The High Court · 2025

The State of Telangana, Rep by its public Prosecutor High Court of Telangana at Hyderabad Registrar of Companies, (For the State of Telangana), ll floor, Corporate Bhawan, Bandlaguda. Nagole, Hyderabad- 500 068. ... RespondenUDefacto Com plainant ...Respondent 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 quashthe criminal proceedings in CC No.7112022 pending on the file of Court of Spl Judge for Trial Cases Under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences under Sec. 7(6) R/w 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. 7112022 pending on the file of Court of Spl Judge for Trial Cases Under Economic Offences, CBI Court Complex, Nampqlly at Hyderabad for the offences under Sec. 7(6) R/w 447 of Companies Act 2013, pending disposal of the quash petition. CRIM INAL PETITION NO: 11266 OF 2025 Between: 1 . Swathi Narala, D/o Soma Narayana Malishetti, Occ.Housewife, H.No.2-2-1 137l1, New Nallakunta, Temple, Hyderabad - 500044. Aged about 33 years, Near New Ramalayam

2. Sumithra Narala, D/o. Yada H.No. 2-2-11371'l , New Hyderabad - 500044. giri Chilkuri, Aged about 55 yerars, Occ.Housewife, Nallakunta, Near New Ramalayam Temple,

3. Narala Vijay Krishna, S/o Narala Rajendra, Aged about 41 Years, Occ.Pvt Consultant, H.No.2-2-1 13711 , New Nallakunta, Hyderabad-500044. ..Petitioners;/Accused No.1 to 3 AND

1. The State of Telangana, Rep by its public Prosecutor High Court of Telangana at Hyderabad

2. Registrar of Companies, (For the State of Telangana), ll floor, Corporate Bhawan, Bandlaguda, Nagole, Hyderabad-SO0 068. ... Respondent ...RespondenUDr:facto Complainant Petition under Section 528 of BNSS praying that in the circumstances $tated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to quash the criminal proceedings in CC No.83/2022 pending on the file of Court of Spl Judge for Trial Cases Under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences under Sec T(6) Rlw 447 ot 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, lhe High Court may be pleased to stay all further proceedings in CC No.83/2022 pending on the file of Court of Spl Judge for Trial Cases Under Economic Olfences, CBI Court Complex, Nampally at Hyderabad for the offences under Sec.7(6) Nw 447 of Companies Act 2013, pending disposal of the quash petition. CRIMINAL PETITION NO: 11270 OF 2025 Between:

1. Swathi Narala, D/o Soma Narayana Malishetti, Occ.Housewife, H.No.2-2-1 13711 , New Nallakunta, Temple, Hyderabad - 500044. Age,J about 33 years, Neerr New Ramalayam

2. Sumithra Narala, D/o. Yad H.No. 2-2-113711, New Hyderabad - 500044. agiri Chilkuri, Aged about 55 years, Occ.Housewife, Nallakunta, Near New Ramalayam Temple, 3 Narala VUay Krishna, S/o Narala Rajendra, Aged about 41 Years, Occ.Pvt Consultant, H.No.2-2 -1137 11, New Nallakunta, Hyderabad-500044. ...Petitioners No. 1 to 3/Accused No.1 to 3 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 o[ T-91!!9-Qna), ll floor, Corporate Bhiwan, Bandlaguda, Nagole, Hyderabad-s00 068. ...RespondenUDefacto Com plai nant 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.6612022 pending on the file of Court of Spl Judge for Trial Cases Under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences under Sec.7(6) Rlw 447 of Companies Act 2013. t.A. NO: aF 2425 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.66/2022 pending on the file of Court of Spl Judge for Trial Cases Under Economic Offences, CBI Court Complex, Nampally at Hyderabad for the offences under Sec.7(6) Nw 447 of Companies Act 2013, pending disposal of the quash petition. These Petitions coming on for hearing, upon perusing the lMemorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri L Harish, representing Sri Praveen Kumar Challa, Advocate for the Petitioners and Sri Jithender Rao Veeramalla, Additional Public Prosecutor on behalf of the Respondent No.1 and of Sri B Narasimha, Additional Solicitor General of lndia for the Respondent No. 2. The Court made the following: COMMON ORDER '.1 1 THE HOf{'BLE SMT. JUSTICE TIRUMALA DEVI EADA CRIMINAL PETITI ON Nos.1 1229,1L?-65 an4112711 OF 2025 COMMON ORDER: crl.P.No.11229 of 2025 is filed by the petitioners - accused Nos.1 to 3 seeking to quash the proceedings in C.C.No.71 of 2022 on the file of the learned Special Judge for Trial rlases under Economic Offences, CBI Court Complex, Nampally at Hyderabad, registered for the offence under Section 7(6) read witl"r Section 447 of the Comparries Act, 2013

2. Crl.P.No.11266 of 2025 is filed by the petitioners - accused Nos.1 to 3 seeking to quash the proceedings in C.C.Nlo.B3 of 2022 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.11270 of 2025 is filed by the petitionerrs - accused Nos.1 to 3 seeking to quash the proceedings in C.C.l',1o.66 of 2022 on the file of the learned Special Judge for Trial Cases under Economic Offences, CBI Court Complex, Nampally ett Hyderabad, registered for the offence under Section 7(6) read witlr Section 447 of tlE eompanies Act, 2013. _:'_ - I ,1 ': 2

4. since the petitioners are the accused Nos.1 to 3 in all the petitions, they are heard together and disposed off by way of this common order. Heard the submissions of Sri L.Hai.ish, learned counsel representing Sri Praveen Kumar Chaila, learned counsel for the petitioners and Sri B.Narasimha sharma, learned Additional Solicitor General of lndia for respondent No.2.

5. The learned petitioners counsel has submitted that the allegations do not attract the ingredients of section 7(6) of the companies Act, 2013 and that accused Nos.l anc.l 2 are the rlii'ectors/officers-in-default of the company, accused No.3 is the Practicing company secretary and accusecl No.4 is the company. He further submitted that the altegations 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. lle further submitted that the said allegations do not point out any offence against the petitioners. He therefore, prayed to quash the proceedings against the petitioners. ..t ^ 3

6. The learned Additional Solicitor General ,rf lndia has submitted that the petitioner No 3 herein is the Company Secretary and there is iegal foundation for the alleged offences and the prima facie contents of the complaint do attract the offena:s against the petitioner. He further submitted that by virtue of the Orders of the Government of lndia, Ministry of Corporate Affairs (fulCA), accused No.4 company was ordered for lnquiry by the Ministry'vide its letter dated 03.09.2021 to inquire into the sustained involvement of Chinese Nationals in fraudulent and money laundering activities through companies registered in lndia. An lnquiry Officer was appointed to visit the registered office of tlrese cornpanies and in the instant case, one such company being the ,A4 company has been incorporated with the involvement of Chinese Nationals who were operating fake websites and using telegram erpp to defraud innocent victims. lt has been reported that thery created 12 companies and one such company is the A4 company and instructed locals/Directors to open bank accounts of these fake companies, which were controlled by the Chinese nationals. lt was further found on verification that the Practicing Company Secretary (PCS) has certified the location of registered office of the company showing at a place mentioned against the name of their company respectively. He further certified and signed ther incorporation I i 4 (:l documents (sPlcE), DIN applicatiorr, situation of registered office submitted through ontine MCA portat by stating that',any false or incorrect particulars of any information or suppression of any material informatiott shall attract punishment for fraud section 447, 448 and 449 of the companies Act, 2013 which provide for false statement and for false evidence respectively and t shall be tiabte for action under section 448 of the companr'es Act, 2013 for wrong certification, if any found at any sfage". Thus, the learned ASG has prayed to dismiss the petition.

7. Perused the recci'd. B. lt is pertinent to refer section 7(6) and 442 of the companies Act, 2013 and the same is extracted hereunder: "7. tncorporation of company - (6) without prejudice to the provisions of sub-section (5) 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 decliration 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 liabte for action under section 447." "447. Punishment for fraud - without prejudice to any liabitity 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. ProvideC further that where the fraud involves an amornt less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interesJ.. any person guilty of such fraud shall be punishable with imprisonmt.'nt for a term which may extend to five years or with fine which may oxtend to fifty lakh rupees or with both. Explanation.-For the purposes of this section- (i) "fraud", in relation to affairs of a company or anybody corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the cornpany or its shareholders or its creditors or any other person, whelher or not there is any wrongful gain or wrongful loss; (ii) "wrongful gain" means the gain by unlaMul means of property to which the person gaining is not legally entitled; (iii) "wrongful loss" means the loss by unlarivful means of property to which the person losing is legally entitled."

9. The record points out serious allegations against the petitioners herein. The accused No.3, is alleged to have certified the certificates of incorporation of accused No.4 company. lt is further alleged that he has created certain dummy accounts and diverted the amounts into the said account. lt is further alleged that the accused No.4 Company is not carrying out its business at the registered address and also not carrying out the activities as mentioned under its registration. lt is also alleged that accused No.3 has made his family members/colleagues as directors i.e. 6 .'-l accused Nos.1 and 2 in the accused No.4 company with an intention to defraud the gullible investors to facilitate the Chinese nationals to be ultimate beneficiaries. Therefore, prima facie allegations point out the alleged offences against the petitioners herein. Hence, the petitions lack merits, therefore, the same are liable to be dismissed.

10. ln the result, the Criminal Petitions are dismissed. Miscellaneous applications pending, if dny, shall stand closed //TRUE COPY// Sd/. T. SRINIVASA REDDY ASSISTANT REGISTRAR i il.''ti'-, ctloN o i SE FFICER To,

1. The Special Judge for Trial Cases Under Economic Offences, CBI Court Complex, Nampally, Hyderabad

2. Two CCs to 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, Additional Solicitor General of lndia, [OPUC] 5. Two CD Copies ABK/karn YY HIGH COURT DATED: 1510912025 .,/ COMMON ORDER CRLP Nos: 1 1229, 11266 and 1 1270 OF 2025 /'. - \ l'.t;"' il i: li i,,r 17 t.l0lJ ?frfi I :_ r :n- '- ir E: .,r ':' .- 1,. , -.( \ * DISMISSING THE CRIMINAL PETITIONS auc'L % X.-