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2025 Supreme(Online)(Tel) 35879
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Tirumala Devi Eada, J
Vinay Palaparthy – Appellant
Versus
State of Telangana – Respondent
CRIMINAL PETITION No.5771 OF 2025
For the Appellants/Petitioners: Vikram Pooserla, M. Abhinay Reddy
For the Respondents: Raja Sripathi Rao, P. Raghavendra, Jithender Rao Veeramalla
In a petition to quash proceedings under Section 138 of the Negotiable Instruments Act, allegations of forgery, contested debt, or prior financial settlements that form triable issues of fact should be resolved during trial rather than summarily decided under Section 482 Cr.P.C. when a prima facie case is established.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Quashing of proceedings - Triable issues - Whether allegations of forgery, missing cheque books, and prior settlement constitute grounds for quashing - Court held that truth of allegations and claims of forgery require full-fledged trial and cannot be determined in a quash petition - Allegations of suppression of material facts and non-furnishing of documents are triable issues. (Paras 9-12)
(B) Criminal Procedure Code, 1973 - Section 482 - High Court’s inherent powers - Quashing of criminal complaint - Scope - Court held that inherent powers should be exercised to prevent abuse of process only when allegations do not prima facie constitute an offence - If prima facie case is made out, the court will not interfere. (Paras 14-15)
Facts of the case:
The petitioner, a former director of the respondent companies, sought the quashing of proceedings initiated against him under Section 138 of the NI Act, alleging that a cheque was dishonored. He contended that his signature was forged, cheque books were stolen and misused, and that a prior settlement of Rs.15.93 crores had been reached, rendering the complainant’s claim of an outstanding debt absurd and improbable. He further alleged the complainant failed to provide necessary documents requested via legal notice.
Findings of Court:
The Court held that contentions regarding forgery, the nature of the debt, and the impact of the prior settlement are factual in nature. As the complainant established a prima facie case regarding the dishonored cheque, these matters must be adjudicated during trial. Expert opinion regarding signatures requires submission of original documents to a forensic laboratory.
Issues: Whether the criminal complaint under Section 138 of the NI Act should be quashed due to disputed signatures, alleged suppression of documents, and an existing financial settlement between the parties.
Ratio Decidendi: Inquiries involving factual disputes like forgery, the legitimacy of a debt, or the misuse of negotiable instruments are triable issues that cannot be summarily decided under Section 482 CrPC when a prima facie case exists. Result : Criminal Petition disposed of; request for quashing denied; petitioner's personal attendance dispensed with.
| Table of Content |
|---|
| 1. nature of the criminal petition against section 138 ni act proceedings. (Para 1 , 2 , 3) |
| 2. contentions of parties regarding forgery, document suppression, and prior settlement. (Para 4 , 5) |
| 3. evaluation of factual disputes which constitute triable issues. (Para 7 , 8 , 9 , 10 , 11 , 12) |
| 4. applicability of quashing powers when a prima facie case exists. (Para 13 , 14 , 15 , 16) |
ORDER:
This Criminal Petition is filed by the petitioner-accused seeking to quash the proceedings against him in S.T.C.(N.I.).No.1175 of 2025 on the file of learned X Additional Chief Metropolitan Magistrate, Secunderabad, registered for the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short, ‘NI Act’).
2. Heard Sri Vikram Pooserla, learned Senior Counsel representing Sri M. Abhinay Reddy, learned counsel for the petitioner, Sri Raja Sripathi Rao, learned Senior Counsel representing Sri P. Raghavendra, learned counsel for respondent No.2 and Sri Jithender Rao Veeramalla, learned Additional Public Prosecutor for respondent No.1-State.
3. The crux of the complainant’s case is that the petitioner has issued a cheque towards a loan taken from it and the said cheque was dishonoured following which, the complainant filed S.T.C.(N.I.).No.1175 of 2025 for the offence under Section 138 of the NI Act. Now, the present Criminal Petition is filed by the accused in the said case seeking quashment of the same.
4. Learned Senior Counsel for the petitioner submitted that the petitioner herein disputes his signature on the alleged cheque and that the petitioner has also sent the cheque to the Truth Labs, which has given a report stating that the signature on the cheque does not pertain to the petitioner. He further submitted that the complainant has given a legal notice, but has not mentioned any details and has not submitted any documents supporting the notice. He further submitted that the petitioner has addressed a reply notice, but the complainant has failed to comply with the request of furnishing the relevant documents. When the necessary material is not supplied to the petitioner, he is not obligated to respond to the said legal notice. He further submitted that the said principle is laid down by the Honourable Supreme Court in Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari Patsansta Ltd. 12025 SCC OnLine SC 641 and since the complainant failed to furnish necessary material to the petitioner in response to his reply notice, the petitioner is not under obligation to comply with the legal notice. He further submitted that since there is no legally enforceable debt, the petitioner is not required to pay any amount to the complainant, as alleged in the complaint. He further submitted that the petitioner was at South Africa and he has come down to India at the request of his maternal uncle i.e., A.M. Emanuel and continued to do business with him, but in the year 2018, he resigned due to some internal disputes and on 06.08.2024, the settlement was arrived at and he was paid an amount of Rs.17 crores towards full and final settlement. Thus, the counsel contends that if at all the petitioner herein is due to pay an amount of Rs.1,34,75,000/-, the complainant could not have settled his account by paying Rs.17 crores. That itself falsifies the contention of the complainant. He further submitted that pursuant to the MoU entered into between the parties, the petitioner has initiated proceedings before the Arbitrator and the complainant pretty well knows that he cannot succeed before the Arbitrator and has lodged the present complaint with false allegations. He further submitted that the cheque is supposed to have been issued towards the loan taken in the year 2012. But, the cheque book pertaining to the alleged cheque was issued to the petitioner on 05.04.2022. Therefore, the petitioner could not have issued the said cheque as security to the loan that was obtained in the year 2012. He further submitted that since the alle
