IN Tl lE I IIGH COUR'I IrOR TI IIj S'IA t.E OI I Lrl-ANC;r\N'' A f t IYDERT\I]r\D

WEDNESDAY, T}IE TWT,,N I Y I.IL. tI t D/\Y OI; NIARCTI

TWO TFIOUSAND AND'IWEN TY SIX

PRLSEN'f

THE HONOURAI]LE SMT IUSTICE I(. SUJANA

CrirninaI Petitiorr No.4570 of 2025

Betlvcen:

1. J.Srinivas, S/o. Sri Rajesham, agcd about 62 Yrs., Occ. I(ctired En-rployee (lndian

Rarrk) R/o.B-105, Hallmark SilVantts, Iioatl No.1, AIkaPur, Nlanikonda,

Hyderabad.

2. N.G.Sai Kumar Naidu, S/o. Late Narayana Rao Coli, ageci 68 Yrs, Occ Retired

Employee (Indian Bank) R/o. Flat No.102, Ulock-A, N'Iat' Flou''er Grande, Opp'

Noma Function I1all, Mallapur, lJyclc'rabac1.

. Petitioners/ Accusc'd Nos. 6 & 8.

AND

1. State of l.elangana, Rcp.by its Special I'ublic ['rosecu rcr, C I] I , I lydcrabad

2- The Zonal Minager, Hyd-erabacl Zor-re, Indian ll.rnk, Viei[.]nce Cell,4d'Floor,

Liberty Plaza, Hirnayathnagar, Flyderabacl - 500 029.

... ResPondents.

Petition under Section 528 of UNSS praying tl-rat in tl-rc' circumstances stated

in the Memorandum of Grounds of Crirninal Petitior-r, tlre High Court may be

pleasecl to quash C.C.No.16/2014 on the filc of l'rirrcipal s1]sclll Judge for CBI

Cases, llydcrabad to thc extent of the pctitioncrs/ accusccl Nos.6 arrd 8 hereirr.

I.A. NO: 2OF 2025

Petition under Section 528 of tsNSS praving that in thc circurnstances statecl

in the Memorandum of Grounds of Crirninal Pe tition, ttre I{igh court may be

plcascd to grant interim stay of all furlher

1-;

rtrcer'cl itres in C.C.No.l6/2014 on thc

ille oi the principal Special Jr-rc{ge for CIll Cases, I lvclcrabacl including thc

appearance of the pe titioners/ acc usecl Nos.(r ancl 8 hercirr, pending disposal of

the above criminal petition.

This Petition coming on for hearing, upotl pc'rusing the Mcmorandum of

Grouncls of Criminal Petition and upon hearing the argumcnts of Sri Raiasripathi

Rao, learned Senior Counsel appearing for Sri C. Actitya Coud, Advocate for thc'

Petitioner Sri T.Srujan Kumar Redcly, Special Public Prosecutor appearing for the

respondent No.1 and of the Respondent No.2 Not appcaling in person oI through

their counsel,

fhc Court made the follow,ing: ORDER

IN THE HIGH COURT FOR THE STATE OF T]].ANGANA

AT TTYDERABAD

rHE HONOURABLE SMT. JUSTICE K. SII ]ANA

CRIMINAL PETITION No.457O OF 2O2 5

DATE: 25.03.2o26

Between:

J.Srinivas & another

Petitionc

-s/A.6

& A.8

And

State of Telangana,

Rep., by its Special Pr-rblic Prosecutor,

C.B.l., Hyderabad& another

Responden t

:ORDER:

This petition is filed under Section 52il ri Bharaliya

Nagarik Suraksha Sanhita, 2023 praying this Co rrt to quash

the proceedings against the petitiolers in C.C.No. I > of 2O 14 on

the file of Principal Special Sessions Judge fo - CBI Cases,

Hyderabad, u,herein the alleged offences against tl:r petitioners

are under Sections l2O-B r1w.420, 409, 467,467 t 1w.472,468

r lw.47l of Indian Penal Code and under Section I 3 (2) r/w.13

(1) (d) and substantive offences.

I

z

2. The prosecution case is that the 2"d respondent lodged a

complaint, based on which the CBi, Economic Offences Wing,

registered FIR No. la(tr)/ 2O 12 alleging that A' I to A'8 entered

into a criminal conspiracy to defraud Indian Bank, Osmangunj

Branch, Hyderabad. A. i, K. Suresh Kumar, initially availed an

Open Cash Credit (OCC) limit of Rs.15 lakh in September 2001

in the name of M/s. Sirish Traders, which was later renamed as

M / s. PDM Industries. The OCC limits were periodically

enhanced, and ultimately, on 06'O2'2OO9, the limit was

increased to Rs.450 lakh. It is further alleged that the Bank

sanctioned multiple loans, including two term loans totaling

Rs.2.25 crore to M/s- P.S Educationai Society' a

mortgage/term loan of Rs'SO lakh to M/" Sri Sakthi

Constructions and M / s. Suryoda-ya Constructions, and a

housing loan of Rs.40 lakh to K. Suresh Kumar and K' Rajendra

Kumar. These loans were secured by mortgaging properties

betonging to K. Rajendra Kumar, Smt' K Bharathi Devi' K'

Suresh Kumar, and Smt. K. Paltavi, along with personal

guarantees from K. Madhu, Smt K Sarita Rani, and J' Krishna'

As the borrowers failed to repay the dues, the accounts were

classihed as Non-Performrng Assets (NPA) on 3103'2010, with

an outstanding amount of Rs.7' 18 crore as on O4'O9'2O1O'

3

'7

3. The prosecution further alleges that certain I

namely A.6 to A.8, who were working as Branch N'[r

Manager, Senior Manager, and Assistant Marr

relevant time, conspired with A. 1 to A.5. It is alle

borrowers submitted forged title deeds as genuinr:

knowing the same, A.6 and A.7 recommenc t

proposals and failed to comply with sanction corc

disbursement, thereby acting with criminal inten-

alleged that in August 2OO2, A. 1 applied for enhart'

OCC limit from Rs.15 lakh to Rs.So lakh under '[

"Trade Well". Along with the appiication, hnanciI

asset and liability statements, a legal opinion, att

report u,ere submitted. However, the application ,'

without independently obtaining legal opinion flt

advocate and without verifying the genuinenct':

deeds. Based on the recommendation of A.7 ar

Department's note, the Circle Oflice sanctioned

limir of Rs.4O lakh on 22.o8.2OO2. On the

complaint and subsequent investigation, it is alle

3

A.8, in furtherance of their conspiracy, commit 'r

cheating, forgery, use of forged documents, crinrr

trust, and criminal misconduct, thereby causinS;

rnk officia1s,

nager/ Chief

rger at the

3ed that the

and despite

d the loan

itions before

I I is furthe r

ement of the

'ade Finance

statements,

I a valuation

as processcd

m the panel

of the title

d the Credit

rn enhanccd

basis of lhe

:d that A. 1 to

d offences of

ral breach of

wrongful loss

4

of Rs.7, 17,96,555/ - to the Bank. Accordingly, the case

"t'as

registered against al1 the accused for the said offences.

4. Heard Sri Rajasripathi Rao, learned Senior counsel

appearing for Sri G.Aditya Goud, learned counsel for the

petitioners, Srr T.Srujan Kumar Reddy, learned Special Public

Prosecutor appearing for respondent No.l and Sri Hemanth

Kumar Vemuri, learned counsel appearing for respondent No'2'

5. The learned Senior counsel for the petitioners con[ended

that the charges framed by the trial Court do not contain any

specific allegations against A.6 and A.8. Charge No' 1 pertains

only to the loal availed by A. 1 to A.5, and the allegations are

confined to them. The only vague allegation against A'6 to A 8 is

that they allegedly joined A.i to A.4 in committing misconduct'

However, the trial has already commenced, and none of thc

prosecution witnesses have implicated the petitioners in the

alleged transaction.

6. It is further submitted that Pw. 1 (complainant) did not

attribute any role to the petitioners and, in cross-examination,

admitted that there 'ere no lapses on the part of the Branch

Manager in assessing or processing the loan. Pw'2, a panel

advocate, also did not make any allegations against the

5

petitioners and admitted lack of recollecti I

verihcation of documents. Pw.3, a retired AGM, orr

A.6 and A-7 rvere Branch Managers during the re

and identified A. I and A.2 as the key persons

admitteci that prior to sanction, the loan proposals

and approved by the legal department and high:

Pw.4 conlirmed that loan proposals were forwal r

authorities u'ithout alteration, and Pw.5 stati c

exceeding Rs.l crore were monitored by the

thereby indicating that the petitioners had

sanctioning the 1oans.

7. Learned Counsel further submitted that

including senior and zonal ofhcers, did not make ir

against the pctitioners. Their evidence shows that

had hnancial strength, the loan process compl t

guidelines, and the staff accountability report r

against the concerned transactions. Pws. 13 to L

about subsequent renewals and did not i

petitioners. Rv.27's evidence also indicates 11

amount was properly utilized for the intenderl

infrastructure and equipment \1ere indeed a.,

therefore contended that the entire evidence of Ill

r regar<ling

y stated that

evant period

He further

rvere verified

authorities.

ed to higher

that Ioans

)ircle Office,

no role in

s.6 to I2,

ry aliegations

the borros.er

C u'ith bank

:corded "Nil"

5 spoke only

nplicate the

at the loan

purpose, as

rilable. It is

;.1 to 15 and

6

other material witnesses does not disclose any role or

involvement of the petitioners in the alleged conspiracy, and

there is no incriminating material against them. Reliance is also

placed on the order of the Hon'ble Supreme Court in SLP (Crl')

No.4113 of 2024 dated O3.10.2024, whereby proceedings

against A.3 and A.4 were quashed, and the same reasoning is

applicable to the pre sent petitioners. It is further submitted that

an earlier quash petition was disposed of due to non

representation of the petitioners' counsel, and liberty was

granted to file a fresh petition. In view of the said liberty, the

present petition is filed, and therefore, the learned counsel

prayed for quashing of proceedings against the petitioners'

8. On the other hand, the learned Standing Counsel

appearing for lndian Bank contended that the CBI investigation

revealed that A.6 to A.8, being bank officials, had conspired

with thc other accused to cheat the Bank. It is submittcd that

A.6, in furtherance of the conspiracy, forw'arded proposals lor

enhancement of credit limits to the Circle Ofhce without

properly verifying the viability of the loan, sales turnover, or end

use of earlier funds. Based on such recommendations, the

Circle Ofhce enhanced the OCC limits from Rs. 15O lakh to

7

Rs.3OO lakh and subsequently to Rs'450 lakh' It s alleged that

A.6 failed to verify the genuineness of financii I statements'

asset and liability details, stock statements, if I i net worth

certificates, and did not ensure compliance 'r'

th sancrion

conditions before release of the limits' It is furtlr r contended

that A.6 and A.7 showed undue favour to the borr rwers by not

rectifying discrepancies and by forwarding prop c sals without

due diligence. It is further submitted that l '5 and A'8

submitted a false visit report dated 07 '06'2007, s i ting that the

school building had 82 rooms with full infral; ructure and

facilities, including air conditioners, laborato ies, library'

computers, swimming pool, and other amenitit--s $'hereas in

re ality the buitding hacl only 38 rooms and lacked such

facilities. This, according to the Bank, clearly t:s I rblishes that

the petitioners submitted false reports, showed rr I lue favour to

the borrowers, and thereby cheated the Bank'

g. The lcarned Standing Counsel further cont'r rded that the

Hon'ble Sul:rcme Court quashed proceedings orl ' against A 3

and A.4, without expressing any opinion on the crt <: against the

present petitioners. It is also pointed out that the r uash petition

Iiled by A. 1 and A.2 was earlier dismissed, and ll at settlemenl

of dues under OTS, issuance of No Due Certificat: or closure of

8

DRT proceedings have no bearing on the criminal liability of the

petitioners. [t is submitted that the Bank suffered a substantial

loss even under OTS, and that the petitioners, by abusing their

ofhcial position, facilirated pecuniary advantage to the

borrowers. After examining their role, sanction was accorded for

prosecution by the competent authority. Hence, dismissal of the

petition is sought.

10. The learned Standing Counsel for CBI also opposed the

petition, contending that there are specific and clear allegations

against the petitioners. It is submitted that the enhancement of

loans was based on reports submitted by the petitioners, which

contained fabricated facts regarding the infrastructure and

capacity of the building, including non-existent facilities such as

a swimming pool. It is further contended that, contrary to

standard banking procedure, the borrowers directly obtained

legal opinion and, based on such opinion, the petitioners

for'..varded proposals for sanction and enhancement of loans,

thereby indicating their involvement in the conspiracy. It is also

submitted that an earlier quash petition liled by the petitioners

r,r,as dismissed after trial had progressed, and that departmental

enquiry f-rndings also held the petitioners at fault. It is argued

that mere settlement of dues is not a ground to quash criminal

9

a

proceedings where allegations of conspiracy atl I miscondltct

exist. In support of his contentions, reliance il placed on

Parbatbhai Aahir alias Parbatbhai Bhimsinhbhai Karmur and

Others V State of Gujarat and Anotherr, Ishoo Narang and

Others V State of Telatrgana and another2, Cenl.l al Bureau of

Investigation V Hati Singh Ranka and Others3 z rd prayed to

dismiss this pe tition.

1 1. Considering the submissions made by the lez rned courlsel

on either side and upon perusal ol the material zrvailable on

record, the primary contention of the petitioners is hat sanction

of the loan rvas made by the Circle Ofhce, and thr Zonal Office

had no authority to sanction such a huge amc,r r t. Therefbre,

according to them, they are not concerned u'ith tl: sanction of

the loan. It is also contended that the recomme r ( ation for the

loan was made by A.7 and that thc petitior < rs were rlot

connected u'ith forwarding or recommending the

Jrt oposal to the

Circle Office. Another contention is that A.2 anc {.3, who are

guarantors to the loan, have already obtained an :

-der from the

Hon'ble Supreme Court quashing the proceedings Lgair-rst them,

and the same benefit should enure to the pe i -ioners. It is

t AIR 2017 Supreme Court 4843

2 2021 (41 ALD 496 (TS)

3 (2O19) l6 Supreme Court Cases 687

-10-

\

further contended that the Bank has accepted the dues under

the OTS scheme and withdrawn the proceedings before the

DRT, and therefore, continuation of the criminal proceedings

amounts to abuse o[ process of law. Lastly, it is contended that

none of the material witnesses, particulariy the balk ofhcials,

have spoken against the petitioners, and the allegation that a

false report u'as submitted by them is incorrect. It is also

contended that once a "No Due Certihcate" is issued and fuli

satisfaction is recorded before the DRT, nothing survives in the

criminal case.

12. Upon consideration of the above contentions, it is an

admitted fact that the loan was sanctioned by the Circle Ofhce

and that the Zonal Ofhce had no authority to sanction such a

large amount. However, the specific allegation against the

petitioners is that they recommended the proposal and, based

on such recommendation, the Circle Ofhce sanctioned the OCC

limit of Rs.45O lakhs in favour of A. 1 and A.2. The core issue

relates to the genuineness of the documents submitted for

availing the loan. In this context, it is not in dispute that the

Bank had a panel of advocates to render legal opinions

regarding the documents. In the present case, the material on

record indicates that the borrowers approached the legal

7L

department and obtained legal opinion 1 (

documents, which were opined to be genuine. Tt

relying upon such legal opinion, recommen i

proposal. The contention of the learned Standirr

CBI that the opinion ought to have been routec

Bank is met with the submission of the petitiont::

relevant point of time, there was no such mandat

and it was a prevailing practice lor borrou'ers to

legal department directly. Therefore, at this stage

conclusively held that the petitioners conspirec

A.2 solely on that basis.

13. Further, the evidence of Pw.5, who was tht'

discloses that the credit proposals were preg

without any misreprcsentation or suppression of f

verilication of the documents, the same were lc r

Branch Manager and thereafter to the Circle Of[.r

alteration or addition. This indicates that the peli

qarding the

e petitioners,

:d the loan

1 Counsel for

through the

s that, at the

rry procedure

approach the

it cannot be

with A. 1 and

lredit Officer,

ared by him

rcts and, after

,r,arded to the

e without any

ioners did not

egal opinion.interfere with or modifr the proposals

Therefore, it cannot prima facie be said

or

that Ire petitioners

facilitated the borrowers in avaiiing the loan or . the basis of

fabricated documents. It is also pertinent to rlo e that certain

properties were proceeded against under the SAI(

'AESI

Act and

-L2-

t.

arnounts were recovered. Subsequently, under the OTS scheme,

the remaining dues were settled and the documents were

returned to the borrowers. With regard to the allege d false visit

report, the material on record shows that in the earlier visit

report dated 10.03.2007 it was noted that the school required

additional rooms for expansion, and this aspect appears to have

been taken into consideration in the subsequent report dated

09.06.2007 . Moreover, the pre-release audit report dated

18.05.2007, prepared by a Chartered Accountant nominated by

the Circle Ofhce, also reflects that a pre-sanction visit was

conducted and the report was forwarded as per sanction

conditions. This indicates that the sanction of the loan was not

solely based on the visit report submitted by the petitioners.

14. [n view of the above, the contention that the visit report

alone lormed the basis for sanction and that the petitioners

conspired with the other accused does not prima facie appear to

be substantiated. It is also brought on record that disciplinary

proceedings were initiated against the petitioners for certain

omissions, which were subsequently closed. Further, the

Hon'ble Supreme Court has quashed the proceedings against

A.2 and A.3, who were guarantors to the loan.

15. In K.Bharthi Devi and another V State , ,f Telangana

and anothera in 29.7 of para 40, it u'as held as foll rw's

29.7. White deciding whether to exercise its por"'

Section 482 of the Code or not, timings of settlern l

crucial role. Those cases where the settlement is €

immediately after the alleged commission of offence

matter is still under investigation, the High Cou 1

liberal in accepting the settlement to quash th,:

proceedings/ investigation. It is because of the reasc

this stage the investigation is still on and even tlt,

sheet has not been filed. Likewise, those cases

'r

charge is framed but the evidence is yet to stril

evidence is still at infancy stage, the High Court r

benevolence in exercising its powers favourabll ,

prima facie assessment of the circumstan(:es

mentioned above. On the other hand, rvhere the pr

evidence is almost complete or after the concluslr

evidence the matter is at the stage of argument, rltr

High Court should refrain from exercising its por

Section 482 of the Code, as in such cases the trial c )

be in a position to decide the case hnally on meri

come to a conclusion as to whether the offence uncr

307IPC is committed or not. Similarly, in those ct.!

the conviction is already recorded by the trial cour

matter is at the appellate stage before the High Cr

compromise between the parties would not be ir

1

accept the same resulting in acquittal of the offend,)r

already been convicted by the trial court. Here

proved under Section 307lPC and convictioll i:

r under

t play a

-r-ived at

and the

man be

criminal

l that at

charge-

-1ere

the

, or the

an show

)ut after

material

secution

n of the

nalll the

:r under

rrt lvould

s and to

. Section

:s rr,here

and the

irt, mere

round to

who has

harge is

already

o

120241 10 Supreme Court Cases 384

-!4-

(t

recorded of a heinous crime and, therefore, there is

question of sparing a convict found guiltl'of such a crime."

no

44. The facts in thc present case are similar to the facts

h Sadhu Ram Singla ICBI

v. Sadhu Ram Singla, (2017) 5 SCC

35O : (2017) 2 SCC (Cri) 5351 wherein a dispute between the

borrower and the Bank rtas settled. In the present case also,

undisputedly, the FIR and the charge-shcet are pertaining to

the dispute concerning the loan transaction availed by the

accused persons on one hand and the Bank on the other

hand. Admittedly, the Ba-nk and the accused persons have

settled the matter. Apart irom the earlier payment received by

the Bank either through equated monthly instalments (EMIS)

or sale of the mortgaged properties, the borrowers have paid

an amount of Rs 3,8O,OO,OOO under OTS- After receipt of the

amount under OTS. the Bank had also decided to close the

loan account. The dispute involved predominantly had

overtures of a civil disPute

45. Apart from that, it is lrrther to be noted that in view of the

settlement between the parties in the proceedings before DRT,

the possibility of conviction is remote arrd bleak ln our vierv,

continuation of the crirninal proceedings would put the

accused to great oppression and prejudice

16. In the above judgment it was observed that already A' 1

and Bank have settled the matter and main accusations are

against A.1 and quashed the proceedings against A'2 and A'3'

In the present case also petitioners are arrayed as A.6 and A.8

and the only allegation against these petitioners is that they

have not verifled the documents frled by the borrower and the

-15-

visit report submitted by petitioners is false vhereas, the

documents are verihed by the legal department r rd basing on

their opinion petitioners have sent proposal to tlr Circle office

and the visit report is also verilied by Pw.S and

( ).A. and loan

was sanctionecl by Circle Office. Considering a1l t rese aspects,

this Court is of the opinion that continuation r proceedings

against the petrtioners is unwarranted. Hence, tlr: proceedings

against the petitioners in C.C.No.16 of 2OI4 c :l the file of

Principal Special Sessions Judge for CBI Cases, {yderabad is

liable to be quashed.

17 . Accordingly, the Criminal Petition is aLl r ved and the

proceedings initiated against the petitioners/A ( and A.8 in

C.C.No. 16 of 2Ol4 on the file of Principal SF(:ial Sessions

.Iudge for CBI Cases, Hyderabad, is hereby quash:1.

Miscellaneous petitions, if any, pendir-r1i shall sland

closed.

//rRUE

C]PY / /

SD/- N.SRIHARI

DEPUTY REGISTRAR

./

,,-q /

sF,clt;-N oFFICEI{

To,

l lhe Principal Sl'ecial Judge for CBI Cast's' Nampall'

, l lyd:f*.1 .,

i. f n* Statit,rr House Officer, CBl, Ecorromic Olfences / Ing' Lherllrill'

: O." CC to Sri G.Aditya Goud, Advocate [OPU-C]

; o;; CC to sri r sru;an Kumai Reddy (sPL PP FoR cl I) IoPUC]

5. Trvo CD CoPics.

]CK/PSL

o

,..'.''-'.x..r.:lili,-'.:'..'.jxiM&}$K{ww;lEi.T.,'*r:--.:

4'

HICH COURT

DATED:25l03/ 2026

ORDER

CRLP.No 1570 or 2025

Allowing tl-re Crirninal l)ctition

7

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