Pizza franchisor to pay man Rs 3 lakh refund after NHAI ‘acquires’ proposed site for highway project

“The retention of the Complainant’s hard-earned money under these circumstances amounts to unjust enrichment,” the commission observed on July 20, holding that the continued refusal to refund the booking amount amounted to deficiency in service and an unfair trade practice.

The dispute arose after the complainant’s proposed pizza franchise outlet became impossible to establish within weeks of signing the ‘Letter of Intent’ because the shop identified for the business was acquired for the expansion of National Highway 154. Despite repeatedly requesting a refund after failing to find another suitable location, he alleged that the companies refused to return the booking amount, leaving him with no option but to approach the commission.

Franchise dream cut short

According to the complaint, Sudhir Kumar approached the opposite parties in August 2024 to acquire a pizza franchise as a means of self-employment. The proposed pizza outlet was to operate from Shop Number 17, New Kartar Market in Shahpur, Kangra.

On September 11, 2024, the companies issued a ‘Letter of Intent’, following which he deposited Rs 3 lakh as booking money in three instalments. They subsequently demanded Rs 15,82,635 as commercial setup charges.

However, in October 2024, the National Highways Authority of India acquired the proposed premises under the four-laning project of National Highway 154, making it impossible to establish the pizza franchise at the agreed location.

After failing to secure an alternative site, Sudhir Kumar sought a refund through phone calls, emails and WhatsApp messages. Despite repeated follow-ups between October 2024 and March 2025, the pizza franchisor companies allegedly refused to return the Rs 3 lakh booking amount, leading him to approach the consumer commission.

Notices issued by the commission were duly served on both opposite parties. However, neither Neo Palates Private Limited nor the pizza franchise company  appeared before the commission despite service, following which both were proceeded against ex parte. Sudhir Kumar supported his case through an affidavit and documentary evidence.

Observing that the opposite parties had chosen not to contest the proceedings, the commission said the complainant’s evidence remained “unrebutted and unchallenged” and added that there was “no reason to disbelieve the cogent and convincing evidence adduced by the complainant.”

Contract Act provisions

• While examining the dispute, the commission noted that the complainant, an unemployed man seeking self-employment, had paid Rs 3 lakh as booking money in September 2024.
• However, within a month, the proposed premises were acquired for the National Highway 154 expansion project, making the agreement impossible to perform.
• Referring to Sections 56 and 65 of the Indian Contract Act, 1872, the commission observed that once a contract becomes impossible to perform, it becomes void and any benefit received under it must be restored.
• The commission further found that the opposite parties had neither provided any services, setup, machinery nor branding material despite receiving Rs 3 lakh as booking money.
• Holding that retaining the amount amounted to unjust enrichment, it concluded that the continued refusal to refund the money constituted deficiency in service and an unfair trade practice.

Allowing the complaint, the commission directed the companies to jointly and severally refund Rs 3 lakh with 9 per cent annual interest from the date of filing of the complaint until realisation. It also awarded Rs 30,000 as compensation and Rs 7,500 towards litigation costs. The complaint was instituted on May 27, 2025, heard on July 6, 2026, and decided on July 20, 2026.

Takeaway

If a franchise or business agreement becomes impossible to perform due to circumstances beyond your control, such as government acquisition of the proposed premises and the company has not provided any services, setup or infrastructure, it cannot automatically retain your advance or booking amount.

Aggrieved consumers may contact the consumer helpline in their respective states (Himachal Pradesh helpline: 1800–180–8087) or call the National Consumer Helpline at 1915 for assistance.

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