Delhi High Court
M/S Janak Infotech vs M/S Wintech E-Commerce & Ors. on 24 August, 2012
Author: Valmiki J. Mehta
Bench: 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/-
CS(OS) 1215/2001 Page 3 of 9
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 CS(OS) 1215/2001 Page 4 of 9 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 CS(OS) 1215/2001 Page 5 of 9 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 CS(OS) 1215/2001 Page 6 of 9 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 CS(OS) 1215/2001 Page 7 of 9 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
CS(OS) 1215/2001 Page 8 of 9
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.
CS(OS) 1215/2001 Page 9 of 9