Charges under IPC Section 420 (Cheating) and Section 4 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, both the trial and appellate courts' judgments were upheld. The court ruled that the applicants had dishonestly induced members of a chit fund (Bhisi) to subscribe, but failed to return their contributions, amounting to cheating. Despite their advanced age, the court rejected the request for probation under the Probation of Offenders Act, 1958, citing the nature of the offences.

1. Overview of the Case and Convictions
The applicants were convicted under IPC Section 420 read with Section 34, and Section 3 read with Section 4 of the Prize Chits and Money Circulation Schemes Act, 1978. They challenged these convictions before the Chief Judicial Magistrate and Additional Sessions Judge, Aurangabad, but both courts upheld the judgments.

2. Arguments by the Applicants' Counsels
The applicants' counsels contended that both courts erred in law by holding that the offences were proved beyond a reasonable doubt. They raised several objections, including the lack of evidence for proving the complainants’ financial capacity and the absence of essential elements for establishing cheating.

3. Specific Legal Arguments Against Conviction
The counsel for one of the applicants, Subhadrabai, argued that the courts relied on oral evidence rather than documentary proof and contested the findings on the seized notebook (Exh. 36). It was argued that failing to return money did not amount to cheating.

4. Defence on Cheating and the Prize Chits Act
It was further argued that the charge under Section 420 IPC was improperly framed and that the Prize Chits and Money Circulation Schemes Act, 1978, did not apply to conventional chit funds (Bhisi). They relied on the Supreme Court’s decision in State of West Bengal vs. Swapan Kumar Guha.

5. Prosecution's Stand and Response
The prosecution argued that sufficient evidence was presented to prove that the accused ran the chit fund, and that the witnesses suffered financial losses due to their actions. The oral evidence was deemed credible and sufficient to establish the case against the applicants.

6. Court’s Discussion on Chit Fund and Prize Chits Act
The court observed that the scheme in question fell under the definition of a "conventional chit" as per the Act of 1978. The transactions were carried out through monthly subscriptions, where members participated in an auction system to receive their money in a lump sum.

7. Nature of the Cheating
The court ruled that the accused deceived the members of the chit by not returning the subscribed money, thus establishing the offence under Section 420 IPC. It was found that the applicants had dishonest intentions from the outset of the scheme.

8. Application of Section 420 IPC and Section 4 of the Prize Chits Act
Both courts correctly concluded that the applicants were guilty of cheating under Section 420 IPC and Section 4 of the Prize Chits Act, 1978. The defense’s reliance on Swapan Kumar Guha was rejected as inapplicable to this case.

9. Applicants' Request for Probation of Offenders Act
Considering the applicants’ advanced age, their counsel argued for leniency under the Probation of Offenders Act. The court, however, emphasized that offences under the Prize Chits Act are serious and that punishment is essential for deterrence.

10. Final Judgment and Sentencing
The court dismissed the revision applications but reduced the applicants' sentences to the period already undergone, considering their advanced age. The bail bonds were cancelled and the sureties discharged.

Acts and Sections Discussed:

• Section 420 IPC (Cheating): Establishes punishment for cheating, defined under Section 415 IPC, where there is dishonest inducement and delivery of property.
• Section 34 IPC: Relates to acts done by several persons in furtherance of a common intention.
• Prize Chits and Money Circulation Schemes (Banning) Act, 1978:
  • Section 3: Prohibits prize chits and money circulation schemes.
  • Section 4: Provides penalties for violating the provisions of the Act.
• Probation of Offenders Act, 1958:
  • Section 4: Provides for the release of certain offenders on probation based on the circumstances of the case.

Ratio Decidendi:

The court upheld the findings that the applicants were responsible for managing the chit fund and dishonestly induced the complainants into subscribing, with no intention of returning the money, thereby amounting to cheating. The oral evidence provided by witnesses was deemed sufficient to prove the charges under both the IPC and the Prize Chits Act. Additionally, the court ruled that the serious nature of the offences precluded the extension of the benefit of the Probation of Offenders Act.

Subjects:

 Criminal Law, Cheating, Chit Fund, Prize Chits Act, Section 420 IPC, Chit Fund, Cheating, Prize Chits Act, Probation of Offenders Act