Ttie High Court · 2025

THE HON'BLE SMT. JUSTICE JUWADI SRIDEVI 2ol This Criminal Petition is filed under Section 482 ot Cr.P.C. by the petitioner-accused No.4 seeking to quash the proceedings against her in C.C.No.1973 ot 2022 on the file of the learned Xll Additional Chief Metropolitan Magistrate at Nampally, registered for the offences under Sections 406 and 420 r'ead with Section 34 of the lndian Penal Code, 1860 (for short'lPC').

2. Heard Mr. T.V.Ramana Rao, learned counsel for the petitioner' Mr. C.Ruthwik Reddy, learned counsel for respondent No-2 and Mrs. S.Madhavi, learned Assistant Public Prosecutor appearing for the respondent No.1-State. Perused the record.

3. Brief facts of the case are that all the accused, including the petitioner-accused No.4, are representatives of M/s. Adwaitha Global Business Private Limited, formerly known as Nisarga (hereinafter referred as 'Company'). The accused have induced the de tacto complainant and several others to invest substantial amounts in their Company by promising huge profits, including S% interest and incentives, thereby collec{ing approximately Rs.7.00 crores. The de tacto complainant has invested Rs.93,03,090/- in the Company of the accused 2 and asi a token of acknow{edgement,.accused No.2 had executed a Corporate Guarantee for toan on30.07.2019 ariiliJna Oy nim. On the very same day, accused No.3 had executed a Support Finance Agreement. The petitioner-accused No.+ has issued a cheque in the name ,cf Nisarga Corporation for Rs.36,33,090/_ duly signed by her. However, instead of utilizing the fun* as represented, the accused misappropriated the amounts for aquacurture rerated activities, thereby cheating the investors. The cheques issired in favour of the victims for repayment of the amount inVested by them were dishonoured. 4 b rss s I for e tioner: 4'1' T'he petitioner is rhe sister of accused No.3. The de facto complainant used to invest amounts in the company of the accused and received good r.eturns out of the said business transactions. To that effec{, the de bcto complainant and the Company, represented by accuserJ No.3, have entered into an investment agreement dated 27.O2.2A2O lwrrth certain tenns. and conditions.

4.2. A,ccor.ding to the complaint, the allegation against the petitioner is that she has issued a cheque for Rs.36,33,090/_ to the de facto complainant. However, the said cheque was issued by the petitioner to the de facto comprainant towards coflaterar secr,rrity on the insistence of \ \ 3 her brother and that too on oondition that it is to be presented only after six months, with prior notice to her. ln violation of a specific clause of the investment agreement, datd 27.02.2020, the de facto complainant presented the ctreque without issuing any prior notice to her, thereby causing it dishonour and subsequently lodged the present complaint against the petitioner and others, with all false allegations. When the de facfo complainant has acted in violation of the terms and conditions of the said agreernent, the question of prosecuting the petitioner does not arise.

4.3. ln fact, accused No.3 has repaid certain amounts to the de facto complainant with great difficulty in the lockdown period due to the repeated harassment and torture made by him. Despite having received the amounts, the de facfo complainant has wantonly and intentionally filed the present complaint by suppressing the true facts, with the sote intention of unlawfully extracting money from accused No.3. Furthermore, he has falsely implicated his own kith ard kin as vic{ims. Wth regard to the harassment made by the de facto oomplainant, accused No.3 has lodged a complaint against him, but tlre same was settled even before registration of crime itself.

4.4. The petitioner holds shares in the Company, however, she is neither a Director nor an authorized signatory of the Company. She has / 4 not received any amount from, the de facto cornplainant,. nor she is a party to any of the agreement. There are no spircific allegations against the petitioner and the ingredients of the offences alleged against her are not made out.

4.5. The present dispute is pur.ely civil in nature, as such the penal. provisions do not attract to the petitioner, and it ought not to be criminalized. ln support of the said contention, he relied on the judgment of the Flon'ble supreme cou( in satishchandra Ratantal sftalr v. sfate of Gujarat and anothe/ and drawn attention of this Court to paragraph Nos.11 to 13, wherein, it is held as follows: 7l:_,- llavinq gbserve.d the background principtes appticabte ne(en, we need to ansider the individuat bharps agjainst the appellant. Tuming to Section ttoi r.ead with Sedlon a1i6 trc, i. obserye that the drspde aa:ses out of a loan transactbn between the parties. lt falts trdn the rcard that Respinclent Z Xnii ie appellant and the altendant circumstances before tending the loan. Fu her it is an admitted fact that in uder to rrlcrltrer thd atoresaia amounf; Respondent 2 had instituted a atmmary civil suit which is {iil pending adiudtcation. The bw deady tdnizes a difrercni between simpte paqentlinve{ment of honey-*A.iit -Ji*i u money of gopefty. A mete brcadt of a rromisr., agrcement or ?onhg q@s not, ipsp fado, cr,nydftute n6 Cfetlc€ of the criminat oneach of trust Mrtained ia Secfirn 405 lpo without there being a clear case of entruilment. 12. In this @ntext, we may note tha/. thea is notNng either f the comptaint or in any mderial Oefore ii,- Wnting to ine fad \.r! *V Wperty was entrusted to tne app6fi6i at wnicn ne didtones y @avefted for his own ,se 'so ,s to satisfy the ingredients of Section 405 punishable uder Ser/1ion A6 pC. Hence the leamed Magistrate committed a serious error in issuing process agprhs, the appeltant for the said dene. llntortunateti, the High Coutt also faited to mrrect this manifei irror. -ail r lzors; e scr: ur ) 5

13.Now @ming to the dtatw urfur *dion 415 punish# under Section 420 lN. ln the context of @ntarls, the clistindbn between merc bedt of cr:nt'e,d. and clreathtg would &Pnd upon the fraudutent indu@firent and mens Ia. (*e Hidaya Ranian fuasad Verma v. State of Bihar.) ln the a* bfore us, admifrdly the appdlant was tnpped in wmnnic ctisis and thercfqe, he had approiAtea Respodertt 2 to ametiorate the situation of cnbtb. Fufther, in oder to reaver the oresaid amount, Reqondent 2 had instituted a $mmary civil suit *eking rcavery of the loan amount which is stitl peding adiudication. The merc inability of the appellant to retum the ban amount cannot give d* to a cdminal pisecution for &eating unless fnudubnt or dishonest fuilention is -shown tkrht at the bginnhg of the transadion, as ,t is frrrb ,rens rea vvttich is the crux of tlF- offene. Even if all the fad;s in the annptaint and material arc. taken. on their fre value, rro sttch drsrrbnest rcpresr;r/lation ir hf,uenrutt @uld be tound or infetred.'

4.6. Hence, he prayed to quash the proceedings against the petitioner'

5. Learned counsel for respondent No.2-de facto complainant submits that the de facto complainant has 8006 of shares in the Company and is, therefore, the major share holder. The petitioner had issued cheques and promissory notes to the victims as a Director in her individual capacity. The petitioner, along with other accused, collected crores of rupees from several innocent people under the guise of investment schemes, promising high returns with interest, and thereby cheated the general public. There are specific allegations against the petitioner and the truth or otherwise of the allegations levelled against her can only be known after conduc{ing full-fledged trial before the trial Court. Hence, tre prayed to dismiss the petition. 6 t Learned Assistant pubric prosecutor atso contended on the sirnirar: lines as those of bamed counSel. for respondent No.2_de lbcfo complainant. 7 ofJanuary, Having gone through the complaint, it is evident that the de facto of accused complainant has invested Rs.93,03,090/_ in the through various transactions, wtrich were made in the months Februan/, March and Julr1,2020. Thereafter, it is stated in the complaint that as a token of accused No.2 has executed a Corporate Guarantee for Loan, accused No.3 has executed a Finance Agreemetnt in the name of Nisarga Corporation on 30.07.2019 and accused No'4 has issueci a cheque bearing No.000240 in the name of Nisarga rlorporation for Rs.36,33,090/-. & Fmm the above, it is olear that the investments were made in the year 2O20. There is no explanation from the de facta wtry the eorporate Guarantee for Loan and Finance Agreement were executed in the year 2019, though he made investments in the year 2020. No specific date is stated by the de facfo cornplainant in the cornplainl: when the cheque was issued in his favour. Th€ documents with regard to his investments, if any, made in the year 2019, were not produced by the de faclo complainant. As per the investment agreement, datd 27'02'2020' the investment made by the de factocomprainant is complainant as to 1 \ 7 Rs.30,00,(D0/-, however, in the complaint, it is stated that an amount of Rs.93,03,090/- was invested by him in the Company of the accused- This inspires a doubt in the mind of the Court with regard to the date of investment, the date of agreement and the amounts invested.

9. lt is alleged in the complaint that the petitioner has issued a cheque for Rs.36,33,090/-, to the de fado in her individual capacity as a Director of the Company. However, the petitioner has placed on record a copy of the seMce lefter, dated 10.10.2021' wherein, it reveals that she was employed with HSBC Softnvare Development (lndia) Private Limited from 07.05.2007 lo 14.09.2021 and her last held designation was a Project Manager. When the petitioner is employed with another Company, the question of petitioner being Director of the Company and issuing cheque as an authorised signatory does not arise. She has also filed a copy of the Company Master Data wtrich shows that only accused No.1 is the Director/Authorised Signatory of the Company since 29.01.2020.

10. lt is the ctlse of the petitioner that she had issued the cheque in question towards collateral security, it has to be presented after six months subject to condition of giving prior notice to her and the same is evident ftom the investment agreement, daled 27.02.2O20. As per the said agreement, there is a dause i.e., Proess to the effect that if the I lnvestor urants to call back the investment, the lnvestor shall issue a prior notice of six months to the Facititator, and the Facilitator shall make all the arrangements to get back the investment from the beneficiary to the lnvestor urithin the notice period. However there is a rock-in period.of 3 yeirs for the rnvestor, during which the tnvestor cannot give notice for retum of the investment amount. The lnvestor can only give the said notice onlv after completion of the lock-in period of 3 years. However, the de facto complainant, despite being fully aware of the terms and conditions of the agreement, presented the cheque in violation of the terms of the agreement and lodged the present complaint on 01.10.2021 i.e., beforr: expiry of 3 years lock_in period and without issuing a prior notice to the accused.

11. The Hon'ble Supreme Courtin thejudgment of paramjeet Batnv. Siate of at paragraph No.7, held as follows: '.7.ryil. exercising its jurididion under sr,(itioo 482 ot the @e the HUh Coutt has to be cautious. frrE.po,rrJ;i"'t" r".A :!:!nsty lnct onty for the p.urpose or pni*ntiig'-riiit * n" {l9cess of any coutt or othetwlf,e fo secu/e ends of iustice. turether a conptaint drbctoses.a ;^i;rt ;;;;;;;"ri i"p",ra" ttpon .the nature of f€ry.s attegect tniii.'vwrltiil'JLnral i.ngLedieltg of diminal offen@ .ate preqent or not has to tE-judged by the High c,ourt. A ai"aiini'rti'iiiiiiii" ,"v atso haue a c(imiaat texture. eut he iisi-ciii ilii"#1hotn", rri;;-;";;"7i iorx or a dispute which is essentiatly of a .otrence. tn such a iituation, ir a cii ;;;;'t <:riminat ilataue and is, in fact. adootd as nas nappeiei ; ;;;;;,ii <burt shoutd not hgsirate to quash ;;;tii ii*iZati't;:;nn nt abuse of process of @Ud.,' "iri 2lzotsy rr sc,: ozs \ l \ I

12. ln view of the aforesaid judgment, ooupled with the fact in respect of the issue involved, which is purely civil in nature, it is pefinent to note that the de facto complainant had already instituted a civil suit for recovery of Rs.30,00,000/- along with interest against all the accused vide O.S.No.141 ot 2O23 before the learned Chief Judge/Senior Civil Judge, City Civil Cou(, Hyderabad and the same is pending for . The foundation for filing the civil suit is the investment agreement datd 27.02.2020, but in the complaint or charge sheet, there is no whisper about the said agreement. lt is an indisputrable fact that the de facto complainant had filed the civil suit in the year 2O23, however, as he has no prima lacie case, no interim relief was granted in the suit.

13. lt is settled law that the offences under Sections 406 and 420 of lPC, cannot subsist in the same transaction. lt is apposite to refer to a recent decision of the Hon'ble Suprme Court in Dethi Race Club (1940) Ltd., v State of llf , wherein, at paragraph Nos.30 and 43, it is held as follows: There is a distinction bebrcen qiminal bread, of ttust and dteatittg.. For cheating, qiminal intention is necr,*ry at the time of making a fat* or misleadiry rcprcsruntatk:rr i.e., sine inceptbn. ln criminat bruch of trud, merc p@f of entrudment is sutrtcbnt. fhus, in caw of criminal brcad of trust, the frender is lawfutly entrusted with the ptWW, and he distrcnestly misappropriated the same. lAlhereas, in casP- of chedirq; the offender fraudulently or dishonestly indues a per*n by tlwiving 3 zo2l tNsc 626 ly!1,9*f fry UoOertl tn sudt a sttudbn, both the ffiences cannot co.-exiy- sim ultaneously.

43. lt is high time.th! the polie oll?ccrs across the @un| are iyryftq NoNt truinins t; i;;';_t;"inaemana the fine dMrdbn bett*een thi otrerw ;;;*;;' viz_a_viz criminat breach of. trust. Both offenes a,e-noiite1nt';;; ;;A#;.,,iF; "i.rtt i6iii.-'i the same set of two offen@s cdnnd c@xist fads. They are antineticat to eiiiiJiilZ to provisions of the tE O_*, BNs, nn) ,* iit tii""tiiiii"y without each dher., "rrnot "u*ir" "f

14. IMren the Company had entered into an agrqement with the de facto amplainant and there are specific allegations against it also, the present mmplaint was lodged against the petitioner and others prosecqting them in individual capacity, without arraigning the Company as an aq:used. Hence, no vicarious tiability can be fastened on the petitioner, without the Company being arrayed as an accused. Furthenno,re, the petitioner-accused No.4 is neither a Director nor an authorizeol signatory of the Cornpany. 15' ,pon a meticurous scrutiny of the averments in the charge sheet, it is evident that the lnvesteating officer has taken considerable efiort in examining as many as 2{ witnesses; but the cheque,.which is alleged to have been issued by the petitioner to the de facfo complainant, was not collected. rErren the specific parricurars rike date of presentation of cheque and dishonor of cheque were not mentioned in the complaint. lt is not even known as to why the proceedings under N.l. Act were not initiated by the de lbcfo complainant. \ \ 11

16. ln view of the foregoing discussion and in view of the law laid down by tre Hon'ble supreme court in the aforesaid iudgments, this court is of the oonsidered view that the present proceedings arc apparenfly an abuse of the prc,cess of the Court inasmuch as the same appear to have been instituted by way of a short cut to recover the amount in question, wtrictr could otherwise, be recovered by filing a civil suit and executing the decree. ln the absence of particulars regarding the date of issuance of cheque and the date of its dishonour, coupled with the fact that a civil suit is already pending, I am of the considered opinion that it is a fit case to exercise the powers under Section 482 of Cr'P'C' and quash the proceedings against the petitioner, so as to prevent an abuse of the process of Court.

17. Accordingly, this Criminal Petition is allowed, quashing the proceedings against the petitioner-accused No-4 in C'C'No'1973 of 2022 on the file of the leamed Xll Additional chief Metropolitan Magistrate' City Criminal Courts at Nampally, Hyderabad. Pending miscellaneous applications, if any, shall stand closed' SDr-F.poNra KRISHNA 6 SECTION OFFICER To,

1. The Xll Additional Chief Metropolitan Magistrate, Nampally, HVdgr.abSd 2. the station House Officer, central crime station Police Station, Hyderabad i. t-*o CCs to Public Prosecutor, High Court for the State of Telangana at . Hyderabad [OUfl a. One CC to Sri Venkata Rangadas Kanuri, Advocate [OPUCI 'j. -1.-rr ....: t: .'!r:j" - i . a

5. One CC to Sri C' Ruthwik Reddy' Advocate [OPUCI O. f*o GD CoPies ABK/PSL w HIGHCOURT DATED: 06nU2O25 t \ ORDER CRLP.No.5692 ol2O22 I ( * T t{E s 1 6 r[8 2026 * t ( ALLQWNG THE CRTMINAL PETITTON &