Andhra Pradesh HC Grants Pre-Arrest Bail to Nephrology Resident Doctor Roped in Under BUDS Act After He Filed Complaint Against Accused
The High Court of Andhra Pradesh found prima facie ambiguity in applying the Banning of Unregulated Deposit Schemes Act to a doctor who was himself a victim, and granted anticipatory bail with conditions.
The High Court of Andhra Pradesh at Amaravati, on 14 July 2026, granted pre-arrest bail to a final-year D.M. (Nephrology) resident doctor who had been arrayed as Accused No.1 in a case registered at I Town Police Station, Visakhapatnam, under Section 318(4) of the Bharatiya Nyaya Sanhitha, 2023 and Sections 21(1)(2)(3) of the Banning of Unregulated Deposit Schemes Act, 2019, read with Section 3(5) of the BNS. Justice Maheswara Rao Kuncheam, sitting singly, found that the petitioner — who had himself lost over one crore rupees to the very accused named in the FIR — prima facie did not fall within the definition of a “Deposit Taker” under the BUDS Act, and that the FIR in Crime No.76 of 2026 appeared to have been lodged as a counter blast to a writ petition the doctor had already filed against the same police station.
The Dispute Before the High Court
The petitioner, Dr. Rayagada Santosh Patnaik, aged about 30 years, is a resident doctor pursuing his final year D.M. (Super Specialty) in Nephrology at Andhra Medical College and working at King George Hospital, Visakhapatnam. He approached the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhitha, 2023, seeking bail in the event of his arrest in connection with Crime No.76 of 2026 registered at I Town Police Station, Visakhapatnam.
According to the version of events placed before the court, Accused No.2 in the case was the attendant of a Chronic Kidney Disease patient who had come into contact with the petitioner. That accused persuaded the petitioner to deposit amounts into “Deccan Fine Chemicals Private Limited, Tuni”, representing that he was well acquainted with the entity's financial transactions and promising good returns. Believing those representations, the petitioner transferred Rs.1,06,00,000 — borrowed at high rates of interest from various financial institutions — to Accused No.2 in multiple tranches.
When the petitioner discovered he had been cheated, he filed a complaint with the police on 07.05.2026. The complaint was not registered promptly. After approaching higher police authorities, FIR in Crime No.255 of 2026 was registered at PM Palem Police Station, Visakhapatnam Commissionerate, on 11.05.2026 against Accused No.2 and others under Section 318(4) of the BNS. The petitioner was thus the de facto complainant in that case.
When the petitioner then filed Writ Petition No.14535 of 2026 before the High Court on 14.05.2026, arraying police personnel of I Town Police Station as respondents and alleging harassment, the matter was pending adjudication before the court. Three days later, on 17.05.2026, Crime No.76 of 2026 was registered against the petitioner himself at I Town Police Station — under the same BNS cheating provision and additionally under Sections 21(1)(2)(3) of the BUDS Act, 2019.
Two Legal Challenges Raised for the Petitioner
Senior Counsel Sri K.S. Murthy, assisted by Smt. Kavitha Gottipati, advanced two distinct lines of argument before the court.
The first was that the BUDS Act, 2019 had been foisted on the petitioner without any legal basis. Counsel drew the court's attention to the specific language of Section 3(b) of that Act, which defines a “Deposit Taker.” The argument was that the petitioner, being a person who transferred money to another on the promise of returns — rather than a person who received deposits from members of the public — cannot be characterised as a Deposit Taker. The provisions of the special enactment, counsel contended, were per se inapplicable.
The second line was factual: the FIR in Crime No.76 of 2026 was registered on 17.05.2026, while the writ petition against the very same police station was already pending before the High Court, having been filed on 14.05.2026. Counsel characterised the FIR as a counter blast lodged under pressure to harass the petitioner.
The State, through the learned Assistant Public Prosecutor, opposed the petition. The prosecution pointed out that the petitioner had directly approached the High Court seeking pre-arrest bail, that many victims exist in the case, and that detailed investigation is required because the transactions involved financial dealings among doctors. The prosecution also noted that Accused No.2 had already been arrested.
How the Bench Reasoned
Justice Kuncheam first addressed the maintainability of the petition under Section 528 of the BNSS, which corresponds to Section 439 of the Cr.P.C. The court observed that such petitions are concurrent in nature and referred to the settled position affirmed by the Supreme Court in Sushila Aggarwal and Others v. State (NCT of Delhi) and Another, (2020) 5 SCC 1, to hold the petition maintainable.
On the substantive facts, the court took note of two significant circumstances. First, the petitioner is a final-year D.M. (Super Specialty) student in Nephrology and a resident doctor at King George Hospital. Second, the same petitioner is the de facto complainant in Crime No.255 of 2026 at PM Palem Police Station, registered against Accused No.2. The court also recorded that the writ petition filed on 14.05.2026 against the I Town Police Station was still pending when Crime No.76 of 2026 was lodged against him on 17.05.2026.
On the applicability of the BUDS Act, the court accepted the substance of the senior counsel's argument. Section 3(b) of the BUDS Act defines who qualifies as a Deposit Taker. The court found that the petitioner, viewed through that definition, does not come within its purview. The court recorded that there is “prima facie ambiguity” as to whether Section 21(1)(2)(3) of the BUDS Act would attract to the subject crime at all.
The court further noted that setting aside the BUDS Act offence entirely, all the remaining offences under Section 318(4) of the BNS are punishable with imprisonment of up to seven years. That is a relevant consideration in the bail calculus, given that they do not carry mandatory restrictions of the kind that attach to special enactment offences with higher sentences.
Conditions Attached to the Pre-Arrest Bail
The court described the bail as granted subject to “certain stringent conditions” and allowed Criminal Petition No.4501 of 2026 accordingly. The conditions imposed are as follows:
The petitioner shall execute a personal bond for Rs.20,000 with two sureties each for the like amount, to the satisfaction of the Station House Officer, I Town Police Station, Visakhapatnam. He shall appear before the SHO of I Town Police Station on the 2nd Saturday and 4th Saturday of every month, between 10:00 AM and 5:00 PM, until the Trial Court takes cognizance of the matter.
The petitioner shall not leave the limits of the State of Andhra Pradesh without prior permission from the concerned SHO. He shall not commit or indulge in the commission of any offence in the future. He shall cooperate with the investigating officer in further investigation and make himself available for interrogation as and when required. He shall not directly or indirectly make any inducement, threat, or promise to any person acquainted with the facts of the case so as to dissuade that person from disclosing such facts to the court or to any police officer.
The petitioner shall also surrender his passport, if any, to the investigating officer. If he claims to hold no passport, he shall submit an affidavit to that effect to the investigating officer.
Order
Criminal Petition No.4501 of 2026 was allowed by Justice Maheswara Rao Kuncheam on 14 July 2026. Dr. Rayagada Santosh Patnaik is enlarged on bail in the event of his arrest in connection with Crime No.76 of 2026 at I Town Police Station, Visakhapatnam, subject to the conditions set out above. Any interlocutory applications pending in the petition stand closed.