IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON’BLE SMT. JUSTICE TIRUMALA DEVI EADA CRIMINAL PETITION No.35 of 2026 Date: 06.01.2026 Between:

Maddineni Vanitha ...Petitioner AND The State of Telangana, Rep by its Public Prosecutor, High Court for the State of Telangana and another ...Respondents

ORDER

This Criminal Petition is filed under Section 528 Bharatiya Nagarik Suraksha Sanhita, 2023 (for short ‘BNSS’) by the petitioner/accused seeking to quash the proceedings against her in C.C.No.5 of 2024 on the file of learned Principal District Sessions Judge at Khammam.

2. Heard Sri Chalakani Venkat Yadav, learned counsel for petitioner and Sri Jithender Rao Veeramalla, learned Additional Public Prosecutor appearing for the respondent No.1-

State.

3. The brief facts of the case are that the petitioner along with her husband are running private chits ad that the de facto complainant joined as a subscriber for a chit of Rs.5 lakhs and on its maturity, the petitioner failed to pay her the chit amount. Likewise the petitioner collected amounts from 32 persons and deceived them. Thus alleged to have committed offences under Section 406, 420, 294 (b) and 506 r/w. 34 of Indian Penal Code, 1860 (for short ‘IPC’) and Sections 4 and 5 of TS Chit Funds Act, 1982 (for short ‘Chit Fund Act’) and Section 5 of Telangana State Protection of Depositors of Financial Establishment Act, 1999 (for short ‘TSPDFE Act’).

4. Learned counsel for the petitioner submits that the petitioner was running an unregistered chit fund and that all the transactions took place between the petitioner and the alleged victims in cash. He further submits that the petitioner has already paid the cash collected from the victims under the chits. The de facto complainant has lodged a false complaint against the petitioner by showing only online transactions. He also submits that, since it is an unregistered chit fund, the provisions of the Chit Funds Act or the Depositors Act are not attracted and that the petitioner has not committed any offence to attract the ingredients of Sections 406 and 420 of the IPC. He therefore, prayed to quash the proceedings against the petitioner herein.

5. Learned Additional Public Prosecutor has submitted that it is a settled law that the cases registered with the allegations of non-payment of the amount to the subscribers in a chit would definitely fall under Section 5 of the TSPDFE Act as the definition of Financial Establishment clearly attracts the nature of business that is run by the petitioner, and hence, the principle laid down by this Court in Revathi v. State of A.P.¹ is clearly applicable to the present case and hence, prayed to dismiss the petition.

6. Perused the record.

7. It is borne out by the complaint lodged by the de facto complainant that the petitioner herein lured the alleged victims through chit transactions and collected huge amounts from them, repaid certain individuals, but failed to pay returns to several others from the said transactions.

8. The recitals of the charge sheet further point out several online transactions and the payments made by the alleged victims. It is alleged that amounts collected from 32 persons, to the extent of Rs.4,33,57,000/-, were not paid back to the alleged victims. The charge sheet further discloses that LWs.1

(2013) 3 ALT (Crl) 116

to 32 are the victims. The veracity of these witnesses needs to be tested during the course of trial.

9. Before going into the principle laid down in Revathi v. State of A.P., it is pertinent to refer to the relevant provisions under TSPDFE Act and Chit Fund Act which are extracted hereunder for the sake of reference:

Section 5 of TSPDFE Act reads as follows:

“5. Where any financial establishment defaults in the return of the deposit either in cash or kind or defaults in the payment of interest on the deposit as agreed upon, every person responsible for the management of the affairs of the financial establishment including the promoter, Manager or Member o