APHC010070882020 IN THE HIGH COURT OF ANDHRA PRADESH THURSDAY,THE ELEVENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE THE HONOURABLE DR JUSTICE VENKATA JYOTHIRMAI PRATAPA CRIMINAL Between: 1. JUPPALLI CHANDRASEKHAR @ CHANDRASEKHAR,, SIO NAGESWARA RAO, AGED ABOUT 42 YEARS, AGED OF 42 YEARS, R/O FLAT NO.A.S.4, GNG TOWERS, EXCISE OFFICE ROAD, SER CENTER, PRASADAMPADU, VIJAYAWADA, KRISHNA DISTRICT, ANDHRA PRADESH. 1. THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS ADDL. PUBLIC PROSECUTOR, HIGH COURT OF ANDHRA PRADESH AT AMARAVATHI. 2. PARUCHURI PANDURANGA RAO, S/O PARUCHURI RAMACHANDRIAH, AGED ABOUT 77 YEARS, R/O LIG HYDERABAD, TELANGANA STATE. Counsel for the Petitioner/accused: 1. CHALASANI AJAY KUMAR Counsel for the Respondent/complainant(S): 1. S SREERAMACHANDRA MURTHY 2. PUBLIC PROSECUTOR (AP) The Court made the following: 1 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) THURSDAY,THE ELEVENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE DR JUSTICE VENKATA JYOTHIRMAI PRATAPA CRIMINAL PETITION NO: 999/2020 JUPPALLI CHANDRASEKHAR @ CHANDRASEKHAR,, SIO NAGESWARA RAO, AGED ABOUT 42 YEARS, AGED OF 42 YEARS, R/O FLAT NO.A.S.4, GNG TOWERS, EXCISE OFFICE ROAD, SER CENTER, PRASADAMPADU, VIJAYAWADA, KRISHNA DISTRICT, ANDHRA ...PETITIONER/ACCUSED AND THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS ADDL. PUBLIC PROSECUTOR, HIGH COURT OF ANDHRA PRADESH AT PARUCHURI PANDURANGA RAO, S/O PARUCHURI RAMACHANDRIAH, AGED ABOUT 77 YEARS, R/O LIG - 97, KPHB COLONY, KUKATPALLY HYDERABAD, TELANGANA STATE. ...RESPONDENT/COMPLAINANT(S): Counsel for the Petitioner/accused: CHALASANI AJAY KUMAR Counsel for the Respondent/complainant(S): S SREERAMACHANDRA MURTHY PUBLIC PROSECUTOR (AP) the following: IN THE HIGH COURT OF ANDHRA PRADESH [3396] THE HONOURABLE DR JUSTICE VENKATA JYOTHIRMAI PRATAPA JUPPALLI CHANDRASEKHAR @ CHANDRASEKHAR,, SIO NAGESWARA RAO, AGED ABOUT 42 YEARS, AGED OF 42 YEARS, R/O FLAT NO.A.S.4, GNG TOWERS, EXCISE OFFICE ROAD, SER CENTER, PRASADAMPADU, VIJAYAWADA, KRISHNA DISTRICT, ANDHRA ...PETITIONER/ACCUSED THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS ADDL. PUBLIC PROSECUTOR, HIGH COURT OF ANDHRA PRADESH AT PARUCHURI PANDURANGA RAO, S/O PARUCHURI RAMACHANDRIAH, COLONY, KUKATPALLY ...RESPONDENT/COMPLAINANT(S): 2 ORDER: The instant criminal petition under Section 482 of the Code of Criminal Procedure, 1973 (for short ‘Cr.P.C)/under Section 528 of Bharatiya Nagarik Suraksha Sanhita, 2023 (for short ‘BNSS’) has been filed by the Petitioner/Accused, seeking quashment of the proceedings in C.C.No.737 of 2019, on the file of the Hon'ble Additional Judicial First Class Magistrate, Nandigama, Krishna District, for the offences under Sections 420, r/w 34 of IPC. 2. The case of the Prosecution, in brief, is that, on 15.10.2016 at about 08:00 hours, with an intention to purchase a house site, Respondent No.2 went to Vijayawada and met Accused No.1, who is a real estate broker, and on his request to purchase a house site, Accused No.1 informed him that good residential plots were available in ARNAA Homes Layout, Amaravathi Smart City, situated at Keesara Village and took him to Keesara Village and showed the said plots. Thereafter, Accused No.1 took Respondent No.2 to the office of Accused No.2, who represented that Plot Nos.22 and 23 in the said venture were ready for sale. The sale consideration was fixed at Rs.14,50,000/- for each plot, totalling Rs.29,00,000/- for both. Upon negotiation, Respondent No.2 agreed to purchase the two plots for a total consideration of Rs.28,50,000/-, to which Accused No.2 agreed, and Respondent No.2 was asked to pay an advance amount of Rs.10,00,000/-. As bank working hours were over on that day, Respondent No.2 returned to Hyderabad and, on 17.10.2016, transferred an amount of Rs.10,00,000/- 3 through RTGS/NEFT from his SBI account at Kukatpally to the bank account of ARNAA Homes maintained by A-2 in HDFC Bank, Benz Circle Branch, Vijayawada. Subsequently, on 18.11.2016 at about 10:00 hours, Accused No.2 pressurized Respondent No.2 to pay the remaining balance amount, stating that upon payment of the entire sale consideration to the land owner, the plots would be registered in favour of LW-1. Believing the said representation, Respondent No.2 transferred an additional amount of Rs.11,90,000/- to the bank account of ARNAA Homes maintained by Accused No.2 in HDFC Bank, Benz Circle Branch, Vijayawada. Besides the said amount, Respondent No.2 also obtained a demand draft for Rs.6,60,000/- in the name of the land owner, namely P. Sundar Shiva. However, as Accused Nos.1 and 2 failed to proceed with the registration of the plots and continued to delay the same, Respondent No.2 cancelled the demand draft issued in favour of the land owner and encashed the amount. Despite having received the substantial portion of the sale consideration, Accused Nos.1 and 2 neither registered the plots in favour of Respondent No.2 nor returned the amounts received. Thus, Accused Nos.1 and 2, with dishonest intention from the inception, cheated Respondent No.2 by making false and deceptive representations, thereby causing wrongful loss to Respondent No.2 and wrongful gain to themselves. 4 3. Heard Sri Chalasani Ajay Kumar, learned counsel for the petitioner and Ms.K.Priyanka Lakshmi, learned Assistant Public Prosecutor on behalf of the State. 4. Learned counsel for the Petitioner would submit that the complaint, even if taken at its face value, does not disclose the essential ingredients to constitute the offence of cheating insofar as the Petitioner is concerned. The Petitioner is arrayed as Accused No.2 only in his capacity as the Managing Director of the Company. It is further submitted that Respondent No.2 has already instituted a civil suit in O.S.No.36 of 2020 on the file of the Court of Principal Senior Civil Judge, Vijayawada, seeking specific performance of contract, wherein the company is arrayed as Defendant No.5 and the Petitioner, in his capacity as Managing Director, is shown as Defendant No.6. Learned counsel would further submit that merely because the company has been implicated, the Petitioner cannot automatically be fastened with criminal liability, unless specific allegations attracting the offence are made out against him personally. In this regard, reliance is placed on the judgment of the Hon’ble Supreme Court in Aneeta Hada and Others v. Godfather Travels and Tours (P) Ltd., and Others1, to contend that such prosecution is legally unsustainable. Learned counsel would further submit that Respondent No.2 had issued a legal notice dated 07.10.2019, to which the Petitioner gave a detailed reply on 18.10.2019. He has also drawn the attention of this Court to the order 1 (2012) 5 SCC 661 5 passed in the anticipatory bail application in Crl.P.No.6705 of 2019 by this Court. Learned counsel would contend that the entire dispute between the parties is purely civil in nature and arises out of contractual obligations, for which a civil remedy has already been invoked. The initiation of criminal proceedings is nothing but an abuse of process of law, intended to give a criminal colour to a civil dispute. Hence, learned counsel prays that the proceedings against the Petitioner are liable to be quashed. 5. Learned Assistant Public Prosecutor would submit that Respondent No.2 was induced into entering a transaction for purchase of Plot Nos.22 and 23 at the rate of Rs.14,50,000/- per plot. It is contended that, believing the representations made by the Accused, Respondent No.2 paid a total sum of Rs.21,90,000/-. However, despite receipt of the said amount, the Petitioner failed to execute and register the sale deed in respect of the subject property in favour of Respondent No.2. It is further submitted that Accused Nos.1 and 2, though not the owners of the said property, had collected the amount of Rs.21,90,000/- from Respondent No.2, and such act of inducing him to part with money without having lawful title or authority over the property clearly attracts the ingredients of the offence of cheating. On these grounds, learned Assistant Public Prosecutor would contend that the allegations disclose a prima facie case and that the proceedings do not warrant interference at this stage. 6 6. In reply, learned counsel for the Petitioner would submit that the copy of the plaint filed by Respondent No.2 in O.S.No.36 of 2020 falsifies the allegations levelled against the Petitioner in the present proceedings. It is specifically averred in the said plaint that Respondent No.2 had paid the amounts to the company and that the Petitioner, who is arrayed as Defendant No.6 therein, had received the said amounts only on behalf of the company. In such circumstances, the Petitioner cannot be fastened with personal criminal liability, particularly when the company in question is a registered entity under the Companies Act, a fact which is supported by the certificate of incorporation placed on record. Learned counsel would further submit that had there been any dishonest intention on the part of the Petitioner to cheat Respondent No.2 from the inception, there was no occasion for the parties to enter into a fresh agreement dated 09.02.2019, even subsequent to the registration of the present crime. Hence, the allegation of cheating does not arise. Learned counsel for the Petitioner, therefore, prays to quash the proceedings against the Petitioner. In support of his contentions, learned counsel for the Petitioner has placed reliance on the judgments of the Hon’ble Supreme Court in Randheer Singh vs. State of Uttar Pradesh and Others 2 and Prof.R.K.Vijayasarathy and another vs. Sudha Seetharam and another3. 7. This Court has carefully considered the rival submissions and perused the record. The essential ingredients of the offence under Section 420 IPC 2 (2021) 14 SCC 626 3 (2019) 16 SCC 739 7 are deception and dishonest intention at the time of making the promise. Mere breach of contract or failure to perform an agreement, without dishonest intention from the inception, does not constitute cheating. 8. In Hridaya Ranjan Prasad Verma v. State of Bihar4, the Hon’ble Supreme Court held as follows: “Mere breach of contract cannot give rise to criminal prosecution for cheating unless fraudulent or dishonest intention is shown at the beginning of the transaction.” 9. In the present case, the material on record indicates that the payments were admittedly made to the company account and that a civil suit for specific performance has also been filed by Respondent No.2 and that a fresh agreement dated 09.02.2019 was entered into even after registration of the crime. These circumstances prima facie do not disclose the allegation of dishonest intention at the inception. 10. In Aneeta Hada’s case referred to supra, the Hon’ble Supreme Court categorically held that criminal liability cannot be fastened on directors or officers of a company in the absence of specific statutory provision or specific allegations establishing individual culpability. Similarly, in Sunil Bharti Mittal v. CBI5, the Hon’ble Supreme Court held that a director cannot be made an Accused merely by virtue of his position unless there is sufficient material to show his active role coupled with criminal intent. 4 (2000) 4 SCC 168 5 (2015) 4 SCC 609 8 11. The Supreme Court has consistently deprecated the tendency to convert civil disputes into criminal proceedings. In Prof. R.K. Vijayasarathy’s case referred to supra, it was held as follows: “Criminal proceedings cannot be used as a weapon for arm- twisting or to settle scores arising out of civil disputes.” 12. In Mohammed Ibrahim and others vs. State of Bihar6, the Hon’ble Supreme Court held as follows: “This Court has time and again drawn attention to the growing tendency of converting purely civil disputes into criminal cases. Criminal courts are not meant to be used for settling scores or pressurising parties to settle civil disputes. When the substance of the complaint is a civil dispute, the same should not be allowed to be converted into a criminal prosecution.” 13. In view of the above discussion and the law laid down by the Hon’ble Supreme Court in the judgments referred to supra, this Court is of the considered opinion that, it is evident that the Petitioner has been arrayed as Accused No.2 solely on the ground that he is the Managing Director of ARNAA Homes. The complaint does not contain any specific allegation showing that the Petitioner, in his individual capacity, made any false representation or had dishonest intention at the inception of the transaction. The amounts admittedly were transferred to the bank account of the company, and not to the personal account of the Petitioner. 14. Further, the record discloses that Respondent No.2 has already instituted a civil suit in O.S.No.36 of 2020 seeking specific performance of the very same transaction, wherein it is pleaded that the payments were made to 6 (2009) 8 SCC 751 9 the company and that the Petitioner received the amounts only on behalf of the company. The criminal complaint arises out of the identical set of facts which constitute the subject matter of the civil suit. Moreover, the fact that a fresh agreement dated 09.02.2019 was entered into between the parties even after registration of the present crime strengthens the contention of the Petitioner that no case is made out against the Petitioner for the offence under Section 420 IPC. In such circumstances, this Court is of the view that, it is a fit case to exercise the jurisdiction under Section 482 Cr.P.C. 15. In the result, the Criminal Petition is allowed. The proceedings in C.C.No.737 of 2019 against the Petitioner / Accused No.2 on the file of the Court of Additional Judicial First Class Magistrate, Nandigama, Krishna District , are hereby quashed. There shall be no order as to costs. As a sequel thereto, miscellaneous petitions pending, if any, shall stand closed. _________________________________________ Dr. JUSTICE VENKATA JYOTHIRMAI PRATAPA Date: 11.09.2025 Dinesh KKV