THE HONOURABLE SMT JUSTICE JUVVADI SRIDEVI CRIMINAL PETITION No.1076 OF 2022

O R D E R

This Criminal Petition is filed by the petitioners-accused Nos.1 and 2 seeking to quash the proceedings against them in C.C.No.18 of 2021 pending on the file of the learned Special Court under the Telangana Protection of Depositors of Financial Establishments Act- cum-Metropolitan Sessions Judge at Hyderabad, registered for the offences under Sections 406 and 420 read with Section 34 of the Indian Penal Code (hereinafter referred as ‘IPC’) and Section 5 of the Telangana Protection of Depositors of Financial Establishments Act, 1999 (hereinafter referred as ‘the Act’).

2. Heard Mr. P. Pratap, learned counsel for the petitioners, Mr. Srinivas Polavarapu, learned counsel for respondent Nos.3 and 4 and Smt. S.Madhavi, learned Assistant Public Prosecutor for the State-

respondent Nos.1 and 2. Perused the record.

3. The petitioners-accused Nos.1 and 2, are the husband and wife and they are the Managing Director and Director of M/s. Sri Rishab Chit Fund India Private Limited (hereinafter referred to as ‘Company’), respectively.

4. The case of the prosecution, in brief, is that the petitioners have induced the de facto complainants and several others to invest amounts in their Company, thereby collecting approximately Rs.69.00 crores from around 622 members. Upon completion of chit period, instead of disbursing the due amounts in cash, the petitioner-accused No.1 has issued cheques and promissory notes as fixed deposit receipts (FDRs). It is further alleged that the petitioners have misappropriated the funds collected from the members of the chit for their personal luxuries and acquired properties, thereby cheating the general public. Basing on the two complaints lodged by the de facto complainants, cases in Crime Nos.196 and 199 of 2018 were registered against the petitioners. After completion of investigation, the Police filed charge sheet in C.C.No.18 of 2021, clubbing both the crimes.

5. Submissions of learned counsel for the petitioners:

5.1. The petitioners-accused Nos.1 and 2 are innocent and they have nothing to do with the offences alleged against them. In fact, the de facto complainants and other victims have voluntarily advanced hand loan to the petitioners for an interest @ 2% per month and the cheques and promissory notes were given towards security by the petitioners to the de facto complainants and others. It is alleged in the complaint that cheques and promissory notes were given as FDRs. However, the petitioners never issued any FDRs in favour of the de facto complainants and other victims. If really the petitioners have issued FDRs, the de facto complainants would have produced the same before the Investigating Officer during the course of investigation. The de facto complainants have not mentioned any basic particulars like tenure or maturity of the FDRs alleged to have been issued by the petitioners to him. Even during the course of investigation, though the Police have examined 65 victims, not even a single FDR was produced by them.

5.2. The case of the petitioners is only that they have taken the amount from the de facto complainants and others as a handloan and cheques and promissory notes were given towards security. The de facto complainants did not deposit any amount with the Company for interest. Accepting hand loan by issuing collateral security does not amount to ‘deposit’. In fact, it is not the case of the de facto complainants that they have deposited amounts in the Company for interest and the said amount was misappropriated by the Company, except stating that after completion of chit period, chit amounts were not disbursed in their favour. Though there is no allegation either in the FIR or in the charge sheet attracting the offence under Section 5 of the Act, the Police purposefully filed charge sheet adding the said offence, to harass the petitioners and the case is to be tried by the learned Principal Sessions Judge. In