Telangana High Court
Mr.Sohan Singh And Another vs The State Of Telangana And Another on 31 October, 2025
THE HONOURABLE SRI JUSTICE J. SREENIVAS RAO
+ CRIMINAL PETITION No.2598 OF 2021
% Dated 31.10.2025
# Mr. Sohan Singh, S/o.Mr. Manoharlal,
Aged: 42 years, Occ: Employee,
Currently R/o.House No.195, Ground Floor,
Nagasandra 2nd Main, Near Nagasandra Circle,
Bangalore, Karnataka - 560 028 and another.
....Petitioners
VERSUS
$ The State of Telangana,
Represented by the Public Prosecutor
High Court for the State of Telangana
Hyderabad and another
... Respondents
! Counsel for Petitioners : Mr.Ch. Venu Kumar
^ Counsel for Respondents : Mr. G. Adithya Goud (R.2)
Mr. M. Vivekananda Reddy
Assistant Public Prosecutor (R.1)
< GIST:
> HEAD NOTE:
? CITATIONS:
1. (2015) 6 SCC 287
2. (2022) 6 SCC 167
3. (2006) 6 SCC 207
4. (2020) 10 SCC 92
5. (2009) 8 SCC 751
6. (1992) Supp (1) SCC 335
7. (2009) 8 SCC 257
8. (1906) AC 439 (HL)
9. (2010) 11 SCC 374
10. (2015) 1 SCC 103
11. (2019) 5 SCC 384
12. 2020 SCC OnLine TS 1577
13. (2019) 14 SCC 350
2
THE HONOURABLE SRI JUSTICE J. SREENIVAS RAO
CRIMINAL PETITION No. 2598 of 2021
ORDER:
This Criminal Petition has been filed under Section 482 of the Code of Criminal Procedure, 1973, (for short, 'the Cr.P.C.) by the petitioners/accused Nos.4 and 5 seeking to quash the proceedings in C.C.No.13010 of 2020 on the file of the XII Additional Chief Metropolitan Magistrate, Hyderabad, for the offences under Sections 406, 420, 463, 465, 468, 471 and 409 read with 34 of the Indian Penal Code, 1860 (for short, 'the IPC').
2. Brief facts of the case:
2.1. The complainant, M/s Metrochem API Private Limited, is a Hyderabad-based private limited company engaged in the manufacture and sale of bulk drugs, drug intermediates, and drug pellets. On 19.10.2019, a complaint was lodged by the Head-HR of the company, alleging that a serious financial fraud had been committed by its employee, Yerra Sudhakar, who was working as Assistant Manager (Purchase), in conspiracy with the Director of M/s P. Praful & Company Agency India Pvt. Ltd.
(the vendor company) and officials of M/s Canbank Factors Pvt. Ltd., Ahmedabad (a factoring company). The complainant company had genuine business dealings with the said vendor till February 2019, which were duly completed and settled by May 2019. Thereafter, without any further supplies being made, 3 the accused persons allegedly conspired to fabricate five forged tax invoices by misusing an un-cancelled Purchase Order No. RM182132, showing fictitious supplies worth Rs. 6,24,92,800/-. 2.2. Accused No. 1, abusing his position, falsely confirmed receipt of goods through official emails, while Accused Nos. 2 and 3 (vendor company) generated fake invoices and delivery challans. These documents were then submitted to Canbank Factors Pvt. Ltd., where petitioner No.1, the Branch Head, processed the invoices for factoring without verification from the complainant's Chief Financial Officer or checking e-way bills, thereby facilitating the fraudulent release of funds. Further investigation revealed that the transporter's consignment note was also fabricated, as the vehicle mentioned was incapable of carrying the alleged load. The forged documents were concealed from the company's stores and accounts departments, and were dishonestly used to induce financial disbursement from the factoring company.
2.3. The investigation established that no goods corresponding to the invoices were ever supplied and that the acts of the accused were part of a well-planned conspiracy involving forgery, fabrication of electronic records, and dishonest inducement to obtain funds. Basing upon the said complaint, Crime No.239 of 2019 was registered and the Investigating Officer after conducting investigation filed final report before the 4 XII Additional Chief Metropolitan Magistrate, Nampally, Hyderabad, and the said Court has taken cognizance for the offences under Sections 120-B, 406, 420, 463, 465, 468, 471 and 403 IPC, as well as Sections 43 and 66 of the Information Technology Act, 2000. Hence, the petitioners filed the present criminal petition seeking to quash the proceedings in C.C.No.13010 of 2020.
3. Heard Mr. Deepak Bhattacharya, learned Senior Counsel, representing Mr. Ch. Venu Kumar, learned counsel for the petitioners, Mr. P. Raja Sripathi Rao, learned Senior Counsel, representing Mr. G. Adithya Goud, learned counsel for respondent No.2, and Mr. M. Vivekananda Reddy, learned Assistant Public Prosecutor appearing for respondent No.1 State.
4. Submissions of learned counsel for the petitioners:
4.1. Learned Senior Counsel submitted that the entire allegations levelled in the complaint are purely civil in nature and contractual issue arising out of regular factoring transaction. However, respondent No.2 with a malafide intention implicated the petitioners as an accused, though they have not forged any document and also there is no dishonest intention to cheat respondent No.2. Hence, the ingredients of Sections 406, 420, 463, 465, 468, 471 and 409 of the IPC do not attract against the petitioner. He further submitted that 5 petitioner No.2-M/s. Canbank Factors Limited is registered with Non-Banking Financial Company (NBFC) under RBI guidelines, engaged in factoring and bill discounting. Accused No.3-
M/s.P.Praful and Company Agency India Private Limited used to regularly factor invoices towards supply of material to respondent No.2-M/s. Metrochem API Private Limited. The invoices were factored basing on undertaking to make payment to petitioner No.2 Canbank on or before due date of accepted credit period of 90/120 days and also obtaining invoice confirmation by respondent No.2. Further, the above arrangement of factoring was supplemented by the letter of undertaking dated 05.11.2015 executed by respondent No.2. Respondent No.2 made payments duly on the factored invoices on time to time, without any objection. The five invoices for an amount of Rs.6,24,92,800/- were defaulted by respondent No.2, though they were confirmed as genuine. To avoid the said payments, respondent No.2 lodged a false complaint. The police, without properly conducting investigation, filed the charge sheet.
4.2. He further submitted that the complaint lodged by respondent No.2 before the Sub-Inspector of Police, CCS, DD, Hyderabad, is not maintainable under law and the said police are not having any power and authority to conduct investigation on the ground that they are not having jurisdiction, as accused 6 Nos.2 and 3 as well as the petitioners are in Ahmedabad of Gujarath State. Hence, the learned XII Additional Chief Metropolitan Magistrate, Hyderabad, is not having jurisdiction to take cognizance.
4.3. He further submitted that accused No.1 was the Assistant Manager (Sales) of respondent No.2 Company and he was the authorized signatory and all the correspondence was undertaken by him. Respondent No.2 used to send e-mails, which were signed by accused No.1, stating that the goods were delivered in good condition. Basing upon the same, petitioner No.2 credited the amount into the account of accused No.2 and the petitioners have not forged any invoices or consignment notes or e-way bills. Even according to the complaint, there are no specific allegations against the petitioners that they created fake invoices.
4.4. He further submitted that respondent No.2 in the complaint stated that all invoices of accused No.3 were delivered by 29.05.2019 and ledger account shown as '0' balance is not true and correct, since respondent No.2 has paid the amounts in favour of accused No.3 company in the months of June and July, 2019.
4.5. He further submitted that the Doctrine of indoor management is applicable to the present case. Respondent No.2 is bound by acts of its own employee, who was authorized to 7 communicate. As per RBI master directions, on frauds applicable to NBFCs (Non-Banking Financial Company), should referred to the C.B.I. Hence, the continuation of proceedings against the petitioners is clear abuse of the process of law. 4.6. In support of his contention, he relied upon the judgments:
1. Priyanka Srivastava and another v. State of Uttar Pradesh and others 1;
2. V.G. Jagdishan v. Indofos Industries Limited 2;
3. Om Prakash Srivastava v. Union of India and another 3;
4. Kaushik Chatterjee v. State of Haryana and others 4;
5. Mohammed Ibrahim and others v. State of Bihar and another 5; and
6. State of Haryana and others v. Ch. Bhajan Lal and others 6.
5. Submissions of learned counsel for respondent No.2 5.1. Per contra, learned counsel submitted that accused Nos.1 to 3 in collusion with the petitioners created fictitious documents and raised five fake invoices amounting to Rs.6,24,92,800/-, without supplying material to respondent No.2. The said invoices were never received by respondent No.2 1 (2015) 6 SCC 287 2 (2022) 6 SCC 167 3 (2006) 6 SCC 207 4 (2020) 10 SCC 92 5 (2009) 8 SCC 751 6 (1992) Supp (1) SCC 335 8 company in due course of business. He further submitted that respondent No.2 company has taken final delivery of last consignment of goods from accused No.3 company on 07.02.2019 through invoice No.HY1800022 dated 06.02.2019 and the same was duly accounted for in the normal course of purchase and all the invoices of accused No.3 company were settled by 29.05.2019 and the ledger accounts shows as '0' balance and thereafter, respondent No.2 has not received any consignment of goods from accused No.3 company. Subsequently, petitioner No.2 sent e-mail on 10.10.2019 claiming certain invoices factored by accused No.2 and 3 are overdue and make arrangement for payment. At that stage, respondent No.2 company came to know that accused Nos.1 to 3 conspired with the petitioners perpetrated the fraud of forging the invoices for an amount of Rs.6,24,92,800/-, though respondent No.2 has not received any consignment of goods in respect of the alleged invoices.
5.2. He further submitted that there are specific allegations levelled against the petitioners that on the basis of e-mail sent by accused No.1, petitioner No.1 processed the false invoices of accused No.2, e-way bills and realized the above said amount and credited into the account of accused No.2 at his Bank at Allahabad, without verifying the facts with the Chief Financial Officer of respondent No.2 company and without observing e- 9 way bills, petitioner No.1. Hence, the ingredients under Sections 420, 409 and 471 of the IPC are attracted against the petitioners. The Investigating Officer after recording the statements of eleven (11) witnesses filed the charge sheet, wherein also specific allegations are levelled against the petitioner and the learned XII Additional Chief Metropolitan Magistrate, Hyderabad, has rightly taken cognizance and the said Court is having jurisdiction to take the cognizance. 5.3. He further submitted that petitioner No.2 had approached National Company Law Tribunal, Hyderabad Bench-II, Hyderabad, (for short, 'NCLT') and filed Company Petition No.IB/86/2021 under Section 7 of the IB Code, 2016 against respondent No.2 and the said petition was dismissed on 28.09.2022 and the said order has become final and the petitioners have suppressed the above said fact in the present criminal petition.
5.4. He further submitted that respondent No.2 is a victim and all the offences has taken place at Hyderabad and the police rightly conducted investigation and filed a charge sheet before the learned XII Additional Chief Metropolitan Magistrate, Nampally, Hyderabad.
5.5. He further submitted that as per the RBI guidelines cited by the petitioners do not override the penal provisions, especially the petitioners with a conspiracy, forged and 10 fabricated the invoices and misused the bank procedures. The learned Magistrate has rightly taken cognizance for the offences under Sections 420, 409 and 471 of the IPC.
5.6. He further submitted that the Doctrine of Indoor Management cannot protect the parties who are active participants in fraud. Petitioner No.2, without performing due diligence, blindly relied upon the unauthorized e-mails issued by accused No.1, remitted the huge amount into the account of accused No.2 Bank, in the absence of any delivery of goods in favour of respondent No.2. The Investigating Officer in the charge sheet specifically mentioned that the vehicle belongs to LW.10 was engaged to transport the paint material for Berger Company to various places at Suryapet, Kodad and Khammam, on 27.05.2019 and 28.05.2019 and for that it discloses, that said vehicle was not available in Hyderabad. Hence, the invoices, e-way bills and consignment note regarding the transportation of 100 barrels on 28.05.2019 are false documents.
5.7. There are specific allegations against the petitioners. The grounds raised by the petitioners are disputed facts and the same has to be adjudicated by the trial Court after full-fledged trial only. Hence, the criminal petition filed by the petitioners is liable to be dismissed.
115.8. In support of his contention, learned Senior Counsel relied upon the judgment of the Hon'ble Apex Court in Sardar Associates and others v. Punjab and Sind Bank and others 7.
6. Learned Assistant Public Prosecutor reiterated the submissions of respondent No.2.
Analysis:
7. Having considered the rival submissions made by the respective parties and after perusal of the material available on record, it reveals that respondent No.2 is a Private Limited Company incorporated under the provisions of the Companies Act, 1956, and having corporate office at Erragadda, Hyderabad. The said company is engaged in manufacture and sale of bulk drugs also known as Active Pharma Ingredients, bulk drug intermediates and drug pellets.
8. The record further reveals that respondent No.2 lodged a complaint on 19.10.2019 stating that on 10.10.2019, the Chief Financial Officer received e-mail from petitioner No.2 claiming certain invoices factored by accused Nos.2 and 3 are overdue and make arrangement for payment. Upon verification, respondent No.2 company came to know that the accused Nos.2 and 3 are in conspiracy with accused No.1, who is the employee of respondent No.2 company, perpetrated the fraud of forging the fake invoices and factoring them with the help of petitioners 7 (2009) 8 SCC 257 12 and other accused for an amount of Rs.6,24,92,800/- and cheated respondent No.2 and committed criminal breach of trust and also other offences.
9. In the complaint, it is stated that respondent No.2 Company has taken final delivery of the last consignment of goods from accused No.3 company on 07.02.2019 vide invoice No.HY1800022, dated 06.02.2019, and the same was duly accounted for, as the same is in the normal course of purchase. All the invoices of accused No.3 company were settled by respondent No.2 company by 29.05.2019 and the ledger account also shown as '0' balance. However, accused Nos.1 to 3 with a dishonest intention in collusion with the petitioners claimed huge amount based upon the forged tax invoices and e- way bills, in the absence of consignment of goods.
10. It is not in dispute that respondent No.2 is a customer of accused No.3 company, which is registered under Companies Act, and has office at Ahmedabad. Accused No.3 company is engaged in business of retail and wholesale distribution of chemicals. During the routine course of business, accused No.3 company has entered into a factoring in the year 2015 with petitioner No.2 company. Accused No.3 company used to routinely factor their invoices raised against their clients which includes respondent No.2 company by executing various factoring documents and customer confirmation invoices 13 payment thereto as per terms and conditions as agreed by them. Accordingly, respondent No.2 company has executed letter of undertaking and given the confirmation of invoices for factoring. Accused No.3 company used to regularly factor invoices towards supply of the material to respondent No.2 company. Accordingly, respondent No.2 company were making payments duly on the factored invoices on time to time.
11. The record further reveals that petitioner No.2 company is a subsidiary company of Canara Bank, a Government of India undertaken, and the said Company is engaged in the business of factoring, bill discounting and allied service work under the guidelines of Reserve Bank of India. Accused No.1, who is employee of respondent No.2 company, entrusted with the duty of preparation of the purchase orders and forwarded to the next authorities for verification and approval. Once approved, a copy of the same will be forwarded to the vendors by accused No.1, in turn, the vendors supply the material as directed under the delivery challan and other GST documents i.e., invoice and e- way bills, etc.,
12. From perusal of the complaint and charge sheet, it reveals that there are specific allegations levelled against accused Nos.1 to 3 that they conspired together and perpetrated the fraud of forging the fake tax invoices and factoring them with petitioner No.2 company for a huge amount of Rs.6,24,92,800/- and also 14 the allegation that factoring of the said fake invoices was done in connivance with petitioner No.1, who is working as branch head at petitioner No.2 company, actively assisted accused Nos.1 to 3 to fraudulently get money.
13. LW.11 in his statement stated that he is no way concerned either with accused No.3 company or respondent No.2 company and that he never transported the goods and the vehicle of LW.11 was not available in Hyderabad at the time of the alleged delivery of consignment of goods to respondent No.2 company. LW.3, who is the Managing Director of respondent No.2 company, stated in his statement which was recorded under Section 161 of the Cr.P.C. that respondent No.2 company has not received any consignment of goods with respect to the five invoices and e-way bills.
14. The record further reveals that petitioner No.2 company has approached NCLT, Hyderabad Bench-II, Hyderabad, and filed Company Petition No.IB/86/2021 invoking the provisions of Section 7 of the IB Code, 2016, against respondent No.2 company for initiation of Corporate Insolvency Resolution Process (CIRP). In the said petition, respondent No.2 company filed counter, inter alia denying the allegations made by petitioner No.2 company, contended that respondent No.2 company has not received any material based upon the five Invoices dated 28.05.2019, 27.06.2019 and 23.07.2019 and the 15 said five invoices are forged and fabricated, and also raised other grounds. The NCLT dismissed the company petition holding that there is no relationship of creditor and borrower between petitioner No.2 company and respondent No.2 company and the company petition filed under Section 7 of IB Code is not maintainable and granted liberty to petitioner No.2 company to seek remedy elsewhere in a manner known to Law, by its order dated 28.09.2022. Even according to the parties, petitioner No.2 company has not taken any steps after disposal of the company petition by NCLT.
15. In Mohd. Ibrahim supra, the Hon'ble Supreme Court clarified the distinction between execution of a false document and mere false claims of ownership. It was held that forgery under Sections 463, 464, 467 and 471 IPC requires the making of a "false document" with the intention to cause injury, support a false claim, induce another to part with property, or commit fraud. A person who executes a sale deed claiming property as his own, even if such claim is false or fraudulent, does not thereby make a false document unless he impersonates the true owner or falsely claims authority to act on the owner's behalf. Therefore, such execution would not amount to forgery, and Sections 467 and 471 IPC would not be attracted. The Court further explained that for an offence under Section 420 IPC, it must be shown that there was deception by false representation 16 or concealment, dishonest or fraudulent inducement to deliver property or to do or omit an act which would not otherwise have been done, and that such act or omission caused or was likely to cause damage or harm to the person deceived.
16. In V.G. Jagdishan supra, the Hon'ble Supreme Court considered the issue of territorial jurisdiction of the Labour Court to adjudicate an industrial dispute. The Court held that where the workman was employed, worked, and was retrenched at Ghaziabad, the mere fact that he subsequently shifted to Delhi and issued a demand notice from there to the employer's head office at Delhi would not confer jurisdiction upon the Labour Court at Delhi. The Court observed that since all material events relating to employment and termination occurred at Ghaziabad, the cause of action arose entirely within that jurisdiction, and therefore only the Labour Court at Ghaziabad would have territorial jurisdiction to decide the dispute.
17. In Om Prakash Srivastava supra, the Hon'ble Supreme Court clarified that to maintain a writ petition under Article 226, the petitioner must show that a legal right has been infringed or is threatened within the territorial jurisdiction of the High Court. Under Article 226(2), jurisdiction exists if the cause of action, wholly or in part, arises within the court's territory, even if the respondent authority is located elsewhere. The Court 17 explained that "cause of action" refers to the bundle of essential facts which the petitioner must prove to establish a right to relief, arising from acts or omissions of the respondent that constitute the alleged infraction. It further held that the correct test to determine sameness of cause of action is whether the same evidence would support both claims. Applying these principles, the Court held that the Delhi High Court erred in declining jurisdiction merely because the Allahabad High Court could deal with the matter more effectively, and remitted the case for fresh consideration on merits.
18. In Kaushik Chatterjee supra, the Hon'ble Supreme Court explained that territorial jurisdiction in criminal cases depends on the place where the offence was committed, its consequences ensued, or where the accused, victim, or related property was found. Unlike civil cases, where objections to jurisdiction are regulated by the C.P.C., the Cr.P.C. contains limited provisions primarily Section 201 for returning complaints before cognizance. The Court summarised Sections 177-184 Cr.P.C., holding that an offence may be tried by any court within whose jurisdiction any part of the offence occurred. It further held that under Section 461(l), if a Magistrate not empowered by law tries an offender, the proceedings are void, and such defect cannot be cured by Section 462, which only saves proceedings conducted in the wrong area if no failure of justice has occurred. 18
19. In Priyanka Srivastava supra, the Hon'ble Supreme Court cautioned against misuse of Section 156(3) Cr.P.C., particularly to harass officials acting lawfully under the SARFAESI Act. The Court held that a Magistrate must apply judicial mind before directing investigation and that any application under Section 156(3) must be supported by a sworn affidavit to prevent frivolous complaints. It further directed that applicants should first exhaust remedies under Sections 154(1) and 154(3) Cr.P.C. before approaching the court. Emphasizing that actions taken in good faith under the SARFAESI Act are protected by law, the Court quashed the FIR and directed circulation of its judgment to all High Courts to ensure proper exercise of jurisdiction.
20. In Bhajan Lal supra, the Hon'ble Supreme Court laid down guiding principles for the exercise of powers under Article 226 of the Constitution and Section 482 Cr.P.C. to quash criminal proceedings. It held that investigation of cognizable offences lies within the exclusive domain of the police, and courts should interfere only in exceptional cases to prevent abuse of process or to secure the ends of justice. The Court identified seven illustrative categories where quashing may be warranted, such as when the allegations do not disclose any offence, are barred by law, or are manifestly mala fide. It further held that under the Prevention of Corruption Act, investigation must be conducted by an officer of the prescribed rank, and any investigation by an unauthorised officer is invalid. While setting 19 aside the High Court's blanket quashing of the FIR, the Supreme Court quashed only the illegal investigation, making this case a seminal precedent on the limits of judicial interference in criminal investigations.
21. The above said judgments relied upon by the petitioners are not applicable to the facts and circumstances of the present case, as Mohd. Ibrahim case pertaining to false claims of ownership and did not involve fabrication of documents or conspiracy, V.G. Jagdishan and Om Prakash Srivastava are pertaining to territorial jurisdiction in civil and writ proceedings, which have no bearing on a criminal prosecution for fraud and forgery. Similarly, Kaushik Chatterjee pertains to procedural aspects of jurisdiction in criminal trials and not to the existence of prima facie evidence of offences. Priyanka Srivastava is limited to the misuse of Section 156(3) Cr.P.C. before registration of an FIR, whereas the present case arising out of final report/charge sheet and the Investigating Officer after conducting investigation filed final report and the learned Magistrate has taken cognizance after following due procedure. Bhajan Lal, though a leading authority on quashing of proceedings, applies only where the complaint fails to disclose a cognizable offence or is mala fide conditions not satisfied, whereas, in the case on hand, there are specific allegations in the complaint and the charge sheet discloses specific acts of 20 cheating, forgery, and conspiracy supported by documentary and electronic evidence.
22. In M/s Sardar Associates supra, the Hon'ble Supreme Court held that the guidelines issued by the Reserve Bank of India (RBI) under Sections 21 and 35A of the Banking Regulation Act, 1949 are binding on all scheduled and public sector banks. The case involved the bank's refusal to accept a One Time Settlement (OTS) proposal despite RBI's mandatory guidelines for uniform, non-discriminatory settlement of NPAs below 10 crores. The Court ruled that the RBI's circulars have statutory force and that a public sector bank, being "State" under Article 12, cannot deviate from such directions in a discriminatory manner. It upheld the Debts Recovery Appellate Tribunal's (DRAT) order directing the bank to settle the dues under the RBI scheme and set aside the High Court's contrary judgment, reaffirming that RBI guidelines create enforceable rights and ensure fairness and equality in banking operations.
23. In the case on hand, petitioner No.2, being a registered NBFC, engaged in factoring, were under a statutory duty to adhere to RBI's prudential norms and operational guidelines while verifying and processing invoices for funding. The failure of the petitioners to conduct due diligence, verify e-way bills, or seek confirmation from authorised company officials, despite the mandatory regulatory framework, demonstrates non-compliance 21 with such binding directions. As held in Sardar Associates, deviation from RBI norms amounts to arbitrary and unlawful conduct, particularly when it results in financial loss or facilitates fraudulent transactions.
24. It is relevant to mention that in Ruben and Ladenberg v. Great Fingall Consolidated Co. 8, the House of Lords laid down the foundational principle that the doctrine of indoor management cannot be invoked where the act complained of is a forgery or where the circumstances themselves arouse suspicion, holding that persons dealing with a company must act with due caution and cannot blindly rely on ostensible authority when the transaction is tainted with irregularity. This principle was subsequently adopted and applied by the Hon'ble Supreme Court in M/s. MRF Limited v. Manohar Parrikar & Ors 9, where the Court observed that when there exists "definite suspicion of irregularity" and the conduct of the concerned individual indicates active involvement in the fraudulent act, the doctrine ceases to operate. Applying the same, accused No.1, being an employee of respondent No.2 company, cannot be treated as a mere intermediary but is prima facie shown to have actively colluded in the fraudulent transactions alleged. The said doctrine was further clarified in Gunmala Sales (P) Limited v. 8 (1906) AC 439 (HL) 9 (2010) 11 SCC 374 22 Navkar Promoters (P) Limited & Ors 10, wherein the Hon'ble Apex Court held that "it cannot be invoked to give a carte blanche to outsiders to avoid liability where the circumstances invite inquiry or suggest collusion". Hence, while bona fide outsiders dealing with a company in good faith may be protected, such protection is unavailable where the transactions are irregular or executed in concert with insiders. In the present case, petitioner No.1, who is employee of the banking institution and petitioner No.2 is a banking institution, though outsiders to respondent No.2 company and there are specific allegations against them that they facilitated or overlooked irregular transactions undertaken in collusion with other accused. Hence, this Court of the considered view that basing upon the principle of protection of the doctrine of indoor management, petitioners are not entitled to seek quash the proceedings at the threshold and the same has to be adjudicated in the trial.
25. It is not in dispute that respondent No.2 company situated at Hyderabad and there is specific allegation that respondent No.2 company has not received consignment of goods through five invoices and e-way bills from accused No.3 company and without supplying goods and in the absence of any confirmation, basing upon the invoices which are forged and fabricated by accused Nos.1 to 3 in collusion with petitioner 10 (2015) 1 SCC 103 23 No.1 and remitted a huge amount to the account of accused No.2 by petitioner No.2 company.
26. It is observed that the inducement and exchange of forged electronic communications, the confirmations relied upon by respondent No.2 company, the entrustment of funds, and the resultant wrongful loss were all rooted in Hyderabad. In terms of Sections 178(b), 178(d) and 179 Cr.P.C., where an offence is committed partly in one local area and partly in another, or where the act is committed in one place and the consequence ensues in another, jurisdiction is attracted at either place. The Hon'ble Apex Court in Rupali Devi v. State of Uttar Pradesh 11, has affirmed that the Court where the consequence of a criminal act ensues is competent to exercise jurisdiction. Further, a Division Bench of this Court in Radhika Anil Upadhyaya v. The Principal Secretary, the Home department 12, has categorically held that where deception, entrustment, and loss occur within the State, jurisdiction is validly attracted notwithstanding that certain portions of the conspiracy or execution took place elsewhere.
27. Insofar as the other grounds raised by learned Senior Counsel for the petitioners that entire allegations which are levelled in the complaint are purely civil in nature and initiation of penal provisions against the petitioners is not permissible 11 (2019) 5 SCC 384 12 2020 SCC OnLine TS 1577 24 under law is concerned, there are serious and specific allegations levelled against the petitioners in the complaint and charge sheet that accused Nos.1 to 3 in collusion with petitioner No.1 created, forged and fabricated the invoices and e-way bills and released a huge amount to the account of accused No.2.
28. It is already stated supra, there are specific allegations against the petitioners that petitioner No.1, who is working as a Branch Head at petitioner No.2 company, actively assisted accused Nos.1 to 3 to fraudulently get money out of petitioner No.2 company and accused Nos.1 to 3 conspired with petitioner No.1 and perpetrated the fraud and forging of fake invoices and factoring them with petitioner No.2 company for a huge amount of Rs.6,24,92,800/-. Even though respondent No.2 company has not received the consignment of goods based upon the five invoices and e-way bills dated 28.05.2019, 27.06.2019 and 23.07.2019, which are forged and fabricated by accused Nos.1 to 3 in collusion with petitioner No.1 and petitioner No.2 and released huge amount of Rs.6,24,92,800/- in favour of accused No.2, even without verification of the invoices and also due confirmation with respondent No.2 company. This Court is of the considered view that the above said allegations have to be adjudicated and decided by the trial Court after full-fledged trial only and the same cannot be gone into in this criminal petition, while exercising the powers conferred under Section 482 of 25 the Cr.P.C.
29. It is very much relevant to mention that in Sau. Kamala Shivaji Pokarnekar v. The State of Maharashtra & Ors. 13, the Hon'ble Apex Court held that the inherent powers under Section 482 Cr.P.C. has to be exercised in exceptional cases sparingly, with caution, only to prevent abuse of process or to secure the ends of justice; and it cannot be invoked to weigh evidence or stifle a genuine prosecution, but may be applied where the allegations in the complaint, taken at face value, do not disclose the basic ingredients of any offence. The case on hand is not the rarest of rare cases to exercise powers of this Court under Section 482 of Cr.P.C. to quash the proceedings in C.C.No.13010 of 2020.
30. For the foregoing reasons, this Court does not find any ground to quash the proceedings in C.C.No.13010 of 2020 against the petitioners on the file of the XII Additional Metropolitan Magistrate, Nampally, Hyderabad.
31. In the result, the criminal petition is dismissed. However, taking into consideration the peculiar facts and circumstances of the case, the presence of the petitioners in C.C.No.13010 of 2020 is dispensed with, unless their presence is specifically required subject to the condition that the petitioners shall represent through their counsel on each and every date of 13 (2019) 14 SCC 350 26 hearing. In case of non-appearance of the petitioners on the specific date so fixed by the trial Court for their appearance, the trial Court is entitled to proceed with the matter, in accordance with law. It is made clear that any of the observations made in this order are confining for the purpose of deciding this case only.
Miscellaneous applications, pending if any, shall stand closed.
_______________________ J. SREENIVAS RAO, J Date: 31 .10.2025 L.R. copy to be marked mar