In a detailed order delivered on October 27, 2025, the Delhi High Court dismissed a petition filed by former Managing Director of Explorers Travel & Tour Pvt. Ltd., Punita Khatter, who sought to quash criminal proceedings initiated against her for allegedly retaining company assets after her removal. Justice Neena Bansal Krishna held that the case presented sufficient grounds to proceed under Section 452 of the Companies Act, 2013, which deals with wrongful withholding of company property.
Background
The dispute arose after Khatter, who held a 35% shareholding in the travel company and had served as its Managing Director since 1995, was removed by a board resolution on April 11, 2016. According to the company, she continued to retain official assets and records even after being asked to hand them over.
The list was not small-four cars, including a BMW and Toyota Innova, official credit cards, an iPhone, and key company records, financial documents, and property papers were among the items said to be in her custody.
When reminders through emails and letters allegedly failed to work, the company filed a criminal complaint under Section 200 of the CrPC, invoking Section 452 of the Companies Act, which makes it an offence for an employee or officer to withhold company property after leaving service.
The trial court took cognizance and issued a notice in 2017. Khatter then approached the High Court under Section 482 of the CrPC, seeking to quash the notice and the proceedings.
Petitioner's Arguments
Khatter's counsel, Advocate Bharat Chugh, argued that the complaint itself was premature since, at the time it was filed in April 2016, she was still a serving director of the company. He maintained that as a lawful officer, she could not be accused of wrongful withholding.
Her lawyers further claimed that the complaint lacked specific details about the allegedly withheld items, such as serial numbers or model information, making the allegations vague. They also pointed out that all items were returned by June 30, 2016, shortly after her resignation on June 9.
The trial court acted mechanically, her counsel said, asserting that entrustment of property is a prerequisite for any such prosecution - a point they claimed was ignored by the magistrate.
Respondent's Stand
Senior Advocate Rakesh K. Khanna, representing the company, countered that Khatter had not approached the court with clean hands. He argued that several key documents, including orders of the Company Law Board (now NCLT) directing her to return company assets and furnish financial details, were deliberately withheld by her in her petition.
The company maintained that the local commissioner’s report, obtained through a prior court order, confirmed the recovery of company documents from her possession, disproving her claims of full compliance.
"The records show she continued to hold on to company property even after her termination," the counsel said, adding that Section 452 does not require proof of entrustment, unlike provisions of criminal breach of trust.
Court's Observations
Justice Neena Bansal Krishna examined both sides carefully but found the petitioner's reasoning flawed. The court noted that the complaint was filed only after she failed to return the items despite being directed to do so immediately after her removal.
"The petitioner’s defence that she was still a Director till June 2016 does not give her any right to retain the company’s assets," the bench observed. "The possession of these articles was by virtue of her office as Managing Director, and once that position ceased, so did her right to hold them."
The court further held that Section 452 of the Companies Act, 2013 is a strict liability provision, which means that once the possession of company property becomes unlawful, it must be returned without delay. "Proving entrustment," the judge clarified, is not a condition precedent under this section.
Rejecting the claim that the notice issued to her was vague, the court noted that the company’s email of April 11, 2016, clearly listed the items to be returned, including cars, office keys, passwords, and all records.
"The fact that records were voluminous," the court remarked, "only strengthens the necessity for their prompt return, not the vagueness of the notice."
Decision
Concluding the judgment, the High Court upheld the trial court’s decision to frame notice under Section 452, stating that a prima facie case existed. Justice Krishna dismissed Khatter's petition and all pending applications, effectively allowing the criminal trial to continue.
The order emphasized that the observations made by the court should not influence the merits of the case during trial.
"There is no merit in the present petition, which is hereby dismissed," the judgment stated plainly.
Case Title: Punita Khatter vs. Explorers Travel & Tour Pvt. Ltd.
