The Bombay High Court has refused to grant interim relief to Desai Hospitals Ventures LLP, a master franchisee of DHI Global Holdings (UK), which had sought to restrain the termination of its franchise agreement.
Justice Sandeep V. Marne held that the plaintiffs had indulged in a gross act of under-reporting sales with a view to evade royalty payments and that such conduct constituted fraud, thus disentitling them from equitable remedies.
The dispute arose out of a Master Franchise Agreement (MFA) executed in March 2018, under which Desai Hospitals operated hair restoration clinics using DHI’s proprietary technology in eight Indian territories. Later, the UK-based franchisor terminated the agreement on 14 August 2025, alleging that the franchisee had reported only about 20% of actual sales between 2022-2025, causing royalty losses.
The plaintiffs contended that the termination was illegal, arguing that the alleged under-reporting was based on leaked WhatsApp chats from a disgruntled ex-employee and that many of the clinic’s packages included non-DHI services such as PRP, stem-cell therapies, and micro-needling, which were outside royalty computation. They also claimed that the termination was void since no 30-day “cure notice” was served as required by Clause 10 of the MFA.
Rejecting these arguments, Justice Marne found prima facie material in the defendants’ comparative data showing a vast difference between actual charges and invoices. The Court noted that while the plaintiffs attributed this to bundled services, they failed to produce invoices or proof of non-DHI work.
The Court further observed that the email dated 29 April 2025, which highlighted sales discrepancies and asked the plaintiffs to submit corrected reports, constituted a valid cure opportunity, even if not formally titled as a notice. The failure to respond, coupled with admitted discrepancies, weakened their case for equitable protection.
The Court held that “if an entity permitted to use proprietary technology suppresses true sales to avoid royalty, it acts in fraud and wilful variance of the contract, and cannot seek specific performance.”
Consequently, the Court dismissed the plea for injunction, observing that even if termination was procedurally defective, the plaintiffs could only seek damages, not specific performance.
Appearances
Mr. Ashish Kamat, Senior Advocate with Mr. Harsh Moorjani, Mr. Smeet Savla, Mr. Manas Bhindora and Mr. Anish Sahapurkar i/b M/s. SHS Chambers for the Applicant/Plaintiff.
Mr. Mustafa Doctor, Senior Advocate with Ms. Sneha Jaisingh, Ms. Jaidhara Shah, Mr. Manan Parekh and Mr. Vaibhav Guliani i/b M/s. Bharucha Partners for Defendant No.1.
Mr. Karl Tamboly with Mr. Zahan Setalvad, Ms. Sneha Jaisingh, Ms. Jaidhara Shah, Mr. Manan Parekh and Mr. Vaibhav Guliani i/b M/s. Bharucha Partners for Defendant No.3.
Ms. Sneha Jaisingh with Ms. Jaidhara Shah, Mr. Manan Parekh and Mr. Vaibhav Guliani i/b M/s. Bharucha Partners for Defendant Nos.2, 4 and 5.