Nilesh Ashok Chavan And Anr vs. The State Of Maharashtra
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The Petitioners, Nilesh Ashok Chavan and another, filed a Writ Petition under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973, seeking to quash First Information Report (FIR) No. 162 of 2024 registered at Sangvi Police Station, Pune, under Sections 406, 420 read with Section 34 of the Indian Penal Code, 1860. The dispute arose from a franchise business relationship. The Complainant alleged cheating and breach of trust concerning an amount of Rs. 2.82 lakhs. The Petitioners argued that the dispute was commercial in nature and that the disputed amount had already been repaid on September 26, 2024, with a receipt produced. One Petitioner was also undergoing treatment for stage 4 cancer. The Complainant acknowledged receiving the Rs. 2.85 lakhs but claimed substantial losses of Rs. 25 lakhs due to renovation and other expenses incurred for the franchise.
Held
The Court held that the FIR registered under Sections 406 and 420 of the Indian Penal Code, 1860, should be quashed. The primary reasoning was that the dispute was fundamentally commercial in nature, stemming from a franchise agreement. Crucially, the Court noted that the amount in dispute, Rs. 2.85 lakhs, had been repaid by the Petitioners and acknowledged by the Complainant. The Court emphasized that criminal proceedings should not be used to settle commercial disputes or for recovery between parties, especially when the primary amount has been returned. While the Complainant claimed significant losses of Rs. 25 lakhs due to renovation and other expenses, the Court explicitly left this question open, stating that the Complainant is free to agitate any claim for damages before an appropriate civil forum. The Court found that continuing the criminal proceedings in light of the repayment and the commercial nature of the dispute would be an abuse of process. Therefore, applying the guidelines from State of Haryana vs. Bhajan Lal, the Court allowed the petition to quash the FIR and the charge sheet. The operative direction was to quash FIR No. 162/2024 and charge sheet No. 277 of 2024.
Key Issues
1. Whether the FIR registered under Sections 406, 420 read with Section 34 of the Indian Penal Code, 1860, is liable to be quashed in view of the commercial nature of the dispute and the repayment of the amount in question? (Question of law) Petitioner's Arguments: The dispute is essentially commercial, arising from a franchise transaction. The entire amount of Rs. 2.85 lakhs, which is the subject of the FIR, has already been repaid by the Petitioner on September 26, 2024, and this repayment is acknowledged. One of the Petitioners is suffering from a serious medical condition, and the continuation of criminal proceedings would cause further hardship. The Petitioners relied on the principles laid down in State of Haryana vs. Bhajan Lal for quashing FIRs in appropriate cases. Respondent's (State and Complainant) Arguments: The Complainant acknowledged receiving the Rs. 2.85 lakhs. However, the Complainant incurred substantial losses of Rs. 25 lakhs due to investments in renovation and interior work for the franchise premises, and taking the shop on leave and license. The Complainant argued that this loss needs to be compensated. The Respondent did not rely on any specific provisions or precedents for the continuation of the criminal proceedings in this context, but rather focused on the financial loss incurred.
Sections Cited
Section 406, Section 420, Section 34, Article 226, Section 482
AI-generated summary — verify with the full judgment below
WP.5509.2024.doc HARSHADA H. SAWANT (P.A.)
IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY CRIMINAL APPELLATE JURI ICTION CRIMINAL APPELLATE JURI ICTION 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.
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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. 1 of 5
WP.5509.2024.doc
Heard Mr. Arote, learned Counsel for the Petitioners.
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.
In view of the above, issue notice to the Respondent. Hamdast permitted. Private notice permitted. Affidavit of service be filed on the next date.
Stand over to 18.09.2026, First On Board.”
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 2 of 5
WP.5509.2024.doc 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.
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 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 4 of 5
WP.5509.2024.doc
Writ Petition is allowed and disposed. H. H. SAWANT [ MILIND N. JADHAV, J. ] 5 of 5 HARSHADA HANUMANT SAWANT HANUMANT SAWANT Date: 2026.09.24 21:03:54 +0530
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.