Gujarat HC Quashes Cheating Case Against Ducati Motor Holding, Finds No Criminal Liability for Distributor's Acts

The Gujarat High Court has quashed a private cheating complaint against Ducati Motor Holding and its country head, holding that the exclusive distribution agreement insulated the manufacturer from the Indian distributor's commitments to a dealer.

The High Court of Gujarat at Ahmedabad has quashed Inquiry Case No.5 of 2012, a private criminal complaint filed before the Metropolitan Magistrate Court, Ahmedabad, against Ducati Motor Holding S.P.A. (accused No.5) and its representative Mr. Mirko Bordiga (accused No.2). Justice P. M. Raval, sitting singly, held on 2 July 2026 that the allegations in the 21-page complaint did not attract the essential ingredients of Sections 418 and 420 of the Indian Penal Code and that proceeding with the trial would amount to an abuse of process. The judgment turns on whether a manufacturer can be held criminally liable for representations made independently by its Indian distributor to a sub-dealer, particularly where a written exclusive distribution agreement expressly prohibited the distributor from binding the manufacturer.

The Dealership Arrangement and the Complaint

The complainant, working as General Manager (Accounts and Administration) at M/s. Cama Motors Pvt. Ltd., lodged the private complaint on 16 February 2012 under Sections 406, 420 read with Sections 120(b), 418, 504 and 114 of the Indian Penal Code. After the Magistrate ordered an inquiry and received the Investigating Officer's report, summons were issued to the petitioners by order dated 6 September 2013, prompting the quashing petition.

The complaint alleged that accused No.7 — Prisison Moters India Pvt. Ltd. — and its CEO, accused No.1 Ashish Choradiya, acting as distributor for Ducati, approached Cama Motors and induced it to enter into a letter of intent on 24 June 2010 for a Ducati dealership in Ahmedabad. Cama Motors alleged it invested heavily in showroom renovation, provided a bank guarantee of Rs.1,10,00,000/-, and paid 100% advance for bikes, but the accused persons delivered wrong models, defective goods, and failed to execute a formal dealership agreement. The complaint accused all seven accused persons of having known from the outset that the bikes were not sufficiently marketable and that adequate supply was unavailable.

The specific allegations against Ducati Motor Holding (accused No.5) and Mr. Bordiga (accused No.2) were that Mr. Bordiga was responsible for day-to-day administration of the company, had visited the complainant's showroom, gave assurances that problems would be resolved, compelled accused No.1 to continue business, and received multiple emails from the complainant detailing the dealer's financial difficulties.

The Legal Issue: Manufacturer's Criminal Exposure for a Distributor's Promises

The central legal question was whether Ducati Motor Holding and Mr. Bordiga could be drawn into a criminal prosecution for cheating and criminal breach of trust when the letter of intent was signed between the complainant and accused No.7, not with Ducati directly, and when the exclusive distribution agreement between accused No.5 and accused No.7 expressly stated that any engagement undertaken by the distributor in the name or on behalf of Ducati would not bind Ducati.

Senior Advocate Mr. Tejas Barot, appearing for the petitioners with several colleagues, argued that the complaint contained no specific averments showing that Ducati or Mr. Bordiga had made any promise, commitment, or false representation to the complainant. He pointed to recital 6.2 of the exclusive distribution agreement, which stated that Ducati might accept or decline purchase orders depending on production capacity without any responsibility to the distributor, and to paragraph 13.2, which governed direct contact between Ducati and retailers only with the distributor's prior notice. He submitted that the Magistrate's issuance of summons reflected non-application of mind, that any grievance was purely civil in nature, and that the complaint was lodged with the ulterior motive of pressuring Ducati to settle the dispute with accused Nos.1 and 7. He pointed to Civil Suit No.2572 of 2011 filed before the City Civil Court, Ahmedabad on 17 November 2011, predating the criminal complaint by three months.

Advocate Mr. Vishal J. Dave for the complainant and the Additional Public Prosecutor for the State countered that the complaint was at the inquiry stage and the Magistrate needed only to find a prima facie case. They relied on a judgment of a coordinate bench in Criminal Misc. Application No.6565 of 2012 dated 12 June 2013, which had declined to quash proceedings against co-accused, observing that allegations were made against all accused including those who had sought quashing. They also pointed to emails between Mr. Bordiga and the complainant, including one dated 16 December 2010 about opening the first Ducati Cafe in Ahmedabad, and an email dated 24 October 2011 in which the complainant raised detailed financial grievances directly with accused Nos.1 and 2.

How the Court Reasoned

Justice Raval began by going through each specific allegation against accused Nos.2 and 5 in the complaint. He noted that page 3 described Mr. Bordiga as responsible for administration of the Ducati company; page 8 referred to Mr. Bordiga visiting the showroom and giving general reassurances; page 10 stated that accused No.2 had compelled accused No.1 to continue business; pages 11–12 narrated that the complainant communicated directly with accused No.2 by email; and page 13 referred to the complainant being called to Milan for a meeting. Beyond these, the court found no specific role attributed to accused Nos.2 and 5.

The court applied the four-step framework for evaluating quashing petitions formulated by the Supreme Court in Pradeep Kumar Kesarwani v. State of Uttar Pradesh [AIROnline 2025 SC 956]. That framework asks whether the material relied on by the accused is of indubitable quality, whether it rules out the factual assertions in the complaint, whether the prosecution has refuted it, and whether proceeding would amount to abuse of process. Justice Raval answered all four in the affirmative: the exclusive distribution agreement was uncontroverted, its terms ruled out Ducati's direct contractual liability to the complainant, the complainant had not refuted it, and continuing the trial would serve no legitimate purpose.

On Section 418, the court held that the provision requires the accused to be bound either by law or by legal contract to protect the interest in the transaction to which the cheating relates. The letter of intent was entered into by the complainant with accused No.7 on 24 June 2010, not with Ducati. Even accepting the complainant's agency argument — that accused No.1 and accused No.7 were Ducati's agents — the complaint contained no allegation of any promise or false representation made by accused No.2 to the complainant at the inception of the transaction.

On Section 420, the court drew on the ingredients identified in Vijay Kumar Ghai v. State of West Bengal (2022) 7 SCC 124: that the representation must have been false, the accused must have had prior knowledge of its falsity, and the false representation must have been made with dishonest intention from the beginning. The court found that the emails placed on record by the complainant himself showed Mr. Bordiga trying to resolve the dealer's problems, which was inconsistent with a finding of fraudulent intent at inception.

Justice Raval also relied on Satishchandra Ratanlal Shah v. State of Gujarat (2019) 9 SCC 148, which drew the critical distinction between a mere breach of contract and cheating: the mens rea must exist at the beginning of the transaction, and mere inability to fulfil a promise later cannot give rise to criminal prosecution for cheating. The court similarly drew on V. Ganesan v. State 2026 SCC OnLine SC 444 for the proposition that where allegations concern failure to keep a promise rather than deception at the time of making it, no offence under Section 420 is made out.

From Delhi Race Club (1940) Limited v. State of Uttar Pradesh (2024) 10 SCC 690, the court extracted the principle that the IPC does not provide for vicarious liability of office bearers of a company for offences of cheating or criminal breach of trust, and that direct allegations against them are necessary. Justice Raval held that the visits by Mr. Bordiga to the showroom and his communications by email could not, without more, attract any penal provision. The allegation that accused No.5 had manufactured bikes it knew were not marketable also did not establish criminal intent at inception from the face of the complaint.

The court distinguished the coordinate bench's order in Criminal Misc. Application No.6565 of 2012 on two grounds: that order related only to the accused persons who had appeared in that petition, not to the present petitioners, and the coordinate bench had specifically noted that the application had been filed at a very primitive stage before cognizance was taken, which was why no interference was warranted at that point.

As for the complainant's argument that a civil dispute does not preclude a criminal complaint, the court accepted the principle but held that it still has to examine whether the ingredients of the offences are made out on the facts. The filing of Civil Suit No.2572 of 2011 before the criminal complaint was lodged was noted as contextually relevant to the motive for the complaint, though not treated as conclusive.

On Section 418 read with Sections 120(b) and 114, the court held that the mere presence of Mr. Bordiga at Ahmedabad along with accused No.1 at the complainant's showroom could not constitute criminal conspiracy or abetment as defined under Sections 107 and 108 of the IPC.

Justice Raval observed: “merely cleverly drafting the complaint by stating all the accused persons, by itself, would not attract penal provisions.” The court was also careful to limit its findings, stating that it had not examined allegations against the other accused and that its observations were confined to accused Nos.2 and 5.

Outcome

Justice Raval allowed the quashing petition. Inquiry Case No.5 of 2012 before the Metropolitan Magistrate Court, Ahmedabad, and all consequential proceedings are quashed and set aside as against the petitioners — Ducati Motor Holding S.P.A. and Mr. Mirko Bordiga. The court made clear that the Magistrate may proceed against the remaining accused in accordance with law without being influenced by the observations in this judgment. Rule was made absolute to that extent, with direct service permitted. Criminal Misc. Application No.1 of 2016 (for vacating interim relief), which was connected to the main application, was disposed of as not surviving.