Allahabad High Court Quashes Criminal Complaint Against Future Group CEO Kishore Biyani Concerning A Commercial Transaction

In a relief to the founder and Group CEO of Future Group, Kishore Biyani, the Allahabad High Court on Tuesday quashed criminal proceedings including a summoning order and a Non-Bailable Warrant issued against him in connection with a case related to a commercial transaction.

A bench of Justice Mayank Kumar Jain passed this order on Biyani's application under Section 482 CrPC challenging a Gorakhpur court's summoning and NBW issuance order passed in a criminal complaint moved against him under Section 120B, 463, 406, 420, 504, and 506 IPC.

The case in brief

The criminal complaint lodged by a wholesale food product supplier accused Biyani's former business establishment Big Bazaar's retail store in Gorakhpur, of failing to pay for food products she supplied worth over Rs. 12 lakhs. It was the complainant's case that she did not receive the payment in return despite issuing invoices for the supplied goods.

The Additional Chief Judicial Magistrate, Gorakhpur, after recording primary evidence of the complainant and her witnesses under Section 200 and 202 CrPC, summoned Biyani to face trial under Section 406 IPC (Punishment for criminal breach of trust). Challenging the case proceedings, Biyani had moved the HC.

Appearing for Biyani, Senior Counsel Anoop Trivedi argued that the applicant was the Executive Chairman of Future Retail Limited in July 2022 and being the Executive Chairman of the aforesaid company, he was not directly involved in the day-to-day business affairs of the company.

It was also pleaded that his erstwhile company Big Bazaar (now acquired by Reliance Retail) was engaged in the business of multi-brand retail, however, the company's business was impacted due to the nationwide outbreak of the COVID-19 pandemic in 2020 leading to it facing severe liquidity crisis and therefore, the company was unable to comply with its obligations due to circumstances beyond its control.

It was further argued that the complaint in question was not maintainable as at the time of its filing of the same, the applicant was not officiating as an Executive Chairman of the company and rather, the officiating board and its power had been relegated to Interim Resolution Professional by the National Company Law Tribunal.

Senior Counsel Trivedi further submitted that the company always made its best efforts so that people like the complainant may not get affected or they might not be forced to take recourse of the court of law for realization of their debts but due to the moratorium, the applicant had no choice but to remain as a silent spectator.

It was lastly submitted that no offence was made out under Section 406 of IPC as alleged in the complaint as the transaction was purely a business transaction which had been dragged into a criminal transaction. It was stressed that it was purely a commercial transaction and that there was no entrustment of any goods to the applicant.

HC's observations

Perusing the facts and record of the case, the Court, at the outset, observed that the primary dispute between the parties was based upon the business transaction and such a transaction of sale cannot amount to an entrustment for Section 406 IPC.

The single judge also noted that at the relevant point in time, Biyani did not have any administrative or supervisory control over the company coupled with the fact that at the same point in time, the COVID pandemic spread over the country and all business transactions were adversely affected, due to which the payment could not be made to the complainant. 

Further, the Court accepted the argument of the Senior Counsel appearing for Biyani that since he was not residing within the local jurisdiction of the Court concerned, therefore, it was incumbent upon the Court to hold an enquiry under Section 202(1) CrPC, which it did not.

"...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 Court observed.

In view of the discussion, the application was allowed and the criminal proceedings were quashed. 

Appearances 

Counsel for Applicant: Senior Advocate Anoop Trivedi assisted by Advocates Dhananjai Rai and Vibhu Rai

Counsel for Opposite Party: Animesh Pandey, GA

Case title - Kishore Biyani vs. State of U.P. and Another 2024 LiveLaw (AB) 166

Case Citation: 2024 LiveLaw (AB) 166

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