IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE FIRST DAY OF JUNE TWO THOUSAND AND TEN PRESENT THE HON'BLE SRI JUSTICE SAMUDRALA GOVINDRAJULU CRL.PETITION No. 2 4 7 2 OF 2007 Between: Sri Rama Finance Corporation Chit Fund, Rep.by Managing Partner Saladi Suryanarayana, Kothapeta, East Godavari district & Anr. ..... Petitioners V/s. Saladi Seethayya & Anr. … Respondents Counsel for the Petitioner : Sri Polisetti Radhakrishna Counsel for the Respondents: Addl.Public Prosecutor The Court made the following : (Order follows 2nd page) THE HON’BLE SRI JUSTICE SAMUDRALA GOVINDRAJULU CRL.PETITION No. 2 4 7 2 OF2007. O R D E R : The petitioners 1 and 2 – A-1 and A-2 are accused of offence punishable under section 420 IPC in CC.No. 243 of 2006 on the file of Judicial Magistrate of the First Class, Kothapeta. A-2 is the Managing Partner of A-1 Finance Corporation running chit fund business also. It is a registered Finance Company. The first respondent-defacto complainant is brother of A-2. There is no dispute that the defacto complainant joined as member in the chit run by A-1 and paid all instalments completely and A-1 became liable to pay Rs.40,000/- to the defacto complainant under the chit transaction. All the payments are borne out by receipts as well as records of A-1. The chit transaction took place between 09-5-1997 and 14-06-1998. 2. It is alleged by the defacto complainant that A-1 corporation did not pay Rs.40,000/- to him in spite of closure of the chit fund transaction. Therefore, the second respondent filed a complaint in the lower court in the year 2005 against A-1 and A-2. The lower court referred the same to the Police for investigation and report under section 156 (3) Cr.P.C. After investigation, the police filed final report referring the case as ‘mistake of fact’. Thereupon, the second respondent filed petition before the lower court protesting against conclusion arrived at in the final report. The lower court after making inquiry took the case on file under section 420 IPC against A-1 and A-2. 3. It is contended by the petitioner’s counsel that the procedure adopted in the lower court with regard to taking cognizance of the case after final report is filed, is contrary to law. The above narrated proceedings in the lower court clearly disclose that there is no deviation of legal procedure by the lower court in taking cognizance of the case. It is contended by the petitioner’s counsel that A-1 Corporation paid the amount of Rs.40,000/- to the defacto complainant. This fact is disputed by the first respondent’s counsel. Even as per police investigation, there is no document or record evidencing repayment of amount of Rs.40,000/- by A-1 to the defacto complainant. It is a question of fact into which this court cannot go into in this petition under section 482 Cr.P.C. 4. Even though the chit transaction ended on 14-6-1998, the defacto complainant did not take any steps before civil court for recovery of the alleged amount from A-1 or A-2. It is stated in final report of the police that because of lapse of time and bar of limitation for filing the suit the defacto complainant resorted to taking proceedings on criminal side by way of private complainant. 5. It is contended by the respondent’s counsel that because of relationship the first respondent did not take any steps in civil court within the prescribed time. Simply because some amounts are due by the accused to the defacto complainant, it will not give rise to file a criminal case under section 420 IPC in a criminal court. It is not as if the chit fund transaction was started with a dishonest intention and the chit fund amounts paid by all the subscribers were misappropriated by the accused. In the absence of any dishonest intention or fraudulent intention on the part of the accused at the time of inception of the transaction, it cannot be said that there was any element of cheating entertained in the minds of the accused. As the matter now stands, the case is one of purely civil in nature., The ingredients of offence under section 420 IPC or 415 IPC are not made out in this case. The final report of the police is staring at the defacto complainant. The lower court should not have taken cognizance of the offence so lightly on mere sworn statement of the defacto complainant. The lower court should have given reason as to how final report of the police is not liable to be accepted. The lower court took the case on record mechanically and without any application of mind. 6. Hence, the petition is allowed, quashing the proceedings in CC.No. 243 of 2006 on the file of the Judicial Magistrate of the First Class, Kothapeta, East Godavari district. ____________________________________ Justice Samudrala Govindrajulu.. 31-05-2010. I s L THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDRAJULU CRL.P.NO. 2 4 7 2 OF 2007 Circulation Entry No. 3 5 Date: 01-06-2010 COMPUTER No. 43 Court Master: I s L