Bombay High Court Upheld Interim Order In favour of Iosis Spa & Wellness
The Bombay High Court on 26th October, 2020 single bench comprising of Hon'ble Justice G.S. Kulkarni rejected the applicants, Interim application which was filed on behalf of the respondent praying for modification of the order dated 30th July, 2020 passed by the same Court.
The order read as followed, "the order dated 30.07.2020 be modified to the extent that in paragraph 8 of the said order dated 30.07.2020, the prayer at clause (a) of the Interim relief granted to the extent, that pending the commencement of the arbitration proceedings, the Hon'ble Court may be pleased to restrain the respondent from operating the centre in the name of IOSIS deleting the words 'or any other name for a period of two years from 21 June 2020 i.e. until 20 June 2022' for which act of kindness and equity, the deponent shall ever pray."
The learned counsel, Mr. Rizvi for the M/s. Arnav Enterprises (applicant), argued that the Franchise Agreement dated 31st March, 2019 is a bogus agreement and it was only the Letter of Intent dated 5th March, 2018 which was acted upon. He contended that a FIR was lodged by the respondent on 19th June, 2020 complaining that the Franchise Agreement is a fabricated document.
His next contention was that there are also irregularities in this document interalia in regard to the stamping; hence the document is required to be presumed and be held as a bogus and fabricated document. He submitted that the ad-interim order dated 30th July, 2020 passed by this Court in terms of prayers of the petition was causing a prejudice to the respondent such that it restrains the respondent from carrying out business "in any other name for a period of two years from 21st June, 2020 i.e. until 20th June, 2022."
He submitted that in these circumstances, the clauses in the agreement were not binding on the respondent; hence the said order passed by this Court was required to be modified, so that the respondent can conduct business in any other name.
On the other hand, Ms. Barodawala, learned counsel for the petitioner asserted that the Court had passed the ad-interim order dated 30th July, 2020 after taking into consideration the documents on record and more particularly the franchise agreement. She drew court's attention to the franchise agreement and the clauses which would take effect on termination of the agreement. Clause 16 provides for the 'effect of termination', the relevant sub- clauses therein are clauses (C) and (E), which reads thus:
"(C) Refrain from operating or doing business under any name or in any manner that might lead to the inference that it is or was franchised with Franchisee or that it is operating a business as a Franchisee;
(E) Cease and desist from taking up any business which will compete with or is likely to compete with the business of Franchisor directly or indirectly for the period of two years from the expiry or early termination of the present agreement. And if the Franchisee wants to start the same business after two years as mentioned herein then under such circumstances he can do so beyond the 5 km. radius from the Franchisor centre."
Referring to these clauses, Ms. Barodawala concentrated to the prayer clauses (a) and (b) of the petition to contend that the prayers made by the petitioners are in consonance to what was agreed between the parties in the Franchise Agreement. Though, the contention although was not relevant in the context of the present application, despite that ad-interim order passed by this Court and the respondent was conducting business in the name of "Essence Wellness", which was also completely contrary to the binding terms of the Franchise Agreement.
The Mumbai High Court, observed , "….there was nothing on record on the date of the said order, that in law, the Court would be in a position to discard the Franchisee Agreement and/or the petitioner was prohibited from referring to this Agreement. The contention as urged on behalf of the respondent that the franchise agreement is a bogus agreement prima facie appears to be absolutely frail or a contention in desperation when tested on the materials on record.
The respondent is not in a position to point out any tangible material consequent to the FIR for the Court to come to a prima facie conclusion that the document is really a fabricated or bogus document which ought not to be taken into consideration. The FIR also appears to be quite belated. Mr. Rizvi's contention on irregularity in regard to the document interalia of it being insufficiently stamped is also without any substance considering the well settled position in law. Such objection could not have detained the Court to protect the interest of the petitioner leading to the order dated 30th July, 2020." Accordingly the court rejected the application and the applicant was not entitled to any relief.