IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SRI JUSTICE N.TUKARAMJI CRIMINAL PETITION No.4620 OF 2024 DATE: 24.02.2026 Between :

Mr A Pitchiah … Petitioner AND The State of Telangana Rep., by its Principal Prosecutor, High Court of Telangana, Hyderabad Telangana and another.

… Respondents.

O R D E R:

This Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short, “Cr.P.C.”), seeking quashment of the proceedings dated 01.04.2024 and 08.04.2024 against the petitioner/A-4 in STC N.I. No. 3660 of 2022 on the file of the XII Metropolitan Magistrate, Manoranjan Complex, Nampally, for the offence punishable under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (for short, “the N.I. Act”).

2. Briefly stated, the relevant facts are that respondent No. 2 filed a private complaint under Section 200 Cr.P.C. alleging that accused No. 1 is a Company and accused Nos. 2 to 4 are its Directors. It is averred that the complainant arranged financial assistance of Rs. 12,70,00,000/-, pursuant to which three cheques dated 10.01.2022 were issued on behalf of accused No. 1 Company. On presentation, the cheques were dishonoured on 11.01.2022 with the endorsement “funds insufficient.” A statutory notice was issued on 08.02.2022, and a reply dated 22.02.2022 was issued on behalf of accused No. 1 Company, represented by accused No. 4. Thereafter, the complaint was filed and cognizance was taken by the Court below. Challenging his arraignment as accused No. 4, the petitioner has filed the present petition seeking quashment of the proceedings.

3.1. Learned counsel for the petitioner submits that the petitioner was not a signatory to the cheques and, though a Director in charge of administrative affairs of accused No. 1 Company, he was not involved in its day-to-day financial transactions. It is contended that the reply notice was issued by him only on behalf of the Company. It is further asserted that accused No. 2 resigned as Chairman on 10.09.2021. According to the petitioner, there was no direct transaction with respondent No. 2, he had no role in the issuance of the cheques, and the complaint contains only omnibus allegations without specific averments as to his role. It is also contended that no legally enforceable debt exists qua the petitioner. On these grounds, quashment is sought.

3.2. It is further pleaded that Section 141 of the N.I. Act mandates a specific assertion in the complaint that the accused was “in charge of” and “responsible for the conduct of the business” of the Company at the time of commission of the offence, and that mere designation as a Director is insufficient. It is submitted that there is no specific allegation of the petitioner’s active participation in the transaction and that no separate statutory notice was served upon him. Hence, it is contended that the cause of action against the petitioner/A-4 is unsustainable and that continuation of proceedings would amount to abuse of process of law.

3.3. In support of his contentions, learned counsel places reliance on S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, wherein it was held that a specific averment in the complaint that a Director was in charge of and responsible for the conduct of the business of the Company is necessary, and that mere designation as Director is insufficient. Reliance is also placed on Sunitha Palita and others v. Panchami Stone Quarry, (2022) 10 SCC 152, wherein the Hon’ble Supreme Court held that a Director who was not in charge of and responsible for the conduct of the business of the Company at the relevant time cannot be prosecuted under Section 138 of the N.I. Act. It is contended that it would be a travesty of justice to prosecute Directors who are not connected with the issuance or dishonour of the cheque.

4. Learned counsel for respondent No. 2, on the other hand, contends that the cheques were issued on behalf of the Company and were dishon