The High Court · 2025

Order

This Criminal Petition has been filed unrl :r Section 4g2 of the Code of Criminal Procedure, 1973, (for sho: , .the Cr.p.C.) by the petitioners/ accused Nos.4 and 5 seekin J to quash the proceedings in C.C.No. l3OlO of 2O2O on LL t file of the XII Additional Chief Metropolitan Magistrate, H\ r crabad, for the offences under Sections 4O6, 42O, 463,465, .t a, 47 1and 4O9 read with 34 of the Indian penal Code, 1g6 I (for sLrort, ,tfre rPC).

2. Brief facts of the case: 2.1. The cornplainant, M/s Metrochern ApI priv rte Limited, is a Hyderabad-based private limited company e I gaged in the manufacture and sale of bulk drugs, drug in:, rrnediates, and drug pellets. On 19.1O.2O19, a complaint u,.a s Iodged by the Head-HR of the company, alleging that a seriour hnancial fraud had been committed by its employee, yerra Su<l rakar, who was working as Assistant Managei- (purchase), in < onspiracy with the Director of M/s P. praful & Cornpany Agencr India pvt. Ltd. (the vendor company) and officials of M/s canb: rk Factors pvt. Ltd., Ahmedabad (a factoring company). Tlt: complainant company had genr-rine b,siness dealings with t re said vendor till Feblrary 2019, which were duly cornpletecj and settled by May 2019. Thereafter, without any further supp i:s being made, 2 o the accr.rsed persons allegedly conspired to fabricate five forged tax invoices by misusing an un-cancelled Purchase Order No. RM182 132, showing fictitious supplies worth Rs. 6,24,92,aOO/

2.2. Accused No. 1, abusing his position, fa,Ise1y confirmed receipt of goods through official emails, while Accused Nos 2 and 3 (vendor company) generated fake invoices and delivery challans. These documents were then submitted to Cctnbunk Factor.s Pvt. Ltd., u.here pe titioner No.1, the Branch Head, processed the invoices for factoring s'ithout verification from the complainant's Chief Financial Officer or checking e-way bills, thereby facilitating the fraudulent release of funds. Further invcstigation revealed that thc transporter's consignment note was also fabricated, as the vehicle mentioned was incapable of carrying the alleged load. The forged documents were concealed from tLre company's stores and accounts departrnents, and were dishonestly used to induce financial disbursement from the factoring company.

2.3. The investigation established that no goods corresponding to the invoices were ever supplied and that the acts of the accused. were part of a well-planned conspiracy involving forgery, fabrication of electronic records, and dishonest inducement to obtain funds. Basing Lrpon the said complaint, Crime No.239 of 2Ol9 was registered and the Investigatin8 Offrcer after conducting investigation hled final report.-before the i \* 3 XII Additional Chief Metropolitan Magiri rate, Narnpally, Hy.dera bad, and the said Court has takcn < t gnizance for the offcnces under Scctions l2O-B, 406, 42O, 4(. 4t)5, 46g, 47 I ancl 4O3 lPC, as rvell as Sections 43 and 66 ,i rhc Inf()rmation Te<;hnology' Act, 2OOO. Hence, the petitioner-s tjlecl the present crirninal pctition seeking to quash the proceedings in C.C.No.130 I O of 2O2O.

3. Hcarcl Mr. Deepak Bhattacharya, lezLrn<,, I Serl ior C)ounsel, represerrting Mr. Ch. Venu Kumar, learnerl ::uitsel for the petitioners, Mr. Ir. Raja Sripathi Rao, Ierrrne<1 Senior Counsel, representing Mr_ G. Adithya Goud, Iearr r ci counsel for respondent No.2, and Mr. M. Vivekananclir Recidy, Iearned Assistant Public Prosecutor appearing lor State, ., spondent No.l 4 Subrnissions of learned coun sel for the etitioners: T

4.l. Learnccl Senior a)legations lcvelled in Counsel submittcd ,I a.t thc entire the cornplaint are pure.l, civil in naLure and contractual issue arlslng out of r-t l ular factoring respondent No.2 transaction. However, uih a malafi.de intention implicated the petitioners as an acctLs < d, ttrough they have not forged any d.ocument and arso there r ; no d.ishonest rntention to cheat respondent No.2. Hence, th< ingredients of Sections 406, 42O, 463, 465, 46A, 47L and 4O9 (,j the IpC do not attract agair-rst the petitioner. He further :, rbnlittcd that 4 petitioner No.2-M/s. Canbank Factors Limited is registered with Non-Banking Financial Company (NBFC) under RBI guidelines, engaged in factoring and bill discounting. Accused No.3- M/s.P.Praful and Company Agency lndia Private Lirnited used to regularly factor invoices towards supply of material to respondent No.2-M/ s. Metrochem API Private Limited. The invoices were factored basing on undertaking to make payment to petitioner No.2 Canbank on or beforc due date of acccpted credit period of 90/ 12O days and also obtaining invoicc Further, the above conhrmation by respondent No.2 arrangement of factoring rvas supplementcd by thc letter of undertaking dated 05. 11.2O15 executed by respondent No.2. Respondent No.2 made paymcnts duly on the factored invoices on time to time, without any objection. The hve invoices for an

amount of Rs.6,24,92,8OO/ - were clefaulted by respondent No 2, though they were confirmed as genuine To avoid the said payments, respondent No.2 lodged a false complaint. The police, without p|operly conducting investigation, frled the charge sheet.

4.2. He further subrnitted that the complairrt lodged by respondent No.2 before the Sub-Inspector of Police, CCS, DD, Hyderabad, is not maintainable under law and the said police are not having any power and authority to cond'uct investigation on the ground that they are not having jurisdiction, as accused c Nos.2 and il as u..ell as the petitioners are r Ahmeciabad of Gujarath State. Hence, the learned XII Additional Chiel. Metropolitau MeLgistrate, Hyderabad, is r-rot ]r rvine jurisdrction to take cogrt izance. .+.3. He further submitted that accused No.1 ...as the Assistant Manager (S:rles) of respondent No.2 Compan... anrl he w.as the authorize d signatory and all the corr: ;porrdent:e tffas t-rnclcr-takcn by liim. Respondent No.2 used .o st:nd e-mails, u'hich rvcre signed by accused No. l, stating thi r thc goc,ds rvere delivered in good condition. Basing upon thr sarne, pctitioner No.2 creditcci the amount into the account of rr:cused No.2 and the petitioncrs have not forged any invoices or consignmenr notes or e-s,ay bills. Ilven according to thc cotr plaint, tltere are no specific allegations against the petitioners : rat they created fi r kr: invoices.

1.+. Hc fur-ther submitted that responde.rr No.2 in the complaint stated that ali invoices of accused Nr.. ] r,r,t:re dclivered b-r' 29.O5.2O 19 and ledger account shown as ,,J balance is not true and correct, since respondent No.2 has p:r cl the amounts in favour of accused No.3 cornpany in the rnor t 1s of June and July, 20 19-

4.5. He further sr,rbmitted that the Doclr ne of indoor management is applicable to the present case. Il rspondent No.2 is bound by acts of its own employee, who rr.rL authorizecl to 6 o communicate. As per RBI master directions, on frauds applicable to NBFCs (Non-Banking Financial Company), should referrcd to the C.B.l. Hence, the continuation of proceedings against the petitioners is clear abuse of tLre process of law.

4.6. In support of his contention, he relied upon the j udgme nts:

1. Prlyanka Sriwastava and another w. State of Uttar Pradesh and othersi; 2- V.G. Jagdishan v. Indofos Industries Limited2; 3. Om Prakash Sriwastawa v. Union of India and anothe13;

4. I(aushik Chatterjee v. State of Haryana and others4;

5. Mohamrned lbrahim and others v. State of Bihar and anothersl and

6. State of Haryana and others w. Ch. Bhajan Lal and ottrers6.

5. Srrbmissions of learned counsel for respondent No.2 5.1. Per contra, learned counsel submitted that accused Nos.1 to 3 in collusion with the petitioners created frctrtior-rs d ocuments and raised hve fake invoices amounting to Rs.6,24,92,8OO/ -, without supplying material to respondent No.2. The said invoices were never received by respondent No.2 I 2 3 5 6 (201s1 t\2o22], (20o6) 12o20) (2009) (1992], 6 SCC 287 6 SCC 167 6 SCC 207 1O SCC 92 8 SCC 751 Supp (1) SCC 335 7 company in due course of business. He ftrrtl ( 1' slrbmitted that r-r:sponden t No.2 cornpany Lras taken fir:ir delivery of last c()nsignmcnt goods from accused N( .3 company olr 07 _o) .201.) through inr'oicc No. HY 18OOO2l.2 lzited 06.02.2019 :r:rd the s:lme \r'as cluly accounted for in tlr,) r.torrl al course of purchase and all the invoiccs of accused N( .3 companv were sc:ttlecl bv

29.05.2(o19 :rnd the ledger accor- nts shows as 'O' llirlance and thereafter, respondent No.2 h;r; r-rot received any c()nsi61nm('r1t of goods from accused No.3 oompany. Surbsequcntly, petitione r No.2 sent e-mrr I on 1O.1O.20 19 claiming certain invoices factored by accusc r No.2 and 3 are or.erdue t.rrrd make arrangement for paymer L At tlrat stage, respondent No.2 cornpany came to know ttrit, accused Nos.1 to 3 conspirr'd rvitll the petitioners perpetrated ti c fraud of lorging tlre irrvoiccs for zrn amor-rnt of Rs.6,24.! ),AOO/-, thoLtgh r-cspondcnt No.2 h:rs not received any consigt rnettt of goods in r,'spect ol t he alJegt'd invoiccs.

5.2. F{e furthcr submitted that there are s 1 t.cific allcgations lcvellcd against the petitioners that on the ltrr;rs of e-mail sent b1' accusecl No. t , petitioner No.1 processed t-l r falsc invoices of accused No.2, e way bills and realized the at tve said amount zrnd credited into the accorlnt of accused No. ) at his Bank at Allahabad, without verifying the facts with tlt : Chief F'inancial Officer of respondent No.2 cornpany and witt out observing e- 8 way bi1ls, pctitioner No.l Hence, tl-re ir-rgredients under Secticns42O,4Ogand,4TlofthelPCareattractedagainstthc recording the The Investigating Officer a fter elewen (L 1) witnesses filed thc charge shcct, petitioners. statemerrts of specifrc allegations are levelled ',vherei.n also petitioner and the learned XII Additional Magistrate, Hyderabad, has rightly taken saiC Court is having jurisciiction to take the cogt.lrzance Chief against the Metropolitan cognizance and the <a Hc furthe r slrbmitted that petitioncr No'2 had approachcd I{yderabad Bench-[l' I.Iational ComPanY Law Tribtlnal, Hydcrabad, (for short, 'NCLT) frled CornPanY Petitior-t No.lB/ 86 / 2O21 under Section 7 rcspondcnt No.2 and the said of thc IB Code, 2O16 against petition was dismissed on has bccome final and the 28.09 .2022 and the said order petitioners have suppressed the above said fa-ct in the present criminal petition. 5-4. He furtl-rcr sLrbmitted that respondent No-2 is a victim and all the offences has taken place at Hyderabad and the police rightly conducted invcstigation and filcd a charge sheet before thelearnedxllAdditionalChiefMetropolitanMagistrate, Nampally, HYderabad.

5.5.Hefi.rrthersrrbmittedthataspertheRBlgr'ridelinescited by the petitioners do not override the penal provisions' especially the petitioners with a conspiracy' forged and \ 9 fabricatcd thc invoices and misused the bank r rocr:dures, The learr-red Magiiitrate has rightly taken cognizanc,_' for the offenccs undcr Scctiurrs 420, 4O9 and 47 t of ihe IpC.

5.6. He further sl.lbmittcd that the Dor:r r ine of Indoor Management cannot protcct the parties \! -)o are active participants in fr:Lud. Petitioner No.2, without :erlbrming due diligence, blirrdly reliecl upon the unautLrorizt:rI c-mails issued bv accused N().1, remitted the huge amollnt int:: the acc()unt of accused No.2 Bank, in the absence o[ any delrv:ry of goods in far.our of resl;ondcnt No.2. The Investigatini! Officer in the charge shcer specifically mentioned that the vt,l icle belongs to LW. I O u':rs t'ngagt:d to transport thc paint m:i , rial for Bergcr Companl, Lo r,:rious places at Sr.rryapet, Kodad I td l(harrrmarn, on 27.O5.2O1c) and 28.O5.2O19 and for that i1 liscloses, that saicl vehicle \\,as ltot available in Hyderaba< Ilencr:, the invoices, e urily bills anci consignment notc regrrrding tlte transportation of lOO barrels on 2g-OS.2O tg are false documen ts.

5.7. There arc spccific allegar.ions against the p( tltioners. The grounds raisecl by the petitioners are disputecl facts and the same Lras to be adjudicated by the trial Court a f er full_fledged trial only. Hence, the crirninal petition hled by tl:r petitioners is liable to be disrnisscd. 10 o

5.8. In support of his contention, Iearned Senior Counsel relied upon the judgment of the Hon'ble Apex Court in Sardar Associates and others w. Punjab and Sind Bank and othersT. 6- Learned Assistant Public Prosecutor reiterated the submissions of responde nt No.2. Analysis:

7. Having considered the rival subrnissions made by the respective parties and after perr.sal of the material available on record, it reveals that respondent No.2 is a Private Limited Company incorporated under the provisions of the Companies Act, 1956, and having corporate office at Erragadda, Hyderabad. The said company is engaged in manufacture and sale of bulk drugs also known as Active Pharma Ingredients, bulk drug intermediates and drug pellets.

8. The record further rcveals that respondent No.2 lodged a complaint on 19.1O.2O19 stating that on 1O. 10.2019, the Chief Financial Oflicer received e-mail from petitioner No.2 claiming certain invoices factored by accused Nos.2 and 3 are overduc and make arrangement for payment. Upon verification, respondent No.2 company cane to know that the accused Nos.2 and 3 are in conspiracy w'ith accused No. 1, who is the ernployee of respondent No.2 company, perpetrated the fraud of forging the fake invoices and factoring them with the help of petitioners 7 (2009) 8 scc 257 11 and other irccusecl for an amoLlnt of Rs.€r '. 4,9,2,8OO/ - and cheated respondcnt No.2 and committed ct- r-rin:rl breach of trust and also otLrcr offences.

9. ln thr: cornpl:rint, it is stated that - ,spondent No.2 Company h:rs taken hnal delivery of the larsr consignrnent of goods from accuscd No.3 company on 07.O2.'_ t,lg uide invoice No.HY18OOO22, dared 06.O2.2O19, and the erme was duly accounted for-, as the sarne is in the norrnal coLr.se of purchase. All the invoices of accused No.3 companv verc settled by rcspondcnt No.2 cornpany by 29.O5.2019 i nd rhe ledger account also shou,r-r ;rs 'O' balance. However, ac c used Nos.1 to 3 with a dishonest tntention in collusion vgith the petitioners claimed Lruge amount based upon the forged tir < invoices and e_ way bills, in the absence of consignment of goocl s

10. It is not in rlisputc that respondent No.2 i a custorner of a<;cused No.3 company, rvhich is registered trn ler Cornpanies Act, and has officc at Ahmedabad. Accused t .3 company is engaged in busincss of retail and r,vholesalc listribution of chemicals- During the routine coLtrse of busin<:s,r , accused No.3 company has ente red into a factoring in the 1 :ar 2O 1 5 with petitioner No.2 company. Accused No.3 corr pany r.rsed to routinely factor their invoices raised against tht i . clients which includes respondcnt No.2 company by excr uting various factoring d()curncnts and customer confirnL,.tion invoices l2 (^) payment thereto as per terrns and conditions as agreed by thcm. Accordingly, rcspondent No.2 company has executed letter of r-rndertaking and given the conlirrnation of invoices for factoring. Accused No.3 company used to regularly factor invoices tou,ards supply of the rnaterial to respondent No.2 company. Accordingly, respondent No.2 cornpany were making payments duly on the factored invoices on tirne to time. 11 The record further reveals that petitioner No.2 company is a subsidiary company of Canara Bank, a Government of India undertaken, and the said Company is engaged in the br-rsiness of factoring, bill discounting and allied service work under the guidelines of Reserve Bank of India. Accused No. 1, who is employec of respondent No.2 company, entmsted with the cluty of preparation of thc purcLrase orders and forwarded to the next authoritics for verification and approval. Once approvcd, a cop]- of the sarne will be forwarded to the vendors by accused No- l, in turn, the vendors supply the material as directed under the delivery challan and other GST documents i.e., invoice and e- way bills, etc.,

12. From perusal of the complaint and charge sheet, it reveals that there are specihc allegations levelled against accused Nos.l to 3 that they conspired together and perpetrated the fraud of forging the fake tax invoices and factoring them with petitioner No.2 company for a huge amount of Rs.6,24,92,AOO /- and also 13 the allegation that factoring of the said fake r voices r",,'as done in connivernce with petitioncr No. 1, u.ho is ..,. r rking as brancLr head at petitioner No.2 company, actively i ssistcd accused Nos.1 to 3 to fraudulently get rnoncy.

13. LW. 1 1 in his statcment stated that he is r r way concerned either with acct-tsed No.3 company or responclr: Lr No_2 cornpany and that he never transported thc goocls :rrr I the vehicle of LW- I 1 rvas not available in H,yclcrabad at thtl r i re of the alleged delivery of consignment of goods to responder r No.2 company. LW.3, who is the Managing Director of r:spondcnt No.2 company, stated in his statcment which u'et:, r.ecorded under Section 161 of the Cr P.C. that respondent N I !) comperny has not received any consignmenl of goods with r _. ;pect to tlre hve invoices and e. way bills.

74. Ttte record furttrer revcals that petitiorl( No.2 company has approached NCLT, Hyderabad Bench-ll Iydcrabad, and filed Company Pe tition No.lB/86/2O2 1 invokjr,, the provisions of Section 7 of the IB Code, 2O16, against : )spondent No.2 company for initiation of Corporate Insolv: tcy Resolution Process (CIRP). In the said petition, responderr No.2 company lrled counter, inter alia dcnying the erllegi r ons made by petitioner No.2 company, contended that rc;pondent No.2 company has not received any rnate rial base: upon the Iive Invoices dated 28.05.2O).9, 27.06.2O l9 anci 23.at.2olg and the l4 o said five inwoiccs are forged and fabricated, and also raised other grounds. The NCLT dismissed the company petition holding that there is no relationship of creditor and borrower between petitioncr No-2 company and respondent No.2 cornpany and the company petition filed under Section 7 of IB Code is not maintainable and granted liberty to petitiorier No.2 company to seek remedy elsewhere in a rnanner known to Law, by its order d.ated. 28.09.2022. Even according to the parties, petitioner No.2 company has not taken any steps after disposal of the cornpany petition by NCLT.

15. In Mohd. fbrahirn supra, tl:-e Hon'l:ie Supreme Court clarified the distinction between execution of a false document and mere false claims of ownership. it was held that forgery r-rnder Sections 463, 164, 467 and 471 IPC requires the making of a "fa1se document" witLr the intention to callse injury, support a false claim, induce another to part with property, or commit fraud. A person who executes a sale deed clairning property as his own, even if such claim rs false or fraudulent, does not thereby rnake a false docurnent unless he impersonates the true owner or falsely claims authority to act on the owner's behalf' Therefore, such execr-rtion would not arnount to forgery, and Sections 467 and 47I IPC would not be attracted' The Court fi-rrther explained that for an offence under Section 42O IPC, it rnust be shown that there was deception by false representation 15 or concealmcnt, dishonest or fraudulent indu<:, rnent to deliver property or to do or omit an act which would rto otherwise have been done, and that slrch act or omission caus:d or r,l,a s likely to cause damage or harm to the person deceiverl

16. In V.G. Jagdishan supra, Lhe Hon,blt_, ir.rpreme Court considered the issue of territorial jurisdictiorr of the Labour Court to adjudicate an industrial dispute. The lolrrt held that r,l,here the r,r,orkrnan was employed, worked, ancl at Ghaziabad, the mere fact that hc subseclt r rvas retrenched :n tlv shifted to Delhi and issued a dernand notice from there r( head off,rce at Delhi would not confcr jurisdi Labour Court at Delhi. The Court obsen,ec. rnaterial events relating to emplovment ar the employer's :1-ion upon the that sincc al1 cl termination occurred at Gha-ziabad, the cause of action arosr that jurisdiction, and therefore onl,r, the I-:r Ghaziabad would have territorial jurisdictior- entirely rvi thin )ottr Coltrt at to decide thc dispute.

17. In Orn Prakash Sriwastawa supra, the F r Court clarified that to maintain a writ petition rrrl the petitioner must show that a legal rigtrt has t,r is threatened within the territorial jurisdicti,r Court. under Article 226(2), jurisdiction exists action, wholly or in part, arises within the court,r t, ,n" .::ndent authority is located elservh t n'ble Supreme ler Article 226, en infringed or r of the High f the cause of territory., even re. The Court *..-zt i i 16 r) explained that "car.rsc of action" refers to the bundle of essential facts u,hich the petitioner must prove to establish a right to relief, arising frorn acts or omissions of. tLre respondent that constitutc the alleged infraction. It further held that the correct test to determinc samcness of cause of action is whether thc same evidence would support both clarms. Applying these principles, the Court hcld that the Dclhi High Court erred in declining jurrsdiction mcrcly because the Allahabad High Court could dcal with the tratter more effectively, and remitted the case for fresh consideration on rnerits.

18. In l(aushik Chatterjee supra, th e Hon'ble Sr._rpreme Court explained that territorial jurisdiction in criminal cases depends on the place where the offence rvas committed, its consequences ensued, or where thc accused, victirn, or related property was found. Unlike civil cases, rt,here objections to jr-rrisdiction are regulated by the C.P.C., the Cr.P.C. contains lirnited provisions primarily Section 20), for returning complaints before cognizance. The Court summarised Sections 177-la4 Cr.P.C., holding that an offence rnay be tried by any court within whose jurisdiction any part of the offence occurred. It further held that under Section 46 1(l), if a Magistrate not empowered by law tries an offender, the proceedings are void, and such defect cannot be cured by Section 462, whiclt only saves proceediirgs conducted in the wrong area if no failure of justice has occurred. 17

19. In Priyanka Srivastava supra, tlne Hon'lt t Supreme Court cautioned :rgainst misuse of Section 156(3) C,.'I.C., particularly to harass officials acting lawfully undcr the S,- ] FAESI Act. The Court held that a Magistrate rnust apply jr,rrl r i;tl mind before d irecting investigation and that any applicat r r under Section 156(3) must be supported b1, a srvorn afll I rvit to prcvent frivolous complaints. It further directcd that a J plicants should first exhaust remedies r.nder Sections I54( 1) rirr I 154(3) Cr. P.C. before approaching thc court. Ernphasizing thril r,ltions t:rken in good faith under the SARFAESI Act are protc - cd bv law, the Court quashed the FIR and directed circulatir:,.r, of its judgment to all High Courts to ensllre proper exercise of -jr r isdiction.

20. In BhaJan Lal supra, the Hon'ble Sr_11; dorvn guiding principles for the exercise of pori',r 226 of the Constitution and Section 482 L Court laid ' Ine s under Article P,C . to quash criminal proceedings. It held that investigatir r ol cognizable offences lies within the exclusive domain o1' rIrc police, and courts should interfere or-rly in exccptional (. jes to prevent abuse of process or to secure the encls of jtt:; ir:c. The Court identifred seven illustrative categories where 11 r rshing rnay be warranted, such as when the allegations do r L, t disclose any offence, are barred by law, or are rnanifestly rntrl: fide. It fi.rrther held that under the Prevention of Corruption Ac -. investigation must be conducted by an officer of the prescribec rank, and any investigation by an unauthorised officer is inval < Whjle setting 18 aside the High Court's blanket quashing of the FIR, the Supreme Court quashed only the illegal investigation, this case a serninal precedent on the limits of rnaking judicial interference in criminal investigations.

21. The above said judgments relied upon by the petitioners are not applicable to the facts and circurnstances of the present case, as Mohd. fbrahim case pertaining to false claims of ownership and did not involve fabrication of documents or conspiracy, V.G. Jagdishan and Om Prakash Srivastava are pertaining to territorial jurisdiction in civil and writ proceedings, which have no bearing on a crirninal prosecution for fraud and forgery. Similarly, I(aushik Chatterjee pertains to procedural aspects of jurisdiction in crirninal trials and not to the existence of pima facie evtdence of offences. Priyanka Srivastava is lirnited to the misuse of Section 156(3) Cr.P.C. before registration of an FIR, whereas the present case arising out of final report/charge sheet and the Investigating Ofhcer after conducting investigation hled final report and the learned Magistrate has taken cognizance after following due procedure. Bhajan Lal, though a leading authority on quashing of proceedings, applies only where the complaint fails to disclose a cognizable offence or is mala fide conditions flot satisfied, whereas, in the case on hand, there are specific allegations in the complaint and the ckrarge sheet discloses specific acts of 19 cheating, forgery, and conspiracy supported ) documentary and electronic evidence. 22 - In M/ s Sardar Assoclates supra, thre F: < rL'blc Supreme Court held that the guidelines issued by the lrrdic (RBl) under Sections 2l and 35A ll )serve Bank of (l the Banking Regulation Act, 1949 are binding on all sched r- led and public sector banks. The case involved the bank's ref ,.r ral to accept a One Time Settlement (OTS) proposal despite Fl I I's mandatory guidelines for r. niform, non-discriminatory setll :rnent oI NPAs below 10 crores. The Court ruled that the RBI's circulars have statl-ltory force and that a public sector banl( being "State" under Article 12, cannot deviate from such < irections in a discriminatory manner. It upheld the Debts Re ; rvery Appellate Tribuna-l's (DRAT) order directing the bank to ettle the dues under the RBI scheme and set aside the High ,_ judgment, reaffirrning that RBI guidelines crc i )urt's contrary te enforceable rights and etrsure fairness and eqr.rality in banki I a operations.

23. In the case on hand, petitioner No.2, be.; NBFC, engaged in factoring, were under a st I adLrere to RBI's pmdential norms and operat ( g a registered .utory duty to nal guidelines while verifying and processing invoices for fund r g. The failure of the petitioners to conduct due diligence, verify e-\ ray bills, or seek confrrrnation from authorised company offrc i r1s, despite the rr andatory regulatory frarnework, demonstrates r on-compliance 20 C) with such binding directions. As held in Sardar Associates, deviation from RBI norms arnounts to arbitrary and unla-wfi-r1 conduct, particr-rlarly when it resr_rlts in Ilnancial loss or lacilitates fraudulent 1ra lt sac rions. 24- It is relevant to mention that in Ruben and. Lad.enberg v. Great Fingall Consolidated Co.8, the House of Lords laid down the foundational principle that the doctrine of indoor management cannot be invoked where the act cornplained of is a forgery or where the circumstances themselwes arot-lse suspicion, holding that persons dealing with a company must act with due car-rtion and cannot blindly rely on ostensible authority when the transaction is tainted with irregularity. This principle was subsequently adopted and appliea by the Hon,ble Supreme Court in M/s. MRF Lirnited v. Manohar parrikar & Orse, where the Court observed that when there exists "dehnite sr..rspicion of irregularity" and the conduct of the concerned individual indicates active involvernent in the fraudulent act, the doctrine ceases to operate. Applying the sarne, accused No.l, being an ernployee of respondent No.2 company, cannot be treated as a mere intermediary b:ut is prima facie shown to have actively colluded in the framdr-rlent transactions alleged. The said doctrine was fr.rrther clarif,red in Gunrnala Sales (Pt Lirnited v. 8 (rgoo) nc +sg (Hr-) e (2010) 11 scc 374 B- 2l Navkar Prornoters (P) Lirnited & Orsro, whe: :in the Hon'b1e Apex Court helcl that "it cannot be rnvoked o girre a carte blanche to outsiders to avoid liability where th r circumstances invite inquirl or suggest collusion". Hence, r outsiders dealing with a company in gooc lllle bona fide faith rnay be protected, such protection is unavailable where 1 1e transactions are irregular or executed in concert with 1r I iders. In the present case, petitioner No. 1, who is ernploye(. of the banking institution and petitioner No.2 is a banking inr; itr.rtion, rhough or.rtsiders to respondent No.2 cornpany and tlr. :re are specific allegations against thern that they facilitaterl or overlooked irregular transactions t.ndertaken in collttsi )n v.ith other accused. Her-rce, this Court of the considered ,, ew that basing upon the principle of protection of the do<: rine of indoor rnanagernent, petitioners are not entitled to quash the proceedings at the threshold and the sar e has to be adjudicated in the trial.

25. It is not in dispute that respondent No.2 cr at Hyderabad and there is specifrc ailegation t npany situatcd -rat respondent No.2 cornpany has not received consignrnent cl goods through five invoices and e-way bills frorn accused No i without supplying goods and in the al) confirmation, basing upon the invoices which fabricated by accused Nos.1 to 3 in collusior: company and ience of any 1re forged and with petitioner 'o 1zo ts1 1 scc 103 22 (, No.l and remitted a huge arnount to the account of accused No.2 by petitioner No.2 cornpany.

26. It is observcd that the inducernent and exchange of forged electroni.c cornmunications, the confirmations rclied upon by respondent No.2 company, the entmstment of funds, ald the resultant wrongful loss were all rooted in Hyderabad. In terrns of Sections 178(b), 178(d) and 179 Cr.P.C., where an offence is cornmitted partly in one local area and partly in another, or where the act is committed in one place and the conseqltence ensrles in another, jurisdiction is attracted at either place. The Hon'ble Apex Court in Rupali Devi w. State of Uttat Pradeshlr, has afhrmed that the Court where the consequence of a criminal act ensues is competent to exercise jurisdictton. Further, a Division Bench of this Court in Radhika Anil Upadhyaya v. The Principal Secretary, the flome departrrrent12, has categorically held that where deception, entrustrnent, and loss occrlr within the State, jurisdiction is validly attracted notwithstanding that certain portions of the conspiracy or execr-rtion took place elsewhere.

27. Insofar as the other grounds raised by learned Senior Counsel for ttre petitioners that entire allegations which are levelled in the complaint are purely.civil in nature and initiation of penal' provisions against the petitioners is not permissible r (2o l gTtsscc 384 r, 2020 SCC Online TS 1577 ' under law is concerned, there are seric,rLr and specihc allegations levelled against the petitioners in tFt complaint and charge sheet that accused Nos.1 to 3 in collusior No.I created, lorged and fabricated the invoices; with petitioner and e-rvay bills and released a huge arnount to the account of a,: rused No.2 .

24. It is already stated supra, there are sp(l against the petitioners that petitioner No. 1 , whc Branch Head at petitioner No.2 company, zr, ific allegations s lr.orkin g as a tively assisted accLrsed Nos. 1 to 3 to frar.rdulently get money l rt of petitioner No-2 cornpanv and accused Nos.1 to 3 conspire,l rvith petitioner No.1 and perpetrated the fraud and forging of fzr factoring them with petitioner No.2 company for of Rs.6,24,92,aOO / Even though respond.ent. has not received the consignment of goods basr:r irrr,,oices and e -r.r.ay bi1ls dated 2a.OS.2Olg, ?.

23.O7.2OL9, which are forged and fabricated by to 3 in collusion la.ith petitioner No.I and peti _t released hugc arnount of Rs.6,24,92,gOO/ _ in fa,, No .2, even without veril-rcation of the invoicesr conllrmation with respondent No.2 company. ,I.l the considered view that the above said a,Ilegat.( adjudicated and decided by the trial Court after r only and the same cannol be gone into in this r:r.i while exercising the powers conferred r-rnd er : :e invoices and r huge arnount No-2 cornpany . upon the hve '.06.2019 and accused Nos.l rner No.2 and nr of accused and also due is Court is of ns have to be Lll-fledged trial ninal petition, :ction 482 of 24 the Cr.P.C.

29. It is very muctr relevant to mention that in Sau. I(amala Shiwaji Pokarnekar w. The State of Maharashtra & Ors.13, the Hon'ble Apex Court held that the inherent powers under Scction 482 Cr.P.C. has to be cxercised in exceptional cases sparingly, rvith caution, only to prevent abuse of process or to secLrrc th€ ends of justice; and it cannot be invoked to weigh evidence or stifle a genuine prosecution, but may be applied w-herc the allegations in the complaint, taken at face value, do not disciosc the basic ingredients of any offence. The case on hand is not the ranest of rare cases to exercise powers of this Court under Section 4a2 of Cr.P.C. to quash the proceedings in C.C.No.130 1O of 2O2O.

30. For the loregoing reasons, this Court does not find any ground to qr..rash the proceedings in C-C.No.13O1O of 2O2O against the petitioners on the file of the XII Additional Metropolitan Magistrate, Nampa11y, Hyderabad.

31. In the result, the crirninal petition is disrnissed. However, taking into consideration the peculiar facts and circtlmstances of the case, the presence of the petitioners in C.C.No.13O1O of 2O2O is dispensed with, r.rnless their presence is specifically required subject to the condition that the petitioners shall represent through their cotrnsel on each and every date of '3 (2019) 14 scc 350 25 Lrearing. In case of non-appearance of the pr:' itioners on the specific date so fixed by the trial Cor-rrt for ttreir , .ppearance, the trial Court is entitled to proceed with the matr€ r in accordance rvith law. It is made clear that anv of the obser" ations made in this order are confining for the ptrrpose of de< iding this case only. closed Miscellaneous applications, pending if z r 1., shali stand //TRUE COPY// iD/- MOHD.ISMAIL- /)t D: 'UTY REGISTfrAR I '\ - .t SECTION OFFICER One Fair Copy to the Hon'ble Sri Justice J SREEI IVAS RAO iFor His LordshiP's kind Perusal) ' To,

1. The Xll Additional Chief Metropolitan Magistrate, Hyde'i bad' 2. The Station House Officer, CCS' DD Police Station, H1c:rabad 3. 11 LR CoPies 4- The Under Secretary, Union of lndia, Ministry of Law' ' t stice and Company Affairs, New Delhi - 5.TheSecretary,TelanganaHighCourtAdvocate'sAss(r(iationLibrary'High C;;,1 f";iha State otieiJngina, High Court Buildings i t Hyderabad' 6.TwoCCstothePublicProsecutor,HighCourtforthe{)ateofTelanganaat Hyderabad.IOUT]

7. One CC to Sri Ch. Venu Kumar, Advocate IOPUC] 8. Two CD CoPies VH/PSL I ! I I I I I I ! i i HIGH COURT DATED: 3111012025 ORDER 9F ,,\ ': S14 t\ 2i oEC Ar i..,-.,j:. \ .,\ CRLP.No.2598 ot 2021 \:. DISMISS!NG THE CRIMINAL PETITON \, \ \