M.K.SHAH - (1.) The original complainant who filed a complaint on behalf of the Reserve Bank of India against the accused charging them for the offences under sec. 450 and 58B read with sec. 58-C of the Reserve Bank of India Act 1934 (the Act) being aggrieved by an order of acquittal passed by the learned Metropolitan Magistrate 9 Court Ahmedabad on 17 March 1977 in criminal case No. 1370 of 1975 has preferred this appeal. ... ... .. ... .. ... ... .. ... ..
(2.) It was the prosecution case that accused No. 1 is a miscellaneous non-banking company within the meaning of clause (b) of para 3 of the Miscellaneous Non-Banking Companies (Reserve Bank) Directions 1973 (the Directions) which were issued by the Reserve Bank of India on 23rd August 1973 in exercise of the powers conferred on it by sec. 45-J read with sec. 45-K of the Act. The company is a private limited company registered under the Companies Act having its registered office at Ahmedabad and it is promoting and running schemes in the natrue of prize chits which chits are generally operated by enrolling members who are required to pay subscription of a specific amount for a specified period. Periodically lots are drawn and prizes are awarded to the holders of lucky numbers. In most of the schemes the prize-winning members are not required to pay further subscription but the subscription already paid till then is not refundable while in some schemes the prize winning members continue as numbers and they are also entitled to refund of the subscription on maturity of the scheme. Some schemes contain provisions for granting loans to the members by the company at the stipulated rate of interest which loans are repayable by monthly instalments.
(3.) We are concerned with seven such schemes floated by the accused company which are at Exs. 9 to 15. By para 4 of the said directions a copy whereof is at Ex. 3 the company was precluded from accepting deposits in excess of the limit prescribed in that para which would be 25 of the aggregate of the paid up capital and free reserves of the company. The company had paid up capital of Rs. 2 0 only with no free reserves and the return which are at Exs. 4 to 8 showed that between 30 and 33-9-1974 though the deposits had already exceeded the prescribed limit the company continued to accept deposits to the extent of Rs. 31. 7 lacs and on 31-3-1975 the figure rose to Rs. 67. 44 lacs. On coming to know about the contravention of the directions and finding that the company had continued to receive deposits in excess of the prescribed limit even after the issuance of the said directions which came into force from 1-12-1973 and that the mandate contained in the directions to reduce the deposits by a phased programme was not carried out a complaint was lodged against the accused before the learned Magistrate on 22nd October 1975;