The High Court · 2025

Smt.M.Sujatha, Asst.Registrar of Chits, Warangal ...RespondenUDefacto ot Grounds of criminal Petition, tnl ,,rn petition under Secl stated in the Memorandr"on l1t be preased to quash tn"' _ Complainant of BNSs Act, praying that iA the circumstances ,,r, jJ:r' il ::H :r::i':;: ffi,',"lil J'."J ilT.;[:fl H:n section 5 of Tetangana protection of Depositors ffi.:::,1:::::,,,fi;r,: Act, 1 999 in the interest of justice. ""rn t.A. NO :1 OF 2025 petition under Secti stated n the Memorand;:::Tfi::: ff:lffi [T ffi[[::T:; be preased to grant stay a' further proceedings incruding appearance of Petitioners/A1 and A2 in c.c.No.03/2021 in crime No.410/20.18 0n the fire of the District and sessions Judge, warangar against the petitioners herein {or the interest of iustice alleged offences U/s 405'420 R/w sec 5 of Telangana Protection of Depositors of Financial Establishments Act'tsgg' pending disposal of Crl Petition in the This Petition coming on for hearing' upon perusing the Memorandum Grounds of Criminal Petition and upon hearing the arguments Mr B.RAVISANKAR' Advocate for the Petitioners and Mr ERIGI GANESH' Assistant Public Prosecutor tfCl on behalf of the Respondent No'1 and N apPeared for the ResPondent No'2' The Court made the following: ORDER \ I rHE HON'BLE S[,IT. JUTiTICE TTRUMALA DEU E CRlMr NALPETtTtON No .73 31 OF 20 25 ORDER: ADA This Criminal pt is filed by the petitioners - accused Nos.l and 2 seeking;tition o'"tn the proceedings in c c'No.o3 of 2021 on the fire o, ,lto '""n"0 District and sessions Judge, warangar, registered ,on" r the offences under section s 406' 420 of lndian penar code (for and Section 5 of Telangana Protection of Depositors of Financial Establishments Act, 1999 (for short ,,lpC,,) short "the Act,,).

2. Heard the submissions of Sri B. Ravi Sankar, counsel for the petitioners and Sri Erigi Ganesh, learnecj learned Assistant Public prosecutor I for respondent No.1 _ State. 3. The learned petitioner counsel has submitted ,nr, ,n" offences alleged against the petitioners are that he could not pay the amounts to the subscribers of a chit and that the allegations fall under the Chit Fund Act, but that the Section 5 of Telangana State Protection of Depositors and Financiar Estabrishment Act (in shoft 'The Act')' does not get attracted against this petitioner and that the other offences dc not have any strength, because the offences u(er Sections 406 and 42O ot the lndian penal Code cannot go L.-

7. together anci that the allegations themselves are false and that the petitiorrer is an innocent person. He therefore' pi'ayed to quash the proceedings against the petif ioner 4. The tearnecl Assistant Pubiic Prosecutor has submitted that it is a settled law that Section 5 of the Depositcrs Act gets attracted in the matters pertaining to the Chit Ftrnd by virtue of a decision of this High Court in Revathi Vs' State of Andhra Pradeshl Hence' praYed to dismiss the Petition

5. Perused the record' 6. The allegations point out the offences trn.der Sections 406' 420 of IPC and Section 5 of the Act' The contentiotr of the petitioner counsel is that the chit fund company in this presept case is a Registered Company under the 'Companies Act' and therefore' the provisions of the said Act are not applicable to the case on hand' HehasfiledaCertificateofincorporationoftheChitFund company. lt is pertinent to mention herein that originally The petitionercounselhasalsofiledtheextractofdefinitionunder Section 2 (c) of Depositors Act. "Section2 individual, ai '20tlrz) ALD (Crt.t Z:S 6p) t._ ancial Establishm ent" neans an association or body of individuals or a firm -t """:#:i!.;i:!,:i!;!i.?i:":i::::::,n_depos,s,,nderanv xT,'i;{{i&:,7txi;!;i;,;;:y";!::;!?:,*!;;;'d;K |?j,]^"_t ,ntut-i,Z"|fr the companies operative :overnme .i't^:*::!. ,1o' iii,ii*oration or a r-''- ".l',[fl central er**Ji,i!, bl any 51"iu wompany ""':-:!' n"g;,"ii,"i"i,"l3ily;131g;""ii:,"'li!,''oi',o1E*y:Z 21:!:rn rinii^,^i7 tventrat Act 10 oi ri;<$' .;;';ff sectni qs_tiii;; ;""Zfly["Xi i,*,." ,i:; Act il of 1%!.,- " ' 'ieoc/ve Hank of tndia A"t, tSSi G[itXt "r,.,*,,:^,:

7. The above said ff: ",n",o.o"ll;;: "J ff:::,,:":::: "x l. Financiat Estab orinaividuiis;J::,1;;L:p:X",i:;!,0"?:::l?rsroup i;,;:i::,;i,r"yrlrw*i,l:rr** controlled by an oovernme or a isii;,;{"j,",:;W'1;ir;,,yr;rwi:xi:;

8. Thus, the above said definition clearly indicat"r,,,nr, it does not exclude the companies which are registered under the Companies Act. Therefore, even if the Chit Fund Company is a registered one as in the present case, the Act becomes applicable. It is further contended by the counsel that the case law relied upon by the Additionar pubric prosecutor is not appricabre to the present case, as it was passed prior to the amendment of Chit Fund Act. 1 4

9. 6upra)2;it ,t:':: organizer/foreman lt is made clear in this regard that in Revathi's case was held that "in the case of a chit fund tansaction' the subscriptrbns of money are made monthty or periodically by a period with the member of the chit in instatntents '' ' of the chit Thoughthe subscriptio n by a member in chit fund transaction is not for interest' the total subscription amount has to be returnedto the subscri ber by the end of the chit periocl wltich is a fixed period' in case the subscriber did not become highest bidder in monthly or periodicar auctions among members and did not obtain prize amount from the element of organizer/foreman of the chit. Though there is no paYment of interest in a chit fund transaction' the sutrscriber gels return by vtay of monthty or periociical dividends from out of the highest bid amount which amount is discounted from'Qut of the total chit vatue while making payment to the prized subscriber who is the highest bidder in the auction Similarly' organizer of the chit becomes 'financiat establishment' as defined in Section 2@ of the 1g99 Act since the organizer/foreman accepts the deposit by way of periodical subscriptions from the members under a scheme or arrangement specifically calted as chit fund transaction. Therefore, the definitions of 'deposit' under Section 2(b) and ,financial 'zotz 121 yo 1crl.) 23s (Ap) 5 establishment, under Section 2@) of the l99t case of organizer of a from members o, ,1, concrude that the 1gg9 Aat ,o ^^. ^,, fund transaction also.,,Act wt rrte 7 999 Act are safisfied in "''' fund transaction receiving subscriptions "n,, ,e chit. Therefore, I har 'dve no hesitation to is equatty appltcabte in the case of a chit - "' t o,^-.t"', 10' Therefore' it is crearly laid down in the above cited decision that the Act is applicable to the cases pertaining to the Chit Funds, and then it is also made clear that the amended Section 2(c) covers even the Registered Companies. Therefore, the contention of the petitioner counsel lacks merits. The allegations in the present case point out that the accused-petitioner herein has deceived several customers by collecting the amounts and not repaying them. The truth or otherwise, shalr be brought out during the course of triar.

11. ln the. result, the Criminal petition is disposed of directing the learned District and Sessions Judge, Warangal, to dispose of C.C.No.03 of 2O2j at the earliest, stricfly in accordance with law, without being influenced by any of the observations macle by this Court. However, the attendance of the petitioners is dispensed with before the trial Court, unless their presence is specifically required I 6 by the trial Court during the course of trial' provided that they shall be represented by their counsel on every date of hearing' Miscellaneous applications pending' if any shall stand closed. ,=??#REBit'+[1h / ,fTRUE COPY" SECT ION OFFICER To,

1. 2 .) 4 5 The District and Sessions Judge' Warangal The Station House Officer' Jangaon Police Station'.Warangal Dist Two CCs to Publig Prosecutor' Hign Court tor the State of Telangana' at Hyderabad lOU ll one CC to Mr' B RAVISANKAR' Advocate [OPUC] t ' Two CD CoPies W RC/PSL HIGH COURT DATED: 2B1OB11O2S STAT5 r) () rtstl lffi i Dt.-sp$ .'l, ORDER CRLP.No.7331 ot 2O2S The Criminal petition is Disposed of. I w $ i l