Allahabad High Court quashes criminal proceedings against Future Group founder Kishore Biyani

The Allahabad High Court recently quashed proceedings against Kishore Biyani, the founder and CEO of Future Group, in a criminal complaint alleging non-payment of money for supply of food products to a Future Retail-owned Big Bazaar outlet in Gorakhpur [Kishore Biyani v State]..Justice Mayank Kumar Jain also set aside the summons and non-bailable warrant issued against Biyani by a court in Gorakhpur on the complaint filed by a wholesaler who had raised a demand of over ₹12 Lakh for the products supplied in 2020.The Court noted that it was a regular commercial transaction between the complainant and the company outlet at Gorakhpur for which the Executive Chairman (Biyani) cannot be held be held responsible.It also noted that the complaint was filed in October 2022 when the National Company Law Tribunal (NCLT), Mumbai, had already passed an order for appointment of an Interim Resolution Professional for the company in a petition filed by the Bank of India.Therefore, the Court found that Biyani did not have "any administrative or supervisory control" over the company. "Pursuant to order dated 20.07.2022 passed by N.C.L.T, Mumbai, coupled with the fact that at the same point of time COVID pandemic spread over the country and all business transactions were adversely effected, indicate that the company of which the applicant was Executive Chairman become helpless in settling dues of its creditors. Thus, the payment cannot be made by the company to opposite party," the Court observed further..On the complaint filed by Neelima Verma, the owner of wholesale supplier Maa Durga Enterprises, a Gorakhpur Court in March 2023 had summoned Biyani to face trial under Section 406 (criminal breach of trust) of Indian Penal Code (IPC). Biyani challenged the order before the High Court and sought quashing of the entire proceedings against him..Biyani's counsel argued that he was the Executive Chairman of Future Retail Limited till July 19, 2022, and not directly involved in the day-to-day business affairs of the company.It was also contended that Future Retail encountered significant challenges following the nationwide outbreak of the COVID-19 pandemic in 2020, resulting in a severe liquidity crisis. As a consequence, the company was unable to fulfil its obligations due to circumstances beyond its control, the counsel added.The company's bank accounts were later classified as Non-Performing Assets and Bank of India also moved the NCLT for insolvency proceedings against it, the Court was told.However, the complainant in response contended that criminal proceedings are not considered to be barred by the moratorium. .At the outset, the Court noted that there was no allegation that the goods supplied to the retail store had been entrusted personally to Biyani and that he with criminal intention had misappropriated them.Commenting on the charge of criminal breach of trust under Section 405 and Section 406 of IPC, the Court said,"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”..The Court also found mens rea missing in the case and remarked that the company was making regular payment to the supplier when it was in a position to do so.It added that there was only a bald allegation of non-payment and no claim of dishonest intention in misappropriating the property"Suffice to say that to make out a case of criminal breach of trust, it is not sufficient to show that money has been retained by the applicant. It is also to be shown that the applicant dishonestly disposed of the same in some way or dishonestly retained the same," the Court said..In conclusion, the Court said Biyani was not entrusted with the property in any manner and did not dishonestly misappropriate or convert it to his own use. The Court thus allowed Biyani's plea and quashed the entire proceedings against him in the complaint case before Additional Civil Judge, (Senior Division), Court No. 2, Gorakhpur..Senior Advocate Anoop Trivedi along with Advocates Dhananjai Rai and Vibhu Rai appeared for petitioner.Advocate Animesh Pandey appeared for opposite party..[Read Order]