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CT 1390_Com.O.S.6694-2007_Judgment.doc KABC170036762022

25. Clause 2 of the agreement [Ex.P 3] deals with payments. It contemplates that the plaintiff shall pay 15% of the course fee received from the students as royalty to the defendant No. 1. In addition to payment of royalty, the franchisee / plaintiff is also liable to pay its share of advertising expenditure incurred under Clause 9.2. The manner in which the payment has to be made are detailed in Clause 2, which states at 2.2 that the franchisor, namely defendant No. 1, shall open bank account in a location convenient to the franchisee / plaintiff. Under Clause 2.1.1, all payments received by the plaintiff from the students shall be deposited into the said designated account not later than the succeeding day. In other words, all payment received from the students has to be deposited by the plaintiff into the designated bank account, which will be opened in the name of defendant No. 1. Thereafter, Clause 2.2 (i) contemplates that, from out of the amounts deposited into the bank account of defendant No. 1, 15% shall be retained by defendant No. 1 towards royalty and remaining amount after deducting any sums payable shall be transferred to the CT 1390_Com.O.S.6694-2007_Judgment.doc KABC170036762022 plaintiff. The said amount so transferred to the plaintiff shall first be utilized by the plaintiff for conducting the training centre and remaining amount shall be the profit of the plaintiff. Clause 2.1.1 contemplates that non-deposit of amount into the designated bank account on the same day or succeeding day shall be considered as breach of the agreement. Clause 4.4 contemplates that non-payment of any amount by franchisee to franchisor within the prescribed time shall be construed as default and the franchisor shall be entitled to terminate the agreement forthwith. Further, Clause 2.1.1 and 4.5 contemplates that plaintiff cannot print any stationery or receipts but shall raise receipts in the blank receipt forms supplied by the defendant No. 1 to the plaintiff. Clause 11.4 contemplates that if there is any delay in payment of amount including royalty the defendant No. 1 can charge 18% simple interest. Clause 18 deals with termination and Clause 18.4 contemplates that in the event of plaintiff- franchisee committing an act of default and if such default is not remedied to the satisfaction of the defendant No. 1 CT 1390_Com.O.S.6694-2007_Judgment.doc KABC170036762022 within 15 days of receipt of notice the defendant No. 1 is entitled to terminate the agreement.

28. It is to be noted that, as already noted supra, in so far as termination of the agreement is concerned, although CT 1390_Com.O.S.6694-2007_Judgment.doc KABC170036762022 clause 18.4 contemplates 15 days notice giving opportunity to the plaintiff to remedy any default on his part, under clause 4.4 of the agreement it is stated as follows;

"The franchisee shall duly and punctually make payment of all amounts due and payable to the franchisor under this agreement. Non-payment of any amount under this agreement by the franchisee to the franchisor within the prescribed period shall be constituted as an act of default and without prejudice to any other rights under this agreement to recover such amount from the franchisee, the franchisor shall be entitled to terminate this agreement forthwith."

"However, it is further informed that the liability to serve the students already enrolled with the said franchisee's centre before the date of termination shall continue to be that of the franchisee, i.e., M/s OHM Computer and its proprietor, Shri. Manish Pachuria."

42. Thereby, he highlighted that, in the public notice, the students are left high and dry by stating that, they have to be serviced by the plaintiff and the plaintiff cannot service them because the franchise of the plaintiff is terminated. He submitted that, this statement in the said public notice is diametrically opposed to the terms of the franchisee agreement which provides at clause 19.5 that the franchisor reserves the right to operate the centre after termination of the agreement to the extent of executing liabilities towards CT 1390_Com.O.S.6694-2007_Judgment.doc KABC170036762022 the students enrolled. He then highlighted that, in a second public notice caused by Defendant No. 1 which is produced by DW1 and marked as Ex. D7, it is stated that validly enrolled students of the terminated franchisee centre may contact Defendant No. 2 for admissions and as a special case, keeping in view the larger interest of validly enrolled students, Defendant No. 1 has made arrangements to service them in its new franchisee centre. He submitted that, if this statement had been made in the first public notice, then the students would not have been incited to riot. Therefore, he submitted that an incorrect statement was made in the first public notice that servicing the enrolled students is the exclusive liability of the plaintiff only with a view to incite the students to riot and destroy the plaintiff's centre. On this ground, he submitted that, the destruction of Plaintiff's service center by the students is a foreseeable consequence of the irresponsible public notice caused by Defendant No. 1 and therefore, it is the liability of Defendant No. 1 to pay compensation for damage caused due to said destruction.