Telangana High Court
Pandiri Malleshwari, Nalgonda vs The State Of Ts., Rep. By P.P. And Another on 11 April, 2025
THE HON'BLE SRI JUSTICE J.SREENIVAS RAO
CRIMINAL PETITION No.2099 of 2017
ORDER:
This Criminal Petition is filed under Sections 482 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.') by the petitioner, seeking to quash the proceedings in C.C.No.437 of 2016 on the file of the Principal Junior Civil Judge, Kodad, Suryapet District.
2.1 The case of prosecution in brief is that LWs.1 to 3 namely Pinupa Bhaskar Rao, Injamuri Dayakar and Kilambi Ranganath are officials of Andhra Bank working as Chief Manager, Andhra Bank, Kodad, Assistant General Manager, Andhra Bank, Rayavaram of East Godavari District and Deputy General Manager, Corporate Finance Branch, Hyderabad respectively. On 13.07.2011 LW.3 had sanctioned Rs.2 Crores to the accused Nos.1 to 4, who are the managing partners, as financial facility by Andhra Bank, Kodad Branch to run M/s. Rajyalaxmi Rice Industries at Thellabelli Village of Nadigudem Mandal on the recommendation of LW.2, by executing all necessary documents i.e., 1) two storey house building door No.1- 229 having 46 yards owned by Pandiri Malleswari (A-3) 2 situated at Guntur road, Miryalaguda, 2) 379 yards house site in plot No.1, block No.28 in survey No.706 of Paidimarri Sathyanarayana to an extent of 952 yards in Sy.No.1031/B1 and block No.12 situated at Ramapuram road, Kodad, 4) A house site registered in the name of Nalla Rathnamma to an extent of 300.50 yqrds, plot Nos.23, 24 in Sy.No.639/E situated at Gayathrinagar, Miryalguda, 7) A house site of Damera Achutharamaiah to an extent of 121 yards, plot Nos.23, 24 in Sy.No.639/E in Sy.No.639/E situated at Gayathrinagar, Miryalguda, 8) 900 yards business and residential plot in block No.4 and Sy.No.528/Ae near Srinivas Mechanical Showroom, Gudibanda road, Kodad of Vangaveeti Pushpavathi, 9) the land admeasuring Ac.1-51 guntas in Sy.No.193/1/4, 193/1/F of Vangaveeti Pushpavathi situated backside of Raja Rajeswari Parboiled Rice Mill, Komarabanda village of Kodad, 10) Residential house door No.4-67/1, block No.4 of Vangaveeti Pushpavathi to an extent of 200 yards in Komarabanda village of Kodad and 11) Rajyalaxmi Rice Industries in Sy.No.129/3 situated in the Revenue limits of Tellabelli village of Nadigudem Mandal with composite agreement as security to inform the Bank time to time of 3 hypothecation of inventory and receivable i.e, goods, produce, merchandise, stock, book debts and other similar assets. But, said M/s. Rajyalaxmi Rice Industries, Thellabelli represented by its Managing partners/accused nos.1 to 4 submitted stock statement in the month of July, 2012 and failed to submit subsequent monthly statements of stock, which are to be submitted by them mandatorily to the Bank, though the Bank so many times demanded the said firm for deposit of the sale proceeds of the hypothecation of the Bank. But there is no proper response from the borrower.
2.2 It is further case of prosecution that the accused failed to pay the loan amount to the bank. Thus shows the accused with a malafide intention obtained the loan, dishonestly failed to repay the loan and failed to maintain the stocks as per the agreement and gained wrongfully from the bank and caused wrongful loss to the bank. Thus, the investigation establishes that accused Nos.1 to 4 dishonestly cheated the Andhra Bank, Kodad branch and failed to submit subsequent monthly statements of stock which are to be submitted by them mandatorily to the Bank though the Bank so many times demanded the 4 said firm for deposit of the sale proceeds of the hypothecation of the Bank. Thus, the accused have committed an offence punishable under Sections 406 and 420 of IPC.
3. Heard Mr. T.V.Kalyan Singh, learned counsel for the petitioner and Mr.G.Bharath Reddy, learned counsel appearing on behalf of respondent No.2-Andhra Bank (Presently Union Bank of India), who appeared through video conference, and Mr.Syed Yasar Mamoon, learned Additional Public Prosecutor appearing for respondent No.1-State.
4.1 Learned counsel for the petitioners submitted that the petitioner has not committed any offence and he was falsely implicated as accused No.3 in this crime. He further submitted that since the petitioner is only a sleeping partner, the ingredients of Sections 406 and 420 of IPC are not attracted against the petitioner. In the absence of making the partnership firm as a party, they are not entitled to lodge the complaint against the partners of the firm.
4.2 He further submitted that the allegations made in 5 the complaint are purely civil in nature. Respondent No.2 without initiating the common civil law remedy, lodged a complaint against the petitioner to settle the disputes for recovery of the amount due, is clear abuse of process of law. He further submitted that the petitioner has given her property as security to respondent No.2-Bank and respondent No.2-Bank has already initiated the proceedings under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 54 of 2002 and sold the property, which was given by the petitioner towards security and received an amount of Rs.32,20,000/- and the said amount was transferred to the loan account and thereafter, lodged a complaint implicating the petitioner as accused No.3 and the same is clear abuse of process of law.
4.3 In support of his contention, he relied upon the following judgments:
i) Satishchandra Ratanlal Shah v. State of Gujarat and Another 1, wherein the Hon'ble Supreme Court held as follows:
13. Now coming to the charge under Section 415 1 (2019) 9 SCC 148 6 punishable under Section 420 IPC. In the context of contracts, the distinction between mere breach of contract and cheating would depend upon the fraudulent inducement and mens rea. (See. Hridaya Ranjan Prasad Verma v. State of Bihar, (2000) 4 SCC 168 : 2000 SCC (Cri) 786] .) In the case before us, admittedly the appellant was trapped in economic crisis and therefore, he had approached Respondent 2 to ameliorate the situation of crisis. Further, in order to recover the aforesaid amount, Respondent 2 had instituted a summary civil suit seeking recovery of the loan amount which is still pending adjudication. The mere inability of the appellant to return the loan amount cannot give rise to a criminal prosecution for cheating unless fraudulent or dishonest intention is shown right at the beginning of the transaction, as it is this mens rea which is the crux of the offence. Even if all the facts in the complaint and material are taken on their face value, no such dishonest representation or inducement could be found or inferred.
ii) Sham Sunder and others v. State of Haryana 2, wherein the Hon'ble Supreme Court held as follows:
9. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not.
iii) V.Y. Jose and another v. State of Gujarat and another 3, wherein the Hon'ble Supreme Court held as follows:
21. There exists a distinction between pure contractual dispute of a civil nature and an offence of cheating. Although breach of contract per se would not come in the way of initiation of a criminal proceeding, there cannot be any doubt whatsoever that in the absence of the averments made in the complaint petition wherefrom the ingredients of an offence can be found out, the court should not hesitate to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.
2 (1989) 4 SCC 630 3 (2009) 3SCC 78 7
22. We may reiterate that one of the ingredients of cheating as defined in Section 415 of the Penal Code is existence of an (sic fraudulent or dishonest) intention of making initial promise or existence thereof from the very beginning of formation of contract.
iv) Proddaturi Shobha Rani@ Shobha Rani and another v. Andhra Pradesh and another 4, wherein High Court of Andhra Pradesh at Amaravathi held that, the court ruled that for a criminal complaint against individuals in a partnership to be valid, the partnership firm must also be included as an accused, as it is the principal offender.
v) Smt. Vunna Visali vs State Of Andra pradesh and another 5, wherein High Court of judicature of Andhra Pradesh at Hyderabad held as follows:
12. As already noted, the petitioner herein is a mere sleeping partner. Even according to the complaint and the charge sheet, it is the defacto-complainant (2nd respondent herein) and A.1, who were managing the affairs of the firm as working partners and also receiving salary. At no point of time the petitioner herein was entrusted with the management of the firm. LW.2, who is no other than the father of the defacto-complainant, categorically stated that the petitioner-A.2 was a sleeping partner of the firm - Siri Marketings. Likewise, LW.3, who worked in the said firm, also categorically stated that the petitioner-A.2 was a sleeping partner. LW.5, who was a friend of the defacto-
complainant, also stated that the day-to-day business of the 4 2020 (2) ALD (Crl.) 111(AP) 5 2001(1) ALD (Crl.) 894(AP) 8 partnership firm was looked after by A.1. As already noted, even the complainant himself stated in the complaint that it is A.1, who was incharge of the business of the firm and operating the Bank account. The petitioner remained as a sleeping partner even in the reconstituted firm after the retirement of the defacto-complainant. This is evident from the partnership deed that was executed on 1-4-1995. Thus, there is no whisper either in the complaint or in the 161 Cr.P.C. statements recorded during the course of investigation or in the charge sheet about the involvement of the petitioner (A.2) in day-to-day business of the firm. Therefore, the petitioner cannot be prosecuted for the alleged offences committed by the Firm under Sections 406, 420 and 477-A IPC.
5.1 Per contra, learned counsel appearing on behalf of respondent No.2-Bank submitted that the petitioner and other accused have followed the terms and conditions of the composite agreement dated 28.07.2011. He further submitted that respondent No.2 lodged a complaint on 01.04.2013, wherein it is specifically stated that M/s. Rajyalaxmi Rice Industries, Thellabelli represented by its managing partners namely, Kakumanu Bapanaiah, Nalla Nageswar Rao and partners namely Pandiri Malleswari and Vempati Rupa have failed to submit mandatory statement of stocks pursuant to the composite agreement and other statements in spite of several reminders issued 9 by the Bank and they deliberately and intentionally failed to maintain stocks.
5.2. He further submitted that the petitioner and other accused of M/s. Rajyalaxmi Rice Industries, Thellabelli, have entered into composite agreement on 28.07.2011 with respondent No.2-Bank. As per the para No.22 of the said composite agreement, "That the Bank is having every right to inspect the records, goods, produce, stock, book debts etc., held by the borrower at any time, which are hypothecated to the Bank. That all the goods and all the documents under this security shall always be kept distinguished and the held as bank's exclusive property specifically appropriate to this security to be dealt with under the directions of the Bank. The borrower(s) shall furnish to the Bank monthly or at such intervals as the bank may require a schedule or copy of all the entries which shall have been made in the said register/as well, as statement of stock/book debts which stand hypothecated to the Bank and as contained in the said register at the close of the previous day and duly certified under the signature of the borrower(s) and or his/her/their/its authorized representative(s). The 10 submission of statement of stock/book debts/other assets from time to time held by the borrower(s) will be as agent for the bank and in nature of endering of account vby agent to principal and statement so submitted shall be the returns of the borrower(s) in his/her/their capacity as agent for holding the securities hypothecated to the Bank."
5.3. He further submitted that, as per the para No.23 of the said composite agreement, "That the borrower is at liberty to sell or dispose the goods under security but proceeds of such sale of goods or the proceeds of book debts realized shall be held in trust for the Bank and as soon as the same are received shall be paid to the Bank to the credit of the respective facility accounts of the borrower." However, the petitioner and other accused have failed to submit monthly statement of stocks before respondent No.2-Bank, which are to be submitted by them mandatorily to the Bank. The petitioner and other accused of the said firm deliberately and intentionally failed to maintain stocks/produces/book debts, which are hypothecated to the Bank with a malafide intention and also the said firm also not deposited the amounts from the 11 sale proceeds of hypothecated stocks to the Bank. The investigating officers after conducted detailed investigation have filed charge sheet, wherein they specifically stated that the petitioner and other accused have committed the offence punishable under Sections 406 and 420 of IPC. Hence, the contention made by the learned counsel for the petitioner that respondent No.2 Bank has lodged the complaint against the partners of M/s. Rajyalaxmi Rice Industries without making any complaint against the said firm, is not tenable under law. The investigating officers are entitled to include M/s. Rajyalaxmi Rice Industries as accused at any point of time.
5.4 He further submitted that as per the partnership deed, the petitioner is having 20% share in the said firm. Hence, the contention raised by the learned counsel for the petitioner that the petitioner is a sleeping partner. All the grounds raised by the petitioner have to be adjudicated during the course of trial. Therefore, the petitioner is not entitled to seek the relief for quashing the proceedings in the alleged Criminal Case.
6. Learned Additional Public Prosecutor also submitted that the petitioner has raised several disputed question of 12 facts and the same have to be decided during the course of trial. Therefore, the petitioner is not entitled to seek the relief for quashing the proceedings in the alleged Criminal Case.
7. Having considered the rival submissions made by the respective parties and after perusal of the material available on record, it reveals that the petitioner and three other partners have entered into partnership deed on 11.12.2009 to carry on the business of rice mill under the name and style of M/s. Rajyalaxmi Rice Industries, Tellabelly. According to the said partnership deed, the petitioner is having 20% share in the said firm. The said partnership firm availed the loan of Rs.2 Crores from respondent No.2-Andhra Bank (presently Union Bank of India), Kodad Branch. The record further reveals that the said partnership firm entered into composite agreement with respondent No.2 dated 28.07.2011. According to the composite agreement, para Nos.22 and 23 are specific complaint of respondent No.2-Bank that M/s. Rajyalaxmi Rice Industries, Tellabelly, represented by its managing partners namely Kakumanu Bapanaiah, Nalla Nageswar Rao and partners namely Pandiri Malleswari and Vempati 13 Rupa have submitted stock statements in the month of July, 2012 through stock statement dated 02.07.2012 and subsequently they failed to submit monthly statement of stocks, which are to be submitted by them mandatorily to respondent No.2-Bank and they deliberately and intentionally failed to maintain stocks/product/book debts which stand hypothecated to the respondent No.2- Bank with a malafide intention and the said firm also not deposited the amounts from the sale proceeds of the hypothecated stocks to the Bank. In spite of several demands made by respondent No.2 Bank, they failed to deposit the sale proceeds and they committed criminal breach of trust.
8. The record further reveals that the investigating officer after recording the statements of LWs.1 to 7 filed charge sheet, wherein, it is specifically mentioned that the petitioner and other accused with a malafide intention obtained the loan from respondent No.2-Bank and dishonestly failed to repay the loan and maintain the stocks as per the composite agreement dated 28.07.2011 and failed to submit subsequent monthly statements of stock, which are to be submitted by them mandatorily to 14 the Bank though the Bank so many times demanded the said firm for deposit of the sale proceeds of the hypothecated stocks of the Bank and accused Nos.1 to 4 dishonestly cheated respondent No.2-Bank and thus, they committed the offence punishable under Sections 406 and 420 of IPC. The above said charge sheet and other documents clearly reveal that there are specific allegations levelled against the petitioner.
9. The judgments relied upon by the learned Counsel for the petitioner are not applicable to that facts and circumstances of the case, especially when there are specific allegations levelled against the petitioner and same has to be adjudicated during course of trial.
10. It is already stated supra, even according to the partnership deed, the petitioner is having 20% share in the said firm. Insofar as the other contention raised by the learned counsel for the petitioner that respondent No.2- Bank has lodged the complaint against the petitioner and three others only and not lodged the complaint against the firm, is not tenable under law, on the ground that respondent No.2-Bank in the complaint, made specific complaint against the partnership firm namely M/s. 15 Rajyalaxmi Rice Industries at Thellabelli Village as well as partners including the petitioner and there are specific allegations against the petitioner and other partners. Hence, this Court does not find any ground to quash the proceedings against the petitioner in C.C.No.699 of 2018 on the file of the Principal Junior Civil Judge, Kodad, Suryapet District, exercising the powers conferred under Section 482 of Cr.P.C.
11. Accordingly, the Criminal Petition is dismissed.
As a sequel thereto, miscellaneous applications, if any, pending in this petition stand closed.
______________________________ JUSTICE J.SREENIVAS RAO Date: 11.04.2025 pgp