The High Court · 2025

THE HONOURABLE SMT JUSTICE JUWADI SRIDEVI CRIMINAL PETITION NO: 310 OF 2025 Between:

1. Vishwanatham Nagaraju, Slo. Vishwanatham Chandraiah, Aged 46 years, Occ. Business, Manager, Management of SS ECO [Vlotors. Rl/o. H.No.1 4- 8211, Sri Ram Nagar Colony, Patancheru tvlunicipality, Near NavathaTransport, Patancheru, Medbk District

2. Peddigari Sangeetha, W/o. Late P. Rajalingam, aged 46 years, Occ. Business, Fl/o, Flat No,404, C Block, Beema Pride Pet Basheerabad, Beside HP Petrol bunk, Pet Basheerabad, Medchal lValkajgiri District ...Petitioners / Accused AND

1. The State of Telangana, Rep. by its Public Prosecutor, High Court for the State of Telangana at Hyderabad

2. Panduga Naresh Kumar, S/o. Devaiah, aged 45 years, Occ. Business, R/o Shabashpalli, R.R. Colony, Vemulawada Urban lMandal, Rajanna Sircilla District ...Respondents / Complainants Petition under Section 528 of BNSS praying that in the circumstances stated in the [\/emorandum of Grounds of Criminal Petition, the High Court may be pleased to quash the proceedings against the petitioner/accused in F.l.R.No.714 of 2024, on the file of P.S. Vemulawada (T) in the interest of justice. l.A. NO: 2 OF 2025 Petition under Section 528 of BNSS praying that in the circumstances stated in the lVlemorandum of Grounds of Criminal Petition, the High Court may be pleased to stay of all further proceedings including the appearance of the petitioners/accused in F.l.R.No.714 of 2024, on the file of P.S. Vemulawada (T), pending disposal of the above quash petition in the interest of justice. This Petition coming on for hearing, upon perusing the lVemorandum of Grounds of criminal Petition and upon hearing the arguments of Sri Dadi Radha Krishna, Advocate for the Petitioners and Sri Jithender Rao Veeramalla, Additional Public Prosecutor on behalf of the Respondent No. 1. The Court made the following Order : THE HONOURABLE SMT. JUSTICE JUWADI SRIDEVI CRIMINAL PETITION No.31O of 2025 ORDER: Petitioners who are arrayed as accused Nos.2 and 3 in FIR No.714 of 2024 on the file of Station House Officer, Vemulawada (T) Police Station, registered for the offences under Sections 318(4) of the Bharatiya Nyaya Sanhita (for short 'BNS'), 3 and 5 of the Prize Chits and Money Circulation Schemes (Banning) Act, 197 B, (for short 'the Act') 5 of the Telangana Protection of Depositors of Financial Establishment Act (for short TSPDFE Act') are seeking to quash the proceedings against them.

02. He ard Sri Dadi Radha Krishna, learned counsel for the petitioners and Sri Jithender Rao Veeramalia, learned Additional Public Prosecutor appearing for the State and perused the record.

03. Learned counsel for the petitioners submits that in order to attract al offence under Section 3 l8(a) of BNS, inducement to deliver property with a fraudulent intention from the inception is necessary, but there are no such averments in the complaint. He further submitted that Section 5 of TSPDFEA is not attracted, as in the present case, the i i 2 subject Chit Fund Company is not a Financial establishment, which accepts deposits. in support of his contention, learned counsel for petitioners relied on the Judgment dated Ol.1\.2022 passed b1. this Court in Crl.A.No.3B of 2019, wherein, at paragraph Nos.14, 15,23 and 24, it was held as under: "14. That apart, it is imperative to note that chit fund is not a finalcial establishment and Section 2 (c) of TSPEDFEA defines 'Financial Establishment', as under: "Financial Establishment', means any person or group of individuals accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a cooperative society owned or controlled by any State Government or the Central Government or a banking company as defined under Clause (c) of Section 5 of the Banking Regulation Act, 1949".

15. Section 2 (b) of the Act defines "deposit", which runs as under: "deposit" means the deposit of a sum of money either in lumpsum or installments made with a financial establishment for a fixed period, for interest or return in any kind." l t l 3

23. ln the case on hand, as narrated above, it is not the case of the prosecution at all that the accused persons are running a linancial establishment. The case prosecution is that the accused are doing chit fund business. Therefore, when it is not the case of the prosecution that accused were not running financial establishment and accused were not accepting the deposits, when pWs.L to 4 and 6 and other subscribers have not deposited the money for interest and when they have not committed the default of the alleged deposit, the question that the accused, including the appellant, have committed the offence punishable under Section S of the Act does not arise.

24. The Police should not have filed charge sheet under Section S of the Act. Similarly cognizance also should not have been taken and that charges also should not have been framed.r'

04. On the other hand, learned Additional public Prosecutor appearing for the State, opposed lor quash of proceedings stating that specific allegations are levelied against the petitioners. Furthermore, investigation is progress, hence, prayed to dismiss the petition.

05. Having heard both sides and perused the material on record, in view of the Judgment of this Court in CRL.A.No.3B l I 4 of 2019, Section 5 of TSPDFEA is not applicabie to the petitioners herein. Accordingly, the proceedings against the petitioners for the offence under Section 5 of 'ISPDFEA, are hereby quashed.

06. Insofar as other offences are concerned, this Court deems it appropriate 1o direct the Investigating Officer to follow the procedure laid dorn n under Section 41 A Cr.P.C., (presently knorvn as Section 35 (3) of the Bharatiya Nagarik Suraksha Sanhita (for short 'BNSS) and also the guidelines formulated by thc Hon'ble Supreme Court rn Arnesh Kum:ar u, State of Bihart scrupulousil,. Hourever, the petitioners-accused Nos.2 and 3 shal1 co-opcrate u,ith the Investigating Officer as and when required by furnishing information and documents as sought by them in concluding the investigation. The petitioners-accused Nos.2 and 3 sha11 file a1l the documents which they ought to file to prove that it do not come under the criminal offences and the Investigating Officer shall consider the sarne before filing appropriate report before the learned Magistrate 07 . With the above observations, this Criminal Petition is disposed ol '(zorq) g scc z:: 5 Pending miscellaneous applications, if any, shall stand I //TRUE COPY// =fl,i"ff'illtEEfitffif / U SECTION OFFICER closed. / To,

1. The Judicial First Class Magistrate at Vemulawada 2. The Station House Officer' P S Vemulawada (T)' Raianna Sircilla District Prosecutor' Hish court for the state or reransana' ;: 4. One CC to Sri Dadi Radha Krishna' Advocate IOPUCI 5. Two CD CoPies lVj]"ttf,33i'0"" VA FV RoY ) 3, 24 t)2. tttE S t-4 14' JAII 2m t a Fs a) L, r:T ,i HIGH COURT DATED:2310112025 ORDER CRLP.No.310 of 2025 DISPOSING OF THE CRLP ."d4 I' "tr*' I