1. The plaintiff has filed the suit for declaration that determination of Business Transfer Agreement with respect to store No. 57767 dated 6th December, 2023 by the defendant nos. 1 and 4 is bad in law and allied prayers. The plaintiff has also filed an application being GA-COM No. 1 of 2024 praying for an ad interim order.

2. The plaintiff entered into a franchise agreement with the defendant no. 1 on 19th October, 2012 for running an outlet of selling various food articles under the brand name “Subway” from Plot No. 204, Block-CF, Sector I, Salt Lake, Kolkata. The said outlet was numbered as Store No. 57767 by the defendant no. 1. The plaintiff also entered into another franchise agreement with the defendant no. 1 on 24th October, 2015 for running another outlet under the brand name “Subway” from Bengal Intelligent Park Limited, Block EP & GP, Sector V, Salt Lake, Kolkata. The said store of the plaintiff was numbered as Store No. 34097 by the respondent no. 1. In terms of the franchise agreement for the Store No. 34097, the plaintiff had paid Rs.3,00,000/- to the defendant no. 1 as franchise license fee.

3. Under the franchise agreement of Store No. 57767, the plaintiff was required to, at her own expenses, to purchase valuable equipments, furniture and fixtures like refrigerators, baking and toasting machines, other cooking accessories, air conditioners, CCTV cameras etc., most of which were also to be obtained from approved vendors of the defendant no. 1 had a price substantially higher than those of other vendors. The plaintiff spent a sum of Rs.70,00,000/- for purchase of various equipments and decorating articles. The monthly expenses for maintaining the said outlet including salary to the personnel, electricity charges, monthly lease rent is Rs.2,40,000/-. The plaintiff paid a sum of Rs.9,94,203/- to the defendant no. 1 as Royalty and Rs.5,59,239/- as Franchise Advertisement Fund for a period starting from 1st April, 2023 to 31st March, 2024.

4. The defendant no. 1 also carries out regular inspection of the said outlet and the inspection team grants rating to the said outlet based on the standards set up by the defendant no. 1. The said reviews are of two types, one by local employees of the defendant no. 1 and the other by special review team engaged by defendant no. 1, being defendant no. 3. Under the said franchise agreement, if there are three continuous failure reports by the special team, the defendant no. 1 can issue pre termination notice requiring the plaintiff to address issues raised by the said team. In case the same are not addressed within a certain time, the defendant no. 1 is entitled to terminate the franchise agreement. Another fall out of the issuance of pre termination notice is that the defendant no. 2 who supplies raw materials on credit to the plaintiff, shall no longer provide credit facility, i.e., the plaintiff is required to make payment to the defendant no. 2 as and when the plaintiff places order for supply of raw materials. Another such pre-termination notice is that the plaintiff is also required to make payment to all the dues to the defendant no. 2. The plaintiff is also required to make payment of Rs.7,876.26p for all subsequent special reviews in case, the plaintiffs outlet does not match the standards of the defendant no. 1. In case of fourth failure, in such inspection, the License is terminated.

5. The defendant no. 4 has been engaged by the defendant no. 1 to provide financial advisory services to the defendant no. 1 involving assisting/advising the defendant no. 1 in making acquisitions of “Subway” stores that are owned by third party franchises. The defendant no. 4 started negotiations with the plaintiff to take over both the Store Nos. 57767 and 34097 of the plaintiff. The defendant no. 4 on behalf of the defendant no. 1 made a non-binding indicative offer on 27th July, 2022 for purchase of the two stores at a sum of Rs. 50,00,000/-. The said offer was not accepted by the plaintiff and a revised offer was made by the defendant no. 4 on 17th August, 2022 for a sum of Rs.56,00,000/-. On 21st December, 2022, the defendant no. 4 has withdrawn the said two offers and in the month of March, 2023, once again negotiations were started between the plaintiff and the defendant no. 4 with respect to two stores. On 7th October, 2023, the respondent no. 4 made a composite non-binding indicative offer to purchase both the stores for a total sum of Rs.85,00,000/- and the defendant no. 4 had categorically mentioned that remodelling costs will be borne by the defendant no. 1. The said offer was not indicate the breakup price of the two stores separately and subsequently the defendant no. 4 clarified that the offer of Store No. 57767 was Rs.75,00,000/- and for Store No. 34097 was Rs.10,00,000/-.

6. The plaintiff has accepted the said offer and the defendant no. 4 on behalf of the defendant no.1 forwarded two Business Transfer Agreements for the said two stores. The plaintiff accepted such offers and also executed two Business Transfer Agreements and sent to the defendant no. 1. The defendant no. 1 taken over the Store No. 34097 on 1st January, 2024 and had paid only Rs.7,41,357/- after deducting royalties and other charges payable leaving a balance sum of Rs.82,373/- to be paid after 45 business days of expiry of Post-Closing Period which expired on 14th February, 2024. The defendant no. 1 failed to pay the balance sum of Rs.82,373/- to the plaintiff with respect to Store No. 34097. As regard Store No. 57767, the defendant no. 1 has neither taken over the same nor has paid any amount in terms of Business Transfer Agreements. The inspection of the stores and the equipment was done on 22nd November, 2023 by the defendant no. 1 as such one of the condition precedent to take over of the Store No. 57767 was complied with.

7. The defendant no. 1 has issued a pre termination notice dated 15th April, 2024 threatening to terminate the franchise agreement in case the plaintiff fails to remodel the Store No. 57767 on or before 60 days from the date of the notice.

8. Learned Counsel for the plaintiff submits that the plaintiff had agreed to transfer the Store No. 57767 to the defendant no. 1, for remodelling thereof incurring further expenses is required to be done by the defendant no. 1 and not by the plaintiff and as per the Business Transfer Agreements. He submits that the plaintiff and the defendant nos. 1 and 4 as late as 13th March, 2024 i.e. way beyond the Long Stop Date were negotiating for transfer of the tenancy of Store No. 57767 in the name of the defendant no. 1 and in such Long Stop Date was given a go-bye by the parties.

9. Learned Counsel for the plaintiff submits that the defendant no. 1 did not show any interest in such negotiation despite the plaintiff ready and willing to help the defendant no. 1 in negotiating with the landlord of the store. He submits that by an email dated 28th May, 2024, the defendant no. 4 purported to terminate the Business Transfer Agreements on the allegation of non-fulfilment of certain conditions. Along with the said email, the defendant no. 4 revised the non-binding indicating offer for the said store at Rs.34,00,000/- instead of agreed amount of Rs.75,00,000/-.

10. Learned Counsel for the plaintiff submits that by an email dated 10th June, 2024, the plaintiff had sent a reply to the defendant no. 4 wherein the plaintiff stated that the Business Transfer Agreements were signed by the plaintiff on 6th December, 2023 and copy of the same was duly signed by the defendant no. 1 but was never sent to the plaintiff. He submits that the Long Stop Date being 26th December, 2023 as claimed by the defendant no. 4 ceased to have any effect by the reason of act and conduct of the defendant nos. 1 and 4 and the same was extended.

11. Counsel for the plaintiff submits that out of the contents of the email dated 28th May, 2024 and the non-binding indicative offer were incorrect and had been made deliberately in a desperate attempt to justify the reduction in the new offer for transfer of the said store at Rs. 34,00,000/-. The Counsel for the plaintiff further submits that the defendant nos. 1 and 4 furtherance of the aforesaid intention had firstly issued a pre-termination notice dated 15th April, 2024 on frivolous grounds and then blocked the supply of inventory to be supplied by the defendant no. 2 whiteout making advance payment for the orders placed on the defendant no. 2. He submits that the defendant nos. 1 and 4 deliberately delayed in taking over the said store. He submits that the defendant nos. 1 and 4 could not draft a suitable lease agreement acceptable to the landlord to the Store No. 57767.

12. Learned Counsel for the plaintiff submits that despite several attempts made by the plaintiff, the defendant nos. 1 and 4 deliberately delayed in taking over the said store and as such the plaintiff by way of email called upon the defendants to withdraw the pre termination notice dated 15th April, 2024 and the email dated 28th May, 2024 along with the revised non-binding indicative offer and further called upon the defendants to execute the lease agreement to the landlord and also to take over the store by making payment of R.75,00,000/-.

13. Learned Counsel for the plaintiff submits that the defendant no. 3 held two inspections on 15th March, 2024 and 22nd April, 2024 and the said purported report alleged certain deficiencies in the services provided by the plaintiff but the said failure report was submitted by the defendant no. 3 in connivance with the defendant nos. 1 and 4 to cause further prejudice to the plaintiff.

14. Heard the Learned Counsel for the plaintiff, perused the materials on record. The defendant no. 4 was ready and willing to purchase both the stores for a total sum of Rs.85,00,000/- ought to which Rs.75,00,000/- for the Store No. 57767 and Rs.10,00,000/- for Store No. 34097. The defendant no. 1 has taken over the Store No. 34097 by paying only an amount of Rs.7,41,357/- after deducting royalties and other charges payable leaving the balance amount of R.82,373/- for Store No. 34097 but till date the balance amount has not been paid. As regard Store No. 57767 neither the defendants come forward to take over the store nor have paid the agreed amount. The plaintiff had also negotiated with the owner of the property for execution of the agreement but the defendants failed to come forward for execution of agreement were the Store No. 57767 situated. Instead of making payment, the defendant no. 4 has revised the sale price from Rs.75,00,000/- to Rs.34,00,000/- and on the other hand, a notice of pre termination is issued on the basis of the alleged report of the defendant no. 3.

15. Considering the above facts and circumstances, this Court finds that in one hand, the defendants have negotiated with the plaintiff with respect to the stores but instead of paying the negotiated amount had issued revised rate much less than the negotiated amount and have also issued the pre termination notice on the basis of alleged report of the defendant no. 3. This Court prima facie is of the view that only to create pressure upon the plaintiff to sell the store at Rs.34,00,000/-, the defendants have issued the pre termination Notice. This Court finds that the plaintiff has made out a prima facie case and balance of convenience and inconvenience are in favour of plaintiff and at this stage, an interim order is not granted, the plaintiff will suffer irreparable loss and injury.

16. In view of the above, the defendants, their men, agents, servants are restrained from giving any effect or further effect to the pre termination notice dated 15th April, 2024 with respect to Store No. 57767 and the defendants are further restrained from giving any effect of further effect to the failure reports submitted by the defendant no. 3 on 15th April, 2024 and 22nd April, 2024 till 9th August, 2024.

17. The plaintiff is directed to serve the copy of plaint, application, documents and this order to the defendants and to file affidavit of service on the returnable date.

18. List the matter on 9th August, 2024.