THE HONOURABLE SMT JUSTICE K. SUJANA CRIMINAL PETITION No.7242 of 2025

ORDER:

This Criminal Petition is filed seeking to quash the proceedings against the petitioner/accused in FIR.No.63 of 2025 before the Chunchupalli, Bhadradri Kothagudem District, registered for the offences punishable under Section 318(4) of Bharatiya Nyaya Sanhita, 2023.

2. The brief facts of the case are that the petitioner and the de facto complainant, who are distant relatives, had jointly established Lyfin Organics Private Limited in the year 2019. Each of them had invested approximately Rs.60 lakhs in the company. Initially, the company had two directors, and later, a third director, Mr. Mahabub Khan, joined the company, and subsequently left the company after receiving Rs.6 lakhs from the petitioner and Rs. 13 lakhs from the de facto complainant. It is alleged that the petitioner started a rival company, Root Well Agro Wet Private Limited, and utilized Lyfin's machinery, raw materials, and products for his own benefit, which resulted in causing significant financial loss to Lyfin. Furthermore, the petitioner is accused of transferring funds from Lyfin's account to his personal account and threatening the accountant of the company. The de facto complainant contends that the actions of petitioner constitute breach of rules, as a person cannot hold directorships in two companies engaged in the same business. Based on these allegations, the de facto complainant lodged a complaint with the police, leading to the registration of a case against the petitioner under Section 318(4) of the BNS Act.

Aggrieved thereby, this Criminal Petition is filed.

3. Heard Sri M. Srinivasa Rao, learned counsel for the petitioner, Sri M.Vivekananda Reddy, learned Assistant Public Prosecutor appearing for respondent No.1 - State and Sri K.Akhil Reddy, learned counsel appearing for respondent No.2.

4. Learned counsel for petitioner submitted that the complaint filed by the de facto complainant, a co-director of Lyfin Organics Private Limited, is not maintainable due to the lack of a board resolution authorizing the complaint. He contended that according to company rules, one director cannot file a complaint against another director without a resolution passed by the board of directors. He asserted that the complaint was not filed by the company itself, which is a separate legal entity, nor was it based on a resolution passed by the company, rendering it invalid and liable to be quashed. He averred that the allegations of petitioner transferring company funds to personal accounts are entirely fabricated, and articulated that the petitioner had actually deposited his own money into the account of company. He reiterated that the transfers made were for legitimate business purposes, including payment of salaries and other expenses, and that only a small amount from dealers towards sale proceeds was transferred, which was utilized for the operational needs of company.

5. Learned counsel for petitioner incessantly contended that the de facto complainant has been mismanaging the affairs of Lyfin Organics Private Limited, and despite repeated warnings from the petitioner, the de facto complainant has continued to do so. In response, the petitioner started his own company, Root Well, in the year 2024, along with his family members, which is not in violation of any company rules. He lamented that one director cannot lodge a complaint against another director without a resolution passed by the board of directors. Therefore, while advocating that the reputation of petitioner and his standing in society, is widely impacted, he prayed this Court to quash the proceedings initiated against the petitioner.

6. On the other hand, the learned Assistant Public Prosecutor, vehemently, opposed the submissions made by learned counsel for petitioner and contended that basing on the averments of the complaint, the petitioner was implicated in the case for the offences as alleged. Therefore, while advocatin