Registered with the Registrar of Newspapers for India under R.N.I 53640/91

Vol. XXIX No. 8, August 1-15, 2019

Three cases of cheating illustrating ‘White Collar Crime’

by J. Lakshmikanthan, Asst. Prosecutor, II President Magistrate Court, Madras 1

Man, with his selfishness, greed and egoism, on the one side commits crimes because of his wants, avarice, aspirations, fear, self-respect etc., and on the other, is a victim. Greedy and cunning persons prey upon the gullible and unsophisticated members of the society, and upon persons placed under difficult circumstances and subject to financial strain. The former dupe the latter, who part with considerable sums as a consequence. Methods in commission of crime vary and subtlety develops according to social and economic progress. So much so, that ‘white collar crime’ has come into prominence, manifesting itself mostly in the offence of cheating.

The following cases of cheating are illustrative of this type of crime.

The facts relating to the first and second cases transpired between the years 1951 and 1952. There were two incidents, and they may be called the “Tanjore incident” and the “Pollachi incident” respectively, with reference to the places to which the parties who were cheated belonged. The accused were three in number, who formed a group, and they were charged in both the incidents. They belonged to Bombay. A finance broker, a financier and his lawyer were the three involved. The three were well educated and by all appearances, they were cultured.

The Managing Director of Modern Motors (Private) Ltd., of Tanjore and the proprietor of Krishna Talkies of Tanjore were in need of funds to develop their respective businesses. They both were friends. The first wanted Rs. 50,000 on the assets of his business, and another Rs. 50,000 on his personal properties, and the second wanted a sum of Rs. 1,25,000 on his theatre. Similarly, the Managing Director of Bhagya Lakshmi Mills of Pollachi wanted a loan of Rs. 6,00,000 (six lakhs) on the security of the properties, assets and machinery of the mills for discharging some old outstandings and for expanding the mills. The period of cheating in the ‘Tanjore incident’ was from 11-8-1951 till the end of 1951, and in the ‘Pollachi incident’ it was from 9-4-1952 to 15-11-1952.

The modus operandi of the three accused who acted jointly was similar in both the incidents. As a consequence of advertisements made by him in ‘The Hindu’, a daily of Madras, the finance broker of Bombay was contacted through correspondence by the parties. The respective advertisements made on 11-8-1951 and 9-4-1952, announced temptingly to the effect that huge loans up to several lakhs of rupees would be arranged and advanced on the security of mills, theatres, and other big running concerns and valuable immovable properties. After an on-the-spot inspection made by the broker of the respective properties and businesses of the parties, he expressed his initial satisfaction as to the value and worth of the properties on which loans were sought by the parties, and also his readiness to arrange for the loans on his return to Bombay. The parties were practically decoyed to Bombay by the broker and the parties went with thousands of rupees cash for stamp duty charges, registration and other incidental expenses in connection with the execution of the mortgage deeds. At Bombay, the parties were introduced to the financier. He was really worth nothing. While he gave the impression of a millionaire, he was actually living in a palatial building which belonged to his mother-in-law at Parel, Bombay. After ostensibly discussing about the amount of loans sought for by the parties, settling the rate of interest, terms of repayment etc., the financier referred them to the lawyer, who discussed the matter with the parties in a professional way regarding the title to the properties and preparation to be made for drafting the deeds, and advised them to get ready the amount required for stamp duty, registration charges and incidental expenses, and also fixed the date for registration of the documents at Bombay. After a full discussion and settling even the details, the parties were asked to meet the financier. When the parties again contacted him, he asked for the stamp and registration charges etc., as the lawyers had informed him through the phone, and the party paid the amount mentioned on the clear and definite statement made by the financier, that the mortgage deeds would be prepared, registration effected, loan amount paid to parties, and the entire transaction would be completed in a couple of days. Thus, the Tanjore parties were deceived, dishonestly induced to part with a total of Rs. 8,750 between 19-11-1951 and the end of 1951, and the Pollachi party parted with Rs. 21,863 between 29-10-1952 and 4-11-1952.

The anxiety of the both parties to obtain huge amounts as loans were fully exploited by these three cunning accused, and from the moment the parties arrived at Bombay, they were subjected to psychological tension. After the amounts were collected by the financier from the parties, the three accused began to adopt a docile attitude. No stamps or papers for mortgage deeds were ever purchased by the financier or the lawyer. The parties were shown some bogus deeds typed on plain sheet of paper on which the accused stated that necessary stamp duty would be engrossed by them at the time of registration of the deed. The broker began to drop out. The financier who referred the parties to the lawyers began to find out for the first time, defects in the title to the properties which needed rectification. The parties were thrown from pillar to post and from post to pillar till they could no longer afford to waste further time and money by remaining at Bombay and they had to leave. Talks about reinspection of properties and documents relating thereto by the agent of the financier took place. Reinspection also was made accordingly, but nothing resulted thereafter. The parties asked for the return of the cash taken from them by the financier, but nothing was returned, and the three accused did not express any intention of making good the amounts collected. Several trunk calls, letters, and advocates’ notices were sent by and on behalf of the parties to the financier demanding repayment of the money that they were dishonestly induced to part with, but all were in vain. The amounts were lost. Apart from the cash lost, to and for, inspection and other incidental expenses incurred by the parties, the waste of time, the exertion made and worries suffered by them and the effect of utter disappointment in the transaction could be well estimated and imagined. Complaints about these criminals were made by the parties to the Government of Madras and they were forwarded to the police for investigation. These two cases were investigated by Mr. T. S. Vivekanandhan, then Inspector, Crime Branch, C.I.D., Madras, who is now Deputy Superintendent of Police.

Charge sheets under Sections 420 I.P.C., read with Section 34 I.P.C. i.e., cheating with common intention, were filed against all the three accused before the Third Presidency Magistrate, Madras on the ground of jurisdiction that the advertisements were made in ‘The Hindu’ at Madras. All the accused could not be secured together. The cases against each of the accused were split up and each was tried separately.

The charges framed against the lawyer in the ‘Tanjore case’ were quashed by the High Court of Madras in Cr. M.P. 1002/58 on 3-10-58 and in the ‘Pollachi case’ in C.C. 1663/58, he was acquitted on 8-5-59 after a full trial. The financier was tried and convicted and sentenced to four months S.I. in each of the two cases in C.C. 3393 and 3394/59 in December 1959. The broker was subsequently arrested and he pleaded guilty for the charges in C.C. Nos. 1535 and 1536/60 on 31-3-1960, and he was convicted and sentenced to 4 months S.I. and fined Rs. 500 in each of the two cases. It may also be mentioned that during the course of the trial in C.C. 1663/58, 3393/59 and 3394/59, several witnesses were examined on two occasions before a Magistrate at Bombay on commission. It was found during the course of investigation that, prior to these two instances, the three accused had similarly cheated several other parties and collected huge amounts from them. Further activities of the broker and the bogus financier and his lawyer were effectively put to an end in the year 1959 and 1960.

In the third case the complainant was a retired civil surgeon who was residing at Santhome, Madras. Four persons joined together and cheated him. The first was an Honorary Presidency Magistrate of Madras. The second was his son. The third was an associate of the first and he belonged to the same locality as the complainant, and the fourth was also an associate of the first and third. They can be called as the first, second, third, and the fourth accused respectively.

In the middle of October 1956, the third accused and an old man named Mohammad Ismail Labbai approached the complainant, representing that the latter had obtained a decree for 96 crores of rupees payable by the State Bank, and they requested the complainant to advance a loan of Rs. 1000 ie., Rs. 640 as the ‘chamber sitting fee’ of the Chief Justice High Court, Madras, for passing necessary orders in execution and the balance for other incidental expenses in The High Court of Madras. The complainant naturally asked for the decree and the relevant papers. A couple of days later, the third accused and Md. Ismail Lubbai came with the first and the fourth accused, who were introduced to the complainant. The first accused explained to the complainant that the originals were all with the Chief Justice, High Court, but showed some typed copies so as to induce the complainant to make a payment of Rs. 1000 cash to the first accused. This was the beginning of a series of cash payments made by the complainant to one or other of the four accused who, jointly and in pursuance of a criminal conspiracy, cheated the complainant through the medium of Md. Ismail Lubbai. They also, particularly the first accused, falsely represented to the complainant that if he pays off the creditors of Md. Ismail Lubbai, he would get back the total amount with great pecuniary advantage to himself. Sometimes the first accused also represented that he was going to see the finance minister at Delhi to expedite the payment of the amount payable under the ‘decree’ in favour of Md. Ismail Lubbai. Several bogus orders of High Court, bogus chalans for the remittance of money to the credit of the High Court for ‘incidental proceedings’ were produced by the first accused to satisfy the complainant. The accused went to the extent of preparing bogus High Court orders showing that cheque books and pass books for drawing amounts ordered in favour of Md. Ismail Lubbai and ‘poundage’ to be paid. All these bogus documents and false representations were made by the accused so as to dishonestly induce the complainant to make not less than fifty one payments to one or other of the accused between the period 30-10-56 to 24-7-57 amounting to Rs. 48,390. The first accused requisitioned the services of a tout by name Imamuddin alias Basha, examined as prosecution witness No. 10 during the trial, and who became almost blind by then. He was an expert in drafting and concocting all sorts of bogus court orders freely using legal terms and phrases. The complainant also got exhausted by making these heavy payments till at last he thought, better late than never, that he should ask for a consolidated acknowledgement from Md. Ismail Lubbai and three of the accused ie., the first, third, and the fourth. From that time, all the accused began to disappear. So much so that, the complainant guessed that he was defrauded by them. When he found that there was no prospect of getting back the moneys lent by them, the complainant reported the matter to the police on 11-5-1958.

The crime was investigated by Sri. P.K. Varadachari, the then Administrative Inspector of Crime Branch, Madras City, who retired as an Assistant Commissioner of Police, Madras. The charge sheet was filed on 4-11-1958 against all the four accused in C.C. No. 6442/58 before the third Presidency Magistrate, Saidapet, Madras, for offences of criminal conspiracy to cheat and cheating him to part with a total sum of Rs. 48,390 (Section 120 B. I. P. C. and 420 I.P.C.). All the accused pleaded ‘not guilty’ to the charges made against them. The trial went on from 30-1-59 to 11-5-59 and fourteen prosecution witnesses, including the officer who investigated, were examined. On 14-5-1959, judgment was delivered by the court convicting the 1st accused and sentencing him to nine months R.I. The second accused was acquitted for want of criminal intention on his part. The third and fourth were released under Section 4 (1) Madras Probation of Offenders Act on their own bond and one surety for Rs. 1000 for a period of one year.

The question may arise as to whether Md. Ismail Lubbai, who was examined as prosecution witness No.3, should have also been included as one of the accused. From his evidence, it was clear that he filed C. S. 173 of 1938 against the Imperial Bank of India as a pauper suit; the same was dismissed by the High Court on 12-9-1940. Thereafter, there was no further proceedings by, or in favour of, Md. Ismail Lubbai in the High Court, Madras. The evidence of Md. Ismail Lubbai and Imamuddin Basha were to some extent divergent. The former stated that the latter made him believe that further proceedings were going on, and the latter said that the former brought the fourth accused and asked the latter i.e., Imamuddin, to represent that the proceedings were being continued, and that the money due under the decree passed in favour of Md. Ismail Labbai for huge amounts against State Bank, and was ready to be realised. But certain it was, that the fourth accused was probably the first victim of this hoax and he was so ruined that he adopted the same tactics for realising at least some portion of the money lost by him by taking the first and the third accused as his partner, using the same Md. Ismail Lubbai as the medium, and Imamuddin as their technical adviser, to cheat the complainant and draw cash as heavily as possible from him.

The intervention of the first accused through the fourth accused in this affair was certainly a turning point. From that moment, the first accused played the leading role in this game of cheating. In fact, the first accused overdid his part to such an extent that at one stage Md. Ismail Lubbai sent on 2-5-58 a complaint to the Commissioner of Police against the 1st and the fourth accused for cheating him i.e., Md. Ismail Lubbai and for not accounting for collections made by the first and the fourth accused on his behalf.

There was another prosecution witness by the name of Ramachandra Naidu, examined as No.4 in the case. He was also a victim of this gang and he was similarly cheated between May 1956 to April 1958 to the tune of Rs. 650 on the same basis. His evidence also revealed the leading role played by the first accused. This witness contacted the Registrar, High Court of Madras and verified the bogus decree and the huge, imaginary amount to be immediately paid. Thereupon, the Registrar, High Court, Madras, sent a report to the Commissioner of Police on 10-4-1958 about Ramachandra Naidu’s incident.

In the above said two cases, one common significant factor can be found, i.e., in the first case, the Tanjore parties and the Pollachi parties, and in the second case, both the doctor complainant and Ramachandra Naidu – all these were intelligent, influential persons but were duped just the same. It is surprising that none of them contacted the legal adviser of their own before or at the time of parting with money and took advice. Probably, the same persons would have sought careful legal advice if a really needy person sought from them a mortgage loan on the security of his property. But the bogus financier, the fake financier broker, the degenerate Honorary Presidency Magistrate and his detestable companions, all these people obviously invoked so much confidence in the minds of their victims that they, the victims, had no time even to think about a lawyer. This is the fundamental implication of ‘white collar crime’ – The Madras Police Journal, Jan.-March 1965)

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