P L D 1964 Dacca 600 (PLP)

MURSHED, J.‑These five applications were heard together by us and would be disposed of by this judgment and order of the Court. The petitioners have been committed to the Court of Sessions for trial on charges under section 420/120‑B of the Pakistan Penal Code. The background of the case, which is material for con sideration of these petitions, may be briefly stated as follows:

2. On the 23rd of December 1952, a company under the name and style of "Economic Aid Corporation" was registered under the Companies Act, 1913, and a certificate of incorporation was, granted by the Registrar of Joint Stock Companies, East Pakistan. The share‑holders and those who subscribed to the Memorandum and Articles of Association of the said Economic Aid Corporation (hereinafter called the company) were the following: (1) Zahid Hasan Khan, (2) Novaid Hasan Khan, (3) Sabahat Hasan Khan, (4) Alim Khan, (5) Asad Ali Khan, (6) Salamat All Khan, and (7) Khalid Husain Khan. Amongst the aforesaid persons Zahid Hasan Khan, Alim Klan and Salamat Ali Khan constituted the Board of Directors of the aforesaid Company. Zahid Hasan Khan acted as its Managing Director. Subsequently Salamat Ali Khan and Alim Khan resigned and in their places one Najmul Hasan and another person called, Md. Ishaque were made Directors in 1953.

3. By the Memorandum and Articles of Association the aforesaid company was authorised to raise funds for the purposes of the company. In accordance with such authority, on the 1st of January 1953, a scheme for raising funds was launched by the Directors, which is known as "Economic Help Scheme" (marked Exh. 314) the relevant portions of which are quoted below: "ECONOMIC HELP SCHEME" "(1) The‑ Scheme will be known as "ECONOMIC HELP SCHEME". (2) The aim and object of this Scheme is to help the deserving public with an Economic Aid so that they may be established in life. It is our aim to uplift the poor people and to raise their standard of living by increasing their wealth. Wealth is a back bone of development. Wealth alone reduces at least 75 p.c. of our troubles. (3) This Scheme is introduced only for the poor class of people to give them such aid so that they can get rid from those money‑holders who are inclined to depress the people by blocking circulation of money. (4) This Scheme is based purely on circulation of money. (5) This Scheme will run under the Administration of "ECONOMIC AID CORPORATION LIMITED", and the said Company will charge As. 0‑2-0 per unit as its commission which will be recovered from the Unit Holders against the cost of forms. (6) After introduction, this Scheme shall run purely on the money subscribed by its unit holders. (7) Under any circumstances if the Company is unable to continue this Scheme then the unit holders during their membership will get the dividends in ratio of their units from the remaining subscription money. (8) Any individual who purchases at least one unit shall become member of this Scheme. This said Company will therefore consider itself fortunate if through this Scheme it can be of any help to improve the Economic condition of the country and the nation. Every individual without any restriction of Sex/Age and Creed can be a member of this Scheme and obtain its immense advantages. "Any person purchasing at least one Unit of the value of Rs. 2 shall be a member of the Scheme for ninety days and during this period of membership he will get bonus against the unit he has purchased which will not exceed three hundred per cent. of the value of his Unit including the cost of his Unit/Units. Bonus will be paid on the agreed ratio for example as follows and on the dates mentioned in Unit's certificates. PAYABLE Rs. a. p. 1st Instalment of Bonus After complete 30 days from the date of issue of Unit certifi cate plus refund of Unit money 0 12 0 2 0 0 2nd Instalment of Bonus 30 days after 1st inst. 1 4 0 3rd Instalment of Bonus 30 days after 2nd inst. 2 0 0 Total 6 0 0 Against One Unit in 90 days. Note.‑‑‑Period of Membership will be counted from the date of issue of unit's certificate."

4. It is apparent that the scheme was based purely on flow of money from the investors into the company and on its circulation. The company professed to pay the investors of units amounting to Rs. 2 in three instalments within 90 days from the date of issue of the "unit certificates" A maximum of 250 units was laid down as the limit for individual investors at a time. The company levied a charge of As. 0‑2‑0 per unit from unit‑holders. The company did not represent to the investors that payments would be made to them out of the profits earned or otherwise made. The investors were promised payments purely on the basis of the circulation of money put in by the investors themselves. When the scheme was launched, there was some response from members of the public and a number of branches were opened in various districts in the Province as well as in the town of Dacca where the head office was located. It appears that the investors were paid according to the scheme and some time towards the month of October 1953, the police had an eye on the company and some amount of panic was engendered. On the 8th of October 1953, the head‑office of the company as well as the residence of the Managing Director and a number of branch offices were raided by the police. Similarly, a day thereafter, various other branch offices of the company in the districts of the Province were also raided. 1t is not clear under what legal authority such raids were made. The result thereof was that whatever assets of the company the police could lay its hand on, were frozen and that, upon such raid the scheme failed to function. The directors and a large number of employees of the company were arrested by the police and kept in detention. After a rather protracted enquiry, on the 23rd of September 1953, a charge‑sheet was submitted against the petitioners as well as few other to Sub‑Divisional Officer (South), Dacca. The charge‑sheet is on the record of this case. In it the Directors, share‑holders, in all numbering nineteen persons, were accused of having committed an offence under section 420/120‑B of the Pakistan Penal Code. Some of the persons accused in the charge‑sheet were also accused of having committed an offence under section 408 of the said Code. One Shamsuddin, who was Manager of the Sylhet Branch of the Company, was further charged under section 477‑A/471 of the Code. One V. P. Ally (since deceased) another person by the name of Abdul Hamid were also charged for having committed an offence under section 467 of the Penal Code. On the 5th of February 1955, sanction under section 5(5) of the Criminal Law Amendment Act, 1953, was granted for prosecuting one Captain Shabbir Hasan Khan. It appears that there was further investigation in the matter and eventually on the 2nd of March 1955, a supplementary charge‑sheet was submitted against the said Captain Shabbir Hasan Khan. On the 14th of March 1956, a Division Bench of this Court directed the trial of the case by the Sessions Judge (Ex‑ofcio Special Judge), Dacca. The Special Judge could not take up the case until the 27th of March 1956. It was however, subsequently pointed out by the learned Special Judge that the Criminal Law Amendment Act, 1953, was not applicable to the case as none of the accused persons was a public servant within the meaning of the Act. Accordingly the learned Special Judge sent the case back to the Sub‑Divisional Officer (South), Dacca, for disposal, holding that he had no jurisdiction to try the case. Thereafter on the 26th of March 1959, a Magistrate, 1st Class, Dacca, received the records of the case from the Court of the Sub -Divisional Officer (South), Dacca, for disposal and the accused persons appeared and witnesses were examined.

5. On the 1st of March 1960, on an application made to this Court, it was directed that the case be tried by the Sessions Judge, Dacca. It was, thereafter, represented to this Court that the Sessions Judge being burdened with various other kinds of work, the trial before him would be necessarily protracted. Accordingly, on the 8th of November 1960, this Court directed that the case be tried by the 2nd Additional Sessions Judge, Dacca.

6. It was subsequently pointed out to this Court that the trial which had commenced before the 2nd Additional Sessions Judge, Dacca, was without a Jury or a body of Assessors and that there was no commitment of the case to that Court. This Court, therefore, issued a Rule at the hearing of which it appeared that the learned Magistrate, before whom the case was pending, simply, transmitted the case physically to the 2nd Additional Sessions Judge, Dacca, without committing it to him or following the procedure laid down in the Criminal Procedure Code for such commitment, with the result that, in the eye of law, the case was still pending before the Magistrate who had merely transmitted the records of the case to the learned Additional Sessions Judge. Thus, a serious bottle‑neck was created in respect of the case which had been pending trial for ten years. Upon an assessment of the situation, this Court passed an order on the 22nd of February 1962, that, inasmuch as the Magistrate before whom the case was pending had been transferred, the case should be taken up by a competent Magistrate nominated by the Deputy Commissioner of Dacca. This Court further directed that such Magistrate should be unburdened with any other work which might hamper the progress of the case, so that the trial should proceed with utmost expedition. This Court 'also directed that in the trial of the accused persons the said Magistrate was at liberty to exercise all the powers that were conferred upon him by the Criminal Procedure Code or any other law of the country.

7. It further appears that on the 19th of April 1961, on an application made by one Serajuddin Ahmed, who was an accused in the case, he was tendered pardon and he wa s allowed to give evidence as approver.

8. The aforesaid learned Magistrate, as stated above, after recording the evidence adduced by the prosecution, committed the petitioners and some other accused to the Court of Sessions to stand their trial under section 420/120‑B of the Penal Code.

9. All the five applications are directed against the aforesaid order of commitment and we have been asked to quash the same.

10. At the very outset we would like to point out that the learned Advocate for the petitioner as well as Mr. Azizuddin Ahmed, who has appeared on behalf of the State, have urged that the commitment order is not a legal and proper order inasmuch as the learned Magistrate has simply made a catalogue of the witnesses and has not discussed how a prima facie case was established against each of the petitioners. Mr. Azizuddin Ahmed invited us to send the case back on remand to the com mitting Court for writing out a proper order of commitment.

11. We do not think that, having regard to the course which this case has taken and, also having regard to the fact that we are to‑day hearing these petitions after about ten years from the date when the criminal law was set in motion against the petitioners, we would be justified in doing so. In the trial Court as many as 142 witnesses were examined and the trial before the said Magistrate took about five months. Even after such protracted investigation and enquiry, we are left with the impres sion that no serious attempt was made by the prosecution to establish even a prima facie case against the petitioners before us.

12. For convenient disposal of these applications, we would divide them into two categories. There is one set of petitioners who were merely the employees of the company and they are concerned in Petitions Nos. 372, 406 and 418 of 1963. None of the petitioners in the aforesaid petitions was the sponsor of the scheme. We would discuss hereinafter whether the scheme itself can be described as a false and fraudulant document. There is absolutely no evidence whatsoever in this behalf. In the charge‑sheet that was submitted by the Police they were also charged with having misappropriated certain specific sums of money on a specified counts. At the commencement of the trial one of the accused persons, namely, Serajuddin Ahmed, applied to the learned Magistrate for receiving pardon, on an offer to give evidence upon such pardon. The learned Magistrate granted him such pardon and examined him as P. W. 34 under the provisions of section 337 of the Code of Criminal Procedure.

13. The evidence of P. W. 34 has been seriously challenged before us and it was argued that the entire evidence of P. W. 34 Serajuddin Ahmad, an accomplice, is inadmissible, and it was further submitted that his evidence must be ruled out of con sideration. We propose to deal with this point hereafter as it was strenuously mooted before us. In so far as the petitioners in the aforesaid petitions are concerned, namely, the employees of the company, even if the evidence of the accomplice P. W. 34 Serajuddin Ahmed is taken into consideration, prima facie case is established against them in respect of the charge under section 420/120‑B of the Code for which they have been com mitted to the Court of Sessions for trial. The accomplice. P. W. 34 Serajuddin Ahmed, has, on an examination of the books that were seized by the police, given evidence against some of them that they were guilty of misappropriation. In committing them to the Court of Sessions the learned Magistrate did not frame any such charge against them. Besides, there is hardly any evidence of entrustment.

14. The accomplice, P. W. 34 Serajuddin Ahmed, speaks of some of them being present in some of the meetings, and it has further been stated by him that secrecy was enjoined at such meetings. It seems that the prosecution was satisfied with raising some suspicion against the accused persons, but hardly any case was made out against them. Such being the state of the prosecution evidence against these petitioners, even if the evidence of P. W. 34 (accomplice) is taken into consideration, it is obvious that no prima facie case is made out under section 420/120‑B of the Code. The learned Magistrate did not frame specific charges against these petitioners under section 408 of the Code because, in the first place, no prima facie case was made out‑ against them on such counts and, secondly, because, the alleged misappro priations being separate transactions, they could not be tried under such charges in a trial against all the petitioners under section 420/120‑B of the Code.

15. We now turn to the petitioners in Criminal Revision Cases Nos. 371 and 407 of 1963, which concern the promoters and sponsors of the scheme. It is useful to point out, at this stage, certain peculiar features of this case as a whole in respect of all the petitioners before us: (1) Prosecution has laid no evidence as to haw the said company, namely, the Economic Aid Corporation, was decided to be formed and registered. (2) Some evidence has been sought to be led though the mouth of the accompli, P. W. 34 Serajuddin Ahmed, who participated in several meetings that had taken place at the residence of the petitioner Zahid Hasan ; but no nexu.9 has been established with regard to such meetings and the formation of the company. In fact, P. W. 34 seems to appear directly on the scene after the formation of the said company. (3) P. W. 34 Serajuddin Ahmad has given some evidence with regard to the meetings which may be connected with the drive for the propagation of the aforesaid scheme called "Economic Help Scheme" (Exh. 314). (4) Nothing has been proved by this witness or any other prosecution witness to show that the sponsors of the scheme did not themselves believe in the success of scheme as it was put forth before the public. (5) Nothing has been proved to show that any of the accused persons had participated in concealing material facts in the launching of the scheme. (6) According to the prosecution, the scheme was faithfully presented before the public for whatever it was worth. (7) The most peculiar feature of the case is that the prosecution examined a number of witnesses who had participated in the scheme as investors. None of the witnesses had made any accusation against the promoters of the company and; there is evidence led by the prosecution, that, but for the action taken by the police, the scheme might have worked. (8) The prosecution has led evidence to prove that all the investors were paid money strictly in accordance with the scheme till the date when the police had raided the company's head office and branch offices, both in Dacca and in. the districts of the Province.

16. In the aforesaid extent, it becomes patent that these petitioners and for less the employees of the company, could not have been charged under section 420/120‑B of the Penal Code, even if the prosecution evidence is accepted in toto. It is also obvious that they could not have been charged under specific offences unconnected with the conspiracy when they were committed for trial under section 420/120‑B of the Penal Code. At any rate, a proper case was not made out for that purpose.

17. In this connection, we may quote section 415 of the Penal Code which runs thus: "Whoever, by deceiving any person, fraudulently or dis honestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or a harm to that person in body, reputation or property, is said to "cheat". Explanation.‑A dishonest concealment of facts is a deception within the meaning of the section."

18. From the very definition of `cheating' as given in section 415 of the Penal Code, it is clear that there must be a deception by way of making a false representation. In the first place, it must be false to the knowledge of those making the representation. In a case like this, where the representation consists in putting forward a scheme to the public, it has to be proved that the sponsors themselves did not believe in the working of the scheme. Secondly, the scheme is a faithful representation for whatever it is worth. Prima facie it appears to be an unworkable scheme or at best a speculative or gambling scheme. But the scheme for whatever it was worth, with all its inherent improbability and its speculative nature, was faithfully put forward to the public. There was no promise made that the money, with which the investors would be ultimately paid, would come by some process of magic or by some mysteriously profitable investments to be made by‑ the company. It clearly and categorically stated that the scheme was totally and wholly dependent upon the circulation of the money of the investors. In these circumstances, the putting forward of the scheme cannot be described as false representation when it was put before the public without any glass (sic) or con cealment. Therefore, a charge of conspiracy for cheating cannot be founded upon agreement to launch the scheme and to vigorously pursue it in the shape of attracting investors to join the scheme. If it was highly speculative and, as we have described above, it was gambling venture, those who participated in the scheme had done so with full knowledge as to what the scheme was, and obviously its appeal was to the gambling instinct in human nature.

19. The only evidence with regard to any meeting and agreement in respect of the scheme comes from accomplice, P. W. 34 Serajuddin Ahmed, who was only competent to speak of meetings subsequent to the formation of the company. His evidence amounts to this : Decisions were taken to promote the scheme as vigorously and as effectively as possible. At best, it would indicate that the sponsors had exhibited a zeal to as many investors as possible, by publicity and other methods for promotion of the scheme. It should also be remembered that as long as the scheme had worked, namely, prior to the raid by the police, the prosecution has itself led evidence to the effect that every single investor was paid all the money that was promised to be paid under the scheme. If this is the position, there is nothing to sustain a charge of conspiracy to cheat the public or individual members of the public.

20. In this connection, we would like to refer to the following decisions of the Calcutta High Court : The first is the case of Radha Ballav v. Emperor (A I R 1939 Cal. 327=43 C W N 388) the facts of which are as follows :‑ The accused had started an insurance scheme which was calculated to confer benefit on the policy holder in the shape of twelve times the money invested by each. The prospectus of the scheme recited that on payment of a certain sum of money, the payee's name would be registered as a policy‑holder and the company would issue policies of the same value. In this way there would be accumulation by issue of fresh policies and thus number of the policies would be multiplied more and more and no difficulty would be experienced for payment to the policy‑holders in the manner indicated in the scheme. The prospectus also gave the mode in which payment would be made to the policy‑holders. A number of persons acting upon the representations were induced to invest money and many of them were paid in the manner stated in the prospectus. But, as many were not paid, the accused were prosecuted for a conspiracy to commit the offence of cheating.

21. It was held that the accused were not guilty of cheating or conspiracy to cheat as upon a fair reading of the prospectus, it could not be said that it contained any fraudulent or deceitful representations though it might appear too absured for such schemes to work with success. In the judgment of the Division Bench which was delivered by Bartley, J., it was observed as follows: "The representation thus made undoubtedly is that the investors will be paid from the money provided by other investors. However absurd such a representation may be, it can hardly be said to amount to a false representation within the meaning of section 415, I. P. C., and even if such can be the case, the findings of the learned Magistrate in the Court below militate against the view that anybody could really have been deceived by the terms of the prospectus. It appears to us that the proper view to take of the present case is that it is one of those snowball schemes which was speculative in the highest degree and probably unworkable. It was not dishonest or fraudulent in the sense that it either represented to the public something which was not true or concealed from them something which should have been disclosed. We are prepared to hold that any appeal to the gambling instinct of humanity must per se amount to cheating and in the present case we are not satisfied that the elements of the offence have been made out." Henderson, J., in the aforesaid case has observed thus: "The difficulty in establishing the charge as framed in this case is illustrated by the way in which the prosecution was conducted. Exh. 4, the prospectus, is the only evidence upon which a charge of conspiracy could be based. We have read that document and it does not purport to put forward anything more than a gambling scheme ; the element of uncertainty being found in the time, the scheme would be able to run. The prosecution has not been able to produce any single witness who purchased a ticket as a result of reading this prospectus and who is in a position to establish that he had been cheated. All that the evidence amounts to is that the witnesses would have not taken tickets if they had known that they were going to lose. That of course applies to every gambling transaction."

22. We would only like to repeat what we have already Indicated that the difficulty of the prosecution in the case which Is now before us is also well‑illustrated, in the language of Hend erson, J:, "by the way in which the prosecution was conducted". The only evidence is that at certain meetings, which took place in the house of petitioner Zahid Hasan, there was an agreement to launch the scheme vigorously and to push it forward. Of course, a piece of poetry to this evidence has been adduced by P. W. 34 Serajuddin Ahmed that secrecy was enjoined. But, it is interesting to note that in spite of this insistence of secrecy the entire scheme was faithfully made public. The said P. W. 34, furnishes some evidence of misappropriation, but they were subsequent to the launching of the scheme and no conspiracy to that effect can be spelt out of the evidence given by this witness.

23. The next decision which we would like to discuss is the case of Hari Das Barat v. Emperor (I L R (1939) 2 Cal. 81), which is a decision of another Division Bench of the Calcutta High Court. In that case the appeal, which was preferred to the High Court, concerned two groups of appellants with distinct set of facts. The first set of appellants were simply prosecuted for conspiracy to cheat on a charge under section 420/120‑B of the Penal Code under the following circumstances: The appellants were associated together for the furtherance of scheme known as the Auto Circulating Co., the objects of which were set out in the prospectus in the following terms: "The Auto Circulating Co. Registered under Act IX of 1937. The company is placing before the public a new scheme, by which each policy‑holder will be benefited to the extent of twelve times the amount of his contribution in the course of fourteen months. On receipt of a sum of Rs. 5 (rupees five only) the company will allot a policy, which will enable him to claim from the company the sum of Rs. 60 (rupees sixty only) in twelve instalments of Rs. 5 (rupees five only) each, commencing after the expiry of two months from the date of his payment. This, in opinion of the company, will be made possible by the issue of two fresh policies of alike value and on similar terms against each original policy ; so that a contribution will be multiplied many times over the allotment of the series of increasing policies. The company expects that policy‑holders in cver‑increasing numbers will be attracted by the benefit offered by the scheme and that policy‑holders once benefited will renew their application over and over again, and thus there will be limitless prospect of expansion ; and there will thus be no difficulty in securing to the policy‑holders payments in the manner stated above. The circulation of the policies will be arranged for by the company. Subsequently, a further prospectus, Exh. B (3), which related to a supplementary scheme and which is described as prospectus of Scheme B was issued and its language is as follows: The Auto Circulating Co. Registered under Act IX of' 1937. The company is placing before the public another novel scheme by which a person will be benefited to the extent of two times in the course of two months or so according to the circulation of the company. On having a sum of Rs. 5, the company will issue a receipt and allot a coupon, which will enable allottees to receive a sum of Rs. 10 from the company by two instalments, the first one of Rs. 5 within a reasonably short time, say, within a fortnight from the pucca receipt of the company, and the other, after the expiry of one and a half months therefrom. This, in the opinion of the company, will be made possible by the issue of two fresh coupons of alike value against each original coupon and by allotting those again on similar terms and thus the amount of benefit will accrue out of allotment of a few successive coupons. The company expects that the allottees of coupons in ever‑increasing number will also be attracted by the benefit to be offered by the scheme and will renew their appli cations again and again; thus there will be limitless prospect of expansion and no difficulty will arise to arrange for the payment of benefit in the manner stated above."

24. It will thus be evident that the aforesaid scheme is substantially similar to the scheme with which we are concerned here, namely, the Economic Help Scheme. Discussing the aforesaid scheme, Kliundkar, J., in delivering the judgment of the Division Bench has observed as follows: "The idea behind the scheme outlined in the two prospectuses set out above may be described as that of a financial snowball which would gather volume as long as it could run without disintegrating and without slackening in speed. Obviously, the investors who subscribed to the scheme first were to be paid out of the subscriptions of the investor who come in later. Obviously also the liabilities of the company towards its sub scribers would grow as policy followed policy in a sort of geometrical progression. Nor is this all. Expenses would have to be met out of takings, and some of these, notably commissions to agents would absorb considerable sums. As subscribers could be paid only so long as the company had in its hands sufficient contributions from other subscribers who came in afterwards, there would‑have to be continuous uninterrupted and enormously progressive increase in the latter. That such a process could not go on for ever is self evident. That the promotors of the scheme intended to make a profit for them selves out of the moneys coming into their hands is also beyond dispute. Large numbers of people were induced to subscribe and many agents were employed at very high rates of commission." After a discussion of the evidence of this case which virtually amounted to an agreement amongst the accused to import as much vigour and energy into the scheme as they could muster, the learned Judge proceeds to observe as follows :‑

"Suffice it to say that, to establish a conspiracy to cheat, the prosecution would be bound to prove an agreement to do something which would fulfil the requirement of section

415. We are not prepared to say that the findings outlined above are findings of such facts as are needed to satisfy the two essential requirements of section

415. They do not show that the contents of the prospectus of schemes A & B and the conduct of the accused amounted to false representations or dishonest concealment of facts such as were calculated to deceive the public and to so induce it to contribute money to the scheme. The idea which dominated the scheme was that of a rapidly increasing number of subscribers out of whose contributions the dues of earlier subscribers as well as expenses and the profits of the promoters would be paid. That it could not go on indefinitely was self‑evident. But it was workable for a time and did, in fact, work for a time, and herein lay the roots of the gamble and the secret of the appeal which the scheme held for the public. The facts established make it difficult to distinguish this case from that of Radha Ballov Pal v. Emperor."

25. The learned Judge thereafter applied the principle laid down in the aforesaid case and set aside the conviction of the appellants based upon the publication and promotion of the Schemes A and B, set out above. The Division Bench thereafter proceeded to deal with the case of another set of appellants against whom it was established that the false representation that they had made to future investors was that the money for payment would come out of the appropriate investments made in this behalf. In fact, it was proved that no such Investments were ever made. On this ground the cases of the appellants were distinguished from the rest of the appellants who were acquitted.

26. Thus, one set of appellants were acquitted of the charge against them. The charge against them was no more than this that they had put forward before the public a gambling, speculative and ultimately unworkable scheme in order to draw investments. So far as the other set of appellants, in respect of whom a direction for retrial was given, there was a further evidence that they made a false representation, namely, that money would be forthcoming to them by means of investments which were never intended to be, and which, in fact, were never carried out.

27. There are some other decisions with regard to such "snowball" scheme as disclosed by the Economic Help Scheme in the present case and it is needless to discuss them any further. We would take leave of this point by merely mentioning another decision of a Division Bench of the Calcutta High Court, namely, the case of Matilal Chakravarty v. The King (A I R 1949 Cal. 586). Sir Arthur Travor Harries, C. J., in pronouncing the judgment of the Court in that case, has reiterated a well‑established principle that before a person or persons could be convicted for cheating or for conspiracy to cheat on the basis of a speculative or improbable scheme issued to the public, it must be established that the pro motors themselves did not believe in the working of the scheme and that they had themselves no faith in it. In short, it must be shown that the scheme was false and fraudulent to the knowledge of the promoters.

28. Thus, the case against all the petitioners, in the final analysis, would boil down to this, that there is no evidence to show that the promoters of the scheme did not themselves have any faith in the workability of the scheme as put forward by them. On the analysis of the scheme, there can be no manner of doubt that it was wholly dependent upon an incessant flow of money into the company for circulation in ever‑increasingly wider circles. There is a plain indication in the scheme itself that its success would depend not only on the reception of money from investors in an increasing proportion, but there was also a broad hint of the fact that the scheme might break down in future for lack of anticipated flow of money. It is clear that a full disclosure was made to the public as to the real nature of the scheme.

29. Having regard to what we have already stated, we are of opinion that no case has been made out upon which the petitioners could be asked to face a trial on the charge framed against them. On this ground alone the petitioners are entitled to ask us to make the Rules absolute. It is said that the assets of the company at the time when the raids were made by the police were disproportionately lower than the liabilities of the company at that time. In the first place, there is no evidence that all the books of accounts belonging to the company were seized by the police and that there were no other books. Similarly, there is no evidence that all the banking accounts were gone into and that the company had no account with any other bank. Besides, accord ing to the prosecution, the raids were made when there was a panic in the public mind prior to the action taken by the police, which must have affected the flow of investors' money into company. Moreover, P. W. 34, Serajuddin Ahmed, has established no nexus between the promotion of the scheme and the various misappropriations spoken of by him. A lot of fog has been introduced by the prosecution in this case.

30. There is, however, another formidable difficulty in the way of the prosecution. It has been argued that the evidence of the accomplice, namely, Serajuddin Ahmed (P. W. 34) is inadmissible and has been illegally received in this case. Our attention was drawn to the fact that, on an application from Serajuddin Ahmed (P. W. 34) who was hitherto a co‑accused of the petitioners, he was tendered pardon by the learned Magistrate, who thereafter received him into the witness box as P. W.

34. Section 337 of the Criminal Procedure Code, under which such a course was taken, runs thus :‑ "337. (1) In the case of any offence triable exclusively by the High Court or Court of Sessions, or any offence punish able with imprisonment which may extend to ten years, or any offence punishable under section 211 of the Pakistan Penal Code with imprisonment which may extend to seven years, or any offence under any of the following sections of the Pakistan Penal Code, namely, sections 216‑A, 369, 401, 435 and 477‑A, the District Magistrate, a Sub‑Divisional Magistrate, or any Magistrate of the first class may, at any stage of the investi gation or inquiry into, or the trial of the offence, with a view to obtaining the evidence of any person supposed to have been directly or indirectly concerned in or privy to the offence, ten der a pardon to such person on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence and to the offence and to every other person concerned, whether as principal or abettor, in the commission thereof Provided that . . . . . (1‑A) Every Magistrate who tenders a pardon under sub section (1) shall record his reasons for so doing, and shall, on application made by the accused, furnish him with a copy of such record: Provided that . . . . . "(2) Every person accepting a tender under this section shall be examined as a witness . . . . . (2‑A) In every case where a person has accepted a tender of pardon and has been examined under subsection (2), the Magistrate before whom the proceedings are pending shall, if he is satisfied that there are reasonable grounds for believing that the accused is guilty of an offence, commit him for trial to the Court of Session or High Court, as the case may be. (3) .."

31. It appears that the gist of the section is that the condition precedent to the reception of such evidence is, that the evidence of the co‑accused can only be received in case of trial or inquiry or investigation of grave offence specified in they section. The first condition with regard to the reception of accomplice evidence under the aforesaid section is that the investi gation, inquiry or trial must be in respect of the following offences: (i) Where it relates to an offence triable exclusively by a High Court or Court of Sessions. (ii) Where the offence is punishable with imprisonment which may extend to ten years. (iii) Where the offence is punishable under section 211, of the Code with imprisonment which may extend to seven years. (iv) Where any offence is investigated or tried under any of the following sections of the Code, namely, sections 216‑A, 369, 401, 435 and 477‑A.

32. In the present case, although all the petitioners have been committed to the Court of Sessions only under section 420/ 120‑B of the Code (which does not come under the categories of offences specified in section 337), the relevant question is, what was the charge or charges submitted to the aforesaid Magistrates who committed the petitioners to the Court of Sessions ? We are not concerned with the charge which finally emerged as a result of the inquiry or trial held by such Magistrate, but with charges that were preferred at the time when the learned Magistrate took cognizance of the case. P. W. 34 Serajuddin Ahmad was tendered pardon at the commencement of the trial. Our attention was drawn to the charge‑sheet as submitted by the police upon the completion of the investigation of this case. It appears that the accusation before the learned Magistrate against some of the petitioners and P. W. 34 Serajuddin Ahmed was one under section 408 of the Code. There were some accusations against some individual accused under section 408 of the Code. Eventually, so far as this case is concerned, only one accused by the name of Shamsuddin was charged under section 477‑A/471. Neither section 420/120‑B nor section 408 would amount to an offence enumerated in section 337 of the Criminal Procedure Code. It was, however, pointed out by the learned Advocate for the State that if there had been no further charges, it could not have been argued on behalf of the State that the provisions of section 337 of the Criminal Procedure Code were complied with. It was pointed out that the aforesaid Shamsuddin, however, was charged under section 477‑A/471 of the Penal Code. Therefore, it is correct to say that the inquiry or trial before the learned Magistrate related, in some part, to an offence described above, namely, the charge against Shamsuddin under section 477‑A/471 of the Penal Code.

33. Thus, it seems that the first condition is fulfilled, that is, it has been shown that a portion of the trial or enquiry related to an offence specified in section 337 of the Criminal Procedure Code, although it concerns only petitioner Shamsuddin with regard to charge under section 477‑A/471 of the Penal Code under definite and specific count. But, the next question is, has any connection between P. W. 34 Serajuddin Ahmed and Shamsuddin with regard to the allegation against the latter under section 477‑A/471, by way of a direct or indirect participation or assistance, been shown in the charge or in the evidence given by P. W. 34, Serajuddin Ahmed? Section 337, Criminal Procedure Code, lays down that before a co‑accused in the inquiry or trial could be tendered pardon and allowed to give evidence, it must also be established that he himself was either a direct participant in the crime itself namely, the crime which comes within the categories mentioned in section 337 (the charge against Shamsuddin was under section 477‑A/471) or was concerned in an indirect share or participation in the said offence. In this case, it appears that P. W. 34 has not claimed any direct or indirect participation in crime alleged to have been committed by the said Shamsuddin under section 477‑A/471 of the Penal Code. Shamsuddin was a Branch Manager of Sylhet office with whom P. W. 34 Serajuddin Ahmed had nothing to do. The latter had no direct or indirect share or participation or concern in the offence alleged to have been committed by the former under section 477‑A/471 of the Penal Code.

34. It is true that P. W. 34 Serajuddin Ahmed has, in the evidence given in Court, spoken of forgery and falsification of accounts done by him at the instance of petitioner Zahid Hasan. His admission of such offence committed by him has no nexus with the specific offence alleged about Shamsuddin under section 477.A/471 of the Penal Code. In the charge‑sheet that was submitted in this case there is no such allegation of any kind of direct or indirect share or participation on the part of p. W. 34 Serajuddin Ahmed with the offence alleged to have been committed by Shamsuddin under section 477‑A/471 on a distinct and specific count. In the evidence given by P. W. 34 no such connection is shown. It is not necessary that P. W. 34 should have himself been charged with an offence under section 477‑A/471 since he was a co‑accused of Shamsuddin, nevertheless, since the charge against Shamsuddin under the said section 477‑A/471 is the only basis upon; which P. W. 34 was tendered pardon, his (P. W. 34's) connection with such specific offence committed by Shamsuddin (under section 477‑A/471) by way of a direct or indirect share or participation must be estab lished. A remote, far fetched and far‑away concern is not enough. The police officers and the lawyers appearing in this case are, in a sense, concerned with the crime but not concerned in it. That is not the kind of concern spoken of in section 337 of the Criminal Procedure Code.

35. Therefore, under section 337 of the Criminal Procedure Code, the aforesaid evidence of Serajuddin Ahmed could not have been received. Section 337 embodies one of the well‑established principles upon which the evidence of an accomplice or approver is received. It is not an exhaustive provision (and we are not concerned with section 494 here) and, so far as this section (section 337) authorises the reception of accomplice evidence, it proceeds on well‑known principles. The requirement is that before a co‑accused can be considered to be a competent witness, it must be established that he has obtained knowledge of the said crime in a direct or indirect manner. His direct or indirect share in the crime is a circumstance which ensures that he is capable of giving evidence in this case. Without such caution, the door would be opened too wide for perjury in the reception oil tainted evidence.

36. In this connection, we may refer to the case of Empress of India v. Asghar Eli (I L R (1880) 2 All. 260). This was a case which was governed by the old Criminal Procedure Code, which has now undergone a series of amendments. In delivering the judgment of the Division Bench, which was pronounced in the case, it was decided that where a pardon was tendered by a Magistrate to a person supposed to have been concerned with other persons in offence none of which was exclusively triable by the Court of Sessions, and such person was examined as a witness in the case, the tender of pardon to such person wars not warranted by section 347 of Act X of 1872. It was further held that he could not legally be examined can oath and that his evidence was inadmissible. Although the aforesaid case is confined to an offence exclusively triable by a Court of Sessions, but the same principle would apply to the present case where there are various other categories of offences which would attract the provisions of section 337 of the Criminal Procedure Code.

37. In the judgment delivered by the Court in the case of Sant Ram v. Emperor (A I R 1924 Oudh 188), there occurs the following significant passages: "If such a statement is accepted as that of an approver without any test as to his complicity in the crime it would be easy enough for the Police to put forward any bad character to narrative a picturesque and a detailed story of a dacoity of which most of the details are known to the police from the complainants." We may add that the aforesaid principle finds itself embodied in the provision of section 337 of the Criminal Procedure Code.

38. Thus, as already discussed by us, it appears that even if the charge against the accused Shamsuddin was also one under section 477‑A/471, there is nothing on record to connect P. W. 34 Serajuddin Ahmed with some direct or indirect association or participation in the crime alleged to have been committed by Shamsuddin under section 477‑A/471. It will not do to say, that all the petitioners along with P. W. 34 were concerned to the alleged conspiracy to cheat. Section 420 of the Penal Code does not come within the purview of section 337 of the Criminal Procedure Code. It is also immaterial that P. W. 34 has confessed the commission of an offence under section 477‑A/471 on some other count. He has had nothing to do with the independent crime supposed to have been committed by Shamsuddin under section 477‑A/471 on a totally different count.

39. The expression, "supposed to have been directly or indirectly concerned in or privy to the offence" must mean some involvement in the crime under investigation, inquiry or trial, by way of some association, direct or indirect, in the commission of the crime. The concern spoken of must be a "concern" in the crime itself, that is, in the commission of the crime and not mere far off and remote "concern" of a co‑employee in the offence committed by his colleague when he has nothing to do with the commission of the crime itself. There must be some complicity or privity in the crime itself before accomplice evidence can be received under section 337 and the crime must be he crime which falls in the category of offence mentioned in section 337 and which forms the basis for acting under that section, namely, section

337. Complicity in some other offence (even of the same kind) will also be irrelevant in this con nection.

40. In this view of the matter, it must be held that the reception of the evidence of P. W. 34 Serajuddin was illegal and such evidence must not be taken into consideration.

41. If the evidence of P. W. 34 Serajuddin is, as it must be, left out, nothing remains of the evidence on which even a semblance of a case could be established under section 420/120‑B of the Code. Mr. Azizuddin Ahmed concedes that of the evidence of P. W. 34 is eliminated, nothing would remain of the prosecution case.

42. Even with the evidence of P. W. 34 Serajuddin, the prosecution evidence is insufficient to sustain the charge framed against the petitioners. Without such evidence the prosecution case, as admitted by Mr. Azizuddin Ahmed, would completely collapse. P. W. 34 admitted in cross‑examination that he turned into an approver in this case in order to escape the harassment, worry and expense of a trial and that, being the only bread‑earner of the family, his detention in jail custody for two years brought about a financial ruination in the family income. He also admitted that in his statement to the police he had said that he met Zahid Hassan by chance in 1953 and that he did not say anything about meeting him (Zahid Hassan) in 1952. What is particularly significant is that the fact that to the police he did not speak any falsification of accounts or misappropriation of moneys or forgery. He is directly contradicted on material points by P. W. 41 Ali Ahmed and some other witnesses. The prosecution case is thus based on such trumpery. Even with the accomplice evidence of P. W. 34 Serajuddin, the prosecution case hangs on very slender threads and, without such evidence, it falls to pieces.

43. For the reasons stated above, we make the Rules absolute in all the five applications before us and direct that the order of commitment in respect of the petitioners before us be quashed.

44. After we had delivered the judgment in this case. Mr. Mazhar Hossain invited us to pronounce an order in respect of the other accused persons who are not before us. As the remaining accused are not legally before us, we will pass no further order at this stage. The result of this order, which we have now made, will however, lead to that consequence. The petitioners are discharged from their bail bonds. SALAHUDDIN AHMED, J.‑I agree. S. Q. Rules made absolute.