Misuse of Criminal Law in Corporate Disputes
Facts of the Case: This case arises out of a long-standing family and business dispute between the petitioner, Shri Vinay Aggarwal, and his own family members—his father, Shri Jai Gopal, and his younger brother, Shri Ajay Aggarwal. The petitioner claimed to have been engaged in the business of chemicals and chemical compounds used in manufacturing Holi colours and gulal since 1989, under the trademark “Gopal.” To expand the business, he incorporated a private limited company named M/s. Laxmi Narain Jai Gopal Products Pvt. Ltd. in 1994, with its registered office at 18/8, Shakti Nagar, Delhi. The petitioner became the Chairman, while his brother Ajay Aggarwal was made a Director. The business allegedly continued under the same brand name “Gopal,” with the company’s trade name and trademarks being applied for registration under the Trade Marks Act, 1999.
According to the petitioner, due to health complications including multiple surgeries, he was unable to participate actively in the management of the company and relied entirely on his father and brother. In 2011, he discovered that his brother Ajay Aggarwal, with the support of their father, had secretly filed two applications in 2003 for registration of the trademarks “Gopal” and “Gopal Gold” in his personal name, without the petitioner’s knowledge. These trademarks, the petitioner alleged, were being used by Ajay Aggarwal to sell similar products through a sole proprietorship firm titled M/s. Laxmi Narain Jai Gopal & Sons, which was distinct from the original company. This act, according to the petitioner, amounted to cheating, forgery, and criminal breach of trust, as the brother had allegedly diverted the goodwill, reputation, and business assets of the company for personal profit.
The petitioner further alleged that in December 2011, he discovered purchase invoices showing that the address of the company had been illegally changed from its registered office at Shakti Nagar to another address in Rohini without his consent. Upon visiting the company’s premises, he found that all company records, furniture, and equipment had been removed and locked away by his father and brother. The petitioner accused them of misappropriating company funds, forging documents, and illegally benefiting from the reputation of the “Gopal” brand, which he claimed to have built over decades.
Procedural Background: The petitioner filed a complaint under Sections 199 and 200 of the Code of Criminal Procedure, 1973, read with Section 156(3) CrPC, seeking registration of an FIR against the respondents for offences under Sections 406, 420, 463, 467, 468, 471, 506, and 120B of the Indian Penal Code, 1860. He also requested the court to direct the police to investigate the alleged fraud and forgery.
The learned Metropolitan Magistrate (MM), after recording the preliminary evidence of the complainant and several witnesses, including officials from the Trade and Tax Department and the Trademark Registry, dismissed the complaint on 5 September 2016. The Magistrate held that the allegations were not substantiated by documentary evidence and that the dispute appeared to be of a civil and corporate nature, not criminal. The petitioner challenged this order before the learned Additional Sessions Judge (ASJ) through Criminal Revision No. 58482/2016, but the ASJ, by an order dated 3 November 2016, upheld the decision of the MM.
Aggrieved, the petitioner approached the Delhi High Court under Section 482 CrPC, contending that both lower courts had failed to appreciate the prima facie evidence and had wrongly dismissed the complaint without considering that, at the stage of summoning, only a tentative view is required and not a detailed inquiry.
Nature of the Dispute: The core of the dispute revolved around three main issues. First, whether the petitioner could substantiate his claim that he had been carrying on the business of manufacturing and selling Holi colours under the brand name “Gopal” since 1989. Second, whether his brother’s act of registering the trademarks “Gopal” and “Gopal Gold” in 2003 in his own name constituted forgery, cheating, or criminal breach of trust. And third, whether the alleged removal of company records, assets, and funds by the respondents amounted to criminal misappropriation or was merely part of an internal family and business conflict better addressed through civil or company law remedies.
The petitioner’s case was built on the argument that his health had kept him away from business management and that his family members had taken advantage of his absence to usurp his proprietary rights and divert business assets. He claimed that these actions were deliberate and fraudulent, aimed at excluding him from the company and stealing his intellectual property and business identity.
The respondents, on the other hand, maintained that the petitioner’s claims were baseless and contradicted by evidence. They contended that it was, in fact, Ajay Aggarwal who had been running the proprietorship M/s. Laxmi Narain Jai Gopal since 1989–90 and had legitimately registered the trademarks in 2003. They denied any illegal removal of records or misappropriation, asserting that these issues had already been adjudicated in prior proceedings before the Company Law Board and civil courts.
Detailed Judicial Reasoning and Discussion: The Court found that there was no documentary evidence or corroborative witness testimony to prove this claim. The petitioner had failed to produce basic materials such as business registration, bank statements, invoices, or tax records from that period. His argument that all records were taken away by the respondents was found insufficient because, as the Court noted, certain documents would have remained accessible to him, especially those relating to registration and personal business transactions. Thus, the Court concluded that the petitioner’s foundational claim of running a business since 1989 remained unsubstantiated.
On the issue of trademark registration, the Court accepted that the trademarks “Gopal” and “Gopal Gold” were indeed registered in 2003 in the name of Ajay Aggarwal. However, it emphasized that trademark registration in itself does not constitute a criminal act. For offences such as cheating under Section 420 IPC or forgery under Section 463 IPC, there must be clear evidence of fraudulent intent or wrongful gain. Since the petitioner’s claim of prior ownership was unproven, the subsequent registration of trademarks by his brother could not, by itself, be treated as fraudulent. Moreover, the petitioner had not filed any rectification petition under the Trade Marks Act, 1999 to challenge the registration, which weakened his assertion of prior ownership.
With respect to the alleged removal of company records, the Court found that the petitioner had only produced his oral testimony without any supporting material. No independent witness testified that the respondents had removed or concealed company records or assets. The respondents, on their part, pointed out that similar allegations had already been raised before the Company Law Board in Company Petition No. 19(ND)/2013, which had been rejected by the Board in its order dated 15 February 2013. The Board had even appointed a Chartered Accountant to audit the company’s accounts, who found no irregularities or misappropriation attributable to the respondents. The High Court held that these findings of the Company Law Board significantly undermined the petitioner’s allegations of criminal breach of trust and misappropriation.
The Court also noted that a civil suit concerning trademark ownership (Civil Suit No. 50/2013) had been decided earlier, in which it was clearly recorded that the trademarks “Gopal” and “Gopal Gold” were registered in Ajay Aggarwal’s name since 2003, and that no rectification application had been filed by the petitioner. In light of these concurrent civil and quasi-judicial findings, the High Court concluded that the petitioner’s attempt to pursue criminal proceedings was essentially an abuse of process, seeking to criminalize a civil and family business dispute.
Court further observed that for a magistrate to issue summons under criminal law, the standard is whether a prima facie offence is made out. Mere suspicion or allegations without supporting evidence cannot justify summoning. The petitioner’s evidence did not meet this standard, as it largely consisted of self-serving statements without corroboration. The Court agreed with both the Metropolitan Magistrate and the Additional Sessions Judge that no criminal offence had been made out against the respondents.
Final Decision: The Delhi High Court upheld the concurrent findings of the lower courts, observing that there was no prima facie material to substantiate the allegations of cheating, criminal breach of trust, or forgery. The Court held that the dispute was, at its core, a family and business conflict with civil remedies available under company and intellectual property laws. It reiterated that criminal law should not be used as a weapon in family business disputes or commercial disagreements.
Accordingly, the Court dismissed the petition, affirming the orders dated 5 September 2016 and 3 November 2016 of the Metropolitan Magistrate and the Additional Sessions Judge, respectively. The judgment concluded that there was no merit in the petition and that the petitioner had failed to produce any cogent evidence justifying the initiation of criminal proceedings. All pending applications were disposed of accordingly.
Analytical Perspective: This judgment exemplifies the judiciary’s cautious approach in distinguishing between civil and criminal liability in cases arising from family or business disputes. While the petitioner alleged forgery and criminal breach of trust, the absence of concrete evidence and the existence of parallel civil proceedings revealed that the matter was fundamentally civil in nature. The High Court reaffirmed the settled principle that criminal law cannot be invoked merely to settle private or commercial scores. By referring to findings of the Company Law Board and earlier civil suits, the Court reinforced the need for consistency in judicial reasoning and the avoidance of conflicting verdicts on identical facts.
The ruling also highlights the importance of evidentiary discipline. Mere allegations of wrongdoing, unsupported by verifiable documentation or witness testimony, cannot justify the serious step of summoning a person to face criminal trial. The Court’s insistence on this evidentiary standard underscores the principle that criminal prosecution must rest on credible prima facie evidence, not conjecture or suspicion.
Case Title: Vinay Aggarwal Vs. State (Govt. of NCT of Delhi) & Ors.
Case Number: CRL.M.C. 1262/2017
Neutral Citation: 2025:DHC:9793
Date of Decision: 10 November 2025
Court: High Court of Delhi at New Delhi
Coram: Hon’ble Ms. Justice Neena Bansal Krishna
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Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
