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2015 (8) TMI 1521 - HC - Indian LawsOffence under Section 420 IPC and Section 5 of the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act, 1997 - It is the specific case of the prosecution that, Helios and Viswapriya had collected deposits from public and on maturity, they failed to repay them, pursuant to which, on the complaint lodged by depositors, the cases were registered against them for the offence under the TNPID Act along with IPC offences - HELD THAT - In Section 45-I(f), the expression which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner is somewhat similar to the definition of the word Financial Establishment in TNPID Act. One difference is, the word principal is not there before the word business in Section 2(3) of TNPID Act. From an analysis of these two Sections, it is clear that, the Legislature wanted to bring into the net of TNPID both Non-Banking Financial Companies and incorporated Companies which are into the business of receiving deposits within the purview of TNPID Act. It is not necessary that an incorporated Company should be a Non-Banking Financial Company for being in the business of receiving deposits. - Though it is clear to me that the definition of the word Financial Establishment' in TNPID Act does not admit into its fold all Companies irrespective of their nature of business, and only Companies which are into the business of receiving deposits, yet I would also like to address this issue from the perspective of the Philosophy of Penal Law. In Democratic Republican form of Governments, the entire edifice of Penal Law is built upon the Rousseauean Philosophy that man is naturally good and anything that is not natural has corrupted us from this natural State. When Rousseau propounded this theory, as usual cynics ridiculed it as merely a romantic hypothesis. He has been proved right by later commentators. Definitions in Penal Law are not intended for semantic debates by trained legal minds, but it is intended for the lay and the laity to understand and act. If an ordinary person reads the definition of the word Financial Establishment , he will have no doubt in his mind that if he carries on the business of receiving deposits and fails to repay the amount, he will have to face penal consequences. For a man who is not into the business of receiving deposits, but into the business of ordinary manufacturing, this definition will not and should not instill fear, for that would be deleterious and counter productive to the progress of the Society - an ordinary manufacturer or a Trading Company, say in jaggery, cannot be prosecuted under the TNPID Act for default in paying its depositor. They can be prosecuted under the Companies Act. It would never have been the intention of the Legislature to give unbridled power to the police to destroy legitimate business in this Country and reduce our countrymen to penury. Petition dismissed.
Issues Involved:
1. Authority of the Deputy Superintendent of Police, Economic Offences Wing to investigate under the TNPID Act. 2. Applicability of the TNPID Act to incorporated companies. 3. Competent Authority's role in investigations under the TNPID Act. 4. The effect of multiple FIRs for similar offences under the TNPID Act. 5. Interpretation of "Financial Establishment" under the TNPID Act. Detailed Analysis: 1. Authority of the Deputy Superintendent of Police, Economic Offences Wing to investigate under the TNPID Act: The petitioners contended that the Deputy Superintendent of Police, Economic Offences Wing lacked authority to investigate under the TNPID Act. They relied on a previous judgment in P.S.Chellamuthu v. The State, which was stayed by the Supreme Court. However, the court clarified that the Supreme Court's stay was specific to the parties in that case and did not constitute a general stay affecting other cases. The court concluded that the Economic Offences Wing had the authority to investigate under the TNPID Act, as supported by Sections 4 and 5 of the Code of Criminal Procedure. 2. Applicability of the TNPID Act to incorporated companies: The petitioners argued that only Section 74 of the Companies Act, 2013 should apply to incorporated companies, not the TNPID Act. The court rejected this argument, citing Section 14 of the TNPID Act, which states that the Act overrides other laws. The court emphasized that the TNPID Act applies to any company engaged in the business of receiving deposits, including incorporated companies, as per the 2003 amendment to the Act. 3. Competent Authority's role in investigations under the TNPID Act: The petitioners argued that only the Competent Authority under Section 4 of the TNPID Act could investigate, and the police's role was limited to assisting the Authority. The court rejected this argument, stating that the Competent Authority's role is to safeguard depositors' interests by tracing and identifying properties, while the police have the authority to investigate criminal offences under the TNPID Act. The court clarified that the police's power to investigate is not derived from the Government Order but from the Police Acts and the Code of Criminal Procedure. 4. The effect of multiple FIRs for similar offences under the TNPID Act: The petitioners contended that registering multiple FIRs for similar offences was illegal, citing T.T.Antony v. State of Kerala. The court acknowledged that registering multiple FIRs for the same occurrence could lead to abuse of police power. It directed that further complaints should be treated as statements under Section 161 Cr.P.C., and no new FIRs should be registered. The trial court can frame distinct charges for each depositor. 5. Interpretation of "Financial Establishment" under the TNPID Act: The court examined the definition of "Financial Establishment" under Section 2(3) of the TNPID Act, which includes any individual, association, firm, or company engaged in the business of receiving deposits. The court clarified that the term "business" implies an activity with the object of earning profit. It concluded that companies primarily engaged in manufacturing but also receiving deposits for business purposes could fall under the TNPID Act if they venture into the business of receiving deposits. The court rejected the petitioners' contention that they were not engaged in the business of receiving deposits, citing evidence from their website and Directors' Report. Conclusion: The court dismissed the petitions, upholding the authority of the Economic Offences Wing to investigate under the TNPID Act, confirming the applicability of the TNPID Act to incorporated companies, and clarifying the roles of the Competent Authority and the police in investigations. The court also provided guidelines to prevent the abuse of police power through multiple FIRs and offered a detailed interpretation of the term "Financial Establishment" under the TNPID Act.
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