Telangana HC refuses to stay probe into paddy diversion case

Hyderabad: The Telangana high court has dismissed a batch of 58 criminal petitions filed by rice mill owners seeking to halt police investigations into allegations of large-scale paddy misappropriation. Justice J Sreenivas Rao delivered the judgment on May 5 and refused to quash the FIRs, observing that the allegations involved serious criminal charges that required a thorough investigation.

The millers, from across the state, were accused of diverting paddy supplied for milling and defaulting on payments totalling Rs 3,960 crore, an amount equivalent to the value of the paddy stocks provided by the govt. The alleged misappropriation came to light a few months ago during a probe conducted by the civil supplies department.

FIRs were initially registered on complaints lodged by the district managers of the civil supplies corporation. According to the prosecution, the govt had entrusted massive quantities of paddy to the millers for processing into rice as part of a welfare scheme. However, during inspections, officials reportedly found no stocks available at several mills, leading to allegations that the grain was diverted for personal profit.

The prosecution pointed out that more than 3,600 mills operated in the state, yet only the petitioners had failed to deliver the required quantity of rice. In one case involving a miller in Kethapally of Nalgonda district, a shortage of 13,967 metric tonnes of paddy valued at over Rs 45 crore, including penalties, was recorded. The total value of the alleged misappropriation across the petitions runs into massive sums.

The millers argued that the dispute was purely civil and contractual in nature. They contended that the govt had supplied excessive quantities of substandard paddy, much of which was damaged by heavy rains and floods in 2022, making it unfit for processing. They further claimed that the authorities were attempting to give a “criminal colour” to a civil matter to pressure them into payments.

Some petitioners also stated that they had already paid significant sums, exceeding Rs 12 crore in certain instances, following govt auctions of the damaged stock. Public prosecutor Palle Nageshwar Rao countered the claims, stating that the millers held the paddy in trust for the state and that, despite multiple notices, they had failed to return the grain or pay the dues, causing a heavy loss to the public treasury.

“Some of the defaulted millers have also invested earnings from the diverted paddy into movie production, real estate business, setting up new mills in benami names and also acquiring movable and immovable assets,” argued Nageshwar Rao.

While dismissing the petitions, the court noted that the allegations prima facie indicated a breach of trust and misappropriation. It observed that, at this preliminary stage, the court could not decide on disputed facts or halt an investigation when the charges involved a potential prison sentence of more than seven years. The court emphasised that the police had a duty to investigate such allegations and that criminal proceedings should not be stalled at the threshold.
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