/- is paid to the subscriber before the expiry of one year, ‘Thrikalam’ magazine would also not be sent to the subscriber thereafter. The price of unpurchased lottery tickets and unused magazines thereafter will be used by the promoters towards the payment of amount of Rs.1,250/- to other unit holders. According to the promoters, the scheme was viable as well as workable. All persons would be able to double their investment at the earliest. No specific time, however, was given but it was assured that the amount would be doubled at the earliest and it would be paid on the basis of seniority. Under the scheme, the amount of Rs.1,250/- (double the investment by the unit holder) will be paid as soon as 14 more members are enrolled. The advantage of technology was borrowed. Passwords could be chosen. There was a web site for promoters. The unit holder could use his password and the site would reveal all details about the tickets purchased on behalf of the unit holder by the promoters. The unit holders thus would be able know the details of the tickets purchased for them by the promoters and wou