Telangana High Court
Sri Sutrave Krishna Mohan vs The State Of Telangana on 10 April, 2026
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HON'BLE SMT. JUSTICE TIRUMALA DEVI EADA
CRIMINAL PETITION Nos.4271 AND 4565 OF 2023
DATE: 10-04-2026
Between:
Sri Sutrave Krishna Mohan and others
... Petitioners
And
The State of Telangana,
Rep. by its Public Prosecutor,
Hon'ble Telangana High Court,
Hyderabad, Telangana and others
... Respondents
COMMON ORDER:
Since the issue involved in both these Criminal Petitions is
one and the same, both these Criminal Petitions are heard together
and disposed of by way of this common order.
2. Seeking to quash the proceedings in S.T.C.NI.No.558 of 2023
on the file of learned V Metropolitan Magistrate, Hyderabad,
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2 Crl.P.No.4271 of 2023 & batch
registered for the offence under Section 138 read with 141 of the
Negotiable Instruments Act, 1881 (for short, ‘N.I. Act‘),
Crl.P.No.4271 of 2023 is filed by accused Nos.4 to 8 and
Crl.P.No.4565 of 2023 is filed by accused Nos.1 to 3.
3. Heard Sri R. Anurag, learned counsel for the petitioners in
Crl.P.No.4271 of 2023, Sri M. Pratheek Reddy, learned counsel for
the petitioners in Crl.P.No.4565 of 2023 and Sri Sushil K. Tekriwal,
learned counsel representing Sri M. Bhaskar, learned counsel for
respondent No.2.
4. For the sake of convenience, the parties are hereinafter
referred to as they were arrayed in the complaint.
5. The case of the complainant is that he is into real estate
business. His wife, Mrs. Sushma Khandelwal, who has now since
expired on 02.12.2022, is represented through her legal heir Manoj
Khandelwal, who is the complainant herein. The deceased has
bequeathed her share of the subject property to the complainant
herein by virtue of a Will, dated 26.09.2021. The case of the
complainant is that he purchased agricultural dry land admeasuring
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3 Crl.P.No.4271 of 2023 & batch
Ac.26-20 guntas in Survey Nos.1276 and 1281 situated at
Nandigama Village of Mahabubnagar District from Venkat Rao
Memorial Trust vide registered Sale Deed bearing document
No.5855 of 2005, dated 01.12.2005. Similarly, late Sushma
Khandelwal, during her lifetime, purchased agricultural dry land
admeasuring Ac.24-34 guntas in Survey Nos.1272 and 1275
situated at Nandigama Village from the said Trust vide registered
Sale Deed bearing document No.5858 of 2005, dated 01.12.2005. It
is his case that in both the Sale Deeds, the Trust and the trustees
commonly represented that it is resolved to sell the subject lands on
their part to the intending purchasers for the benefit of the school,
since no income was accrued from the Trust lands; that the Trust is
the sole and absolute owner and possessor of the subject lands; that
the school run by the Trust requires lot of funds to run the school;
and that the funds were also required to further develop the school
to provide sufficient accommodation. The complainant further
submits that himself and late Sushma Khandelwal have paid the
entire sale consideration of Rs.10,36,250/- and Rs.9,73,690/-
respectively. Consequently, they became the absolute owners and
possessors of the subject lands and all the documents relating to the
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4 Crl.P.No.4271 of 2023 & batch
subject lands were handed over to them and the sale consideration
paid under the said sale transactions is also declared in the Income
Tax returns. Thus, the sales are legally valid.
6. It is the further case of the complainant that similarly he has
paid the entire sale consideration from his own account for two more
subject properties i.e., agricultural dry land admeasuring Ac.25-21
guntas in Survey Nos.1271 and 1274, situated at Nandigama Village
vide registered Sale Deed bearing document No.5856 of 2005,
dated 01.12.2005, executed by the trustees, namely,
Dr. T.V. Narayana, late B. Madhava Reddy and P. Brahmananda
Chary, in the name of one A. Praveena, and agricultural dry land
admeasuring Ac.25-17 guntas in Survey Nos.1270 and 1282
situated at Nandigama Village, Mahabubnagar District, vide
registered Sale Deed bearing document No.5857 of 2005, dated
01.12.2005, executed by the trustees, namely Dr. T.V. Narayana,
late B. Madhava Reddy and P. Brahmananda Chary, in the name of
one A. Keshav Reddy. It is his further case that the understanding
between him, A. Praveena and A. Keshav Reddy is that A. Praveena
and A. Keshav Reddy shall return back the consideration at market
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5 Crl.P.No.4271 of 2023 & batch
price subsequently, with all consequential claims, since they were
not having the arrangement for payment of the entire consideration
at the relevant time, and as long as the same is not being affected,
they shall hold on to the subject properties merely as custodians of
the complainant without having any rights, obligations and
entitlements in any manner upon the subject properties accruing
from the Sale Deeds. The status of both of them was merely of a
curator and keeper and nothing more than the same. Subsequently,
over a period of 16 years, there was a complete failure on the part of
A. Praveena and A. Keshav Reddy to repay the consideration on the
market price. Therefore, the complainant has resumed and
reoccupied the said properties existing in the name of A. Praveen
and A. Keshav Reddy, and to set the same into motion with
immediate effect, he has sent legal notices to that effect to A.
Praveena and A. Keshava Reddy. It is his case that the payment
was made exclusively from his account and hence, he is legally
entitled to resume his rights over the said properties. Thereafter, the
complainant has sent statutory notice in the capacity of absolute
owner of the entire Ac.100-00 of land along with his spouse, late
Sushma Khandelwal, to the accused. Subsequently, all the disputes
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6 Crl.P.No.4271 of 2023 & batch
that arose between the parties was amicably settled by way of a
Settlement Deed executed on 02.05.2013, whereby it was settled
that all the parties thereto have agreed to settle all the existing
issues in respect of the subject properties and also agreed to put the
subject properties to sell and share the consideration in equal
proportion. It was also agreed upon that the dispute arising if any
out of the Settlement Deed shall be adjudicated by way of
arbitration.
7. Subsequently, when accused Nos.5, 6, 9, 10, 11 and 12 have
refused to perform their part of obligation, the complainant has filed
an Arbitration Application vide A.A.No.137 of 2021 before this Court
on 22.09.2021, under Section 11(6) of the Arbitration and
Conciliation Act, for appointment of an Arbitrator. In the
interregnum, accused Nos.5, 6, 9, 10, 11 and 12 reconstituted the
Venkat Rao Memorial Trust and there were several changes in the
incoming and outgoing members of the Trust and the new office
bearers are accused Nos.5, 6, 7 and 8. It is submitted by the
complainant that accused Nos.4 to 12 allegedly collaborated with the
third party investors being accused Nos.1 to 3 and further, accused
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7 Crl.P.No.4271 of 2023 & batch
Nos.1 to 3 along with accused Nos.4 to 8 approached the
complainant for settlement and thus, a Tripartite Settlement
Agreement was executed on 06.05.2022. The main terms of the
said settlement are as follows:
“(a) Complainants herein have agreed to sell and Accused
Nos.1 to 3 have agreed to purchase the subject land as
defined in the schedule therein.
(b)The instant settlement agreement is executed to give rest
to all the contentions arose post settlement agreement dated
08.05.2013.
(c) The instant settlement agreement is executed because
of the initiatives of Accused Nos.1 to 3 and also at the
behest of and in concurrence and confirmation, ratification &
attestation of the Accused Nos.4 to 8.
(d) All the parties hence are significant and important and
thus qualified and competent to execute the instant
agreement.
(e) Accused Nos.1 to 3 have agreed to pay to the
complainants herein a total consideration of Rs.12 Crores
against which Rs.25 Lakhs was paid on 06.05.2022 vide
cheque.
(f) Remaining balance of Rs.11.75 Crores was agreed to be
paid by the Accused Nos.1 to 3 to the complainants herein
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8 Crl.P.No.4271 of 2023 & batch
on or before 25.08.2022. This balance could be made in
proportion but not beyond 25.08.2022.
(g) That time and timely payment shall be the essence of this
agreement.
(h) That Accused Nos.4 to 8 shall endeavour all assistance
and cooperation to the Accused Nos.1 to 3 as well as
complainants herein in making the agreement executed in its
real and true spirit.
(i) That any extension of time for making the balance
payment shall be only and only with written concurrence of
the parties hereto.
(j) That Accused Nos.4 to 8 are the real beneficiaries of the
agreement therein and hence having no objection to the
agreement and have given their consent and concurrence to
the fullest.
(k) That any dispute arising from the present indenture shall
be adjudicated by way of arbitration by a sole arbitrator to be
appointed by all the parties in mutual consent failing which
the same shall be by way of legal course. The place of
Arbitrator and courts of jurisdiction shall be Hyderabad only.
The seat and venue of Arbitration also shall be Hyderabad
only.”
8. Subsequently, accused Nos.1 to 8 realizing that they would
not be in a position to make the balance payment of Rs.11.75 crores
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9 Crl.P.No.4271 of 2023 & batch
to the complainant by 25.08.2022, they approached the complainant
for extension of time in making the payment of balance amount of
Rs.11.75 crores. Thereafter, a Supplementary Agreement, dated
21.08.2022, was entered into and an amount of Rs.25 lakhs was
paid by a cheque. Again there arose a situation that accused Nos.1
to 8 could not comply with the payment of balance amount of
Rs.11.50 crores to the complainant by 15.10.2022. Therefore, a
Second Supplementary Agreement, dated 12.10.2022, was entered
into. Thus, accused Nos.1 to 3 and 4 to 8 have agreed to make
payment of Rs.3 crores in consent and issued a cheque, dated
25.10.2022, with an undertaking that the same shall be honoured.
Thereafter, the subject cheque given by accused Nos.1 to 3 in
consent and concurrence at the behest of accused Nos.4 to 8,
towards part balance payment against the total sale consideration of
Rs.12 crores, was dishonoured on 25.10.2022. It is submitted that
the complainant has brought the same to the notice of this Court in
the pending Arbitration Application by filing an additional affidavit
and subsequently, the same was withdrawn by the complainant after
the leave being granted by this Court with a liberty for taking
appropriate action as per law.
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10 Crl.P.No.4271 of 2023 & batch
9. The case of the complainant is that the dishonor of cheque
has resulted in huge loss to the complainant and hence, he along
with late Sushma Khandelwal got issued notice to the accused on
09.11.2022 for dishonor of cheque bearing No.533023, for an
amount of Rs.3 crores, on 25.10.2022. Since, the accused failed to
comply with the payment within a period of 15 days from the date of
receipt of notice, the complaint was filed on 27.12.2022 and the
same was numbered as S.T.C.NI.No.558 of 2023. The present
Criminal Petition is filed seeking to quash the proceedings in the
said S.T.C.NI.No.558 of 2023 pending on the file of learned V
Metropolitan Magistrate, Hyderabad.
10. Learned counsel for the petitioners submitted that the case
vide S.T.C.NI.No.558 of 2023 is not maintainable, as there is no
legally enforceable debt to be paid by the petitioners herein to
respondent No.2-complainant, which is palpable from the language
of the complaint and the notice issued under Section 138 of the N.I.
Act. He has argued that Clause 26(A) in the notice issued under
Section 138 of the N.I. Act clearly envisages that if the cheque is
dishonoured, it shall make the Second Supplementary Agreement
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11 Crl.P.No.4271 of 2023 & batch
null and void and ineffective. Therefore, the only effect of
dishonouring the subject cheque is that the agreement entered into
between the parties would lapse. Thus, it does not constitute any
legally enforceable debt on the part of the petitioners. He further
submitted that respondent No.2 is merely using the above case as a
tool to blackmail and harass the petitioners by involving them in
criminal proceedings. He further submitted that accused No.3 is not
at all involved in the affairs of accused No.1- Company and that he is
merely a name lender to most of the contracts and agreements that
the Company enters into, as he is the son of accused No.2. He
further submitted that only the person who issued the cheque drawn
on an account maintained by him can be prosecuted for an offence
under Section 138 of the N.I. Act and that accused No.3 has not
signed on the cheque and the account on which the cheque is drawn
also does not belong to accused No.3. He further submitted that the
proceedings under Section 138 of the N.I. Act cannot be merely
used as a tool for extracting money from the accused. Thus, there is
no obligation on the part of the petitioners to pay the amount to
respondent No.2 and therefore, prayed to quash the proceedings
against the petitioners. Learned counsel for the petitioners has relied
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12 Crl.P.No.4271 of 2023 & batch
upon Nusun Genetic Research Limited and others v. The State
of Telangana and another 1 and Anand Kumar Mohatta and
another v. State (NCT of Delhi), Department of Home and
another 2.
11. Learned counsel for respondent No.2 has submitted that the
power under Section 482 Cr.P.C. cannot be invoked when a remedy
is available under Section 239 Cr.P.C., as it is an extraordinary and
inherent jurisdiction of the High Court and must be exercised
sparingly and with great circumspection. Thus, the present Criminal
Petitions are not maintainable, as it is impermissible and would
amount to abuse of process of law. When an adequate statutory
remedy is available under Section 239 Cr.P.C., invoking the power
under Section 482 Cr.P.C. is not justified. He further submitted that
the multi-tiered collaborative arrangement involving multiple stake
holders with distinct but interlocking obligations between the parties
establishes that the dishonoured cheque bearing No.533023, dated
25.10.2022, for an amount of Rs.3 crores, was issued as a part
payment of sale consideration and not as a security cheque.
1
2015 SCC OnLineHyd 571
2
(2019) 11 SCC 706
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13 Crl.P.No.4271 of 2023 & batch
Therefore, the attempt of the petitioners to characterize the subject
cheque as a security instrument is legally untenable and factually
incorrect. He further argued that the Clause in the Second
Supplementary Agreement that the dishonor of the cheque would
render the entire agreement null and void and ineffective, clearly
establishes that the cheque was the life and breathe of the payment
obligation and not a collateral security. He further submitted that
subsequent to filing the present Criminal Petitions, a fresh settlement
agreement in respect of same subject matter was executed between
the same parties in June, 2025, which demonstrates that the parties
themselves have moved beyond the dispute underlying
S.T.C.NI.No.558 of 2023. The original Tripartite Settlement
Agreement, dated 06.05.2022, and its supplementary agreements,
which form the very foundation of the cheuqe dishonor complaint,
stand novated and replaced by the fresh settlement arrangement.
Thus, the cause of action that animated the complaint namely the
breach of payment obligation under the Second Supplementary
Agreement, dated 12.10.2022, has been subsumed within the new
supplementary framework. Therefore, because of novation of
contract, the Criminal Petitions seeking quashment become
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14 Crl.P.No.4271 of 2023 & batch
infructuous, since there is no longer a live dispute requiring
adjudication by this Court.
12. He further submitted that late Smt. Sushma Khandelwal
(respondent No.3 in Crl.P.No.4271 of 2023), who is the wife of the
complainant, expired on 02.12.2022, which is admitted by the
complainant himself at paragraph No.5 of his affidavit, and
Crl.P.No.4271 of 2023 is filed before this Court on 24.04.2023, after
five months following the death of Smt. Sushma Khandelwal, despite
which the petitioners have arrayed the deceased Smt. Sushma
Khandelwal as a living respondent without disclosing her death,
thereby suppressing the material facts from this Court. Thus, the
suppression of material facts affects the maintainability of
Crl.P.No.4271 of 2023 and that the jurisdiction under Section 482
Cr.P.C. has to be exercised only in favour of those who disclose all
the relevant facts truthfully and completely. He further submitted
that the death of Smt. Sushma Khandelwal does not extinguish the
complaint or the other criminal proceedings initiated in respect of the
dishonoured cheque, as the complainant has stated in his affidavit
that Smt. Sushma Khandelwal has bequeathed her property to him
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15 Crl.P.No.4271 of 2023 & batch
by virtue of a Will, dated 26.09.2021, and that he represents her
estate as a legal heir. He, therefore, prayed to dismiss the Criminal
Petitions.
13. Learned counsel for respondent No.2 has relied upon the
judgment of the Honourable Apex Court in Madhu Limaye v. State
of Maharashtra 3 , and contended that the foundational principle
governing the exercise of inherent powers under Section 482
Cr.P.C. was laid down by the Honourable Apex Court holding that
the inherent powers cannot be invoked when other remedies are
expressly provided for in the code itself. He has submitted that
Section 482 Cr.P.C. does not confer any new power on the High
Court but only saves the pre-existing inherent powers, and such
powers must yield to express statutory remedies wherever they are
available. He has also relied upon R.P. Kapur v. State of Punjab 4
and contended that in the said case, the Honourable Apex Court
delineated the categories in which the High Court may exercise
inherent jurisdiction to quash criminal proceedings. The Honourable
Apex Court emphasized that where the accused has adequate and
3
(1977) 4 SCC 551
4
AIR 1960 SC 866
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16 Crl.P.No.4271 of 2023 & batch
alternative remedies available at the stage of trial, the High Court
should refrain from exercising its extraordinary jurisdiction. He has
also relied upon State of Haryana v. Bhajan Lal 5, and contended
that the Honourable Apex Court, while recognizing the inherent
jurisdiction of the High Court, cautioned that such power should not
be exercised as a matter of course. It was held that it would be
improper to quash the proceedings at a nascent stage when
disputed questions of fact fall for consideration, which may be
properly examined by the trial Court at the stage of discharge or
framing of charges. He has also relied upon Amrutbhai
Shambhubhai Patel v. Sumanbhai Kantibhai Patel and others 6
and contended that the Honourable Apex Court has held that when
an application for discharge under Section 239 Cr.P.C. is pending
before the trial Court, it is not open to the accused to simultaneously
or alternatively invoke the jurisdiction of the High Court under
Section 482 Cr.P.C. The Court observed that permitting a parallel
challenge would cause multiplicity of proceedings and undermine
the authority of the trial Court. He has also relied upon Neeharika
5
1992 Supp. (1) SCC 335
6
(2017) 4 SCC 177
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17 Crl.P.No.4271 of 2023 & batch
Infrastructure Private Limited v. State of Maharashtra and
others 7, and contended that a Constitution Bench of the Honourable
Apex Court held that the Courts should be extremely circumspect in
staying or quashing the criminal proceedings, especially at a
preliminary stage. The inherent power under Section 482 Cr.P.C. is
not to be exercised to stifle the legitimate prosecution or to
circumvent statutory remedies expressly provided by the Code of
Criminal Procedure.
14. He has also relied upon Sampelly Satyanarayana Rao v.
Indian Renewable Energy Development Agency Limited 8 ,
wherein it was held by the Honourable Apex Court that where a
cheque is issued as part of a payment obligation or towards
discharge of an existing liability under an agreement, it cannot be
characterized as a security cheque, and dishonor of such cheque
attracts full penal consequences under Section 138 of the N.I. Act.
The Court drew a categorical distinction between a cheque issued
“in discharge of a debt or liability” and one issued “as security”,
holding that the former squarely attracts Section 138 of the N.I. Act.
7
(2021) 19 SCC 401
8
(2016) 10 SCC 458
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18 Crl.P.No.4271 of 2023 & batch
The contention of the learned counsel for respondent No.2 is that
the cheque in the present cases is issued towards part of the
balance sale consideration payable under the Second
Supplementary Agreement, dated 12.10.2022, and that the
agreement further records that the dishonour of the cheque would
render the entire agreement null and void and ineffective, clearly
establishing that the cheque was the very life and breathe of the
payment obligation and not a collateral security.
15. Learned counsel for respondent No.2 has also relied upon
Aparna A. Shah v. Sheth Developers Private Limited 9, wherein
the Honourable Apex Court held that the collaborative settlement
arrangements involving multiple parties where obligations are
interdependent, all the parties who are privy to and beneficiaries of
the arrangement can be proceeded against when the payment
obligation is breached.
16. Perused the record.
9
(2013) 8 SCC 71
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19 Crl.P.No.4271 of 2023 & batch
17. The petitioners are seeking quashment of the proceedings in
S.T.C.NI.No.558 of 2023 on the file of learned V Metropolitan
Magistrate, Hyderabad. The said case was filed as the cheque
bearing No.533023, which was issued by accused No.2, was
dishonoured and it is alleged that the accused failed to make the
payment in spite of receiving the statutory notice. It is borne out by
record that since there were disputes among three parties i.e., the
Trust, the complainant and the petitioners herein, a Tripartite
Agreement was entered into on 06.05.2022 to resolve the disputes.
The said terms could not be complied with and therefore, a
Supplementary Agreement was executed on 21.08.2022 and even
then, the terms could not be settled amicably. Therefore, a Second
Supplementary Agreement, dated 12.10.2022, got executed
between the parties. In pursuance of the Second Supplementary
Agreement, the subject cheque, dated 25.10.2022, was alleged to
have been issued by accused No.2 in favour of the complainant and
the said cheque was dishonoured. The contention of the petitioners’
counsel is that the cheque is not issued towards a legally
enforceable debt and that the very Clause in the Second
Supplementary Agreement stating that the dishonour of cheque
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20 Crl.P.No.4271 of 2023 & batch
under any circumstances would nullify the Second Supplementary
Agreement, makes it clear that it would fall back on the original
agreement and thus, it cannot assume the status of legally
enforceable debt. While the contention of learned counsel for
respondent No.2 is that the inclusion of said Clause in the Second
Supplementary Agreement makes it all the more important that the
payment obligation is a must by the accused and that it is not a
collateral security. For the sake of reference, the said Clause in the
Second Supplementary Agreement is extracted hereunder:
“A. Noticees/respondents No.1 to 3 are making a payment of
Rs.3 crores in consent and concurrence and at the behest of
Noticees/respondents No.4 to 8 as agreed towards balance
payment of Rs.11.50 Crores by way of cheque dated
25.10.2022 with an undertaking that the same shall be
honoured or substituted by any other mode of payment and
the dishonour of subject cheque shall make the instant
Second Supplementary Agreement to Agreement dated
06.05.2022 and to First Supplementary Agreement dated
21.08.2022 null and void and ineffective.”
18. It is further brought to the notice of this Court that
subsequently a Release Deed was executed between the parties on
04.06.2025, which happens to be the most recent and latest one. A
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21 Crl.P.No.4271 of 2023 & batch
perusal of the terms under the said Release Deed makes it clear that
with a view to settle the dispute, the releasor approached the
releasee to explore the ways and means to resolve all the issues
and therefore, the releasee agreed to purchase the subject
properties from the releasor and finally resolved to get all the
contentious issues resolved and that the releasee being the absolute
owner has also resolved to come forward to settle all the disputes
and get a registered Release Deed from the releasor for the subject
properties subsequently through the SRO, Shadnagar, or MRO,
Nandigama or through Lok Adalat. Accordingly, the releasor has
agreed to cooperate with the releasee. The releasor is the
complainant herein i.e., Manoj Khandelwal. The releasee is the
Ventak Rao Memorial Trust, represented through its trustees and
President i.e., Nishit Harwalkar, President; S. Krishha Mohan,
Trustee and S. Mohinder, S/o. S. Krishna Mohan. It was agreed
upon that the releasee shall pay the consideration amount of Rs.10
crores as per the payment schedule i.e., Rs.3 crores by way of
cheque bearing No.734644 and the remaining balance amount of
Rs.7 crores will be paid in installments as mutually agreed by both
the parties and that the installments shall begin as soon as the land
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22 Crl.P.No.4271 of 2023 & batch
conversion and relevant permissions are obtained from the
Government authorities/agencies, such as HUDA or HMDA.
However, the entire balance amount of Rs.7 crores irrespective of
the said obtainments shall be made in toto in an outer limit time of 9
months i.e., by 03.03.2026. It was also agreed that on receipt of the
advance amount, all the arbitration cases, including A.A.No.35 of
2023, with respect to the scheduled properties shall be withdrawn,
including all the connected claims, applications etc., pending before
the Arbitrator and also the releasor shall withdraw the criminal case
filed by them vide STC.NI.No.558 of 2023 against all the accused
and the releasee shall withdraw their cases pending before this
Court vide Crl.P.Nos.4271 and 4565 of 2023.
19. A Receipt is also executed by the complainant-Manoj
Khandelwal and a copy of the said receipt is also filed along with the
Release Deed into the Court vide Memo of Additional Material
Papers, dated 14.11.2025. The said Receipt is signed by Manoj
Khandelwal for having received from M/s. Venkat Rao Memorial
Trust an amount of Rs.2,82,00,000/- through RTGS bearing
UTR.No.CNRBR52025061358934997, in Savings Account bearing
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23 Crl.P.No.4271 of 2023 & batch
No.50100220776390, HDFC Bank Limited, Attapur, Rajendranagar,
and balance amount in cash after deducting 1% Income Tax at
source i.e., Rs.3 lakhs against cheque bearing No.734644, Canara
Bank, Shah Ali Banda Branch, Hyderabad, dated 06.06.2025,
mentioned in the Release Deed, dated 04.06.2025. Thus, the
Release Deed amply clarifies the position that there is another
agreement entered into between the parties and as per the said
agreement, once the payment is realized, they shall withdraw the
case vide STC.NI.No.558 of 2023. In that backdrop, if examined,
the recitals of the Second Supplementary Agreement and the
Clause mentioned therein would clarify that in case if the amount is
not paid under the cheque, then it would nullify the Second
Supplementary Agreement and it would fall back on to the original
agreement.
20. The main ingredient of the offence under Section 138 of the
N.I. Act is the existence of a legally enforceable debt. The above
said Clause clearly discloses that the amount alleged to be paid by
the accused does not fall under the term ‘legally enforceable debt’.
The cheque was issued pursuant to the Second Supplementary
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24 Crl.P.No.4271 of 2023 & batch
Agreement and it was agreed upon by both the parties that in case if
the cheque is dishonoured, it would not create any legal obligation
but it would nullify the Second Supplementary Agreement giving
effect to the original agreement. Therefore, it cannot be held that
the subject cheque is issued towards any legally enforceable debt.
The argument of the learned counsel for respondent No.2 that the
said Clause is introduced to give undue importance to the Second
Supplementary Agreement and to resolve the entire dispute among
the parties, cannot be sustained. It is a fact borne out by record that
there has been a long drawn litigation between the parties and that
there are inter se disputes among the parties and there have been
many agreements that have been entered into from time to time. A
perusal of the subject cheque reveals that it is signed by accused
No.2-Ch.Shyam Sunder Reddy issued to the complainant-Manoj
Khandelwal for an amount of Rs.3 crores. The account appears to
have been held by both Ch. Shyam Sunder Reddy and
Mrs. Ch. Vijaya. Accused No.3-Ch. Vikas Reddy is not at all a
signatory to the subject cheque, but he is also arrayed as an
accused. The account also does not pertain to accused No.3. The
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25 Crl.P.No.4271 of 2023 & batch
entire litigation discussed in the preceding paragraphs is purely civil
in nature.
21. In Nusun Genetic Research Limited‘s case (supra 1), it was
held that:
“16. Here importantly, besides the terms of the one
time settlement speak the payment schedule when due and
not for the payment schedule due the cheques issued of
respective dates but in the event of non-adhering to the
payment schedule, to recover; leave about the earlier two
complaint cases not even withdrawn as still pending and
continuing and what the remedy reserved by para-4 of the
memorandum of understanding is in the event of non-
adhering to payment schedule and dishonour of cheques,
not reserved any criminal liability, leave about whether a
waiver operates as estoppel to enforce against the accused
even such a reserve of a criminal liability to take away the
statutory right not a germane here to go into with reference
to Section 115 of the Evidence Act; once the one time
settlement is arrived and recovery process is envisaged and
one time settlement itself stipulates if payment not made as
stipulated to go back and recover the original amount and for
the original amounts covered by the cheques already
prosecution is pending and sustainable as answered supra;
it is for the one time settlement that was committed breach
even for the civil remedy is elsewhere. Leave about the civil
liability as per Section 131 r/w 117 of the Act to recover the
ETD,J
26 Crl.P.No.4271 of 2023 & batchamount with interest @18% p.a. so far as criminal liability
concerned within the meaning of Section 138 of the Act it
can be clearly said that there is no any legally enforceable
debt or other liability for want of independent or fresh
consideration as what is required is not only of giving of
cheque from the account maintained by the accused/drawer
and its presentation within validity time and its dishonour and
giving of statutory notice within the statutory time and from
service or deemed service after statutory waiting from
accrual of cause of action under Section 142 of the Act and
filing of complaint within the time stipulated or by application
for extension of time if at all extended to take cognizance
with reference to Section 190 Cr.P.C. r/w 142 and 138 of the
Negotiable Instruments Act; but what is further prerequisite
from Sangeetaben Mahendrabhai Patel v. State of Gujarat
there must be legally enforceable debt or other liability; when
that is also the crux here and when there is no independent
debt or liability and so far as the existing one concerned
already the cheque dishonour cases are pending not even
withdrawn thereby suffice to say the prosecution so far as
criminal complaint covered by C.C. Nos. 314 (renumbered
as C.C. No. 171 of 2015 on the file of XI Special Magistrate
covered by Crl.P. No. 4126 of 2015) and 315 of 2013
(renumbered as 170 of 2015 on the file of XI Special
Magistrate covered by Crl.P. No. 4124 of 2015), the quash
petitions are to be allowed by quashing the proceedings.
When there is no legally enforceable debt or other liability,
ETD,J
27 Crl.P.No.4271 of 2023 & batchthe prosecution won’t survive (a case of time barred debt) is
the expression in Gerard Kollian v. Wies Electronics.
19. The other submission by the learned counsel is these
are the disputed questions to be agitated before trial Court to
decide as to whether there is a legally enforceable debt or
other liability or not, for which once cheque is rooted from
the account of the accused, admittedly issued when not in
dispute and from presumptions under Sections 139 and 118
of the Act apply, the matter has to be left to be decided by
the trial Court and not a fit case to quash the proceedings for
allowing the accused to discharge the burden before the trial
Court. For that placed reliance upon the Apex Courts three
judges Bench expression, on burden of accused under
reverse onus clause in Rangappa v. Mohan. Here, as
discussed supra, when the facts are clear and not in
complication and when the clear facts on hand no way
complicates to the conclusion that there is no legally
enforceable debt or other liability, within explanation of 138
of the Act, the contention cannot be accepted to leave it to
the wisdom of the trial Court, when any continuation of the
proceedings when not sustainable no way sub-serves the
ends of justice and it is not the spirit of law to put the
accused unnecessary ordeal to face trial with no purpose,
apart from that tantamounts to abuse of purpose for which
the Courts power under Section 482 Cr.P.C. is not meant
and there is nothing to abdicate the responsibility of this
Court in this matter from what is discussed and concluded
supra.”
ETD,J
28 Crl.P.No.4271 of 2023 & batch
22. In Anand Kumar Mohatta‘s case (supra 2), it was held that:
“15. Even otherwise it must be remembered that the
provision invoked by the accused before the High Court is
Section 482 CrPC and that this Court is hearing an appeal
from an order under Section 482 CrPC. Section 482 CrPC
reads as follows:
“482. Saving of inherent powers of the High Court. –
Nothing in this Code shall be deemed to limit or affect the
inherent powers of the High Court to make such orders as
may be necessary to give effect to any order under this
Code, or to prevent abuse of the process of any court or
otherwise to secure the ends of justice.”
16. There is nothing in the words of this section which
restricts the exercise of the power of the Court to prevent the
abuse of process of court or miscarriage of justice only to the
stage of the FIR. It is settled principle of law that the High
Court can exercise jurisdiction under Section 482 CrPC even
when the discharge application is pending with the trial court.
Indeed, it would be a travesty to hold that proceedings
initiated against a person can be interfered with at the stage
of FIR but not if it has advanced and the allegations have
materialized into a charge-sheet. On the contrary it could be
said that the abuse of process caused by FIR stands
aggravated if the FIR has taken the form of a charge-sheet
after investigation. The power is undoubtedly conferred to
prevent abuse of process of power of any court.”
ETD,J
29 Crl.P.No.4271 of 2023 & batch
23. The contention of the learned counsel for respondent No.2 is
that the petition filed under Section 482 Cr.P.C. cannot be
entertained, while the petition under Section 239 Cr.P.C. is pending
before the trial Court. But, in the light of the principle laid down by
the Honourable Apex Court in Anand Kumar Mohatta‘s case (supra
2), the present Criminal Petitions are very much maintainable.
24. In Nusun Genetic Research Limited‘s case (supra 1), it was
held that when the facts on hand concludes that there is no legally
enforceable debt, continuation of proceedings would be an abuse of
process of law. In the present case also, there is no legally
enforceable debt when the facts of the case are looked into. In the
absence of legally enforceable debt continuation of proceedings
against the petitioners would be an abuse of process of law.
Therefore, in view of the principle laid down by the Honourable Apex
Court in Bhajan Lal‘s case (supra 5), when no prima facie case is
made out against the petitioners, the proceedings should not be
allowed to continue. Therefore, since there is no legally enforceable
debt, the complaint under Section 138 of the N.I. Act is not
maintainable and no purpose would be served, even if the
ETD,J
30 Crl.P.No.4271 of 2023 & batch
proceedings are continued, since the ingredients of Section 138 of
the N.I. Act cannot be satisfied. Therefore, it is opined that the
proceedings in S.T.C.NI.No.558 of 2023 before the trial Court
deserve to be quashed.
25. Accordingly, the Criminal Petitions are allowed and the
proceedings against the petitioners in S.T.C.NI.No.558 of 2023 on
the file of learned V Metropolitan Magistrate, Hyderabad, are hereby
quashed
Miscellaneous Petitions pending, if any, shall stand closed.
____________________________
JUSTICE TIRUMALA DEVI EADA
Date: 10.04.2026.
MD