Allegations of cheating must demonstrate a dishonest intention; mere claims without evidence do not satisfy the prima facie standard to continue criminal proceedings.

JUDGMENT /ORDER :

The instant petition under Section 482 of Code of Criminal Procedure, 1973 (for short "Cr.P.C"), has been filed by the petitioners/accused Nos.1 and 3, seeking quashment of the proceedings against them in CC No.620 of 2019 on the file of the Court of II Additional Chief Metropolitan Magistrate, Visakhapatnam City for the offence under Sections 420 , 471 and 120-B read with 34 of the INDIAN PENAL CODE , 1860 (for short "IPC").

2. The case of the Prosecution, in brief, is as follows :

(a) Accused No.1 being the Managing Director and Director of M/s. Baby Food Products Private Limited, Visakhapatnam obtained loan of Rs.3.85 crores from the respondent No.1-Bank, for the construction of cold storage for agricultural purpose, by mortgaging the land of an extent of Ac.1.28 cents in Sy.No.20-18 of Mushidipalli Village, S. Kota Mandal, Vizianagaram District and 2,500 Square yards of vacant land situated in Sy.No.111/1 of Madhurawda Village, GVMC Limits and accused No.3 stood as guarantor for the said loan. The Bank has released an amount of Rs.2,59,84,162/- and the same has to be paid in 84 EMIs @ Rs.3,95,000/- per month.

(b) Subsequently, the Firm has constructed the cold storage in the land which is not mortgaged to the Bank and actually semi completed cold storage is erected in Sy.Nos.78/17, 18, 19, 20, 21, 22 and 23 instead of the land mortgaged to the Bank. Further, the vacant site in Sy.No.111/1 admeasuring 2,500 Sq. yards was under strong legal claim from M/s. Suryaveni Constructions Private Limited. As the borrower deliberately mortgaged the disputed property and also constructed cold storage in a different survey number, respondent No.1-Bank lodged a complaint against all the accused, which was registered as a case in Crime No.366 of 2012 on the file of II Town Police Station, Visakhapatnam City and after completion of investigation filed charge-sheet for the offence under Sections 420 , 471 and 120-B read with 34 IPC, which was numbered as CC No.620 of 2019.

(c) Aggrieved thereby, petitioners/accused Nos.1 and 3 filed the present petition seeking quashment of the proceedings against them.

Arguments Advanced at the Bar

3. Heard Sri Raja Reddy Koneti, learned Counsel for the petitioners, Ms. K. Priyanka Lakshmi, learned Assistant Public Prosecutor for the respondent No.2/State. Despite service of notice, none appeared for respondent No.1.

4. Learned Counsel for the petitioners, while admitting the availment of loan by the petitioners, would submit that the allegations mentioned in the complaint do not make out a case against the petitioners for the alleged offence. Learned Counsel would submit that, even according to the Prosecution, more than 35 installments out of 84 installments were paid by the petitioners and subsequently, the loan was cleared as One Time Settlement by selling away the vacant site of 2,500 Square yards and the said loan account was also closed. Learned Counsel would further submit that the petitioners never committed any offence, as alleged by respondent No.1-Bank and hence, prayed for quashment of proceedings against the petitioners/accused Nos.1 and 3.

5. Learned Assistant Public Prosecutor would submit that there are specific allegations against the petitioners which would attract the offence alleged against them. At this stage, the proceedings against the petitioners cannot be quashed. Hence, prayed for dismissal of the petition.

Point for determination :

6. Having heard the submissions of the learned Counsel representing both the parties, now the point that would emerge for determination is :

Whether there are any justifiable grounds for quashment of the proceedings against the petitioners i