Franchise Status No Shield Against Regulatory Duties, MP High Court Tells Gwalior Preschool
The Madhya Pradesh High Court at Gwalior dismissed a writ petition by Kangaroo Kids International Preschool seeking to quash an FIR and show-cause notice over non-disclosure of book details, holding that operating as a franchisee does not absolve an institution of its statutory and regulatory obligations.
The Gwalior Bench of the Madhya Pradesh High Court on 7 May 2026 dismissed a writ petition filed by Kangaroo Kids International Preschool, Gwalior, and its operating company, Palakk Academy of Learning Private Limited, challenging a show-cause notice dated 26 March 2026 and a subsequently registered FIR. Justice Milind Ramesh Phadke, sitting singly, found that the petitioners' explanation — that the school's website was controlled entirely by the franchise headquarters and they had no authority over it — was “wholly vague, evasive, and misconceived.” The court declined to interfere with the investigation, holding that no case of abuse of process or patent illegality had been made out.
The Dispute Before the High Court
Kangaroo Kids International Preschool, Gwalior, was established in 2015 and imparts preschool education. It is owned and operated by Petitioner No. 2, Palakk Academy of Learning Private Limited, incorporated under the Companies Act. The school functions as a franchise unit of Kangaroo Kids International Preschool, with all educational material developed, published, and copyrighted by the franchise headquarters and supplied through authorised vendors.
The Collector had issued directions requiring educational institutions to disclose particulars of prescribed books, their rates, and details of sellers, with the stated aim of ensuring transparency and regulating complaints about arbitrary sale of educational material. The petitioners were issued a show-cause notice dated 26 March 2026 for alleged non-compliance with these directions.
The petitioners replied to the notice on 27 March 2026. Their reply contended that a common website for all Kangaroo Kids institutions was created, operated, and exclusively controlled by Lighthouse Learning Private Limited, which also held copyright over the website. The petitioner institution, they argued, had neither authority nor control over the website's operation, management, or contents. They further submitted that the educational material was developed and priced by the franchisor, and the franchisee's role was confined to implementing the prescribed curriculum.
Without adjudicating upon the reply or recording any finding on it, the respondents registered FIR bearing Crime No. 101/2026 on 30 March 2026 against the Director of the petitioner institution for an alleged offence punishable under Section 223(a) of the Bharatiya Nyaya Sanhita, 2023.
Reliefs Sought
The petitioners approached the High Court under Article 226 of the Constitution of India seeking a writ of mandamus directing the respondents not to interfere with the school's academic functioning, including its prescribed curriculum, teaching methodology, and use of licensed study material. They also sought quashing of the show-cause notice dated 26 March 2026 and all consequential actions, including FIR Crime No. 101/2026. Additionally, they prayed for directions permitting supply of prescribed books and study material through authorised channels, and for restraint on any coercive action pursuant to the show-cause notice or the FIR.
Counsel for the petitioners placed reliance on a judgment rendered by the Division Bench at the Principal Seat, Jabalpur, in a batch of writ appeals including W.A. No. 1778/2024, decided on 2 December 2025.
How the Court Reasoned
Justice Phadke examined the reply submitted by the petitioners to the show-cause notice and found that it contained no specific or satisfactory explanation regarding compliance with the Collector's directions. The court observed that the petitioners' entire defence rested on the plea that the school's website was under the control of the website developer, and that they had no authority over it.
The court rejected this position squarely. It held that merely functioning as a franchisee does not absolve the petitioners of their statutory and regulatory obligations in relation to the institution being operated by them. Students are admitted to the institution managed by the petitioners, and all educational activities are carried out under their supervision and administration. Compliance with lawful directions issued by competent authorities, the court held, cannot be avoided by shifting responsibility onto the alleged developer or operator of the website.
The court also addressed the argument that the website developers or operators possessed exclusive rights and therefore the petitioners were incapable of making the required disclosures. This contention was found to be devoid of substance. The reply did not indicate any concrete steps having been taken towards compliance with the Collector's directions. The court characterised the explanation as “nothing but an attempt to evade responsibility.”
On the question of jurisdiction, the court reiterated the settled position that it would not ordinarily interfere with the process of investigation under Article 226 unless a clear case of abuse of process or patent illegality is made out. No such exceptional circumstance was found to exist in the present case.
The Division Bench judgment in W.A. No. 1778/2024 relied upon by the petitioners was distinguished. The court found that the said judgment was rendered in entirely different factual circumstances and on issues distinguishable from those in the present matter. The petitioners had failed to demonstrate how the ratio of that decision would apply to the facts before the court.
Outcome
The writ petition was dismissed as devoid of merit. No case for quashment of the show-cause notice dated 26 March 2026 or FIR Crime No. 101/2026 was found to be made out. The investigation into the alleged offence under Section 223(a) of the Bharatiya Nyaya Sanhita, 2023 will accordingly proceed.