Criminal Petition No. 5337 of 2022 · The High Court · 2025

Order

B THE HONOURABLE SRI JUSTICE E.V. VENUGOPAL . CRIMINAL PETITION No.5337 oF 2022 ORDER: This Criminal Petition is filed under Section 482 of Cr.P.C., by the petitioners/accused, seeking to quash the proceedings against them in C.C.No.68 1 of 2O2I on the file of learned Principal Junior Civil Judge-cum-VIII Metropolitan Magistrate, Cyberabad, Kukatpally, registered for the offence punishable under Section 138 of Negotiable InstrumentS Act,

2. Heard Mr.Nandigama Krishna Rao, learned counsel for the petitioners, Mr.M. Sarat Chandra Murthy, learned counsel for respondent No.1 arrd Mr.E.Ganesh, learned Assistant Public Prosecutor for respondent No.2/State. Perused the record.

3. The brief facts of the case are that the first respondent herein has hled a private complaint under Section 2OO Cr.P.C. before the learned VIII Metropolitan Magistrate, Kukatpally, Rangareddy District, alleging that the complainant/ lst ggqgondent herein is the Partnership Firm carrying otr I I I I 2 EW'J crLP.N.'.5337 ol 2022 \ a business in Iritness and Yoga under the name ald style of iFitStudio. !l'he petitioner No. 1 is the Proprietary' Firm for which the 2nd petitioner herein is the sole proprietrrr and the J.d petitioner is its CEO.

4. It is al.lt:ged that the petitioners, who are carrying on business in a.dvertisement sector approached the conrplainant for the promotion of advertisement like magazine corer pages, articles, prol.essional picture shoot, online TV banners, etc. the complainant during the course of business on the representatic,rL of 2nd arrd 3.d petitioners, paid certain amounts and the petitioners partly complied with the promise but failed to rt:nder the remaining part of their service even in spite of receiving huge amounts. On questioning r_he same, the complairrant was offered allotment of 10% share in the business of the l"t petitioner firm on investment of Rs. 10.00 Iakhs excludirtg the tax amount. After having rec:e ived the said amount, it is a-lleged that they have turned down. During the course o{' business in between the l"t petitioner lirm and the complairLant, the 1"t petitioner fell due an amount of Rs.26,39,400/- (Twenty Six Lakhs Thirty Nine Thousands -$ 3 EW,J CrLP.No-5337 oJ 2022 Four Hundred only), ald a further amount of Rs.5.00 lakhs in total Rs.31,39,4OO1- (Rupees Thirty one lakhs thirty nine thousands four hundred only); out of which an amount of Rs.14,60,000/- (Rupees Fourteen Lakhs Sixty Thousands only) was paid and for the balance amount of Rs. 16,79,400 (Rupees Sixteen Lakhs Seventy Nine Thousands Four Hundred only). In part discharge of the above said debt as on

07.OL2OI9, a cheque bearing No.61088, dated O7.O1.2019 drawn on State Balk of India, Nandagiri Hills Branch, Jubilee Hills, Hyderabad, for amount of Rs. 16,12,000/- (Rupees Sixteen Lakhs Twelve Thousand Only) was issued ald the cheque on being presented on 18. L2-2O19, was returned with an endorsement 'funds insufficient" from the Banker through Cheque Returned Memo dated La.L2.2Ol9, for which a legal notice was issued on 07.Ol.2019 calling the petitioners to pay the said amount within fifteen days from the date of receipt of the said notice and the sarne was received by the accused/petitioners on 11.01.2020. But, however, as they a failed to pay the said cheque amount, the complaint was filed \ for the offence under Section 138 of the Negotiable Instruments Act on 20.2.2O2O and the learne{ VIII 4 EW,J CrLP No.5337 ol2022 \ Metropolitan Magistrate, Kukatpally, Rangareddy, took cognizance ci the offence for the offence under Section 13g of the Negotiable Instruments Act and the case was ;rumbered as C.C.No.6,31 of 2O2O.

5. Learne,c. counsel for the petitioners contende.c[ that the complainant was initially approached for the purpose of advertisement like magazines cover pages, articles, professional picture shoot, online TV Banners, et(1. by the 1st accused firm and for the services to be render.r:d by the 1"r accused firm, the complainant paid certain an,:unt and later, during the course of business in betweerL the l"t accused firl:e and the complainant, the complairrant has invested 19lo in the business of the l.t accused firm. As such, from the said fact, it goes to show that the statLrs of the complainant initially from the status as a customer is turned to that of a partner. When such is the case, the quss1i61 61 Iiability of partnership with that of the individual pzu.tner will not arise alrl, as such, the complaint under Section 138 of the N.I. Act cirnnot be maintained. s 5 EW.J C|LP.No.5337 ol2022 6 . He further contended that in the entire complaint, nowhere it is alleged that the 2nd petitioner has issued the cheque in question to the complainalt. But, however, as seen from the cheque fiIed by that of the complainant, the cheque is signed by the 2nd petitioner. It is the specific case of the l"t respondent/complainant that the cheque in question was issued for Rs. |6,L2,OOOl on 07.01.2019. The validity of the cheque is only for a period of three months from the date of issuance in terms of the provisions of the Negotiable Instruments Act and as such, after expiry of the said period, the cheque looses its validity and, as such, it cannot be said that the cheque has been issued as against any debt or liability except the date mentioned on the cheque. Even otherwise, il it is assumed that the complaint is maintainable even in relation to a post dated cheque is concerned, the date on the cheque is 30.1 l.2ol9 in the instant case, as on

30.11.2019 and as on the date on which the cheque was presented i.e. 18.12.2019, mqior amount was paid by the 1st petitioner firm and as such, knowing pretty well that the complainant has received a mqjor portion of the amount, corqrlainant calnot present the same at a later date i.e. on 6 EW,J CrLP.No.s337 oJ 2022 \ C

18.12.2019 lty then, the liability to the extent of the cheque amount is zrlmost cleared. As such, it is the clear case .,vhere the complainl. has abused the process of law attd tried to make wrongfirl gain by retaining the cheque. .lhe counterfoils lated 30.ll.2olg and O3.L2.2OI7 are hled to substaltiate: their case.

7. He fult."rer contended that though it is aileged in the complaint thar the complainalt has issued the krgal notice dated 07.01.2020 and that the said notice was sery,:d on the petitioners/:rc cused, the petitioners/accused did not receive any notice and there is no proof of service of the said notice and no acknowledgement with regard to the receipt of the notice on th,: ps1i1i.r.rs/accused has been filed along with the compiainl_ nor was mentioned or referred 1_o in the complaint. Ar; such, it is a crear case that there is n. notice to the petitioners, which is mandatory under law.

8. He further contended that it is the case of the complainant that the 2"d petitioner is the proprietor of the 1"t petitioner firm The cheque is issued in the narne rlf the l"t petitioner flirm. But, however, nowhere it is stated as to what ? 7 EW,J C.LP.No.5337 o! 2022 is the role of the 3d petitioner in the issuance of the cheque in question nor it is alleged in the complaint that the J.d petitioner has got the knowledge about the issuance of the cheque or that she has sigrred the cheque. In the absence of the same, in the capacity of CEO, the 3.d petitioner cannot be made a party to the proceedings nor she can be shown as an accused ald the present complaint not only as against the 3'a petitioner but also as against the 1"t and 2"4 petitioners is nothing but an abuse of process of Law that too after having received substantial amounts towards repayment of the cheque amount.

9. l,earned counsel for the petitioners by relying upon the decision rendered by the Hon'ble Supreme Court in A.C. Naragaraan tts State of Maharashtra & anotherr, Whlle holdlng tha.t there ts no serlous coqlTlct betueel the declslons ln IfrMTC (sulrrc/ qnd Janki Vashd.eo Bhoiwani (suPrq), we clartJg the posltlon q,nd qnsuer the questlons ln the folloulng nt<trrrrer: (1) Flllng oJ conqrlatnt petitloa under Section 738 ol N.I Act thtough pouter ol qttoflGg k perJectlg lego.l and. cornPetenL (ll) The. Pouer oJ Attorneg hoder cq''t depose ead vertg on oath beJore the Court la ordet to Ptoue the co7.ten.ts of the complatnt. Ho,Deoer, the pouer of ataoraeg hold,e? murt h@tte utitnessed the transqctlo as q.n agent ol the payee/holder ln due course or possass due knouledge regdrdlig the sald transd.ctTons. (tlt) It ts reqwired b! the cott,rlo,ln,d,'rt to mq.ke specltic dssertlon L e.IR 20t5 Supreme Court I198 i i I 8 EW,J C|LP.No-5337 of 2022 t\ ds to the knouledge oJ the pouter of attorneg hoLder la the sdld trq.nsq.ctlort eapltcltlg ln the complalnt o\d the pouer of qtxorneg holder uho hqs no knowled.ge regq.rdlng the tra sc.ctlorts cdnlot be ex.annlned. as a rrltaess Ia the case. (lat In the light of Section 145of N.I Act, lt ls open to the Mdglstrdte to tel! upon the uerTficdtlon ln the lorrn of d.ffi.ddvit Jlled bg the co,7tplaln,a.nt ln support of the compldl^t und.er Sectton 738 of the N.I Act qnd. the lwaglstrate ls nelther mqfld.dtoilg obllged to call upon the compl@i^qnt to rema.ln present beJore the Court, nor to ex(lr'tl,re the complal'ra't.t oJ hls rr'dltrless uport odth for to.kt'rg the declslon whethe" or not to lssue proces.s on the complalnt undet Section 138 ol the N.1. Act. (v) The furt tion-s under the genetal poutet ol dttorneg ca'ftn,ot be delegated to dnother person wlthout specttl,c clause peflnltti^g the same in the power oJ qlrtomeg. Neaertheless, the gene"q.l power oJ .tttorneg ltser c(In be cancelled qnd be glven to another person. wherein the Hon'ble Supreme Court has come to a conclusion tha t the complaint was not signed either by Malaging Direr:1.or or Director of the Compary. PWl is only the employee ol the Company arld in the present cit se on hand Ms.M.Sirisha, being an employee of the Compan/ signed the complaint f,ut not by the Managing Partner of the Company and even according to the alleged facts and circumstances of the case, no case has been made out to attract the off en ce under Section 138 of the Negotiable Instruments Act. Therefore, he prays this Court to quash the proceedings against the petitioners in C.C.No.681 of 2021 pending on thr: flr1e of the Court of the learned p.nncipal 1 9 EW,J C.LP.No.5337 oJ 2022 Junior Civil Judge-cum-VIII Metropolital Magistrate, Cyberabad, Kukatpally

10. On the other hand, learned counsel for the 1"! respondent contented that it is not correct to state that l"t respondent invested 7o/o in the business of the l"t petitioner firm, as such the status of complainant changes from customer to pa-rtner. He further contended that the ls Petitioner is registered asa Proprietar5r Firm and no partnership deed or agreement has been made and it 1S nothing but taking the amount from the l.t respondent/complainant in order to cheat her. So, this is a clear case of cheating and just to receive huge amounts from the l.t respondent with dishonest intention to make wrongful gain and to create wrongful loss to the 1"t respondent. So, there is no partnership between the l.t Petitioner Firm and the l.t respondent herein. He further contended that irrespective of whether the l"t petitioner Firm and ttre 1"t respondent are pa-rtners or not, when they have issued a cheque it is their liability to honor the cheque, so the L l 10 EVY}' C.LP-,\o-5337 of 2c22 \ 7 complaint given under Section 138 of the Negotiable Instruments Act is highly maintainable.

11. It is further contended by the learned counsel for the 1"t responden t that the l"t petitioner is a partnership firm registered urrrler the Indiar Partnership Act, 19321. carry.ing its business in Fitness and Yoga under the name and style of iFitStudio. T'he l"t Petitioner is a proprietary firm, the 2nd Petitioner is the sole proprietor of the l"t Petitioner hrm and the 3'a Petitioner is the Founder ald CEO of the l"t Petitioner firm. The 2"d zutd 3ra Petitioners are mother and daughter and both of therrr actively participate in the day-to-day affairs of the businesr;. The Petitioners carrying their business in Advertisement sector and approached the complainant for the promotion of Advertisements llke Magazine Cover Pages, Articles, Professional Picture shoot, Online TV Banners, etc. ard having bu.siness transactions with the l"t respondent from two years prior to liling of the case. It is submitted that, during the course of the business, believrng the representatio.ns of the 2nd arld 3.d Petitioners, tl.e 1"t respondent paid various amounts to the petitioners, but the EW.J CrLP.No.5337 oJ 2022 petitioners partly complied their promise and failed to render other services as promised by them, accordingly by receiving huge amounts deceived the complainant. Further, taking advantage of the acquaintance with the management of the l"t respondent, petitioners succeeded to make the l"t respondent to invest the amounts for the allotment of 17o share in the Petitioners hrm with a false promise that, their firm will grow leaps and bounds and promised that if the l"t respondent invests Rs. 1O Lakhs she gets assured return of Rs.15 Lakhs after one year.

12. Learned counsel for the 1"t respondent further contended that the Petitioners did photo shoot for other covers during the same period for Vogue India cover in the months of December 2018 and January 2Ol9 at Hyderabad PAWS office located at 4O2, Pranav Nivas, Road No: 51, Jubilee Hills, Hyderabad 5OOO33 and some parks in and around the office, but the l"t respondent never received any proof of these covers in spite of repeated requests made by the l"t respondent/complainant continuously for 6 months from April 2Ol9 to November 2019, lhe Petitioners/accused ev_aded EW,J C.LP.No.5337 of 2022 t2 stating that the assignment completed and they will be sending pictures along with magazines but 1st respondent did not receive the same th at petitioners apart from

13. He further contended that in the aJoresaid manner the become due for an amount of Rs' 26'3'!\'400l-' the petitioners are also liable to pay per the understanding confirme<l by the Rs.5,0O,0OO/- as petitioners through their mail for the premium fol share' accordingly ttre petitioners are liable to pay Rs'31'39'4OOl- out of which they have paid in different occasions a sum of Rs. 14,60,000,/- and stil1 they are liable 1-o pay Rs.16,79,400,/ In part discharge of the above said liability and legally er:Lforceable debt as on 07'O1'2019' the petitioners have issued a post dated cheque for an amount of Rs.16,12,000/- (Rupees Sixteen lakhs twelve thousand) vide cheque bearing no.61088, dated 30'11'2OI9 drawn on State Bank of Ind,ia, Branch of Nandagiri Hills' Jubilee Hills' On presentation of the said cheque by in their bank State Bank of India, Madinaguda Branch, Madinaguda, Hyderabad-500049 the 1st lssprgndent Hyderabad-5110033. EW,J CrLP-No-5337 oJ 2022 78172/2OL9 for encashment, the said cheque has been returned with an endorsement nFunds Insufficient' vide return memo, dated 18.I2.2O19

14. He further contended that the 1st petitioner lSa company incorporated under the Indian Companies Act, 1956, and introduced accused No.2 as Managing Director and accused No.3 as Director & CEO and founder as well, but upon the verihcation of the 1"t respondent, the 1"t Petitioner is a proprietary firm arld tlne 2"d and 3.d Petitioners being. the mother and daughter jointly operating their business Further, in the said manner they have made maly false representations and succeeded to receive huge amounts with a dishonest intention to cause wrongful gain and also to cause wrongful loss to the 1"t respondent and the grounds raised by the petitioners are untenable, even otherwise these facts has to be decided during the course of trial only and section 482 of Cr.P.C. has no application to the facts and circumstances of the case in hand. Learned counsel for the respondent No.1 by relying upon the decision rendered by the Hon'ble Supreme Court in S.P.Mani and Mohan Dairy os I l I I I I i I t4 EW,J ctLP.No.5337 of 2022 \ f Dr.Snehalatha Elangooan,2 wherein it was held that Complaint eLgainst Director/partner Cannot br: quashed merely on ground that apart from basic averment no particulars are given in the complaint about his rolt:. He must make out a case that making him stand the trial wrtr:ld be an abuse of process of Court. Therefore, he prays to dismiss the Crimina-l Pet.ition with exempla-ry cost.

15. On penrsal of complaint filed before the trjal Court reveals that the complainant all through had staied in the cause title itself that the complaint is filed by the Arrthorized Sigrratory person Ms.M.Sirisha and the averments of the complaint s;peaks for itself. Though it is sta ted that Ms.T.Sailaja represented as Managing Partner of M/s.iFitStudio, the complaint has been signed by the Authorised Signatory person but not by Ms.Sailaja, Managing Partner. The objection taken by the learned senic,r' counsel does not call ibr any interference by this Court and the order passed by the Hon'ble Supreme Court is not applicable to this Case, ,2023 (1)ALD (Crl.) I (SC) --a./) r5 EW,J CrLP-No.5337 ol2022

16. With the above observation, this Criminal Petition is dismissed Miscellaneous applications pending, if any, shall stand closed. To //TRUE COPYII Sd/- L. LAKS;I BABU ASSISTANT REGISTRAR S GTION OFFICER 1, The Principal Junior civil Judge-cum-Vlll tr/etropolitan Magistrate, cyberabad, Kukatpally

2. Two CCs to the Public Prosecutor, High Court for the State of Telangana, Hyderabad [OUT]

3. One CC to I\4r Nandigam Krishna Rao, Advocate IOPUC] 4. One CC to Mr M Sarat Chandra Murthy, Advocate [OPUC] 5. Two CD Copies VA/DL 6 4'i HIGH COURT DATED:0510212025 ORDER CRLP.No.5337 of 2022 11E s i '\T6, ,] o th t{rR u6 Z o r\ ,i: I I CE S * DISMISSING THE CRLP @)qo W