2025 Supreme(Online)(Mad) 78772

IN THE HIGH COURT OF JUDICATURE AT MADRAS
D.Bharatha Chakravarthy, J
S.Prabhu – Appellant
Versus
The State Rep. by The Inspector of Police, Economic Offences Wing-II, Erode – Respondent
Crl.A.Nos.212 of 2022|Crl.A.No.709 of 2021|Crl.M.P.Nos.5044, 5033 and 3814 of 2022

The court held that fraudulent intent can be established through misleading agreements, and criminal liability persists even if some contractual obligations were fulfilled.

Headnote:(A) Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997 - Section 5 - Indian Penal Code - Sections 120B and 420 - Conviction of accused for fraudulently collecting investments through misleading agreements presenting as employment - The appellants were convicted under Sections 120B and 420 IPC for cheating and under Section 5 of the TNPID Act, with total fines amounting to Rs.1,65,60,000/- imposed on them - The accused misled public into investing in their schemes with the promise of returns which were ultimately unfulfilled, leading to financial loss for a significant number of victims. (Paras 1-27)

(B) Scope of Criminal Liability - Determination of fraudulent intent in the context of financial establishments and the requirement for prosecution to prove the accusation of cheating beyond reasonable doubt. (Paras 11-12)

(C) Sentencing - Factors for reduction of sentence based on the level of involvement in the offence established through the evidence presented. (Paras 20-26).

Facts of the case:
The appeal arises from the conviction of several individuals and firms for a fraudulent scheme that lured 69 investors into parting with significant sums under the guise of a lucrative employment model that involved raising chickens, ultimately leading them to face substantial financial losses.

Findings of Court:
The court established that the accused had devised schemes to defraud the public with fraudulent intent from the onset, masking schemes as employment agreements.

Issues: The court addressed key issues surrounding the nature of the agreements presented to depositors, the determination of intentions by the accused, and the sufficiency of evidence in establishing criminal liability under the TNPID Act.

Ratio Decidendi: The court found that mere claims of an employment agreement do not absolve the accused from fraudulent intentions and that prosecutors must demonstrate beyond reasonable doubt the intent to defraud in accordance with the established legal principles.

Result: Criminal appeals are partly allowed reducing sentences and fines but upholding the convictions.

Table of Content
1. factual background and charges against defendants. (Para 2 , 3)
2. trial process and evidence presented. (Para 4 , 5 , 6)
3. defendants argue legitimate business intent. (Para 7 , 8 , 9)
4. defense argues lack of personal involvement and prosecution's burden. (Para 10 , 11 , 12 , 13 , 14)
5. prosecution asserts fraudulent intent and evidence of guilt. (Para 15 , 16)
6. court's analysis of the evidence and the role of the accused. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24)
7. sentencing rationale for each accused. (Para 25 , 26)
8. final order and conclusion of the judgment. (Para 27)

COMMON JUDGMENT

These two appeals challenge the judgment in C.C.No.3 of 2014, dated 23.11.2021 passed by the learned Special Judge of the Special Court under the TNPID Act , Coimbatore. By the said judgment, the appellants, who were arraigned and prosecuted as accused Nos.1, 2, 3, and 6, were convicted of offences under Section 120B read with Section 420 , of the Indian Penal Code and Section 5 of the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997 (hereinafter referred to as ' TNPID Act '), and sentenced as follows:-

S.No .	Name and Rank of Accused/Appellan t	Convicted under Section	Sentence of Imprisonme nt	Sentence of Fine
1.	A1, M/s.Healthy Poultry & Farms and A2, M/s.Healthy Poultry & Farms India Pvt. Ltd.	Sec.420 of I.P.C. and Sec.5 of TNPID Act	-	Rs.30,000/- for each counts (Fine of Rs.30,000 x 69 counts x 2 offences), in total Rs.41,40,000/-, under Sec.420 of I.P.C. and Sec.5 of TNPID Act
2.	A3, Karthika and A6, Prabhu	Sec.420 of I.P.C. and Sec.5 of TNPID Act	in default of payment of fine to undergo further one year rigorous imprisonment for each counts	Pay the said fine amount equally on behalf of A1 and A2, namely each Rs.20,70,000/-
3.	A3, Karthika and A6, Prabhu	Sec.120B r/w 420 of I.P.C.	seven years rigorous	Pay fine of Rs.30,000/- for each

S.No .	Name and Rank of Accused/Appellan t	Convicted under Section	Sentence of Imprisonme nt	Sentence of Fine
			imprisonment in default of payment of fine to undergo further one and half years rigorous imprisonment for each counts	counts (Fine of Rs.30,000 x 69 counts x 2 accused), in total Rs.41,40,000/-
4.	A3, Karthika and A6, Prabhu	Sec.420 of I.P.C.	seven years rigorous imprisonment in default of payment of fine to undergo further one and half years rigorous imprisonment for each counts	Pay fine of Rs.30,000/- for each counts (Fine of Rs.30,000 x 69 counts x 2 accused), in total Rs.41,40,000/-
5.	A3, Karthika and A6, Prabhu	under Sec.5 of T.N.P.I.D. Act, 1997	ten years rigorous imprisonment, in default of payment of fine, to undergo further two years rigorous imprisonment for each counts	Pay fine of Rs.30,000/- for each counts (Fine of Rs.30,000 x 69 counts x 2 accused), in total Rs.41,40,000/-

S.No .	Name and Rank of Accused/Appellan t	Convicted under Section	Sentence of Imprisonme nt	Sentence of Fine
Note:- 1. The sentences shall run concurrently. 2. Total fine amount Rs.1,65,60,000/-. A3 and A6 each has to pay fine Rs.82,80,000/- each.

2. On 12.12.2012, N.Ponnusamy was on duty at the Nambiyur Police Station. P.W.1, Palanisamy, appeared before him and filed a complaint (Ex.P-1), stating that he was lured by an advertisement from the Company, M/s.Healthy Poultry & Farms India Pvt. Ltd., which claimed that his investments would multiply. He invested Rs.1,00,000/- and entered into an agreement. The agreement was for a scheme involving raising country chickens, and a receipt for his deposit was issued by the owner, R.Karthika. According to the agreement, the company was to provide chicks, feed, and medical care, and in return, he would receive a monthly salary of Rs.8,500/-. Believing this, he invested the amount on 03.05.2012, and received Rs.25,000/-, representing three months’ income. However, thereafter, he was not paid any further amounts. On 27.08.2012, the owner called a meeting at Nambiyur Arun Kalyana Mandapam and promised to keep the company running. Again, on 08.09.

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