1

IN THE COURT OF THE SPECIAL COURT UNDER THE TAMILNADU

PROTECTION OF INTEREST OF DEPOSITORS (In Financial Establishment) ACT
1997, MADURAI.
PRESENT: Thiru.T.V. Hemanandakumar, B.A., L.L.B.,
Special Judge, Special Court under TNPID Act Cases, Madurai.
Wednesday, the 27th day of January 2021
Calender Case No: 4/2019
State represented by the Inspector of Police,
E.O.W. II, Karur. Cr.No.1/2018. … Complainant
/vs/
1. M/s. Anuram Capital,
T.A.M. Complex,
No.88, NRMP Street,
Kovai road,
Karur Town,
Karur District.
Represented by A2 Chitrasenan
2) Chithirasenan, age 50,
S/o. Periyasamy,
484, GMR Arcade,
Kalamangalam road,
Ganapathipalayam 4 road,
Erode District.
3) G.N.S. Moorthi, age 53
S/o. Nallasamy,
Velayudhampalayam,
Karur District. … Accused
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Offence : u/s. 120(B), 406, 420 IPC & section 5 of TNPID Act

Finding :

In the result, prosecution failed to prove the offence alleged u/s 420 and

120(B) IPC and the accused found not guilty u/s 420 and 120(B) IPC. All the accused

found guilty u/s 406 IPC and section 5 of TNPID Act and convicted.

Sentence :

The 1st accused is sentenced to pay a fine of Rs.1000/- u/s 406 IPC and

Rs.4000/- u/s 5 of TNPID Act. The 2 nd and 3rd accused are sentenced to undergo

rigorous imprisonment for one year each u/s 406 IPC. A2 and A3 are sentenced to

undergo rigorous imprisonment for a term of 5 years each and to pay fine of

Rs.10000/- each in default of payment of fine sentenced to undergo rigorous

imprisonment for six months u/s 5 of TNPID Act. Both sentences shall run

concurrently. The period of imprisonment already undergone by 2 nd accused from

10.4.2018 to 07.06.2018 and 3rd accused from 10.4.2018 to 11.5.2018 is ordered to be

set off u/s 428 Cr.P.C.

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Seri Description of the accused

al Name Father's Caste Occupation Residence Age
Nu name or race
mb
er
(1) (2) (3) (4) (5) (6) (7)
1. M/s. Anuram -- -- -- --
Capital,
2. Chithirasenan Periyasamy, Business 484, GMR 50/2018
Arcade,
Kalamangalam
road,
Ganapathipala
yam 4 road,
Erode District.
3. G.N.S. Nallasamy, Business 26/1Valluvar 53/2018
Nagar,
Moorthi Velayuthampal
ayam, Karur

Date of
Occurrence Complaint Apprehensi Release Comme Close Sentence Explanat
on or on bail ncemen of trial or order ion of
appearance t of trial delay
(8) (9) (10) (11) (12) (13) (14) (15)

10.4.2018 10.4.2018 7.6.201 8.8.201 11.1.20

8 21
9
10.4.2018 11.5.20 8.8.201 11.1.20
18 21
9

This case came up on 23.12.2020 for final hearing before me, in the

presence of Thiru K. Ramani, Special Public Prosecutor for the Complainant and of

Thiru A. Balaji, Advocate for the Accused No.2 and Thiru C. Pandithurai, Advocate
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for the Accused No.3 and upon hearing the arguments of the Prosecutor and after

perusing the records, and having stood over till this day for consideration, this Court

passed the following:

JUDGMENT

The Inspector of Police, E.O.W-II, Karur District filed final report against

the accused on the allegation that A2 Chithirasenan and A3 G.N.S. Moorthy are the

partners of A1 Anuram Capitals financial establishment and they collected deposit to

the tune of Rs.41,00,000/- from 5 depositors and failed to refund the same. Thereby

the accused committed offences punishable u/s 120(B), 406, 420 IPC and section 5 of

TNPID Act.

2) On appearance of the accused before the court copies of records were

furnished to the accused u/s 207 Cr.P.C. and upon perusing the records and hearing

arguments on both sides and having satisfied that prima facie case made out against

the accused and from the available records, this court has framed charge against all

the accused u/s.120(B), 406, 420 IPC & section 5 of TNPID Act. When the said

charge was read over and explained to the accused in Tamil they denied the charges.

Hence this court has ordered the prosecution to let in evidence.

3) To prove the guilt of the accused, the prosecution has examined P.W.1 to

P.W.8 and marked Exhibits P1 to P10 and on the side of defence, D.W1 examined

and Ex.D1 to Ex.D21 were marked.

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4) It is the case of the prosecution that the 2nd accused Chithirasenan and 3rd

accused G.N.S. Moorthy executed Ex.P7 partnership deed on 24.6.2010 and

commenced partnership firm namely the 1st accused Anuram Capitals. The firm was

registered with Registrar of Firms, Karur and having office at No.88, NRMP Street,

Kovai road, Karur. The accused 2 and 3 met several persons and induced them to

deposit money in their financial establishment saying that they would give 1.25%

monthly interest. Subsequently P.W1 Jegathambal deposited Rs.600000/-. On behalf

of the 1st accused firm, the 2nd accused executed A2 promissory note in favour of

Jegathambal. P.W2 Revathy deposited Rs.20,00,000/-, Ex.P4 is the promissory note

executed in favour of P.W2. P.W3 Murugesh deposited Rs.5,00,000/-, P.W4

Murugesan deposited Rs.5,00,000/- and P.W5 Periyasamy deposited Rs.5,00,000/-.

Ex.P10 is the promissory note in the name of Periyasamy. This accused did not repay

the deposit amount to P.W1 to PW5 and A2 Chithirasenan filed insolvency petition in

I.P.No.33/17 before Subordinate Judge, Karur.

5) On 7.8.2017, P.W3 Murugesh sent a complaint to the Superintendent of

Police, E.O.W, Chennai. Ex.P5 is the complaint. That complaint was forwarded to the

Inspector of Police, E.O.W-II, Karur and on receipt of the complaint, on 10.4.2018,

the Inspector of Police, P.W8 Tmt. Tamilarasi registered a case in Cr.No1/2018.

Ex.P6 is the First Information report. On 10.4.2018 at about 9 a.m, P.W8 arrested the

2nd accused Chithirasenan in Thanthondrimalai toll gate. At 9.30 A.M,on

interrogation, A2 gave confessional statement which was recorded by P.W8 in the

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presence of P.W6 Suresh and P.W7 Kanagaraj. On that day at about 12.15 P.M, P.W8

arrested A3, G.N.S. Moorthy, in Manohara garden round about. On interrogation, A3

also gave confessional statement which was also recorded by P.W8. On 10.4.2018

P.W1 Jegadhambal gave Ex.P1 complaint against the accused. P.W8 received the

complaint and examined P.W1 Jegathambal. On 13.4.2018 P.W5 Periyasamy gave

complaint. After receiving the complaint P.W8 examined him. On 2.5.2018 P.W4

Murugesan gave a complaint. On 4.5.2018 P.W2 Revathy gave Ex.P3 complaint to

the Inspector of police. Then P.W8 seized Ex.P7 partnership deed and E.x.P8 and P9

account books from the accused and after completion of her investigation she laid the

charge sheet against the accused.

6) The accused was examined under section 313(1)(b) Cr.P.C. in respect of

the incriminating circumstances found against them in the prosecution evidence. The

accused denied them as false. On the side of the 3rd accused, he was examined as

D.W1 and Ex.D1 to D21 marked.

7) It is the case of third accused as spoken by him(D.W1) is that on

24.6.2010, he along with the 2nd accused started a financial business as Anuram

Capitals. In the month of April 2017, there was difference of opinion between the 3 rd

and 2nd accused and so the dispute was placed before an Arbitrator. The total liability

of the 1st accused firm was fixed as Rs.15crores and they agreed before the Arbitrator

that A3 has to settle amount of Rs.7crores85 lakhs to the depositors and A2 has to

settle a sum of Rs.7crores15lakhs. According to D.W1, he refunded amount to

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Seerammal, Kannan, Tamilarasan, Chandra Reddy, Senthilkumar, Arjun, Sasikumar,

Sivakumar, Shanmugasundaram, Subramanian, Sakunthala, Sadasivam, Kavitha,

Rajagopal and Ramasamy. Ex.D1 to D4, D6 to D12, D14 to 16, D19 and D20 are the

receipts and affidavits given by the depositors. Ex.D2 is the Arbitration award. So,

according to A3, he has settled the amount as per the award and it is for the 2 nd

accused to settle the other depositors.

8) Point for consideration is whether prosecution proved the offences

against accused beyond reasonable doubt?

9) In this case, the accused stands charged u/s 120(B), 406, 420 IPC and

section 5 of TNPID Act with allegation that they collected deposits from P.W1 to

P.W5 and failed to refund the same. The 1st point to be decided in this case is whether

the 2nd and 3rd accused are conducting a financial establishment, P.W1 Jegathambal,

P.W2 Revathy, P.W3 Murugesh, P.W4 Murugesan and P.W5 Periyasamy are

examined depositors in this case. Out of the above witnesses, P.W3 Murugesh has

stated that he deposited a sum of Rs.5,00,0000/- with the 2 nd accused and he received

back the said amount. According to P.W4 Murugesan, he also deposited a sum of

Rs.5,00,000/- and received it from the 2nd accused. P.W5 Periyasamy also stated the

same version that he deposited Rs.5,00,000/- and received it back from 2 nd accused.

So, it is seen that all the above three witnesses P.W2 to P.W5 were declared hostile.

10) P.W1 Jegathambal in her evidence stated that she deposited a sum of

Rs.6,00,000/- with A3 G.N.S. Moorthy through one Kandasamy. Thereafter the 1 st

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accused firm was closed and so the amount was not refunded to her. P.W2 Revathy

also stated that she handed over a sum of Rs.20,00,000/- with 3 rd accused G.N.S.

Moorthy and the amount was not refunded. Ex.A2 is the promissory note issued for

the payment of Rs.6,00,000/- to Jegathammabl. Ex.P4 series are the promissory notes

issued in favour of P.W2 Revathy. It is seen that in all the above promissory notes, the

2nd accused has signed on behalf of the 1st accused firm. So the evidence of P.W1 and

P.W2 that they deposited amount with the accused is supported by Ex.P2 and P4

promissory notes.

11) The learned counsel for the 3rd accused argued that according to P.W1,

she handed over money to one Kandasamy and never with 3rd accused. But on the

side of the 2nd accused, it is argued that P.W1 has categorically stated that she handed

over the money to 3rd accused G.N.S. Moorthy. So it is seen that both the accused A2

and A3 are levelling allegations against each other regarding receipt of money from

P.W1. On perusal of evidence of P.W1, it is seen that she had handed over money to

A3 G.N.S. Moorthy through one Kandasamy. At the same time during cross

examination, she has stated that at the time of handing over money, she did not go to

the 1st accused company. Though there is minor discrepancies in this regard,

evidence of P.W1 that she deposited a sum of Rs.6lakhs with the 1st accused firm

cannot be doubted, since there is documentary evidence to prove that.

12) Now it is the contention on the side of the accused that the 1 st accused

firm is not a financial establishment. Both the learned counsels for the accused argued
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that the prosecution failed to prove that there was any scheme or arrangement and the

accused received deposits. The learned counsel submitted that here, the proof of

money transaction is only promissory note in favour of the witnesses. That can be

taken as the accused borrowed money from the depositors for their business and it

can be only civil transaction. It is further argued that the promissory notes are now

time barred and only to convert civil liability into a criminal one this complaint has

been given. The learned counsel appearing for the 2nd accused submitted a judgment

of Hon'ble High court of Madras in Singnamala Ramesh Babu /vs/ State

represented by Inspector of Police, CCB, EDF-I, Team II, Vepery, Chennai and

another. In that judgment, the Hon'ble High court has held that First Information

Report cannot be registered for recovery of a loan under the promissory note and

Hon'ble High court quashed the First Information report.

13) In this regard, this court has perused the section 3 of TNPID Act which

reads as follows:

" (3) Financial Establishment - means an individual, an

association of individuals, a firm or a company registered under

the Companies Act, 1956(Central Act 1 of 1956) carrying on the

business of receiving deposits under any scheme or arrangement

or in any other manner but does not include a corporation or a

co-operative society owned or controlled by any State

Government or the Central Government or a banking company

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as defined in section5(c) of the Banking Regulations Act,

1949(Central Act X of 1949)"

As per the above section, any association of individuals, if carrying on the business of

receiving deposits under any scheme or arrangement or in any other manner is a

financial establishment. In the above section, the term, "in any other manner"

assumes importance. Here, D.W1 / 3rd accused has admitted that he along with the

second accused was conducting a financial establishment namely Anuram capitals as

a partnership firm. As already discussed from Ex.A2 and A4, promissory notes, it is

clear that the amount was received for the purpose of business of financial

establishment. So it has to be held that the above receipt of amount is only a deposit

under section 2 of TNPID Act. If the court holds that any amount received by way of

promissory note, is not a deposit under the TNPID Act. It would defeat the very

purpose of the Act. So the argument of learned counsel that since the amount were

received by executing promissory notes it will not attract definition of "deposit"

cannot be accepted.

14) The learned counsels appearing for the 3 rd accused further argued that

P.W2 is an Engineering graduate and she had not paid any income tax for the said

deposit of Rs.20,00,000/-. It is also argued that the said Rs.20,00,000/- is only black

money. The fact whether P.W2 has paid income tax or not is not a question to be

decided by this court and it is for the income tax authorities to look into the matter.

On the sole ground that P.W2 has not paid income tax, her evidence that she
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deposited Rs.20,00,000/- with the accused cannot be disbelieved. As already

discussed, the evidence of P.W1 and P.W2 were supported by Ex.P2 and P4

documents. Hence this court is of the considered view that the 1 st accused is a

financial establishment and 2nd and 3rd accused are the partners of the firm.

15) Now to see whether the deposit amount was refunded by the accused?

D.W1 has deposed that he has returned the deposit amount to various persons as

agreed in the Ex.D2 Arbitration award. It is the evidence of D.W1 that as per the

arbitration award, he has to settle some of the depositors and A2 Chithirasenan has to

settle the other depositors. According to D.W1 he has no connection with P.W1 to

P.W5. It is seen that in Ex.P2 and P4 promissory note, the 2nd accused has signed as

partner. But D.W1 has admitted that in Ex.P10 promissory note in favour of P.W5

Periyasamy, he himself has signed. No documents were produced by either of the

accused to prove that the amount due to P.W1 and P.W2 were refunded to them.

P.W3, P.W4 and P.W5 turned hostile stating that they received the amount from the

accused. So it is clear that the accused has not refunded the deposit amount to P.W1

and P.W2.

16) The next limb of argument on the side of both the accused is that First

Information report is belated one. Ex.P5 complaint was dated 7.8.2017, the First

Information report was registered only on 10.4.2018. It is seen that Ex.P5 complaint

was addressed to the Superintendent of Police, E.O.W, Chennai and according to

P.W8, the complaint was subsequently forwarded to her and after receipt of the
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complaint, she registered the First Information report on 10.4.2018. So, it is explained

that since the complaint was received by Superintendent of Police and forwarded to

the Inspector of Police, there was a delay. There is nothing to show that due to the

delay in registering First Information report, the accused was in any way prejudiced.

There is no suspicious circumstances in the First Information report. So mere delay in

registering First Information report in Economic Offences cannot be held fatal to the

case by prosecution.

17) Now coming to the offences charged, the main offence is section 5 of

TNPID Act. As per section 5, if a financial establishment failed to return the deposit,

every person responsible for the management of the affairs of the financial

establishment are liable to be punished. Here, it is the evidence of D.W1 that he is not

responsible for the management of the financial establishment, D.W1 in his evidence

clearly admitted that the 1st accused financial establishment was started by him and

2nd accused as partners. Ex.P7 is the partnership agreement. Para 6 and 7 of the

agreement reads as follows:

6. "ek; $l;L tpyhrj;jpd; rhh;ghf gq;Ffspy; fzf;Ffs;

itj;J tuT nryT nra;aTk;> nrf;Ffs;> cz;bay;fs;>

GNuhNehl;Lfs;> nlghrpl; urPJfs; Kjypatw;wpy;

ifnahg;gkplTk; ek; $l;L tpyhrj;jpd; rhh;ghf tUk;

gjpTj;jghy;fs;> ghh;ry;fs;> kzpahh;lh;fs; Kjypatw;iwf;

ifnahg;gkpl;L thq;fTk; gpw md;whl eph;thf

fhhpaq;fisf; ftdpf;fTk; Nfhh;l; tptfhuq;fs; Vw;gl;lhy;

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mtw;iw Kd;dpd;W elj;jTk; ek; ,UtUf;Fk; Nrh;j;Jk;

jdpj;jdpahfTk; G+uz mjpfhuk; cz;L.

7. ek; $l;L tpyhrj;jpd;; md;whl eph;thf fhhpaq;fis

ftdpj;J tUtjw;fhf ek; ,UtUf;Fk; jdpj;jdpNa khjk;

xd;Wf;F &.5000 tPjk; rk;gsKk; ,uz;L khj rk;gsj;

njhifapid NghdrhfTk; nfhLj;J nghJtpy; nryT

vOjpf;nfhs;sNtz;baJ"

The above recital clearly show that both the accused A2 and A3 are responsible for

the management of affairs of the 1st accused firm. Moreover, D.W1 has admitted that

he himself has signed in Ex.P10 promissory note in favour of Periyasamy. So it has to

be held that both the accused are responsible for the management of the 1st accused

firm which defaulted refund of deposit amount to P.W1 and P.W2. Therefore the

prosecution has proved the alleged offence u/s 5 of TNPID Act against the accused.

18) The next offence alleged is that they induced the depositors and

received money and thereafter cheated the witnesses. On careful perusal of evidence

of P.W1 and P.W2 there is nothing that the accused induced the witnesses with

intention to cheat them. It is seen that the 2 nd and 3rd accused were conducting a

financial establishment, it ended in loss and the third accused in the year 2017 and

2018 refunded the deposits to various persons more than one crore. Likewise P.W3,

P.W4 and P.W5 have stated that they have received money from the 2nd accused. So

it cannot be held that the accused 2 and 3 were having intention to cheat the

depositors at the very inception. To prove the offence u/s 420 IPC, prosecution has to
 14

prove that at the very inception, the accused were having intention to cheat the

depositors. In the absence of same it has to be held that prosecution failed to prove

the ingredients of section 420 IPC.

19) The next offence alleged is u/s 406 IPC. P.W1 and P.W2 has clearly

stated that they invested money with the accused and it was not refunded. So the

inducement and subsequent breach of trust is proved and so the offence alleged u/s

406 IPC is proved against the accused.

20) Then regarding the other alleged offence 120(B) IPC, the case of

prosecution that both the accused conspired together to cheat the depositors. From the

evidence of D.W1, it is seen that the business of 1st accused firm ended in loss and so

before the arbitrator both the accused decided to divide the loss and profit and both of

them were separately settling the depositors. A2 and A3 are blaming at each other for

non refund of the deposits to the witnesses. So to the facts of this case, it cannot be

held that there was meeting of mind between A2 and A3 to cheat the depositors.

Hence the offence alleged u/s 120(B) IPC is not proved.

21) In the result, prosecution failed to prove the offence alleged u/s 420 and

120(B) IPC and the accused found not guilty u/s 420 and 120(B) IPC. All the accused

found guilty u/s 406 IPC and section 5 of TNPID Act and convicted.

Special Judge,
Special Court under TNPID Act Cases,
Madurai.
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22) The 2nd and 3rd accused were questioned about the sentence to be

imposed against them. They pleaded leniency. Plea of accused is considered.

23) The 1st accused is sentenced to pay a fine of Rs.1000/- u/s 406 IPC and

Rs.4000/- u/s 5 of TNPID Act. The 2 nd and 3rd accused are sentenced to undergo

rigorous imprisonment for one year each u/s 406 IPC. A2 and A3 are sentenced to

undergo rigorous imprisonment for a term of 5 years each and to pay fine of

Rs.10000/- each in default of payment of fine sentenced to undergo rigorous

imprisonment for six months u/s 5 of TNPID Act. Both sentences shall run

concurrently. The period of imprisonment already undergone by 2 nd accused from

10.4.2018 to 07.06.2018 and 3rd accused from 10.4.2018 to 11.5.2018 is ordered to

be set off u/s 428 Cr.P.C.

Dictated to stenographer, transcribed by her, corrected and pronounced by

me, in open court this the 27th day of January 2021.

Special Judge,
Special Court under TNPID Act Cases,
Madurai.

ANNEXURE

List of prosecution witnesses :-

P.W.1 Jegadambal
P.W.2 D. Revathi
P.W.3 Murugesh
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P.W.4 Murugesan
P.W.5 Periyasamy
P.W.6 Suresh (Village Administrative Officer)
P.W.7 Kanagaraj (Village Assistant)
P.W.8 Tamilarasi. (Inspector of Police)

List of exhibits marked by prosecution :-

Ex.P1 304.2018 Complaint by Jegadambal

Ex.P2 2.2.2016 Promissory note in favour ofJegadambal
Ex.P3 Complaint by Revathi.
Ex.P4 1.2.2016 Promissory Note in favour of Revathi
Ex.P5 7.8.2017 Complaint by Murugesh
Ex.P6 10.4.2018 First Information report
Ex.P7 24.6.2010 Partnership deed
Ex.P8 Account book
Ex.P9 Account book
Ex.P10 20.1.2016 Promissory note in the name of
Periyasamy

III. List of M.O. marked by prosecution: - Nil,

IV. List of Defence witnesses:
D.W.1 -- G.N.S. Moorthy.
V. List of exhibits marked by defence :-

Ex.D1 12.6.2017 Receipt issued by Seerammal

Ex.D2 11.6.2017 Arbitrator award
Ex.D3 20.6.2017 Receipt issued by K. Kannan.
Ex.D4 20.6.2017 Receipt issued by A.V. Tamilarasan
Ex.D5 23.6.2017 Copy of Sale deed in favour of Chandra
Reddy
Ex.D6 Affidavit executed by M. Senthilkumar.
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Ex.D7 Affidavit executed by Arjun

Ex.D8 Affidavit executed by Sasikumar
Ex.D9 Affidavit executed by N.S. Sivakumar
Ex.D10 Affidavit executed by Shunmugasundaram
Ex.D11 4.9.2017 Receipt issued by M. Subramanian
Ex.D12 21.7.2017 Receipt issued by Sakunthala
Ex.D13 Copy of Sale deed in favour of K. Sadasivam
Ex.D14 Receipt issued by Kavitha
Ex.D15 4.11.2017 Receipt issued by Rajagopal
Ex.D16 2.3.2018 Receipt issued by Ramasamy
Ex.D17 20.11.2017 Copy of Sale deed in favour of Saravanan
Ex.D18 26.10.2017 Copy of sale deed in favour of Thangamani.
Ex.D19 Affidavit executed by Ulaganathan
Ex.D20 Affidavit executed by Rajagopal
Ex.D21 Notice published in Dinathanthi daily.

Special Judge,
Special Court under TNPID Act Cases,
Madurai.