Recently, the Delhi High Court was called upon to examine whether the criminal law had been rightly invoked in a bitter fallout between a company director and his former employees, raising important questions on the limits of criminal prosecution in employer–employee conflicts
The case arose from the resignation of several employees from two private companies where the Petitioner served as a director. One of the former employees had been entrusted with access to confidential client data, official emails and internal documents during the course of employment under contractual obligations of confidentiality.
According to the Petitioner, after tendering resignation, the employee failed to return the company data and documents and allegedly deleted official emails from the system. Legal notices were issued demanding the return of the data and compensation for breach of employment terms, but the same was allegedly ignored. The Petitioner further claimed that following the initiation of civil recovery proceedings and cheque bounce cases, the former employees allegedly joined hands and lodged multiple criminal complaints against him, resulting in the registration of four FIRs alleging offences of molestation and sexual harassment. These FIRs were stated to be pending trial independently.
Aggrieved, the Petitioner filed a private criminal complaint alleging that the former employees had conspired to falsely implicate him and sought their prosecution for offences including criminal breach of trust, defamation, false prosecution, criminal intimidation, and conspiracy.
The counsel for the Petitioner contended that the criminal complaints filed against him were malicious and intended to pressure him into withdrawing legal proceedings. He argued that confidential data had been entrusted to the former employees, and its non-return amounted to criminal breach of trust. The counsel also submitted that the filing of allegedly false complaints had tarnished his reputation in business circles, constituting defamation. The Petitioner further alleged that he had been threatened with false cases if he continued pursuing legal remedies.
The State submitted that the FIRs against the petitioner were based on complaints made by former employees and were investigated in accordance with law, including recording of statements under Section 164 CrPC and collection of electronic and documentary evidence. The counsel argued that access to official data during employment does not automatically constitute criminal breach of trust and that criminal law should not be used to settle employment-related disputes.
The High Court examined whether the material placed on record disclosed the essential ingredients of the alleged offences. The Court noted the statutory bar under Section 195 CrPC with respect to offences relating to false information and false prosecution.
On criminal breach of trust, the Court observed that mere possession of data during employment, without clear evidence of dishonest misappropriation or conversion, may not satisfy the legal requirement of “entrustment”. The Court also noted that approaching lawful authorities with complaints does not, by itself, amount to defamation. However, the Court found that allegations concerning threats and intimidation required examination on the basis of available evidence.
After analysing the record and applicable legal principles, the Delhi High Court declined to interfere with the orders passed by the lower courts and disposed of the petition, permitting proceedings to continue only to the limited extent already directed earlier.
Case Title: Rajan Sareen V. State NCT of Delhi
Case No.: CRL.M.C. 2514/2017, CRL.M.A. 26337/2025
Coram: Hon’ble Mr Justice Neena Bansal Krishna
Counsel for the Petitioner: Adv. Aishwarya Rao, Adv. Deepak Rathore , Adv. Mansi Rao and Adv. Kaveri
Counsel for the Respondent: APP Utkarsh
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