1 CGHC010123902026 2026:CGHC:34462-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR CRMP No. 950 of 2026 1 - Rupesh Kumar S/o Harihar Prasad Aged About 57 Years Office At Haakim Arcade, 2nd Floor, Rear Wing Coffee House Square, W H C Road, Dharampeth, Nagpur, Maharashtra India, 440010 Mob 9373289832. 2 - Vedank Kumar S/o Rupesh Kumar Aged About 30 Years Office At Haakim Arcade, 2nd Floor, Rear Wing Coffee House Square, W H C Road, Dharampeth, Nagpur, Maharashtra India, 440010 Mob 9373289832 ... Petitioner(s) versus 1 - State Of Chhattisgarh Through Police Station, City Kotwali, Tahsil And Distt. Rajnandgaon Chhattisgarh 2 - Mukesh Kumar Sahu S/o R.C. Sahu Aged About 34 Years R/o Chikhali Ward No. 6, Police Station Chikhali, Rajnandgaon, Distt Rajnandgaon Chhattisgarh Mob 9685010003 ... Respondent(s) (cause title taken from CIS) For Petitioner(s) : Mr. Gopal Swaroop Gupta, Advocate (through virtual mode) For State For Respondent No. 2 : : Mr. Sumit Singh, Dy. Advocate General Mr. Gyan Prakash Shukla, Advocate (through virtual mode) SAGRIKA AGRAWAL Digitally signed by SAGRIKA AGRAWAL Date: 2026.08.07 12:13:32 +0530 2 Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal, Judge Order on Board Per Ramesh Sinha, Chief Justice 06/08/2026 1. Heard Mr. Gopal Swaroop Gupta, learned counsel for the petitioner appeared through virtual mode. Also hearing Mr. Sumit Singh, Dy. Advocate General for the Respondent/ State as well as Mr. Gyan Prakash Shukla, learned counsel for Respondent No. 2 appeared through virtual mode. 2. The present petition under Section 528 of BNSS, has been filed by the petitioner with the following prayer:- “I. To Quash and set aside the FIR no.388/2025 dated 26.07.2025 Station registered by Kotwali Police Rajnandgaonfor the offence under section 405, 420. 120(b) r/w 34 of IPC, against the petitioners by allowing this petition, in the interest of justice and equity. (Annexure-A/1) II. To Quash and set aside the Final Report bearing Final Report No. 544/2025 dated 4/12/2025 registered by Kotwali Police Station Rajnandgaon in Crime No.388/2025 for the offence under section 405, 420, 120(b) (Annexure-A/10). III. To Quash and set aside the impugned order dated 15.12.2025 by virtue of which the Ld. Chief Judicial Magistrate, Rajnandgaon Dist. Rajnandgaon (C.G) has taken cognizance of the impugned final report no. 544/2025 and registered the impugned criminal proceedings as Criminal Case No.11306/2025 against the petitioners. (Annexure-P/11) IV. Pass any other orders deems fit under the circumstances of the case in the interest of justice and equity.” 3. The facts, as mentioned in the petition, are that the Respondent No. 2, who was associated with a franchise institute operating under the name and style of "Fashion Interior Institute of India", lodged a 3 complaint alleging that the present Petitioners had dishonestly refused to issue mark-sheets to six students and had failed to grant him a franchise despite earlier assurances. The Petitioners submit that they had granted a valid franchise to the partnership firm "Fashion Interior Institute of India" under a Franchise Agreement dated 05.05.2017 for a period of three years, which automatically expired on 04.05.2020 and was never renewed thereafter. They further contend that the complainant was merely associated with the franchise and had no independent contractual relationship with the Petitioners. It is also their case that mark-sheets were issued only upon fulfillment of the prescribed academic and administrative formalities, while online classes were conducted during the COVID-19 pandemic in accordance with prevailing circumstances. The complainant had initially approached Police Station Rajnandgaon on 09.10.2023, where his complaint was treated as non-cognizable and closed on the same day. Thereafter, upon alleging inaction by the Superintendent of Police, he approached the learned Judicial Magistrate First Class, Rajnandgaon, who, by order dated 26.07.2025, directed registration of an FIR. Consequently, FIR No. 388/2025 was registered for offences under Sections 420, 405, 120-B read with Section 34 of the Indian Penal Code, notices under the BNSS were issued to the Petitioners, who duly appeared before the Investigating Officer, cooperated with the investigation, submitted the requisite documents, recorded their statements, and were granted regular bail. Upon completion of investigation, Final Report No. 544/2025 dated 04.12.2025 came to be filed. According to the Petitioners, the entire dispute arises out of contractual and franchise-related obligations, if any, and pertains to the 4 issuance of mark-sheets and grant of franchise, which are purely civil in nature and do not disclose the essential ingredients of the alleged criminal offences. It is, therefore, contended that the registration of the FIR as well as the consequential Final Report amount to an abuse of the process of law, warranting interference by this Hon'ble Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023. 4. Learned counsel for the petitioners would submit that the impugned FIR, the consequential Final Report and the order taking cognizance are wholly unsustainable in law and amount to a gross abuse of the process of the Court. The Petitioners had granted a valid franchise to "Fashion Interior Institute of India" only for the period from 05.05.2017 to 04.05.2020, whereafter the franchise automatically expired and was never renewed. Respondent No. 2, was never a franchisee of the Petitioners and had no independent contractual or legal relationship with them, but was merely acting on behalf of the erstwhile franchise. Even after expiry of the franchise, the Petitioners continued to provide academic support to the students admitted during the subsistence of the franchise, subject to fulfillment of the prescribed formalities, including payment of institutional and university dues. The allegation regarding non-issuance of mark-sheets is factually incorrect, inasmuch as two students have already received their mark-sheets after clearing their dues, while the remaining students failed to comply with the requisite formalities despite repeated communications. Respondent No. 2 has no locus standi to espouse the alleged grievances of the students, none of whom has initiated any criminal proceedings against the Petitioners. It is further submitted that Respondent No. 2, after failing to secure a fresh franchise on account of his inability to fulfill the 5 eligibility requirements, started an institute under the deceptively similar name "Cadence Institute of Design and Management" with an intent to exploit the goodwill and reputation of the Petitioners. Upon discovering such infringement, the Petitioners issued a cease-and- desist notice, lodged complaints before the police and the Ministry of Corporate Affairs, and also instituted a trademark suit against Respondent No. 2. The Ministry of Corporate Affairs itself directed Respondent No. 2 to change the name of his company, thereby substantiating the Petitioners' grievance. It is only thereafter, with a vindictive and mala fide intention, that Respondent No. 2 initiated successive complaints against the Petitioners. The allegations, even if accepted in their entirety, do not disclose the essential ingredients of the offences punishable under Sections 420, 405, 120-B or 34 of the Indian Penal Code, as there was neither any dishonest inducement nor entrustment of property by Respondent No. 2 to the Petitioners. At the highest, the dispute pertains to contractual obligations and franchise- related issues, which are purely civil in nature. Since the Petitioners themselves had taken legal action against Respondent No. 2 for trademark infringement much prior to the impugned proceedings, the present prosecution is nothing but a retaliatory and malicious attempt to pressurize the Petitioners. Accordingly, the continuation of the criminal proceedings would amount to misuse of the criminal justice system and deserves to be quashed. 5. Learned counsel for Respondent No. 2 would submits that the impugned FIR was not registered mechanically but pursuant to a reasoned order passed by the learned Judicial Magistrate First Class under Section 156(3) Cr.P.C. (now corresponding provisions under the 6 BNSS), after considering the complaint and being satisfied that the allegations disclosed commission of cognizable offences. Upon investigation, the police collected material supporting the allegations and submitted the Final Report, whereafter the learned Chief Judicial Magistrate, on being satisfied that a prima facie case existed, took cognizance of the offences. The allegations against the Petitioners pertain to the collection of fees from students for recognised courses and the subsequent withholding of their mark-sheets despite completion of the courses and fulfillment of the necessary requirements. Whether the Petitioners were directly dealing with the students or through a franchisee, whether any dues remained outstanding, whether the withholding of mark-sheets was justified, and whether the ingredients of the alleged offences are ultimately established, are all disputed questions of fact which require appreciation of oral and documentary evidence during trial and cannot be adjudicated in proceedings for quashing. The Petitioners' own pleadings acknowledge their role in issuing mark-sheets, thereby raising issues which can only be decided after a full-fledged trial. The attempt of the Petitioners to project the present criminal proceedings as a mere civil dispute by relying upon the expired franchise agreement, the trademark dispute, the proceedings before the Ministry of Corporate Affairs, and the pending trademark suit is wholly misplaced, as those proceedings arise from an entirely different cause of action and have no bearing upon the criminal allegations forming the subject matter of the present FIR. It is further submitted that the mere availability or pendency of civil remedies does not bar criminal prosecution where the allegations prima facie disclose the commission 7 of cognizable offences. Since the investigation has resulted in the filing of a charge-sheet, cognizance has already been taken by the competent Court, and the record discloses sufficient material warranting a full-fledged trial, no exceptional circumstance exists for invoking the extraordinary jurisdiction of this Court under Section 528 of the BNSS. Accordingly, the present petition is devoid of merit and is liable to be dismissed. 6. Learned State counsel would submit that, the FIR was registered pursuant to an order passed by the learned Judicial Magistrate, the investigation was conducted in accordance with law, and upon collection of sufficient material and evidence, the police filed the Final Report against the Petitioners. The learned Chief Judicial Magistrate has also taken cognizance after finding a prima facie case. The contentions raised by the Petitioners involve disputed questions of fact, which can only be adjudicated upon after appreciation of evidence during trial and not in proceedings under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023. It is, therefore, prayed that the present petition, being devoid of any merit, be dismissed. 7. We have heard learned counsel for the parties and perused the documents annexed with the petition. 8. Having heard learned counsel for the parties and having perused the material available on record, this Court finds that the principal allegation against the Petitioners pertains to the non-issuance of mark- sheets to certain students after expiry of the franchise arrangement. The record reveals that the franchise agreement executed between the Petitioners and "Fashion Interior Institute of India" was valid only till 04.05.2020 and was not renewed thereafter. The dispute essentially 8 arises out of the rights and obligations flowing from the franchise arrangement, the issuance of mark-sheets, and the alleged non- fulfilment of contractual obligations. Such issues are intrinsically contractual in nature and require adjudication of civil rights and liabilities. Mere breach of contractual obligations or failure to perform a promise, in the absence of material showing dishonest or fraudulent intention at the inception of the transaction, does not constitute the offence of cheating under Section 420 IPC. Likewise, in the absence of any entrustment of property, the ingredients of criminal breach of trust under Section 405 IPC are also not satisfied. 9. It is further evident from the record that prior disputes had already arisen between the parties regarding the use of the trade name "Cadence", in respect whereof the Petitioners had issued a cease-and- desist notice, initiated trademark proceedings, and obtained an order from the Ministry of Corporate Affairs directing Respondent No. 2 to change the name of his company. These undisputed facts indicate that civil and commercial disputes were already subsisting between the parties much before the registration of the impugned FIR. The criminal proceedings, therefore, appear to have been initiated in the backdrop of such pre-existing disputes and are essentially an attempt to give a criminal colour to a dispute arising out of contractual and commercial dealings. 10. A perusal of the Final Report dated 04.12.2025 reveals that the Investigating Officer has merely narrated the procedural steps undertaken during the course of investigation, namely, registration of the FIR pursuant to the order passed by the learned Judicial Magistrate First Class, preparation of the spot map, recording of the statements of 9 the complainant and other witnesses, collection of documents produced by the concerned students, and issuance of notices to the accused persons under Section 41-A of the Code of Criminal Procedure (corresponding to Section 35 of the BNSS) in compliance with the directions of the Hon'ble Supreme Court in Arnesh Kumar v. State of Bihar. The Final Report further records that, after completion of investigation, a charge-sheet was submitted before the competent Court. However, the Final Report does not disclose any independent material demonstrating that the Petitioners had dishonest or fraudulent intention at the inception of the transaction, that any property was entrusted to them so as to constitute criminal breach of trust, or that there existed any agreement or meeting of minds attracting the offence of criminal conspiracy. Apart from referring to the statements of the complainant, the witnesses, and the documents produced by the students, the Final Report does not indicate any specific evidence establishing the essential ingredients of the offences punishable under Sections 420, 405, 120-B and 34 of the Indian Penal Code. The material collected during investigation, therefore, primarily reflects a dispute arising out of contractual and academic obligations relating to the issuance of mark-sheets, which, by itself, does not disclose the commission of the alleged criminal offences. 11. The essential ingredients of the offence punishable under Section 420 of the Indian Penal Code are dishonest or fraudulent inducement at the very inception of the transaction and consequent delivery of property. Similarly, to constitute an offence under Section 405 IPC, there must be an entrustment of property coupled with dishonest misappropriation or conversion thereof. In the present case, even if the allegations 10 contained in the FIR and the material collected during investigation are accepted in their entirety, they do not disclose that the Petitioners had any dishonest intention at the inception of the transaction or that any property was entrusted to them by Respondent No. 2 or the concerned students so as to attract the offence of criminal breach of trust. The allegations, at best, disclose a dispute concerning issuance of mark- sheets and alleged non-performance of contractual obligations arising out of a franchise arrangement, for which appropriate civil remedies are available. 12. The Hon'ble Supreme Court in Indian Oil Corporation v. NEPC India Ltd., (2006) 6 SCC 736, has categorically held that a given set of facts may give rise to both civil and criminal liability, however, a criminal proceeding cannot be permitted to continue when the dispute is essentially of a civil or commercial nature and the basic ingredients of the alleged criminal offences are absent. The Court further observed that criminal law should not be allowed to be used as an instrument of harassment or for exerting pressure in disputes predominantly civil in character. 13. In Delhi Race Club (1940) Ltd. & Others v. State of Uttar Pradesh & Another, Criminal Appeal No. 3114 of 2024, decided on 23.08.2024, the Hon'ble Supreme Court reiterated that the offences under Sections 406 and 420 IPC are distinct and ordinarily cannot coexist on the same set of facts. It was further held that, in the absence of entrustment or dishonest inducement from the inception, continuation of criminal proceedings would amount to abuse of the process of law. The principles laid down in the said judgment squarely apply to the facts of the present case, where neither entrustment nor dishonest intention at 11 the inception is borne out from the allegations or the material collected during investigation. 14. It is equally well settled that while exercising jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 (now Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023), the High Court is empowered to quash criminal proceedings where the uncontroverted allegations and the material collected during investigation fail to disclose the commission of any cognizable offence or where continuation of the prosecution would amount to abuse of the process of law. In State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, the Hon'ble Supreme Court illustratively enumerated the categories of cases wherein the inherent jurisdiction of the High Court can be exercised to prevent abuse of the process of Court and to secure the ends of justice. The present case, in the considered opinion of this Court, falls within the parameters laid down therein. 15. In view of the aforesaid discussion, this Court is of the considered opinion that the allegations made in the FIR, even if accepted at their face value along with the material collected during investigation, do not satisfy the essential ingredients of the offences punishable under Sections 420, 405, 120-B and 34 of the Indian Penal Code. The dispute between the parties essentially arises out of contractual and commercial dealings relating to a franchise arrangement and issuance of mark-sheets, which is predominantly civil in nature. Allowing the criminal prosecution to continue in the absence of the foundational ingredients of the alleged offences would amount to permitting the criminal process to be used for settling a civil dispute, which is impermissible in law. 12 16. Consequently, the present petition deserves to be and is accordingly allowed. The impugned FIR bearing Crime No. 388/2025 registered at Police Station Kotwali, Rajnandgaon, the Final Report No. 544/2025 dated 04.12.2025, the order dated 15.12.2025 passed by the learned Chief Judicial Magistrate, Rajnandgaon taking cognizance in Criminal Case No. 11306/2025, and all consequential criminal proceedings arising therefrom, insofar as they relate to the present Petitioners, are hereby quashed. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice sagrika