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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 ..... ause at Para 43 Page 98, that the appellant has reserves its rights to directly or indirectly engage, invest or participate in or provide assistance to any person or entity which competes with the company in India or abroad. After the termination of the franchisees agreement, 1st respondent company being reduced to virtually defunct company, restrictions on 2nd and 3rd respondent would not be justifiable. 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 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. Therefore, we do not see that there is enough ground to object to use of the word Ex-Director . We see no irregularity in this matter. In any case, it can not be matter for consideration for consideration of question of oppression. In the absence of any supporting documents for a huge amount of ₹ 10 crores, the demand of the appellant is illogical. It could only be a wild guess for a loss. Having noted that few of the courses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 Services Pvt Ltd is 25.3.2003. 4. This company took over the business of a partnership firm, in consideration for which 2nd and 3rd respondent was allotted certain shares. 5. Shares were further allotted in 2005 and the shareholding pattern was changed to approximately 33.33% each for 1st appellant, 2nd respondent and 3rd respondent. 6. In 2009, 100 shares held by Mr. Manek N. Daruvala were transferred to 2nd appellant. The shareholding pattern as on 25.7.2009 was as under:- No of shares held %age of shares held TIME PVT LTD 59900 33.28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 ₹ 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 First Respondent at the instance of the Second or Third Respondents. e. Direct the Second and Third Respondent to refrain from any or omission tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iefs: a) Set aside the impugned order dated 1.3.2018. b) Direct the 2nd and 3rd respondent 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 ₹ 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was otherwise made available to all other franchisees of 1st appellant (Page 88). Respondents further submitted that 1st appellant being a shareholder in 1st respondent started its own venture (direct outlet) in Kolkata. 1st appellant targeted the market and business of 1st Respondent in Kolkata and introduced its direct outlets 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 Franchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent s operations were near to being shut down, by requiring the 1st respondent to stop CRT and BPO courses without any reasons. 36. Respondent has submitted that 2nd and 3rd respondent have not contravened any provision of Article of Association, alternatively there has been no violation of the non-compete clauses. 37. 2nd and 3rd respondent submitted that the 1st respondent was not striped of its premises. 3rd respondent intimated vide email dated 29.5.2012 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion imposed on 2nd and 3rd respondent is one sided and lose its force as soon as 1st respondent has stopped doing the same business. Therefore, any alleged breach of an unreasonable restriction cannot be a ground of oppression and mismanagement. We find no force in the arguments of appellant, therefore, it is rejected. 45. Learned counsel for the appellant argued that 2nd and 3rd respondent have attempted to ride on the goodwill and reputation of the appellants by representing themselves as Ex-Director- T.I.M.E. and they have promoted 4th respondent and sought to divert business 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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