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2019 Supreme(Bom) 1486
IN THE HIGH COURT OF BOMBAY
S.S. SHINDE, J.
M.S. Banga - Appellant
Versus
Pawan Gulzarilal Chopra - Respondent
Criminal Writ Petition No. 1954 of 2004
Decided On : 10-10-2019
Sushil A. Inamdar, Adv., Vinod Chate, Adv.
The main legal point established in the judgment is that the dispute involving the franchise agreement and alleged breach of trust was of a commercial nature falling within the purview of civil jurisdiction.
Headnote:
Breach of Trust - Franchise Agreement - Code of Criminal Procedure - [Section 156 (3) of Cr.P.C., Agreement dated 06-08-91, 07-08-93, and 10-05-94]
Fact of the Case:
The petitioner sought to quash a complaint and summons issued against them in a case involving a franchise agreement for the manufacture of ice cream. The complainant alleged that the respondents, who were directors of the petitioner-company, committed criminal breach of trust by not honoring the franchise agreement and withholding money entrusted to them.
Finding of the Court:
The court found that the amounts paid as franchise fees were not entrusted to the respondents but to another company. It also noted that the complainant had agreed to make all claims against the original company and not the respondents. The court concluded that the dispute was of a commercial nature and fell within the purview of civil jurisdiction.
Issues: The issues revolved around the entrustment of funds, the responsibility under the franchise agreement, and the nature of the dispute as civil or criminal.
Ratio Decidendi: The court's decision was based on the lack of entrustment of funds to the respondents, the agreement to make claims against the original company, and the commercial nature of the dispute.
Final Decision: The court quashed the impugned order, restored the complaint to the original file, and directed the trial court to decide the complaint afresh, considering the police report, agreements, and other relevant factors within four months. The court also exempted the presence of the accused and directed the payment of legal fees to the counsel.
JUDGMENT :
S.S. Shinde, J.
This writ petition is filed with following substantive prayers:-
(B) After perusal of the record of the Trial Court, this Hon'ble Court be pleased to quash the complaint Case No.34/SW/2004 before the Court of the Additional Metropolitan Magistrate, 9th Court, Bandra; and Quash the order issuing summons/process dated 04.02.2004 in Complaint Case No.34/SW/2004 before the Court of the Additional Metropolitan Magistrate, 9th Court, Bandra.
(C) Quash the order issuing bailable warrants against Petitioners 4, 11, 13 and 15 dated 03.09.2004 in Complaint Case No.34/SW/2004 before the Court of the Additional Metropolitan Magistrate, 9th Court, Bandra.
2. Respondent No. 1 is original complainant. Gist of the complaint is that, Mr. Pavan Gulzarilal Chopra is the Director Skipper Foods (P) Limited, New Delhi. His company is in the business of production of ice cream. On 6th August, 1991, the complainant had entered into an agreement with Cadbury India Limited (for short "CIL") granting the complainant company the franchise for manufacture of ice cream under the brand name DOLLOPS which then belonged to CIL. The franchise agreement was for a period of 5 years. As per the franchise agreement, Rs. 8 lacs was paid for Franchise fees and Rs. 2 lacs was paid as deposit.
3. It is further the case of the complainant that for extending the territories to Punjab, Jammu & Kashmir and for sale within Delhi region, the Complainant paid a further sum of Rs. 8 lacs, 3 lacs, and 1 lac as franchise fees respectively. This franchise was granted from November 1992. The total amount therefore was Rs.22 lacs entrusted by the complainant to CIL. That, CIL entered into an agreement with Brooke Bond India Limited (for short "BBIL") dated07.08.1993, by which BBIL became the owner of the said brand name. That, Rs. 58 lacs were held as deposits by BBIL and that BBIL was having dominion over the said money and were bound to account for the same. In February 1993, BBIL, ignoring the agreement gave away franchise for the manufacture of ice cream to another company. That, there was correspondence alleging that BBIL was violating the agreement which was subsisting between CIL and the complainant. On or about 10.05.1994, the complainant company entered into a separate agreement with BBIL for manufacture of ice cream and that BBIL had undertaken to lift the said goods and sell the same in the market on their own. Accordingly, the complainant had upgraded their plant and machinery incurring Rs. 34 lacs as per specifications of BBIL and thus an amount of Rs. 34 lacs was entrusted by the complainant towards the said project to BBIL. It is further alleged that, suddenly without notice BBIL stopped operations of ice cream with the complainant company. Subsequently, BBIL came to be merged with Hindustan Lever Limited (for short "HLL") and actually the money, which was entrusted by the complainant company to CIL, whose brand DOLLOPS was in turn taken over by BBIL, were held in dominion by HLL and its Directors. It is the case of the complainant that, neither of the companies had honoured the said agreement and that the complainant was entitled to the refund of all amounts as the franchise agreement was not honoured. Similarly, Rs. 34 lacs which were to be accounted for have not be accounted for. The complainant has not received the said amounts and by virtue of with-holding the said money, the Accused have committed an offence of criminal breach of trust.
4. It appears that, the learned Magistrate directed the investigation under Section 156 (3) of Code of Criminal Procedure (for short "Cr.P.C.") and the said investigation was entrusted to the Inspector of Police General Branch, Crime Branch, CID, Mumbai. During the said inquiry/investigation the said officer recorded statement of various persons. The police report submitted before the learned Additional Metropolitan Magistrate is reproduced herein below:- During the course of investigation, statements of the
