In a striking order that could reshape franchise accountability in India’s booming cosmetic health sector, the Bombay High Court has refused to grant interim protection to Desai Hospitals Ventures LLP in its dispute with DHI Global Holdings Ltd (UK). The case revolves around allegations of massive underreporting of revenue from the “Direct Hair Implantation” (DHI) franchise, leading to the termination of the 2018 Master Franchise Agreement (MFA).
Justice Sandeep V. Marne, delivering the 31-page judgment, held that the franchisee had “grossly suppressed sales figures with the ulterior motive of avoiding royalty payments,” thereby acting in “fraud of the contract.”
Background
The plaintiffs — Desai Hospitals Ventures LLP and its partner, a Mumbai-based plastic surgeon — were appointed as DHI’s master franchisee for Western and Central India in 2018.
Under the agreement, Desai Hospitals was authorized to operate clinics offering DHI-branded hair restoration services in states like Maharashtra, Gujarat, Madhya Pradesh, and Goa, among others.
In August 2025, DHI Global issued a termination notice, claiming the franchisee had underreported over ₹25.7 crore in sales across three years and avoided paying royalty dues exceeding ₹1.8 crore.
The plaintiffs responded with a lawsuit, seeking to stay the termination, restrain DHI from transferring its rights, and demand damages of ₹50 crore.
Counsel Ashish Kamat, appearing for the plaintiffs, argued that the termination was “illegal and premature,” as no 30-day “cure notice” was issued as required under the contract. He insisted the sales figures were misread, claiming the packages offered to patients “included several non-DHI services like PRP and stem-cell therapies.”
On the other hand, Senior Advocate Mustafa Doctor, for DHI Global, countered that the franchise had engaged in “systematic misreporting,” backed by WhatsApp chats and invoice discrepancies. “When invoices say one thing and WhatsApp tells another story, the truth is self-evident,” he remarked during the hearing.
Court’s Observations
Justice Marne’s detailed reasoning left little room for sympathy. The Court examined evidence including the termination notice, WhatsApp exchanges between clinic staff, and invoice data showing significant mismatch between reported and actual revenues.
For instance, the judgment cites a comparison:
“Patient Rahul Shirke was charged ₹4 lakh for a DHI session, but the invoice reflected only ₹1.18 lakh. Several such instances reveal deliberate underreporting.”
The Court also dismissed Desai Hospitals’ claim that the alleged discrepancies stemmed from bundled service packages. “The plaintiffs’ explanation that packages covered non-DHI services is unconvincing. There is no material to substantiate this defense,” the judge noted.
Significantly, the bench emphasized that Section 16 of the Specific Relief Act, 1963 bars relief to those who act in “fraud of the contract.” Justice Marne observed:
“When a party falsifies its sales to evade contractual royalties, such conduct amounts to fraud and willful variance with the contract.”
The Court further held that the email dated 29 April 2025, sent by a DHI official flagging the discrepancies, served as a sufficient warning — effectively satisfying the requirement of a “cure notice.”
“The plaintiffs were put to notice of underreporting and given an opportunity to cure the default, yet they chose silence,” the order recorded.
Concluding the matter, the Court refused to grant interim relief or stay the termination. It held that the termination of the Master Franchise Agreement (MFA) was valid, and the plaintiffs’ allegations of bad faith were “untenable.”
“The plaintiffs have indulged in gross acts of suppression of sales figures with the intent of avoiding payment of royalty,” the Court ruled, adding that any procedural lapse like non-issuance of a formal cure notice could at best “give rise to a claim for damages, not reinstatement.”
With that, the Bombay High Court dismissed the interim application.
Case Title: Desai Hospitals Ventures LLP & Anr. v. DHI Global Holdings Ltd. (UK) & Ors.
Case Number: Interim Application (L) No. 29470 of 2025 in
Commercial Suit (L) No. 29319 of 2025
