1. The Criminal Petition has been filed under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (for brevity ‘the BNSS’) by the Petitioners/Accused Nos.1 & 2 for granting of pre-arrest bail in connection with Crime No.132 of 2025 of Patamata Police Station, NTR District, registered for the alleged offence punishable under Section 403, 406, 409 and 420 of the Indian Penal Code, 1860 (for brevity ‘the I.P.C.’)

2. The case of the prosecution is that between 20.09.2021 and 23.05.2023, at Flat No.4, Satyam Towers, Road No.7, Bharathi Nagar, Vijayawada, the accused persons, namely Idupulapati Srinivasa Rao (Accused No.1) and his wife, Idupulapati Madhavi (Accused No.2), committed acts amounting to cheating, dishonest misappropriation of property, and criminal breach of trust. The complaint was lodged on 15.03.2025 at 06:00 hours by Sri Kakarla Vinay, who is a designated partner of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP, Capital Region LLP, and Rayalaseema Region LLP. The prosecution asserts that the complainant’s firms intended to acquire approximately 50 acres of land in Visakhapatnam for business expansion. The accused represented that they had agreements for such land but lacked sufficient funds to complete the transactions. Relying upon these representations, the complainant’s firms transferred a total of Rs.11,99,68,000/-, including Rs.2.4 crores credited directly into the personal account of Accused No.1 and Rs.29.59 crores issued through demand drafts in favor of landowners.

3. It is further alleged that out of these transactions, 5.38 acres situated in Survey No.56, Gurrampalem Village, Pendurthi Mandal, was registered in favor of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP under Document No.557/2022, for a consideration of Rs.1,77,54,000/-. However, instead of registering the remaining extent of land in favor of the complainant’s firms, the accused fraudulently diverted funds and caused 9.5 acres registered in the name of their own entity, Blue Sea Ventures LLP, thereby misappropriating Rs.10,05,14,000/- belonging to the complainant’s firms. Despite repeated assurances, the accused failed to fulfill their commitments.

4. Sri Posani Venkateswarlu, learned Senior Counsel appearing on behalf of Sri P.Vivek, learned counsel for the Petitioners submits that the allegations contained in the typed report are wholly misconceived, vague, and omnibus in nature. The de-facto complainant asserts that he is a designated partner of certain LLPs, namely Navyandhra Grama Vaidya Healthcare Services Coastal Region, Capital Region, and Rayalaseema Region. It is alleged that in the year 2021, one of the partners of the said firms approached the Petitioners, who had earlier entered into agreements of sale with certain landowners, and expressed interest in purchasing the lands. The Petitioners, in good faith, introduced the complainant’s partner to the landowners, who themselves admitted execution of agreements and receipt of advance consideration. It is further alleged that between September 2021 and May 2023, the complainant’s firms transferred a sum of Rs.11,99,68,000/-, part of which was remitted to the Petitioners’ accounts and part issued in the form of demand drafts to the landowners. Out of these transactions, 5.38 acres in Survey No.56, Gurrampalem Village, Pendurthi Mandal, was duly registered in favor of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP under Document No.557/2022. The allegation thereafter is that subsequent monies were misapplied, and lands registered in the Petitioners’ own firm.

5. Sri Posani Venkateswarlu, learned Senior Counsel for the Petitioners submits that even if the allegations are taken at face value, they disclose at best a civil dispute arising out of a commercial transaction. The attempt of the de-facto complainant is to give criminal colour to a mercantile arrangement, which is impermissible in law. The allegations are bereft of specific overt acts and are designed to harass the Petitioners. The registration of the present crime is nothing but an abuse of process of law. It is further submitted that the de-facto complainant has no locus standi to institute the present proceedings, as he is not a designated partner of the companies in question. The allegations of entrustment are wholly invented to attract Section 409 of ‘the I.P.C.’ In the absence of any contractual agreement of agency or fiduciary relationship between the Petitioners and the complainant’s firms, Section 409 of ‘the I.P.C.,’ cannot be invoked. The incorporation of this offence is mala fide, intended only to deprive the Petitioners of the statutory protection under Section 41-A of ‘the Cr.P.C.’

6. Learned Senior Counsel for the Petitioners further submits that the ingredients of Section 420 of ‘the I.P.C.,’ are not satisfied. There is no allegation of fraudulent or dishonest inducement, nor any averment that the complainant was deceived into delivering property or omitting to act in a manner he otherwise would have. Similarly, Section 403 of ‘the I.P.C.,’ which deals with dishonest misappropriation of movable property, is not attracted, as no movable property is involved. Section 406 of ‘the I.P.C.,’ also requires entrustment and dishonest misappropriation, which are absent in the present case. The allegations are purely contractual in nature and pertain to transactions between 2021 and 2023. The FIR was lodged belatedly on 15.03.2025, without any preliminary enquiry as mandated in Lalita Kumari v. Govt. of U.P((2014) 2 SCC 1). The delay in lodging the report casts serious doubt on its veracity, as held in Dilawar Singh v. State of Delhi((2007) 12 SCC 641), where delayed complaints were viewed with suspicion for permitting embellishments and fabrications. The registration of the crime without enquiry is contrary to the guidelines laid down in State of Haryana v. Bhajan La(1992 Supp (1) SCC 335) and renders the proceedings liable to be quashed.

7. Sri Posani Venkateswarlu, learned Senior Counsel for the Petitioners further submits that the first petitioner is suffering from Cerebral Venous Sinus Thrombosis, a life-threatening condition requiring constant medical supervision and restricting travel. The second petitioner is his wife. Both are law-abiding citizens with no criminal antecedents. They are willing to cooperate fully with the investigation. The Petitioners are willing to abide by any condition that this Court may deem fit and proper for the grant of anticipatory bail. The Petitioners have got fixed abode. The Petitioners have cooperated with the investigation and there is no likelihood of absconding or tampering with the prosecution evidence. Therefore, it is prayed that this Court may be pleased to grant pre- arrest bail to the Petitioners/Accused No.1 & 2.

8. Per contra, Sri Neelotphal Ganji, learned Assistant Public Prosecutor vehemently opposes granting of pre-arrest bail contending that the allegations in the complaint are not only specific but supported by documentary evidence relating to both the flow of funds and the acquisition of land. The complainant’s firms entrusted a sum of Rs.11,99,68,000/- to the petitioners, of which Rs.2.40 crores were transferred directly into the Petitioners’ personal accounts and Rs.9.59 crores was issued by way of demand drafts to landowners. While 5.38 acres in Survey No.56, Gurrampalem Village, Pendurthi Mandal, was registered in favor of Navyandhra Grama Vaidya Healthcare Services Coastal Region LLP for a consideration of Rs.1,77,54,000/-, the Petitioners thereafter diverted the remaining funds and caused 9.5 acres to be registered in the name of their own entity, Blue Sea Ventures LLP. This deliberate diversion of entrusted money and property constitutes dishonest misappropriation and cheating.

9. Learned Assistant Public Prosecutor further contends that the defence plea of the Petitioners that the matter is purely civil in nature is untenable. The entrustment of funds for a specific purpose, followed by fraudulent diversion and registration of land in their own firm, clearly attracts the penal provisions of Sections 403, 406, and 420 of ‘the I.P.C.’ The magnitude of the misappropriated amount and the fraudulent acquisition of land demonstrate a calculated breach of trust and cannot be trivialized as a mere contractual dispute. The delay in lodging the complaint is explained by the de-facto complainant that repeated assurances given by the petitioners, which kept the de-facto complainant under the impression that the commitments would be honoured.

10. Sri Neelotphal Ganji, learned Assistant Public Prosecutor submits that the investigation is at a nascent stage, and the custodial interrogation of the Petitioners is imperative for eliciting material facts. It is submitted that if the Petitioners are granted pre-arrest bail, there is a grave apprehension that they may not cooperate with the investigation and may evade the process of law. The Petitioner may influence witnesses or tamper with evidence, thereby obstructing the fair and impartial investigation. In view of the seriousness of the allegations and the potential risk to the progress of the investigation, it is prayed that the instant bail application be dismissed.

11. Sri N.Ashwani Kumar, learned Counsel for Respondent No.2/de-facto complainant filed counter-affidavit and contends that the averments made in the Criminal Petition filed by the Petitioners/Accused Nos.1 and 2 are wholly false, baseless and devoid of merit. It is contended that Crime No.132 of 2025 registered on the file of Patamata Police Station, NTR District, pertains to grave offences of cheating, dishonest misappropriation and criminal breach of trust under Sections 403, 406, 409 and 420 of ‘the I.P.C.,’ alleged to have occurred between 20.09.2021 and 23.05.2023. The de-facto complainant, being the designated partner of Navyandhra Grama Vaidya Healthcare LLPs, had remitted a sum of Rs.11,99,68,000/- to the Petitioners and landowners for acquisition of lands in Visakhapatnam. While part of the consideration was utilized for registering Ac.5.38 cents in Sy.No.56 of Gurrampalem Village in the name of the complainant’s LLP, the Petitioners wrongfully caused the remaining sale deeds to be registered in their own names, despite repeated assurances to transfer the properties to the complainant’s company. The complaint dated 15.03.2025 was thus lodged without delay, upon the Petitioners’ refusal to honour their commitments. It is further urged that the Petitioners have suppressed material facts, including their involvement in other criminal cases, and have approached this Court without clean hands, thereby disentitling themselves to any discretionary relief.

12. Learned Counsel for the Respondent No.2 further submits that the Petitioners are habitual offenders with criminal antecedents, including pending proceedings in Crl.P.No.8331 of 2023 before this Court, and their suppression of such antecedents is contrary to the mandate laid down by the Hon’ble Apex Court in Munnesh v. State of Uttar Pradesh(2025 SCC OnLine SC 1319), which requires disclosure of all pending criminal cases in bail petitions. It is stated that the offence under Section 409 of ‘the I.P.C.,’ being punishable with imprisonment for life and non- bailable in nature, warrants strict consideration of the gravity of the offence. Grant of bail in such circumstances would seriously prejudice the ongoing investigation, enable tampering of witnesses and repetition of offences, and defeat the ends of justice. In view of the settled principles that bail cannot be granted mechanically and must be refused where the accused poses a threat to fair investigation and trial, it is urged that the present Criminal Petition be dismissed.

13. Thoughtful consideration is bestowed on the arguments advanced by the learned Counsel for both sides. I have perused the entire record.

14. In the light of the case of the prosecution and the contentions of the learned Counsel for both the sides, now the point for consideration is:

                  “Whether the Petitioners are entitled for grant of pre-arrest bail?”

15. Upon careful consideration of the submissions advanced by both the learned Counsel and the material placed on record, this Court is of the considered view that the Petitioners are entitled to the relief of anticipatory bail. Except the offence under Section 409 of ‘the I.P.C.,’ which prescribes punishment extending up to imprisonment for life, all other offences alleged against the petitioners are punishable with imprisonment not exceeding seven years. In such circumstances, the necessity of custodial interrogation does not arise. Indeed, the simultaneous invocation of Sections 406 and 420 of ‘the I.P.C.,’ is legally incongruous, since the essential ingredients of entrustment and dishonest misappropriation under Section 406 of ‘the I.P.C.,’ are distinct from the fraudulent inducement contemplated under Section 420 of ‘the I.P.C.’

16. The Hon’ble Apex Court in Delhi Race Club (1940) Ltd. v. State of U.P.,( (2024) 10 SCC 690) at paragraph Nos.44 & 49 held as under:

                  “44. At the most, the Court of the Additional Chief Judicial Magistrate could have issued process for the offence punishable under Section 420IPC i.e. cheating but in any circumstances no case of criminal breach of trust is made out. The reason being that indisputably there is no entrustment of any property in the case at hand. It is not even the case of the complainant that any property was lawfully entrusted to the appellants and that the same has been dishonestly misappropriated. The case of the complainant is plain and simple. He says that the price of the goods sold by him has not been paid. Once there is a sale, Section 406IPC goes out of picture. According to the complainant, the invoices raised by him were not cleared. No case worth the name of cheating is also made out.

                  49. From the aforesaid, there is no manner of any doubt whatsoever that in case of sale of goods, the property passes to the purchaser from the seller when the goods are delivered. Once the property in the goods passes to the purchaser, it cannot be said that the purchaser was entrusted with the property of the seller. Without entrustment of property, there cannot be any criminal breach of trust. Thus, prosecution of cases on charge of criminal breach of trust, for failure to pay the consideration amount in case of sale of goods is flawed to the core. There can be civil remedy for the non-payment of the consideration amount, but no criminal case will be maintainable for it. [See : Lalit Chaturvedi v. State of U.P. [Lalit Chaturvedi v. State of U.P., (2024) 12 SCC 483 : 2024 SCC OnLine SC 171] and Mideast Integrated Steels Ltd. v. State of Jharkhand [Mideast Integrated Steels Ltd. v. State of Jharkhand, 2023 SCC OnLine Jhar 301”

17. The Hon’ble Apex Court in Arshad Neyaz Khan v. State of Jharkhand(2025 SCC OnLine SC 2058), at paragraph No.21 held as under:

                  “21. Furthermore, it is pertinent to mention that if it is the case of the complainant/respondent No. 2 that the offence of criminal breach of trust as defined under Section 405 IPC, punishable under Section 406 IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined in Section 415, punishable under Section 420 IPC. This Court in Delhi Race Club (1940) Limited v. State of Uttar Pradesh, (2024) 10 SCC 690 observed that there is a distinction between criminal breach of trust and cheating. For cheating, criminal intention is necessary at the time of making false or misleading representation i.e. since inception. In criminal breach of trust, mere proof of entrustment is sufficient. Thus, in case of criminal breach of trust, the offender is lawfully entrusted with the property, and he dishonestly misappropriates the same. Whereas, in case of cheating, the offender fraudulently or dishonestly induces a person by deceiving him to deliver a property. In such a situation, both offences cannot co-exist simultaneously. Consequently, the complaint cannot contain both the offences that are independent and distinct. The said offences cannot co-exist simultaneously in the same set of facts as they are antithetical to each other.”

18. Section 406 of ‘the I.P.C.,’ deals with criminal breach of trust, which presupposes lawful entrustment of property followed by dishonest misappropriation or conversion. In contrast, Section 420 of ‘the I.P.C.,’ addresses cheating and dishonestly inducing delivery of property, which requires deception at the inception of the transaction. Thus, while Section 406 of ‘the I.P.C.,’ arises from a breach of an existing fiduciary relationship, Section 420 of ‘the I.P.C.,’ is predicated upon fraudulent inducement at the very outset. The two offences, therefore, operate in distinct spheres.

19. Even if the allegations are taken at their face value, they disclose a commercial transaction involving transfer of funds for acquisition of immovable property. The dispute, therefore, essentially emanates from contractual obligations. It is further pointed out that there is an unexplained delay of nearly two years in lodging the FIR, which casts a serious doubt on the spontaneity and veracity of the allegations. The Respondent No.2 has got three companies namely Navyandhra Grama Vaidhya Health Care services Costal Region, Navyandhra Grama Vaidhya Health Care Services Capital Region and Navyandhra Grama Vaidhya Health Care Services Rayalaseema. The Respondent No.2 alleged in his report lodged with police that the land owners had admitted the execution of Agreements of Sale and receipt of advances/part payments from the Petitioners. Having believed the words and representations of the Petitioners as true, partner of de-facto complainant had consented to purchase the lands through them as their agents.

20. It is pertinent to point out that Respondent No.2 did not lodge any complaint in Visakhapatnam where the most of the transaction was taken place. The properties are situated in Visakhapatnam. The accused are residents of Visakhapatnam. Sale considerations/Money was allegedly transferred in between the parties at Visakhapatnam. However, just because in the month of December, 2021 another meeting was convened between the Petitioners and one Jaya Bharathi Reddy in the presence of Respondent No.2 at his house at Bharathi Nagar, Vijayawada in which the Petitioners informed that they had incorporated two firms namely Blue Sea ventures LLP and Tiger Woods Projects LLP, in which they are the designed partners, the Respondent No.2 chosen to lodge a report with police in Vijayawada.

21. Furthermore, in Lalita Kumari 1st supra, the Hon’ble Supreme Court has categorically held at para No.120.6 that a preliminary enquiry is mandatory in cases involving commercial transactions before registration of a crime. In the present case, however, the FIR was registered on the very same day of receipt of the complaint without any such enquiry, which is contrary to the settled principles of law.

22. It is also pertinent to note that the lands in question are situated at Visakhapatnam, whereas the FIR has been registered at Vijayawada, thereby raising issues of jurisdiction and propriety. Further, the medical reports reveal the condition of the first petitioner, who is suffering from cerebral venous sinus thrombosis, a serious ailment necessitating constant medical supervision. The second petitioner is a woman, wife of Petitioner No.1.

23. In view of the facts and circumstances, the gravity and nature of the allegations levelled the Petitioners, this Court is inclined to grant pre-arrest bail to the Petitioners/ Accused Nos.1 & 2.

24. In the result, Criminal Petition is allowed with the following conditions:

                  i. In the event of their arrest, the Petitioners/ Accused Nos.1 & 2 shall be enlarged on bail subject to them executing a personal bond for a sum of Rs.1,00,000/- (Rupees One Lakh only), each with two sureties for the like sum each to the satisfaction of the arresting police officials;

                  ii. The Petitioners/ Accused Nos.1 & 2 shall not cause any threat, inducement or promise to the prosecution witnesses;

                  iii. The Petitioners/ Accused Nos.1 & 2 shall not leave the State of Andhra Pradesh and Telangana without the express permission from the Station House Officer concerned.

                  iv. The Petitioners/ Accused Nos.1 & 2 shall surrender their passports, if any, to the investigating officer. If they claim that they do not have passport, they shall submit an affidavit to that effect to the Investigating Officer.