LexSTATE OF MADHYA PRADESH versus MIR BASIT ALI KHAN & ORS.
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iTATE OF MADHYA PRADESH v. MIR BASrr ALI DIAN & ORS. March 22, 1971 [S. M. Smu, C. J., P. JAGANMOHAN REDDY AND I. D. DUA, JJ.] Indian Penal Code, s. 420-Money circulation schemes-No cheating without misrepresentation or dishonest concealment of facts. 12$ B The respondents organised a money circulation scheme. For alleged cheating and misrepresentation in connection therewith they were convicted by the Sessions Judge, Bhopal under s. 120B and s. 420 Indian Penal C Code. The. High Court however acquitted them. The State of Madhya Pradesh by special leave appealeil to this CourL In support of the appeal the following fact> were stressed: _(!) None of the 200 odd persons who purchased the policy issued under the scheme received Rs. 2309. 50, the assured amount in the policy: (2) The large amounts of Rs. 90,750 and Rs. 5,52,587.95 were. detained by the respondents and showed the extent of wrongful gain by them. (3) The policy holders had no control over other policy holders which would assure continuance of the scheme. (4) D Merely because some persons receive some amount it could not be inferr~ ed that the scheme was not fraudulent. (5) The evidence showed that tho names entered in columns 3, 4, S, 6 and 7 of the pamphlet, issued by the respondents were bogus and that 2696 money orders were sent back to the remitter, as the persons were not traceable because of wrong address on the form. HELD : As held by the Calcutta High Court in Radha Ballav Paf J E case and Harida:1 Barafs case there was an element of speculation in money circulation schemes, but those who ran them could not be held guilty of cheating unless there was misrepresentation or dishonest conceal- ment of facts. It could not be said in the present case that the respondents had deceived the public aod thereby induced it to contribute money to the scheme. The appeal must accordingly fail. [131H-132F] Redha Ballav Pal v. Emperor, A.I.R. 1939 Cal. 327 and Hari Das F Baral v. Emperor, 1939 II I.LR. Cal. 81, approved. Nadir Barga Zaidi v. State of U.P. A.I.R. 1960 All. 103 and ln re M. K. Srinivasan, A.I.R. 1944 Mad 410, referred to. It is for the legislature to intervene if it wants to protect people who participate in these schemes, knoWing that sooner or later the schemea are bound to fail. [132F-G) CRIMINAL APPELLATB JURISIDCl10N: Criminal Appeal No. 142 of 1968. Appeal by special leave from the judgment and order dated September 8, 1967 of the Madhya Pradesh High Court in Criminal Appeal No. 81 of 1966. I. N. Shroff, for the appellant. U. P. S.iri.gh and Nur-ud-din Ahmed, for the respondent. G H i26 SUPRBMB COURT REPORTS [1971J;':Sl.(PP. s.c.~. c .D E F G H The Judgment of the Court was delivered by Sikri, C. J~This appeal by special leave by the State cf Madhya Pradesh is against the judgment of the High Court allow· ing the appeal of the respondents, Mir Basi Ali Khan, Mir Shahni· waz Ali Khan and Mir Sarfaraz Ali Khan, and setting aside th': conviction and sentences passed on them by the learned Fmt Additional Sessio!ls Judge, Bhopal, who had convicted them under Section 120B and Section 420, I. P. C. The respondents weri, however, acquitted of the charge under Section 406, I. P. C. W: may mention that there were two committal orders made by th'' learned Magistrate, First Class, Bhopal, on April 5, 1965 and 011 October 12, 1965, respectively, which gave rise to two Sessions Trials, No. 90 of 1965 and No. 98 of 1965. The learned Sessions Judge disposed of both the trials by a single judgment as he was of the view that both the trials were in effect a single trial of a single conspiracy and of several incidents of cheating. The res· pondents also filed one appeal before the High Court and the High Court disposed of ~t appeal by one judgment. The facts are not very much in dispute. The prosecutio11 case, in brief, was that Mir Bas it Ali Khan, the father, and hi> two sons, Mir Shahniwaz Ali Khan and Mir Sarfaraz Ali Khiln, entered into a partnership which was registered on September ~l. 1959, under the Indian Partnership Act of 1932 in the State of Andhra Pradesh at Hyderabad. The registration number of th•: firm was 1468. Mir Basit Ali Khan started a money circulation scheme known as Multi-Purpose Constructive Circulation Schem1: with its head office at Hyderabad. in the year 1960. He, along· with others, was prosecuted in the City • Magistrate's Court at Hy
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