The High Court · 2025

Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to pass an order quashing the proceedings in the complaint in C.C.No.147312018 on the file of the XIX Additional Chief Metropolitan Magistrate, Secunderabad, against the petitioners/accused No.1 and 2, in the interest of justice. l.A. NO: 1OF 2023 Petition under Section 482 of Cr-P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petrtion,the High Court may be pleased to pass an order extending the order granted in lA.No. 2 of 2019 dated 1210712019 in Crl.P.No. 3922 ol 2019 until further orders or till the disposal of the Crl.P.No.3922ol 2019 in the interest of justice. l.A. NO: 2 OF 2024 .' Petition under Section 482 of Cr.P.C praying that rn the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to extend the stay order dated 1210712019 made in lA No. 2 of 20'19 in Crl P No. 392212019 untrl further orders or till the disposal of Crl P No. 3922 of 2019 in the interest of .justice l.A. NO: 4 OF 2024 Petition under Section 482 of Cr.P .C praying that n the circumstances stated in the fVlemorandum of Grounds of Criminal Petition,the High Court may be pleased to extend the stay order dated 1210712019 made in LA. 212019 in Crl.P.No. 392212019 until further orders or till the disposal of Crl.P.No. 392212019 in the interest of justice This Petition coming on for hearing,upon perusing the [\ilemorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri B. RAVEENDRA BABU Advocate for the Petitioner and the Public Prosecutor on behalf of the Respondent No.'1 None appeared for Respondent No.2. The Court made the following ORDER; .,"i JUDGMENT: HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION No.3922 OF 2019

1. This Criminal Petition is frled to quash the proceedings against the petitioners in C.C.No.l473 of 2018 on the lile of XIX Additional Chief Metropolitan Magistrate, Secunderabad.

2. Notices are served on the respondents I arrd2. Heard.

3. The petitioners are aggrieved by the complaint hled by the 2"d respondent/Canara Bank for the offence under Section 138 of the Negotiable Insfruments Act, 1881 (for short the ActJ.

4. According to the complainant, the petitioners approached the complainant Bank vide letter dated 02.08.2017 requesting the complainant Bank to extend the Bank Guarantees for a period of one year. Three Bank Guarantees were issued as follows: 1) Bank Guarantee in favour of the Engineer-in-Chief, Indira Sagar Polavaram Project, Dowlaisaram. The Bank guarantee was valid up to 08.08.2016, and on specific request, it was extended till

09.O8.2OL7, and once again, extended till 09.08.2018. The commission required to be paid is Rs.76,52,772/-. 1 2 2) Bank Guaraltee in favour of the trngineer-in-Chief, Indira Sagar Polavaram Project, Dowlaisaram. The same was valid up to 09:08.2016, and the same was extended up to 09.08.2017, and on specific request, the same was extended up to 09.O8.2O18. The commission required to be paid is Rs.1,47,13,833 l-. 3) Bank Guarantee in favour of the Engineer-in-Chief, Indira Sagar Polavaram Project, Dowlaisaram. The sarne was valid up to

24.08.2017, and the salne was extended up to 24.08.2018. The commission required to be paid is Rs.2,02,02,544 l-. The 2"d, petitioner, who is the Chairman and Managing Director of A.1 company, issued a cheque for Rs.4,25,69,149 l-, drawn on Bank of Baroda, Arikirevula, West Godavari Branch, towards the repayment of the commission to the complainant Bank The said cheque, when presented for clearance, was returned unpaid with an endorsement, "funds insufhctent", vide cheque return memo dated 23.10.2017. According to the complainant, there was a legally enforceable debt, and without keeping a sufficient balance, the cheque was issued, and the dishonor of the cheque 1S an offence punishable under Section 138 of the 3 Negotiable Instruments Act. Since the amount covered by the cheque was not paid, even though a notice was issued, the complaint was filed.

5. It is stated in the complaint that a reply notice dated l4.ll.2ol7 was given, and there was e-mail correspondence. The three Bank Guarantees, agreement between the parties, letters issued for extension of the Bank Guarantees, e-mail correspondence, cheque return memo, notice, and the reply notice, are all hled along with the complaint.

6. l,earned counsel appearing for the petitioner would submit that the cheque in question was taken long before the date of its. presentation, as a securi$r, in relation to the transaction with the Bank, and not specifically towards the commission of Bank Guarantees. The commission for the Bank Guarantees, that were provided by the Canara Bank, had to be paid by the Bank of Baroda, and not the petitioners herein, which is evident from the e- mail correspondence, and the copy of the reply notice which are filed along with the compliant. Further, the Escrow agreement in between the petitioners ar.d the Bank of Baroda is not disputed by 4 the complaint, which clearly reflects the liability of the Bank of Baroda to pay the commissions, and not the petitioners'.

7. The extract of the admitted documents would be relevant for consideration. The e-mail correspondence. addressed by B.Manohar, Manager, Canara Bank, Prime Corporate Branch, to the Bank of Baroda, Hyderabad Bank, is exacted below: "Sent: Thursday, October 05,2077 12:26 PM TO : INDHYD(rDbankolbaroda.com Cc: Lokesh Varada CM PCB: VEERA BHADRA REDDY DCM PCB- SECBAD; SATYA VARMA AGM PCB; Koteswara Rao PPCB; cDP SHARMA SM PCB; Suryam DVSR Subject: Fw,: M / s.Transstroy-Jsc EC UES JV Payment of BG Commission Dear Sir, This has reference to your trailing mail, wherein you had informed the par\y viz., Transtroy (lndia) Rrt.Ltd to remit the BG Commission of Rs.4,25,69,149/- will be pard out of the proceeds of future Running Bills payment of the Polavaram Authority. As the BCs already extended and almost 2 months over since extension, we request you to release the BG commission of Rs.4,25,69,149- immediately and credit the same to us by ways RTGS as per the details mentioned below: BANK: CANARA BANK BRANCH: PRIME CORPORATE BRANCH ACCOUNT: 209272434 IFSC Code CNRB 0002657 Thanks & Regards B.MANO}{AR Manager Canara Bank Prime Corporate Branch 1-7-1 TSR Complex, SP Road, Secunderabad-500003 T: +4O 2343 8641" 5 "From: CFS Hyderabad Brarrch, Hyderabad, Telangana mailto: [email protected] Sent: 08 August 2Ol7 12:49 To: vp_acc: V.SREEDHAR Cc: cb2657, Subject: M/s.Transstroy-JSC EC UES-JV Pa5rment of BG Commission abank.com lokeshkumarvarad arrarabank.com Dear Sir, We refer to your letter dated O2.08.2017 received today for pa5rment of BG Commission for the Balk Guarantees issued by Can':ara Bank and Central Bank of India for execution of Polavaram Project ald inform as under: As requested by the captioned firm, payment of BG commission of Rs.4.25 Crores to Canara Bank for renewal of Ba:nk Guarantees of Rs.175.93 Crs issued by them towards Mobilization Advance Guarantee of Polavaram Project for further period of I year from the Escrow Account as per the Escrow Mechanism. Further as per the firms' request for payment of BG commission will be paid out of the proceeds of future Running Bills payrnent of the Polavaram Authority as per the payment mechanism of Escrow Account with our Bank. This is for your information ald doing needful Regards Jakkaiah Lalam Assistant General Manager"

8. In the reply notice dated 14.11.2017, it is stated as follows: "2. Our clients states that the letter addressed by them on 2/8/2017 to your client is explicitly clear that the BG commission amounts for extension of BGs in respect of Polavaram Project will be paid by their Escrow account Bank M/s.Bank of Baroda once the pa5rment on IPCs are released by their Employer the Government of AP as the said Bills are pending due to GST issue. Our client states that they have addressed a letter on the same day to their Escrow account Banker M/s.Bank of Baroda to tralsfer the BG commission to your Bank directly once the amount towards IPC Bill is credited."

9. The Escrow Agreement in between the Bank of Baroda and petitioners states the withdrawals as follows: 6 "(ii) to pay such amount towards payment of the guarantee commission and other fees, costs and charges due ald payable as advance for renewal of the bank guarantees issued by the Lender pursuant to the Facility.,,

10. From the above admitted documents and communication, it is clear that the complainant Bank is entitled to receive the amount of commission from the Escrow account, to be paid out of the proceeds of future running bills of the polavaram Authority. The e- mail was in fact, addressed by the complainant Bank to the Bank of Baroda on 05. ro.2017, to release the Bank Guarantee commission of Rs.4,25,69,I49/- and credit the said amount to the complainant Canara Bank. A copy of the Bank of Baroda,s e_mail dated

08.08.2017, addressed by the Assistant Generar Manager of Bank of Baroda, was sent to the Canara Bank, wherein the Bank of Baroda undertook to pay the Bank Guarantee commission out of the proceeds of future running bils payments of the polavaram Authority, in accordance with the pa5rment mechanism of the Escrow account with Bank of Baroda. 1 1' In pursuance of the agreement in between petitioner's Bank of Baroda and Canara Bank, and the correspondence made by the complainantf canara Bank to Bank of Baroda, the Bank Guarantee 7 commission can only be recovered from the Escrow account with the Bank of Baroda, CFS, Hyderabad Branch, and that too, out of the proceeds of the mnning payments from the polavaram Authority.

72. As seen from the complaint, and the documents filed along with the complaint, there is no liability of the petitioners to pay the Bank Guarantee Commission. The same is apparent from the record Iiled by the complainant that the outstanding, which according to the complainant is the Bank Guarantee commission. 13 The explanation under Section 138 of Negotiable Instruments Act clarifies the meaning "debt or other liability". Once a cheque is issued towards the discharge of any debt or liability, and is subsequently returned unpaid, the non-pa5rment of the outstanding amount covered by the cheque entails prosecution under Section 138 of the Negotiable Instruments Act. If the cheque is given pursuant to an agreement in between the parties, the burden is on the complainant to prove that there is a legally enforceable debt, i.e., to the extent of the outstanding amount covered by the cheque. The fundamental burden is on the complainant to prove existence 8 of a legally enforceable debt, and only under such circumstances, does the presumption under Sections 1rg or r 19 of the Negotiabre Instruments Act come into play. Though the question of 'enforceable debt, is a subject matter of tria_I, however, when the complainant accepts that the liability to pay the commission is on Bank of Baroda, and also addressed communication to the Bank of Baroda regarding the pa5,,rnent of the commission, it is for the complainant to substantiate the outstanding. "

14. The complainant has fiied e_mail correspondence and the reply notice, which'clearly indicate that it is for the Bank of Baroda to pay the commission insofar as the Bank Guarantees afe concerned. Having accepted the same, the complainant oughl to have explained in the complaint how the liability shifted onto the accused to pay the commission. It is not the case of the complainant that, at the first instance when the Bank Guarantees were issued or during the subsequent extension, the petitioners/accused had paid the amounts. Nothing is placed on record to suggest that, in the absence of payment by Bank of Baroda, the petitioners had undertaken to pay the commission for the extension period of the 9 Bank Guarantees. In light of the fact that the payment of the commission by the Bank of Baroda would be out of the proceeds of running bills payments of the polavaram authority, which was also accepted by the canara Bank/complainant, it cannot be said that the petitioners are liable. In the said circumstances, it cannot be said that the complainant has proved the existence of any legally \ enforceable debt on the part of the petitioners, except for stating in the complaint that the petitioners issued. a reply notice dated

14.1r -2017 admitting the receipt of notice of liability for payment of , the bank commission covered by the cheque. Having gone through the reply notice, it is not mentioned in the reply notice of the petitioners that the petitioners are liable to pay the commission, and it is specifically stated that the Bank of Baroda has to pay the a I commlss10n.

15. In the circumstances discussed above, the complainant accepted that the liabihty to pay the commission charges for the extension of Bank Guarantee would lie on the Bank of Baroda. However, it has not substantiated how the petitioners are liable to pay the commission as covered by the cheque. L6. For the said reasons, the petition is liable to be allowed. 10

17. In the result, the proceedings against the petitioners 1n C.C.No.1473 of 2018 on the hle of XIX Additional Chief Metropolitan Magistrate, Secunderabad, are hereby quashed.

18. Accordingly, Criminal Petition is a-llowed. Consequently, miscellaneous applications, if any, shall stand disposed off. SD/. N SRI HARI DEPUTY REGISTRAR //TRUE COPY// SECTION OFFICER To 1. The XIX Additional Chief Metropolitan Magistrate, Secunderabad. 2. Two CCs to Public Prosecutor, High Court for the State of Telangana at Hyderabad (OUT)

3. One CC.to SRl. B. RAVEENDRA BABU, Advocate [OPUCI 4. Two CD Copies Kul/PSL{ry I HIGH COURT DATED:1 9/03/2025 , ORDER CRL.PETITION .No.3922 ot 2019 ALLOWING THE CRI-.PETI1'I()N 1 € v * 1i: I i __- 2 B r'[$ 2m .,';. 'i\.- S P T\TC \: