Bengaluru: On the premise that civil proceedings take longer to complete, criminal laws cannot be allowed to be implemented to recover money as an easier route, Karnataka HC said in a judgment.
Justice M nagaprasanna, in a recent order, quashed the proceedings against Vilas Deore, Managing Director, Shriganesh Textiles and Infrastructure (India), Pune. The plaintiff is CB Ganapati, Executive Vice President of Himatsingka. The FIR was recorded before Hassan Rural police in April this year for offenses punishable under IPC for criminal breach of trust and cheating, among others. Last year, Shriganesh Textiles and Himatsingka signed an agreement whereby the plaintiff (Himatsingka) would supply bales of cotton to the petitioner (Shriganesh) 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 petitioner stating that he would invoke the Insolvency and Bankruptcy Code, 2016, if the amount was 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.
Vilas 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.
“Scuttling said process and setting in motion the criminal law for the recovery of the disputed money is not what the criminal law should be used for, because it would be to misuse the criminal law as a shortcut to seek the recovery of the money. money, that too without whether there are any ingredients of IPC Section 406 or 420,” the order reads.
The judge said the claimant had twice made it clear in letters that if the wire was not removed and payment was not made, he would sell it on the open market to meet his contingencies. Therefore, the allegation of diversion cannot be accepted.
Lately, the judge said, many criminal cases have been brought to court alleging torts of breach of trust in commercial transactions, which arise from breach of agreements and without any evidence (to invoke criminal laws) or resort to civil proceedings. available for the collection of this money.