2025 Supreme(Online)(AP) 20339

HIGH COURT OF ANDHRA PRADESH
Y. LAKSHMANA RAO
Idupulapati Srinivasa Rao – Appellant
Versus
The State of Andhra Pradesh – Respondent
CRLP 9451/2025

Headnote:

(A) Indian Penal Code, 1860 - Sections 403, 406, 409 and 420 - Bharatiya Nagarik Suraksha Sanhita, 2023 - Section 482 - Pre-arrest bail - Criminal breach of trust and cheating - Offences distinct and cannot co-exist - For Section 406 (criminal breach of trust), entrustment of property and dishonest misappropriation is essential; for Section 420 (cheating), fraudulent inducement at inception is required - Simultaneous invocation of Sections 406 and 420 is legally incongruous as they are antithetical to each other. (Paras 15, 17, 18)

(B) Criminal Procedure Code, 1973 - Section 41-A - Object of - Invocation of Section 409 IPC, which is non-bailable and punishable with life imprisonment, with the intent to deprive accused of statutory protection under Section 41-A CrPC is mala fide. (Para 5)

(C) Criminal Procedure Code, 1973 - Preliminary Enquiry - Mandatory in cases involving commercial transactions - In Lalita Kumari v. Govt. of U.P., (2014) 2 SCC 1, it was held that a preliminary enquiry is mandatory in cases involving commercial transactions before registration of a crime - FIR registered on the same day without such enquiry is contrary to settled law. (Para 21)

(D) Criminal Procedure Code, 1973 - Delay in lodging FIR - Unexplained delay of nearly two years casts serious doubt on the spontaneity and veracity of allegations - A delayed complaint is viewed with suspicion. (Paras 6, 19) (E) Bail - Anticipatory bail - Principles - Where the offence is punishable with imprisonment not exceeding seven years, custodial interrogation is not necessary - Medical condition of accused and cooperation with investigation are relevant considerations. (Paras 15, 22)

Facts of the case:
A criminal petition was filed under Section 482 of the BNSS seeking pre-arrest bail for two petitioners in a case registered for offences under Sections 403, 406, 409 and 420 of the IPC. The complainant alleged that between 2021 and 2023, the petitioners, while acting as agents, induced the complainant's firms to transfer a total sum of Rs.11,99,68,000/- for acquiring land. The petitioners allegedly represented that they had agreements for land but lacked funds. Out of the total funds, 5.38 acres was registered in favor of the complainant's firm, but the petitioners allegedly diverted the remaining funds and caused 9.5 acres to be registered in the name of their own entity, Blue Sea Ventures LLP. The FIR was lodged on 15.03.2025. The petitioners contended the dispute was purely civil, the complaint was vague, there was delay in lodging the FIR, and the registration of the crime at Vijayawada, despite the properties and parties being in Visakhapatnam, raised jurisdictional issues. The first petitioner also cited a serious medical condition.

Findings of Court:
The court found that the simultaneous invocation of Sections 406 and 420 of the IPC was legally incongruous as the two offences are distinct and cannot co-exist in the same set of facts. The allegations, taken at face value, disclosed a commercial transaction arising from contractual obligations, not criminal offences. The unexplained delay of nearly two years in lodging the FIR cast doubt on its veracity. The court also noted that a preliminary enquiry was mandatory before registering an FIR in a commercial transaction case, which was not conducted. The lack of territorial jurisdiction at Vijayawada was also a factor. Considering the first petitioner's medical condition (cerebral venous sinus thrombosis) and that the second petitioner was a woman, the court granted anticipatory bail.

Issues: The main issues were whether the petitioners were entitled to pre-arrest bail; whether the allegations disclosed criminal offences or were purely civil in nature; whether the simultaneous invocation of Sections 406 and 420 of the IPC was sustainable; and whether the delay in lodging the FIR and the lack of a preliminary enquiry vitiated the proceedings.

Ratio Decidendi: The court held that the offences of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) are distinct and cannot co-exist in the same set of facts. A dispute arising from a commercial transaction and contractual obligations, without clear evidence of fraudulent inducement at the inception or entrustment of property, is essentially a civil dispute and cannot be given criminal colour. The court also reiterated that a preliminary enquiry is mandatory before registering an FIR in commercial transaction cases. Result : Criminal Petition allowed. Petitioners directed to be enlarged on bail on executing a personal bond of Rs.1,00,000/- each with two sureties, subject to conditions including not threatening witnesses, not leaving the state without permission, and surrendering passports. (Para 24) Respondent No.2 was impleaded as per court order dated 19.11.2025 in I.A.No.2 of 2025 in Crl.P.No.9451 of 2025. (Paras 2, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24) Non-Internal References: Lalita Kumari v. Govt. of U.P., (2014) 2 SCC 1; Dilawar Singh v. State of Delhi, (2007) 12 SCC 641; State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335; Delhi Race Club (1940) Ltd. v. State of U.P., (2024) 10 SCC 690; Arshad Neyaz Khan v. State of Jharkhand, 2025 SCC OnLine SC 2058; Munnesh v. State of Uttar Pradesh, 2025 SCC OnLine SC 1319; Lalit Chaturvedi v. State of U.P., (2024) 12 SCC 483; Mideast Integrated Steels Ltd. v. State of Jharkhand, 2023 SCC OnLine Jhar 301. (Paras 6, 16, 17, 21, 12) Sections of the IPC referred to: 403 (Dishonest misappropriation of property), 406 (Punishment for criminal breach of trust), 409 (Criminal breach of trust by public servant, or by banker, merchant or agent), 420 (Cheating and dishonestly inducing delivery of property). Sections of the BNSS/ CrPC referred to: 482 BNSS (Saving of inherent powers of High Court), 41-A CrPC (Notice of appearance before police). (Paras 1, 2, 4, 5) The court noted that the complaint was lodged on 15.03.2025 at 06:00 hours, but the transactions occurred between 20.09.2021 and 23.05.2023, and the de-facto complainant alleged they were kept under the impression that commitments would be honored. (Paras 2, 9) The court also noted that the de-facto complainant had three companies, and the meeting regarding the transaction took place at Vijayawada, but the properties were in Visakhapatnam. (Paras 19, 20) The first petitioner's medical condition of cerebral venous sinus thrombosis was noted. (Para 7, 22) The court held that the petitioners were entitled to pre-arrest bail because the offence under Section 409 IPC was the only one punishable with life imprisonment, and for all other offences, custodial interrogation was not necessary. (Para 15) (Paras 15, 22, 23, 24) Ratio Decidendi Summary: The court's core reasoning was that the case involved a commercial transaction, the offences of criminal breach of trust and cheating are mutually exclusive, and there was a significant, unexplained delay in filing the FIR without a mandatory preliminary enquiry, making the custodial interrogation of the petitioners unnecessary. (Paras 15, 16, 17, 18, 19, 21)

Result: The criminal petition was allowed with conditions. (Para 24) The court also noted the suppression of other criminal cases by the petitioners but still granted bail. (Paras 11, 12) The respondent No.2 was impleaded. (Paras 11, 12) The court found that the petitioners had no criminal antecedents, but the respondent No.2 argued to the contrary. (Paras 7, 12) The court did not make a finding on the veracity of the respondent No.2's claim of other criminal cases. (Paras 7, 11, 12) (Paras 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24) The judgment cites the following provisions: Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 Sections 403, 406, 409, 420 of the Indian Penal Code, 1860 Section 41-A of the Code of Criminal Procedure, 1973 (Paras 1, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24) The court held that the dispute was essentially a civil dispute arising out of a commercial transaction. (Para 23) The court held that the delay in lodging the FIR casts serious doubt on its veracity. (Para 19) The court held that the lack of a preliminary enquiry was contrary to settled law. (Para 21) The court granted pre-arrest bail subject to conditions. (Para 24) The court held that custodial interrogation was not necessary. (Para 15) The court held that the simultaneous invocation of Sections 406 and 420 IPC is legally incongruous. (Para 15) The court held that the offence under Section 409 IPC was the only non-bailable offence punishable with life imprisonment. (Para 15) The court noted that the first petitioner was suffering from cerebral venous sinus thrombosis. (Paras 7, 22) The court noted that the second petitioner is a woman. (Para 22) The court noted that the petitioners were residents of Visakhapatnam and the properties were also situated in Visakhapatnam, but the FIR was registered in Vijayawada. (Para 20) The court held that the petitioners were entitled to pre-arrest bail. (Paras 23, 24)