According to the Calcutta High Court, if an employer fails to pay outstanding salary dues or performance bonus, it does not amount to Criminal breach of trust.
Justice Ajay Kumar Gupta based his ruling on the Supreme Court case of Binod Kumar and others vs. State of Bihar and another, as reported by LiveLaw.
A former employee of Safal Life Science had complained that though he was appointed the CEO of the company by the directors (the petitioners), he had not received the salary or performance bonus that was promised and agreed upon. The two directors, who were no longer directors of the company, denied the allegations and claimed that the summons was wrongly issued against them.
Their argument was that any dues pending with the company, would be a civil dispute and cannot be converted to a criminal case simply in order to recover pending dues.
The petitioners also highlighted the fact that the Court did not have the territorial jurisdiction to consider the complaint. Also, the complaint did not reveal any specific offence against the petitioners which would justify the continuance of their prosecution; that there wasn’t enough proof to punish them under Sections 420/406/34 of the Indian Penal Code, 1860. Therefore, the case against them was quashed by the Calcutta HC.
