False ‘Computer Job Scheme’ To Lure Depositors Is Cheating: Madras High Court Upholds Conviction Under TNPID Act

“Mere Default In Repayment Attracts Liability—Mens Rea Not Required Under TNPID Act”, Madras High Court has upheld the conviction of two accused for running a fraudulent deposit scheme, holding that inducing the public with false promises of employment and returns amounts to cheating and criminal conspiracy, and that default in repayment itself is sufficient to attract liability under the TNPID Act, even without strict proof of mens rea.

Justice G.K. Ilanthiraiyan partly allowing criminal appeals by modifying the sentence, while affirming conviction under Sections 120B and 420 IPC and Section 5 of the Tamil Nadu Protection of Interests of Depositors (TNPID) Act, 1997.

 ‘Computer Job Scheme’ Used To Induce Deposits

The prosecution case was that the accused, running a firm named M/s Nandhu Systems and Softwares, floated a scheme promising computer-based data entry work. They induced the public to deposit ₹1,00,000 per unit, assuring that depositors would receive 1000 forms per month and ₹13,000 monthly income for three years, along with return of the deposit.

Relying on these assurances, 39 depositors invested substantial sums. However, the accused failed to repay matured deposits amounting to ₹82,27,250, leading to prosecution under IPC and TNPID Act.

The Trial Court convicted the accused and sentenced them to 10 years imprisonment under Section 5 TNPID Act, along with other sentences and fines.

 “Common Design To Cheat Public Clearly Established”

The High Court found that the prosecution had established its case through consistent oral and documentary evidence, including testimony of 39 depositors (PW1–PW39) and supporting documents such as receipts, agreements and cheques.

The Court noted:

“The accused had conspired together… by issuing advertisements and pamphlets to canvass the general public to deposit.”

It further observed that the promises made were false and intended to induce deposits, and that:

“Believing the said assurances… all the innocent depositors invested their hard-earned money… however, the accused failed to repay.”

The Court held that the ingredients of cheating and criminal conspiracy stood clearly proved, emphasizing that cross-examination did not shake the prosecution’s case.

“Default Itself Is Offence Under TNPID Act”

On the applicability of the TNPID Act, the Court made a significant clarification:

“The said provision does not require proof of mens rea and a mere default in payment to a depositor would attract punishment.”

Rejecting the defence argument of partial repayment, the Court held that repayment of ₹31 lakh did not absolve liability, as ₹51 lakh still remained unpaid.

Sentence Reduced With Strict Condition

While affirming conviction, the Court took note of partial repayment and modified the sentence:

• 10 years imprisonment under Section 5 TNPID Act reduced to 5 years
• Fine imposed by Trial Court confirmed

Additionally, the Court issued a strict direction:

“The appellants are directed to deposit ₹37,50,000/- each… failing which the sentence imposed by the Trial Court shall stand restored automatically.”

The ruling reinforces that fraudulent deposit schemes disguised as employment opportunities attract strict criminal liability, and that under the TNPID Act, default in repayment itself is punishable irrespective of intent.

While granting limited relief on sentence, the Court ensured accountability by imposing a conditional deposit requirement, thereby balancing penal consequences with restitution to victims.

Date of Decision: 10 March 2026