Criminal proceedings under Sections 420 and 406 IPC should be quashed if the charge sheet relies on omnibus allegations without substantive evidence of inducement, entrustment, or dishonest intention, as continuing such proceedings constitutes an abuse of the process of law.

ORDER:

This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973, seeking quashment of the proceedings against the petitioner-accused No.10 in C.C.No.9 of 2022 on the file of Principal Senior Civil Judge-cum-Assistant Sessions Judge at Malkajgiri.

2. Heard learned counsel for the petitioner and Mr.M.Vivekananda Reddy, learned Additional Public Prosecutor appearing for respondent No.1-State.

3.1. Briefly stated, the relevant facts are that accused Nos. 1 and 2 established a Company by name Apex Web Service and Online Education Private Limited. It is alleged that the said Company, presenting itself as approved by the Ministry of Corporate Affairs, published various promotional materials and social media posts offering investment schemes promising returns up to four times the invested amount within twenty months under different packages such as “Micro,” “Mini,” “Basic,” “Gold,” and “Diamond.” On the basis of such representations, several persons invested money.

3.2. It is further alleged that, contrary to the assurance of 20% monthly returns, the promised amounts were not paid. It is also alleged that investors were subsequently informed that, in order to withdraw their investments, they were required to refer four additional persons to invest in the scheme, where after declined the repayments. On these allegations, the Company and its promoters are stated to have cheated the investors.

3.3. The specific allegation against the petitioner is that he was one of the promoters of the Company and that he deceptively induced investors and collected money on behalf of the Company.

4.1. Learned counsel for the petitioner submits that the petitioner has no connection whatsoever with the said Company. It is contended that, even after completion of investigation, the prosecution has failed to place any material demonstrating his role either as a promoter or as a person in charge of the affairs of the Company. On the contrary, it is asserted that the petitioner and his wife had themselves invested amounts in the scheme and had made representations to the concerned police authorities to treat them as victims. However, no steps were taken in that regard and, instead, the petitioner has been arrayed as an accused.

4.2. It is further submitted that the statements of the victims recorded under Section 161 Cr.P.C. do not attribute any role to the petitioner, nor do they state that he induced them to invest or received any amount from them. It is also contended that the Company itself has not been shown as an accused, which, according to the petitioner, constitutes a serious legal infirmity. In the absence of any material establishing his involvement, continuation of the proceedings is stated to be an abuse of process of law. Hence, quashment of the proceedings is sought.

5. Learned Additional Public Prosecutor, on the other hand, fairly submits that a perusal of the charge sheet does not disclose any substantive material against the petitioner except a passing reference describing him as a promoter of the Company. It is further stated that the charge sheet specifically attributes the formation and operation of the Company to accused Nos. 1 and 2 with the alleged intention to cheat investors. It is also admitted that the statements of the witnesses do not refer to the petitioner’s role in inducing investments or receiving funds. The Company itself has not been arrayed as an accused. Appropriate orders are therefore sought from this Court.

6. I have perused the material available on record.

7. The petitioner has been arrayed as accused No. 10 for offences under Sections 420 and 406 of the Indian Penal Code. The essential ingredients of Section 420 IPC (cheating and dishonestly inducing delivery of property) are:

(i) deception of any person;

(ii) fraudulent or