Abuse of Trust Cannot Be Camouflaged as Business Dispute: Delhi High Court Dismisses Plea to Quash Cheating NRI Business Fraud Case

“Misuse of Power of Attorney, siphoning of funds, and betrayal of trust by close relatives—such allegations demand judicial scrutiny, not summary dismissal.” - In a strongly worded judgment Delhi High Court dismissed a petition under Section 482 CrPC filed by Simardeep Singh Arora and others, challenging their summoning in a criminal case involving allegations of cheating, criminal breach of trust, and criminal conspiracy against their uncle and NRI businessman Gurvinder Singh Dhodi.

Justice Neena Bansal Krishna, holding that “prima facie misuse of authority and siphoning of assets is established from documents and depositions”, upheld the order of the Metropolitan Magistrate summoning the accused under Sections 406, 408, 409, 420, and 120B IPC, and found no merit in the petitioners’ claim that the matter was purely civil or lacked jurisdiction.

“Part of the Offence Was Committed in India—Section 188 CrPC Sanction Not Required”: Court Asserts Jurisdiction Over Transnational Fraud

Rejecting the petitioners’ primary objection regarding territorial jurisdiction, the Court clarified:

“It is not a case which comes squarely under Section 188 CrPC as part of the offence has been committed in India... the signing of blank cheques in India and their misuse abroad brings the offence within Indian jurisdiction.” [Para 39]

The Court relied on the Supreme Court’s ruling in Sartaj Khan v. State of Uttarakhand (2022) 13 SCC 136, which held that prior sanction under Section 188 CrPC is unnecessary when any part of the offence occurs in India.

“PoA Was for Management, Not Ownership Transfer”: Summoning Upheld for Alleged Fraudulent Sale of Businesses, Diversion of Funds

The case stems from a complaint by Gurvinder Singh Dhodi, an NRI entrepreneur who had built a food trading business in Sharjah, UAE, since 1985. After being deported in 2007, he entrusted his business, properties, and finances to his nephew Simardeep Singh Arora, granting him a limited Power of Attorney.

But what followed, as per the complaint, was a systematic takeover of his companies and assets, allegedly under a criminal conspiracy involving Simardeep and his immediate family.

Justice Neena Bansal Krishna observed:

“From the Share Sale and Assignment Contract dated 30.09.2007 [Ex. CW1/D], it is evident that while the Complainant was in India and had entrusted his businesses to Simardeep for management only, he transferred the entire business to his own name. This prima facie discloses breach of trust and cheating.” [Para 49]

The Court noted that the PoA did not authorize the sale or transfer of shares:

“There is no clause in the Power of Attorney which authorized Simardeep Singh to transfer the company to any third party or to close it.” [Para 47]

“Rs. 47 Lakhs Transferred to Wife’s Account Is Not Mere Coincidence”: Evidence Shows Prima Facie Siphoning of Funds

The Court also took serious note of the allegation that Rs. 47 lakhs from the sale of another company, Sharjah Cold Store, were transferred into the bank account of Simardeep’s wife, Jaspreet Kaur (also a petitioner).

“It is not disputed that Rs. 47 lakhs were received from the sale of Sharjah Cold Store business, which have been transferred to the account of Petitioner No. 2/Jaspreet Kaur.” [Para 55]

The Court emphasized that this was not a civil dispute disguised as a criminal case, but rather:

“The testimony of CW1, supported by documents, prima facie shows misuse of Power of Attorney and siphoning of funds... the Ld. MM has rightly concluded that offences under Sections 406/408/409 IPC are made out.” [Para 56-57]

“Family Ties Don’t Immunize Against Criminality”: Close Relation Between Parties Doesn’t Diminish Legal Culpability

The petitioners argued that they were being dragged into litigation due to family enmity, and that the complaint lacked evidence. The Court rejected this plea, noting:

“The Petitioners No.1 and 3 are real nephews of the Complainant, and the other accused are close family members. The abuse of such trust for personal gain cannot be brushed aside on technicalities.” [Para 32]

It further held that contradictions regarding civil proceedings or cheque bounce litigation in UAE were not sufficient to warrant quashing of criminal proceedings at this stage.

“Criminal Conspiracy and Cheating Are Not Erased by Delay or Civil Suits”: Court Dismisses Plea Based on Delay and Parallel Civil Cases

On the issue of delay in filing the complaint, the Court found the explanation reasonable given the international nature of the alleged fraud, and held:

“Delay of six years does not erase the gravity of the offence, especially when the complainant was deported and deprived of access to his own business.” [Implicit in Para 20, 31]

The Court also pointed out that pending civil proceedings or execution cases regarding the same facts do not bar criminal prosecution:

“The existence of civil disputes does not dilute the criminality when the allegations disclose ingredients of breach of trust and cheating.” [Implicit across Paras 19, 31, 49]

Summoning Order Sustained, Petition Dismissed

Concluding that the Metropolitan Magistrate’s summoning order dated 20.10.2016 was well-reasoned and legally sound, the Delhi High Court held:

“There is no infirmity in the Impugned Order... There is no merit in the present Petition, which is hereby, dismissed.” [Para 58-59]

Date of Decision: 11 November 2025