Authority: Supreme Court of India

Order Date: 15 September 2026

Case Overview

  • Parties: Appellants – Vijay Kumar Ghai and others, directors of M/s Priknit Apparels Pvt. Ltd.; Respondents – The State of Uttar Pradesh & Anr.
  • Background: The directors entered into a franchisee agreement with the second respondent. The franchisee alleged that Priknit owed Rs 17,66,423 and cancelled the agreement, demanding payment. In retaliation, the franchisee filed a criminal complaint before the Additional Chief Judicial Magistrate, III Meerut under Sections 406 and 420 of the IPC.
  • High Court Proceedings: The petitioners sought to quash the criminal proceedings and obtained interim protection on 19‑09‑2013 (Annexure P14). Priknit later entered the Corporate Insolvency Resolution Process (CIRP). The High Court dismissed the petition filed under Section 482, leading to the present appeal.
  • Disputed Claims: The franchisee claimed a refundable security of Rs 7,00,000 and four blank, undated, signed cheques as security. Priknit claimed the franchisee owed Rs 17,66,423 as per Annexure P8.
  • Court’s Observation: The complaint (Annexure P9) did not contain the requisite ingredients to sustain a criminal prosecution. The Court limited its finding to the criminal case, expressly not commenting on the commercial dispute, the outstanding amount claim, or the security‑deposit issue.

Final Outcome

  • The criminal case (Case No.34/2009) is quashed.
  • The appeal is disposed of.
  • Any pending applications, if any, are rejected.
  • An exemption from filing O.T. (Item No.44 Court No.5 Section II) was allowed.

Topics: Legal Dispute, Franchisee Agreement, Criminal Proceedings