Bombay High Court
NILESH ASHOK CHAVAN AND ANRversusTHE STATE OF MAHARASHTRA
- Decided
- Disposal
- Allowed
Holding
The FIR and chargesheet under IPC sections 406, 420 r/w 34 are quashed as the dispute is civil in nature and the amount has been repaid.
Summary
The petitioners filed a writ petition under Article 226 and Section 482 CrPC seeking quash of FIR No.162/2024 filed for offences under IPC sections 406, 420 read with 34, arising from a commercial dispute over a franchise amount of Rs.2.85 lakh. The petitioners argued that the amount had been repaid on 26‑09‑2024, the dispute was essentially civil, and one petitioner suffered a serious illness. The respondent (the complainant) contended that while the amount was repaid, he incurred a loss of Rs.25 lakh due to cancellation of the franchise agreement and sought compensation, but agreed that the criminal case was not the appropriate forum. The Court held that the repayment negated the basis for criminal prosecution and that criminal proceedings cannot be used to settle commercial grievances. Applying the Bhajan Lal guidelines, the Court quashed the FIR and the chargesheet, allowing the petition and directing that any civil claim for damages be pursued in the appropriate forum.
Issues considered
- The appropriateness of invoking criminal proceedings for a commercial franchise dispute.
- Whether the repayment of the alleged stolen amount bars continuation of the FIR under IPC sections 406, 420, and 34.
- Whether the court can quash the FIR under its inherent powers under Section 482 CrPC and Article 226 of the Constitution.
Legislation cited
- Code of Criminal Procedure, 1973 — s. 482
- Constitution of India — s. 226
- Indian Penal Code — s. 34, 406, 420
Subjects
- quash FIR
- criminal proceeding
- commercial dispute
- franchise agreement
- IPC 406
- IPC 420
- Section 34
- Article 226
- Section 482 CrPC
- Bhajan Lal test
- repayment
- civil remedy
Judgment
48.WP.5509.2024.doc
HARSHADA H. SAWANT
(P.A.)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO.5509 OF 2024
Nilesh Ashok Chavan And Anr. .. Petitioners
Versus
The State of Maharashtra and Anr. .. Respondents
....................
Mr. Abhishek U. Arote a/w. Mr. Satyam Harshad Nimbalkar,
Advocates for Petitioners.
Mr. Sukanta A. Karmakar, APP for Respondent No.1 – State.
Mr. Ghanasham Jadhav, Advocate for Respondent No.2.
...................
CORAM : MILIND N. JADHAV, J.
DATE : SEPTEMBER 24, 2026
P.C.:
1. Heard Mr. Arote, learned Advocate for Petitioners; Mr.
Karmakar, learned APP for Respondent No.1 – State and Mr. Jadhav,
learned Advocate for Respondent No.2.
2. Present Writ Petition is filed under Article 226 of the
Constitution of India in the matter under Section 482 of Code of
Criminal Procedure, 1973 for quashing First Information Report
No.162 of 2024 registered with Sangvi Police Station, Pune under
Sections 406, 420 read with Section 34 of the Indian Penal Code,
1860.
3. After hearing Mr. Arote, learned Advocate for the petitioners,
on 09.09.2026, the following order was passed:-
“1. Mentioned. Not on board. Taken on board.
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2. Heard Mr. Arote, learned Counsel for the Petitioners.
3. The dispute is between the owner and franchise with regard to a
business relationship rather long standing business relationship
between them. The dispute is with regard to non-payment or non-
receipt of an amount of Rs. 2.82/- lacs only for which the
Complainant
has filed a case for cheating and breach of trust. Mr. Arote, learned
Counsel would submit that the dispute between the parties prima
facie arises out of a franchise transaction and is essentially
commercial in nature and therefore, this Court should step in.
Another strong circumstance which he would forcefully submit is the
fact that the concerned amount of Rs. 2.85/- lacs has already been
repaid back by the Petitioner on 26.09.2024 which has been duly
stated otherwise at page 21 of the Petition and also forms part of the
FIR and the receipt to that effect is also shown to the Court. I have no
reason to disbelieve the learned Counsel regarding the above
circumstances. That apart, one of the Petitioners is suffering from
stage 4 medical ailment of Caner and is undergoing treatment.
Therefore, the learned Counsel persuades the Court to determine the
present Petition and end the ignominy of the Petitioners. Arguable
case is made out by Mr. Arote, learned Counsel for the Petitioners for
immediate intervention. Hence, in above facts, there shall be ad-
interim relief in terms of prayer clauses (c) & (d) of the Petition.
4. In view of the above, issue notice to the Respondent. Hamdast
permitted. Private notice permitted. Affidavit of service be filed on the
next date.
5. Stand over to 18.09.2026, First On Board. ”
4. Today Mr. Jadhav, learned Advocate appears for the
Complainant-Respondent No.2, before the court. In his usual fair
mindedness, he would submit that what is stated in the aforesaid order
is true and correct and his client has received the entire amount of
Rs.2.85 Lakhs which is the subject matter of the dispute. However, he
would submit that in order to get the franchise allotted and with the
prospect of the franchise being run by the Complainant, the
Complainant had invested substantial amounts in renovating and
doing the interior of the shop premises. He would also submit that the
Complainant had also taken the shop on leave and license basis for the
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purpose of putting up the said franchise and followed the due process
of law and only thereafter the Complainant had paid the franchise
amount of Rs.2.85 Lakhs with the franchise fees together with the GST
amount and therefore in view of cancellation of the present Agreement
or relationship between the parties the Complainant has faced a
substantial loss to the tune of Rs.25 Lakhs.
5. He would submit that the loss incurred by the Complainant
needs to be compensated. Mr. Jadhav would undoubtedly be otherwise
correct but the forum before which the issue needs to be agitated and
resolved maybe not the present criminal proceedings. The record
prima facie shows that the Complainant’s franchise agreement was
cancelled by the Petitioners in view of the fact that the Complainant
had opened a similar ice cream business through a rival vendor in the
same market within close proximity and therefore that was the reason
for not going ahead with the relationship between the Petitioner and
the Complainant.
6. I need not go into the depth of those issues because they are
not germane to the present proceedings for quashing. The reason for
mentioning the aforesaid issue is only because grievance is made by
Mr. Jadhav that having incurred a loss of Rs.25 Lakhs on the
incumbent shop which was taken on leave and license and having
spent on renovation and interiors, compensation of Rs. 25 Lakhs
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should be paid to him. Nevertheless, if at all the franchisee is entitled
to any damages from the Petitioners, I leave that question expressly
open for the franchisee i.e. the Complainant before the Court to agitate
the same before an appropriate forum or Court of law.
7. I also direct that whatever is stated herein will not come in
the way of the franchisee to seek any damages that the franchisee may
have incurred, in view of the relationship between the parties.
However to the extent of the criminal proceedings, in view of the
amount having been paid back and the same having been
acknowledged to have been received by the franchisee, I do not find
any reason as to why the present criminal proceedings should be
continued.
8. Needless to state that criminal proceedings cannot be gone
into or be protracted merely for settling scores or for extracting
recovery between the parties.
9. Be that as it may, in view of the guidelines given in
paragraph No.102 of State of Harayana vs Bhajan Lal 1, the Petition
stands allowed in terms of prayer clause (b):-
“b. That, after perusing the record, this Hon’ble Court be pleased to
Quash the FIR bearing No.162/2024 dated 16/04/2024 and
chargesheet dated 30.12.24 bearing No.277 of 2024 for offence’s
u/s 406, 420 r/w 34 of Indian Penal Code registered with the
Sangvi Police station. ”
1 1992 AIR 604
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10. Writ Petition is allowed and disposed.
H. H. SAWANT [ MILIND N. JADHAV, J. ]
Digitally signed
by HARSHADA
HARSHADA HANUMANT
HANUMANT SAWANT
SAWANT Date:
2026.09.24
21:03:54 +0530
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