The High Court · 2025

This Petition coming on for hearing, upon perusing the lVlemorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri L. Harish, counsel representing Sri Praveen Kumar Challa, Advocate for the Petitioner and Mr. Jithender Rao Veeramalla, Additional Public Prosecutor on behalf of the Respondent No.1 and of Sri B. Narasimha Sharma, Additional Solicitor General of lndia for the Respondent No.2. Criminal Peti tion No.1{190 of2025 Between: Narala Vijay Krishna, Sio Narala Rajendra, Age: 41 years, Occ: Pvt Consultant, H.No.2-2-1 13711 . New Nallakunta, Hyderabad- UOOOOO."",,,,oner/Accused No.1 AND

1. The State of Telangana, Rep by its public Prosecutor High Court of Telangana at Hyderabad Regisirar of Companies, (For the State of Telangana), ll floor, Corporate Bhawan, Bandlaguda, Nagole, Hyderabad- 500 068. ...Respondent 2 ...RespondenU Defacto Complainant Petition under Section 528 of BNSS praying that in the circumstances stated in the Memorandum of Grounds of criminal Petition, the High court may be pleased to quash the criminal proceedings in CC No. 44 ot 2023 pending on the file of Honble court of Spl Judge for Trial cases Under Economic offences, CBI Court Complex, Nampally at Hyderabad for the offences Sec. 7(6) Rlw 447 of Companies Act 2013. l.A. NO: 1OF 2025 Petition under Section 528 of BNSS 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 in CC No. 44 ot 2023 pending on the file of Hon'ble Court of Spl Judge for Trial Cases under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences Sec. 7(6) Rlw 447 of Companies Act 2013, pending disposal of the quash petition. This Petition coming on for hearing, upon perusing the Memorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri L. Harish, counsel representing sri Praveen Kumar Challa, Advocate for the Petitioner and Mr. Jithender Rao Veeramalla, Additional Public Prosecutor on behalf of the Respondent No.'l and of Sri B. Narasimha Sharma, Additional Solicitor General of lndia for the Respondent No.2. Cri minal Petition No.'t 1192 ot 2025 Between: Narala Vijay Krishna, S/o Narala Rajendra, Aged about 41 years' Occ: Pvt Consultant, H.No.2-2-113711, New Nallakunta, Hyderabad-500044. ...Petitioner/Accused No.1 AND

1. The State of Telangana, Rep by its public Prosecutor High Court of Telangana at Hyderabad ... Respondent 2. Registrar of Companies, (For the State of Telangana), ll floor, Corporate Bhawan, Bandlaguda, Nagole, Hyderabad-500 068 ...RespondenU Defacto Complainant Petition under Section 528 of BNSS praying that in the circumstances stated in the [Vlemorandum of Grounds of Criminal Petition, the High Court may be pleased to quash the criminal proceedings in CC No.45 of 2023 pending on the file of Hon'ble Court of Spl Judge for Trial Cases under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences Sec.7(6) R/w 447 of Companies Act 2013. l.A. NO: 1 OF 2025 Petition under Section 528 of BNSS 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 in CC No.45 of 2023 pending on the file of Hon'ble Court of Spl Judge for Trial Cases under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences Sec.7(6) R/w 447 of Companies Act 2013, pending disposal of the quash petition. This Petition coming on for hearing, upon perusing the [t/emorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri L. Harish, counsel representing Sri Praveen Kumar Challa, Advocate for the Petitioner and Mr. Jithender Rao Veeramalla, Additional Public Prosecutor on behalf of the Respondent No.1 and of Sri B. Narasimha Sharma, Additional Solicitor General of lndia for the Respondent No.2. The Court made the following: COMMON ORDER .../ ,':/ I THE HON'BLE SMT. JUSTICE TIRUMALA DEVI EADA CRIMINAL PETITION Nos.l11 86, 1 1 1 90 and 1 1192 OF 2025 COMMON ORDER: Crl.P,No.11186 of 2025 is filed by the petitioner - accused No.1 seeking to quash the proceedings in C.C.No.43 of 2023 on the file of the learned Special Judge for Trial Cases under Economic Offences, CBI Court Complex, Nampally at Hyderabad, registered for the offence under Section 7(6) read with Section 447 of the Companies Act, 2013.

2. Crl.P.No.11190 ot 2025 is filed by the petitioner - accused No.1 seeking to quash the proceedings in C.C.No .44 of 2023 on the file of the learned Special Judge for Trial Cases under Economic Offences, CBI Court Complex, Nampally at Hyderabad, registered for the offence under Section 7(6) read with Section 447 of the Companies Act, 2013.

3. Crl.P.No.11192 of 2025 is filed by the petitioner - accused No.1 seeking to quash the proceedings in C.C.No .45 of 2023 on the file of the learned special Judge for Trial cases under Economic Offences, CBI Court Complex, Nampally at Hyderabad, registered for the offence under section 7(6) read with section 44T of the Cdmqan ies Act, 2013 i l i i1ii I ; i i i: i .,

4. Since the petitioner is the accused No.1 in all the petitions, they are heard together and disposed off by way of this comnlon order. Heard the submissions of Sri L.Harish, learned counsel representing Sri Praveen Kumar Challa, learned counsel for the petitioner and Sri B.Narasimlta Sharma, learned Additional Solicitor General of lndia for respondent No.2

5. The learned petitioner counsel has submitted that the allegations do not attract the ingredients of Section 7(6) of the Companies Act, 2013 and that accused No.1 is the Company Secretary and accused No.2 is the Company. He further submitted that the allegations that the company is not functioning at the given address and that it is not doing any software business as mentioned by it during its registration and that they are conducting fraudulent transactions is all false. He further submitted that none of the victims have given a complaint, therefore question of deceiving anybody does not arise. He further submitted that the said allegations do not point out any offence against the petitioner who is accused No.1 and the cognizance order dated 02.11.2023 is also defective and that cognizance is taken only against accused No.1 and accused No.2 is arrayed as proforma party, which is very \ ' .,// ,/, 'ii+q*fr8+HE?zryjs - t.itl*" ,' nJ. 3 wrong. He therefore, prayed to quash the proceedings against the petitioner.

6. The learned Additional Solicitor General of lndia has submitted that the petitioner herein is the Company Secretary and there is legal foundation for the alleged offences and the pima facie contents of the complaint do attract the offences against the petitioner. He further submitted that by virtue of the Orders of the Government of lndia, Ministry of Corporate Affairs (MCA), accused No.2 company was ordered for lnquiry by the Ministry vide its letter dated 08.10.2021 to inquire into the sustained involvement of Chinese Nationals in fraudulent and money laundering activities through companies registered in lndia. During the course of lnquiry, it was found that accused No.2 company was not operating at the registered office and it was found that there is no such company existing in the premises. lt is has been reported by the lnquiry Officer that A2 company in its memorandum of association stated that its business is to carry on the technical consulting of mobile application, e-commerce etc., but it is doing its business activities contrary to its objects mentioned in the MOA which is prejudicial to the interest of general public. lt is further submitted in the lnquiry Report that as per the statement on oath given by the l ,r/ 4 Practicing Company Secretary i.e. the accused No.1, has certified the incorporation of documents and that he developed acquaintance with Chinese lndividuals through his friends and at their behest, the PCS incorporated the accused No.2 company and they wanted certain people to be as dummy directors and authorized signatory of bank accounts, thus accused No.1 has appointed his wife namely Swathi Narala and his mother namely Sumithra Narala as dummy directors to appropriate remuneration for himself. lt was further reported by the lnquiry Officer that as per the statements of accused No.1, the accused No.2 company has not been carrying out any activities as stated in the MOA. lt was further found on verification that the Practicing Company Secretary (PCS) has certified the location of registered office of the con'rpany showing at a place mentioned against the name of their company respectively. He further certified and signed the incorporation documents (SPICE), DIN application, situation of registered office submitted through online MCA portal by stating that "any false or incorrect pafticulars of any information or suppression of any material information shall attract punishment for fraud section 447, 448 and 449 of the Companies Act, 2013 which provide for false statement and for false evidence respectivety and I shatl be liable for ac[on under Section 448 of the Companies Act, 2013 for wrong '\ ./ i i ) i I ltItIeI I I I x t I I I I I f, certification, if any found at any sfage". Thus, the learned ASG has prayed to dismiss the petition.

7. Perused the record.

8. lt is pertinent to refer Section 7(6) and 447 of the Companies 4ct,2013 and the same is extracted hereunder: "7. lncorporation of company - (6) Without prejudice to the provisions of sub-section (S) where, at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of sub-section(1) shall each be liable for action under section 447." "447. Punishment for fraud - Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, involving an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever is lower shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud: Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years. Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to fifty Iakh rupees or with both. ) , Explanation.-For the purposes of this section- f' I i 'l t: t i 1 6 l (i) "fraud", in relation to affairs of a ccmpany or anybody corporate, includes any act, cmission, concealment of any iact or abuse of position committed by any person or any other person rrvith the connivance in any manner, witlr intent to Ceceive, to gain uirdtre advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, wtrether or not there is a;ry wrongful gain or r,,rrongful loss; (ii) "wrongful gain" means tlre gain hy unlawful means of p:-operty to which the person gaining is rrot legally entitled; (iii) "wrongful loss" meatls the loss by unlawful means of propedy to whiclr the person losing is legally entitled."

9. The record points out serious ailegations against the petitioner herein. The petitioner is accused No.1, he is alleged to have certified the certificates of incorporation of accusecl No.2 company. lt is further alleged that he has created ceftain dummy accounts and diverted the amounts into the said account. lt is further alleged that the accused No.2 Company is not carrying out its business at the registered address and also not carrying out the activities as mentioned under its registration. Therefore, prima facie allegations point out the alleged offences against the petitioner herein. Hence, the petitions lack merits, therefore, the same are liable to be dismissed.

10. ln the result, the Criminal Petitions are dismissed. In 1$ t 7 [/liscellaneous applications pending, if any, shall stand closed SD'- A.JAYASREE T REGISTRAR ASSIST //TRUE COPY// OFFICER s, CBI Court To,

1. The Special Judge for Trial Cases under Economic Complex, NamPallY at HYderabad

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

3. One CC to Sri Praveen Kumar Challa Advocate [OPUC] 4. One CC to Sri B. Narasimha Sharma, Additional Sollcitor General of lndia loPUCl

5. Two CD Copies Kam/PSL, YY HIGH COURT DATED:1 510912025 t COMMON ORDER CRLP.Nos.l 1 186, 11 190 and 1 1192 ot 2025 .\: =:=:>- l:-tE I;) 4r r)B o; (1\ B 4 ilEt/ zut J .) i * ;2 DISMISSING OF THE CRIMINAL PETITIONS ,Sdg H,..