The court reiterated that a mere breach of contract does not amount to cheating or criminal breach of trust, and that the essential ingredients of these offenses, such as fraudulent or dishonest intention, must be established for criminal prosecution to be justified.

JUDGMENT :

Ananya Bandyopadhyay, J.

1. The instant criminal revisional application is filed to quash the proceedings being G.R. No. 1005 of 2009, arising out of Titagarh Police Case No. 122 dated 24.03.2009, under Sections 420/380/120B of the Indian Penal Code pending before the Learned Additional Chief Judicial Magistrate at Barrackpore.

2. The Petitioner is the Chairman of Erudite Educational Centre Private Limited, a Company incorporated under Companies Act 1956, having its registered office at 3B, Camac Street, P.S. Shakespeare Sarani, Kolkata – 700016 (hereinafter referred to as the "Company"); which is engaged, amongst other activities, in the business of providing training to students to compete MBA entrance examinations (like CAT, XAT, FMS, MAT, etc), communicative English and admission in foreign universities.

3. The Opposite Party No. 2 was appointed as a Franchisee of the Company on terms and conditions contained in the Franchisee Agreement dated December 20, 2006.

4. On or about March 2009, the Opposite Party No. 2 purportedly filed an application under Section 156(3) of Cr.P.C. against the petitioner in the Court of Learned Additional Chief Judicial Magistrate at Barrackpore.

5. The petitioner became aware of such proceedings being informed by the police officers of Shakespeare Sarani Police Station on March 22, 2012 that a warrant had been issued against the petitioner in Titagarh P.S. Case No. 122 of 2009. The petitioner on March 25, 2013 surrendered before the Learned Additional Chief Judicial Magistrate at Barrackpore and obtained bail. Charge Sheet was submitted against the petitioner on June 22, 2010.

6. In order to expand the operations of the company, the petitioner decided to appoint Franchisees to set up training centres at various places under the name and style of "ERUDITE". In October 2006, the Opposite Party No. 2 approached the petitioner and expressed his desire to obtain a franchisee of the company and to operate a training centre in Barrackpore area under the name and style of "ERUDITE".

7. Consequently the Opposite Party No. 2 and the petitioner through his company entered into a Franchisee agreement with the Opposite Party No. 2 dated December 20, 2006 whereby the Opposite Party No. 2 was appointed as a Franchisee of the Company on terms and conditions contained therein.

8. The Learned Advocate for the petitioner submitted that the terms of the Franchisee Agreement depicted the Opposite Party No. 2 to advertise and promote the franchisee run by the Opposite Party No. 2 in order to meet the enrolment and revenue targets mutually agreed by the parties. During the three year terms of the agreement, the Opposite Party No. 2 was entitled to receive 70% of the fees collected from the students for the first two years, and 60% of the fees collected from the students for the third year. It was also agreed between the parties that the training centre would be run by the Opposite Party No. 2 under the guidance and supervision of the Company but as an independent contractor and not as an agent of the Company. It was further agreed between the parties that the Company would in no manner be responsible for any loss incurred by the Opposite Party No. 2 from such venture. The Opposite Party No. 2 had further agreed that the he shall not claim any damages, cost, charges or expenses from the Company in respect of the liabilities arising out of the performance of the obligations under such agreement.

9. It was further submitted since the commencement of the training centre, the Opposite Party No. 2 was unable to promote activities of the centre. The Petitioner and the Company rendered every assistance to the Opposite Party No. 2 so as to meet the targets as agreed between the parties. However, in spite of all efforts by the Petitioner and the Company, the Opposite Party No. 2 failed to run the centre properly and the number of students plummeted gradually. Whereby Opposite Party No. 2 was unable to meet his targets and gen