CRLP/7533/2024 of Adapa Rama Krishna Vs The State of Telangana on 20 February 2026

ORDER

This Criminal Petition is filed by the pet I oner-accused No.2 seeking to quash the proceedings a yainst him in CC.No.627 of 2018 (oldC.C.No.45of 2013)or,thefileof the learned I Additional Judicial First Class \4agistrate at Kothagudem, registered for the offence under ]ection 42O of the lndian Penal Code (for short 'lpC') 02 Heard Sri V. Satyanarayana Fr rsad, learned counsel for the petitioner-accused; Sri M Ramachandra Reddy, learned Additional public prosecutc,r for the State and Sri P. Animi Reddy, learned counsel for the respondent No.2 Perused the material on record.

03. The case of the prosecution, in brief, is that the petitioner-accused No.2, along with the accused No.'l , allegedly started a business in the name and style of Amar Cotton Oil Mills Private Limited at Guntur. lt is alleged that, in connection with the said business, the accused persons used to purchase cotton from farmers and traders in Chandrugonda and Kothagudem Mandals. lt is the further alleged that during the year 2009, the accused persons purchased cotton from LW1 to LW1 1 and issued sixteen cheques on different dates towards payment of the sale consideration amounting to Rs.1 ,1 1 ,31 ,000/-. lt is alleged that on 28.08.2009, when the respondent No 2 approached the bank for withdrawal of the cheque amount, the bank authorities, after verifying the account, issued a certificate stating that there were insufficient funds in the account of the account holder. lt is further alleged that some of the other alleged victims also approached the said bank and faced a similar situation with regard to dishonour of the cheques issued to them. Hence, the respondent N:2 lodged a complaint against the accused persons for the c ffence under Section 42O of IPC 04 Learned counsel for the petitioner submits that the petitioner-accused No.2 is nothing to do wl r the alleged offence. lt is contended that no dishonest rr fraudulent intention can be attributed to the petitioner-::cused No.2 from the inception of the transaction. All t-: allegations leveled against the petitioner-accused No ll are civil in nature. lt is further submitted that there is n,: incriminating material on record to substantiate the allel ations made against the petitioner-accused. The responderr No.2 instead of filing the case under Section 138 of il-: Negotiable lnstruments Act, filed the present false case rnder Section 420 of IPC The respondent No.2 did not arra) the company as accused The dispute, if any, is purely civi n nature, and the respondent No.2 is attempting to give a cr r rinal colour to a civil dispute. lt is further submitted that I is Court vide Order dated 13.07.2022 passed in CRL.p.No 2066 of 2013 quashed the proceedings against the accused No.1. The contents of the charge sheet do not disclose the necessary and essential ingredients required to constitute the offence under Section 420 of the IPC

05. With the above submissions, learned counsel for the petitioner-accused while praying for the quashment of criminal proceedings relied upon a decision of the Honourable Supreme Court in Sripati Singh (since deceased) through his son Gaurav Singh v. The State of Jharkhand and anothe/, wherein it was held at Paragraph Nos.'11,12&22lhal'. "!!. ln the background of what has been taken note by us and the conclusion reached by the High Court, insofar as the High Coud aniving at the conclusion that no case punishable under Section 420 IPC can be made out in these facts, we are in agreement with such conclusion. Ihls is due to the fact that even as per the case of the appellant the amount advanced by the appellant is towards lhe buslness transaction and a loan agreement had been entered into between the parties. lJnder the loan agreement, the peiod for repayment was agreed and the cheque had been lssued fo ensure repayment. lt is no doubt true that the cheques when presented for realisation were 1 Criminal Appeat Nos.1269-1270 of 2021 (Arrsing out of SLP(Criminal) No.252-253n020

-v dishonoured. The mere dishonourment of the cl\ que cannot be construed as an act on the paft oi the respondent No.2 with a deliberate intention to c teat and the mens rea in that regard cannot be gat red from the point the amount had been received. tt the present facts and circumstances. there is no sulrt :ient evidence to indicate the offence under Sectiol 420 IPC is made out and therefore on that aspect, A.( see no reason to inteiere with the conclusion react t d by the High Courl.

12. Having arrived at the above conclusion an: also having taken note of the conclusion reached t r the High Courl as extracted above, it is noted thz I the High Courl has itself arrived at the conclusion flt ,t the instant case becomes a simpliciter case o, non- refunding of loan which cannot be a basis for init ating criminal proceedings. The conclusion to the ext ,nt of holding that it would not constitute an offe t :e of cheating, as already indicated above wout I be justified. However, when the High Couft ltsr;, . has accepted the fact that it is a case of non refunc ng of the loan amount, the first aspect that there is a t >gatty recoverable debt from the respondent No.2 , t the appellant is primafacie estabtished. The onty q t >stion that therefore needs consideration at our hanct: is as to whether the contention putforth on be\ ilf of respondent No.2 that an offence under Sectior, ,3g of the N.l. Act is not made out as the dishonct. rment alleged is of the cheques which were issuect L r way of 'security' and not towards discharge of any c,t bt.

22. These aspects would primafacie indicate that there was a transaction between the parties towards which a legally recoverable debt was claimed by the appellant and the cheque issued by the respondent No.2 was presented. On such cheque being dishonoured, cause of action had aisen for issuing a notice and presenting the criminal complaint under Sectlon 138 of N.l. Act on the payment not being made. The further defence as to whether the loan had been discharged as agreed by respondent No.2 and in that circumstance the cheque which had been issued as security had not remained live for payment subsequent thereto etc. at best can be a defence for the respondent No.2 to be put forth and to be established in the tnal. ln any event, it was not a case for the Coui to either refuse to take cognizance or to discharge the respondent No.2 in the manner it has been done by the High Court. Therefore, though a criminal complaint under Section 420 IPC was not sustainable in the facts and circumstances of the instant case, the complaint under section 138 of the N.l Act was maintainable and all contentions and the defence were to be considered duing the course of the trial."

06. On the other hand, learned Additional Public Prosecutor appearing for the State-respondent No.1 as well as the learned counsel for the respondent No.2 contended that there are triable issues and factual aspects to be examined by the learned trial Court and it is nr t a fit case to quash the proceedings against the petitioner : this juncture and the matter is to be decided after conducli rg trial by the learned trial Court and prayed to dismiss this Criminal Petition

07. ln order to attract the provisions of iection 42O of the lPC, it is a well-settled principle of law tt at there must exist a dishonest or fraudulent intention ir deceive the complainant right from the very inception of .l e transaction Mere failure to fulfil a promise or mere non-rr: tayment of an amount, in the absence of such initial dish:rest intention would not constitute the offence of cheatitg punishable under Section 420 of IPC

08. A careful perusal of the materie I available on record demonstrates that the dispute essentiil ly arises out of business transactions relating to purchase of cotton and issuance of cheques towards payment. Er:n as per the prosecution case, the gravamen of the allegz tion is that the cheques issued towards payment were dislr noured due to n'/ -)'

B insufficiency of funds. Such allegations, in the absence of specific material indicating fraudulent or dishonest intention from the inception of the transaction, would at best give rise to civil liability or proceedings under the Negotiable lnstruments Act, but would not satisfy the essential ingredients required to constitute the offence of cheating under Section 420 of IPC

09. lt is also relevant to note that the company, through which the alleged business transactions were carried out, was not arrayed as an accused in the present case. ln the absence of arraigning the company, and in the absence of specific and clear allegations demonstrating the individual role and culpable intention of the petitioner-accused No.2, continuation of criminal proceedings against the petitioner would amount to abuse of process of law

10. lt is further pertinent to note that the investigation conducted after registration of the FIR and prior to filing of the charge sheet constitutes a crucial stage in criminal proceedings. The charge sheet is expected to reflect the

I outcome of such investigation and must be s upported by material evidence sufficient to prima facie r stablish the alleged offences. However, in the pres€ r t case, to substantiate the basic allegations against tf = petitioner- accused, no independent witness has been exil nined by the lnvestigating Officer. Out of the nineteen witne sses cited in the charge sheet, eleven are complainants and alleged victims, two are panch witnesses for CDF prc< eedings, two are panch witnesses for the alleged confessiorr rl statements of the accused, and the remaining four are p rlice officials Thus, there is no independent corroborativt: evidence to support the prosecution verston against 1t e petitioner- accused No 2

11. The entire set of allegations revoh,, 's around the alleged failure of the accused to repay the ar rounts due to the complainant and other alleged victims lt is also an admitted fact that the cheques were issued by 1 re accused in favour of the complainant and others, whir: I prima facie indicates that the accused had intended t honour the payments. lssuance of cheques, by itselt, indicates an intention to discharge liability, which is against the allegation of fraudulent intention at the inception of the transaction. As the cheques were dishonoured, the complainant and other alleged victims had a statutory remedy under the provisions of the Negotiable lnstruments Act

12. ln view of the aforementioned facts and circumstances and having regard to the well-settled principles of law enunciated by the Honourable Supreme Court in the decision referred supra, this Court is of the considered view that the essential ingredients necessary to constitute the offence under Section 420 of IPC are not made out against the petitioner-accused No.2. Hence, the continuation of the criminal proceedings against the petitioner-accused No.2 amounts to abuse of process of law and the same are liable to be quashed

13. Accordingly, this Criminal Petition is allowed and the criminal proceedings against the petitioner-accused No.2 in C.C.No.627 of 2018 (old C.C.No.45 of 2013) on the file of the learned I Additional Judicial First Class lr, agistrate at Kothagudem, are hereby quashed As a sequel, pending miscellaneous a1t tlications, rf any, shall stand closed SD/- T C.SULEKHA DEVI ASSIIJ;ANT REGISTRAR f\ SECTION OFFICER The lAdditional Judicial First Class Magistrate' at Kothag rdem The Station House Officer , Kothagudem I Town Poli; : Station' Khammam District Two CCs to the Public Prosecutor, High Court for the I ate of Telangana' at Hyderabad. (OUT) One CC to SRl. V- SATYANARAYANA PRASAD' Advcc :te IOPUC] One CC to Sri P.ANlMlREDDY,Advocate [OPUC] Two CD CoPies J

I/TRUE COPY// To,

KUT,/PSi I I

HIGH COURT DATED: 2010212026

ORDER

CRLP.No.7533 ot 2024 ALLOWING THE CRL.PETITION J Lqt4 ( -h 'i ,) ?l f a |J llll n 1( l\) _|s Dcs I ,\TcY 1L * *