Shambhunath Jajodia & Anr. Vs Fashion Creation (Calcutta High Court)
The Calcutta High Court quashed criminal proceedings pending before the Metropolitan Magistrate, Calcutta, under Sections 420, 422, 506 and 120B of the Indian Penal Code, holding that the dispute was essentially civil in nature.
The complaint alleged non-payment of ₹6,32,122 under four invoices dated 04.11.2019. The petitioners contended that the parties had a long-standing business relationship and that all transactions were conducted without any formal written agreement. They further submitted that GSA Retail Limited, in which both petitioners had served as directors, had already been admitted into the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. By an order dated 07.06.2022, the National Company Law Tribunal (NCLT) appointed an Interim Resolution Professional (IRP) to ascertain creditors’ claims and constitute the Committee of Creditors. According to the petitioners, the criminal complaint had been filed after the commencement of the insolvency proceedings.
The High Court noted that the Magistrate had sought a police report on the complaint. The report recorded that the company had entered insolvency proceedings, an IRP had been appointed by the NCLT, and the complainant had already been informed of the CIRP through a letter dated 30.06.2022. The report also stated that the complainant’s claim had been received and admitted as a creditor under Regulation 12(2) of the IBBI (Insolvency Resolution for Corporate Persons) Regulations, 2016 for an amount of ₹10,06,614. The police concluded that the dispute related to recovery of business dues and was purely civil in nature.
