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2025 Supreme(Online)(Tel) 62424
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
Disputed facts in a Section 138 NI Act proceeding, such as claims of forgery, signature validity, or prior settlements, are triable issues that cannot be adjudicated in a petition for quashing proceedings, as they require evidence led during a full-fledged trial.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Dishonour of cheque - Quashing of proceedings - Triable issues - Allegations of forgery, missing cheque books, and prior settlement are factual matters requiring evidence at trial - Appellate/Revisional court cannot decide such contested facts in a quash petition - Proceedings cannot be quashed when a prima facie case exists. (Paras 9, 10, 11, 12, 15)
Facts of the case:
The petitioner, a former director of the complainant company, challenged proceedings under Section 138 of the NI Act, claiming the cheque was forged, the debt was not legally enforceable, and that a prior full mutual settlement existed. The petitioner alleged the cheque was stolen and misused.
Findings of Court:
The court found that the issues regarding forgery, the nature of the debt, and the settlement are questions of fact that require a full-fledged trial. The court rejected the request to quash the proceedings as a prima facie case was made out.
Issues: Whether the proceedings under Section 138 of the NI Act should be quashed based on claims of forgery, prior settlement, and non-disclosure of documents.
Ratio Decidendi: Allegations that essentially constitute triable issues of fact, such as the genuineness of a cheque or the existence of a legally enforceable debt, cannot be determined in a petition to quash criminal proceedings, but must be resolved through a full trial.
Result: Petition disposed of with a direction to the trial court to proceed, while dispensing with the petitioner's personal appearance.
| Table of Content |
|---|
| 1. introduction to facts and case initiation under section 138 ni act. (Para 1 , 2 , 3) |
| 2. summary of rival contentions regarding cheque validity and procedural fairness. (Para 4 , 5 , 7 , 8) |
| 3. evaluation of triable issues like debt existence and document forgery. (Para 9 , 10 , 11 , 12) |
| 4. court's refusal to quash when prima facie case is established. (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 alleged d
