Non-Payment Of Outstanding Dues Towards Salary Or Performance Bonus By Employer Does Not Amount To Criminal Breach Of Trust: Calcutta HC

The Calcutta High Court has recently held that non-payment of outstanding dues towards Outstanding Salary or Performance Bonus by a company does not amount to a Criminal breach of trust.

A single bench of Justice Ajay Kumar Gupta relied on the Supreme Court case of Binod Kumar and others vs. State of Bihar and Another, and held: "From the aforesaid observation of the Hon'ble Supreme Court, it is crystal clear that non-payment of outstanding dues towards Outstanding Salary or Performance Bonus by the company does not amount to Criminal breach of trust."

Accordingly, the Court quashed the case against the petitioners filed under Sections 420/406/34 of the Indian Penal Code and also set aside the summons issued against them.

Background

The complainant was the ex-employee of Safal Life Science (P) Ltd. (hereinafter referred to as 'the said company') and filed a complaint stating that he was appointed as CEO of the company by the directors, but had not been paid his salary or performance bonus as had been mutually agreed upon.

On the other hand, the petitioners disputed and denied the allegations of the complainant. It was contended that the petitioner nos. 1 and 2 were Directors of Safal Life Science (P) Ltd. at the alleged period of work but now they were no longer Directors of the said company, and the summons was wrongly issued against them.

It was stated that even if any dues lie with the company, it would be a civil dispute and the Apex Court, in many judgments, had clarified that if the facts relating to the case involved civil disputes, then Courts should not hesitate to quash the proceeding for ends of justice and the civil dispute cannot be converted to the criminal case for the realisation of the dues amount.

It was also submitted by the petitioners that the court in the present case lacked the territorial jurisdiction to consider the complaint of the opposite party.

Upon hearing the arguments, the court observed that the present stage was not one where it could decide the question of territorial jurisdiction.

It was also held that the complaint did not disclose any specific offence against the petitioners to allow for their prosecution to continue.

"This Court finds there is no substance or ingredients to constitute offence punishable under Sections 420/406/34 of the Indian Penal Code, 1860. The Learned Trial Court issued process under Sections 406/34 of the Indian Penal Code, 1860 without considering the case of the complainant. He must have to prove at least prima facie case against the petitioners. A reading of the complaint petition in question does not disclose any specific role or act or particulars of the Petitioners resulting in commission of the offences alleged."

Accordingly, the case against the petitioners was quashed.

Case: Dasrathbhai Narsangbhai Chaudhary @ Dasrath Chaudhary & Another Versus The State of West Bengal & Another

Case No: CRR/1395/2022

Citation: 2024 LiveLaw (Cal) 220

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