Telangana High Court
Gude Rambabu vs The State Of Telangana on 9 April, 2026
ETD,J
Crl.P.No.8472_2022
1
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HON'BLE SMT. JUSTICE TIRUMALA DEVI EADA
CRIMINAL PETITION No.8472 OF 2022
Date: 09.04.2026
Between:
Gunde Rambabu and others ... Petitioners
AND
The State of Telangana,
rep. by Public Prosecutor,
High Court, Hyderabad
and another ... Respondents
::ORDER::
This Criminal Petition is filed by the petitioners - accused Nos.1 to 3 seeking to quash the proceedings in C.C.No.5944 of 2022 on the file of the learned XXXII Additional Metropolitan Magistrate, Cyberabad at Kukatpally, for the offences under Sections 406, 420 and 503 read with Section 34 of the Indian Penal Code (for short 'IPC').
2. The case of the complainant is that the complainant is working with CCMB (Centre for Cellular and Molecular Biology) in the development of a communication platform for autistic children ETD,J Crl.P.No.8472_2022 2 using disruptive technologies like artificial intelligence and data analytics. That accused No. 1 happens to be the Chairman of Radharam Marketing Pvt. Ltd., and accused No. 2 is the founder of Radharam Marketing Pvt. Ltd., and is the key person in carrying out the day-to-day operations of their business, while accused No. 3 is the Head of Operations of Radharam Marketing Pvt. Ltd., and is aiding and advising accused Nos. 1 and 2 in the conduct of business. All the three accused, while approaching the complainant, represented that their business is running through a large network over the years and that they have enough experience in emerging technologies. They requested the complainant to develop and provide them an e-commerce inventory platform for their business in FMCG products.
3. An agreement was entered into between both the parties on 20.06.2021. Further, a supplementary agreement, terming it as Software as a Service (SaaS), was also executed between the parties on 20.08.2021. However, the most crucial Business Requirement Document (BRD) was not furnished, without which the assigned project could not have been executed. Despite ETD,J Crl.P.No.8472_2022 3 many requests and emails, the accused failed to furnish the same, and it is the complainant who had taken the ordeal of preparing the BRD for RRM to develop the IMS (Inventory Management System) application. The accused have convinced the complainant to take Rs. 30 lakhs in white and Rs. 35 lakhs in cash, to which the complainant was reluctant. Thus, the complainant submits that two other agreements were entered into for "development of e-commerce inventory platform" and "mutual confidentiality and non-disclosure agreement." As seen from the terms, there was consensus ad idem as to what is the area and scope of the agreement that has to be carried on. That on account of time constraints, the complainant took an internal call for rollout of the modules (there were more than 10 modules in the product) using one of the very reputed modules and by securing an open-source platform, which is universally accepted in the e-commerce industry.
4. The accused did not indicate anywhere in writing via emails or during the meetings that they were employing one Mr. Venkateswara Rao as their technical SPOC (Single Point of ETD,J Crl.P.No.8472_2022 4 Contact). Surprisingly, the said Venkateswara Rao, leaving aside all business ethics, started poaching one of the consultants of the complainant, namely Mr. Anudeep, who had been engaged to oversee the ad hoc requirements coming from RRM, to handle them without disturbing the actual development, and tried to support the business activities through the temporary provision mentioned above. Thus, the said Venkateswara Rao polluted the minds of the accused with baseless allegations, saying that the project does not cost Rs. 65 lakhs and that it can be completed within Rs. 10 lakhs. Thus, in spite of the best efforts made by the complainant to convince the accused, by showing the actual work even after the major deviations, the efforts of the complainant went in vain, and thereafter, they started avoiding their financial commitments. While the complainant was bent upon discharging its part of the contractual obligations, the accused Nos. 1 to 3, in order to cause wrongful loss to the complainant, expressed their dishonest intention by sending an email on 25.12.2021 repudiating the agreement, stating that the complainant could not carry out any further work in developing the software. Aggrieved by the same, the present complaint has been lodged by the ETD,J Crl.P.No.8472_2022 5 complainant, and a charge sheet is laid for the offences under Sections 406, 420, and 503 of IPC.
5. Heard the submissions of Sri K.V.Bhanu Prasad, learned Senior Counsel representing Sri K.Sai Sri Harsha, learned counsel for the petitioners and Smt.I.Sujatha, learned counsel for respondent No.2.
6. The learned counsel for the petitioners has submitted that the 2nd respondent has already received cash component to the tune of Rs.10 lakhs as well as cheques to the tune of Rs.48,38,000/- in pursuance of the agreement, but still the de facto complainant is unable to develop the software within the time frame given to her. Even the sample software developed for testing was proved to be unsatisfactory; thus, it made the petitioners repudiate the contract, but the de facto complainant has turned the civil dispute into a criminal one for the reasons best known to her. When they have expressed their concern and made repeated requests for completion of the project, the respondent No. 2 could not oblige, and thus, they repudiated the contract, pursuant to which the present complaint has been ETD,J Crl.P.No.8472_2022 6 lodged. The entire dispute revolves around the repudiation of the contract, which is purely civil in nature, and thus, the allegations do not attract any of the offences as alleged by the de facto complainant. Hence, he prayed to quash the proceedings.
7. The learned counsel for respondent No.2 has submitted that the petitioners are well known for such deceptive activities and that there are two newspaper clippings disclosing their attitude, which reveal that they always enter into contracts, get some work done, and deceive the people who work for them, and that, being unaware of their dishonest intention, the de facto complainant has entered into the said contract. They have deceived hundreds of people through the said newspaper clippings. Thus, the petitioners' contentions are not at all tenable and that they never indicated in writing that they were employing the so-called person as a Single Point of Contact (SPOC), and that just believing his words, they have repudiated the contract without any notice being served on the respondent No. 2. Thus, the petitioners have committed criminal breach of trust and breach of contract against the respondent No. 2, and none of the ETD,J Crl.P.No.8472_2022 7 grounds raised by the petitioners can be considered to quash the proceedings, and that they need to be tried for the said offences. He, therefore, prayed to dismiss the petition.
8. Perused the record.
9. The contents of the complaint point out that there was a contract between both the parties, i.e., the petitioners herein and respondent No. 2, and there was a deviation in the contract, as a result of which it was repudiated. The offences alleged against the petitioners are under Sections 406, 420, and 503 of IPC. The said sections are extracted hereunder for the sake of reference:
"405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits "criminal breach of trust".
406. Punishment for criminal breach of trust.--Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.
420. Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.
503. Criminal intimidation.--Whoever threatens another with any injury to his person, reputation or property, or to the person or reputation of any one in whom that person is interested, with intent to cause alarm to that person, ETD,J Crl.P.No.8472_2022 8 or to cause that person to do any act which he is not legally bound to do, or to omit to do any act which that person is legally entitled to do, as the means of avoiding the execution of such threat, commits criminal intimidation. Explanation.--A threat to injure the reputation of any deceased person in whom the person threatened is interested, is within this section."
10. As far as the offence under Section 406 of IPC is concerned, there should be an entrustment, and there should be some allegation or material to show that the petitioners were entrusted with some dominion over the property and that they have put it to their own use. But in the present case, it is the repudiation of the contract which was entered into between both the parties. It is not the case of the respondent No.2 that they have entrusted some dominion over any property; therefore, the ingredients of Section 406 of IPC do not get attracted.
11. So also, to point out the allegations under Section 420 of IPC, there must be dishonest intention from the beginning, but in the present case, the contract had been proceeded to a certain extent, even as per the allegations made by the respondent No.2. The contents of the complaint themselves disclose that there was progress in the work for certain months, after which it was repudiated. Thus, it cannot be inferred that the dishonest intention ETD,J Crl.P.No.8472_2022 9 was entertained from the inception of the contract. Thus, the allegations under Section 420 of IPC also do not get attracted, and there is nothing in the complaint to point out the allegation under Section 503 of IPC.
12. Learned counsel for the petitioners has relied upon a decision of the Apex Court in Arshad Neyaz Khan v. State of Jharkhand1. In the said case, the agreement of sale was entered into between both the parties, and when the sale deed was not executed, the de facto complainant filed a complaint, and the charges were laid under Sections 406, 420, and 120-B IPC. The Apex Court has held at para Nos.19 and 20 as follows:
"19. It is settled law that for establishing the offence of cheating, the complainant/respondent No.2 was required to show that the appellant had a fraudulent or dishonest intention at the time of making a promise or representation of not fulfilling the agreement for sale of the said property. Such a culpable intention right at the beginning when the promise was made cannot be presumed but has to be made out with cogent facts. In the facts of the present case, there is a clear absence of dishonest and fraudulent intention on the part of the appellant during the agreement for sale. We must hasten to add that there is no allegation in the FIR or the complaint indicating either expressly or impliedly any intentional deception or fraudulent/dishonest intention on the part of the appellant right from the time of making the promise or misrepresentation. Nothing has been said on what the misrepresentations were and how the appellant intentionally deceived the complainant/respondent No.2. Mere allegations by the complainant/respondent No.2 that the appellant failed to execute the agreement for sale and failed to refund the money paid by the complainant/respondent No.2 does not satisfy the test of dishonest inducement to deliver a property or part with a valuable security as enshrined under Section 420 IPC.1
2025 SCC OnLine SC 2058 ETD,J Crl.P.No.8472_2022 10
20. On perusal of the allegations contained in the complaint, in light of the ingredients of Section 406 IPC, read in the context of Section 405 IPC, do not find that any offence of criminal breach of trust has been made out. It is trite law that every act of breach of trust may not result in a penal offence unless there is evidence of a manipulating act of fraudulent misappropriation of property entrusted to him. In the case of criminal breach of trust, if a person comes into possession of the property and receives it legally, but illegally retains it or converts it to its own use against the terms of contract, then the question whether such retention is with dishonest intention or not and whether such retention involves criminal breach of trust or only a civil liability would depend upon the facts and circumstances of the case. In the present case, the complainant/respondent No.2 has failed to establish the ingredients essential to constitute an offence under Section 406 IPC. The complainant/respondent No.2 has failed to place any material on record to show us as to how he had entrusted property to the appellant. Furthermore, the complaint also omits to aver as to how the property, so entrusted to the appellant, was dishonestly misappropriated or converted for his own use, thereby committing a breach of trust."
13. With the above said observations, the Apex Court has quashed the proceedings. The principle laid down in the above- cited decision squarely get attracted to the present case.
14. Since a prima facie case is not made out from the allegations for the offences under Sections 406, 420, and 503 of IPC, the petitioners cannot be prosecuted. Therefore, the proceedings are liable to be quashed.
15. Accordingly, the Criminal Petition is allowed and the proceedings in C.C.No.5944 of 2022 on the file of the learned XXXII Additional Metropolitan Magistrate, Cyberabad at Kukatpally, are hereby quashed against the petitioners herein.
ETD,J Crl.P.No.8472_2022 11 Miscellaneous applications pending, if any, shall stand closed.
____________________________ JUSTICE TIRUMALA DEVI EADA Date: 09.04.2026 ns