Telangana High Court
Sri Sai Santosh Enterprises vs The State Of Telangana on 30 April, 2026
Author: N. Tukaramji
Bench: N. Tukaramji
IN THE HIGH COURT FOR THE STATE OF TELANGANA, HYDERABAD
***
CRIMINAL PETITION No. 1855 OF 2024
Between:
1. Sri Sai Santosh Enterprises, A proprietary concern, Having its
office at H.No. 1-9-324/34/35, VN Reddy Nagar, Phase-II,
Kushaiguda, Rangareddy, Telangana - 500 062, Represented
by its Proprietor Ch. Venkat Reddy.
2. Ch. Venkat Reddy, S/o. Hanumantha Reddy, Aged 50 years,
Occu: Business, R/o. H.No. 1-9-354/23, Kushaiguda, ECIL
Post, Medchal-Malkajgiri, Ranga Reddy District, Telangana -
500 062.
... Petitioners/Accused Nos. 1 and 2.
AND
1. The State of Telangana, Represented by the Public
Prosecutor, High Court for the State of Telangana, Hyderabad.
2. M/s. Continental Hospitals Private Limited, Having Regd.
Office at Plot No.3, Road No.2, IT & Financial District,
Gachibowli, Hyderabad, Telangana - 500 035, Represented
by Authorised Signatory Mr. K. Venkata Reddy.
... Respondents.
ORDER PRONOUNCED ON: 30.04.2026
THE HONOURABLE SRI JUSTICE N. TUKARAMJI
1. Whether Reporters of Local newspapers
may be allowed to see the Judgment? : Yes
2. Whether the copies of judgment may be
Marked to Law Reporters/Journals? : Yes
3. Whether His Lordship wishes to
see the fair copy of the Judgment? : Yes
________________
N. TUKARAMJI, J
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Crl.P. No. 1855 of 2024
* THE HON'BLE SRI JUSTICE N. TUKARAMJI
+ CRIMINAL PETITION No. 1855 OF 2024
% 30.04.2026
# Between:
1. Sri Sai Santosh Enterprises, A proprietary concern, Having its
office at H.No. 1-9-324/34/35, VN Reddy Nagar, Phase-II,
Kushaiguda, Rangareddy, Telangana - 500 062, Represented
by its Proprietor Ch. Venkat Reddy.
2. Ch. Venkat Reddy, S/o. Hanumantha Reddy, Aged 50 years,
Occu: Business, R/o. H.No. 1-9-354/23, Kushaiguda, ECIL
Post, Medchal-Malkajgiri, Ranga Reddy District, Telangana -
500 062.
... Petitioners/Accused Nos. 1 and 2.
AND
1. The State of Telangana, Represented by the Public
Prosecutor, High Court for the State of Telangana, Hyderabad.
2. M/s. Continental Hospitals Private Limited, Having Regd.
Office at Plot No.3, Road No.2, IT & Financial District,
Gachibowli, Hyderabad, Telangana - 500 035, Represented
by Authorised Signatory Mr. K. Venkata Reddy.
... Respondents
! Counsel for the petitioners : Mr. Nandigam Krishna Rao, learned
Senior Counsel for the petitioners.
^Counsel for respondents : Mr. M.Vivekananda Reddy, learned
Assistant Public Prosecutor,
appearing for respondent No.1.
M/s. Achalasiri Doddala, learned
counsel for Respondent No.2.
<GIST:
> HEAD NOTE:
? Cases referred
MSR Leathers v. S. Palaniappan (2013) 1 SCC 177
Sicagen India Limited v. Mahindra Vadineni (2019) 4 SCC 271
Govinder R. Chordia v. Shanti Lal P. (2011 SCC Online Mad 860)
Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) 3 SCC 249
Laxmi Dyechem v. State of Gujarat (2012) 13 SCC 375
Rangappa v. Sri Mohan (2010) 11 SCC 441
Ashok Transport Agency v. Awadhesh Kumar (1998) 5 SCC 567
Raghu Lakshminarayanan v. Fine Tubes (2007) 5 SCC 103
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Crl.P. No. 1855 of 2024
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HONOURABLE SRI JUSTICE N.TUKARAMJI
CRIMINAL PETITION No. 1855 OF 2024
DATE: 30.04.2026
Between :
Sri Sai Santosh Enterprises, A proprietary concern, Having
its office at H.No. 1-9-324/34/35, VN Reddy Nagar, Phase-II,
Kushaiguda, Rangareddy, Telangana - 500 062,
Represented by its Proprietor Ch. Venkat Reddy, and
another.
... Petitioners/Accused Nos. 1 and 2.
AND
The State of Telangana, Represented by the Public
Prosecutor, High Court for the State of Telangana,
Hyderabad, and another.
... Respondents.
ORDER
This Criminal Petition is filed under Section 482 of the Code of
Criminal Procedure, 1973 (“Cr.P.C.”), seeking quashment of the
proceedings against the petitioners in STC NI No. 5827 of 2023, pending
on the file of the learned X Metropolitan Magistrate, Manoranjan
Complex, Nampally, Hyderabad.
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Crl.P. No. 1855 of 2024
2. The petitioners are arrayed as accused Nos. 1 and 2 in the
aforesaid Case arraigned for the offence punishable under Section 138
of the Negotiable Instruments Act, 1881 (“NI Act“).
3. I have heard Mr. Nandigam Krishna Rao, learned Senior Counsel
appearing for the petitioners, Mr. M. Vivekananda Reddy, learned
Assistant Public Prosecutor, representing respondent No.1-State and
M/s. Achalasiri Doddala, learned counsel for respondent No.2.
4.1. Brief facts of the case are that the son of Accused No. 2 underwent
medical treatment at the hospital of Respondent No. 2 during the period
from 10.07.2022 to 10.01.2023. During the course of such treatment, the
hospital raised bills amounting to approximately Rs.1,07,52,894/- and
Rs.25,52,398/-. Out of the said amounts, the accused made part
payments of Rs.57,09,712/- and Rs.20,00,000/-, thereby leaving an
outstanding balance of Rs.55,95,580/-.
4.2. Towards partial discharge of the aforesaid liability, the accused
issued Cheque No. 000253 dated 23.02.2023 for a sum of
Rs.15,00,000/-, drawn on ICICI Bank, Kapra Branch. Upon presentation
of the said cheque on 04.03.2023, it was dishonoured with the
endorsement “payment stopped by the drawer.” Thereafter, a statutory
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notice dated 31.03.2023 was issued by the complainant demanding
payment in accordance with Section 138(b) of the Negotiable Instruments
Act, 1881 (hereinafter “NI Act“). The cheque was subsequently
re-presented and again dishonoured on 09.05.2023 with the same
endorsement. A second statutory notice dated 02.06.2023 was issued,
which was allegedly refused by the petitioners. Consequently, upon filing
of a complaint, the learned Magistrate took cognizance of the offence
under Section 138 of the NI Act and registered the case as STC NI No.
5827 of 2023.
5.1. The learned Senior Counsel appearing for the petitioners contends
that the complaint under Section 138 of the NI Act is not maintainable
either in law or on facts, as the essential ingredients of the offence are not
satisfied. It is specifically urged that the complaint is barred by limitation,
as it was not instituted within the statutory period reckoned from the date
of accrual of the first cause of action. It is further contended that the
subsequent presentation of the cheque and issuance of a second
statutory notice would not give rise to a fresh cause of action, thereby
rendering the complaint legally untenable.
5.2. Additionally, it is argued that there exists no legally enforceable
debt or liability against the petitioners, which is a sine qua non for
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invoking Section 138 of the NI Act. The petitioners also assert lack of
privity of contract between the first petitioner and the hospital of
Respondent No. 2, thereby negating any liability. It is further contended
that the complaint has been instituted by a person whose authority or
capacity has not been duly established, rendering the proceedings
defective in law. On these grounds, it is submitted that the complaint is
false, vexatious, and constitutes an abuse of the process of law,
warranting quashment under Section 482 of the Code of Criminal
Procedure, 1973.
6.1. Per contra, learned counsel for Respondent No.2/complainant
submits that the complaint is fully maintainable and satisfies all statutory
requirements under Section 138 of the NI Act. It is contended that the
cheque in question was issued towards discharge of a legally enforceable
debt arising from the medical expenses incurred for the treatment of the
son of Accused No. 2. The dishonour of the cheque with the
endorsement “payment stopped by drawer” squarely attracts the penal
provisions of Section 138.
6.2. It is further submitted that statutory notices were duly issued in
compliance with the mandatory requirements of the NI Act, and despite
service (or deemed service), the accused failed to make payment within
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the prescribed period of fifteen days. It is specifically contended that
re-presentation of the cheque within its validity period is legally
permissible and gives rise to a fresh and independent cause of action. In
support of this proposition, reliance is placed on MSR Leathers v.
S. Palaniappan (2013) 1 SCC 177, wherein the Hon’ble Supreme Court
authoritatively held that successive presentations of a cheque and
initiation of proceedings based on subsequent dishonour are permissible
under law. Similar principles have been reiterated in Sicagen India
Limited v. Mahindra Vadineni (2019) 4 SCC 271 and Govinder R. Chordia
v. Shanti Lal P. (2011 SCC Online Mad 860).
6.3. The respondents further contend that dishonour of a cheque due to
“stop payment” instructions also constitutes an offence under Section
138, as held in Modi Cements Ltd. v. Kuchil Kumar Nandi (1998) 3 SCC
249 and Laxmi Dyechem v. State of Gujarat (2012) 13 SCC 375, wherein
it has been clarified that such dishonour falls within the ambit of
insufficiency of funds. It is also argued that once issuance of the cheque
is admitted, the statutory presumption under Section 139 of the NI Act
arises in favour of the complainant, placing the burden on the accused to
rebut the same, as held in Rangappa v. Sri Mohan (2010) 11 SCC 441.
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6.4. With regard to the liability of the first petitioner, it is submitted that
the first petitioner is a proprietorship concern and, in law, a proprietorship
has no separate legal identity distinct from its proprietor. Consequently,
the proprietor is personally liable for all acts of the concern, as held in
Ashok Transport Agency v. Awadhesh Kumar (1998) 5 SCC 567 and
Raghu Lakshminarayanan v. Fine Tubes (2007) 5 SCC 103. It is further
contended that the complaint has been filed by a duly authorized
representative, and any alleged defect in authorization is curable and
does not vitiate the proceedings at the threshold.
7. Upon perusal of the material on record and consideration of the
rival submissions, the following issues arise for determination:
(i) Whether the complaint discloses the essential ingredients of an
offence under Section 138 of the NI Act;
(ii) Whether the complaint is barred by limitation;
(iii) Whether re-presentation of the cheque gives rise to a fresh
cause of action; and
(iv) Whether the existence of a legally enforceable debt can be
prima facie established at this stage.
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8. At the outset, the contention of the petitioners that dishonour due to
“stop payment” instructions does not attract Section 138 is devoid of
merit. The law is well settled by the Hon’ble Supreme Court in Modi
Cements Ltd. and Laxmi Dyechem (supra), wherein it has been
unequivocally held that such dishonour falls within the scope of Section
138, as it is akin to insufficiency of funds.
9. With respect to limitation and cause of action, the objection raised
by the petitioners cannot be sustained in view of the authoritative
pronouncement in MSR Leathers (supra), wherein a three-Judge Bench
held that a cheque may be presented multiple times within its validity
period, and each dishonour, followed by compliance with statutory
requirements, gives rise to a fresh cause of action. This position has
been consistently reaffirmed in subsequent decisions, including Sicagen
India (supra).
10. As regards the existence of a legally enforceable debt, once
issuance of the cheque is admitted or not disputed, the presumption
under Section 139 operates in favour of the complainant. As held in
Rangappa (supra), the burden shifts to the accused to rebut the
presumption by raising a probable defence. At the stage of considering a
petition for quashment under Section 482 Cr.P.C., such disputed
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questions of fact cannot be adjudicated conclusively and must be left for
trial.
11. On the issue of privity of contract and liability of the first petitioner,
the contention of the respondent that a proprietorship has no independent
legal existence finds support in settled law. The proprietor is personally
liable for the acts of the concern, and such liability cannot be ruled out at
the threshold stage. Similarly, objections regarding authorization of the
complainant’s representative, in the absence of clear evidence of lack of
authority, are curable defects and do not warrant quashing of
proceedings.
12. It is well established that the scope of interference under Section
482 Cr.P.C. is limited. The Court is not expected to conduct a mini-trial or
evaluate disputed facts. If the complaint, on its face, discloses the basic
ingredients of the offence, the proceedings should not be interdicted.
13. In view of the foregoing analysis, it is evident that the complaint
prima facie satisfies the statutory requirements of Section 138 of the
NI Act. The grounds raised by the petitioners involve mixed questions of
fact and law, which necessitate evidence and adjudication during trial.
The legal objections relating to limitation, cause of action, and dishonour
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due to stop-payment instructions are no longer res integra and stand
concluded against the petitioners by binding precedents.
14. Accordingly, no case is made out for quashing the proceedings at
this stage. The criminal petition is liable to be dismissed. However,
liberty is reserved to the petitioners to raise all permissible defences
before the trial Court in accordance with law.
15. Accordingly, this Criminal Petition is dismissed. Pending
miscellaneous applications, if any, shall stand closed.
_______________
N.TUKARAMJI, J
Date: 30.04.2026
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