m f IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI WEDNESDAY, THE NINETEENTH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE { PRESENT THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY ' 'Vv \< C^RIMINAL APPEAL NO: 1431 OF 9nn7 Appeal under Section 378 of Cr.P.C praying that the High Court may acquittal dt. 26-04-2007 passed in on the file of the Special Judicial Magistrate of First be pleased to set-aside the order of C.C.No. 264 of 2005 Class (Excise) at Vizianagaram consequently punish the Respondent/ Accused according to law. Between: A.P. State Financial Corporation, Vizianagaram Branch, rep. by its Deputy Manager, Office at Vuda Balaji Complex, Viznanagaram District- 535 002. ...Appellant AND 1. The State of Andhra Pradesh, Rep. by its Public Prosecutor, of A.P., at Hyderabad. 2. Smt. Tetali Radha High Court W/o Venkate Krishna Reddy, R/o 10-3000 Krishna Murthy Post Master Chalapathi Nagar, Near Dairy Farm C/o. Visakhapatnam. ...Respondent Counsel for the Appellant: Sri G R Sudhakar Counsel for the Respondent No.1: Public Prosecutor Counsel for the Respondent No.2; None Appeared The Court made the following: THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY CRIMINAL APPEAL N0.1431 OF 2007 JUDGMENT: The Criminal Appeal is preferred by the AP State Financial Corporation, Vizianagaram Branch, represented by its Deputy Manager, against the Judgment dated 26.04.2007 in C.C.No.264 of 2005 on the file of the Special Judicial Magistrate of First Class (Excise) at Vizianagaram, whereby and whereunder the respondent/accused was found not guilty of the offence under Section 42(1) of the State Financial Corporations Act, 1951 (for short ‘the Act’) and was acquitted of the said offence. 2. A private complaint was filed by the appellant-Corporation against the respondent-accused alleging as follows. (a) The complainant is a Corporation incorporated under the Act with a motto to give financial assistance to the prospective entrepreneurs for small scale industries, etc., with an aim to develop the Nation. The accused is one of the Directors of M/s.Jayalaxmi Synthetics Pvt. Ltd Thammayapalem Village of PusapatiregaMandal in Vizianagaram. She approached the complainant on 21.09.2002 for grant of a term loan of Rs.97.10 lakhs for its unit under the name and style M/s. Jayalaxmi Synthetics Pvt.Ltd., a manufacturing unit of polyester Grey cloth, and aimed at 2 to be situated in 2800 sq.yards., in Sy.No.140/2-B at Thammayapalem, Pathivada Village of Poosapatirega Mandal, Vizianagaram Documentation was completed by 31.05.2003 and the accused term loan of Rs.73.79 lakhs by creating charge over the land, buildings, plant and machinery etc., in favour of the complainant. The accused District. availed the and the other Directors demonstrated opening of the unit and they run the said unit for a couple of months and stopped the same due to inadequate working capital and abandoned the unit. (b) On 15.07.2004, the Vigilance team of the complainant Corporation visited the unit and found that some valuable machinery and motors of the unit were missing and furthermore, it was informed that the Directors and the promoters had drawn another term loan and working capital from the State Bank of Hyderabad, Vizianagaram Branch, under different names of companies and also it is found that the payments irregular in the loan accounts and furthermore the accused along with the other Directors submitted fake bills for the valuable machinery etc. 19.07.2004, the vigilance officials effected seizure of the unit and took possession of the same as per the provisions contemplated under the Act. The complainant, after discussions with the officials of the State Bank of Hyderabad and Karnataka Bank Ltd., of Vizianagaram Branch, came to a were On % 3 conclusion that the accused and the other Directors are not fair and played fraud on the complainant’s organization. The complainant deputed its officials, along with the Special Deputy Tahsildar, Visakhapatnam, to inspect the locations where the accused had declared properties for the purpose of establishing solvency. On inquiry and reports, it was found that there are no properties worth mentioning either in the name of the accused or in the name of the other Directors in consonance with the declarations of solvency submitted by the respective persons in favour of the organizations of the complainant. The accused submitted a declaration to the complainant that she owned properties listed in the solvency declaration. Her solvency was accepted to a tune of Rs.83,50,000/- and she expressed her intention to invest a margin money of Rs.24,25,000/-. The properties declared were situated at different places viz. Thossipudi village in Bikkavolu Mandal of East Godavari District and Bommuru Village, Bommuru Mandal (Razole) and Bondapalli Village, Parvathipuram Mandal of Vizianagaram District. On enquiry, the Panchayat Secretary of Pandalapaka Gram Panchayat through his letter dated R.O.C.No.240/2004 dated 07.12.2004, the Panchayat Secretary of Gram Panchayat of Thossioudi through his certificate dated 10.08.2004, the Village Secretary, Bondepalli of Parvathipuram Mandal through his certificate dated 23.09.2004, the Assistant Secretary, Gram Panchayat, Rajiolu through his certificate dated 08.12.2004 and the M.R.O., 4 % Bikkavolu through 09.08.2004,revealed that the accused had her letter under R.C. No. 349/2004 dated no properties in respective villages in consonance with the declaration given by him to the complainant, (c) Basing on the material on record and the sworn statement of the complainant, the case was taken on file as CC No.69 of 2005 on the file of Class, Vizianagaram against the accused for the offence under Section 42(1) of the Act the learned Additional Judicial Magistrate of First 3. When the accused was examined under Section 251 Cr.P.C.,she denied commission of offence, pleaded not guilty and claimed to be tried. 4. Subsequently, CC No.69 of 2005 was transferred from the file of the Additional Judicial Magistrate of First Class, Vizianagaram to the file of the learned Special Judicial Magistrate of First Class (Excise), Vizianagaram and renumbered the same as CC No.264 of 2005. 5. In order to prove its case, the prosecution examined PWs.1 got Exs.P1 to P7 were got marked. to 8 and 6. After closure of the prosecution evidence, the accused under Section 313 Cr.P.C. She denied the incriminating circumstances evidence of prosecution witnesses. On behalf of the defence were examined, except marking Ex.DI. was examined in the no witnesses 5 7. Heard. Perused the record. 8. This is an appeal against an Order of acquittal. There is a presumption available under law that an accused is presumed to be innocent unless contrary is proved. That presumption of innocence is further strengthened by an order of acquittal passed by the trial Court. In dealing with the appeals against acquittal, though this Court has full power to re-appreciate the evidence, at the same time, it would be slow in interfering with the order of acquittal because presumption available under law is further strengthened by the order of acquittal. Unless there are substantial or compelling reasons. this Court will not ordinarily disturb the findings of the trial Court. If the trial Court has given any perverse finding, then it can be a ground to interfere with the order of acquittal. Similarly, if admissible evidence has not been taken into consideration or inadmissible evidence has been looked into for the purpose of arriving at a particular finding, then also it can be said to be a compelling reason to interfere with the same. 9. On this aspect, it is pertinent to refer to a decision in Harbans Singh & another v. the State of Punjab\ wherein it was held as follows: (para 8) “The question as regards the correct principles to be applied by a Court hearing an appeal against acquittal of a person has engaged the attention of this Court from the very beginning. In ^ AIR 1962 SC 439 many cases, especially the earlier ones, the Court has in laying down such principles emphasized the necessity of interference with an order of acquittal being based only substantial reasons’ and has on ‘compelling and • oxpressed the view that unless such reasons are present in an Appeal, Court should not interfere with an order of acquittal (Vide Suraj Pal Singh v. The State, 1952 SCR 193; (AIR 1952 SC 52); Ajmer Singh v. State of Punjab, 1953 SCR 418; (AIR 1953 SC 459). The use of the words, ‘compelling in exercising their difficulties reasons’ embarrassed some of the High Courts jurisdiction in appeals against acquittals and occasionally arose as to what this Court had, ‘compelling reasons’. In later meant by the words years the Court has often avoided emphasis on ‘compelling reasons’ but nonetheless adhered to the view expressed earlier that before interfering in appeal with an order of acquittal a Court must examine not only questions of law and fact in all their aspects but must also closely and carefully examine the reasons which impelled the lower courts to acquit the accused and should interfere only if satisfied, examination that the conclusion reached by the lower the guilt of the person has not been proved is unreasonable. after such court that 10. The case of the appellant/complainant is that the accused gave false statements of solvency with regard to the properties mentioned in Ex.P2, hence she is liable for punishment under Section 42 of the Act. Whereas, the contention of the accused is that as per Section 42(3) of the Act,no Court shall take cognizance of any offence punishable under this Act otherwise than on a complaint in writing signed by an officer of the Financial % Corporation authorized by the Board in this behalf, and since PW.1 is not authorized by the Board to file the present complaint, the complaint filed by PW.1 is not maintainable. 11. There is no whisper either in the complaint or in the evidence of PW1 that he is authorized by the Board to file the complaint on behalf of the Corporation. It is the contention of the learned defence counsel that, the order dated 01.08.1997 issued by the Managing Director in respect of delegation of powers to the officers of the Corporation, is filed at the time of filing of the complaint, and pursuant to the same, the Court took cognizance. But, mere filing of document without any reference either in the complaint or in the evidence is not sufficient to say that PW1 is properly authorized by the Board to file the complaint. Moreover, the complainant has not chosen to mark the said letter for the reasons best known to it. Moreover, a specific suggestion to PW1 was made by the learned defence counsel during the cross examination that he is not authorized to launch prosecution for which, the complainant has not chosen to file either the resolution passed by the Board or the order issued by the Managing Director referred to by the complainant during arguments. Therefore, there is no cogent and convincing evidence to conclude that PW1 is authorized by the Board to file the complaint under Section 42 of the Act. 8 12. It is the further submission of the learned provisions of Section 42 of State Financial Corporation applicable to Ex.P2, which is a solvent declaration. It is his contention that Section 42 of the Act applies to the false statement security given and not to every statement, complainant argues that though PW1 and PW3 counsel for accused that the Act are not made with regard to the The learned counsel for the were subjected to cross- examination at length, nothing worth mentioning was elicited to say that the declaration in Ex.P2 is true. He further contends that of the Act, the complainant got every right to proceed owned and possessed by the accused for realization the complainant though such properties are not given as security. as per Section 31(1)(c) against the properties of the amount due to 13. Admittedly, Ex.P2 is only a declaration made by the accused to prove her solvency. During the cross-examination of PW.1, it is elicited that after sanctioning the loan, the Corporation would send the sanctioning letter to the applicants containing the terms and conditions of the capital clause, repayment schedule and also collateral admitted fact that the said sanction letter has not sanction and also security. It is an seen the light of the day for the reasons best known to the complainant. It is admitted by PW1 and PW8 that Ex.DI - letter dated 29.04.2003 was addressed by the complainant company revising the capital clause, collateral security and repayment % 9 schedule at the request of applicant. In the said letter, the original capital clause under condition No.70 of original sanctioning letter is modified and also the Corporation accepted the collateral security equivalent the term loan of Rs.37.9 lakhs in the form of land and buildings of the unit which the company is not seeking any financial assistance for the short fall by way of fixed deposits. to 50% of on 14. Under these circumstances unless the original sanction letter issued after receiving the capital clause etc., is produced before the court, it cannot be decided whether any property declared under Ex.P2 IS given as security by the accused or not. Moreover, it is well established principle of law that penal provisions in a Statute have to be interpreted strictly. 15. In view of the aforesaid facts and circumstances of the case, this Court is of the considered opinion that the learned Special Magistrate has rightly acquitted the accused of the aforesaid offence and there are no compelling or substantial reasons to interfere with the impugned judgment. 16. The Criminal Appeal is devoid of merit and the same is, accordingly, dismissed, confirming the Judgment dated 26.04.2007 in C.C.No.264 of 2005 on the file of the Special Judicial Magistrate of First Class (Excise) at Vizianagaram. 10 As a sequel, pending interlocutory applications if any, shall stand closed. Sd/- K. TATA RAO DEPUTY REGISTRAR //TRUE COPY// SECTION OFFICER To. 1. The Special Judicial Magistrate of First Class (Excise): Vizianagaram, Vizianagaram District. (With Records) One CC to Sri. G R Sudhakar, Advocate [OPUC] Two CC's to The Public Prosecutor, High Court of Andhra Pradesh at Amaravati [OUT] The Section Officer, Criminal Section, High Court of Andhra Pradesh at Amaravati. Two CD Copies 2. 3. 4. 5. SAM RAM j , ; • ? HIGH COURT DATED: 19/03/2025 JUDGMENT CRLA.No.1431 of 2007 ’Tli I'K • O . ^ 2'I SEP 2025 r»' .JJvCurrMt S«ct|ojv/i^ DISMISSING THE CRIMINAL APPEAL