Thu. Mar 28th, 2024
Supreme Court of IndiaThe Hindu

Synopsis: The 38 petitioners’ plea seeks evidence against the directors and recipients of Westland Trade Pvt. Ltd, alleging it to be ‘the biggest franchise scam in India’.

In a plea seeking CBI investigation in a franchise scam, the Supreme Court issued notice alleging that Westland Trade Private Limited cheated and duped its clients by launching fake companies such as Hyper Supermarket, Southland Store, H Mart, Louies Salon, Franchisee World, etc.

Notices were provided to the Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and Serious Fraud Investigation Office (SFIO) by Chief Justice S. A. Bobde and Justices A. S. Bopanna and V. Ramasubramanian.

Franchise Scam
The Franchise King

Mahendra Singh Rana and 37 others who paid money for the suspected scam franchise, filed a petition. The company received Rs. 3 lakh franchise fees, plus 18 percent GST and set up a cost of Rs 5,000 per sq ft and ensured the following payouts: (i) 2% minimum guaranteed profits on total store setup cost charged by the owner of the franchise (ii) store rent Rs. 60/sq ft. (iii) 10% commission sales. The company also ensured that employee wages, utility bills, required licences to run the shop, etc. were taken care of.

In the petition, it is alleged that the case is a well-planned criminal conspiracy, directors, partners and workers deceived the petitioners by fraudulently and dishonestly inducing them to deliver their hard-earned money, causing injury not only to their mind and property, but also to their right to trade, life, liberty and dignity, guaranteed in accordance with Articles 19 and 21 of the Constitution and therefore, CBI, ED, SFIO probe is requested.

Last month, a plea was filed asking the Central Bureau of Investigation (CBI), the Enforcement Directorate (ED), the Serious Fraud Investigation Office (SFIO) and the Economic Offenses Wing (EOW) to investigate the scam. The founders, directors, partners and other beneficiaries of DBM Retails Pvt Ltd. are the ones likely to be in the dock. The PIL also stated that Jammu, Punjab, Uttarakhand, Rajasthan, Haryana, UP, MP, Maharashtra, Gujarat, Bihar, Jharkhand, Bengal, Manipur, Assam, Odisha, Andhra Pradesh and Karnataka had the fake stores of the company.