V.R.Othisamy v. The State Of Tamilnadu

In the High Court of Judicature at Madras Dated: 09.06.2015 Coram:

The Honourable Mr. SANJAY KISHAN KAUL, Chief Justice and The Honourable Mr. Justice T.S.SIVAGNANAM Writ Petition No. 28935 of 2012 and M. P. Nos.1 of 2012 and 3, 4 and 5 of 2013 V.R. Othisamy .. Petitioner vs.

1. The State of Tamil Nadu rep. by its Chief Secretary Fort St. George, Chennai 600 009.

2. The Director General of Police Office of the Director General of Police Kamarajar Salai, Chennai 600 004.

3. The Superintendent of Police Coimbatore District, Coimbatore.

4. The Superintendent of Police Erode District, Erode.

5. Senthil Kumar

6. Vivek .. R5 & R6 impleaded as per order dated 28.11.2012 in M.P.No.2/2012 in W.P. No.28935/ 2012.

7. K. Manoharan

8. C. Balamurugan

9. R. Bakiyaraj .. R7 to R9 impleaded as per order dated 11.01.2013 in M.P.No.1/2013 in W.P. No.28935/ 2012.

.. Respondents --- Prayer: Petition filed under Article 226 of the Constitution of India praying for issue of a Writ of Mandamus to direct the respondents to take necessary action by framing appropriate guidelines to prevent and to stop running of any business in the name of Multi Level Marketing or any type of similar business with chain of members in referral scheme involved collection of money from the general public by any individual or by any firm.

For Petitioner : Mr. A.V. Raja For Respondents : Mr. S.T.S. Murthi Government Pleader for R1 to R4 No Appearance for R5 Mr. R. Vivekananthan for R6 Mr. Mohamed Ismail for R7 to R9

O R D E R

(Made by The Hon'ble The Chief Justice) The greed for extracting money without realising the pitfalls has resulted in public being misled into investing in Multi Level Marketing Scheme (MLMs). Such kind of scheme is a pyramid scheme which is stated to be a non-sustainable business model, involving exchange of money primarily for enrolling other people to earn more by simple method of introducing new members to grow in the pyramid. Such schemes are stated not to be falling under direct jurisdiction of any regulators or departments and thus, there is no monitoring.

2. In order to regulate the MLMs, various State Governments are stated to have framed guidelines and even draft Bills.

3. That apart, in respect of the particular case in question, cases have been registered against the fraudulent financial establishment and the accused have been secured from the hideouts. Investigation was conducted and it transpired from their statements that they could not have paid such a high rate of interest i.e. 102% per annum, as there cannot be a business model of this kind. The financial operation of the present Scheme has been only rotation of depositors' money itself for paying the assured returns and commission amounts and after having collected Rs.800 crores from the general public, stopped payment of assured returns. The matter is stated to be pending before the Special Court at Coimbatore in C.C. No.15 of 2013 . Attachments have been made of various properties under Section 3 of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997. Ultimately, the accused have been enlarged on bail.

4. The petitioner is stated to have made some suggestions, on which views have been invited.

5. The aforesaid shows that the respondents-authorities are taking steps and will make all endeavour to see to the proper prosecution of the accused and to secure the amounts taken away by the accused.

6. As requested by the learned counsel for the sixth respondent, it is clarified that if a particular asset is seized, it

is open to him to take steps for release of the asset in accordance with law.

7. The State Government may look into the issue from the perspective of not only prosecuting the offending parties, but taking preventive measures including appropriate publicity, so that people are not lured by such schemes.

8. The writ petition accordingly stands disposed of. No costs. Consequently, M.P. Nos.1 of 2012 and 3, 4 and 5 of 2013 are closed. Sd/- Asst.Registrar (CS III ) /true copy/ Sub Asst. Registrar ATR Copies to;

1. The Chief Secretary State of Tamil Nadu Fort St. George, Chennai 600 009.

2. The Director General of Police Office of the Director General of Police Kamarajar Salai, Chennai 600 004.

3. The Superintendent of Police Coimbatore District, Coimbatore.

4. The Superintendent of Police Erode District, Erode.

1 cc to Mr.A.V. Raja, Advocate, Sr. 28789 1 cc to Mr.A. Mohamed Ismail, Advocate, Sr. 28328 1 cc to Mr.R. Vivekananthan, Advocate, Sr. 28060 W.P. No. 28935 of 2012 RJ (CO) kk 18/6