Section 9 Shield for Franchisor to Preserve Franchisee Record Before Arbitration
the Judgment dated 16.10.2026 of the High Court of Delhi in OMP (I) ICOMM) No.491/2026 of Aakash Educational Services Limited Vs. Vaibhav Gupta
Section 9 of the Arbitration Act & Appointment of Local Commissioner to inspect the premises of the Respondent’s erstwhile franchise centre and to preserve the records, documents and electronic data pertaining thereo.
The Franchise Agreement of the Petitioner and the Respondent has permitted the petitioner to inspect and audit the books of accounts, receipts and other records maintained in the Franchise Centre.
Since April 2026, the respondent failed to deposit the fees collected from the students, issued self-generated receipts in the name of the petitioner and failed to furnish complete inform on the number of students enrolled at the Franchise centre and the fees collected from them. On the reconciliation of the fees payable by the enrolled students and deposited with the petitioner, an aount of Rs.2,13,77,967/- was outstanding.
By the notice dated 14.10.2026, the franchise agreement was terminated and the petitioner applied for appointment of Local Commissioner for inspection of records of the Franchisee.
Franchise disputes often involve access to critical records such as sales data, customer databases, inventory records, communications, and digital accounts that remain under the franchisee’s control. By permitting the appointment of a Local Commissioner under Section 9, the Court has reinforced an effective mechanism to preserve vital evidence and prevent its concealment, alteration, or destruction before arbitral proceedings commence.
