HC dismisses pleas by 2 financial firms for quashing of FIRs

Madras High Court today dismissed petitions by two financial firms seeking the quashing of FIRs filed against them by the police's Economic Offences Wing (EOW) for allegedly cheating depositors.
Helios and Matheson Information Technology Ltd and Viswapriya (India) Limited (formerly Viswapriya Financial Services and Securities Ltd) sought the quashing of the FIRs filed under IPC Section 420 (cheating) and Tamil Nadu Protection of Interests of Depositors (In Financial Establishments), or TNPID, Act, 1997.
The FIRs were registered on complaints by depositors that the two companies failed to repay deposits on maturity.
The petitioner companies contended that the Deputy Superintendent of Police, EOW, had no authority to conduct investigation under the TNPID Act and, therefore, the FIRs deserved to be quashed.

Dismissing the petitions, Justice PN Prakash said the TNPID Act clearly defined "the offence" and, if a Special Police Wing was created for investigating the offence, it cannot be violative of Article 14 of the Constitution.
He also rejected arguments that the EOW can investigate only partnership firms and unincorporated companies.

The judge further dismissed the contention that the accused were companies incorporated under the Companies Act, 1956, and, therefore, only the provisions of Section 74 of the Act can be made applicable to them and not the provisions of the TNPID Act.
"Section 74(1)(a) permits a company to prepare a scheme for repayment and the clause used therein would mean that, if any other law prescribes such a scheme of repayment, then the provisions of Section 74 will supersede that law.

"Section 5 of the TNPID Act does not envisage preparation of any scheme of repayment. It simply states that, if the financial establishment defaults in repaying a depositor, the offence is made out... May be it is draconian, but, nevertheless, its constitutional validity has been upheld by a Full Bench of this Court and the Supreme Court and it is too late in the day to challenge the vires of the Act," the Judge said.
He directed police not to register any fresh FIR on further complaints received in this regard but to treat all of them as 161 CrPC statements and proceed with the investigation in the case.