Telangana High Court
Sri K. Nageswar Reddy vs The State Of Telangana on 1 July, 2026
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT
HYDERABAD
THE HONOURABLE SMT. JUSTICE RENUKA YARA
CRIMINAL REVISION CASE No.455 of 2025
01st DAY OF JULY, 2026
Between:
K. Nageswar Reddy.
...Petitioner
AND
The State of Telangana,
Through CBI, ACB, Hyderabad.
...Respondent
ORDER:
Heard Sri P. Vishnu Vardhan, learned counsel for the petitioner and
Sri Srinivas Kapadia, learned Special Public Prosecutor for Central Bureau
of Investigation (‘CBI’) for respondent. Perused the entire record.
2. The Criminal Revision Case is preferred by the petitioner/accused
No.7 challenging the order dated 27.03.2025 passed in Crl.M.P.No.1217 of
2021 in C.C.No.8055 of 2020 on the file of the learned XXI Additional
Chief Judicial Magistrate-cum-Special Judicial Magistrate of First Class for
trial of CBI Cases, Hyderabad (‘trial Court’), wherein a discharge petition
filed by the petitioner under Section 239 of Cr.P.C, was dismissed.
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CRLRC_455_2025
Brief facts:
3. The background facts of the case are that the CBI, ACB, Hyderabad,
filed charge sheet showing M/s.BNR Infra and Leasing Private Limited as
accused No.1 represented by accused No.2 in a loan transaction with State
Bank of India, Bible House Branch, R.P.Road, Secunderabad. The
transaction took place on 16.04.2011, wherein the State Bank of India has
advanced loan of Rs.2,00,00,000/- on 22.07.2011 with Rs.1,00,00,000/- as
bank guarantee. Said loan limit was subsequently enhanced to
Rs.3,00,00,000/- on 28.03.2013. Further, the loan limit was enhanced from
Rs.3,00,00,000/- to Rs.8,00,00,000/- on 17.11.2014, thereafter, the bank
categorized the loan account as Non-Performing Asset (‘NPA’) on
26.09.2015. An allegation is made to the effect that accused No.1-company
has availed loan on the basis of forged documents and later diverted the
loan amount to different accounts including that of the petitioner. The
petitioner is accused No.7 and he is alleged to have received Rs.68,89,000/-
on 24.11.2014 from accused No.1. Out of said amount the petitioner
transferred Rs.58,89,000/- to accused No.9-M/s. Elite Infra Projects Private
Limited on 25.11.2014 and retained Rs.10,00,000/-. This transaction is
witnessed by the statement of L.W.26-Assistant Manager, Scale I of
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Syndicate Bank. The charges alleged are under Sections 120-B read with
420, 468 and 471 of IPC.
4. The petitioner claims that only on the basis of a single financial
transaction that took place in the regular course of business, allegation of
committing offences is made. It is pleaded that the offences under Sections
468 and 471 and offence under Section 420 are attributed to accused No.1
on the basis of forged documents submitted for availing loan from State
Bank of India. The petitioner herein is not instrumental in the loan
transaction between the bank and accused No.1. There is no allegation in
the FIR or the charge sheet indicating any meeting of minds between the
petitioner and the principal accused or any participation in the conspiracy
alleged. Therefore, it is pleaded that ingredients of Sections 120-B or 420
or 468 or 471 are absent vis-Ã -vis the allegations made against the
petitioner. In the circumstances, the petitioner filed Crl.M.P.No.1217 of
2021 for his discharge from the case. Said petition was dismissed on
27.03.2025 vide impugned order.
5. The petitioner alleges that the impugned order is passed due to non-
application of judicial mind to the contentions urged and the record
produced and also despite a settled principle of law in CBI v. Srinivas D.
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Sridhar1 and HDFC Bank Limited v. State of Bihar2. It is emphasized
that petitioner is not an introducer of accused No.1 or a co-applicant or
guarantor to the loan transaction with the bank. Only mere transfer of
Rs.68,89,000/- to the petitioner on 24.11.2014 coupled with transfer of
Rs.58,89,000/- by the petitioner to accused No.9 on 25.11.2014 and
payment of Rs.5,00,000/- to accused No.8, which is a sister concern of
accused No.1 represented commonly by accused No.1, is the basis for
implication of the petitioner in crime. The contents of the charge sheet are
clear that a case is made out against accused No.1 on account of non-
repayment of loan with the intention of cheating. It is argued that there is
no complicity between the primary accused and the petitioner. The
implication of the petitioner as accused is groundless.
Grounds of revision:
6. In grounds of revision, it is pleaded that default of payable money
does not attract charge of Section 420 of IPC and that the contents of
charge sheet coupled with evidence demonstrate that accused No.1 availed
loan from the bank which was periodically enhanced to Rs.8,00,00,000/- as
on 17.11.2014 and then became an NPA on 26.09.2015. Linking the
transaction of accused No.1 with the bank to the petitioner is unfounded
1
2024 SCC OnLine SC 2875
2
2024 SCC OnLine SC 2995
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CRLRC_455_2025
and constitutes arbitrariness and violation of petitioner’s right under Article
21 of Constitution of India. It is alleged that there is failure to distinguish
between a legitimate business transaction and a criminal conspiracy. In the
absence of allegations of knowledge, intent or collusion, the essential
ingredients of offences under Section 120B and Sections 420, 468 and 471
of IPC cannot be met. The allegation of forgery of collateral security
documents is against accused Nos.1 to 6 and 14. The continuation of trial
against the petitioner in the absence of material to connect him to the
offences amounts to abuse of Court process, as such prayed that the
impugned order passed by the learned trial Court in Crl.M.P.No.1217 of
2021 in C.C.No.8055 of 2020 dated 27.03.2025 be set aside.
Contentions of the petitioner:
7. The learned counsel for petitioner went through the contents of the
charge sheet to give a picture of the conspiracy alleged against accused
No.1 represented by accused No.2 and the role of other accused in availing
loan from State Bank of India on the basis of forged documents and
subsequent declaration of the loan transaction as NPA. It is submitted that
during SARFAESI proceedings the bank came to know that collateral
security documents mortgaged for the purpose of borrowing the loan were
not enforceable for the purpose of realizing the outstanding amount. The
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CRLRC_455_2025land covered under sale deed No.1456 of 2011 dated 23.05.2011 was
agricultural land against which no loan can be sanctioned. Whereas, said
land was represented to have been converted from agriculture to non-
agriculture by producing a certificate bearing memo No.B1/2394/08 dated
29.12.2008 purportedly issued by RDO, Chevala Division. In the enquiry
conducted by the bank, it is learnt that the certificate produced is a forged
document, i.e. the certificate was never issued by RDO, Chevala. Further,
the valuer of the panel bank, submitted a valuation report assessing the
value of agricultural land at Rs.4,60,00,000/-, much higher value, though
the same was not non-agricultural land. The second mortgage collateral
security under sale deed document No.1827 of 2013 dated 02.05.2013 is
falsely mentioned as non-agricultural land. In that regard, the bank received
legal notice from one Buchi Ramulu claiming ownership. It is alleged that
at the time of commencement of sanction of loan, the valuers on the panel
of the bank mentioned the value of agricultural land under sale deed
No.1456 of 2011 dated 23.05.2011 on the higher side at Rs.16,94,00,000/-
and Rs.17,79,00,000/- respectively and thus, the loan transaction came to
be effected. In this transaction, the role of the petitioner/accused No.7 is
detailed at paragraph No.16.25 as follows:
“16.25 That, accused company M/s BNR Infra & Leasing (A-1)
represented by Shri B. Narsimha Reddy (A-2) in pursuance of the6
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CRLRC_455_2025criminal conspiracy was dishonestly and fraudulently transferred a
sum of Rs.68.89 Lakhs to the account of with M/s. Neonate
Enterprises, a proprietary concern of Shri K Nageswar Reddy (A-7)
without doing any genuine business to the account of M/s Neonate
enterprises, from the ABL account of M/s BNR Infra & Leasing (A-1)
on 24/11/2014. Out of which Rs.58.89 Lakhs was dishonestly
transferred by Shri K Nageswar Reddy (A-7) to M/s Elite Infra
Projects Pvt. Ltd. (A-9) in which Shri B Narsimha Reddy (A-2) and
Shri B Nagi Reddy (A-10) are directors and misappropriated the same
without doing any genuine business as claimed. Further the remaining
of Rs.10 Lakhs out of the above mention transfer to the extent of
Rs.58.89 Lakhs to his account, was misappropriated and misutilised
by Shri K Nageswar Reddy (A-7) himself without doing any genuine
business with accused company A1.”
8. Except at the above paragraph No.16.25, the role of petitioner is
nowhere discussed in the charge sheet. On the basis of a stray monetary
transaction between accused No.1 and accused No.7, it is alleged that the
petitioner is falsely implicated as an accused, more particularly for offences
under Sections 120-B, 420, 468 and 471 of IPC, in which the petitioner has
no role whatsoever. Except alleging misappropriation and misutilization of
Rs.10,00,000/- there is no other allegation against the petitioner.
9. In that context, the learned counsel for petitioner relied upon the
judgment in the case of Sanjay Kumar Rai v. State of Uttar Pradesh3,
wherein it is held that while considering a discharge application, a trial
Court is not expected to act as a mere post office. The Court has to examine
3
(2022) 15 SCC 720
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the evidence in order to ascertain whether there are sufficient grounds to try
the suspect.
10. Further, in the case of Dr. Vijaya Anand Reddy v. State of
Telangana 4, it is held that when a suspect is charged under Section 418 of
IPC, which defines cheating with knowledge that he is likely to cause
wrongful loss to a person whose interest in the transaction to which
cheating relates, he is liable either by law or by legal contract to protect
shall be punished with imprisonment of a description for a term which
extends 3 months or with fine or with both. On the basis of aforementioned,
it is argued that the ingredients of cheating under Sections 418 and 420 are
not etched out against the petitioner in the charge sheet and therefore, the
petitioner is entitled for discharge from the said charges.
11. Further, reference is made to the case of Srinivas D. Sridhar
(supra), wherein it is held that a perusal of statements of the witnesses and
documents on record in the charge sheet and the charge sheet do not reveal
allegations against the respondents as regards his sanction of SBLC, no
material placed in the charge sheet to show that respondent played any role
in sanction of SBLC and therefore, the suspect was held to be entitled for
discharge.
4
2025 SCC OnLine TS 876
8
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CRLRC_455_2025
12. Further, in the case of HDFC Bank Ltd. (supra), the Hon’ble
Supreme Court of India held that the bank is a juristic person as such, a
question of mens rea does not arise. Reading the FIR and complaint on the
face value does not disclose that the appellant bank or its staff members
dishonestly induced someone or deceived to deliver any property to the
person and that no mens rea existed at the time of such inducement and
therefore, held that the ingredients do not attract offence under Section 420
of IPC.
13. On the basis of aforementioned citations, the learned counsel for
petitioner submits that the contents of the charge sheet do not disclose any
ingredients of offences under Sections 420, 468 and 471 of IPC and
therefore, the petitioner is entitled to discharge from the said offences.
Contentions of the respondent:
14. In response, the learned counsel for respondent-CBI referred to the
judgment in the case of Abhishek Singh v. Ajay Kumar 5, wherein it is
held that at the stage of discharge, the Court has to see whether there is
prima facie an offence made out or not, and not whether the charges would
hold up in the Court.
5
2025 SCC OnLine SC 1313
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15. Further, in the case of State of Gujarat v. Dilipsinh Kishorsinh
Rao 6 , the Hon’ble Supreme Court held that the power of a High Court
under Section 397 of Cr.P.C would clothe the Court with the power to call
for and examine records of an inferior Court. The object of the provision is
to set right a patent defect or an error of jurisdiction or law. The purpose is
not to scrutinize the orders passed by an inferior Court. Revisional
jurisdiction can be exercised where decisions under challenge are grossly
erroneous or where there is no compliance with provisions of law or the
finding is based on no evidence, material evidence is ignored, or judicial
discretion is exercised arbitrarily.
16. Further, reliance is placed on the case of Amit Kapoor V. Ramesh
Chander 7 , wherein principles that are to be considered for exercise in
jurisdiction under Section 397 of Cr.P.C. for quashing a charge under
Section 228 Cr.P.C are discussed. It is held that there is a fine line between
Section 397 and Section 482 of Cr.P.C. It is held that there are no limits to
the power of the Court under Section 482 of the Code. However, the power
of quashing criminal proceedings, particularly when the charges are framed
in terms of Section 228 of the Code, should be exercised sparingly and with
circumspection. It is further held that the allegations and the material on
6
(2023) 17 SCC 688
7
(2012) 9 SCC 460
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record have to be perused to ascertain prima facie existence of an offence
or not. Only when the basic ingredients of a criminal offence are not
satisfied, the Court may interfere. Reference is made to the finding of the
Court wherein it is held that the loans obtained from a bank by the family
members are all questions of the fact which require adjudication, which can
be taken up only during trial. The explanation relating to borrowing of
large sums raises a suspicion, which according to the investigation agency,
is a strong material to file the charge sheet. On such material, the
sanctioning authority recorded its satisfaction under sanction order dated
05.03.2015 to prosecute the accused. Raising reasonable suspicion cannot
be construed at a primary stage for discharging the accused.
17. Lastly, reference is made to the case of Central Bureau of
Investigation v. M/s.Sarvodaya Highways Ltd. 8 wherein the Hon’ble
Supreme Court of India held that offences when committed in relation with
banking activities including offences under Sections 420 and 471 of IPC
have harmful affect on public having consequential affect on the wellbeing
of the society. Such offences fall under the category involving moral
turpitude by public servants while working in that capacity. On prima facie,
the bank is a victim in such cases, but the society in general, which
8
2025 INSC 1359
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includes the customers of the bank are the sufferers. In that context, the
Court as a guardian was expected not to remain silent or a mute spectator to
allow the proceedings to be withdrawn. It is held that the Court’s duty is to
scan the entire facts to find out the crux of allegations and the crux of the
offence.
18. In view of the foregoing judgments, the learned counsel for CBI,
referring to the contents of the charge sheet, emphasized that the accused in
the present case have committed criminal conspiracy of availing a bank
loan by producing forged and fabricated documents showing agricultural
land as non-agricultural land. In order to demonstrate the same, a fake
certificate allegedly issued by RDO, Chevala, has been produced to make
believe the bank that the collateral security provided is valuable non-
agricultural land when it was agricultural land. By producing such fake
documents, there was a loan transaction between the accused No.1
represented by accused No.2 and active involvement of the remaining
accused in the fabrication and forgery of the supporting documents. It is
emphasized that as a part of said criminal conspiracy, the amounts in the
custody of accused No.1 were transmitted to petitioner and from petitioner
to accused No.9. An amount of Rs.68,89,000/- is the amount involved in
the transaction between accused No.1 and the petitioner. Having received
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said amount, the petitioner transmitted Rs.58,89,000/- and retained
Rs.10,00,000/- per misappropriation and misutilization.
19. According to the learned counsel for respondent-CBI, the existence
of a criminal conspiracy between all the accused and creation of forged
documents are all questions of fact that need to be decided after a full-
fledged trial. It is further emphasized that at the stage of discharge petition,
a Court is expected only to examine prima facie case, but not whether the
allegation made against a suspect/accused would stand in the Court.
Therefore, urged that the present criminal revision case is liable to be
dismissed.
Findings of the Court:
20. A perusal of the record shows that there was a loan transaction
between State Bank of India and accused No.1, which is represented by the
accused No.2. The loan transaction began with Rs.2,00,00,000/- on
22.07.2011 and was increased to Rs.8,00,00,000/- by 17.11.2014 and
thereafter, the loan account was declared as an NPA on 26.09.2015.
21. In that context, charge sheet contains a description of role of M/s.
BNR Infra & Leasing (A-1); B. Narsimha Reddy (A-2) proprietor of A-1;
Soma Bindu Sagar Reddy (A-3), a partner of A-1; L. Kishore Chand (A-4),
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empanelled valuer of Canara Bank; M/s. Comfort Securities Limited (A-5),
which is engaged in securities business; Anil Agarwal (A-6), Director of A-
5; K. Nageswar Reddy (A-7/petitioner), who is proprietor of M/s. Neonate
Enterprises; M/s. Sinus Infra Projects Private Limited (A-8), in which A-2
is Director; M/s. Elite Infra Projects Private Limited (A-9), in which A-2
and A-10 and one Janardhan Mahasreshti were Directors; B. Nagi Reddy
(A-10), Managing Partner of M/s. Sri Sai Balaji Steel Traders along with
his wife and other partner; M/s. Heights Infra (A-11) represented by
Venkat Subba Rayudu (A-12) and P. Siva Shankar (A-13); AE Rani (A-
14); M/s. Vaishnovi Infratech Limited (TNR Infra) (A-15) and Polavarapu
Sridhar (A-16).
22. The entire loan transaction and misappropriation thereof is attributed
to the aforementioned accused. Whatever may be the role attributed to each
of the accused, the role of the petitioner/accused No.7 herein is limited to
the extent of a transaction of Rs.68,89,00,000/-, wherein said amount was
transferred from accused No.1 to petitioner and in turn transferred to
accused No.9. In sum and substance, the petitioner is accused of
misappropriating and misusing Rs.10,00,000/-.
23. Coming to the aspect of whether any offence is made out against the
petitioner, it is to be seen that prima facie there is a monetary transaction
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between accused No.1 and the petitioner for which there is documentation.
Coming to the aspect of whether there was criminal conspiracy and
whether there was role of the petitioner in forgery and fabrication, said
issues are to be decided on the basis of facts which can be elicited only
after a full-fledged trial. It is possible that the petitioner may not have a role
in forgery and fabrication of documents which are submitted by accused
Nos.1 and 2 for the purpose of securing a loan from the State Bank of
India. However, involvement of the petitioner/A-7 in a criminal conspiracy
cannot be ruled out at the outset. Merely because, a charge sheet is filed
under various offences, all said offences are not meant to apply to all the
accused. It is possible that among all the offences alleged, some of the
accused may have committed acts which attract all the offences whereas
the others may have committed acts which attract fewer offences. The
charge sheet is filed with offences which is a sum total of acts of all the
accused, but not a single accused or piece meal. After recording the
evidence, it is for the trial Court to decide as to which accused has
committed which offence, whether all the offences, fewer offences, or none
at all.
24. In view of documentary evidence available about a financial
transaction between accused No.1 and the petitioner, until it is proven that
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said transaction was a normal transaction in the course of business, there is
a prima facie case against the petitioner, as such, the trial Court did not
commit any error in dismissing the petition filed to discharge the petitioner
for the offences alleged. In view of the foregoing, there are no merits in the
present petition and the same is liable to be dismissed.
25. In the result, the Criminal Revision Case is dismissed confirming the
order dated 27.03.2025 in Crl.M.P.No.1217 of 2021 in C.C.No.8055 of
2020 on the file of the learned trial Court. There shall be no order as to
costs. Miscellaneous applications, if any, pending shall stand closed.
__________________
RENUKA YARA, J
Date: 01.07.2026
GVR
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147
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT
HYDERABAD
THE HONOURABLE SMT. JUSTICE RENUKA YARA
CRLRC.No.455 of 2025
W
GVR
01st DAY OF JULY, 2026
17
