HC quashes criminal case against VF Brand India Ltd, calls it ‘abuse of law’

The court observed that continuing the case would amount to a misuse of the criminal justice system, as no elements of cheating, forgery, or breach of trust—under which the FIR was registered—had been established

MUMBAI: The Bombay high court (HC) has quashed a criminal case filed against VF Brand India Ltd (now Kontoor Brands), the company behind the retail operations of popular apparel labels Lee, Wrangler and Vans in India. The court held that the case, initiated by former franchise partner Krysh Retail Pvt. Ltd., was purely contractual in nature and did not merit criminal prosecution.

HC quashes criminal case against VF Brand India Ltd, calls it ‘abuse of law’

The court observed that continuing the case would amount to a misuse of the criminal justice system, as no elements of cheating, forgery, or breach of trust—under which the FIR was registered—had been established.

The case stemmed from a franchise agreement dated November 3, 2010, through which Krysh was granted non-exclusive rights to sell products under the three brands. Over the next seven years, the partnership expanded to include 12 additional showrooms. In late 2016, a dispute emerged when Krysh demanded a 30% guaranteed return on investment—an assurance VF Brands denied, citing no such provision in the agreement. The partnership eventually ended with Krysh handing back control of all outlets.

In November 2017, following an order by a magistrate court, the MRA Marg Police registered an FIR against VF Brands based on Krysh’s complaint. The FIR alleged financial irregularities, including backdated entries totalling ₹1.77 crore related to store operations and unsold inventory. It also accused VF Brands of failing to honour promised discounts and of not compensating for unsold merchandise.

VF Brands countered the allegations, stating that Krysh actually owed it significant dues for stock supplied. The matter was taken to arbitration, where Krysh’s claims—including the 30% ROI and reversal of ledger entries—were heard. An arbitral award of ₹1.90 crore was granted to Krysh, which the company accepted, relinquishing any further claims.

Senior counsels Sanjog Parab and Abad Ponda, appearing for VF Brands, argued that since the dispute had already been resolved through arbitration, pursuing criminal charges was an abuse of legal process. Krysh’s counsel, however, maintained that their grievances went beyond what was covered in arbitration, and claimed they had been assured substantial returns during the business arrangement.

The division bench of justices Bharati Dangre and Shyam C Chandak disagreed, noting that Krysh had voluntarily chosen the arbitration route and accepted the award. “Once the agreed contractual remedy is invoked and compensation is received, the criminal courts cannot be used as instruments of pressure or retaliation,” the court stated.

Criticising the magistrate for failing to assess the complaint thoroughly before directing the registration of an FIR, the bench remarked, “Had the magistrate applied his mind to whether the ingredients of the alleged offences were even made out, this situation could have been avoided.”

The court concluded that the case was a civil dispute dressed up as a criminal complaint and set aside the FIR, delivering relief to VF Brands.