Andhra Pradesh High Court – Amravati
Ramya Constructions Ltd vs The State Of Ap on 4 April, 2025
APHC010130182019
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3333]
(Special Original Jurisdiction)
FRIDAY ,THE FOURTH DAY OF APRIL
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE SMT JUSTICE V.SUJATHA
CRIMINAL PETITION Nos: 2762 and 2761 of 2019
Crl.P.No.2762 of 2019
Between:
Kapil Infra Avenues Pvt Ltd and ...PETITIONER/ACCUSED(S)
Others
AND
The State Of Ap and Others ...RESPONDENT/COMPLAINANT(S)
Counsel for the Petitioner/accused(S):
1. G RAMA GOPAL
Counsel for the Respondent/complainant(S):
1. Pasala Ponna Rao,DEPUTY SOLICITOR GENERAL OF
INDIA
2. PUBLIC PROSECUTOR (AP)
3. 0
4. GIRI BABU MARTHI
2
VS,J
Crlps_2762 and 2761_2019
Crl.P.No.2761 of 2019
Between:
Ramya Constructions Ltd and Others ...PETITIONER/ACCUSED(S)
AND
The State Of Ap and Others ...RESPONDENT/COMPLAINANT(S)
Counsel for the Petitioner/accused(S):
1. G RAMA GOPAL
Counsel for the Respondent/complainant(S):
1. Pasala Ponna Rao,DEPUTY SOLICITOR GENERAL OF
INDIA
2. PUBLIC PROSECUTOR (AP)
3. GIRI BABU MARTHI
The Court made the following:
3
VS,J
Crlps_2762 and 2761_2019
COMMON ORDER:
Criminal Petition No.2762 of 2019 is filed under Section 482
of Criminal Procedure Code (for short “Cr.P.C.”) to quash the
proceedings in C.C.No.9 of 2019 on the file of the IV Additional
District Judge – cum – II Additional Metropolitan Sessions Judge –
cum – the Special Judge for trial of Economic Offences at
Visakhapatnam, registered for the offences punishable under
Section 76A of the Companies Act, 2013 for violation of Section 73
of the Companies Act 2013 read with Companies (Acceptance of
Deposit) Rules, 2014.
2) Criminal Petition No.2761 of 2019 is filed under Section 482
of Cr.P.C. to quash the proceedings in C.C.No.10 of 2019 on the
file of the IV Additional District Judge – cum – II Additional
Metropolitan Sessions Judge – cum – the Special Judge for trial of
Economic Offences at Visakhapatnam, registered for the offences
punishable under Section 76A of the Companies Act, 2013 for
violation of Section 73 of the Companies Act 2013 read with
Companies (Acceptance of Deposit) Rules, 2014.
3) C.C.No.9 of 2019 was registered against M/s. Kapil Infra
Avenues Private Limited and others and C.C.No.10 of 2019 was
registered against M/s.Ramya Constructions Limited and others, but
the complainant and allegations made against the petitioners in both
the cases are one and the same in both the cases.
4) As the complainant, the allegations made therein and the
point involved in both the cases is one and the same, I find that it is
expedient to decide both the petitions by common order taking
Criminal Petition No.2762 of 2019 as leading petition.
4
VS,J
Crlps_2762 and 2761_2019
5) The Registrar of Companies lodged complaint against the
petitioners herein on the basis of the complaint received by him from
one Guruzala Venkateswara Rao, defacto complainant, on various
dates, alleging that in the course of the real estate business,
petitioner No.1 company acquired lands abutting the National/State
Highway in and around the District Head Quarters in the States of
Andhra Pradesh and Telangana, where there are chances for
potential development of the real estate. After acquiring the lands,
the Company submitted an application for conversion of the
agricultural lands into non-agricultural lands before the Competent
Revenue Authorities and thereafter obtained permission from the
Director of Town and Country Planning (DTCP) for development of
the 75% of land into layouts of residential plots and 25% of the land
immediately abutting the National Highway which is earmarked for
constructing high rise buildings at a future date. The company
offered the residential plots for the prospective purchasers by
outright sale on paying the entire sale consideration in a short span
of time before the sale deed is registered by the Company. Further,
the Company also offered for sale, residential plots on installment
basis and after payment of all the installments, the prospective
purchaser will get the sale deed registered in his favour by the
Company. In this regard, the prospective purchaser of the company
entered into a written agreement enumerating all the terms and
conditions of the sale. The company also offered for sale of the
undivided share of the land earmarked for constructing high-rise
buildings to the prospective purchasers by receiving part of the sale
consideration around 80% by entering into a written agreement i.e.
Memorandum of understanding. In the said agreement, it is
5
VS,J
Crlps_2762 and 2761_2019
stipulated that the transfer of the land in favour of the prospective
purchaser will be made at a future date mutually agreed between
the parties in the MOU. Before the said stipulated period, if the
prospective purchaser, is satisfied about the developmental activity
around the property agreed to be sold, and the viability of the
market value, the prospective purchaser will pay the balance 20% of
the sale consideration and will have the sale deed registered in his
favour. Advance sale consideration received pursuant to the sale of
immovable property offered by petitioner No.1 company to the
prospective purchasers will be treated as “Deposit accepted from
the public” and the said deposit is in violation of Section 73 (1) of the
Companies Act, 2013.
6) On the basis of the said complaint, an inspection was
ordered, thereafter, inspecting officers have inspected the records of
petitioner No.1 company and submitted a report dated 14.08.2018
to the Government of India, Ministry of Corporate Affairs. The gist of
the report is that the company has been collecting money as
advance for sale of property during the financial years 2014-15,
2015-16 and 2016-17 and has been paying interest for such
deposits and refunding the money with interest at the end of the
period within which period the land should be registered or when the
parties demand refund at the optional dates mentioned in the MoU.
Further, the inspection report revealed that the company has been
accepting the above amounts from public by receiving applications
through agents engaged by the company, which are shown as
advance for the sale of property being a percentage of standard
selling rate fixed by the board from time to time (with condition that
the balance amount is payable within a specified period) with
6
VS,J
Crlps_2762 and 2761_2019
advance optional interest rate to be payable on monthly or on
cumulative basis till the actual registration of the land or till the
amount is refunded. From the scrutiny of some of the applications
verified during the course of inspection, it is found that the company
is taking amount as advance for sale of plots or undivided share out
of total land mentioned in the MOU, for which the company has
agreed to pay monthly and cumulative interest. It is further stated in
the report that the company is collecting money as advance for sale
of plots, in the brand name of Kapil Homes, however, the application
form signed by the applicant contains terms and conditions which
provide for much lesser cost of land and lesser period for finalizing
the transaction. The complaint received from the Registrar of
Companies was registered as C.C.No.9 of 2019. The criminal
petition No.2762 of 2019 has been filed seeking to quash the
C.C.No.9 of 2019.
7) On 25.04.2019, when Criminal Petition Nos.2762 and 2761 of
2019 came up for admission, this Court passed the following interim
order.
“……. Post on 10.06.2019.
Till then, there shall be stay of all further proceedings as
prayed for.”
8) Thereafter, the said interim order has been extended from
time to time.
9) During hearing, Sri S.Sriram, learned Senior Counsel
representing Sri G.Rama Gopal, learned Counsel for the petitioners,
would submit that the complaint filed by respondent No.2 under the
provisions of the Act suffers from infirmities and is a gross abuse of
7
VS,J
Crlps_2762 and 2761_2019
process of law. He further submits that the allegations against the
petitioners under Section 73 of the Act are not maintainable
inasmuch as the amounts accepted by petitioner No.1 do not come
under the purview of „deposits‟ as they are purely in the nature of an
immovable property transaction. He further submits that a perusal of
the provisions of Rule 2 (1) (c) (xii) (b) of the Companies
(Acceptance of Deposits) Rules, 2014, makes it very clear that the
Rules exclude the advances received towards sale consideration of
immovable property, pursuant to an agreement or arrangement from
the purview of „deposit‟, provided that such an advance is adjusted
against such property in accordance with the terms of agreement or
arrangement. The petitioners have entered into agreements/M.O.Us
upon receipt of such advances from customers. Further, they have
refunded the advance sale consideration received by them, only to
those persons, who have not paid the entire sale consideration, or in
other words, petitioners have refunded the advance sale
consideration received by it with interest, to only those persons, who
have failed to pay the balance sale consideration, within the period
agreed for payment of the second and final instalment, as per the
terms of the agreement.
10) He further submits that a perusal of the complaint reflects that
the allegation against the petitioners is that the amounts are being
collected without an intention to sell the property, but the defacto
complaint has no cogent facts or evidence to prove the said
allegation and for this reason, the complaint is liable to be quashed
as the same is without any basis and that the defacto complainant
has further noted that the transactions were concluded in respect of
certain transactions where money was received in full. He also
8
VS,J
Crlps_2762 and 2761_2019
submits that the Registrar of Companies has acted on whimsical
complaints of one Gurazala Venkateswarlu, who had foisted many
complaints against the petitioners, and filed many Writ Petitions
before this Court, without any basis. He further submits that Rule (2)
(1) (c) (xii) (b) of the Companies (Acceptance of Deposits) Rules,
2014 makes it clear that the amounts received as advance by the
petitioners cannot be deemed to be a “deposit” and requested to
allow these petitions.
11) Learned Deputy Solicitor General appearing for respondent
No.2 contended that petitioner – companies herein have been
collecting money as advance for sale of property and paying interest
on such advances and refunding money without actual sale of such
properties. As a result of which, Rule 2 (1) (c) (xii) (b) of the
Companies (Acceptance of Deposits) Rules, 2014 is attracted to
term such advance money collected as “Deposits”. It is stated that
since the advance money collected by the petitioners as
consideration for an immovable property under an agreement of
arrangement (M.O.U.), if such advance is not adjusted against such
property in accordance with the terms of agreement or arrangement,
it comes under the definition of deposits. In the instant case, the
exemptions in the proviso to Rule 2 (1) (c) (xii) (b) of the Companies
(Acceptance of Deposits) Rules, 2014 are not applicable to the
petitioners companies in view of the fact that they been intentionally
collecting advance and paying interest on such advance without
actual sale of property for which the agreement/M.O.U. was entered
into between the petitioners – companies and their subscribers. He
also submits that it is irrelevant to state whether or not such
collected advance is refunded, as the company never intended to
9
VS,J
Crlps_2762 and 2761_2019
adjust such collected money for the sale of immovable property,
which is evident from the Balance Sheets of the petitioners
companies showing the opening balance, amount accepted during
the year, amount refunded during the year, balance lying at the end
of the year and interest paid to the applicants during the year. Thus,
the petitioners have committed the offence punishable under
Section 76-A of the Act by violating Section 73 of the Act and
requested to dismiss the petitions.
12) Learned counsel for respondent No.3 and Assistant Public
Prosecutor appearing for respondent No.1, reiterated the
contentions urged by the learned Deputy Solicitor General
appearing for respondent No.2.
13) Having heard the submissions made by the learned counsel
representing both parties and on perusal of the material available on
record, the point that arises for consideration is as follows:
“”Whether the proceedings against the petitioners in
C.C.No.9 of 2019 and C.C.No.10 of 2019 on the file of the IV
Additional District Judge – cum – II Additional Metropolitan
Sessions Judge – cum – the Special Judge for trial of
Economic Offences at Visakhapatnam are liable to be
quashed by exercising jurisdiction under Section 482 of
Cr.P.C.?”
P O I N T:
14) The petitioners filed the present petitions under Section 482
of Cr.P.C.
15) Section 482 of Cr.P.C saves the inherent powers of the High
Court to make such orders as may be necessary to give effect to
10VS,J
Crlps_2762 and 2761_2019any order under the Code or to prevent abuse of the process of any
Court or otherwise to secure the ends of justice. It is an obvious
proposition that when a Court has authority to make an order, it
must have also power to carry that order into effect. If an order can
lawfully be made, it must be carried out; otherwise it would be
useless to make it. The authority of the Court exists for the
advancement of justice, and if any attempt is made to abuse that
authority so as to produce injustice, the Court must have power to
prevent that abuse. In the absence of such power the administration
of law would fail to serve the purpose for which alone the Court
exists, namely to promote justice and to prevent injustice. Section
482 of Cr.P.C confers no new powers but merely safeguards
existing powers possessed by the High Court. Such power has to be
exercised sparingly in exceptional cases and this power is external
in nature to meet the ends of justice.
16) Time and again, the scope of powers of this Court under
Section 482 of Cr.P.C. were highlighted by the Apex Court in long
line of perspective pronouncements, which are as follows:
17) Section 482 of the Code of Criminal Procedure empowers the
High Court to exercise its inherent power to prevent abuse of the
process of Court. In proceedings instituted on complaint exercise of
the inherent power to quash the proceedings is called for only in
cases where the complaint does not disclose any offence or is
frivolous, vexatious or oppressive. If the allegations set out in the
complaint do not constitute the offence of which cognizance is taken
by the Magistrate it is open to the High Court to quash the same in
exercise of the inherent powers under Section 482. It is not,
however, necessary that there should be a meticulous analysis of
11VS,J
Crlps_2762 and 2761_2019the case, before the trial to find out whether the case would end in
conviction or not. The complaint has to be read as a whole. If it
appears on a consideration of the allegations, in the light of the
statement on oath of the complainant that ingredients of the
offence/offences are disclosed, and there is no material to show that
the complaint is mala fide, frivolous or vexatious. In that event there
would be no justification for interference by the High Court as held
by the Apex Court in “Mrs.Dhanalakshmi v. R.Prasanna Kumar1“
18) In “State of Haryana v. Bhajan Lal2” the Apex Court
considered in detail the powers of High Court under Section 482
and the power of the High Court to quash criminal proceedings or
FIR. The Apex Court summarized the legal position by laying down
the following guidelines to be followed by High Courts in exercise of
their inherent powers to quash a criminal complaint:
(1) Where the allegations made in the first information report or
the complaint, even if they are taken at their face value and accepted in
their entirety do not prima facie constitute any offence or make out a
case against the accused.
(2) Where the allegations in the first information report and other
materials, if any, accompanying the FIR do not disclose a cognizable
offence, justifying an investigation by police officers under Section
156(1) of the Code except under an order of a Magistrate within the
purview of Section 155(2) of the Code.
(3) Where the allegations made in the FIR or complaint and the
evidence collected in support of the same do not disclose the
commission of any offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non- cognizable offence, no1
AIR 1990 SC 494
2
1992 Supp (1) SCC 335
12VS,J
Crlps_2762 and 2761_2019investigation is permitted by a police officer without an order of a
Magistrate as contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no prudent
person can ever reach a just conclusion that there is sufficient ground
for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which a criminal
proceeding is instituted) to the institution and continuance of the
proceedings and/or where there is a specific provision in the Code or the
concerned Act, providing efficacious redress for the grievance of the
aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously instituted with an
ulterior motive for wreaking vengeance on the accused and with a view
to spite him due to private and personal grudge.
19) Keeping in view the above principles, I would like to examine
the case on hand.
20) A perusal of the material on record would show that basing on
the complaints lodged by one Guruzala Venkateswara Rao on
various dates alleging that the petitioners – companies have been
collecting deposits through various schemes and have defaulted in
refund of matured amounts to the depositors, respondent No.2
ordered inspection of the petitioners Companies. The record also
reveals that respondent No.3 – Guruzala Venkateswara Rao filed
W.P.No.15333 of 2017 before this Court. By an order dated
11.09.2017, a Division Bench of this Court observed as under:-
“1. This is perhaps the 106th case filed by the petitioner
against the private respondents, seeking a Writ of Mandamus to
declare the action of the respondents 1 to 5 in failing to conduct a
13VS,J
Crlps_2762 and 2761_2019proper investigation, pursuant to the raids conducted by the 3rd
respondent.
2………………………
3. This is at least the second round of litigation that the
very Bench has come across from the very same petitioner
against the very same respondents. In W.P.Nos.11301, 13295,
1318 and 13159 of 2016, disposed of on 19.07.2016 by a Bench
of this Court, observed that the petitioner had virtually declared a
war on the contesting respondents before different forums. It
appears that the scores and scores of writ petitions were filed
seeking a direction against the Income Tax Department,
Enforcement Directorate, Central Bureau of Investigation, local
police and various other authorities. The petitioner appears to
have withdrawn some of those writ petitions after advancing
arguments. Despite noting this, this Court took a lenient view and
merely closed W.P.No.11301 of 2016 and batch, lastly on
19.07.2016, after making certain observations.
4. After this Court closed the last of the series of writ
petitions on 19.07.2016, there appears to have been an income
tax raid on 07.04.2017 and 08.04.2017 in the premises of the 6th
respondent Company. Upon seeing news items in the print and
electronic media that a few crores had been recovered during the
raids, the petitioner got motivated once again, commenced war
against the respondents and has come up with the present writ
petition. But, as we have pointed out earlier, the writ Court is not
intended for people to settle private scores. The war launched by
the petitioner has gone unabated from the year 2011 for the past
six years. Every Court has taken a lenient view, even while
dismissing the writ petitions of the petitioner, which has perhaps
emboldened him to again and again make an attempt through this
Court to settle a private dispute that he has. Therefore, we are of
the considered view that it is high time that the abuse of process
14VS,J
Crlps_2762 and 2761_2019of Court is put an end to by imposing costs. Hence, the Writ
Petition is dismissed. The petitioner shall pay costs of Rs.50,000/-
to the High Court Legal Services Committee, within a period of
eight (8) weeks from today.”
21) Therefore, I find considerable force in the contention of the
petitioners that the said Guruzala Venkateswara Rao foisted many
false complaints against the petitioners in order to settle his
personal scores with petitioners herein and the other group of
companies. Further, the said Guruzala Venkateswara Rao is neither
allottee nor he is in any way directly involved or linked with the
business transactions of the petitioners.
22) Further, the short point that arises for consideration is
“whether the amounts collected by the petitioners for sale of
immovable property as advance would come under the purview of
„deposits‟ or could be exempted from the purview of „deposits‟ by
virtue of Rule 2(1) (c) (xii) (b) of the Companies (Acceptance of
Deposits) Rules, 2014”?
23) Before proceeding further, it would be appropriate to refer to
Rule 2 (1) (c) (xii) (b) of the Companies (Acceptance of Deposits)
Rules, 2014, which reads as under:-
“(c) “deposit” includes any receipt of money by way of
deposit or loan or in any other form, by a company, but does not
include –
(xii) any amount received in the course of, or for the
purposes of, the business of the company,-
(a) Xxxx
(b) as advance, accounted for in any manner whatsoever,
received in connection with consideration for property under an
15VS,J
Crlps_2762 and 2761_2019agreement or arrangement , provided that such advance is
adjusted against the property in accordance with the terms of
agreement or arrangement;
Provided that if the amount received under items (a), (b)
and (d) above becomes refundable (with or without interest) due
to the reasons that the company accepting the money does not
have necessary permission or approval, wherever required, to
deal in the goods or properties or services for which the money is
taken, then the amount received shall be deemed to be a deposit
under these rules:
Explanation.- For the purposes of this sub-clause the
amount referred to in the first proviso shall be deemed to be
deposits on the expiry of fifteen days from the date they become
due for refund.”
24) In the complaint itself, respondent No.2 has stated that the
petitioners have been intentionally collecting money as advance for
sale of property, entering into M.O.U. and paying interest on such
advances received without the actual sale of property. Further, none
of the persons, who have paid the advance amount for sale of
immovable property, have made any complaint against the
petitioners. The proviso to Rule 2 (1) (c) (xii) (b) makes it very clear
that only when the amount becomes refundable (with or without
interest) due to the reasons that the company accepting the money
does not have necessary permission or approval wherever required,
to deal in the goods or properties or services for which the money is
taken, then the amount received shall be deemed to be a deposit
under the respective rules. Further, as per the explanation to the
Rule 2, the amount referred in the first proviso shall be deemed to
be deposits on the expiry of 15 days from the date they become due
for refund.
16
VS,J
Crlps_2762 and 2761_2019
25) Admittedly, petitioners – companies had purchased the
agricultural land and after obtaining the permission from the
competent authorities for conversion of agricultural land into non-
agricultural land, have obtained permission for development of the
said land duly converting into layout of plots for
residential/commercial housing. To unlock the funds invested in
development of the lay outs etc., petitioners had offered to sell the
land in its possession and for this purpose entered into written
agreement/arrangement. By virtue of proviso to Rule 2 (1) (c) (xii)
(b) of the Companies (Acceptance of Deposits) Rules, 2014, the
advances received by the petitioners for sale of immovable property
are exempted from the purview of the deposits. However, the said
issue has already been decided by the High Court for the State of
Telangana in Criminal Petition Nos.1771, 5372 and 4731 of 2021,
wherein similar complaints raised by the defacto complainant
against the petitioners therein were quashed.
26) According to guideline No.7 of guidelines formulated in “State
of Haryana v. Bhajan Lal” (referred supra), where a criminal
proceeding is manifestly attended with mala fide and/or where the
proceeding is maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to spite him
due to private and personal grudge, the Court can exercise power
under Section 482 of Cr.P.C. and quash the proceedings. In present
cases also, without taking the malafide conduct of respondent No.3
– Gurajala Venkateswara Rao, respondent No.2 initiated the present
criminal proceedings against the petitioners basing on the complaint
submitted by respondent No.3. As discussed earlier, respondent
No.3 is neither allottee nor he is in any way directly involved or
17
VS,J
Crlps_2762 and 2761_2019
linked with the business transactions of the petitioners, however, he
lodged complaint against the petitioners with some ulterior motive to
wreck vengeance on the accused.
27) Having regard to the facts and circumstances of the case and
in view of the proviso to Rule 2 (1) (c) (xii) (b) of the Companies
(Acceptance of Deposits) Rules, 2014, guideline No.7 of guidelines
formulated in “State of Haryana v. Bhajan Lal” (referred supra),
this Court is of the considered view that continuation of proceedings
against the petitioners in both cases/accused would amount to
abuse of process of the Court.
28) Accordingly, the criminal petition Nos.2762 and 2761 of 2019
are allowed by quashing the proceedings against the petitioners
herein in C.C.No.9 of 2019 and C.C.No.10 of 2019 on the file of the
IV Additional District Judge – cum – II Additional Metropolitan
Sessions Judge – cum – the Special Judge for trial of Economic
Offences at Visakhapatnam.
29) The miscellaneous petitions pending, if any, shall also stand
closed.
________________________
JUSTICE V.SUJATHA
04.04.2025
Ksp