Telangana High Court
Vishwanatham Nagaraju vs The State Of Telangana, on 23 January, 2025
Author: Juvvadi Sridevi
Bench: Juvvadi Sridevi
THE HONOURABLE SMT. JUSTICE JUVVADI SRIDEVI
CRIMINAL PETITION No.310 of 2025
O R D E R:
Petitioners who are arrayed as accused Nos.2 and 3 in
FIR No.714 of 2024 on the file of Station House Officer,
Vemulawada (T) Police Station, registered for the offences
under Sections 318(4) of the Bharatiya Nyaya Sanhita (for short
‘BNS’), 3 and 5 of the Prize Chits and Money Circulation
Schemes (Banning) Act, 1978, (for short ‘the Act’) 5 of the
Telangana Protection of Depositors of Financial Establishment
Act (for short ‘TSPDFE Act’) are seeking to quash the
proceedings against them.
02. Heard Sri Dadi Radha Krishna, learned counsel
for the petitioners and Sri Jithender Rao Veeramalla, learned
Additional Public Prosecutor appearing for the State and
perused the record.
03. Learned counsel for the petitioners submits that
in order to attract an offence under Section 318(4) of BNS,
inducement to deliver property with a fraudulent intention
from the inception is necessary, but there are no such
averments in the complaint. He further submitted that Section
5 of TSPDFEA is not attracted, as in the present case, the
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subject Chit Fund Company is not a Financial establishment,
which accepts deposits. In support of his contention, learned
counsel for petitioners relied on the Judgment dated
01.11.2022 passed by this Court in Crl.A.No.38 of 2019,
wherein, at paragraph Nos.14, 15, 23 and 24, it was held as
under:
“14. That apart, it is imperative to note that chit fund is
not a financial establishment and Section 2 (c) of TSPEDFEA
defines ‘Financial Establishment’, as under:
“Financial Establishment’, means any
person or group of individuals accepting
deposit under any scheme or
arrangement or in any other manner but
does not include a corporation or a
cooperative society owned or controlled
by any State Government or the Central
Government or a banking company as
defined under Clause (c) of Section 5 of
the Banking Regulation Act, 1949″.
15. Section 2 (b) of the Act defines “deposit”, which runs as
under:
“deposit” means the deposit of a sum of
money either in lumpsum or installments
made with a financial establishment for a
fixed period, for interest or return in any
kind.”
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23. In the case on hand, as narrated
above, it is not the case of the
prosecution at all that the accused
persons are running a financial
establishment. The case of the
prosecution is that the accused are doing
chit fund business. Therefore, when it is
not the case of the prosecution that
accused were not running financial
establishment and accused were not
accepting the deposits, when PWs.1 to 4
and 6 and other subscribers have not
deposited the money for interest and
when they have not committed the
default of the alleged deposit, the
question that the accused, including the
appellant, have committed the offence
punishable under Section 5 of the Act
does not arise.
24. The Police should not have filed
charge sheet under Section 5 of the Act.
Similarly cognizance also should not
have been taken and that charges also
should not have been framed.”
04. On the other hand, learned Additional Public
Prosecutor appearing for the State, opposed for quash of
proceedings stating that specific allegations are levelled against
the petitioners. Furthermore, investigation is progress, hence,
prayed to dismiss the petition.
05. Having heard both sides and perused the material
on record, in view of the Judgment of this Court in CRL.A.No.38
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of 2019, Section 5 of TSPDFEA is not applicable to the petitioners
herein. Accordingly, the proceedings against the petitioners for
the offence under Section 5 of TSPDFEA, are hereby quashed.
06. Insofar as other offences are concerned, this Court
deems it appropriate to direct the Investigating Officer to follow
the procedure laid down under Section 41-A Cr.P.C., (presently
known as Section 35 (3) of the Bharatiya Nagarik Suraksha
Sanhita (for short ‘BNSS’) and also the guidelines formulated by
the Hon’ble Supreme Court in Arnesh Kumar v. State of Bihar 1
scrupulously. However, the petitioners-accused Nos.2 and 3
shall co-operate with the Investigating Officer as and when
required by furnishing information and documents as sought by
them in concluding the investigation. The petitioners-accused
Nos.2 and 3 shall file all the documents which they ought to file
to prove that it do not come under the criminal offences and the
Investigating Officer shall consider the same before filing
appropriate report before the learned Magistrate.
07. With the above observations, this Criminal Petition
is disposed of.
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(2014) 8 SCC 273
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Pending miscellaneous applications, if any, shall stand
closed.
__________________
JUVVADI SRIDEVI, J
Date: 23-JAN-2025
Note:
Issue CC Today.
B/o. KHRM
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8THE HONOURABLE SMT. JUSTICE JUVVADI SRIDEVI
50
CRIMINAL PETITION No.310 of 2025
Date: 23-JAN-2025
Note:
Issue CC Today.
B/o. KHRM
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