BENGALURU: Assuming that civil proceedings take longer to complete, criminal laws cannot be allowed to be implemented for the recovery of money as an easier route, the High Court of Karnataka said in a judgment.
Justice M Nagaprasanna, in a recent order, quashed the case against the petitioner, Vilas Deore, Managing Director, Shriganesh Textiles and Infrastructure (India), Pune. The plaintiff in this case is CB Ganapati, Executive Vice President of Himatsingka, who filed a FIR before the rural police of Hassan in April this year for offenses punishable IPC for criminal breach of trust and cheating, among others.
Last year, Shriganesh Textiles and Himatsingka signed an agreement under which the latter would supply bales of cotton to the former to convert into yarn and return them.
In October 2021, a dispute arose regarding the payment, retention and delivery of the yarn.
When the dispute could not be settled amicably, the complainant sent a legal notice to the claimant advising him that he would invoke the Insolvency and Bankruptcy Code, 2016, if the amount was not not settled.
On April 8, 2022, the plaintiff approached Hassan Police, alleging that the petitioner had yet to pay just over Rs 9 crore for almost 520 tons of cotton lint. An FIR was recorded later in the day.
Deore challenged the FIR and said the matter was “civil” in nature and added that he was arraigned without charging the company. The plaintiff argued that even though the matter is civil in nature, if the defendant’s act amounted to a breach of trust or cheating, then the civil and criminal charges could stand.
Judge Nagaprasanna said the plaintiff should have continued the proceedings under the Insolvency and Bankruptcy Code to its logical end.
“Scuttle the said process and put in place the Criminal law in motion for the recovery of the disputed money is not what the criminal law should be used for, because it would amount to an abuse of the criminal law as a shortcut to seek the recovery of the money, that too without it there is no element of Section 406 (criminal breach of trust) or 420 (cheating) of the IPC,” the order reads.
The judge said the petitioner had twice indicated in letters that if the wire was not removed and payment was not made, they would sell it on the open market to meet their contingencies. Therefore, the allegation of diversion cannot be accepted.