C.M.C. LIMITED vs PRAVEEN KUMAR TYAGI

ADMITTEDLY respondent No. 2 was a franchisee of the appellant who gave admission to the respondent No. 1 Mr. Praveen Kumar Tyagi/student who paid a sum of Rs. 34,000/- for a course upto 10.4.2001. This fee was charged by the franchisee on behalf of the appellant. There was an agreement between franchisee/respondent No. 2 and the appellant which was abruptly terminated leaving respondent/student in lurch. In view of the aforesaid admitted facts the District Forum vide impugned order dated 9.7.2004 held the appellant and the franchisee/respondent No. 2 jointly and severally liable and ordered for payment of the fees received by the franchisee/respondent No. 4 with interest @ 9% besides cost of litigation.

THE said impugned order has been challenged through this appeal by the appellant mainly on the ground that it has no liability qua the respondent/students as the franchisee was receiving fees in cash without the knowledge of the appellant. Secondly that on having come to know about the conduct of the franchisee the appellant offered admission to the respondent/students in alternative centres but they declined. THE main plank of the agreement between the appellant and franchisee resorted by the appellant is Clause 5 of the agreement which reads like this "in the event of termination of the agreement, for whatever reasons, both the parties agree to fulfil their respective commitments to the already registered batch of students as if the agreement is still in force." The plea taken by the appellant that the franchisee accepted the cash and did not forward the list of the students registered with it and, therefore, it did not know as to how many students were registered and how much fee has been charged from them. This plea holds water like a sieve inasmuch as the appellant had entered into an agreement with the franchisee and it was its duty and obligation to know as to how the franchisee was conducting course and from whom they had charged fees. If the franchisee did not fulfil its obligation arising out of the agreement entered into between them it was for the appellant to take action against it. The respondent/students were in no way concerned as to what was the internal agreement between the franchisee and the appellant. They were only concerned with the certificate to be issued by the appellant. The appellant cannot abjure or absolve itself from the liability of the acts of omission and commission of its franchisee. If such a defence is allowed, the whole concept of principal, agent and franchisee would render meaningless.

The learned Counsel for the appellant has placed reliance on Life Insurance Corporation of India and Another v. Consumer Education and Research Society and Others, III (1994) CPJ 32 (NC), wherein the LIC had taken the plea that as a rule, the insurance agents are prohibited from collecting insurance premium from the insured and to accept the risk for or on behalf of the corporation as it has laid down that it is a function of the agent to ensure that every instalment of premium is remitted by the policy holder to the corporation. It was held that since the premium was collected by the agent and paid to the LIC in the account of the insurer it has to be presumed that the principal received the premium in time and as such the insurance policy remained alive on the date of the death of the insured. The plea that there was a delay on the part of the insurance agency in depositing the insurance premium with the LIC was not accepted as it did not affect or abrogate the contract of insurance. Ratio of this judgment is not applicable in the given facts and circumstances of the case as the appellant had entered into agreement and contract with the franchisee and through this agreement the liability of the appellant became joint and several for acts of omission and commission of the franchisee.

IN the result appeal is dismissed being devoid of merit. The FDR furnished by the appellant along with the appeal be returned to the appellant forthwith.

A copy of this order, as per the statutory requirements, be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to record room. Appeal dismissed.