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Supreme Court declines to quash criminal proceedings against woman, her son accused in Rs 66-crore scam duping 45,000 investors

The Bench put forward to counsel of Petitioner, Rajeev Maheshwaranand Roy, AOR, that a case for acquittal is different from a case where cognizance order has been challenged.

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The Supreme Court on Wednesday dismissed an appeal filed by a mother and son seeking quashing of criminal proceedings against them for duping 44,537 persons/depositors, and of misappropriating funds worth Rs 66 crore in connivance with other family members. 

A two-judge bench of Justice Indira Banerjee and Justice V. Ramasubramanian after hearing the matter at length dismissed the appeal of Shanu Sheik and S. Ghouse Yacoob Hussain who sought the quashing of criminal proceedings in offences under Sections 406, 420 r/w 120-B of IPC and under Section 5 of Tamil Nadu Protection of Interests of Depositors (In Financial Establishment) Act, 1997. 

Both Shanu Sheik and S. Ghouse along with other accused persons were found to be involved and complicit with other accused persons in devising various schemes and also by assuring the general public and collected crores of rupees as deposits from the general public and totally 44,537 depositors have been cheated and their money has been misappropriated to the tune of Rs 65,46,87,508. 

The Bench put forward to counsel of Petitioner, Rajeev Maheshwaranand Roy, AOR, that a case for acquittal is different from a case where cognizance order has been challenged. The contentions of the counsel of Petitioner was that Shanu Sheik has no active role to play in the commission of offence and the chargesheet reflects no such role of Shanu Sheik. 

The counsel further submitted that findings recorded by High Court should not be influenced by trial court, to which the bench agreed. Shanu Sheik is the wife of Sheik Mohidheen, who is a managing director of P.M.C. Mercantile Pvt.Ltd , S.Ghouse Yacoob Hussain is a son of Shanu Sheik and Sheik Mohidheen.

Sheikh Mohidheen, the husband of the petitioner, floated fraudulent companies aided with family members and started luring public by providing false promises by announcing five schemes. Major funds were collected from the depositors, subsequently routed through bank accounts of Sheikh Mohidheen and of his family members for the personal benefits and misappropriated huge sums of money, creating a financial crunch.

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Allegation against the petitioner is that a single cheque of Rs 10,00,000 credited to her account from the ICICI Bank account of the Paramount Marketing Corporation, the cheque was signed by her husband. The account was in operation only for 14 days and within a short period, huge sums of money to the tune of Rs 27,98,130 was credited to the account of petitioner.

All the amounts were from the Companies Account and the amounts were converted into jewels, costly consumer articles and immovable properties were purchased by using the money.

The contentions of the counsel of Petitioner raised before the Madras High Court that Prosecution roped in the Petitioners since they belong to one family. Admittedly, they were neither the directors nor the partner of P.M.C. company and also of the proprietorship firm.

“Scheme devised by alleged PMC company and Proprietorship firm is only for sale of “Thirukural” books and receipts issued for the same. It is only an incentive by way of commission for the persons, who added as commission agents and nowhere deposits of money was the sole criteria,“ As further stated by counsel of Shanu Seikh and S. Ghouse Yacoob Hussain.

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The foremost contention of counsel of Shanu Sheikh raised “The nature of transactions involving in receipt of deposits from the general public and obligation to the persons who receive his return to the persons, who made deposits on holding that all these types of transactions will come under TNPID Act.”

Shanu Seikh and her son S. Ghouse Yacoob Hussain preferred Criminal Original petition under section 482 CrPc seeking quashing of the Chargesheet High court of Madras, Bench at Madurai and simulatenously also filed revision petition challenging cognizance order dated 1.06.2016  taken by the Special Judge (TNPID Act).

The High Court had observed while dismissing the both Petition of Petitioners that “voluminous deposits held by both PMC Mercantile Private Ltd. Co. and Proprietorship firm stands proved by Prosecution. Uninformed and gullible small depositors, fall prey to such mala fide modus operandi of augmentation of deposits. Such unfair growth of deposits, outside the banking system and proliferation of institutions both financial and non-financial, depending mainly or wholly on the deposits from the general public. Such companies should not have unlimited and unrestricted access to the public funds.”

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