Telangana High Court
M/S. Nestila Developers Llp vs The State Of Telangana on 26 March, 2026
Author: Juvvadi Sridevi
Bench: Juvvadi Sridevi
HIGH COURT FOR THE STATE OF TELANGANA
*****
CRIMINAL PETITION No.11901 of 2024
Between:
M/s. Nestila Developers LLP and three others ...Petitioners
AND
The State of Telangana represented
by Public Prosecutor and another ...Respondents
DATE OF ORDER: 26th MARCH, 2026
SUBMITTED FOR APPROVAL:
THE HON'BLE SMT. JUSTICE JUVVADI SRIDEVI
1 Whether Reporters of Local
newspapers may be allowed to see Yes/No
the Judgment?
2 Whether the copies of judgment
may be marked to Law Yes/No
Reporters/Journals
3 Whether HER Lordship wish to see
the fair copy of the Judgment? Yes/No
___________________
JUVVADI SRIDEVI, J
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* THE HON'BLE SMT. JUSTICE JUVVADI SRIDEVI
+ Criminal Petition No.11901 of 2024
% Date: 26th March, 2026
Between:
M/s. Nestila Developers LLP and three others ...Petitioners
AND
The State of Telangana represented
by Public Prosecutor and another ...Respondents
! Counsel for the Petitioners: Sri Bankatlal Mandhani
! Additional Public Prosecutor for
the State: Sri M.Ramachandra Reddy
! Counsel for Respondent No.2: Sri Anup Koushik Karavadi
>HEAD NOTE:
? Cases referred
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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT
HYDERABAD
THE HONOURABLE SMT. JUSTICE JUVVADI SRIDEVI
CRIMINAL PETITION No.11901 of 2024
DATED: 26th MARCH, 2026
Between:
M/s. Nestila Developers LLP and three others ...Petitioners
AND
The State of Telangana represented
by Public Prosecutor and another ...Respondents
O R D E R:
This Criminal Petition is filed by the petitioners-accused Nos.1 to 4 seeking to quash the criminal proceedings against them in C.C.No.3046 of 2021 pending on the file of the learned VIII Additional Metropolitan Magistrate-cum-Principal Junior Civil Judge, Ranga Reddy District at Kukatpally, (for short 'learned trial Court), registered for the offences under Section 138 of the Negotiable Instruments Act (for short 'the Act') and Section 420 of the Indian Penal Code (for short 'IPC').
02. Heard Sri Bankatlal Mandhani, learned counsel for the petitioners and Sri M.Ramachandra Reddy, learned 4 Additional Public Prosecutor for the State-respondent No.1 as well as Sri Anup Koushik Karavadi, learned counsel for the unofficial respondent No.2. Perused the record.
03(a). As seen from the record, the respondent No.2- partnership firm lodged a private complaint before the learned trial Court against the petitioner-accused No.1-partnership firm and its representatives i.e. the petitioner-accused Nos.2 to 4, for the offences punishable under Section 138 of the Act and Section 420 of IPC. It is stated in the complaint that the petitioner-accused No.1-firm, along with others, were retired designated partners of the respondent No.2-firm and had contributed certain amounts towards share capital in the respondent No.2-firm.
03(b). According to the complainant, there were financial adjustments between the respondent No.2-firm and the accused No.1-firm in connection with their business dealings. In relation to a sale transaction covered under a registered sale deed dated 09.02.2021, the petitioners-accused Nos.1 to 4 allegedly issued seven cheques for a total sum of Rs.3,53,27,404/- towards discharge of their liability. On 5 presentation, the said cheques were dishonoured by the banker. Thereupon, the respondent No.2 issued statutory legal notice to the petitioners demanding payment of the cheque amounts within the stipulated time. The petitioners issued a reply notice disputing the liability. However, as the cheque amounts were not paid within the statutory period and remained unpaid despite subsequent developments, the respondent No.2 initiated the complaint proceedings against the petitioners before the learned trial Court.
04(a). Learned counsel for the petitioners-accused Nos.1 to 4 contended that there was no legally enforceable debt or liability subsisting as on the date of presentation of the post- dated cheques, i.e. 02.04.2021. It is submitted that in view of the subsequent tripartite Memorandum of Understanding dated 19.02.2021, the original arrangement stood altered and, therefore, the very foundation for invoking Section 138 of the Act is absent. It is further contended that the essential ingredients of the offence under Section 420 IPC are not made out, as there was no dishonest or fraudulent intention at the inception of the transaction.
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04(b). It is further submitted that the cheque amount of Rs.3,53,27,404/- was deposited by the petitioners in O.S.No.80 of 2021 on the file of the learned XVI Additional District Judge, Ranga Reddy District at Malkajgiri, which was subsequently transferred and renumbered as O.S.No.682 of 2022 on the file of the learned II Additional District and Sessions Judge, Medchal, and that such deposit was made on 29.04.2021 pursuant to orders in I.A.No.772 of 2021 filed by the petitioners seeking permission to deposit the said amount. It is also stated that the respondent No.2 had filed I.A.No.487 of 2021 in the said suit seeking attachment of the property covered under the sale deed dated 09.02.2021.
04(c). It is further submitted that the respondent No.2 had filed Civil Revision Petition No.1581 of 2022 before this Court and ultimately the deposited amount was withdrawn by the respondent No.2 pursuant to the order dated 25.05.2024 passed in I.A.No.106 of 2023 in O.S.No.682 of 2022 (old O.S.No.80 of 2021). With the above submissions, learned counsel for the petitioners prays that continuation of the criminal proceedings would amount to abuse of process of law and 7 therefore seeks quashing of the proceedings against the petitioners-accused Nos.1 to 4.
05(a). Per contra, learned counsel for the respondent No.2, while fairly admitting the factum of deposit and subsequent withdrawal of the amount, contended that such withdrawal was permitted only pursuant to an understanding between the petitioners and a third party, whereby the respondent No.2 was required to deposit the withdrawn amount into the account of the said third party in C.O.P.No.80 of 2022. It is submitted that the said withdrawal cannot be construed as voluntary payment by the petitioners towards discharge of the cheque liability.
05(b). It is further contended that the deposit of the cheque amount in the civil suit was made subject to the outcome of the suit proceedings and, therefore, the amount cannot be treated as unconditional payment to the respondent No.2. According to the learned counsel, the liability under the dishonoured cheques was not extinguished, as the amount was neither paid within the statutory period contemplated under 8 Section 138 of the Act nor paid absolutely and unconditionally to the complainant.
05(c). It is further submitted that the amount remained withheld from the respondent No.2 for more than two years and no interest whatsoever was paid on the said sum. Therefore, the statutory offence under Section 138 of the Act stood completed upon failure to pay within the prescribed period after receipt of legal notice, and subsequent developments cannot absolve the petitioners of criminal liability. It is contended that the conduct of the petitioners, viewed in its entirety, discloses dishonest intention from the inception of the transaction, thereby attracting the ingredients of cheating. It is submitted that these aspects involve disputed questions of fact which require trial and cannot be adjudicated in proceedings under Section 528 of BNSS. Hence, he prayed for dismissal of the Criminal Petition.
06. Having considered the rival submissions made by the either side and on perusal of the material available on record, it is apparent that the complaint specifically alleges issuance of cheques towards discharge of liability arising out of 9 financial adjustments and sale transaction, dishonour of the said cheques, issuance of statutory notice and failure to pay the amount within the prescribed time. These averments, prima facie, satisfy the ingredients of Section 138 of the Act. Whether there existed a legally enforceable debt on the date of presentation of cheques in view of the subsequent MoU dated 19.02.2021 is a matter of evidence which requires appreciation during trial. Similarly, the contention regarding absence of dishonest intention and the effect of deposit and subsequent withdrawal of the amount in civil proceedings are disputed questions of fact. The plea that the amount was deposited subject to outcome of the suit and that the liability stood discharged are matters that require adjudication on evidence and cannot be conclusively determined in proceedings under Section 528 of BNSS.
07. It is well settled that subsequent deposit of the cheque amount or pendency of civil proceedings does not absolve the accused of criminal liability under Section 138 of the Act, unless it is demonstrated that the liability stood legally extinguished. Such determination involves factual inquiry. 10 Insofar as the offence under Section 420 IPC is concerned, the allegations in the complaint, when read as a whole, cannot be said to be inherently improbable or absurd at this stage. Whether there was dishonest intention at the inception of the transaction is again a matter to be established by evidence during trial. Therefore, this Court is of the considered view that the matter involves disputed questions of fact, which are triable in nature, and the truth or otherwise of the allegations can be determined only upon conclusion of the trial. Therefore, there are no grounds to quash the criminal proceedings against the petitioners.
08. Accordingly, this Criminal Petition is dismissed. The learned trial Court shall proceed with the matter in accordance with law and dispose of the same expeditiously, without being influenced by any observations made in this order, which are made only for the purpose of deciding this petition.
As a sequel, pending miscellaneous applications, if any, shall stand closed.
__________________ JUVVADI SRIDEVI, J Date: 26-MAR-2026 KHRM