Delhi High Court
M/S Janak Infotech vs M/S Wintech E-Commerce & Ors. on 24 August, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No. 1215/2001
% 24th August, 2012
M/S JANAK INFOTECH ..... Plaintiff
Through: Mr. Parmod K. Sharma, Advocate.
versus
M/S WINTECH E-COMMERCE & ORS. ..... Defendants
Through: Nemo.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This is a suit filed by the plaintiff/franchisee for recovery of Rs.80,46,224/-
(Rupees eighty lacs forty six thousand two hundred twenty four only) along
with interest against the franchiser partnership firm/defendant No.1 and the
partners, who are defendants No.2 to 10.
2. The facts of the case are that the plaintiff and defendant No.1/partnership
firm entered into a „Satellite Franchise Agreement‟ dated 24th March, 2000,
Ex. PW.1/3, under which the plaintiff provided its premises admeasuring
7000 sq. ft. at N-9, South Extension, Part-I, New Delhi for running of a
computer centre alongwith the new hardware and software for running of the
CS(OS) 1215/2001 Page 1 of 9
computer training franchise centre. Defendant No.1/franchiser had the
responsibility to run the franchise centre by employing trained professionals
to teach the courses and also supplying the necessary study material and so
on. The defendant No.1 was to get a total amount of Rs. 21,40,000 (Rupees
twenty one lacs, forty thousand only) and Rs. 18,60,000/- (Rupees eighteen
lacs, sixty thousand only) i.e. ` 40,00,000/- as initial Franchise Fee as per
para 5(i) of the Agreement Ex.PW.1/3. Defendant No.1 was also entitled to
collect the entire fees, and the plaintiff was entitled to receive 10% of the
collected fees amount subject to a minimum of 2% p.m. and maximum of
6% p.m. of the actual investment done. Plaintiff was also entitled to
monthly license fee of ` 6,20,000/- (Rupees six lacs, twenty thousand only).
Some of relevant clauses of Agreement Ex.PW.1/3 are as under:-
1. "TERM
The period of the Satellite Franchise shall be for 62 months
which may be extended by mutual consent on such terms as
may be agreed upon PROVIDED in case of renewal a new
agreement shall be executed incorporating the new terms and
conditions.
2. RIGHTS OF THE FRANCHISER:
i) The franchiser shall be running computer educate centre at the
said premises in the first instance for the courses/modules
related to Internet and Intranet.
ii) The franchiser shall prescribe the standards for the course to
be taken up.
CS(OS) 1215/2001 Page 2 of 9
iii) The franchiser shall reserve the sole right to fix the fees for
the different schemes/modules of studies.
iv) The period of training, method of evaluation of performance
of students, trainees, in the different modules of training and
classes, shall be as prescribed and implemented by the
franchiser.
......
3. SATELLITE FRANCHISEES OBLIGATIONS:
i) The Satellite Franchisee shall invest in new
hardware/software as per the specification of the franchiser.
ii) .....
iii) The Satellite Franchisee shall meet all the cost of the
infrastructure including any cost overrun in setting up the
facilities as prescribed by the franchiser upto a maximum of
`30,00,000/- as provided in Clause 5(i).
.....
4. FRANCHISER‟S OBLIGATIONS:
i) The franchiser shall be responsible for providing assistance
and advise in interior planning, layout, colour code and
specifications for hardware and software selection.
ii) All the recurring expenses like salaries, telephone bills and
ele3ctricity bills of the place used will be borne by the
franchiser with effect from the date of completion of provision
of facilities as per Clause 5 (i) above to the satisfaction of the
franchiser or handing over of the possession of the premises to
the franchiser, whichever is earlier.
......
5. INVESTMENT BY THE SATELLITE FRANCHISE:
i) The Satellite Franchisee will invest a maximum of
`76,00,000/- towards initial investment as follows;
a) Initial Franchise fees `40,00,000/-
b) Hardware and Software `14,00,000/-
c) Interiors `20,00,000/-
d) Launch publicity ` 2,00,000/-
TOTAL ` 76,00,000/-
ii) The initial franchise fee, as mentioned in point 5(i)
hereinabove will be dealt in as follows:-
a) `21,40,000/- to be paid in the 4 equal installments of `
5,35,000/- each, first such instalment to
be paid at the time mentioned in Clause
4(ii) hereinabove.
b) `18,60,000/- `3,10,000/- to be deducted by the
franchiser out of the monthly license fee
payable to the franchisee over a period of
first six months.
6. COMMISSION AND MODE OF PAYMENT:
i) The Satellite Franchisee would be entitled to receive 10% of
the fees collected from the students amounting to a minimum of
2% p.m. and a maximum 6 % p.m. of the actual investment
done as specified in Clause 5 hereinabove. The payment for the
same be made by the franchiser to the franchisee on by-monthly
basis.
ii) The Satellite franchisee will be paid a monthly license fee of
`6,20,000/- (Rupees six lac and twenty thousand only)_, w.e.f.
the date mentioned in Clause 4 (ii) hereinabove, during the first
five years of this agreement and thereafter it will be increased
by 30% every three years (subject to tax deduction at source as
per income tax Act) for a period as specified in Clause I
hereinabove. The license fee shall be paid to the Satellite
Franchisee by the Satellite Franchiser by a/c payee cheque/DD
on/before 15the of every month.
9. TERMINATION :
i) ......
ii) The Franchiser shall have no right to terminate this
agreement before the expiry of three years from the date of
handing over the premises to the franchiser. Thereafter
franchiser at his sole discretion is entitled to terminate this
agreement by giving 2 months notice. However, if the
franchiser terminates this Agreement without intentional
violation on the part of the franchisee before the expiry of 18
months from the date of handing over the premises to the
franchiser, as mentioned in Clause 4 (ii) above, the Franchiser
shall return the complete investments made by the Satellite
Franchisee as specified in the Clause 5 (i) hereinabove, without
any deduction. However, if the Franchiser terminates this
Agreement without any intentional violation on the part of this
Franchisee after the expiry of 18 months but before the expiry
of 36 months from the date of handing over the premises to the
Franchiser, as mentioned in Clause 4 (ii) above, the franchiser
shall return the franchise fee, on pro-rata basis, for the
unexpired period of the Agreement and the investment made in
hardware, software and interiors as per clause 5 (i) will be
depreciated as per the rates specified in the companies Act,
1956 and the amount equivalent to the written down value of the
same will be paid by the franchiser to the franchisee. The
hardware, software and interiors would belong to the franchiser,
after the payment of the above mentioned amounts to the
franchisee. If the Franchiser does not pay the amounts specified
hereinabove then, the Franchisee shall be paid interest @ 1.5%
per month till such payment is made."
3. The defendants are ex parte. Since the plaintiff has not proved that the
defendant No.1-partnership firm has any other partners except the defendant
No.2, the suit would have to be decreed as stated below only against
defendant No.1, who is the partnership firm and defendant No.2/partner
through whom the Agreement Ex.PW1/3 was entered into.
4. The plaintiff has made averments in the plaint, which have been supported
by the affidavit by way of evidence filed as Ex.PW1/A, that the plaintiff
made necessary investment for running of the centre, the centre began to run,
the defendants committed default in performing of their obligations by not
paying the licence fee or the minimum guaranteed commission fee. In fact,
the plaintiff was forced to pay the salary of the staff, which was an
obligation of the defendants under the Agreement Ex. PW1/3.
5. The plaintiff also paid to the defendant Nos.1 and 2 an amount of `21,40,000
(Rupees twenty one lacs, forty thousand only) in four equal installments of
`5,35,000/- each, as per the details contained in para 7 of the affidavit by
way of evidence. Plaintiff also incurred expenditure by investing a sum of
`38,92,942/- (Rupees thirty eight lacs, ninty two thousand, nine hundred
forty two only), as stated in para 6 of the affidavit by way of evidence and
the bill in this regard is exhibited as Ex.PW1/4. The further paras of the
affidavit by way of evidence reiterate and prove the different paras of the
plaint with respect to different working months upto the end of December,
2000.
6. The affidavit by way of evidence shows that the defendants are guilty of the
default in making the payment not only to the plaintiff but also to the various
other franchisees, for which FIRs having been filed against the defendants
throughout the country. Even the plaintiff had filed an FIR. The complaint
is exhibited as Ex.PW1/6.
7. The amounts, which are due to the plaintiff as per the affidavit by way of
evidence are as per the following calculations:-
i) "The defendants shall pay the balance outstanding amounting to
`46,91,385/- on or before 30th September, 2001. Details are as per
below:
Outstanding MGR `13,38,111/-
Outstanding licence fee `37,20,000/-
Reimbursement of expenses
Incurred on behalf of the
Defendants till 31st March, 2001 `6,91,104/-
Total `57,49,215/-
LESS-Collections adjustable
Against expenses `4,79,930/-
LESS received by withdrawal
From a/c No.3994 of Andhra Bank `4,33,000/-
LESS Received from the Defendants `99,900/-
`45,000/-
Total O/S Dues AS upto 31.3.2001 `46,91,385/-"
8. Since the defendants are ex parte and there is no cross-examination with
respect to the examination-in-chief of the witness of the plaintiff, I have no
reason to disbelieve the stand of the plaintiff. In fact, it is obvious that
defendants cheated not only to the plaintiff, but also to various other
franchisees and made away with crores of rupees, for which various FIRs are
pending. The main culprit i.e. the person incharge is stated to be the
defendant No.2/Murtaza Mithani and who has been declared as absconder in
the criminal cases.
9. In view of the above, suit of the plaintiff is decreed against defendant Nos.1
and 2 for a sum of `80,46,224/- as per details below:
(A)On account of MGR
MGR for June, 2000 1,01,035/-
MGR for July, 2000 1,88,657/-
MGR for August, 2000 1,06,693/-
MGR for September, 2000 1,30,916/-
MGR for October, 2000 1,25,835/-
MGR for November, 2000 1,32,035/-
MGR for December, 2000 1,38,235/-
MGR for January, 2001 1,38,235/-
MGR for February, 2001 1,38,235/-
MGR for March, 2001 1,38,235/-
TOTAL OUTSTANDING MGR 13,38,111/-
(B) On account of Licence Fee for
August 2000 to November, 2000
@ `3,10,000/- per month i.e. 50%
Licence fee. `12,40,000/-
For December, 2000 to March 2001
@ `6,20,000/- per month i.e. full
Licence fee. `24,80,000/-
TOTAL OUTSTANDING
LICENCE FEE `37,20,000/-
(C) On account of expenses incurred
By plaintiff on returnable basis `6,91,104/-
(D)On account of proportionate
Franchisee fee recoverable after
deducting the franchisee fee for
the period upto May, 2001 `33,54,839/-
TOTAL (A+B+C+D) `91,04,054/-
(E) Collections adjusted against
Expenses `4,79,930/-
(F)Received by withdrawal `4,33,000/-
(G)Received from Defendants
directly ` 99,9000/-
` 45,000/-
NET RECOVERY AMOUNT (A+B+C+D)-(E+F+G)
`80,46,224/-
10. Plaintiff will also be entitled to pendente lite and future interest (simple) at
12% p.a. on the amount of `80,46,224/-. Plaintiff is also held entitled to the
costs of the suit in terms of the rules applicable to this Court. Decree sheet
be prepared.
11. Finally I must add that though there are clauses of jurisdiction of Mumbai
Courts and of arbitration in the Satelite Franchise Agreement, however, such
defences have to be taken, otherwise the same are waived. Since the
defendants are ex parte, these defences are waived as not pressed.
12. Suit is decreed and disposed of accordingly.
AUGUST 24, 2012/n VALMIKI J. MEHTA, J.
