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 stay all further proceedings including arrest of the petitioners (Ponduri Venkata Satya Kumar) in FIR No. 545 of 2O15 dated 14.05.2015 on the file P.s Banjara Hills, Hyderabad and grant such other relief as it deems fit in the circumstances of the case and in the interest of justice. l.A. NO: 'l OF 2017(CRLPMP. NO: 217 oF 2017) Between: The State of Telangana, Rep. by its Public prosecutor, High Court for the State of Telangana and State of A.P., Hyderabad, Telangana. ...Petitioner/Respondent AND

1. A//s.Techsmarat lndia Pvt Ltd, A Company incorporated under the Companies Act, 1956.Registered offrce at 50-12j-S4l1lA, B.S.Layout, Hyderabad. Rep by Ponduri Venkata Satya Kumar

2. A/lr. Ponduri Venkata Satya Kumar, S/o p.Ch, Ayyanna, Age _ 42 years, At 50_ 121-54llA, B.S.Layout, Hyderabad. ...Respo-ndenUAccused -

3. Mr Satish Vanthair, S/o. Sudharshan, Age: 52 years, Office at Bagmane World. Technology Center, IVarathalli Outer Rihg Road, Doddanikundi, lVlahadevapu r, Ben gal uru. ...Com p lain a nURes po n d e n t (R-3 is not necessary party) 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 vacate the interim stay granted in crl.Mp.No.17170 of 2016 in Cr1.P.No..15175 of 2016 on the file of the Hon'ble High Court dated 26-10_20.16. l.A. NO: 1OF 2021 Between: 9tate of Telangana, Rep. by its public prosecutor, High Court for the State of Telangana and State of A.P., Hyderabad, Telangana. ...Petitioner/Respondent AND 1 M/s.Techsmarat lndia Pvt Ltd, A Company incorporated under the Companies Act, 'l956.Registered office at50-i21-S4l1lA, B.S.Layout, Hyderabad. Rep by Ponduri Venkata Satya Kumar [\il r. Ponduri Venkata Satya Kumar, S/o p.Ch. Ayyanna, Age:42 years, At 50- 1 21 - 54 llA, B.S. Layout, Hlrderabad. 3 Sri. Vinod Kumar, S/o A.V.Kesavan, Age:42 years, Occ: Associate Vice President and Lead. Cornorate.Security-and iniestigation, # B;g;;;e y;i Centre, \A[_C-3, Btock B, L:y:.I ] riIafiaOevapul-,'"ntartnifratt,- R";;, Bangalore, R/o H.No.B-301, SVS patms, Z CfrinhipZnafratti, BangtaorE_iZ.--' -H;;g ...Respondents/Accused ... Res pon de n ts/C om pla inant (R-3 is not necessary party) Petition under section 482 of cr.p.c praying that in the circumstances stated in the A/emorandum of Grounds of criminal petition, the High court may be pleased to vacate the stay granted in crl.p.Mp.No .17170 of 20t-6 in crl.p.No. 15175 of 20'16 on the file of Hon'ble High Court, dated 26_.10_20.16. This Petition coming on for hearing, upon perusing the [\/emorandum of Grounds of criminal Petition and upon hearing the arguments of Sri I\/ _ Abhinay Reddy, Advocate for the Petitioners and the sri syed yasar Momoon, Additional Public Prosecutor on behalf of the Respondent No.1 and of Sri [\/. pranav, Advocate for the Respondents No.2 & 3. The Court made the following: ORDER (: ORDER: THE HONOURABLE SMT. JUSTICE K. SUJANA CRIMINAL PETITION No.15175 of 2OL6 This Criminal Petition is filed under Section 482 of Code of Criminal Procedure, 7973 (for short Cr.P.C.') to quash the proceedings against the petitioners in Crime No.545 of 20 15 of Banjara Hills Police Station, Hyderabad, registered for the offences punishable under Sections 406 and 420 of the Indian Penal Code, 186O (for short 'IPCJ.

2. The brief facts of the case are that on 14.05.2O15, a complaint was received from Srr Satish Vanthair, Vice President of Mphasis Ltd, stating that Techsmart India Pvt. Ltd, along with its Managing Director Ponduri Venkata Staya Kumar, Additional Director Venkata Janardhana Kutchu, and Director Vidya Ponduri, approached Mphasis Ltd claiming they had been awarded a contract by the Commissioner of Civil Supplies Department, Government of Andhra Pradesh, and Registrar, UIDAI. They persuaded Mphasis Ltd to enter into a teaming agreement on December 10, 2010, to jointly deliver services. Mphasis Ltd invested Rs. 14.6 crores and incurred signifrcant costs for software development, implementation, and procurement of kits for UIDAI l ) 2 SKS,J Crl.P.I{o.15175 of 2016 contract enrollment. Howevcr, Techsmart India pvt. Ltd failed to deliver services, leaving an outstanding balance of Rs.8,07,61 ,097/-. Despite a settlement agreement, Techsmart India Pvt. Ltd paid only Rs.2,96,0O,OOO/ -, leaving a balance of Rs.5,52,00,OOO/ -. The complainant alleged that Techsmart India Pvt. Ltd made false allegations, claiming they had paid the amount to M/ s Jayani Software, a company registered and operated by them.

3. Heard Sri M. Abhinay Reddy, learned counsel appearing on behaif of the petitioners as well as Sri Syed Yasar Momoon, learned Additional Public Prosecutor appearing on behalf of respondent No-1-State and Sri M. Pranav, learned counsel appearing on behalf of respondent Nos.2 and 3.

4. Learned counsel for the petitioners submitted that the present complaint filed against the petitioners / accused pertains to a contractual issue that is purely civil in nature and subject to adjudication and that the High Court of Karnataka, by order dated

19.08.2016, appointed Dr. Justice N. Kumar, a former Judge of the Hon'ble High Court of Karnataka, as the sole arbitrator to adjudicate the dispute between the parties. He further submitted that even if the allegations in the FIR are taken at face value, they do not disclose any ingredients of the specific offences mentioned (rt 3 SI(s,J Crl,P.No.15175 of 20l6 therein and that as the FIR does not disclose the commission of any offence, the inves[igation based on the said FIR is tiable to be quashed. He further submitted that the respondents themselves, in their application before the Hon'lcle High Court of Karnataka concerning the Tcaming Agreement dated 10.l2.2OlO, acknowledged that any dispute or difference between the parties was to be resolved amicably through discussions and negotiations, and unresolved disputes were to be referred to arbitral ion as per the Arbitration and Conciliation Act, 1996, with the venue of arbitration bcing Bangalore.

5. Learned counsel for the petitioners contended that the complainant, acting with mala fide intenlions, is attempting to drag a purely civil matter arising out of a contractual dispute into criminal proceedings to takc vengeance against the petitioners, avoid civil liability, and exert undue pressure. The act of the complainzrnt of approaching criminal courts for this purpose renders the FIR liable to be quashed and that there exists an exclusive jurisdictional clause in the agreement, conferring jurisdiction upon the Courts of Karnataka, thereby rendering the present proceedings outside the jurisdiction of P.S. Banjara Hills. He further contended that the respondents did not approach the Court with clean hands, as they failed to disclose material facts 4 sxs,J Crl.P.tro.15l75 of 2016 concerning payments made by the petitioners to M/ s. Mphasis Software & Services (lndia) Pvt. Ltd., and misled the Court by suppressing these facts, thereby abusing the process of law.

6. In support of the submissions of the learned counsel for the petitioners, he placed reliance on the decision in MCD w. State of Delhi & Aurr, where it was held that a litigant withholding vital documents or suppressing material facts to gain advantage would be guilty of committing fraud upon the Court and the opposite party. Additionally, he refers to the judgment of the Hon,ble Supreme Court in Anjani Kumar vs. State of Bihar & Anr2, wherein it is held thar a complaint hled as an after-though t to extract more money from the petitioner is liable to be quashed. The counsel further submits that it is a settled position of law that directors of a company are not vicariously liable for offences committed by the company under the Indian penal Code unless there is a statutory provision extending such liability, which is absent in the present case. Further, the dispute, as evident from the FIR, is centered around payment issues between the parties, which is a civil matter requiring adjudication by the appropriate forum as agreed upon by the parties. He also relies on the ' zoos scc 1crt1 t322 '1zooa; z scc 1c.i; ssz sl(s,J Crl.P.No.15l75 of 2016 judgment in Chandran Ratnaswami vs. K.C. Palanisarnya, uThish held that criminal proceedings initiated to evade civil liability or convert purely civil disputes into criminal cases should be quashed to prevent abuse of thc legal process.

7. Furthermore, the counsel contends that thc FIR has been filed to evade civil liability with an ulterior motive of harassing the petitioners. In V.Y. Jose & Anr vs. State of Gujarat & Anra, the Hon'ble Supreme Court held that an offence of cheating under Section 42O IPC requires a showing of lraudulent or dishonest intention at the time of making a promise or represcntation. In the present case, there is no allegation o[ fraudulent or dishonest intention at the time of executing the contract, and subsequent disputes over payment do not attract the ingredients of Section 420 IPC. Therefore, he prayed the Court to quash the proceedings against the petitioners b1,a11or.r,ing this criminal petition.

8. On the other hand, learned counsel for respondent No.3 opposed the submissions made by the learned counsel for the petitioners, stating that the case is at the stage of FIR. There are clear avermcnts in the complaint demonstra t ing how the respondents were cheated by the petitioner, who, through inducement, Ied them to enter into the contract. After entering '1zor:1 e scc zao o 1zoos1 r scc zs 6 sK{i,J CiI.P. o.15175 of2016 into the contract, the petitioners failed to perform their contractual obligations, which amounts to criminal bre ach of trust and cheating. He relied upon the judgment of the Hon'ble Supreme Court in Indian Oil Corporation v- NEPC India Ltd. and Otherss, stating that even though a civil remedy is available, the criminal case cannot be quashed. In the present case, the petitioners entered into a contract with the respondents, received the amount, and cheated the respondents. The petitioners entered into an MOU, but even after the MOU, they paid only two crores, leaving a balance of live crores and hfty-two lakhs unpaid. He further submitted that ncgotiations or proceedings under arbitration are not grounds to quash the proceedings. As such, he requested the Court to dismiss the criminal petition.

9. In the light of the submissions made by both the learned counsel and a perusal of the material available on record, the averments in the complaint show that the complainant-company entered into the contract with the petitioner-company and the petitioner-company failed to pay the amount for the services rendered by the complainant-company. As a resuit, the complainant-company approached the Karnataka High Court for the appointment of an arbitrator, and the Karnataka High Court appointed one of the former judges of the Karnataka High Court as s (2006) 6 supreme court cases 736 7 SKS,J Crl.P.No.15175 of 2016 an arbitrator, who constituted the arbitral Tribunal to adjudicate the dispute.

10. The arbitral proceedings were conducted under A.C.No.108 of 2016, wherein M/s Mphasis Ltd. had raised claims against M/s Techsmart India Pvt. Ltd. regarding unpaid invoices and the cost of 1O0 UIDAI kits based on a teaming agreement dated I O. 12.2010 and a subsequent corporate guarantee deed dated 16.12.2010. The Arbitral Tribunal, by its award dated 14.06.2017, direcred Techsmart to pay Mphasis {5.52 crore s with 6nl, interest from

01.O5.2O12 and t2.O8 crores towards the cost of 1OO kirs with 6% interest from the same date. Aggrieved by this arvard, Techsmart hled a petition under Section 34 of the Arbitration ar-rd Conciliation Act, 1996 vide Com.A.S.No.113 of 2077, challenging the award on grounds of lack of jurisdiction, invalid documents, and improper appreciation of evidence. However, the Commercial Court dismissed the petition on 10s December 202 1 , upholding the validity of the arbitration agreement and confirming that the Arbitral Tribunal had properly appreciated the evidence and followed due procedure. The Court reiterated that it could not act as an appellate body to reappreciate evidence or substitute its own findings.O 8 sl{s,J Crl.P.Ito.15175 of 20l6 l fl\-

11. It is the specihc contention of the learned counsel for the respondent is that even though there is a civil remedy, the criminal case has to be continued, in view of the judgment of the Indian OiI Corporation (supra). However, the facts of the present case do not di""lo". ingredients of criminal offences but are purely civil in nature. The complaint fails to establish any fraudulent or dishonest intention on the part of the petitioners at. the time of executing the contract, which is a necessary ingredient for invoking Section 42O IPC, as held by the Hon,ble Supreme Court rn V.y. Jose (supra).

12. Further, as seen from the record, when a complaint discloses several transactions that may also have criminal breach, but civil remedies are available and have already been adjudicated, there is no need to continue the proceedings in the criminal case. The arbitral Tribunal has already concluded the proceedings, and the award has been conhrmed by the Commercial Court. Moreover, the exclusive jurisdiction clause conferring jurisdiction upon the Courts of Karnataka renders the proceedings before the Banjara Hills Police Station, Hyderabad, without legal basis.

13. In view of the above, this Court is of the opinion that the continuation of the criminal proceedings would be unjustifred and the proceedings against the petitioners are liable to be quashed. l- 9 SKS,J Crl.P.No.15175 of20l6

14. Accordingly, this Criminal Petition is allowed and the proceedings against the petitioners in Crime No.545 of 2O15 of Banjara Hills Police Station, Hyderabad, are hereby quashed. Miscellaneous applications, if any pending, shall stand closed Sd/- MOHD. ISMAIL ASS TANT REGISTRAR //TRUE COPY// SECTION OFFICER To, l The Ill Additional Chief Metropolitan Magistrate Co The Station House Officer, Banjara Hills Police Station, Hyderabad District Two CCs to the Public Prosecutor, High Court for the State of Telangana at Hyderabad. [OUT] One CC to M. Abhinay Reddy, Advocate [OPUC] One CC to Sri I\L Pranav, Advocate [OPUC] Two CD Copies , Hyderabad 1 2 3 4 6 kam/DLw HIGH COURT DATE D: 1 310312025 ORDER CRLP.No.15175 of 2016 ( q f, o o a) 1 HE STAT €' 2 E t{AY 2025 t l, t)FSPr r C.P -rr2 ALLOWING THE CRIMINAL PETITION f"a XN