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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)
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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
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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
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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
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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
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
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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)
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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
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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
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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
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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
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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
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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
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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.
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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
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