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IN THE HIGH COURT OF ALLAHABAD
MAYANK KUMAR JAIN, J.
Kishore Biyani – Applicant
Versus
State of U.P. and Another - Opposite Parties
Application U/S 482 No. 239 Of 2024
Decided On : 12-03-2024
Criminal Breach of Trust - Business Transaction - Section 120B, 463, 406, 420, 504, 506 IPC - 405, 406 IPC - The court discussed the legal provisions of criminal breach of trust under Section 405 and 406 of the Indian Penal Code (IPC) and emphasized the elements required to establish the offence. It highlighted the importance of entrustment and the absence of dishonest misappropriation or conversion in a business transaction. The court also emphasized the mandatory requirement for the court to hold an enquiry under Section 202(1) Cr.P.C. when the accused resides beyond the local jurisdiction.
Fact of the Case:
The applicant, Executive Chairman of a retail company, was accused of criminal breach of trust for non-payment of goods supplied by the complainant. The applicant argued that the company faced financial difficulties due to the COVID-19 pandemic and was under insolvency proceedings. The complainant alleged that the goods were entrusted to the applicant and payment was not made within the stipulated time.
Finding of the Court:
The court found that the business transaction did not constitute criminal breach of trust as there was no entrustment of property to the applicant. It also emphasized that the applicant's non-residence within the local jurisdiction required the court to hold an enquiry under Section 202(1) Cr.P.C. The summoning order and entire proceedings were quashed.
Issues: The key issues revolved around the elements of criminal breach of trust, including entrustment and dishonest misappropriation, and the mandatory requirement for the court to hold an enquiry under Section 202(1) Cr.P.C. when the accused resides beyond the local jurisdiction.
Ratio Decidendi: The court's decision was based on the absence of entrustment and dishonest misappropriation in the business transaction, as well as the mandatory requirement for the court to hold an enquiry under Section 202(1) Cr.P.C. when the accused resides beyond the local jurisdiction.
Final Decision: The summoning order and entire proceedings of the complaint case were quashed.
JUDGMENT :
1. Heard Sri Anoop Trivedi, learned Senior Counsel assisted by Sri Vibhu Rai, learned counsel for the applicant, AGA for the state of U.P. and Sri Animesh Pandey, learned counsel for opposite party no. 2.
2. Present Application under Section 482 Cr.P.C. has been filed to quash the summoning order dated 27.03.2023 passed by learned Additional Civil Judge, (Senior Division), Court No. 2, Gorakhpur, order issuing non-bailable warrant dated 18.07.2023, and to quash the entire proceedings of complaint case no. 32393 of 2022 (Neelima Verma Vs. Future Retail Ltd. (Big Bazaar) through CEO, Mr. Kishore Biyani) pending in the court of Additional Civil Judge, (Senior Division), Court No. 2, Gorakhpur.
3. Opposite party no. 2 instituted a criminal complaint against the applicant under Section 120B, 463, 406, 420, 504, and 506 IPC.
4. The substance of the complaint are summarised thus: –
4.1 That the complainant is a wholesale supplier of food products in the name and style of M/s Maa Durga Enterprises, Gorakhpur. The applicant was running his business establishment in the name and style ‘Big Bazaar’ in Gorakhpur.
4.2 During the period from 10.02.2020 to 01.06.2020, the complainant supplied food products to the applicant worth Rs. 4,38,938/- against proper receipts. Further, during the period from 10.02.2020 to 24.06.2020, the complainant supplied food products of worth Rs. 7,75,925/ and raised corresponding invoices towards supply of the same.
4.3 The complainant made regular demands for payment against aforesaid supplies but the applicant waved her off. Whenever she visited the employees of the applicant, they misbehaved and hurled abuses at her. Thus, the applicant had usurped the money of the complainant and committed breach of trust.
4.4 The complainant sent a notice through her counsel to the applicant but no action was taken by the applicant.
5. The Additional Chief Judicial Magistrate, Court No. 3, Gorakhpur after recording primary evidence of the complaiant and her witnesses under Section 200 and 202 Cr.P.C. summoned the applicant to face trial under Section 406 IPC.
6. Sri Anoop Trivedi, learned Senior counsel appearing on behalf of the applicant submitted that the applicant was Executive Chairman of Future Retail Limited till 19.07.2022. Being the Executive Chairman of the aforesaid company, he was not directly involved in the day-to-day business affairs of the company. The company is engaged in the business of multi-brand retail and operated India’s most popular retail chains spread across the country through digital platforms and retail stores in the trade name of ‘Big Bazaar’.
7. That the business of the company was impacted due to nation wide outbreak of COVID-19 pandemic in 2020. The company faced severe liquidity crisis and therefore, was unable to comply with its obligations. These circumstances were beyond the control of the company.
8. In August 2020, a scheme of arrangement was proposed between the Company and certain Reliance group entities. This scheme could not be materialised and the bank accounts of the company were classified as Non-Performing Assets.
9. Later, the Bank of India moved before National Company Law Tribunal, Mumbai against the company. The N.C.L.T, Mumbai vide its order dated 20.07.2022, admitted Insolvency Petition against the company. The bank account operation of the company was restricted as the bank had frozen their accounts. Pursuant to order dated 20.07.2022, moratorium was imposed and the management was devolved upon the Interim Resolution Professional (I.R.P.), appointed by the Tribunal. Not only payments of various vendors were stopped but payment of the electricity was also stopped and thus, all stores had to seize operations.
10. Learned Counsel for the applicant submitted that complaint was not maintainable at the time of its filing since at the relevant time, the applicant was not officiating as an Executive Chairman of the company. The officiating board and its power has been relegated
Even if any case has been filed by the complainant/informant before the consumer forum and the same has been dismissed on the ground of alternate remedy, the same could not clothe this case as a civi....
(1) Issuance of process – Mere existence of some grounds which would be material in deciding whether accused should be convicted or acquitted does not generally indicate that case must necessarily fa....
Fraudulent intent at the inception of a transaction is essential to establish cheating; mere breach of contract does not constitute a criminal offence.
Non-payment of dues does not constitute criminal cheating or breach of trust unless fraudulent intent is established from the inception of the transaction.
A mere breach of a promise, agreement, or contract does not, ipso facto, constitute the offence of criminal breach of trust contained in Section 405 IPC without there being a clear case of entrustmen....
A breach of contract does not constitute cheating unless fraudulent intent is proven at the outset of the agreement, as established in relevant legal precedents.
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