The court held that Sections 406 and 420 IPC cannot co-exist as they are distinct; in a sale transaction, once property passes, there is no entrustment, and contractual disputes should not be given criminal colour.

ORDER

The Criminal Petition has been filed under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (for brevity ‘the BNSS’) by the Petitioners/Accused Nos.1 & 2 for granting of pre-arrest bail in connection with Crime No.132 of 2025 of Patamata Police Station, NTR District, registered for the alleged offence punishable under Section 403, 406, 409 and 420 of the Indian Penal Code, 1860 (for brevity ‘the I.P.C.’)

2. The case of the prosecution is that between 20.09.2021 and 23.05.2023, at Flat No.4, Satyam Towers, Road No.7, Bharathi Nagar, Vijayawada, the accused persons, namely Idupulapati Srinivasa Rao (Accused No.1) and his wife, Idupulapati Madhavi (Accused No.2), committed acts amounting to cheating, dishonest misappropriation of property, and criminal breach of trust. The complaint was lodged on 15.03.2025 at 06:00 hours by Sri Kakarla Vinay, who is a designated partner of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP, Capital Region LLP, and Rayalaseema Region LLP. The prosecution asserts that the complainant’s firms intended to acquire approximately 50 acres of land in Visakhapatnam for business expansion. The accused represented that they had agreements for such land but lacked sufficient funds to complete the transactions. Relying upon these representations, the complainant’s firms transferred a total of Rs.11,99,68,000/-, including Rs.2.4 crores credited directly into the personal account of Accused No.1 and Rs.29.59 crores issued through demand drafts in favor of landowners.

3. It is further alleged that out of these transactions, 5.38 acres situated in Survey No.56, Gurrampalem Village, Pendurthi Mandal, was registered in favor of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP under Document No.557/2022, for a consideration of Rs.1,77,54,000/-. However, instead of registering the remaining extent of land in favor of the complainant’s firms, the accused fraudulently diverted funds and caused 9.5 acres registered in the name of their own entity, Blue Sea Ventures LLP, thereby misappropriating Rs.10,05,14,000/- belonging to the complainant’s firms. Despite repeated assurances, the accused failed to fulfill their commitments.

4. Sri Posani Venkateswarlu, learned Senior Counsel appearing on behalf of Sri P.Vivek, learned counsel for the Petitioners submits that the allegations contained in the typed report are wholly misconceived, vague, and omnibus in nature. The de-facto complainant asserts that he is a designated partner of certain LLPs, namely Navyandhra Grama Vaidya Healthcare Services Coastal Region, Capital Region, and Rayalaseema Region. It is alleged that in the year 2021, one of the partners of the said firms approached the Petitioners, who had earlier entered into agreements of sale with certain landowners, and expressed interest in purchasing the lands. The Petitioners, in good faith, introduced the complainant’s partner to the landowners, who themselves admitted execution of agreements and receipt of advance consideration. It is further alleged that between September 2021 and May 2023, the complainant’s firms transferred a sum of Rs.11,99,68,000/-, part of which was remitted to the Petitioners’ accounts and part issued in the form of demand drafts to the landowners. Out of these transactions, 5.38 acres in Survey No.56, Gurrampalem Village, Pendurthi Mandal, was duly registered in favor of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP under Document No.557/2022. The allegation thereafter is that subsequent monies were misapplied, and lands registered in the Petitioners’ own firm.

5. Sri Posani Venkateswarlu, learned Senior Counsel for the Petitioners submits that even if the allegations are taken at face value, they disclose at best a civil dispute arising out of a commercial transaction. The attempt of the de-facto complainant is to give criminal colour to a mercantile arrangement, which is impermissible in law. The allegations are bereft of specific o