Commercial disputes must show intentional wrongdoing to constitute criminal liability; simple breaches of contract do not suffice for criminal charges.

JUDGMENT :

ANANDA SEN, J.

In this writ petition the petitioners have prayed for:

“issuance of an appropriate writ/order/direction for quashing the entire criminal proceeding arising out of Ranchi Sadar Kotwali P.S. Case No. 264/2024 registered u/s 318(4)/ 316(2)/61(2) of the B.N.S. The case is pending in the court of CJM at Ranchi for submission of final form.”

2. The First Information Report (FIR) being Ranchi Sadar Kotwali PS Case No. 264 of 2024 has been registered on 02.10.2024 for offences under sections 318(4), 316(2) and 61(2) of the Bharatiya Nyaya Sanhita, 2023 against the petitioners on the basis of written statement of the informant-respondent no. 5.

3. As per the First Information Report, in August 2019, ABFRL approached the informant for setting up a showroom in Ramgarh. Prior to entering into any agreement, the company shared a ROI Sheet (Return on Investment) and Term Sheet, projecting attractive returns and assuring that (i) rent of the showroom would be paid by the company, and (ii) employee salaries (except the store manager) would be borne by the informant and reimbursed at a specified rate. Mr. Prasoon Mukherjee confirmed via WhatsApp on 31.8.2019 that the total monthly salary cost would be Rs.2,25,000/- and the company would compensate the informant Rs. 25,000/- per month for 60 months due to the difference between rent and salary.

Further, Mr. Prabhakar Pandey negotiated with the landlord for the Ramgarh store, as is evident from WhatsApp chats and emails dated 4.8.2019, 14.8.2019, 19.8.2019, and 10.9.2019, and falsely induced the informant to enter into the rent agreement in his personal capacity by misrepresenting the facts and modifying the terms deceitfully through an email dated 17.10.2019.

However, after the store became operational, the actual salary expenses were found to be only Rs.1,40,000/- per month, as per the salary sheet prepared by the company’s store manager. Due to this false representation, the informant suffered a recurring monthly loss of Rs.1,10,000/- amounting to a total of Rs.41,80,000/- over 38 months. The informant did not even get 1/3rd return from his investments, rather incurred a loss of approximately 1.65 crores.

Further, it is stated that a similar fraudulent transaction occurred in the Banaras store, where the informant, based on assurances and LOI and agreement dated 14.12.2020 and 08.04.2022, invested a huge amount under the belief that the store space was exclusively allocated for ABFRL’s Style Up brand. However, it later emerged that the company had secretly entered into a separate agreement with the landlord, permitting a significant portion of the store to be used for selling unrelated products like toys and books. This misrepresentation and suppression of facts caused a huge financial loss of Rs.82,81,025/-. The informant clearly stated that any internal thing that happened between ABFRL and the landlord were never told to him nor before making the agreement nor was any mention of it made in the agreement of Banaras.

Additionally, it was falsely promised by Mr. Prasoon Mukherjee via message dated 13.3.2019, that in the event of premature termination of either store, the company would pay back the entire investment made in furniture, fixtures, and fittings at Written Down Value (WDV). Contrary to this promise, both stores were abruptly terminated (Banaras in 2 years, Ramgarh in 3.5 years), and the company refused to reimburse the capital expenditure, causing a further loss of Rs.67,15,339.

Despite issuing a legal notice to ABFRL on 13.05.2024, no amicable settlement was reached.

In total, the informant suffered a cumulative loss of approximately Rs.3.57 crores due to the deliberate acts of fraud, misrepresentation, and breach of trust by the company and its named officials.

4. Learned counsel for the petitioners submits that no offence is made out. A pure business transaction has been converted into a criminal case. A franchise was obtained by the respondents and as the busines