Wed. Aug 17th, 2022
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BENGALURU: On the premise that civil proceedings take longer to culminate, criminal laws cannot be permitted to be set in motion for recovery of money as an easier route, the Karnataka high court has said in a judgement.
Justice M Nagaprasanna, in a recent order, quashed the proceedings initiated against the petitioner, Vilas Deore, managing director, Shriganesh Textiles and Infrastructure (India), Pune. The complainant in the case is CB Ganapati, executive vice-president, Himatsingka, who had filed an FIR before Hassan Rural police in April this year for offences punisha ble under IPC for criminal breach of trust and cheating, among others.
Last year, Shriganesh Textiles and Himatsingka signed an agreement that said the latter would supply cotto n bales to the former to convert them into yarn and return them.
In October 2021, a dispute arose over payment, retention and delivery of yarn.
When the dispute could not be amicably settled, the complainant sen t a legal notice to the petitioner that it would invoke the Insolvency and Bankruptcy Code, 2016, if the amount was not settled.
On April 8, 2022, the complainant approached the Hassan police, alleging the petitioner was yet to pay a little more than Rs 9 crore for nearly 520 tonnes of cotton fibre. An FIR was registered later in the day.
Deore challenged the FIR and said the matter w as “civil” in nature and added that he has been made an accused without arraigning the company. The complainant argued that even though the matter is civil in nature, if the act of the accused amounted to breach of trust or cheating, then both civil and criminal proceedings are maintainable.
Justice Nagaprasanna said the complainant should have taken the proceedings initiated under Insol vency and Bankruptcy Code to its logical end.
“Scuttling the said process and setting the criminal law in motion for recovery of the disputed money is not what the criminal law should be used for, as it would amount to misuse of criminal law as a shortcut to seek recovery of money, that too without there being any ingredients of either Section 406 (criminal breach of tr ust) or 420 (cheating) of the IPC,” the order said.
The judge said the petitioner has indicated twice in mails that if the yarn was not lifted and payment not made, then they would sell it in the open mar ket to meet their contingencies. Hence, the allegation of misappropriation cannot be accepted.

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