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TMI Blog2019 (6) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... nal petitioner, under the brand name of "TIME" has a country wide reputation of being the premier Institute for coaching for management entrance examinations and other competitive examinations. The appellant had used the franchising model to expand its business in various cities. The franchisees use all this intellectual property to run the courses under the guidance and supervision of the 1st appellant. In return the franchisees pay to the 1st appellant a "fee royalty" which is a fixed percentage of the fee collected from the students, and "Material royalty", which is sum paid per set of study material indented by the franchisees. This amount per set varies from course to course and from time to time. 3. 2nd and 3rd respondent showed their interest in being franchisees of 1st appellant for Kolkata city. Therefore, it was mutually decided among 1st appellant and 2nd and 3rd respondent to form "Inspire" as a joint venture company in which 1st appellant will hold approximately 40% shares, 2nd respondent would hold 60% shares approximately and Mr. Manek N. Daruvala, a director of 1st appellant had subscribed to 100 shares. The date of incorporation of the Inspire Educational Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manner in which it was set out in the email dated 25.4.2012 (Page 122) 1st appellant vide email dated 13.5.2012 (Page 125) stated the issues that needed to be sorted out. 1st appellant also stated that it relieved 1st respondent of some of the obligations it had undertaken under the Franchise Agreement. 11. Being aggrieved of the actions of the 2nd and 3rd respondent, 1st appellant filed company petition before the NCLT, Chennai under Section 397, 398, 402, 406 read with Part XI and other applicable provisions of the Companies Act, 1956 praying for the following reliefs: a. Direct the second and third Respondent to give up all interests on the Fourth Respondent, in all capacities, including as directors or shareholders either directly or through their associates or affiliates. b. Restrain the Second and Third Respondents from diverting any further business of Inspire to the Fourth Respondent. c. Direct the Second and third Respondent to make good the loss of Rs. 10 Crores suffered by the First Respondent due to the diversion of the First Respondents' business to the Fourth respondent. d. Restrain the Fourth Respondent from employing any of the employees of the Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer is also frequent, especially in private sector. Therefore, freedom of choosing an employer cannot be curbed by this Tribunal. e) The Respondents have also submitted that in their advertisement they advertised only as Centre Director and not as Director/Board of Directors of the R1 company. It is also necessary to add that designation in small companies, certain sectors like IT, Hospitality and Service sector etc the Position of Director is even below position of General Manager and not to be treated as Director of the Board. Therefore, the Respondents submission that they have advertised as only Centre Directors of the franchise of the 1st Respondent Company may not be of much prejudicial to the petitioners companies. f) In view of the above discussions/observation other prayers of the petitioners are also rejected." 13. Being aggrieved by the said impugned order the appellants have preferred this appeal. 14. 1st appellant stated that the even before termination of the Franchise Agreement, 2nd and 3rd respondent incorporated 4th respondent company alongwith three others, with its registered office at Bangalore and operating from Bangalore, Chennai, Kolkata, Mysor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give up all interests in the 4th respondent, in all capacities, including as directors or shareholders either directly or through their associates of or affiliates. c) Restrain the 2nd and 3rd respondent from diverting any further business of Inspire to the 4th Respondent. d) Direct the 2nd and 3rd respondent to make good the loss of Rs. 10 crores suffered by the 1st respondent due to the diversion of the First Respondent's business to the 4th Respondent. e) Restrain the 4th respondent from employing any of the employees of the 1st Respondent at the instance of the 2nd and 3rd respondent. f) Director the 2nd and 3rd respondent to refrain from any act or omission that may cause detriment to the petitioners or First Respondent Company. g) Such other further order (s), Direction(s) as may be deemed fit and proper under the facts and circumstances of the present case; and h) Award cost(s) and damages as this Hon'ble Tribunal may deem fit and proper. 19. Appellant has stated that while passing the impugned order no reasoning for conclusions arrived have been given and the NCLT has failed to consider the contentions of the appellant in fact or in law. 20. Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlets in the city which operated in direct competition with 1st respondent. 27. Respondent stated that the 1st appellant was unwilling to continue its franchise with 1st respondent in Kolkata and therefore, as a prelude to its then upcoming start up venture, it devised a plan to discontinue Campus Recruitment Training and Bank Probationary Officer Courses with 1st respondent. It is stated that the decision to withdraw the CRT and BPO courses by 1st appellant was clearly an arm twisting tactic to compel the respondents to accede to their unreasonable terms (Page 89). 28. It is stated that the appellant have miserably failed to establish or make out a case of oppression on the basis of the documents/evidence adduced. 29. It is stated, without prejudice, that the instant dispute, at most, emanates from a Franchise Agreement and some other agreements entered into between the 1st respondent and appellant company and the same stands outside the ambit of Sections 241 and 242 of Companies Act, 2013. 30. Respondents stated that the 1st appellant has submitted that the 2nd and 3rd respondents have set up a competing business and made a concerted effort to divert business of 1st respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.5.2012 to 1st appellant's nominee director about the surrendering of the office premises and class room location to bring down costs, since 1st respondent admittedly did not have any business upon the termination of the Franchise Agreement. 38. Respondents have stated that the impugned order is supported by cogent reasoning. At last the respondents prayed that the impugned orders deserve to be upheld. 39. We have heard the learned counsel for the parties and perused the record. 40. Perusal of the record shows that in the appeal they have by and large repeated all their contentions which were raised in the company petition. Further apart from setting aside the impugned order all the reliefs are again the repetition. 41. Learned counsel for the appellant has argued that the impugned order passed by the NCLT is without any reasoning or analysis. On the other hand, learned counsel for the respondents have argued that the NCLT has rightly rejected the petition on justified grounds and the impugned order is supported by cogent reasoning. 42. We have gone through the impugned order and find that the impugned order contain the submissions/contention of the parties. Once it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness away from 1st respondent. 46. Learned counsel for the Respondents argued that subsequent to the termination of Franchisee Agreement, 2nd and 3rd respondent referred to themselves not as "Ex-Directors" of 1st appellant but "Ex-Directors" of Centers managed by them under the Franchisee Agreement with 1st appellant. 47. We have perused the advertisement issued in the newspaper at Page 143 of the appeal paper book. We find that name of the centre such as Kolkata, Chennai, Lucknow & Kanpur, and Mumbai is also mentioned with Ex-Director. It is a fact to be noted that 2nd and 3rd respondent have been working as Directors of Franchise Unit of TIME at Kolkata. After the franchise agreement is terminated the status of persons as Ex-Director of the Unit cannot be denied as it is a factual position as existed in the past. At the time of these advertisements it has been noted already termination of the franchise agreement has taken place and it has also been accepted w.e.f. 25.4.2012 (Page No.125) by the appellant company. After this position has been accepted, the right of the persons to use the word "Ex-Director" cannot be denied as it would represent their experience as well. There ..... X X X X Extracts X X X X X X X X Extracts X X X X
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