Chunduru Siva Ram Krishna & Anr vs Peddi Ravindra Babu & Anr

3. In order to appreciate the contentions raised before us by the counsel appearing for the parties it would be necessary to set out the brief facts leading to filing of the aforesaid complaint dated 02.07.2005. One Chunduru Subba Rao, Accused No. 1 was having a rice mill at Village Lakshmipuram in District Guntur, Andhra Pradesh under the name and style of "C.S.R. Rice Mills". He was the sole proprietor of the said rice mill. Accused Nos. 2 to Accused No. 5 are the family members of Accused No. 1 whereas Accused Nos. 6 to Accused No. 8 are son-in-law, the daughter of Accused No. 1 and the brother of the son-in-law of Accused No.1 respectively. Accused No. 9 has also been arrayed as one of the accused in the complaint filed and he is the younger brother-in-law of Accused No. 1. Accused No. 2 and Accused No. 3 are the two sons of Accused No. 1 who are aged about 28 and 25 years respectively. Accused Page 2 of 19 No. 2 is stated to be doing his job after completing his graduation from Nagarjuna University, Guntur, Andhra Pradesh and his post graduation in Master of Computer Applications under University of Madras. On the other hand, Accused No. 3 is stated to be studying Engineering course in Bapatla, Guntur, Andhra Pradesh. It is, therefore, disclosed from the aforesaid facts that all the family members of Accused No. 1 have been arrayed as accused persons in the complaint filed.

4. It is disclosed from the records that Accused No. 1 had been into rice mill business for about 20 years and had been purchasing paddy from the local paddy growers in the village and that he issued vouchers to some of them while to others promissory notes ranging from Rs. 30,000/- to Rs. 3 lakh were executed as security towards the purchase of paddy. He had also obtained Rs. 30 lakhs as loan from State Bank of India, Ponnur and remodeled the rice mill and fortified his goodwill. However, his business has declined and consequently he owed debts to the banks, several financial institutions and to public and that his liabilities aggregated to Rs. 89,51,600/-. Therefore, on 24.06.2005, he filed an insolvency petition bearing I.P. No. 11 of 2005 in the Court of Senior Civil Judge, Baptala, Guntur District, Andhra Pradesh in which Page 3 of 19 he stated that he was sustaining loss for 5-6 years and his aggregated liabilities was approximately Rs. 89,51,600/. He also got published in the newspaper regarding the factum of filing of the said insolvency petition.

5. Consequent upon filing of the aforesaid insolvency petition several representations were made to the District Collector by the villagers making allegations against Accused No. 1 and his family members. The said representations were endorsed by the District Collector to the police for investigation. The paddy suppliers, who are respondents herein, also lodged a report dated 2.7.2005 against Accused No. 1 and his family members with the Station House Officer, Kakumanu Police Station in Kakumanu Mandal, District Guntur for offences punishable under Sections 406 and 420 read with Section 34 of the Indian Penal Code.

6. On 18.9.2006, the Station House Officer, Kakumanu filed a charge sheet bearing C.C. No. 110 of 2006 in the court of the learned Judicial Magistrate First Class, Ponnur under Sections 406, 420 and 424 read with Section 37 IPC against Accused No. 1 to Accused No. 9 which included both the appellants herein. In the said charge sheet the police Page 4 of 19 stated that Accused No. 1 to Accused No. 9, who are inter related, developed an evil idea by colluding themselves and fraudulently directed the loans and gold secretly in benami names in order to defraud the persons who supplied paddy to them. It was further stated in the charge sheet that during the year 2005 Accused No. 1 purchased paddy crop from several farmers saying that he would pay the cost of paddy as per the existing market value. They blindly believed Accused No. 1 and unloaded huge quantities of paddy produced by them and entrusted the same with Accused No. 1. But Accused No. 1 diverted part of the paddy to Accused No. 5 who was running rice mill under the name and style of `C.S.R. Industries' opposite to Sivalayam, Old Ponnur, on the ground of inadequate power supply and secretly sold it for his own use. It has been further stated that 10 days before that he had also diverted huge quantities to `NRI Industries', Ponnur. Eventually, Accused No. 1 gained unlawfully to the tune of Rs. 1,20,00,000/- by cheating the abovementioned paddy suppliers. He surrendered before the learned Judicial Magistrate First Class, Ponnur on 19.7.2005. Vide order dated 19.7.2005 in the petition for grant of anticipatory bail, the Hon'ble High Court of Andhra Pradesh directed release of A-6 to A-8 and A2 to A-4 including the appellants herein.

7. On 25.11.2006 all the accused i.e. Accused Nos. 1 to Accused No. 9 including the appellants herein (Accused No. 2 and Accused No. 3) jointly filed a Criminal Petition No. 5618 of 2006 under Section 482 of the Criminal Procedure Code (for short `CrPC') before the High Court of Judicature, Andhra Pradesh at Hyderabad seeking quashing of the Criminal Complaint No. 110/2006 and the charge sheet which were pending in the Court of learned Judicial Magistrate First Class, Ponnur on the ground that it was only a civil liability arising out of breach of contract by Accused No. 1 in payment of price of paddy and, therefore, it was improper on the part of the police to come to their aid to recover the money under a transaction by filing criminal cases and that the said criminal complaint itself was a counter blast to the insolvency petition filed by Accused No. 1. However, the learned Single Judge of the High Court vide impugned order dated 01.03.2007 observed that they collected paddy from various agriculturists worth Rs. 1,20,00,000/- by making them to believe that the cost of paddy would be paid immediately but after having collected the paddy, they failed to pay the amount to the agriculturists and thereby they cheated those persons. So, it was held that there was prima facie material against all the accused i.e. Accused Nos. 1 Page 6 of 19 to Accused No. 9. Accordingly, the High Court dismissed the criminal petition.

20.The allegations made against other accused are that Accused No. 1 diverted huge quantities of paddy to NRI industries, Ponnur and made it disappear with the active assistance of Accused Nos. 2 to Accused No. 9 and that Accused No. 1 purchased lands at Nethaji Nagar, Nidubrolu in the name of benamies with the assistance of Accused No. 6 and that Accused No. 1 also purchased valuable properties at Bangalore with the help of Accused No. 2. These are the only allegations made against the Page 17 of 19 role of the present appellants namely Accused Nos. 2 and 3 and Accused Nos. 6, 7 and 8. No specific role is ascribed to any of the aforesaid persons except for stating that the huge quantities of paddy was diverted by Accused No. 1 and made to disappear with the active assistance of Accused No. 2 to Accused No. 9. Without ascribing any specific role to any one of them the aforesaid allegation appear to us to be very bald and vague. Similarly the allegations made against Accused No. 2 and Accused No. 3 that they had helped their father in purchasing some property is also very vague as no specific role is ascribed to them.

22.We are of the opinion that such allegations do not make out a case of prima facie evidence. Consequently, we have no other option but to Page 18 of 19 quash the proceedings as against the appellants herein i.e. Accused Nos. 2 and 3 and Accused Nos. 6 to 8. While doing so, however, we make it clear that we express no opinion so far as the allegations made in the said charge sheet against Accused No. 1 and other accused persons are concerned. We also make it clear that the observations made herein by us are only with respect to the criminal proceedings and none of these observations shall be construed as an opinion of ours so far civil liability, if any, is concerned.

23. Both the appeals are allowed to the aforesaid extent. There shall be no order as to costs.