Dismissed

Dr. G. Srinivasa Rao (A-4) v. The State

Telangana HC8 Nov 2012CRLP/10961/2009

Case brief

AI extract

What is this about?

The Court disposed of three criminal petitions seeking quashing of FIRs regarding alleged cheating and criminal breach of trust. The Court dismissed the petitions for the first petitioner due to a controllable confessional statement, but allowed quashing for the first two by holding that prima facie cases exist based on the falsity of representations made to investors.

What did the court decide?

Criminal Petitions 2909 and 6549 of 2010 dismissed; Crl. Petition 10961 of 2009 dismissed on merits.

Dr. G. Srinivasa Rao (A-4) Vs The State — Cheating and Forgery | Telangana HC (2012)

¶1

HON’BLE SRI JUSTICE K.G. SHANKAR Crl. Petition Nos.10961 of 2009, 2909 and 6549 of 2010

¶2

Date: 08.11.2012

¶3

Crl.P.No.10961 of 2009: Between: Dr. G. Srinivasa Rao … Petitioner/A.4 AND Investing Officer of Crime No.249/09 Of CCS (Inspector West Zone Team), Detective Div., the State rep.by P.P., High Court of A.P., Hyderabad, and 2 others … Respondents Crl.P.No.2909 of 2010: Between: Dr. G. Srinivasa Rao … Petitioner/A.3 AND The S.H.O., Madhapur P.S., Cyberabad, the State rep.by P.P., High Court of A.P., Hyderabad, and another … Respondents Crl.P.No.6549 of 2010: Between: Sri Seshu Guddanti, and another … Petitioners/ A.1 & A.2 AND The S.H.O., Madhapur P.S., Cyberabad, the State rep.by P.P., High Court of A.P., Hyderabad, and another … Respondents

¶4

HON’BLE SRI JUSTICE K.G. SHANKAR

¶5

Crl. Petition Nos.10961 of 2009, 2909 and 6549 of 2010

¶6

COMMON ORDER:

¶7

This common order disposes of the three criminal petitions. Crl. Petition Nos.2909 and 6549 of 2010 seek to quash C.C.No.2105 of 2009 on the file of the IX Metropolitan Magistrate, Kukatpally at Miyapur, Cyberabad, Ranga Reddy District relating to First Information Report (FIR, for short) in Crime No.517 of 2009 of Madhapur Police Station, Cyberabad. A.1 and A.2 in C.C.No.2105 of 2009 filed Crl. Petition No.6549 of 2010. A.3 therein filed Crl. Petition No.2909 of 2010.

¶8

The second respondent in both the cases is the de facto complainant.

¶9

2. Crl. Petition No.10961 of 2009 is for quashment of FIR in Crime No.249 of 2009 on the file of the Central Crime Station (CCS) Police Station, DD, Hyderabad together with

¶10

transferred FIR in Crime No.272 of 2009 of Asifnagar Police Station and FIR in Crime No.153 of 2009 of Tappachabutra Police Station. The sole petitioner in this Crl. Petition is A.4 in the FIRs. Respondents 2 and 3 in the Crl. Petition No.10961 of 2009 are the de facto complainants. The de facto complainants in Crl. Petition 10961 of 2009 are said to be close friends of the de facto complainant in Crl. Petition Nos.2909 and 6549 of 2010. Although the FIRs are different, they contain a common thread. The case of the de facto complainants in all these cases is that the accused committed criminal breach of trust, cheating and conspiracy as well as criminal intimidation punishable under Sections 406, 408, 418, 420 and 120-B read with Section 34 of the Indian Penal Code (IPC, for short).

¶11

3. The averments of the charge sheet in C.C.No.2105 of 2009 are:

¶12

a) One Lalit Shah, who is the de facto complainant in C.C.No.2105 of 2009, has been working as Software Engineer in M/s. Computer Associates since about four years. Akella Sinivas has been his friend.

¶13

A. Srinivas was co-employee of Lalit Shah for some time. He has been presently staying in the United States of America (USA, for short) along with his wife-Smt. Kidambi Krishna.

¶14

b) Guddanti Seshu and his wife Shalini, who are A.1 and A.2 in C.C.No.2105 of 2009, became friends of

¶15

A. Srinivas while they were working in the USA. A.1 and A.2 returned to Hyderabad about a year prior to the complaint. They planned to start a chain pharmaceutical companies. They sent email to A. Srinivas on 25.01.2009 inviting him to invest in the business venture started by A.1 and A.2. They described J.A. Chowdary, Managing Director of Nvidia Company and Dr. Ramesh, Managing Director of Medwin Hospital and others as share holders in the company floated by A.1 and A.2. It may be noted that J.A. Chowdary and Dr. Ramesh are A.6 and A.5 respectively in C.C.No.272 of 2009 on the file of the VI Additional Chief Metropolitan Magistrate, City Criminal Courts, Nampally, Hyderabad in the complaint lodged by A. Srinivas and his wife-Smt. Kidambi Krishna.

¶16

c) A.1 and A.2 also represented to A. Srinivas that J.A. Chowdary and others invested to a tune of

¶17

US $ 212,000 in the venture floated by A.1 and A.2. A.1 to A.3 informed Lalit Shah through email that they started 600 chain stores already and that another 20 stores would be opened shortly. Lalit Shah believing the representation invested US $ 25,000 and Rs.9,75,000/- in Indian currency. However, the accused made themselves scarce after the investment by Lalit Shah.

¶18

d) Lalit Shah made enquiries with the Registrar of Companies and came to know that no shares were registered in his name. A.1 later informed Lalit Shah that the business was suffering from losses and asked Lalit Shah to invest further to turn the venture into a profitable business. Lalit Shah made further enquiries and came to know that A.5 and A.6 had not invested any monies in the business of the accused.

¶19

e) On 07.10.2009, police apprehended A.1, upon the complaint by Lalit Shah. A.1 confessed to police that he started M/s. Yellowstone Pharmacy Retail Business at Hyderabad

¶20

in 2007 in the name of A.1 and A.2.

¶21

He further confessed that names of leading personalities like the names of A.5 and A.6 were used as share holders and co-founders of the firm, that A.1 was the Managing Director, A.2 was the Chief Executive Officer and A.3 was the Director of the firm and that accused subsequently misused the collected funds for their personal need and thus cheated the investors. On the basis of the complaint of Lalit Shah, together with the confession of A.1, C.C.No.2105 of 2009 on the file of the IX Metropolitan Magistrate, Kukatpally at Miyapur, Cyberabad, Ranga Reddy District was lodged against the petitioners/A.1 and A.2 and A.3 who is the father of A.1.

¶22

4. A. Srinivas in his turn lodged a complaint with CCS Police Station on 09.09.2009. It was registered as FIR in Crime No.249 of 2009. The averments of the complaint which are similar to the complaint of Lalit Shah are as under:

¶23

a) A. Srinivas and his wife Kidambi Krishna are residents of the USA. A.2 and A.3 who are G. Seshu and his wife Shalini (A.1 and A.2 in C.C.No.2105 of 2009) informed the de facto complainant that a chain pharmaceutical companies are being established under the name and style of M/s. Yellowstone Pharmacy Pvt Ltd. A.5 and A.6 claimed that they invested US $ 50,000 in the company. The de facto complainant invested in the proposed company to be floated by A.2 and A.3 under the inducement. A.2, however, subsequently informed that the company could not be started owing to shortage of financial reserves. A.2 and A.3 have been acting with dishonest intention from the beginning and have conspired with other accused and cheated NRIs.

¶24

b) The de facto complainants initially lodged a complaint with Asifnagar Police Station, where the same was registered as Crime No.272 of 2009. The case was subsequently transferred to Tappachabutra Police Station and renumbered as Crime No.153 of 2009. The case was once again transferred to CCS Police Station, Hyderabad and was registered as Crime No.149 of 2009. Considering that A.2 and A.3 and others have cheated the de facto complainant and others, a private complaint was lodged by the de facto complainant. As already pointed out, it is the private complaint referred to police u/s.156 (3) Cr.P.C. that was registered as FIR in Crime No.149 of 2009.

¶25

5. Thus, the material facts are common in both the cases. It is the case of the de facto complainants that the petitioners herein and more particularly the petitioners in Crl. Petition Nos.2909 and 6549 of 2010 induced the de facto complainant and others to invest in their firm styled as M/s. Yellowstone Pharmacy Pvt. Ltd. and that the petitioners thus not only cheated but committed criminal breach of trust and other offences as the company never took off. The thread between the two cases is the friendship between A. Srinivas and Lalit Shah. On account of their friendship, the de facto complainants allegedly invested huge monies by believing the false representation of A.1 and A.2. The de facto complainants consequently seek that the accused be punished for their criminal activity.

¶26

6. Sri D. Madhava Rao, learned counsel representing the accused in all the three criminal petitions, contended that the petitioners were innocent of the crimes, that the claims of the complaints are prima facie false and that the accused deserve to be exonerated from any

¶27

criminal liability. On the other hand, Sri B. Chandrasena Reddy, learned counsel for the de facto complainants contend that prima facie case is made out against the accused and that the cases cannot be smothered at the threshold.

¶28

7. With reference to the FIR in Crime No.249 of 2009 of CCS Police Station, the learned counsel for the petitioner-Guddanti Srinivasa Rao (A.4) in the complaint contended that although an exhaustive complaint was lodged, there was a stray reference to G. Srinivasa Rao in the FIR and that absolutely no case is made out against the said Srinivasa Rao. It may be recalled that Srinivasa Rao is the father of G. Seshu, who is A.2 in the FIR. C.C.No.272 of 2009 is the complaint laid by Akella Srinivas and his wife against six accused arraying G. Srinivasa Rao as A.4. It is contended by Sri D. Madhava Rao, learned counsel for the petitioner-

¶29

G. Srinivasa Rao (A.4) that in a complaint running to about 10 pages, the complicity of A.4 was referred at two places and that too without assigning any overt acts to him.

¶30

8. However, the petitioner was arrested by police on 14.10.2009 when he surrendered before police, as can be seen from Part-I Case Diary containing the remand report. It was mentioned that the Inspector of Police, West Zone Team, CCS DD, Hyderabad, interrogated the petitioner at the time of his arrest and that the petitioner confessed the commission of the offence at that time.

¶31

As rightly submitted by the learned counsel for the

¶32

de facto complainant, the validity of the confessional statement and the evidentiary value of the surrender and confession by the petitioner are matters to be decided at trial and not in a petition u/s.482 Cr.P.C. Where the remand report recites that the petitioner made a confessional statement, I am afraid that this is not the stage or forum for quashing proceedings against the petitioner. Consequently, Criminal Petition No.10961 of 2009 is liable to be dismissed.

¶33

9. The petitioners in Crl. PetitionNo.6549 of 2010 are A.1 and A.2, while the petitioner in Crl. Petition No.2909 of 2010 is A.3 in C.C.No.2105 of 2009. A.3 is Dr. G. Srinivasa Rao, who is A.4 in FIR in Crime No.249 of 2009. His petition in Crl. Petition No.10961 of 2009 is found to be not meritorious for the reasons already set out. He joined A.1 and A.2 in seeking for the quashment of C.C.No.2105 of 2009 on the file of IX Metropolitan Magistrate, Kukatpally at Miyapur, Cyberabad.

¶34

The allegations against A.1 to A.3, who are G. Seshu (@ Seshu Kumar), his wife-Smt. Shalini and Dr. Srinivasa Rao, father of A.1 are more or less identical with the allegations of the complainant against six persons and others in FIR in Crime No.249 of 2009. The primary allegation is that the accused duped and induced the complainants including the de facto complainant in the present case to invest in the company floated by the accused under the mistaken assumption that the company has been flourishing on the basis of the representation of the accused. Admittedly, the de facto complainant and others have invested monies in M/s.Yellowstone Pharmacy Pvt. Ltd. It is the contention of the de facto complainant that the accused deliberately made a false statement to the de facto complainant and others that a pharmaceutical chain of companies has come up with about 600 branches with plan for

¶35

additional 20 more branches and that it subsequently came to the knowledge of the de facto complainant that the company never possessed 600 branches muchless was planning to expand the chain with 20 more franchises.

¶36

10. The learned counsel for the accused on the other hand contended that the accused never misrepresented anything to the de facto complainant or anyone else and that the activity of the accused is quite honourable, so much so, criminal intention cannot be attributed to the conduct of the accused. The learned counsel for the accused placed reliance upon Alpic Finance Ltd., v. P. Sadasiva n^[1] . In that case, the accused-trust running a dental college allegedly cheated the de facto complainant, which was a non-banking financial institution and dishonestly induced such a complainant to deliver property to the accused-trust. There was no allegation that the trust made wilful false representation. Curiously, there was no allegation that the trust resorted to fraud or dishonest inducement.

¶37

The trust in fact repaid substantial monies in terms of the hire purchase agreement. Holding that there was no element of misappropriation of cheating, the Supreme Court held that it was a fit case for quashing the proceedings.

¶38

11. In U. Dhar v. State of Jharkhan d^[2] , a sub-contractor demanded payment from the contractor after completion of the work entrusted to the sub-contractor. When the contractor failed to pay the demanded amount, the sub-contractor filed a criminal complaint alleging that the contractor misappropriated his money, after receiving payments from the principal. The Supreme Court observed that it was not a case of misappropriation since the contract between the principal and the contractor and the contract between the contractor and sub-contractor do not have nexus with each other.

¶39

The Supreme Court further observed that the dispute was regarding the recovery of money and that it was primarily fairly a civil dispute.

¶40

12. In Ajay Mitra v. State of M.P.^[3] , the accused were alleged to be guilty of cheating. The first accused, which was a Beverages Company, entered into a bottling agreement with the complainant for a period of five years. Subsequently, A.6 purchased the trademark of the Beverages Company of A.1. A.1 assigned the bottling agreement between it and the complainant to A.6- Industry. However, A.6-Industry issued a notice to the complainant terminating the bottling agreement.

¶41

The complainant preferred a complaint against A.1 and its directors alleging that they committed the offence of cheating. The Supreme Court held that mens rea could not be attributed to the accused either to cheat or to deceive the complainant and that the complaint did not prima facie disclose the commission of an offence u/s.420 IPC. In State of A.P., v. Goloconda Linga Swam y^[4] , the Supreme Court held that where the FIR did not disclose the commission of an offence without anything being added or subtracted from the recitals in the FIR, it would be appropriate to quash the FIR.

¶42

13. On the basis of these decisions, the learned counsel for the accused contended that no prima facie case is made out against the accused and the charge sheet, therefore, deserves to be quashed. This is a case where charge sheet has already been filed.

¶43

Goloconda Linga Swamy is an authority regarding the quashment of the FIR and not the charge sheet. This decision of the Supreme Court, consequently, has no relevance in the context of the present dispute. It is well settled law that there should be prima facie case to proceed against the accused in criminal litigation. The learned counsel for the petitioner-accused contended that prima facie case is not made out against any of the accused.

¶44

14. He referred to arbitral proceedings and the confirmation of the same in the Circuit Court for Loudoun County, United States of America. Srinivas Akella, his wife-Smt. Krishna Kidambi and one Shiv Bhuvanpalli raised arbitral proceedings before the sole arbitrator. It may be recalled that Akella Srinivas and Kidambi Krishna are the de facto complainants in FIR in Crime No.249 of 2009. The respondents in the arbitral proceedings are Guddanti Seshu, his wife-Smt. Shalini and his father-G. Srinivasa Rao.

¶45

15. The de facto complainant submitted the claim that the accused made fraudulent misrepresentations concerning their proposed Enterprise, which induced the de facto complainant to invest in the company floated by the accused. Inter alia, the award referred to A.3 (Guddanti Srinivasa Rao), father of A.1 as playing no part in promoting investments in M/s. Yellowstone Pharmacy Pvt. Ltd. The learned arbitrator also observed that there was no incidence of fraudulent misrepresentation, as the same was not proved by the de facto complainant. This award was subsequently made the Rule of the Court by the Circuit Court for Loudoun County in case No.65740, through order dated 30.05.2012. The learned counsel for the accused-petitioners project the same as a factor in their favour that there was no cheating, misappropriation or other offences as alleged by the de facto complainant. So far as A.3 in C.C.No.2105 of 2009 is concerned, in view of the remand report where it was alleged that he made a confessional statement, the accused cannot place reliance upon a foreign arbitral award, which was made Rule of the Court by a foreign Court. Even otherwise, the arbitrator merely held that from the evidence let in before the arbitral Tribunal, fraudulent misrepresentation was not established. In the light of voluminous evidence put fourth before me, the arbitral award has lost its evidentiary value. At the most, it is one of the pieces of evidence in favour of the petitioners-accused as against other evidence.

¶46

16. The learned counsel for the accused- petitioners contended that there was no premeditated mens rea on the part of the petitioners-accused to dupe and induce the de facto complainants to invest in the company floated by the accused. The learned counsel for the petitioners has taken me through Section 161 Cr.P.C. statements of Lalit Shah, A. Srinivasa Rao, Kidambi Krishna, J.A. Chowdary and Dr. Ramesh and submitted that the statements of the witnesses show that the petitioners-accused acted in a transparent and honest manner to start a business. He contended that there was no prima facie evidence that the accused nurtured any intention to obtain wrongful gain. The learned counsel for the petitionersaccused submitted that at the worst, it is a case of breach of contract exposing the petitionersaccused to civil liability and that there cannot be any criminal liability against them by any stretch of imagination.

¶47

17. It may be recalled that according to the

¶48

de facto complainants, the accused stated that J.A. Chowdary and Dr. Ramesh were founder

¶49

directors of the newly floated company, whereas admittedly, neither of them was a shareholder or a director of M/s. Yellowstone Pharmacy Pvt. Ltd. It is the case of the complainants that but for the inducement that J.A. Chowdary and Dr. Ramesh were directors of the company, the de facto complainant would not have invested in the company floated by the accused. Sri B. Chendrasena Reddy, learned counsel for the de facto complainants further contended that albeit there is no dispute that A.1 and A.2 in C.C.No.2105 of 2009 were directors of the company and that by the date of the investment by the complainant in January, 2008 A.1 was not even a director of the company, as can be seen from the Annual Return for the year ending on 30.09.2008. The page 3 of the Annual Return shows that the father of the first accused was director from 01.08.2007, whereas Seshu became a director from 01.08.2008 only. Thus, the first accused was not even a director at the time of the investment by the complainants. The complainants, therefore, are prima facie justified in claiming that false information was fed to the complainants as to who had been at the helm of affairs of the company for the de facto complainants to judge whether to invest in the company or otherwise. I am afraid that such an activity, in the absence of contrary evidence, is liable to be considered to be cheating.

¶50

18. Added to it, it is the further case of the complainants that when the complainants came to know that J.A. Chowdary and Dr. Ramesh were not directors of the company and when the de facto complainants enquired about the stage of the company, the accused responded stating that the company was in losses and that unless the de facto complainants invest further, the company cannot be restored to a profitable venture. This again would prima facie be tantamount to not only criminal misappropriation but also criminal breach of trust. In the back drop of such overwhelming evidence, when charge sheet was already filed by police finding a prima facie in respect of the very serious allegation, I am afraid that trial does not deserve to be throttled, more so, where there is a prima facie case against the accused. I, therefore, consider that the petitioners in Crl. Petition Nos.2909 and 6549 of 2010 have failed to make out a case for the quashing of C.C.No.2105 of 2009 on the file of the IX Metropolitan Magistrate, Kukatpally at Miyapur, Cyberabad.

¶51

19. The three Criminal Petitions, consequently, are found to be devoid of merits and are accordingly dismissed.

¶52

________________ K.G. SHANKAR, J Date: 08.11.2012 Isn

¶53

[1] AIR 2001 SC 1226

¶54

[2] AIR 2003 SC 974 [3] AIR 2003 SC 1069 (1)

¶55

[4] AIR 2004 SC 3967

Dr. G. Srinivasa Rao (A-4) v. The State

Case brief

What is this about?

What did the court decide?

Dr. G. Srinivasa Rao (A-4) v. The State

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Bavisetti Nagamani Vs Guthikonda Rama Prakash

DM United India Insurance Co. Ltd. N.Bad Vs T.Venugopal and Another

A.P.S.R.T.C. Vs Sri Jakka Shanker Reddy , Shanker Reddy

Thotakura Venkaiah Prasanth, Vs The State of Andhra Pradesh

Dara Subbalakshmi, Vs The State

Vyjayanthi Services rep by Prop S. Bhaskar, Vs The State of A.P.