Mere Transaction Of Sale Is Not ‘Entrustment’: Allahabad HC Quashes Criminal Proceedings Against Kishore Biyani
The Allahabad High Court quashed criminal proceedings against Kishore Biyani, Chief Executive Officer (CEO) of Future Retail Group (Big Bazar).
A criminal complaint was instituted against Biyani under Sections 120B, 463, 406, 420, 504, and 506 IPC alleging that he had usurped the money of the complainant and committed breach of trust.
Pursuant to which, after recording primary evidence of the complainant and her witnesses under Section 200 and 202 CrPC, the court had summoned Biyani to face trial under Section 406 IPC.
However, the High Court was of the opinion that a mere allegation that the applicant did not pay the money to the party does not amount to criminal breach of trust, as it is also to be shown that he dishonestly disposed of the same in some way or dishonestly retained the same.
A Bench of Justice Mayank Kumar Jain after considering the relevant facts and circumstances, observed, “Admittedly, it was a business transaction. A mere transaction of sale cannot amount to an entrustment. The primary dispute between the parties appears to be based upon the business transaction. The transaction is based upon the sale and purchase of the articles. The transaction between the parties is established as a business/commercial transaction, thus, the sale of any goods does not fall under the definition of “entrustment”. Moreover, the main ingredient of mens rea is missing under the business transaction. Simplicitor, opposite party no. 2 was supplying food products to the retail outlet of the company of the applicant and it was making regular payment, when it was in a position to do so”.
“…it transpires that the applicant was not entrusted with property or dominion over the property in any manner. He did not dishonestly misappropriate or convert to his own use any property so entrusted by opposite party no. 2. Mere transaction of sale cannot amount to an entrustment. Admittedly, regular commercial transaction took place between opposite party no. 2 and the company at its outlet at Gorakhpur. The applicant being the Executive Chairman of cannot be held to be responsible for non-payment of the bill raised by opposite party no. 2. Admittedly the applicant was not residing within the local jurisdiction of the Court concerned who passed the summoning order dated 27.03.2023, therefore, it was incumbent upon the Court concerned to hold an enquiry under Section 202 (1) CrPC”, the bench further observed.
Senior Advocates Anoop Trivedi, Dhananjai Rai appeared for the applicant and AGA for the State and G.A. Animesh Pandey appeared for the opposite party no. 2.
The complainant in the matter, a wholesale supplier of food products in the name and style of M/s Maa Durga Enterprises, asserted that between February and June 2020, they supplied food products worth Rs. 4,38,938 and Rs. 7,75,925, respectively, to the applicant's establishment, accompanied by proper receipts and invoices. Despite regular demands for payment, the applicant allegedly ignored the requests, with their employees reportedly misbehaving and verbally abusing the complainant when approached for payment.
In response, the applicant's legal representative argued that the applicant, during the relevant period, was the Executive Chairman of FRL, a company engaged in multi-brand retail. The business, like many others, faced severe financial strain due to the COVID-19 pandemic, resulting in a liquidity crisis and the inability to fulfil financial obligations. The situation worsened when a proposed scheme of arrangement with Reliance group entities fell through, leading to FRL's bank accounts being classified as Non-Performing Assets.
Furthermore, the applicant's counsel contended that the complaint was not maintainable at the time of filing, as the applicant was no longer officiating as the Executive Chairman, and the company's management was under the control of an Interim Resolution Professional following an insolvency petition before the National Company Law Tribunal.
Additionally, the applicant's defense argued that no criminal intent existed, as the transaction was purely commercial, and the applicant did not directly handle day-to-day business affairs. It was argued that the dispute should be resolved through civil proceedings, and the complainant could file a claim before the Interim Resolution Professional for payment.
On the other hand, the complainant's counsel argued that the moratorium imposed by the NCLT did not bar criminal proceedings and that the applicant had failed to fulfil payment obligations despite clear terms on the invoices. It was asserted that the property was entrusted to the applicant, as indicated on the bills, and thus, urged the court to reject the applicant's arguments.
Resultantly, summoning order passed by the Additional Civil Judge, (Senior Division), Court No. 2, Gorakhpur, order issuing non-bailable warrant dated July 18, 2023, and entire proceedings of complaint case in Neelima Verma v. Future Retail Ltd. (Big Bazaar) through CEO, Kishore Biyani in the court of Additional Civil Judge, (Senior Division), Court No. 2, Gorakhpur, were quashed.
Appearances:
Applicant: Senior Advocates Anoop Trivedi, Dhananjai Rai assisted by Advocate Vibhu Rai
Opposite Party: AGA for the State and G.A. Animesh Pandey appeared for the opposite party no. 2.
Cause Title: Kishore Biyani v. State of U.P. and Another [Neutral Citation: 2024:AHC:43655]