Telangana High Court
T. Anjana Reddy vs The State Of Telangana on 12 August, 2025
THE HON'BLE SRI JUSTICE E.V.VENUGOPAL
CRIMINAL PETITION No.3829 of 2019
ORDER :
The present criminal petition is filed by the petitioner/accused No.4
under Section 482 of Cr.P.C., seeking to quash the proceedings against her in CC
No.410 of 2018 on the file of the learned XII Additional Chief Metropolitan
Magistrate at Nampally, registered for the offences under Sections 420, 403, 406
and 120(b) of IPC.
2. Heard Sri S.Niranjan Reddy, learned senior counsel appearing on
behalf of Sri A.Chandra Shaker, learned counsel for the petitioner, Sri Nachiketa
Joshi, learned senior counsel appearing for Mrs.Manasvi Reddy Jakka, learned
counsel for the respondent No.2 and Sri E.Ganesh, learned Assistant Public
Prosecutor for the State/respondent No.1.
3. The case as projected by the 2nd respondent against the petitioner
and other accused is that on 25.03.2017 the 2nd respondent, which engaged in
the business of sporting and other recreational activities, lodged a complaint
alleging that the accused Nos.2 to 4, representing accused No.1 approached the
complainant through a common friend viz. Chamundeshwari Nath and stated
that the accused No.2 promoted a super car racing company by name
M/s.Machdar Motorsports Private Limited (hereinafter referred to as
"MMSPL")/A1 and is allocating franchises in 9 cities and the accused Nos.3 and 4
misrepresented that the franchises are pretty much on demand and the accused
No.2 stated that various celebrities and their business houses have bought their
franchises quoting cine actor Mr.Nagarjuna for Hyderabad, Bollywood actor
Mr.Shahrukh Khan for Mumbai and cricketer Mr.Sachin Tendulkar for Delhi.
Stating thus the accused misguided and misrepresented respondent No.2 to
invest in and opt for Chennai Franchise. Accordingly, the complainant agreed to
invest by taking Chennai Franchise. The subscription fee for one year was
Rs.12,50,00,000/- payable in three stipulated instalments. After deliberations,
the complainant company was induced to pay an amount of Rs.7,44,52,500/-
towards opting Chennai Franchisee and accordingly, the complainant paid the
said amount through cheque bearing No.071494 dated 14.11.2011 drawn on
Axis Bank, Film Nagar Branch, Hyderabad, which was encashed by the accused
No.1 company on 24.11.2011. Even after lapse of three months, the accused
failed to start the business and postponed and dragged-on the matter.
Thereafter, upon conducting a little enquiry, the complainant came to know that
not more than four franchises have been subscribed out of the total 9 franchises
and none of the remaining subscribers paid any considerable amount for
subscription of franchise. A1 company never got the remaining franchises filled
up nor started the i1 Car Racing Series even after a year. Upon persistent
demands of the complainant, A1 represented by A2 agreed to refund an amount
of Rs.5,00,00,000/- in two instalments out of Rs.7,44,52,500/-. Accordingly, a
memorandum of understanding was entered into on 01.02.2012 fixing
10.04.2012 as first date for payment of Rs.2,50,00,000/- and remaining amount
of Rs.2,50,00,000/- to be paid on or before 10.06.2012. The copy of the said
MOU was kept with the accused No.1. However, even after expiry of the said
dates, the accused did not repay the amount as agreed. Hence, the complaint.
4. Basing on the above complaint, the respondent/police registered
FIR No.59 of 2017, dated 25.03.2017, conducted investigation, arrested accused
No.2 on 24.01.2018, examined LWs.1 to 14, collected documents and after
completion of investigation laid charge-sheet against the accused Nos.1 to 5
before the trial Court for the offences under Sections 420, 403, 406 and 120(b)
of IPC. Accused No.6 was stated to be absconding. The accused No.3 obtained
anticipatory bail. Accused Nos.4 and 5 were issued notices under Section 41(A)
of Cr.P.C. The trial Court took cognizance of the offences with which the
accused were charge-sheeted and assigned calendar case number vide CC
No.410 of 2018 and proceeded further.
5. While proceedings are still pending before the trial Court, the
petitioner filed the present criminal petition. The principal contention advanced
on behalf of the petitioner is that the very initiation of criminal proceedings
against her, including the registration of the FIR, filing of the complaint and the
subsequent filing of the charge-sheet, is not only unwarranted but also
constitutes a gross and manifest abuse of the legal process. To provide
necessary context, M/s. Machdar Motor Sports Private Limited, through its
Director Mr.Darshan Uthappa Machamada (Accused No.2), approached Universal
Collectabillia Private Limited (hereinafter "UCPL") sometime around July, 2011,
seeking investment into a motor sports venture to be launched under the name
and style "i1 Car Racing Series" (hereinafter referred to as "the League"), which
was to be launched in December, 2011. At that relevant point of time, the
petitioner was serving as the Managing Director of UCPL.
(a) In connection with the proposal for investment, the petitioner
received an email on 18.06.2011. Prior to finalizing any investment or entering
into any understanding the petitioner, acting in her official capacity on behalf of
UCPL, prudently sought certain key clarifications from MMSPL and from A2
specifically. These clarifications pertained to the business model, ongoing
operations, list of existing investors and the nature of the promoters behind
MMSPL. Such queries were necessary and legitimate as the petitioner, acting in
her fiduciary capacity for UCPL, was expected to make a decision regarding any
financial investment. In response, A2 assured and represented to the petitioner
that MMSPL was promoted by three individuals viz. Mr. Joy Varghese, Mr.
Darshan himself, and Mr. Vinod Sudhindran Menon/A3. On the basis of these
assurances and representations, and in reliance on the same, UCPL proceeded to
invest in the League through MMSPL. It was mutually agreed that UCPL would
acquire a 20% equity stake in MMSPL. Believing in good faith that such shares
would indeed be allotted, UCPL proceeded with the investment. A term sheet
dated 11.07.2011 was accordingly executed between UCPL and MMSPL, outlining
the terms and conditions governing the investment. Pursuant to this, two
cheques amounting to a total of Rs.4,00,00,000/- were issued by UCPL to
MMSPL, dated 12.07.2011 and 11.08.2011, respectively.
(b) The Complaint, FIR and Charge-sheet are vague, indistinctive and
do not set out any facts or grounds whatsoever, on which an offence of cheating
and criminal breach of trust could be even prima facie made out against the
Petitioner. The Complaint, FIR and Charge-sheet fail to disclose any ingredients
of the offences with which the petitioner is charge-sheeted. Even going by the
averments made in the Complaint, it is evident that the alleged investment made
by respondent No.2 into MMSPL, was paid through a cheque, drawn on the
personal account of Mr.Kanumuru Raghurama Krishnam Raju, which was
encashed by MMSPL. If at all respondent No.2 or Mr.Kanumur are aggrieved,
the only remedy lies as against MMSPL in a civil claim and certainly not against
the Petitioner. The respondent No.2 has initiated criminal proceedings against
the petitioner with a view to blackmail and coerce her into making payments,
even though the petitioner is not at all liable for the same. Respondent No.2 has
also alleged in the Complaint that respondent No.2 and MMSPL entered into the
MOU for refund of amount of Rs.5 Crores. The petitioner is totally unaware of
the said MOU and in any event going by the averments in the complaint itself, it
would become evident that no representation was made by the petitioner in any
manner whatsoever as the agreement was entered into between MMSPL and
respondent No.2.
(c) The alleged investment said to have been made by the respondent
No.2 into MMSPL was based on its own due diligence. In any event, prior to
investing into MMSPL, the said respondent would have done sufficient due
diligence on the risks involved in making such investments, the growth and
prospects of MMSPL and the League. The respondent No.2 would have also been
aware at the time of making the investments said to have been made into
MMSPL, that the investments into MMSPL were subject to risks like in any other
business. Therefore, merely because respondent No.2 may not have been able to
reap profits from its investment into MMSPL and/or recover its investment in
MMSPL, it does not give respondent No.2 the right to convert a civil claim against
MMSPL into a criminal case against the Petitioner. The Learned Magistrate
erroneously referred the complaint for investigation without considering the fact
that the same was investigated by the police and final report was filed referring
the dispute as civil in nature. The learned magistrate instead of following the
procedure laid down under the code and criminal rules of practice mechanically
referred the complaint to police for investigation without considering that the law
does not permit such a measure when already complaint is closed.
(d) It is submitted that the allegations made in the Complaint are so
absurd and inherently improbable on the basis of which no prudent person can
ever reach a just conclusion, therefore, the same are liable to be quashed. The
Learned Magistrate also ought to have noted that the dispute being of
commercial in nature, the police ought to have conducted a preliminary enquiry
before even registering the same in terms of guidelines issued by the Hon'ble
Supreme Court in its recent judgments. The order of the trial Court in directing
registration of the subject complaint is non-speaking, bland and laconic and does
not disclose application of mind. Respondent No.2 is a disgruntled element which
is frustrated in its inability to recover its alleged investments in MMSPL on
account the said company being liquidated pursuant to an order of the Hon'ble
High Court of Karnataka.
(e) It must be emphasized here that the petitioner did not, at any
point, invest personally in MMSPL. All investments were made by UCPL, a
separate legal entity. Furthermore, the petitioner never agreed to act as a
director in MMSPL, nor did she involve herself in the day-to-day operations,
management or administration of MMSPL in any manner whatsoever. Her role
was strictly limited to representing UCPL as its Managing Director. However, her
digital signature was procured by A2 on the pretext of facilitating the allotment
of shares, and the same was later misused to show the petitioner as a Director in
MMSPL without her knowledge or consent. Official records of MMSPL show the
petitioner as a non-executive Director. However, a bare perusal of the
incorporation documents of MMSPL makes it abundantly clear that the petitioner
was neither a founding member, nor an initial director, nor a promoter of MMSPL
as alleged by respondent No.2. MMSPL was incorporated on 21.10.2010, much
before UCPL was approached. The initial Directors listed were Mr. Darshan
Machamada (A2), Mr. Vinod Menon (A3), and Mrs. Shivani Darshan (A5). The
promoters of MMSPL, as mentioned in the Articles of Association, were Mr.
Darshan Machamada and Mrs. Shivani Darshan. When the petitioner realized that
the promises made by Mr.Darshan regarding the share allotment to UCPL were
not honored and that neither shares were issued nor funds were refunded, she
immediately chose to disassociate herself from MMSPL. However, since her name
had already been recorded as a Director without her consent, she had to formally
tender a resignation letter dated 06.02.2012, which was duly acknowledged by
the board through Mr. Darshan.
(f) It is a settled legal position that a resignation becomes effective
upon tendering and does not require formal acceptance. Despite this, MMSPL
failed to notify the Registrar of Companies (ROC) about the resignation. To
safeguard her interests and to ensure accuracy in public records, the petitioner
herself sent a letter dated 11.04.2012 to the ROC, Bangalore, informing them of
her resignation. Ultimately, on 16.11.2012, MMSPL's board passed a resolution
formally accepting her resignation and filed Form-32 with the ROC.
(g) Despite all this, UCPL has still not recovered its investment and has
suffered significant financial loss. Eventually, MMSPL was wound up by the High
Court of Karnataka on 18.02.2014 in Company Petition No.182/2012. Yet, more
than six years later, respondent No.2 issued a notice dated 05.07.2016 to the
petitioner demanding Rs.7.5 Crores as Franchise Subscription Fees. This was
promptly replied to by the petitioner's legal counsel on 22.06.2016, denying all
allegations and any execution of an MoU. Subsequently, respondent No.2 filed a
criminal complaint with the Central Crime Station, Hyderabad on 02.05.2016.
After due inquiry, the Detective Department of Hyderabad Police, through an
endorsement dated 24.05.2016, rightly directed the complainant to approach a
civil court as the matter was of civil nature. Unhappy with this, respondent No.2
filed a private complaint under Section 200 Cr.P.C. on 09.09.2016, repeating the
same allegations. It was further alleged that the petitioner misappropriated funds
to float a new company - Universal Sportsbiz Private Limited by siphoning of the
funds invested by the respondent No.2. These are false, baseless, and
unsubstantiated allegations made solely to malign the petitioner. The allegations
made in the Complaint, even if they were taken on their face value, do not prima
facie constitute any offence or make out any case against the Petitioner.
(h) It is submitted that the petitioner has been a successful
entrepreneur in the fashion apparel industry and has built her business through
her own hard work and merit. She never received or dealt with the monies paid
by respondent No.2. The entire transaction concerning the Chennai franchise
was strictly between respondent No.2 and MMSPL. The petitioner responded to
Section 91 Cr.P.C. notices on 07.08.2017 and submitted detailed responses with
documents. Despite this, a charge-sheet was filed without any credible evidence.
Further notices from the Official Liquidator were replied to with supporting
documentation, and on 04.03.2019, the Office of the Official Liquidator issued a
final endorsement confirming that the petitioner was not a director, officer or
promoter of MMSPL and had no statutory obligations under the Companies Act.
The core of the complaint, FIR and charge-sheet does not disclose commission of
any offence under Sections 120B, 403, 406 or 420 of the IPC. In fact, the so-
called aggrieved party is Mr. Raghu Ramakrishna Raju Kanumuru, who seems to
have personally invested in MMSPL. His emails dated 21.12.2011 and
12.01.2012, addressed to MMSPL, show that the funds were given in his
individual capacity. Even the bank statements annexed confirm that the money
originated from his personal account, and not from any account of respondent
No.2.
(i) Nowhere in these communications is the petitioner even
mentioned, let alone accused of anything. The petitioner is not a party to the
alleged MoU, nor has she signed it. No affidavit supports the complaint, nor was
any representation under Section 154(3) Cr.P.C. made to the Superintendent of
Police prior to filing the private complaint, which is mandatory. Considering that
MMSPL has already been ordered to be wound up, no criminal liability can be
imputed upon the petitioner or other directors post-liquidation. Under Section
456 of the Companies Act, once the Official Liquidator is appointed, all company
assets are under his custody. Hence, any payment claims must be directed solely
to him. The complaint and charge-sheet are vague, unsubstantiated and do not
make out even a prima facie case. At best, the issue is civil in nature. It is
evident that respondent No.2 is using criminal proceedings merely as a tool to
harass, pressurize and extort the petitioner into making payments she is not
legally liable for.
6. Learned counsel for the petitioner relied upon the decisions
rendered in State of Haryana Vs. Ch.Bhajan Lal 1, Mukesh Vs. State of
Uttar Pradesh 2, Anand Kumar Mohatta Vs. State (NCT of Delhi) 3,
Shaileshbhai Ranchhodbhai Patel Vs. State of Gujarat 4, Sunil Bharti
Mittal Vs. CBI 5, Ravindranatha Bajpe Vs. Mangalore Special Economic
Zone Ltd., 6, Maksud Saiyed Vs. State of Gujarat 7, Pepsico India
Holdings Pvt. Ltd., Vs. Food Inspector 8, Delhi Race Club (1940) Ltd., Vs.
State of Uttar Pradesh 9, Srinivas Rao Vs. State of Telangana 10,
Dipakbhai Jagdishchandra Patel Vs. State of Gujarat 11, Thermax Ltd.,
Vs. K.M.Johny 12, State of A.P. Vs. M.Madhusdhan Rao 13, Mohd.Wajid Vs.
State of UP 14, Paramjeet Batra Vs. State of Uttarakhand 15, Chandran
Ratnaswami Vs. K.C.Palanisamy 16.
(a) The contentions advanced on behalf of the petitioner, relying on
various judicial precedents, referred to above, are that the High Court, under
Section 482 of the Code of Criminal Procedure, is empowered to exercise its
(1992) SCC (Cr.) 426
(2019) 11 SCC 706
(2015) 4 SCC 609
(2022) 15 SCC 430
(2008) 5 SCC 668
(2011) 1 SCC 176
(2024) 10 SCC 690
(2019) 16 SCC 547
(2011) 13 SCC 412
(2008) 15 SCC 582
2023 SCC OnLine SC 951
(2013) 11 SCC 673
(2013) 6 SCC 740
inherent jurisdiction to secure the ends of justice and prevent abuse of the
process of the Court. It is argued that the scope of an application under Section
482 Cr.P.C. is significantly broader than one under Section 227 Cr.P.C., allowing
the High Court to consider documents produced by the accused, even beyond
the charge-sheet, to demonstrate that the proceedings are malicious or legally
unsustainable. It is further submitted that where the FIR or charge-sheet fails to
disclose the essential ingredients of a cognizable offence, or appears to be
motivated by harassment, the High Court is well within its jurisdiction to quash
such proceedings. The petitioner contends that criminal liability cannot be
fastened upon a director unless it is clearly established that she was in charge of
and responsible for the conduct of the company's business at the relevant time.
Since offences under the IPC are not vicarious in nature, specific overt acts must
be attributed to an accused; in the absence of sufficient material, directors and
company officials cannot be prosecuted. It is also argued that a mere breach of
contract, regardless of its seriousness, does not amount to cheating or criminal
breach of trust under Sections 420 or 406 IPC unless fraudulent or dishonest
intention is demonstrated at the inception of the transaction. Further,
confessions made to the police are inadmissible against co-accused under
Sections 25 and 26 of the Evidence Act.
(b) The petitioner asserts that complaints filed to circumvent the
jurisdiction of civil courts, particularly when barred by limitation, are
impermissible, and unexplained delay in lodging such complaints raises concerns
of embellishment and exaggeration. Courts must exercise caution not to rely
solely on a well-drafted FIR or complaint that appears to satisfy the ingredients
of the offence on paper, and must consider the surrounding circumstances.
Where a civil dispute is cloaked in criminal allegations, and civil remedies are
available, the Court should not hesitate to quash the criminal proceedings to
prevent abuse of the legal process. In support of these submissions, the learned
counsel also places reliance on the orders passed by this Court in Criminal
Petition No.8108 of 2022 and Criminal Petition No.2463 of 2019, wherein it was
held that mere breach of contract cannot give rise to prosecution for cheating
unless fraudulent or dishonest intent is established at the outset. In particular,
the petition filed by Accused No.5 in Criminal Petition No.2463 of 2019 was
allowed by this Court on the ground that the essential ingredients of
misrepresentation or entrustment necessary to attract Sections 406 and 420 IPC
were absent. In light of the above submissions and legal position, it is therefore
prayed that the present criminal petition be allowed and the impugned
proceedings against the petitioner be quashed.
7. Per contra, the learned senior counsel appearing for respondent
No.2 argued that the present petition is misconceived and devoid of merit, as it
improperly seeks the Court's extraordinary jurisdiction under Section 482 Cr.P.C.,
despite the existence of serious and disputed questions of fact. These issues,
including the petitioner's alleged role in MMSPL, can only be adjudicated during
trial through proper evidence. The petitioner is attempting to short-circuit the
trial process and prematurely seek an adjudication of disputed facts. The power
under Section 482 of Cr.P.C., is not intended for such a purpose and should be
invoked sparingly, only in rare cases where continuing proceedings would clearly
amount to abuse of process or miscarriage of justice. It was further submitted
that the petitioner's denial of involvement in MMSPL's affairs is a matter for trial,
as her claims are neither supported by unimpeachable evidence nor self-evident
from the record. The veracity of allegations, her role and intent, and the overall
context of the alleged offences must all be evaluated through full-fledged trial
proceedings. The Court, at this stage, cannot conduct a mini-trial or assess the
reliability of the allegations. As long as the complaint and charge sheet disclose
prima facie commission of cognizable offences, interference under Section 482
Cr.P.C., is unwarranted. The Hon'ble Apex Court in Iqbal Vs.State of UP 17 has
reaffirmed that where a charge-sheet is filed, the appropriate course is for the
accused to seek discharge before the trial Court, rather than invoke Section 482
of Cr.P.C. Likewise, merely because a matter has civil aspects does not preclude
criminal proceedings, especially where criminal intent is alleged. Delay in filing a
complaint is also not, by itself, sufficient ground for quashing when the offences
involved are punishable with imprisonment beyond three years.
(a) Respondent No.2 also refuted the petitioner's claim of being
wrongfully shown as a director. It is submitted that she was formally appointed
as a director on 01.09.2011 and resigned only in February, 2012. The resignation
(2023) 8 SCC 734
itself shows she accepted her role at the time when key representations and
payments were made. No prior communication requesting removal from
directorship was filed along with her petition. The resignation letter also makes
no mention of unpaid dues, further weakening her claim of being
misrepresented. Additionally, the Liquidator's letter dated 04.03.2019 merely
states that the petitioner ceased to be a director from 16.11.2012; it does not
state that she was never a director. Her appointment was during the relevant
period in 2011 when payments were made, and she was involved in promoting
the league and franchise activities. Therefore, she cannot escape criminal liability
for actions taken during that period. It was also pointed out that a sworn
affidavit was indeed filed by respondent No.2 with the complaint. The petitioner's
selective filing of only the complaint, omitting the affidavit, is misleading. The
contention that the complainant lacks locus standi since funds came from an
individual account is also without merit. The complainant company was the
intended franchise holder, and the MoU dated 01.02.2012 was executed between
MMSPL and the complainant company. Therefore, the complainant company is
the aggrieved party and has sufficient locus to maintain the complaint.
8. The learned counsel for the respondent No.2 relied upon the
decisions rendered in Kolusu Partha Sarathy Vs. State of AP 18, Ashwini
Kumar Upadhyay Vs. Union of India and another 19, Punit Beriwala Vs.
221 SCC OnLine AP 4466
2018 SCC OnLine SC 3713
State of NCT of Delhi and others 20, Kamal Shivaji Pokarnekar Vs. State
of Maharashtra and others 21, Priti Saraf and another Vs. State (NCT of
Delhi) and another 22, Naresh Aneja Alias Naresh Kumar Aneja Vs. State
of Uttar Pradesh and another 23, Neeharika Infrastructure Vs. State of
Maharashtra 24, HMT Watches Ltd., Vs. M.A.Abida and another 25, State
of M.P. Vs., Surendra Kori 26, Skoda Auto Volkswagen (India) Private
Limited Vs. State of Uttar Pradesh and others 27 and Iqbal Vs. State of
U.P. (supra).
9. The contentions advanced, based on the aforementioned decisions,
are that the representative of the 2nd respondent was not a Member of the
Legislative Assembly (MLA) as on the date of the alleged commission of the
offence, and therefore, the present matter need not be referred to the Special
Courts constituted for MPs and MLAs. Moreover, the designated Courts are
designated to try criminal cases against the present and former public
representatives and not for the complaints filed by them. The above proposition
of law is very much fortified by the decision of the Hon'ble Supreme Court in the
matter of Ashwini Kumar Upadhyay Vs. Union of India 28. It is further
2025 SCC OnLine SC 983
(2019) 14 Supreme Court Cases 350
(2021) 16 Supreme Court Cases 142
(2025) 2 Supreme Court Cases 604
(2021)19 SCC 401
(2015) 11 SCC 776
(2012) 10 SCC 155
(2021) 5 SCC 795
submitted that the alleged cognizable offence of fraud committed through
misrepresentation warrants a full and proper investigation, irrespective of the
existence of parallel civil suits or perceived delays in initiating proceedings. It is
contended that criminal proceedings should not be prematurely scuttled at the
threshold stage and that quashing of a criminal complaint must remain an
exception rather than the rule. The mere availability of a civil remedy in the
context of a commercial transaction or breach of contract cannot, by itself, be a
ground to quash criminal proceedings, especially when the allegations on the
face of it disclose the commission of a criminal offence. Courts must remain
mindful of the principle that in certain cases, both civil and criminal proceedings
may validly coexist.
(a) It is also argued that while exercising jurisdiction under Section 482
of Cr.P.C., the Court should not entertain factual defences raised by the accused
involving disputed questions, as such defences can only be appropriately
addressed during trial. The High Court, under its inherent powers, should
ordinarily refrain from rendering any prima facie findings in cases where the
factual matrix is incomplete or unclear, particularly when evidence is yet to be
collected or produced before the Court, and the legal or factual issues involved
are complex and wide-ranging. Additionally, the delay in lodging the complaint
cannot, by itself, be a ground for quashing the proceedings, as per Section 468
of Cr.P.C., there is no limitation period for offences punishable with
imprisonment exceeding three years.
10. Upon a perusal of the records and the materials placed on file, it is
evident that the petitioner seeks quashing of the proceedings on the ground that
she was not a director of the company at the time of commission of the alleged
offence and that she had no role in the alleged investment made by the 2nd
respondent in A1 company and that she had nothing to do with the alleged
liability of the accused No.1 and hence she cannot be held liable. However, the
recitals of complaint and other allied documents relied upon by the complainant,
prima facie indicate the involvement of the petitioner in the alleged transaction
of investment by the 2nd respondent in the accused No.1 company. However,
they have to be tested on the touchstone of the trial. At the stage of quashing,
the Court is not required to embark upon a meticulous examination of the
evidence or conclusively determine the veracity of the said allegations.
11. The settled legal position is that if the complaint discloses the basic
ingredients of the offence and the role of the accused, then the proceedings
ought not to be quashed in limine. The contentions advanced on behalf of the
petitioner are the matter of defence that can only be adjudicated upon trial on
appreciation of evidence. The petitioner has not demonstrated any
unimpeachable and incontrovertible material to conclusively show that she was
not in charge or responsible for the conduct of the business of the company at
the material time. Whether the petitioner was formally holding the position of
director or was acting in a de facto or shadow capacity is a matter of evidence
that cannot be conclusively determined at this stage. The Hon'ble Supreme
Court has consistently held that while exercising powers under Section 482
Cr.P.C., the Court must be cautious not to stifle legitimate prosecution, especially
where the allegations disclose the commission of a cognizable offence and the
role of the accused is supported by prima facie material.
12. The petitioner's claim that she was not a director is a factual
assertion that necessitate trial and it cannot be a ground for quashing when the
complaint discloses active participation or complicity. In the absence of
incontrovertible material demonstrating the petitioner's complete dissociation
from the company's operations or decision making process, the mere denial of
directorship cannot be a basis for exercising inherent jurisdiction to quash the
proceedings. The petition appears to be an attempt to stifle the legitimate
investigation and should not be entertained under Section 482 Cr.P.C. In the
instant case, the FIR discloses specific allegations that the petitioner along with
other accused dishonestly induced the complainant to part with money, failed to
fulfill the assurances, and subsequently misappropriated the funds. Whether the
accused had the requisite intention at the time of the transaction, or whether it
was a mere civil dispute, is a matter of evidence and cannot be determined
conclusively at this stage.
13. It has been repeatedly held that the High Court should not interfere
where the allegations disclose a cognizable offence, or where there is a factual
foundation for the prosecution. That there are triable issues requiring
investigation/trial, and this Hon'ble Court may not exercise its extraordinary
powers at this preliminary stage to stifle legitimate prosecution. There is nothing
on record to show that the petitioner was not a director or responsible for day to
day affairs of the accused No.1 company and on the other hand, she herself
admitted that she resigned as a director from accused No.1 company. There is
nothing on record to show that the petitioner took reasonable steps to prevent
the wrongful conduct of accused No.1 company.
14. When the above factual matrix are carefully scrutinized, this Court
is of the considered opinion that this is not a fit case where to quash the
proceedings against the petitioner and the allegations leveled against her require
full-fledged trial and before letting the petitioner to such a litmus test, she
cannot be declared either way at the threshold. Accordingly, the present criminal
petition is liable to be dismissed.
15. In the result, the present criminal petition is dismissed.
Miscellaneous applications, if any pending, shall stand dismissed.
_________________________
E.V.VENUGOPAL, J
Dated :12-08-2025
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