HIGH COURT FOR THE STATE OF TELANGANA : AT HYDERABAD *****

Between:

Gunda Prakash Rao S/o. Rajamouli, Aged 73 years, Occ: Chairman cum Director (Bhavitha Sri Chit Fund Pvt. Ltd.), R/o.H.NO.12-2-90, Pinnavari Street, Warangal.

… Petitioner And

1. The State of Telangana, Rep. by its Public Prosecutor, igh Court for the State of Telanganna, Hyderabad.

2. Sampath Rao Sudhadi S/o.Rajeshwar Rao, Age: 54 years, Occ: Pvt. Employee, R/o.Mutharam, Peddapalli District.

… Respondents DATE OF JUDGMENT PRONOUNCED : 12.11.2025 Submitted for approval.

HON’BLE SMT. JUSTICE TIRUMALA DEVI EADA

1 Whether Reporters of Local newspapers may be allowed to see the Judgments? Yes/No

2 Whether the copies of judgment may be marked to Law Reporters/Journals Yes/No

3 Whether Their Ladyship/Lordship wish to see the fair copy of the Judgment? Yes/No HON’BLE SMT. JUSTICE TIRUMALA DEVI EADA + CRIMINAL PETITOIN No.13181 of 2025 % Dated 12.11.2025 Between:

# Gunda Prakash Rao S/o. Rajamouli, Aged 73 years, Occ: Chairman cum Director (Bhavitha Sri Chit Fund Pvt. Ltd.), R/o.H.No.12-2-90, Pinnavari Street, Warangal.

… Petitioner And $ 1. The State of Telangana, Rep. by its Public Prosecutor, High Court for the State of Telanganna, Hyderabad.

2. Sampath Rao Sudhadi S/o.Rajeshwar Rao, Age: 54 years, Occ: Pvt. Employee, R/o.Mutharam, Peddapalli District.

… Respondents ! Counsel for the Petitioners : Sri CMR Velu ^ Counsel for the Respondent No.1 : Sri Jithender Rao Veeramalla Addl. Public Prosecutor < Gist:

> HEAD NOTE:

? Cases referred:

1. (2013) 3 ALT (Crl) 116 2. Crl.A. No.1195 of 2018 THE HON’BLE SMT.JUSTICE TIRUMALA DEVI EADA

ORDER:

This Criminal Petition is filed by the petitioner-accused seeking to quash the proceedings in FIR No.123 of 2024 on the file of Hanamkonda Police Station, Warangal, for the offences under Sections 420, 406 read with 34 IPC and Section 5 of the Telangana Protection of Depositors of Financial Establishments Act, 1999 (hereinafter referred as ‘TSPDFE Act’).

2. Heard Sri CMR Velu, learned counsel for the petitioner and Sri Jithender Rao Veeramalla, learned Additional Public Prosecutor for the respondent No.1-State.

3. Learned counsel for the petitioner has submitted that the present case is registered under Sections 420, 406 read with 34 IPC and Section 5 of the TSPDFE Act and that the said Act does not get attracted to the present case. The contention of the learned counsel for the petitioner is that a chit fund transaction does not amount to collection of deposit and thus, the provisions under the Depositors Act do not get attracted. Therefore, registration of the crime under the said Act would be an abuse of process of law. If that offence is set aside, then the other allegations under Sections 420 and 406 IPC also do not get attracted against the petitioner as there is no dishonest inducement by the petitioner and that there is no allegation that the petitioner has put the property to his own use to constitute the offence under Section 406 IPC. He further submitted that the ingredients of the complaint did not point out that there is dishonest intention of the petitioner from the inception to constitute the offence of cheating under Section 420 IPC. Hence, the learned counsel submitted that all the alleged offences cannot be made out from the recitals of the complaint therefore, he prayed to quash the proceedings against the petitioner herein.

4. 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 thus, the contention of the learned counsel for the petitioner cannot be maintained and further unless the matter is subjected to (2013) 3 AL