The main legal point established in the judgment is the requirement for evidence to demonstrate fulfillment of obligations under the Franchise Agreement and the defense of waiver of dues, leading to the conclusion that the case needs to proceed to trial.

JUDGMENT

Rajiv Shakdher, J. - I.A. No. 5541/2020

1. This is an application preferred under Order XIIIA Rule 2 and 6 read with Section 151 of the Code of Civil Procedure, 1908 [hereafter referred to as the "CPC"].

2. The application has been preferred by the plaintiff i.e. Ozone Spa Pvt. Ltd. (hereafter referred to as "Ozone"). Via this application Ozone seeks a summary judgement and decree for recovery of Rs. 97, 43,250/- along with pendent-lite and future interest at the rate of 12% per annum against defendant no. 1. In the alternative, Ozone seeks a direction for the deposit of the "suit amount" or a security or bank guarantee equivalent to the said sum.

3. Shorn of verbiage, the facts obtaining in the matter, those which are necessary for adjudication of the instant application are set forth hereafter:

4. Ozone, which is in the business of creating, marketing, selling facilities concerning fitness club, beauty and hair care salon and spa in India entered into a franchise agreement on 09.06.2016 [hereafter referred to as "FA"] with defendant no. 1. The FA detailed out the terms and conditions on which franchise was given to defendant no. 1 to run a salon. The upshot of the FA was that defendant no. 1 could use the plaintiff's trademark "OZONE" for its business and to run the same from the "franchise territory" based on the stipulated "systems" and "standards" subject to payment of franchise fee/royalty. The franchise territory as per schedule "C" to the FA was to be located at M-7, Greater Kailash, New Delhi. Evidently with mutual consent the "franchise territory" was shifted to M-41, M-Block, Greater Kailash, Part-II, New Delhi. The said premises are owned by defendant no.2 and were taken on lease by defendant no. 1 to run its franchise business.

5. The FA had a fixed tenure period of 10 (ten) years which was to expire on 08.06.2026 with an option for renewal as per clause 4 of the FA.

5.1 The initial and continuing obligations which were undertaken by the franchisor i.e. Ozone are outlined in clause 6 of the FA. Likewise, obligations undertaken by defendant no.1 are set forth in clause 8 of the FA.

5.2 The provision for franchise fee/royalty and collection-sharing as well as payment arrangements are provided in Clause 9 read with Schedule D of the FA.

5.3 Likewise, the provision for termination of the FA is provided in Clause 18.

5.4 Pertinently, Schedule D detailed out the provisions for payment of franchise fee/royalty. As per clause (i) of Schedule D, defendant no.1 was required to pay on or before the execution of the FA a non-refundable lumpsum franchise fee of Rs.12,00,000/- inclusive of service tax and all applicable taxes.

6. Besides these, defendant no.1, in terms of clause (ii) Schedule D, was required to pay a franchise fee/royalty of Rs.75,000/- per month plus service tax and all other applicable taxes in the first year with the caveat that franchise fee/royalty was not to be paid for the initial 3 (three) months. However, after the first year from the date of execution of the FA, defendant no. 1 was required to pay a royalty fee of Rs.1,00,000/- plus service tax and all other future taxes as may be applicable.

6.1 The royalty fee was to be deposited in the bank account of Ozone by the 7th day of the following month. For this purpose, defendant no.1, was required to give an ECS mandate to its bank in the relevant format. It would be germane to note that no such format was placed on record along with the copy of the FA.

6.2 Going further, it was also provided that if the franchise fee/royalty was not credited into Ozone's account by the designated date, defendant no.1 was liable to pay interest/penalty at the rate of Rs.10,000/- per month for the "period of delay or part thereof".

6.3 Furthermore, it was also provided that interest/penalty, at the rate of Rs.10,000/- per month, for the delayed payment, was required to be paid by defendant no.1 even if defendant no.1 made in the payment in the "mid of the month".

6.4 Importa