'Arbitration Proceedings Do Not Bar Criminal Investigation': Karnataka High Court Refuses To Quash Cheating FIR Against MyFitness Promoters

The Karnataka High Court recently refused to quash an FIR registered against the promoters of Tanvi Fitness Private Limited (which manages 'MyFitness' brand), accused of cheating Mensa Brand Technologies Pvt Ltd. of Rs. 143 crores by concealing a prior trademark agreement. [2026 LiveLaw (Kar) 435]

The single judge bench of Justice M. Nagaprasanna, while dismissing the petition preferred by the promoters, ruled that the existence of parallel arbitration and NCLT proceedings does not bar the police from investigating separate allegations of misrepresentation and suppression of material facts.

“….Though in the first blush all these would appear to be a matter which is purely civil in nature, the submissions of the learned senior counsel for the complainant would merit acceptance. The fact of the matter is that investigation in the least is necessary in the case at hand. It is complained that Mensa made investment on representations of unrestricted ownership of Myfitness, which was not the case, as Myfitness had only restricted ownership with regard to some peanut butter and allied items…Mere existence of an arbitration proceedings and National Company Law Tribunal proceedings would not bar investigation into an independent allegation of misrepresentation and suppression”, the Court observed.

Mensa, which was a Singapore based entity [later got merged with the Indian company] allegedly made an investment of Rs 143 crores in Tanvi Fitness back in 2022, whereby the former acquired a 51.66 controlling stake by virtue of such investment.

According to Mensa, the promoters of Tanvi represented that the company had unrestricted ownership of the 'MyFitness' trademark across all categories. To the contrary, Mensa later allegedly came to know about a 'Co existence Agreement' from 2019 between Tanvi and Paradise Nutrition Inc.

The said agreement, according to Mensa, restricted the use of the 'MyFitness' mark to specific goods under Class 29 (majorly peanut butter and allied products), consequently stopping Tanvi from venturing into protein bars or supplements, which comes under other classes, using the said Trademark

According to Mensa, this co-existence agreement was suppressed knowingly, which made Mensa to invest in the company at a higher valuation.

After sometime, Tanvi issued notice of termination in February 2026 with respect to the investment agreement, citing fraud and siphoning of funds by Mensa. At this juncture, Mensa invoked the arbitration clause and initiated proceedings before the Company Tribunal.

In May 2026, Mensa, in turn, filed a police complaint invoking the offences under offences under Sections 316(2) (cheating), 318(4) (criminal breach of trust) read with Sections 3(5) and 61(2)(b) of the Bharatiya Nyaya Sanhita (BNS).

Aggrieved, the petitioner company promoters of Tanvi approached the High Court. They argued that the dispute was purely contractual and civil in nature.

Senior Advocate Aditya Sondhi, appearing for the petitioners [promoters], argued that the FIR did not disclose the essential ingredients of cheating or criminal breach of trust.

According to the counsel, the alleged non-disclosure of the co-existence agreement was a civil dispute. The said contract and its terms are already the subject matter of the current arbitral proceedings and the NCLT case proceedings, it was submitted.

Senior Advocate S. Basavaraj, representing Mensa, vehemently argued that the petitioners had represented Tanvi as the sole owner of the trademark in question. Mensa was led to believe that Tanvi could use this trademark with unrestricted rights, which is why Rs 143 crores was invested. The dishonest intention on the part of Tanvi was present from the inception of the transaction, the counsel argued. It was further submitted that a pendency of a contractual dispute before an arbitrator or the NCLT would not bar a criminal investigation since both can exist independently.

After hearing both sides, the court noted that while matter initially appeared to be purely civil in nature, the allegations of fraudulent misrepresentation warranted investigation.

The crime was registered on May 7, 2026, and the petition was filed shortly after, and henceforth no substantial investigation had been carried out, the court remarked further.

Referring to the Supreme Court's rulings in Neeharika Infrastructure (P) Ltd. v. State of Maharashtra [2021] and Somjeet Mallick v. State of Jharkhand, the Court iterated that an FIR is not an encyclopedia of all facts and imputations.

“…The Apex Court... holds that investigation cannot be interdicted when a cognizable offence is made out in the FIR”, the Court stated, adding that the police must be permitted to complete their investigation.

The court has now permitted the police to proceed with the investigation.

“In the above circumstances, without embarking upon consideration of the case on merits or de-merits of the contentions and contra-contentions, I deem it appropriate to permit investigation in the matter, reserving all liberties to the petitioners to knock at the doors of the appropriate fora in the event of need. All contentions would remain open, as well as the liberty to knock the doors of this Court in the event the investigation leads to the filing of a final report and the final report going against the petitioners…”, the Court ordered, while dissolving the interim order that was previously operating in favour of the petitioners.