LAKSHYA INDIA Vs. STATE OF ORISSA AND ORS.

JUDGEMENT

(1.) IN this writ petition, challenge has been made to the action of the Crime Investigation Department, Crime Branch, Orissa (hereinafter referred to as "the CID (CB)") in freezing the accounts of the Petitioner operating in different branches all over India.

(2.) THE brief facts of the case are as follows: The Petitioner is a Company under the name and style of Lakshya Level Marketing Pvt. Ltd. which is registered under the Indian Companies Act, 1956 with a website name "Lakshya India". The said company is represented by its Managing Director Naresh Mundhra. One Himansu Sekhar Panigrahi filed an FIR on 25.7.2009 before Sahadevkhunta Police Station which was registered as Sahadev Khunta P.S. Case No. 130 of 2009 corresponding to C.T. Case No. 1358 of 2009. As per the allegations made in the FIR, the informant after verifying the scheme in the website of the Petitioner company invested Rs.15, 000/ - with an impression that he would get more benefits. As per the scheme, if one deposits Rs.5, 000/ - with the Petitioner company, he would get Rs.75/ - in the first month, Rs.150/ - in the second month, Rs.300/ - in the third month and likewise every month he would get double amount received by him in the proceeding month for one year consecutively and in the process he would get about Rs.2 lakhs. If the said person promotes Anr. person, he would get promotional benefit of Rs. 50/ - per person. However, the informant did not receive the money as promised in the website. He felt that the "circulation of money may disrupt financial system". Therefore, the FIR was registered and the matter was investigated. Thereafter, the case was taken over by the CID (CB) by reporting the matter to the learned SDJM, Balasore. The FIR was registered as CID Case No. 21 of 2009. The Petitioner stated that the business of the company has no connection with any money circulation in its website. It displayed the scheme which is transparent in the internet and accessible to everybody. The website is known as www.lakshyaindia.net and Email as lnfo @ lakshyaindia.net. The functioning of the company is totally different. It is doing business online as well as offline interactive marketing specialists offering complete online marketing and sales rewards/incentives for their sales distributors. Their clients are provided marketing solutions which ultimately raise the sales volume positively. The company is associated with authorized all -India marketing Partners of branded products like Sangini diamond jewellery Freya life style jewellery (imitation jewellery), Liverpool, Barcelona apparels. Haier Appliances, gold jeweler, Lawmen, Integrity, etc. The company has product marketing experience of 12 years and are serving its clients in the filed of marketing. By this process, the company generated great sales volume particularly because of the referral reward marketing programme. The entire system works through distributorship. Each distributor has been given an identification number on payment of a non -refundable product booking charge for purchase of product from the company. The persons are treated as privileged distributors of the company. The informant and the other persons named in the FIR are the distributors of the company. They are also eligible to get the benefits upon purchase of the products. The advance coupons issued are accepted at all Lakshya India franchise stores/showrooms and other establishments disclosed in the website. The distributor is entitled to make purchase as per the requirements with optimum benefits. It has been specifically stated that the company has no connection or business with the banking, investment or even money circulation. There is no money circulation, far less any transaction of chits and prizes in the commercial functioning of Lakshya India. Therefore, the feeling expressed by the informant is wholly imaginary and based on hearsay. However, the CID (CB) investigated the matter on 29.7.2009 as if it is a money scam purportedly related to deposit by the persons resulting in money circulation with expectancy of quick profit. The concept of "prize" and " chits" or money circulation" is relatable to deposits made by the innocent investors with the hope of getting extra profit money wise immediately. The Petitioner company was not aware of such circulation going on unlawfully. While the matter was investigated by the CID (CB), the investigating authority issued letter dated 30.7.2009 to the banks to freeze the Petitioner's accounts. The investigating authority also issued instructions to other sister concerns working throughout India not to enter into any banking transaction with the company. The company's various bank accounts have been frozen i.e. HDFC Bank, Andheri West and Malad West, State Bank of India, Malad West and ICICI Bank account, Andheri West and Kandivali West, Mumbai. The FIR was lodged on an apprehension of alleged disruption of financial system in circulation of money which does not make out a case against the Petitioner company as a result of which the Petitioner is facing acute financial stringency to meet the day to day financial need and operate the business in website. The entire running business of the Petitioner has come to a standstill. Since the Petitioner company stands on a different footing and there is no allegation against the Petitioner company from the authorized customers establish all over India regarding any type of irregularities, the action of the CID (CB) is illegal and it infringes the constitutional and fundamental rights of the Petitioner company to carry on business as guaranteed under Article 19(1)(g) of the Constitution of India. Therefore, the Petitioner approached this Court for quashing of the direction of the CID (CB) to freeze the Petitioner's account in different banks though the matters is pending before the learned S.D.J.M., Balasore and till date there has been no seizure or production of property before the learned S.D.J.M. in terms of Section 102 Code of Criminal Procedure Hence, it is stated that the action of the investigating authority is unconstitutional and the same is liable to be quashed and the Petitioner may be allowed to operate its bank accounts for its business purpose.

(3.) THE Reserve Bank of India (in short "RBI") by its letter dated 18.8.2009 issued guidelines to the Chairman/Chief Executives of all Scheduled Commercial Banks regarding the activities of Multi Level Marketing Company. The RBI has given a list of 7 companies involved in Multi Level Marketing and the Petitioner company's name finds place at serial No. 2 in the said list. In the aforesaid letter dated 18.8.2009, the RBI specifically stated as follows: