Prima facie allegations made out.

1. The accused in Crime No.479 of 1991 on the file of respondent police station has filed this petition under Sec.482, Cr.P.C, praying to call for the records in the aforesaid Crime No.479 of 1991 and quash the same.

2. The respondent has registered case in Crime No.479of 1991. The First Information Report was given by one P.Dhanasekaran. The allegations in that First Information Report are briefly as follows:

The financial enterprises under the name and style of Vazhge Vaiyagam Enterprises and Vazhge Valamudan Enterprises are in existence in Salem for six months. They are bringing the idea to the public that if they deposit Rs.2,000 it will be refunded on 15th day with an interest of Rs.600. They would have given Rs.60 crores by way of interest and Rs.150 crores by way of principal. They should have deducted tax at the source at the time of disbursement as per the provisions of Income Tax Act. But they have not done it. So they are punishable under Sec.269-SS and 269-1 of Income Tax Act, 1961. These financial enterprises are run by government employees and public sector employees without getting necessary permissions from the Government. They have neither obtained permission from Reserve Bank of India. This scheme is banned under Sec.2(c) of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. The persons running the financial enterprises have purchased lot of properties. If action is not taken day by day more people will start investing in it and at one stage, the financial enterprises will not be in a position to repay the principal. Lakhs and lakhs of people will be cheated by that time. From recently they have started similar money circulation schemes under various names. Hence he had prayed action. This First Information Report was registered in Crime No.479 of 1991 under Sec.4 of the Prize Chits Funds and Money Circulation Scheme (Banning) Act, 1978 and under Sec.420, Indian Indian Indian Penal Code.

3. Mr.S.Chellaswamy, the learned counsel appearing for the petitioner would contend that even if the allegations made in the complaint preferred by P.Dhanasekaran areall taken as true, offences under Sec.420, I.P.C. and under Sec.4 of Prize ‘Chits Funds and Money Circulation Scheme (Banning) Act, 1978, are not made out and hence the proceedings in Crime No.479 of 1991 should be quashed.

4. To appreciate the contention of the learned counsel, Sec.2(c) of the above act need extraction. Sec.2(c) defines money circulation scheme. It reads as follows:

“2(c) money circulation scheme” means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions;”

Sec.3 of the said Act reads as follows:

“3. Banning of prize chits and money circulation schemes or enrolment as members or participation therein: No person shall promote or conduct any prize chits 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.”

Sec.4 of the Act, provides for penalty for contravening the provisions of Sec.3.

5. I shall now extract the relevant portions in the First Information Report which are as follows:

“They are bringing the idea before the public if they deposit Rs.2,000 it will be refunded on 15th day with an interest of Rs.600……above enterprises have collected and operated more then Rs.200crores from the public to the effect……Moreover the scheme in operation is banned by under Sec.2(c) of the Prize Chit Funds and Money Circulation Scheme (Banning) Act, 1978…. If you do not take any action, day by day more people will start investing in it. At one stage the financial enterp