Authority: Supreme Court of India
Order Date: 15 September 2026
Case Overview
- Appeal: Criminal Appeal No.4376 of 2026 (Special Leave Petition (Crl.) No.6342 of 2026) filed by Vijay Kumar Ghai and others, directors of M/s Priknit Apparels Pvt. Ltd., against the State of Uttar Pradesh & Anr.
- Background: The appellants had a franchisee agreement with the second respondent (franchisee). The franchisee cancelled the agreement and demanded payment of an outstanding amount of Rs.17,66,423, as shown in Annexure P8.
- Retaliatory Complaint: The franchisee filed a criminal complaint before the Additional Chief Judicial Magistrate, III Meerut, invoking Sections 406 and 420 of the IPC (Annexure P9). The complaint was recorded as Criminal Complaint No.A34/2013 (Annexure P12).
- Interim Protection: The appellants obtained interim protection against coercive steps on 19.09.2013 (Annexure P14). The matter later entered the Corporate Insolvency Resolution Process (CIRP).
- High Court Proceedings: The appellants approached the Allahabad High Court seeking to quash the criminal proceedings under Section 482. The High Court dismissed the petition, leading to the present appeal.
- Disputed Claims: The appellants claim the franchisee owes Rs.17.66 lakh, while the franchisee alleges he was duped of a refundable security of Rs.7 lakhs and four blank, undated, signed cheques.
- Court’s Reasoning: The Supreme Court observed that the complaint (Annexure P9) does not contain the requisite ingredients to sustain a criminal prosecution under Sections 406 and 420 IPC. Consequently, the criminal complaint is deemed untenable.
Final Outcome
- The Supreme Court quashed Criminal Complaint No.A34/2013, stating it lacks basis for prosecution.
- The appeal is disposed of.
- Any pending applications, if any, are rejected.
Topics: Legal Dispute, Franchise Agreement, Criminal Procedure